BBC On The Record - Broadcast: 14.05.00

Film: MANUFACTURING VT, Labour MPs and trade union leaders call on the Government to intervene to help Britains ailing manufacturing industries.



PAUL WILENIUS: Britain's factories were once the driving force of the economy. Manufacturing goods - like these cars at Vauxhall in Luton - to be sold across the world. Even though they now produce less than a fifth of the nation's wealth , for those who work in them and the Labour Government , they're crucially important , as the Chancellor admitted in 1991. GORDON BROWN: Our argument is that manufacturing matters . That even our service sector depends ultimately on modern manufacturing strength. MALCOLM GIBSON: Manufacturing industry at the moment is under the cosh and unless we see some respite from the problems , particularly of the high pound at the moment, there is no question that a number of those businesses aren't going to survive. DEREK FOSTER: A lot of votes hinge upon the prosperity of manufacturing industry. Particularly in Scotland, Wales , the North East, the North West, the West Midlands, but also in many other parts of the country where there are marginal seats, and the government can't afford to be seen to do nothing. WILENIUS: Manufacturing was once at the very heart of the Labour Party, and its policies. But despite strong words of support for some of Britain's key industries, the government is under attack from the unions and many Labour MPs for failing to act. They fear the high value of the Pound is crippling vital businesses, and is putting tens of thousands of jobs at risk. Since the election, manufacturing has been suffering. The government let the Siemens semi-conductor factory in County Durham close. But coal, Labour's heartland industry, needed �100 million of aid to head off extinction. Then Ministers backed a rescue package for Rover, which may only be a stay of execution - while Harland and Wolf in Belfast was saved at the last minute when a no strike deal with workers helped win �300 million pounds of new orders. There's also trouble up at this woollen mill in Bradford. Whiteheads had to merge with its rivals, invest in new machinery to increase productivity, and slash the numbers of workers in an effort to cut costs. Textile factories axed 40,000 workers last year, and another 25,000 will go this year. The hardest hit have been women. The dangers for this plant and the industry are stark, as factory boss Malcolm Gibson explains. He's fighting to survive as the huge rise in the value of the pound against the Euro has wiped out productivity gains. GIBSON: We have been working very hard over the last three years to improve our productivity and reduce our cost base. We have invested in new machinery. Our whole workforce is working together in a much more effective way to ensure that we can produce more for less time. In fact we have probably achieved significantly in excess of a ten per cent improvement in our productivity This has been totally eroded by a twenty five per cent strengthening of sterling in that period. WILENIUS: Keeping industries like this rolling is now a high priority and Ministers are under intense pressure to bring down the value of the strong Pound, or bolster the weak Euro. Others want the government to deliver more radical action, to change the way the Bank of England sets interest rates, or even put up taxes. JOHN EDMONDS: The remit of the Monetary Policy Committee of the Bank of England which is just to look at inflation, worry about that worry a lot about that, but not to worry about anything else. That's got to be changed. It's got to be changed to have a much wider scope, to look at competition abroad , to look at interest rates abroad and see where Britain is standing by comparison, but also of course the second change is actually need a change in personnel . You need the Monetary Policy Committee to contain people who know about manufacturing industry. At the moment it's just academic economists and a few economists from merchant banks. There's no real experience there. So of course they're worried about house prices in the South of England and they're not worried about what happens in Belfast or the West of Scotland or the North West or the West Midlands. FOSTER: I've argued for some time that we've over relied upon monetary policy but Gordon Brown would say that his fiscal policy has actually been buttressing the monetary policy. But there used to be a time when the economy was overheating and where it was consumption that was driving the overheating, and it was a perfectly feasible economic policy to raise taxes in order to take that extra consumption out of the economy. WILENUIS: But to make sure workers like this stay in jobs , some in the Labour Party want Britain to spend billions of pounds to prop up the Euro . JOHN MONKS: Not so long ago there was concerted action across the exchanges by governments and central banks to bring down the value of the dollar and I think it is time for the same kind of concerted action to be put together to bring up the value of the Euro against the pound but also against the yen and against the dollar. And I am looking for Gordon Brown to give a lead to the international authorities in the financial area, particularly the G7 countries along those lines, I think he can do it, I think the time is right. WILENIUS: But to some this all looks like old Labour is back on the march. The Rover crisis sparked off this mass rally at Longbridge in Birmingham which saw the trade unions back on the streets . The scale of the protests and fear of up to 50,000 job losses alarmed Ministers. Although the company's saved for the moment , the new Rover boss John Towers and senior Labour figures feel manufacturing can only bloom again if the government makes the Pound fall by saying Britain will join the Euro soon. MARTIN O'NEILL: The government's commitment to join the Euro, which at the moment has been understated ought to be made far more clear and that at the Labour Party Conference, or the TUC a senior minister or the Prime Minister, or the Chancellor, should make it abundantly clear that it's our intention to join the Euro within twelve to eighteen months, or at least have a referendum on it. LORD HASKINS: The government has got to in my view make a more positive statement about where it might find itself vis a vis the Euro in two or three years time. In other words if the conditions that the government has laid down for joining the Euro are met they would need to be saying at some point that that would clearly accelerate the case for us joining the Euro. I don't think business is hearing a clear enough message from government about its intentions about the relationship with Britain and Euro land. WILENIUS: This one hundred and forty year old woollen mill in Bradford needs help, as it's fighting to survive. The Government's unwilling to go beyond sending a message to markets that the Pound is too strong but there are now growing calls on Ministers to intervene in other ways, to support ailing businesses. And these businesses will need gentle nurturing over the next couple of years. Ministers are under pressure to give much more help to factories like this Yorkshire woollen mill, otherwise it may become just another historical monument to a golden age of British manufacturing. MALCOLM GIBSON: We are not a headline industry, the large companies, the motor industry which is obviously getting a lot of publicity at the moment and appears to be getting support, a lot of smaller and medium sized companies that are really where the back bone of the employment is in this country could also benefit from having some assistance in either a regional form or helping with training or similar sort of aspects. WILENIUS: The motor industry faced two big crises last week over Longbridge and Dagenham. Here at Vauxhall they're successful and investing. But to keep the wheels of manufacturing industry turning many are calling for direct government intervention. They want more "Regional Aid " to help hard hit areas, such as the West Midlands and the North of England. "Grants " available for development and training. And business is calling for "Tax Breaks " to keep industry moving forward. JOHN MONKS: We want to see the governments intervene to protect jobs and employment and good jobs. We know that there comes a time with some areas where those jobs can't be continued but there are other cases where the dip is temporary and we don't want to see people go out of business and jobs lost and Britain suffer loss of a major earner, because of some short term dip. WILENIUS: Although company bosses wants tax breaks, they don't want a return to government intervention where taxpayers' money is used to bale out lame duck businesses. DIGBY JONES: I would hope over three years, that this government has learned that where business is left to create wealth, as long as it is responsible in a socially inclusive way. As long as it can take on most of the processes going forward, the unions with it, and the environment with it. The best role for government is to have created an environment and butt out. WILENIUS: But when the wheels of business fall off , the big global companies can close factories very easily in Britain. So many in the Labour Party also want British workers to have the same kind of protection as workers on the Continent. JOHN EDMONDS: Frankly within Europe ,British workers are regarded as mugs. We're not properly protected . We haven't got the sort of rights that should exist in a civilised society and frankly any company can sort of shut up shop and leave almost without any notice at all and BMW did in this country what they could never do in Germany, just saying we're going to sell off Rover and go. No consultation with government, but no consultation with their own employees. I mean what sort of civilised standards are that. And that's possible in the economy at the moment. DEREK FOSTER MP: I think in the short term it's very difficult for the UK government to stand on one side and to make our manufacturing employees more vulnerable than anyone else in Europe. We cannot actually live with unnecessary closures. WILENIUS: Tony Blair will be told by CBI bosses over dinner this week, that manufacturing industry is under serious threat. They don't want Labour to go back to its old ways and use taxpayers money to prop up ailing industries. But there'll be a political price to pay, if parts of Britain boom, while more manufacturers go bust. JONES: I want to hear this week from the Prime Minister that he understands the serious effects that the strength of sterling is having on jobs in the country. That he doesn't abrogate the responsibility for the challenges that are now facing industry by saying it's all down to interest rates and a weakness of the Euro. WILENIUS: Tony Blair's determined not to return to the old days of Labour intervention, but he could well have his work cut out explaining to his party and the voters that this could mean more lost jobs. MARTIN O'NEILL: We've got to recognise that the recent local election results are evidence of the end of the honeymoon. I mean it really was the longest honeymoon in history and I think in that sense, the government has got to recognise that they cannot take the electorate for granted and that they've got to get across the message that we live in a rapidly changing world economy in which production is being shifted ruthlessly in part by the manufacturers and in part by the customers because they will go where the prices are most attractive. EDMONDS: The government can't afford to allow manufacturing industry to suffer any more. The economic arguments are very strong. But the political ones for a government in its last eighteen months of office are overwhelming. Unless action is taken a lot of marginal constituencies are going to feel the heat and the government is going to feel the heat from the MPs who represent them now. WILENIUS: Indeed this is one of Tony Blair's hottest problems. If he backs old style Labour intervention, his hard won reputation in business and the City could disappear. But if he continues to leave manufacturing to its fate, many factories, jobs and voters could well head off elsewhere.
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.