Skip to main content

Manufacturing Sector (CSR)

Volume 520: debated on Tuesday 21 December 2010

1. What estimate he has made of the potential effects on the level of demand and output in the manufacturing sector of the outcomes of the comprehensive spending review. (31813)

I am happy to report today that annual growth in manufacturing output is the fastest in 16 years, and the Chartered Institute of Purchasing and Supply reported the strongest manufacturing employment balance on record last month. This is a crucial contribution to rebalancing the British economy away from its dependence on debt. The Budget and the spending review will help to sustain that by cutting tax rates for manufacturers, investing in transport infrastructure and skilled apprenticeships, and providing the economic stability that our deficit reduction plan has delivered in an unstable world.

I thank the Chancellor for that reply, and I wish him and his fellow Ministers on the Treasury Bench, and all right hon. and hon. Members, including you, Mr Speaker, a happy and peaceful Christmas. Does the Chancellor agree that the best Christmas present he can give manufacturers in my constituency and throughout the country is a proper White Paper on growth? He has often promised to publish one. When exactly will he be bringing it before this Chamber for debate?

We have a specific review of advanced manufacturing to see what more we can do to help it, and I intend the Budget on 23 March to focus very much on supporting economic growth and removing the barriers to the expansion of manufacturing businesses and others. We are looking both at specific sectors, such as advanced manufacturing and pharmaceuticals, and at cross-government issues, such as planning and employment law, so that we provide not only the economic stability that we have delivered in recent months, but the platform for economic growth.

Further to that question and that reply, the Government’s efforts so far in that regard consist of “The path to strong, sustainable and balanced growth”. Frankly, it is an insubstantial document—well short of a strategy. The Chancellor has given us a firm lead on fiscal policy. Will he now commit to cutting through what appear to have been a large number of interdepartmental arguments about this, and give us a clear strategy for growth in his next Budget?

The first thing that I would say is that, of course, deficit reduction is an essential platform for economic growth. The fact that this Parliament, almost alone in Europe, is not having to discuss the sovereign debt crisis is in itself testament to the success that we have had. But we need now to turn around many Departments that have not really thought for years about this question: how do we stimulate private enterprise and private sector growth? We have inherited government machinery that is not equipped to deal with that. We are turning that around, and the Budget in March is the focus point that I expect all Departments to work towards.

Responsibility for our manufacturing sector rests, of course, with the Secretary of State for Business, Innovation and Skills, who had some interesting things to say this morning about the “Maoist” nature of this Government. [Interruption.] Does the Great Leader—or rather, the Chancellor—recognise himself in the Business Secretary’s description of “cack-handed” Tories? Strictly speaking, does the Chancellor believe that the reason we have waited so long for any sign of a strategy on jobs and growth is that he is out of step with his Cabinet colleague?

The Business Secretary is a powerful ally in the Government in promoting growth—and, frankly, he has forgotten more about economics than the shadow Chancellor ever knew. I refer the shadow Chancellor to the statement that he gave recently about his own party:

“On economic credibility, we are in a really worrying position.”

We see this morning record borrowing for November, unemployment higher than expected and inflation well above where it should be. According to the Office for Budget Responsibility, we are about to destroy £5 billion of economy activity through the increase in VAT on 4 January. The Institute for Fiscal Studies says that absolute poverty—not relative poverty—will rise for children and working age adults, with 900,000 more slipping below the breadline over the next three years. If the Chancellor has not got a plan B yet, is he hoping to get one for Christmas?

I am glad that the shadow Chancellor reminds the House of the terrible economic inheritance that we are struggling with—and overcoming. He talks about the public borrowing figures today, and I am glad that he has brought them up, because they are a reminder of the fact that we have a record budget deficit. He is—if he wants to do Christmas analogies—the incredible no-man: every time we have put forward any proposal for deficit reduction, he has said no. He is running out of time to come forward with sensible credible contributions to the economic debate about how we get Britain growing again, because at the moment the Christmas lights are on but there’s no one at home.

Does my right hon. Friend not agree that the record borrowing figures announced today simply serve to underline the seriousness of the situation to which the spending review was addressed, as well as the importance of sticking to the fiscal plan that has been agreed and not deviating from it in the slightest?

My hon. Friend is absolutely right. This country has a record budget deficit; that is the situation we have inherited. We have made some in-year reductions, which have made it slightly less worse this year than it otherwise would have been, and then we have measures next year to try to bring the budget deficit down. Every one of those measures has been opposed by Opposition Front Benchers. They have put forward not a single plan, not a single proposal, to reduce the budget deficit, but our proposals have provided this country with economic stability, in a very unstable European continent.

Following on from the remarks of my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), what does the Chancellor have to say about the Institute for Fiscal Studies report, which says that almost 1 million people will be below the breadline by 2014? That is an extra million people. Does the Chancellor not feel any shame about what will happen to so many of our constituents—certainly mine—as a result of the policies that he is pursuing? I would have thought that it was a matter over which the Business Secretary might wish to consider resigning.

As usual, the hon. Gentleman’s question is totally over the top. I would make this observation: we have inherited this economic situation—a record budget deficit—and we are taking the action to deal with it. We are also promoting social mobility by funding a pupil premium and giving new nursery entitlements to disadvantaged two-year-olds. Child poverty rose in the last years of the Labour Government. They set a child poverty target and entrenched it in law, knowing full well that they did not have the policies to meet that target in any way. We are putting in place the policies that will deliver greater social mobility and deal with entrenched poverty in our country.