Engineers lash out at Treasury: Last remaining obstacle to a sea change that could mean recovery, says Johnson

BRITAIN'S engineering firms have attacked the Treasury as the last remaining obstacle to a 'sea change' in Whitehall attitudes that could lead to sustained recovery.

Neil Johnson, director general of the Engineering Employers Federation, said: 'The Treasury needs to understand a lot more about UK's wealth-creating sector. They hold power without responsibility. But they have to change and become the servants of the wealth-creating departments rather than the wealth- distributing departments.'

He called on Kenneth Clarke, the Chancellor, to show his 'street credibility', but added that other people in the Treasury must also change their attitude. Mr Johnson, who six months ago launched a campaign for an industrial strategy, said that in recent months the Department of Trade and Industry had been 'supportive, positive and helpful', and that John Major had also proved willing to take notice of industry's concerns.

'Time will tell, but there is a different attitude and I think we have to thank the man at the top for that,' he said. However, he said that a recent statement by Mr Major - that government and business could together build a new prosperity for Britain - had failed to get through to the Chancellor's department.

Mr Johnson warned that any recovery would be irregular and could be easily destroyed. Industry saw no sign of any boom and exporters faced problems with their major markets going into recession.

Earlier, Richard Needham, the minister for trade at the DTI, acknowledged that the recession in Europe would cause difficulties for UK firms. Speaking after the launch of the British Overseas Trade Board annual report, he said that there must now be a focus on non-OECD countries, the Far East and America.

Michael Heseltine, President of the Board of Trade, said that in the first quarter of 1992, the value of visible exports to countries outside the European Community were 20 per cent higher than during the same period last year.

In spite of its praise for the DTI and the Prime Minister, the EEF warned against complacency. It said that estimated sales by the engineering sector would still be pounds 18bn lower in real terms in 1993 than in 1989. The EEF predicts a 3 per cent rise in total engineering output by this time next year. It plans to renew its lobbying effort for better capital allowances for new plant and machinery.

Mr Johnson said that the last Budget from Norman Lamont as Chancellor had done little for any industry other than horse racing and whisky. Although he welcomed measures to help small business, he said that the Treasury had to understand that many of them existed because of the larger firms that were still struggling slowly and tentatively out of recession.