HC Deb 07 November 2002 vol 392 cc422-4
8. Mr. Archy Kirkwood (Roxburgh and Berwickshire)

What assessment he has made of the change in output of manufacturing industry since January 2001; and if he will make a statement. [78330]

The Chief Secretary to the Treasury (Mr. Paul Boateng)

The contraction in United Kingdom manufacturing output, which began last year, was due to the sharpest slowdown in G7 industrial activity since 1975, but UK economic fundamentals remain sound and our macroeconomic framework leaves us well placed to respond to those challenges. The Government will publish an updated assessment of prospects for manufacturing in the forthcoming pre-Budget report.

Mr. Kirkwood

Does the Minister accept that whatever success the Government may have achieved in other parts of the economy, the deep and abiding recession in manufacturing is a matter of continuing concern? Does he also accept that in the past four years, an estimated 500,000 jobs have been lost across the United Kingdom? In my constituency in the Scottish borders, the number of people employed in manufacturing has fallen by 23 per cent. since 1995. Would it not be right for the Treasury team to engage in an onslaught on exchange rate policy rather than on the unemployed, to ensure that there are some manufacturing vacancies in prosperous businesses for job seekers in the future?

Mr. Boateng

There has undoubtedly been a decline in manufacturing across the G7. We are seeking to ensure that Scotland benefits not only from the macroeconomic measures that we have taken, but from micro-economic measures such as the improvements that we have made in the climate for research and development, and the steps that have been taken with the Scottish Executive to promote enterprise and manufacturing in Scotland. In 2001–02, that led to 61 new inward investment projects being created in Scotland—the equivalent of more than 6,000 new jobs. We intend to continue to work with the Scottish Executive to that end. That is the best hope for the hon. Gentleman's constituents, and for the people of Scotland and the United Kingdom generally.

Ross Cranston (Dudley, North)

Manufacturing has taken a knock in the west midlands as well as in Scotland. However, does my right hon. Friend agree that short-term fixes such as fiddling with the exchange rate are not the way to deal with this? The Government have addressed the long-term approach to productivity by improving research and development as well as average skill levels.

Mr. Boateng

Low inflation, low interest rates and good, solid macro-economic foundations are, as my hon. and learned Friend accepts, the best hope for British industry. However, the important steps that we are taking, not least in relation to research and development and to science and technology, stand in marked contrast to the successive failures of Conservative Members over the years in their stewardship of the economy.

Matthew Taylor (Truro and St. Austell)

Does the Chief Secretary accept that manufacturing employment has gone up in the euro zone since 1997 while plummeting by 500,000 in this country since 1997? Does the Chief Secretary think that that is simply down to bad British business or that it might relate to Government policy, which has seen exchange rates remain uncompetitive, investment at record low levels and the longest manufacturing recession since 1981? As the Monetary Policy Committee has not been able, in a two-track, two-speed economy, to cut interest rates today, what do the Government plan to do with the rest of the policy armoury to help them?

Mr. Boateng

I do not think that the hon. Gentleman's figures will stand up in Germany or bring much comfort there. Comparing our performance with that of the rest of the G7 shows that we have the highest employment rates and the lowest unemployment rates. That is a direct result of the policy of this Government and of my right hon. Friend the Chancellor of the Exchequer.

Mr. Peter Pike (Burnley)

Does my right hon. Friend agree that aerospace is a crucial, high-skill and high-value industry to Lancashire, the north-west and the country as a whole? It has been hit particularly hard since 11 September last year. Will my right hon. Friend stress to the industry that the Government will give the maximum support possible to encourage research and development and training? They are crucial and, at a time when the industry is being squeezed, they should not be squeezed. In that way, we will ensure the future of the industry to the benefit of the country.

Mr. Boateng

My hon. Friend's interest in the aerospace and high-tech industries in his constituency and throughout the north-west is well known. We meet regularly with the aerospace industry. Recently, I visited the north-west and spoke with the vice-chancellors of the three major universities there. They are all working in close contact with the industry and the regional development agency. They are benefiting from our proposals not only on science and technology but on the additional funding for the RDA and the important bedrock that we have put in place for long-term research and development, particularly in large companies, and they will continue to benefit.

Bob Spink (Castle Point)

Is the Chief Secretary aware of the importance of the construction products industry, which is a full 20 per cent. of the total British manufacturing sector? Will he ensure that the Government deliver their promises in the public sector by building the schools, hospitals and road infrastructure that they promised in their public spending review and are way short on delivering, so that the construction products industry can benefit?

Mr. Boateng

I take that as a request from the hon. Gentleman for yet more investment in the public sector, but that rings pretty hollow given the Conservatives' record. They failed to invest in our infrastructure and in our schools and hospitals. While they are talking about it, this Government are doing it.

Mr. Bill O'Brien (Normanton)

Does my right hon. Friend agree that the large manufacturing losses in the Yorkshire region occurred because the mining machinery industry there has declined considerably? Will he favourably consider help for the mining industry to maintain its current output, which in turn will help to sustain the manufacture of mining equipment and machinery in the Yorkshire area, thereby saving jobs? Will he also accept my appreciation for the work that he and my right hon. Friend the Chancellor have done to help manufacturing in the Yorkshire region?

Mr. Boateng

I am grateful to my hon. Friend. I know that he takes a keen interest not only in mining but in manufacturing, research, development, science and technology throughout his region. Our best hope for maintaining and developing the manufacturing base of his region lies in the encouragement of IT and innovation. That is the Government's commitment, and it will endure.