HL Deb 25 October 1979 vol 402 cc198-202

3.4 p.m.


My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what has been the trend in Britain's international competitiveness over the last two years in terms of a common currency, measured (a) by relative increases in export prices; and (b) in unit labour costs; and what are the forecasts for the next 12 months.

The MINISTER of STATE, TREASURY (Lord Cockfield)

My Lords, I am arranging to have the relevant figures available published in the Official Report. Figures are available only up to the last quarter of 1978 for relative export prices and to the first quarter of the present year for labour costs. Both series show a loss in competitiveness compared with two years ago. Whether this continues depends upon a number of factors which it is not possible to forecast reliably.

Following are the figures referred to:

Relative export prices Relative normalised unit labour costs
(1975 = 100) (1975 = 100)
1977 2nd Quarter 102.2 87.2
3rd Quarter 103.6 88.1
4th Quarter 107.2 91.5
1978 1st Quarter 110.5 95.7
2nd Quarter 104.4 93.1
3rd Quarter 108.0 95.7
4th Quarter 109.6 96.7
1979 1st Quarter Not available 98.6


My Lords, would my noble friend agree that when we have a chance to look at these figures they will be very disturbing indeed? Is not one of the main reasons for that the fact that some major industries persist with long out-dated restrictive practices? If my noble friend agrees, will he say how the Government see their role in helping and encouraging industry—that is, management and unions—to get rid of restrictive practices as well as creating a climate in which industry can again flourish?


My Lords, my noble friend draws attention to a point of great importance. An improvement in our standard of living can only come from an increase in national output. This depends upon productivity, and an improvement in productivity depends, in part at any rate, on the removal of restrictive practices. The Government are themselves doing their part by squeezing inflation out of the system by following a strict fiscal and monetary policy, and they are providing tax incentives in indirect taxation at all income levels. So far as individual restrictive practices are concerned, that is primarily a matter for the employers and employees of the industries concerned.


My Lords, may I ask the noble Lord the Minister whether the Government will resign in order to get rid of the greatest restrictive practice?


My Lords, the Government are doing a first-class job in tackling the very great problems which have been exacerbated by five years of Labour rule, and I am sure that the success of their policies will be evident in the years to come.


Would not a little modesty now be more prudent, my Lords?


I was, my Lords, speaking with all due modesty.


My Lords, would the Minister also speak with some veracity as well as with modesty, and would he in the circumstances agree that investment in industry is a much more important matter than the one he has just been discussing? Does he feel that investment in industry in this country has been facilitated by the complete removal of exchange control over the last 48 hours?


Yes, my Lords, investment in industry is a matter of very great importance. Investment depends upon confidence. The Government are endeavouring to restore confidence in industry, not least by squeezing out inflation, which has been one of the greatest impediments to growth and one of the greatest deterrents to investment.


My Lords, would the Minister not agree that the 1944 White Paper, which has formed the basis of our attempts at full employment, calls for particular attention to the necessity for collaboration in the reduction of restrictive practices but that, in spite of all efforts, the problem has got worse rather than better? Will he not also agree that that accounts for the gradual decline in the rate of growth of the GNP?


Yes, my Lords. I had the great pleasure of working with the late Lord Keynes at the Treasury while the White Paper to which the noble Lord referred was being written. Its emphasis upon removal of restrictive practices and improvement in productivity is just as valid today as when those words were written 35 years ago.


My Lords, does the noble Lord regard it as purely coincidental that this trend took a sharp turn for the worse when Britain changed Governments?


My Lords, there has been no sharp turn for the worse as a result of the change in Government. In fact, on the contrary, the prospects of this country are much better than they were during the years of the Labour Government.


My Lords, will the noble Lord explain to the House why he believes that the removal of foreign exchange controls in this year will have any different effect in British industry from that which it had when it was tried under a previous Conservative Government—when it was tried in 1970 and 1972—when the capital released left this country for other countries?


All the evidence, my Lords, is that investment from this country overseas creates export opportunities and therefore improves matters so far as British industry is concerned.


My Lords, will the noble Lord explain why the confidence that he has expressed in the future is not shared by the Stock Market?


My Lords, I do not know whether the noble Lord wishes to look at the history of the Stock Market in any detail, but if he would care to examine the progress of prices under the Labour Government it would give him no great comfort.


My Lords, having inquired into the history of the Stock Market, may I ask the noble Lord whether it is not a fact that since the present Government came to power there has been a steady and uninterrupted deterioration in Stock Market prices?


My Lords, the Government are not directly or indirectly responsible for Stock Exchange prices——

Several noble Lords: Oh!


——but if the noble Lord wishes to follow this point, may I remind him that in the heyday of the Labour Government the Stock Ex- change Financial Times Index reached the figure of 146, and that today it stands at three times that figure.


And when the Labour Government——


My Lords, I hesitate to interrupt this bowling, which my noble friend is hitting for sixes every time, but the House may feel it is time to move on to the next Question.