HC Deb 21 February 1985 vol 73 cc1181-2
1. Mr. Bell

asked the Chancellor of the Exchequer when he expects to achieve his targets as regards sustainable growth and jobs, as set out in the medium-term financial strategy.

The Chancellor of the Exchequer (Mr. Nigel Lawson)

Output has been growing steadily for the best part of four years and employment has been rising since the first quarter of 1983. With inflation under control, those trends are expected to continue.

Mr. Bell

The nation will not recognise the picture that the Chancellor of the Exchequer painted. Does he agree that output has not yet reached the level of 1979 when the Labour Government left office? Does he agree that the medium-term financial strategy had three elements: the conquest of inflation, sustainable growth, and job creation? Is it not a fact that they are mutually exclusive, that he has not conquered inflation, or achieved sustainable growth, and that he cannot create jobs? When will the Chancellor tell the House that he is abandoning the medium-term financial strategy?

Mr. Lawson

From someone who is normally as well informed as the hon. Gentleman, I have never heard so many errors in a single question. First, output, far from not having reached the 1979 peak, exceeded the 1979 peak in 1983, went still higher in 1984, and is expected to go higher still in 1985. The latest figures for employment published only yesterday show that during the 18 months to September 1984 there was an increase of about 480,000. That is a substantial increase, in which an increase in self-employment has played a large part. My right hon. and hon. Friends will be glad to know that. Far from the conquest of inflation being incompatible with a healthy economy, growth and more jobs, it is one of the essential elements in the foundation for more jobs, although there are also other elements.

Mr. Forman

While I welcome the Government's record since 1981 in boosting both output and employment, does my right hon. Friend believe that there is a place now for treating the public sector borrowing requirement calculation on an oil-adjusted basis?

Mr. Lawson

I read with great interest the pamphlet written and published by my hon. Friend and my hon. Friend the Member for Lewisham, West (Mr. Maples). Many adjustments must be made to the PSBR in different directions to decide on an appropriate level. Those adjustments were all made. The factors were all taken into account when the last medium-term financial strategy was published in March 1984.

Mr. Wainwright

Since the Chancellor recently published a careful study of the effect on the number of jobs of lower employment costs, will he tell the House approximately how many new jobs he reckons will have resulted from the abolition of the national insurance surcharge last year?

Mr. Lawson

It is extremely difficult to put a figure on that, but the same factor would broadly apply as applied in the Treasury paper, that is, the 1 per cent. lower level of real earnings would over time be expected to result in between 110,000 and 220,000 additional jobs.

Mr. John Browne

Does my right hon. Friend accept that, in the light of the world recession and the decades of industrial decline that preceded this Government's tenure of office, his financial strategy is working well in the national economic interest? Will he acknowledge the great role being played by new and small businesses in the creation of jobs within the economy? Furthermore, will he have regard to the wishes of my constituents that that should be taken into account in the forthcoming Budget?

Mr. Lawson

I always take my hon. Friend's representations very carefully into account when framing my Budget.

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