HC Deb 10 February 1988 vol 127 cc348-9
11. Ms. Mowlam

To ask the Chancellor of the Duchy of Lancaster what is his latest estimate of the deficit on the balance of payments in 1987.

Mr. Alan Clark

The deficit was £2.7 billion in 1987. This is less than that forecast in the Financial Statement and Budget Report for the year.

Ms. Mowlam

Will the Minister explain how we will pay our way in the world after oil, in view of the huge deficit which now exists and which is clearly soaring?

Mr. Clark

How we pay our way. The hon. Lady may remember that all our overseas assets were sold during the war to pay the United States for armaments and raw materials. Those assets, if used now to pay our deficits each year at the present rate, would last until the 22nd century.

Mr. Madel

If people want to improve the balance of payments in car and truck manufacture, should they not seek to persuade the trade unions at Ford to end the strike at once and start to renegotiate wages and conditions? Does that not apply particularly to the hon. Member for Dagenham (Mr. Gould)?

Mr. Clark

One of the most praiseworthy features of our export performance has been the great improvement in industrial relations over the past two or three years. Therefore, I very much regret the dispute at Ford and hope that it will be settled very soon.

Mr. James Lamond

Does the Minister realise that the deficit will continue to grow as long as he presides over agreements such as that reached on the import of acrylic yarn from Turkey? Was he surprised that, when he answered my question last time and lost his temper, he received a great deal of angry correspondence from the manufacturing employers in the industry, who feel that he is prepared to sit and let the industry go to rack and ruin before he accepts that the agreement is damaging?

Mr. Clark

I did not lose my temper with the hon. Gentleman. Indeed, I have great sympathy with the case that he argues. As I have told him, both at the Dispatch Box and in correspondence—at some length, I hope he will admit — the evidence that I needed to take a different position in the negotiations began to come forward only halfway through those negotiations. If this evidence is to be accepted in Brussels, it must satisfy and conform to very strict criteria. Anecdotal evidence simply about reductions in the work force is not sufficient. The evidence must relate to falling output and falling orders and to a clearly defined set of statistics about which the industry is well aware. I had a meeting yesterday with representatives of the industry and made all that plain to them. I accept that the situation has deteriorated since the negotiations were concluded. I have asked the industry for a clear statement about what is happening. When that is to hand, I hope that I shall be able to put a further process in train.

Mr. Page

is my hon. Friend aware that in 1986–87 corporation tax was nearly £13 billion—about £9 billion more than in 1981, despite a corporation tax reduction from 52 to 35 per cent.? Given those facts, does he agree that reducing taxation gives an increase in productivity and in enterprise and leads to the largest overseas investments of any country? That is the way to close our trade gap, and no other method will succeed.

Mr. Clark

Certainly taxation policy has a lot to do with it, but I remain convinced that other factors such as price, quality and delivery are all important.

Mr. Austin Mitchell

Last year the deficit on manufactured trade on a balance of payments basis was about £7 billion. Ten years ago there was a surplus of about £12 billion at today's prices. Can the Minister tell us how many jobs that appalling turnround of £19 billion represents? How many jobs have been exported as a consequence? Is that not the new "jobgeld" that we are paying as tribute to Tory incompetence towards manufacturing industry?

Mr. Clark

Unemployment figures have continuously improved over the last 14 months. The trade gap is a per cent. of our gross domestic product compared with 34- per cent. of the United States gross domestic product. I remember the hon. Gentleman and many of his hon. Friends up to about a year ago further proselytising the deficit financing policy of the United States. Look where that got the United States.