HL Deb 08 July 1976 vol 372 cc1328-37

4.18 p.m.

The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of INDUSTRY (Lord Melchett)

My Lords, with your Lordships' permission, I should like to repeat a Statement which is now being made in another place by my right honourable friend the Secretary of State for Industry about the progress on industrial strategy which was the subject of an all-day meeting of the National Economic Development Council yesterday with my right honourable friend the Prime Minister in the chair. The Statement is as follows:

" The Government's approach to industrial strategy was outlined in the White Paper published after the meeting of NEDC at Chequers last November. Our prime aim is to put Britain on the path to a high wage, high output, full employment economy by improving productive potential and the performance of manufacturing industry.

"The prospects and problems of over 30 sectors of manufacturing industry were selected for more detailed examination on a tripartite basis. These sectors represent about 60 per cent. of total manufacturing output. In the first phase of their work, the Sector Working Parties were asked to concentrate in particular on constraints or bottlenecks which might limit their ability to exploit the opportunities provided by the economic upturn. The Working Parties were further asked to recommend appropriate action. They were also asked to develop strategies for improving the performance of the sectors in the longer term, though it was recognised that this would take some time to complete.

"The reports on the first stage of this work were considered by the NEDC yesterday. The Council welcomed these reports as a very valuable first stage in the strategy programme. Many of the individual sectoral reports will be made publicly available, although the decision to publish is a matter for each Working Party to take. Copies of a summary of the issues raised in the reports have been placed in the Library together with copies of the covering paper which my right honourable friend the Chancellor of the Exchequer and I presented to NEDC.

"We want this work to lead to action. Many of the recommendations of the Working Parties are addressed to the Government, and we will be considering the action that we as a Government need to take. In some cases we have already been able to take the necessary steps. The NEB, planning agreements, the Manpower Services Commission, the schemes to encourage and accelerate investment and other instruments of our policy will all play their full part.

"Many of the recommendations are for action by management and unions at the level of the sector, the enterprise and the factory. The TUC and CBI have both undertaken to play their part. The Working Parties themselves will also have an important role in their follow-up. The Government are setting in hand arrangements for monitoring and follow-up in collaboration with the CBI, TUC and the National Economic Development Office.

"At its next meeting, the NEDC will go on to consider detailed proposals for the second stage of the work. The intention is for the Sector Working Parties to report again by the end of the year so that my right honourable friend the Chancellor of the Exchequer can take account of their recommendations in the formulation of his Budget strategy.

"It is essential for this country to develop an effective industrial strategy which will reverse the contraction of our industrial base and enable us to create wealth through industrial production. Only in this way can we achieve the social improvements to which we must aspire.

"Our tripartite approach to industrial strategy has made an encouraging start and we intend to build on this for the future."

My Lords, that concludes the Statement.

4.23 p.m.

Lord CAMPBELL of CROY

My Lords, we are grateful to the noble Lord, Lord Melchett, for having repeated the Statement which has been made in another place. The Statement about the meeting of the National Economic Development Council yesterday appears to be an encouraging report. The main business was the reports of 39 groups on different sectors of manufacturing industry. The House will recall that my noble friend Lord Watkinson has been advocating in at least two debates in this House the greater use of the National Economic Development Council as the place where most of those who can formulate our country's industrial strategy and carry it out can meet and effectively make progress. My noble friend Lord Watkinson is now in a key position to take part in that process himself.

I noted the short sentence in the Statement: We want this work to lead to action ". From the Press reports, it is clear that the CBI, for its part, is undertaking to do its best to increase and accelerate investment in industry. For the Government's part, will they, in order to assist this, move further in a helpful direction following responses to the Consultative Document on the Price Code? This is important for industry if it is to build on this promising start in work and co-operation in the NEDC. How do the Government intend to make the improvements in profitability which are so central for private industry ?

Lastly, can the noble Lord, Lord Melchett, confirm the Press report that the Prime Minister and my noble friend, who is now President of the CBI, were in agreement on the following point after the day's work ? My noble friend is reported as having said: " What we are going to concentrate on is making the mixed economy work rather than spending time on what the mixed economy should be." The Prime Minister is reported as having added that that was the Government's position, too. If that report is correct, it is most welcome, and I hope that the noble Lord will be able to confirm it.

4.25 p.m.

Baroness SEEAR

My Lords, we on these Benches would also like to thank the noble Lord, Lord Melchett, for repeating this Statement which has been made in another place. We can only welcome both the tone and the content of the report. It is good news that the tripartite " Neddy " meeting was apparently enthusiastic in its support for the tripartite approach and for the policy of a high wage, high output, full employment economy, as the Statement says.

It is also welcome news that the reports of the Working Parties were of a very practical and down-to-earth nature because a great many of the things which need to be done are of that kind and relate to the removing of practical constraints upon getting on with the job. We also note that further reports are to be made at the end of the year. I am sure that it is not necessary to say to the Government—though there is perhaps no harm in underlining it—that there is a very great deal that could be done without waiting for any further reports and, indeed, a very great deal could have been done without the reports which have already come forward. If the Government really mean business in what they say in this Statement, there are a number of actions which they could take and which they could have been taking for a long time. They can take them now.

In particular, I draw attention to the existing shortages of labour in a number of areas of skill, shortages which are bound to become greater as the recovery of the economy gets under way. This is a point which we on these Benches have raised on a number of occasions. We have several times asked what has been done through the Manpower Services Com- mission or in other ways to fill those vacancies which were listed in the Commission's own report at the end of December. In addition to that, if the Government really want to enlarge the industrial base, much greater encouragement will need to be given to middle management in industry. Much greater encouragement will have to be given not only to existing middle management but to those young men and women who are at present considering a choice of career and who are greatly discouraged when they look at the prospects in industry at the moment. This is something which has real implications for taxation policy and in the attitude which is adopted by many people towards the management sector in industry, including, on occasion, Her Majesty's Government.

I would also add—though, here. I feel that I should declare a personal interest—that, if the Government really want industry to get ahead, the discouragement of the undergraduate and postgraduate sector of our Society, the decrying of work in these areas and the discouragement that many of us in higher education feel at the present time, is no way to increase the long-term prosperity of industry.

4.29 p.m.

Lord MELCHETT

My Lords, I thank the noble Lord, Lord Campbell of Croy, and the noble Baroness, Lady Seear, for their general welcome for what I believe is agreed on all sides to be a very encouraging report to come out of the first stage of the industrial strategy exercise. I agree with the noble Lord, Lord Campbell of Croy, that this exercise underlines the importance of the NEDC and we look forward to its playing a full role and making sure that the practical recommendations that have been made for action are implemented. Indeed, that will be one of the important matters which the Sector Working Parties will be dealing with over the next few months. They will not merely be preparing another report, although that, again, is something which, as the noble Baroness mentioned, they will be doing on the medium-term prospects.

Inevitably, this has been a very rushed exercise. The sector Working Parties have done an enormous amount of work. Over 1,000 people were involved and have given a very great deal of time and effort to this, and I believe that from all sides we should express our gratitude to them. They have done a marvellous job in a very short time but, inevitably, they have been dealing with short-term constraints, particularly manpower constraints which the noble Baroness mentioned. They will now go on to look at the medium term which I think everyone would agree is equally important for British industry—to plan ahead as well as to deal with the immediate constraints.

However, a number of things are left to be done by the Government, by both sides of industry, and the Sector Working Parties. They all have a part to play in making sure that these practical steps and recommendations are fulfilled. One of them will undoubtedly be, having identified areas where shortages of labour are likely to occur, to take steps to meet those shortages. The noble Baroness will know from several debates in this House that the Government have done a great deal. If the noble Baroness cares to look at the papers which have been placed in the Library she will see a very clear-cut statement of proposals for action and action already taken in a simple form where there cannot be any possibility that one is using mealy-mouthed words and general remarks to get round things. One of the things which come up in this exercise is that we really have got down to the nitty-gritty of particular, definite, specific recommendations and lines for action.

The noble Lord, Lord Campbell of Croy, mentioned the Price Code. Of course, we had a very full debate on this in your Lordships' House yesterday. As the noble Lord knows, the proposals for modifications in the Code were introduced only after very extensive consultations, in particular with the CBI, and the Government are now listening very carefully to comments which are being made from all quarters on the proposals we have put forward.

I am well aware of the problems of middle management which the noble Baroness raised and the need, indeed, to encourage young people to go into industry. On Tuesday I attended an occasion with a large number of 16-yearolds who are currently deciding whether to read engineering at university. It is very encouraging—and the noble Baroness will be pleased to hear this—that about 30 per cent. of those present were women, and all of them were particularly impressed by the possibilities for them in industry and in engineering in particular I found it a very encouraging experience to talk to them. This was an operation organised in part by the Department of Industry, and we are doing our best, on a very practical and much too small a scale at the moment, to encourage people of that age to take up careers in industry. The sector working parties have identified many matters and many practical steps have been taken. Some things have already been done by the Government, and we recognise that much remains to be done and we are determined to see that it is done.

4.33 p.m.

Lord SHINWELL

My Lords, can my noble friend say whether any consideration was given by the National Economic Development Council to the question of a reduction in public expenditure ? If not, can he say what are the Government's intentions ? If there is to be a substantial reduction in Government expenditure, as has already been announced by the Chancellor of the Exchequer, next year, the following year and perhaps even after that, how does my noble friend reconcile that with full employment, which is also the intention of " Neddy " and the Government?

Lord MELCHETT

My Lords, as my noble friend knows, this Government are determined to keep public expenditure under control and substantial cuts in forward programmes of public expenditure have already been made. Naturally public expenditure is kept constantly under review at this period of the year just as much as at any other period of the year. The Sector Working Parties themselves were not concerned with public expenditure considerations as such, but in any event, as my noble friend will know, the Government are clearly on record as saying that investment in productive manufacturing industry must take precedence over our social objectives, no matter how desirable those may be. Whatever the future of public expenditure, that will remain the position.

Lord DRUMALBYN

My Lords, is not the purpose of the reduction in Government expenditure precisely to enable more to be spent on capital investment ? Is not the purpose of the NEDC to point the way to where capital investment can best be put ? Is the noble Lord aware that we on this side are extremely pleased with the backing which the Government have given to the NEDC in the past few months and we hope very much that they will continue to give it the fullest backing? Is the noble Lord aware that the purpose which we would see for this is to enable the various sectors not only to identify what needs to be done, but to make recommendations for it to be done? The most encouraging feature of the statement which the noble Lord has just made is that, quite plainly the NEDC sectors are approaching this matter in that way, and they are enabled to approach it in that way—if I am right, and I hope the noble Lord can confirm this—because they are getting together in the committees people who really know what they are talking about, including people from the shop floor.

Lord MELCHETT

My Lords, I certainly can confirm that, and it has been my privilege on various occasions when attending industry associations, trade associations and the like, to talk to people who have been working on EDCs and sectional working parties over the past few months. Almost without exception I have been very gratified to hear from them that they feel that the work they have been doing has been useful and constructive as it was going on. Very often established EDCs—because many of the " little Neddies " have been going for some time—have become much more action orientated over the period of formulating these reports under the industrial strategy. Many of the EDCs had taken a rather long-term view of some of the industrial problems which their sectors face. Given the impetus which I think everyone is agreed this exercise has given to the NEDC and to the " little Neddies ", the discussions have become, as I say, much more orientated towards practical steps which can be taken to meet the problems which will undoubtedly occur in the upturn.

The noble Lord mentioned public expenditure. Of course, some public expenditure is designed specifically to encourage investment and perhaps I may draw the attention of the noble Lord to the documents placed in the Library, particularly Annex I which is the summary of action which has been taken to remove the short-term constraints and to increase capacity in the upturn. There is a table there showing in particular the expenditure undertaken in the Accelerated Projects Scheme, where a relatively small proportion of public expenditure has led to a very large increased investment by British industry in new plant and machinery which will undoubtedly stand the country in good stead during the next upturn.

Lord WIGG

My Lords, does not the Minister agree that the document yesterday, while it arouses in his heart unstinted praise, in fact spells out a full-scale retreat from the concept of planning and that it is an agreed document by all those interests who have served this country ill in the past, who have taken us from the beginning of this century from being one of the greatest industrial Powers to what is now the sick man of Europe ? If they are given their head, which this document unquestionably gives them, then the future will be very bleak indeed. I do not ask the noble Lord to comment. I would not have risen to my feet except for what I regard as the noble Lord's unstinted praise, while I regard the document as lamentable. It completely fails to diagnose the ills which face this country. What it seeks to do, rather as with a child with measles, is to take out the spots.

Lord MELCHETT

My Lords, this has been described as a bottom-up exercise, which so far as I can see means that instead of setting ourselves long-term plans which we know we are going to fail to meet, and do fail to meet, we are setting ourselves realistic objectives which are agreed, I say to my noble friend, by all sides of industry, which we very much hope we shall meet.

Lord WIGG

But, my Lords, in relation to the mere fact that it is agreed by all sides in industry I must draw the attention of my noble friend to the fact that the spokesman for the Conservative Party did not fall back on the praise from the Conservative Party's leadership. What he fell back on was the praise from the noble Viscount, Lord Watkinson. Why? Because the Tory Party, just for the moment for political reasons, pays lip-service to this document, but they know perfectly well the realities behind it, and if they were given their political heads they would even reverse this.