Manufacturing Industry: Employment (Hansard, 17 December 1985)

§ Lord Hatch of Lusby
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Minister of State for Defence Support (Lord Trefgarne)
My Lords, following the long-established practice of previous governments, we do not make forecasts of future employment levels. In this country, as in other countries, the long-term trend is a shift in employment from manufacturing towards services. Since 1983 we have seen a much slower rate of decline in manufacturing employment; and the CBI forecast expects that to continue.

§ Lord Hatch of Lusby
My Lords, I am perfectly well aware of what the CBI forecast states. I am more interested to know what the Government are going to do about it. Does the CBI report, which was drawn from the data provided by 1,600 companies in this country and which forecasts that 120,000 jobs will be lost in manufacturing in the next two years, square with the analysis and forecast which one hopes Her Majesty's Government are now executing, in view of the future of the economy of this country?

§ Lord Trefgarne
My Lords, the noble Lord seems to regard this slower decline in the numbers employed in manufacturing industry as some terrible evil. But I think, on the contrary, it is the result of much greater productivity in British industry and the much greater modernisation of plants which has taken place in recent years. What is more important is the overall level of employment and, as the noble Lord will be aware, there has been a significant increase in the number of jobs in recent years.

The Lord Bishop of Manchester
My Lords, is the noble Lord the Minister aware, as regards the CBI forecast, that, whether the decline in the rate of job losses is faster or slower, the fact is that a very high proportion are losses in the older manufacturing areas of the North of England? Are the steps being taken to try to halt this decline constantly under review, especially in view of the fact that the take-up in the service industries is often comparatively slow?

§ Lord Trefgarne
My Lords, the solution lies in the direction of greater growth of investment in new manufacturing industries and the CBI forecast anticipates 8 per cent. growth in that area next year.

§ Lord Mackie of Benshie
My Lords, as the Government are paying attention to the CBI, will they now pay attention to the very strong demand to reduce the rate of interest which is one of the worst factors in holding back manufacturing employment and exports?

§ Lord Trefgarne
My Lords, the rate of interest which companies have to pay, like some of the other factors which respond to international rather than national pressures, is not wholly within the gift of the Government. In any event, we think that a sharp decline in the rate of interest would result in a rapid increase in inflation.

§ Lord Glenamara
My Lords, further to the question of the right reverend Prelate, has the noble Lord seen or heard of a report prepared and published recently by officials of Newcastle District Council which points out that Tyneside is now one of the poorest regions in the whole of Europe because of the progressive rundown in manufacturing industry over the past five years? When will the Government recognise the effect of their policies on the older industrial areas of Britain and do something about it?

§ Lord Trefgarne
My Lords, I have not seen the report to which the noble Lord refers, but nobody denies that there has been a sharp decline in industrial activity in certain parts of the country in recent times. The future lies, as I suggested to the noble Lord, Lord Hatch, just now, in new investment in new industries. That is the way for the future.

§ Baroness Seear
My Lords, will the noble Lord consider the possibility, since there will be an increase in unemployment as a result of this run-down, of allowing people on unemployment benefit to earn a higher amount than is at present allowed while still keeping their benefit, bearing in mind particularly the Shops Bill which is going through the House at present?

§ Lord Trefgarne
My Lords, with respect to the noble Baroness, that departs a little from the Question on the Order Paper, but I think the noble Baroness will be aware of the Government's views.

§ Lord McCarthy
My Lords, will the noble Lord not agree that the estimates of the CBI to which he does not seem to want to refer are, if anything, conservative? The fact is that the job loss since 1979 is far greater than the estimates which the CBI suggests for the job loss next year. If the noble Lord will not give figures on the CBI's estimates, will he tell us in what direction the Government expect to see an increase in employment next year? Is it to be in the service industries? And if it is to be in services, which part of services? Can the noble Lord give any figures at all?

§ Lord Trefgarne
My Lords, the noble Lord may recall an Answer which I gave three or four weeks 658 ago—I am not certain whether the noble Lord was in his place on that occasion—when I reported that there had been a considerable increase in the numbers in employment in the United Kingdom in recent months. We expect that increase to continue. The difficulty has been that the total number of persons seeking work has also increased, and thus it has not been possible to make the inroads into the numbers of unemployed that we would have wished. But we believe that the trends which I reported to your Lordships recently will continue and that the position will improve steadily from now on.

§ Baroness Turner of Camden
My Lords, does the noble Lord believe that the gap in employment that has been created by the decline in manufacturing industry can be made up from the service industries, in view of the vulnerability of those industries to developments in new technology?

§ Lord Trefgarne
My Lords, as I have just said, the total number of people in employment in the United Kingdom has increased in recent months and years despite the decline in some of the older manufacturing industries to which the noble Baroness has referred. The future will lie in an increase in the numbers employed in new manufacturing activities and also in an increase in those employed in service industries.

§ Lord Avebury
My Lords, does the noble Lord agree that it is not only the older manufacturing industries which have lost out but also some of the more modern industries, such as motor-cycle manufacturing and computer printer manufacture, where the United Kingdom is now totally absent from the world market? Is not the only way we shall ever get back into these fields to encourage overseas manufacturers, particularly the Japanese, to come to the United Kingdom and set up within the EC?

§ Lord Trefgarne
My Lords, that is certainly one of the possibilities and one of the things that we are encouraging. Industries such as the older motor-cycle manufacturing industry were at their most successful at a time when competition was a good deal less than it is now in terms of modern manufacturing standards. Firms that were successful in earlier years were not able to keep up with modern trends.

§ Lord Hatch of Lusby
My Lords, is the noble Lord aware that in the same CBI report the forecast is that next year the growth in exports will be only about 4½ per cent. whereas the growth in imports will increase to more than 6½ per cent.? Does this not indicate clearly that next year, according to these forecasts, there will be an even greater loss of employment and an increase in unemployment?

§ Lord Trefgarne
My Lords, I do not accept that there will be an increase in unemployment next year. As I have already said, we anticipate that the increase in the numbers in employment in the United Kingdom will continue, and if the total number of those people seeking work does not increase at the rate that it has recently then the numbers of unemployed will likewise decline.

§ The Lord Bishop of Birmingham
My Lords, does the noble Lord consider that it would be easy to attract new investment for new industries in the West Midlands without substantial help being given to assist in cleaning up the environment in that area?

§ Lord Trefgarne
My Lords, that is another question, if the right reverend Prelate will forgive me for saying so. Nonetheless, the Government do provide substantial support for industry in all areas of the country, but especially in some of the more difficult areas. For example, exports support, to which the noble Lord, Lord Hatch, referred just now, is currently running at something of the order of £1 billion annually. Research and development innovation, which again has a benefit to some of the newer industries, is costing some £430 million; and, speaking from my own point of view as a Minister in the Ministry of Defence, we are spending something like £8 billion annually with British industry.