§ 3.4 p.m.
§ 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 |
Lord CHELWOODMy 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?
§ Lord COCKFIELDMy 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.
§ Lord WELLS-PESTELLMy Lords, may I ask the noble Lord the Minister whether the Government will resign in order to get rid of the greatest restrictive practice?
§ Lord COCKFIELDMy Lords, the Government are doing a first-class job in 200 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.
§ Lord ELWYN-JONESWould not a little modesty now be more prudent, my Lords?
§ Lord COCKFIELDI was, my Lords, speaking with all due modesty.
§ Lord MISHCONMy 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?
§ Lord COCKFIELDYes, 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.
§ Lord ROBERTHALLMy 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?
§ Lord COCKFIELDYes, 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.
Lord PAGET of NORTHAMPTONMy Lords, does the noble Lord regard it 201 as purely coincidental that this trend took a sharp turn for the worse when Britain changed Governments?
§ Lord COCKFIELDMy 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.
§ Lord HATCH of LUSBYMy 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?
§ Lord COCKFIELDAll 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.
§ Lord TAYLOR of GRYFEMy Lords, will the noble Lord explain why the confidence that he has expressed in the future is not shared by the Stock Market?
§ Lord COCKFIELDMy 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.
§ Lord LEATHERLANDMy 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?
§ Lord COCKFIELDMy Lords, the Government are not directly or indirectly responsible for Stock Exchange prices——
§ Several noble Lords: Oh!
§ Lord COCKFIELD——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- 202 change Financial Times Index reached the figure of 146, and that today it stands at three times that figure.
§ Lord LEATHERLANDAnd when the Labour Government——
§ Lord DENHAMMy 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.