Manufacturing Industry and the Economy (Hansard, 25 November 1991)

§ The Minister of State, Department of Transport (Lord Brabazon)
My Lords, Ministers attend regular meetings of the National Economic Development Council I to discuss the performance of the UK economy. Representatives of the CBI and the TUC also attend council meetings.

§ Lord Molloy
My Lords, I am grateful to the Minister for giving that reply. Is he aware that there have been recent reports of sensible liaison between Sir John Banham of the CBI and Norman Willis of the TUC? They have been meeting to try to resolve the climate of low confidence and high unemployment. Should not the Government invite the CBI and the TUC to meet them to contribute towards finding a solution which would be of benefit to everyone in the country?

§ Lord Brabazon of Tara
My Lords, one of course applauds the sentiments expressed in the first part of the noble Lord's question. The NEDC, having as it does representatives from government, the CBI the TUC and independents, provides a forum for the type of discussion the noble Lord has suggested in his question.

§ Lord Mason of Barnsley
My Lords, is the Minister aware that since 1979 manufacturing employment has slumped from 7 million people to 5 million people and that manufacturing investment today is lower than it was in 1979, having fallen by 19 per cent. in the past 18 months? Is he further aware that from 1979 to 1991 Britain was the only country within the EC, except Greece, to see a decline in manufacturing investment? There has been a decline of 16 per cent. over that period, while Germany's grew by 63 per cent and 1144 France's by 57 per cent. With those figures, it must be a constant embarrassment for the Government to talk to anyone.

§ Lord Brabazon of Tara
My Lords, we are not embarrassed to talk to anyone. Employment in manufacturing has of course been decreasing for years—long before 1979. Since 1979 we have seen considerable improvements in productivity and manufacturing output. Our share of world trade in manufacturers has risen for the past three years. That is the first time that has happened for decades.

§ Lord Marlesford
My Lords, did my noble friend share my dismay when he heard that the Ford Motor Company, which is currently losing millions of pounds, has once again made a wage agreement for this year and next year which is well above the rate of inflation? Does he agree that slow, commercial suicide by a large, though admittedly weakly managed company such as Ford, will do absolutely nothing to underwrite employment or economic recovery in this country?

§ Lord Brabazon of Tara
My Lords, the Government believe that pay should be settled between the parties directly involved, according to their own circumstances. Settlements should be based on the need to recruit, retain and motivate staff within affordable limits and by reference to prevailing market conditions.

§ Lord Ezra
My Lords, in answer to the Question asked by the noble Lord, Lord Molloy, the Minister referred to the NEDC. Is the Government's position with regard to the NEDC positive, because at a certain period it was felt that the Government considered that the NEDC role was less important than it had been in the past? Will he refer, in particular, to the role of the "little neddies"?

§ Lord Brabazon of Tara
My Lords, as the noble Lord will be aware, my right honourable friend the then Chancellor of the Exchequer initiated a major reorganisation of the NEDC and the NEDO in July 1987. He then wished to see a slimmer, more efficient organisation concentrating upon micro-economic issues. That, I believe, has been achieved.

§ Lord Stoddart of Swindon
My Lords, does the Minister agree that there is an urgent need to increase manufacturing investment and to get the economy going again? Is he aware that what is constraining the economy from expanding are record high real interest rates? Irrespective of the fact that the Government are constrained within the ERM, will they take immediate action, as demanded by the CBI and others, to lower real interest rates to a level where industry can invest and once again expand?

§ Lord Brabazon of Tara
My Lords, I shall not speculate about future interest rates. They will be set to maintain our commitment within the ERM and to bear down on inflation. Our real interest rates are in the middle of the G7 range. They are below those of France and Canada; the same as those of Italy; but above those of Germany, Japan and the United States.

§ Lord Molloy
My Lords, is the Minister aware that many people do not know who forms the NEDC, and that sometimes people, such as the two I mentioned, can be frustrated? They must be the most vital people on the NEDC. Should not just those two be seen together from time to time with government representatives.

§ Lord Brabazon of Tara
My Lords, both the gentleman mentioned by the noble Lord are on the NEDC. They meet four times a year within the forum of the NEDC.

§ Lord Williams of Elvel
My Lords, the Minister seems to have few friends in the House today. Has he studied what Sir Clifford Chetwood, the chairman of Wimpeys, said to the Building Employers' Confederation this morning: that 5,000 companies in the industry will go bust this year; the industry is shockingly depressed; and things are getting worse? Will he concede the case put forward by my noble friend Lord Molloy, that it is time for the Government to invite the CBI and the TUC to serious talks on how to get the economy back on the road again?

§ Lord Brabazon of Tara
My Lords, the role of government is to create a climate in which the economy can thrive. To do that, we have brought inflation right down to 3.7 per cent.—much lower than it has been for a long time. We have a low-tax economy, and from those circumstances we expect to see the recovery continue.

§ Lord Williams of Elvel
My Lords, I am grateful to the Minister for giving that reply, but has he studied the words of Sir Clifford Chetwood, who is not a member of the Labour Party but chairman of Wimpeys? He is talking about a major manufacturing industry in this country. What are the Minister and his government going to do about it?

§ Lord Brabazon of Tara
My Lords, we outlined what we are doing about it in debates on the Autumn Statement and the humble Address. I have not yet seen Sir Clifford Chetwood's remarks. No doubt I shall do so in due course.

§ Lord Stoddart of Swindon
My Lords, the Minister said that the recovery would continue. Will he tell us when it started?

§ Lord Brabazon of Tara
My Lords, technically, we came out of recession with the publication of the latest quarterly figures.

Lord Morris
My Lords, with regard to the reference to the absence of friends made by the noble Lord, Lord Williams, does my noble friend agree that there is a great deal more to friendship than asking questions?

§ Lord Brabazon of Tara
My Lords, obviously, and I am grateful to my noble friend for his support.