HC Deb 26 November 1986 vol 106 cc267-70 3.34 pm
Mr. John Smith (Monklands, East)

(by private notice) asked the Secretary of State for Trade and Industry if he will make a statement on the Government's recalculation of invisibles in the trade figures to show a higher surplus.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard)

Statistics of invisible trade are compiled by the Central Statistical Office, mainly from quarterly and annual surveys of businesses and individuals engaged in invisible trade transactions. This information becomes available much less frequently than the corresponding information for visible trade. Estimates of the invisible balance for the third quarter of 1986 and the month of October were calculated by the statisticians of the Central Statistical Office on the basis of the latest information available to them.

Mr. Smith

Were the Government concerned to read the report in today's edition of the Financial Times which said: but the large revisions in the invisibles came as a surprise and were greeted with widespread scepticism in the City"? Is it not disturbing that scepticism should exist about figures on which the markets crucially depend and the integrity of which, in any proper system, ought to be beyond question? Given the Government's record on the manipulation of unemployment statistics, ought they not to be especially careful that their previous convictions do not run before them in this area?

Why did the Government depart from the practice of waiting for the figures that will be available to the Central Statistical Office on 4 December, which is only two weeks away, upon which a more justifiable revision could be made and which until now has been the standard practice?

As the Minister will be aware, the revision upwards of invisibles of about £200 million in each month over a three-month period, which leaves October out of account, gives a large increase of about £600 million. Can the Government give the basis for their confidence that these increases have occurred? Why have they occurred? On the assumption that the Government's forecasts are correct, would it not have been more prudent to have announced prior to the publication of the detailed figures that an upward revision of invisibles was at hand? That would have been better than offering an explanation after the event, especially since the upward revision has the convenient effect of changing a deficit into a surplus.

In order to restore confidence in the figures, and bearing in mind the heavy reliance placed on increases in invisibles in the Chancellor's autumn statement, would it not be desirable next time to produce more detailed justification for the calculation of invisibles and to show them in future announcements so that the scepticism that this month's experience has clearly engendered does not recur?

Mr. Howard

Unlike the right hon. and learned Gentleman, I read with a degree of scepticism some of the newspaper reports on these matters. These changes were made because it became clear to the statisticians of the Central Statistical Office that they were changes of a magnitude that ought to be drawn to the attention of the public. If the right hon. and learned Gentleman is in any way alleging that these figures were doctored by the statisticians of the Central Statistical Office, I hope that he will make that allegation in the clearest possible terms.

We are accustomed to the Opposition finding failure where there is none. Will they now stop sniping at the success represented by these figures for invisible balances? The right hon. and learned Gentleman is widely respected in the House. At this advanced stage of his career, there is no need for him to start modelling himself on his hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott).

Sir William Clark (Croydon, South)

Does my hon. and learned Friend agree that every time we have good news about the economy the Opposition make wild and frivolous accusations and do not bear in mind that the Government do not produce these figures but that they are produced by the CSO? Does he also agree that the increase in our invisible earnings is due to the increased investment that we have put abroad since 1979, and that invisible foreign earnings are as good foreign earners as manufacturing industry?

Mr. Howard

My hon. Friend is right. The trouble with the Opposition is that they cannot bear to see good news and desire to misrepresent it whenever it appears.

Mr. Paddy Ashdown (Yeovil)

The Minister ought to accept that the scepticism is not just on this side of the House but is in the City as well, as the figures clearly show. Will he address the fact that the figures he has produced do not engender confidence in the City and that that cannot be good for him or for the figures? Is he aware that today's report in the Financial Times used the rather Delphic statement that the statisticians had detected some buoyancy but could not say where or how that buoyancy had taken place? Can the Minister tell us where and how it has taken place and, if possible, whether this convenient buoyancy will take place again?

Mr. Howard

I do not for a moment accept that scepticism is widespread, particularly in the City. Indeed, it is due in no small part to the City's performance over the period in question that the figures for invisibles have improved.

Mr. Anthony Nelson (Chichester)

Does my hon. and learned Friend agree that it is quite extraordinary that when a trade deficit is announced the Opposition blame the Government's economic policies, but when a trade surplus is announced they accuse the Government of fiddling the figures? Is it not clear to everyone that it is not the Government but the Opposition who are in need of some creative accounting in support of their economic policy?

Mr. Howard

My hon. Friend is absolutely right. The Opposition are quite unwilling to recognise good news when it is thrust before them.

Dr. Jeremy Bray (Motherwell, South)

Is the Minister aware that adding up the surpluses and deficits for all industrial countries shows that there is a large and unexplained deficit, which if allocated proportionately amounts to about £2 billion a year for the United Kingdom? This has been known for years. Can he explain the suspicious circumstances as to why this should apparently he corrected just at the moment when the balance of payments is in deficit?

Mr. Howard

I hope that the hon. Gentleman does not hold me responsible for statistics of this kind that are produced for the world as a whole. My responsibilities are much more limited, and all I am doing is reporting the fact that the figures that have been questioned by the Opposition were produced by the statisticians of the Central Statistical Office. If any charge is to be made against them, I hope that it will be made in the clearest terms.

Mr. John Townend (Bridlington)

Is not one of the reasons for the increase in invisible earnings the recovery in tourist earnings that we have seen in recent months? To what extent will the pessimistic noises from the Opposition affect the value of the pound?

Mr. Howard

I think that the markets are sufficiently used to the antics of the Opposition to be able to take their comments in the appropriate spirit.

Mr. Bruce Milian (Glasgow, Govan)

Will the Minister answer the question that he has avoided so far? Why has the publication of these figures been brought forward and done in advance? For example, will he give a previous occasion on which figures which have been deteriorating have been announced in advance?

Mr. Howard

I did answer that question. The point is that there became evident to the statisticians large changes that they thought it right to bring to the attention of the public in the context of these figures. That is why they have been produced in this way. I hope that the right hon. Gentleman is not suggesting that inaccurate figures should be put forward knowing them to be inaccurate and without making an attempt to reflect the most up-to-date information available.

Mr. Andrew MacKay (Berkshire, East)

Does my hon. and learned Friend agree that the House has witnessed yet again the Opposition taking an opportunity to denigrate the City and to ignore the very great export potential for invisibles?

Mr. Howard

I fear that the Opposition's inclination for denigration goes far wider than the City. The invisibles sector of our economy is by no means limited to the City, and it is right that its good performance should be drawn to the attention of the nation.

Mr. Robert Sheldon (Ashton-under-Lyne)

Did the statisticians insist that their latest figures be incorporated within the trade statistics?

Mr. Howard

I do not know whether the right hon. Gentleman is suggesting that the Government ought to have told the statisticians to take their figures back.

Mr. Alex Fletcher (Edinburgh, Central)

Can my hon. and learned Friend confirm that there has been no change in the relationship between Department of Trade Ministers and the Government's professional statisticians, as the same statisticians provided figures for the right hon. and learned Member for Monklands, East (Mr. Smith) when he was a trade Minister?

Mr. Howard

My hon. Friend tempts me, but I fear that I cannot say what the relationship was between the right hon. and learned Gentleman and his statisticians. All I can say is that these figures come from the statisticians, were brought forward by them and were not subject to any interference whatever by Ministers.

Mr. Derek Fatchett (Leeds, Central)

The Minister has attributed this change to the work of the statisticians in the Central Statistical Office. Has there been a previous occasion when the statisticians have revised the figures, in one case by one third upwards and by 50 per cent. upwards in relation to the October figures? That surely shows that there was a major error in the first place.

Mr. Howard

As I have said, the information about invisibles becomes available at less frequent intervals than does that for visibles. When it becomes available, it is right and proper that the statisticians should bring forward the most up-to-date information so that that is within the knowledge of the public. That is what has happened on this occasion. It is a pity that Opposition Members cannot recognise good news when they hear it.

Mr. Ian Gow (Eastbourne)

Is it not clear that my hon. and learned Friend and the Department have in no way interfered with the statistics that came from the Central Statistical Office? Is it not also clear from these exchanges that it is the shadow Secretary of State for Trade and Industry who apparently would fiddle the figures?

Hon. Members


Mr. Speaker

Order. I hope that there is no question of anyone fiddling anything.

Hon. Members


Mr. Speaker

Order. In the interests of Christmas, and good order, I think that the hon. Member for Eastbourne (Mr. Gow) should rephrase the word "fiddling". I do not think that he intended to suggest that the right hon. and learned Member for Monklands, East (Mr. Smith) was a fiddler.

Mr. Gow

I think that the implication of the private notice question asked by the right hon. and learned Member for Monklands, East (Mr. Smith) was that my hon. and learned Friend had in fact done that.

Mr. Howard

I have invited the right hon. and learned Member for Monklands, East to say in the clearest possible terms whether he is making any allegations against the statisticians in the Central Statistical Office. That is something that he has consistently refused to do.

Mr. John Smith

On a point of order, Mr. Speaker. The hon. Member for Eastbourne (Mr. Gow) suggested that I would fiddle the trade figures. In the circumstances, and if he is a man of decency, he should withdraw that wholly unjustified allegation.

Mr. Speaker

Order. We often hear the phrase "fiddling the figures" in this House in all sorts of connotations. I do not think that the hon. Member for Eastbourne was intending to impute any dishonour to the right hon. and learned Gentleman. [Interruption.] My understanding is that the hon. Gentleman did not intend that. I gave him the opportunity to clarify the matter as I was anxious to move on in a spirit of good will.