HC Deb 09 February 1984 vol 53 cc1007-9
6. Mr. Tony Lloyd

asked the Chancellor of the Exchequer what fiscal steps he is taking to expand the output of the manufacturing sector of the British economy.

Mr. Lawson

Our policies have sharply reduced inflation and so provided a sound basis for the sustained growth in output which is now under way.

Mr. Speaker

Mr. Tony Lloyd.

Mr. Lawson

Perhaps I may continue, Mr. Speaker. Manufacturing has shared in this recovery and the January CBI survey points to a 7 per cent. increase in manufacturing investment this year.

Mr. Lloyd

Is the Chancellor aware that the people of Manchester have the same view as Mr. Speaker of the Chancellor's answer—that it is irrelevant to the real issues?

Mr. Speaker

Order. The hon. Gentleman must not bring me into this.

Mr. Lloyd

I apologise, Mr. Speaker. The manufacturing base in the north-west, particularly in Trafford park, is being destroyed by the Government. Given that the Government are frittering away the benefits of North sea oil, what hope can the Chancellor give to areas such as Manchester, the north-west and whole regions of the country once those revenues disappear?

Mr. Lawson

The hon. Member may not be aware that the growth of the economy in this country during 1983 of 3 per cent. was the highest in the European Community and that the prospect is for a further increase of 3 per cent. during the current year. I am sure that the north-west will participate fully in that recovery.

Mr. Farr

One welcomes the encouraging words of my right hon. Friend about growth in exports and the fact that we shall succeed in an exporting war next year, but is he aware that manufactured imports exceeded manufactured exports last year for the first time in the country's history? If my right hon. Friend is aware of that, what will he do to correct that balance?

Mr. Lawson

I am not clear why my hon. Friend wants that balance corrected. The plain fact of the matter is that we are exporting oil on a substantial scale, and there is bound to be a counterpart to that on the import side. The counterpart that we are seeing is in manufactured goods, many of which are important and helpful to British industry in equipping it for the future. My hon. Friend will also be aware, of course, that on current account last year we had a surplus of some £2 billion.

Dr. Bray

Is the Chancellor not aware that the level of manufacturing output is still 13 per cent. below what it was in 1979? Has he looked at the prospects for Fawley North sea oil production, and has he considered what impact this will have on the balance of payments, on competitiveness and on the exchange rate?

Mr. Lawson

The hon. Member is one of the gloomiest Members in the House consistently, and always has been as long as I have known him, in contrast to his brother, who is a very jolly fellow.

Of course we consider very seriously the longer-term prospect. As I indicated, that is one of the reasons why we shall in due course be publishing a Green Paper on longer-term public expenditure and taxation prospects.

Mr. Beaumont-Dark

Does my right hon. Friend agree that manufacturing industry is at long last beginning to expand? One of the reasons for that is that banks have been willing to lend way above normal banking prudence. Does he therefore agree that, if that is to continue, and there is a need for it, another windfall tax on banks would discourage the very growth in manufacturing industry that we need?

Mr. Lawson

The extent to which banks lend is a matter for the banks. The Government have assisted small businesses in particular very considerably in this respect with the loan guarantee scheme, but I think that the lessons of history, taken with the current position of the international debt problem, make one hesitate to wax too enthusiastic about banks lending above the limits of banking prudence.

Mr. Wainwright

Is the Chancellor aware that what manufacturing industry most urgently needs is to be allowed to become competitive with industries overseas? Will he therefore take steps to abolish the tax on jobs and to help interest rates and the effective exchange rate to come down?

Mr. Lawson

I shall be happy to abolish various taxes when the hon. Gentleman and his party tell me where I am to make the public expenditure savings to pay them.

Dr. McDonald

Is the Chancellor aware that, according to Government figures, manufacturing investment is 37 per cent. below the levels of 1979, and that manufacturing output is well down? Is he further aware that manufacturers in this country will be deeply shocked by his apparent disregard of the contribution that they make to the economy, as shown by his previous reply? Would he not do better spending his efforts on increasing public investment, so that investment and output in manufacturing industry can expand?

Mr. Lawson

I am at a loss to understand the selective importance attached by the hon. Lady and many Opposition Members—and some Conservative Members—to the manufacturing sector.

Mr. Rooker

Because of jobs.

Mr. Lawson

From a sedentary position, the hon. Gentleman says, "Because of jobs." Approximately a quarter only of all jobs in the country are in the manufacturing sector of the economy. All sectors of the economy are important, manufacturing and non-manufacturing alike, and it is foolish to make these distinctions between them.