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We must also consider how we can become better at converting the innovations devised by the best of British science, British engineering and British technology into exploitation by companies that are basing themselves here for the production, sale, employment, and research and development opportunities. This country is very bad at that. We have a history of innovations being made in our universities by our scientists and engineers, reaching a certain stage, and then being moved away to be developed by companies in the United States of America or Germany.
We must look at the whole question of manufacturing in this country. The Government have totally ignored all the warnings that they have ever received about the state of manufacturing. Almost exactly half all manufacturing jobs that existed when new Labour took power have subsequently been lost. Manufacturing still accounts for 13, 14 or 15 per cent. of GDP, depending on the source of one's figures, but that is far too small a part of an economy and needs to be rebalanced. No politician and no business man in the United States, Germany or Japan will accept the argument that a modern economy does not need manufacturing-that an economy can be successful without making anything.
Of course, what an economy makes has got to be different, and it is the high-value and high-tech manufacturing that we should be encouraging. A large part of that depends on skills and training. We would reform the system of training to produce the skilled people of whom the country has always been in short supply. We are particularly committed to the future of apprenticeships.
The main point about apprenticeships, which we are seeking to reform, is that we must be clear about what we mean by "apprenticeship". It has always been very popular for politicians to make speeches about apprenticeship, but what it should mean is training in the workplace-employer-provided training, obviously allowing some absence for necessary further education and training outside at the same time. It should also be of an acceptable level. It is no good re-badging what people are already doing and describing that as training. It is also no good saying an apprenticeship has been successfully completed by someone who has reached the level of national vocational qualification level 2. Real apprenticeship requires the support of employers; it has to be work-based training, and we have produced proposals to give support to that.
Frank Dobson (Holborn and St. Pancras) (Lab) rose-
Mr. Clarke: So as not to offend the hon. Member for High Peak (Tom Levitt), I shall give way to him first.
Tom Levitt:
I would like to give the right hon. and learned Gentleman the opportunity to talk about creating jobs, as I think that must be an important part of any approach to dealing with the recession. He is a very reasonable man, and I am sure he acknowledges that the future jobs fund is in place to create sustainable, long-term jobs with Government help. I am sure that he will also acknowledge that many Conservative councils around the country have signed up for the future jobs fund and are delivering jobs through that means. Does he not therefore agree that it is a bit rich both that there is no mention of the future jobs fund in a High Peak
Conservatives press release talking about how keen they are to help the unemployed, and that Conservative-controlled High Peak borough council is refusing to take part in that fund?
Mr. Clarke: Like so many such initiatives, it seems that the future jobs fund is not quite fully up and running yet. It reminds me of the community programme. These matters will be dealt with by my right hon. Friend the Member for Maidenhead, who will be winding up the debate. I hope the hon. Gentleman will be present for her speech. My right hon. Friend and I participated in putting together a whole programme of measures that will seek to find proper jobs for the unemployed with training and help; we announced that at our party conference.
The question enables me to respond to one of the myths that the Labour party so frequently expresses about the 1980s. I was a Minister at that time, and both then and now I have had to listen to repeated Labour speeches summing up that period as days of horror, desolation and the destruction of all that was finest in our British economy and society, whereas I personally regard it as the time when structural reforms were put in place that paved the way for us to be a modern economy. It is not true that we did nothing about the millions of unemployed. I was in the Department of Employment and the Department of Trade and Industry. We had project after project, all of them scorned by the Labour party. The future jobs fund is the community programme redesigned. It is all to be provided by local authorities on a temporary basis. The last time we had that, it rebuilt every village hall in my constituency. We have to move on from that policy, however. I will not discuss at length the youth training scheme-YTS-which Labour Members howl about, saying it did not provide real jobs and that people were not paid the union rate. There was also an enterprise allowance scheme to help the self-employed. We will modernise that, as we will all the schemes, but it worked very successfully. It got 100,000 people into working for themselves, and there are some very highly motivated people who cannot find jobs who could benefit from that.
All these schemes have been moved on, however. Unlike the current Government, who have gone back to the days of Lord Young and myself at the Department of Employment, and who are probably using some of the same officials to redesign all the various make-work schemes locally that we steadily refined when we were in office, we have put in a lot of work and have produced a full package of measures that we think are fit for the 21st century and will help a lot in the current situation.
I shall now take my last intervention, which will come from the right hon. Member for Holborn and St. Pancras (Frank Dobson).
Frank Dobson: The right hon. and learned Gentleman is harking back to his halcyon days in the Thatcher Government. I welcome his conversion to the idea of apprenticeships. Will he confirm that he was a member of the Thatcher Government who abolished them?
Mr. Clarke:
We can both relive our halcyon days if the right hon. Gentleman likes, but I do not remember him having hurled that allegation at me. The first policy attempt to set up modern apprenticeships was undertaken
20 years ago in the late 1980s by the Thatcher Government. In those days, in some circles it was considered that any work that did not involve people getting their hands dirty or belonging to a trade union was not a real job or real training. I suspect that lay at the heart of much of the debate we had then, but I do not think the right hon. Gentleman and I should relive the old days now as there are a lot of very young people who are unemployed-about 1 million of them. They want to hear about real programmes designed for today's economy and my right hon. Friend the Member for Maidenhead will be setting those out later. However, I hope we all agree now that high-value manufacturing is essential to our future.
Those are the kind of proposals we are putting forward. We have made a considerable advance in addressing what would be our overriding problem: not just tackling the public deficit but at the same time creating a climate in which we can get back to growth, which is eventually the best way of solving a deficit problem and the only way in which prosperity and jobs can be provided.
Meanwhile, I study the outline of business policy that comes from my opposite number. On the recent publication "New Industry, New Jobs", I think it will be left to us to create the new industry. I fear that the current Secretary of State, and perhaps even his No. 2, will be looking for the new jobs, and we will hope to assist them as well. The documents are platitudes. Even Lord Mandelson says they are not earth-shattering. He has produced something that I hope T he Sunday Times is wrong in inferring is designed simply to badge speeches, advertisements and publications over the next few months. He seems desperately anxious to prove that he is somehow "interventionist" and activist. If that is meant to be an ideological statement, I at least give him the mitigation of not thinking he is genuinely either-if by that we mean interventionism in the classic, social democrat sense; he obviously has not been that so far.
Unfortunately, what Lord Mandelson is producing is not delivering very much but press releases and it is doing little to improve the business climate. He delivers it through an absolutely enormous number of agencies and quangos, as well as all the initiatives and programmes he produces. Unfortunately, the real business man out there finds when he tries to source or address any of these things that it is all sound and wind, signifying nothing and not available to the business man in the midlands who is stuck for credit and facing difficult times, or even to the entrepreneur with a new type of business that he wants to get under way.
When we come out of the recession, it will not be the same as it was before. Not only will there not be a return to the crazy bubble for which the Government enjoy taking credit, and which I sometimes think they wish we could go back to. Was it not nice then-when house prices, business growth and the share stock market were all soaring, everybody was happy and one could simply benignly brush aside warnings from Jeremiahs in the House of Commons and elsewhere and take credit for it? We are going to have a new type of economy. In Britain, it will have to be rebalanced and not be so dependent on financial services. We are going to have to invest more, export more and manufacture more, and we are certainly going to have to provide a great deal of new employment.
We are working on the task. We are frustrated by a winter of having to watch a Government wondering how they can re-badge themselves one last time to
survive after May and perhaps tackle the problems. Twelve years of new Labour have proved very bad for British business. We need a Conservative Government as soon as possible to make Britain open for business again.
5.23 pm
The Minister for Business, Innovation and Skills (Mr. Pat McFadden): I beg to move an amendment, to leave out from "House" to the end of the Question and add:
"welcomes the Government's decision to support families and businesses during the current global downturn; believes it is vital the Government takes an active role to support recovery and build future economic strength; notes the authoritative view of business leaders and leading economists against premature withdrawal of the support for the economy; commends the Government's leadership in co-ordinating the international action, through the G20, to support jobs and growth; further welcomes the Government's decision to invest an extra £5 billion to help people back into work and provide the Young Person's Guarantee, increased numbers of Jobcentre Plus staff, 150,000 Future Jobs Fund jobs and an offer to all jobseekers at six months; calls on business and the voluntary sector to support the campaign Backing Young Britain; further welcomes the introduction of the Employment and Support Allowance, the accompanying Work Capability Assessment, the expansion of Access to Work, and the Flexible New Deal delivering tailored support with providers paid by results; further believes that it is the right judgement by Government to encourage investment by small and medium-sized enterprises through the Enterprise Finance Guarantee and other support; further welcomes the successful car scrappage scheme; further welcomes the help for over 150,000 businesses through giving more time to pay tax bills; and commends the Government's new industrial activism, which, combined with the real help now being offered, will help secure the country's future prosperity.".
I very much welcome this debate on economic recovery and welfare. Responding to the global recession of the past 18 months or so has tested Governments right around the world. When the world was faced with a collapse in credit, the seizing up of the banking system and a steep decline in trade, Governments had to step in to stop a catastrophe for people and economies throughout the world. Of course, it is not just Governments who will be judged by their response to the crisis; it is Opposition parties, too. For in those moments when intervention had to take place-in those times when we sought to stabilise the banking system; to put more money in people's pockets; to launch schemes to support industry, such as the scrappage scheme, which we have just extended; and to stop recession turning into depression-the judgment of all politicians was tested. Time after time, we have found that the judgment of the Conservative party has been called into question. From the Conservatives' opposition in the beginning to the nationalisation of Northern Rock-the shadow Chancellor said that he opposed that "full stop"-to their opposition to the fiscal stimulus, they have proven time and again that they would not have been up to the task of responding to the grave economic situation in which we have found ourselves. That judgment problem continues to haunt them as the issue becomes not response to recession, but how to foster and sustain economic recovery.
Perhaps we should not be surprised about that, because people of my generation, who grew up in the 1980s, know about the Tory response to recession; I have gently to disagree with the right hon. and learned Member for Rushcliffe (Mr. Clarke) here, because I remember very well the times when communities were torn apart by swathes of job losses, with little or no real assistance in place to help them recover, when there was
long-term unemployment and when child poverty doubled. The Leader of the Opposition says that he is angry about poverty. He should be, because his party created enough of it when it was last in power.
David T.C. Davies (Monmouth) (Con): I am of the same generation as the Minister, and I remember the previous financial shenanigans from the 1970s. Does he have a sense of déjà vu as, once again, the economy collapses at the fag end of a long Labour Government?
Mr. McFadden: I do not have a sense of "déjà vu, once again", as the hon. Gentleman puts it.
I do not wish to dwell on yesterday. It is today and tomorrow that really matter and there, more importantly, the Opposition have got the judgment calls wrong time after time. This Government knew that when faced with the biggest worldwide economic contraction in decades, we needed to act to ease its effects and help the economy get through it. That meant taking action to stabilise the banks to protect people's savings and keep credit moving. As I said, the shadow Chancellor opposed the renationalisation of Northern Rock and proposed amendments to the Banking Bill, the effect of which would have been to make the rescue of Bradford & Bingley impossible too.
Following the action that we took on the banks, we launched a fiscal stimulus, which included bringing forward capital spending, tax cuts to put more money in people's pockets, and support for business. Some of that included the VAT cut, which I believe the right hon. and learned Member for Rushcliffe said was an option that he supported, although it was attacked by many in his party. The Centre for Economics and Business Research said:
"The figures are clear; the VAT cut is working."
The Institute for Fiscal Studies said:
"The temporary cut in the standard VAT rate...is a better stimulus measure than its critics suggest."
More broadly, fiscal stimulus measures were supported around the world, although not by the Conservative leader, who said in April:
"We were against the fiscal stimulus...when it came to"-
-to oppose the VAT cut and the so-called fiscal stimulus, I didn't consult a focus group or an opinion poll I just knew it was the right thing to do."
Mr. Redwood: Does the Minister not see that the Government are squeezing the life out of the private sector to pre-empt all the money into the public sector? Can he tell us what he thinks the long-term rate of interest will be in this country when they stop printing it?
Mr. McFadden: I am certainly not here to predict the interest rates for the future. We have a system for setting interest rates, which the right hon. Gentleman well knows.
As the Leader of the Opposition said, he opposed the fiscal stimulus, whereas right around the world Governments of left and right were coming to the opposite conclusion. While the Conservatives opposed what we were doing, countries came together at the G20, here in the UK, to agree that co-ordinated action to support our economies
was necessary. For example, the managing director of the International Monetary Fund said at the height of the crisis:
"If there has ever been a time in modern economic history when fiscal policy and a fiscal stimulus should be used, it's now".
The contention of the Opposition, apart from saying that they opposed the stimulus, was that Britain "could not afford it." However, the real issue was whether we could afford not to support the economy, given the situation that we faced.
John Reid: Lest my right hon. Friend feels isolated, may I speak for the generation before his? We went through this, too. We saw unemployment of 25 per cent., and the distinction between the way that the Conservatives addressed the last big economic crisis and what is happening now can be expressed in three words-"judgment", "action" and "balance" between economic, fiscal and financial stimuli and social protection. Those three things-judgment, action and balance-were dramatically missing during the last recession.
Mr. McFadden: My right hon. Friend makes a very good point in a very effective way.
Mr. Kenneth Clarke: While we are having this wander through history, may I move on to the rewriting of history? I opposed the fiscal stimulus of the VAT cut when I was a freelance Back Bencher-before I was on the Front Bench-on the basis that we could not afford it. The British Government have gone in for less fiscal stimulus than almost any other developed country because of the state of our public finances. They have gone for far less than, say, the Germans have gone for, because they cannot afford it. The IMF has said of Britain that it needs to take faster action to tackle its fiscal problems-that was its comment on the Budget this year. The idea that we have been leading the way in fiscal stimulus is a myth-fortunately, because had we tried any real fiscal stimulus in this country, the long-term problems of our deficit and debt would be enormous. We are sustained by low interest rates and quantitative easing, not by any illusory fiscal deficits.
Mr. McFadden: I think that the right hon. and learned Gentleman will find that with both the discretionary measures and the automatic stabilisers, the stimulus adds up to some 4 per cent. of GDP. That is a substantial stimulus. My point is that Governments of left and right from around the world engaged in similar action while his party said that it opposed it. His leader said that he opposed it because that was the "right thing to do". In fact, Nobel prize winner Joseph Stiglitz said:
"You're fortunate that you have had a much more responsible government over the last eight years than we have had in the United States...We look to Britain as an example in times of which the economy was good, you did the right thing, we didn't."
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