Manufacturing Growth

HC Deb 29 June 1978 vol 952 cc1551-2

3. Mr. David Price

asked the Chancellor of the Exchequer in view of the fact that the Government have abandoned their scenario II target for an average annual growth rate of 7.9 per cent. for total manufacturing industry, what is the current growth target for the Government's industrial strategy.

Mr. Healey

The aim of the industrial strategy is to improve industrial performance. There is no overall quantified growth target but many sector working parties have set quantified targets for their own sectors.

Mr. Price

Will the Chancellor assure us that with his abandonment of the scenario III targets—and he has abandoned them—the Treasury has also abandoned its belief in fairy godmothers as a substitute for industrial policy?

Mr. Healey

I regret to say that one cannot believe in fairy godmothers for long if one is Chancellor of the Exchequer. I know that the hon. Gentleman is very concerned with the welfare of British industry and will be glad to know that industrial production rose by 1.6 per cent. in April and that its level in the last three months was 1.3 per cent. above the rate in the three months before that. In other words, our industrial output is now growing at a very satisfactory rate.

Mr. Hooley

Will my right hon. Friend say how the proposed 2.5 per cent. surcharge on insurance contributions will encourage manufacturing industry to expand?

Mr. Healey

My hon. Friend may have missed the news. The increase in the national insurance surcharge is likely to be 1½ per cent. rather than 2½per cent. I pointed out in the recent debate that we had a very rapid expansion in private industrial investment during the last 12 months, which is expected to increase at the same rate this year, despite the fact that that was the year when the 2 per cent. surcharge was in force.

Mr. Lawson

Is the Chancellor aware that as a result of his taxation and incomes policies, at a time of record postwar unemployment one manufacturer in five is now reporting a shortage of skilled labour? What sort of industrial policy and strategy is that?

Mr. Healey

I know that there are shortages of skilled labour, but that is no consequence of the incomes policy. It may well be the case that under free collective bargaining differentials between production workers and skilled workers, particularly in the engineering area, were compressed, but that has not happened in the past year.