THE Government last night defended its record on employment and highlighted figures showing signs of recovery in manufacturing.

Chancellor Gordon Brown hit back at a TUC report saying that more than 750,000 jobs in the sector had been lost since Labour came to power.

Mr Brown pointed to Office for National Statistics figures showing manufacturing growing at the strongest rate for nearly two years, while profitability had increased by 1.3 per cent during the past year.

Speaking at a TUC conference, Mr Brown said unemployment in France was nine per cent and ten per cent in Germany, despite higher levels of state aid for industry, something which the TUC had praised.

"It is Britain, with unemployment at half that rate and the lowest for 30 years, that is creating jobs.

"Facing competition from Europe, Asia and now India and China, modern economies will not create modern manufacturing stren-gth by the old policies of picking winners, by old-style aids or the old inflexibilities of directing industry."

The Chancellor said he will launch the most ambitious commitment to science and innovation in a generation next week and would publish details showing investment growing faster in Britain "where it really matters".

Trade and Industry Secretary Patricia Hewitt said it was wrong to talk down service sector work, which she said gave higher than average salaries than in manufacturing.

Ms Hewitt said that for every manufacturing job lost during the past seven years, two jobs had been created elsewhere in the economy.