Productivity (Hansard, 27 June 1991)

§ The Minister of State, Department of Transport (Lord Brabazon of Tara)
My Lords, it is not the practice to publish forecasts for output per person employed. However, the Government expect some productivity growth in line with the recovery in activity forecast for the second half of the year.

§ Lord McCarthy
My Lords, I thank the Minister for his Answer. Does he accept that it is important that the Government should anticipate some increase in output per person employed because it always predates any improvement in the level of unemployment? The last time we had this level of fall, it took 12 months before unemployment stagnated, and four years before it began to fall. Is that what the Government expect this time?

§ Lord Brabazon of Tara
My Lords, I can only quote from the Financial Statement and Budget Report concerning productivity. It states that unit labour cost growth in manufacturing is likely to slow sharply through 1991 and beyond, principally as productivity growth rebounds with the recovery in activity. I hope that is reasonably encouraging.

§ Viscount Caldecote
My Lords, does my noble friend agree that during the period of the Labour Government between 1974 and 1979, labour productivity in manufacturing industry was virtually static? However, during the period of this Government labour productivity increased by 50 per cent.

§ Lord Brabazon of Tara
My Lords, in the 10 years between 1970 and 1980 we were bottom of the table for G7 in manufacturing productivity growth. In the years between 1980 and 1990 we have been top.

§ Lord Peston
My Lords, I could have sworn that there was a Conservative Government during part of the period from 1970 to 1980. Noble Lords seem to wish to forget about that. However, it is up to them. The noble Lord referred to a recovery of activity in the second half of 1991. Is he aware that the second half of 1991 starts on Monday? Is it the current view of the Government that the recovery of economic activity will start at about that time? I know of no other economic forecaster who remotely believes that.

§ Lord Brabazon of Tara
My Lords, that quote came from the latest government prediction which was 698 made in the Financial Statement and Budget Report. It looked for a recovery in the second half of the year. Whether that starts on 1st July, I should not like to say.

§ Lord Peston
My Lords, there can be doubt that it starts on 1st July. I wish to make sure that I understood the Answer. The statement that the noble Lord gave us was the one made at the time of the Budget. Is he now telling us that as a result of the Government's experience since the Budget, they have not reformulated their view as to what is likely to happen in 1991?

§ Lord Brabazon of Tara
My Lords, I think that we still expect a recovery in the second half of the year.

§ Lord Barnett
My Lords, given that there is a large balance of payments deficit during the current recession, what does the Minister think will be the source of the rise in output during the second half of the year? Why does he think that it will not result in an even bigger deficit and a return to the recession rather quickly?

§ Lord Brabazon of Tara
My Lords, as I said in my original Answer, the Question refers to output per person. We expect to see that as activity grows it is fairly normal for unit labour cost growth to come down.

§ Lord Stoddart of Swindon
My Lords, does the noble Lord agree that the recession has been longer and deeper than the Government's forecast? Does he further agree that it will be even longer and deeper still unless the Government immediately cut interest rates and cut them sharply?

§ Lord Brabazon of Tara
My Lords, that is a different Question from the one on the Order Paper. It is a subject for a different Question.

§ Lord Dean of Beswick
My Lords, the Minister must be aware of the recent report that shows that the average working week of 48 hours in this country is considerably in excess of that for similar groups of people in Europe. I speak as one who used to work in engineering, producing goods. Is the Minister aware that history has clearly shown that the longer the working week, the poorer the production per hour? When can we expect our people to have the same privileges and working conditions as their colleagues in Europe?

§ Lord Brabazon of Tara
My Lords, that is a matter for negotiation between employers and employees. It is not for the Government to interfere.

§ Lord Dean of Beswick
My Lords, the Minister must be aware that the Secretary of State in another place has already rejected it.

§ Lord McCarthy
My Lords, does the noble Lord agree that since he mentioned the 1970s, the rise in productivity growth began in 1976 when we had a Labour Government? More to the point, after what he said to us today about productivity growth and unemployment, is it not about time that the Government announced their policy for job creation?

§ Lord Brabazon of Tara
My Lords, there are more jobs now than ever before. The best way to produce more jobs is to have better productivity and lower inflation.