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Inward Investment
10. Mr. Waterson: To ask the President of the Board of Trade if he will make a statement on the current level of inward investment into (a) the United Kingdom, (b) France and (c) Germany. [28365]
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Phillip Oppenheim): The latest OECD figures available show that, in 1993, the UK attracted £130 billion by value of stock compared with approximately £80 billion for France and £41 billion for Germany.
Mr. Waterson: I thank my hon. Friend for that answer. How does he explain the fact that this country seems to be attracting more inward investment than France and Germany put together? Is it merely a co-incidence, or is
it due to the fact that, in this country, we have a Government who are committed to enterprise and to reducing burdens on business, and who will have nothing to do with the pettifogging, bureaucratic interference in business that we can expect from Opposition Members, the home-grown socialists, or their socialist friends in Europe?
Mr. Oppenheim: I thank my hon. Friend for that question. Because he was politically active in the 1970s, he will remember the 1970s fondly as the good old days of Labour's industrial strategy, when international companies fell over themselves to move production from Britain and a trade union leader said that he would not buy a Ford made in a British plant, but would only buy one from a German plant.
Now, by contrast, Ford and General Motors are using Britain as a core export base; Toyota, Honda and Nissan are exporting; and even Rover, which used to make such world-beaters as the Austin Allegro and the Morris Marina under Labour Governments, is now exporting more than half its production.
Mrs. Anne Campbell:
Is it not true that the increase in inward investment in 1995 is largely due to takeovers of investment banks and privatised utilities? How is that bringing extra jobs to the UK?
Mr. Oppenheim:
I do not think the hon. Lady is right, but I shall be interested in any figures that she can produce. What is true is that the manufacturing performance of this country has been transformed.
Manufacturing productivity, which is the key element in competitiveness, was stagnant and bottom of all the major industrial countries when the Labour party was in power, whereas manufacturing productivity growth has been top of the G7 countries under the present Government. I remind the hon. Lady that manufacturing output actually fell under the last Labour Government, whereas it has risen quite sharply under the present Government.
Mr. Atkins:
Does my hon. Friend accept that part of that inward investment will have come from Saudi Arabia? Does he agree that Saudi Arabia is an extremely important trading and investment partner, and that the constant criticism in the media about its importance to export, investment and other trade with this country can only be damaging and ought to be stopped?
Mr. Oppenheim:
I entirely agree. It always amazes me that Opposition Members are so quick to attack countries that are our good trading partners and allies, when it is clear that in many other countries that still have socialist regimes human rights abuses are far worse than they are in Saudi Arabia.
Mr. Tony Banks:
Will the Minister comment on the fact that one of the reasons given for the substantial investment by Taiwan in south Wales that has been announced--
Mr. John D. Taylor:
South Korea.
Mr. Banks:
I am told that the investment is coming from South Korea. One of the reasons given for that is
Mr. Oppenheim:
That was one of the silliest questions that the hon. Gentleman has ever asked. He makes the simple error that all his hon. Friends make: they confuse low wages with low costs. If they were correct, everything would now be made in Bangladesh. What matters is wages relative to productivity. The real difference between Britain now and Britain in the 1970s is not that wages have fallen--they have risen by 50 per cent. in real terms since 1979--but that productivity has increased by 90 per cent. since the days of stagnant productivity under Labour. That is why British industry is successful again, and why foreign companies want to come and manufacture goods here.
Mr. Ian Bruce:
Has my hon. Friend observed that there has been something of a downturn in new inward investment in the United Kingdom? Might that be because of new Labour's threatened policy of windfall taxes on those who make high profits? Is it not clear that, while a Conservative Government have been ensuring that the utilities, for instance, have given money back to the consumer--which is what people want--the Labour party has got it completely wrong, and is already trying to scare off inward investment?
Mr. Oppenheim:
I agree. I thought it interesting that, at this morning's press conference on the youth guarantee, the great and dear leader did not mention his primary policy for youth, the minimum wage. Perhaps he needs a youth guarantee because of all the young people who will lose their jobs if Labour is ever given the chance to implement that policy.
11. Mr. Chisholm:
To ask the President of the Board of Trade what has been the change in the level of manufacturing output in the past three months. [28366]
Mr. Oppenheim:
Manufacturing output has grown by 0.5 per cent. during the past three months.
Mr. Chisholm:
Will the Minister confirm that manufacturing industry is now officially in recession following the second quarterly fall in output? Will he also confirm that manufacturing employment will continue to fall over the next few months, as stated in the leaked memorandum from the President of the Board of Trade to the Chief Secretary to the Treasury? How many more people will have to lose their jobs because of the Government's neglect of manufacturing industry?
Mr. Oppenheim:
The hon. Gentleman is wrong on both points. First, manufacturing industry is not in recession; in fact, it has expanded at a time when in most of the rest of Europe it has been stagnant, or has contracted. Secondly, manufacturing employment rose last year. We shall be able to take Labour's complaints about manufacturing industry seriously only when it first has the guts to admit to the disastrous legacy that it left
Mr. Forman:
Does not asking a question about the level of manufacturing output over the past three months show a complete lack of proper perspective? If we consider the level over a sensible period, such as since 1980, we discover that manufacturing output has increased by about 30 per cent. Will my hon. Friend confirm that those are the figures on which the House should focus?
Mr. Oppenheim:
My hon. Friend is absolutely right. One of the most astonishing things about the attitude of Opposition Members is that they seem conveniently to forget that, when they were in power, our manufacturing performance was diabolical--manufacturing output fell and the balance of trade was moving rapidly into deficit. Under this Government, not only has manufacturing output risen sharply, but we have had the best record of any major industrial country in manufacturing productivity growth.
Mr. Sheerman:
The Minister knows that, in the bad old days of 1979, 2.5 million more people were working in manufacturing industry than are today. We made more, and sold more abroad than we imported--that is pretty good economics. If the Minister is going to put his head in the sand and ignore the fact that there is a manufacturing downturn that is serious for the country's future, we face a disaster in the autumn. When will the Government address reality?
Mr. Oppenheim:
The hon. Gentleman is right on one important point. Manufacturing jobs have been lost--not only in this country, but in every industrial country in the world. Indeed, as the hon. Gentleman well knows, a huge number of manufacturing jobs were lost under the last Labour Government. That is in the nature of modern economies--when productivity increases, more is made by fewer people. In a sense, that is the sign of a successful economy. The difference between the 1970s, and the 1980s and 1990s is that, in the 1970s, we were losing manufacturing jobs and manufacturing output whereas, since 1979, we have increased our output substantially and become more productive and competitive. That is the only way in which to create what we all, regardless of party, ultimately want: a competitive economy that will guarantee high-quality jobs for everyone.
Mr. John Marshall:
Does my hon. Friend agree that it is absurd, even by their standards, for Opposition Members to talk about manufacturing output when they would impose a national minimum wage, a social chapter and a single currency--all of which would lead to a reduction in manufacturing output?
Mr. Oppenheim:
My hon. Friend is right. Apart from that, Opposition Members are reticent about telling us the exact detail of their policies, and I can probably understand why. They are probably afraid that the hon.
Mr. Ingram:
Why does the Minister refuse to accept the truth, which has been stated by independent commentators, that our manufacturing industry is facing a Government-induced recession? Is it because the Minister shares the view of Geoffrey Dicks, an economist at NatWest Markets, who said of the recent downturn in manufacturing output that it is not worrying that manufacturing has become as small a part of the economy as it has? Is not that statement an accurate reflection of the Government's policy towards the manufacturing sector? The Government do not want it to work; they want to hurt it.
Mr. Oppenheim:
Perhaps the hon. Gentleman will tell the House why, if there is a so-called recession in manufacturing--which, in fact, does not exist--it is worse in Europe, where manufacturing output has fallen sharply, than in this country? The truth is that manufacturing industry in Britain has regained three quarters of the competitiveness against Germany that it lost in the late 1970s under the last Labour Government. When will Opposition Members admit the disastrous legacy of ruin that they left for manufacturing industry in 1979? I do not deny that there are problems in manufacturing industry--of course there are, we are still not as competitive as the best--but we have made up much of the ground that we lost in the 1960s and 1970s, primarily under Labour Governments.
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