HC Deb 17 December 1981 vol 15 c444
15. Mr. Norman Atkinson

asked the Chancellor of the Exchequer if he has studied the precise mechanism necessary to bring about an upturn in the economy; and whether, in this connection, he now regards it as necessary to intervene deliberately in the economy to ensure that the process leading towards growth is both started and adequately funded, or whether he remains of the view that the mechanism will be self-starting.

Sir Geoffrey Howe

The Government's policies are designed to produce a more competitive and flexible economy. There are now signs that they are beginning to succeed.

Mr. Atkinson

May we assume from that answer that the Chancellor remains a free-market non-interventionist? Is he aware that the latest analysis of new orders being fed into manufacturing industries suggests that the total number of new orders and contracts in manufacturing for next year amounts to less than the total required to sustain even the low level of output for this year? Therefore, does the Chancellor accept that, contrary to all the optimistic predictions, it now appears that manufacturing output will drop during next year? If so, what does he intend to do about it?

Sir Geoffrey Howe

That characteristically gloomy forecast is out of line with expectations. The hon. Gentleman should take account of and be content with the fact that manufacturing output in the third quarter of this year was up by 2½ per cent. on the second quarter; construction industry activity in the third quarter was up by 2½ per cent. on the second quarter; engineering orders this year are up by 20 per cent. on the second half of last year; and engineering export orders this year are up by 22 per cent. on last year. Those figures represent a prospect for increased growth, rather than the reverse.

Mr. Latham

If the mechanism is self-starting, will it operate at a sufficiently fast rate to achieve the Government's objective of lower taxation? If not, will my right hon. and learned Friend give it a fiscal shove in the spring?

Sir Geoffrey Howe

My hon. Friend knows that everyone in our party is anxious to secure reductions, rather than increases, in taxation. The precise decisions will depend upon the balance between expenditure and revenue.