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Manufacturing and Industrial Relations

Madam Speaker: We now come to the Opposition motion on manufacturing and industrial relations. I have selected the amendment in the name of the Prime Minister.

3.30 pm

Mr. John Redwood (Wokingham): I beg to move,

"Business confidence hits five-year low": today's business headline in the Financial Times and other leading newspapers says it all. The Government are creating a them and us economy: a booming economy for the Government, their advisers and their lobbyists; a bust economy for people who dare to make things or try to sell abroad.

The Government proudly tell us that they have been elected to stop the trade cycle. The President of the Board of Trade is as likely to stop the trade cycle as I am to find a regular tube service on the Central line today. The Government stand Canute-like on the edge of a manufacturing recession claiming that the tide of lost jobs and closed factories is not coming in or has nothing to do with them, while the rest of us see the waves that they have generated enveloping British industry in closures and depression.

When we last debated these matters, the President of the Board of Trade told the House that the Government were to establish a competitive and stable exchange rate. She refused to recognise that, with the pound at its present level, it cannot be both. I confess that there has been more stability recently, but stability of the pound at around DM3 means more stability in the level of pain to manufacturers; more stability in the level of pain and difficulty for those seeking to export; and more stability in the terrible loss of jobs and loss of orders that now afflict our manufacturing heartlands.

It has certainly meant more job losses announced in steel, engineering and textiles. It has meant more job losses in the manufacturing heartlands of the north and the midlands. I hope that Labour Members will, for once, speak up about the fears and worries of their constituents. Many Labour Members represent those heartlands.

Mr. Barry Sheerman (Huddersfield): Will the right hon. Gentleman give way?

Mr. Redwood: I hope that the hon. Member for Huddersfield (Mr. Sheerman) will confirm what I have said about the difficulties facing manufacturers in his constituency.

Mr. Sheerman: The right hon. Gentleman is right. Labour Members are concerned when times get tougher

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rather than easier, and they are not as easy as they could be at the moment. I must respond to the right hon. Gentleman's remarks. Between 1979 and 1997, under the previous Administration, 2.6 million jobs were lost in manufacturing. Blame for the basic state of our manufacturing industry should be laid at the door of Thatcher, Major and the Administrations of which the right hon. Gentleman was a part.

Mr. Redwood: The hon. Gentleman should have referred to my right hon. Friend as the right hon. Member for Huntingdon (Mr. Major).

Mr. Sheerman: I am sorry.

Mr. Redwood: The hon. Gentleman is wrong. The Leader of the Opposition and I have, on several occasions--often at the behest of Labour Members, but sometimes voluntarily--confessed that mistakes were made in the early 1990s when we were in the exchange rate mechanism. Conservative Members regret that: we have been over this matter many times before, and we have apologised to the nation. I am waiting for an apology from Labour Members. Why will they not apologise for supporting that policy? It was the only economic policy of the Conservative Administration that they ever supported, and it was the one that went wrong and did damage.

Mr. Nicholas Soames (Mid-Sussex): I congratulate my right hon. Friend on the measured way in which he responded to that fatuous intervention.

Is my right hon. Friend aware that, in my constituency, companies that have done extraordinarily well in the past few years are now under great and increasing pressure? As of the last few weeks, there is a risk of numerous manufacturing redundancies in the south-east. How does that put the remarks of the hon. Member for Huddersfield (Mr. Sheerman) into context?

Mr. Redwood: My hon. Friend is right. There is a threat to manufacturing jobs in all parts of the country, including his constituency and those of other Conservative Members in the south of England, as well as the areas in the north and the midlands to which I have referred.

The hon. Member for Huddersfield began by agreeing that times are difficult, and I was grateful for that. What he and his right hon. and hon. Friends do not appreciate is this. The present Government now purport to be in control. They have been on watch for more than a year, and they have made many changes in economic policy. It is their tax rates that are now determining our economic future; their interest rates, through the Bank of England, that are determining the future of manufacturing; their sterling rate policy, or lack of one, that is doing the damage. I would have accepted, after a month or two of Labour Government, that what Conservatives had done had had more impact than what Labour was doing. Our case today, however, is that it is Labour's policies that are coming home to roost, and Labour's policies that are doing the damage. If Labour had stuck with our policies, fewer factories would have closed.

Mr. Dale Campbell-Savours (Workington): What would the right hon. Gentleman do to reduce the exchange rate? Would he reduce interest rates? Is that the policy that he would pursue?

Mr. Redwood: I am grateful to the hon. Gentleman for seeking advice from the Opposition in these parlous times

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for the Government. If he will restrain his impatience, I will set out later in my speech six measures which I think will help a great deal; but I will give him one easy answer to start with. I believe that the Chancellor should promote savings rather than taxing them. If he promoted savings, the Bank would not need to drive interest rates so high. It has driven them so high because it despairs of the low savings rate in this country, and of excess consumption.

Mr. Campbell-Savours: May I ask the right hon. Gentleman exactly the same question? Would he reduce interest rates--yes or no?

Mr. Redwood: I am saying that the Opposition would follow policies that would produce lower interest rates, even from a so-called independent Bank of England. I will set out at some length the way in which we think the Government, even now, should do that.

Why does the hon. Gentleman not understand that, if the Government reversed their policies on the taxing of savings, more money would be saved and less would therefore be spent? The Bank would then be less worried about inflation taking off in the shops and the service sector, and would not need to panic about interest rates as it has to now, given the awful policies followed by the present Government.

Mr. Denis MacShane (Rotherham): I read in the papers this morning that the right hon. Gentleman's party was about to embark on an apology tour of the country. I hope that he will be leading those in sackcloth and ashes.

The right hon. Gentleman has blamed the early 1990s. Is he aware that the collapse of profits--not yet jobs--in the steel industry arises directly from the increase in sterling that took place in the last year of Conservative Government? Between May 1996 and May 1997, sterling rose by 70 per cent. against European currencies; since then, it has risen by 9 per cent. The former Chancellor is responsible for the 70 per cent., and we are responsible for the 9 per cent. Will the right hon. Gentleman join me in condemning the former Chancellor as a useless has-been who has nothing more to say on current economics?

Mr. Redwood: The last Chancellor of the Exchequer did a great deal more good to British industry than the present Government have done in their first year.

The hon. Gentleman should check his facts. There is no way that sterling appreciated by 70 per cent. against the European currencies in a single year--our last year in office. That is complete nonsense. What is true is that the level of sterling when we left office was high but just about bearable for those manufacturers; and it is the further turn of the screw over the past year under Labour that has done the real damage and led to all those announcements of further job losses.

Mr. Sheerman: May I try to be helpful on that point?

Mr. Redwood: I do not know whether the hon. Gentleman will be helpful, but I give way.

Mr. Sheerman: I am seeking to be helpful. The Library has given me a list of interest rates over the past

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40 years, which clearly show that the previous Chancellor was not the only person responsible for high interest rates and what happened to our country. From 1979 until the most recent terrible recession, Conservative Governments almost without exception were persistently high-interest Governments, who made a competitive disadvantage the bedrock on which our industry had to build. That is the truth. If the right hon. Gentleman wants me to pass the figures to him, he can read them out.

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