HC Deb 27 March 2003 vol 402 cc431-3
1. Mr. Tony Lloyd (Manchester, Central)

If he will make a statement on the impact of his Department's policy on manufacturing. [105150]

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

Manufacturers globally are facing difficult times as the world economy slows. This Government remain committed to delivering a stable macro-economic environment, which will allow businesses to plan, invest and grow, while at the same time taking a range of measures to boost productivity, enterprise and skills.

Mr. Lloyd

Does my right hon. Friend recognise that the role of manufacturing industry is still massively more important for regions, for example, in the north of England, than it would be in the south-east? Of course, the present difficulties and problems that manufacturing industry is experiencing impact differentially in different parts of the country. I certainly give great praise to the Government for their policies on employment in relation to the manufacturing base, unlike the policies of the previous Government, which were devastating. Can we have a clear statement nevertheless that the future of manufacturing is fundamental to the future of the British economy and is central to the economic management proposed by the Government?

Mr. Boateng

My hon. Friend is absolutely right to stress the importance of manufacturing, in which he takes a great interest in the north-west. It has a vital role to play in the productivity drive that must be the key to prosperity, not only in his region but throughout the UK. He will therefore welcome the emphasis that we have put on the role of the regional development agencies, and the £991 million over three years that his north-west development agency has been given, which will enable it to continue its work with universities and local businesses in enhancing local skills and improving productivity and competitiveness. It is on that that the success of his region and the United Kingdom depends.

Sir Nicholas Winterton (Macclesfield)

Following the question of the hon. Member for Manchester, Central (Mr. Lloyd), the Chief Secretary will know my interest in manufacturing. I had a brief working lunch yesterday with a number of important representatives of UK industry who expressed concern about the amount of regulation coming from Government. Given the increase in national insurance contributions, and the huge increases in many parts of the country in business rates, will he accept that manufacturing industry is finding it very difficult to be competitive, and much of it is relocating abroad to the detriment of employment in this country?

Mr. Boateng

The hon. Gentleman makes his point about manufacturing and red tape. He will know, because I know that he studies these matters, that the Government have taken seriously the issue of red tape, and we have taken steps to deal with burdensome regulation. He will also be aware, not least because of the candour shown in this matter by the shadow Chancellor, who still maintains that labour market flexibility is the key, that this country has made progress in that area—that is never denied. He will also know that the best gift that we can give to manufacturing is a sound, stable macro-economic framework. That is what this Government have done and what his Government notably failed to do.

Mr. Derek Foster (Bishop Auckland)

My right hon. Friend will know that in my constituency 50 per cent. of the jobs are in manufacturing. That gives us enormous strength when things are going well, but, over the last four years, there has been a continual leakage of jobs. I am enthusiastic about the exciting new futures that the Chancellor is laying out for regions such as the north-west and the north-east, but my constituents are saying, "We need some respite now." What will my right hon. Friends do about that?

Mr. Boateng

My right hon. Friend will recognise that in his region, looking across the sectors, unemployment has in fact been falling. New jobs have been created—1.4 million new jobs—since this Government came to office. That is never a cause for complacency, but what we can and will do is make sure that we invest in regional development agencies and that we put the encouragement and incentives in place with our research and development tax credits. All of those make a contribution to en sure that we not only keep jobs in regions such as his but that we create them, too. We are doing that with considerably greater success than Germany or France, and that is something that we should celebrate.

Mr. Mark Prisk (Hertford and Stortford)

Despite the Chief Secretary's somewhat fanciful claims, in the real world, manufacturing companies are struggling to survive. Yesterday, for example, I spoke to a company in Buxton called Otter Controls, which has just announced the transfer of two production lines to Hungary, and, with them, 40 jobs. The reason that it gives is the rising cost of Government regulations and taxes. Given that, why are the Government taking another £4.1 billion in national insurance from business next year? Does not he understand that this tax rise will either drive manufacturers out of business or out of Britain?

Mr. Boateng

In the hon. Gentleman's discussions with business, he will recognise that what businesses value is the macro-economic stability that this Government have brought to their management of the economy. What they value is the determination that the Government have demonstrated to put in place the framework for skills and research and development that is the best hope of industry across the piece. That is something that this Government have done and that his Government failed to do, and that is why we have created in our five years in office 30,000 more new jobs than they were ever able to do in their last five years in office. That is our record of success, compared with their record of failure.

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