Below is the text of Mr Major’s written Parliamentary Answer on the Exchange Rate on 18th January 1990.
Mr. Denzil Davies To ask the Chancellor of the Exchequer by how much the £ sterling has moved against(a) the yen, (b) the US dollar and (c) the deutschmark over the last 10 years.
Mr. Major I refer the right hon. Member to table 13.1 of the Central Statistical Office’s “Financial Statistics”.
Below is the text of Mr Major’s written Parliamentary Answer on Incomes on 18th January 1990.
Sir Ian Gilmour To ask the Chancellor of the Exchequer if he will recalculate the figures given in his reply to the hon. Member for Pembroke (Mr. Bennett) on 2 November 1989 Official Report column 282 to show percentage annual changes in average real net incomes of (a) pensioners, (b) married men with two children, and (c) single non-retired people, taking into account increases in local authority rates, local authority and other rents, and mortgage costs.
Mr. Major [holding answer 17 January 1990]: The changes in average real net incomes given in the reply to my hon. Friend the Member for Pembroke (Mr. Bennett) on 2 November take account of price increases as measured by the retail prices index. This includes increases in housing costs.
Below is the text of Mr Major’s written Parliamentary Answer on the Manufacturing Industry on 18th January 1990.
Mr. Denzil Davies To ask the Chancellor of the Exchequer what percentage of the increase in private non-residential fixed investment in the period 1987 to 1989 was accounted for by investment in manufacturing industry.
Mr. Major 1988 is the last full year for which data are available. The data for 1987 and 1988 may be found in the “United Kingdom National Accounts” 1989 edition (CSO Blue Book).
Below is the text of Mr Major’s written Parliamentary Answer on Business Investment on 18th January 1990.
Mr. John D. Taylor To ask the Chancellor of the Exchequer when he last made representations to the European Commission to have the restrictions on the movement of Irish shoppers into Northern Ireland removed.
Mr. Major I assume that the right hon. Member is referring to the Irish Government’s withdrawal in March 1987 of travellers’ allowances from persons who have been out of the Republic for less than 48 hours. Her Majesty’s Government made it clear at the time both to the European Commission and to the Irish Government that they believed these restrictions to be contrary to EC law. The United Kingdom has intervened accordingly in support of the proceedings instituted by the Commission against Ireland in the European Court of Justice. The hearing is due to take place in February.
Below is the text of Mr Major’s written Parliamentary Answer on Inflation on 18th January 1990.
Mr. Denzil Davies To ask the Chancellor of the Exchequer what assessment he has made of the effect of the growth of average earnings over the last six months on the rate of inflation.
Mr. Major Excessive pay settlements primarily threaten job prospects. The Government will not bail out employers who do not control their costs.
Below is the text of Mr Major’s written Parliamentary Answer on Investment on 18th January 1990.
Mr. Jack Thompson To ask the Chancellor of the Exchequer what is the Treasury’s forecast for the growth of total investment.
Mr. Major The Autumn Statement forecast projected investment to rise by 5¼ per cent. in 1989 and 1¾ per cent. in 1990. This comes after an average growth of 7¼ per cent. a year between 1983 and 1988.
Mr. Hanley To ask the Chancellor of the Exchequer what was the growth in total investment since 1983.
Mr. Norman Lamont Total investment grew by 42 per cent. between 1983 and 1988, an annual average increase of 7¼ per cent. This is far higher than the growth range recorded under the last Labour Government, which averaged ¼ per cent. per year.
Below is the text of Mr Major’s written Parliamentary Answer on Business Investment on 18th January 1990.
Mr. Ian Bruce To ask the Chancellor of the Exchequer what are the latest figures indicating the share of gross domestic product taken by business investment.
Mr. Major Business investment as a proportion of gross domestic product was 14.6 per cent. in 1988. The Industry Act forecast projected total business investment to grow by 9¼ per cent. in 1989. As a share of GDP, in 1989 business investment is likely to be one of the highest since the war.
Below is the text of Mr Major’s response on the European Monetary Union held on 18th January 1990 in the House of Commons.
Mr. Day To ask the Chancellor of the Exchequer what representations he has received on the Delors plan for a three-stage advance towards the full integration of European Community economic and monetary policies.
Mr. Major I have received a number of representations.
Mr. Day Does my right hon. Friend agree that the current arguments surrounding the Delors plan, particularly in the area of economic sovereignty, do not, as is often thought, offer us a choice between the Prime Minister’s vision of a free market in Europe and a federal Europe, but rather offer the prospect of a single unitary European state about which both federalists and free marketeers should be equally alarmed?
Mr. Major I share that view and believe that that danger exists with the full stages, 1 to 3, of the Delors proposals. I recollect that the House was almost united in rejecting those proposals some time ago.
Below is the text of Mr Major’s response on the Bank of Credit and Commerce International held on 18th January 1990 in the House of Commons.
Mr. Rathbone To ask the Chancellor of the Exchequer what discussions he or his officials have had with United States counterparts about the banking operations of the Bank of Credit and Commerce International.
Mr. Major There has been close liaison between United Kingdom and United States customs officials in connection with Operation C-Chase, a drugs money-laundering investigation directed at the Medellin cartel, involving bank accounts held with the BCC group.
Mr. Rathbone The Chancellor will be aware of newspaper reports of the handling of huge amounts of drug-trafficking money by the bank, which transferred £15 million from this country to Luxembourg last year and has held the major part of $60 million in deposits for Mr. Rodriguez Gacha and the Medellin drug cartel this year. Is he satisfied that there is sufficient national and international supervision of the bank’s operations? In the light of his investigations, what initiatives will he present for inclusion in the report by the international financial action task force, which is due in April?
Mr. Major I am aware of the reports to which my hon. Friend refers and I am satisfied with the supervision responsibilities and powers available to the Bank of England. As my hon. Friend will know, under the Banking Act 1987 the operations of BCCI in the United Kingdom are supervised by the Bank of England. Internationally, overall supervision of the group is carried out by a college of supervisors with representatives from a number of countries in which the bank has its operations. I have no doubt that those supervisors will give careful consideration to the outcome of the case, and it would be inappropriate of me to comment on that now.
Mr. Skinner If the Chancellor of the Exchequer really wanted to get hold of the money that has been salted away by the drug barons, he need only use the system that was adopted by the previous Chancellor of the Exchequer during the miners’ strike. Is the right hon. Gentleman aware that when the miners’ money was in banks in Switzerland and elsewhere on the continent, the British Government found ways and means of sequestrating that money that belonged to the National Union of Mineworkers? Is the right hon. Gentleman aware that if he adopted a similar system, he could get at the drug barons’ money? If he wanted to adopt an even stronger method, he could tell all the banks that the Government intend to stop the tax relief that they give them every year.
Mr. Major I am fascinated by those post hoc revelations. On money-laundering, the hon. Gentleman will be aware that the Drug Trafficking Offences Act 1986 strengthened considerably the powers of enforcement agencies and introduced a provision for financial institutions to report suspicious transactions to the police. The United Kingdom is participating fully in the financial action task force that has been established, with representatives from a number of countries, specifically to deal with this problem.
Mr. Dykes Does my right hon. Friend agree that although the Florida allegations are serious and must be pursued rigorously, it would be unfair – particularly as he has confirmed that supervision of the BCCI is correct so far as he can tell – to criticise on a worldwide basis this successful international bank, which apparently has helped millions of people in the Third world?
Mr. Major As my hon. Friend will know, senior representatives of that bank are facing trial in the United States. It would be unwise of me to comment.
Dr. Marek The Chancellor will accept that this is a most serious affair in that it could besmirch the good name of the City and the whole financial industry in this country. Will he assess the amount of man and woman power that should be available to Customs and other officers in the Bank of England to assure the public that there is no cause for alarm, that this is an isolated incident and that it will not recur in the City or anywhere else in this country?
Mr. Major I share the hon. Gentleman’s view that this is a serious matter, and I hope and believe that it is an isolated incident. The Bank of England has sufficient staff working on the proposition. The hon. Gentleman will be aware of the successful year that Customs and Excise has had in combating and grabbing hold of illegal drug imports.
Below is the text of Mr Major’s response on Industrial Investment held on 18th January 1990 in the House of Commons.
Mr. John Greenway To ask the Chancellor of the Exchequer what assessment he has made of the prospects for industrial investment over the next 12 months.
Mr. Major The Industry Act 1971 forecast published with the Autumn Statement projected total business investment to grow by 9¼ per cent, in 1989 and 4½ per cent, in 1990. This follows growth of 30 per cent, in real terms between 1986 and 1988.
Mr. Greenway Has my right hon. Friend noted the results of a survey of leading industrialists published this week which described the fear of a recession as a myth based on a misconception? It rejected the gloomier predictions of the effect of high interest rates on industry. In his forthcoming Budget, will my right hon. Friend the Chancellor give priority to measures that will keep up the momentum of increased investment seen under the Government? Will he target the small independent business sector as one deserving of particular help through investment-related taxation reform?
Mr. Major I have noted the survey to which my hon. Friend refers and he characterises it accurately. He will know that I cannot anticipate the Budget. However, I can draw to his attention the fact that the small business sector is still growing substantially, with a rate of VAT registrations of more than 1,300 a week during the past year.
Mr. Robert Sheldon But manufacturing industry will clearly be damaged by the high level of interest rates, even if they remain as they are and do not increase. Is the Chancellor of the Exchequer aware that something must be done for manufacturing industry? One problem that it faces is that the capital allowances militate against investment – a rate of 25 per cent, capital allowances in the first year is not realistic. Manufacturing industries cannot retrieve 75 per cent, of the cost of that investment at the end of the first year and, therefore, the allowances are an investment disincentive. Will the Chancellor replace them with a proper investment incentive, as existed pre-1979?
Mr. Major The right hon. Gentleman will be aware of the reforms in corporate taxation introduced by my right hon. Friend the Member for Blaby (Mr. Lawson) in 1984. They made significant changes, not least a dramatic reduction in the prime rate of corporation tax. The vast majority of capital investment in manufacturing in recent years has come out of retained profits, at present taxed at a much lower rate. There will be a slowdown in capital investment in manufacturing, but there will be continued growth. There has been a considerable record growth in recent years.
Mr. Ian Taylor Does my right hon. Friend agree that one factor in the continued good news about business investment is that Britain has managed to increase labour productivity and keep down unit costs of labour? If the position were to change – given the irresponsibility of certain unions backed by the Labour party – the climate for business investment might decline. In the internal market of the European Community businesses could switch their investment criteria elsewhere which would largely be the result of the unions’ failure to appreciate the position.
Mr. Major My hon. Friend is entirely right. Productivity is vital, not only to maintain competitiveness and present profitability, but to open up the opportunity of future investment to create future jobs and prosperity.
Mr. John Garrett What are the figures for manufacturing disinvestment? Bankruptcies rose – by 40 per cent, last year. In the city that I represent, 400 jobs were lost in a liquidation which the management attributed directly to the Government’s level of interest rates. How many more victims will there be of the Government’s use of interest rates as the sole means of controlling the economy?
Mr. Major The hon. Gentleman picks a strange day to make that charge. He does so on the very day unemployment and employment figures show that more people in this country are in work than ever before.
Mr. Sumberg Is my right hon. Friend aware that the north-west of England is present enjoying an economic boom, with increased investment and reduced unemployment? Does he agree that the Government have laid to rest for ever the idea of a north-south divide?
Mr. Major I agree with my hon. Friend. Between 1980 and 1988, investment growth in the whole economy grew at the rate of 4½ per cent, per year. Between 1970 and 1980, the rate of growth was not 4½ per cent, annually but 0.4 per cent.