HC Deb 30 October 1997 vol 299 cc1015-7
6. Mr. Kirkwood

What steps he proposes to take to protect the competitiveness of exporting manufacturers in the United Kingdom from the adverse effects of high levels of sterling; and if he will make a statement. [12653]

The Economic Secretary to the Treasury (Mrs. Helen Liddell)

The Government wish to see a stable and competitive pound over the medium term, consistent with our objective of price stability. One key route to United Kingdom export success is to ensure that there is no return to the boom and bust that we saw over the 18 years of the previous Government. We need to allow companies to plan ahead and to be competitive in the marketplace.

Mr. Kirkwood

I well understand the sentiment behind the Minister's answer. However, is she really aware of the damage to manufacturing exporters caused by the high level of the pound? She will be aware that during the past seven days, Pringle of Scotland—a company that exports the vast bulk of its knitwear—has announced 300 job losses in the Scottish borders.

Will the hon. Lady use her good offices, working with the Minister for Education and Industry in the Scottish Office, to try to produce a package of measures for the communities affected—Hawick, Berwick-upon-Tweed and Galashiels—and to try to save what is left of the knitwear industry and diversify for the future? Will she find time to meet a small delegation from the senior management of Pringle, so that she may hear at first hand about some of the exchange rate difficulties that the company is facing?

Mrs. Liddell

Manufacturing exports are still rising, but I take the hon. Gentleman's point about Pringle. I have been following the matter in the Scottish press. I commend the hon. Gentleman on his prompt action in contacting my office. I will be happy to meet a delegation from the company, and whoever else it wishes to bring, to discuss these matters. I am sure that my hon. Friends in the Scottish Office will be only too happy to join in that meeting.

Mr. Stevenson

Does my hon. Friend agree that a core economic issue is how to control inflation while also controlling interest rates and exchange rates? Is she aware that in my Stoke-on-Trent constituency about 500 jobs have been lost over the past six months? If she further aware that one of the main reasons cited for that by the pottery industry, which exports 80 per cent. of its products, is the exchange rate? Will she review economic policy and take fully into account the growing and serious concern about the effect of the exchange rate on manufacturing industry?

Mrs. Liddell

The Government fully understand and share the concerns of industry and exporters. However, it is important to remember the significance of ensuring that this country does not return to the boom and bust cycle. I recognise the problems in my hon. Friend's constituency, but since the peak in July there has been a reduction in the value of the pound against other currencies. On his point about reviewing economic policy, I remind him that the economic policy that we have embarked on since we were elected on 1 May is aimed at bringing long-term stability to the economy. By bringing long-term stability, which was so lacking under the previous Government, we hope to get on to the sort of economic footing that will ensure that the vicissitudes of the marketplace that are occurring in my hon. Friend's constituency cease to have the same impact.

Mr. Ruffley

Given the Government's commitment in principle to joining economic and monetary union, will they give a commitment also, in principle, to joining the exchange rate mechanism? If they will not, will it not be merely another example of the Government running scared of British public opinion?

Mrs. Liddell

My right hon. Friend the Chancellor has made it perfectly clear that we have no intention of joining the ERM.

Mr. Skinner

Is it not also true to say that, in a highly technological world, people who export must also import if they are to provide their exports? There is an argument about swings and roundabouts in the value of the pound, and we should take no notice of those tinpot Liberals. We should remember that previous Labour Governments have devalued the pound, and previous Labour Governments have not managed to secure a second full term in office.

Mrs. Liddell

My hon. Friend is right in the points that he makes about the Liberals, who are consistent on nothing. I take the point that he makes, and I can assure the House that the Government intend to secure an economy that is on a stable and sound footing.

Mr. Lilley

Further to the answer that the Economic Secretary to the Treasury gave to my hon. Friend the Member for Bury St. Edmonds (Mr. Ruffley), does she recall the Chancellor saying that the Maastricht criteria should be applied without fudging? She will be aware that one of the treaty criteria is participation for two years in the exchange rate mechanism without devaluing against member currencies. Will she explain why the Government do not think that it is in Britain's interests to rejoin the exchange rate mechanism?

Mrs. Liddell

The right hon. Gentleman asks an intriguing question. The criterion is exchange rate stability. The House will be interested to learn from him, however, what action the Conservative party is prepared to take, and which faction of the Conservative party has the ascendancy this afternoon as distinct from this morning.

Mr. Lilley

The Economic Secretary might consult the treaty to learn that the criterion is participation in the Exchange Rate Mechanism … for at least two years, without devaluing against the currency of any other member state. She has not answered the question why she believes that a two-year apprenticeship in the exchange rate mechanism would be damaging for Britain, whereas a lifelong membership of the more onerous single currency will automatically be in our interests.

Mrs. Liddell

I will answer the question quite clearly so that the right hon. Gentleman can understand it: the issue is exchange rate stability. I wonder whether he would care to answer my question about the position of the Tory party today.