HC Deb 12 January 1981 vol 996 cc736-7
7. Mr. Marlow

asked the Secretary of State for Industry whether he will make a statement on the state of the engineering industry.

Mr. Kenneth Baker

I draw my hon. Friend's attention to my right hon. Friend's remarks in the Supply day debate on 4 December. I have nothing further to add to these at present.

Mr. Marlow

Is my hon. Friend aware that many of our most efficient engineering companies are on a two-day or a three-day week at the moment and that this state of affairs has arisen largely because of the once and for all steep increase in the value of the pound which has reduced their competitiveness against overseas and particularly European competition? Whereas over a long period the engineering industry could cope with this, over a short period it is very difficult. I wonder what encouragement my hon. Friend can give to the engineering industry.

Mr. Baker

I am very much aware of the difficulties of the engineering industry. Needless to say, not all is black. There are some good parts of the engineering industry.

Mr. Orme

Where?

Mr. Baker

In pumps, valves and mining machinery, companies are doing quite well. It must be some encouragement to us all that the Metro line of British Leyland represented the highest output of the car line since 1975.

I have looked into the problems of the exchange rate in other capacities to see whether the Government could operate effectively to reduce the level. I am unconvinced that any Government intervention would have a long-term or an effective influence on the level of sterling. Foreign experience in this is very discouraging.

Mr. Douglas

Will the hon. Gentleman have regard to the prospects for new investment in the industry, especially in machine tools? Does he agree that we are reaching a situation, if and when we take off again, where British engineering will find itself denuded of adequate British machine tools and will have to import, as it is unhappily having to do at present, from Japan particularly, which is quite unfair in competitive terms at present?

Mr. Baker

I accept the hon. Gentleman's point. Perhaps I could draw to his attention and to that of firms in the engineering industry the existence of the product and process development scheme run by my Department, which makes grants available not only to engineering companies but to other companies for the design, development and launch of new products. Under the scheme, we have committed some £63 million, £46 million of which has been committed in the lifetime of this Government.