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Mr. Redwood: I am delighted that the Secretary of State has given way. He is obviously enjoying himself, but he is replying to a speech that I did not deliver. Will he recognise that, in my speech, I was full of praise for many manufacturing and industrial achievements in this country? However, it is time that the Government were held to account for their many mistakes, which have made things worse. Will the right hon. Gentleman now answer my points?
Mr. Mandelson: As Sir Clive Thompson might say, "When you're in a hole, stop digging".
The right hon. Member for Wokingham dwelt on the McKinsey report, and I want to deal with that straight away. The report is undoubtedly a valuable contribution to the national debate on productivity, and I agree with much of its thrust. However, let us be clear about the thrust of the report, which is that our productivity, relative to that of our main competitors, did not improve during the Tory years, and that that remains a serious challenge for the whole country.
The right hon. Gentleman does not accept that. He rejects the findings of the McKinsey report, and wants to pretend that there is no such challenge for British business and the British economy. He does not even accept that a productivity problem exists. In his speech to the CBI last week, he referred to McKinsey's findings as a stream of "fiddled figures". If there is no productivity problem, how else does he explain the fact that our national income per head is still lower than those of the United States, Germany and France, much as it was 25 years ago?
The fundamental point to emerge from the McKinsey report is the paramount importance of competition. On that score, the Government have already taken major and decisive action by introducing the Competition Act 1998. That is a belated and much-needed piece of legislation, which the previous Administration failed to deliver and which the right hon. Gentleman refused to have anything to do with when he was in the Department of Trade and Industry. So much for the right hon. Gentleman's clarion call for more competition and greater competitiveness. When he had the opportunity to act, he did absolutely nothing; he did not lift a finger.
Mr. Bercow:
Will the Secretary of State give way?
Mr. Mandelson:
I will come to the hon. Gentleman later. I want to save him up. It would be wrong to squander him too early in the debate.
I do not want to dwell on the McKinsey analysis. However, all the important questions raised in the long letter that I received from the right hon. Member for Wokingham--milk quotas, new hotels and price systems in the newspaper industry--will receive an answer from me in writing in due course.
Mr. Gill:
Will the Secretary of State give way?
Mr. Mandelson:
I will give way presently.
As the right hon. Member for Wokingham demanded of me, I want to address seriously what I think are the basic issues for debate today. I want to discuss what is happening to the global economy--the real world, if Opposition Members can remember what that is--and what we are doing to help British businesses and individuals throughout the economy, not just in manufacturing, in what we recognise are difficult times. Also, I want to lift our sights a little and look beyond the immediate questions to the future and the challenges facing the British economy.
Mr. Bermingham:
I hope that my right hon. Friend understands my question far better than the right hon. Member for Wokingham understood my intervention during his speech. The right hon. Gentleman clearly did not understand a word of what I was saying. All I was saying--perhaps the Secretary of State agrees--is that the McKinsey report must be read in the context of our infrastructure and our social patterns. If it is read in that context, our competition policy a propos hotels and so on will be built to the way in which we work as a nation. I assume that that is what the Government intend to do.
Mr. Mandelson:
I did not read any argument or analysis in McKinsey contradicting my hon. Friend's comments. Moreover, I did not read any argument in McKinsey on social standards or on the way in which the United Kingdom--in many respects, fortunately, unlike the United States--seeks to combine competitiveness and fairness in a modern economy. That is what McKinsey is all about, and that is what we shall be pursuing.
Mr. Bercow:
Will the right hon. Gentleman give way?
Mr. Mandelson:
I give way to the hon. Member for Ludlow (Mr. Gill).
Mr. Gill:
Before the Secretary of State takes us on a tour d'horizon of events in the rest of the world, may I bring him back home--to what is happening in this country? Does he realise that what matters in competitiveness is the unit cost of producing a product, and that there are many components to that cost--not only the factor that he has already mentioned, productivity, but also overheads?
The one factor that is within the Government's gift--that it is within their power to do something about--is the one that we call "overheads". Last week, the House debated the working time directive regulations, which, over a full year, will add £2.3 billion to costs to industry. The Government now propose to lift the cap on compensation in industrial tribunals. May I put to the right hon. Gentleman the not-so-hypothetical case of a west midlands engineering company--possibly employing 50 people, and possibly with a turnover of about £3 million--that, if it had an award against--
Mr. Deputy Speaker:
Order. The hon. Gentleman should probably now come fairly quickly to his question.
Mr. Gill:
Does the Secretary of State realise that the consequence of proposals now in train could be that half
Mr. Mandelson:
I was impressed by the hon. Gentleman's diatribe against the working time directive--although I have not heard Opposition Front Benchers state that they will ensure that the United Kingdom does not have statutory three-week per year holidays for every employee. I do not know whether that is the Opposition's policy. Nevertheless, the hon. Gentleman's diatribe might have been delivered more appropriately during the time of the previous, Conservative Government. They signed up to the working time directive, not us. We are simply implementing something that the previous Government agreed to.
Mr. Bercow:
I am most grateful to the Secretary of State for giving way at last. Given his unwise invocation--in his own support--of the comments of the president of the Confederation of British Industry, has he noticed that, as recently as 3 November, the CBI president said that, since Labour took power, the business horizon had darkened because of the "creeping paralysis" of regulation introduced by the Government? The president added that, unless Ministers did something to stop and reverse that trend, the only growth industry in Britain--with the right hon. Gentleman as Secretary ofState--would be regulation. Is the right hon. Gentleman proud of that record?
Mr. Mandelson:
Sir Clive and many others would have been recalling that, although the previous Administration did indeed repeal 3,000 such regulations--on which I congratulate them--they introduced 10,000 more. Such a record does not allow the hon. Gentleman to give any lectures on business regulation. If the hon. Gentleman will allow me, I should like now to deal with the real world and events in the global economy. Those events are serious, affect us all and have to inform this debate.
As the right hon. Member for Wokingham barely recognised in his remarks--coming as they did from his own rather extra-planetary world--all is not well in the global economy. Asia caught a very serious bout of flu, with repercussions reverberating around the world. No one is immune to the contagion. A quarter of the world is now in recession, which is a fact of life with which we have to live.
Mr. David Chidgey (Eastleigh):
Is the right hon. Gentleman aware that, although it is predicted that there will be a 7 per cent. growth year on year in world manufacturing export markets over the next four years, it is also predicted that our exports will increase by only 4 per cent? Markets are growing, but we are not taking advantage of them.
Mr. Mandelson:
That is exactly the point that I made at the outset, and I shall return to it later. The markets are there--what we need is the competitiveness to make sure that our share of those world markets is keeping up, and, indeed, expanding. That is exactly what our policies are focused on.
No one disputes the fact that there is a very serious downturn in the world economy. There will be inevitable job losses as a result. The question is how much Britain will suffer. Can we withstand the worst?
Mr. Barry Jones (Alyn and Deeside):
I support my right hon. Friend's rational and robust defence of the Government's policies. I know that his Department aims to help British manufacturing, but yesterday, because of the conditions that he is outlining, major redundancies were announced in my constituency by Umbro, the sports manufacturer.
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