TNAG-0938-FCO40-1157-Visit-of-John-Nott--Secretary-of-State-for-Trade--to-Hong-Ko-1980 — Page 179

that subsidising or protecting every threatened sector, in the

end saves jobs. It does not. It merely perpetuates inefficiences

and, in the process, reduces standards of living. Further, any

widespread resort to protection in whatever form would run counter

to our aim to strengthen the supply side of our economy and to

overcome inflation by monetary and fiscal economies. From an international angle, too, subsidy and credit races are not in our interest. Those races and indeed any trade wars would be

won by the most powerful economic nations, and our Gross National Product does not place us in these ranks.

14 Sixth, we recognise that ultimately our trade can only flourish if we create the conditions at home that make enterprise worthwhile. We have sharply reduced the rate of tax for managers and, I believe, that this will also encourage back to the UK, those men of talent and experience who were driven abroad to work for foreign companies. At least our managers are now taxed on a more or less comparable basis to our competitors in the EEC. We have made a start at freeing resources for more. industrial investment and this can only be achieved by restraini! public spending. The Chancellor is reviewing the whole range of capital taxes which have fallen so heavily on family firms. It is the numerical strength and vitality of the small firm in the US, Germany and Japan which stands out so sharply in contrast to the UK. Altogether we have begun to remove the controls price control, pay controls and dividend controls - which were stifling enterprise, limiting flexibility and denying the flow of skills and resources to the natural areas of high market demand.