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Mr. Clarke : I agree with the first part of the hon. Gentleman's question. It is extremely important to us that the rest of the Community comes out of recession, because it is our most important market and we need to see
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demand revived there. That is why I was glad to take part in the convergence process. I was glad that the Community welcomed the steps that the Government are taking to cut the public deficit and public finances and to improve prospects for recovery. That is why I look forward to urging the Community to take the necessary measures to tackle exactly the same problems, particularly of fiscal deficits, which many member states face.The main proposal that I shall make to the European Commission is that it should stop putting new burdens on employment and industry. We will certainly make our suggestions for the forthcoming White Paper. They will be based on increased efforts to improve the competitiveness of European industry, including our own, ever-more flexible labour markets, improved education and training, benefits systems that ensure that incentives for work are maintained and keep the unemployed close to employment, and all the other supply-side measures on which the Government have been leading the way in Europe for the past 14 years.
Mr. Nicholas Winterton : Will my right hon. and learned Friend accept that the manufacturing sector of the United Kingdom can make a major contribution to continued economic growth? Therefore, will he consider not only extending capital allowances, which run out at the end of October, but increasing them--they could either run on immediately from 31 October or be introduced in his Budget--because manufacturing industry, particularly epitomised through the Machine Tool Technologies Association, can make a major contribution not only to increasing efficiency and productivity, but to aiding our economic growth?
Mr. Clarke : I agree with my hon. Friend about the importance of manufacturing industry. That is why, when asked about other matters, I kept putting stress on the figures for manufacturing output that we had two days ago. They show that, in the past few months, we have already recovered about half of the drop in output that we suffered in the depths of the recession. My hon. Friend made a Budget representation about capital allowances, which I shall carefully bear in mind. I hope that he will consult his friends in manufacturing industry about his views on the social chapter and his proposed voting intentions in the light of what I have just said about placing burdens on manufacturing industry.
Manufacturing Investment
12. Mr. Mike O'Brien : To ask the Chancellor of the Exchequer what plans he has to increase manufacturing investment ; and if he will make a statement.
Mr. Dorrell : The Government will continue to foster an economic climate which will encourage investment.
Mr. O'Brien : Is the Minister aware that many industrialists and business men in manufacturing do not share that complacent view of his policy? Is it not the case that manufacturing investment at constant prices year on year is still at a level below that at which it was when the Government came to office in 1979? Does he agree that that is not a good record? When will we have new policies that will start to increase manufacturing investment?
Mr. Dorrell : It is extraordinary that we have been on Treasury Questions for 35 minutes and not a single Labour
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Member has chosen to refer to the fact that, today, we announced that unemployment has fallen for the fifth month in succession. The hon. Gentleman thinks that he has a point that will embarrass the Government, but he is wrong. If we compare business investment in 1992 with that in 1979--1979 being the top of the nearest thing that the Labour party got to a boom and 1992 being a poor year in our record--that in 1992 was 37 per cent. higher in real terms than that in 1979.Sir Donald Thompson : Will my hon. Friend join me in welcoming the drop in unemployment in my constituency, which is down to 7.5 per cent? Will he keep paramount in his Department the interests of manufacturing industry and the people who work in it and in commerce because it is on them that we all depend?
Mr. Dorrell : Yes, I am glad to join my hon. Friend in welcoming the fact that his constituency, among many others, is enjoying a fall in unemployment and has been for five months this year. That is, at least in part, because business investment through the 1980s grew faster than in any other G7 country, with the single exception of Japan. That is in sharp contrast to the record of business investment growth in the 1970s when the country was at the bottom of the league--seventh out of seven. In the 1980s, it was second out of seven.
Mr. Geoffrey Robinson : Is the Minister aware that, while the House welcomes his commitment to a general economic climate that will promote growth, the two essential ingredients necessary to achieve that are a competitive exchange rate and low interest rates? While we do not expect from him or from the Chancellor any commitment on those points, could not there be a general sign from the Government that those two quintessential requirements for sustained economic growth, which we are now witnessing, will be foremost in their minds, not only as they formulate the Budget later in the year, but in the next few weeks and months?
Mr. Dorrell : If devaluation were the path to economic expansion, the 1970s would have been glory years rather than locust years. The Government believe that the best backdrop that we can deliver to allow business to invest, expand and create jobs and wealth is to provide monetary stability and price stability, which give the opportunity for long -range planning, rather than the short-termism that was imposed on the private sector when the hon. Gentleman tried to run a company against the impossible background created by the then Labour Government.
Mr. Garnier : Does my hon. Friend recognise that the good employment figures in my own constituency of Harborough are to be welcomed? They are the lowest in the county, as he, as a Leicestershire Member, will recognise. Does he accept that one of the reasons for that is that manufacturers in my constituency have continued to invest in manufacturing industry, and that we have the fullest order books for some time, both domestically and in the export market? Would he care to comment on the good performance of Leicestershire manufacturing industry at the moment?
Mr. Dorrell : My hon. Friend is quite right to draw attention to the success of manufacturing and, indeed, all other forms of economic activity in the county that both of us have the honour to represent. I have referred to
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investment as being one of the things that brought that about. Another thing, of course, is the fact that productivity has grown in the last 12 months by 8.7 per cent. That has made possible a decline in unit wage costs in British manufacturing that is the best on record.PRIME MINISTER
Engagements
Q1. Mr. Waterson : To ask the Prime Minister if he will list his official engagements for Thursday 15 July.
The Prime Minister (Mr. John Major) : This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
Mr. Waterson : Will my right hon. Friend join me in welcoming not only the lowest inflation rate for 30 years, but the fifth successive monthly fall in unemployment? Does he agree that the House deserves an apology from the hon. Member for Dunfermline, East (Mr. Brown) for predicting a steady rise in unemployment over the spring and summer?
The Prime Minister : My hon. Friend is unkind to remind the House of the predictions by the hon. Member for Dunfermline, East. There have been a great deal of them--all wrong. If it would be for the convenience of the House, I will place a copy of them in the Library. The further fall in unemployment and inflation is very good news indeed. Unemployment has fallen by over 80,000 since the beginning of the year, and, taken with the remarkable figures on Tuesday for manufacturing output, we can now say with some certainty that there is clear evidence of recovery gathering pace.
Mr. John Smith : Does the Prime Minister accept that it should be for the House to decide whether the social chapter is included in the British version of the Maastricht treaty?
The Prime Minister : The House has examined the whole of the treaty. I expect to ratify the treaty that I signed at Maastricht. The House has shown its support for the treaty ; I expect that it will do so again.
Mr. John Smith : The Prime Minister has carefully not answered the question. Let me put it to him plainly and clearly. Whichever way the House votes on the social chapter, will the Government accept the decision?
The Prime Minister : I have said to the right hon. and learned Gentleman before, and I repeat, that I expect the Government's motion to be carried, and I expect to ratify the treaty that I signed.
Mr. John Smith : The House and the country will have noticed another failure to answer the question directly. Does the Prime Minister understand that, were he to defy the will of the House of Commons, it would be a monstrous violation of the rights of the House, and would at one fell swoop undermine our parliamentary democracy?
The Prime Minister : The right hon. and learned Gentleman perhaps does not understand the answers. I will make them more clear for him, so that he is in no
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doubt. We expect to ratify the treaty that I signed at Maastricht. The House has shown its support for the treaty ; I expect it to do so again.Mr. Lamont : This month, like last, has seen a remarkable catalogue of good economic indicators. Is it not the case that, in addition to the fifth fall in monthly unemployment, we have seen the largest increase in industrial production for four years and the lowest inflation record for nearly 30 years? When one puts that into a European context and sees that Britain has a lower than average rate of inflation in the European Community, is the only country in the European Community in which unemployment is falling, and is the only country in the European Community in which industrial production is rising, I congratulate the new Chancellor on the rapid success of his policies.
The Prime Minister : I know that my right hon. and learned Friend the Chancellor of the Exchequer will be most grateful for my right hon. Friend's support for his policies. It is entirely clear that we are coming out of recession and into recovery. It is equally clear that we are leading Europe into recovery.
Mr. Ashdown : Will the Prime Minister reflect on the fact that the Government have said to their rebels that nothing will stop them from ratifying the Maastricht treaty, but they have said to the House that adopting the social chapter would jeopardise the treaty? Both statements cannot be true ; which is?
The Prime Minister : I think that the right hon. Gentleman has forgotten what he said about the social chapter. [Interruption.] I am glad that the right hon. Gentleman has not forgotten, but perhaps I can remind the House what he said :
"I believe what is now being put forward in the social chapter may well lead to a form of Euro-sclerosis."
He continued :
"The social chapter in the Maastricht agreement, it seems to me, is a really worrying attempt by Europe to try and rebuild in Britain the things that we have dismantled over the last 12 or 15 years." If that is the view of the right hon. Gentleman and his party, and he is true to his view, I shall expect to see him in our Lobby next Thursday.
Portsmouth
Q2. Mr. David Martin : To ask the Prime Minister whether he has plans to pay an official visit to Portsmouth.
The Prime Minister : I have no immediate plans to do so.
Mr. Martin : Does my right hon. Friend recall that he has not visited Portsmouth since the general election, at a time when the so-called poll experts were predicting not only a Government defeat in general but, even more shamefully, the loss of my seat in particular? Will my right hon. Friend visit us again soon, preferably in the 50th anniversary year of D- day? Such a visit would not only mark the premier naval port of Portsmouth's vital contribution to our defence needs in the past, but mark its present contribution and the efforts it will make for many years in the future.
The Prime Minister : My hon. Friend is an extremely forceful advocate for Portsmouth, and I am grateful for his
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invitation. I understand how important the defence industry is to his constituents, and I hope that he will take every opportunity to remind them of two facts : that the Labour party would cut defence spending by a quarter, and that the Liberal Democrats would cut it by half. We hear a lot from the leader of the Liberal Democrats about taking military action in Bosnia ; we hear rather less from him about how we would be able to take that action after his policy had dismantled the Army, the Navy and the Royal Air Force.Engagements
Q3. Mr. McAllion : To ask the Prime Minister if he will list his official engagements for Thursday 15 July.
The Prime Minister : I refer the hon. Gentleman to the reply I gave some moments ago.
Mr. McAllion : Is the Prime Minister aware that, because of the legal shackles on British trades unions, this week sacked Timex workers were banned from taking part in the national launch of the Timex boycott campaign, and banned from calling on the support of other British trade unionists?
What is banned here is legal elsewhere in Europe. Sacked Timex workers have been in France this week, exercising the democratic rights denied to them in their own country. Is the Prime Minister not ashamed of the Government's record on labour law, which has isolated Britain in Europe and left British workers on their own, with no social chapter, no wages councils and no effective right to strike? The Government have turned Britain, once one of the workshops of the world, into one of the world's sweatshop economies.
The Prime Minister : The sort of behaviour that we saw from trade unionists at Timex is nothing for the hon. Gentleman to be proud of. I dare say that the jobs lost at Timex as a result will stand as the clearest evidence that the hon. Gentleman's policy is utterly the wrong way to look at labour and trade union relationships.
Q4. Mr. Kynoch : To ask the Prime Minister if he will list his official engagements for Thursday 15 July.
The Prime Minister : I refer my hon. Friend to the answer I gave some moments ago.
Mr. Kynoch : Will my right hon. Friend thank and congratulate the anti-terrorist branch and MI5 for its continuing efforts to protect the public from terrorist crimes, and especially their efforts yesterday? Does he agree that had we failed to pass the prevention of terrorism Act and gone down the path of giving away Northern Ireland--the policy of the Opposition--the anti-terrorist branch and MI5 might as well have been told by us to pack up their things and go back to traffic duty?
The Prime Minister : The police and the Security Service deserve our congratulations on their professionalism and vigilance. They have demonstrated that in fighting terrorism over many years. It is clear, and it has been endorsed repeatedly by the House, that we need the prevention of terrorism Act to defeat the terrorists. With the greatest goodwill in the world, I cannot understand why, year after year, Opposition Members have voted it down.
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Mr. Boyce : In view of the Prime Minister's utterances in recent days about nuclear weapons being defensive measures, may I ask him to take this opportunity to assure the House, the country and the world that Britain will never use them first?
The Prime Minister : The hon. Gentleman should know better than to ask such a daft question.
Q5. Mr. Nicholas Winterton : To ask the Prime Minister if he will list his official engagements for Thursday 15 July.
The Prime Minister : I refer my hon. Friend to the answer I gave some moments ago.
Mr. Winterton : My right hon. Friend has announced this afternoon dramatic improvements in a number of economic indicators which are of immense interest to the House and the country. Will he continue to encourage manufacturing industry as a way of improving our economy, and will he ensure that in the Budget to be announced in December, the fragile recovery of our manufacturing base, which is vital to our future, will continue to be encouraged and that measures will be introduced to ensure that recovery and continued economic growth?
The Prime Minister : The whole House knows and respects my hon. Friend's advocacy of manufacturing, so he will be as pleased as I am about the growing success of British manufacturers. As he knows, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) introduced measures in the Budget and autumn statement to help manufacturing industry. I say also to my hon. Friend that the one thing that would do great damage to manufacturing industry would be the provisions of the social chapter.
Mrs. Mahon : Does the Prime Minister realise that 500,000 of the present unemployed are aged between 18 and 24 and that, because of the cuts that he helped to introduce, they are having to manage on £4.97 a day? Does he think that that is enough to keep them in food and on which they can live? Will he take action now to end the discrimination against that age group, instead of making cheap political points at the expense of the unemployed?
The Prime Minister : I do not think that the hon. Lady has grasped the training opportunities that exist for young people. I want youngsters to take up those training opportunities. That is what they are there for and it is in their interest to take them up.
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Q6. Mr. Amess : To ask the Prime Minister if he will list his official engagements for Thursday 15 July.
The Prime Minister : I refer my hon. Friend to the answer I gave some moments ago.
Mr. Amess : Does my right hon. Friend agree that the Government's trade union reforms have made a significant contribution to Britain's increased industrial competitiveness over the past 10 years, while the trade unions have made a significant contribution to the Labour party's electoral uncompetitiveness over the same period?
The Prime Minister : I agree with my hon. Friend, and I came across an interesting quote last week from a delegate at a Transport and General Workers Union conference, who said :
"We are not the tail wagging the dog. We are the dog."
That is the true relationship between Labour and the unions. The unions are the dog and Labour is the lamp post.
Q7. Mr. Hain : To ask the Prime Minister if he will list his official engagements for Thursday 15 July.
The Prime Minister : I refer the hon. Member to the answer I gave some moments ago.
Mr. Hain : What is the Prime Minister going to do about corruption in his flagship council in Westminster? When will he stop crooks financing the Conservative party? Why did he allow 44 of his own Members to vote themselves tax privileges in the Lloyd's amendments on Tuesday? Is that why he is the most unpopular Prime Minister on record?
The Prime Minister : The best that can be said about that compendium question is that it is worthy of the hon. Gentleman.
Mr. Fry : In welcoming the unemployment figure, will my right hon. Friend also take time to express vividly to all those in employment the cost of the social security budget, currently running at more than £60 a week for every worker? Does not that large sum justify the Government's intention to re-examine that budget?
The Prime Minister : My hon. Friend is right about that for the reasons that I have set out on a number of occasions in recent weeks. That problem is faced not only in Britain, but right across the European Community, in Japan, the United States and other industrial countries.
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