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7.48 pm

Mr. Graham Brady (Altrincham and Sale, West): I am pleased to follow the hon. Member for Gravesham (Mr. Pond), as it gives me an opportunity to point out a profound illogicality in his remarks. He said that there was a business case for the proposals, and seemed to suggest that there was a business case only for large companies which would gain a competitive advantage. However, he went on to say that small businesses would be disadvantaged. If there is an advantage for a business--large or small--surely small business will embrace the proposal as well, and will not suffer a competitive disadvantage.

The hon. Member for Bolton, South-East (Dr. Iddon) may not always remember where he is, but he always remembers what he believes. There is no doubt about his passion for representing the interests of Bolton and the north-west. Sadly, he invariably reaches the wrong conclusions about how the best interests of that city and our region can be pressed forward most effectively. The great prosperity of Manchester and the area that he and I are privileged to represent was built through free markets: it was built through enterprise, not through the socialist regulation that the Government have foreshadowed in the Queen's Speech.

It is a great and refreshing thing, though, to hear a Labour Member setting out an honest set of beliefs, in stark contrast with what we hear from Ministers, who get themselves tied up in trying to justify some of their proposals in a rather illogical fashion. The Secretary of State for Trade and Industry may have betrayed the reasons for that, as well as the low regard that he has for many of his Cabinet colleagues, when he described the Government as half-intelligent--although that may have been flattery.

The fatal flaw in the Government's economic and business policy is that they are making it progressively more costly to produce goods in this country as compared

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with competitor countries throughout the world. It is bizarre to hear Ministers repeatedly talking about their belief in greater labour market flexibility, precisely when they are decreasing that flexibility. That will cause a progressively worse problem for British business at a time when world and domestic economic trends suggest it is likely to be least able to cope with added burdens.

It never fails to amaze me how the Government use a word to mean the exact opposite of what the rest of us understand by it. That appears to be the case with the word "flexibility". The game was given away to me when I went to Brussels with the Employment Committee and we had a meeting with Padraig Flynn, the Social Affairs Commissioner, who, just after the Prime Minister had come back from the so-called jobs summit, said to me, "Oh, no. We are not talking about flexibility but about positive flexibility." I apologise to hon. Members for my poor impersonation, and perhaps I should apologise to the Commissioner, too.

Mr. Flynn said that the agenda of the European Union, with which he believed the Government were entirely in accord, was not about creating greater flexibility, as any normal commentator or outside observer would understand it, but about something entirely different, called positive flexibility, which in fact meant the opposite. When I asked the Social Affairs Commissioner which country he thought had the most flexible labour market at the moment, he said Denmark, not the United Kingdom.

A few days ago, I put the same question to the Secretary of State for Trade and Industry, who gave an even more remarkable reply, saying that the United Kingdom had the most flexible labour market. It is odd that the right hon. Gentleman seeks to take credit for that, when the whole thrust of his policy will make our labour market less flexible.

The Government would be wise to consider the great Conservative achievement of the past 20 years in freeing up the British economy, making it more flexible and competitive, and allowing a more responsive employment market to develop. Those things can be destroyed overnight, but they are very difficult and time-consuming to put in place.

That was brought home to me last week when I had the privilege of addressing a seminar in Bonn, where the British Council's hospitality was adequate, but not exotic. One of the other speakers, a German economist from the Kiel institute for world economics, presented some very interesting findings, in particular a comparison between the UK and west German employment markets. He was careful to remove the effect of reunification from the comparative figures.

That economist's graphs showed that the decline in manufacturing employment in both the United Kingdom and west Germany had followed a broadly similar trend, but that in the former that had not led to a constant trend increase of unemployment as it had in the latter. The inescapable conclusion is that the more flexible, freer labour market, and the more dynamic economy built up in this country by Conservative Governments, can deliver higher levels of employment and is the fundamental reason why our unemployment is at only half the level that prevails in Germany.

It is a great cause for concern that the direction of European Union policy may make things much worse. The Social Affairs Commissioner clearly has an agenda

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of raising social and employment costs, and members of the Government, along with their socialist colleagues in Europe, have signed up to increased labour costs and reduced flexibility. The programme has serious potential consequences for the UK economy.

In line with frequent comments from the German Government, the head of customs and revenue in the European Union stressed in the Evening Standard today that the single currency will be the engine driving taxation issues. It is becoming increasingly plain to everyone outside the Government that achieving and maintaining convergence in a single currency area will have numerous implications, with harmonised social, employment and taxation regulations and law. It is time that the Government recognised that and stopped risking leaving the British public to make decisions in the dark.

We do not yet know what will be proposed in detail, after a protracted debate in the national newspapers between the left wing of the Labour party and the trade unions on the one hand, and the Secretary of State for Trade and Industry and the Confederation of British Industry on the other. He appears to be trying to please both the unions and the CBI.

We do not know exactly what the final fairness at work proposals will be, but it is certain that they will increase costs on businesses and make it less efficient to run them in the United Kingdom, with a damaging effect on employment. That was perhaps recognised by the Secretary of State in his opening remarks, when his only proposal to help enterprise was to remove the stigma of business failure. Perhaps he was quietly recognising that his one achievement on enterprise and business will be to oversee the closure of far more businesses, with far more people put out of work.

Today, we have read that we had the highest ever trade deficit this month: £2.5 billion. That will be made worse as the cost of producing goods here increases relative to the cost elsewhere. The new deal programme is vastly expensive and has only one distinction: that it has completely arrested the decline in unemployment in the target groups, and possibly even turned it around.

It is a remarkable fact that, in April to July 1997, 27,000 18 to 24-year-olds who had been unemployed for six months or more came out of unemployment, whereas, in January to April 1998, unemployment in that age group increased by 1,226, and in April to July 1998--the first quarter when the new deal was effective--only 2,500 came out of unemployment.

The figures showing whether employability is being enhanced are perhaps more damning still. The likelihood of 18 to 24-year-olds remaining unemployed for nine months if they have already been unemployed for six months is increasing. In July 1997, the likelihood of still being unemployed after nine months was 60 per cent: in July this year the figure had risen to 64 per cent.

The Government promised to put young unemployed people back into work, but they have failed. The Government said that their new deal programme would increase employability. That is difficult to define, and therefore to judge, but the figures are beginning to make it clear that the Government are also failing at that.

The new deal programme will not even compensate for the massive increased costs to business that the Government have created. It will not compensate for

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the cost of the minimum wage or of the working time directive. Perhaps more important--I made my point about the Engineering Employers Federation's submission earlier in an intervention in the speech by the Secretary of State for Trade and Industry--the new deal programme will not compensate for the enormous burden of regulation and record-keeping that the Government's proposals will force on to business.

I turn to the Government's achievements, or rather failures, in education. Education is vital for the well-being and development of our children, as well as for our economic success. I am sure all hon. Members would agree that this country has not had the strongest educational record, and that has been true for some time.

Ms Candy Atherton (Falmouth and Camborne): For 18 years.

Mr. Brady: It is longer than that since this country had the best performance in education, which we would all like to see. The hon. Lady and her party would be wise to seek to improve what is failing, rather than to break down what is succeeding. I represent an area with some of the best schools in the country, certainly in Greater Manchester, where we have a selective education system, with good grammar schools and good secondary modern schools. I am concerned that one of the Government's priorities was to introduce a programme to destroy good schools rather than to improve bad ones. That is also the case in the foolish and wilful destruction of the grant-maintained schools, which have achieved so much already and could have achieved so much more in raising standards in education.

My hon. Friend the Member for Maidenhead (Mrs. May) and I both had the pleasure of serving in Committee on the School Standards and Framework Act 1998, as did the hon. Member for Plymouth, Devonport (Mr. Jamieson), who cannot say so, even from a sedentary position. I am happy to give him credit for the many hours that we enjoyed in Committee.

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