HC Deb 26 March 1987 vol 113 cc563-4
7. Mr. Straw

asked the Chancellor of the Exchequer if he will estimate the effect of his Budget on manufacturing industry.

The Chief Secretary to the Treasury (Mr. John MacGregor)

Manufacturing industry will continue to benefit from the Government's policies, which have seen inflation fall to levels not experienced in this country for almost two decades and created a stable and encouraging environment in which businesses can plan and invest. The Budget continues them and we expect manufacturing output to increase by a further 4 per cent. this coming year.

Mr. Straw

Does the Chief Secretary share the widespread concern, felt on both sides of the House, about the effect of trade barriers in Japan that are operating with great discrimination against British manufacturing industry and to which there has been no reference whatsoever in the Budget debates? If the right hon. Gentleman shares our concern, can he say what action the Government intend to take to deal with Japan, other than bleating about unanswered letters?

Mr. MacGregor

Yes, I share that concern. Yesterday my hon. Friend the Minister for Trade made clear what action the Government were taking.

Mr. Kenneth Carlisle

Does my right hon. Friend agree that the one thing that manufacturing needs is certainty? The Budget has given the certainty of low inflation, and therefore businesses can plan ahead without devastating effects on their cash flow. Therefore, their plans have the chance of coming to fruition.

Mr. MacGregor

I agree with my hon. Friend. It is not only the Budget, but the certainty and stability of the economic policies of the past seven years that have produced results. Since the last election manufacturing industry output has gone up by 10 per cent., productivity by nearly 16 per cent., export volume by nearly 30 per cent., investment by 21 per cent., and profitability in manufacturing industry is the highest since 1973. I believe that the continuation of those policies is best for industry and, indeed, industry has recognised that.

Mr. Milian

Will the Chief Secretary elaborate on the action which he says has been taken about Japan? Those of us who listened to the Minister for Trade yesterday gained the impression that nothing was happening except that letters had been written to the Prime Minister of Japan to which he had not even bothered to reply.

Mr. MacGregor

The Government will continue to pursue the issue that was dealt with in the letters. The Government continue to take action on the problem, within the EEC and in other ways.

Mr. Nicholls

Has my right hon. Friend received any representations from the hon. Member for Dagenham (Mr. Gould)? If so, have the representations shed any light on the fact that the hon. Gentleman is now apparently against tax cuts, whereas in 1983, in a Fabian tract or pamphlet, he was calling for a Labour Government to implement such cuts so that we can buy our way back into full employment?

Mr. MacGregor

I have received no representations from the hon. Gentleman apart from his contribution to the Budget debate, to which I listened. It is clear that the policies that he is putting forward to the country include higher interest rates, higher taxation and higher inflation that are the reverse of what manufacturing industry now requires.

Mr. Blair

Is the Minister aware that the problem of Japanese trade is not entirely new, and that in November 1986 the Prime Minister was saying that what happened in Japan should happen in Britain and vice versa, and that competition was a two-way street? When the Prime Minister of Japan does not even reply to the right hon. Lady's letters, what action will the right hon. Gentleman take to translate the Government's rhetoric into reality?

Mr. MacGregor

I am sure that if the hon. Gentleman cares to put the question about my right hon. Friend"s letters to my right hon. Friend he will get a clear answer.

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