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Yvette Cooper (Pontefract and Castleford): If the right hon. Gentleman's party is so good at encouraging business and innovation in business, why is there a 40 per cent. productivity gap between UK companies and American companies?

Mr. Redwood: The productivity gap is largely the result of the higher taxes, higher exchange rate,

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higher interest rates and higher regulatory costs that this Government have imposed. In 1995, BMW thought that Britain was the best place in Europe, bar none, to make motor cars. Under this Government, it is talking of pulling out, and the Secretary of State will have to offer a lot of money to try to keep the company here. What has changed is not British productivity by British managers and workers, but the Government's policy.

Mr. Richard Burden (Birmingham, Northfield): The right hon. Gentleman referred to BMW and the high rate of sterling. It is true that the company has commented on that. Will he comment on the statement by Mr. Samann, the new BMW-appointed chair of Rover, who said:


Mr. Redwood: I agree with all of that apart from the last comment about the euro, and if I were handling the negotiations with the BMW chairman, I would explain to him why I think that and try to persuade him that, under a Conservative Government, Britain would again be the best place in which to invest and to make motor cars. When one of my hon. Friends saw the hon. Gentleman leaving the House of Commons the other day, he noticed that he was not driving a Rover car or one made in Longbridge, which seems a great pity. Surely it is best for all hon. Members interested in that industry to buy cars from Longbridge.

Mr. Burden: I do not know what car the right hon. Gentleman saw me driving. I own a Rover 200 and my partner drives a Mini, so perhaps the right hon. Gentleman would like to apologise.

Mr. Redwood: If that is true, of course I apologise. I said that an hon. Friend had observed the hon. Gentleman, and he was apparently driving a Vauxhall out of the House, which seemed a pity for one who is meant to be defending Rover. I assure the hon. Gentleman that my wife and I make sure that we buy British and represent the British motor industry.

The American economy has been growing much more quickly than the European economy. Industrial production has leapt ahead in the USA thanks to interest rates, tax rates and exchanges rates that make sense for business. Industrial production has been sluggish on the continent, and countries are trying to drag themselves out of the mire by devaluing against the UK and the US.

Why do the Government want to converge with slow growth and high unemployment? Do they want a fifth of our work force to be out of work, as in Spain or southern Italy? Do they want our output to crawl ahead as some continental output has done in recent years? Why does the Prime Minister tell us that he wants a single currency as long as Europe follows the American dream? Does he not realise how stupid that sounds? Even he must realise that it will not happen. It is like saying that the Government are determined to have only fine weather and have instructed everybody accordingly on their pagers, so it is bound to work.

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The Secretary of State for Trade and Industry delights in being the cover-up Minister. He will not answer letters and he does not like answering questions. When Parliament is not in Session, he waits until it resumes and then says that it is not permissible to write letters to him and that questions must be tabled instead.

The other day, I asked what impact a 1 per cent. increase in various costs would have on British industry. The Secretary of State must know the answer. I do not believe that he is so incompetent that he has not done his sums. His temporary lapse on his sums is not representative of his work as a whole. I am sure that he can work out percentages. So what did he say instead of giving me the answer? He replied that this Government were abolishing the boom-bust cycle. I asked nothing about cycles or busts.

The Secretary of State may be less grey than we thought if he has all those busts in his brain, but is it not about time that he lifted the quality of debate and told us what is the impact on companies of higher exchange rates, higher labour costs and higher regulatory costs, and what he is going to do about that? His failure to answer tells us a great deal about his state of mind. Either the Secretary of State is preoccupied or he knows that this is the big issue, but does not know how best to cover it up and so continues his trite mantra about no more boom and bust.

Of course, the Secretary of State and the Chancellor prefer to blame British industry. The Secretary of State tells us that it is not the Government's fault that we have a record trade deficit; that that has nothing to do with having sky-high sterling or higher interest rates than our competitors; that business is not short of cash because the Government are milking it dry; and that it is all industry's own fault for being unproductive. That is another nice irony. At precisely the time when one part of the Government are trying to subsidise people into work, the Trade Secretary and the Chancellor are trying to price people out of industrial jobs and to encourage a massive labour shake-out from traditional sectors. Everything that the Treasury and the DTI have done in the past two years has made it more likely that industrial payrolls will be slimmed down mercilessly.

One job is lost every 10 minutes. The Trade Secretary offers more job losses as his answer, which is dressed up as 75 points from a White Paper, but amounts to just one simple, painful, unfriendly point. It says to British industry, "Sack some of them now, or go bust. Get rid of some of them today, or get rid of them all tomorrow." That is Byers's choice. That is the Government's choice. They make it too dear to employ people and business has the horrible job of telling people that they are out on their ear.

This is a Budget of soundbites and contradiction. It is a family-friendly Budget which reveals just how family-friendly it is by removing the married couples allowance and mortgage interest relief. It is a shareholders' Budget which leaves in place the hated pensions tax, which taxes the main way that people in Britain own shares. It is a Budget for jobs, but its main recommendation to industry is to slim down the payroll and pray for better times.

The combination of trade war, stealth taxes and a big increase in regulation is lethal. Meanwhile, the Government weep crocodile tears over small businesses while tying them up in ever more paperwork and

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regulation and imposing higher national insurance on the self-employed. Businesses have to cope with new rules on unfair dismissal, the working families tax credit, the minimum wage, statutory sick pay, EU paternity leave, emergency leave, union recognition, the working time directive and extended maternity leave. We shall soon find that as the small business man comes to the end of his 48 permitted hours, he has worked only for the Government and has had no time to work for his customers and himself. The Government have swamped him with more paper than the Andrex puppy.

Pity the poor haulier facing more vehicle excise duty on top of the DERV and other taxes. What advice does that vanishing British industry get from Ministers? Hauliers are told to go to the continent to fill up. Some are doing more--they are going to Luxembourg to set up and pulling out of Britain altogether.

Labour views this as an election Budget for Wales and Scotland. The farmers will not see it like that because they will remain in slump. Rural dwellers will not see it like that as they seek a mortgage to pay to use their car. People who want better schools and hospitals will not see it like that as they watch the money being wasted on other things.

This is a Budget for manufacturing collapse and industrial unemployment. It may make work for accountants and lawyers, but it will not work for business. It certainly means bust for manufacturing. The only boom that I foresee is a continuing boom for spin doctors seeking to explain away the industrial collapse. I beg to oppose this Budget.

Mr. Deputy Speaker: Before I call the Minister, I should inform the House that the Speaker has decided that there will be a time limit of 10 minutes on Back-Bench speeches between 6.30 and 9.30 pm.

5.30 pm

The Secretary of State for Trade and Industry (Mr. Stephen Byers): I am grateful for the 40-odd minutes that the right hon. Member for Wokingham (Mr. Redwood) took to set out his opposition to the Budget. It was The Daily Telegraph, I think, which stated that, each time the right hon. Gentleman gets up and speaks, he loses votes for the Conservative party.

The Budget presented yesterday by my right hon. Friend the Chancellor will have broad and popular appeal for business, for British people, for those who rely on the public services, and for parents who have children in school, because it confirmed that the £19 billion promised by the Chancellor as part of the comprehensive spending review was to be devoted to our schools. For those who need health treatment, the £21 billion for the national health service has been confirmed.

It is possible to marry fiscal prudence with the need to invest in high-quality public services. That is what the Budget will do. It takes forward the agenda outlined by my right hon. Friend the Chancellor. It is a Budget for jobs, enterprise and the family. That is what we should be debating this evening. I regret that the right hon. Gentleman did not use the opportunity to address those issues.

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This is a radical Budget, which recognises that our country's future economic success depends on promoting fairness and enterprise. It is a new Labour Budget,based on a fundamental understanding of the role that business and Government can and should play in relation to the economy. Businesses create jobs and wealth. Entrepreneurs take risks in the face of uncertainty, and open up new markets. Governments should not try to second-guess boardroom decisions, yet much of what we heard from the right hon. Gentleman this evening sought to encourage us to do precisely that--massive intervention in the way in which businesses operate.

That is not the way in which the Government intend to go. We believe that the responsibility of Government is to create the climate and the framework in which business can prosper without interference from Government. The right hon. Gentleman said that Labour does not look after business. It is hardly surprising that he should say that, as the principal Opposition spokesman on trade and industry affairs.

It would be far better to listen to the comments of people who do not have a vested interest and do not approach the matter from a party political perspective--or perhaps some of them do. Let us consider the comments of some captains of industry on yesterday's Budget.

Sir Ronnie Hampel, chairman of ICI, welcomed the overall approach of continuing the direction adopted in previous Government statements about laying the foundations for business growth. The chief executive of Asda, no longer the hon. Member for Tunbridge Wells (Mr. Norman), but Sir Alan Leighton, said that he was happy with the Budget. He said that it was a Budget for individuals, families and enterprise and that the benefits that it brought to all three would go through to every sector. Lord Harris, chairman of Carpetright--who, if I remember correctly, has over time been a substantial donor to Conservative party funds and is one of the few business men who still give generously to Conservative party funds--thought that it was a good Budget for his business and that it would get people spending, especially at the bottom end.

Those are overwhelming endorsements from people who, with the possible exception of Lord Harris, do not approach the Budget from a party political position.


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