HC Deb 14 February 1983 vol 37 cc10-1
13. Mr. Chapman

asked the Secretary of State for Industry if he will make a statement on the competitiveness of British manufacturing industry as measured by unit costs and output per man-hour in the past three years.

Mr. Patrick Jenkin

Following several years in which United Kingdom manufacturing industry lost competitiveness, since the first quarter of 1981 it has improved by 24 per cent. Between 1979 and the third quarter of 1982 output per man-hour has improved by 10.1 per cent. Those trends are encouraging.

Mr. Chapman

I welcome that dramatic reversal in the trend of uncompetitiveness, which was entered into in the last half of the 1970s. Will my right hon. Friend confirm that that augers well for Bitish manufacturing industry as the world recession ends? Does he agree that so long as the Government allocate subsidies to industry it is better to allocate them to creating new jobs in new expanding industries than to use them to prop up and preserve uneconomic jobs in dramatically declining manufacturing industry?

Mr. Jenkin

I cannot dissent from my hon. Friend's general proposition. Unfortunately, in the real world of politics it is not always easy to adhere to that, tout court. I agree that the trends are encouraging, but there is still some way to go before we can recover the competitiveness that we had in 1975.

Mr. J. Enoch Powell

How is the factor of exchange rates eliminated from the comparisons to which the Minister has just referred?

Mr. Jenkin

The changes in the exchange rates are included in the figures that I have given. It is important to make sure that the benefits endure, by keeping hold of costs. That has not happened when the pound has been devalued previously. The benefit that comes to industry through having a lower exchange rate has been lost as costs have risen to absorb that benefit. We must make sure that that does not happen this time round. That will be to the benefit of British industry recovering its share of the markets both here and overseas.

Mr. Orme

Why is the manufacturing sector in such a crisis? The Minister must know. Like him, I travel round the country visiting many major companies, which tell me the same story. Since 1979 there has been a disaster. In many cases firms have lost half their employees. I visited Lansing Bagnall, a major vehicle company, last week. It has lost over 2,500 employees. One cannot complain about unit costs of production at a firm such as that. Why is there such a crisis?

Mr. Jenkin

The right hon. Gentleman should have come with me when I visited the TI Raleigh company in Nottingham on Friday. That company is bent on putting its house in order. It is recovering its share of the market, restoring its profitability and has introduced new models. It is introducing new production methods. I give it three hearty cheers.