Economic Recovery: Facilitation (Hansard, 19 January 1982)

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

§ The Minister of State, Treasury (Lord Cockfield)
My Lords, economic recovery depends upon the determination of all sectors of our community to ensure that our industry is competitive at home and abroad. To this end, the Government's policy is directed to creating the right fiscal and monetary climate, and to encouraging initiative and enterprise by reducing controls and providing incentives through the tax system—particularly to help new and small businesses.

§ Lord Molloy
My Lords, while thanking the noble Lord for that reply, I must say that I am deeply concerned with the content because, of course, the facts do not bear out anything that he has said. May I ask him this? Since it has been reported in the Daily Telegraph today that there are 35 Members of his party in another place, which must mean the possibility of a majority who are against Her Majesty's Government, and that both sides of industry are deeply concerned at the way we are drifting, would it be possible perhaps, inasmuch as NEDC does not seem able to do much, to establish a grand industrial council to guide the Government to get us out of the terrible morass we are in?

§ Lord Cockfield
My Lords, the noble Lord's anxieties about events in another place lie outside the field of this Question. So far as the facts are concerned, the position is that output has been increasing, that productivity has increased quite remarkably, that orders in important sectors of industry are picking up, that leading indicators do show the prospect of further improvement, and we do look forward to a slow but sustained recovery in the British economy.

§ Lord Jacques
My Lords, is the noble Lord aware that if the Government had given a bit more attention to the retail price index and a bit less attention to monetary control they might have been more successful in controlling inflation?

§ Lord Cockfield
No, my Lords. Perhaps I might draw the noble Lord's attention to the fact that since 1975 unit labour costs in this country have doubled; in Canada they have increased by one-half only, in the United States by one-third, in Western Germany by one-sixth and in Japan not at all. It is this loss of competitiveness which lies at the root of our difficulties at the present moment.

§ Lord Jacques
My Lords, that is the very reason why 522 the Government would have succeeded more if they had used the retail price index. Does the noble Lord not appreciate that the retail price index is reflected in wage agreements in the future, and therefore perpetuates inflation?

§ Lord Cockfield
No, my Lords, I do not agree with the thesis put forward by the noble Lord. I think it is entirely wrong for people to believe, either in wage negotiations or in other matters, that they are entitled to automatic compensation for rises in prices. The obvious example is, of course, the rise in oil prices, where there can be no question of people in this country protecting themselves from such increases. The increasing sense of realism which is occurring in this country at the present moment under which many wage settlements, indeed the great majority of wage settlements, are being negotiated at figures below or well below the increase in the retail price index shows that both sides of industry have a greater sense of realism than the noble Lord opposite.

§ Lord Orr-Ewing
Is my noble friend aware that of all the OECD countries Britain, equally with West Germany, exports more of its manufactured production than any other, well ahead of the United States and Japan? Is not this a reflection of the success of the Government's policies?

§ Lord Cockfield
My Lords, I am most grateful to my noble friend for the point that he makes, which is of course entirely valid. The quite magnificent performance of British industry in the export field is something for which we all ought to be grateful.

§ Lord Glenamara
My Lords, would the noble Lord relate his original Answer, and what he said in reply to the noble Lord who spoke about the success of Government policy, to the position in the four northern counties in England, where unemployment is by far the highest in the country, in some areas well over 25 per cent., where businesses are closing down every week, long-established businesses, big ones, small ones, where there is no prospect of anything new coming in at all? Would the noble Lord relate what he has said to that situation and tell us what the Government are going to do about it, or do we have to wait for a Toxteth in Newcastle or in Sunderland before the Government do anything there?

§ Lord Cockfield
My Lords, we are suffering very grievously from the errors of the past, to which the noble Lord contributed in very full measure. The Government have the courage, and indeed it is the first Government which have had the courage, to tackle these problems, and it is only if they are tackled at the roots, which is what we are trying to do, that we have any real hope for the future.

§ Lord Glenamara
My Lords, would the noble Lord tell us how they are tackling the problems in Northumberland, in Durham and in Cumberland?

§ Lord Cockfield
Yes, my Lords. The problems of all these areas are a reflection of the problems of the United Kingdom as a whole. These are the 523 problems we are tackling, and we are tackling them with a degree of success which is becoming increasingly evident.

Lord Paget of Northampton
My Lords, does the degree of success include a steady increase in unemployment?

§ Lord Cockfield
My Lords, the rate at which unemployment is increasing has fallen sharply. At present the rate of increase is only one-third of what it was a year ago. It is, however, the position that just as a rise in unemployment follows after a fall in output so a fall in unemployment will come only after a rise in output.

§ Lord Molloy
My Lords, is the noble Lord aware that he spoke about what the Government inherited, and that when the day comes when the industrial situation and the unemployment situation and the level of inflation is back to what it was the day that this Government took over there will be great jubilation in this nation because we will then be improving? Would the noble Lord not accept that many people find it distressing that there is no evidence of great concern being shown by the Government about the difficulties we are in? Perhaps the grand council which I have suggested, possibly apolitical, might be some way at least of making a contribution other than what the current economists have done to get us into this dreadful situation? Is it not at least in the interests of the nation to try it?

§ Lord Cockfield
My Lords, I would not follow the noble Lord in his attack upon economists, many of the more distinguished of whom sit on the Benches opposite and gave advice for a long period of Labour Government. So far as the rest of his question is concerned, the Government are acutely concerned about the level of unemployment. Measures have been announced to deal with it. There are a large number of new measures announced in this field. The expenditure both this year and next year on these special employment measures shows a very substantial increase. So far as his suggestion of a tripartite forum is concerned, such a forum already exists in NEDC, and it has been the policy of Her Majesty's Government to discuss issues of wide-ranging importance in that body.