Adjournment (Summer)

Part of the debate – in the House of Commons at 4:27 pm on 26 July 1984.

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Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney 4:27, 26 July 1984

I beg to move, as an amendment to the proposed motion, to leave out '22nd October' and insert '13th August'.

The Opposition have taken the unusual course of tabling an amendment proposing that the House does not adjourn on 1 August. Hon. Members will also have seen on the Order Paper an amendment proposing that we return in the week commencing 13 August and thereafter as necessary. We are resolved to vote on the amendment that has been selected.

The amendment reflects our view of the gravity of the interlocking crises that confront us — economic and industrial, social and political—and our belief that those problems will only intensify in the weeks between 1 August and 22 October. Economic crisis is now upon us. The most vivid expression of that is the recent leap in interest rates of no less than 2¾ per cent. in a single week. The markets, which have been lulled and gulled by the Chancellor's Budget, by his tax cuts and his emphatic assurance that the economy was making a strong recovery, suddenly woke up to the fact that it was a pipe dream, that the recovery was not proceeding, that output was fast receding, that the money supply was growing faster than Ministers said it would or should, and that, more generally, the Government looked in almost every area of affairs that they touched just about as incompetent as they actually are.

In the past four months, the whole economic outlook has clouded and darkened. When he wound up the Budget debate on 19 March the Chancellor went out of his way to contrast the critical words and warnings of the Opposition with what he called a better test: the so-called impartial verdict of the market. He proudly pointed out: During the week that has elapsed since the Budget the clearing banks' base rates were cut 0·5 per cent. to their lowest level for six years, the mortgage rate was cut by 1 per cent. and the stock market rose by 5 per cent. Now, just four months later, the minimum lending rate is not 8½ per cent., but 12 per cent.; mortgage interest rate is not 10¼ per cent., but 12¾ per cent.; the share index is not 894, but 770 — a drop of some 14 per cent. The Chancellor himself stressed the enormous importance of interest rates, when he said: Such reductions are of immense benefit to industry, business and the country".—[Official Report, 19 March 1984; Vol. 56, c. 789.] If that is true of a reduction of a half per cent. in March, how much more damage and harm to industry, business and the country does an increase of 3½ per cent. in July entail? There is not much mystery about that. Every 1 per cent. increase in bank minimum lending rates inflicts an increase of about £250 million in the costs of manufacturing industry.

What we have had since the confident presentation of the March Budget is an increase in the cost burdens on manufacturing industry of about £850 million a year. It is not just industry that has been clobbered by steeply rising interest rates. Millions of housebuyers, particularly young people struggling with their first mortgages, now face a sharp cut in their living standards and expectations.

No one should imagine that there are corrective forces at work to counter such trends as the year proceeds. The whole structure of interest rates for months ahead has now been altered, as the latest issues of Government stocks and national savings intruments have clearly revealed. The trade deficit is growing, output—at the very best—is on a plateau and unemployment will leap yet again when the school and college leavers register this autumn. The Prime Minister's claim, on 10 July—two days before interest rates shot up by a further 2 per cent.—that The economy is in good shape"—[Official Report, 10 July 1984; Vol. 63, c. 875.] is there for all to see, in all its absurdity. On present trends, we could be in deep financial difficulty and economic crisis before the summer is out.

I turn now to the mining dispute—in its 20th week. It is our most ardent wish that a resolution will be found —and long before 22 October. But we are far from certain about that. With the House in recess, there will not be the constant probings of the Government's intentions and of the state of play, nor the pressure for constructive action which the Opposition have persistently advocated thoughout the course of the long dispute.

It is all too plain to us that the Government lack the will to find a solution. Throughout the past 20 weeks they have been active and diligent in organising for victory—and inert and negligent in searching for a reasonable solution. The Secretaries of State for Energy and for Employment have washed their hands of the whole dispute. No talks have been arranged. There have been no initiatives, no mention even of inquiry, conciliation, arbitration or any other means by which men of good will and sense seek to achieve solutions to difficult problems. Even the limited, but indispensable, role of listening to and making contact with the parties has been left to my right hon. Friend the Member for Salford, East (Mr. Orme), who hopes to intervene later in the debate.

What are the Government's aims? Bluntly, they believe that with the backing of the state—