Economic Indicators (Hansard, 6 May 1993)

§ 3. Mr. Trend
To ask the Chancellor of the Exchequer if he will list the economic indicators published since the Budget for car registrations, industrial production and retail sales; and if he will make a statement.

§ The Chancellor of the Exchequer (Mr. Norman Lamont)
Figures published since the Budget have shown further increases in car registrations, industrial production and retail sales. These, and a number of other indicators, are clear signs of a resumption of growth.

§ Mr. Trend
Does my right hon. Friend agree that it is extremely encouraging that the upturn in economic activity is so broadly based? Is it not evident that this improvement has been under way for some time now in the face of unremitting gloom from the Opposition Front Bench?

§ Mr. Lamont
My hon. Friend is absolutely right. It is astonishing that that fact gets no recognition from the Opposition. Retail sales have been on a rising trend for about a year; car registrations have risen each month for the past six months and in the first quarter of this year were up 11 per cent. on last year; and manufacturing production in the first three months of this year was 1.5 per cent. up on a year ago.
This poses extraordinary difficulties for the Opposition, as is revealed in this morning's edition of that well-known Tory newspaper Tribune. It has an article by the Labour party's noble and candid spokesman in the House of Lords, who asks: How should Labour … react to the news that unemployment has fallen for two successive months? The article goes on to say: 271 It is much easier to be negative when the economy is in trouble, but what does one say when the economy starts bouncing back? That is the dilemma of the Labour party. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) does not appear to want to acknowledge that newspaper, to which he himself contributed an article in the same edition. As he raised the question of VAT—and as he normally intervenes in my answers—perhaps he would care to comment on this statement by the Labour party spokesman in the House of Lords: I would remove zero rating for VAT on all items. That is the proposition put forward by the Labour party spokesman in the House of Lords. I hope that the shadow Chancellor will now intervene.

§ Mr. Gordon Brown
Given that the Labour party is opposed to the extension of VAT to food, children's clothes and transport, will the Chancellor give exactly the same assurance? Can he tell us that there will be no extension of VAT to children's clothes, fuel, food and transport? Will he give an answer—yes or no?

§ Mr. Lamont
The whole country and the House will have observed that the Labour party seems to have one policy in the House of Commons and another policy in the House of Lords.

§ Mr. Congdon
Does my right hon. Friend agree that the recent economic indicators are very good news for the economy and that we must not throw this opportunity away, either by letting inflation rip or by having an uncompetitive exchange rate?

§ Mr. Lamont
My hon. Friend is right to say that it is important that we should see that the recovery is sustainable and is sustained. The policies that we are following will ensure exactly that. The prospects for sustained recovery are good. First, inflation is at the lowest level for 25 years. Secondly, the rate of increase in earnings is at the lowest level for 25 years. At the same time, productivity in manufacturing industry is increasing sharply. Those are all the reasons why the recovery ought to be sustainable.
The hon. Member for Newcastle upon Tyne, East—who, of course, could not give an answer—told us that the autumn statement, which, he said, was heralded by almost everybody in November, is now seen to have failed. Since he said that, the number of car registrations has risen in each of the last six months. Manufacturing output rose in January and February by the biggest margin for more than two years. Retail sales have risen to record levels. What the hon. Gentleman says is, as it always is, complete nonsense.

§ Mr. Beith
Before the Chancellor of the Exchequer gets too carried away by these encouraging and welcome figures, will he reflect on the fact, which is confirmed in the Red Book, that even if we achieve growth of more than 2.5 per cent. and sustain it, we shall still in three years' time have a public sector borrowing requirement of £35 billion? Will he also bear in mind that if he wants to claim any credit for the improvement in figures that he has announced, he will have to accept full responsibility for the desperate depths to which the recession went?

§ Mr. Lamont
The right hon. Gentleman is right to highlight the public sector borrowing requirement as something to which we must devote attention. Firm control of public spending is necessary. That is not 272 something, alas, for which we get support from the Labour party. Although I notice that the right hon. Gentleman and his hon. Friends have been very happy to make political capital out of the extension of VAT to fuel and power, that is precisely what they proposed in their own policy document.