Industrial Competitiveness (Hansard, 10 June 1982)

§ Baroness Elliot of Harwood
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ The Minister of State for Defence Procurement (Viscount Trenchard)
My Lords, United Kingdom cost competitiveness (as measured by the IMF index of relative normalised unit labout costs) improved by about 10 per cent. between the first and fourth quarters of 1981. This reflects a change in the path of the exchange rate but also a considerable reduction in the rate of growth of United Kingdom unit wage and salary costs last year. The latter stemmed from increased productivity and continued moderation in pay settlements.

§ Baroness Elliot of Harwood
My Lords, while thanking the noble Viscount very much for that most encouraging reply, may I also ask whether he welcomes the fact that productivity in manufacturing is rising at record levels and that over-manning has been virtually eliminated in much of British industry?

§ Viscount Trenchard
My Lords, I agree with my noble friend. Compared with the fourth quarter of 1980, the first quarter of 1982 shows a 12 per cent. increase in productivity in manufacturing industry. This is indeed at a record level for all time, and it is in spite of volume having improved only a little in the second half of last year and still being at roughly the same level as in the first quarter of this year. As the House will know, increasing productivity by those amounts without a volume increase of a substantial order is a remarkable achievement for British industry.

§ Lord Beswick
My Lords, as we are doing so well, can the noble Viscount say why we cannot afford to give more than 4 per cent. to the hospital workers?

§ Viscount Trenchard
My Lords, the noble Lord does not, I think, need to be reminded of the amount of competitiveness that we have lost over many recent years and of the need to regain that in comparison with other countries. We still have a long way to go, but we are certainly moving, and moving in a real way.

§ Lord Cledwyn of Penrhos
My Lords, is the noble Viscount aware that these figures about competitiveness and improved productivity are very welcome but 290 that what concerns us on this side of the House, and indeed throughout the House, is that while we have these record levels in one field, there is a record level of high unemployment in another field? Can he say whether these encouraging figures mean a prospect of high unemployment being brought down, and can he say what plans the Government now have, on the basis of these good figures, to bring down unemployment?

§ Viscount Trenchard
My Lords, indeed it is a fact that employment levels inevitably follow levels of competitiveness and shares of world markets that this country wins. If we can keep these trends up there is no doubt but that unemployment will also turn, but at a distance behind the economic factors. I would add, as one factor not yet mentioned, the extremely good progress (though it has not yet reached levels of which we should be really proud) in the fight against the basic causes of inflation.

Viscount St. Davids
My Lords, will the noble Lord comment on the fact that over-manning was believed to be somewhat over 20 per cent. and that unemployment is by no means at such a height, so it would appear that a lot of those who have lost their jobs have subsequently become employed in a better manner elsewhere?

§ Viscount Trenchard
My Lords, although there has been rising unemployment in some industries, particularly those where we have been uncompetitive for a long while, there is solid evidence of rising employment in those industries which are competitive.

§ Lord Molloy
My Lords, would the noble Viscount the Minister not agree that, if we could take some real action against the cheats and the spivs who make multi-millions from the black economy, the picture he has described this afternoon would be even better?

§ Viscount Trenchard
My Lords, I believe that if the economy becomes fully healthy again, as it is now beginning to do, the advantages of any black economy will be less and it will decline.

§ Lord Soames
My Lords, would the noble Minister agree that the question put to him by the noble Lord, Lord Beswick—namely, that he would like to see an increase in wages for the public sector higher than that which has been offered by the Government—denotes that he has learnt nothing from what has happened in the last few years and that he would like to go back to all the bad old practices which the last Government pursued?

§ Viscount Trenchard
My Lords, I agree with my noble friend, and his point enables me to add that, while our unit labour cost last year rose by only 22½ per cent., which was better than the figures for the United States or France, it was still behind those for Germany and Japan. We have therefore a major backlog of uncompetitiveness which we still have to make up.

§ Lord Avebury
My Lords, if workers in the public sector, and particularly those in the health service, 291 are expected to set a good example in exercising restraint, why have the Government recently approved enormous increases for judges and generals? Does the Minister not think that the Top Salaries Review Body has set an appallingly bad example, of which workers in the health service will have taken note and which they cannot be expected to ignore?

§ Viscount Trenchard
My Lords, the Question refers to the competitiveness of British industry and I take that to be both the private sector and the competitive part of the public sector. I think the noble Lord's question is largely on other matters.

§ Lord Balogh
My Lords, would the noble Viscount the Minister tell us the figures on which he bases his optimism? The figures do not show any improvement; on the contrary, the trend is still to higher unemployment.

§ Viscount Trenchard
My Lords, I am afraid that my affliction always makes it slightly difficult to hear the noble Lord, Lord Balogh. But I think that the balance of economic points which I have already mentioned is an indication that, although slow, the foundations have been laid for a real economic recovery for this country.

§ Lord Balogh
My Lords, the noble Viscount the Minister merely asserts, but I am asking a direct question. He should give us the basis of his assertion that improvement is obvious. It certainly is not at all obvious here.

§ Viscount Trenchard
My Lords, I note that the noble Lord does not find the signs that I have mentioned as obvious as I believe we on this side of the House do.