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Inter-bank Transfers
8. Mr. Richard Ottaway (Croydon, South): If he will introduce legislation to provide for the payment of interest on inter-bank transfers. [106889]
The Economic Secretary to the Treasury (Miss Melanie Johnson): I have no plans to introduce such legislation.
Mr. Ottaway: Notwithstanding banking practice, there is an important consumer point. It takes at least three days to transfer money from one bank to another. During that time, the owners of the money do not have access to it, they cannot use it and they do not earn interest on it. Under those circumstances, will the Economic Secretary conduct a review to find out where that money has gone and who earns the interest on it?
Miss Johnson: The hon. Gentleman is right that cheque clearance takes, on average, three days to complete, but he is incorrect to say that there is a disparity between the money going into the account and it being received at the other end. Funds commonly reach the payee's account and attract interest, if appropriate, on the same day that a cheque is presented or an electronic transfer made. The Association of Payment Clearing Services believes that the majority of banks make no profit from the clearing process.
Economic Growth
9. Dr. Rudi Vis (Finchley and Golders Green): What are his forecasts for United Kingdom economic growth in 2000-01, 2000-02 and 2002-03. [106890]
The Chief Secretary to the Treasury (Mr. Andrew Smith): Forecasts for growth were set out in the pre-Budget report, and were between 2.25 and 2.75 per cent. for each of the years listed. Through our tough and decisive action, the Government have established the
platform of stability necessary to secure stable growth in output and employment. Updated forecasts will be published in the Budget.
Dr. Vis: I thank my right hon. Friend for that answer. Are those growth rates sufficiently high to pursue the Government's various other goals, such as full employment and an end to child poverty?
Mr. Smith: The crucial point is that we have more than 750,000 more people in jobs since the general election, thanks to the steps that we have taken to achieve stability, sustained investment and low, stable inflation. That platform of stability, with the new deal and our other measures for investment and regeneration, will enable us steadily to increase employment. We want to move towards full employment so that all our people, who were so cruelly wasted under the Conservatives, can realise their full potential and use their talents and energies.
Mr. Peter Brooke (Cities of London and Westminster): Is the Chief Secretary satisfied by the productivity gains since 1997? Will he extrapolate from that performance his productivity predictions for the years in the original question?
Mr. Smith: No one can be complacent about this country's productivity record, which is due not least to the lack of education, training and investment that we inherited from the previous Government. We continue to press ahead to improve productivity, which is why educational and vocational skills are so important and rising levels of investment are so encouraging.
We welcome the upturn in output by manufacturing industry in the quarter to November; the annualised rate was 4 per cent., which is the highest for five years. Moreover, we are now seeing the highest ever levels of manufacturing output. It is especially encouraging that improvement is greatest among small firms. There is further to go, but we are making progress.
Exchange Rate
10. Mr. David Taylor (North-West Leicestershire): If he will make a statement on the impact of his fiscal policy on the exchange rate of the pound in the last six months. [106891]
The Chief Secretary to the Treasury (Mr. Andrew Smith): The factors affecting the exchange rate are many and complex, so it is not possible to identify the precise impact of fiscal policy. However, as I have just said, the Government's fiscal policy has made an important contribution towards achieving long-term economic stability by locking in sound public finances.
Mr. Taylor: The Minister knows that sterling has risen to levels last seen in the mid-1980s. Does he share my concern that any fiscal loosening in the March Budget risks driving up the pound even further, accentuating the difficulties experienced by small firms in North-West Leicestershire that export to, or compete with, firms in
Europe? What does he say to those who claim that it is safer to invest any fiscal elbow room in better public services rather than further income tax cuts?
Mr. Smith: I am sure that my hon. Friend would not expect me to speculate on the contents of the Budget, any more than he would expect me to speculate on interest or exchange rates. Our message is clear: the programmes that we have put in place for stability, sound public finances, investment and higher skills levels are the best measures to help businesses, including small businesses, to succeed in the global economy.
The trends for manufacturing industry are encouraging, in the east midlands as elsewhere. Output is higher than ever; exports are rising and, as this month's CBI and British Chambers of Commerce surveys showed, confidence is increasing. It is as a consequence of those measures that in the east midlands employment has gone up and unemployment has gone down since the general election, with youth unemployment down by three quarters and long-term unemployment down by two thirds. That is the confidence that we have in the businesses of the east midlands, and which they are reciprocating through their record on jobs and exports.
Sir Michael Spicer (West Worcestershire):
As the Minister has implied, when he is answering the right question, interest rates are one of the factors that affect exchange rates. Why has the Chancellor of the Exchequer, according to The Times today, in effect told what is meant to be an independent Monetary Policy Committee to increase interest rates?
Mr. Smith:
That is not what my right hon. Friend told The Times. He told it that we backed the actions of the Monetary Policy Committee and the Bank of England in taking whatever steps are necessary to ensure that we stick to the path of stability, steady growth and sound public finances that is steadily transforming the economic prospects of this country.
13. Mr. David Kidney (Stafford):
What assessment he has made of the prospects for growth in the United Kingdom's manufacturing sector over the next 12 months. [106897]
The Economic Secretary to the Treasury (Miss Melanie Johnson):
The pre-Budget report forecast is manufacturing output growth of 1½ to 2 per cent. this year.
Mr. Kidney:
I thank my hon. Friend for that answer. Recently, Stafford's premier manufacturer, Alstom, announced quite heavy job losses later this year. As my right hon. Friend the Chancellor of the Exchequer has announced that the Budget will be on my birthday, may I ask for a birthday present, namely fiscal measures that are targeted to help those sectors of the economy that are exposed to international competition and hit by the value of the pound?
Miss Johnson:
I am sorry to hear about the difficulties that are being experienced by the company to which my hon. Friend referred. I shall be happy to meet him to talk about them.
It is a coincidence that the Budget will be introduced on my hon. Friend's birthday. He should draw no conclusions from the fact that the Treasury team does not give birthday presents. However, our best birthday present has been to the country, and it has been the prudence with which we have looked after the economic affairs of the nation, the caution that we have deployed and our policy of sound public finances, leading to the fastest rate of growth in the United Kingdom for five years. Manufacturing output rose by 1.1 per cent. in the three months to November on the previous three months. We have stabilised the economy and ensured that we do not return to the record interest rates that the Opposition allowed to happen when in government. We have avoided a return to the boom-and-bust policies of the Tory years.
Mr. Nicholas Winterton (Macclesfield):
The Government have talked about the optimistic outlook for manufacturing industry. I am sure that the Minister would agree that the manufacturing base is too small. Do the Government see an expansion of it? What policies will the Government pursue to bring that about, as that will lead to more stable and sustainable economic growth?
Miss Johnson:
I am grateful to the hon. Gentleman for his support for manufacturing industry, which I strongly share. Manufacturing productivity is now up by 6 per cent. on the previous year. That is the strongest growth for five years. These developments augur well for the future. The Conservative Government, in sharp contrast to the present Government, presided over zero growth in productivity from 1995 to 1997. I am sure that he agrees that it is the present Government's policies that are helping to provide the base on which manufacturing and exports will continue to grow.
Dr. Vincent Cable (Twickenham):
Is the Minister aware that concern about the future of British manufacturing industry has been expressed by no less a body than the International Monetary Fund, which considers the pound to be 15 to 20 per cent. overvalued? What reply has the Treasury given to the IMF?
Miss Johnson:
The IMF has given the UK Government a glowing report on their management of the economy, on which I am sure the hon. Gentleman would wish to congratulate us, although I did not hear him do so. As I said, manufacturing output has improved. We have on many occasions drawn to the attention of hon. Members an increase of 700,000 jobs across the UK economy. That is supported by strong manufacturing output.
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