HC Deb 25 November 1987 vol 123 cc241-2
1. Mr. Nicholas Bennett

To ask the Chancellor of the Duchy of Lancaster by how much he now expects manufacturing output to increase during 1987.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher)

In his Autumn Statement my right hon. Friend the Chancellor of the Exchequer forecast that manufacturing output would be 5 per cent. higher in 1987 than in 1986.

Mr. Bennett

May I start, Mr. Speaker, by wishing you many happy returns of the day on behalf of us all.

Does my hon. Friend agree that the enormous increase in manufacturing productivity of the past two or three years means that we shall be in very good shape to weather the storm caused by the international fall in equity prices?

Mr. Butcher

For the past three or four years the British economy has celebrated particularly happy anniversaries, in that it has grown faster than nearly all our major industrial competitors. As to the fall in equities, I am encouraged by the fact that the main barometer used by the manufacturing sector — its order book position — remains healthy, and recent CBI reports confirm that.

Mr. James Lamond

Is the Minister aware that textile firms, such as Lees-Newsome Ltd. in my constituency, have been badly affected by the increase in electricity charges? The company has written to me, and perhaps to the Minister, claiming that its export potential will be diminished by that increase. Was there any consultation with the Department before these increased charges were allowed?

Mr. Butcher

With your permission, Mr. Speaker, I shall deal with the detail of the hon. Gentleman's question under question 5. Suffice to say the textile industry has enjoyed a remarkable recovery. It is getting its order share back and is concentrating on improving its design. It is obtaining higher value and has become very competitive. I should have thought that the hon. Gentleman would be proud of that.

Mr. Charles Wardle

Does it not augur well for manufacturing output in 1988 that 49 per cent. of CBI companies expect to increase their investment in plant and machinery next year? Given the uncertainties in the financial markets, is that not a positive endorsement of the strength of the British economy and of the new competitiveness of British industry?

Mr. Butcher

That is very much the case. In the Autumn Statement, growth is projected at 3.5 per cent. for manufacturing output in 1988. It is a long time since the British economy has been able to sustain good, non-inflationery, real growth arising from increased competition and improvement in market share. All the signs are good.

Mr. Austin Mitchell

Given that manufacturing investment in Britain is still lower than it was in 1979, that British real interest rates are higher than those of our competitors, that manufacturing imports have a higher share of our market than of any other advanced industrial country and that the pound against the deutschmark is now up by 11 per cent. in real terms compared with February, the Minister will not be too optimistic about prospects for manufacturing, so I shall ask him a simple, straightforward question: can he name one industrial country that has had a lower increase in manufacturing output than Britain since 1979?

Mr. Butcher

I can understand why the Opposition are getting increasingly desperate in their search for bad news. Throughout the 1970s we were at the bottom of the league table in manufacturing output and growth, and we are now consistently at the top. This country is now enjoying increased competitiveness in each of its major sectors and has an excellent future.

Mr. Butler

My hon. Friend will be aware that many economic pundits wrote off manufacturing as a source of new jobs. How does my hon. Friend expect this increase in output to be reflected in the manufacturing sector and employment?

Mr. Butcher

Until recently it was fashionable to say that, with the introduction of new manufacturing techniques, especially automation, it would be impossible to reverse the fall in employment in the manufacturing sector. That need not always be the case in future. It depends entirely on the way in which we continue to increase our market share. I fully agree with the comments made by the hon. Member for Dagenham (Mr. Gould) in July that inflation is certainly under control, that the balance of payments is likely to be manageable and that output is rising relatively fast.