HC Deb 09 March 1981 vol 1000 cc601-2
3. Mr. Gwilym Roberts

asked the Secretary of State for Industry what are the latest figures of changes in industrial production since May 1979; and what steps he is taking to increase industrial production.

The Minister for Industry and Information Technology (Mr. Kenneth Baker)

In the fourth quarter of 1980 the index of industrial production was 12½ per cent. below its value in the second quarter of 1979. Industrial production can best be increased through greater competitiveness based on realistic working practices, sensible wage settlements and improved productivity.

Mr. Roberts

Does the Minister agree that the fall in industrial production in Britain is much greater than that in most other Western European countries and is a reflection not only of the general recession but of Government policies? Does the hon. Gentleman agree also that unless there is a rapid and prolonged U-turn his right hon. Friend the Secretary of State will preside over the decline and collapse of British industry?

Mr. Baker

Industrial decline varies from country to country. The real reason why there was such a sharp decline in industrial production last year was that there was quite massive destocking, on a scale that has been unknown in our recent economic history. There has been a quite exceptional fall in stocks.

Mr. Roberts


Mr. Baker

I shall explain why. British industry was caught between two pressures on competitiveness—the pressures on the pound due to rising exchange rates and the pressure due to a rapid increase in wage demands.

Mr. Dorrell

Has my hon. Friend studied the assistance that is available to French industry from the French Government in the form of public purchasing policy and in the form of market and product development support? Does he agree that it is unlikely that British industry can compete with French industry in an open market when the French are receiving support on that scale?

Mr. Baker

Of course I am aware of the various support measures that are available, not only in France, but in other countries. A little later I shall be answering a question on public purchasing, which I think will go some way towards satisfying my hon. Friend's anxiety on this score. With regard to support for research and development, I re-emphasise that there are several schemes in the Department—for example, the product process development scheme and two microelectronic schemes—where grant money is available for projects and products that are brought forward by British industry.

Mr. Ioan Evans

Does the Minister agree that production has been affected by the Government's policy of high interest rates, high energy costs and the high value of the pound? Has not the closure of thousands of companies during the last two years been a direct consequence of the Government's economic policy?

Mr. Baker

No. The problem is more sophisticated than that. The equation is not simple, but quadratic. Many factors affect the decline in industrial activity that I have indicated. Some of the ones that the hon. Gentleman mentioned are correct, but he should not overlook the unrealistic level of wage settlements for the most part of last year.

Mr. Kenneth Carlisle

Although output has declined as a result of the recession, does my hon. Friend agree that many firms have used this difficult time to improve their working methods and efficiency, which gives hope for greatly increased output, sales and productivity once the recession is over?

Mr. Baker

I am grateful to my hon. Friend for reminding us all that there is some advantage in this, in that in many cases companies have become more efficient and slimmed down and will be able to take advantage of the world recession when it comes to an end.

Forward to