Job gains outweigh the losses

"You can't win them all," Kenneth Clarke, Chancellor of the Exchequer, said of Ford's decision.

But union leaders were swift to blame the move on the fact that the flexibility of the labour market, so prized by the Government, had exposed Britain to "social dumping".

Larry Brooke, national automotive secretary for the Manufacturing, Science and Finance Union, said: "The Government often applauds its so-called inward investment policies but stands idly by when companies outward invest jobs to other parts of the world." Britain, he said, was "the soft underbelly for any further cutbacks and closures".

However Ian Lang, President of the Board of Trade, said inward investment had created hundreds of thousands of jobs, including 83,000 on Merseyside, since 1979. He insisted that the balance between employees' rights and employers' freedom was now about right.

A survey by The Independent of job losses and gains during the past six months found that more than 14,000 new jobs have been created in the car and components industry, far outweighing the losses.

Nissan, Honda, Rover, General Motors and Renault are among the companies to have announced new jobs in the UK. The losses have been confined to Ford - which announced in September that 1,000 jobs would go - and at the automotive components maker Lucas after its merger with Varity.

In recent months, most job losses have been concentrated in financial services and in the privatised utilities. Service sector companies such as the McDonald's burger chain and Marks & Spencer, along with Japan's Sony, and Hyundai of Korea, have announced big employment programmes.

"It is true that the attractiveness of the UK as a place to invest has created jobs," said Professor Charles Bean of the London School of Economics. But he said the ease of hiring and firing was less important in attracting companies to Britain than low wages, low taxes and the emasculation of the trades unions.

Professor Bean added that it was clearly easier to sack workers in the UK than in Germany and Spain, where other Ford plants have retained all their jobs.

The level of overseas investment in the UK had reached pounds 132.3bn by the end of 1995, with another pounds 14.7bn flowing in during the first three-quarters of last year. Typically, around half of inward investment involves building new plants rather than taking over existing ones.