Skip to main content


Volume 127: debated on Thursday 11 February 1988

The text on this page has been created from Hansard archive content, it may contain typographical errors.


To ask the Chancellor of the Exchequer what has been the growth of productivity in the United Kingdom economy over the period since 1980.


To ask the Chancellor of the Exchequer what has been the growth of productivity in the United Kingdom economy over the period since 1980.

From 1980 to the third quarter of 1987 output per head in the whole economy has grown at an average rate of 2¾ per cent. per year, similar to that of Japan, and faster than all other major industrialised countries.

How does the figure that my right hon. Friend has just announced compare with figures in the 1970s?

Productivity growth in the whole economy has averaged about 2 per cent. per annum since the cyclical peak of 1979. That is nearly twice as fast as the average annual growth between 1973 and 1979, when, as I recollect, another party was in power.

Does my right hon. Friend agree that the very low productivity which used to characterise our economy and which got to the heart of our national economic ills has now been replaced by increasing and increased productivity, which is why we shall compete so effectively and why we are the envy of our Western industrialised competitors?

I totally concur with my hon. Friend's question. It is significant that United Kingdom manufacturing output per head has increased since 1979 at six times the rate it increased between 1973 and 1979.

Given the issue of investment, will the Chancellor reflect on exports and imports? Is the Chancellor proud of the fact that since 1979 manufactured imports have risen twice as fast as exports? Why has the Prime Minister broken the pledge she made in 1979 that the Tories would create conditions for our factories and workshops that would produce manufactured goods, so that the customers of the world would be scrambling over each other to buy them? Is it by design, or by sheer incompetence on the part of the Government, that such a disastrous imbalance in manufactured goods has been achieved?

The question that I was asked related to productivity rather than to investment and exports, but manufacturing output and productivity have been increasing even more rapidly than the rest of the economy.

How can the Minister concur so boastfully when, as recently as 1986, Britain imported cars, textiles and steel to the value of £8 billion? Is that not a ruinous rate of imports? What will he do about that?

As I remarked a moment ago, the question related to productivity rather to than imports.

Does my right hon. Friend agree that the increase in productivity has resulted in a significant increase in profitability and that the taxes from profits pouring into the Treasury will give the Chancellor the opportunity in the Budget to do what no Chancellor has been able to do in the past 50 years—to balance the budget, reduce taxation and increase public expenditure by the £4·6 billion laid down in the White Paper on public expenditure?

I cannot anticipate my right hon. Friend's Budget, but the scenario my hon. Friend describes sounds attractive.

If the Minister is correct in obtaining some satisfaction from productivity figures, why did Britain have a surplus in the balance of trade on manufactured goods of £5 million in 1979 and a deficit last year of £8 billion, which is deteriorating? What is the point of so-called increases in productivity if we cannot compete successfully with our competitors? What will the Government do about the balance of payments?

The economy is competing successfully and we have maintained our share of manufactured exports in world trade in a manner unknown in recent generations.