HC Deb 14 May 1986 vol 97 cc696-8
8. Mr. Thurnham

asked the Secretary of State for Trade and Industry if he is satisfied with the competitiveness of British industry.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon)

I welcome the increase in our share of world trade in manufactures last year, and the continuing improvement in our manufacturing productivity, but I cannot be satisfied as long as unit labour costs in manufacturing industry are rising faster in the United Kingdom than in our main competitor countries.

Mr. Thurnham

Does my right hon. Friend agree that the profit-sharing proposals in the Budget should be of particular benefit to manufacturing and other companies which have to compete in world markets?

Mr. Channon

Yes, I hope that they will have some effect. I hope that those proposals, which I warmly welcome, will receive a good welcome from both sides of the House.

Mr. Evans

Does the Secretary of State ackowledge that the competitiveness of British industry would be greatly improved if it were operating on the same basic standards as those of our EEC competitors? Will the Secretary of State answer the question which his hon Friend the Minister for Trade could not or would not answer, as to why has there been so little progress over the harmonisation of technical standards in the EEC and why it is that EEC countries can export to this country, although we cannot, apparently, export to them?

Mr. Channon

I should like to look at a specific example, because the situation varies from industry to industry. In general terms, I believe that quite a lot of progress is being made on the harmonisation of technical standards. If the hon. Gentleman is saying that it should proceed faster I agree entirely with him, but, alas, that is not entirely within our gift.

Mr. John Browne

Does my right hon. Friend accept that competitiveness depends crucially upon new products and that that in itself depends upon the birth of new and smaller businesses, which, under this Government, have never enjoyed a better environment? Does my right hon. Friend also accept that, to be truly competitive, our products must be designed properly, built with quality, delivered on time and given adequate after-sales service? Again, does he accept that under this Government the environment has never been better for encouraging competitiveness, particularly because of our firm exchange rate?

Mr. Channon

I agree entirely with my hon. Friend that the factors he has cited are crucial if British industry is to be more competitive. Immense strides have been made, but I remain worried about unit labour costs, which are extremely important and a major factor.

Mr. Haynes

When will the Secretary of State and the Government wake up to the fact that we cannot possibly compete against other nations of the world, which receive heavy financial assistance from their Governments? When will this Government stop industry floundering around and collapsing right across the nation? When will they wake up and do something about it?

Mr. Channon

Most uncharacteristically, the hon. Gentleman exaggerates his case. In fact, the prospects for British industry are extremely good. The forecast for the economy is also extremely good. I look forward with confidence to the progress of British industry during the next few months.

Mr. Holt

Will my right hon. Friend note that, however competitive the furniture industry may be, it is impossible for it now to compete with the flood of furniture that is being imported from the Eastern bloc? It is undermining a very old and well-established industry in this country. If the Government do not take action, the industry will suffer a serious decline.

Mr. Channon

If there is evidence of dumping in the furniture industry, I shall be very glad to receive it and to take appropriate action.

Mr. Gould

Does the Secretary of State accept that the most widely used index of competitiveness, the IMF index of relative normalised unit labour costs, shows a loss of competitiveness since this Government took office of no less than 30 per cent.`? Will he therefore have a word with his right hon. Friends about this? His right hon. and learned Friend the Secretary of State for Scotland is the latest culprit, after his appearance on television last Sunday. All those Ministers constantly, and Wrongly, assert that competitiveness has improved under this Government. Will he give the facts to them so that they cease making false and misleading statements?

Mr. Channon

We are doing well on productivity and we are doing well in industry. The forecast for the economy is good, GDP is now entering its sixth successive year of growth and investment is at a record high. The Labour party's attempts to diminish these achievements are very misleading and undesirable.

Mr. Ashdown

Does the Minister recognise that real interest rates in Britain are still higher than in competitor nations? Is he aware that our inflation rate is still the second highest in Europe—ahead only of Italy—and that wage rates here are much higher than in competitor countries? Does he accept that unless he does something more effective—for instance, by joining the European monetary system and imposing more effective wage restraint—[Interruption.]—those three factors will continue to undermine the competitiveness of British industry?

Mr. Channon

We shall all want to study with care what the hon. Gentleman said in the last part of his question, which did not seem to meet with universal approval. I am interested in the hon. Gentleman's views on wage rates and wage restraint. I hope that we shall soon have good news about inflation. The news on inflation is becoming better and better, and long-term interest rates are at their lowest for 14 years.

Mr. Roger King

Does my right hon. Friend agree that one way to improve the further competitiveness of British industry is to remove the penal rating which many Labour authorities throughout the country are levying on British industry? According to the Birmingham chamber of commerce and industry, £55 million extra is being spent by industry and 10,000 jobs have been lost. Is it not time that we did something about the rate system?

Mr. Channon

I agree with my hon. Friend. He is right to draw our attention to the fact that high and excessive rates imposed by Labour councils can cause damage to industry throughout the country.