§ 1. The Government's industrial policies and the economic Plan are complementary means to a common end—the achievement of a sustained high level of economic growth and 1939 employment. Industry must operate at maximum efficiency and competitiveness. To do this it needs all relevant information on the development of its markets, and the capital and skills which will be required to serve them. This the Plan for economic growth provides.
§ 2. The Plan, which is being prepared by Government in consultation with both sides of industry, will form a firm basis for investment, expansion, modernisation and greater international competitiveness. It will provide information on the likely development of markets, of the projected rate of expansion of different industries and on Government industrial policies. Such information should help management to plan ahead with greater confidence. The Plan will also provide a framework in which the Government can arrange its own expenditure. Work on the Plan should help to identify particular problems in the way of faster growth and suggest means of tackling them.
§ 3. The task of the Economic Development Committees is to encourage a better use of our industrial resources. They have therefore been involved in the discussions on the Plan and on its implications for their particular industries. This "dialogue" constitutes one of the major functions of the E.D.C.s and will continue after the publication of the Plan. Consultations are also taking place with other industries not yet covered by E.D.C.s.
§ 4. The Plan is not a rigid blueprint nor an infallible guide to the future. It is, however, a useful yardstick against which progress can be measured and difficulties diagnosed. The individual figures will almost certainly be revised and adjusted, but not the main objectives, which are to be clearly stated in the published Plan.
§ 5. Action to bring about a lasting improvement in the balance of payments is the first priority. The measures which the Government has already taken to bring this about will provide a basis for further advance. For only if British industry is fully competitive in world markets will it be possible to achieve a faster rate of growth.
§ 6. The need to sharpen our competitive ability was recognised in the Joint Statement of Intent on Productivity, Prices and Incomes signed by the Government with both sides of industry last December. The prices and incomes policy and the machinery for giving it effect, worked out with both sides of industry, is intended to combat the tendency for incomes to rise faster than productivity. In addition, the two sides pledged themselves "to encourage and lead a sustained attack on the obstacles to efficiency, whether on the part of management or workers, and to strive for the adoption of more rigorous standards of performance at all levels".
§ 7. This involves a faster adoption of proved new methods and techniques by all engaged in industry. Workers will more readily accept change if they see that opportunities are being provided for training in new skills and that jobs are available in all parts of the country. The preliminary work on the Plan has already revealed that labour is likely to be short over the next few years if the growth rates anticipated 1940 by industry are to be achieved. This suggests:
- (a) The need for a stronger regional policy to obtain balanced development of all areas in the country and the fuller use of resources. The newly created Regional Councils and Boards will be responsible for this policy.
- (b) The need for an increase in both the quality and the quantity of productive investment. The N.E.D.C., in its report on "Investment Appraisal", which has had a very good sale throughout industry, has given valuable advice to industry on new techniques for assessing the profitability of capital projects.
- (c) The need for better use of labour. There is need for greater mobility, so that people move to those industries and occupations where they can make the best use of their skills. Industrial Training Boards covering the bulk of industry and commerce are being set up under the 1964 Industrial Training Act, and a major expansion of Government Training Centres has been started. Legislation on redundancy payments is now before Parliament, unemployment benefit has been improved, and wage related benefits are under consideration. Industry is being encouraged to forecast requirements of manpower further ahead.
§ 8. These national policies will affect the performance and prospects of each individual industry. But the problems of industrial efficiency must also be tackled at the level of individual industries and firms. This is another function of the E.D.C.s or "Little Neddies". The E.D.C.s, like the N.E.D.C., contain representatives of management, trade unions and Government, as well as independent members. There are at present nine E.D.C.s and a further four are in process of formation. I hope to increase the total number to about twenty, covering the great bulk of employment in the private sector of the economy before the end of the year.
§ 9. The priorities for the "Little Neddies" vary from industry to industry. Nevertheless, some common priorities have emerged. In addition to work on the Plan, many E.D.C.s have studied in detail the extent and causes of imports of the various products of their industries. This has shown the need for more investment to provide for our own markets and the need to improve in other ways the competitive position of individual industries. A study of ways of making British industry more competitive with imported products, arising out of the work of the "Little Neddies" has now been considered by the N.E.D.C. Meanwhile the E.D.C.s themselves have evolved Action Programmes to reduce the volume of imports in their industries. Programmes agreed by the Machine Tools, Chemicals and Mechanical Engineering E.D.C.s include specific recommendations to bring about improvements in design, increases in productive capacity, better links between suppliers and customers, a more efficient industrial structure and Government action to encourage investment. These measures which lie within the Government's responsibility are being urgently studied.
1941§ 10. The E.D.C.s are also undertaking detailed studies of manpower problems. They are working for ways of extending productivity bargaining, on the lines of recent agreements in a number of industries. Such agreements have allowed increases in productivity, relaxations of job demarcations, a more effective deployment of labour and drastic reductions in overtime, while at the same time guaranteeing a reasonable security of employment for the workers involved and providing higher earnings.
§ 11. The "Little Neddies" are giving urgent attention to standardisation and specialisation in order to achieve economic production runs. Increased production can only come in the short run from higher output from the same men and machines, and standardisation and specialisation are in turn the quickest way of achieving this higher output, combined with lower costs and prices. This will require detailed discussion in each E.D.C. and in subcommittees for separate sectors.
§ 12. Some E.D.C.s have now turned from the study of imports to a study of methods increasing exports in their industries, and others will shorty follow. Other subjects under consideration include ways of improving market research, technical research and development, design and training and stock control. The priorities vary with the structure, markets and production processes of each industry. There are many areas where there is scope for more co-operation inside industry, and between industry and Government, subject to the disciplines of the market economy.
§ 13. The framework within which the work of the E.D.C.s is taking place is the National Plan. Despite the complications and the detailed discussions involved, the Government are determined to have the Plan ready by the end of the summer so that everyone concerned can he aware of the aim and the means proposed for achieving it.