Business Confidence (Hansard, 26 January 1982)

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

§ The Minister of State for Defence Procurement (Viscount Trenchard)
My Lords, the results of the last three CBI Quarterly Industrial Trends Surveys taken together indicate some modest strengthening of business confidence. This, together with the rise in output since the second quarter of 1981, especially in manufacturing industry, suggests that a gradual recovery in economic activity is under way.

§ Lord Gisborough
My Lords, I thank my noble friend the Minister for that Answer. Can he give an indication of the figures on output for 1981 and how they compare with perhaps those of some of our industrial competitors? Can my noble friend say whether the rise in the chemical industry's output is a significant factor towards an approaching increase in demand?

§ Viscount Trenchard
My Lords, the figures of increase in output in the third quarter were some 2½ per cent. up on the previous level, and there has been an increase since that time. As I mentioned before Christmas in an Answer to another Question, this modest increase in output has meant a very significant increase—some 10 per cent. from the low point—in productivity or output per man. These increases, both in output and in productivity, are ahead of our main industrial competitors. I am afraid that I did not quite hear the last part of my noble friend's supplementary question.

§ Lord Gisborough
My Lords, I thank my noble friend for that answer. I asked him whether he considers the increase in the output of the chemical industry to be a strong indicator.

§ Viscount Trenchard
My Lords, the chemical industry has had a share of the increase, and the engineering industry has also had a share of the increase, with particularly good export orders.

Lord Paget of Northampton
My Lords, the noble Lord's Question refers to: … a return of business confidence ", but he does not say business confidence in what. Surely it is not suggested, in the Government?

§ Viscount Trenchard
My Lords, I think that there is an increase in confidence in the future, and an increase in confidence that the policies of this Government will lead to a real improvement in our competitive position.

§ Lord Mackie of Benshie
My Lords, can the noble Viscount say from what level that increase started?

§ Viscount Trenchard
My Lords, after a loss of half British industry's share of world markets since 1960, confidence was low. The result of this loss of share of markets due to lack of competitiveness showed up only when world growth stopped. But confidence from that accumulated low—accumulated under Governments of both parties over a long period—is now being dispersed.

Lord Glenkinglass
My Lords, will my noble friend not agree that it is not only the engineering industries who have had a very good increase in exports, and has this not stimulated some confidence in business?

§ Viscount Trenchard
My Lords, yes. Indeed, during the most difficult periods, the maintenance of very low margins on our export position showed the determination of British industry, and, with a more competitive position now, those who stuck to the export markets are receiving their rewards.

§ Lord Molloy
My Lords, will the noble Viscount agree that perhaps a lowering of the bank rate and other interest rates would enhance the confidence of the small businessman who, I believe, has a magnificent contribution to make; and that, if this is announced early, it would make some contribution to easing the fear of the nation, when today the highest figure for unemployment ever recorded has been announced?

§ Viscount Trenchard
My Lords, I believe that small business confidence is improving. Interest rates will be kept no higher than is necessary in the continuing battle against inflation. On the unemployment figures, I do not think that anyone expected the peak to have yet been reached, but unemployment trends follow economic trends, and the rate of increase of unemployment is already substantially lower than it was this time last year.

Lord Bruce of Donington
My Lords, is the noble Viscount aware that we on this side of the House very much welcome the fact that there has been an increase of 2½ per cent. in output from the low level to which it has sunk? But is he aware that since May 1979 industrial production—manufacturing production—has declined by 16½ per cent., and this still leaves the odd 14 per cent. to go?—and one would hope for rather more significant signs than the noble Viscount has been kind enough to give so far.

§ Viscount Trenchard
My Lords, as I have already said, the reason for the lowering of manufacturing output prior to this rise was based on the loss of world market share, from nearly 20 per cent. in 1960 to 8½ per cent. in the late 1970s. This showed up only when world growth of the most spectacular level came 857 to an end. That is the reason that the troubles of non-competitiveness did not show much earlier.

§ Lord Leatherland
My Lords, if the prospects are as bright as he suggests, may I ask the noble Viscount why the Government are selling their investments in British industry?

§ Viscount Trenchard
My Lords, if the noble Lord will table a Question on which particular industries he has in mind, I am sure we will answer it. The confidence is rising, but I do not want to give an impression that we believe there is going to be a very fast rise in economic activity. With the winter we have just had there is bound to be a small change.