§ 8. Mr. Andrew F. Bennett
asked the Chancellor of the Exchequer if he is satisfied with the growth rate of the economy in the last 12 months.
§ Mr. Bennett
Will the Minister explain to my constitutents why he is so pleased with those figures? If the pound has responded by going down, thus forcing inflation to start rising again, it masks a fall in industrial production. What figures does the Minister believe have to be achieved before unemployment starts to fall?
§ Mr. Moore
I should have thought that the whole House, whatever its legitimate concern about the long-term problem of tackling unemployment, would welcome the fact that we are in the middle of four years of recovery. As the hon. Gentleman is worried about our manufacturing capability, I hope that he will not only remember the words of my right hon. Friend the Chancellor of the Exchequer a few moments ago about manufacturing investment being up by 13 per cent. in 1984, but that he will be interested in the fact that in 1984 manufacturing export volume was up by 11 per cent.—another piece of what I hope the hon. Gentleman thinks is good news.
§ Mr. Yeo
Has my hon. Friend noticed that the level of real interest rates is higher now than it has been, on average, for some time? Does he agree, therefore, that one of the most desirable forms of stimulus to the British economy would be a Budget which enabled real interest rates to be significantly reduced in the coming months?
§ Mr. Moore
The rate of real interest rates reflects one of the features of the last five years—the reduction of inflation. Obviously I shall draw the attention of my right hon. Friend to the budgetary recommendations of my hon. Friend, but what most industrialists and business men want, and what would add most to long-term employment, is a further reduction of inflation and the opportunity in wage settlements for our country to be competitive in terms of international wage unit costs.
Mr. A. Cecil Walker
Does the Chancellor realise that the imposition of further taxation on the tobacco industry will seriously affect jobs in that long suffering sector and the economy of the country as a whole?
§ Sir William Clark
Does my hon. Friend agree that one action that the Government could take to relieve unemployment would be the complete abolition of wages councils?
§ Mr. Campbell-Savours
How are discussions developing on the package of incentives for small businesses and the community programme that was commented upon a few weeks ago in the leader columns of the Sunday newspapers? Is it true that the Chancellor is under pressure from his own Back Benchers to introduce such a package, and will he make sure that if it is introduced it includes a substantial increase in the number of places made available under the community programme, because that would create real employment in areas such as mine?
§ Mr. Moore
I could not begin to comment on newspaper speculation, but I draw the hon. Member's attention to the major achievements in the small business sector over past years, especially the radical reduction in the corporation tax rate to 30 per cent.—a record low in the whole of the Western world.
§ Mr. Thurnham
Does my hon. Friend agree that the cost of financing the miners' strike is a burden on the money markets, and that capital investment is not helped if there is a Scargill surcharge on mortgage payments?
§ Mr. Moore
There is no way in which industrial disputes of the kind that we are going through at the moment can in any way help our country's economic development. I am sure that all those who wish to see a reduction in unemployment, and a return to the kind of growth pattern that might have developed last year without the strike, would wish to see this unnecessary dispute ended.
§ Mr. Wainwright
To remove one of the obstacles to economic growth and to assist business confidence, will 1189 the Government take advantage of the present favourable opportunity to open negotiations with a view to Britain joining the exchange rate mechanisms of the European monetary system?
§ Mr. Soames
Does my hon. Friend agree that one of the factors restraining the economy is that the state is still far too much engaged in industry? Will he accordingly introduce plans to denationalise the gas, water and electricity industries, in order to release a large amount of money into the economy?
§ Mr. Blair
Is not industry now paying about £1,000 million per year more for the cost of borrowing because of high interest rates? Are not real interest rates now the highest that they have ever been, under a Government who said that they should be judged by their achievement of low real interest rates? When will the Minister tell the House that those real interest rates will come down?
§ Mr. Moore
As I said earlier, in the last five years industry has seen a reduction in the burden of taxation relative to total taxation, from 14 per cent. of all taxes to 9 per cent. now. That is a significant achievement, which helps industry. I am sure that the hon. Member will help in further assisting industry by ensuring that pay settlements reflect productivity increases, instead of having the kind of pattern that has made our wage unit costs so unattractive in competitive terms.