Manufacturing Production (Hansard, 12 January 1981)

§ 1. Sir David Price
asked the Secretary of State for Industry what is his latest forecast of the trends in manufacturing production through 1981.

§ The Minister of State, Department of Industry (Mr. Kenneth Baker)
The most recent Industry Act forecast suggests that, within the large margins of error inherent in forecasting exercises, manufacturing production may fall, though at a significantly lower rate than in 1980.

§ Sir David Price
If it be in order, I should like to congratulate my hon. Friend on his translation from the "Third Bench" to the Front Bench. Is it his view that, in the language of one of his right hon. Friends, the economy has now "bottomed out" and that through 1981 we can hope to see a gradual increase in the general level of output of British manufacturing industry?

§ Mr. Baker
I am grateful to my hon. Friend for his kind words; and I thank him for them. I am very concerned, as I am sure that everybody in the House is, about the drop in manufacturing output last year. The most powerful contractionary force operating in the manufacturing sector in 1980 was the reduction in inventories and stocks. The level and rate of the reduction was unprecedented in the recent economic history of any country. In the first three quarters, manufacturers cut their stocks by some £675 million. Any recovery in output essentially depends upon whether the de-stocking exercises come to an end. We shall not really know that until we have the figures for the last quarter of 1980.

§ Mr. Gwilym Roberts
Does not the hon. Gentleman agree that there is no real sign of bottoming out and that in fact there will be no major change in the trend until the Government decide to stimulate demand, rather than curbing it as they are trying to do at present?

§ Mr. Baker
As I have said, the figures on manufacturing output will depend very much upon the figures for de-stocking in the last quarter and the pre-Christmas trade. If the hon. Gentleman is calling for some 732 change of course, I would only remind him that the Government's overriding target is to bring down the rate of inflation. If we lose sight of that or abandon that, we shall never pull out of this recession. Surely that is the lesson that successive Governments have learnt.

§ Mr. Kenneth Lewis
I join my hon. Friend the Member for Eastleigh (Sir D. Price) in appreciating the fact that my hon. Friend has now been translated from poacher on the Back Benches to gamekeeper on the Front Bench. However, will he bear in mind that there are still some poachers behind him and that the name of the game must be to ensure that on the ground there is sufficient gain for British industry so that the re-stocking process begins as soon as possible?

§ Mr. Baker
I thank my hon. Friend for his remarks, which I think were meant to be friendly. I assure him that I have every sympathy with the poaching approach.

§ Mr. Stoddart
Is the hon. Gentleman, whom I congratulate on his elevation, aware that the decline in manufacturing output and production is related almost entirely to Government action? Is he aware that only last week Yorkshire Imperial Plastics in my constituency sacked 150 men because the pipes which the men manufacture are no longer needed by water authorities whose capital allocations have been cut?

§ Mr. Baker
I thank the hon. Gentleman, but I must refute his allegation. The drop in manufacturing output is due to a wide range of very complicated factors, one of which is the lack of competitiveness of our economy, and part of the element must be the unrealistically high levels of wage settlements during most of last year— [HON. MEMBERS: "When?"]. Hon. Members ask "When?". Up to October, average gross earnings for the whole of the economy were 20 per cent. up. Now settlements are at about half that level.