HC Deb 29 June 1983 vol 44 cc564-5
5. Sir David Price

asked the Secretary of State for Trade and Industry what has been the change in industrial output between the second quarter of 1982 and the second quarter of 1983.

Mr. Kenneth Baker

In the three months ended April 1983, the latest period for which figures are available, the all-industries index of industrial production was 1½ per cent. higher than in the corresponding period in 1982.

Sir David Price

I thank my hon. Friend for that encouraging information. Does one take it that, in the Department's view, this is the spring for British manufacturing industry? Does my hon. Friend accept that lower interest rates would be the best nutrient to turn that spring into an abundant harvest?

Mr. Baker

The level of interest rates is critical to the level of manufacturing activity and indeed to the strength of the whole economy, but there are other fairly optimistic signs. The CBI survey this week stated that order books were now stronger than at any time since September 1979 and export order books were the strongest since 1980. Certainly the economy has recovered from the trough of the recession in the spring of 1981 and there is solid evidence that recovery is on the way.

Mr. Wrigglesworth

Does the Minister accept that there is still a long way to go before those industries which currently have enormous unused capacity can be brought fully into use again? What do the Government intend to do to ensure that the capacity available in engineering, petrochemicals, steel and so many other industries is used for the benefit of the country?

Mr. Baker

If the hon. Gentleman is arguing for a reflation of demand, in my view that is not the policy that we should follow, because there is no evidence of an absence of demand in the domestic economy at present. The ability of our factories to be more gainfully employed and to produce more goods depends on a whole series of factors, including the productivity gains that can be made and the levels of wage settlements. If our major competitors have wage settlements between 2 and 3 per cent. and we persist in having higher settlements than that in both the private and the public sectors, there will be fewer jobs and lower output in British factories.