HL Deb 07 April 1987 vol 486 cc899-901

3.8 p.m.

Lord Hatch of Lusby

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

The Question was as follows:

To ask Her Majesty's Government what was the deficit in Britain's overseas trade balance in manufactured goods in 1986 and how many employees in manufacturing industry lost their jobs as a consequence.

Lord Lucas of Chilworth

My Lords, the deficit in Britain's overseas trade balance in manufactured goods was £5.4 billion in 1986. No useful conclusions can be drawn from this deficit about the level of employment in manufacturing industry.

Lord Hatch of Lusby

My Lords, is the Minister aware that time could have been spared on this Question this afternoon if in his 26-minute speech on 11th March he had answered precisely the same question which I put to him during the debate? Is he also aware that the figure that he has just given is the worst in history for British manufacturing industry? Is he further aware of the fact that, whereas in 1979 out of every pound spent by British shoppers on manufactured goods 26p went on imported goods, last year the figure was 35p out of every pound?

Lord Lucas of Chilworth

My Lords, I can tell the noble Lord that three-quarters of total imports are taken up by manufacturing industry in terms of semifinished products, raw material and machinery in order for those industries to improve their competitiveness and to secure, as they have secured, their volume share of world markets, 28 per cent. of manufactured goods having been exported last year out of a total of £55 billion. That record of improvement since the low of the recession of 1981 is a credit to manufacturing industry.

Lord Dean of Beswick

My Lords, is the Minister aware that the figures issued by the Department of Employment in February show that 22,000 jobs were lost in manufacturing industry in the month of January alone? Taking November, December and January as a quarter, the average was 8,000 jobs lost in the manufacturing sector each month, which is an increase of 33 per cent. over the preceding quarter. Whichever way we look at the situation, does it not show that the bedrock of our future and of the economic survival of manufacturing industry is still being eroded at an alarming rate?

Lord Lucas of Chilworth

My Lords, suppose that in answer to the noble Lord I suggested, with a degree of certainty, that 65 per cent. of the population of working age are in work and that that is a higher number of people out of the population than we find generally in Western Europe. I may also say to him that to pick on one particular sector is not very helpful. We require a competitive economy. That is central to our prosperity. Both manufacturing and services are important and have a role to play in our economic position.

Lord Morris

My Lords, bearing in mind the fact that our overall trading deficit with Japan is some £3 billion and that a considerable amount of that is in the manufacturing sector, may I ask my noble friend (although I appreciate that it is somewhat wide of the Question) for an assurance that Her Majesty's Government will in no way lessen their resolve in dealing with the way in which the Japanese are treating the United Kingdom?

Lord Lucas of Chilworth

My Lords, that is a little wide of the original Question. Perhaps I can best answer by saying that Her Majesty's Government are committed to free, open and fair trade conditions throughout the world. We do not subscribe in any way to protectionist measures, wherever they may be practised.

Lord Rochester

My Lords, does the noble Lord agree that a further reduction in interest rates, with its consequential beneficial effect on the sterling exchange rate, particularly in relation to the German mark, would greatly assist our major companies on whose exporting performance our overseas trade balance in manufactured goods largely depends?

Lord Lucas of Chilworth

My Lords, along with exchange rates, inflation, competitiveness and quality come interest rates. All of those matters have a bearing on the ability of our manufacturing industries to compete across the world. As I said in the debate of 11th March to which the noble Lord, Lord Hatch of Lusby, referred, there is no doubt that British manufacturing stands on the threshold of a great opportunity. I have little doubt that it will take advantage of that opportunity this year and next year.

Lord Williams of Elvel

My Lords, leaving aside cause and effect, will the noble Lord give the House the Government's estimate for 1987 for both manufacturing trade deficit and the expected loss of employment in manufacturing?

Lord Lucas of Chilworth

My Lords, not without notice.

Lord Bruce-Gardyne

My Lords, in the light of my noble friend's response to the noble Lord opposite, can he advise the House whether current conditions of credit trading and the credit boom point to a case on domestic credit grounds for any reduction in interest rates?

Lord Lucas of Chilworth

My Lords; I am sorry; I do not like refusing to answer my noble friend's question. However, I think it is just a bit wide of the original Question put down by the noble Lord, Lord Hatch of Lusby.

Lord Hatch of Lusby

My Lords, is the Minister able to tell us, in response to the question asked by my noble friend Lord Williams, what the comparison is between the deficit figures which he gave to me in his first Answer and those of the previous year? Is he aware that for three years now Ministers have been telling us that we are on the threshold of a great boom in manufacturing industry and that every year the deficit has become greater? Will he also for the House compare production, which he said so much about in his first answer to my supplementary question, not with the low of 1981 produced by a Conservative Government but with the year 1979 when the Conservative Government first took over?

Lord Lucas of Chilworth

My Lords, the noble Lord always asks a number of fascinating questions which demand number responses. I do not have all the numbers at my fingertips. I can say that we have enjoyed a balance of payments surplus for a number of years. As conditions have changed, particularly as regards the recession and oil prices, the position has changed somewhat. If one looks at the overall position that we must face for the future, we expect no more than perhaps a £24 billion deficit in current account payments for 1987, which is after all just one half of 1 per cent. of gross domestic product. Instead of looking backwards I prefer to look forwards to the great opportunities which lie before us and which I am convinced British industry will take.

Baroness Fisher of Rednal

My Lords, can the noble Lord offer great opportunities also to those in the major areas of unemployment in this country mainly within manufacturing? They also look for a ray of hope.

Lord Lucas of Chilworth

My Lords, the ray of hope which is before them lies in increased productivity, increased competitiveness, increased profitability and the reinvestment of those profits in British industry. All of those results will have stemmed from the policies of this Government. Those manufacturing industries, as they capture a bigger share of world markets, will provide the long-term jobs.