It is odd how old arguments return in politics. In the early 1980s when British industry was really falling out of bed, the Government came under enormous pressure to intervene to protect industry and jobs.
The trouble was that the industry we had was simply not worth protecting. Manufacturing industry collapsed, including carmaking, and unemployment rose to record levels, yet by the end of the decade we were making more cars than ever before. The difference was that now the cars sold and could be exported, we had efficient factories and the UK had become a design centre. The downside was that the cars were called Honda, Toyota and Nissan, but the employees were British, the suppliers largely British and the effect on employment wholly positive.
At that time I used to go to India for the Department of Trade and Industry. I recall explaining to Rajiv Gandhi that the reason the bestselling car in India at that time was a copy of the 1948 Morris Oxford was solely down to import restrictions designed to protect Indian employment and jobs. The result was that Indians had to make do with an expensive car that was impossible to export. After Mr Gandhi’s assassination, his successors opened up Indian industry to such an extent that the flourishing Land Rover and Jaguar car companies are now Indian-owned.
Now the wheel has turned again with the announcement that after losing a £1.5 billion contract to build trains for the Capital Connect line to a German company, Bombardier is closing its operations in Derby with the loss of some 1,400 jobs. Of course no one wants any jobs lost but from the outcry of the unions you would think the Government was to blame. The very people striking, or threatening to strike, to prevent change in the public sector are calling on the Government to award the contract to the losing party. If you lived and worked through the 1970s, as I did, you would know how awarding contracts only on the basis of protecting British jobs can destroy the economy in a few years.
If there is anyone to blame for the loss of this contract, it is probably the management at Bombardier. Their customer wanted the best product at the most competitive price and they could not supply it. Other orders have dried up and the company is having to let more employees go. What should our response be?
Advertisement
The rules of the EU internal market effectively prevent our restricting business on a national basis. Some claim that we simply don’t know how to play the game and that the French or Germans get round the rules.
Of course, they may have got round the rules this time, but I rather doubt it. For the past hundred years German industry has been far better than ours, despite the destruction of two world wars. If you want a reason, start with education. While our educational establishment has long felt that the world of work was beneath it, in Germany respect has always been paid to vocational and technical education. It is 40 years since I was first told of the difference between our countries — in Germany an engineer is known as “doctor”, and in the UK as “a bloody mechanic” — and little has changed.
What other country would turn all its polytechnics into third-rate universities offering degrees in media studies? Of course I exaggerate, but not by much. My old colleague Kenneth Baker has government support for his plans to open 24 university technology colleges and the quicker he does so the better. I hope that the new free schools will also instil respect for the technical and vocational.
Of course it is not all about education. Even if we had a properly educated and trained workforce, we would need a competitive and entrepreneurial economy, and this is where government has a real role to play. Ministers cannot pick winners but they can create a competitive climate in which industry can flourish. By the mid-1990s we had not only come back from the abyss but had created the most competitive economy in Europe.
Throughout the Blair-Brown years regulation was heaped upon regulation, some from Europe, some home-grown. Concerns about health and safety became ludicrous. People forgot that employment protection was about encouraging jobs, not smothering them in bureaucracy.
Advertisement
In a few months the most ludicrous regulation of all from Europe will come into effect — all part-time and agency employees will have full employment protection after 12 weeks. In the whole of Europe, only Britain and Ireland have extensive part-time employment. Last year the vast majority of jobs created here were part-time and I believe this will be the employment pattern of the future. Our economy depends on the flexibility that it gives, and when it is stopped — for the best way to destroy employment is to protect it — we will lurch a little farther down the list of competitive economies.
The problem for Bombardier and others in British industry lies not with the French or Germans but with what we do at home.
Lord Young of Graffham was Secretary of State for Trade and Industry, 1987-89