HC Deb 24 January 2002 vol 378 cc1004-5
10. Mr. Mark Hoban (Fareham)

What recent assessment he has made of the state of the services sector. [27560]

The Chief Secretary to the Treasury (Mr. Andrew Smith)

The Government's latest assessment of the United Kingdom economy, including the service sector of course, is contained in annexe A of the pre-Budget report.

Mr. Hoban

In the last quarter, we saw the end of employment growth in the service sector. It is now clear that it cannot absorb job losses elsewhere in the economy. When will the Government realise that their policies on red tape and taxes are damaging all sectors of the economy, not just manufacturing?

Mr. Smith

The capacity of Opposition Members to talk down important and successful sectors of the British economy never ceases to stagger me. The truth is that the service sector, notwithstanding the difficulties arising from foot and mouth disease and the events of 11 September, has continued to perform strongly, with outputs up 3.7 per cent. on the previous year and employment in September 229,000 higher than a year before. As the figures that came out yesterday show, the sector made a trade surplus contribution to the economy of more than £12 billion in the first 11 months of last year, although there are, of course, difficulties in some sectors.

As for regulation, this Government introduced regulatory impact assessments, mandatory on audits and registration. We are raising the audit level for firms, simplifying the VAT procedures and doing everything that we can to cut down unnecessary regulation.

Dr. Vincent Cable (Twickenham)

May I take the Chief Secretary back to the answer given a few minutes ago to my hon. Friend the Member for Kingston and Surbiton (Mr. Davey)? Is he aware that the Government proposal to redefine services to boost manufacturing output has been roundly condemned by, among others, the director of the highly respected National Institute of Economic and Social Research, because to do that unilaterally would be against Britain's international treaties and bring the statistical service into serious disrepute? Will he agree to approach the issue with a little more humility than the Financial Secretary and to take a fresh look at it?

Mr. Smith

The derivation and basis of official statistics is independent and the statistical service will form its own judgment. When my right hon. Friend answered that question he said that what is at issue is the very important contribution that services make to manufacturing success. Genuine issues, however, arise as a result of the fact that there is less vertical integration within industry than there was in the past.