HC Deb 15 April 1975 vol 890 cc287-9
Mr. Healy

In our present situation the most important single object of economic policy must be to improve the performance of our manufacturing industry. Generations of schoolboys have been taught that Britain is crucially dependent on the export of manufactured goods to pay for her indispensable imports of foodstuffs and basic materials. The slow rate at which our exports of manufactures has grown over the last century, and particularly in the last 50 years, has undoubtedly been a major constraint on the sustainable rate of our economic growth. In the last 20 years the situation has been made worse by the fact that our imports of finished manufactures increased so much faster than our exports of manufactures, making our net exports increasingly inadequate to pay for our net imports of food and raw materials.

In the 10 years, 1964 to 1974, the volume of our imports of finished manufactures increased by 14 per cent. a year while our exports of finished manufactures rose by only 6 per cent. a year. In the three years up to the end of 1973 the situation became a great deal worse. The volume of imports grew at 23 per cent. a year while exports increased by just under 7 per cent. If these trends were allowed to continue, it would not take many years before we became net importers of manufactured goods as well as being net importers of food and raw materials. It would be impossible to balance our accounts without savage cuts in our standard of life. We would have to earn a living far below that of other countries by being a tourist attraction and a provider of banking and financial services.

It is imperative to reverse this trend. and it is not impossible to do so. In fact, last year was one of the rare years when our exports of finished manufactures increased by more than our imports—just over 7 per cent. in volume compared with less than 2 per cent. Of course, one cannot build much on the experience of a single year and it is possible that this was due to special factors.

But from now on we must do everything in our power to ensure that our exports of manufactures increase faster than our imports and not the other way round. We must preserve and improve our international competitiveness—a word that covers many things other than just relative wages and prices. It comprises the quality and availability of industrial capacity and of skilled manpower, and the efficiency, the originality and the vitality of our industrial management. It includes, above all, the ability to deliver on time. In all these respects there is a vast task of regeneration ahead of us. We must reverse the process of deindustrialisation—of a steady loss of jobs and factory capacity year after year—which my right hon. Friend the Secretary of State for Industry described so convincingly in a recent article. The Industry Bill now before Parliament will shortly provide two new and powerful instruments for this regeneration. In my Budget measures, to which I now turn.

I have attempted to complement my overall financial strategy and to foreshadow the operation of those new instruments with specific measures which, though modest, go to the heart of our industrial problems.

Whatever the short-term constraints, we must protect and improve the industrial capability which will be essential for our economic growth in the longer term. This applies both to manpower and to investment and is particularly necessary if we are to take full advantage of export opportunities next year without suffering from the supply constraints which limited our performance during the last boom in 1972–73. The measures I am about to describe will go some way to reduce the level of unemployment in the short run as well as improving our industrial capacity in the medium term.