Manufacturing Industry

HC Deb 28 November 1991 vol 199 cc1055-6

5. Mr. Allen McKay

To ask the Chancellor of the Exchequer what was the average annual rate of investment in manufacturing industry (a) from 1974 to 1979 and (b) since 1979.

The Chief Secretary to the Treasury (Mr. David Mellor)

Manufacturing investment, narrowly defined, averaged £9.8 billion a year between 1974 and 1979 and £9.8 billion a year between 1979 and 1990 at constant 1985 prices. Total capital investment in plant and machinery averaged £17.7 billion between 1974 and 1979 and £24.3 billion a year between 1979 and 1990, also at constant 1985 prices.

Mr. McKay

The Minister has chosen his statistics carefully. Has not he forgotten to mention that between 1979 and 1981 investment fell sharply and that it was lower in the third quarter of 1991 than in any other quarter—12 per cent. of the 1979 level? With all the income from oil and from selling off the family silver, is not it a disgrace that manufacturing investment is now lower than in 1979? If the right hon. and learned Gentleman believes in that vital sector of our economy, why does not he take measures to increase investment?

Mr. Mellor

If one takes the narrow definition of manufacturing investment, which excludes a range of investment that is made by manufacturing companies in services that no longer count as manufacturing investment but which they used to do in-house, the average for the past six years was£10.9 billion—much higher than under the previous Labour Government. I do not know what the Labour party is so proud of, because under the previous Labour Government manufacturing output fell by 2½ per cent. whereas between 1981 and 1991 it increased by 25 per cent.

Mrs. Peacock

Will my right hon. and learned Friend confirm that in the 1980s manufacturing output rose by 31 per cent? Irrespective of what the Labour party says about what happened before 1979, if he visited various parts of Yorkshire he would see massive investment in manufacturing, including £1 million in wool textiles.

Mr. Mellor

My hon. Friend is absolutely right, but the international comparisons are even more telling. In the 1970s—for much of which there was a Labour Government—the United Kingdom was the only Group of Seven country where average year-on-year manufacturing output fell. In the 1980s, we ran joint third among the Group of Seven, which was a considerable improvement

Mr. Nicholas Brown

Is the Chief Secretary aware that today 900 of our fellow citizens in Derby, Crewe and York will lose their jobs in the manufacturing sector? Is he further aware that since 1979, 2 million of our fellow citizens have lost their jobs in the manufacturing sector? Is it the Government's policy to arrest the accelerating decline in manufacturing—both in investment and employment—and, if so, when they will do it and how?

Mr. Mellor

There is evidence that the decline in manufacturing has been arrested, and I shall give the hon. Gentleman that evidence. It seems clear that in 1991, as in 1990 and 1989 and after decades of decline, Britain's portion of world trade in manufacturing exports will increase. That is a significant achievement, of which the hon. Gentleman should be aware. Despite the Labour party's smears about what has been happening recently, manufacturing exports are up this year, notwithstanding the recession.

Mr. Alex Carlile

The latest Confederation of British Industry economic forecast shows a decline in manufacturing investment in 1991 of almost 20 per cent. and a further decline of 4.4 per cent. in 1992. Is the right hon. and learned Gentleman satisfied with that performance?

Mr. Mellor

What is absolutely clear is that——

Mr. John Smith

Answer the question.

Mr. Mellor

I am about to do so. It is not an answer that the right hon. and learned Gentleman will like.

The only basis on which criticism can be made of the inevitable decline in investment during the recession is if high praise is lavished on the Government for the three years in the last 1980s when investment touched peaks. Even with the decline in business investment in this recession, it is about 40 per cent. higher in real terms than in 1979. That is the proof of our achievement in the 1980s, to which we can return.

Mr. Andrew Mitchell

Does not business investment, of which manufacturing investment is a part, remain extremely high? Is not it higher today than throughout the 1970s and the first half of the 1980s?

Mr. Mellor

My hon. Friend is absolutely right. I am only too happy to discuss manufacturing, as it is an important sector of the economy. However, it is 20 per cent. of the economy and I never understand why the Labour party is not interested in the other 80 per cent. It appears that unless people go to work in some landscape recognisable to L. S. Lowry, their jobs, conditions and efforts are not worth talking about.