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AMENDMENT OF THE LAW

I am pleased to hear the right hon. Gentleman moving back towards the middle path that I was suggesting, which is to have a use for those instruments, but not a misuse. We can now take that as read. I want to concentrate my remarks on what I regard as the heart of the economy—the manufacturing capacity in this country. I want to focus particularly on the auto and aerospace industries, and to consider them as part of the export effort that we must continue to make. If a Budget is about the gathering and distribution of taxation, there must be real wealth before anything of note can happen. That is why I choose to speak about the manufacturing industries in our country. Export is everything, as far as Britain is concerned. Whether in manufacturing or services, we must recognise that for an island economy, the choice is trade or die. Therefore, we have to make friends worldwide. The right approach to world peace is to have mutually advantageous trade. I wholeheartedly support the efforts of our exporting community to call for assistance wherever it is required, in their main effort of ensuring that Britain pays its way. I shall speak in a moment about the conditions of work in which we are operating, and the effect that those have on the balance of payments. The overall thrust of our economic policy has not been particularly helpful to our manufacturing industries. If manufacturing is at the heart of what we do, and most else is peripheral to it, we have for many years not taken care of it as we should have done. Our current balance of payments deficit is some £51 billion—considerably different from what it was just 10 or 15 years ago. That figure is accounted for by a monthly deficit in manufacturing of £7 billion to £8 billion, which is offset only by a services surplus of some £3 billion. Given that situation, it is right to recognise that manufacturing has continued to increase its output, although its share of GDP has fallen. In 1995, the output of manufacturing and allied services was overtaken, in terms of growth in GDP, by the services sector. The services sector now accounts for some 75 per cent. of total output. Again, that illustrates the fall from grace of manufacturing in our country. At the same time, I should like to pay tribute to those in the manufacturing industries, by recognising that their productivity gain has been startling—startlingly good, it is nice to report. Indeed, in 2004-05, it reached the giddy heights of 8 per cent. per annum. The figure has moderated a little since then, but it is still well ahead of the productivity gains seen in the services sector. Although more should have been done to assist in the manufacturing endeavour, those increases in productivity illustrate that manufacturers have, in the vernacular, been playing a blinder.