Manufacturing: Employment and Productivity (Hansard, 21 October 1987)

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

§ The Minister of State for Defence Procurement (Lord Trefgarne)
My Lords, it is estimated that in the year to June 1987, employment in manufacturing (including self-employment) fell by 53,000 to 5,307,000. This is less than half the fall in the previous 12 months. More recently, productivity and output in this sector have increased by 6.8 per cent. and 5.8 per cent. respectively.

§ Lord Dean of Beswick
My Lords, I am grateful to the Minister for that reply. However, would not the noble Lord agree with this view? Although some of the trends show a favourable movement, there is the continuing erosion in the numbers of people employed in our manufacturing industries. This is allied to the fact that over the past 12 months in terms of balance of payments in our manufacturing industries, we show an adverse balance of upwards of £7 billion. Those are very dangerous continuing trends. I should like to ask the Minister whether the Government have any new proposals in mind which may attempt to deal with this situation?

§ Lord Trefgarne
My Lords, the increase in production and productivity to which I referred in my original Answer indicates that our manufacturing industry is becoming very much more competitive in world markets. Success will lie in increasing this productivity and in improving still further the significant success in export markets. Incidentally, while the manufacturing industry has been performing as I have indicated, employment in service industries rose by 436,000 to the figure of 16,184,000.

Lord Bruce of Donington
My Lords, is the noble Lord aware that the figures that he cites are a grim reminder of the truth contained in the report of the Select Committee of this House on overseas trade, under the distinguished chairmanship of the noble Lord, Lord Aldington, which clearly showed that the future of this country lay within its manufacturing industry?
Is the noble Lord further aware that although manufacturing industry, after eight years under this Government, has just about attained the level achieved in 1979, unless further steps are taken urgently this country stands in very great peril indeed, not only on balance of payments but as regards the economy generally?

§ Lord Trefgarne
No, my Lords, I do not agree with any of that. The fact is that industry was in a declining state in 1979 when we came into power. It has taken a considerable time, because of the disarray that we found at that time, to bring the position back to a satisfactory level. Added to that, of course, we have had to face difficulties in world markets, and that makes the attainment of the goals to which I have referred today all the more satisfactory. The noble Lord might be interested to know that there are now important signs that investment in manufacturing industry is also increasing in a very satisfactory way.

§ Lord Orr-Ewing
My Lords, is my noble friend aware that almost every OECD country is showing exactly the same tendency; that is, a reduction in manufacturing but an increase in output and competitiveness with a considerable increase in the service industries? Surely we are not unique but doing rather better than any of the others. Is not that true?

§ Lord Trefgarne
My noble friend is right to point to the comparison with other nations, my Lords. The position is broadly as my noble friend indicates. It might also be of interest to your Lordships that profitability, which is so important in manufacturing industry, is now the highest since 1973.

§ Lord Molloy
My Lords, is not what the noble Lord has just said somewhat distressing? We may have been deliberately misled by renowned newspapers such as the Financial Times and The Times which only three weeks ago suggested that this Government have done so well that in all probability, before the end of the year, this country would reach the status of economic production and low unemployment that existed in 1979 when Mr. Callaghan's Government left power.

§ Lord Trefgarne
My Lords, the noble Lord has a very short memory. Perhaps he remembers, as I do, the winter of discontent which led rightly to the dismissal of the Labour Government.