§ Mrs. Jacqui Lait (Hastings and Rye)
I beg to move,That this House recognises that it is only through the competitiveness of the United Kingdom that wealth is generated, and calls for a flexible business-friendly environment which encourages aggressive exporting, investment and innovation at home and abroad, unencumbered by excessive regulation, high social wage costs and statutory minimum wages.I am pleased to have this opportunity to air my views on an issue which concerns us all. The publishing of the White Paper on competitiveness just before the recess was extremely useful. Even if the White Paper had not been published, however, I should still have chosen this subject.
All hon. Members will agree that competitive industry and a competitive business base in the United Kingdom are crucial to produce wealth and to generate the profits and money necessary to achieve the sort of society that all of us wish to see.
Most hon. Members present will be relieved to hear that I have no intention of going through the White Paper in great detail. [HON. MEMBERS: "Shame."] It is kind of hon. Members to suggest that I might go through it in great detail, but I know that some hon. Members want to concentrate on specific aspects and it is only fair to give them the opportunity to voice their views. If I were to cover the White Paper in great detail, I would take up all of this five-hour debate. My voice would probably give up long before then.
I was fascinated by the reaction to the White Paper. I was delighted that the Confederation of British Industry, 870 the Engineering Employers Federation, the Institute of Directors, small businesses and even trade unions were pleased with it and welcomed it for its thorough analysis, for its wide variety of recommendations on the work that the Government plan to undertake and for pointing businesses, employers and employees in the right direction to a more competitive economy.
I was fascinated by the fact that the Opposition did not like the White Paper—probably, I suspect, because it did not recommend throwing public money at businesses, having a development bank or picking winners.
The White Paper makes it clear what each player involved in the game of producing wealth and generating goods and services can do. It encapsulates a broad cultural theme—the need to change, much of which has already been done. I do not wish to rehearse all the events of the 1980s, but the changes in industrial relations, the increase in the number of small businesses, the return to management of control of their businesses, the welcome new emphasis on exporting and the improvements in quality control are already under way.
In terms of quality control, the importance of businesses acquiring BS5750 status cannot be overstressed. The improvement in production and production methods that the standard brings about—this may sound double Dutch to some—is crucial to businesses being accepted both in the United Kingdom and abroad. Businesses should also be aware of the international standard 9000.
I know that there are worries about BS5750. I am aware that it requires continual management and the concentration of employees on the systems that have been set up. There is a danger if 5750 becomes set in concrete. It must be recognised that it should be an evolving standard and process. We must ensure that businesses continue to—
§ Mr. Michael Trend (Windsor and Maidenhead)
Does my hon. Friend accept that for smaller firms BS5750 puts a great burden on their resources and time? Many such firms feel that it is essential to get 5750 status because so many firms that they supply insist on the standard. In some instances, however, it has become a pointless and damaging exercise for small firms.
§ Mrs. Lait
I am grateful to my hon. Friend for that intervention, because it reflects some of the worries that have been voiced to me. They go to the core of the changes that are being considered in the context of 5750 systems. I can assure my hon. Friend, however, that some extremely small businesses find the standard a key to their success and have found the resources to concentrate on it. Several small companies in my constituency that employ only a few people have made 5750 the key to their management systems.
§ Mr. Peter Butler (Milton Keynes, North-East)
My hon. Friend may be interested to know that experience shows that companies without 5750 talk different languages and cannot communicate between themselves easily. Companies with 5750—it is sponsored by the British Standards Institution, which is based in my constituency and with which I am negotiating in seeking 5750 for myself, so as to be the first Member so accredited—can communicate between themselves and, therefore, become more effective. Whether firms are small or large, the need for them to communicate and to become more effective is exactly the same.
§ Mrs. Lait
I can do no more than endorse my hon. Friend's recommendations and suggest that perhaps collectively—as 651 Members—we should acquire 5750 status.
Having concentrated for some time on the need to improve standards in business, I think it important to set the need for greater competitiveness in the United Kingdom in its proper context, which is global market competition. Our businesses do not function solely within the UK. We are not functioning only in the European Union or the European continent. Equally, we are not functioning only in the Commonwealth. The reality is that we are in a global market. Our competitors come from countries that we have not taken much account of in the past. They are coming from Asia and are known commonly as the Asia tigers. They, even more than the United States and Japan, are the countries and the companies that we need to be looking to, not merely to compete with and sell to, but to learn lessons from.
We must not look within Europe alone to provide the standards of business within the United Kingdom. We must focus on customers in the huge world market to which I have drawn attention. They are customers who are used to wide choice and to high quality, and those are the keys to our competitiveness.
We need to ensure that, as a country, our companies are on top of the demand for new goods and new technologies. We must adapt to meet changes. I am sure that many hon. Members, bearing in mind some of the battles that have taken place over the past 15 years, will realise that the reluctance to adapt and to meet changes has been one of our greatest problems. There have been difficulties in persuading the nation of the need to change and adapt. It is a battle which we cannot afford to lose. It must be recognised that if the battle is lost, we shall never be able to compete in the world market. As part of the adaptation to meet changes, we must ensure that businesses are free.
It is interesting that we are still talking about manufacturing industry. Various organisations commented on the White Paper and many of them said, "It is good to see the Government focusing on a manufacturing policy and an industrial policy." Over many years, I have been bothered by the artificial division between services and manufacturing. We have, for example, a successful computer hardware exporting operation. That is regarded as manufacturing industry. The software to go with it is an equally successful operation. It might be said that it is more successful than the hardware operation because much of it is home generated. It is regarded as being part of the service industry.
We must re-examine the definition of services, which includes education services. In Hastings, for example, English language schools are a large part of the local economy. They are earning good export money. They are still regarded as services. Sport is an export. Rubbish and cleaning services—known in the colloquialism of statisticians as sanitary services—are earning us export money. Another relevant sector is posts and telecommunications. I do not wish to be too controversial, but it must be recognised that British Telecom has done brilliantly in exporting its services. One of the reasons for wishing to make changes to the Post Office is to ensure that it, too, can do the same.
We must get away from artificial distinctions between manufacturing and services, which, in the past, have led to the psychological impact of some jobs being classified as 872 real and others not—if someone is in manufacturing he has a real job; if someone else is in services, he cannot have a real job. We must concentrate on removing these artificial distinctions. After all, services accounted for 17 per cent. of world trade in 1992, as against 15.6 per cent. in 1984. That shows us how important services are and how crucial they will be to the development of our economy. I do not subscribe—
§ Mr. Jim Cousins (Newcastle upon Tyne, Central)
I am following the hon. Lady's argument closely and with a great measure of agreement. Does she feel that the report that came out yesterday about the condition of London and the significance of London in Britain's service trading, and the way that its position is being undermined by neglect, is a source of great concern?
§ Mrs. Lait
I shall talk about the City in due course. I shall argue that, given the City's importance in world financial markets, without wishing to be complacent, we will continue to dominate world financial services. London will, therefore, continue to be a crucial player in world markets.
In the United Kingdom, the service industry is worth £12.6 billion. Its value has increased by 121 per cent. since 1982. That explains, perhaps, why over the past decade there has been criticism that we have concentrated too much on services and not sufficiently on manufacturing. I see these operations as one seamless whole. I hope very much that we shall begin to change our attitudes and, hence, the classification of different industries so that we can recognise their important roles.
It is in the service industries—the information and knowledge industries, for example—where the Asian economies have become so dominant. That has happened because they have flexible economies. They do not have the rigidities of the European continent and of the European Community. We have taken the lead within the Union in trying to free up our economies. It is an interesting fact that the results of the European elections may strengthen our elbow in continuing to lobby for that.
We must consider the Italian Government under Mr. Berlusconi and whatever one might think of the politics of the anti-Maastrichters in France, they have at least brought to that debate a more sensible and balanced view of how the French economy needs to be opened up.
Who becomes the President of the Commission is crucial. I was delighted to see my right hon. Friend the Prime Minister supporting so strongly our candidate, as he has been the key in the Community in terms of mergers and competition policy.
We have said on many occasions that the Community should be opened up and made more flexible through social and labour policies. The Organisation for Economic Co-operation and Development report and the charges and counter-charges about the statutory minimum wage are timely.
I have read all the OECD report and it contains only two references to the statutory minimum wage, although much of the report implies criticism of it. The OECD report states that Europe is motivated to protect people from the vicissitudes of economic life. The European Community has tried to protect them through social welfare and the effect has been to rigidify the economies' ability to change.
No Conservative Member would disagree with that sentiment. I have no desire to rehearse the arguments about 873 social wage costs and the statutory minimum wage. However, it is worth bringing to the attention of the House the references in the OECD report to the problems that have arisen as a result of a very tight social wage structure and the statutory minimum wage.
§ Mrs. Cheryl Gillan (Chesham and Amersham)
Is my hon. Friend aware that the statutory minimum wage has been such a success in France that the French have now withdrawn and reduced it?
§ Mrs. Lait
That was a key issue in one of the last bouts of civil unrest in France. Most of us were horrified to see the effects of that, as it probably reminded many of us of our problems in the 1970s which were caused by rigid social wage policies.
The OECD recognises that the statutory minimum wage is a barrier to employment. It can support a statutory minimum wage only if there is a clear policy decision to reduce poverty, when a statutory minimum wage system should relate only to prices and not to average earnings and should differentiate between age and regions so that it is flexible. That must be contrary to the Opposition's concept of a statutory minimum wage.
§ Mr. Roger Berry (Kingswood)
If the problem in the 1970s was one of rigid wages, why was the growth rate in the 1970s far higher than it has been since 1979 when the Government have pursued precisely the opposite policy?
§ Mrs. Lait
We do not have a statutory wage policy, but, if my memory is correct, I recall that on many occasions the Labour party attempted to have a statutory wage policy, but that was broken time and again by the trade unions. Most of us remember the horrors of the winter of 1978 which were the result of having a statutory wage policy.
I do not want to spend too much time on the statutory minimum wage. I simply wanted to demolish the arguments about its being a way of making our economy competitive in the world.
We need more changes in the European Union, because we must break down the rigidities in the employment market which are leading to barriers to employment. We are excluding people from the employment market because of the rigidities in the system.
§ Mr. Martyn Jones (Clwyd, South-West)
If the United Kingdom is so much more flexible and less rigid than the European Union, why has our economic growth lagged behind that of all the other European Union nations since 1979 except for Denmark and Greece?
§ The Minister for Industry (Mr. Tim Sainsbury)
May I remind my hon. Friend and the House that the 1980s were the only post-war decade in which our economy grew faster than those of Germany, France and Italy?
§ Mr. Nigel Waterson (Eastbourne)
Before my hon. Friend leaves her point about rigidities in the labour market, did she hear the comments on the radio this morning of one of the Labour leadership contenders, the right hon. Member for Derby, South (Mrs. Beckett), who 874 indicated in fairly clear terms that, as leader of the Labour party, she would be looking to restore rights of secondary picketing in this country? That would be a serious backward step for trade union relations and for the economy generally.
§ Mr. John Sykes (Scarborough)
I should like to join this bandwagon. Is my hon. Friend aware that the Transport and General Workers Union, the biggest dinosaur of them all, has this morning thrown its weight behind the right hon. Member for Derby, South (Mrs. Beckett)?
§ Mr. Cousins
The hon. Lady should have taken careful note of the comments of my right hon. Friend the Member for Derby, South (Mrs. Beckett) about her commitment to positive rights at work. Does the idea of staff, employees and managers having positive rights at work have any echo of sympathy in the hon. Lady?
§ Mrs. Lait
Every employee, of whatever status, already has rights at work. One of the strengths of the development in the United Kingdom economy is that those rights at work are beginning to devolve down from company level to working level. Therefore, people can enter into direct discussions with their employers about those rights at work, payments and benefits which match the conditions of the company and the local economy. That is crucial to the flexible economy that we need in this country. That is underpinned by a legal system which ensures that everyone has direct legal rights.
§ Mr. Cousins
We are now quite clear: the hon. Lady is advocating a positive right for staff to discuss matters concerning the enterprise and the business with their employers. The hon. Lady is saying that that positive right should be included in law. That is very commendable.
§ Mrs. Lait
I like the hon. Gentleman's attempt to put words into my mouth, but that was not what I said. The direction in which our economy is moving, a direction of which I approve, is one in which employees and employers have a direct relationship in terms of remuneration and benefits. That must be the key to the flexible economy that we need to compete in the world. It is the world that we need to compete in, not the European Community. While the European Community as a whole is becoming increasingly uncompetitive, the United Kingdom is becoming increasingly competitive in the world. That is the direction in which we should be going.
§ Mr. Butler
I am afraid that my hon. Friend may inadvertently have been slightly misled by my hon. Friend the Member for Eastbourne (Mr. Waterson). I listened for several minutes to the interview with the right hon. Member for Derby, South (Mrs. Beckett) when she spoke about secondary picketing. I heard the right hon. Lady asked about four times what her view was, and the most that she would say was that her view was very well known; she would not actually say what it was.
875 I had to turn off after the fourth attempt to obtain an answer. Perhaps she subsequently answered. I suspect that my hon. Friend the Member for Eastbourne has thrown an extremely red herring into the water. I do not think that the right hon. Lady has a view on secondary picketing, and I would not wish her to be unfairly castigated for the possession of a view that she does not hold.
§ Mrs. Lait
I appreciate my hon. Friend's comments. I reiterate only that that makes the right hon. Lady an even better candidate for the Labour leadership.
I should like to make progress, because I would hate to be accused of filibustering. I have a large part of my speech still to make and it is about time I moved on to the further changes that are required in the European Union in order to make our companies more flexible. That matter was encapsulated by a paper that I received from the Chemical Industries Association Ltd., a body for which I worked in the early 1980s. The chemical industry is one of our most successful industries, both internationally and within the European Community. The association is exceedingly worried about the need for the European Union to look much more strategically at international requirements for company structures.
We need within the European Union a better understanding of global markets, how very large companies need to play in global markets, what constitutes mergers and monopolies, and when there should be interference in company changes. We need to consider cross-border transactions, shareholdings, deals on plant sales and so on which are crucial to the development of the chemical industry. Also, the European Union has not yet got the legal structure right in respect of co-operative joint ventures. They need to be streamlined and made much speedier and much more responsive to changes in world demand, which the chemical industry can be, as can many other successful international players in the industrial world.
§ Mr. Cousins
Is the hon. Lady saying that she supports the principle of European companies organised on a similar basis in respect of shareholders and stakeholders right across Europe? If so, how does she support the opt-out from so many aspects that the present Government, whom she supports, have carried out?
§ Mrs. Lait
The hon. Gentleman is trying to develop the concept of European companies. I am not entirely convinced that the body of law that is required for that is easily created. In the middle of the 1980s, great efforts went into trying to create European companies with the necessary legal requirements, and the idea fell upon the differences in national legal terms. We have to ensure that the European Union is capable of reacting flexibly to the requirements of the international industries that we need in order to be competitive throughout the world.
§ Mr. Butler
Does my hon. Friend accept that, contrary to the intervention by the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins), there is a significant difference between a company which operates in more than one European country operating similar systems throughout its operations for the benefit of itself and its employees and that company being required under the social chapter to operate totally ineffectual but very expensive 876 regulations and compliance systems which do nothing for the company, its employees or its competitiveness? The Labour party is unable to distinguish between those two models, but does my hon. Friend accept that that is a clear and proper distinction?
§ Mrs. Lait
I would not have attempted to put it better myself, and I certainly do not want to repeat it. I am very conscious of time passing, and I want to make progress.
Several industries have expressed concern about the need for the United Kingdom to ensure that our civil servants are seconded at a high enough level within the European Commission to be influential, that we take up our complete quota of them, and that the system rewards them rather than penalises them for working in Brussels. I express an heretical thought: France and Germany exchange civil servants so that they grow up through the system knowing one another terribly well and can always telephone Francois or Helmut, so we should do exactly the same and set up such agreements with other European Union countries. I have no strong feeling about which countries they should be—
§ Mr. Butler
I would not wish to put my hon. Friend under pressure in any context whatsoever. I hope that she will recall that as our relationship develops slowly but positively over the years ahead. She happens, though, to have released from the closet, as it were, a hobby horse of mine. Never mind exchanging civil servants; would it not be an excellent idea throughout Europe to have a mutual exchange of, for example, health inspectors, abattoir inspectors, veterinary inspectors and compliance inspectors? It is not that one believes for one moment that the Italians, Greeks, Spanish or French administer rules any less rigorously than we do, but, to reassure those who are more sceptical than my hon. Friend and I are about such matters that that is, indeed, the case, would not such an exchange have very positive benefits?
§ Mrs. Lait
There would indeed be an exceedingly positive benefits. I should like to see people's reactions when reciprocal inspectors from Greece and Spain appear in our environmental health departments.
There is another issue in respect of which the Department of Trade and Industry can help directly. Many industries complain that it is difficult for them to take part as advisers on European Union committees. Such committees are legion and they take enormous time, but they are crucial in developing the common European standards that we need in order to complete the single market. Many industrialists say that their counterparts in other countries are helped financially in terms of fares and so on to take part in those committees, whereas our companies must cover the cost from their own income. For a small business in a high-tech sector, that can produce 877 great strains, but such participation is necessary to ensure that industry's survival. It would help if my right hon. Friend the Minister could tell me whether that idea has floated across desks at the DTI.
I have spoken at great length about greater flexibility within the European Union, and I should now like briefly to go back to the subject of employment and talk about the need to get away from rigid working hours.
In some of the recent BBC strikes, we have seen some of the consequences of old-fashioned rigidities. Those strikes were often castigated because they exposed practices such as soft shoes for studio staff and macs for political reporters. We see exactly the same problems in Germany, where, interestingly, the post office is being privatised, but part of the privatisation is to buy out some of the perks of the German ,postie, which include lemonade when the temperature is above 80 deg F and tea and coffee when it is below 14 deg F—let me try to keep within the same temperature system. Silly rigidities are limiting employment opportunities and ensuring that our economies still have some way to go before they are sufficiently flexible to meet the challenges from Asia.
We cannot afford to be a fortress Europe. We will be besieged by goods from outside, and eventually we will be starved into defeat. That is one reason why the single market is so crucial and why the United Kingdom pressed so hard for it. Of course, as a consequence of developing a single market, we have seen a fall out in the United Kingdom, as we have had to reconcile our traditional cultural and legal patterns of work which, in some respects, has caused great pain.
In some areas, we are way ahead—for instance, on copyright. But in our constituencies, we have all had to deal with the dissatisfaction that has been brought about by excessive regulation, for example, as we move towards the single market.
I welcome the Deregulation and Contracting Out Bill. I hope that the constitutional device included in it and recommended to another place by the House of Commons goes through that place without any problems, because it chills me to think of the consequences of having to deal with every single part of deregulation and re-regulation through primary and secondary legislation in this House. We need to be able to move forward.
I must tell the House that some of the regulatory madness continues. CMR in my constituency is a small chemical company which recycles chemicals—most people would approve of that. The company has discovered that regulations that came into effect on 6 May require the companies to have bonds for the chemicals that are used, in case there is an accident, which would require cleaning up by one of the waste authorities.
When the regulations came into effect, the bonds did not exist; insurance companies were not prepared to provide them and banks had not even heard of the regulations, as far as I could find out. We are, therefore, left with a situation where there is no good mechanism for companies to be able to comply with regulations after they come into place. I deplore that. When regulations are still required, and it is agreed that they are required, there should be more thought about how they are implemented.
I also have the pleasure of having a division of Philips in my constituency. Many hon. Members will know that I regularly talk about the weakness of the Hastings economy, but Philips is one of my outstandingly good examples because it has gone from the threat of complete 878 closure to being the centre of the Philips kettle-making division for world markets. However, one of the issues that Philips must deal with is one that many of us, especially those who have bought electrical goods over the years, have regularly complained about—the absence of a plug at the end of the lead and the fact that we must buy one separately.
At present, there is great confusion about whether the provision of a plug will be required by law. Of course, the question whether there will be a legal requirement to put a plug on the end of the lead, or whether it can be done as a gesture to the consumer, makes a big difference to companies such as Philips. If hon. Members have bought electrical equipment recently, they may have noticed that more and more such equipment has the plug attached, and that greatly reduces the irritability factor for the consumer. It would be helpful for producers to know whether they are legally required to produce a plug. That will come under regulation—then again, it may not.
The package that was produced when the White Paper on competitiveness was published included a report on the regulation initiatives of the Health and Safety Executive. I and many of the companies that I have spoken to welcome the Health and Safety Executive approach. When I was working on the deregulation issue, I was interested to find that the HSE and Her Majesty's inspectorate of pollution were two of the least criticised bodies. I suppose that, because they are of such high quality, they were the first bodies to come out with ways of changing their approach.
I am impressed by the fact that, at long last, the HSE has decided to move towards goal setting and away from prescriptive targets. That is the best way forward, and it will make things much easier for companies.
I also welcome the fact that, after many years of problems, the HSE is beginning to focus much more clearly in a public way on risk assessment. Risk assessment is exceedingly emotive but little understood. I often' describe it simply as assessing the risk brought about by Chernobyl: most of us probably got more radiation from watching television reports of Chernobyl than we ever did from Chernobyl itself. That is a simple way of putting over to people the meaning of risk assessment.
The problem is that we are beginning to create a society in which risk is being taken out, so that we become less and less able to assess risks to ourselves, our neighbours, our family and our friends. If the HSE can begin to focus on that in a more coherent and sensible way, I can only approve of it.
§ Mr. Butler
This is not only a problem within the HSE. Does my hon. Friend recall the recent case of the photographer who managed to step on to a slippery part of a breakwater, or some similar construction, and fall in the sea? He was the first person to injure himself on that particular piece of coast—I know that my hon. Friend represents a constituency which, at one time at least, was on the coast; part of it may still be on the coast.
The photographer sued the local authority for not having put up warning notices. He was the first person in 90 years to fall in the sea and then receive damages against the local authority, which has now had to go to the expense of putting up notices.
Does my hon. Friend accept that no-risk compensation —the idea that any risk, however minimal, must be 879 guarded against and that the failure so to do renders one liable in the courts and under the HSE—is a widespread problem and needs a widespread response?
§ Mrs. Lait
I most certainly accept that. I am sure that many of us could think of many other similar instances. We need to look at the whole body of regulation in that area.
I shall refer again to Her Majesty's inspectorate of pollution because an issue that arises time and again goes under the glamorous title of BATNEEC—best available technology not entailing excessive cost. BATNEEC has led to endless arguments between HMIP, which tends to be in the middle, the DOE, the DTI and various other regulatory bodies and companies. I understand that HMIP has now provided a definition that is acceptable to all those bodies. That means that, at long last, some of that grey area which has produced so much argument may be resolved, and that will help in the whole of the deregulation issue.
There is still one remaining worry that business people have about HSE, HMIP and even—dare I say it—that other body, the environmental health officers.
§ Mr. Patrick Thompson (Norwich, North)
I am grateful to my hon. Friend for giving way; earlier, I vowed not to intervene at any point in her speech. For a long time, I have been conducting a campaign against acronyms. My hon. Friend has used probably a dozen completely incomprehensible acronyms in the past five minutes. Her speech is excellent and fascinating, but may I, even at this late stage, ask her to join my campaign against acronyms?
§ Mr. Sainsbury
Perhaps I may remind my hon. Friend that if our hon. Friend the Member for Norwich, North (Mr. Thompson) were to launch a campaign against acronyms, he would be taking on not only the DOE but the whole Government as well. He might recall that when my hon. Friend the Member for Romford (Sir M. Neubert) moved from the Government Whips Office to the MOD, he said that he had moved from anonymity to acronymity.
§ Mrs. Lait
My right hon. Friend is absolutely right.
I shall return to my previous remarks. One of the worries that business people have is the need to ensure that within that collection of acronyms there are people who have a business background, as well as technical and scientific experts who are required for that sort of job, because often the bottom line is affected by the decisions of those acronyms. We need to ensure that there are sensible negotiating stances, not the well-known stamping of the foot and companies being told that they will be closed within 24 hours if they do not do it.
I shall move on to a different area: business-friendly finance. I have no intention whatever of mentioning the clearing banks, although I am sure that some hon. Members may wish to do so. If I started on the clearing banks, I am sure that I would go on for even longer.
The White Paper had great difficulty dealing with late payment. I understand why from the reactions to the proposals that it came up with. The Forum of Private Business asked, "How dare the White Paper not propose 880 legislation?", but the Confederation of British Industry and the Federation of Small Businesses both welcomed the fact that we have not done so. Those are the three principal organisations affecting small businesses, so I have enormous sympathy for the stance that we have taken in the White Paper.
It is sensible to require that particularly large companies, which publish their accounts, include in their annual report and accounts a statement of their payment policy. That would at least put on some psychological pressure and give smaller businesses a handle on how to get some movement on payment.
It is not merely a question of companies, as the Government should also be setting an example. Unfortunately, I know of two cases in my constituency in which the Government have conspicuously not done so. One case involves one of those silent companies that do so well and which we all notice only when something goes wrong. It maintains all the clocks in the royal palaces and that includes Big Ben—we all know when that goes wrong.
During the past 10 years, the company's contract has been with a variety of different forms of the Property Services Agency and therein lies the problem, because, as we are all aware, there have been great changes in the agency during that time. The company's bills were sent to addresses that were vacated, and to people who had left or moved and a very large sum of money was outstanding.
The company is small and, eventually, through the use of solicitors, it persuaded whoever was finally in charge to pay the bills. What he or she was not prepared to do, however, was pay for the cost of financing the money that the company had not received, which in many cases dated right back to 1982. The company has had to lay people off, largely because it needed to fund the bills that had not been paid. I very much hope that, as I have alerted my right hon. Friends the Minister for Industry and the Environment Minister, something will be done about that.
To move to a slightly happier note, another company in my constituency called Photek— a small, high-tech company, involved in image intensifier technology—has been helped enormously during the past few years by Government and European grants, under the SMART and Eureka awards. Originally, when its bills were submitted against invoices, under the system as laid down, it was paid within one month, but it now finds that it is taking one month for the Government to write a cheque. I urge the Department of Trade and Industry, which is responsible for dispersing the money, to look again at its systems because it causes difficulties for small companies' cash flows if they do not receive their grant cheques as they should.
Finance for small business is an issue which has long concerned many of us and we all await the Treasury report. One of the greatest problems, which I come up against time and again, is the need for venture capital of up to £500,000 for companies. With our latest suggestion in the Budget —the Venture Capital Trust—and other encouragements, we are beginning to deal with that problem. We cannot just rely on business angels, however.
I have regularly heard the line about how one can make a small fortune—start with a large one and go into venture capital. I have sympathy with that view, because I know people who have suffered in that way. We need a culture change. Companies must get away from always looking to overdraft finance. We must change to long-term investment, equity stakes and even to preference shares, which do not dilute an owner's ownership of a company.
881 There is also an opportunity for the private sector to come in, as it has done so well in the past, through small investment trusts, enabling any member of the public to take a stake in venture capital—investment trusts designed to invest in businesses needing up to £500,000. We all know why it is so difficult, because the costs of finding venture capital are very high, but something like an investment trust would reduce that cost.
It is a matter of interest that 3Is is at long last coming to the market. It was set up by the clearing banks to avoid being nationalised in 1948 and has proved to be their greatest investment. It has done a tremendous job in providing venture capital.
That brings me to the contentious subject of dividends being too high. I tend to believe that one of the closest things that we have to a sensible market is in the City. We have had an unstable economic background for three decades, with high inflation, high interest rates. One has never known which way the economy is going, or whether taxes will go up or down. Some of us remember the 1970s, when we had Budgets fairly regularly. The noble Lord Healey was known for multiple Budgets in the way that other people run multiple stores.
We now have a regime that enables us to see clearly our future for the next few years. We set out in the Budget a very clear statement, which the Chancellor reiterated a couple of days ago, of Government policy and the intention to keep inflation and interest rates low and to set out a tax regime. That will bring the stability that is required for a more sensible longer-term view in the City markets. Quite rightly, as they have not known what would happen to the economy in the next one, two or three years, they have looked for a higher return for high risk. One asks for short pay-back terms on investment. Investors rightly want a high return for that risk.
We have had a high dividend regime, but, equally, United Kingdom companies have been used to going to the City to get investment. The success of those requests has a direct relationship to the success of the business, its management skills and ability and its profitability. We must try very hard to get over the message that stability is the key to ensuring long-term, worthwhile investments, which will ensure a growing and competitive economy in the long run.
Briefly, on the role of the City, which I promised to mention, the key to success has much to do with the skills that it has developed and even more to do with the fact that it sits on Greenwich mean time and hence can deal throughout the world during its working day. Even if we move to European time, with the extra hour, that power will remain. We also have the English language, which is the international language of business. Because of those advantages, we have developed a range of business and financial skills that is not apparent in other European countries.
We are continually being challenged that Frankfurt and Paris will take over from us in Europe. One has only to study the financial structures of those two countries to realise that they do not have the wide range of skills required in the global market. Hence, as long as we remain flexible and the regulators in the City do not become too rigid, we will remain pre-eminent. We must not be complacent, but we will remain pre-eminent in world financial skills, which will keep up our competitiveness.
We are still the second-biggest investor abroad. Our surplus in 1992 was £8.3 billion, and that must be good for 882 all of our pensioners and for everybody who has a stake in businesses. Sensible businesses are obviously investing abroad, and hence we are bringing money back into this country at a much greater rate than that at which other countries are investing in us; their outflows are smaller than the inflows into the United Kingdom.
We need to ensure that because of longer-term financial stability, companies will increase their research and development, and that is crucial for our continuing competitiveness. It was with great pleasure that I read today that, practically for the first time ever, British companies are investing in research and development at four times the international rate. Long may it continue. I hope very much that that is a reflection of the creation by the Government of the long-term stable economy which we are all looking for.
It also helps companies to export, and many of the things that I have described lead in the long run to better exporting. The Department of Trade and Industry has done a tremendous job with its export promoters. I chair a committee which is very involved in west Africa, and a year ago it was in the doldrums about the help which it was getting from the Government in terms of exporting. Now, in so far as business men are ever lyrical, they are lyrical about the help they are getting. I know that the response is not just coming in west Africa, and I commend the DTI for that.
It is encouraging going round companies—as I do in my constituency—and seeing the percentage of their products that are going to export. It is no longer uncommon for 85 per cent. of production to be exported, and not necessarily just to the Community. I do wish that we would stop talking about exporting to the Community—we are one single market.
Finally—the House may be glad to know—I would just like to examine the role of infrastructure in our competitiveness. Some hon. Members may have seen today the report by the Henley Centre which says that the area around Cambridge and the east midlands will have the greatest growth in the coming decade. One of the keys to that growth, the report says, is easy communication. I could not agree more.
The need for good roads is crucial to this country and we must ensure that we invest wisely and quickly in areas where we do not have good roads at the moment. It is crucial for our economic development, and I say that as someone who has pleaded loud and long for investment in two principal roads into and out of my constituency—the A259 and the A21. There is a direct correlation between the fact that we have only just got below 13 per cent. unemployment, the quality of our roads and our weak economy. I should like the Department of Transport to move to a system of recognising the economic development potential of roads, rather than a straight mathematical calculation on growth based on the current economy.
I am conscious that I have not covered all of the issues in the White Paper, but I never said that I would. I am beginning to run out of puff, and I should just like to draw my remarks to a close.
§ Mr. John Austin-Walker (Woolwich)
One of the areas of the White Paper to which the hon. Lady has not made much reference is the question of discrimination. I note that the White Paper says that unfair discrimination in the labour market is 883morally wrong and economically damaging".Will she prevail upon her colleagues not to continue the filibuster this morning, so that we can discuss the rights of disabled people and their opportunities to enter the labour market?
§ Mrs. Lait
I am fascinated that the hon. Gentleman wishes me to continue to discuss the White Paper, which I should be happy to do. I am equally conscious that a large number of hon. Members want to discuss other parts of it, and it is only fair that I should draw my remarks to a close. I commend the White Paper and my motion to the House, and I commend also the long-term policy of the Government of introducing flexibility into our economy and producing economic stability. The need for us as a nation is to rejoice in change, and not to resist change. That is the key to continual competitiveness.
§ Mr. Jim Cousins (Newcastle upon Tyne, Central)
I congratulate the hon. Member for Hastings and Rye (Mrs. Lait), both on her good fortune and on her choice of subject. When the hon. Lady was the Conservative candidate for Wallsend—a constituency close to my own—I said at the time, "This lady will go far." Of course, in going to Hastings and Rye she has gone about as far as she reasonably could.
§ Mr. Cousins
That is even closer to my constituency, and hence even further for the hon. Lady to go.
I knew the hon. Lady's predecessor—Sir Kenneth Warren as he now is—extremely well. I served on the Select Committee on Trade and Industry with him, and he was in many respects a remarkable man with many fine qualities. One of those fine qualities was arguing convincingly that Indonesian food did not have to taste exclusively of peanuts. It is of course such small, but important, discoveries that make our life in this House so rich and rewarding. In one respect, however, the hon. Lady is very different from her predecessor. I say this with no disrespect to Sir Kenneth Warren, but I could not visualise him speaking for over an hour on a Friday morning.
The subject is, of course, extremely important, and I agree with much of the hon. Lady's analysis—although sadly very few of her conclusions. She alluded in her own way to the point at which our approach to these matters should begin, and I share her opinion about that: we must work with the idea that no one in the world owes anyone in this country a living. Any cronyism, complacency, the old person network—[Interruption.] I appear to have said something entertaining. I am delighted to think that, at such an early point on a Friday morning, I can give rise to such amusement. I repeat the phrase which I think caused the excitement—"the old person network". The "steady as we go" and "It'll be all right on the night" spirit are part of the "back to basics" of very many people in the British economy.
§ Mr. Butler
I am terribly grateful to the hon. Gentleperson for giving way. Does the hon. Gentleperson not realise quite how silly phrases such as "old person network" sound?
§ Mr. Cousins
As we discover on these occasions, such remarks are intended to give rise to even greater silliness in others. I appear to have achieved my objective in that respect.
Every British institution and enterprise is being tested in the global challenge—including, I may say, this one. This House's ability to discuss matters that are important to many of our people is being challenged and, on some occasions, we do not succeed in seeing those matters through to their conclusion as we should. Such matters are important in a discussion of global challenges, and the way in which banks conduct themselves and the kind of research and development expenditure that we have are fundamental to that challenge. I am sorry that the hon. Lady did not respond as promised to an intervention in which I drew her attention to the disturbing report about the rundown of the City of London. It is, after all, the base for much of our financial information and high-technology services.
Every time the hon. Lady was confronted with such institutional issues, she fell back to using the oldest trick, by arguing, "On the one hand this, but on the other hand that." That was her approach to late payment, to research and development, to the evolution of our company structures and, I am afraid, to much else in her speech.
The truth is that there is no point in any of us looking back to the 1960s, the 1970s or the 1980s because every one of those decades was a period of relative failure according to some crucial necessary indicator of economic success. Any political party that plays a party game of statistical charades and dresses things up to make relative failure look like absolute success will fail: people will no longer be fooled by such behaviour. Sadly, many of our people expect us to try to fool them. If we are to correct that impression, we must start by not fooling ourselves.
The hon. Lady spoke about the search for stable macro-economic conditions and, although she may have focused too closely on it, I accept that it is important. In the 1980s, we experienced swings from boom to bust. Such experience should guide us on what to avoid in the future and I appreciate that the Government are trying to learn that lesson in their own way. We must avoid reproducing the stop-go economies of the past. The Government's adoption of a multi-speed, multi-track approach to the indicators governing the economic cycle will not do.
At each end of the punt, poling furiously in opposite directions, we have the Chancellor, who is, for the moment, preaching fiscal rectitude, and the Governor of the Bank of England, who has allowed monetary laxity. Each of them is still promising the other that, in some further eddy in the economic cycle, they will change places.
Stability is not achieved by setting all the signals at amber and hoping that the trains will not hit each other. Such a strategy will not produce stability; it is simply a posture of informed indifference and neglect. I fear that that represents the macro-economic policy of this Government.
Neither the White Paper nor any other item of Government policy addresses some of the fundamental structural deficiencies in the British economy. We do not 885 undertake enough research. We do not draw enough upon the skills and enterprise of every part of our society and every region of our country. We are not sufficiently well trained and our skill levels are not high enough, although I accept that a minority of our population is extremely skilful and well trained. Our investment levels are not large enough, not financed soundly enough and not targeted on the right kind of object. The Government have not addressed those fundamental institutional and supply-side deficiencies. The White Paper merely refers to them as a signal of past failure and indifference and does not offer any real promise of a change of heart.
§ Mr. Butler
The hon. Gentleman is suggesting that policy is not directed at the correct projects and sectors, but has failed to answer the question, "Who should do the targeting?" Is he suggesting a return to Government targeting—the National Economic Development Office, NEDO and so on—or does he have some other proposal?
§ Mr. Cousins
All the stakeholders in any enterprise must be involved to a far greater extent, because currently too few of them are involved in serious discussions on the future of their enterprise. One of the major deficiencies of the market in corporate performance is the lack of involvement of some of the major institutional shareholders and financiers; they simply do not engage in a continuing evaluation of companies and their activities. They do not engage in forward looks, to use the Government's phrase, at their investments. "Forward look" is a good phrase, although I do not believe that the result of the effort is that promising.
I deliberately use the term "stakeholder" here because more is involved than the shareholders. It is important to discover who are the stakeholders—the legitimate social partners—because their lack of involvement underpins one of the fundamental deficiencies in the Government's analysis of our problems.
§ Mr. Butler
I am grateful to the hon. Member for his response to my question. Do I take it that he is not proposing any form of NEDO, albeit known by another set of acronyms or title? Does that mean that the old Labour party idea of Government centrally controlled investment planning and targeting, to use the hon. Member's expression, will not be proposed by him or by any future leader of the Labour party?
§ Mr. Cousins
There is no point in talking about reinventing NEDO, which the Government abolished. It is significant, however, that part of the current work of the Department of Trade and Industry has led to the surreptitious re-creation of many of the sectoral procedures and devices adopted by NEDO. That was exactly the format adopted by NEDO when it got down to business through its sector working parties. In effect, the Dii has re-created that sector working approach. We should not be too bugged about institutional structures, because what the Government have taken away with one hand they have partially reinvented with the other.
It is important to note, however, that the Government have failed to involve all the social partners who were involved in the work of NEDO. It is a pity that although the DTI has re-created the sector working approach it has not involved some of the stakeholders. Sadly, those people have been missed out and I suspect that that is deliberate policy.
§ Mr. Nirj Joseph Deva (Brentford and Isleworth)
Is the hon. Member suggesting that politicians and civil servants can spot winners whereas the market and industrialists cannot?
§ Mr. Cousins
In the 1980s, we saw the manufacture of losers across all sectors of industry and we must seek to avoid that in the future.
The argument about picking winners is an argument from the past, because what we see around us is the creation of losers. I acknowledge that, to some extent, the White Paper recognised that, because it recommends ways in which the Government can work to try to prevent it from happening again. We should all agree about the importance of such work.
§ Mr. Cousins
As I said at the beginning of my speech, we cannot proceed to operate a system in which many people are excluded from decision making simply because of some antique stereotype that some other people claim still exists. That is a lesson which my own party has had to learn in its own way and it is a lesson which I commend the Conservative party to learn in its own way. If we are serious about meeting global challenges, we cannot operate on the basis that some people who represent an important interest should be excluded from decision making. We must operate on the basis of partnership.
§ Mr. Cousins
As we all now know, Wednesday's strike was a deliberate result of secondary action by the Government. [HON. MEMBERS: "Rubbish."] Every commuter in the south-east of England and everywhere else in the country knows it. Just as in the past we sometimes went wrong when we had open caucuses and tea and sandwiches in 10 Downing street, so we should seek to discourage operating by secondary action—nods and winks from senior Ministers on how managers faced with managerial responsibility should behave towards their work force. Let us put things clearly on the table.
§ Mrs. Gillan
The hon. Gentleman said that every commuter in the south-east knew that Government action caused the strike. He may like to tell that to Mrs. Jo Franks who, when she heard that my Chiltern train line would run throughout the strike, said:I wasn't sure whether to believe it at first but I am very grateful. I would just like to thank these people for letting me get to work.
§ Mr. Cousins
I should be happy to talk to Mrs. Franks, presumably of Amersham or Chesham. Indeed, we intend to do so because, sadly, despite our victory last Thursday, the refreshing new democratic socialism that will take Britain to success at the end of the century has not reached some parts of the country. We have still to convince the Cotswolds and some of those Tory heartlands of their error. Rest assured that we intend to do so. On the evidence of the last European elections, we are well on our way to 887 success. A party that comes third in a constituency like Eastleigh must take stock of its position in its own heartlands.
§ Mr. Butler
May I preface my remarks by saying that Chesham and Amersham are nowhere near the Cotswolds. As the hon. Gentleman travels further south, he will find that out. He may be assisted in his tentative approach towards expressing a view from the Labour Front Bench about the rail strike. I would encourage that, as attempts to get a view from the leadership contenders, apart from the hon. Gentleman, have been unsuccessful. Is he saying that a Government who state clearly, as this Government have repeatedly done, that wage settlements grossly in excess of the inflation rate are not good for industry or the country generally are interfering? And is the hon. Gentleman tentatively groping towards saying that, with inflation at 2.6 per cent. and holding, an 11 per cent. wage increase is perfectly reasonable?
§ Mr. Cousins
If that is a criticism—[interruption.] As the question is addressed to me, I shall take it as such. I am sorry that the hon. Member for Milton Keynes, North (Mr. Butler) thought that I was being tentative because I thought that I was simply being gentle. One should not draw a distinction between gentleness and tentativeness. I thought that I was extremely clear in my reaction towards the entirely unnecessary rail dispute which the Government managed to engineer this week.
§ Mr. Cousins
Jimmy Knapp will end this matter as a hero, in the Chilterns and the Cotswolds and in many parts of the country where, owing to the Government's action, people can no longer travel by train. As a result of their policies, in some parts of the country people will cease to go by train in the future—or, if they do, it will be at a much higher price.
On the question of wage settlements, the 1980s taken as a whole was a period without precedent in British history when earnings constantly exceeded inflation by a factor of between 60 and 100 per cent. That occurred at all points of the trade cycle and in all aspects of the labour market condition. It was a permanent feature of the 1980s. If that is a problem for the hon. Member for Milton Keynes, North-East—I understand that some people might regard it as a problem, although I do not see it as such—he should take the matter up with the Government because it has been a central feature of the British economic experience of the 1980s.
There was just one three-month period in the whole of the 1980s when earnings increases fell below price increases. Strangely, that three-month period coincided with the period that led to the dismissal, by her own party, of the former Prime Minister, Baroness Thatcher—an interesting coincidence which may throw some light on Conservative Governments' earnings policies.
§ Mr. Trend
Does the hon. Gentleman accept that, during the 1980s, many of the wage increases were accompanied by increased productivity and output and were genuinely earned in that way for the first time for many generations? What this country needs is a 888 high-wage, high-skill, high-productivity and high-output economy, not, as he seems to suggest, a low-wage economy.
§ Mr. Cousins
I was responding to the point put to me. If the experience of the 1980s, when wages rose roughly twice as fast as prices, is fine, then let us not argue about it.
§ Mr. Butler
I must correct the hon. Gentleman, as he has not responded to the point that I made. It is right that I should give him another opportunity to do so. Does he think that a wage claim of 11 per cent. when inflation is running at 2.6 per cent. and holding is reasonable?
§ Mr. Cousins
I find it slightly surprising that a Government say that we should not pick winners and intervene in industry. That matter should be freely negotiated between employers and employees. That is not a matter on which politicians should strike a position. It is a matter of considerable regret that the secretive arm tugging that went on prior to the dispute this week brought that about when the process of negotiation was clearly signalled and was on course for an outcome satisfactory to both parties.
§ Mr. Sainsbury
This is an important point. I take it from what the hon. Gentleman is saying, on behalf of the Labour party, that he does not think that any Government, of whatever party, should take a view on the appropriate level of growth in earnings in relation to the rate of inflation. Is he saying that, although the Government are an employer and finance employers through the tax system, they should be totally disinterested in the level of wages paid and in wage claims?
§ Mr. Cousins
The Government should certainly not run, secretive incomes policies operated in a random and arbitrary way and produce the kind of disputes that we have had this week. I remind the Minister that we are here to discuss competitive industry. I hope that he will forgive me if I move on to more substantive aspects. We are dealing with the "classic" Cola of the problems of industry and should move on to discuss the Pepsi Cola.
§ Mr. Cousins
The hon. Gentleman must realise that we are not here to debate the rail dispute that occurred this week, or the way that the Government engineered it. That, I am afraid, is clearly on the record. Perhaps we may move on to the subject of our debate now, Madam Deputy Speaker, and discuss the issues before us. Conservative Members seem to want to speak about everything apart from the matter that the hon. Member for Hastings and Rye chose as the centrepiece of the debate.
One of the key things that the Government can do is to act as a good negotiator for British industry in foreign discussions. I hope that the Minister will tell us about the negotiations that are going on in relation to access to the American telecommunications markets. I hope that he will tell us how the Government sought to support British 889 Telecom in its arrangements with the American company MCI to gain regulatory access to the American markets for telecommunication services. I hope that he will also explain the Government's reaction to the objections that are being made by French and German telecommunications operators to that agreement, and tell us what steps he is taking to ensure that our telecommunications systems operators have full and free access to French and German markets.
That is a critical area for the development of British industry in which the Government have the ability to negotiate on behalf of British companies and British enterprise, in which, as far as we are aware from the outside, no such effective negotiation has taken place. The Government have not stood behind British enterprise and the British telecommunications companies.
As recently as this morning, an important report on research and development was published—the so-called "research and development scoreboard", which emphasises so many of the difficulties that are visible in the performance of British industry. We now discover that only 13 British companies are listed in the top 200 companies on research and development indicators. If we are seriously worried about global challenges, that should cause us considerable anxiety. We also ought to be anxious about the fact that the British companies that did appear in the list had half the commitment, in terms of the relationship of their turnover to R and D, to the other 187. Those are very significant indicators.
§ Mr. Cousins
I should like to continue and complete my argument.
Those are significant indicators of a failure to perform adequately in the key area of research and development.
We have already alluded to the debate about the retention of dividends and the attitude of the stock market and banks to large dividend pay-outs. That is clearly demonstrated in that research and development scoreboard. The commitment of 187 of those 200 companies—that is, not the British ones—is that they invest in research and development more than 100 per cent. of their pre-tax profits and almost three times the amount of their dividend pay-outs. The 13 British companies that appear in the list contribute to their research and development 29 per cent. of their pre-tax profits and only 72 per cent. of their dividend pay-outs.
That is a clear signal that the financial markets, which measure corporate performance in this country, are not working to encourage research and development in the way that those same markets work in countries that compete with us. That should give rise to considerable anxiety. Business enterprises' commitment to research and development as a share of GDP in this country decreased during the 1980s and we are alone among the Organisation for Economic Co-operation and Development countries in that respect. That should cause considerable anxiety not only about our performance now but about our prospects.
§ Mr. Trend
Does the hon. Gentleman agree that, although we are all disappointed at the low percentage of money that is put into research and development, the picture in the past couple of years, especially through the past recession, has been much better than it was in the past—that companies have become aware of the importance of 890 R and D and that they are putting more money into R and D? It is a low base, but it is an increasing base and it is good news for the future. That should be emphasised.
Many of the industrialists who gave evidence to the Trade and Industry Select Committee said that the thing that would most encourage them to put more money into research and development with a long-term view was a stable economic base. I believe that that is what the Government have now produced for industry.
§ Mr. Cousins
Let me answer that argument directly.
I infer from the hon. Gentleman's intervention that he is, in that respect, a Dorrellite, not a Portillo-ite. One of the attractions of the present Government and of the great supermarket of alternative policies on which we can draw is that the Opposition cannot pick the winners. That would not be an appropriate thing for us to do. Who can say whether Dorrellism or Portillo-ism will ultimately be the winner, but at any rate those alternative policies are set out for us and I commend the hon. Gentleman for taking up his position as a Dorrellite rather than a Portillo-ite in that regard.
§ Sir Michael Grylls
I am grateful, because I know that the hon. Gentleman has been generous in giving way. He referred to dividend policy. Is he saying that it is the Opposition's policy to legislate to restrain dividends? If not, what is he proposing?
§ Mr. Cousins
I shall discuss that point directly.
One of the indicators of success that is mentioned in the White Paper on competitiveness—the Opposition agree with the Government's Department of Trade and Industry team that it is a true indicator of economic success—is the increasing share of business turnover that is going into investment. That process began at the depths of the recession, which is interesting. As people could not rely on their finances, businesses began to go for organic growth from their turnover and profits.
That is obviously the way forward, but if we are to sustain that development and if it is to become the way that we envisage British industry growing—I am delighted to know that there is more than one Dorrellite on the Conservative Benches this morning—we must tackle some of the key features of the way in which British industry is governed and financed. In five years of the 1980s, the banks put more into commercial property development than they put into manufacturing industry in 15 years. We must correct that. It cannot be corrected by legislation. It can be corrected by Government and others, through the social partners and by creating a culture of investment and growth in enterprise. It cannot be achieved by Government alone and it cannot be achieved by legislation, but the Government are a key player in changing the psychological climate and the investment culture in this country. The Government cannot duck their responsibilities in that respect.
If that is to be done, the stakeholders must understand what is happening. There must be a different relationship of banks to enterprise and of shareholders to enterprise —especially the big institutional shareholders, whose growth has been such a significant feature of the 1980s because of the development of pension funds and other 891 financial instruments. One of the most curious features of the entire period of Conservative Government is that the influence of individual shareholders in companies and the proportion of shares that they control have steadily decreased. The fact that their numbers have increased should not disguise the fact that the influence that they exercise and the proportion of the equity that they control have gone steadily down.
The key relationship that has come about, therefore, in measuring the performance of the enterprise, in directing its strategy and in informing the way in which it seeks to grow, is the relationship between the big institutional shareholders and the company board. That cannot and should not be controlled by legislation, but it is something to which the Government can give a steer and a guide through the creation of the right kind of culture. It would certainly be our intention, through corporate governance changes and changes in financing arrangements, by sending signals and perhaps through the tax system—we should look at that—to change that culture and get that relationship right.
I go further than that. If we want to business investment itself to grow as a share of its turnover, the staff of the enterprise must also be fully informed and fully engaged and must fully understand what is going on. That is where the present Government's policy—of not putting an emphasis on social partnership and seeking to opt out of the European works councils arrangement and aspects of the social charter, which bring those social partners together—is undermining the basis for some of the indicators which we could agree are significant signals of a change in our economic culture and an improvement in our economic performance.
The hon. Member for Hastings and Rye gave an example of a company in her constituency—Philips. Philips would have gone down in Britain. It was saved in the Netherlands, because it had the advantage of Dutch company law and the strong stakeholder involvement in which the non-shareholding stakeholders were able to pick it up and turn it around. The hon. Lady should recognise that. She should recognise, too, the absurdity of the fact that Philips's European workers work through works councils, yet the British Government are trying to prevent its British workers from working through works councils. That is absurd and runs contrary to the whole idea of social partnership and of stakeholders sharing in decision making, which is the foundation of our future economic success.
§ Mr. Butler
Is not the hon. Gentleman ignoring the facts? When the decisions that led Philips to the brink of imminent collapse were made, those same stakeholders were also involved in those decisions. The same Dutch company law and commercial law informed those same decisions. Nothing changed. There was not a miraculous change whereby the stakeholders suddenly became involved and the company was saved. They were equally involved in the decisions that almost led to its collapse.
§ Mr. Cousins
It was the structure of Dutch company law that enabled that company to be rescued from a situation in which one of the key networks of shareholders, who, historically, had controlled the company, had made some key errors in terms of investment direction. It was the 892 Dutch structure of company law that enabled that company to be turned around. If that company had been in Britain, it would have been taken over or would have gone down.
We learnt the this week that Scrabble, one of our sports, leisure, cultural, service-type contributions to the global market—and a very successful one—is about to fall into non-British ownership. What kind of country are we becoming if we cannot retain the ownership of Scrabble? A reform of stakeholder relationships to some of the key indicators is at the heart of our own policy of winning for Britain, and a reflection of that, albeit a pale one, can be found in the White Paper itself, and in some of the indicators that are chosen as the ones that we should adopt.
I am conscious of the time and have no desire to speak for as long as the hon. Member for Hastings and Rye, but let me state briefly some of the key areas to which I have alluded, and summarise them as being some of the key ways in which we see British competitiveness being built up. We must look at the workings of the financial system and the way in which it services British industry. We must look at the way in which companies are controlled and run, because in those corporate governance relationships are to be found the foundations of high levels of invest-and-grow policies and strategies to be adopted by British enterprises.
We must look at our performance in research and development in technology. There is some recovery there. We welcome it, but it starts from a terrifyingly low and narrow base. It cannot be right that, as regards our performance in research and development, we rely on one industry, and one alone—pharmaceuticals. The performance of that industry is brilliant and impressive. It is one of the great hopes for our future, but we cannot rely on superb performances in terms of invest-and-grow policies simply in one tiny part of the British economy and in one narrow sector of British industry. That performance must be diffused across the whole of our manufacturing industry.
We must do more about small business. That is another issue on which, when confronted with it, the hon. Member for Hastings and Rye said, "On the one hand this, and on the other hand that." The payment of interest on debt is a key way in which the Government can signal their support for small business. Surely the Government do not have to be told about the power of price signals. Putting a price signal into good payment practice is one clear way in which the Government can assist small business.
We have seen a growth of small enterprises in this country. We should all welcome that and build on it. But the wastage rate of innovation and start-up is staggering and tragic. Since 1979, this country has grown some 900,000 small businesses. We welcome that. But those small businesses have been starting up at the rate of almost half a million a year. Even if we take into account the fact that some of them are very small, the wastage rate, which is represented by the generation of half a million businesses a year, and the survival of only 900,000 in net growth after 15 years, represents human tragedy on a massive scale and the disruption of millions of people's lives. We must find ways in which small business not only comes into existence but is aided to stay in existence. A lowering of that terrifying weight of wastage is a one key way in which we can help our economy to grow.
In talking about competitiveness, there was one issue that the hon. Lady always ducked—social partnerships and social cohesion. We shall look carefully at the speeches that follow, however many there may be, because to talk 893 about competitiveness and not talk about social partnerships and social cohesion is an enormous error. An economy will not grow unless every one of our people feels part of its growth and feels committed to and involved with its growth. No matter whether people are considering starting an enterprise, where they should be in the labour market or whether they should stay with their enterprise or move to another one, they should always feel a part of it. They should always feel fully involved and, committed to its success and to its performance. We should not shy away from that.
It must be a source of great anxiety to all of us that so many of our people are poorly educated, poorly trained, poorly motivated and are low achievers—not just at school, but in the labour market as well. It is worrying that many parts of our society are underachieving. We are not realising the full potential of our people. The building of social cohesion and a true partnership are key conditions for our economic success. Let us admit that there are too many spectacular examples of Roger Levitts and Oskar Botnars sending wrong signals to many of our people about the real nature of success and enterprise and performance.
It would be sad if in talking about competitiveness we were debating a concept that engaged the enthusiasm of only some of our people. In such a debate, we must also reach out to the "invisible" people who are entering internal exile. An extraordinary feature of the present economic indicators is that not only unemployment but employment is falling. Hundreds of thousands of our people are disappearing from the statistics into a form of internal exile. Those of us who represent tough areas know that those people are there. They are the giro drops, the panhandlers and the hustlers. That should also cause concern.
Let us build competitiveness but not attempt to deny the global challenge to which the hon. Member for Hastings and Rye referred and which lies in front of us all. Let us also say that all our people and our entire work force should be engaged in that and that they should take pride and pleasure in our future economic success.
§ Mr. Patrick Thompson (Norwich, North)
I am grateful to have an opportunity to speak in the debate. I have not the slightest intention of speaking for as long as the Opposition spokesman, the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins), who spoke for some 46 minutes. In view of earlier interventions, I find that rather surprising. I shall return to the subject of the hon. Gentleman's speech.
I congratulate my hon. Friend the Member for Hastings and Rye (Mrs. Lait) on her good luck, which we all envy, in winning the ballot and on her initiative in choosing this vital subject for debate. I also congratulate her on her excellent speech, which I am able to criticise in only one respect—her use of a large number of acronyms. My speech will be brief and I must now try to make sure that it is totally acronym free. That may be easier said than done.
I listened with great interest to the lengthy speech by the hon. Member for Newcastle upon Tyne, Central. As is often the case with Opposition speeches, most of it was negative in tone and depressing in outlook and would not have uplifted anyone inside or outside the House. It is rather sad that so much debate goes on in College Green 894 and I have no doubt that even at this moment many people on College Green are giving sound or vision bites to television. Those who take the trouble to listen to the debates—
§ Mr. Martyn Jones
On a point of order, Madam Speaker. I am sorry to interrupt the hon. Gentleman's speech, but have you had any notification that the Government intend to allow time to debate the Civil Rights (Disabled Persons) Bill later today? There are six or seven Conservative Members in the Chamber, but 6.5 million people in the country are waiting for us to discuss that Bill. Have you had any notification about that?
§ Madam Deputy Speaker (Dame Janet Fookes)
That is strictly not a matter for the Chair nor for the Government. These are private Member's motions. I have no ability to control the length of this debate; nor do I have any foreknowledge of how long it will take.
§ Madam Deputy Speaker
I have said that it was not strictly a point of order. Does the hon. Gentleman have a different point?
§ Mr. Austin-Walker
It relates to the fact that you referred to private Members' motions. A private Member's motion in terms similar to that which my hon. Friend wishes to move later was voted on and carried without any votes against. Can you say how that motion, which has been passed, may be given effect? It was that the House should provide time to debate the Civil Rights (Disabled Persons) Bill.
§ Mr. Thompson
I have congratulated my hon. Friend the Member for Hastings and Rye on her choice of subject, Hon. Members in all parts of the House must agree that there is no more important subject for today's debate than competitiveness and wealth creation, which can do only good for the health service and education and other matters. None of us should feel ashamed of taking part in the debate. As I said earlier, I was struck by the time that Opposition Members appear to be taking up in a rather wasteful way. Not least in that respect was the over-lengthy speech by the hon. Member for Newcastle upon Tyne, Central. I wish to take part in the debate because of the importance of its subject.
I was struck by three aspects of the speech by the hon. Member for Newcastle upon Tyne, Central. He spoke about stability, which was also mentioned by my hon. Friend the Member for Hastings and Rye. Of course stability is good, but in the same breath the hon. Gentleman referred critically to policy on Europe. That is surprising from a spokesman for a party which has had seven reversals of policy on Europe in the years that I have been involved as a parliamentary candidate or as a Member of Parliament.
Secondly, the hon. Gentleman made the apparent admission that his party now has no policy on wage inflation. I was not surprised when my hon. Friend the Member for Hastings and Rye picked him up on that, and I suspect that we shall hear much more about that in the coming months. Thirdly, I am surprised at the lack of interest by Opposition Members in the debate generally.
895 While the hon. Member for Newcastle upon Tyne, Central was speaking, I counted the number of Opposition Members who were obviously interested in the debate and intended to take part; judging from the attendance at the moment the number seems to be almost zero. That must be a reflection of their view of the importance of wealth creation, which we believe in and which the debate is all about because without competitiveness there is no wealth creation.
The only point on which I had any sympathy with the hon. Member for Newcastle upon Tyne, Central was when he struck a note similar to that struck by my hon. Friend the Member for Hastings and Rye in referring to shorttermism, dividends and the operation of the City. In that respect, I was in sympathy not only with my hon. Friend but with some of the implications of what was said by the hon. Member for Newcastle upon Tyne, Central. There, at least, I found interesting points that were worth further consideration.
I shall concentrate on education and training, but first I wish to refer to the comments of my hon. Friend the Member for Hastings and Rye on the importance of infrastructure and roads. Any Member from Norwich must have a strong interest in communications, infrastructure and roads. Since I was first elected in 1983, I have campaigned for better road communications with Norwich and East Anglia generally.My hon. Friend is right: the Government should look at this not in terms of counting how many cars or heavy goods vehicles are using the All, but in terms of the economic benefits to the communities involved. I am delighted to support what she said in that respect and plead with my right hon. Friend the Minister for Industry to speak to our Government colleagues—particularly my neighbour in Norfolk the Secretary of State for Transport, my right hon. Friend the Member for Norfolk, South (Mr. MacGregor)—who are concerned with these matters, to persuade them to continue fighting for better road communications for East Anglia. It is a credit to the Government that much has been done and that it now takes me only half the time to drive from Norwich to London that it used to take. However, there is still a long way to go to bring the network up to standard. My hon. Friend the Member for Hastings and Rye gave me an opening which I have taken to make a constituency and local point.
Better competitive performance is essential for our success in the European Union, in which there is no alternative to co-operation. We tended not to notice the recent vote in Austria because we were busy with our own elections, but in that referendum there was a 66 per cent. yes vote and the turnout was more than 80 per cent. That was encouraging and showed that Austria was not fooled by the wilder claims of the extreme right and others in that country. I gather that older people were predominant in supporting Austria's membership of the European Union. I do not know whether that had anything to do with the old person network to which the hon. Member for Newcastle upon Tyne, Central referred, but I found that an interesting point.
The approach of the White Paper on competitiveness is welcome and I congratulate Ministers on the work that they put into it and on the good message that it gives. The long-standing gap between our education and training 896 performance and that of our competitors has long been recognised. The good news about the White Paper is that it has addressed the problem again and, I think, more vigorously than before. Thanks to the policies and actions of the Government, the gap is closing, but it must be eliminated altogether. It is not tolerable that there should be any gap between our performance in education and training and that of our competitors in Europe or elsewhere.
I welcome in particular the streamlined approach to the national curriculum, on which Ofsted—I have used an acronym, which has woken everyone up, but time or my memory does not permit me to give its full title—recently gave evidence to the Select Committee. According to that splendid organisation, standards have been raised in achievement and motivation, which must be due to the dedication of our teachers and the support of parents in the education system.
The White Paper is correct to concentrate on strengthening the vocational element of the last years of secondary education. I particularly welcome the new general diploma and its emphasis on mathematics, science and languages—the key subjects for our young people, whatever future careers they pursue. Britain cannot afford to have its young people less qualified than those in Germany, Japan or elsewhere. I heard at a recent Industry and Parliament Trust conference in the House that some of our industrialists are saying that it may be more worth while to employ a German boy who is well qualified vocationally and in engineering and to teach him English than to employ an English boy and give him the necessary technical skills. I hope that that is not true, but if it is, I hope that it will give the Government further encouragement to do more than they are doing at present on vocational and technical training.
I welcome the additional support and training for careers teachers. That is another important matter which I do not have much time to deal with in a shortish speech. The Government have been wise to provide an extra £23 million to ensure that the maximum number of 15 and 16-year-olds get work experience. All of this is good. The expansion in the range of schools' contacts with the outside world is bound to have an impact also on the responsibilities of head teachers and deputy heads. The White Paper—this is perhaps the only critical note that I shall introduce—refers to a voucher scheme working from 1995–96 to help with the training of head teachers. That is good, but it does not go far enough. For many years, I have argued for a much bolder initiative—a staff college, perhaps funded through .the proposed new Teacher Training Agency, dedicated to the training of heads, deputies and other senior teachers. A voucher scheme is a tiny move in that direction, but I am critical to the extent that I should like to see more. I welcome the opportunity once again to put forward that idea, which I know finds favour in many quarters.
Not many years ago, I was a member of the Education Select Committee. We visited Germany, where we saw the key contrast between the strength and quality of its technical education at secondary and apprenticeship level compared with ours. As other hon. Members have said —I do not intend to speak at length on this as time does not permit—there are differences in culture between Germany and this country from which we can still learn. Of course it works both ways: there are many things that people in Germany can learn from our culture.
897 The good news is that we are now introducing modern apprenticeship schemes for 16 to 17-year-olds and accelerated apprenticeships schemes for 18 to 19-yearolds, which will provide them with vocational or academic qualifications and high-quality work, leading to recognised qualifications. These are all clear steps in the right direction. The £100 million that the Government have promised is good news, but I shall be one of those hon. Members, possibly from both sides of the House, who will be pressing the Government on training and apprenticeships. I am not in favour of ever higher public spending, but when considering priorities I would favour pushing training and apprenticeships higher up the list of priorities, and I suspect that Opposition spokesmen would not disagree with that sentiment.
The reaction of manufacturing and engineering companies and education and training bodies 1.0 the proposals on education and training in the White Paper has been very favourable. This is all good news. Perhaps my hon. Friend the Member for Stevenage (Mr. Wood), who has taken up his place on the Front Bench, will pass on to Ministers my welcome for the competitiveness White Paper and the opportunity to take part in the debate. Ministers must expect to be asked for more by groups interested in training, not least the all-party parliamentary group for engineering development, of which I am a member. A senior member of it—indeed, its treasurer—my hon. Friend the Member for Meriden (Mr. Mills) will take part in the debate later.
The Government deserve the strong support of both sides of the House for the initiatives outlined in the White Paper and for the work that they have done.
§ Mr. Iain Mills (Meriden)
I shall limit my remarks to manufacturing industry, particularly the car industry. Hon. Members will be aware of my involvement in the motor industry, which is at the forefront of our economic and industrial operations. That was recognised by the President of the Board of Trade in his remarks to the Industry Forum, which was set up by the Society of Motor Manufacturers and Traders. In deference to my hon. Friend the Member for Norwich, North (Mr. Thompson), I will not give the acronym. The society, along with the Department of Trade and Industry, has established the Industry Forum. My right hon. Friend the President of the Board of Trade said:
The automotive components industry is a major contributor to the UK's industrial performance. It plays a crucial role in the future competitiveness of our vehicle manufacturers.I shall not continue the quote as that makes the situation pretty clear.
The motor industry is particularly relevant to this debate. I congratulate my hon. Friend the Member for Hastings and Rye (Mrs. Lait) on her excellent speech, in which she was aided by the penetrating wisdom of Conservative Members. The Employment Select Committee investigated the attractiveness to Japanese business men of investing in Britain. It was clear that there were a number of factors, such as our language, but the predominant one was our work practices. Just as we compete to sell our goods, we compete for inward investment not only from Europe but from the world. The fact that the Japanese choose to invest in Britain—whether it be to manufacture motor cars or television tubes—shows that we are competitive, but we can never be competitive enough.
898 My motivation to leave my job as a senior manager in the car industry and to join the House in 1979 was to help to make changes which would make us more competitive. Given our productivity, the number of strikes and our industrial attitude in 1978–79, the changes that we have made are a fantastic achievement. It is not coincidental that they have been made over the same period as I have been an hon. Member, although I do not, of course, take full credit for the changes. We were greatly aided by Lord Tebbit, as he now is, who was at the forefront in introducing changes. As his Parliamentary Private Secretary, I greatly enjoyed seeing so many changes introduced. Democracy was introduced to the trade unions and the Government have introduced sense to the work force. Nissan, Toyota and Honda are manufacturing cars in Britain, the local content of which is about 80 per cent. About 80 per cent. of their products are sold abroad. It has been said that we do not export to Europe, which is correct as it is a single market, but I am talking of exports well beyond Europe.
The three Japanese motor manufacturers have created new jobs, and the same can be said of all the other companies that have invested in the United Kingdom. They are not taking jobs away from domestic manufacturers, by and large. The jobs have been created as a result of sensible work practices. They have certainly not been created by social partnership. It is clear to me that if we signed up to the social chapter and faced increased costs—£17 billion or whatever—we would become less competitive and less attractive to inward investment at a time when we need to do everything possible to keep our costs low.
§ Mr. Cousins
Does the hon. Gentleman think that there is a major Japanese investor in new manufacturing plant in the United Kingdom who is not already meeting and exceeding by far any requirement of the social charter? In his patterns of social partnership and worker involvement, the Japanese investor is blazing a trail for the rest of British industry.
§ Mr. Mills
The hon. Gentleman has a point. The Japanese are glad to admit that where they have introduced the Japanese system in our country the British have taken it over and improved it. Work practices in many Japanese companies in this country may be excellent. It must be remembered, however, that they are the practices that they have chosen. The Japanese made it clear to us at chairman level—it is usually president level in Japan—and through leading members of the Japanese equivalent of the Confederation of British Industry that they do not wish to have a centralised structure imposed upon them. They do not wish to be told that they must do this or that, that the working week must be 38 hours, and so on. If they wish to exceed their working practices, that is up to them. They do not want rigidity. They want flexibility. They wish to be able to consult the work force. They refer to their employees as associates or members of the company. They wish to be able to discuss with them the best way forward. If best practice schemes are introduced, the Japanese wish to ensure that they are paid for by productivity and that the return to the company will be greater. They say, "If you want all these good things, we must increase our productivity. We cannot lose productivity." By and large, their companies have succeeded because of the Japanese culture at the workplace.
899 The reaction of our traditional domestic manufacturers—Ford, Vauxhall and Rover—has been fascinating. These companies are in or near my constituency. They have adopted Japanese work practices and then exceeded them. Their approaches have perhaps been slightly different from those followed by Japanese companies. These companies have also increased their productivity. The chairman of BMW, Mr. Pischetsrieder, talked about the reasons why his company wished to buy Rover. He explained that it was partly because of Rover's products and partly because of their quality. I asked him whether BMW wished to buy partly because of Rover's work practices and its high productivity. His answer was yes. That is the chairman of a leading car manufacturer which achieves engineering excellence. He has given Rover great credit in saying that one of the reasons for thinking that Rover would be a suitable partner in facing the tough car world of the future was its work practices, along with quality and engineering. The Conservative Government can take credit for introducing policies that have allowed good working practices to be introduced and implemented. Management has been encouraged to manage and to achieve successes.
Of course, we must never stop looking for greater productivity and greater competitiveness. The Industrial Forum of the Society of Motor Manufacturers and Traders is a joint approach to try to improve best practice for car component producers and car manufacturers. There is obviously a need for funding and the society is concerned because it feels that there is insufficient funding. That may be because the funding for training is channelled through training and enterprise councils. Perhaps the Department of Trade could talk to the Department of Employment about ensuring that appropriate funding—it may not have to be additional to the funds now allocated to training—is channelled more specifically to the Industrial Forum so that increased competitiveness can be continued as a result of better training. If my right hon. Friend cannot respond today, perhaps he will inform me of his views in future. The forum is seen by the car industry as a most important initiative. It would be a great shame to lose it.
I met the president of the training standards officers to discuss his concerns and those of his members. By and large, they support deregulation, and so do I, but they are concerned that local government changes leading to more unitary authorities could lead to a loss of competitiveness, bearing in mind the number of training standards that would be involved and their competitiveness. If my right hon. Friend the Minister feels that that is not a matter for his Department, perhaps he will pass it on to the appropriate Department.
Manufacturing industry and industry generally is facing competition which is not confined to our partners in the European Union or others in the western world, all of whom face a level of social employment costs which are not dissimilar. Our unit labour costs, however, are well ahead of those of our European partners. As my hon. Friend the Member for Hastings and Rye said, we are increasingly facing competition from the Pacific—from Taiwan, the Philippines and Indonesia. As those countries become more sophisticated, which happens rapidly as a result of access to high technology on a turnkey basis, they become more competitive because they do not have our social practices and costs. Their unit labour costs are far 900 lower than ours, but they have access to the same technology. There is a burning need to increase our competitiveness. It is no good making comparisons with European countries or other countries in the west. In the real world, we must compete world wide in terms of both goods and services. That is why it is so important that this debate is taking place.
The car industry has shown that it is at the start of our pull out of recession. Housing starts take far too long. About 17 per cent. more cars were sold last year than previously. Fleet sales have at last started to pick up. When I attended the fleet show a few weeks ago, I was amazed by the number of people present. There was a buoyant feeling among company managers, who were about to buy the latest of the cars produced in this country. Generally, company cars are usually British cars. I welcome the partnership between BMW and Rover. I know that the intention of improving the joint company's competitiveness will give both parts of it a far better chance in the future. One element of competitiveness is having a large enough base to ensure world-class engineering. Our domestic car industry now has that base.
§ Mr. Nigel Waterson (Eastbourne)
I am delighted to be able to participate in an excellent debate. I join all those who have congratulated my hon. Friend the Member for Hastings and Rye (Mrs. Lait) on her good fortune in securing the debate and on her good judgment in selecting this subject.
It was interesting to hear the views of the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) on the recent rail strike and a possible threatened rail strike. He reminded me of the old saying that when in a hole the best thing to do is to stop digging.
The almost complete lack of attenders and would-be speakers on the Labour Benches is remarkable. However, the complete absence of Members on the Liberal Democrat Benches is significant and I hope that point will not be lost on the House and the British public.
We have had some good news in my constituency over the past couple of days. The statistics show that unemployment fell in the last month by 6 per cent. Since December 1992, unemployment has fallen by more than 19 per cent. Like so many parts of the south-east, my constituency was hit extremely hard by the recession. That is one of the reasons why this debate is so timely. It is manufacturing industry which will primarily drag us quickly out of recession and promote and encourage the recovery.
Contrary to popular myth, Eastbourne has a strong light engineering and manufacturing sector as well as the obvious service and tourism sectors. The problem is that, as in so many places in the south—far more during this recession than in many parts of the north—many companies have gone out of business. It has been all too easy for politically motivated people and the people involved in those companies to blame what has happened purely and simply on the recession.
It is true that some of those businesses went out of business entirely because of the recession and the difficulties that it brought in its wake. I fear that some would have gone out of business anyway, perhaps because of the management or other faults in the company. I am sure that some went out of business because of the late 901 payment difficulties about which we have heard, when large customers with whom those companies were doing business slowed up payments to aid their own cash flow and, as a result, brought down the smaller companies. I also have to say that some of those companies went out of business because of excessive regulation. Finally, I am convinced that some of them went out of business because of the attitude of the major clearing banks.
It is unfair to tar all the banks with the same brush. In some cases, the banks have leaned over backwards to help companies. To put it differently, in some companies the bank manager has done the owner a favour by drawing a line and bringing matters to a head instead of perhaps putting the owner's home or whatever in jeopardy.
However, there is a very strong feeling among local business men, which was revealed during a visit that I paid recently to the Eastbourne and District chamber of commerce, that the banks have not, for the most part, been helpful. People feel that the banks were far too ready to pull the rug from under companies as the recession took hold and, perhaps more relevantly, that the banks are not flexible enough with regard to new lending policy as the economy recovers.
We all know that, as an economy recovers, there is an extra danger of people going out of business, of cash flow coming under stress and of over-trading. That demands extra sensitivity from the major banks. The White Paper is particularly useful in respect of some of these matters. It makes the point that a significant proportion of total United Kingdom employment is in small and medium-sized enterprises or, to use the favoured acronym in this case, in SMEs.
With regard to international comparisons, a Bank of England report showed that overdrafts account for 56 per cent. of small firm debt in the United Kingdom compared with only 14 per cent. in Germany. That is a staggering difference.
In paragraph 9.11, the White Paper makes a point with which we are all familiar from our experience of talking to small business men and women. It states thatmany businesses do not expect overdrafts to be withdrawn and come to rely on them as permanent sources of finance. This can give rise to misunderstanding and resentment when a bank wishes to reduce its exposure. There is evidence that both banks and businesses are now beginning to place greater weight on longer term finance.
§ Mr. Gary Streeter (Plymouth, Sutton)
Does my hon. Friend agree that another worrying trend among our major clearing banks is the increasing tendency for decisions to be made at headquarters and not by the managers out in the branches who know the businesses concerned and the people behind those businesses and who are perhaps better placed to decide whether to support such a business? Increasingly, accountants at headquarters take decisions that are good for the bank's balance sheet, but perhaps very bad for the business.
§ Mr. Waterson
I am grateful to my hon. Friend, particularly for saying almost word for word something that I was about to say a little later. However, I am grateful to him all the same.
I want to refer to two recent cases in my constituency. I spend a lot of my time, as I suspect most hon. Members do during these recessionary times, talking to small business men. A road haulier, whose business had been going for many years, came to my surgery. He told me that he had plenty of business. He wanted to expand and to buy 902 new lorries. However, he could not even get an overdraft facility from his bank. The most that he could achieve was a chequeing facility. That is incredible for a business of that sort where cash flow is obviously very much up and down.
The second case is perhaps even more dramatic and it concerns a firm that I visited in my constituency called Channel Triline. That company was formed as a result of a management buy-out and it produces window cladding for buildings. It has been very successful following the management buy-out. It had a positive balance at the bank and a good full order book. At the end of April, that stood at almost £1 million.
Despite the difficult construction market of which we are all aware, that company had a £1 million turnover in its first year and a £2 million turnover in the second year. It had won prestigious contracts such as the London central mosque in Regent's park and the new Glyndebourne opera house just up the road from my constituency. It had also recently secured a very important order for screens and windows at a new Cadbury Schweppes factory in Poland.
That company had an enthusiastic work force and management and, as I have said, it had a very full order book. When I visited it, one of the directors looked fondly out the window at a neighbouring empty industrial unit and said that he could fill it tomorrow with men and machines. He showed me a pile of letters from every type of bank and financial institution one could imagine, and some that one perhaps could not imagine.
Clearly, the figures that the director wanted to discuss were not suitable for venture capital organisations. It is fair to say that the company received some help from the know-how fund, for which it was grateful. However, it had little or no success with the small loans guarantee scheme. I fear that that scheme is still difficult for business men to access.
My point is that that company, with its full and growing order book, with a tremendous future and, by definition, with no outstanding debt, because it had effectively bought out a business that had gone into liquidation, could not obtain any facilities, not even an overdraft facility, from its bankers. That is incredible. As a result of that, there was the notorious equity gap. The company was unable to finance its day-to-day, let alone its longer-term, financial needs. Such companies, which need finance, perhaps of £500,000 or less, have a major problem obtaining it.
In recent days, it has been announced that that company is to be put into liquidation at the behest of the directors. They have suggested that to the shareholders simply because they cannot find any finance to run the operation.
It is difficult for hon. Members to comment on relationships between business entities and their bankers—one never really knows all the facts—but there is evidence, certainly in my constituency, that the banks are very inflexible at times in dealing with companies' financial needs and that they have an effective blacklist for certain sectors, of which the construction industry is one. It mystifies me how we are ever to see a recovery in that sector if the banks simply do not want to know.
My hon. Friend the Member for Plymouth, Sutton (Mr. Streeter) touched on the problem of inflexibility. We have seen swathes of redundancies among older and more experienced managers in the banking system and, as a result, I fear, the average local bank manager is much more susceptible to guidelines and directives from regional or head offices.
903 But that is not to say that there are no success stories, including some in my constituency. One of our biggest companies in Eastbourne, the Nobo Group plc, which began life in a garage when two entrepreneurs found that there was a need for notice boards in industry, is now a very successful and substantial company. One of its subsidiaries, Elite Optics Ltd., has tremendously increased the quality of its designs, and its sales abroad have increased from less than 10 per cent. three years ago to more than 50 per cent. today. As a result, it also won a much-coveted Queen's award for export in April. That company is fighting hard to compete in an ever-more competitive world. The price of the hardwood that it imports from Malaysia and which is necessary for some of its products has increased by 40 per cent. in recent times. Such companies are at the coal face of competitiveness in our country.
Another example is Rhone-Poulenc Rorer Ltd., the pharmaceutical giant, which employs 600 people in my constituency. The important point to note about that company is that it spends approximately £28 million a year on research and development in the United Kingdom and that it makes a positive contribution of £50 million net to the United Kingdom balance of payments.
A company called HMD Seal/Less Pumps is another great success story in my constituency and it is well known to the DTI, with which it has had many discussions over the years. Some 84 per cent. of its turnover is sent overseas and it is competing on at least equal terms with the Japanese and many others. It has produced advanced designs and it has had some help by means of a DTI-subsidised consultancy under the enterprise initiative scheme. That company has effectively doubled its turnover in three years, which is a tremendous achievement in a recessionary time. It has substantial exports; it has exported to 20 countries in the past year. The management are very committed; they seem to spend much of their time travelling around the world.
I appreciate that the Government have decided for the moment that they will not introduce legislation on late payment. Like most small business men, I have mixed feelings on the subject. Of course there is a problem; we all know about it. I have described how some of the companies that went out of business in the recession in my constituency did so through no fault of their own or because of the recession but because people simply became slower in making payments. On the whole, my view is still that the Government should reconsider statutory rights to interest, and so on.
There is a significant feeling among my small business men and women that it would be a matter of who would bell the cat, particularly with a large organisation or even a governmental or quasi-governmental department, and that it is all very well giving people a legal right, but whether, in commercial terms, it would make sense for them to try to enforce that right when competitors might not be willing to do so is another matter. I still have some doubts on that score.
I am conscious that time is moving on, so I shall refer only briefly to deregulation. Obviously, I have been particularly concerned about deregulation in tourism because of my constituency. I am delighted at the various steps that the Government have been taking in the 904 deregulation initiative. The Government, as we know, have just completed the first stage of their review of 3,500 regulations affecting business—it is staggering enough to think that there are so many regulations—and more than 500 measures have been identified for action. A rolling review will continue. Deregulation will turn out to be one of the great touchstones by which the success of this Administration is judged when the history books are written.
On health and safety, there is a dynamic to reducing the number of regulations. The review recommended a reduction of 94 such regulations, including the removal of more than 40 per cent. of regulations that currently affect business in general. My hon. Friends and I very much welcome the new deregulation task force under the able chairmanship of Francis Maude. The White Paper states:The Government is determined to ensure that further regulation does not place unnecessary burdens on business. Before new regulations can be introduced, business will be consulted and the costs and benefits fully addressed.That is extremely important.
What is particularly interesting is the way in which our views on deregulation are very much in the fast lane within the European Union. Other countries, such as, particularly encouragingly, Germany, are beginning to see things from our point of view. It is important to realise that there are various reasons for over-regulation. Often, the European Union is the source of the problem, but, all too often, it is the United Kingdom gold-plating regulations when they are translated into our domestic situation. There is also over-zealous enforcement.
Also, some problems have been brought about by genuine misunderstandings either by the people who obey the regulations or by those who try to enforce them, such as environmental health officers. One example of that—I will not dwell on it—is the electricity at work regulations.
There is also the problem of under-enforcement in some. European Union countries. No one will persuade me that a building inspector in Sicily, for example, approaches his job with the same rigour as a building inspector in the home counties. We must address that problem. Although I am fairly unable to be persuaded on increasing the powers of some European institutions, the strengthening of the powers of the European Court to deal with the enforcement problem are to be welcomed.
I am grateful for the opportunity to participate in this important debate. I am pleased to see so many of my right hon. and hon. Friends present, but I am not surprised to see so few Opposition Members here. As I conclude my speech, the only person from any Opposition party gracing—if I may use that expression—the Chamber is the Labour spokesman, the hon. Member for Newcastle upon Tyne, Central. It is very good to see him in such splendid isolation. I will not press him, although I am willing to accept his intervention on the rail strike or his preferences for the Labour leadership.
We owe everything to British industry. The 40 per cent. of public spending that goes on social security, our defences, our education system and all the other good things are paid for by the taxpayer, but, ultimately, by the creativity, hard work and application of our business men and women, industry and commerce. They deserve our support as well as our thanks.
§ 12.9 pm
§ Mr. Gary Streeter (Plymouth, Sutton)
As always, it is a pleasure to follow my hon. Friend the Member for Eastbourne (Mr. Waterson) who talks enormous common sense. He is a real champion of the small business man in this country.
It is entirely appropriate that the my right hon. Friend the Minister for Industry will wind up this debate, because he is a friend to the west country. I am sure that he will understand if I begin my remarks by referring to the sad announcement that was made at Devonport dockyard of the loss of a further 850 jobs from that dockyard with effect from September. That is entirely as a result of the fact that there is not sufficient surface ship work for two dockyards in this country.
My right hon. Friend will understand that I share the anger and concern of people from our region in Devon and Cornwall at the announcement this morning. I urge my right hon. Friend to press our right hon. and learned Friend the Secretary of State for Defence to reconsider the decision that was made in June 1993 to place all surface ship work at Rosyth. There is a growing belief that it is now as plain as a pikestaff that there is not sufficient work for two dockyards. The Royal Navy wants a single dockyard solution; that would be better for the taxpayer. Of course, it makes tremendous sense for the defence of our nation for our ships and submarines to be maintained at one location.
I call on my right hon. Friend to press the Secretary of State for Defence to reconsider the decision and reach the only conclusion possible: there is not room for two dockyards. As we have the Trident contract, our future is guaranteed. We must bite the bullet and take the difficult decision to close Rosyth dockyard and bring the surface ship work entirely to Plymouth. I know that in addressing my right hon. Friend, as a friend to the west country, that message falls on sympathetic ears.
I must tell my right hon. Friend and my colleagues in the House that I will not stop my campaign until I believe that the right decision for the taxpayer, the Navy and my constituents is reached—a single dockyard solution which, sadly, would involve the closure of Rosyth dockyard.
I turn to the subject at hand today; the question of jobs and competitiveness in Plymouth, as well as in the rest of the country, is tied up with that. I am delighted to take part in the debate, because it seems that any debate on competitiveness divides the sheep from the goats. As we have heard, there are no Liberal Democrats present so I cannot comment on how llamas are placed in a debate of the push-me, pull-you variety à la Dr. Dolittle. Certainly, any debate on competitiveness divides the sheep from the goats, the realists from the idealists, and the people who live in the world as it really is from those who wish for some other sort of world—some far-off fantasy world.
The other day, my 12-year-old son asked me why all people could not have a job and be paid as much as they need to pay all their bills. I tried to explain that it would be great if we lived in such a world. However, that it is not the real world and it can never be the real world. My 12-year-old son will grow up and realise that; it is a pity that Labour Members never seem to take that truth on board.
I spoke in a recent debate at the university of Plymouth. During the question and answer session, one of the students talked about everyone having the right to a job. I 906 asked her where that right to a job came from. There is no such thing as a right to a job, there is no divine right to a job and there is no natural law right to a job.
We need to create jobs. We do that by ensuring that our companies and businesses are competitive and are selling goods and services that people want to buy. That is the essence of competition. The truth, whether we like it or not, is that the world is an ever-shrinking global marketplace and our companies must compete to flourish. We need to compete to eat. We must ensure that our products and services are more attractive than those of our competitors.
When people decide to purchase goods, they look at quality, customer service and availability. By and large, if all those things are right, they then look at the price. We must ensure that the prices of our products compete favourably with those of our competitors in Europe, the United States, Japan and elsewhere.
I shall focus my remarks on a success story in Plymouth. We have a company on the Estover industrial estate called the Barden Corporation. It makes high-precision ball bearings. Hon. Members may find that a dull subject—[Interruption.] I should be delighted if they considered ball bearings an exciting product. Indeed, to see high-precision ball bearings being manufactured is exciting, because the skill level of the work force and the equipment involved are phenomenal and extremely impressive.
The Barden Corporation employs 250 people in Plymouth and it competes in a worldwide market. It has a sister company in Germany creating exactly the same product. I have visited Barden Corporation on two occasions in the past two years, and in the past few weeks I have spoken to the managing director, Dr. Graham Stirling. He is an excellent managing director—the sort of person who is giving British management a good name. He is keen to involve the best workplace practices.
Dr. Stirling told me that non-wage labour costs are so much higher at the German sister company than in the United Kingdom that the end product coming out of the German company is 25 to 30 per cent. more expensive than it is in Plymouth. I asked him what that meant for his sales, and he said that sales in the United Kingdom are increasingly dramatically and sales in Germany are reducing phenomenally. That is the sharp end of competition. That is where the rubber hits the road. It not only means that the Plymouth branch of the company is getting more business; it means that the German company has now decided that as non-wage labour costs in the United Kingdom are much cheaper—I shall come to the reason for that in a moment, although hon. Members may guess what it is—it will close down its manufacturing arm in Germany and bring it to Plymouth.
In the past six months, the company in Plymouth has taken on 40 more full-time employees, two thirds of whom are men. That is a direct result of being more competitive. That means that 40 of my constituents, who were depressed and lacking self-esteem at Christmas because they were unemployed, can now hold their heads high and enjoy the fulfilment of a rewarding job because our companies are more competitive than their German counterparts. That is the reality of the social chapter.
§ Mr. Michael Bates (Langbaurgh)
The movement that my hon. Friend is talking about is not restricted to Plymouth. In the north-east of England, we can point to Black and Decker, which closed its production capacity in 907 Germany and transferred it to Spennymoor for exactly the same reasons. That is the trend which we are talking about, and which my hon. Friend eloquently set out.
The Tory party is looking to the future, whereas the Labour party is constantly looking backwards to the days when perhaps they can reopen the shipyards, the steelworks and the coal mines which we know will never come back. They are mouthing the platitude of full employment while seeking to introduce measures that would remove the competitiveness that has introduced so many jobs into the north-east and Plymouth, and which the Opposition employment spokesman said will cause a massive loss of jobs.
§ Mr. Streeter
My hon. Friend makes a telling point. In one sense, he disappoints me. I had been under the impression that Devon and Cornwall were leading the nation out of recession into recovery. He tells me that is also happening in the north-east and I am forced to conclude that that is even better news.
I asked Dr. Graham Stirling why his products were cheaper than those of the German sister company. He said it was because we are not in the social chapter, or burdened by those extra costs and the extra inflexibility that the chapter and all its supporting social legislation entail and, therefore, his company in Plymouth has greater flexibility. He told me that at the German sister company, if management want to make a decision they must go through the committee process, consulting their works council, which was set up under German social legislation. That process takes months. The German Barden Corporation does not have the same velocity of decision-making as the Barden corporation in Plymouth, which means that Dr. Stirling can make the right decision now, rather than waiting for three to six months to make it. That means that he can give his customers what they want, and that is why the product in Plymouth is cheaper than that of the company's German counterpart.
§ Mr. Cousins
I am listening carefully to the hon. Gentleman's arguments, but I wonder how all the anecdotes stack up. Is it Britain or Germany that has a balance of payments deficit in manufacturing industry?
§ Mr. Streeter
The hon. Gentleman will soon find out that one group of people in the world increasingly realise the damage caused by the social chapter—German and French business people, who are increasingly aware of the fact that they are suffocating under the weight of social legislation and failing to compete with British companies. Pressure is mounting from German and French industrialists to cause their Governments to shake themselves free of the dead hand of the social chapter. It is a pity that the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) does not have his eyes open.
The Barden Corporation is one example of many companies that are doing well, free from the social chapter and it has the flexibility to give customers what they want, producing an end product at the price that they want. Opposition Members would probably say that such companies employ people on a sweatshop basis and are exploiting their workers—those poor workers, who work all the hours that there are, under terrible conditions, to produce high-precision ball bearings.
908 Opposition Members should open their eyes. I wonder whether they have ever visited today's modern factories in Britain. Have they looked at some of the workplaces or spoken to the staff concerned, as Conservative Members frequently do? If they did, they would realise that management is becoming increasingly enlightened. Managers believe in workplace empowerment. Managers such as Dr. Graham Stirling understand that the man putting the widget on the wodget knows best and that such workers are the people who guide and shape management decisions.
I have been to several similar companies in my constituency and just outside it and have spoken to the staff. They are very content with the legislation that is in place to protect them. They do not want further burdens from the social chapter and they are pleased to have a job.
The hon. Member for Newcastle upon Tyne, Central, who is the only Opposition Member present, can by all means have the social chapter and a national minimum wage, but he must not expect me to explain to the 40 families in Plymouth who have been put back in work this year why they are out of a job because of some ridiculous European legislation. That is where the rubber hits the road.
Last Friday, I attended a debate at Devonport high school for girls in Plymouth— [Interruption.] Hon. Members have obviously visited the school, which is one of three excellent grammar schools in Plymouth, one of which my daughter attends. The debate was on a number of issues and one of the sixth formers said that we must have the social chapter because all our workers are suffering without it. I told her that she should by all means have the social chapter, but that it would not be teachers, academics and intelligent high-fliers—the people who are advocating it—who would suffer. It would be the ordinary workers, who would be thrown out of a job onto the scrap heap of life just to satisfy some academic, theoretical notion of justice. I wish that Opposition Members would wake up to the real world.
We heard earlier about positive rights for employees, but they already have such rights. Opposition Members want to place all those so-called positive rights in statute.
The House will be pleased to learn that I have a very positive relationship with my wife. I know that it is important to listen to her, spend time with her, encourage her and share my overdraft with her. I do not need those things to be set out in statute or to be told the best way to conduct my relationship. It works on the basis of partnership. Management increasingly understand that their employees are their best asset. My wife is my best asset. I do not need a statutory instrument to tell me that. I do not need a Minister at the Dispatch Box to tell me how to love my wife. Management and employees today do not need chapter and verse set out in endless legislation to tell them how to conduct best practice in the workplace.
§ Mr. Streeter
The hon. Gentleman, who has complained several times about the time that this debate is taking, constantly makes spurious and irrelevant interventions. If he wants us to get on to other business, he will learn to keep his counsel.
I have mentioned the impact of our being outside the social chapter. I feel so strongly about this—it is not 909 merely words, or a totem pole around which Conservative Members dance. It means something; it means jobs in Britain compared to our European competitor countries.
We must not put off foreign investors by discussing and describing European legislation and our role in Europe so that they gain the impression that we do not see our future as being in Europe. Not many Members are by instinct more sceptical about European integration than I, but I recognise the economic reality. It behoves all of us, when we discuss such subjects, to take care to explain that we do not see our future outside the European business community, but very much within it, so that we continue to attract United States and Japanese investment, which we have been so successful in doing during the past few years.
Secondly, it is important that we do not give employees the impression that we are denying them some benefit. I believe with every ounce of my body that that is not true. Therefore, let us explain to people carefully that it is in their interests that we to continue to say no to the social chapter, so that those 40 families in Plymouth and thousands more in the nation are not denied the jobs which they so desperately need and so richly deserve.
Let us continue to persuade our European allies that it is in Europe's interests to shake ourselves free from the inflexibility and the suffocating nature of the social chapter. We are not just competing with Germany and France, but with America and Japan. For the sake of the future of Europe, let us continue to make our arguments in the European marketplace and in the corridors of power in Europe that it is in their own best interests to rethink the provisions of the social chapter, and to shake themselves free from it.
I have much more that I was going to say, but, in view of the time and of the fact that other hon. Members want to speak, I shall curtail my remarks. It is abundantly clear that, as we talk to business people in our constituencies, the economic framework for companies to compete abroad is now in place thanks to the policies of the Conservative Government. The thing that gives us the edge on our European competitors is our freedom from the suffocating and stifling provisions of the social chapter.
Now is not the time—just as we are coming out of recession and into prosperity, and just as enterprise is stirring again in this nation—to weaken our resolve and to go back to the bad old days of over-regulation and bureaucracy.
§ Mr. Barry Sheerman (Huddersfield)
On a point of order, Mr. Deputy Speaker. There are hon. Members here this morning who are obviously filibustering to stop the Civil Rights (Disabled Persons) Bill being discussed again. I asked Madam Speaker earlier this morning whether she could introduce a time limit on speeches. I do point out in aid of that plea that, following the Government's leaving of the European exchange irate mechanism in disarray, the Prime Minister only spoke for 27 minutes and the Leader of the Opposition for 41 minutes. Today, on this Bill, there have been longer and longer speeches from Government Members to filibuster and to do down disabled people in this country.
§ Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)
Order. I have nothing further to add to what Madam Speaker said this morning.
§ Mr. Streeter
I am incensed by that intervention. The hon. Member for Newcastle upon Tyne, Central spoke for 910 47 minutes and has intervened on a number of occasions, often with spurious and pathetic points. I yield to no one in my concern for the disabled. I am making a speech which I believe to be in the interests of my constituents, and I resent implications to the contrary.
In conclusion, now is not the time for us to blur our vision for the future or for us to yield to faint hearts, academics and theorists who want to enter into social legislation. Now is the time to stand firm and continue the economic regeneration of this nation.
§ Mr. David Willetts (Havant)
This debate is very important, and demands careful and considered discussion because the Government's White Paper on competitiveness is one of most significant that they have produced.
One of the particular strengths of the White Paper—I am pleased to see the Minister on the Front Bench—is that it is frank about the problems that Britain faces in improving its competitiveness; it is not simply a document announcing that everything in the garden is rosy. The document contains some criticisms which we must accept are significant in explaining Britain's poor industrial performance since the war.
In the discussion on management, for example, it says that an attitude survey of more than 1,000 managers in Europe's smaller companies found thatUK managers thought they were the best in Europe and their companies second only to Germany. Other countries disagreed, placing both UK managers and companies third out of five … this 'perception gap' was greater for UK managers than for any others".We have a problem of complacency about the standards of management in this country.
On training, the document says:technical qualifications tend to be less common and less well rewarded in UK industry than in … other countries".The Government's meaty and substantial White Paper forces us to accept that we need to do more to improve the competitiveness of British industry.
It is admirable that my hon. Friend the Member for Hastings and Rye (Mrs. Lait) decided when she won the ballot to raise this subject. I am sorry that she is not in her place, but I believe that she is upstairs with Hansard, ensuring that her speech is as elegant to read as it was satisfying to hear. She made a point which I thought was particularly significant when she addressed the old canard about whether something is special about manufacturing industry.
My hon. Friend reminded us that many of the arguments about manufacturing industry turn on the completely bogus assumption that physical products are wealth-creating, while non-physical products are not. One of the great difficulties that one has in explaining to people from, for example the Soviet bloc—particular victims of that fallacy —is that the physical box of a computer may be much less valuable than the software programme which enables that computer to generate useful conclusions. In future, I can well imagine a world in which computers are given away free provided that the purchaser buys the software. Value increasingly rests with those services, not with physical products.
We are often told that we have suffered from a relative decline in our manufacturing industry. My hon. Friend the Member for Hastings and Rye did not mention the fact that that claim is often based on a statistical artifice. If a motor manufacturing company decides, instead of employing its 911 own staff in the canteen, its own security guards or its own in-house design team, to contract out the functions to an external caterer, security firm or design company—that is a widespread trend in British industry and a very healthy one—that is shown up in the statistics as a decline in manufacturing employment and a rise in services industry employment. The changes in employment that we are supposed to have seen in Britain in the 1980s and 1990s could well be statistical changes rather than real changes in the relative size of manufacturing and non-manufacturing industry.
§ Mr. Willetts
I am sorry that the hon. Member for Huddersfield (Mr. Sheerman)—the only representative of the Labour party present—does not accept that possibility, which the Confederation of British Industry has pointed out in the past.
§ Mr. Sheerman
I speak as someone who represents a true manufacturing constituency. I disagree with the hon. Member because, according to all the other criteria, the number of people employed in the manufacturing process for engineering, chemicals and everything else declined steeply during the 1980s. I am sure that the Minister must agree with me.
§ Mr. Willetts
My precise point is that the business of measuring the number of people involved in the manufacturing process is a jolly sight more complicated than the hon. Gentleman seems to accept.
§ Mr. Willetts
Havant, which I represent, also has a strong manufacturing base.
As a result of what has been achieved since 1979, it now takes two people to manufacture the same thing that it took three people to make in 1979, when the Labour Government were in power. We can take pride in that achievement.
That intervention from the hon. Member for Huddersfield offers me a good opportunity to draw attention to some of the distinctions between Conservative and Labour policy on the subject. Perhaps the most important is that we care about the competitiveness of British industry—unlike the Opposition, as is all too apparent; the empty Opposition Benches bear eloquent testimony to the Labour party's apparent lack of interest in our competitiveness.
One of the arguments so often adopted by the Opposition—and, sadly, by some people in the media—is that the fact that we believe in competitive and flexible labour markets means that we believe that Britain can survive and thrive only as some sort of sweatshop in which people earn low wages so that they can compete with the poorest countries of the third world. A flexible labour market involves much more than just wages, as several of my hon. Friends have explained.
Havant is home to an IBM factory and I am pleased to report that that factory's employees are well paid. When it competes for big manufacturing contracts with IBM factories elsewhere in Europe, the fact that its staff can work three 12-hour shifts a week—whereas 12-hour shifts 912 are impossible in many continental countries—and can work on Saturdays without having to go through complicated negotiations through multi-tier consultation procedures, gives that factory, like other manufacturing plants in Britain, a competitive advantage. That is what real flexibility in the labour market is about. It has nothing to do with cutting the last 10p an hour off people's wages; it enables managers and work forces to operate together in the way that they think best.
Another crucial distinction between us and the Labour party is that we understand that open markets and free competition represent the best way in which to improve the performance of our industry. Too often in the past we have been tempted by the idea that by picking a winner and concentrating industry on one particular firm of international size we will be able to face the competition. All the lessons from the serious analysis that has been done shows that that is the exact opposite of the truth. The best way to have an industry that is competitive internationally is for it to face intense competition domestically from rival domestic manufacturers and also from imported products in a free trading environment with the lowest possible tariffs. That is the best way to stimulate local industry to be as successful as possible.
Various gurus have written about business success. I confess that I have long been an admirer of Michael Porter of the Harvard business school, who has written on that subject. In his publication, "The Competitive Advantage of Nations", he says:
Intense local rivalry is one of the most significant pressures on companies to innovate and upgrade. Companies almost never succeed abroad unless they compete with capable rivals at home. Such rivalry forces competitors to lower costs, improve the quality of their products and services, and create new products and processes …Vigorous domestic competition ultimately pressures domestic competitors to seek global markets and toughens them to succeed there.The dangerous illusion that, if only we had big British firms of an international size that could look to a large domestic market, we could deliver industrial success, did much damage to British industry in the 1960s and 1970s as Governments set themselves up as marriage brokers, bringing together disparate firms in large organisations, which, sadly, could not thrive internationally.
Too often, the Opposition draw the wrong lesson from the Japanese experience. We are told that Miti has somehow steered Japanese industry along the route chosen by Japanese officials. Far from it. Miti's strategy for Japan in the post-war period was to have one Japanese car manufacturer, but the entrepreneurial spirit of Japanese car manufacturers would not allow that. Three, if not four, significant domestic car manufacturers were fighting for a share of the Japanese domestic market. That is what gave Japan its enormous competitive advantage in motor manufacturing, not grand strategies formulated by Japanese officials.
The recognition that domestic competition drives competitiveness is a crucial distinction between the Conservative and Labour parties. Another distinction lies in our view about the significance of inward investment. We all understand that one of Government's great successes has been to attract nearly half the American and Japanese investment in Europe to this country since 1979. Because of the success of that investment, one of the few predictions that one can confidently make, in a changing world, about the structure of the British economy in the 913 next decade is that manufacturing industry will increase as a proportion of British gross domestic product, as Japanese car plants and colour television factories come on stream and increase our manufacturing output.
How have we attracted international investment to this country? My right hon. Friend the Minister for Industry kindly visited a conspicuous example of that inward investment earlier this week when he opened an extension to the plant run by Wyeth, an international drug company, in my constituency. Wyeth has made a £20 million investment in manufacturing and packaging over-the-counter medicines for the entire European market. It carried out the review which many international firms carried out as the single market loomed. Having looked at its various factories dotted around the European Community, it decided that it was silly to continue to manufacture in so many places. In order to concentrate its manufacturing, it decided to close several plants but took the strategic decision to expand its British plant.
I took the opportunity of Tuesday's meeting to ask members of the firm's senior management from America why they had taken that decision. They said that it was because Britain had lower tax rates, a well-trained work force and an environment that was favourable to business. They said that, although the British regulatory regime that applied to pharmaceuticals was tough—they had no objections to tough regulation—it was also stable and predictable, and one could get decisions out of the regulators fast. Those are the keys to competitive success and the reasons why we have attracted investment to this country. I take this opportunity to thank the Minister for coming to Wyeth on Tuesday to open that plant—I know that he had to speak in a debate on GATT later that day.
§ Mr. Flynn
The hon. Gentleman refers to inward investment in industry. Does he not think it a rather one-eyed approach to disregard altogether the outward divestment of jobs, such as the jobs at INMOS in my constituency? One of the most brilliantly successful state-of-the-art computer companies in the world went from this country and resettled in Italy and France, just as Parke Davis went to Germany and other jobs go to the continent. Does not he agree that we cannot make a rational judgment if we not only disregard the outward divestment of jobs to Europe but do not even count them? If he 'would like to check on that, he can ask Ministers, as I have done, how many British jobs have been siphoned out of this country to Europe. No figures are collected about those jobs.
§ Mr. Willetts
In a modern world economy, of course businesses will move in and out. There is no point in trying to pretend that the British industrial base will remain fixed. The important thing is the net flow, and the net flow has been very successful.
Although I bow to the hon. Gentleman's expertise in relation to INMOS, as it is in his constituency, I regard the story of attempts by successive British Governments—and especially the last Labour Government—to prop up British industry in that respect as another warning of the way in which picking winners can easily go wrong. We do not hear in those stories about the higher taxation borne by employees and companies to finance Ministers picking the firms that they wish to subsidise. We have a sophisticated capital market, allocating resources into micro-electronics 914 and chip manufacturing. I see no reason why the decisions of industry should be interfered with by Government in that respect.
I shall now discuss one or two things that Governments can do, because Governments obviously have a responsibility in improving industrial competitiveness, as my hon. Friend the Member for Hastings and Rye rightly said. One of those things relates to education and training.
I believe that education is much more important as a Government responsibility than training. I become worried by demands for big increases in Government expenditure to subsidise training. Training is a matter, above all, for employers and their employees: at the training level, it is for the firm to work out what skills it needs to thrive.
It is a responsibility of Government to ensure that people emerge from school well educated. Often that does not involve their being masters of the latest technical fad, because that may change in a few years. It is a matter of giving people a rigorous education so that their minds are sufficiently well trained to enable them to keep up with scientific and intellectual developments in the decades ahead. I hope that it does not sound too old fashioned to argue that a rigorous training in the classics, English literature or mathematics may well be a better basis for creating a highly skilled work force in future than trying to run after the exact state-of-the-art keyboard techniques, which will change.
I suspect that a traditional British education has been crucial in the success of British service industries such as advertising. It is important that subjects that have a history, a discipline and a rigour are not displaced by various studies that are not difficult enough to guarantee that the children who are educated in them emerge with a sufficiently rigorous education.
§ Mr. Trend
I wonder whether my hon. Friend has read the evidence that Gottfried Bruder gave the Trade and Industry Select Committee, in which he said:In most continental countries most people would have no problem in declaring that the broadest possible general knowledge is an integral part of education. Vague concepts of personality formation … seem to dominate in Britain.That is one of our key problems.
§ Mr. Willetts
I am grateful to my hon. Friend. Of course I agree with him about that.
The Government have further responsibilities. One aspect, which is discussed eloquently in the White Paper, is public purchasing. The discussion in the document recognises the significance of public purchasing. I am slightly worried about some of the ways in which public purchasing is developing.
One of the liveliest debates that is going on at the moment—it has already cropped up this morning—is about British standard 5750. I must confess to being—I am afraid that the Minister might not agree with this—a bit of a sceptic about BS 5750. One of the things that worries me is the way in which Government Departments, local authorities and public bodies now say that the only way to get on to their list of approved suppliers is to have BS 5750. We know what happens. An artificial market is created in which consultants pop around and say, "If you pay us £1,500, we will get you BS 5750." Many of the industries and services involved do not seem to me to be suitable for BS 5750. Perhaps I can give one example of that.
915 A junior trade of my own is that I undertake a modest amount of pamphleteering. I was surprised the other week when a think tank—the Social Market Foundation—published one of my pamphlets on health policy, which was priced, if I remember correctly, at £7.
§ Mr. Willetts
Who knows whether it was worth that or not? A health authority wrote in and ordered the pamphlet, and it was sent off with an invoice. A few weeks later, we had a request from the purchasing side of the health authority saying that, as part of the process of securing BS 5750, it needed to investigate the quality of all its suppliers, and asking the Social Market Foundation to fill in the enclosed form so that it would know that it was dealing with an approved supplier. I thought that that was taking the BS 5750 approach to public purchasing just a little bit too far.
§ Mr. Alan Howarth (Stratford-on-Avon)
I am extremely interested in what my hon. Friend says, and it should be noted that his latest pamphlet, just produced by the Social Market Foundation, is now priced at £10. As it was only a short time ago that his pamphlet on health policy was priced at £7, what are we to conclude from that? I take it that the quality of my hon. Friend's thinking and the ideas that he has to offer by way of policy have continued to appreciate by a quite remarkable extent. I am very ready to believe that. Will he confirm that that is the case?
§ Mr. Willetts
My hon. Friend is quite right. I have to confess—and I am grateful for the plug—that my latest pamphlet, "Civic Conservatism" is indeed priced at £10. It is a larger and fatter pamphlet, and we price it by the yard. That is the explanation.
The final area in which there is Government responsibility is, of course, regulation and deregulation, to which several of my hon. Friends have already referred. We must ensure that the burden of regulation that industry faces is not too heavy. That is why the deregulation initiative is so crucial. Although we all support it in general, the test of the success of the deregulation initiative will be the individual difficult decisions that have to be taken. In particular, it will come whenever there is a panic about some particular problem; as democratic politicians, we all find ourselves under pressure from the people in our constituency surgeries and from people in the media who say, "Why won't the Government legislate to do something about that?" The next time there is a salmonella scare, we should not rush into something like the Food Safety Act 1990, because policy making by panic, in which we suddenly impose a new set of regulations after the latest accident and disaster, is something in which to engage in haste and about which to repent at leisure. That requires discipline on all of us. It will require tough decisions in future.
I hope also that it will be possible to ensure that the regulatory regime remains simple and stable. We now have industries, such as broadcasting, where the number of regulators with an interest has multiplied so much that it is difficult for an individual television company or 916 broadcaster to know exactly whom they have to deal with. There are roles for several different regulatory bodies, and that can cause confusion.
I hope that, in education and training, public purchasing and deregulation, the Government can pursue the admirable initiatives that they have already launched to ensure the crucial objective in which Conservative Members believe—making the British economy and British industry as competitive as possible.
§ Mr. Alan Howarth (Stratford-on-Avon)
I shall concentrate on one aspect of the competitiveness of the United Kingdom—the contribution that disabled people can make to our economic competitiveness. I congratulate my hon. Friend the Member for Hastings and Rye (Mrs. Lait) on her choice of subject for debate. I believe that she made that decision imaginatively and tactfully, because it enables us to discuss an issue with which she—in her capacity as Parliamentary Private Secretary to the Minister for the Disabled—is very much concerned.
I hope that there will be time to debate the second motion on the Order Paper. Perhaps we will have an opportunity to do so, because I am sure that my hon. Friends recognise the desirability of the House having an opportunity for a further debate on the Civil Rights (Disabled Persons) Bill.
The subject for debate now is the competitiveness of the United Kingdom. There is no doubt that in the rapidly emerging world of global interdependence and global open trade which the new GATT agreement has done so much to bring closer, the competitiveness and quality above all of nations' work forces will be at a premium.
At a conference on equal opportunities organised by the CBI last September, Mr. Howard Davies, the director-general of the CBI, observed thatunless we secure the best contribution from all the talent that is available to us we will simply not be able to compete effectively.That is right, and at the moment, to too great an extent, our society is denying itself the contribution that disabled people can make to our economic performance.
Disabled people are three times more likely to be unemployed, and they are unemployed for longer. When they are in work they are in lower-paid jobs and worse working conditions. A survey by the Spastics Society found that a third of employers who were willing to interview would not interview an applicant for a job who had qualifications equal to other applicants but was registered as disabled. But all the research evidence shows that disabled people are good workers. Nobody should be surprised at that because they appreciate the fact that they have an opportunity to work, and they are determined to hold their jobs and to make the best contribution they can. The survey evidence demonstrates that disabled people are average or better job performers and average or better in attendance.
The booklet produced by the Department of Employment which is entitled "Employing People with Disabilities" states:People with disabilities are likely to have had a lot of practice in converting day-to-day obstacles into opportunities. They often develop extra skills because of their disability, such as effective communication, good concentration, dealing positively with change and the ability to recognise and use opportunities imaginatively.917 Those are, indeed, among the most sought-after qualities in employment and it is good to see the Government recognising that reality.
We know that the potential of people who have the misfortune of some impairment to be able to overcome it so that it is not, in effect, a disability has been greatly enhanced by the development of information technology. People with serious disabilities are none the less frequently able to make an extremely valuable contribution to economic activity through the use of computers and working at keyboards.
The contribution that disabled people can make to the United Kingdom's competitiveness is before us all because of the Civil Rights (Disabled Persons) Bill, but in any case it is an issue which we should address. The Government have started to think about the economics of it because they have produced a compliance cost assessment in relation to the proposals in the Bill. The figure that they have produced for compliance is £17 billion. A compliance cost of £17 billion for a measure before the House is an extremely important issue in relation to the competitiveness of British firms and the British economy. But I have to say that regard that figure as very implausible. I believe that a Department of Social Security official was quoted anonymously as going so far as to say that the figure was plucked out of the air.
It is certainly true that the time scale for implementing and complying with the provisions of the Civil Rights (Disabled Persons) Bill is not limited to the five-year period that seems to be supposed in the compliance cost assessment. It is strange that a document, produced by the Government after Committee proceedings on the B ill had concluded, ignored the important all-party amendment, which was readily agreed in Committee, to provide that the timetable for compliance with aspects of the legislation would be at the discretion of the relevant Secretary of State. The assessment tells us that compliance costs for transport services will amount to £6 billion. It assumes that compliance would be required over a maximum period of five years, but the Bill does not contain such a proposition. The Bill would allow the Secretary of State for Transport to require implementation over a much longer period. He could follow the model of the United States of America, where the federal Government have said that a 20-year period is appropriate. Plainly, all vehicles will be replaced over 20 years. That £6 billion figure, therefore, disappears from the compliance cost assessment.
It is incumbent on the Government carefully to analyse the realities of the costs because much is at stake. Enormous benefits and opportunities for our economy and our international competitiveness will result if we mobilise the talents and abilities of so many disabled people, who as it is are denied the opportunity to make their contribution to society and to our economic performance, often because of simple misunderstanding, but too often still because of prejudice and discrimination.
Ministers should address themselves systematically and open-mindedly to the potential benefits of the Bill. In the document, the Department of the Environment invites us to contemplate construction costs of £10 billion, a very round figure that it has conjured out of the air. Ten billion pounds of additional construction activity would be very important to the economy. Such economic activity would create enormous benefits in employment, tax flows to the 918 Exchequer, national insurance contributions and the modernisation of buildings and plant, which would improve the competitiveness of the British economy.
The Institute of Directors considers that the benefits that would be conferred on the economy and our competitiveness if the Civil Rights (Disabled Persons) Bill were introduced are tangible and quantifiable. It no doubt draws some encouragement from evidence offered by the National Federation of Small Business Owners in America, which has said that the introduction of comparable legislation—the Americans With Disabilities Act—has led to new business opportunities. That is not surprising if one considers what a large consumer market there is among disabled people. There are 6.2 million disabled people in this country. If they are better enabled to avail themselves of the opportunity to participate in a range of economic activities in our society, all sorts of new business activities will result. It will lead to a strengthening of the economy's domestic base, which, as a number of my hon. Friends have argued, is an essential precondition for our international competitiveness and our export capacity. That factor cannot sensibly be ignored.
Even if the compliance costs that the Government have crudely and exaggeratedly estimated at £17 billion were to prove correct, we have to net off against that figure the benefits to the economy and to competitiveness of enabling disabled people to have the fullest opportunity to be workers and consumers. That is a large amount to be deducted from the £17 billion. If we bear in mind the fact that the £17 billion should be spread over, say, 20 years, we are talking of compliance costs averaged at less than £1 billion a year. If the economic benefits are then taken into account, I strongly suspect that we would be left with minimal or perhaps zero net costs. There would be the benefit of enabling a significant element of our population to be employed and to make the contribution of which they are potentially capable.
I hope that my right hon. and hon. Friends who are Ministers, and especially those at the Department of Trade and Industry, will make a new, more careful and, if I may say so, more open-minded study of the issue. I have been slightly disappointed with the response so far when I have tabled questions for written answer. Only this week, my right hon. Friend the Chief Secretary to the Treasury once again declined to undertake a cost-benefit analysis. He said that the relevant information was not easily available and that the cost of undertaking the exercise was disproportionate. I recognise that it would be a difficult and sophisticated exercise. I recognise also that it is not an exercise which could be carried out with absolute precision. At the same time, I feel that the potential benefit of ending discrimination is so great that it would be worth the investment of time and energy and resources within the Treasury and the Departments of Trade and Industry and of Employment—the economic Ministries—to make a thorough and systematic study of the issue. There are huge benefits for us if only we know how to avail ourselves of them.
§ Mr. Peter Thurnham (Bolton, North-East)
I am enjoying my hon. Friend's speech. He has spoken well about the contribution that disabled people could make. Does he agree that the public sector could play a greater role in providing further opportunities for disabled people? Although the Department of Employment has fulfilled its 919 quota, not many other Government Departments have done so. Some public bodies, such as the BBC, employ hardly any disabled people.
§ Mr. Howarth
My hon. Friend makes a helpful point. The Government have suggested that the £17 billion cost of compliance would fall entirely on "private industry". I think that that was the term used in answer to a question not long ago. That is a misconception and my hon. Friend has given me the opportunity to draw attention to it. The cost of compliance would fall extensively across the public sector as well as the private sector. It is incumbent on the public sector—especially the Government, who should take a lead—to ensure that it does everything that it can to maximise opportunity while minimising its costs. We must recognise, of course, realistically and responsibly, that costs will be incurred. I reiterate, however, what I consider to be the profoundly important argument that there would be major benefits in the long term. In unlocking economic potential, there would be major benefits to the public sector as well as to the private sector.
The Government have made the welcome announcement that they are embarking on consultation in a number of relevant sectors such as financial services, transport and access with a view to considering what policies might be brought forward. The Government have gone so far to say that that will be done with a view to preparing a Bill that would focus, to the satisfaction of employers, of the Government and of disabled people, on discrimination and on providing opportunities for disabled people to make their contribution to our national life, including, importantly, our national competitiveness.
The Government have promised that the consultation will be completed within six months of the announcement. I think that the announcement was made a month ago. It is exciting and encouraging, as we are clearly moving forward quite rapidly in the development of policy, with the Government playing a major part in a constructive approach to the matter. Notwithstanding the reluctance to date of my right hon. Friend the Chief Secretary to the Treasury to cause his Department to consider the economic benefits of anti-discrimination legislation, the Government will inevitably have to consider the matter. It is not too soon to consider the methodology of such an inquiry.
We must consider the matter on a micro-economic level, to discover the implications of equal opportunities for disabled people at company level. A great deal of evidence could readily be made available. Some of this country's leading and best-established firms, including British Telecom, British Gas, Boots and McDonald's, are members of the Employers Forum on Disability. Those companies can demonstrate to other businesses that good practice in relation to disabled people is good business. They can show that disabled people can make a distinctive and particularly valuable contribution to business activities. Those companies would be able to offer useful advice by way of detailed case studies and show the benefits as well as the costs in their operations. They would be able to offer evidence about policies that they have chosen to adopt at company level to encourage disabled people.
Far from the costs being significantly disadvantageous, I believe that we will find that those firms have gained enormous benefits. I am sure that they could also provide 920 evidence to show that equal opportunities for disabled people, just like equal pay for women where they do work of equal value, is not ruinous for companies, as many feared at the outset.
I hope that my right hon. Friends will be willing to consult organisations such as the Employers Forum on Disability and the CBI. The CBI has told me that it is anxious that the benefits of the policy change, which it must anticipate is going to come, should be assessed seriously and responsibly.
A cost-benefit analysis would also have to consider the macro-economic benefits, but we have already discussed those.
In this intensely competitive open-trading world which is so rapidly unfolding, our competitiveness will depend above all on the quality of our work force. The United States, Canada, Australia and New Zealand have already recognised that they cannot afford to deny themselves the contribution that disabled people can offer. They have realised that they must avail themselves of that large, latent source of strength. Most of the countries of continental Europe are lagging in that respect, as are countries in south-east Asia, so we have a good opportunity now.
Hon. Members on both sides of the House know that there is no future for the British economy in chasing labour costs down market. We will never succeed in competing on wage costs with the Chinese or the Brazilians. We must develop and release all the best potential of the people in our society. That is right in moral and humane terms, and it is at the least prudent economically.
We must find the best ways to get disabled people into work. I welcome the improvements in the disability working allowance. As we are discussing this aspect of competitiveness and what the disabled can contribute, I congratulate my right hon. Friend the Minister for Social Security and Disabled People on what he has been able to achieve here. Perversities remain in the social security system which must be addressed. It is absurd that if a lone mother with two children increases her earnings from £80 a week to £180 a week she keeps only £20 out of that increase. Much more work remains to be done to ensure that all our people encounter no more discouragement to enter work and to earn more or to contribute than is absolutely unavoidable.
Of course, we need to invest more in education and training. Referring again to the contribution that disabled people can make, training and enterprise councils need to do more than many of them are currently doing. TEC performance in that respect is variable. Some are imaginative, enlightened and forward looking, but the Spastics Society survey entitled "Wasted Opportunities" showed that there are too many wasted opportunities in that aspect of TEC responsibility. I hope that my right hon. Friend the Secretary of State for Employment will use all possible leverage to ensure that TECs offer the best training opportunities that can be provided for disabled people. The Department of Employment has leverage in this because it must approve TECs' corporate plans and provide their funding.
We must encourage and enable all our people, including disabled people, to make the best contribution that they can to our economy. It is for us to decide how to do that at national level, and we should do so.
§ Notice being given that strangers were present, MR. DEPUTY SPEAKER, pursuant to Standing Order No. 143 (Withdrawal of Strangers from House), put forthwith the Question, That strangers do withdraw:—
§ The House divided: Ayes 0, Noes 51.
|Division No. 265]||[1.15 pm|
|Tellers for the Ayes:|
|Mr. Dennis Skinner and|
|Mr. Martyn Jones.|
|Arbuthnot, James||MacKay, Andrew|
|Atkinson, Peter (Hexham)||Madden, Max|
|Baker, Nicholas (Dorset North)||Mates, Michael|
|Bates, Michael||Mills, Iain|
|Bendall, Vivian||Moss, Malcolm|
|Booth, Hartley||Patnick, Irvine|
|Chapman, Sydney||Porter, Barry (Wirral S)|
|Deva, Nirj Joseph||Robathan, Andrew|
|Dover, Den||Ryder, Rt Hon Richard|
|Duncan-Smith, Iain||Sainsbury, Rt Hon Tim|
|Faber, David||Scott, Rt Hon Nicholas|
|Flynn, Paul||Stanley, Rt Hon Sir John|
|Fry, Sir Peter||Steen, Anthony|
|Garel-Jones, Rt Hon Tristan||Streeter, Gary|
|Gillan, Cheryl||Thompson, Patrick (Norwich N)|
|Goodson-Wickes, Dr Charles||Thurnham, Peter|
|Greenway, Harry (Ealing N)||Townsend, Cyril D. (Bexl'yh'th)|
|Grylls, Sir Michael||Trend, Michael|
|Hague, William||Waterson, Nigel|
|Hanley, Jeremy||Wells, Bowen|
|Hayes, Jerry||Whitney, Ray|
|Hughes Robert G. (Harrow W)||Whittingdale, John|
|Jessel, Toby||Willetts, David|
|Kirkhope, Timothy||Wood, Timothy|
|Knight, Greg (Derby N)|
|Lait, Mrs Jacqui||Tellers for the Noes:|
|Lightbown, David||Mr. Derek Conway and|
|Lloyd, Rt Hon Peter (Fareham)||Mr. Andrew Mitchell.|
§ Question accordingly negatived.
§ Mr. Sheerman
On a point of order, Mr. Deputy Speaker. You will know that the Speaker has been looking into the way in which private Members' business is handled in the House. There was an appeal for fairness from the Opposition Dispatch Box this morning, so that two important motions would have a fair share of the debate. Not only has the Minister for Social Security and Disabled People just voted in the Lobby, but his Parliamentary Private Secretary led the debate with an hour-long speech to stop us getting on to the disabled persons— [Interruption.]
§ Mr. Deputy Speaker
Order. That is not a point of order for me. Madam Speaker is dealing with the matter to which the hon. Member referred and has already dealt with another point of order on the subject this morning. I later repeated her decision.
§ Mr. Dennis Skinner (Bolsover)
On a point of order, Mr. Deputy Speaker. Will you consider having a further look—perhaps you could pass the word on to Madam Speaker—possibly a Speaker's Conference, with a view to trying to get a little sense into the situation, especially as we had many debates about the disabled just before the recess but could not get a Bill through, although Government Members and the Prime Minister have been on the Normandy beaches talking to crippled veterans and—
§ Mr. Max Madden (Bradford, West)
On a point of order, Mr. Deputy Speaker. We are all well aware of the difficulties that you face today. Motions 2 and 3 on the Order Paper are on the same subject, which is of great concern to Members on both sides of the House. Clearly it is impossible for us to move the closure on a motion, but in fairness to the hon. Members who tabled motions 2 and 3, would it not be fair to ensure that there is some limited discussion on those motions? They deal with a subject which gives rise to considerable and understandable emotion. Could you say, perhaps, that the present debate should finish at two o'clock so as to enable proper discussion of the remaining two motions?
§ Mr. Michael Bates (Langbaurgh)
On a point of order, Mr. Deputy Speaker. I seek your guidance. Will it be possible for there to be some investigation of the conduct of Opposition Members this morning? It seems to Conservative Members that there has been an honest attempt to move the debate along fairly and firmly, but that it has been interrupted and delayed by a 47-minute speech from the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins), by bogus points of order and by the hon. Member for Bolsover (Mr. Skinner) walking into the Chamber and wasting 15 minutes on—
§ Mr. Deputy Speaker
Order. I wonder whether it would be possible now to get a genuine point of order. That would be quite an occasion in the House.
§ Mr. Tristan Garel-Jones (Watford)
Further to the point of order from the hon. Member for Bolsover (Mr. Skinner), Mr. Deputy Speaker, regarding a possible Speaker's Conference on private Members' Bills, may I avail myself of the opportunity to ask you to let Madam Speaker know that many of us in the House believe that no private Member's Bill should be introduced which requires a money resolution?
§ Mr. Roger Berry (Kingswood)
On a point of order, Mr. Deputy Speaker. A few weeks ago, an equally important private Member's motion was carried unanimously in the House calling on the Government to provide time to complete the Civil Rights (Disabled Persons) Bill. Has the Minister responsible, who did not oppose that motion on that day, indicated whether he wishes to make a statement as to when the Government—
§ Mr. Deputy Speaker
Order. It has been made clear that the Minister has made no indication whatever about a statement.
§ Ms Liz Lynne (Rochdale)
On a point of order, Mr. Deputy Speaker. I seek your advice. Is there any way in which the Civil Rights (Disabled Persons) Bill can be debated in the House without Ministers trying to talk it out? As a relatively new hon. Member, I seek your advice on whether private Members' Bills from Back-Bench hon. Members can be given time for a proper debate instead of having this disgraceful behaviour from Ministers.
§ Mr. Deputy Speaker
Procedural advice cannot be given across the Floor of the House, but it can be given privately.
§ Sir Michael Grylls (Surrey, North-West)
We have been taking part today in a fascinating debate of huge importance and I congratulate my hon. Friend the Member for Hastings and Rye (Mrs. Lait) on introducing it. There could not be a more important subject to our country, as I should have thought the Opposition would agree, than the competitiveness of British commerce and industry because that is the basis for the number of jobs that we shall have in the future.
I must confess that I feel great sympathy for the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins), whose speech I listened to with great care and which I found very interesting. He struck me as being a little like a general who is right out in front and looks around to find no army behind him. This is a hugely important debate and, while there is the odd infantryman lying around now, there was nobody behind the hon. Member for Newcastle upon Tyne, Central for the whole morning. Nobody from the Labour party took any interest whatever in the crucial subject of whether our business can compete in the world today.
§ Mr. Waterson
Would my hon. Friend also draw attention to the fact that, for the same period of this important debate, nobody was present from the Liberal Democrats?
§ Sir Michael Grylls
My hon. Friend took the words out of mouth; I was about to refer to the Liberal Democrats. What my hon. Friend has said is absolutely true. It is extraordinary that a party which seems to have increasing pretensions to being an important party did not even bother to turn up.
§ Sir Michael Grylls
That was only about half an hour ago and it is now nearly half-past one. Throughout the vast morning when this hugely important subject was being debated, no Liberal Democrat was present. However, let us now move quickly away from that matter.
§ Mr. Madden
The hon. Gentleman has been dealing with the interest in the debate, and clearly the bulk of the contributions this morning have been made from the Conservative Benches. Will he consult the sponsor of the motion—the hon. Member for Hastings and Rye (Mrs. Lait), who is placed conveniently next to him—to see whether, in view of the extensive debate that has taken place, she would be willing for the debate on her motion to conclude at two o'clock, which would enable a brief debate to take place on motions Nos. 2 and 3?
§ Sir Michael Grylls
It is a great pleasure to liaise with my hon. Friend the Member for Hastings and Rye at any time of the day or night, if the House happens to be sitting then. You would shut me up swiftly, Mr. Deputy Speaker, if I tried to intervene to say what should or should not be 924 in order or how the procedures of the House should be undertaken, because that is your prerogative and it would be impertinent of me to trespass on it.
One of the central arguments of the hon. Member for Newcastle upon Tyne, Central was his criticism of the excessive dividends that British public companies tend to pay. It is true that in the past two years dividends have increased, but the hon. Member must accept that it is a case of pluses and minuses. He did not respond to my intervention when I asked whether a future Labour Government would legislate to control dividends. I assume that his refusal to reply means that they would not intervene.
§ Sir Michael Grylls
The hon. Member was not even in the Chamber at the time, but I will give way to him in a moment.
The hon. Member for Newcastle upon Tyne, Central must consider the pluses and minuses. Of course one can criticise the level of dividend payments in Britain and in the United States, which are higher than those paid in Germany and Japan, but that is partly due to our effective capital markets, certainly for public companies. Those markets represent some of the most efficient markets for raising money for investment of any countries. There are large gaps in those markets, but they work efficiently for large quoted companies. It is important that those who put their money into the stock exchange, either as direct investors through their own shares or through pension funds or however, get a proper return on their money.
I do not think that there is much to be gained by debating whether there should be a certain level of dividend payments. The important thing is whether companies can effectively raise capital to invest or renew their capital, which is necessary in times of high inflation but not so important now that we are lucky enough to have a low inflation rate.
§ Mr. Skinner
The hon. Gentleman has a cheek to talk about people being absent from the Chamber when he has 10 extra jobs. He moonlights for 10 other companies, as well as being a member of Ian Greer Associates. He makes money hand over fist. He may talk about restrictions on dividends, but why does he not have the guts to declare now how much money he is making on the side from those four directorships, five advisorships and one consultancy as well as from being a member of Ian Greer Associates? When he tells us all that, we shall be better informed and then he might be able to turn up for work as often as I do.
§ Sir Michael Grylls
Unlike the hon. Member, I have been here for the majority of the morning although I have other responsibilities. I believe that that is a great advantage to the contributions that I can make to the House. If one asks a busy person to do something, he generally succeeds in doing it.
The hon. Member asked a question, but he does not even have the courtesy to look at me when I reply. I do not believe that we need to take his intervention too seriously, but if the burden of his point—it is not strictly about the motion—is that he would like to have a House of Commons full of people with no other occupation outside politics, he should say so.
§ Mr. Deputy Speaker
Order. I will do some inviting now. Will the hon. Member for Surrey, North-West (Sir M. Grylls) and Opposition Members stick to the motion?
§ Sir Michael Grylls
I fear that I was seduced down an avenue into which I should not have gone. To give way to the hon. Member for Bolsover is a normal politeness; the fact that he misused and abused that privilege in Parliament is something on which the House must make its own judgment.
I wish to underscore the importance of the White Paper. As my hon. Friend the Member for Havant (Mr. Willetts) said in his excellent speech an hour ago, the White Paper was bold because it underlined many of the weaknesses and challenges in the British industrial and commercial economy. There would have been no point in carrying out a public relations exercise saying how wonderful everything is. In my experience of this place, it is somewhat unusual because it portrays the British industrial economy honestly, warts and all. Anyone who studies the economies of the leading industrial nations in the world will know that they all have pluses and minuses: some are stronger in one area while some are stronger in others.
My hon. Friend the Member for Havant quoted Professor Michael Porter from Harvard university, who made an excellent point in his textbook on competitiveness. The view of that great expert on competitiveness throughout the world is that the most successful companies are those that operate in a deregulated economy. That reinforces the fact that we should support the Government in their deregulation initiative and face up to measures that will simplify life for businesses. If a firm wants to expand and has the money to do so, it must not be tripped up by unnecessary regulations. Too often, businesses that want to expand their factories because they are doing well are told by planners that they cannot do so because it would be too complicated. If planners and those involved in statutory procedures would be a little more positive, it would help our competitiveness enormously.
Huge improvements have been made in some areas, but we tend to remember the bad events and forget the good ones. Many positive measures have been taken to relieve business of excessive taxation—for example, simplifying and improving the loan guarantee scheme for firms that wish to raise money to expand but do not have adequate security to do so have been hugely important. Since the Government enhanced and improved that scheme in the last Budget, the number of firms applying for loans has doubled month on month, which is a good sign that people are not only taking up the scheme but finding it a positive advantage.
The abolition of inheritance tax for quoted companies is also important. One may ask why companies should not pay some tax when a business is passed on from one generation to another. Too often, however, when an owner-manager has died or retired, the business has had to be sold to pay the high inheritance taxes and that unit of competition has then disappeared. That is the damage done by high capital taxation. Almost any capital taxation 926 distorts business decisions and damages the independent small companies which are likely to be set up in this country.
The abolition of inheritance tax on non-quoted companies by the former Chancellor of the Exchequer, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), was one of the most important steps taken in the Government's whole lifetime. It has enabled companies to be passed on intact from one generation to another and to grow in the hands of each generation of owner-managers. The Government should be congratulated on having done that. We have to keep up the work on deregulation. We have to keep up the work on tax reform. Tax reform is needed. Capital gains tax is outdated. It distorts business decisions and stops the proper flow of capital going in the direction that it should.
§ Mr. Jimmy Hood (Clydesdale)
The hon. Gentleman talks about abolishing capital gains tax. Would he mind telling the House what he would replace it with? Would he increase value added tax on fuel? Would he increase direct taxation and shift the burden from the rich to the poor further than it has been shifted? Is that what the hon. Gentleman would do?
§ Sir Michael Grylls
I understand the hon. Gentleman's argument. I am not trying to make a Budget, so I do not have to balance my books. I am simply saying that capital taxes are distorting and damaging. As I am sure the hon. Gentleman knows, capital gains tax raises only a few hundred million pounds—a relatively small amount. If capital gains tax were abolished, the advantage that would flow to the country is that new jobs and new wealth would be created. The new wealth would be put into productive hands and create jobs.
I say to the hon. Member for Clydesdale (Mr. Hood) that we must get rid of that prejudice—because that is what it is. To some extent, a few years ago, I was enticed by the idea that capital gains tax had a degree of fairness, so I understand the feeling, but it is far too damaging to allow that type of prejudice to stay in our minds because it distorts business decisions and restricts the creation of wealth and therefore of jobs.
I welcome the White Paper and I welcome the fact that it is radical, open and honest. I am sure that the Government will continue to pursue the initiatives in the White Paper, especially in relation to financing and deregulation, and I look forward to participating in another debate on this important subject in a year's time or a few years' time. We can then see all the extra progress that the Government have made in making the British economy more competitive.
§ Mr. Michael Trend (Windsor and Maidenhead)
There has been much to admire in this morning's debate, although I fear that one cannot admire the guerrilla tactics of the Opposition some moments ago.
I enormously admired the way in which my hon. Friend the Member for Hastings and Rye (Mrs. Lait) brought up the subject. I also admire the way in which my hon. Friend the Member for Havant (Mr. Willetts) managed to get in an advertisement for his new pamphlet, which, even at £10, remains excellent value.
927 I enormously admired the speech of my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth), who made effective arguments that have sympathy throughout the House, in a way that no Opposition Member sought to do.
I shall speak about the first phrase of the motion:To call attention to the need for the United Kingdom to be competitivebecause that begs an important question and it needs broader consideration. Often, in discussion of the subject, people speak about the historical, cultural and social factors that are important, but those are not gone into in much depth. Yet I believe that those go to the heart of the matter.
We should ask ourselves what competition is. A fairly straightforward definition in "Johnson's",The action of endeavouring to gain what another endeavours to gain at the same timeis the definition that begs the questions. In one sense, competition, as Bentham put it, was the way in which traders brought reduction in prices to purchasers, but there have been other usages of the word which betray characteristically English attitudes towards competition.
For a long time, there was an idea in our culture—I think that it persists—that competition was somehow ungentlemanly. It was to do with trade, which many people, of course, despised. There was suspicion of the examination system, which was the competition gateway. I am reminded that, in the past century, in the Indian civil service, people who had had to exert themselves to obtain work by engaging in the examination system were known as "competition-wallahs" and disregarded for that.
Why, though, did Britain, which had such pre-eminence in the field in the 19th century, decline? In an earlier intervention, I mentioned Gottfried Bruder, whose evidence to the Select Committee was second to none. He said:Britain's early and long-held lead in industrialisation, the inventiveness and individualism of her people, their capacity for organisation, discipline and improvisation, virtues all of which were amply displayed for instance in the success of Empire, their wide knowledge of the world and high international repute, as well as a broad home market combined with a widely spread international trading base, make the industrial decline"—of Britain—
a seemingly inexplicable phenomenon.I would argue that, in the past century and in much of this one, we have not been competitive. Because we had imperial preference, our traders were not as competitive as other countries quickly became. That phenomenon has been widely studied, particularly in a splendid book, which I will not bother the House with at the moment, by Mr. Martin Weiner, "English Culture and the Decline of the Industrial Spirit 1850–1980". Thought on the matter suggests that there was an English spirit abroad that denigrated and found trade distasteful—not in the milieu for finance, of course, as that was not at all different from the traditional world of the aristocracy and the then middle classes, who regarded it as a clean activity, done in a fashionable location. The roots of our present debate over the split between a financial culture and an industrial culture can be found to a certain extent in the past.
Much has changed in recent years, but there is still considerable room for further change. I give as an instance of that the status, say, of engineers, who are at the centre of our competitiveness in our industries. An engineer in Germany or Italy is somebody who is widely respected in 928 the community and is always introduced as an engineer, in the way in which one would say, "Here is a doctor." In this country, an engineer is the person one sends for when one's washing machine breaks down. The status of engineers is a key measure of how seriously we take the manufacturing industry.
Many of our university graduates, I fear to say, come out of university having done extremely well in arts and sciences and choose to go into one of the professions or the City rather than industry. Although the situation has improved, it must improve much more before we are in the same position as Germany. A good arts graduate coming out of university today would still be very tempted to go into, say, the civil service, the cream of which, of course, are the Clerks of the House of Commons. If one put all that superb egg-head power together and applied it to British industry, no doubt the country would be 10 times more prosperous.
There was also a sense in the past that there was something almost immoral about competitiveness, that the mammon gospel of competitiveness was not somehow in accordance with the Christian message. A characteristically pragmatic English view was put on that by Arthur Hugh Clough in his new 10 commandments, "The Latest Decalogue", when he said:
Thou shalt not covet; but tradition approves all forms of competition.I come to a third usage of the word, in which competition is placed in opposition to co-operation. That is particularly found in the ideologies of the Left, where they pretend that competition and co-operation are two sides of the same coin, and that they cannot work together, as we would think. It is particularly true of Bertrand Russell, who said that one could have one or the other. Yet that is not the case. We believe very strongly that the ideological bias against competition still exists in the left of British politics. I shall give one example of that—education and training.
Many hon. Members have spoken today about training, but it really is a motherhood subject. Everybody approves of training, but what matters is how one does it. If we are to have a people who are more competitive and able to get away from the mental attitudes of the past, and compete more vigorously in the world markets, it must begin in the education system.
Where does Labour stand on this? Its attitude is nowhere more evident than in its lack of enthusiasm for competition. In the past 10 years, pressure on the examination system has come mainly from left-wing dominated unions and has been to try to get everybody to win prizes. It is viewed as disgraceful that some people should do better than others. Streaming in schools and especially in the big comprehensives has meant that there has been no encouragement for pupils to be competitive, one against the other. The idea in school sports that there should be no team or individual competitive spirit has been encouraged.
Rather than picking winners in education, Labour has encouraged a bland similarity throughout the system. It is against the assessment of teachers, which is a form of competition within the profession, and it does not approve of the competitive grading of schools. That distrust of league tables is at the heart of a profoundly uncompetitive attitude.
As I have said, some of the damage to our country stems from the attitude that competition is ungentlemanly and might be immoral. Some people on the Labour side of the 929 debate think that competition is ideologically wrong and politically incorrect. If we are to be more competitive we must stick to the Government's policies as outlined in the White Paper.
In the world markets that are currently developing a new order of competition is coming into existence. I have the pleasure to be taking part in an Industry and Parliament Trust placement scheme with GKN which works successfully at the centre of the automotive industry. It has plants all over the world manufacturing constant velocity joints of which the company has a large share of the world market. Increasingly, its factories will be more competitive with each other. Whether we can produce those joints more competitively than the factories in Germany, Spain or Italy will be enormously important.
The Japanese car factories that have been set up in Britain are not British in any sense of the word, but they are producing jobs for us, which is what we want. Jobs are the reason for our need to be competitive in world markets. That is why education and training, business, exporting, turning away from high social on-costs and open markets matter. Our people will judge us on our success in increasing performance, and that can only be done by a party that understands how competition will develop in new world markets.
This is a wide-ranging subject and I fear that I have not been able to speak on it as expansively as I should have wished. I commend the Government's policy on competitiveness and congratulate my right hon. Friend the Secretary of State on his White Paper. I again congratulate my hon. Friend the Member for Hastings and Rye on the way in which she brought the subject to the House.
§ The Minister for Industry (Mr. Tim Sainsbury)
We have had an interesting, high-quality and wide-ranging debate. I am sorry that not all my hon. Friends who wanted to contribute could be called. I am also rather sorry that I have much less time to respond to the debate than the time that the Opposition spokesman took for his speech.
I warmly congratulate my hon. Friend the Member for Hastings and Rye (Mrs. Lait) on her success in the ballot and most of all on her choice of subject. Competitiveness is the foundation on which our future prosperity has to be built and my hon. Friend was right to remind the House and the members of the Government, whichever Department we are in, that we must not forget it. I also congratulate her on the able way in which she moved the motion and on the many telling points that she made.
I congratulate all my hon. Friends on not only the quality of their speeches but the knowledge that they have displayed and the interest that they take in businesses, especially those in their constituencies.
I should like to reinforce what has been said about why competitiveness is so important. Business and industry are the main creators of wealth in our economy. They are the drivers of our economy, which is why I agree with my hon. Friend the Member for Norwich, North (Mr. Thompson) that there is no more important subject than business and industry for the House to debate. I am happy to agree with the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) that the subject is important. Business and industry are the foundations on which our other achievements are built—schools, hospitals, improvements in living standards and a better quality of life. We all wish 930 for those things and business and industry generate the wealth to pay for such improvements in our lives. The competitiveness of business and industry is essential, therefore, for our future prosperity and vital if Britain is to be able to satisfy the social and economic aspirations of its citizens.
That goes as much, if not more, for the disabled as for other members of society. I take the strongest objection to the synthetic indignation and the Opposition's time-wasting during this important debate. I am astonished that they do not seem to be aware that, as often as not, the first motion on the Order Paper on a day such as this takes up the whole of that day. I can think of no subject that more justifies filling the day and not all my hon. Friends who could have made valuable speeches were able to speak. In those circumstances, it is astonishing that there has been a total absence of speeches from Opposition Members, apart from that of the Opposition Front-Bench spokesman. They have nothing to say about business, industry and wealth creation. That is equalled only by the performance of the Liberal Democrats, who have not only had nothing to say, but have not been present for the vast majority of this important debate.
§ Mr. Berry
The Minister will be aware that work on the second Severn crossing has ceased because more than 700 workers were sacked yesterday as a result of taking 24-hour industrial action after a ballot. Those workers want the matter to be referred to the Advisory, Conciliation and Arbitration Service, but the management has refused. Will the Minister use his best endeavours to ensure that investment in infrastructure in Bristol continues and that the matter is referred to ACAS for settlement as a matter of urgency?
§ Mr. Sainsbury
That intervention is an example of why I would be unwise, in the limited time available, to give way again. I want to respond to the important points made by those who have spoken in the debate.
I agree with my hon. Friend the Member for Hastings and Rye on the achievements of the 1980s—the progress on industrial relations, the gains of smaller and medium-sized companies and the improvement in managements' ability to manage, which is an important point. That is reflected in the new-found emphasis on exporting and quality. She rightly put the matter in the context of the global market in which we now compete. She and other hon. Members referred to the importance of service industries and the artificial distinctions that occur between the manufacturing sector and other industries.
As I have many language schools in my constituency, I was delighted to hear her reference to language schools. We all agree that London is a vital part of our economy and has a vital contribution to make. I have recently announced a grant in aid to the London First centre.
My hon. Friend the hon. Member for Hastings and Rye drew attention to the disadvantages of an unstable macro economy, particularly in respect of investment. Unless we firmly control public spending, it is inevitable, as during the era to which my hon. Friend referred of Lord Healey, as he now is, that we shall be faced with macro-economic instability, which is damaging to our economy.
I was glad to hear what my hon. Friend said about improvements in export support. She referred to the roads to Hastings and my hon. Friend the Member for Norwich, North referred, rightly, to the importance of roads to 931 Norwich. I shall ensure that my right hon. Friend the Secretary of State for Transport is aware of what my hon. Friend the Member for Hastings and Rye said.
My hon. Friend brought her remarks to a close by saying that we must accept and welcome, rather than resist, change when it is necessary to improve competitiveness. I hope that we all agree about that.
My hon. Friend the Member for Meriden (Mr. Mills) referred, understandably—he is a great expert on it—to the car industry. It is an industry transformed. It reflects all the benefits of the changes that we brought to the environment in which business operates during the 1980s, not least to inward investment. I was glad to hear the welcome that my hon. Friend expressed for the success that the BMW takeover of Rover is achieving. I noted what he said about trading standards officers. I shall ensure that his comments are followed up.
My hon. Friend the Member for Eastbourne (Mr. Waterson) made some cogent remarks about banks. I will ensure that my right hon. and learned Friend the Chancellor of the Exchequer is aware of them. My hon. Friend the Member for Plymouth, Sutton (Mr. Streeter) talked about Devonport with great feeling. I know that we all regret the additional redundancies that have occurred there. I will ensure that my right hon. Friend the Secretary of State for Defence is made aware of what he had to say on the subject.
My hon. Friend the Member for Havant (Mr. Willetts) commented on the changes in structure that are occurring in manufacturing employment and how the transfer, for instance, of transport can mean that somebody is reclassified as being in the service industry. Service industries and manufacturing industries are interlinked. The success of service industries makes an important contribution to the success of manufacturing industries. I thank my hon. Friend for what he said about my visit—I much enjoyed it—to his constituency.
My hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) spoke of the contribution that the disabled can make to our economy. I am sure that we all agree about that. I will ensure that my right hon. Friend with responsibility for the disabled is aware of what my hon. Friend said.
My hon. Friend the Member for Surrey, North-West (Sir M. Grylls)—
§ Mr. Howarth
I am grateful to my right hon. Friend. It is extremely important that the economic Departments respond to the issue with proper seriousness and address themselves intelligently to the proposition that is before them. It is not something that will go away; it is a real issue. I am grateful that my right hon. Friend intends to draw to the attention of my right hon. Friend the Minister with responsibility for disabled people the remarks that I made this morning, but what I said was very much addressed to him and his ministerial colleagues.
§ Mr. Sainsbury
I take that point. I was present when my hon. Friend was speaking and my right hon. Friend was not.
My hon. Friend the Member for Windsor and Maidenhead (Mr. Trend), in a rather philosophical speech—perhaps appropriate from Windsor—talked about the importance of engineering and spoke of what more we should do to enhance the status of engineers in our society. I very much agree with him. I was glad to hear him applaud the importance of trade. He will not be surprised when I say that I entirely agree that trade should not be disregarded.
I move on to some more substantial points—well, not necessarily more substantial, but matters to which I can refer at slightly greater length. My hon. Friend the Member for Hastings and Rye talked about support for business men who are helping to develop standards in Europe. That is important. We want to ensure that British business makes a full contribution to the development of those standards. If we do not, we can be sure that standards will be developed more to the advantage of industry elsewhere. For that reason, we have consulted on the matter. After listening carefully to the views of business, we concluded that we should contribute £7.3 million to the British Standards Institution and industry concerned with standards writing.
My hon. Friend the Member for Hastings and Rye also suggested that there could be benefits in an exchange scheme between the home civil service and civil servants elsewhere in the European Union and the Commission. I very much agree with her. Indeed, there are regular interchanges of staff with the French, German and Irish civil services. Some 140 United Kingdom officials are currently seconded to the Commission.
In 1990, we introduced a special scheme of recruitment, training and postings designed to equip young United Kingdom graduates to take and pass the European institutions' examinations. Our ultimate objective is to increase the number of UK permanent officials in the Commission and in other European institutions. That is in addition to the Commission's scheme for the exchange of officials which was introduced in 1993.
I am sorry that time is running a little short, and I want now to consider the extremely important subject of deregulation. That subject was referred to by my hon. Friends the Members for Hastings and Rye, for Havant, for Surrey, North-West and for Eastbourne who quite rightly—and I have a constituency interest in this—put his point in the context of tourism.
My hon. Friend the Member for Hastings and Rye emphasised the value of goal setting, risk assessment and compliance-cost assessment with regard to the work of the Health and Safety Executive. I fully agree with her points. My noble Friend—or noble brother—Lord Sainsbury, through the work of the task forces which he superintended, has identified that as an important point.
It is clear that Conservative Members agree that over-regulation reduces competitiveness and impedes growth. As we all know, the lack of legislative time has in the past prevented many common-sense changes to primary legislation. As my hon. Friends have made clear, such changes would benefit businesses, charities and individuals. That is why we attach such importance to the deregulation order-making power included in the Deregulation and Contracting Out Bill which is now being considered in another place and why we find it so strange 933 that, once again showing their disregard for the interests of business and the wealth-creating importance of business, the Opposition oppose that Bill. We believe that proper parliamentary scrutiny and other stringent safeguards have been built into the Bill. The cumulative effect of the changes that the Bill could bring about would improve competitiveness by releasing business from unnecessary bureaucratic burdens.
Many of my hon. Friends, and the hon. Member for Newcastle upon Tyne, Central, mentioned the important subject of research and development. The so-called R and D scoreboard, which is sponsored by my Department's innovation unit, is published by Company Reporting Ltd. It is produced using individual company account; and it helps to promote informed discussion between the industrial and financial communities and, more generally, informed discussion about the overall level of company R and D spend.
Like my hon. Friends, I welcome the increase in overall reported United Kingdom R and D spend which has increased by 9 per cent. to £7.1 billion in line with a similar rise in sales and profits. That is perhaps not altogether surprising because, as we all know and as Conservative Members recognise, it is from profits and retained profits that R and D and investment are likely to be financed.
Britain's performance compares very favourably with the world's top 200 companies which reported only a 3 per cent. rise in R and D spend, a 2 per cent. sales increase and a 3 per cent. fall in profits. There were particularly notable increases, for example in the pharmaceutical industry, where the increase was 19' per cent. Other sectors also performed particularly well. In engineering, the increase was 10 per cent. It was 29 per cent. in media and 23 per cent. in support service sectors.
§ Mr. Cousins
I find the Minister's complacency on that point absolutely unbelievable and very destructive of the interests of Britain. Is he not concerned that about a third of our expenditure on research and development occurs in one sector of industry only, pharmaceutical? Well done, pharmaceutical; what about the rest?
§ Mr. Sainsbury
If the hon. Gentleman had read the competitiveness White Paper, he would know that we are very far from complacent on the subject. I welcome the increase that we have seen and that we wish to continue in United Kingdom investment in research and development, but we will see that only if we provide a business-friendly environment and allow business to make profits with minimum regulation, which is the last environment that the Opposition's policies would provide.
The United Kingdom has 13 companies in the world's top 200 spending companies. To put that in perspective, there are 81 in the United States, 48 in Japan, 17 in France, and only 11 in Germany in the top 200. Our top company is Glaxo, the third highest spender in its sector in the world.
Of course, research and development is important, but it is just one aspect of the far wider process of innovation. The White Paper, which I commend to the hon. Gentleman —perhaps he will read it—underlines United Kingdom industry's need to improve in many sectors of management and innovation if it is to be globally competitive. That underlines the fact that we are by no means complacent on 934 the subject. My Department's "Managing in the 90s" programme has already promoted and demonstrated aspects of best practice to more than 50,000 managers. Increasingly, business links will be the local providers of that programme, providing the service more locally and effectively than it has been provided in the past.
The White Paper also reinforces the Government's commitment that research and development support is directed at improving our competitiveness. Recent initiatives build on last year's White Paper on science, engineering and technology which, as the hon. Gentleman will know, was the first for a very long time. It focused all Government science and technology expenditure and the science-based Government Departments and Europe on the objective of improving industrial competitiveness and the quality of life.
Our research and development funding is concentrated on sectors in which it can make the greatest difference. One sector of particular need is technology. We are working to help industry, especially smaller firms, to gain access to, and make use of, existing technology from all sources as well as state-of-the-art technology supported by United Kingdom and European research and development programmes. We are expanding our overseas technology services to make sure that innovations, technologies and management practices developed elsewhere in the world are available to British industry through business links and local or national networks. We are working with research and technology organisations and regional and other bodies with technology interests to prepare them to provide effective technology services to business link customers as well as their existing members and clients.
It is by helping firms to achieve maximum benefit from the wealth of research and development funding in the United Kingdom that we are ensuring that the taxpayer gets better value for money, but it is primarily for industry to fund its own research and development. It spends 50 times what my Department does. The important role of Government is to create and to continue to create the right climate for the private sector to be prepared to invest more in research and development. That is the way to sustainable economic growth in the longer term.
§ Mr. Thurnham
Does my right hon. Friend agree that what would be most damaging of all to British industry would be to return to the trade union strife that we saw under the previous Labour' Government? Not only have Labour Members stayed away from the debate, but the news tapes outside show that there are cracks in the show of unity among contenders for the Labour leadership. The right hon. Member for Derby, South (Mrs. Beckett) is recorded as saying that she wants a return to secondary picketing and to sweep away large chunks of the Government's trade union reforms.
§ Mr. Sainsbury
My hon. Friend makes a very important point. It was just those attitudes and inflexibilities that acted as such a deterrent to management to invest and to carry out research and development.
I now refer to the single most important subject that has been touched upon by my hon. Friends, particularly my hon. Friends the Members for Norwich, North and for Havant. It features very largely in the White Paper, and that 935 is education and training. Skills have never been more important for competitiveness, and that applies at all levels and in all sectors. The Government are committed to raising the levels of participation and attainment throughout education and training. We must develop the self-confidence and esteem of all pupils and students.
Much has already been achieved. The Government and their partners—employers, schools, colleges and, of course, students—are beginning to close the gap which has been referred to between our performance and that of the best of our competitors. But there is undoubtedly still much to do. The demanding national targets for education and training provide a valuable focus for that work, and we are better placed to meet the need than ever before.
I shall turn to an example in education. More than 70 per cent. of 16-year-olds now stay in full-time education, and well over 90 per cent. are in some form of education and training. More of our young people secure good GCSE and GCE A-level results than ever before. A record number—it is almost one in three compared with about one in eight in 1979—are now entering higher education, and we have the highest graduate output in Europe. At the same time, our training strategy—training is more the responsibility of industry, as education is more the responsibility of Government—is to provide better training to more people and with more employer involvement, which is so important.
Training and enterprise councils are delivering. They are creating better local training provision, helping local people and regenerating local economies. In a four-week period in 1993, 2.4 million employees received job-related training. That is 70 per cent. more than in a similar period in 1984—nine years earlier. In addition, between 1987 and 1993, the number of workers with qualifications at A-level or equivalent rose by 2.4 million to nearly half the total work force.
Six thousand employers are now committed to meeting the investors-in-people standard for training and the development of their employees to meet the business needs that they perceive for their businesses. To build on that success, promotion of that standard is to be intensified. In addition, I am glad to be able to tell the House that all Government Departments are carrying forward their own plans to become investors in people.
But as several of my hon. Friends have made clear, it remains absolutely vital that businesses continue sufficiently to invest in training because that is the way to take full advantage of the recovery that we have in our economy. It is welcome news that a survey showed that in April 1994, 86 per cent. of manufacturing firms expected to increase or maintain their investment in training.
For our part, the last Budget included support for new modern apprenticeships to help young people to gain vital technical and supervisory skills. Modern apprenticeships represent a serious and major reform of the training system and a major change from the old time-served apprenticeship approach. The aim is to increase the number of young people gaining NVQ level 3 qualifications through work-based training to more than 40,000 a year.
But it is important that sights in the field of education and training are raised still further. Skill needs are changing and the levels of skills required is steadily rising. As we look to the needs of the next century, we must 936 recognise that our international competitors are hard at work raising the skill levels of their work force to what they see as being required in that century.
Engineering skills—my hon. Friend the Member for Windsor and Maidenhead referred to this—underpin many sectors of industry. I believe that the engineering industry can offer a rewarding career to young people, but employers must make that clearer by demonstrating that they can and will utilise and reward engineering skills. They must do that if they are to persuade more young people—both boys and girls—to follow engineering as a career. The Government, the engineering profession and industry are promoting all levels of engineering careers in schools and working with industry to develop the qualifications needed to train those who enter engineering.
This autumn, we are introducing engineering bursaries, to encourage students with good A-levels to choose engineering degree courses. The White Paper on competitiveness announced a demanding and exciting agenda for action on education and training—I should really say further action on education and training. The White Paper measures build on existing policies and successes. In all, the new measures announced represent a Government commitment of more than £300 million in the three years to 1997–98.
On education, we are streamlining the national curriculum. The emphasis will be on the basics—English, mathematics and science—and there will be rigorous testing at the key stages to check on progress. I find it hard to understand how anyone who has any interest in the competitiveness of the wealth-creating parts of our economy could do anything other than support and approve that programme of rigorous testing.
We are giving more choice to young people, by developing vocational options for 14 to 16-year-olds. They can provide motivation for pupils who might have become disenchanted with the conventional academic curriculum—we all recognise that there are bound to be some. Those options will complement more academic work, but I stress that they will not be a soft option. They will also be rigorously assessed, to ensure that they are comparable with more academic courses.
In 1995, we will introduce the new general diploma for young people, to acknowledge achievement in English, mathematics and science, plus two other subjects or their vocational equivalents. That will provide employers and others with a quality check that young people have mastered the basics.
We are also developing a head teachers' leadership and management programme; it is nicknamed Headlamp, but I would not want to minimise its importance in any way. Head teachers have to provide the lead and it is important that they have the quality and commitment and that they cultivate the right ethos and seek support from parents, employers and others in the community.
§ Mr. Thompson
My right hon. Friend will recall that in my speech I called for something further—a staff college for head teachers. I hope that he will pass that call on to my right hon. Friend the Secretary of State for Education.
§ Mr. Sainsbury
That is a very good point. Nearly all my right hon. Friends will have to read the entire debate to pick up the various excellent suggestions that have been made.
On careers guidance, which is another important matter, even without the passport of the general diploma, a clear map of the way ahead is vital for young people. That is why we are improving careers education and independent guidance to help young people to make the right choices.
§ Mr. Sainsbury
I cannot give way as there is too little time left.
As part of that programme, we will invest £87 million in the next three years to enable the careers service to offer earlier and better independent advice to every young person at 13, 15 and 17. The amount of careers guidance, in schools and colleges will nearly double by 1997 and all pupils will receive a statement of entitlement to careers education guidance, and careers officers and teachers will receive extra training.
At the same time, the framework of academic and vocational qualifications post-16 needs to be challenging and attractive. It must enable young people to make the most of their abilities and aptitudes. The White Paper on competitiveness pledged us to strengthen further pest-16 qualifications. As part of that process, I welcome the progress made by GCE examining boards towards adopting a code of practice for GCE A-level and AS-level exams. The broadly occupational GNVQs are already proving popular, I am happy to say. The National Council for Vocational Qualifications is reviewing the consistency of standards of rigour across the board.
I should like to say a lot more about education and on a number of other subjects of great importance. I hope that what I have already said about education and training will have made clear to the House the Government's commitment to, and recognition of, the importance of the subject to the competitiveness of British industry. Clearly it is a recognition which is shared by my hon. Friends. Another very important subject to which I should have liked to be able to reply is the importance of inward investment, which has made such a contribution to the success of our economy. My hon. Friends the Members for Havant, for Sutton and for Meriden referred to that issue. There are a number of other points on which I will try to write to my hon. Friends, if I have not already responded to them.
The debate has covered a wide range of issues, and it has one simple message: if business and industry are to succeed, they must be competitive. They must provide customers with the products they want at the price they want, of the right quality and service and at the right time. The Government have a role in achieving that objective and my Department's goal is simple: to help British business compete successfully at home, in the rest of Europe and throughout the world. That is a long-term aim which is shared by the whole of the Government—
§ It being half-past Two o'clock, the debate stood adjourned.