HC Deb 10 December 1992 vol 215 cc982-4
4. Mr. Nicholas Winterton

To ask the Chancellor of the Exchequer what further proposals he intends to bring forward to stimulate manufacturing industry.

The Chief Secretary to the Treasury (Mr. Michael Portillo)

Manufacturing industry enjoys the benefits of the lowest interest rates in the European Community, inflation below the European Community average in each of the last 14 months, as well as a competitive exchange rate. In addition, the measures in the autumn statement are targeted on sectors where assistance will be most effective. Against that background, I hope to see increasing optimism and confidence about the future.

Mr. Winterton

Does my right hon. Friend agree that, if the manufacturing and construction industries are to be stimulated again and are to rise to fulfil their potential as vital parts of the United Kingdom economy, we need a new recognition and understanding by his Department, the Department of Trade and Industry and the banking and investment sector of the vital long-term potential of those industries as the only source of non-inflationary economic growth? Does he agree that they must not be sacrificed on the altar of a quick buck or a big dividend?

Mr. Portillo

My hon. Friend's support for manufacturing industry is one of the best-known facts about the House of Commons. My right hon. Friend the Chancellor has strongly echoed part of what he said, in particular in his speech at the Mansion House when he said that the Government should examine every policy to ensure that it supports industry. My hon. Friend will have been pleased—indeed, I remember his remarks at the time—at the measures in the autumn statement: increased capital allowances; a new 20 per cent. allowance for industrial buildings; the abolition of car tax; the additional export credit cover; and a further reduction in interest rates.

Mr. Skinner

If the Chancellor of the Exchequer has decided on an individual policy of spending his way out of the recession, why cannot it apply to the rest of the country?

Mr. Portillo

The autumn statement set out what we believe to be an appropriate level of public spending. It is extremely important to keep it under tight control. I am surprised that the hon. Gentleman appears to be proposing that we should have higher spending and higher borrowing.

Mr. Ward

Does my right hon. Friend agree that the best thing that the House could do for this country is to prevent the Labour party from talking down the country, particularly the manufacturing industry, at every opportunity both at home and abroad?

Mr. Portillo

My hon. Friend is absolutely right. The greatest challenge that we face now is the restoration of confidence. It is not only the Government who must play a part in restoring confidence; it is business, the Labour party and the media. There are many reasons why we should feel confident about the future, and I have already given some of them. Recovery in our car industry is another example. Recently, production increased by 20 per cent. on the same period last year, and forecasts show that there will be a 12 per cent. increase in car production next year. One would hope that Opposition Members would promulgate such facts as evidence of the recovery and evidence that confidence should be picking up.

Mr. Llwyd

When will the Chancellor take effective action to ensure that the banks pass on interest rate cuts to their hard-pressed customers?

Mr. Portillo

My right hon. Friend the Chancellor has expressed his concern about the matter, as I have. He has already held a meeting with the banks, and will be meeting them again next week.

Mr. Anthony Coombs

Does my right hon. Friend agree that, with low interest rates, record productivity and a competitive exchange rate, the base for the manufacturing industry to take advantage of the upturn is the best that it has ever been? Does he agree that the last thing that manufacturing industry wants is to be burdened with additional costs of the sort that the social chapter would impose on it?

Mr. Portillo

My hon. Friend is absolutely right. Productivity in the third quarter was up by 4.4 per cent. on the year before and stood at a record level. Manufacturing exports now stand at a record level. The United Kingdom is in a highly competitive position. We should like to see all of the European Community being more competitive in world markets.

It is certainly the United Kingdom's policy not to adopt the social chapter, because of the extra costs that it would impose. Our Community partners have already decided to adopt it. That decision may be to their disadvantage, but the United Kingdom will not follow them down that road.