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Volume 406: debated on Thursday 5 June 2003

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What steps her Department is taking to increase the UK's manufacturing industry productivity; and if she will make a statement. [116507]

The Government's manufacturing strategy, published last year, identified seven key areas of activity for Government and industry that are vital for manufacturing success. We are taking action in all those areas to help British manufacturers improve productivity in very difficult global conditions.

How much importance do the Government ascribe to research and development and diversification as ways of sustaining our manufacturing base in the face of increasing global competition?

The manufacturing strategy puts great emphasis on research and development, which is key to the driving up of innovation. We have put £300 million from the comprehensive spending review into scientific research and technological development, and invested a further £100 million to improve the flow of skilled scientists and engineers. That is crucial if we are to succeed. We will not succeed on the basis of low pay and low skills, nor should we want to. The only way in which we can compete in a fiercely competitive global manufacturing world is by innovating and adding value.

Is the Minister aware of the latest figures in the House of Commons Library, which show that although there has indeed been a superficially impressive growth in manufacturing productivity over the last five years—13.5 per cent.—it is derived from two negatives, a decline in output of 3.5 per cent. and a collapse in manufacturing employment amounting to 17 per cent.? Do the Government distinguish between manufacturing productivity improvements achieved through contraction and mass sackings, and improvements achieved through growth and investment? When do they expect to complete the transition from the former to the latter?

We have never crowed about improvements in manufacturing, or in manufacturing productivity. Manufacturing is still going through a terrible time. It is going through a terrible time in Germany, it is going through a terrible time in Japan, and it is going through a terrible time in America. There are no easy solutions. However, the manufacturing strategy, which is about hard slog rather than quick fix, has involved the industry and trade unions and has established measures that should have been introduced many years ago. It will take a long time for the measures to bear fruit, but as manufacturing is worth a fifth of our gross domestic product, 4 million jobs and 60 per cent. of our exports, it is worth making the effort to help manufacturers.

I was not aware of the statistics in the Library. I shall hurry away to have a look at them after Question Time.

May I draw my hon. Friend's attention to the anger that is felt in Stoke-on-Trent and north Staffordshire generally about Waterford Wedgwood's shock announcement that it is to cut 1,085 jobs? We urgently need new, real jobs. No matter how productive factories such as the two that are to be closed may be, we cannot compete with labour costs abroad. Will my hon. Friend ask the Secretary of State to request the Cabinet to take a personal interest in what is happening in Stoke-on-Trent, and try to find quick ways of securing new jobs, retraining and other help for those who are to lose their present jobs?

I sympathise with my hon. Friend and her colleagues in Stoke-on-Trent. It was dreadful to hear that more than 1,000 jobs are to be lost. I believe that the HR1 notices have already been issued.

As my hon. Friend will know, I went to Stoke-on-Trent a few months ago and spoke to the council and people in the ceramics industry. They are having a very difficult time. Waterford Wedgwood says that it is moving to China, where labour rates are 70 per cent. lower than those in the United Kingdom. As I have said, we cannot compete on that basis. Protectionism is not the answer; the answer is to introduce measures such as those we have introduced through the Ceramics Industry Forum with the aim of increasing innovation and driving up research and development.

The Department has contributed to an investment of £20 million in the Chatterley Valley project, which is expected to bring 4,000 jobs to Stoke-on-Trent. I hope that that will, to some extent, mitigate the problems experienced by my hon. Friend's constituents following the recent announcement.

The Minister's own departmental statistics show that manufacturing productivity has halved since 1997 and that over the same period 650,000 manufacturing jobs have been lost. Yesterday, we heard that jobs will be lost at Wedgwood and that 1,500 jobs will be lost at Cable and Wireless. The hon. Member for Leigh (Andy Burnham) mentioned the number of jobs that have been lost in his constituency. Are we not suffering the consequences of the Government piling more and more burdens on businesses and removing our opt-out from the social chapter? Does he have a manufacturing policy to reverse those trends, or is he just going to sit back and do nothing?

Pick the nuts out of that one. According to the party that wants to be the official Opposition, we have increased manufacturing productivity. Now we are told that it is in a worse position. The two Opposition parties need to tell us what their pouch of fairydust is for solving the problems in manufacturing. If they have one, let us know about it.

The hon. Gentleman said that one of the reasons why manufacturing is suffering is that we signed up to the social chapter. I am really pleased that he has emphasised the fact that his party still opposes basic workers' rights. I have not heard one manufacturer mention the issue of the social chapter. The Conservative party was not just an embarrassment to this country—