HL Deb 24 February 1988 vol 493 cc1197-200
Lord Dean of Beswick

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government how many people have been employed in the manufacturing industries for each of the last five years.

The Secretary of State for Trade and Industry (Lord Young of Graffham)

My Lords, the number of people employed in manufacturing industries in Great Britain, including the self-employed, was 5.5 million in December 1983 and 5.3 million in December 1987. I have arranged for the full figures to be published in the Official Report.

The information is as follows:

Lord Dean of Beswick

My Lords, I am grateful to the Secretary of State for that Answer. Is it not a fact that there is still serious deterioration in numbers of people employed in manufacturing industries over the past 12 months, taken on an average monthly basis? Taking into account that our balance of payments for the manufacturing industries shows a deficit for the past 12 months of over £100 million each week, is that not a dangerous trend which we ought to be doing more to arrest in the interests of the economy as a whole?

Lord Young of Graffham

My Lords, I accept that, for example, in the last six months of last year manufacturing industry showed an average decline of some 3,700 employees a month. However, between 1966 and 1974 the figure was 7,100 a month; between 1974 and 1979 the figure was 10,000 a month; between 1979 and 1983 (in the very difficult period when we were readjusting) it rose to 35,000 a month. Since then, it has, by and large, been under 6,000 a month. Indeed, averaging the period between 1966 and 1986, the average, including the difficult periods of constant and continual decline, has been 13,600 per month.

That would be serious if we were alone in the world. However, the shift in balance from manufacturing to service sectors is happening in most other industrial nations. The proportion of our citizens engaged in manufacturing as compared to service in the United Kingdom is roughly the same as that of Japan, France and Italy and is higher than that of Canada and the United States.

Lord Harmar-Nicholls

My Lords, as regards the effects on the balance of trade, is my noble friend in a position to say what the output per man has been over the past five years? Has that figure gone up or down?

Lord Young of Graffham

My Lords, productivity growth in recent years has been strong. It rose by 6.3 per cent. in the three months to December 1987 compared with the corresponding figures last year. Today it is more than 40 per cent. above the 1979 level. What counts more than almost anything else is surely our degree of competitiveness.

Lord Mason of Barnsley

My Lords, is the Secretary of State aware that most of the manufacturing industry in this country is north of the Watford Gap? That is another example of the North-South divide. Secondly, since this Government came into office, they have reduced drastically the major traditional industries of the North—namely, steel and coal—with a resultant increase in unemployment. In those areas where many people were employed in steel and coal industries, we now have unemployment figures of between 15 per cent. and 20 per cent. What will his new Department for Enterprise do in order to replace those basic industries with other major industries?

Lord Young of Graffham

My Lords, whether or not major industries go to different parts of the country depends upon those industries rather more than upon my department. It is the actions of my department in past years which have contributed so much to parts of the region becoming a branch economy. Of course there are substantial manufacturing industries north of Watford Gap, because that is where the original Industrial Revolution started and where the great enterprise of our citizens made this country great. There has been and is continuing to be change. I am vastly encouraged by the resilience of those who live in the regions and by the way in which they are adapting to new technologies and new occupations. I can do no more than quote the Japanese Ambassador, who yesterday paid tribute to what our citizens can do in the North.

The Earl of Lauderdale

My Lords, is the Minister aware that one of the most encouraging trends has been the rise in the gross national product, which over the past few years has been of the order of 4 per cent. per annum?

Lord Young of Graffham

My Lords, I think that we have to accustom ourselves to the fact that in the future the balance between industry and the service sector will not be the same as it has been in the past. What really counts is that the nation as a whole creates wealth. That we are certainly doing.

Baroness Seear

My Lords, the Secretary of State told us that there has been a great increase in productivity, which is very welcome news. Can he tell us how that productivity compares with that of our major competitors—for example, Germany and France?

Lord Young of Graffham

My Lords, if the noble Baroness cares to put down a Question, I should be happy to supply the details. Our productivity is improving vastly. We had fallen a long way behind, and I suspect that we still have some way to catch up with Germany, although on the whole we are beginning to catch up with France and indeed show signs of overtaking them.

Lord Northfield

My Lords, despite the unemployment figures, can the noble Lord say to what extent he is now aware of shortages of specialist skills in manufacturing industry? Where are those shortages beginning to emerge, and what does he think the Government can do about it?

Lord Young of Graffham

My Lords, unemployment is now standing at 9.2 per cent., which is somewhat below that for most of the other major industrial nations in Europe. There are considerable areas of skill shortage in our country. Over the past few years we have been taking steps to deal with those shortages. It is very much for the private sector to accept that it should be providing more training; and there is some evidence that that is now beginning to happen.

Baroness Turner of Camden

My Lords, is it not a fact that the decline of job opportunities in manufacturing industry is responsible for the very high rate of male unemployment as distinct from female unemployment? According to the latest figures, male unemployment accounts for 11.6 per cent. of the workforce compared with 7.2 per cent. for females. Should not something be done about that?

Lord Young of Graffham

My Lords, that set of figures ignores totally the self-employed and, in doing so, unfortunately distorts the picture considerably. The number of self-employed in our land approaches 2.8 million; it could be even higher. It is not for the Government to create opportunities; it is for the Government to create the climate so that industry and the manufacturing and service sectors can expand and thus provide employment opportunities. There can be no greater evidence than the experience of the past two years to show that this has been happening.

Lord Jay

My Lords, has the Secretary of State noticed that so far as concerns imports, far from a decline it is precisely the huge increase in manufactured imports which is pushing us into deficit?

Lord Young of Graffham

My Lords, I am aware that our balance of payments is running at a deficit—from memory, I think, of some £2.7 billion. In many cases these deficits tend to be adjusted for the better in due course. However, the most important factor is that we are showing growth as great as, if not greater than, any other industrialised nation in the world. The British economy is doing very well; it is very strong. One sign of that strength is that we tend to import more. I hope that in the years to come we shall see the economy as a whole, including the service sector and the industrial sector, continue to grow and that we shall find the position rights itself.

Lord Dean of Beswick

My Lords, I accept and welcome the improvement as stated by the Secretary of State. But is it not a fact that if the present trend continues our manufacturing base will steadily diminish and a very adverse balance of payments will be shown for our manufacturing industry? Can the Secretary of State indicate the options available when the very lucrative revenues from North Sea oil run out in the foreseeable future?

Lord Young of Graffham

My Lords, the industrial sector is not diminishing. It may well be that employment is declining as a result of new technology and increased productivity and efficiency. However, when I last saw the figures, industrial output was some 2½ per cent. above that for 1979 and rising strongly. I believe that that will continue to be the position. It is something of a red herring to talk about the situation when the oil revenues run out. Over the past 10 years we have achieved substantial reserves of £140 billion or £150 billion of UK net overseas investments. The dividends from that source last year alone amounted to some £5 billion, which was almost as much as the entire drop in oil proceeds when the price of oil halved.