HC Deb 11 April 1978 vol 947 cc1188-9

If the bulk of the additional demand created by this Budget is to be met by British goods then we must make sure that the products of our industry are more competitive in terms of design, delivery and price. An improvement in these fields is the prime objective of the tripartite industrial strategy to which the Government, the TUC and the CBI committed themselves afresh last month when they approved the programmes of the sector working parties for this year. Our main job now is to carry the industrial strategy down to the managers and workers in individual companies and plants throughout the country. I hope that the whole House will endorse these efforts because the future of our economy lies ultimately in the hands of those who work in British industry.

If industry is to become more competitive and unemployment is to fall, we need better product design, better marketing, more efficient use of plant and materials and more investment in new capacity. The main responsibility must fall on management and work force in the individual firms and plants. But the Government have a responsibility for providing an environment which encourages their work.

The Government will therefore continue to support the industrial strategy through industrial assistance, training schemes and the National Enterprise Board and by helping to provide a favourable economic climate. Moreover, we are now giving industry priority across the whole range of Government policies—for example, in education and local planning.

I believe that small businesses have a special role in improving our industrial performance. They have always been a prime source of innovation in British industry. The development of small businesses often produces more additional jobs more quickly than development in the larger firms. They can also play a vital role in regenerating our inner cities and our countryside. For this reason, this Budget will give a special importance to the needs of smaller businesses.

Now that our economy is in so much better balance and our financial situation is transformed, an improvement in our industrial performance must be our overriding objective, since this is a precondition for restoring high employment. But this improvement is bound to take time. To the extent that our performance falls short in design, delivery and productivity of that of our competitors, we shall have to concentrate on making ourselves competitive in price.

It remains as true as ever that inflation is the main enemy of full employment. Monetary policy will be one decisive factor here. But our price competitiveness will also depend crucially on reducing industrial costs, of which wages are bound to remain much the most important element.

Over the last three years, the British people have given overwhelming support for pay policy, and this has played an indispensable role in keeping our industry competitive and in bringing the rate of inflation down. The country owes a lasting debt to our trade union movement for its invaluable contribution here.

I believe that the Government can help to support common sense and moderation in pay negotiations both by controlling prices and avoiding unnecessary increases in indirect taxation and by cutting income tax. But the main responsibility here again must continue to lie with the trade unions and employers who actually negotiate on pay.