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Exchange Rates

3. Mr. Win Griffiths (Bridgend): If she will visit Bridgend to assess the impact of exchange rates on future employment. [116506]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): Although I have no current plans to visit Bridgend, I am well aware of the difficulties that the weakness of the euro, until very recently, has caused for British industry, particularly manufacturing.

Mr. Griffiths : My right hon. Friend would be warmly welcomed in Bridgend, where there is an important manufacturing sector; Sony and Ford are the two major contributors. Although I would not expect her to say anything about the euro, about which we will hear something on Monday, does she agree that something

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close to the current exchange rate would be one that British industry could welcome in terms of any entry to the euro in the fairly near future?

Ms Hewitt: I agree that the recent strengthening of the euro has significantly improved matters for Sony and Ford as well as for many other manufacturing companies that export to the eurozone. The views of those two companies and many others on the exchange rate and the single currency are very well known, as are mine, but the fuller answer that my hon. Friend would like will have to wait for the Chancellor's statement on Monday.

Mr. Tim Yeo (South Suffolk): Will not future employment be affected not only by the exchange rate, but by the collapse in business investment and the slowdown in productivity growth? Will not it be affected by the worsening strike record and the deteriorating trade deficit? Does the Secretary of State accept responsibility for those failures or does she blame them on rogue elements in the Department of Trade and Industry? Is she aware that business people are today hoping that she may indeed be promoted in the forthcoming reshuffle? They are praying that that will be one case of rewards for failure that she does not attempt to block.

Mr. Speaker: Order. That did not have much to do with Bridgend.


4. Mr. John MacDougall (Central Fife): What steps her Department is taking to increase the UK's manufacturing industry productivity; and if she will make a statement. [116507]

The Minister for Employment Relations, Industry and the Regions (Alan Johnson): The Government's manufacturing strategy, published last year, identified seven key areas of activity for Government and industry that are vital for manufacturing success. We are taking action in all those areas to help British manufacturers improve productivity in very difficult global conditions.

Mr. MacDougall : How much importance do the Government ascribe to research and development and diversification as ways of sustaining our manufacturing base in the face of increasing global competition?

Alan Johnson: The manufacturing strategy puts great emphasis on research and development, which is key to the driving up of innovation. We have put £300 million from the comprehensive spending review into scientific research and technological development, and invested a further £100 million to improve the flow of skilled scientists and engineers. That is crucial if we are to succeed. We will not succeed on the basis of low pay and low skills, nor should we want to. The only way in which we can compete in a fiercely competitive global manufacturing world is by innovating and adding value.

Dr. Vincent Cable (Twickenham): Is the Minister aware of the latest figures in the House of Commons Library, which show that although there has indeed

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been a superficially impressive growth in manufacturing productivity over the last five years—13.5 per cent.—it is derived from two negatives, a decline in output of 3.5 per cent. and a collapse in manufacturing employment amounting to 17 per cent.? Do the Government distinguish between manufacturing productivity improvements achieved through contraction and mass sackings, and improvements achieved through growth and investment? When do they expect to complete the transition from the former to the latter?

Alan Johnson: We have never crowed about improvements in manufacturing, or in manufacturing productivity. Manufacturing is still going through a terrible time. It is going through a terrible time in Germany, it is going through a terrible time in Japan, and it is going through a terrible time in America. There are no easy solutions. However, the manufacturing strategy, which is about hard slog rather than quick fix, has involved the industry and trade unions and has established measures that should have been introduced many years ago. It will take a long time for the measures to bear fruit, but as manufacturing is worth a fifth of our gross domestic product, 4 million jobs and 60 per cent. of our exports, it is worth making the effort to help manufacturers.

I was not aware of the statistics in the Library. I shall hurry away to have a look at them after Question Time.

Ms Joan Walley (Stoke-on-Trent, North): May I draw my hon. Friend's attention to the anger that is felt in Stoke-on-Trent and north Staffordshire generally about Waterford Wedgwood's shock announcement that it is to cut 1,085 jobs? We urgently need new, real jobs. No matter how productive factories such as the two that are to be closed may be, we cannot compete with labour costs abroad. Will my hon. Friend ask the Secretary of State to request the Cabinet to take a personal interest in what is happening in Stoke-on-Trent, and try to find quick ways of securing new jobs, retraining and other help for those who are to lose their present jobs?

Alan Johnson: I sympathise with my hon. Friend and her colleagues in Stoke-on-Trent. It was dreadful to hear that more than 1,000 jobs are to be lost. I believe that the HR1 notices have already been issued.

As my hon. Friend will know, I went to Stoke-on-Trent a few months ago and spoke to the council and people in the ceramics industry. They are having a very difficult time. Waterford Wedgwood says that it is moving to China, where labour rates are 70 per cent. lower than those in the United Kingdom. As I have said, we cannot compete on that basis. Protectionism is not the answer; the answer is to introduce measures such as those we have introduced through the Ceramics Industry Forum with the aim of increasing innovation and driving up research and development.

The Department has contributed to an investment of £20 million in the Chatterley Valley project, which is expected to bring 4,000 jobs to Stoke-on-Trent. I hope

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that that will, to some extent, mitigate the problems experienced by my hon. Friend's constituents following the recent announcement.

Mr. Henry Bellingham (North-West Norfolk): The Minister's own departmental statistics show that manufacturing productivity has halved since 1997 and that over the same period 650,000 manufacturing jobs have been lost. Yesterday, we heard that jobs will be lost at Wedgwood and that 1,500 jobs will be lost at Cable and Wireless. The hon. Member for Leigh (Andy Burnham) mentioned the number of jobs that have been lost in his constituency. Are we not suffering the consequences of the Government piling more and more burdens on businesses and removing our opt-out from the social chapter? Does he have a manufacturing policy to reverse those trends, or is he just going to sit back and do nothing?

Alan Johnson: Pick the nuts out of that one. According to the party that wants to be the official Opposition, we have increased manufacturing productivity. Now we are told that it is in a worse position. The two Opposition parties need to tell us what their pouch of fairydust is for solving the problems in manufacturing. If they have one, let us know about it.

The hon. Gentleman said that one of the reasons why manufacturing is suffering is that we signed up to the social chapter. I am really pleased that he has emphasised the fact that his party still opposes basic workers' rights. I have not heard one manufacturer mention the issue of the social chapter. The Conservative party was not just an embarrassment to this country—

Mr. Speaker: Order.


5. Richard Ottaway (Croydon, South): If she will make a statement on the level of competition in the broadband market. [116508]

The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms): The Government target is for the UK to have the most extensive and competitive broadband market in the G7 by 2005. The latest assessment indicated that at the end of March we had the third most competitive market—we are ahead now of the USA—based on measures of choice, price and regulatory framework.

Richard Ottaway : I am afraid that the reality is not matching the Minister's rhetoric. He must be aware that in suburbs of London and in the home counties there are areas where broadband is not available. What is needed is more competition. BT runs an arcane system of registration before it will introduce broadband to an area. Will he explain why his party defeated a Conservative party amendment to the Communications Bill that promoted more competition in broadband?

Mr. Timms: The reality is well ahead of my rhetoric. We passed the 2 million mark on broadband last month, only eight months after we reached 1 million. In April alone, another 163,000 broadband connections were

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added. That is probably the highest monthly figure ever. The two million connections are evenly divided between ADSL—asymmetric digital subscriber line—and cable. There is fierce competition going on—exactly the competition that the hon. Gentleman calls for. In the ADSL market, there are more than 100 competing resellers of the BT wholesale product. Indeed, I received an e-mail last week from a company offering broadband at less than £19 a month, so the competition is working. We need a competitive market. That is what we are getting and we are seeing the benefits of it.

Mr. David Borrow (South Ribble): What is the Department doing to ensure that public sector investment in broadband, particularly in education and health, can be piggybacked by communities that do not have access to broadband? In many areas, there is no competition because there is no broadband. If the public sector is investing in broadband, surely that investment should enable local communities in those areas to get access.

Mr. Timms: My hon. Friend is absolutely right. It is an important part of the answer in rural areas in particular. I am chairing a ministerial steering group addressing exactly the issues that he raises. The public sector as a customer will make a key contribution. We will spend £1 billion across the public services on broadband over the next three years. That will lead to investment in telecommunications infrastructure for the public sector, which will then be available to other users such as small businesses and residential customers. Our task is to ensure that we manage that process to maximise the benefits in areas such as his. We are firmly committed to that, as are my colleagues in education, health and the other public services. I believe that we can be very optimistic about the outcome.

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