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UK Competitiveness

5. Mr. Michael Fallon (Sevenoaks) (Con): What    recent assessment he has made of UK competitiveness. [6519]

The Secretary of State for Trade and Industry (Alan Johnson): The real measure of the competitiveness of an economy is how well it is performing. On that basis, the UK is doing extremely well. Gross domestic product has grown for 51 consecutive quarters, the longest sustained expansion on record; the UK's employment rate is highest among the G7 economies; and we are enjoying the longest period of sustained low inflation since the 1960s.

Mr. Fallon: Has the Secretary of State read the recent British Chambers of Commerce survey, which said that some 1,200 regulations introduced since 1997—70 per cent. of which are home-grown rather than inflicted on us from Europe—are costing British business £40 million? If he really wants to improve the competitiveness of British business, why does not he start at the top in his own Department, which cannot possibly need seven Ministers?

Alan Johnson: The vast array of talent that can be seen beside me is absolutely essential for the proper running of our economy and our country, and I refute any remarks to the contrary.

I did read the report that the hon. Gentleman mentions. I also read the report by the Organisation for Economic Co-operation and Development and saw the reports by KPMG and various other experts saying that we are one of the lowest regulated countries in Europe, if not the world.

I have also read an interesting quotation from the right hon. and learned Member for Rushcliffe (Mr. Clarke). He said:

I do not think that he was talking about his bid to lead the Conservative party. He was talking about deregulation.

The thrust of the hon. Gentleman's question related to this Government's approach to regulation. Regulation is an extremely serious issue, and making a Cabinet member—the Chancellor of the Duchy of Lancaster—absolutely and completely responsible for better regulation, building on the Hanson and Arculus
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reports and turning the Better Regulation Task Force into a commission with permanent status, along with the rigid and strict rules set by the Prime Minister, will lead to a real step change.

The hon. Gentleman is probably right. Neither his party nor ours in government has ever successfully tackled a task that we all want to perform. Only completely unreconstructed philistines would suggest that there should be no regulation at all. One of those is probably bidding to become leader of the Conservative party, but it is certainly not the hon. Member for Havant (Mr. Willetts). Some businesses need to be regulated, but our task is to ensure that there are no regulatory burdens that we could remove, thus allowing our businesses to expand and compete more effectively.

Helen Goodman (Bishop Auckland) (Lab): Will my right hon. Friend join me in congratulating the people who work at the Electrolux factory in Spennymoor, where 600 jobs have been secured this week following a new investment by that large multinational? Does he agree that that is an indication of the competitiveness of the British economy, and that the involvement of the regional development agency made a significant contribution to that competitiveness?

Alan Johnson: I applaud my hon. Friend. I congratulate the company in her constituency, and I think that that is a sign of what is happening in the country. Investment is at a record level. We attract 60 per cent. of investment in the European Union. We have 2.2 million more jobs. Our economy and our companies are probably best placed to deal with the difficult economic times that the whole world is experiencing, and to tackle the threat of globalisation. I think that the example from my hon. Friend's constituency can be repeated in other constituencies, including those of Conservative Members.

Mr. David Willetts (Havant) (Con): I welcome the Secretary of State to his first Trade and Industry Question Time and congratulate him on the impact that he has already had. Since he took office, or at any rate since Labour came to office, we have lost 1 million manufacturing jobs, our main nuclear reprocessing plant has closed because of a safety scare, and we have seen a record number of bankruptcies. I do not hold the Secretary of State responsible for that—at least not yet—but may I ask him about competitiveness? Does he accept that Britain has fallen has fallen from fourth to 11th in the competitiveness league table? Why does he think that has happened?

Alan Johnson: I welcome the hon. Gentleman as well. He has followed me from the Department for Work and Pensions. I am tempted to burst into a chorus of "Me And My Shadow". He is a decent and effective politician, and it is a pleasure to be shadowed by him. Having said that, I should add that he is also wrong about almost everything, particularly this wonderful thing called the World Economic Forum's growth competitiveness index. I presume that that is what he was talking about. I do not have a great deal of faith in such artificial indexes, which are based on very volatile survey information. [Interruption.] Well, I like them when they are in our favour.
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The hon. Gentleman said that we had fallen from fourth place to 11th . I remind him that in 1996 we were 15th, in 1995 we were 18th, and in 1993 we were 23rd. I think that, as judged by that index, our record is pretty good. Moreover, the KPMG survey said that the UK ranked first in competitiveness in Europe and third in the world. Labour Members welcome those statistics, and I think the British electorate judged us on them at the recent general election.

Mr. Willetts: Those figures show that we were going forward under the Conservatives and are going back under the present Government. It is as simple as that. If the Secretary of State does not like the competitiveness league table, may I try another measure of competitiveness on him, which I consider to be the most fundamental of the lot? What is the value of the output that we produce for every hour that we work? Does the Secretary of State accept that according to the latest OECD figures, Britain's output per hour worked is one of the worst among the major western economies? We are behind France, which the Prime Minister is lecturing at the moment; we are also behind America, Germany and the G8 average. We produce less per hour worked than most of our major competitors. Will the Secretary of State try to escape from his complacency and accept that that is a problem? Will he accept that productivity under this Government is simply not good enough? Does he also recognise that we are going to carry on performing this badly, because we are over-regulated and overtaxed, because we have excessive Government intervention, and because we do not have high enough skills in our economy?

Alan Johnson: No, I do not accept any of that. Yesterday, I read the article that the hon. Gentleman has written as part of his campaign. I understand that he has 20 names backing him to run for the leadership; indeed, one of them might be mine, because I am a great admirer of his. That has probably ruined his chances.

Conservative Members seem only just to have discovered the productivity gap. However, it was so wide when their party was in government that it is a wonder they did not fall into it. It did narrow, as we have seen happening in France, at a time of high unemployment. The gap narrows at such times because the people in work are desperate to keep their jobs, and because high unemployment is a driver of productivity. If that was the policy of the Conservative Government, it resulted in the two worst recessions in British history, and an unemployment level of 3 million being reached twice. That is not how we intend to deal with productivity.

We can consider productivity per worker or per hour. In 1997, the productivity gap with France in terms of productivity per worker was 20 per cent.; it is now 10 per cent. In terms of productivity per hour, the gap with France in 1997 was 33 per cent.; it is now 25 per cent. The productivity gap with Germany per worker in 1997 was 5 per cent., and it is now zero—we have closed that gap. In terms of productivity per hour, it was 22 per cent. in 1997; it is now 13 per cent. Trend productivity growth—which, as the hon. Gentleman well knows, is the important measure—is rising. Without the terrible waste of high unemployment, we have been able to close the productivity gap substantially. Yes, we have to do
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more, because this is an issue for the British economy, but I think we are on the right road; we are certainly a million miles away from the regressive policies pursued by the previous, Conservative Government.

Richard Burden (Birmingham, Northfield) (Lab): Does my right hon. Friend agree that the manufacturing skills and tenacity of people in the west midlands have a great deal to offer in regard to future UK competitiveness, as he saw a couple of weeks ago at Rimstock plc in West Bromwich? That company is being assisted by the Rover taskforce to cope with the collapse of MG Rover, and is now winning new markets in different parts of the world. Many people in and around south-west Birmingham also have those skills and that tenacity.

Will my right hon. Friend and his colleagues look with favour at projects such as the proposal for a nanotechnology centre at the Longbridge site? Will he also work with his ministerial colleagues in other Departments to ensure that regeneration programmes are put in place to back up such projects and to provide real opportunities for local people?

Alan Johnson: I congratulate my hon. Friend on all the work that he has done around Longbridge in very difficult circumstances. He and I attended an extremely impressive presentation by the taskforce—one of whose members, incidentally, is the Conservative leader of Birmingham city council. The taskforce also comprises representatives of the regional development agencies, the learning and skills councils and Jobcentre Plus—all organisations that we have developed since 1997. The way they have dealt with the dreadful situation in which they found themselves has been a lesson to us all; they deserve our wholehearted congratulations.

With regard to the problems that the taskforce is still dealing with, and the nanotechnology centre at Longbridge that my hon. Friend mentioned, we need to work together with the taskforce to bring about that regeneration. I should just mention, however, that of the 500,000 job offers that came in to Jobcentre Plus in that area after the collapse of MG Rover, about 1,600 of the vacancies were in high-value manufacturing. I believe that the important skills of the people in the area will eventually be picked up, and that is a tribute to everyone involved in the taskforce.

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