HC Deb 15 July 1993 vol 228 cc1106-8
12. Mr. Mike O'Brien

To ask the Chancellor of the Exchequer what plans he has to increase manufacturing investment; and if he will make a statement.

Mr. Dorrell

The Government will continue to foster an economic climate which will encourage investment.

Mr. O'Brien

Is the Minister aware that many industrialists and business men in manufacturing do not share that complacent view of his policy? Is it not the case that manufacturing investment at constant prices year on year is still at a level below that at which it was when the Government came to office in 1979? Does he agree that that is not a good record? When will we have new policies that will start to increase manufacturing investment?

Mr. Dorrell

It is extraordinary that we have been on Treasury Questions for 35 minutes and not a single Labour Member has chosen to refer to the fact that, today, we announced that unemployment has fallen for the fifth month in succession. The hon. Gentleman thinks that he has a point that will embarrass the Government, but he is wrong. If we compare business investment in 1992 with that in 1979–1979 being the top of the nearest thing that the Labour party got to a boom and 1992 being a poor year in our record—that in 1992 was 37 per cent. higher in real terms than that in 1979.

Sir Donald Thompson

Will my hon. Friend join me in welcoming the drop in unemployment in my constituency, which is down to 7.5 per cent? Will he keep paramount in his Department the interests of manufacturing industry and the people who work in it and in commerce because it is on them that we all depend?

Mr. Dorrell

Yes, I am glad to join my hon. Friend in welcoming the fact that his constituency, among many others, is enjoying a fall in unemployment and has been for five months this year. That is, at least in part, because business investment through the 1980s grew faster than in any other G7 country, with the single exception of Japan. That is in sharp contrast to the record of business investment growth in the 1970s when the country was at the bottom of the league—seventh out of seven. In the 1980s, it was second out of seven.

Mr. Geoffrey Robinson

Is the Minister aware that, while the House welcomes his commitment to a general economic climate that will promote growth, the two essential ingredients necessary to achieve that are a competitive exchange rate and low interest rates? While we do not expect from him or from the Chancellor any commitment on those points, could not there be a general sign from the Government that those two quintessential requirements for sustained economic growth, which we are now witnessing, will be foremost in their minds, not only as they formulate the Budget later in the year, but in the next few weeks and months?

Mr. Dorrell

If devaluation were the path to economic expansion, the 1970s would have been glory years rather than locust years. The Government believe that the best backdrop that we can deliver to allow business to invest, expand and create jobs and wealth is to provide monetary stability and price stability, which give the opportunity for long-range planning, rather than the short-termism that was imposed on the private sector when the hon. Gentleman tried to run a company against the impossible background created by the then Labour Government.

Mr. Garnier

Does my hon. Friend recognise that the good employment figures in my own constituency of Harborough are to be welcomed? They are the lowest in the county, as he, as a Leicestershire Member, will recognise. Does he accept that one of the reasons for that is that manufacturers in my constituency have continued to invest in manufacturing industry, and that we have the fullest order books for some time, both domestically and in the export market? Would he care to comment on the good performance of Leicestershire manufacturing industry at the moment?

Mr. Dorrell

My hon. Friend is quite right to draw attention to the success of manufacturing and, indeed, all other forms of economic activity in the county that both of us have the honour to represent. I have referred to investment as being one of the things that brought that about. Another thing, of course, is the fact that productivity has grown in the last 12 months by 8.7 per cent. That has made possible a decline in unit wage costs in British manufacturing that is the best on record.