Manufacturing Competitiveness

Oral Answers to Questions — Trade and Industry – in the House of Commons at 2:22 pm on 12th July 1995.

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Photo of Richard Caborn Richard Caborn , Sheffield Central 2:22 pm, 12th July 1995

To ask the President of the Board of Trade what measures have been taken to improve manufacturing competitiveness. [32123]

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

The Government's policies since 1979 have contributed to a transformation of the competitiveness of manufacturing industry. We have reformed the labour market and our education system, cut taxes and pursued a vigorous programme of privatisation and liberalisation. The results are clear. Since 1979, manufacturing productivity has grown faster in the UK than in any other major industrialised country—after two decades in which the UK was the slowest.

Photo of Richard Caborn Richard Caborn , Sheffield Central

I thank the President of the Board of Trade for that answer. I do not know whether I am addressing my question to the right person in view of the Government's reorganisation, particularly in the area of competition, but I expect that the President will resolve the matter when he responds to my question.

Has the President seen the 3is report, which was released last week, about investment in small and medium-sized businesses? It underlined the points made by the Select Committee on Trade and Industry in its report about the competitiveness of United Kingdom manufacturing and in its second report about investment in small and medium-sized businesses, which showed clearly that we are yet again falling behind Europe in terms of investment. The 3is report confirms much of that serious evidence.

Does the President of the Board of Trade agree that he should put pressure on the Treasury to provide some fiscal incentives in the next Budget to ensure that there is medium to long-term investment in small and medium-sized businesses rather than to opt for the short-termism that seems to be inherent in the United Kingdom?

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

I certainly accept the hon. Gentleman's point that investment is important in all businesses, large and small. It is important for the Government to encourage a stable economic environment with low inflation in which businesses can undertake such investment. I am encouraged by the fact that investment in manufacturing industry has risen by 8.3 per cent. in the past year. That is a substantial rise, which I am keen to encourage further.

Photo of Mr Anthony Coombs Mr Anthony Coombs , Wyre Forest

Will my right hon. Friend confirm that one reason why competitiveness in manufacturing industry has risen is the 8.3 per cent. increase in investment in the past year, following a 6.75 per cent. increase in the previous year? Does he agree that one of the fiscal incentives that manufacturing industry would like and that was mentioned a moment ago is a reform of the capital gains tax regime to encourage longer-term rather than shorter-term investment?

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

I hear what my hon. Friend says and I have no doubt that my right hon. and learned Friend the Chancellor of the Exchequer will consider such points, along with all the other issues that he will consider before his Budget. My hon. Friend, and indeed the whole House, will agree that one of the most important ways in which large and small businesses can remain competitive is to keep down non-wage labour costs and resist the minimum wage and the social chapter.

Photo of Andrew Miller Andrew Miller , Ellesmere Port and Neston

On the evening of 6 July, I placed on the board a letter to the President of the Board of Trade and faxed his office asking important questions about competitiveness in respect of the reorganisation of science in his Department. First, will the President of the Board of Trade assure the House that in future we will receive information directly and that the press will not get it the previous day? Secondly, will he give the House an assurance that research councils that are not in the near market area will not be treated as second division organisations within his new arrangements?

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

I am happy to reassure the hon. Gentleman that I have taken careful note of the points that he raised in his letter. I replied to his letter today, as soon as I had announced the disposition of portfolios within the Department. My hon. Friend the Member for Esher (Mr. Taylor) is taking on the role as Minister for Science and Technology. I hope that between us we will reassure the hon. Gentleman of the importance that we attach to science and technology—alongside the other activities of the Department of Trade and Industry—in its own right and as a way of improving the competitiveness to which we are all committed.

Photo of Mr Michael Grylls Mr Michael Grylls , Surrey North West

Does my right hon. Friend accept that he will have the enthusiastic support of all British industry if he continues to resist vigorously—as the Government have done until now—unnecessary social charges from the continent of Europe that have done so much to ensure that Europe created fewer jobs than either Britain or the United States in the past 20 years? That is crucial to competitiveness.

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

I absolutely agree with my hon. Friend. It is significant that in the past year employment in manufacturing industry in the United Kingdom has risen by no fewer than 31,000 jobs. In the past two and a half years, unemployment across the economy as a whole has fallen by well over 600,000. That is in sharp contrast to many countries in the rest of Europe that are burdened with excessive social costs.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

Can the Minister tell us why the Government do not seem to practice a great deal of competition within the Department of Trade and Industry when it comes to handing out contracts, for example, for the refurbishment of No. 1 Victoria street? Can he tell us more about the internal inquiry that is taking place? I assume that he has been informed about the letter that I set him quite recently referring to the fact that top officials at the DTI were gallivanting around the world and being handed big raffle prizes, although they had not entered a raffle, and then some very uncompetitive tenders and bids were handed out to the favoured few. Is it not time that the scandal was sorted out?

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

I can reassure the hon. Gentleman that the new headquarters of the Department at Victoria street were built under the private finance initiative. As for his letter, my hon. Friend the Minister for Science and Technology has sent the hon. Gentleman a full and detailed reply today.