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Lord Sainsbury of Turville: My Lords, it is obviously a concern that there is a fall in manufacturing, because of the impact on individual lives. However, long term the concern has to be whether we are moving, in terms of employment, into knowledge-intensive manufacturing and services. If we move into high value-added manufacturing and service jobs, we will be able to compete across the world.

So far as public sector employment is concerned, over the period about which we are talking—1997 to 2004—on a national basis the private sector increased by 1.2 million, and the public sector by 570,000. The majority of jobs still come very much in the private sector, and the Government make no apology for employing unprecedented numbers of people to deliver front-line public services in areas such as education, health and criminal justice.

Lord Brookman: My Lords, although I hear what my noble friend has to say and acknowledge the huge amount of restructuring that is taking place in what could be termed the heavy industries such as steel and
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shipbuilding, does he not agree that it is vital that those industries thrive and survive, particularly given the current world economic climate? Does he also agree that those who say that we now live in a non-industrial or post-industrial society are blatantly wrong?

Lord Sainsbury of Turville: My Lords, we have to accept that we live in a world in which the division of labour is being redrawn. In 1980, less than a tenth of manufacturing exports came from developing countries. Today that figure is 30 per cent. In 20 years, the figure will probably be 50 per cent. We must recognise that our labour-intensive manufacturing is likely to go to the developing world. We have to achieve a move into knowledge-intensive manufacturing and service. Both manufacturing and service are important, because we need to maintain a strong manufacturing sector in this country.

Lord Roberts of Conwy: My Lords, are the Government not being rather complacent about this growing imbalance in our economy? What are they doing to promote manufacturing of the higher value kind that the noble Lord described and what success have their measures achieved?

Lord Sainsbury of Turville: My Lords, we are doing a great deal to help manufacturing industry move up the value added chain. The range of measures includes increasing the science budget, increasing the level of knowledge transfer from universities to industry, the R&D tax credits, the technology strategy and the highly successful Manufacturing Advisory Service. All of those are elements of our strategy to help manufacturing to move up into high value added sectors.

Lord Newby: My Lords, the Minister will be aware of the paradox of falling employment in manufacturing and persistent, chronic skill shortages in many parts of the manufacturing sector. Does he agree that one of the key ways of tackling that would be achieved by increasing the number of apprentices? What action do the Government intend to take on the recommendation of last week's Industry Task Force report on apprenticeships?

Lord Sainsbury of Turville: My Lords, I totally agree. We have already increased the number of apprenticeships from some 75,000 to 275,000, if my memory is correct. I believe that there are plans to increase that figure to 300,000. Such an increase in skill levels is a key factor of productivity in manufacturing.

Baroness Turner of Camden: My Lords, my noble friend will be aware that the number of people who have been made redundant in manufacturing industries as a result of the decline are often highly-skilled people. What steps are the Government taking to reintegrate those skilled people into the workforce?

Lord Sainsbury of Turville: My Lords, yes. In fact, there are, at present, many unfilled vacancies in manufacturing—over some 50,000. When significant
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redundancies take place, the rapid response service works quickly to try to get people into new jobs, so that they do not become disconnected from the labour market.

Biofuels: EU Targets

3.12 pm

Baroness Byford asked Her Majesty's Government:

Lord Davies of Oldham: My Lords, we are confident that we have implemented the directive properly and in full. We will respond to the European Commission shortly with a robust justification of our 2005 target.

Baroness Byford: My Lords, in the circumstances, is not the Government's and the Prime Minister's commitment to renewable sources of energy and combating climate change just empty rhetoric? Will the Minister confirm that the EC infraction proceedings and the recommendation of the report of the Environment, Food and Rural Affairs Committee of 2003 demonstrate only that the Government have yet—I repeat, yet—to devise an over-arching biofuel strategy, let alone establishing responsibility for this area of policy?

Lord Davies of Oldham: My Lords, the noble Baroness underestimates the progress that we have made. We have increased the sale of these fuels by five times since last year and we expect to hit our target of 0.3 per cent—we communicated that to the Commission. She will recognise that member states will move at different paces in relation to this directive. That is why it is not mandatory. Of course, some states have targets of nil progress, due to the base from which they start. Britain starts from a low base, but we are making satisfactory progress and we will meet our target.

Lord Carter: My Lords, as my noble friend said, our report to the European Commission proudly announced a "realistic target" of 0.3 per cent of fuel sales by the end of 2005. Is he aware that that is one-seventh of the EU-indicated target of 2 per cent for 2005? How can the Government expect to be taken seriously on the climate change initiative when they are prepared to accept such a derisory target?

Lord Davies of Oldham: My Lords, the target was arrived at after full consultation across all interests. As I have indicated, it was recognised that there is a massive difference between a country such as Germany, which has been producing biofuels for more than 30 years, and Britain, which is starting from a very low base. I understand my noble friend's concern about progress. It is important that we hit the target that we have set. We shall respond to the commission, make it clear that we intend to do so and set a more ambitious target for 2010, which is also our obligation. I assure the House that we are on
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target for the position that we set forward two years ago and we are making progress in this area in the way in which I have indicated.

Baroness Miller of Chilthorne Domer: My Lords, is the Minister aware of the innovative project by Somerset County Council, Ford Cars and Wessex Grain to get more than 80 per cent biofuel into production? Can he assure me that the distribution network is being talked about by his department because distribution of that grade of fuel is one of the major challenges?

Lord Davies of Oldham: My Lords, the noble Baroness has lighted upon an important point. We are seeking to make progress in that respect. We welcome all developments and want to encourage them. That is why we have incentives to encourage the development of bioethanol fuels. It is not an easy target to hit. We set ourselves a proper, realistic target because of the factors to which the noble Baroness has drawn attention. We are seeking to overcome the barriers that restrict us from future progress.

Lord Palmer: My Lords, I am mystified by that answer to the noble Baroness, Lady Miller. More than a year ago, this House passed the renewable fuel transport obligations legislation, which could have meant that we could easily meet our biofuel targets. I simply fail to understand why nothing has been done in the past 13 months. Can the Minister explain why?

Lord Davies of Oldham: My Lords, far from nothing being done, we have seen a five-fold increase in the production and consumption of these fuels in the past year. A 20p rebate on the tax on the fuels is in place as an incentive. None of us can expect Britain to reach the standard of some European countries overnight. It is clear that we have considerable progress to make. A substantial number of other European states are in exactly the same position as us. The difference is that Britain has got a realistic target and will be hitting it.

Baroness Ludford: My Lords, on another "bio-" issue with a European angle, the Minister will be aware that the Commission is taking infringement proceedings against the UK for failing to have proper collection and treatment facilities for raw sewage discharges. Will the Government seek to avoid infringement proceedings for the massive raw sewage discharges into the Thames, which breach the urban waste water directive?

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