Introduction

First of all, Mr. President, My Lord Bishop, I thank you for your kind words of welcome this evening. [Marginal note by MT: (Opposition Vote. Now in fact we manage things rather better.) ] I am delighted to see that we have a record crowd here, notwithstanding the recession. Tonight's invitation was one I was determined to accept. For this great industry remains today, as it has been for the past hundred-and-fifty years, the pivot upon which our prosperity as a nation turns. It is also the supreme example of a free enterprise industry which stands or falls by its ability to meet the needs and preferences of its customers. [end p1]

You take a considerable risk in inviting a Minister to address your biennial dinner. For it exposes you to the danger of being subjected to thirty minutes of the departmental brief, at least twenty of them on sterling M3 and all the other monetary aggregates and another ten minutes on the dynamics of economic recovery. I am afraid that the departmental brief turns out to be a good deal less amusing than when it appears on “Yes, Minister” . [end p2]

Fortunately for you, I have no Department, although my official and oldest title is First Lord of the Treasury.

TOM SAWYER

And I promise not to spend too long giving you all the vital statistics designed to demonstrate how well the Government's doing. Nevertheless, don't expect me to imitate one of my namesakes. You'll remember that when Becky Thatcher got lost in the caves with Tom Sawyer, she didn't behave at all like me. [end p3]

She kept on saying things were only going to get worse and worse, and she wished she'd never left home.

But they got out all right in the end, and as far as we know lived happily ever after. Perhaps the moral for the politician lies in the fact that it was Tom Sawyer, the one who never gave up, who led the way out in the end.

TRIBUTE TO PRESIDENT AND DIRECTOR-GENERAL

Mr. President, this biennial dinner marks the end of your term of office, and that of the Federation's Director-General, Anthony Frodsham It would be wrong to let either of you slip away without some acknowledgement of your very considerable services to the engineering industry. [end p4]

You, Mr. Hampton, have been President for two years. You have devoted a great deal of time and energy to the Federation's affairs. Your diplomatic skills have contributed greatly to the successive national negotiations in which you have led the employers' side. You have now retired from a distinguished career in a long established engineering company in the industrial heartland of Sheffield, having at last succumbed, so I am told, to Swedish embraces. And you have become a Director of Lloyds Bank. Clearly, in the light of their profits announced last week, you are in for a prosperous future. We wish you well. [end p5]

Anthony Frodsham has served the Federation for seven years as its Director-General. He has greatly strengthened the Federation's contacts with Government, and it is hard to realise that the friendly boom of his voice will no longer be heard putting the Federation's case in the corridors of power, or on the “Today” programme. Not the least of Tony Frodsham 's achievements is his part in the establishment of the Engineering Council following the report of Sir Monty Finniston. I am sure you will join me in congratulating your Director-General on his distinguished term of office at the Federation. [end p6]

Mr. President, that celebrated trans-atlantic armchair critic of free enterprise, Professor J.K. Galbraith, once described the engineer as “the enemy of the market” . But then I suspect it has sometimes occurred to most of you who have to earn your living in the market-place that those who are most scornful of its benefits often display a considerable misunderstanding of the way it works.

At any rate, I doubt if there are many here tonight who would subscribe to the proposition that engineering in the 1980s has insulated itself from the rough hard world of competition. [page missing] [end p7]

It is the culmination of a long, sad story. Twenty years ago one of the great industries to which you sold your wares, the shipbuilders, had work for about a quarter of a million people. Today the number has shrunk by almost half. Twenty years ago some 650,000 people worked in metal manufacture. Today, again, it is about half that number. Twenty years ago about 900,000 were employed making motor vehicles; today it's less than three-quarters—and that's not for lack of demand: think how many more cars there are on the roads. Altogether, we lost a million jobs over that time. But of course unemployment rose by much more because we had more people of working age, and far [end p8] more women wanting to work. And so the unemployment register has risen by 2½ million over twenty years.

I'm always being asked where the new jobs are going to come from; and whether we'll ever get back to full employment.

The same questions must have been asked at the time of the first Industrial Revolution. Were not machines going to replace men? And yet those very machines increased our productive capacity; enlarged the number of jobs; took the drudgery out of much of our work; and became the foundation of our prosperity. [end p9]

The age of the car at first caused problems, but eventually gave rise to thousands of jobs. The age of the computer was greeted with apprehension, but enabled us to do things which would have been impossible before the technology was developed. So I believe it will be with the micro chip. Each new technology carries the potential of more jobs and wider markets, for those who will rise to the challenge.

Mr. President, we shall not win the new jobs unless we welcome new technology, and adopt more effective working habits. [end p10] When two men do the work of one, both stand to lose their jobs. Restrictive practices and overmanning once designed to save jobs have lost whole factories. And even whole industries. This kind of unemployment cannot possibly be ascribed to Governments. It is due to attitudes in industry. It is far easier to destroy jobs than to create them.

But, Mr. President, your industry is setting an example in adapting to the requirements of a swiftly changing world. [end p11] It is an example which is being widely followed. That, I believe, is why you were able as an industry to win last year more orders than you collected the year before and an impressive 20%; more orders overseas. The ANZSCAN Cable project, the Davy steel plant in India, the mass transit and power station orders in Hong Kong all bear witness to the reviving competitiveness and reputation of the British engineering industry across the globe. [end p12]

That is your achievement, and I applaud it. But Government can take some measure of credit for at least one important aspect.

We have created the conditions within which management can manage. That is why we acted to cut away the controls on wages and prices; [end p13] why we acted to reduce the top rates of tax, which was so important an issue to management; and why we acted to remove exchange controls so that British firms could take their proper place in a world of multinational investment. I regard it as one of the principal achievements of this Government that management have had restored to them their proper authority and responsibility; for only in the factory can that vital leadership be provided which will secure the co-operation, innovation, design, efficiency and salesmanship which are the ingredients of success. [end p14]

Your industry, Mr. President, has shown us what can be done.

You have shown us how, throughout the private sector, the fatal obsession with keeping up with the pay of the Joneses is making way for recognition of the need to catch up with the performance of the Siemen's and the Mitsubishi's.

You have shown that there is no substitute for the spur of competition if our performance is to be improved.

It remains our deep conviction that the interests of the customer are best served by choice—and not by direction. [Marginal note by MT:] Fanatical & fervent in the pursuit of the freedom of the individual(?) as the communists are in the relentless pursuit of their tyranny.

That is why we have paved the way for the introduction—announced yesterday—of the [end p15] independent telecommunications system, Mercury: to give commercial users a choice.

Even the Railways cannot wholly escape this principle. No Arbitration Tribunal can wave a magic wand and restore the traffic which the Railways have lost. The public sector, Mr. President, cannot remain insulated from the realities of the marketplace; and we are acting to sharpen these competitive pressures wherever we can. [end p16]

You spoke, Mr. President, of your hopes for the Budget. Everyone wants to have a word in the Geoffrey HoweChancellor's ear. This is the season when the dreaded Buzby is working overtime in Downing Street.

I can't comment on your specific propositions, or I would soon be in trouble.

I can say that the common theme which runs through all the advice that we have been given is one that we can endorse. [end p17]

It is the need to tend and nurture the first fruits of recovery.

That will be our purpose.

But it will not be achieved by a lurch into irresponsibility.

Every day I read of proposals to reduce this tax or that. Together they add up to a formidable total, and I fear that expectations are being raised too high.

After all, the Government have announced (and Parliament has debated) the expenditure for next year, and the purpose of the Budget is to raise the revenue. [end p18]

The recent oil price reductions, which are still continuing, will lower costs, and are particularly welcome to industry.

But they also cut the revenue to the Exchequer from North Sea oil, thereby diminishing the Geoffrey HoweChancellor's limited room for manoeuvre.

This is a factor which cannot be ignored, for the Chancellor has to make the sums add up.

And on his ability to do so rests confidence in our currency. [end p19]

For our part we will resist the calls for easy options. Ulysses, you will remember, resisted the siren voices and so came safely home to harbour.

Mr. President, there is some good news. [end p20]

Productivity in manufacturing increased by 7 per cent last year.

A performance unprecedented during a recession.

At the same time the rise in the unit cost of labour in British manufacturing industry, previously one of the fastest in the world, was transformed into one of the most modest—well below most of our international competitors.

We are becoming much less strike prone—with one or two notable exceptions in the public sector.

In 1981 industrial stoppages were the lowest for four decades. [end p21]

We are becoming much more aggressive in selling overseas. In 1981 our current account surplus will almost certainly be the highest on record; and our exports have performed well.

And finally, and most important of all, we have much lower expectations about inflation.

People really are beginning to understand that we're going to get it down well into single figures, and we must keep it there.

The Wholesale Price Index in January rose by the smallest amount for nine years. [end p22]

But, Mr. President, the other side of the coin is, of course, that the unemployment that was previously hidden in industry, now swells the unemployment register.

Tragically for those involved, the recovery of employment lags some way behind the recovery of output. [end p23]

Nevertheless Mr. President, we are now well placed to take advantage of an expansion in world trade, and also to increase our share at home.

We have within our reach a new and lasting prosperity; more stable prices; a long overdue recovery in profits and investment; a revival of enterprise; followed by the new jobs we all so much want to see.

Our difficulties are far from over.

But you, Mr. President, are a sailor, and you know that the voyage to full competitiveness in today's world is a long and hard one.

But I say to you. [end p24]

“The ship sails e* the ship sails west;

Whatever the wind that blows,

'Tis the set of the sail, and not the Gale

That determines the way she goes.”