Manufacturing: Employment Statistics (Hansard, 19 December 1991)

§ The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)
My Lords, the number of employees in employment in manufacturing industries in Great Britain in January 1991 was 4.949 million and in September 1991 was 4.693 million. Figures for the intervening months are available if required.

§ Lord Dean of Beswick
My Lords, I am grateful to the Minister for that reply. However, is he aware that his department's figures, issued on 14th November, show that in 1989–90 we lost 68,000 jobs in the manufacturing sector and that in 1990–91 (September) we lost 348,000 jobs in the industry? That is an increase of 500 per cent. All that has taken place during the stewardship of Mr. Major and Mr. Lamont. In view of those figures, can the Minister now tell the House that the situation is improving?

§ Viscount Ullswater
My Lords, I would have to quote the names of many people who have been in charge since manufacturing jobs have declined. They have declined since 1966 on a straight basis and therefore I do not believe that anything can be attached to the two right honourable gentlemen whom the noble Lord mentioned. It is a fact that these jobs have been lost. One fact that I have previously stressed to the noble Lord is that many jobs in manufacturing have been reclassified into the service industry; for instance, catering and cleaning have been contracted out and they no longer count as manufacturing jobs.

§ Baroness Turner of Camden
My Lords, is the Minister aware of the recent report issued by the Engineering Employers' Federation which states that something must be done to stimulate a sustainable recovery? Can he urge his honourable friend to give attention and consideration to the recommendations of the federation?

§ Viscount Ullswater
My Lords, yes, that is exactly what the Government seek to do. Preliminary estimates show that GDP grew in the third quarter. The latest figures for retail sales show a welcome rise. Although I confess that manufacturing output has fallen during the past three months, the performance of difference sectors is certain to vary as recovery gets under way. However, the most important point is that inflation has fallen from 10.9 per cent. last autumn to 4.3 per cent. now. Interest rates have fallen four-and-a-half points since entry to the ERM last October. That should ensure that growth accelerates during the coming months.

§ Lord Marlesford
My Lords, does my noble friend agree that, if the Government were to re-introduce, perhaps for a period of two years, a 100 per cent. 1460 capital allowance for plant and machinery, there would be a welcome, non-inflationary boost to investment, to manufacturing and thus to jobs? If my noble friend does agree, will he discuss the possibility with his right honourable friend the Chancellor of the Exchequer?

§ Viscount Ullswater
My Lords, as my noble friend suggested, any form of taxation change is a matter for my right honourable friend. However, he should understand that the adjustments that were made in the Budgets during the 1980s which brought down the rate of corporation tax and adjusted the rates of capital allowances have done a great deal for industry. They have ensured that the right form of investment has been made.

§ Lord Cledwyn of Penrhos
My Lords, is the Minister aware that Members on this side of the House thoroughly agree with the proposal made by the noble Lord, Lord Marlesford? Will he undertake to discuss the matter seriously with his right honourable friend? Furthermore, do the Government still adhere to their policy of replacing jobs in industry with jobs in the service industry? For several years that is what noble Lords occupying the position of Minister for Trade and Industry in this House were saying; notably the noble Lord, Lord Young of Graffham, who was in the Chamber yesterday but who is not in his place today. Is that still the policy of Her Majesty's Government?

§ Viscount Ullswater
My Lords, I believe that the noble Lord the Leader of the Opposition is in some way decrying jobs in the service industry. Certainly during the past 10 years more than 2 million jobs have been created in the service industry and those people have earned their living from it. That is some record. I understand the attraction that a 100 per cent. capital allowance would imply to industry. However, that would be an extraordinarily heavy burden on the Treasury and any Chancellor must look at the issue carefully. I am grateful to know that that is now the policy of the Labour Party.

§ Lord Cledwyn of Penrhos
My Lords, in view of what the Minister said about the service industry, perhaps I may be allowed to say that coming from Wales I value the service industry very much, including the tourist industry. Is the Minister aware that the service industry in no way matches jobs in industry as regards future employment in this country?

§ Viscount Ullswater
My Lords, I believe that to be just a supposition because there is no doubt that during the past 10 years manufacturing industry has remained at just under 25 per cent. of GDP. When jobs move from one industry to another, while manufacturing industry has retained its place in GDP, I do not believe that one can say those jobs have been lost in vain.

§ Baroness Denton of Wakefield
My Lords, the issues of employment and the manufacturing base raised by the noble Lord, Lord Dean, are a concern to all Members of your Lordships' House. However, 1461 when last month the House discussed the constructive Select Committee report on innovation in manufacturing there was a total absence of input from Members on the Back Benches opposite. Does my noble friend agree that their concern would be seen as greater if there were a more positive and a less negative input?

§ Viscount Ullswater
My Lords, I would have to agree with a great deal that my noble friend has said. The House will be aware, as will noble Lords opposite, that in the United Kingdom manufacturing productivity growth in the 1980s was the highest of the major industrialised countries. It is good to see that that productivity growth has resumed in recent months.

Lord Bruce of Donington
My Lords, how can the noble Viscount justify or brush aside the decline in manufacturing output that has taken place during this year and over the past three months? Is he aware that under this Government's economic miracle British manufacturing capacity is being permanently disabled? It will take years to get it back on its feet again.

§ Viscount Ullswater
My Lords, the noble Lord suggests that manufacturing output has dropped. All I can say is that in the past five years it has risen by over 10 per cent. I believe that the noble Lord refers to when manufacturing output dropped under a Labour government. That is what he remembers. Since 1981 the United Kingdom's volume of world trade in manufacturing grew faster than that of France, Germany, Italy, the United States and Japan. I believe that that is a fine record.

§ Baroness O'Cathain
My Lords, referring to the proposal of the noble Lord, Lord Marlesford, about the 100 per cent. capital allowance being written off, is it not true that investment in manufacturing industry does not necessarily create jobs in manufacturing industry? As an industrialist of many years' standing, I know that every single proposal—

Noble Lords
Question!

§ Baroness O'Cathain
I did ask: is it not true that investment does not necessarily create jobs in manufacturing industry. What happens is that companies invest in manufacturing industry so that they reduce the labour content or the costs of production in order that those companies become more competitive. But there is a spin off to service industries. Does the noble Viscount agree?

§ Viscount Ullswater
My Lords, I have to agree with the noble Baroness. The introduction of computers and robots into manufacturing industry has decreased the number of jobs, but it is important that a service industry should provide jobs for people. I believe that I have demonstrated that it has done so.

§ Lord Orr-Ewing
My Lords, was it not a healthy sign for the engineering industry that Govan shipyard announced yesterday that against extreme competition it had acquired an important order? That will be a huge impetus for the whole shipbuilding industry in this country which has been in a parlous condition for many years.

§ Viscount Ullswater
My Lords, I believe that that is a good indication of the competitiveness of British industry.

§ Lord Dean of Beswick
My Lords, in reply to my first Question, the Minister used a form of smokescreen by referring back to 1966. However, he produced no figures for any year that showed anything as devastating as the figures issued by his department for the past 12 months. Will he comment on what my noble friend on the Front Bench, Lady Turner, said about the report issued by the Engineering Employers' Federation? It stated that if matters do not change the industry will have lost a quarter of a million jobs. That is not reclassification into the service sector; it is jobs vital to the economy of the country. Those are the findings of all the Select Committees reporting to your Lordships' House. Will the Minister try to persuade the Government to take action to prevent that taking place?

§ Viscount Ullswater
My Lords, I agree that the loss of jobs is important to those who become unemployed. I have said so on many occasions. Unemployment is devastating to the individuals and their families. However, we must make certain—as the employment service does—that opportunities are available for those who lose their jobs to seek and obtain others.

§ Lord Glenamara
My Lords, I believe I have asked the Minister this before. Does he agree that there is a close relationship between the balance of payments deficit and the rundown of the manufacturing sector of our economy? We shall never get rid of the balance of payments deficit until we rebuild the manufacturing sector. That is because the manufacturing sector makes goods to sell abroad.

§ Viscount Ullswater
My Lords, the most important point is that there has been a sharp fall in the manufacturing deficit this year. In other words, manufacturing industries have been much more productive. The Autumn Statement forecast a deficit of £3 billion in 1991 compared with a deficit of £11 billion in 1990. The car industry is a particular success story. In the first nine months of 1991 car exports increased 39 per cent. on the corresponding period last year.

§ Lord Dormand of Easington
My Lords, arising from the first Answer to my noble friend Lord Dean, will the Minister tell the House on what basis cleaning and catering, which were classed as manufacturing, have been reclassified?

§ Viscount Ullswater
My Lords, catering and cleaning used to be considered as manufacturing jobs if they were carried out in-house in a company such as Ford. If they are now contracted out to a service company, they are reclassified as service jobs.