HC Deb 10 December 1986 vol 107 cc330-1
7. Mr. Tony Lloyd

asked the Secretary of State for Trade and Industry if he will make a statement on the future of the engineering industry.

Mr. Giles Shaw

The prospects for the United Kingdom engineering industry are encouraging and I feel sure it will continue to make a vital contribution to our economic prosperity in the future.

Output has been rising steadily over the past five years and output per head has risen by 30 per cent., demonstrating a significant improvement in productivity.

The Confederation of British Industry "Industrial Trends" survey for October indicated that both mechanical and electrical engineering firms were expecting new orders to increase over the next four months. For the medium term, the National Institute for Economic and Social Research forecasts mechanical engineering growth at 1.5 per cent. per annum and electrical engineering at 3.5 per cent. per annum, the fastest for any manufacturing sector over the next five years.

Mr. Lloyd

The Minister paints a rosy picture of the industry, but it is the same industry which has lost 1 million jobs since the Government came to power and the same industry which can no longer offer a future to young people in my constituency and many others. Do the Government intend to use the public sector to revitalise the engineering industry in the many areas where the public sector is an important purchaser, as that is what we have not seen in the past and why we are still losing jobs in Trafford and elsewhere?

Mr. Shaw

I do not deny that there has been a substantial contraction in employment and a significant restriction on the number of apprenticeships available, as the hon. Gentleman knows from discussions that we have had previously. He will be aware, however, that public sector purchasing plays a vital part, especially in the power generation industry.

Mr. Watts

Does my hon. Friend agree that the opportunities for the engineering industry are very much greater than the growth forecasts that he quoted and that the proof of this is to be found by visiting any factory and seeing the vast quantity of imported machinery that is used? The challenge is therefore to British companies to identify what sort of equipment is imported and to get into the market and produce it itself.

Mr. Shaw

My hon. Friend is absolutely right. There are many sectors of engineering in which there is a high level of import penetration and in which United Kingdom producers could meet the demand. With the reduced costs that many are now carrying, they should be able to meet such demand if they have a mind to do so.

Mr. Hardy

Is the Minister aware that one indicator of the dreadful decline in our steel and engineering industries is that the Ministry of Defence has now invited Thyssen to tender for certain engineering steels required by Her Majesty's armed forces? Is the Minister further aware that the Federal Republic will not allow any other power to tender for similar supplies for the German services? Is that not an appalling example of the deplorable negligence of the past five years?

Mr. Shaw

I shall look into whether we are able to tender for other European orders. The hon. Gentleman will be among the first to recognise that, with the wider Community market available for the full range of engineering products, the prospects for the British to compete are increasing.

Mr. John Mark Taylor

In considering the future of the engineering industry, will my hon. Friend take note of the recent survey from the Birmingham chamber of industry and commerce, which showed that the two greatest inhibitors to growth were perceived by their members to be high local authority rates on the one hand and high interest rates on borrowing on the other?

Mr. Shaw

I am sure that my hon. Friend is correct. With regard to his latter point, clearly the Government will do their best in the management of the economy to ensure that interest rates do not increase but continue to decline on average. With regard to the first point, my hon. Friend will be aware that yesterday we passed a Bill which shows the forecast way in which local authority financing will be conducted.

Mr. Eastham

When will the Minister recognise the gravity of the position of the engineering industry, which has seen a decline of 30 per cent. since 1979? I draw to the attention of the Government the decline of confidence, because of all the takeover bids, which is having an adverse effect on the engineering industry. What will he do about it?

Mr. Shaw

I hear the hon. Gentleman's point. I understand it, and I know that in the Manchester area there have been significant contractions. However, I was present at the awards given by the Jaguar company to many of its components suppliers, 44 of which have pursuit of excellence awards. The winners for the past two years have come from the hard-pressed area of Yorkshire, of which I am proud to be a representative.

Mr. Thurnham

I am a practising member of the industry which last week His Royal Highness Prince Charles described as being not quite all that we would like it to be. Will my hon. Friend confirm that the measures that the Government are introducing should ensure that our engineering industry has every opportunity to take advantage of all the new technologies?

Mr. Shaw

My hon. Friend is right, and the take-up of computerisation in the engineering industry is a good example of what has happened. There is now much greater take-up of computerisation in the engineering industry, and this has shown a growth that is four times more than that which we inherited in 1979.

Mr. John Smith

Is the Minister aware of the enormous opportunites in advanced electronic engineering which the GEC-Nimrod project offers? In view of the crucial role that the Secretary of State for Trade and Industry may play in the ultimate decision, may we be assured that he will fight for Britain's interest when this matter is discussed in Cabinet?

Mr. Shaw

My right hon. Friend the Secretary of State will have heard what the right hon. and learned Gentleman has said. It would not be for me to comment on what my right hon. Friend would say, but obviously the matter is of great concern and will be discussed fully in Government before a decision is made.