Heseltine marked change in line: Anthony Bevins looks at the Conservative record on the decline of the UK manufacturing industry

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THE Thatcher Government responded icily to a Lords select committee report which argued in 1985 that industrial decline not only threatened Britain's standard of living, but its economic and political stability.

As Michael Heseltine wrote from the political wilderness in 1987: 'The Government's initial brusque reaction seems to have been occasioned not so much by the hurt feelings at the criticism of economic policy as by the report's numerous suggestions for various forms of cash help for industry.'

Mr Heseltine said: 'The committee's principal recommendation was that the nation's attitude towards trade and manufacturing must be changed if social and economic crisis 'in the foreseeable future' was to be avoided.'

The Prime Minister's appointment of Mr Heseltine as President of the Board of Trade in December 1990 was a calculated signal that Government attitudes were about to change.

While Margaret Thatcher was able to tell CBI News in February 1984 that manufacturing was every bit as important - 'perhaps more important' - than service industries, because a lot of services depended on manufacturing, there was a distinct perception during the 1980s that the Government did not care much about manufacturing.

Having told the Director magazine in 1983 that service sector companies like McDonald's and Wimpy would be employing a lot more people, she told the Commons in 1985 that the shift from manufacturing to service employment 'has already taken place and is entirely compatible with an expanding economy'.

Mr Heseltine begged to differ. 'However the figures are looked at,' he said, 'Britain is not yet in any real way producing adequate alternative sources of wealth and employment. In these circumstances it would be complacent to assume that manufacturing can be allowed to decline further without undermining economic recovery.'

The figures can indeed be looked at in different ways. Denouncing the 'self-denigrating myth' that British manufacturing was in decline, Norman Lamont, Chancellor of the Exchequer, said in January that manufacturing exports increased by 66 per cent in the decade after 1981 - 'In manufacturing exports, Britain has been the top performing major economy.' He also said that British manufacturing had been 'top of the league for productivity growth'.

In a speech made in London yesterday, Mr Major again condemned those who talked the country down. Manufacturing output had increased by 6 per cent last year, exports were at a record level and inflation and interest rates were at record lows.

'Be gentlemanly by all means,' he urged his industrial audience. 'But not too gentlemanly. Don't miss the opportunity to remind people when we're the best, when our products are the best.'

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