Budget Strategy (Hansard, 24 March 1982)

§ 4. Mr. Douglas
asked the Secretary of State for Scotland if he will make a statement on his assessment of the impact of the Budget strategy on the Scottish economy.

§ 12. Mr. Lambie
asked the Secretary of State for Scotland what effect he expects the Budget proposals to have on unemployment in Scotland.

§ Mr. Younger
By giving priority to maintaining progress on inflation and competitiveness the Budget will enhance economic prospects throughout the United Kingdom, including Scotland, and reinforce the recovery now under way. Increasing activity takes time to feed through to unemployment, although the rate of increase has fallen sharply over recent months, and in the meantime provisions under the special measures have been greatly expanded.

§ Mr. Douglas
Will the Secretary of State reflect on the fact that his answer is little more than a bromide and that Scotland is much better at holding by-elections in relation to economic activity than having Budgets? Have the Government made a decision on the urgently needed cheap energy package for the smelter, as that would be much more important to that area than any budgetary proposals?

§ Mr. Younger
For a moment I was not sure whether the hon. Gentleman was offering to create a by-election that we could all enjoy. It would certainly be welcome to Conservatives. His point about Invergordon is important. Let me make it quite clear that we are pursuing several options for a new power contract for the Invergordon smelter, and there is no truth in the suggestion that appeared in some newspapers this morning that one of these options has been ruled out.

§ Mr. Lambie
In spite of the relatively small reductions in unemployment announced this week, is the right hon. Gentleman aware that in his Budget documents the Chancellor indicated that unemployment in the United Kingdom would rise by about 300, 000 this year? With unemployment levels in the North Ayrshire area still around 25 per cent., with fears being expressed about the future of the Glengarnock steelworks, which has been starved of orders, and with compulsory redundancies announced for the first time at Hysters in Irvine, is not the right hon. Gentleman being just a little too complacent about unemployment not only in North Ayrshire but throughout Scotland? When will he do something about it?

§ Mr. Younger
I cannot agree with the hon. Gentleman that the fall in the seasonal rate of unemployment is a matter for either depression or regret. It is a matter for satisfaction that some movement in the right direction has taken place. The hon. Gentleman is correct to point out that in parts of his constituency and the surrounding area unemployment is serious. As he knows, we are doing as much as we can through the institutions on the ground, the local authority, the Ayrshire, Saltcoats and Stevenson Enterprise Trust and others to create new industry and bring jobs to that area.

§ Mr. Myles
What effect will the Budget proposals have on the Scotch whisky industry?

§ Mr. Younger
As my hon. Friend will know, my right hon. and learned Friend the Chancellor ensured that he kept to a minimum the uprating of the threshold for duty on Scotch whisky precisely because he recognised the industry's current difficulties. That, combined with the other measures in the Budget, such as the reduction in the national insurance surcharge and the prospect of lower interest rates, will surely be of great benefit to the Scotch whisky industry as well as to all other industries.

§ Mr. Grimond
Will the Secretary of State comment on what is happening to fuel prices in Scotland, fuel being so important in the North of Scotland? In spite of a fall in the world market, the price of petrol is still rising in the North of Scotland and is now 30 to 40 per cent. above what it is in London. Indeed, the price of Avgas, on which the duty was reduced in the Budget, is being put up by 32p a gallon.

§ Mr. Younger
I am not sure about the latter point, but I am sure that the right hon. Gentleman was as glad as I was that at long last the Chancellor was able to make a reduction in the duty on Avgas, which has long been sought. My right hon. and learned Friend the Chancellor took particular care in the Budget, because of the extreme difficulty that he knows exists in rural areas, to ensure that the uprating in petrol duty was no greater that that necessary to keep pace with inflation. I understand that the alterations being made in fuel prices by the petrol companies this week involve reducing the amount of discount in city areas, and should not adversely affect the rural areas.

§ Mr. Millan
I revert to the question of Invergordon. As today's newspapers are full of detailed accounts of how proposals for a new power contract have been turned down by the Government, will the Secretary of State repeat the statement that he made last week in Hillhead, that he was confident that the smelter would re-open? If not, was that statement not just a cynical attempt to con the electors of Hillhead, not to mention the people of Invergordon?

§ Mr. Younger
I am happy to repeat what I said last week in Hillhead on that and any other subject. The right hon. Gentleman is right to say that there are some reports in this morning's newspapers purporting to be an account of discussions yesterday. I can only tell him that they are wholly inaccurate.

§ Mr. Millan
Will the right hon. Gentleman say when we will get an announcement about the reopening of the Invergordon smelter?

§ Mr. Younger
That is another question. I do not have an immediate date in mind, but we are making progress towards the first step, which is to establish the basis for a new power contract. It will then be necessary to negotiate with the various parties that have expressed an interest in the smelter to see whether they are prepared to operate it.

§ Mr. Henderson
Are separate figures kept in Scotland for the take-up of the loan guarantee scheme and the business start-up scheme? Is it not a fact that the substantial reduction in interest rates following the Budget would not have come about by any of the budgets proposed by other parties?

§ Mr. Younger
We can produce figures for the interesting effects of the business start-up scheme in Scotland. If my hon. Friend would like them, I shall be glad to provide them. I fully agree that the welcome easing of the rise in interest rates and, indeed, the prospect of reductions, would not have had the faintest chance of happening on the programmes that have been put forward by either the SDP or the Labour Party.

Dr. J. Dickson Mahon
I revert to the answer that the Secretary of State gave about unemployment. He implied that there might be a reduction in unemployment, whereas the Chancellor of the Exchequer implied in the Budget that 918 no substantial reduction was to be expected in the United Kingdom. Will the Secretary of State tell us whether by next year's Budget there will be a fall in Scottish unemployment?

§ Mr. Younger
I made no suggestion earlier that I expected unemployment to go on reducing at the rate at which it has reduced this month. We can only record with some pleasure that it has reduced in the seasonal figures for this month. Like all Ministers in all Governments, I do not make forcasts. I can only say that Government policies are designed to do everything possible to improve the competitiveness of Scottish industry, which means lower unemployment when that works through.