Balance of Payments:Estimate (Hansard, 17 December 1986)

§ Lord Ezra
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)
My Lords, the Chancellor in his Autumn Statement put the likely outturn for this year at broad balance on the current account and a deficit of £1½ billion for next year.

§ Lord Ezra
My Lords, will the noble Lord comment on the trend in the non-oil visible balance underlying the overall balance, bearing in mind that so far this year there has been a deficit of some £9½ billion on the non-oil visible balance compared with £10 billion for the whole of last year? Does this not indicate that, in spite of improvements in our export trends, imports of goods continue to surpass them?

§ Lord Lucas of Chilworth
My Lords, manufacturing output between September and October is up by a half per cent. The forecast for 1987 on 1986 is an upturn of 4 per cent. While it is true that imports continue to exceed our own domestic consumption, the outlook remains bright.

§ Lord Williams of Elvel
My Lords, is the noble Lord aware that there is a serious problem of credibility in the estimates produced by Her Majesty's Government on balance of payments in 1986 and 1987? Will he comment on the revised estimate of invisible earnings which was debated on the Statement which the noble 167 Lord repeated from another place in this House and which has now come down in the latest figures from the Central Statistical Office? Does the Minister think that those figures will come down further in the future?

§ Lord Lucas of Chilworth
My Lords, I do not believe that there is any lack of credibility in the statistics provided by the CSO. I do not think that I can add anything to that which I said in response to the noble Lord and to other noble Lords in this House on 26th November.

§ Lord Ezra
My Lords, nonetheless, is it not surprising that, as we indicated in the debate on the occasion of the Statement being made by the noble Lord, estimates should have been made on invisibles so close to the period when the actual figures would emerge? In the event the actual figures were somewhat lower than the estimates then made. I agree with the noble Lord, Lord Williams, that if this is to become a regular practice, even if a lack of credibility may not be the case, nevertheless we could become confused.

§ Lord Lucas of Chilworth
My Lords, again, I do not think that I can add a great deal to what I said on 26th November. It has been the practice of all governments to adjust and modify the figures as information comes to light. That could be upwards as well as downwards.

§ Lord Harmar-Nicholls
My Lords, is it not unhelpful to the overall position of this country for the official figures to be accused of lacking credibility without facts being produced to justify such an extreme comment?

§ Lord Lucas of Chilworth
My Lords, I am grateful to my noble friend for his question. The truth of the matter is that our exports are in a very healthy position. Over the last two or three years we have gained in world share on 1980. We continue to make an impressive performance in world markets. The surpluses which have arisen in other areas have led to increased demand, reflected in higher imports, and that is indicative of the success of the Government's fiscal policies.

§ Lord Beswick
My Lords, how can the noble Lord expect credibility when he talks about increased exports without giving a satisfactory explanation for the increased imports?

§ Lord Lucas of Chilworth
My Lords, I am quite sure that the noble Lord appreciates, as I do, that as the wealth of the country increases consumer demand increases. Our manufacturing industries have not yet been able to meet the increased demand. There is therefore a demand which is satisfied by imports.

§ Baroness Seear
My Lords, does the noble Lord agree that a considerable amount of the increased demand is being financed by debt, and that this not only creates serious problems but to some extent makes nonsense of the Government's claim to be able to control liquidity—to control the money supply?

§ Lord Lucas of Chilworth
My Lords, I do not think that this makes nonsense of the Government's policies at all. If the noble Baroness would like to put down a Question on the element of indebtedness of the nation, I or one of my noble colleagues will be pleased to answer it.

§ Lord Beswick
My Lords, has the noble Lord not noticed that the total amount of debt floating around has increased by £1,000 million? This has been used for consumer purposes. That is why we are sucking in imports from abroad. Has this not something to do with the Government's financial policy?

§ Lord Lucas of Chilworth
My Lords, that may well be so and it may have some effect upon the Government's policy. Nevertheless, the situation reflects a growing confidence both of the lender and the consumer and a confidence in the buoyancy of the economy.

§ Lord Mackie of Benshie
My Lords, did I understand the noble Lord to say that the result of this tremendous efficiency and success was to be a £1½ billion deficit in the balance of payments next year?

§ Lord Lucas of Chilworth
My Lords, I shall not comment on the forerunner to the noble Lord's question because he draws an assumption which I did not. I gave an estimate and repeated the Chancellor's estimate of the outlook. One must accept that the change in the trading pattern that has occurred over the last two years, notably since the fall in oil prices, takes some while to readjust. I believe that our manufacturing industry is making that adjustment, and that is reflected in the acceptance of our exports abroad.

§ Lord Williams of Elvel
My Lords, can the noble Lord explain how, when the figure of £800 million per month surplus on invisibles was given by the Government from statistics provided by the Central Statistical Office at the time that he commented on the Statement on invisibles, two weeks later the CSO revised that figure down to £750 million? What new facts came to light for it to revise the estimate downwards?

§ Lord Lucas of Chilworth
My Lords, I explained to your Lordships' House on 26th November exactly how these figures are arrived at, the length of time it takes to collect figures on invisibles in particular and the way in which adjustments are made. I see nothing wrong with the way in which the CSO has arrived at the figures. I believe that it is right and proper that, as the information comes through, the adjustments as it sees them are made public.

§ Lord Leatherland
My Lords, in view of the sad nature of the figures that the Minister has given us, is he satisfied with the economic policy which the Government are pursuing?

§ Lord Lucas of Chilworth
My Lords, first, I see nothing sad whatever in the figures. Manufacturing industry output is at a higher level than it was in 1980. Investment is greater; profitability is greater; our 169 penetration of export markets is greater. That is all indicative of the success of this Government's financial policies since we came to office in 1979.

§ Lord Leatherland
My Lords, does the Minister agree that the number of unemployed, which is well over 3 million, is greater than it was in 1979?

§ Lord Lucas of Chilworth
My Lords, I or one of my noble colleagues will be happy to answer questions on unemployment if the noble Lord cares to put down a specific Question.

§ Lord Leatherland
My Lords, the Minister cannot answer the question.

§ Lord Beswick
My Lords, in all kindness perhaps I may say to the noble Lord that credibility is not increased when he selects 1980 as the base line instead of 1979.