HL Deb 18 October 1990 vol 522 cc1033-6

3.13 p.m.

Lord Stoddart of Swindon asked Her Majesty's Government:

What action they are taking to promote manufacturing, and particularly to increase manufacturing output.

The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)

My Lords, the Government continue to pursue policies intended to improve the climate for business activity, including manufacturing, and to reduce the burdens on business. In addition, the Department of Trade and Industry continues to operate a range of specific schemes to improve business performance under the enterprise initiative.

Lord Stoddart of Swindon

My Lords, can the noble Viscount confirm that manufacturing production in the three months to August fell by 1 per cent. and is likely to fall even further during the present quarter? Will he also agree that Britain is now suffering from a proliferation of economic evils including high inflation, high unemployment, recession at home and a severe and worrying balance of payments abroad? What are the Government going to do about these evils, instead of relying on the single weapon of high interest rates? Further, will they do something to improve manufacturing industry and indeed help exports?

Viscount Ullswater

My Lords, manufacturing productivity in the three months to August was 1 per cent. higher than a year earlier. The fall to which the noble Lord quite rightly drew attention reflects the necessary slowdown in the economy, but not a long-run trend. Manufacturing productivity growth in the 1980s was faster than that in all other major industrialised countries, whereas over the two previous decades the UK was at the bottom of the league.

The Viscount of Oxfuird

My Lords, can my noble friend tell the House what is the reduction in productivity of the other countries in Europe and also in the United States of America and in Japan?

Viscount Ullswater

My Lords, I do not have the figures for those areas. However, I can say that the output of manufacturing industry in the three months to August 1990 was one-half of 1 per cent. higher than a year earlier.

Lord Ezra

My Lords, is the noble Viscount aware that investment in manufacturing industry has shown a worrying turndown and that investment intentions suggest that the situation may be even worse in the future? Are the Government concerned about this and, in particular, are they looking at measures which could be taken to counteract this trend?

Viscount Ullswater

My Lords, manufacturing investment was at a record level in 1989 and a recent CSO investment intention survey indicates a further increase this year and next. After a decade of rising productivity and profitability, the industry is far more able to handle the inevitable slowdown and beyond that to face the decade with confidence.

Lord Hatch of Lusby

My Lords, can the noble Viscount tell the House what are the present figures of manufacturing output for this year in comparison to those when the Government took office in 1979? Can he also say how those figures compare with those of our major competitors; namely, Germany, France, Japan and the rest of the OECD countries?

Viscount Ullswater

My Lords, the indices which I have at my disposal show that the manufacturing output is some 20 per cent. higher than it was about five years ago. Therefore the output has been rising, as has productivity.

Lord Hatch of Lusby

My Lords, I am sorry to press the matter but I asked the Minister for a comparison between now and 11 years ago in 1979, not between now and five years ago.

Viscount Ullswater

My Lords, I thought I had already said that I did not have such figures at my disposal. I shall ascertain the information and write to the noble Lord accordingly.

Lord Williams of Elvel

My Lords, is it still government policy that the present balance of payments deficit will be in some manner rectified by redressing the visible trade deficit? If that is still the policy, will the noble Viscount please reiterate it firmly and clearly for your Lordships? If he does so, will be also explain how this can be achieved by falling output in manufacturing, falling output in other production industries of the economy and a reduction in manufacturing investment to which the noble Lord, Lord Ezra, referred?

Viscount Ullswater

My Lords, the underlying trends remain favourable. In the three months to August, non-oil export volume, excluding erratics, was 10 per cent. higher than a year earlier while imports grew by only one half of 1 per cent. I should like to draw your Lordships' attention to the fact that under Labour in the 1970s manufacturing output fell.

Baroness Phillips

My Lords, does the Minister agree that the Government should now start a campaign to make people buy British goods? I always make a point of asking whether an item has been made in this country. Such a campaign would encourage people to buy British rather than always buying imports.

Viscount Ullswater

My Lords, I very much agree with what the noble Baroness has said. Goods made in this country are of a very fine quality. In my view, everyone should consider purchasing them before they purchase any others.

Viscount Montgomery of Alamein

My Lords, does my noble friend not agree that the overall state of the nation so far as concerns economic development is not wholly dependent upon manufacturing industry but is also dependent on the considerable contribution from the service industries and from the invisible sector, to which reference has already been made, which play a major part in balancing our payments and indeed in creating considerable services?

Viscount Ullswater

My Lords, I agree with my noble friend. It is unfortunate that we should concentrate upon one aspect of industry.

Viscount Massereene and Ferrard

My Lords, does my noble friend agree that the public have done far better and have had a far better standard of living under this Conservative Government? Is my noble friend aware that I once had a factory? Tourism has to a great extent taken over from manufacturing industry in raising the standard of living.

Viscount Ullswater

My Lords, yes, I agree with my noble friend. The workforce in employment in the United Kingdom is increasing and is over 500,000 more than it was in June a year ago.

Lord Cledwyn of Penrhos

My Lords, is the Minister aware of the increasingly acute anxiety felt throughout the country about the increase in the number of bankruptcies of small and medium-sized manufacturing companies which are, after all, the seedcorn of industry in the future? What are the Government doing about that? Furthermore, what steps are the Government taking to ameliorate the problem and prevent the closure of Cammell Laird in Birkenhead which will result in the loss of 2,000 jobs in an area where unemployment is high?

Viscount Ullswater

My Lords, in a dynamic economy there will always be firms ceasing to trade and new firms starting up. The figures for 1990 show that VAT registrations continue to exceed VAT deregistrations. As for Cammell Laird, it is sad that a shipbuilding firm such as that has found itself in difficulties, but that reflects the nature of the industry.

Lord Barnett

My Lords, does the Minister still recommend people to buy British goods even where the imported equivalents are much cheaper because of the present exchange rate?

Viscount Ullswater

My Lords, that is a long way from the Question on the Order Paper.

Lord Gregson

My Lords, is the Minister aware that in his speech to the Conservative conference the Chancellor of the Exchequer stressed the importance of the manufacturing sector above all others? Is he aware that the Chancellor of the Exchequer also stressed that reducing our overseas negative trade balance was the most important way of steering this country's economy?

Viscount Ullswater

My Lords, yes, I have drawn attention to the increase in productivity of manufacturing industry, and to the fact that without an increase in productivity we shall never be able to compete.

Lord Stoddart of Swindon

My Lords, will the Minister tell the House why, if the economy is as rosy as he has made out from the Dispatch Box today, the CBI is so worried about the future economy of the country?

Viscount Ullswater

My Lords, no, I cannot answer for the CBI, but I can answer for the Government. The future prospects for inflation and jobs are good.

Lord Stoddart of Swindon

My Lords, is the Minister aware that the people of this country are more likely to listen to businessmen than the nonsense that he has been talking today?