Blog

Below is the text of the speech made by Cecil Parkinson in the House of Commons on 7 July 1986.

I congratulate my hon. Friend the Member for Lincoln (Mr. Carlisle) on his choice of subject. It is good that Parliament should debate such an important subject in the unacrimonious atmosphere of a private Members’ day. Whichever party is in power, the manufacturing sector will remain vital. I do not regard today as a chance to score points. Rather, it is a chance to discuss a vital subject.

I am pleased to join the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) in saying that what is sometimes presented as a choice, but is not, between Britain being a manufacturing or a service country is utterly spurious. We must succeed in both.

I should like to pick up a point that the right hon. Gentleman made. He talked about our exchange rate policy in 1980–81. I was the Minister for Trade at the time and saw many industrialists who said that if the exchange rate was at $2 to the pound we could sweep the world. During that period the Government never charged the rate of interest that matched the rate of inflation. We never had a real rate of interest paid to savers. The Government did not offer a real rate of interest — they offered one substantially below the rate of inflation.

The Government had recently been elected on a sound money platform, following a Government who, until they were stopped by the International Monetary Fund, had followed a very unsound money policy. The world’s money markets put a substantial value on sterling. The Government were committed to trying to protect sterling’s value, and they were prepared to charge the borrower a higher rate of interest than had been charged before, but never a real rate. People who argue about our exchange rate policy in 1980–81 are saying that the Government should have perpetrated an even bigger cheat on the saver by having a rate of interest which was even further below the rate of inflation.

People such as the right hon. Member for Hillhead are arguing that we should have continued to rob the saver so that we could support the borrower. Put in those terms, it is clear that such a view is not nearly as noble as saying in a rather sweeping way that the Government got their exchange rate policy wrong. I do not think that they did get it wrong. They were seen by the the financial markets as prepared to follow sensible policies and to charge a rate of interest which began to approach, but never got very near to, the rate of inflation. I do not accept the rather dismissive argument that everything can be traced back to the Government’s exchange rate policy.

Nor do I accept the statements that are now made so often that they are almost accepted as true that Britain’s manufacturing industry is in terminal decline. The facts do not support that thesis. Industrial production last year was clearly recovering dramatically from the low point of 1981. I know that Opposition Members say that 1981 was an all-time low, but if manufacturing was still in decline, the figures would continue to fall. We have reversed that trend. Manufacturing production is growing substantially. To the dismay of our opponents, it should achieve all-time record levels next year.

There is nothing to be complacent about, but the statement that our industry is still in decline is not borne out by any test which any fair-minded person would care to apply. Production has bounced back substantially and is continuing to rise. For the first time, exports of manufactured goods reached a value of £52 billion last year — £1 billion a week. Industry invested nearly £7 billion last year and nearly 6 million people were employed in manufacturing. If we constantly talk about our industry having no prospects, and if we write it off, we will help to produce just what we complain of. Who buys his car or anything else from a business which is about to close down and has no future? For us to dismiss the efforts of the 6 million-plus workers in our manufacturing sector as people who are somehow misguidedly dedicating their lives to trying to breathe life into a corpse is not only to mislead the world and the British public, but to cause damage where we need help and support.

Mr. Dykes I am sure that we would all agree with that. However, does my right hon. Friend agree that the £7 billion figure that he gave is less than 2.5 per cent. of gross domestic product, the lowest figure of any advanced Organisation for Economic Co-operation and Development investing country?

Mr. Parkinson That may be the case. However, my point is that to dismiss our manufacturing sector as something that people are not interested in and has no future is to mislead the country and the House. The market was prepared to invest £7 billion in its future in 1985. Perhaps we should be investing more, but £7 billion is a substantial sum of money, and it is put up by people who believe that they are investing in something that has a real future, and so do I.
Let us take the anecdotal evidence. For instance, a constituent came to see me on Saturday who is a director of MFI. He told me that in 1976 MFI imported 60 per cent. of everything it sold. That figure is now down to below 25 per cent. MFI is in fact using more and more British goods because they are excellent value.

Goodness knows, as Minister for Trade I took part in many debates about the textile industry. Last year textile production was near to an all-time record high and textile exports were at an all-time record high. This year the British engineering industry will invest £850 million in computers and software, and a recent survey suggests that outside Japan the British engineering industry makes more use of high technology and engineering computers than any other engineering industry in the world. British industry was in decline for a time, but the decline has been arrested and the climb back has begun in real earnest. There is a very good prospect for Britain in an area which, far too often, we talk about dismissively.

If we apply the wrong tests to the statistics that emerge, we can turn success into failure and failure into success. For example, I heard the right hon. Member for Chesterfield (Mr. Benn) making an interesting speech about the steel industry. He said that we should look at the good old days when steel employed 250,000 people and it now employs only 100,000. To him that was proof that our steel industry was in a state of decline. However, when the steel industry employed 250,000 people it was losing nearly £3 million a day. We had a steel capacity which we simply could not use and which nobody wanted. Therefore, we had 250,000 insecure jobs. We have moved from that position to having the best and most efficient steel industry in Europe producing as much steel with 100,000 people as it used to produce with 250,000. With 250.000 employees losing £3 million a day it is a national asset by the test of the right hon. Member for Chesterfield; with 100,000 employees producing steel at a very competitive price it is a national problem. That is absolutely wrong.

Dr. Jeremy Bray (Motherwell, South) The right hon. Gentleman is making an interesting point about steel. Is he aware that an even more competitive steel industry in Japan, faced with a similar fall in orders and intense competition from Korea and other new producers, is maintaining its employment and diversifying in order to maintain a policy of lifelong employment? Does he not think that that kind of policy is more relevant in this country today?

Mr. Parkinson It depends where one starts from. I shall give an example from a different industry in Japan, the motor industry. In 1978 the motor industry in Japan was producing 65 vehicles per employee on average, and we were producing in our worst company, five and a half. At that level of productivity one can start to think in terms of lifelong employment, because one starts at a high level of productivity. However, if one has an industry which is losing substantial sums of money and is unproductive, it is unrealistic to talk of ensuring lifelong employment. The hon. Member for Motherwell, South (Dr. Bray), who studies these things carefully, must realise that.

First, I am saying that it is wrong to talk as though British industry is still in decline. It is starting to recover. It is wrong to draw the wrong conclusions from the available statistics. Industry does not exist to create jobs; it exists to create products. The industries which are efficient at creating viable products produce the best insurance of long-term employment.

Secondly, we continually draw attention to the fact that we have a huge and growing deficit on manufactures. That is true, but the conclusion we draw from that is the wrong one. We say that we need more Government demand injected into our economy. The bigger the level of our imports, the more evidence there is that there are customers here who want to buy. The argument that a deficit on manufactures is somehow evidence of a need for further demand to be injected into the economy by the Government again seems to be drawing totally the wrong conclusion from the facts that stare us in the face.

It was interesting to read in The Times today that a survey of British management said that the first priority for a better industrial performance was to improve the product. I thought immediately of Jaguar. Jaguar is now a highly profitable company selling the same range of motor cars as it was selling six or seven years ago. It has moved from being a disaster to a success because it has improved the quality of its performance. The product is the same, the range has not changed, but the prospects for those in the company and for this country, as the country in which Jaguar is based, have changed. The reason is that the quality of the product has improved out of all recognition.

Far too often in the House, especially in our economic debates, we have arguments about whether an extra £1 billion or £2 billion of Government-injected demand would turn the economy round. If it was as simple as that I might he tempted to join the argument for reflation. However, I hasten to tell the House that I will not, because I think that it is distracting us from the fundamental problem, which is how does this country compete for the business which is there? At home there is a great demand for the whole range of manufactured goods. World trade in manufactures is expanding. The customers are there overseas as well, and the real question which the House, the Government and British industry have to address is how we get a bigger share of the business which is there rather than how we generate artificial demand.

I do not underestimate the difficulties of trade union leaders at a time of high unemployment having to persuade their members that the way forward may be to reduce employment in industries because with new technology and a whole host of advances we can produce more with less people. I recognise the enormous difficulties that that presents for trade union leaders. I believe that we should pay tribute to the many trade union leaders and members who have co-operated with management in improving productivity in British industry.

I end as I began. I believe that if we continue to talk down our prospects as a manufacturing country, and if we continue to talk about our decline as if it were terminal, we must not be surprised if people start to believe us and if we produce the results that we do not want. This country has bright prospects. Way into the foreseeable future, we shall have a very important manufacturing sector. We have a strong service sector. We are prolific earners of invisible earnings. We have substantial overseas investments. Although we talk about it as if it is a problem, we still have energy self-sufficiency.

This country has a very bright future to add to its glittering past, but we shall need, as a country, and especially within industry, to produce that cohesion, that co-operative attitude that is the source of the success of all our major rivals. The question for Britain is: how do we compete? One of the answers—such an obvious one—is: working better together. Britain’s future as a manufacturer stretches ahead of her. She has a fine past, but a very promising and exciting future.

Below is the text of the speech made by Cecil Parkinson, the then Secretary of State for Transport, in the House of Commons on 24 July 1990.

Directly after the tragedy I announced immediate requirements for chartered Thames river craft to record passenger numbers before sailing, and lodge the record ashore, and that passengers should be given proper instructions on where to find emergency equipment and what to do in the case of an emergency. Regulations to make these provisions mandatory for all passenger craft throughout the United Kingdom came into force on 12 April 1990.
Within 10 days I had received the marine accident investigation branch’s interim report, and announced that the six recommendations made in that report should take effect as soon as practicable, with the assistance of the Port of London Authority where required.

The two recommendations on look-outs and lights on vessels of more than 40m in length were implemented on 18 September 1989 by amendments to the general direction for navigation in the port of London.

The third recommendation related to the need for those in charge of passenger launches to keep continuous radio watch—implemented in the same general directions for navigation—and look frequently astern—covered in a PLA notice to mariners. This recommendation also proposed that if necessary insulation against noise should be provided on passenger launches. My surveyors are taking action to ensure that launches are modified so that recommended noise levels are not exceeded.

The fourth recommendation proposed a review of traffic control arrangements, particularly under bridges. This has been considered, and a contractor has been appointed to develop a triggered light system, activated by the passage of ships along the river, indicating priority for larger vessels at bridges.

The fifth recommendation was that the interim recommendations should be transmitted to port authorities generally. This has been done.

The final recommendation suggested that the Department should examine the possibility of setting standards for the construction of ships’ bridges, with a view to international agreement. This recommendation is being dealt with on two fronts. First, the question of bridge visibility has already been raised at the International Maritime Organisation with a view to incorporating the IMO guidelines as an amendment to the safety of life at sea convention 1974. Secondly, inspections of all relevant vessels on the Thames are taking place to determine existing visibility standards in order to determine necessary action. These inspections are well under way.

Apart from this action, I should also add that all passenger craft on the Thames were inspected by my surveyors after the tragedy, and the frequency of random inspections has been increased.

Below is the text of the speech made by Cecil Parkinson, the then Secretary of State for Transport, in the House of Commons on 25 July 1990.

A Sikorsky S-61 helicopter on charter to Shell UK from British International Helicopters crashed into the North sea in the Brent field at about 10.45 am today. The helicopter was on its way to the Brent Spar loading rig, 116 miles north-east of Lerwick, from an accommodation unit also in the Brent field. The helicopter came down alongside the rig itself. The cause is not yet known.
Thirteen persons are known to have been on board the helicopter. Seven have so far been rescued, of whom four are seriously injured. They are being taken to the Aberdeen royal infirmary, along with the other three less seriously injured survivors. The two crew and four other passengers are so far unaccounted for, but the search is continuing.

Two Shell search-and-rescue helicopters based in the Brent field were on the scene within minutes of the accident. They were joined by a coastguard helicopter based at Sumburgh and an RAF Nimrod.

The rescue operations are being co-ordinated by the Aberdeen coastguards, assisted by the rescue co-ordination centre at Edinburgh. The wreckage of the aircraft has been located on the sea bed, in 400 ft of water. Specialist diving craft are on the scene.

Shell and Grampian police have set up contact telephone lines for relatives at their Aberdeen emergency control rooms.

The Chief Inspector of Air Accidents has ordered a formal investigation.

I am sure that I speak for the whole House in expressing sympathy for the families of those injured and missing.

Below is the text of the speech made by Cecil Parkinson, the then Secretary of State for Transport, in the House of Commons on 14 June 1990.

With permission, Mr. Speaker, I should like to make a statement about the proposals for a new high-speed rail link to the channel tunnel.

The opening of the tunnel in 1993 will provide a major new business opportunity for Britain and for British Rail. Let me first dispel any doubts that we intend to invest in the infrastructure required to service the tunnel fully from the day that it opens. For British Rail, investment in tunnel services will be the largest that it has undertaken this century—more than £1 billion on passenger and freight services. Orders have already been placed for a common fleet of high-speed passenger trains, owned jointly by the British, French and Belgium railway companies, that will link London to Paris in three hours and to Brussels in two and three quarter hours. In addition to the half-hourly services between those three capitals, BR plans through trains from the regions offering 3 million seats a year.

Work has started on improving the track between London and Folkestone and on the new passenger terminal at Waterloo. Last month I announced approval for new electric freight locomotives that will haul channel tunnel freight at speeds just as high as those on the continent. More than two thirds of rail freight to the tunnel will come from outside the south-east and BR is planning through services and freight depots throughout the country. We plan to spend more than £600 million on tunnel-related road schemes, which is about the same amount as the French Government. When the channel tunnel treaty was signed, we undertook that BR would meet the demand for passenger and freight services when the tunnel opened, and those commitments are being fulfilled.

The railway investments will cater for demand in 1993 and for several years thereafter. In the case of freight, there is ample capacity in the south-east outside the commuter peaks. However, all the traffic forecasts show that growth in demand for international rail passenger services and domestic commuter services will eventually outgrow the capacity of the present system. That is why we asked British Rail to examine how best to increase that capacity when the time came. We made it clear that the investment in international services would have to be commercially justified, just as it would be in ferry, in air or in other competing services.

Last November, British Rail selected Eurorail from a field of eight private consortia, and announced its intention to pursue the possibility of forming a joint venture to operate the international services and to construct a new line. Since then, it has identified measures that substantially improve the commercial prospects of the international passenger business. Despite those improvements, the forecasts submitted by the joint venture showed that its costs were likely to exceed its income by a wide margin. To meet that gap, the joint venture first required a capital grant of £500 million towards the use of the line by commuter services. Secondly, British Rail would need to invest up to £400 million, mainly in commuter terminals. Thirdly, it proposed a low-interest deferred loan of £1 billion, which in the case of default would rank below all other creditors.

I have given careful consideration to the case for a capital grant. We have never ruled out capital grants for improvements in commuter services where they are justified on cost-benefit grounds. I made that clear in the new objectives that I published for British Rail last year. The new line would indeed bring significant benefits to commuter services, but unfortunately the benefits to commuters were not sufficient to justify both the investment by Network SouthEast of £400 million in its own facilities and grant of £500 million towards the use of the new line.

The loan of £1 billion represents public investment already made in international rail services up to 1993, and taken over by the joint venture. The joint venture would get the benefit of that expenditure, but would not make any repayments or pay any interest until 2010. The House will now recognise that the total sums of public expenditure involved are far greater than the £350 million that has been widely but erroneously reported. In the event of cost overruns, the political reality would be that there would be great pressure on the Government to increase their already substantial contributions. I have therefore informed the parties that the proposals that they have made are unacceptable.

In the light of that, British Rail and Eurorail have agreed that there is not a basis for carrying forward the project in the private sector at this stage. The Government remain very grateful to Eurorail for the considerable effort it has put into the development of the proposals, and for the expertise it has shown. BR has informed me that it will continue to work with Eurorail in the development of international services.

The financial case for a new line will improve as demand for travel grows. I have discussed this with BR’s new chairman, and British Rail remains eager to proceed as soon as the project is viable. How soon this will be depends, among other things, on the benefits the new line can bring to commuters.

I have already approved investment of more than £400 million on new rolling stock and improved infrastructure for services on the north Kent lines. British Rail has plans for further rolling stock investments of £300 million to £400 million for the rest of the Kent commuter services. That will radically improve the services from Kent.

If demand continues to grow, even more capacity may eventually be needed and British Rail and Eurorail have shown that a new line could transform the slow commuter services from north and mid-Kent by halving journey times. I am not yet satisfied, however, that they have found the best solution and I am therefore asking British Rail to complete its studies with the aim of maximising the benefits to international passengers and commuters alike.

This further work will concentrate on the options for the route from the North Downs to Waterloo and King’s Cross, with its efficient connections to the rest of the country. I have considered carefully the views expressed in the House and elsewhere about alternative routes. On the face of it, they are unlikely to be better financially than the Eurorail proposal or to offer a better deal for commuters.

But the new chairman of British Rail is determined to satisfy himself on that and has commissioned a report by consultants on the proposals for routes to King’s Cross via Stratford. There seems to be general agreement that any service will need to terminate at King’s Cross. In our view, nothing in this statement invalidates the benefits to British Rail of the House proceeding with the King’s Cross Bill.

A major civil engineering project of this kind, through this densely populated part of England, is bound to cause great concern to the people who live there. We owe it to them to minimise the uncertainty and to see that, where they suffer financial loss, there is proper compensation. Between the North Downs and the channel tunnel there is now broad agreement on the right corridor for the new line and considerable effort has been put into designing an environmentally acceptable route.

There will need to be further consultations on the engineering details and a full environmental report will be published. But I am satisfied that it would now be right to safeguard that section of the route by planning directions. I therefore propose to consult British Rail and the local authorities about that. British Rail’s compensation scheme will continue to apply to the whole of the route published in September 1989.

I began by confirming our commitment to invest in the infrastructure needed to make sure that we reap the benefits of the channel tunnel when it opens in 1993. I have also explained how we propose to carry forward the work needed to plan for increases in capacity. Some argue for vast and premature expenditure that would not be economically justified. International rail services are certainly of growing importance, but there are many other needs for improvements in transport infrastructure, including better public transport services within Britain, improved motorways, better access to airports and ports and better air traffic control.

The Government’s aim is a balanced transport policy which allocates investment where it will bring the greatest benefit. Within that framework, we have approved the largest railway investment programme for over 25 years, the largest underground programme for over 20 years, an increase in the road programme and approaching £2 billion worth of investment in the infrastructure to serve the channel tunnel. I commend these policies to the House.

Below is the text of the speech made by Cecil Parkinson in the House of Commons on 28 January 1987.

I have listened with interest to the speech of the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) and his discussion on the big bang and the City revolution. Last week, we heard the speeches of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and today from the hon. Member for Stockton, South (Mr. Wrigglesworth) which seemed to imply that the whole City revolution was started by the Conservative Government as a way of creating a sort of free-and-easy in the City.

I wish to remind the House that the rule book of the stock exchange was referred to the restrictive practices court in February 1979 by the right hon. Member for Sparkbrook. It was the Labour party that decided that the stock exchange. in its old form, was guilty of unacceptable restrictive practices and set out to make sure that the stock exchange rules were changed.

In 1983, the Conservative Government, after four wasted years on the legal case, sought to get the equivalent of an out-of-court settlement and we obtained from the stock exchange all the concessions that were sought by the Office of Fair Trading when it started its action. Indeed, the Director General of Fair Trading, who initially resisted the actions that I took, later admitted that the reforms that had been agreed were the ones he and the Labour Government had had in mind. Therefore, the notion that the free and easy City was started by the Conservative Government and that all troubles such as Guinness flow from it does not stand up to examination. The truth of the matter is that — perhaps the right hon. Member for Sparkbrook is ashamed of it and perhaps he did not realise what he was doing — that the right hon. Member for Sparkbrook set the changes in train.

It is a mistake to think that the big bang was somehow connected with the Guinness and Distillers affair. That wrong thinking argues that, because of the big bang and the resultant changes, affairs such as that of Guinness have become possible. The Guinness affair was concluded in March but the changes to the City took place on 27 October.

The hon. Member for Stockton, South spoke about the absence of a regulatory system after the big bang but the troubles of which he complained took place before the big bang under the old system. The other fallacy is that because of the big bang and the Guinness affair the new system of regulation has been discredited and there is convincing evidence that what we now need is a statutory system of regulations. It is argued that because of the existence of the Securities and Exchange Commission, insider trading and the Guinness affair came to light.

Mr. Boesky’s activities came to the attention of the SEC because someone wrote an anonymous letter to it about Mr. Levene and his insider trading. Mr. Levene then talked about Mr. Boesky and Mr. Boesky talked about Guinness. It was not because of the magical powers of the SEC that Mr. Boesky’s activities came to light; it was because of an anonymous letter. I would have thought that the Securities and Investments Board is just as capable as the SEC of receiving an anonymous letter.

Mr. Nelson Although I accept that the SIB is capable of receiving such a letter, there is nothing that the SIB can do about it.

Mr. Parkinson I appreciate that, on the Conservative Benches, my hon. Friend is almost a lone devotee of the SEC. The Opposition have argued that there is a need for a body such as the SEC but nothing that has happened justifies that argument. The fact is that Mr. Boesky prospered for four years under the SEC. He made hundreds of millions of dollars and he was discovered only by accident. There is no argument for trying to impose on Britain the system that failed in America.

Opposition Members make a big mistake by arguing that statutory somehow means certain. The impression is that if one has statutory regulations it is bound to work.

Mr. Allan Rogers rose—

Mr. Parkinson I shall give way in a moment.

Allow me to offer to the House the experience that I gained when I was Trade Minister. We were having trouble with the Americans who were trying to extend their market regulations into our commodity markets. I invited the chairman of the Commodity Futures Trading Commission—that is another statutory body—to come over and see how we regulated our markets. At the end of the week, he admitted that our system of self-regulation was better than theirs. Unfortunately, he had to leave early because Hunts had cornered the silver market — his statutory system had failed. Therefore, to believe that somehow statutory means certain and that, as a result a statutory system, discovering people is inevitable has no basis when one considers the experience of the American or other markets overseas.

Mr. Rogers If we accepted the logic of the right hon. Gentleman’s argument we would not need statutory regulations to catch criminals. The process that led to the apprehension of the criminals in this case is exactly the same that pertains in many instances, for example, in America, when one canary sings and the rest of the Mafia are pulled in. American crooks are just the same as British crooks.

Mr. Parkinson The hon. Gentleman is implying that we will have a system that is voluntary and, in some way, unenforceable. That is the big difference between the two sides of the House.
We do not know whether the SIB will work as it is not fully in place and, therefore, to argue its failure before it is in operation is to overstate one’s prejudices.

The SIB is not a voluntary body exercising, if it wishes, powers. It is a body made up of practitioners in the market who understand how the system works but who have imposed upon them, by law, statutory duties that they must carry out. We have a system that is based on the law but run by people who understand the market.

I believe that our system is imaginative and that it will work. It is quite wrong for Opposition Members to argue in favour of the SEC, a system that has patently failed, and to dismiss the SIB which is not yet in operation and which we have every reason to believe will be a success.

The hon. Member for Hackney, South and Shoreditch congratulated one of his hon. Friends because he tripped up the Secretary of State by asking him why investment was not bigger than it was in 1979. Today’s debate is on the City and I would argue that it was not a shortage of funds that caused a shortage of investment. That is the implication of the Opposition’s motion.

When I first went into the City as a chartered accountant more than 20 years ago there were few sources of capital. One could get short-term money from the joint stock banks, the ICFC that took minority stakes in medium-sized businesses, the merchant banks—but they wanted a substantial stake in the company if they agreed to be involved — and the stock exchange. Therefore, many companies went to the stock exchange far earlier than they should have done. That was the only way to get the necessary money.

Now everything is different. There are venture capital organisations, the joint stock banks have their own merchant banks, business expansion schemes have been introduced and the banks are more ready to lend money. There is, in fact, a proliferation of sources of capital. There is no shortage of money for a good proposition. To criticise the City because the figures show that investment has not increased is to misunderstand the fact that the money is available, but the demand for it has not been there. That is hardly the City’s fault, and the demand is growing.

It is wrong to argue that the City has failed in its job of providing capital. There is growing demand for investment capital, and I am pleased about that. However, it is wrong to imply as the Opposition motion does, that the cause of our less than desired investment is shortage of money. It has been shortage of good propositions.

When the Labour Government were in power we had low company profitability and high rates of yield on gilts, and the stock exchange was used by the Government as a way to fund their ever increasing debt. It is outrageous of the Labour party to criticise the stock exchange because it does not provide enough capital when it was creating an economic climate in which business could not make the profits that justified further investment. We do not want any nonsense from the Labour party about the stock exchange. Nobody used the stock exchange more actively than the Labour Government, to raise money at high yields that were beyond the reach of industry, thus pricing industry out of the investment business.

There is a notion that the British investment institutions take a short-term view. This morning, I was at a meeting of the board of a unit trust group that handles £4 billion of savers’ money. We have over 400,000 investors. When Labour Members talk about City institutions and how they are investing money, they talk as if they are the private property of the people who are running the organisations. We are investing the savings of 400,000 people, and it is no part of our business to experiment with them. We have to invest them soundly so that we can give a proper return to those who save with us.

The House partly contributes to the problem of short-term thinking in the City and investing institutions because we have such relatively short parliamentary terms. We have to face the fact that the two sides of the House offer the electorate a different economic system. One of the reasons why our investors shorten their thinking is the uncertainty that could arise if we had a change of Government. Unlike other, successful capitalist countries, we have an Opposition who basically do not believe in private enterprise, so do not support the system.

I refer now to BTR and Pilkington. We have supported enthusiastically the privatisation of nationalised industries, because we believe that the Government are a bad commercial decision taker and should be taken out of commercial decision taking wherever possible. We have also supported the sales because we believe in wider share ownership and giving people a stake in the businesses in which they work and a say in how those businesses are run.

It struck me as absolutely unbelievable, when my right hon. Friend the Secretary of State took the correct decision that the takeover was a matter for the shareholders of Pilkington, and that there should not be a reference, that that decision was criticised by people who have made speech after speech saying that Governments should not take commercial decisions, we should privatise and reduce the size of the public sector. It is wrong of the House to say that we want to take the Government out of commercial decision taking, we want to privatise and spread share ownership, but then to say that there are a range of decisions that are far too important to be left to people such as shareholders, and the Government should intervene and take those decisions.

My right hon. Friend the Secretary of State is to be congratulated on resisting the pressure to refer the BTR bid. That pressure was not the result of a genuine desire to see the Monopolies and Mergers Commission do its job. The only reason why anybody wanted the reference was to delay the bid and to mess it about. It was not to allow the MMC the chance to decide whether the bid was in the public interest.

I have one thing to say to my right hon. Friend the Secretary of State about the review of mergers policy. We have broad criteria which my right hon. Friend uses in arriving at his decisions about whether to accept the advice of the OFT, and the principal criterion is that of national and public interest. My right hon. Friend has been urged to come forward with a series of very tightly drawn specific proposals. I hope that he will resist that advice, as he resisted the advice on Pilkington.

As an accountant, I found that the section of the tax law that was most effective was the general anti-avoidance provision. The more specific the provisions, the easier it was to get around them. The more specific the rules about takeovers and mergers, the easier it will be for people to work their way round them, and my right hon. Friend will be legislating continuously. With the national interest criteria applied sensibly and wisely, my right hon. Friend has the basis for good decision taking. I hope that he will not allow himself to pushed or cajoled into thinking that if he comes forward with specific and clear-cut rules he will be doing something worthwhile. The present rules, with the national and public interests, as the main criteria, are just what he needs.

I heard the right hon. and learned Member for Monklands, East (Mr. Smith) quoting the theory that one of the problems is that a company that makes investments and does research makes itself vulnerable. The idea is that one can either be profitable or invest and do research. The best companies do both, and they do them in tandem. I know that Labour Members admire the SEC greatly, so I was interested to read a speech by the acting assistant Attorney General of the anti-trust division of the American Government. He said this about the argument that one makes oneself vulnerable if one does research: Finally, this argument is also contradicted by an SEC study that demonstrates firms that are subsquently takeover targets spend relatively less on research and development than firms in the same industry that are not takeover targets. The idea that one makes oneself vulnerable in this way is nonsense. Companies that are not doing research are shown, by the Labour party’s favourite, much admired organisation, the SEC, to he the vulnerable ones.

Below is the text of the maiden speech made in the House of Lords by Cecil Parkinson on 7 June 1993.

My Lords, in the spring of 1972 I was invited to go to Germany and speak in six cities about the British attitude to the Community. I was invited as a new Member of Parliament and I chose the subject, which had a certain novelty at the time, of losing an empire and finding a role. I promised myself that during the summer I would write my speech. But the morning came when I was due to fly to Germany. I got on the aeroplane, produced my notepaper, and started to write, at which point an American sitting next to me noticed the House of Commons paper, and said, “Are you a Member of Parliament?” I got off the aeroplane an hour later having lost the empire but not having found a role and facing the prospect of making six speeches throughout Germany.

The role that I envisaged for Britain was as a Member of the Community and as a staunch and vital part of the NATO alliance. My speeches were on that theme. Throughout the whole of my parliamentary career, as a new Member, supporting the original Act, campaigning for a “Yes” in the referendum campaign, supporting the Single European Act, and as a Minister in a number of departments going to Brussels to try to make the free movement of goods, people and services a reality, I retained my enthusiasm for the Community. I still do so. There were many reasons why I was enthusiastic but three in particular were important to me. They were touched on by my noble friend Lord Thorneycroft in his excellent speech. At the heart of them all was the ambition to create a truly common market within the European Community.

I believe passionately that the open trading system is the great guarantor of prosperity. It ensures that opportunity will become available to many peoples. The Community seemed to me to offer a chance for 12 large countries to work together within a framework and create a genuine common market based on real free trade principles. Then, using that as a working example of the open trading system in action, I hoped that the Community would become a great force for good in the wider world, showing that the principles of free trade worked and that the Community as a working model was one which should be emulated and supported. Finally, I hoped that the Community of the Twelve would become a much larger Community; that it would not become exclusive; and that it would spread throughout Europe. It always seemed to me very pretentious for 12 countries to claim the title of “The European Community” in a continent which included many more than 12 countries.

I have not changed my attitude to the Community at all. But I still have very substantial reservations about the treaty which we are in the process of ratifying. I should like to explain why to noble Lords.

It seems to me that we need not speculate about whether economic and monetary union, a single currency and a single central bank will be good or bad for us. We do not need to speculate. We do not need to stare into the crystal ball. We have already had experience. The ERM is the first step towards monetary union and it has failed us twice already.

We joined it informally in the late 1980s. We tied our economic policy to Germany’s. The Germans at that time were in or beginning to be in a recession; they needed lower interest rates. We were in danger of overheating our economy; we needed high interest rates to cool it off. We took our interest rates down; and the recession, the overheating, the deficit and the problems with which we have been coping for a number of years now stem from that decision to follow the policies which were right for Germany at the time when they were wrong for us.

In 1990 we joined the ERM. Germany shortly afterwards re-unified and for its own good reasons —I do not criticise the Germans for it—needed high interest rates. We were in a recession. We took our interest rates up, sustained them at a higher level than was needed and prolonged and deepened the recession. Once again, what was right for Germany was wrong for us.

We need not speculate either about a single currency and a single central bank, and the dangers of adopting both too soon. We can look at East Germany. There is a working model of 18 million people who are part of a country that is the strongest country in Western Europe and who have adopted a hard currency and imposed it on a weak economy. We can see how the policies that were good for western Germany have caused chaos in eastern Germany. We can see the dangers of adopting a single currency before one is ready for it.

Eighteen million East Germans have caused enormous damage to the West German economy. But even more important from our point of view is that they have also wrecked the ERM and shown the dangers of the sort of policy that this treaty envisages becoming the norm for all the countries of Europe. If 18 million East Germans can wreck the first step towards economic and monetary union, how are we to cope with Greece, Portugal, Spain and southern Italy, in all of which the standard of prosperity has to be raised to the level of the highest before there can be monetary union? Who will provide the resources which will be needed for transfer to the poorer countries? Certainly the poorer countries are enthusiastic about receiving them. But I have not heard anybody in the more prosperous countries explaining to their peoples that they will be the ones who have to fund that transfer. Therefore economic and monetary union, which are at the heart of the treaty, offer the potential for being divisive and disruptive and creating disillusion rather than harmony within the Community.

The Community is becoming, by the detailed structure which it has set up for itself, ever more exclusive. It is almost impossible to envisage any countries other than Austria, Sweden, Norway and Switzerland (which turned down the opportunity) qualifying for membership. I have taken part in discussions in the Community in which it was agreed that there could be no question of taking into the Community in the foreseeable future any country which will be a dependent and not a contributor. By its nature, the more tightly the Community draws itself together, the more exclusive it makes itself and the less it has the potential for becoming a truly European Community.

Again, as the Community develops in the way in which the other 11 members want—with identical wages, hours of work and social provision—the whole concept of comparative advantage, which is at the heart of the open trading system, is being abandoned. The argument is that we cannot trade with each other unless we have the same wages and social conditions. But where does that leave the rest of the world? I see the treaty as a major preparation for trade wars and protectionism. I do not see it as a step towards an open trading system and internationalism.

Finally, I judge the Community by its actions and attitudes. It has not been the great proponent of the open trading system which my noble friend Lord Thorneycroft outlined in his extremely moving speech. It has been a major break from the movement towards free trade. At the moment the agricultural policy—that ultra protectionist device which is the jewel in the Community’s crown—is being used as a way of preventing the completion of the most important trade round into which the world has entered; that is, a round in which we are going to extend to trade in services and agricultural products the rules which have been so welcome and helpful in the field of manufactured goods.

Even the most enthusiastic supporters of the treaty say—my noble friend Lord Carrington in a splendid speech made the point—that much of it will not come about in the foreseeable future. It is a bad basis for signing a treaty when one’s basic motivation is that one does not believe that it will be implemented. There has never been a case of a European Act being put on the statute book which has not been interpreted far more broadly than those who signed it originally expected. The Single European Act was a case in point. Yet we are signing an infinitely more fundamental and radical Act in the vain hope that it will not be implemented. That is a very unsatisfactory way in which to proceed.