HC Deb 09 February 1994 vol 237 cc282-3
13. Mr. Austin Mitchell

To ask the President of the Board of Trade what study he plans to conduct of the competitiveness of British manufacturing with particular reference to (a) exchange rate competitiveness, (b) investment and (c) labour productivity; and if he will make a statement.

Mr. Heseltine

I have already announced that the Government will be publishing a White Paper on competitiveness in response to the forthcoming report of the Trade and Industry Select Committee.

Mr. Mitchell

Before the President of the Board of Trade rushes to print, perhaps I can help him. Is not it correct that, in a market economy, the chief determinant of manufacturing success is price competitiveness and that that, in turn, is largely determined by exchange rate competitiveness? Cannot that be demonstrated by looking at the increase in manufactured exports since White Wednesday, which is four times greater to those non-EEC markets against which our devaluation was greatest than it is to EEC markets? That being so, is not it crazy to allow the Bank of England to sabotage an historic opportunity to recover the manufacturing base of this country by encouraging the pound back up against the deutschmark?

Mr. Heseltine

The hon. Gentleman will have his own views on what constitutes competitiveness; but he may well wish to apply the test provided by today's CBI survey, which reveals that all regions report strong growth in both business and export optimism. That is excellent news for British industry, the economy and the country, and disastrous news for Labour.

Sir Thomas Arnold

Do not our recent labour market reforms mean that Britain's international competitiveness is now better than ever?

Mr. Heseltine

My hon. Friend has made his point briefly, and extremely well. Today's economic indicators are as favourable as any that I can remember.

Mr. Geoffrey Robinson

Does not the right hon. Gentleman recognise that, although we are competitive at present and the dollar-pound exchange rate is good for British industry, over recent months—since White Wednesday—the pound has been in danger of appreciating against the deutschmark? Not only is that bad for our position in Europe but we have come up against German manufacturers which are reducing prices like mad in other markets throughout the world. While we await a report that will be of great interest to all hon. Members, is it not vital to maintain exchange competitiveness with the deutsch mark in Europe and elsewhere?

Mr. Heseltine

I accept at once that it is necessary to remain competitive amid all the current factors. The Labour party should bear in mind the effect that the imposition of the social charter would have on British industry.

Mr. Butcher

Does my right hon. Friend agree that the terms of trade and the internal position of British industry have never been better than they are now? We have a real chance to flatten the international competition both inside and outside Europe. Will my right hon. Friend use this opportunity to scotch the myth that ours is a low-wage, sweatshop economy? It is our total payroll costs that are lower; we are not a low-wage economy. We are beginning to achieve high productivity, which will enable us to afford high wages.

Mr. Heseltine

My hon. Friend is absolutely right. We have a remarkable set of economic statistics behind us and our productivity has risen very sharply. That is another reason for us to cling on to our advantages, rather than frittering them away in the manner threatened by so many of Labour's policies.

Mr. Robin Cook

Does the President of the Board of Trade really believe that we can compete with other nations when we invest less than they do? Is he aware that last week's figures show investment in manufacturing industry to be 12 per cent. down on the 1979 figure? They also show that under the Conservatives, manufacturing investment, as a percentage of gross domestic product, has in no year matched any year's investment under Labour. If the right hon. Gentleman really wants to give us good news, will he tell us in what year the Government will return manufacturing investment to where it was before they ran it down?

Mr. Heseltine

The hon. Gentleman will, of course, be preoccupied with the results obtained from investment. He doubtless includes in his figures our investment in a range of nationalised industries that then lost money. The real test lies in the fact that British exports are at an all-time high, in a real market with real products and profits earned by real people—as opposed to phoney policies from a phoney party.