HC Deb 26 October 1988 vol 139 cc279-81
4. Mr. Knox

To ask the Chancellor of the Duchy of Lancaster what is the most recent figure for output in manufacturing industry; and what was the figure for the same month in 1973.

14. Mr. Andrew MacKay

To ask the Chancellor of the Duchy of Lancaster what are the latest figures he has for the output of manufacturing industry; and what was the comparable figure one year ago.

Mr. Forth

In August 1988 manufacturing output was at a level of 116.9, based on 1985 equal to 100. This is 5 per cent. more than the level of 111.1 for August 1973, but my hon. Friends will appreciate that monthly data can be erratic. A firmer based comparison would be that in the three months to August 1988 manufacturing output was 3.5 per cent. higher than in the same period in 1973. It was also 7 per cent. higher than in the three months to August 1987. Manufacturing output is at its highest ever level.

Mr. Knox

Does my hon. Friend feel that manufacturing industry has expanded in a satisfactory manner over the past 15 years?

Mr. Forth

The record shows that, for example, between 1973 and 1979 manufacturing output fell by 4 per cent. However, having gone through a world recession, having restructured British industry and having achieved unprecedented levels of productivity and profitability, we are now well on the way to having an outstandingly successful manufacturing sector.

Mr. MacKay

Are not rising unit labour costs the biggest dangers to manufacturing industry, and are not the essential tasks of the Government to make sure that inflation remains low and that wage increases are kept to a minimum and based on productivity increases?

Mr. Forth

Yes, my hon. Friend has characteristically put his finger on an important problem, which is that whereas the Government accept full responsibility for keeping inflation as low as possible, and are doing so now, the private sector must bear the primary responsibility for wage restraint. Any increases in productivity may be prejudiced by excessively high wage settlements, which are causing much concern.

Mr. Kennedy

The Minister correctly warns about the erratic nature of some of the comparisons on manufacturing output. However, we should not be blind to the errors that occurred between 1979 and 1981, when two massive deflationary Budgets did so much damage and caused so much destruction in the manufacturing base. Is it not significant that many of the Government's figures, as shown by the Minister's response, are based on events since 1981 and not on events since 1979, when the Tory Government came to power?

Mr. Forth

I agree that the basis of comparison is of the essence, but I ask the hon. Gentleman to consider both the position that we found when we inherited Government in 1979, and the background of world recession. I hope he will agree that the progress that we have made since then has been remarkable, and the figures on manufacturing output, productivity and profitability show that we are on a long trend of success that will continue, even according to the Confederation of British Industry, into the foreseeable future.

Dr. Reid

Is it not a pathetic reflection on the Government that manufacturing output is only now back to the level that it was when the Government came into power? Is the Minister proud of the Government's three records in manufacturing industry, which have produced the first manufacturing deficit in our trade, the worst in one single month and, this year, the worst in one year? Will not the privatisation of industries such as steel make things even worse, by allowing firms to go for short-term profit, private closures and more steel imports?

Mr. Forth

The hon. Gentleman seems to forget that the world continues to change and progress and that if we do not change and progress with it we have little or no chance of surviving. He must come to terms with that and realise that unless the private sector continues to change, to invest and to improve productivity, we shall have no chance of competing in an ever more competitive world.