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Mr. John Cryer (Hornchurch): Will the hon. Gentleman give way?
Mr. Winterton: I am afraid not, because I do not have the time.
I may be unpopular with my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) when I say that the demands of the City for companies to produce dividends that are impossible to achieve is a contributory factor.
As with all of manufacturing, matters have not always been helped by the Government. A lack of joined-up government between the Department of Trade and Industry and the Ministry of Defence has let down textile producers in relation to Her Majesty's Government in sourcing goods.
Waterproof jackets costing a total of £1 million have been purchased for our Navy from Germany. Why? There are good suppliers in this country. A further £6.5 million worth of combat kit for the Army was also purchased in Germany, putting 100 jobs at risk in Cumbernauld. Some 120,000 camouflage jackets and trousers were purchased from Belgium. Why, when we have super, excellent manufacturers in this country? Army boots were ordered from Brazil, forcing the closure of the last footwear factory in Wales, with the loss of 65 jobs. The Government are--if I may be excused for using this phrase--putting the boot into our textiles industry.
I could also refer to the climate change levy, which will add tremendous costs to industry. It seems, from time to time, that the Government make it harder for industry to be competitive. The Engineering Employers Federation is concerned that there are many companies outside the potential scope for energy efficiency agreements, whose extra costs due to the levy will far exceed their small rebate on national insurance.
The EEF believes that extending negotiated agreements, to which I hope that the Minister will refer, is much more likely to secure a reduction in carbon dioxide emissions than leaving companies to respond to a tax price signal.
My interest in manufacturing is long established. I have, in my party, been one of the very few people who has stood up for this vital sector--
Mr. Deputy Speaker: Order. I call Mr. Ottaway.
6.38 pm
Mr. Richard Ottaway (Croydon, South): Time is short, so I shall not dwell too long on the speeches, other than to say that my hon. Friend the Member for Macclesfield (Mr. Winterton) has demonstrated how well Macclesfield is served by its Conservative and independent Member of Parliament.
The opening speeches in the debate could not have provided a sharper contrast. My hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) showed, with flair and imagination, why Britain has slipped in the international competitiveness league, to such an extent that Government supporters actually asked her what they should be doing. What a contrast that was with the Secretary of State for Trade and Industry. He repeated endlessly that he would take no lectures from anybody, and seemed proud of the extra burden of regulation that he has imposed on Britain's industry. At least he had the decency to admit that he had read our "Commonsense Revolution".
I should like to dwell on the speech of the hon. Member for Birmingham, Northfield (Mr. Burden), who unfortunately is not here. I did not agree much with what he said, apart from the compliments that he paid to my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler). I see that the hon. Gentleman is coming into the Chamber. Let me say to him that despite not agreeing with much of what he said, we respect the sincerity with which he made his speech and his commitment to his constituency.
The hon. Member for Crosby (Mrs. Curtis-Thomas) was right to emphasise the support for small business--in particular, the enterprise zones and business links. I hope that she recalls that they were both Conservative ideas.
My hon. Friend the Member for South-West Bedfordshire (Sir D. Madel) emphasised the importance of transport to the economy.
The charge against the present Government is that during their three years in office they have failed British industry, in particular manufacturing, and much of the blame must lie with the DTI and the Treasury. In 1997 Labour's manifesto said:
- we will . . . promote dynamic and competitive business and industry at home and abroad.
My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), in a telling speech, commented on the fact that the Government had inherited a golden economic legacy of sustainable growth, low inflation and falling unemployment. Manufacturing industry was prospering after years of decline. Consecutive Conservative Governments had provided a competitive environment for UK manufacturers through measures such as trade union reform, low taxation and light regulation.
Since then Labour has slowly squandered its legacy. Business has become disillusioned. The other day the director general of the British Chambers of Commerce said:
- The rhetoric is good, but the Government seems to be unaware that its actions seem to be working against creating a better climate for business.
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We have a Government who are clearly not at ease with themselves. They talk the language of a new economy, but their instincts lie in the other direction. A commentator recently likened them to religious converts who sang the hymns but did not know what the words meant. They talk right, but they act left. They do their best to obscure the truth. The red book is indecipherable. Budget commentators refuse to be drawn into instant comment so that they can work out what the Chancellor has said.
Rover is still in difficulties. Car production at Dagenham is ending. Component industries are under threat. In my Croydon constituency yesterday Avon, the tyre maker, announced 150 redundancies on the back of cancelled contracts from Rover and Ford. Strong communities face bleak futures.
Over the last three years more than 200,000 jobs have been lost in British manufacturing. It is struggling. Exporters are hit. Investment is threatened. Profit margins are shrinking. Whatever happened to that election pledge to promote competitive business? Their attack on industry has been savage.
Company pension funds have been hit, with firms such as Tesco having to go to their employees for bigger contributions. The Government changed the system for advance payment of corporation tax, a measure costing billions. Road fuel duties are hitting profits. So are stamp duty rises. The windfall tax on privatised utilities was mean and vindictive. The climate change levy will--another point made by my hon. Friend the Member for Macclesfield--impose a huge increase in taxation on manufacturing. The tax will harm energy-intensive businesses, principally manufacturers. Research indicates that it will destroy 150,000 jobs over the next decade.
Just when Britain is leading the high-tech race to make industry more competitive the Government introduce IR35, a hard-hitting tax on the self-employed, driving our best people overseas. IT consultant Steven Weaver writes:
- I am ashamed to say that I voted for this business hostile Government . . . I have no wish to remain in a country that punishes enterprise instead of encouraging it. My company turned down six months' further work in the UK implementing e-commerce systems for our major telecommunications company, entirely because of IR35.
The Budget a few weeks ago hit the aggregates and construction industry. The changes to double taxation relief will cost manufacturers and other British companies that invest abroad billions a year. They will make Britain one of the least attractive locations for international companies seeking to relocate. Is that what the Government meant when they said that they would
- promote . . . industry at home and abroad?
- The Government has introduced a series of well-camouflaged taxes which has put the tax burden firmly on to business. Changes by the Chancellor since 1997 will push up business taxation by almost £5 billion a year for the first five years of the Labour Government.
The British Chambers of Commerce declared that Labour's honeymoon with business was over. Its chief executive said:
- I think business attitudes may well have reached a watershed. There is growing disillusionment with this Government's pro-business credentials. There is a feeling that they are not hearing us. They listen but do not hear . . . It is becoming incredibly difficult for business to match the rhetoric to the reality.
- entrepreneurs are being distracted from running and growing their businesses by the cumulative burden of taxation and regulation.
- the prospects for obtaining sustained output, growth and low inflation are the best in 30 years.
But the House should be quite clear that below the surface the sharks are circling. The tax and regulatory burden is hurting. The problems are a symptom of the Government's failure to understand the challenges of the global economy. They are leading us in the wrong direction.
In the last Budget, the Chancellor started taking risks. Savings have collapsed. The International Monetary Fund, the Institute of Directors and the CBI have all predicted that the Chancellor's latest Budget will put further pressure on interest rates. That is bound to affect Britain's competitiveness.
To cope with this, Britain is faced with a clear choice. We can either follow the European model of higher taxation and greater regulation or head in the direction of lower taxation and a smaller regulatory burden, as found in Asia and the United States. Given the growth of global competitive pressures, the answer is--to this party at least--self-evident.
But what surprises us most is that, given our successful economy, the Government are going in the opposite direction. The tax burden has risen by 2 per cent. since 1997. Red tape is endangering our competitive position. The Government are going in the wrong direction now, as they did in the past. In opposition, they opposed every privatisation, even though they now admit that we were right. However, even in government their limited vision shows.
The lack of industrial strategy is evident. Subsidy is available for coal, but not for shipbuilding; it may be available for cars. We must have a strategy based on a proper understanding of the global economy. We need to be agile, quick on our feet and able to adapt to world conditions, as and when they develop.
Competitiveness is everything, as my right hon. Friend the Member for Henley (Mr. Heseltine) demonstrated in the last Parliament. But the Government have a problem: they are in hock to the unions and they cannot break out. In The Times last Thursday, under the headline "Unions plot to hijack Labour policy", there appeared a report that began:
- Britain's seven biggest trade unions have joined forces in a concerted attempt to dictate policy to Tony Blair on manufacturing industry.
The Government should listen to John Edmonds, the leader of the GMB. He said:
- Thousands of jobs are being lost every week in the very heartland areas that the Labour Party is supposed to be cultivating in the run up to the next election . . . Tony Blair should wake up and smell the coffee.
- Eddie Cadd, 61, a retired factory worker, said that new Labour's priorities since 1997 had been "all wrong . . . People here are worried about their jobs, about their pensions, about the things that really matter. But all he cares about--
- are things like foxhunting, devolution and abolishing the House of Lords. What difference does that make to us?"
- All of us here are staunch Labour. But in certain areas we know the Tories were better for us than Labour are now. If we voted according to common sense, instead of sticking to our roots, maybe we would all vote Tory and that lot would never get in again.
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