Manufacturing Output (Hansard, 13 February 1986)

§ 13. Mr. Evans
asked the Chancellor of the Exchequer if he will make a statement on the growth of the economy as it relates to manufacturing output.

§ Mr. MacGregor
Manufacturing output has grown by 11 per cent. since June 1983. We are now experiencing the longest period of uninterrupted growth of manufacturing output since 1971.

§ Mr. Evans
The Chief Secretary has been highly selective in his choice of years. Will he say when he expects manufacturing output to reach the level that prevailed in May 1979?

§ Mr. MacGregor
The years were not at all selective. I thought it entirely reasonable to pick the figures since the last general election, when the country returned the Government to power. My choice of years shows the progress that we have made since then. As I said last night, there was obviously a major worldwide recession between 1979 and 1981. Since then we have been making good progress on manufacturing output.

§ Mr. Fletcher
Does my right hon. Friend agree that the best way to improve and maintain manufacturing output and productivity is to minimise wage awards, and that the best thing that the Treasury might do towards that would be to raise tax thresholds as far as possible?

§ Mr. MacGregor
I shall not comment on any tax issue that my hon. Friend raises. There are two main conditions. The first condition is the maintenance of a low inflation policy, which enables our manufacturing sector to remain competitive. The second consideration, as my hon. Friend has rightly said, is to ensure that we keep unit labour costs in manufacturering as low as possible. It is worrying that at present they are higher than those of some of our competitors.

§ Mr. Lofthouse
Why has unemployment increased since last year's so-called Budget for jobs?

§ Mr. MacGregor
As my right hon. Friend the Chancellor of the Exchequer has made clear, the three major ingredients of last year's Budget have not had time to take effect— [Interruption.] There is nothing funny about that. The national insurance contributions changes of the 1985 Budget came through only four months ago. A second major ingredient, the two-year youth training scheme, comes into operation in April because it requires time to plan.

§ Mr. Dykes
With the manufacturing base in Germany being three times as large as that in Britain, will my right hon. Friend tell us what the interest rate to industrial and commercial borrowers in Germany now is and when we shall be able to reduce our rate to that level as a result of my right hon. Friend the Chancellor of the Exchequer's brilliantly adroit management of the economy?

§ Mr. MacGregor
Obviously there are many factors that operate on interest rates. One of the key ingredients is to maintain the pressure on inflation. To ensure the right monetary conditions, interest rates are as they are to keep the pressure on inflation.

§ Mr. Terry Davis
The Chief Secretary has told us when the measures in the last Budget will come into effect. Will he now tell us when we shall see the jobs?

§ Mr. MacGregor
We debated this last night. There are many factors causing the present levels of unemployment, including the demographic factors. We have made significant progress in the economy and there has been continuous economic growth in the last four years. Without that, we would be in a more serious situation. It is important that we maintain these policies.

§ Mr. Wrigglesworth
Does the Chief Secretary agree that if the Chancellor of the Exchequer has available a fiscal adjustment of some £3.5 billion, as against the £1 billion forecast, he will be in a much more powerful position to help manufacturing industry? Will the Chief Secretary therefore tell us whether we should give any credence to the reports that a Secretary of State has calculated, on the basis of his Department's forecasts, that there will be a £3.5 billion fiscal adjustment?

§ Mr. MacGregor
The hon. Gentleman will clearly have to await the Budget statement, which is not very far away. With regard to jobs, about which I was asked, I make the point that in the last 18 months more new jobs have been created in this country than in the whole of western Europe put together.