Industrial Policy and Manufacturing

Debate between Paul Farrelly and Kelvin Hopkins

Thursday 22nd November 2012 Commons Chamber

[Kelvin Hopkins (Luton North) (Lab)]

May I first congratulate my new hon. Friend the Member for Corby (Andrew Sawford) on his absolutely splendid maiden speech? I have some connection with him in a sense, because I come from the east midlands, my grandfather worked in the boot and shoe industry, and at this moment I am wearing a pair of English leather shoes that were probably made in his constituency—and splendid shoes they are, too. It really was an excellent speech, and I am pleased that my hon. Friend’s father is here to hear it, because he was a very good personal friend and comrade in this place. I am delighted that my hon. Friend is following in his father’s footsteps and I welcome him to the House of Commons.

I want to mention Bedford trucks as well, because the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) mentioned them. They were made just outside my constituency in Dunstable and are all over Pakistan—thousands of them can be seen there today. Many people think it was a great mistake to stop manufacturing the basic truck, which is so rugged and can work in any conditions—and no doubt is infinitely superior to the Chinese competition.

I want to talk about Britain’s experience of manufacturing. Britain has suffered from savage deindustrialisation, brought about by utterly misguided economic policies enacted over a long period. We have had many figures quoted to us today. We have only to look at, say, the comparable 2006 figures for Germany and Britain, to see that manufacturing comprised 12.4% of our economy in Britain and 23.2% of Germany’s economy—almost twice as much. Germany is indeed the economic powerhouse of Europe, and one can see why. During the period 2000 to 2010, the UK share of world trade fell by 28%, whereas Germany’s fell by a mere 3%. Why are our countries so different? Governments in Britain have made persistent attempts to sustain an overvalued exchange rate. This goes right back even to the 1931 crisis, which sadly destroyed the Labour Government, because they did not realise that they could come off the gold standard and devalue, which is what they should have done and what happened immediately after they lost office.

Then we had the 1949 devaluation—very sensible—and in 1967, again after resisting devaluation for a long time, we eventually devalued, following which the economy of course bounced a bit. But then in 1979 we had the Thatcher Government, who immediately introduced policies that saw a massive appreciation of the pound. In two years we saw a fifth of manufacturing industry disappear and unemployment rise to 3 million, simply because of the massive appreciation of the pound and the collapse in demand for manufacturing. Between ’82 and ’88, in the Nigel Lawson period, we saw a pretty savage depreciation of the pound—by some 35% from peak to trough—and a great recovery because of that depreciation.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

One of the industries hardest hit has been ceramics. One of the things that we have wanted for years in the ceramics industry is accurate country-of-origin marking and an end to bogus back-stamping. If something says “Made in England”, it should be made in England. Other countries in Europe want that in the ceramics industry, but the UK has always stood in the way. Does my hon. Friend agree that it is time we had a more open mind to such measures to ensure accurate consumer information, to counter counterfeiting and to give our industries a fighting chance?

[Kelvin Hopkins]

I absolutely agree with my hon. Friend. Indeed, I have a wonderful set of Wedgwood china, which we use on special occasions, that no doubt comes from his constituency.

Then we had the 1990 to 1992 exchange rate mechanism disaster—again, an attempt to pinion our currency, in essence against the Deutschmark. We recovered from that after we devalued substantially—golden Wednesday—and the economy started to strengthen again. Indeed, if that economic strengthening had continued for three or four years longer, Labour might not have won the 1997 election, because we won on the basis of the terrible mistake made by the Conservative Government by going into the ERM. Those are key factors—the key factor, I think—in our economic weakness. But Germany kept its Deutschmark at a low parity for a prolonged period, and was allowed to do so because West Germany had to be, inevitably, the showcase for western capitalism against the east, and everything was done to ensure that Germany succeeded. It was permitted; it was allowed by the rest of the western world to keep its currency low as a necessary condition for economic success. Other factors, of course, were used to ensure that the Germans were successful, including a very strong interventionist industrial policy, which we forgot and left behind when we abandoned, for example, the National Economic Development Council, abolished by the Tory Government.