HC Deb 25 November 1987 vol 123 cc252-4
11. Mr. Cran

To ask the Chancellor of the Duchy of Lancaster what are the latest figures for the productivity of manufacturing industry; and what comparable figures he has on the recent performance of the United Kingdom's major competitors.

Mr. Butcher

In the year to the third quarter of 1987 productivity in manufacturing industry, as measured by output per man, increased by 6.9 per cent. In the year to the second quarter of 1987, the most recent period for which international comparisons are available, productivity in manufacturing industry increased by 6.5 per cent. in the United Kingdom. This was the fastest increase achieved by any of the major seven industrialised countries and com-pares with an average increase for the major seven countries of 2.7percent.

Mr. Cran

I thank my hon. Friend for that answer. Does he agree that if he checks the record he will find that under the last Labour Government the United Kingdom was at the bottom of the productivity league of all the industrial countries? Does he agree that the future competitiveness of British industry and British manufacturing vitally depends upon individual British companies maintaining control of unit labour costs, which under the last Labour Government went through the roof?

Mr. Butcher

The United Kingdom's average growth rate was only l½ per cent. between 1970 and 1980. In that period we were at the bottom of the productivity league of major industrialised nations. That contrasts with this decade in which the average growth rate has been over 5 per cent. and we have been at the top of the league. In regard to costs, of course we have to maintain our healthy obsession with unit wage costs and all unit costs. If we can keep that going until well into the 1990s, we shall have a very favourable outlook indeed.

Ms. Armstrong

Will the Minister encourage industry to plough back the improvement in productivity into investment in manufacturing, which is still showing a decline in areas such as the north? Investment needs to be — [Interruption.]I am only going on last month's figures. Investment in manufacturing needs to be increased, so that areas such as the north can benefit from increased investment and increased growth, so that we may put the hundreds of thousands of people who are still out of work back to work.

Mr. Butcher

As a northern Member, I hope that the hon. Lady will have drawn much comfort from the fact that the manufacturing sector is now spearheading our economic growth. It is growing faster than the general level of the economy.

Mr. Tim Smith

Are not the encouraging figures that my hon. Friend has given to the House further evidence that the enterprise culture is well established in many parts of the United Kingdom? Will my hon. Friend make it his overriding objective——

Mr. Cryer

Two million jobs have gone.

Mr. Smith

Shut up.

Mr. Cryer

The hon. Gentleman does not like the truth.

Mr. Speaker

Order. Questions are to the Minister, not to the Bench below the Gangway.

Mr. Smith

Will my hon. Friend make it his overriding policy objective to ensure that the enterprise culture is established throughout the United Kingdom? We have the conditions for further investment, further productivity growth and more jobs.

Mr. Butcher

I can understand the antagonism of some Opposition Members towards the enterprise culture, because the arrival of the enterprise culture in some of their constituencies could well mean that they will lose their seats to the Conservative party. In regard to the sedentary question——

Mr. Speaker

Order. Please do not answer sedentary questions.

Mr. James Lamond

Is the Minister aware that increased productivity and increased investment frequently lead to fewer jobs in industries such as the textile industry? If more jobs are to be created, which I assume we all desire, there has to be a buoyant market for the products, so that their improved competitiveness can result in increased sales. If the United States puts on an embargo on our goods, is it not true that goods intended to be imported into the United States from many other countries will be diverted to Britain? That will result in the market here being less buoyant. There will be fewer jobs and the investment in productivity will have been for nothing.

Mr. Butcher

To take the last question first, it confirms that we are right to be concerned to see the continuation of the open trading market internationally. That is a prime objective of my right hon. Friend the Chancellor of the Exchequer. On productivity and job loss, productivity gains are the friends and precursors of increased employment, as the Japanese experience demonstrates. I hope that we shall no longer be sidetracked by the myth that increasing productivity equals job losses. It means gains in income to United Kingdom plc and therefore gains in jobs.