Industry blasts Treasury criticisms as unfounded

Manufacturing industry this week fiercely hit back at Treasury criticisms that its problems are due to poor productivity, not the strength of sterling. EEF director general Graham Mackenzie seized on research by the London Business School which appeared to show that Treasury figures seriously underestimated productivity. He called on the Department of Trade and Industry, […]

Manufacturing industry this week fiercely hit back at Treasury criticisms that its problems are due to poor productivity, not the strength of sterling.

EEF director general Graham Mackenzie seized on research by the London Business School which appeared to show that Treasury figures seriously underestimated productivity.

He called on the Department of Trade and Industry, under new industry secretary Peter Mandelson, to ‘start doing its job’. The DTI appeared to have ceded responsibility for monitoring productivity to the Treasury, he said.

‘The DTI is concentrating on qualitative, woolly issues such as competitiveness and world-class companies, while the Treasury is doing the harder-edged stuff.’

The LBS analysis of official figures for manufacturing and productivity found that manufacturing employment appeared to have been over-recorded and output under-recorded. It suggested that productivity growth was 2.7% in 1996 and 3.2% in 1997, as opposed to official figures of a 0.9% fall in 1996 and a 1.2% rise in 1997.

Mackenzie said the LBS analysis was a serious challenge to the official figures. ‘The improvement in manufacturing has been seriously under-reported and the plateauing criticised by Gordon Brown hasn’t really happened.

‘I would like some of the confusion between the DTI and Treasury to be cleared up and the Government to respond to to the LBS.’

Mackenzie was supported by Brian Moffat, chairman and chief executive of British Steel. In a letter to the Financial Times he said: ‘It is infuriating to see politicians and leader writers disparaging UK manufacturers.’

Moffat said virtually all recent analysis of UK industry’s competitiveness was ‘generalised interpretation of macro-economic data’.

ADTI spokesman said that in its view, ‘there is no evidence that the index of production or the estimate of manufacturing jobs is not accurate’.

Point of View, page 12