Competitiveness

Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 1st November 1989.

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Photo of Austin Mitchell Austin Mitchell , Great Grimsby 12:00 am, 1st November 1989

To ask the Secretary of State for Trade and Industry what representations he has received on the competitiveness of British industry.

Photo of Douglas Hogg Douglas Hogg Minister of State (Department of Trade and Industry)

Most contacts which my Department has with industry and commerce involve matters having a bearing on United Kingdom competitiveness.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

Will the Minister bear in mind that, measured in terms of unit labour costs, the competitiveness of British industry declined by 9 per cent. in the first quarter of this year? Since the Conservative party came to office it has declined by 21 per cent.—a worse record than for any other country. As it is now official Government policy to crucify British industry with high interest rates, why does not the hon. Gentleman take a leaf out of Government policy in other Departments and simply abolish all figures on competitiveness and anything that is inconvenient on the ground that the situation will get so bad in the next two years, he will have to do that?

Photo of Douglas Hogg Douglas Hogg Minister of State (Department of Trade and Industry)

It is very nice to see the hon. Gentleman in his place, because I know that his external interests detain him elsewhere rather a lot.

As for competitiveness, yesterday my right hon. Friend the Chancellor of the Exchequer, in his singularly powerful speech, spelt out the fundamental and remarkable transformation in the British economy since the Conservative party came to power 10 years ago. We will not be lectured by the Labour party on questions of competitiveness. Two good reasons for that will suffice for the moment: first, competitiveness declined between 1974 and 1979 by 25 per cent.; and, secondly, inflation touched 27 per cent. when Labour was in office.

Photo of Charles Wardle Charles Wardle , Bexhill and Battle

Will not industrial competitiveness suffer if the claim by the Confederation of Shipbuilding and Engineering Unions for a 35-hour week prevails, because every hour worked over 35 will incur overtime rates, thereby pushing up the cost of goods sold?

Photo of Douglas Hogg Douglas Hogg Minister of State (Department of Trade and Industry)

I agree, but it is much worse than that. Anyone who has the misfortune to study the Labour party's review will find on page 21, for example, a commitment to a payroll tax. One merely has to contemplate the consequences of that on British competitiveness.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Trade and Industry), Chair of Communications, Liberal Democrat Party

Given the Minister's comments on competitiveness, can he explain the £20 billion trade deficit and reveal the present trend of bankruptcies among small businesses?

Photo of Douglas Hogg Douglas Hogg Minister of State (Department of Trade and Industry)

I can only suppose—indeed, I fear it to be the case—that the hon. Gentleman was not in his place yesterday when my right hon. Friend the Chancellor dealt precisely with that issue.

Photo of Mrs Maureen Hicks Mrs Maureen Hicks , Wolverhampton North East

Is it not a competitive reality on which jobs depend that the country cannot afford engineering employees to have a shorter working week than employees in West Germany or in many other European countries as long as productivity in Germany is so much higher than ours?

Photo of Douglas Hogg Douglas Hogg Minister of State (Department of Trade and Industry)

I agree. It would be extremely helpful if the Labour Front Bench would stop backing inflationary pay settlements in the public and private sectors.

Photo of Mr John Garrett Mr John Garrett , Norwich South

Does the Minister agree that our loss of competitiveness has meant that the share of imports of manufactured goods in our home market has risen from a quarter to a third in the past decade? Does that not show that we are so uncompetitive that we cannot even compete in our home market? Would the cut by the hon. Gentleman's Department of 30 per cent. in support for industrial research and development have anything to do with that?

Photo of Douglas Hogg Douglas Hogg Minister of State (Department of Trade and Industry)

Here is another hon. Gentleman who was not paying much attention to my right hon. Friend the Chancellor of the Exchequer yesterday when he drew careful lessons from the strength of growth, especially in investment and output, since the Conservative Government came to power. However, as the hon. Gentleman has got to his feet, may I ask him what he supposes that a substantial increase in national insurance contributions will do to competitiveness? In case he has not read that proposal, it is to be found on page 33 of his miserable policy review.