HC Deb 25 October 1982 vol 29 cc721-2
7. Sir David Price

asked the Secretary of State for Industry what has been the output of British manufacturing industry during the first three quarters of 1982; and how it compares with the same period in 1980 and 1981, respectively.

Mr. Kenneth Baker

Figures for the third quarter of 1982 are not yet available. In the first half of 1982 the index of manufacturing output averaged 89, compared with 99 in the first half of 1980 and 88 in the first half of 1981.

Sir David Price

Is my hon. Friend aware that while no one can be happy about those figures, the great issue is how to deal with them? While no Conservative Member wants a general reflation of the economy, we believe that there is a strong case for selective import controls on those who cheat.

Secondly, there is a case for advancing public sector investment in those areas where it will be made one day, such as replacing frigates for the Royal Navy.

Mr. Baker

I share my hon. Friend's views about the figures that I have announced. They show that the trough in manufacturing was reached in the first quarter of 1981, since when there has been only a modest recovery.

I re-emphasise what the Prime Minister said at the Dispatch Box a week ago about import controls. As consumer sales are so buoyant, if more people can be persuaded to buy goods made in Britain, it will have a ripple effect throughout the economy.

A group from the Machine Tools Trade Association is going to Japan this week with the Government's full support to negotiate a voluntary restriction agreement on the import of machine tools from Japan.

Mr. McNally

Is the Minister aware that the director of the Manchester chamber of commerce said only this week that there can be no hope of industrial recovery in our region under present Government policy? The chamber specifically asked for a programme of infrastructure investment and a revamping of regional policy. Is there any hope of a positive Government response to those specific requests?

Mr. Baker

Those matters were taken into account by the Government in the formulation of their policy. The essential precondition for Britain's industrial and economic recovery is the further reduction in the rate of inflation. If that can be reduced below 5 per cent. , which is the main thrust of our economic policy, we may be able to move to a period of proper and sustained growth.

Mr. Eastham

During the Government's lifetime, manufacturing output has declined by 18 per cent. Is it not true to say that national output is now the lowest since 1931?

Mr. Baker

The hon. Gentleman should be aware that that is not unique to Britain. The drop in American manufacturing between the second quarter of 1981 and the second quarter of 1982 was 10 per cent. compared to 0.5 per cent. in Britain.

Mr. Dorrell

Does my hon. Friend agree that one of the greatest threats to British manufacturing output is the increasing tendency to see in import controls a way out of our problems? Does he further agree that it is useless to support the principle of free trade while opposing each practical example of its application?

Will my hon. Friend assure hon. Members that his Department will not present measures to the House that are a response to special pleading for just one more example of protection? Will he confirm that that amounts to a policy of picking losers?

Mr. Baker

We should all be aware that arguments for across-the-board import control are a seductive but wrong answer to Britain's economic problems. A protected economy will become a museum economy. However, we must ensure that free trade is also fair trade.

Mr. Orme

Do any of our main competitors practice free trade? Does Japan? What progress did the Prime Minister make with the Japanese with regard to their export of machine tools to the United Kingdom? What will the Government do about the number of Japanese cars that are coming into Britain at the moment? As the Secretary of State recently said at the motor show, our market is now saturated to 60 per cent.

Mr. Baker

The car arrangement with Japan is voluntary and the Japanese have stuck to it for the past two years in agreeing to restrict their import level to about 11 per cent. of the United Kingdom market. This week a group of business men from the Machine Tools Trade Association is in Japan as a result of the initiative that the Prime Minister took when she was there.