My Lords, according to the Office for National Statistics, manufacturing employee jobs declined by around 947,000 between April 1997 and May 2005. However, UK employment levels remain excellent and, over the same period, business services employment increased by 772,000, for example. Over the same period, there were falls of 3 million in manufacturing employment in both the US and Japan. Those figures emphasise the need for the UK manufacturing industry to innovate constantly, and to move into higher value-added sectors, if we are to compete against emerging economies such as China and India.
My Lords, I thank the noble Lord for that reply, but he is no doubt aware that there is considerable concern about the fall in our manufacturing capacity in the UK. That is particularly so in the north-west of England, where our manufacturing GDP is down to 20 per cent, although that is still the highest figure of all regions. A recent report—the business forecast for the north-west of England—indicated that, from 2000 to 2008, we would lose 97,000 manufacturing jobs but gain 127,000 jobs in the public sector. That seems to be a transfer of wealth-creating people to people who will be a cost on all of us. I would be grateful for the Government's views on those changes. At what level do we reduce our GDP to such a point that manufacturing becomes an issue for the UK economy?
My Lords, it is obviously a concern that there is a fall in manufacturing, because of the impact on individual lives. However, long term the concern has to be whether we are moving, in terms of employment, into knowledge-intensive manufacturing and services. If we move into high value-added manufacturing and service jobs, we will be able to compete across the world.
So far as public sector employment is concerned, over the period about which we are talking—1997 to 2004—on a national basis the private sector increased by 1.2 million, and the public sector by 570,000. The majority of jobs still come very much in the private sector, and the Government make no apology for employing unprecedented numbers of people to deliver front-line public services in areas such as education, health and criminal justice.
My Lords, although I hear what my noble friend has to say and acknowledge the huge amount of restructuring that is taking place in what could be termed the heavy industries such as steel and shipbuilding, does he not agree that it is vital that those industries thrive and survive, particularly given the current world economic climate? Does he also agree that those who say that we now live in a non-industrial or post-industrial society are blatantly wrong?
My Lords, we have to accept that we live in a world in which the division of labour is being redrawn. In 1980, less than a tenth of manufacturing exports came from developing countries. Today that figure is 30 per cent. In 20 years, the figure will probably be 50 per cent. We must recognise that our labour-intensive manufacturing is likely to go to the developing world. We have to achieve a move into knowledge-intensive manufacturing and service. Both manufacturing and service are important, because we need to maintain a strong manufacturing sector in this country.
My Lords, are the Government not being rather complacent about this growing imbalance in our economy? What are they doing to promote manufacturing of the higher value kind that the noble Lord described and what success have their measures achieved?
My Lords, we are doing a great deal to help manufacturing industry move up the value added chain. The range of measures includes increasing the science budget, increasing the level of knowledge transfer from universities to industry, the R&D tax credits, the technology strategy and the highly successful Manufacturing Advisory Service. All of those are elements of our strategy to help manufacturing to move up into high value added sectors.
My Lords, the Minister will be aware of the paradox of falling employment in manufacturing and persistent, chronic skill shortages in many parts of the manufacturing sector. Does he agree that one of the key ways of tackling that would be achieved by increasing the number of apprentices? What action do the Government intend to take on the recommendation of last week's Industry Task Force report on apprenticeships?
My Lords, I totally agree. We have already increased the number of apprenticeships from some 75,000 to 275,000, if my memory is correct. I believe that there are plans to increase that figure to 300,000. Such an increase in skill levels is a key factor of productivity in manufacturing.
My Lords, my noble friend will be aware that the number of people who have been made redundant in manufacturing industries as a result of the decline are often highly-skilled people. What steps are the Government taking to reintegrate those skilled people into the workforce?
My Lords, yes. In fact, there are, at present, many unfilled vacancies in manufacturing—over some 50,000. When significant redundancies take place, the rapid response service works quickly to try to get people into new jobs, so that they do not become disconnected from the labour market.