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4.58 pm

Mr. Denis MacShane (Rotherham): I welcome the speech of the hon. Member for Eastleigh (Mr. Chidgey), because he is a chartered engineer, and is one of those rare beings in the House who has got his hands dirty in manufacturing.

Mr. Chidgey: I am grateful to the hon. Gentleman for giving way so early. On a point of information, not only am I a chartered civil engineer and mechanical engineer--

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I have got my brains and hands dirty--but my hon. Friend the Member for Weston-super-Mare (Mr. Cotter) runs a manufacturing company. Perhaps the hon. Gentleman was not aware that we on the Liberal Democrat Benches speak with a great deal of experience.

Mr. MacShane: Even if I were not aware of that, I sense that, as so often, the only effective opposition in the House is coming not from the two Conservative Members sitting on the Back Benches, but from hon. Members from parties below the Gangway.

As a lifelong supporter of manufacturing, I am delighted that this motion has been tabled. It allows me and any other hon. Members with a shred of intellectual honesty to place in front of the House the sorry record of the Conservative Government, who undermined, weakened and scorned the needs of manufacturing. By sheer chance, on Friday night I spent three hours with a group of representative employers from my constituency, which lies at the heart of the traditional manufacturing sector in the United Kingdom economy. It was a good discussion, and I shall put some of their points and comments on the record, because I want Ministers to consider what they had to say.

This debate will continue: it is not a fixed announcement of policy. There is a crisis about what kind of a nation we want to be. The fall in the manufacturing sector of our economy, which has been accelerating in the past 20 years, needs to come to a stop and, where possible, to be reversed. We have gone through the years in which, as the former Chancellor Lord Lawson said, it did not matter how people made a pound--whether it was by trading a pound or making a product. We have gone through the years when all that counted was the weightless economy. Just look at the contents of our homes, what is on sale in our shops, and the number of cars we drive. We live in an economy that is more weighty than ever.

I hope that Britain will start to make a little more of what we and the rest of the world consume. To achieve that end, we shall need a significant change in policy.

Mr. Boswell: Would the hon. Gentleman like to comment on events since May last year? Have the Government shown a greater sympathy towards manufacturing industry or the service sector? Which of those sectors has done better during that time?

Mr. MacShane: A culture inimical to manufacturing existed not just during the 18 Tory years, but for longer. Under the present Government, 14,000 new manufacturing jobs have been created in the United Kingdom. In my constituency, British Steel is taking people on, but it cannot make a decent profit because of the value of the pound. I shall come on to that, because these points need to be raised. But the difference is that only in Britain has it been the fixed and focused policy of the Government, when in the hands of the Tories, to do down the UK-owned and managed manufacturing sector.

Manufacturing may be different from the service economy, because, perhaps more than any other sector, it requires stability to plan for the future. Last week, I went to Bournemouth. I got up early, picked up some papers at the House of Commons and walked across Westminster bridge. I had not had breakfast, so I went into a typical

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part of the service sector: a cafe underneath Waterloo station. I asked for a bacon sandwich with brown bread. Two young girls were smoking and examining their fingernails. One of them eventually got up and told me that she did not have any brown bread.

I went next door to make the same request, but there was no one behind the counter--that is the service economy that the Tories created. Someone finally arrived, but there was no brown bread--bacon, yes; tea, yes; but no brown bread. I like my brown-bread bacon sandwiches.

I went into Waterloo station, where I saw a bagel stand. Three young men and women were sweating like dogs. They had six different types of bagel and a dozen different types of fillings, from Marmite to marmalade. They were working hard to produce what customers wanted. That is the service sector that Labour should be backing, and we should abolish the old Tory sector that could not provide clients with what they wanted.

Bacon sandwiches apart, cafes and bagel stands may come and go, but manufacturing requires stability in three areas: first, in the cost of its inputs and the price of its outputs; secondly, in the availability and cost of skilled labour; and thirdly, in the prospects for its markets. In the past years, we have known nothing but chronic, enduring instability in all three areas. Virtually all the present problems facing manufacturing--I do not deny that there are real problems--arise directly from the previous Government's irresponsible handling of the economy.

We may exclude the right hon. Member for Wokingham (Mr. Redwood), because he was not part of the previous Government during their last one or two years. However, before he became a Member of Parliament, he was one of the chief advisers to Mrs. Thatcher, and he participated in the culture of hostility to manufacturing that developed so strongly in the 1980s.

Mr. Redwood: I should like to correct the hon. Gentleman. I had no hostility to manufacturing then, and I do not have any now. I have been a model of consistency on this issue. The advice I gave included advice that would help manufacturing.

Mr. MacShane: The right hon. Gentleman reminds me of the general who reported back to the Roman emperor, who then said, "They created a desert and called it peace." The wipe-out of manufacturing in the 1980s--when the right hon. Gentleman was not an MP, but was an adviser to Mrs. Thatcher--is one of the industrial crimes of the century.

The real culprit, however, is not the right hon. Gentleman: it is the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), who is not present. I think that it was the poet W. H. Auden who said that history sometimes forgets, but it never pardons. I do not know whether history will forget the previous Chancellor, but his party will certainly never forgive him. His flippant and irresponsible stewardship of the economy led to the Tory wipe-out at the last election.

As my right hon. Friend the President of the Board of Trade said in her excellent speech, 70 per cent. of the rise in sterling since May 1996 occurred under the Tories. The increase in the rate of money supply nearly doubled in the

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last year of Tory government. Interest rates were held down deliberately to maintain a pre-election boom. Fat use that did them, because the British people are much wiser than the Conservative party. There was no serious, sustained investment in manufacturing.

Mr. Redwood: Will the hon. Gentleman give way?

Mr. MacShane: May I finish my point first? The right hon. Gentleman was more than courteous in giving way to Labour Members, so I shall repay his courtesy.

As the hon. Member for Eastleigh said, under the Tories there was no investment in training. There was a decrease in the amount of fixed capital formation--an absence of investment essential to any successful manufacturing economy. Short-termism was rampant: dividend payments were maintained at all costs, even at the expense of investment, training and jobs.

Mr. Redwood: For the sake of accuracy, I should point out that the money supply did not double in the last year of the Conservative Administration, as the hon. Gentleman suggested. Indeed, it did not double even in the last five years of that Administration.

Mr. MacShane: I am terribly sorry, but the right hon. Gentleman did not listen to me. I said that the rate of increase in the money supply nearly doubled. If he wants to check the facts, I refer him to an excellent House of Commons publication on GDP indicators.

Mr. Bercow: Will the hon. Gentleman give way?

Mr. MacShane: Perhaps the hon. Gentleman would let me make a little more progress.

I want to refer to the talks that I had with employers in Rotherham last Friday. It was a varied group of men and women. Rotherham has a combined chamber of commerce and training and enterprise council, which is also associated with the business link. One organisation represents about 75 per cent. of the employed people in Rotherham. I commend that model to other parts of the country, because it concentrates the voice of employers.

At what was, in effect, a seminar--I hope that similar meetings take place in the Treasury, the Department of Trade and Industry and, indeed, the counsels of the Opposition parties--the question was asked, should we raise taxes? I think that the hon. Member for Eastleigh suggested that we should. In fact, a number of taxes on consumption, such as insurance premium taxes and the tax on cigarettes, have gone up; but the response of those selling goods in Rotherham was, "Hang on a second: we need to maintain demand."

What about interest rates? My good friend Brett Ainsworth, who runs a metal company that has been successful on both the domestic and the international scene, said that the Chancellor, or rather the Monetary Policy Committee, should lower them by a quarter of 1 per cent. I must say that I am not entirely sure that a quarter of 1 per cent. is all that significant.

As inflation remains a worry for the men and women to whom I spoke, I asked them about the minimum wage. "We welcome it," said one hotel keeper. "It will solve the problem of the low-wage competition that has been undermining us."

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One issue that bubbled up surprised me, because I do not associate South Yorkshire with the keenest of views on Europe. There was a feeling that Britain was not being clear enough, as a nation--no blame was attached to any particular Minister or party--about European monetary union. Those people respect and appreciate our Government's view that ultimate democratic control rests in the hands of the people through a referendum--and, having raised the issue in my maiden speech four years ago and subsequently written an article in The Times arguing in favour of such a course, I am wholly behind it.

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