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9.41 pm
The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang): I have no doubt that the Government were right to hold this important debate on the economy, if only so that we could hear the excellent speeches of Conservative Members. In particular, my right hon. Friend the Member for Guildford (Mr. Howell) drew attention to the rise of the Asian economies and rightly pointed out that, for us, they are not so much a threat as an opportunity. My hon. Friend the Member for Wyre Forest (Mr. Coombs) spoke of the dramatically improved industrial relations that we are experiencing and of the need to press further ahead with our deregulation policy.
My hon. Friend the Member for Carshalton and Wallington (Mr. Forman) talked about Governments of all complexions having less ability to influence most issues than we sometimes pretend. His remarks on job insecurity were far more sensitive than those of Labour Members. My hon. Friend the Member for Ribble Valley (Mr. Evans) talked knowledgeably about small businesses' interests and the benefits of lower tax rates. In an eloquent speech, my hon. Friend the Member for Gillingham (Mr. Couchman) spoke of the benefits of inward investment.
My hon. Friend the Member for Dover (Mr. Shaw) spoke knowledgeably of the Government's taxation changes and my hon. Friend the Member for Scarborough (Mr. Sykes) made a telling speech on the damage done to our nation's economy by the winter of discontent and of the great benefits that have derived from our privatisation programme. My hon. Friend the Member for Aylesbury (Mr. Lidington) prayed in aid the New Statesman and Society and spoke of the need to invest more in human capital. My hon. Friend the Member for Brentford and Isleworth (Mr. Deva) pointed out that all the Labour party has done today--again--is to talk Britain down.
I am sorry that I was out of the Chamber and missed the speech of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), but I shall read it with great care in Hansard tomorrow. I was sorry to learn of the mine accident to which the hon. Member for Sherwood (Mr. Tipping) drew the House's attention and I shall of course ensure that it is fully and properly investigated.
The hon. Member for Huddersfield (Mr. Sheerman) made what I think can be described as a thoughtful speech and I found much in it with which to agree. He spoke of there being more convergence of party policy than we like to admit--certainly much more than the Labour Front Bench likes to admit. He spoke of wealth creation being central and said that he wanted more manufacturing. Unfortunately, he spoiled it all by praising the United States of America and asking why we could not be more like them when, as a proportion of GDP, we are almost identical in terms of the level of manufacturing.
Opposition Back Benchers were more in touch with reality than their Front-Bench colleagues. My right hon. and learned Friend the Chancellor of the Exchequer spelled out the extremely favourable economic circumstances that face the United Kingdom. For the benefit of newcomers to the debate and of the hon. Member for Oxford, East (Mr. Smith) I shall precis my right hon. and learned Friend's speech and repeat some of his important points.
We will soon be entering our fifth year of a healthy and sustained economic recovery based on sound public finances and permanently low inflation. All the economic
fundamentals are in place to ensure that that continues. Total underlying exports have risen by almost a third since the beginning of the recovery and they continue to rise. Unemployment has fallen by more than 750,000 since the beginning of the recovery; at below 8 per cent., it is at its lowest for five years. Meanwhile, 600,000 more people are in work than at the end of the recession. Perhaps most impressive is the fact that inflation has been below 4 per cent. for more than three years--something we have not experienced in the United Kingdom for almost 50 years.
We are just getting used to low inflation. Our national record on inflation since the war has, at times, been less than impressive. That is why we adopted the current inflation target and, more important, stuck to it. The underlying rate of inflation has averaged just 2.6 per cent. since we adopted the target in 1992, compared with an average rate of 6.5 per cent. in the 1980s and 13 per cent. in the 1970s. Low inflation is vital to providing the confidence to invest in the future. It is the best way to encourage business men and investors to take the long-term view.
I am glad to note that many of our businesses are responding. Manufacturing investment has risen by6.5 per cent. in each of the past two years. What matters is the long term, not the short-term fluctuations of a notoriously volatile measure, with which Labour Members are so bedazzled. It is a pity that the Opposition will not spell out any of their targets, whether for inflation, investment or any of the other issues that really matter for the management of the economy.
Mr. Malcolm Bruce:
I obviously agree with the right hon. Gentleman that permanently low inflation is a desirable objective. Is he aware of a report published on Friday by the Library which shows that Britain is the fourth worst performer on inflation in the European Union and that we are on course to fail the Maastricht inflation criteria? How, in his opinion, can the Government ensure that we do qualify and that we raise ourselves to near the top of the European Union average?
Mr. Lang:
Our inflation rate is low, but the hon. Gentleman must recognise that all the inflation rates in the European economies are relatively close. What is significant is that, compared with the appalling record of the last Labour Government, under whom the cost of living doubled, Britain's record has improved dramatically in recent years--as it did in the 1980s.
For the benefit of the Opposition, I shall spell out what a commitment to the long-term health of the United Kingdom economy means in practice. Since 1979, overall investment has risen faster in this country than in any other major European economy. What is more, it has risen six times faster than it did under the last Labour Government. Investment in plant and machinery has risen by more than 50 per cent. and business investment has risen by more than a third. The Confederation of British Industry has reported investment intentions at their highest level for six years.
The hon. Member for Dunfermline, East (Mr. Brown) spoke about job insecurity and tried to distort and misquote what I have said on the subject. I emphasise, as I have previously, that job insecurity exists, and we must take that into account. People feel a sense of anxiety about
future employment. However, the reality is that, by creating a flexible labour market, as we are doing, we shall be best prepared to create the jobs and increased employment that will help to remove the sense of insecurity.
The 1994 labour force survey showed that three quarters of men in employment had been with the same employer for more than two years--the same figure as 10 and 20 years ago. The change is nothing like as dramatic as the hon. Member for Dunfermline, East suggested. Another survey of males between 30 and 49 showed that 44 per cent. had been in the same job for at least 10 years. Further research shows that, of those in jobs for five to 10 years, 80 per cent. will still be there in five years and most of those who move will go to better jobs. The hon. Gentleman drew attention to the Juvos database, which shows that the number going through unemployment are doing so for shorter periods. Half of those who claim unemployment benefit leave the count in three months and two thirds leave in six months.
The biggest cause of insecurity is unemployment. The fact that unemployment has fallen for two and a half years and is down by almost 200,000 in the past year alone is a considerable boost to the increase in a sense of security. At below 8 per cent., unemployment is more than two percentage points below the European average, three points lower than in France, four points lower than in Italy and almost 14 points lower than in Spain. Britain has more of its people in work and fewer out of work than any other major European country.
Mr. Michael Connarty (Falkirk, East):
Is the President of the Board of Trade not concerned that, of the 25 million people employed in Britain, 6 million are in part-time employment? Only 19 million people are keeping an economy of 56 million people going. Full-time employment is being substituted by part-time, low-paid employment. Is he proud of that?
Mr. Lang:
The vast majority of people in part-time employment are in it because that is the kind of employment that they want. The hon. Gentleman will find that, although youth unemployment in Britain is too high--almost 16 per cent.--in France it is almost 28 per cent., in Italy it is 36 per cent. and in Spain it is 38 per cent. In Britain, unemployment among women is 7 per cent., in France it is almost double that at almost 14 per cent., in Italy it is 17.5 per cent. and in Spain it is more than 29 per cent. Almost every comparison that one can find shows that enormous progress has been made in the United Kingdom compared with European Union countries in recent years.
However, we need greater flexibility in employment. It is only by pursuing the Government's flexible labour market policies that we will create more jobs and thus greater job security.
Mr. Andrew Smith:
If the news about unemployment is all so good, why are more than 1 million fewer people in employment than when his right hon. Friend became Prime Minister? Is that not a true indictment of the Government's unemployment record?
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