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Mr. Mandelson: No, I am afraid that the hon. Gentleman is too late. He had his chance to cheer.
In the concluding part of my speech, I want to talk about the future. To emerge with strength from what is without doubt a very difficult period for the British economy, we need to continue to attract high-quality overseas investment. We are far from complacent; there is a always a great deal more for us to do to attract high-quality inward investment. In addition to inward investment, we must bolster Britain's supply of home-grown productive capacity and competitiveness. That task is certainly equal to coping with the short-term problems brought about by the global downturn.
Our predecessors had no such ambition or creative vision. They specialised only in destruction--of industries, jobs, regions. Of course things needed to change in British industry and the economy. The problem was that their policies failed to support the creation of successful British businesses, with expanding numbers of jobs rooted firmly in the UK. They failed to bring Britain into the fresh industrial revolution--the revolution of the new knowledge age. That is the challenge that I have set for my Department.
Mr. Mandelson:
The right hon. Gentleman says, "Claptrap." What world is he living in?
Mr. Redwood
Will the Secretary of State give way?
Mr. Mandelson:
No. The right hon. Gentleman does not realise that the generation, harnessing and application of knowledge is the sole source of comparative advantage in our economy.
Mr. Redwood
indicated dissent.
Mr. Mandelson:
He says that that is rubbish. We do not want any more of his rubbish. We need knowledge applied throughout the British economy. The theme of the White Paper that I shall publish next month will be to equip Britain to succeed in the knowledge-driven economy.
We are already world leaders in some of the most advanced sectors of the economy, such as computer games and biotechnology. [Hon. Members: "Ah."] That is not a result of what your Government did--
Mr. Deputy Speaker:
Order. It is not my Government.
Mr. Mandelson:
That is as a result not of the Conservative Government, but of what entrepreneurs and business people did for themselves. They are the ones to be credited with the success of the computer games and biotechnology industries--not the Tories. The problem is that no big British business has grown out of those sectors--no Microsoft, no CISCO, and not even a
We shall see, too, firms in traditional sectors innovating constantly--not just sunrise and new technology companies. Mature industries and companies must apply knowledge, innovation and imagination to what they do just as much as everyone else, in order to improve production and processes, and to keep and grow their market share.
There are some important success stories in Britain in our pharmaceutical and aerospace industries, but too many firms are just not innovative enough. They do not spend enough on research and development to generate knowledge. They do not put enough into skills. I want innovation to be the watchword of all business in Britain. How we achieve that has already been touched on in the pre-Budget report, and will be addressed further in the White Paper, although I can say that we shall succeed only if we create open, competitive markets in which British companies can compete, thrive and achieve rising market shares.
We shall succeed only if we create and exploit knowledge, including our science base, upgrade skills, spread knowledge of best practice--to help businesses learn from other British businesses so that best practice can flow throughout the economy and there can be lasting improvement is as important a job for the Department of Trade and Industry and the Government as any--and, above all, help entrepreneurship to thrive once again, harnessing through enterprise the best of Britain's brilliant record in scientific discovery.
That is why the Government will invest to give our entrepreneurs the knowledge with which to work, why we are putting £1 billion into British science, and why we shall forge better links between our universities and businesses, so that new enterprises and businesses spin off, and we excel not just in scientific discovery but in scientific enterprise and business. That is the challenge facing us.
Amid all the undoubted pressures on British business, it is vital to realise that it is possible to talk ourselves into a greater slowdown than is necessary. That is what we have heard from the Conservatives this afternoon. They must understand that, for perfectly understandable reasons, confidence in many British businesses is fragile. [Hon. Members: "Ah."] That is a lesson for us all to heed, not only those of us in government.
Mr. David Chidgey (Eastleigh):
At least until the last couple of minutes, I was beginning to agree with the Secretary of State in his aspirations for the future of our economy--including our manufacturing industry, which
The right hon. Gentleman made great play of the need to avoid talking down the British economy, and I agree that we should have confidence in our economy and in our work force. However, when he commented on the forecasts that he had seen concerning whether we were going into recession, he was careful to speak in terms of "the economy". I agree that the economy is not going into recession--but the debate is about manufacturing industry, and that is a different story.
I am not here to talk down manufacturing industry for any political advantage. I am talking about it because I am concerned about it, and I have to say that an incredible degree of complacency has been shown towards the crisis that it faces. If we do not recognise that crisis, how can we start to help?
Why are the Secretary of State and the Chancellor of the Exchequer so confident that manufacturing industry can avoid recession next year, when almost every other analyst forecasts such a sharp fall in output? I am sure that the Secretary of State knows that every month the Treasury contacts 29 City analysts and forecasters to find a private sector consensus on the economic forecast for the following month.
Is the Secretary of State aware that, after last week's pre-Budget report, my colleagues contacted all 29 of those analysts to establish their latest consensus on GDP growth and manufacturing output growth? The consensus forecast for manufacturing output growth next year was minus1.2 per cent. Whether we like it or not, and whether we are trying to boost our manufacturers or not, the forecast is for a manufacturing recession. We should be aware of that, and take measures to try to ameliorate or even avoid it.
The Treasury uses the same forecasters--the ones who are forecasting minus 1.2 per cent. growth--so where did the Treasury dream up its forecast of zero growth next year, which carefully avoids slipping into the negative? That is not good enough.
It is interesting to note the response of the private sector and the City analysts. The Hong Kong and Shanghai bank says that the Chancellor's expectation that output will dip only to zero in 1999 is
No wonder the survey is truly awful if exports are falling at the fastest rate since measurement in volume terms began. No wonder, if output is falling so much more rapidly than expected, at the sharpest rate for more than seven years--
Mr. Ian Bruce:
Will the hon. Gentleman give way?
Mr. Chidgey:
I shall make a few more points first.
Even more worryingly, the fall in domestic orders has been the greatest on record since 1992. We used to worry about skill shortages, but with manufacturing heading for recession, restraints on output due to shortage of skilled labour are at their lowest level for four and a half years.
Mr. Bruce:
The Government misunderstand why we are so passionate in trying to tell them that they have got their statistics wrong. I do not know whether the hon. Gentleman was in the House when we last went into recession, but many of us will remember going as Back-Bench Members to see Ministers and tell them that businesses knew that business was going into recession, even when the Treasury statistics said that it was not and that everything was fine. The position is not exactly the same now, because there has been a change of Government, but the Treasury and its statisticians are still the same.
"so far out of line with the survey evidence on the sector that it is barely credible".
I heard what the Secretary of State said about the latest CBI survey, but we should still listen to what the CBI says, because its survey takes place across industry as a whole; it is not made to prove any particular debating point. The latest CBI survey underlines the crisis. According to the Deutsche bank, the results of that survey were "truly awful".
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