HC Deb 17 May 1989 vol 153 cc300-1
2. Mr. Graham

To ask the Chancellor of the Duchy of Lancaster what has been the change in competitiveness of British industry in the last 10 years.

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Anthony Newton)

Competitiveness involves numerous factors including quality, reliability, assurance of delivery and after-sales service. In relation to price competitiveness alone, unit labour costs in United Kingdom manufacturing compared with those in other industrial countries, allowing for the effects of exchange rate movements, are thought to have been on average the same in 1988 as in 1979.

Mr. Graham

Does the Minister agree that in 1979 we had a manufacturing trade surplus of £5 billion but in 1988 we had a deficit of more than £14 billion? When will the Government do something to reassure Britain that we can recover our position at least to that of 1979?

Mr. Newton

That is a rather odd question from someone who would presumably have supported the last Labour Government under whom—by comparison with the stability of our competitiveness on the index that I have mentioned—competitiveness dropped by 25 per cent. between 1974 and 1979.

Mr. Charles Wardle

As well as efficiencies in output and product costs, is not competitiveness about getting the product that the customer wants tomorrow into the market before our rivals? If that is so, should not British companies be investing a large proportion of their profits today in research and development?

Mr. Newton

Yes. We do all that we can to encourage increased R and D, not only in this country but through the important collaborative mechanisms of the European Community. The important point is that United Kingdom companies, not least those involved in manufacturing, now have the profitability enabling them to do just that.

Mr. Gould

May I attempt to help the Chancellor of the Duchy with his apparent difficulty in handling some of the statistics? Will he bear in mind that there was an immediate and substantial loss of competitiveness in 1979 upon the Conservative Government taking office due to their insane exchange rate policy? The true comparison is therefore not with 1979 as a whole, but with the first quarter of 1979, and it is that comparison which shows such a huge loss of competitiveness. The figures—if the Chancellor would really like to hear them—show that on actual labour costs the index figure for 1979 was 99, but for the first quarter it was only 90. [Interruption.] I know that the Conservative Members do not want to hear this. [HON. MEMBERS: "Ask a question."] I am about to ask a question, but first we must get the facts clear. That comparison shows not only a huge loss of competitiveness on actual labour costs but an even greater loss on normalised unit labour costs.

Will the Chancellor therefore—[Interruption.] I will not be deterred by shouting. I want to put my question. In those circumstances, will the Chancellor refrain from making claims about competitiveness which are disputed and denied by his own statistics and by our experience in the market place?

Mr. Speaker

Order. I remind the House that this is Question Time, not a debate.

Mr. Newton

If there is any difficulty about statistics I venture to say that it is experienced in Dagenham and not in Braintree. The biggest single effect on Britain's competitiveness in 1979 is not be measured by the statistics mentioned—it was the winter of discontent and the shambles of industrial relations.

Mr. Bill Walker

Does my right hon. Friend agree that any fool can create the conditions in which products can be given away at enormous loss? The sales figures may be good, but such a policy eventually leads to bankruptcy. Such were the conditions that we inherited in 1979 and which prevailed throughout 1979 until the Government were able to bring in the changes that have produced eight years of continuous growth and continuous profits.

Mr. Newton

My hon. Friend has put, with commendable succinctness, the point that I sought to make rather more aggressively a moment ago.