Mr Major’s Parliamentary Answer on Manufacturing Output – 25 October 1990

Below is the text of Mr Major’s response on Manufacturing Output made on 25th October 1990 in the House of Commons.

Mr. Morgan To ask the Chancellor of the Exchequer if he will make a statement on the prospects for manufacturing output in 1990.

The Chancellor of the Exchequer (Mr. John Major) I shall be publishing a forecast of manufacturing output in 1990 with the autumn statement.

Mr. Morgan Will the Chancellor confirm that, according to his officials, the manufacturing side of the British economy is now in recession? Will the right hon. Gentleman also give up his previous habit of trying to alter the definitions of expressions such as “recession”, renaming it “technical recession”, which we understand is the current ministerial sales line, just as he has done with “inflation”, renaming that “headline inflation”, with “convergence of inflation” in the Madrid conditions becoming “divergence of disinflation”? Does he accept that what industry now wants from the Government is some leadership out of recession so that just entering the exchange rate mechanism is not seen as the answer, because on its own that can be no more than putting on a gas mask full of carbon monoxide?

Mr. Major I have rarely heard such a short point put at such length. I can certainly confirm that output is slowing and has been slowing over the past two or three months, as I have repeatedly said. Whether it is within the normal definition of “recession”—which is, of course, why my officials and subsequently I use that term – is a matter that we shall soon see. It is not entirely clear yet. It is conceivable that it is, but we must wait and see.

Mr. Oppenheim Will my right hon. Friend remind the macho champions of manufacturing interests on the Opposition Benches – [HON. MEMBERS: “Oh.”] – that in the past decade, manufacturing output in Britain rose faster than in any other EEC country, according to OECD figures, and that during the period of the previous Labour Government, manufacturing output fell?

Mr. Major I can certainly confirm those OECD figures. I can also confirm that manufacturing investment has grown on an annual basis over the past decade, whereas that also fell during the period of the previous Labour Government.

Mr. Beith Has the Chancellor noted the bleak report produced by the British chambers of commerce earlier this week? Recognising that the task of manufacturing industry will not be any easier in the early days of the ERM, will the right hon. Gentleman help it by seeing that we get more investment in skills and skill training and in transport for access to markets so that it can have some hope of increasing competitiveness?

Mr. Major I read that survey with some interest. It has, of course, been only a recent survey and has not yet passed through a complete economic cycle. There are signs that some of the observations in that survey were a little overdone, but we must wait and see what happens in the next few months. It is certainly consistent with the slowing down in the economy that we are seeing. That is a necessary part of the cycle. It has been predicted, it is expected and it is here, and the sooner we have it, the sooner we shall be through it and back to low inflation and growth again.

Mr. Beaumont-Dark Does my right hon. Friend agree that wage restraint is needed from the very top of industry, but that it is failing to give the right lead? If industry is to become profitable, it is no good having 6 per cent. wage increases in the German car industry while Rover and other workers are getting 13 per cent. That is the way to ruin and to losing jobs, not the way to prosperity.

Mr. Major I agree with my hon. Friend. He will recall that it was about a year ago, possibly in answer to one of his questions, that I first made the observation about pay affecting people at the top of industry as well as on the shop floor. That was true when we had that exchange a year ago, and it remains true today.