HC Deb 19 March 1985 vol 75 cc787-8

In determining the nature of those measures, within the overall framework of the medium-term financial strategy, my overriding objective has been to improve the prospect for jobs. It is important to be clear what this means. Jobs are created by firms that are competitive, efficient, profitable and well managed. This in turn requires a work force with the right skills, one that is adaptable, reliable, motivated and prepared to work at wages that employers can afford to pay.

The extent to which Government—let alone a single Budget—can bring this about is clearly limited. We cannot instantly inculcate the spirit of enterprise by Act of Parliament, or abolish latter-day Luddism overnight simply by adding a few more pages to the statute book.

We cannot even prevent trade unions from pricing their members out of a job. Last year, despite a further encouraging growth in productivity, wage costs per unit of manufacturing output rose by some 4 per cent. In the United States, Germany and Japan, unit wage costs actually fell. This is bad for our competitiveness and bad for jobs. Too much of the benefit of economic growth is currently being enjoyed in higher living standards for those in work, too little in the form of better job prospects for those out of work. In a free society, the remedy lies in the hands of those responsible for collective bargaining throughout the economy.

However, limited though the role of Government is, it remains an important one: to prepare the ground in which enterprise can best flourish; to remove obstacles to the effective working of markets in general and the labour market in particular; to correct the deficiencies in our education and training that make it hard for industry—and individuals — to adapt to change; to construct a pattern of taxation that does least damage to incentives, and in particular does least to deter people from taking jobs at wages that businesses can afford.

We have made progress on all these fronts. Inevitably, it takes time for the effects to come through. That is not surprising — attitudes and behaviour acquired over decades cannot be changed overnight — and there is much still to be done; but there is no short cut. If it were possible to create jobs simply by boosting Government borrowing and Government spending, there would be no unemployment in the world today, for nothing is easier for a Government than to borrow and spend. Impatience is a bad counsellor.

In setting financial policy for the year ahead I have had one object in mind: the continuing reduction of inflation. Equally, in deciding my individual Budget proposals within that overall framework, I have sought throughout to make those changes that will do most to promote enterprise and employment.

Our attack on the evil of unemployment is clear, coherent and strong. My Budget today represents a further step along the road we have been taking since 1979. It will help us to ensure that more new jobs are created and that they will be new jobs that last.