§ Mr. Austin Mitchellasked the Secretary of State for Trade what is his assessment of the reasons why the unit value of imported motor vehicles has risen twice as fast as the unit value of imported machinery since 1975; and to what extent this was due to imports of more expensive and larger vehicles since 1975.
§ Mr. TebbitThe faster growth in the import unit value index for motor vehicles compared with machinery reflects both the differences between the product groups and the way in which the index numbers are compiled.
First, machinery covers a wide range of goods such as office and ADP machinery, electronic calculators and telecommunications equipment, where, as a result of technological improvements, prices have risen less rapidly than elsewhere.
Secondly, in the context of the method of compilation, the series are derived as the ratio of value to quantity for a sample of detailed product groups, and are not, therefore, strict price indices. Hence, as well as reflecting genuine price movements, the indices will also reflect changes 276W in the composition of the product groups, including those which result from the need to modify the sample of products in the light of periodic changes to the classification. This has been an important factor in the series for motor vehicles, where, as the hon. Member suggests, the proportion of larger and more expensive vehicles imported has increased since 1975. Work is currently in hand to try to assess the impact of this change on the figures.