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Manufacturing Industry

3. Mr. John MacDougall (Central Fife) (Lab): What measures her Department is taking to increase the UK's manufacturing industry productivity; and if she will make a statement. [177753]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): We are working with manufacturing industry, the trade unions and others in all the areas identified in the Government's manufacturing strategy, which is, of course, the first UK industrial strategy for more than 30 years, to help UK manufacturing industry to increase productivity. For example, the
 
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manufacturing advisory service has already proved a real success, particularly with smaller manufacturers, generating a total value added of more than £53 million.

Mr. MacDougall: Does the Secretary of State agree that prospects for UK manufacturing industry are improving?

Ms Hewitt: I certainly do, and I warmly welcome the fact that all recent business surveys of manufacturing have been positive. The report by the Engineering Employers Federation on Tuesday showed the fastest rise in orders and output in British industry for seven years. That encouragement from the manufacturers themselves is confirmed by figures released yesterday by National Statistics, which show a much bigger than expected increase in output between March and April. That does not mean there are not challenges for manufacturing industry, but the industry is much more confident about the future.

Mr. John Wilkinson (Ruislip-Northwood) (Con): If the prospects of British industry are so good, can the right hon. Lady explain why the United Kingdom's position in the international league of competitiveness has dropped dramatically? Why was the United Kingdom's rate of increase in productivity during the first five years of her Government half of what it had been during the last five years of Tory government? Is the answer not something to do with the huge extra tax and regulatory burden and the fact that British industry is paying an extra £7 billion a year in taxation?

Ms Hewitt: I simply do not accept the hon. Gentleman's criticisms. In spite of his personal commitment to manufacturing, his comments come ill from a member of the party whose Government wrecked a large part of British manufacturing, particularly in the recession of the early 1980s, but throughout nearly 20 years of neglecting, ignoring, talking down and doing their best to undermine it. Over the past seven years, we have seen a significant improvement in Britain's productivity position compared with those of Germany, in particular, and France and the United States. We will go on working with manufacturing to improve productivity, particularly through our investment in science and innovation, which the Conservative party completely neglected and underfunded during its years in government.

Tony Cunningham (Workington) (Lab): New Balance, a company in my constituency that makes running shoes, has hugely increased its productivity through investment in training and, in particular, in multi-skilling. So successful has it become that it has been granted the Queen's Award for Industry. Should we not learn from best practice?

Ms Hewitt: My hon. Friend makes an extremely important point, and I am delighted, through him, to add my congratulations to New Balance on its excellent achievement of the Queen's Award for Industry. That is a superb example of how wrong people are to say that there is no future for British manufacturing and that
 
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everything will go off to low-wage countries. The truth is, even in a country with high wages and proud of it, if management and employees work closely together and invest in skills and in the right technology, Britain can continue to have some of the best manufacturers in the world.

Rural Post Offices

4. Mr. Alistair Carmichael (Orkney and Shetland) (LD): If she will make a statement on Government support for rural post offices after April 2006. [177754]

The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms): The Cabinet Office performance and innovation unit report on the future of the post office network recommended that Postcomm should advise the Government on the main policy options beyond 2006. We are considering that advice and will reach conclusions on the shape of the rural network after 2006 in time to allow a smooth transition from the current support arrangements.

Mr. Carmichael: Can the Minister confirm that the advice given by Postcomm in a report last year included the possible closure of up to 1,600 rural post offices and a reduction in the support money currently available to them? Will he publish that advice in full so that Members and people in rural areas throughout the country can be made aware of the nature of the debate going on within government rather than being consulted in a few years' time on a decision that has already been taken?

Mr. Timms: I can say only that we are looking at the range of options available. The advice was submitted in confidence, although a summary may well be published in due course. The hon. Gentleman will appreciate that it contains commercially sensitive data, so I cannot commit to full publication. He will recognise that we have provided strong support for the rural post office network, which has led to a significant fall in the number of rural closures. We want to build on the lessons learned as a result of that strong Government support.

Mr. Harry Barnes (North-East Derbyshire) (Lab): When a post office is closed down, the Post Office usually explains where the alternative is and may suggest transport, such as bus routes or boat and helicopter routes for the Orkney and Shetland islands. However, problems can arise with the buses themselves. It is not just post offices that close; bus routes get closed down, too. Is the Department of Trade and Industry involved in assessing transport arrangements in rural areas and how they may develop in future, because that has a knock-on consequence in terms of whether people can handle the change?

Mr. Timms: My hon. Friend raises an important point. We have imposed an obligation on the Post Office that there should be no avoidable rural post office closures. There is a different arrangement for urban post offices. Where urban closures are proposed there is a requirement to look at the public transport and other arrangements that would allow people to access alternative branches. For rural areas, we said that
 
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wherever possible there should be no closures of branches. The support that we are providing to allow that obligation to be delivered will last at least until 2006.

Malcolm Bruce (Gordon) (LD): Will the Minister acknowledge that because business is collapsing underneath rural post offices, many of them see no future beyond 2006? Therefore, it is important that the Government publish an early indication of whether they wish to continue with the subsidy or what alternative business rural post offices can look forward to after that date. What are the Government doing about Tesco's plans, having taken over convenience stores, to close post offices in rural communities? Will he undertake that the Government will ensure that those communities continue to have access to a post office on their criteria, not Tesco's?

Mr. Timms: The hon. Gentleman is absolutely wrong to speak about post office business collapsing. We are making sure, through investment and rationalisation, that the Post Office can serve today's needs. We have invested £500 million in technology, which is unprecedented, to allow banking at every single post office branch in the country. Basic bank accounts are available from every high street bank and 20 million ordinary current accounts can now be accessed from every post office branch in the country. The Post Office is developing new products to build new markets. We are putting in place a business with a strong commercial future in both urban and rural areas, thus giving the prospect of a successful future for the thousands of people who work in post office branches.

Where Tesco proposes a closure, the company has agreed to talk to the Post Office to ensure that if it is needed—it is not part of an urban reinvention arrangement—alternative arrangements can be made. I hope that will satisfactorily resolve the small number of instances in which that problem has arisen.

Mr. Henry Bellingham (North-West Norfolk) (Con): Does the Minister recall that I contacted him about North Wootton post office in my constituency? It was categorised as an urban post office, yet it is opposite a village green, there are cows out the back and perhaps the odd pig or sheep, children ride by on their ponies and farmers go by on their tractors. Despite that, some sharp-suited bureaucrat from the Post Office characterised it as an urban post office. What is a rural post office? Will he tell the House whether the social network payment scheme will continue after 2006?

Mr. Timms: The definition that the Post Office uses depends on the contiguous population in the area served: whether it is more or less than 10,000. That definition has been rigorously applied and I have no doubt that it was applied in the case of the hon. Gentleman's constituency, but I will check that a consistent definition has been used. We are looking at a range of options for the form of support that will be provided to the rural network beyond 2006. The current
 
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arrangements, strongly supported by the Government, will last for almost a further two years, so we have plenty of time to make sure that once we have made the decision there is a smooth transition from the current arrangements to those that will apply after 2006.

Mr. Andrew Robathan (Blaby) (Con): Has the Minister noticed the many campaigns against the closure of individual post offices, including petitions backed by Members of Parliament? Does he agree that if a Member of Parliament voted for Government policy on 15 October 2002 to close one in three urban post offices, it would be the utmost hypocrisy for that Member to present a petition or campaign to keep open a post office?

Mr. Timms: I do not agree, because—as Members on both sides recognise—the urban post office network is getting less business, so rationalisation is necessary. The Post Office has made proposals for closures area by area, but it is essential that a careful process of consultation take place on each proposal. Some of the closures initially proposed were not appropriate and should not—indeed, will not—go ahead. Members of Parliament can play a part in drawing attention to such inappropriate proposals and I would encourage them to do so.

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