§ 9. Miss Anne McIntosh (Vale of York)What representations he has received on the impact of his policies on the competitiveness of manufacturing industry; and if he will make a statement. [121379]
§ The Chief Secretary to the Treasury (Mr. Andrew Smith)Manufacturing industry makes a vital contribution to the economy. We are helping its competitiveness by creating the right economic climate of stability, low inflation and sound public finances, and through policies that help firms to innovate, to develop the skills of their work force and to grow.
§ Miss McIntoshDoes the Chief Secretary agree that the two most damaging measures for the competitiveness of British manufacturing industry are high interest rates and the high pound? Does he agree that they must be tackled, or does he agree with the Secretary of State for Northern Ireland that we should simply scrap the pound?
§ Mr. SmithThe hon. Lady is wrong. It is right that business has the confidence and the certainty to plan for the future, and it can do that with the platform of stability that we have created. We took the tough decisions on making the Bank of England independent and on imposing a fiscal and monetary framework that provides stability. We have avoided the penal levels of interest rates from which manufacturing industry suffered under 455 the Conservatives and that saw manufacturing output down by 18 per cent. in the early 1980s and down by 7 per cent. in the early 1990s—manufacturing output is actually now going up.
We have acknowledged the competitive difficulties that some in manufacturing face. However, when Conservative Members emphasise that point, they are at risk of talking down British manufacturing industry and ignoring the fact that productivity is going up, that profitability has been at near record levels, that manufacturing output is going up, that exports have gone up 9 per cent. year on year—including a 6 per cent. in exports to the eurozone—and that manufacturing investment has been at historically high levels. Manufacturing has a good future with the policies for stability provided by this Government.
§ Mr. Robert Sheldon (Ashton-under-Lyne)I shall not bore my right hon. Friend with my views on the euro, but will he bear in mind the fact that in addition to the difficulties that some manufacturers face from a decline in exports, there are problems with cheaper imports—up to one third cheaper in some cases? Manufacturers may complain about losses of exports, but importers do not complain because they make the money. Will my right hon. Friend take this aspect of a serious problem into account? The fact that imports come in cheaply has to be paid for by our manufacturers.
§ Mr. SmithThe best way that we can help our manufacturers compete against imports is through the platform of economic stability that I have described and the extra measures that we have taken. In the Budget, we cut corporate taxes to their lowest-ever level and made permanent the 40 per cent. first-year capital allowances for small and medium-sized businesses. We also introduced the new research and development tax credit, which is worth £150 million a year, and the information technology allowances for small firms. We have provided £100 million to lever private finance into venture capital funds in the regions and £50 million for business clusters. The last thing that manufacturing businesses facing competition from abroad want is a return to the instability, boom and bust and short-termism that resulted from the Conservative party's attempt in government artificially to target a particular value for the pound.
§ Mr. Christopher Gill (Ludlow)Why do the Government not come clean and admit that Labour's poll tax on jobs will do nothing for the competitive position of British manufacturing industry? What advice would the Chief Secretary give to, for example, the managing director of the Lawson Mardon Star aluminium company in Bridgnorth in my constituency? It employs 600 people and it calculates that the net extra payment that it will 456 have to find for each and every one of those employees as a result of the climate change levy will be £1,000 per annum.
§ Mr. SmithAs my hon. Friend the Financial Secretary has already explained in answer to several questions, the climate change levy is fiscally neutral. Firms will benefit from the cut in the national insurance contributions that they will make. Moreover, not only is the levy fiscally neutral for the economy as a whole, but it is fiscally neutral within and between manufacturing and services.