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Economic Recovery

I remind the House that I have business interests in manufacturing and investment management, but I am obviously not speaking on their behalf today. In the debate on Monday, I said that we needed to make the banks more competitive and change banking regulation at the bottom of the cycle, which is where we are now. Unless we make the banks work, we will not have a sustainable recovery. I drew attention to the grotesque distortion in the economy, in that we have very easy money at very low rates of interest for the public sector, created by quantitative easing, but a dreadful shortage of money, and high interest rates for those who can get money for the private sector. That is why we will not have a vigorous and sustained recovery such as those in China and some other big economies around the world. I hope that the Minister will bear that in mind and that the Government will do something about it, because we all want to see more jobs, more prosperity and a quicker return to the levels of economic activity of a couple of years ago. We will not get that unless we fix the banks. There is another huge imbalance in the British economy that has to be adjusted in the years ahead if we are to have a return to prosperity and sustainable growth. The big imbalance that the Government’s policies have allowed to occur is that we are borrowing too much, consuming too much and importing too much, but saving too little, investing too little, making too little and exporting too little. Let us start by looking at the parlous plight of manufacturing. The sector has been squeezed and squeezed under this Government. They came to power with the best of intentions. They said that they wished to reverse the long-term trend downwards of manufacturing as a proportion of our economy. They said that they wished to reverse the balance of payments difficulties that had been experienced from time to time under Governments of both political persuasions in the previous 30 years. The Prime Minister, as an Opposition spokesman, used to specialise in going through the balance of payments figures every month and drawing attention to what he thought were unsatisfactory levels of excess imports over exports, especially in manufacturing. Well, the deficits that we were then running were tiny in comparison with the monumental deficits that we are now seeing month after month. We cannot go on like this. It is most important that activity is shifted away from consuming, importing and spending into producing, making and selling abroad. The Government have not been good for manufacturing, which is now only 13 per cent. of our total economy. However, I am pleased to say that we have some fine companies and good performance in certain sectors. Two sectors in which British performance has been good are pharmaceuticals and aerospace and defence engineering. Those two sectors have some characteristics in common: they employ a lot of talented people, they spend a lot on research and development, they have high returns on sales in normal times, and they have a lot of public purchasing, providing them with demand and activity for their factories. NHS purchasing is an important element of the demand for the leading pharmaceutical companies that have come here, expanded here or grown here. We also have a monopoly purchaser of defence hardware in the UK. One of the things that is most disappointing is how little intelligent purchasing there is in other areas to provide that kind of enthusiastic support—not a free lunch or subsidised purchasing—to sustain more industries on the back of the huge sums that the Government are spending. For example, we have had a substantial train investment programme in recent years, much of it financed by public subsidy. Much of that work has gone abroad. Was it not possible for Ministers to apply competitive purchasing but ensure, as other countries do, that those purchases benefit domestic manufacturers and create opportunities for people to set up and make things here in the UK? Why is it that so many quango chiefs, civil service chiefs and Ministers run around in foreign-manufactured cars? Surely competitive products can be found from the extremely good British factories? Many of them are owned by foreign companies, but that does not matter. The important point is that they employ people in this country and the value is added here. Why are we not able to make more intelligent use of our purchasing?