Select Committee on Trade and Industry Third Report



60.   We were struck by the similarity of the evidence given by all our witnesses Government, management and unions — about the causes of the comparatively poor productivity gains of UK manufacturing. This consensus is a good basis for tackling the problems.

61.   The immediate background to our inquiry was the terrible events of 11 September 2001. We welcome the signs that, contrary to the views of many commentators at the time, the economic consequences of those events have, for most of the manufacturing sector, proved only temporary, although we recognise the continuing difficulties faced by those sectors most affected by the downturn in the American economy and in travel.

62.   Overall, however, the problems of UK manufacturing are both longer term and more intractable. Manufacturing has suffered from decades of under-investment in plant, labour force skills and R&D. UK management has been slow to adopt good practices from abroad. Government can have only a limited role in solving these problems: managers, the workforce, capital markets, trade bodies and educational organisations all have at least as significant a role. But Government can show the importance it accords to manufacturing by giving a vigorous lead. Because of the nature of the problems faced by industry, the DTI must have the close co-operation of other Departments such as the DfES on training, the DTLR on planning and, not least, HM Treasury on incentives to promote investment in plant and R&D, if the UK is really to become a world leader in this sector. Recent initiatives by Government are a start. It is essential that the impetus be maintained; we will continue to monitor this area to assess whether it is.

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