HC Deb 06 April 1981 vol 2 cc677-8
13. Dr. Mawhinney

asked the Secretary of State for Industry if he is satisfied that the effects of Government policies are to make the private engineering industry more competitive.

Mr. MacGregor

I am satisfied that the policy of reversing inflation and seeking to free resources for productive investment will contribute positively in the creation of a more competitive industry. To a large extent competitiveness depends on management's skill and drive and co-operation by the work force, including reasonable pay settlements and reductions in restrictive practices.

Dr. Mawhinney

Could my hon. Friend find time to say a kindly word of encouragement to the workers and management of Perkins Engines, Baker Perkins and Peter Brotherhood in my constituency which have greatly increased their competitiveness over the past 18 months in difficult circumstances? Does he agree that, if they are to continue that desirable trend, they must have as much help as possible from a favourable exchange rate and favourable interest rate levels?

Mr. MacGregor

I certainly pay tribute to the firms to which my hon. Friend referred. He will know that among the difficulties facing them have been the worldwide recession and the problems in overseas markets. It has been demonstrated in other countries, as well as here, that large-scale intervention on exchange rates has only short-term effects. Often it would undermine our efforts to control inflation. There are serious difficulties in intervening on exchange rates. My hon. Friend will know the course on which we are embarked in relation to interest rates, and MLR has come down five percentage points in the past few months.

Mr. Foster

Is the hon. Gentleman aware that his policies have been so successful in making private engineering competitive that a 2,000-signature petition on unemployment was completed in one week in Newton Aycliffe, which was formerly an oasis of prosperity in South-West Durham? In view of the great fears about unemployment in that town and the rest of South-West Durham, will he consider regrading Newton Aycliffe and the rest of South-West Durham as special development areas?

Mr. MacGregor

That is a separate question. The hon. Gentleman will know that stability in grading is an important part of the special development area policy. It is important that industrialists know where they stand. Where there are clear indications of a long-term change in the structure of an area and its levels of unemployment—I stress "long-term"—we are prepared to consider them.

Mr. Ioan Evans

Will the Minister study the long list of private engineering firms that have closed down since the Government took office? How can such firms be competitive when they are ceasing to exist?

Mr. MacGregor

Apart from the recession, one of the factors that hit many engineering firms was the effect of pay settlements of earlier years. One of the important elements now is the mood of greater economic realism in approaching pay settlements.