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Mr. Redwood: Will the Minister give way?

Mrs. Beckett: Certainly. I hope that the right hon. Gentleman can tell us that a Conservative Government would not seek to abolish such a fund.

Mr. Redwood: Has the Minister some advice for a manufacturer who, today, is looking at the figures and saying to himself, "If sterling and interest rates stay at this level or go higher for the whole of the next six months, I must close my factory, but, if there is relief in sight--if there is to be some improvement--it is worth clinging on"? Would she advise that manufacturer to cling on--or will her Government do absolutely nothing to help him?

Mrs. Beckett: Such a manufacturer will find no answer in the issues that the right hon. Gentleman has raised, most of which have no relevance whatever to him or her.

I am slightly sorry that the right hon. Gentleman could not find it in himself to be generous enough to welcome the £1.1 billion package that I have just announced for the science and engineering base. I would not attempt to second-guess the decisions that any manufacturer or industrialist must take over the next few months; all I can say to him is that, in terms of economic policy and supply side investment, the Government are laying the foundations for the type of long-term prosperity that can alone secure our economy and our manufacturing base, the neglect of which was such a feature of the Conservative party's record in office.

Mr. MacShane: Perhaps the right hon. Member for Wokingham (Mr. Redwood) has not welcomed that remarkable new statement--which, alas, there is no one in the Press Gallery to hear--for the following reason.

13 Jul 1998 : Column 40

At page 10 of the latest Library research paper on the economy we read that, in 1997, investment in our country, expressed in gross domestic fixed capital formation,

    "was still 2.1 per cent. below the peak reached in 1989"--

so the period when the right hon. Gentleman sat in government was the period in which we invested nothing in our economy.

Mrs. Beckett: My hon. Friend is entirely right. That was a feature of the Conservative party's entire time in office.

The announcement that I have made today is not the only sign that the Government have given that where we can work in partnership with manufacturing, we shall. Immediately after the general election, we set up the export forum to consider what steps lay within our power as a Government to help and support Britain's exporters, especially small and medium businesses. We reinstated specific support for trade fairs and seminars threatened by the Government who left office last year. Earlier this month, we established the national exporters database. We have introduced the export explorer service, to give small firms first-hand experience of export markets. Later in the year, we shall launch the new sales leads service, which nearly 1,300 companies have already applied to join.

Moreover, directly in manufacturing, in the past15 months we have pledged £323 million of supportive investment into Britain's aerospace industry--substantially more than the amount that flowed from the previous Government over seven whole years.

We have secured inward investment in pharmaceuticals from Pfizer, with 1,000 more scientific research jobs in Kent, and from Jaguar, Vauxhall, LDV and Honda. In all those cases, investment is bringing more quality and skilled jobs to various parts of the UK. In addition, we have seen investment in jobs in IT, particularly in the east Midlands and Glasgow. All those investments are the fruits of partnership with this Government which look to secure our economy and our employment prospects in the longer term.

Mrs. Dunwoody: Will my right hon. Friend give way?

Mrs. Beckett: I will, but, if my hon. Friend and the House will forgive me, it will be the last time, as I am almost at the end of my remarks.

Mrs. Dunwoody: I am grateful. Will my right hon. Friend look carefully at the Export Credits Guarantee Department? I know that it is a difficult area where, because of past problems with particular countries, some contracts are being lost. I understand the difficulty and the reinsurance problems, but will she undertake over a longer period to examine closely what is happening in ECGD?

Mrs. Beckett: We are taking a careful look at the scope of the operations of the Export Credits Guarantee Department. As my hon. Friend knows, it is a high-quality operation which has had great successes. I recognise that there are those who would like it to stretch its wings a little more sometimes, and I shall bear my hon. Friend's remarks in mind.

It is only natural, when people are facing particular difficulties, for them to begin to blame the Government of the day--although not, I hope, for the weather or our

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sporting record, as the right hon. Member for Wokingham suggested. It is only natural for them to want the Government to do something, even though the specific action for which they call may neither identify nor address the underlying problems that they face.

It is right for a Government to take those concerns seriously and never to ignore or dismiss them, but it is also right for a Government not to take their eye off the fundamental long-term changes that, in the end are the only basis for sustainable and secure economic prosperity. That is what this Government are determined to do.

The petulance and fury displayed by the Conservative Opposition, trying to fire on all cylinders and certainly firing in all directions, adds nothing to the serious analysis or the resolution of Britain's long-term problems. They had the greatest investment opportunity in our long and sometimes glorious history, and they frittered it away buying short-term popularity at the price of continuing long-term decline. We and the House need no lectures from them. What we need is to continue to work to develop a new understanding and a new approach to making Britain more competitive. It is a task from which we will not be deflected, because it is a task in which the future of Britain requires us to succeed.

4.42 pm

Mr. David Chidgey (Eastleigh): I am glad that the Conservative Opposition tabled the motion. It seems that they have finally recognised that creating a boom-bust economic cycle of high interest rates and wage and price inflation is not good for the economy. They are right to point out the damage being done to manufacturing industry by an unvirtuous cycle. However, rather predictably, they have begun to lose their way in addressing the problem.

I am sure the House would agree that the present Government did not cause the situation: they inherited it. However, that is no excuse for not recognising the problems visited on manufacturing industry and for not acting to correct them. Having given the Government some credit, perhaps I am now allowed to chide them a little.

It is clear that the Government are in danger of mismanaging the economic situation that they inherited. They have yet to send a clear message to the international community that they mean business when it comes to creating stability and investing for the long term. When they presented last year's Budget, they had the opportunity to dampen consumer spending through taxation--to damp down the side of the economy that was and is overheating. That would have removed the need for the interest rate rises that have increased the cost burden of debt management right across industry.

The pound, which is proving so attractive to overseas investors because of high interest rates, and whose strength is doing to much to damage the export sector, would be lower and would be pitched at a realistic rate.

Dr. Ladyman rose--

Mr. Chidgey: I give way to the hon. Gentleman.

Mr. Deputy Speaker (Mr. Michael J. Martin): Dr. Ladysmith.

Mr. Bercow: Dr. Ladyman.

Dr. Ladyman: Thank you. I am grateful to the hon. Member for Eastleigh (Mr. Chidgey) for giving way--to someone.

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My understanding was that the Liberal party campaigned in the general election on the notion of putting 2p on income tax for various good works. Presumably the hon. Gentleman is arguing that that 2p on income tax would have dampened consumer demand sufficiently to make a significant rise in interest rates unnecessary. I would be surprised if any serious economist suggested that that would have saved more than half a percentage point on interest rates. How would the hon. Gentleman have dealt with that situation? Would he have carried on putting income tax up, beyond the 2p?

Mr. Chidgey: I share with the hon. Gentleman the problem of the mispronunciation of one's name. I often suffer from a similar problem, but I hope that he does not feel too flushed by the mispronunciation of his.

Mr. MacShane: Get on with the answer.

Mr. Chidgey: I shall indeed answer the question, as was so accurately said from a sedentary position.

The hon. Member for South Thanet (Dr. Ladyman) is wrong on several counts. He has not got his figures right with regard to our manifesto. He may not be aware of, or he may have ignored, a fully costed alternative Budget that we proposed when the Government proposed theirs. I recommend it to the hon. Gentleman. It will make interesting reading, and he may learn quite a bit from it.

The Government should have made an early commitment to join the EMU, which would have encouraged interest rates to fall, accompanied by a fall in the value of the pound. Instead, a combination of inflammatory rhetoric from the Conservative Opposition and indecision from the Government have led the pound to rise even higher.

The Government should not have adopted the self-imposed economic straitjacket of the Conservative spending limits. Taxes on consumer spending could have provided the levels of investment that are desperately needed to repair the damage that has been done to investment in education and training. The billions of pounds in surpluses that the Chancellor is building up in his war chest over the life of this Parliament could have begun the process of reskilling the work force and closing the skills gap that is doing so much to encourage wage inflation in the industrial base.

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