Manufacturing is important for the health of the British economy. It helps the UK export to China and India, it provides jobs – especially in areas that suffer from high levels of unemployment – and it gives diversity to our economy, better enabling it to weather the storm of an economic downturn.

The government, however, appears to believe that manufacturing is old-fashioned and unimportant. Under this government’s stewardship, over one million jobs have been lost in the manufacturing sector, and research and development in manufacturing has fallen by over 12 per cent. Manufacturing output was subdued through much of 2005 and declined by around one per cent for the year as a whole.

Conservatives have in the past been accused of neglecting manufacturing industries, but the facts do not bear this out. During the last two periods that the Conservatives were in office, manufacturing output grew substantially (by 5.5 per cent and 12.8 per cent). It is under this government that it has fallen.

Conservatives are concerned by the falling competitiveness of the British economy. Higher taxes, a greater burden of red tape, and energy prices that are higher than competitors across the Channel, have all combined to erode the strong competitive position we used to enjoy.

The party has set up the competitive challenge policy review group to advance policy ideas with the aim of making Britain ‘the best place in the world to do business’.

We understand that business and enterprise are vital to a thriving and prosperous country, and that it is through enterprise that jobs are created and incomes earned. If the competitiveness of British business is eroded, everyone loses out. In order to compete, one cannot expect business to stand still: instead it must constantly improve, delivering better quality, greater flexibility and higher productivity.

This government appears not to understand these things. That is why it makes 15 new regulations every working day, and raises and complicates taxes on business. That is why business investment as a proportion of GDP is at an all-time low and the number of new registrations at Companies House is falling.

One obvious example of the complete failure of Labour to understand what this country needs came in the chancellor’s recent budget. He announced a new business advisory council, but it will only meet once a year. This is yet another headline-grabbing attempt to divert attention from the damage this government is doing to British business.

The difference is that Conservatives understand what businesses need to thrive. We understand risk, and what business needs, and what government should and should not do.

One of the things that governments should do is provide a level of certainty in public policy. Businesses want to know, with as much certainty as possible, what is coming, so they can plan and invest. But Gordon Brown is forever tinkering with the tax system. Every year the Finance Bill gets fatter, there are more regulations to digest, more schemes set up and more guidance issued.

As well as providing certainty, governments can do much with the policies they do adopt – business support schemes, for example. Even good businesses need some support, especially when they are small or just getting started. But some support is more trouble that it’s worth.

The government announced recently that there were over 3,000 schemes in place to help businesses, whether with funding or advice, tax relief or incentives. The government may have been well intentioned in setting up all these schemes, but the sheer number makes accessing the help and support they can provide more difficult – typical of a government that does not understand business.

The National Audit Office has criticised the complexity and the lack of monitoring or coordination in the current system of business support. They say the government has no idea – and no way at present of finding out – which of its small business schemes are effective and which are not.

It’s a measure of the way things have gone under Labour that they have finally admitted they want to reduce the number from 3,000 to just 100. Of course, the intention to simplify these schemes is welcome, but it is a measure of the direction of travel of policy under Labour that it was ever allowed to get to this situation. Furthermore, they have been unclear as to how they intend to reduce the number.

Businesses have begun to speak out about this government, and about time. A survey for the London Chamber of Commerce showed that 78 per cent of company directors said it was harder now for a small business to survive than in 1997, and 62 per cent said starting up a new business was more difficult than nine years ago.

The economic statistics tell a depressing story of Labour failure. Not only have we fallen from 4th to 13th in the World Economic Forum’s league table, but also our share of world exports is shrinking and our trade deficit is increasing to record levels.

The recent job losses announced at Peugeot and Vauxhall are the latest indication that all is not well with the economy. There are signs that the long-term drivers of prosperity are weakening. We need to think carefully about how Britain’s productivity can be improved – otherwise more British families will be hit hard in the long run.