HC Deb 26 November 1987 vol 123 cc365-8
3. Mr. David Davis

To ask the Chancellor of the Exchequer what has been the growth of United Kingdom manufactured exports since 1981.

7. Mr. McLoughlin

To ask the Chancellor of the Exchequer what has been the growth of United Kingdom manufactured exports since 1981.

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

The volume of United Kingdom exports of manufactures has grown by 35 per cent, since 1981.

Mr. Davis

Does my right hon. Friend agree that that welcome growth in exports is due largely to the fact that the growth in unit wage costs in the United Kingdom has performed well and is now expected to perform better than the majority of other industrial nations? In the light of that, will my right hon. Friend remind the House of the findings of the CBI report on exports?

Mr. Major

I am grateful to my hon. Friend. His objective analysis is entirely right. The underlying point of most importance is that productivity growth generally over recent years, in fact since 1979, has been at around 4 per cent, a year—the fastest of all the major industrial countries.

Mr. McLoughlin

Does my right hon. Friend agree that our performance depends on our competitiveness? Will he inform us how our productivity compares with that of our overseas competitors.

Mr. Major

As I have said, our productivity is exceedingly good at over 4 per cent, a year. It is faster than all our major competitors. As the CBI points out in its survey, not only is productivity good, but so is output, and profitability and exports are growing. It is an excellent outlook.

Mr. Mullin

Will the Chancellor tell us what the rate of manufacturing investment has been since 1979, and will he confirm that it is among the lowest in the industrial world?

Mr. Major

On behalf of my right hon. Friend the Chancellor I can confirm that manufacturing investment is rising and the hon. Gentleman ought to be pleased at that.

Dr. Bray

Is the Minister aware that exports of manufactured goods have increased by 34 per cent, and imports of manufactured goods have increased by 81per cent?

Mr. Major

It is true that manufacturing imports have grown faster than exports. However, that is hardly surprising, as the United Kingdom's economy is growing faster than those of its major competitors.

Mr. Nicholas Winterton

Will my right hon. Friend inform the House that in his view the United Kingdom's manufacturing sector plays a major role in our economy, and will he outline the steps that he will take to ensure that Her Majesty"s Government minimise any additional on-costs that could in any way inhibit or undermine the future potential of British manufacturing industry?

Mr. Major

As my hon. Friend has said, manufacturing industry is of immense importance. That is why we are delighted that it is doing so well and that investment is rising. As for on-costs, the most important requirement for manufacturing industry is that we have a stable economy under good management, and we have that.

Mr. Morgan

In his encomium on the beauty of productivity rates in this country, will the Chief Secretary comment on the report of the National Institute, which compared the kitchen manufacturing industry in this country with that in the Federal Republic of Germany and showed that German productivity was 63 per cent, higher than that of our industry, making the same equipment?

Mr. Major

I have not seen that report. However, as I told the House a few moments ago, productivity generally is growing faster in this country than elsewhere. The hon. Gentleman would do more good for manufacturing industry, and all industry, in this country if, instead of repeatedly pointing out deficiencies, he pointed out our excellent growth.

Mr. Thurnham

Does my right hon. Friend agree that under the Government's policies our share of world trade is improving steadily for the first time for many years, in stark contrast to the deterioration that occurred when the Labour party was in power?

Mr. Major

My hon. Friend is absolutely right. The Opposition may not like it, but the fact is that manufacturing investment is rising, output is rising, productivity is rising, exports are rising and profits are rising—and do not Opposition Members dislike it?

Mr. Gordon Brown

Given that even the Confederation of British Industry is now predicting that unemployment will start to rise in the early months of 1988, can the Chief Secretary continue to ignore the real figures about the British economy—that on the monthly figures that are available to us manufacturing output and industrial production are starting to fall and that the manufacturing trade deficit is at its worst-ever level? Will the Chief Secretary start to face up to the real problems of the British economy, which are that manufacturing investment has fallen by 8 per cent, since 1979 and is starting to fall again—by 1per cent, during the previous quarter—and that it will continue to deteriorate unless counter-recessionary measures are taken? When will he realise that what he does not spend on higher investment today he will have to spend on higher unemployment tomorrow?

Mr. Major

I congratulate the hon. Gentleman on being the Spectator's "Man to watch" but, having listened to him, I must say that he certainly is not the man to listen to, because most of his facts are incorrect. When he produces the right information, I shall respond to him.

4. Mr. Holt

To ask the Chancellor of the Exchequer what are the latest figures for the net real rate of return in British manufacturing.

The Financial Secretary to the Treasury (Mr. Norman Lamont)

The net real rate of return in manufacturing has risen in each of the last five years to reach 7.2 per cent, in 1986—the highest level since 1973.

Mr. Holt

Does my right hon. Friend agree that those remarkable figures are excellent in showing that in every year since 1981productivity in the manufacturing sector has increased and that it is now about three and a half times what it was? Will he confirm that the real rate of return in 1985–86 was higher than in any year under a Labour Government and that that clearly vindicates the Government's economic policies?

Mr. Lamont

My hon. Friend is absolutely right. Opposition Members talk continually about manufacturing investment and manufacturing output, but such things depend upon the rate of return and the profitability of manufacturing industry, and that is what the Government have made much stronger than for many years.

Mr. Skinner

If everything in the economic garden is so lovely, why have the Government imposed new charges on eyes and teeth?

Mr. Lamont

That point does not arise out of this question. The reasons have been explained in the House and have absolutely nothing to do with manufacturing. However, it is certain that unless the health of manufacturing industry and the British economy is sustained by our policies, there will not be any money for the Health Service.

Mr. John Greenway

Does my right hon. Friend agree that the growth in profitability is due to the fact that we now have fewer strikes in British industry than for over a quarter of a century and that manufacturers are making again reliable, innovative products that the world wishes to buy?

Mr. Lamont

My hon. Friend is right to describe those factors as being among the causes of profitability. It is also true that the dramatic fall in the rate of inflation has brought certainty and improved the profitability of industry.

5. Mr. Vaz

To ask the Chancellor of the Exchequer what is the current level of investment in manufacturing industry.

The Paymaster General (Mr. Peter Brooke)

In the third quarter of 1987 manufacturing investment is provisionally estimated to be £2,783 million.

Mr. Vaz

Is the Minister aware that, on Tuesday of this week, the all-party footwear and leather committee reconvened in the House? Is he also aware that, since 1979, investment in the footwear and leather industry — vital to Leicester and the east midlands—has declined by 20 per cent.? What is the Chancellor proposing to do about that, not just as the Chancellor, but as a Leicestershire Member of Parliament?

Mr. Brooke

I am delighted to hear that the all-party committee has been reformed. If the figures are as the hon. Gentleman has described—I take his word that they are — I am delighted that a further searchlight will be placed upon them. Investment across the economy has been growing at the pace that it has over the past four years because of the extremely successful way in which my right hon. Friend the Chancellor is running the economy.

Mr. Neil Hamilton

Does my hon. Friend agree that one of the most active sectors of manufacturing in the past year has been the Opposition Benches, which have manufactured all manner of scares and crises about the economy? Can he tell us what real rate of return has been shown on that investment?

Mr. Brooke

In these difficult categorisations I suspect that that activity is a service industry. Certainly, so far as I can see, the rate of return has been negative.

Mr. John Smith

If the Government's policies for manufacturing industry have been so successful, why was there a surplus in the balance of trade in manufactured goods of £5 billion when the Government took office, but now a deficit of £8 billion and heading for £9 billion?

Mr. Brooke

The hon. Member for Leicester, East (Mr. Vaz) asked about the level of manufacturing investment. That has grown by 44 per cent, since 1983.

Mrs. Peacock

Does my hon. Friend agree that it is not just the quantity of investment in manufacturing that is important, but the quality of that investment? Does he also agree that those two factors are helping our manufacturing industry throughout the country, particularly in the north of England?

Mr. Brooke

I agree with my hon. Friend that not just the quantity, but the quality, of investment is important. Since 1979 quality has improved, as is evidenced by the improvement in productivity and profitability. The quality of manufacturing output is also much higher, and that output is now above its 1979 peak. One might sometimes forget that manufacturing output fell under the previous Labour Government.