Lord Carrington of Fulham
Main Page: Lord Carrington of Fulham (Conservative - Life peer)
Lord Carrington of Fulham (Con)
My Lords, I, too, congratulate my noble friend Lady Wilcox on this important debate and on her powerful opening speech.
I started my working life in manufacturing in the early 1970s. I worked on the shop floor, making components for the motor industry, in what were called—in those distant days—the metal-bashing industries. A sorry place it was, too. Labour was largely unskilled, using outdated tools to produce motor components that met any specification or tolerance limits required by the customer only by coincidence. Indeed, most of the skilled workforce in the factory seemed to spend their time rectifying or hiding the errors in the motor components so that they could be shipped to the desperate customer and sold on to the poor, unsuspecting motorist. Perhaps it was not surprising that the UK motor industry went into precipitate decline. Sadly, the decline in British manufacturing was not confined to the motor industry, as I later discovered when I was financing exports to the Middle East. But we have come a long way since then.
The lessons were very simple. Manufacturing needs good, professional management. It requires high and continuous levels of investment, equipment and research. It must be responsive to the changing needs of its customers and to anticipate changing markets. When I worked in the motor components industry, the Government were trying to pick winners. They were trying to direct investment. They were trying to tell manufacturers how to do their job while, at the same time, taking too much in tax—mostly through personal taxation, since little profit was made in companies such as the one for which I worked. They took so much in tax that no manager or investor had any incentive to take risks or to invest.
Since the much needed and vital reforms of the 1980s, under the leadership of Baroness Thatcher, British manufacturing has changed out of all recognition. Thanks to my noble friend Lord Young, the motor industry is a near perfect case study, with resurgent motor manufacturing and superb motor components suppliers. Exports boom and the quality of vehicles is second to none. What we have learnt is that the Government cannot run industry. All they can do is to create a supportive, nurturing environment so that industry can flourish. They cannot double guess the entrepreneur, still less the market.
It is no use pretending that the Government can protect jobs. The only protection for jobs is that someone wants to buy the goods being sold at the price at which they have been manufactured. That is why we have to have a low-tax economy. We need a globally competitive corporation tax rate to encourage our industry to invest and to attract new investment from abroad. We also need low personal taxes. No one will work hard unless they get to keep the fruits of their labour, and the cleverest people in manufacturing, as in the service industries, will have many offers to work elsewhere in the world.
The world has changed. We can compete with low-wage manufacturing in eastern Europe, Asia and Africa only by producing high-tech goods and having high quality in traditional products. Competing solely on price has proved time and again not to work. However cheaply we can produce something, someone else can produce it cheaper.
Just as manufacturing industry needs low taxes, so it needs a high level of education in the workforce, which is why the Secretary of State for Education’s reforms are so important. It does not matter if a student gets high marks in a debased exam; what matters is if he or she can read, write and understand numbers. Then they can progress to a full education.
I used to run an organisation with the second-largest apprentice training scheme in the UK—again in the motor industry. We would take on several thousand apprentices every year and, even after rigorous aptitude testing and positive reports from their schools, a depressing number of them would require us to start their apprenticeship with remedial reading, writing and maths so that they could understand the basic instruction manuals. That was after 11 years of schooling.
The really sad thing about that is that after about 12 weeks of remedial work, we got those boys and girls up to a satisfactory level of literacy and numeracy. The problem was not the apprentice, it was the school, which either did not notice those talented young people’s problems or did not care. In any event, the school had done nothing about it. I am glad that our Government are tackling that scandal.
Having the UK business environment right is vital, but not enough. Industry needs markets into which to sell its goods. I am sure that we are all in favour of free trade and open markets; then we can compete in the world. Sadly, much of the rest of the world does not see it that way. It is the age-old problem; many countries see it to be in their national interest to protect their local industries from foreign competition. The emerging or emerged markets in the Far East are not alone in putting up formal and informal trade barriers. The EU does the same, and the USA has always done so throughout its history. Let us not kid ourselves that we can be any different.
It would be wrong in this context not to pay tribute to Joseph Chamberlain, who died 100 years ago yesterday. He was a very great man and a very great politician, whose influence in making the Conservative Party the vibrant, radical party it is today is still immense—not in policies, but in attitude and political style. His last great campaign of tariff reform was designed specifically to tackle the problem of unfair competition. He advocated the raising of tariffs against those countries that did not allow us to export to them on the same terms as we allowed their imports.
The trade problem with manufactured goods that Chamberlain saw more than 110 years ago is still with us. Large countries—empires, as Chamberlain called them—such as the USA, Germany and Russia were manipulating trade agreements to their advantage while we naively clung to the belief that if we manufactured a better mousetrap, the customers would beat a path to our door. Sadly, as he knew and we know on a daily basis, if we allow unfair competition—no matter whether it is from Asia, America or Russia—we can have the best manufacturing industry in the world but it will still go under.