HC Deb 15 November 1984 vol 67 cc783-4
6. Mr. Straw

asked the Chancellor of the Exchequer whether he is satisfied with the progress of the economy in terms of national output and employment.

7. Mr. Dormand

asked the Chancellor of the Exchequer if he is satisfied with the progress of the economy; and if he will make a statement.

Mr. Lawson

Output has been rising at a rate of 2½ per cent. per annum since the trough of the recession. Employment has risen by an estimated ¼ million over the year to June and is expected to continue to rise. But had real wages grown less rapidly, employment would be rising still faster and unemployment would not now be rising at all.

Mr. Straw

Is the Chancellor aware that his answer shows a staggering complacency about the state of Britain's economy? Is he aware that in 1979 our performance on inflation and unemployment was average among the major seven OECD countries? Our performance on inflation is still average, but our performance on unemployment and manufacturing output is worse than that of any of our major competitors. When does he believe that manufacturing output will return to its 1979 level, since it is 10 per cent. behind that level now?

Mr. Lawson

There is general interest throughout the House in making comparisons with other countries. Since the election, and on the latest available figures our unemployment rose, I regret, by 3.7 per cent., but unemployment rose by 5.2 per cent. in the remainder of the Community. The number of jobs in Britain rose by 1 per cent., but there was no increase in the remainder of the Community. Britain's gross domestic product rose by 2.9 per cent., compared with only 1.5 per cent. in the remainder of the Community.

Mr. Forman

Although I welcome the encouraging sustained increase in output under this Government during recent years, does my right hon. Friend accept that if we are to create sufficient new jobs to counteract the inexorable rise in unemployment we must put greater emphasis in the forthcoming Budget on finding ways to lower industrial costs, which will facilitate that process?

Mr. Lawson

I entirely agree with my hon. Friend that the next Budget — as was the last Budget, with the abolition of the national insurance surcharge and the reform of corporation tax and business taxation generally — must be framed to encourage the creation of new jobs. That is of the first importance. That is why reductions in taxation, and especially direct taxation, are so important.

Mr. Dormand

When will the Chancellor stop giving credence to the myth that public borrowing in Britain is dangerously high? Britain's 3 per cent. of GDP compares with 4.5 per cent. in other industrial countries. Is it not abundantly clear that such a tight fiscal policy is the major cause of Britain having 4 million unemployed? When will the Chancellor take off his blinkers and recognise the disastrous effect of those policies on the people of Britain?

Mr. Lawson

Britain does not have 4 million unemployed, I am glad to say. The recovery that we are now seeing—[Interruption.] The facts are unpalatable to Opposition Members. The recovery began when my right hon. and learned Friend the Foreign Secretary very courageously made a major reduction in the borrowing requirement in the 1981 Budget.

Mr. John Townend

Does my right hon. Friend agree that one way to increase employment is to remove restriction and rigidities in the labour market and allow market forces to work? Is it not time that we did away with such bodies as wages councils and the National Dock Labour Board?

Mr. Lawson

Obviously we shall be looking seriously at the question of wages councils.

Mr. Hattersley

Does the Chancellor recall that from time to time he has favoured such organisations as election press conferences and the Leicester young farmers with his estimates for unemployment during the next year? Will he now do the same for the House of Commons?

Mr. Lawson

I made it clear earlier this week—but perhaps the right hon. Gentleman was not paying attention — that everything that the Government are doing is designed to create maximum opportunities for new jobs. I have not made forecasts about unemployment in the past and I do not propose to do so now.