Balance of Payments (Hansard, 27 October 1983)

§ 5. Mr. Maxton
asked the Chancellor of the Exchequer what is his latest estimate of the current account of the balance of payments for 1983.

§ 10. Mr. Terry Lewis
asked the Chancellor of the Exchequer whether the forecast contained in the Budget Statement and Financial Review 1983–84 of a surplus on current account balance of payments of £1½ billion remains his best estimate of the likely outturn of this item.

§ The Financial Secretary to the Treasury (Mr. John Moore)
A new forecast will be given in my right hon. Friend's autumn statement.

§ Mr. Maxton
Is it not a disgrace that Britain's manufacturing trade is running at a deficit of £4 billion? Does the Minister agree that that is the worst trading figure since Tudor times? Is that not a sign of how badly the Government are running the economy? Is it not time that they made way for a Government who could do better?

§ Mr. Moore
It is extraordinarly difficult to expect a word of congratulation for Britain's workers on the recently announced September surplus of £270 million. I should have thought that hon. Members on both sides of the House would welcome that. Opposition Members might find it helpful to know that, although manufacturing is an important part of our economy, it employs only 27 per cent. of the nation's work force.

§ Mr. Terry Lewis
How many jobs in manufacturing industry have been lost because of the £4 billion deficit?

§ Mr. Moore
The House will be much more interested to learn that, in a changing and competitive economy, the percentage of Britain's working population employed in manufacturing industry is similar to that in West Germany and France. It is difficult to understand the statements of the new Leader of the Opposition when he argues that unproductive labour includes those employed in financial activities, insurance, banking and business services, as those concerns employ 1.3 million British people in extremely productive work.

§ Mr. Eggar
If we are to continue exporting successfully, as we have been doing in the past four years, is it not vital that we keep control over wage increases?

§ Mr. Moore
My hon. Friend is quite right. Wage increases are one of the factors involved in maintaining cost competitiveness, which is essential if we are to hold our markets. To that extent I endorse what my hon. Friend says.

§ Mr. Forman
As the balance of payments is substantially affected by import penetration—which must be a source of anxiety to the Treasury—is my hon. Friend, whom I welcome to his new responsibilities, keen on encouraging infrastructure or capital investment, which usually has a low import content and therefore does not cause difficulty with the balance of payments?

§ Mr. Moore
I am tempted simply to say yes, but the essence of the latter part of my hon. Friend's statement is correct. The key to it is profitability in an industry, which will attract investment to that industry, which in turn, added to effective cost competition in labour expenses, will enable us to win back world markets.

§ Mr. Wrigglesworth
Is it not a fact that the balance of payments has been shored up by oil exports? Will not 414 those oil exports decline steadily during the coming years, and what plans do the Government have to shore up what will then be a catastrophic state of affairs?

§ Mr. Moore
It is always interesting to find ways in which the new party seems not to wish to embrace economic market freedom. I cannot understand why its Members assume that the 100,000-odd jobs that have been created by an investment of £35 billion from the private sector into such a successful industry should be ignored. It is also difficult to understand how they can ignore the enormous achievement in the creation of a massive overseas asset. We now have net assets overseas worth £42 billion, as opposed to £10 billion in 1978, which are already producing net portfolio remittances of about £ 1.6 billion a year, as opposed to £400 million a year in 1978.

§ Mr. Shore
I, too, congratulate the Minister on his promotion within the Treasury, and I wish him good fortune, especially in solving the growing new problem of balance of payments deficits. Surely the Minister understands and recognises that, of all the figures that have been exchanged across the Floor of the House during this Question Time and many previous ones, nothing is more grievously damaging to the fortunes and prospects of Britain than the massive deterioration in the balance of payments that has taken place this year. Does he agree that within the past 12 months our balance of payments has deteriorated by no less than £5,000 million and that we are heading for the most serious crisis in our balance of payments in the year ahead? What will he do to restore the competitiveness of British industry so that we can resist import penetration and promote our exports? How will he handle the continuing problem of a massive outflow of capital from Britain?

§ Mr. Moore
I thank the right hon. Gentleman for his kind words. It might be useful to correct the misapprehension that the outside world might have. We are not in balance of payments deficit. The figures for the first nine months of this year show an approximate surplus of more than £550 million. I recognise that manufacturing figures are down, but one of the happy factors in the longterm development of Britain is that our economic development is ahead of that of most of our European competitors.