Manufacturing Industry

Oral Answers to Questions — Treasury – in the House of Commons at 10:30 am on 26th January 2006.

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Photo of Michael Fabricant Michael Fabricant Opposition Whip (Commons) 10:30 am, 26th January 2006

What recent assessment he has made of the competitiveness of UK manufacturing industry; and if he will make a statement.

Photo of Des Browne Des Browne Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

The pre-Budget report provided an assessment of all areas of the UK economy, and action taken by the Government to provide the right environment for business competing in a global environment. Manufacturing productivity in the UK rose by 30.9 per cent. between 1997 and 2004. The Government want a successful and dynamic manufacturing sector with more companies moving to high-value production to meet the challenge of globalisation, for which the best foundation is, of course, macroeconomic stability.

Photo of Michael Fabricant Michael Fabricant Opposition Whip (Commons)

We look so alike, Mr. Speaker, that getting us mixed up is easily done.

I know that the Chief Secretary will join me in offering sympathy to the 175 workers at GKN Lichfield who have just lost their jobs because the company is moving its manufacturing plant from the UK to Europe. However, that is not so surprising, given that the Engineering Employers Federation has said that extra taxes placed on manufacturing directly amount to £2.2 billion since 1997, and that the total for extra taxes in that period comes to £5.5 billion. That compares with what has happened in Europe and the US, where the overall tax burden has fallen since 1997. What can the Chief Secretary do to reverse that trend?

Photo of Des Browne Des Browne Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

First, may I take the opportunity to express my condolences and support to the workers at the GKN Lichfield plant, which is now to be closed? My understanding of the situation is not exactly the same as the hon. Gentleman's. We are dealing with his constituency and I accept that I may be wrong, but I understand that GKN announced at the same time that it would relocate all the jobs to its 10 other UK plants. That is not entirely consistent with what the hon. Gentleman said, but I recognise that he will have more accurate information.

The loss of manufacturing jobs in the west midlands and the rest of the UK has been going on for some time, but I point out that the service sector in the west midlands has expanded significantly, with more than 300,000 jobs created since we have been in government. Job opportunities exist, and I assure the hon. Gentleman that the Government will support the people who have lost their jobs today.

In relation to the meat of the hon. Gentleman's question, I suggest that his analysis of why this is happening is slightly skewed. I understand why, for political reasons, he wants to skew it, but corporation tax has gone down in this country from 33 per cent. to 30 per cent. We support manufacturing industry through research and development credits, 80 per cent. of which go to manufacturing industry.

The global challenge that we all face in relation to manufacturing will have to be met by a number of activities, and most of those my right hon. Friend the Chancellor announced in the pre-Budget report.

Photo of Michael Foster Michael Foster PPS (Rt Hon Peter Hain, Secretary of State), Northern Ireland Office

Cadbury's is a highly competitive manufacturer of chocolate based in the west midlands. Does my right hon. Friend understand the dismay felt by workers in our region that Opposition Members have signed an early-day motion urging people to boycott the products—