HC Deb 15 July 1982 vol 27 c1158
6. Mr. Hoyle

asked the Chancellor of the Exchequer if he foresees a further period of reduction in real incomes.

Mr. Hayhoe

As the Budget forecast showed, a small fall in after-tax real incomes is likely this year. Continued moderation in pay settlements is essential to improve the competitiveness and profitability of industry and so create more jobs for the future.

Mr. Hoyle

Does the Minister realise that that cut in spending power can only lead to more company closures and therfore much more unemployment? Does he agree that the cut in spending power means that areas such as Warrington, which were prosperous until the advent of this Government, will be turned into industrial wildernesses?

Mr. Hayhoe

That is why it is necessary to improve the competitiveness of British industry. We shall then be able to sell more goods and services.

Mr. Dudley Smith

Does my hon. Friend agree that one of the contributory factors to the problem of real incomes in the past 10 or 15 years has been that most people, whether they are good or bad performers, expect and demand an annual wage increase?

Mr. Hayhoe

Widespread expectations of increases in income that are not linked to increases in productivity are a recipe for increased inflation and a fall in real income.