Manufacturing Investment

Oral Answers to Questions — Trade and Industry – in the House of Commons at 2:30 pm on 5th April 1995.

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Photo of Roger Berry Roger Berry , Kingswood 2:30 pm, 5th April 1995

To ask the President of the Board of Trade what was the change between 1979 and 1993 in the proportion of gross domestic product invested in manufacturing industry in (a) the United Kingdom, (b) Germany and (c) Japan. [16444]

Photo of Mr Richard Needham Mr Richard Needham , North Wiltshire

The latest figures show that the United Kingdom invested 2.2 per cent. of gross domestic product in manufacturing industry in 1992 and 3.1 per cent. in 1979. Comparable figures, for which the hon. Gentleman asked, for Japan and Germany are not available, not least because Germany did not exist in 1979.

Photo of Roger Berry Roger Berry , Kingswood

Does the Minister consider that the decline in the share of GDP invested in manufacturing industry over that period might explain why, under this Conservative Government, Britain has had the worst growth record and the highest levels of unemployment since the war? Does the Minister consider that it might also explain why Britain has had the worst economic performance of any of our major industrial competitors? Does he not also consider that it suggests that quoting statistics on economic performance over the past 12 months might be seriously misleading?

Photo of Mr Richard Needham Mr Richard Needham , North Wiltshire

It is always a privilege to have another lecture from a lecturer among Opposition Members, who, as usual, know nothing about industry. As the hon. Gentleman asked about Germany, I can respond only about western Germany. Since 1979, manufacturing productivity in the United Kingdom has risen nearly two and a half times as much as in western Germany. Since 1979, our exports have risen faster than in Germany.

It is nonsense to claim that this country's economy is not competing effectively with the rest of the world. When the hon. Gentleman is not lecturing, why does he think that we have managed to attract 40 per cent. of Japanese investment in Europe while Germany has managed to attract only 17 per cent? Why does he think that the same applies to investment from the United States, in respect of which Germany has attracted investment of only 9 per cent? The facts speak for themselves. The hon. Gentleman should be proud of the fact that, in Bristol, he represents a city which, under this Government, is increasing its share of world trade faster and faster.

Photo of Mr David Shaw Mr David Shaw , Dover

Does my hon. Friend agree, however, that often it is not so much the quantity as the quality of manufacturing investment that is important? Is it not also important to remember that manufacturing investment statistics do not include items such as research and development in pharmaceuticals? Do not British pharmaceutical companies, whether owned by overseas companies or by United Kingdom companies, lead those of Japan and Germany?

Photo of Mr Richard Needham Mr Richard Needham , North Wiltshire

Of course my hon. Friend is right, and he is also right to stress the importance of the quality of manufacturing investment. In the last days of the Labour Government, when billions of pounds were used to subsidise nationalised industries, much of that money appeared in the figures as if it were manufacturing investment, although it did nothing for exports, for productivity or for competitiveness. Most of what it was subsidising had to be closed down, because it had been invested in the wrong products.

Photo of Stuart Bell Stuart Bell , Middlesbrough

Everyone, both in the House and in the country, knows that last year when the right hon. Member for Loughborough (Mr. Dorrell), now Secretary of State for National Heritage, talked about high dividends and low investment, he was promptly denounced by Lord Hanson, who contributed £120,000 to the Conservative party and then sent a letter to the Prime Minister denouncing the right hon. Gentleman. When it comes to high dividends and low investment, we know full well where the heart of the Tory party is. [HON. MEMBERS: "Question?"] The question is: in heaven's name, who runs the Department of Trade and Industry when it comes to investment? Is it the President of the Board of Trade or is it Lord Hanson?

Photo of Mr Richard Needham Mr Richard Needham , North Wiltshire

The hon. Gentleman talks about investment regardless of the quality of that investment, to which my hon. Friend the Member for Dover (Mr. Shaw) referred—

Photo of Mr Richard Needham Mr Richard Needham , North Wiltshire

I am talking not about Lord Hanson but about the question, which concerned investment. The hon. Gentleman, who is more sensible than most Opposition Members about such matters, will know that if manufacturing productivity has increased two and a half times faster in the United Kingdom than in Germany, that has to reflect the quality and importance of British investment over that period. [HON. MEMBERS: "Answer the question."] That is the answer.

Photo of Mr John Sykes Mr John Sykes , Scarborough

As everybody who works in the private sector relies on the competitiveness of his company not only in Europe but elsewhere abroad, will my hon. Friend tell Opposition Members and the rest of the world what effect the social chapter and the minimum wage would have on manufacturing investment in this country?

Photo of Mr Richard Needham Mr Richard Needham , North Wiltshire

My hon. Friend knows a great deal about that subject and has been involved in business all his life, so he knows perfectly well that the social chapter would impose a massive additional burden on industry, because it would reduce support through arrangements such as family credit. The consequences for British competitiveness and profitability would be dire indeed. The right hon. Member for Copeland (Dr. Cunningham) knows that perfectly well, but he does not know what to do about it.