Productivity and Output

HC Deb 20 July 1981 vol 9 cc6-8

5. Mr. Gwilym Roberts

asked the Secretary of State for Industry what changes have taken place in the productivity and output of British industry since May 1979; what steps he is taking to increase productivity and output; and if he will make a statement.

Sir Keith Joseph

In the first quarter of 1981 manufacturing output was 20 per cent. lower than it was in the second quarter of 1979. Output per person employed was 8 per cent. below its level in the second quarter of 1979, but it rose by 1.9 per cent. between the last quarter of 1980 and the first quarter of 1981. Output per head cannot fully reveal movements in productivity because it takes no account at all of changes in hours worked. By January of this year, for example, provisional estimates suggest that output per operative hour stood at a record level.

Mr. Roberts

Will the Secretary of State now admit that, in spite of the incredible optimism in the supplementary question asked by the hon. Member for Bristol, North-West (Mr. Colvin), the figures reveal clearly that the Government's industrial policies are not working and that the only effect of the so-called slimming down process—apart from the human hardship it creates—is to destroy our industrial base?

Sir Keith Joseph

No, I do not accept either proposition. Industrial countries as a whole have suffered a loss of industrial output during the last couple of years. We have suffered more than most because we were more over-manned and less competitive.

Mr. Chapman

Can my right hon. Friend give any data on the movement of labour unit costs, which are crucial to this question? As the British Steel Corporation has cost the British taxpayer over £6,000 million in the last 10 years, can he say whether output and productivity are improving in that industry?

Sir Keith Joseph

Yes, productivity is increasing, dramatically in some places, in the British Steel Corporation. We welcome that. In some cases, unit labour costs are falling, but that is after the huge increase in unit labour costs that followed the mad escalation of wage claims in 1980 which, as the House will remember, was unaccompanied by any rise in productivity or production.

Mr. Arthur Lewis

Whether one is Labour, Liberal or Tory, for or against private or public enterprise, should not one accept that if we are not producing the cake we cannot argue about how it should be shared? We are not producing the cake. When will the Government do something to get back to the production that we had in 1979?

Sir Keith Joseph

There is a limit to what the Government can do to secure the higher productivity and the better competitiveness upon which jobs depend. The House should recognise that that surge of high wage claims, unaccompanied by higher productivity, was to a large extent responsible for the dramatic rise in unemployment which immediately followed, as we warned.

Mr. Stokes

Does my right hon. Friend agree that there has been a substantial increase in productivity per man? Does he agree that that is most encouraging and augurs well for the competitiveness of British industry when the slump eventually is over?

Sir Keith Joseph

My hon. Friend is right that the gains in productivity, potential or actual, now being manifested will stand us in good stead as output recovers. However, we handicapped ourselves by those excessive wage claims without co-operation in productivity so that we have far further to catch up. Opposition Members totally mislead those whom they seek to lead by telling any different story. The future employment and prosperity of the country depend upon good management and co-operation between work forces and management in securing profitable higher productivity and competitiveness.

Mr. Orme

Output and investment are down and unemployment is rising. Is the Secretary of State aware that the CBI's figures in its June forecast show that 70 per cent. of firms have a smaller order book? Is he aware of the IMF's international forecast of a depression? What steps are the Government taking to create employment and industry? The right hon. Gentleman is the Secretary of State for Industry. When will he do something about it?

Sir Keith Joseph

Nearly all our competitors are suffering a decline in manufacturing output because the growth in world trade has levelled off. We are suffering in particular for the reasons that I have already described—uncompetitiveness, low productivity and low profit. Those factors are closely and intimately linked with lack of co-operation, in many cases, between work forces and management to secure what is needed for more jobs.