Economic Growth (Hansard, 23 February 1987)

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

§ The Secretary of State for Employment (Lord Young of Graffham)
My Lords, I based my statement that, we shall shortly be entering our seventh successive year of economic growth on our achievement of six years of uninterrupted growth, averaging around 3 per cent. a year, the low rate of inflation and the fact that since the last election ours has been the fastest-growing major economy in the European Community. All independent forecasts predict continued growth this year.

§ Lord Beswick
My Lords, I am grateful to the noble Lord for his usual statement of how well we are doing. Does he not now agree, looking back, that it would have been better had he stated on the 28th January that despite those seven successive years of growth we were, for the first time in those seven years, going into deficit on our trading account?

§ Lord Young of Graffham
No, my Lords, most assuredly not, because our current balance this year is broadly in balance and I have to do no more than look at the independent forecast made today by the Confederation of British Industry to have a real look to see what lies ahead of us in our country.

§ Lord Beswick
My Lords, does the noble Lord agree with the statement by the DTI which was made at the same time as his own that we were for the first time in those seven years going into deficit to the tune of £187 million, not in manufacturing only, but overall? 8 Would it not have given us a much more balanced picture of our economic state of affairs had he included that information?

§ Lord Young of Graffham
No, my Lords, but I am very grateful to the noble Lord, Lord Beswick, for putting this question today so that we can at least ventilate this particular problem. It is misleading just to look at one component of the whole picture. Much more important is to look at the overall current account, which is in broad balance. Perhaps I may say that from 1979 to 1986 it showed a cumulative surplus of something like £21 billion as against a cumulative deficit of some £5 billion between 1974 and 1979.

Lord Bruce of Donington
My Lords, is the noble Lord aware that we on this side of the House will welcome economic growth at any time? However, is he also aware that the economic growth to which he refers is due entirely to the fact that our oil output during that time increased by no lesss than 60 per cent. over the figure that it was in 1980? Can the noble Lord now tell us when the output from manufacturing industry in the United Kingdom is likely to reach the level that it was in 1979?

§ Lord Young of Graffham
My Lords, what is actually much more to the point is that manufacturing exports are now picking up strongly and they rose by 5 per cent. in the last quarter of 1986 compared with a rise of only 3½ per cent. in manufactured imports. There is no doubt that so long as we maintain a considerable improvement in United Kingdom unit wage costs, which in this country are rising lower than the rate of inflation and lower than the rates in Germany and Japan, we can look forward to a very good future for exports.

§ Lord Diamond
My Lords, is the noble Lord aware that he would have given the House a fairer descrip-tion of the growth of this country, to which this Question referred, if he had started his figures from the point of time at which his Government took power and had responsibility for them? Is it not the case that whereas the long-established trend in this country over this century is a growth rate of 2.4 per cent. per annum, the average growth rate achieved by this Government is one half of that?

§ Lord Young of Graffham
My Lords, I do not desire for one moment to indicate from any statement that we are about to enter our seventh year of successive growth: nor do I need, at any time I make a speech or a statement, to have to go back with a caveat for the year when we first came into power—for the year when there was last a Liberal Government for that matter—or for any other particular matter. In fact, I must say that I look with great satisfaction at the amount of growth that we have achieved in the past seven years, and I compare it with the amount of growth that we achieved during the 1970s.

§ Lord Leatherland
My Lords, can the Minister tell us whether there are still over 3 million unemployed people in this country?

§ Lord Young of Graffham
My Lords, yes, there are over 3 million umemployed in this country.

§ Lord Beswick
My Lords, is the noble Lord aware that I look back with some satisfaction to the fact that last year the aerospace industry had exports of £4.74 billion? We draw satisfaction from that; but ought not the noble Lord also to be considering what kind of growth is represented by the rest of the figures that he gives? Is it not an extraordinary growth that we have seen in the country recently in the business of selling loans and getting us all into debt? Has there not been an extraordinary growth in the number of unnecessary estate agents? Was there not an extraordinary figure of £500 million expended last year in the business of arranging mergers? Is that kind of growth going to earn us our living in the future?

§ Lord Young of Graffham
Yes, my Lords, I have no objection to growth so long as it is properly based, and this growth is properly based. Unlike the recovery that we had in 1975 and 1979, fixed investment grew in real terms by over 4 per cent. a year from the first quarter of 1981 until the first quarter of 1986, compared with only one and a quarter per cent. per annum during that earlier period. This country is on a period of real economic growth, and it would do us well if we were to accept the judgment of the CBI in this matter and not try to pick holes in what is rapidly becoming a good performance.

Lord Bruce of Donington
My Lords, can the noble Lord now answer the two questions that I put to him?

Viscount St. Davids
My Lords, can the noble Lord confirm that the figure that is given as a deficit includes enormous sums in multi-millions that we are investing abroad? That has made us the third richest creditor in the world after Germany and Japan. It will also provide an income for us for generations to come after the oil bonanza has ceased.

§ Lord Young of Graffham
No, my Lords. I hate to take issue with the noble Viscount, but so far as I am aware we are the second highest overseas investor, preceded only by Japan.

§ Lord Beswick
My Lords, if the noble Lord is quoting the CBI, ought he not to make reference to the fact that the director general advised Ministers—and I have no doubt he had the noble Lord in mind—that we should not make headlines of the so-called boom in industry?

§ Lord Young of Graffham
My Lords, perhaps the noble Lord will not take it amiss if I say that I did not put down this Question on the Order Paper and I am quite happy with what I have said in that answer.

Lord Bruce of Donington
My Lords, will the noble Lord do me the kindness of answering the two questions that I put to him?

§ Lord Young of Graffham
My Lords, if the noble Lord would do me the even greater kindness of reminding me what they were.

Noble Lords
One question!

Lord Bruce of Donington
I feel bound in all courtesy to comply with the noble Lord's request and refresh his memory. I asked him whether he was aware that we on this side of the House were very pleased to welcome economic growth of any kind. But I also asked him whether he was aware that the increase in total output during that time was due to the fact that our oil output increased by 60 per cent. At the same time, I asked him whether he would give a date when he expected manufacturing output of the United Kingdom to reach the level it achieved in 1979.

§ Lord Young of Graffham
My Lords, if the noble Lord put the second part of that question down on the Order Paper he would find that even then I should be reluctant to answer it. I do not see that it is any part of my task to forecast when certain events are or are not likely to come about. What we are seeing now is manufacturing industry based on a firm foundation and moving forward. I hope that that will continue. If it continues in a satisfactory manner, I think we shall find that all will go forward.