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BLAIR ALLY TO ATTACK LABOUR ON JOBS GAP

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The government will be attacked by one of its closest union allies for sacrificing manufacturing jobs in the north ...
The government will be attacked by one of its closest union allies for sacrificing manufacturing jobs in the north of England for the sake of tempering growth in the south, and for its obsession with boosting high-tech, high-risk businesses, reported The Observer (Business, p1).

Sir Ken Jackson, head of the Amalgamated Engineering and Electrical Union, will tell a conference on manufacturing tomorrow - which will be attended by trade and industry secretary Stephen Byers - that jobs outside the south of England have been sacrificed to cool the boom in the housing market. The country is becoming more divided

under labour, he will add.

Sir Ken will point to figures showing that 160,000 jobs were lost in manufacturing last year and that 125,000 of these were in the north and midlands. He will say he is sceptical about the effects of interest rate rises on stemming the growth in house-price inflation, and urge the government to use fiscal policy - possibly including rises in stamp duty - to alter the balance.

Sir Ken will also say the governemnt should look beyond encouraging high-tech companies through measures such as those introduced in last week's pre-budget report, and focus more on industry.

He told The Observer: 'There is a growing divide between industry in the south and the rest of the country. Interest rates are knocking confidence in the midlands and the north, but they don't seem to be controlling house-price inflation. The government needs to do much more to ensure that we have a manufacturing future in these regions'.

The AEEU is commissioning research into the issue. Further criticism of the pre-Budget statement came from Trades Union Congress general

secretary John Monks. The chancellor announced share option schemes for all employees, allowing them£3,000 of tax-free shares if held for five years. Under the scheme, a further£1,500 can be bought from pre-tax income and a further£3,000 can be awarded by employers.

Mr Monks said these measures - which will cost£400m a year - are effectively penalising public sector workers, who cannot own shares.

'The pre-budget report seems to have focused on giving to the private sector and neglecting the public sector,' he said.

His concern was backed by Martin Weale of the National Institute for Economic and Social research, who commented: 'You are giving tax incentives of up to£4,000 a year to private sector workers, which are not available to the public sector. That seems unfair.'

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