asked the Secretary of State for Industry whether he is satisfied with the level of profitability in manufacturing industry.
Will my hon. Friend agree that one of the features that has distinguished British industry from its competitors in recent years is the low and falling rate of profitability? Will he accept that one of the prices that must be paid for a high exchange rate is further compression of that profitability? Accepting the argument that there will be a lag before Government policies are successful, may I urge my lion. Friend to give the House some idea of when productivity in British industry will improve, in order to restore the competitive balance?
My hon. Friend rightly points out that the profitability of manufacturing industry has been falling over a number of years and has become a long-term problem which reached its crescendo in the last four years of the previous Government.
Will the Minister bear in mind that the manufacturing industries, especially carpets, textiles and machine tools, which have formed the backbone of the industries of Halifax and West Yorkshire for many years, are now in serious difficulty? What specific proposals have the Government to help those industries, particularly in view of the great contribution that they made in the past towards industrial development?
The House is unlikely to forget the contributions made by these industries as long as the hon. Lady is a Member. The question that she raises comes back to the broad ways in which the economy must be stimulated in order to produce the growth that we all seek.
In the representations that my hon. Friend or his ministerial colleagues have made to the Treasury in the last few weeks, have they drawn attention to the fact that one of the major factors intensifying the liquidity squeeze on British companies is the high level of the national insurance employer's surcharge, which was increased so savagely by the former Chancellor of the Exchequer?
As ever, my hon. Friend has put in a timely word to remind my right hon. and learned Friend, the Chancellor of the Exchequer, but I am sure that he is aware of these matters. I did not fully answer my hon. Friend the Member for Loughborough (Mr. Dorrell) on the previous question. It is impossible to say what the time lag will be, particularly given the nature of the long term problem that we face.
Does the Minister realise that the present Government's policies are making private manufacturing industry and investment less profitable than for many years past?
The right hon. Gentleman should bear in mind that the profitability of British industry fell to an all-time low of 2 per cent. during the life of the previous Government. We seek to reverse that trend as a matter of policy.
Is my hon. Friend aware that there are many businesses and industries, especially small businesses, which are in great difficulties at present? They are profitable, but they are threatened with liquidation because they have cash flow problems. Will he ask the Chancellor to have a word with the banks to ensure that they lend money to industry, rather than give personal loans? This is not being done sufficiently at present.
I am sure that the Chancellor will note my hon. Friend's suggestion. There is a good deal of evidence that the banks are being particularly helpful at present, bearing in mind the existing difficulties.
Will the Minister explain how he proposes to increase profitability in the manufacturing industry when his Government are, by savage deflation, destroying demand; by high exchange rates, preventing our exports from being competitive abroad; and by ludicrously high interest rates, driving many companies into liquidation?
As usual, the right hon. Gentleman presents only one side of the picture, and he does so with his usual vigour. He has overlooked the fact that in the battle against inflation it is vital to strike a reasonable balance on wage agreements. I hope that he will lend his weight to that side of the argument as well.