Manufacturing Industry (Hansard, 18 December 2001)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, the Government recognise the difficulties that UK manufacturers are experiencing because of the slow-down in the world economy.
We are helping UK manufacturing industry to drive up productivity and to increase competitiveness. We are doing that by providing a stable fiscal environment, by investing in basic science, by pursuing a strong competition policy, by investing in transferable basic skills and in infrastructure, by actively promoting knowledge transfer between universities and industry and by supporting exports, regions and small business.

§ Lord Roberts of Conwy
My Lords, I am grateful to the Minister for that reply. Will he confirm that after two consecutive quarters of negative growth manufacturing is now in recession? Does that situation not call for other special measures such as exemption from the climate change levy, or has manufacturing ceased to occupy the central position in the Government's industrial and economic plans?

§ Lord Sainsbury of Turville
My Lords, as I have said, we recognise that there is a fall in output in manufacturing industry. That does not require us to take emergency measures, such as changing the climate change levy. But, as was shown by the fact that we had the manufacturing summit recently, we take the performance of manufacturing industry extremely seriously. We shall continue to support it as necessary to increase its productivity and competitiveness.

§ Lord Razzall
My Lords, does the Minister accept, having been asked this Question probably six times in this House since the Summer Recess, that this is a serious issue? Does he further accept that there are 132 really only two policies that Her Majesty's Government can pursue? The first one, which seemed to be the answer that the noble Lord was giving, is to do very little and allow the decline of manufacturing industry to be left to the market place. The alternative is to have a proactive fiscal and monetary policy in order to preserve our manufacturing industry, including—dare I say—making plans to go into the euro. Which of those two policies do the Government propose to adopt?

§ Lord Sainsbury of Turville
My Lords, I thank the noble Lord for asking that question. He has asked it every time this issue has been raised. I shall give the same answer as I have given before. I do not think that the failed policies of the past, in terms of either fiscal or monetary stimulation, are the right policies to pursue. What industry wants and has always said it wants is stability in these areas. Equally, to go into the euro, which is what the noble Lord has in mind, without the five tests being passed would be a great mistake.

§ Lord Jones
My Lords, is my noble friend aware that in my former constituency some £250 million is currently being invested in the Airbus factory? It is a world leader in wing technology and wing production to the tune at the moment of over 4,000 jobs. Is he further aware that the aerospace manufacturing industry in Britain now earns nearly £5 billion a year for our country, employs over 40,000 skilled workers and is the last great reservoir of skills? Therefore, will the Government bring forward their plans to buy the heavy lift aircraft, the A400M? Will they increase the already notable research and development grants that they give to BAe Systems and to Airbus? Without the aerospace industry Britain would be in serious industrial trouble.

§ Lord Sainsbury of Turville
My Lords, I totally agree that the aerospace industry is one of the best performing industries in this country and is a notable example of where we have world-class manufacturing which can compete against any other country in the world. I do not think that it is the last reservoir of skills in this country. There are other industries, such as the biotechnology industry and pharmaceuticals, which equally are world-class industries. There are many more to which we should give more recognition. The particular measures mentioned by my noble friend are constantly under review.

§ Baroness Miller of Hendon
My Lords, is the Minister aware of the letter that his noble friend Lord McIntosh received from the glass manufacturers on 3rd December after a similar Question was asked in the House about the climate change levy? The letter from the glass manufacturers said that a disproportionately large amount of money is taken by the climate change levy—they called it a tax, as I did—from this very delicate industry. Is the noble Lord aware that Pilkington pays £1.75 million and gets £44,000 back and Potters of Barnsley Ltd pays £175,000 and gets only £2,000 back? Do the Government still maintain 133 that what we call a tax and they call the climate change levy is actually still tax neutral especially as far as concerns the manufacturing industry?

§ Lord Sainsbury of Turville
My Lords, I am not aware of the letter to which the noble Lord referred. I have been in contact with a number of industries that are in a similar position, such as the plastics and rubber industry. They have made the same point. The position is that the levy is revenue neutral across the private sector. We have never said that it is revenue neutral on a particular industry or a particular company where clearly it is not the case, but across the whole of the private sector it is revenue neutral and therefore not a tax.

§ Lord Dormand of Easington
My Lords, will my noble friend tell us what plans the Government have to revive manufacturing industry—or, indeed, any kind of industry—in the North East of England?

§ Lord Sainsbury of Turville
My Lords, I am glad to say that One North East is a good regional development agency and has taken extremely effective action to support particular clusters of industry in the North East. We want to give regional development agencies more scope so that they can play a part in increasing innovation and productivity within regions.

§ Lord Ezra
My Lords, does the noble Lord agree that our adverse balance on visible trade is now at an all-time high and rising? Of course, that means that we are importing vastly more manufactured goods than we are exporting. Is not that of grave concern? If that had occurred a few years ago, it could have led to a governmental crisis but it now seems to be totally ignored.

§ Lord Sainsbury of Turville
My Lords, it is obviously an issue of concern. We now have proper control of public finances, so that does not inevitably lead to a crisis across the whole of the Government's financial policy, as it has done in the past.

Lord Campbell of Croy
My Lords, does the Minister accept that the climate change levy is haphazard in its impact? The return—the refund—entirely depends on a firm's number of employees, because it is the return of national insurance contributions.

§ Lord Sainsbury of Turville
My Lords, that is not a random situation. There will not always be perfect equity between every company, but it seems to us the best method of recycling the money to companies—no better method has been suggested.

§ Lord Trefgarne
My Lords, while declaring an interest in training matters, as set out in the Register, is the Minister satisfied that there will be an adequate supply of skilled personnel—especially engineers—for manufacturing industry now and in future?

§ Lord Sainsbury of Turville
My Lords, the question of the supply of skilled engineers is extremely 134 important. There are severe gaps in some key areas. That is why we are taking action, such as the restructuring of the Engineering Council to turn it into the Engineering and Technology Board, so that we can do more to drive up the supply of engineers throughout the economy.