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Manufacturing Industry

Volume 281: debated on Wednesday 17 July 1996

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12.

To ask the President of the Board of Trade when he next plans to meet his European Union counterparts to discuss measures to strengthen manufacturing industry. [36078]

The Parliamentary Under-Secretary of State for Trade and Industry
(Mr. Phillip Oppenheim)

My colleagues and I meet our European Union counterparts regularly to discuss a wide range of industrial issues.

When the Minister next visits Europe, will he reassure his European counterparts that the recent welcome deal with LG in Newport in south Wales was well within the European Union's rules for regional aid? Will he tell the Conservative candidate for Newport, West, Peter Clarke, that he is out of order to claim that the money that the Government gave to support the company's relocation to south Wales was a waste? Will he disown that Conservative candidate here and now?

If the hon. Gentleman will listen for a second, I will tell him that we now have a major inflow of inward investment—in stark contrast with the 1970s, when multinationals fell over themselves to move production away from Britain—because British manufacturing productivity growth since 1979 has been the fastest of any major industrial country. Our social costs are low also. That means that Britain is not a low wage haven for inward investors, but a low cost haven. That is why the company has come to south Wales and why unemployment in the hon. Gentleman's constituency has fallen to 7 per cent. I thought that he would welcome that fact instead of try to make irrelevant, cheap and silly party political points.

Following the Government's great success in opening up the telecommunications market in the European Union, and now their efforts to open up the energy market, is it not time that we considered the possibility of extending the single market to cover the defence industries? If we did, would not all member states gain greatly from increased competition and reduced procurement costs? Since we have—judged by the volume of our defence exports—the most successful defence industry in the Union, would not we gain disproportionately in terms of the industrial and employment benefits of such a move?

One reason why we have the most successful defence industry in Europe is that, during the past 15 years, we took the hard decisions that allowed our industry to become efficient and productive. Indeed, we are already going down the route of more shared projects with other European countries.

My hon. Friend mentioned telecommunications and energy, in respect of which we were at the forefront of liberalisation and yet were opposed at every turn by the Opposition. Now, apparently, the Opposition have decided that they are great liberalisers, which shows that Labour's policy formation cycle is, first, to oppose our policies and, secondly, when it sees that they work, rather shamefacedly and slyly to adopt them.

How will privatising the road network help manufacturing? How will manufacturers be helped by having to pay profits to private companies? Surely it will add to the cost. Is this the real Tory manifesto for the next election?

I am sorry, but because of the gabble from the Opposition Benches and the animal noises—not that I dislike animals—I missed the first part of the hon. Lady's question.

How will road privatisation help manufacturing? Surely a toll on travel costs will simply put profits into the hands of private owners and do nothing to help manufacturing.

Apart from the fact that there are absolutely no plans to privatise the road network, I should have thought that the hon. Lady's question would have been better addressed to the Department of Transport.

When my hon. Friend meets his European counterparts to discuss manufacturing, will he point out to them and, indeed, to the House today that, since 1981, our manufactured exports have expanded faster than those of France, Germany or Japan? Does not that demonstrate clearly that we have the right policies?

My hon. Friend is absolutely right. Not only manufactured exports have done well since 1979. In the 1980s and 1990s, we had the fastest growth of manufacturing productivity of any developed country. Our manufacturing output growth, which was negative under the last Labour Government—manufacturing output fell under the last Labour Government—has increased in line with the average for Europe for the first time since the war. I believe that that shows that we have transformed our manufacturing industry from being a laggard to being at least as good as the average and, in some cases, as good as the best.

On strengthening the position of manufacturing industry in Europe, is the Minister aware that this country's electricity generating equipment is some of the finest in the world; that, in general, our electricity supply industry is among the most efficient and cost effective in the world; and that it is hungry to compete in lucrative markets such as Germany and France, where currently it is excluded by the protectionist attitudes of those Governments? If he is aware of that, why did the Government sign up on 20 June to a miserably inadequate deal to open up a small part of the electricity supply market in Europe? In so doing, the Government limited severely the possibility to create new jobs for British workers in this burgeoning sector. Was it part of some shabby trade-off to secure the beef deal?

The hon. Gentleman attributes more conspiratorial motives to the Conservatives than we are capable of—[HON. MEMBERS: "Oh!"]—and significantly more than Opposition Members are capable of. His question is rather interesting, because it shows that the much-touted slogan new Labour, new danger is not always right. This is a classic example of new Labour, no danger. Unfortunately, the hon. Gentleman is totally out of line with the rest of his hon. Friends. He says—[Interruption.] May I ask Opposition Members to listen for just one minute? The hon. Gentleman says that we have the most efficient electricity generation in Europe. Does the hon. Member for Bolsover (Mr. Skinner) agree with that? I do not know. We have the most efficient electricity generation in Europe because, over the past 10 years, we made the difficult decision to move to gas. Gas is cleaner and cheaper, yet virtually every Opposition Member opposed that move. I do not understand how the hon. Gentleman can argue for more energy liberalisation in Europe, when only three weeks ago he was flinging out press releases right, left and centre opposing European liberalisation of postal systems. Where is the consistency in that?

Will my hon. Friend confirm that, for the first time in history, Germany is exporting manufacturing capacity not only to this country, but to other parts of the world, including the Pacific rim—

In fact, it applies to North America and South America. The reason is the substantial social costs that Germany must bear. Those costs are very damaging to its industry. Does its experience teach us any lessons?

I will do my best to answer.

My hon. Friend is right. After decades during which the productivity, efficiency and competitiveness gap between us and Germany widened, during the 1980s and 1990s we have managed to close no less than three quarters of that: gap, which is a tribute to the efforts of British manufacturing. It is a shame that Opposition Members sometimes do not recognise the enormous progress made by British industry since 1979.

13.

To ask the President of the Board of Trade what additional measures he plans to encourage manufacturing industries; and if he will make a statement. [36080]

Manufacturing is served best by a stable economic environment with low inflation and historically low interest rates. Manufacturing output has risen by 8 per cent. since the beginning of the recovery, and is expected to continue to grow this year and next.

Should not the Minister read recent reports rather than lecture Opposition Members and expect them to listen to him? Does not the most recent report of the Office for National Statistics show that factory production is stagnating? Is it not also true that, according to a Government-backed report, poor productivity, low levels of innovation and even lower levels of investment are now threatening the competitiveness of the west midlands?

The hon. Gentleman is right, to the extent that we must not be complacent about our manufacturing performance. I would not claim for one minute that we are yet as good at manufacturing as the best in the world; what I will say is that, since 1979, we have made significant progress in narrowing the gap that widened so dramatically under the last Labour Government, when our manufacturing output fell and our manufacturing productivity growth was lower than that of any other major industrialised country.

Is not one of the factors that encourage manufacturing industry in this country the Government's hacking away at red tape? Does not that compare very favourably with what is happening on the continent, where red tape is growing like a triffid—particularly given the requirements of the social chapter, which Opposition Members would like to impose on this country?

I entirely agree. Although Opposition Members often speak the language of free and open markets nowadays—supposedly—in practice they are still old-fashioned interventionists and protectionists. Most of them are, anyway. That is manifested by the Labour party's dishonest minimum wage policy. It is doubly dishonest. It pretends to the less well-off that there is some easy, cost-free way of raising their wages without increasing their productivity, and it does not have the guts or the honesty to tell the low paid at what level it would set the minimum wage. Nor do we know how many of those low paid people would be not low paid, but not paid at all.