§ 2. Mr. Cowansasked the Chancellor of the Exchequer if he has made any estimate of the impact of (a) tax cuts and (b) public sector construction spending on imports.
§ The Chief Secretary to the Treasury (Mr. Peter Rees)It would be misleading to look at tax and expenditure decisions solely in terms of their relative import content. What matters is whether tax or expenditure decisions will contribute towards improved economic performance.
§ Mr. CowansHas the Minister read the input and output tables of the Department of Trade and Industry, which show conclusively that public sector construction is less import intensive than tax cuts? Will he now at last treat jobs as the main priority instead of putting forward his own pet theories?
§ Mr. ReesAny addition to disposable income will go on imports, and that is true of higher wages as well as of additional income due to tax cuts. If the hon. Gentleman is consistent in his view, he is presumably also opposed to wage increases on the ground that they, too, suck in imports.
§ Mr. Beaumont-DarkDoes my right hon. and learned Friend accept that it is not only tax cuts that have an effect on the economy, and that the Government are right not to set themselves a harsh target on the value of the pound, as many of the things that have happened have been very helpful to manufacturing industry, which in turn helps to strengthen the economy? Anyone who thinks that having a set target for the pound helps this country just does not understand the facts of economic life.
§ Mr. ReesMy hon. Friend is quite right. The export opportunities to, for example, the United States are enormous at present. Hon. Members will know that, even disregarding oil, the volume of exports rose by 9.5 per cent. in 1984 to reach an all-time high.