Economic Affairs

Part of Bill Presented – in the House of Commons at 12:00 am on 27th July 1966.

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Photo of Mr Stratton Mills Mr Stratton Mills , Belfast North 12:00 am, 27th July 1966

A closer comparison is a comparison with David Lloyd George, who, by his oratory and brilliant mind, bewitched the electorate and won a classic victory in 1919. But eventually people saw through him, and that is what is happening now to the right hon. Gentleman. As my right hon. Friend the Member for Barnet (Mr. Maudling) said, people are rumbling him. Hon. Members opposite must realise that the Prime Minister is now repudiating everything in which their party has believed for two generations.

My right hon. Friend the Member for Flint, West (Mr. Birch) is entirely right to say that these measures are the greatest deflation in this country's history. I read this morning some of the speeches made by right hon. and hon. Members on the Treasury Bench when they were in opposition. I shall not repeat them to the House this evening, but the complete world of unreality that they built up when in opposition can be seen in those HANSARD reports and in their election speeches. They are now saddled with those speeches. Part of the reason why they are having such great difficulty in removing those shackles is that their history is sitting on their shoulder and is particularly difficult for them to move.

Why have we had this crisis of confidence and why, in the past week following the greatest deflation in history, has the not recovered as sharply as one would have expected? The reasons are complicated. What frightens me most is that the Government could put up Bank Rate to 10 per cent. and could take another £1,000 million of purchasing power out of the economy, but it would have no great effect on overseas holders of sterling, because they have now reached the stage at which they do not have complete trust and faith in the Prime Minister because they recognise his financial schizophrenia. Unless this situation is recognised, we shall drift on and on, and we shall be merely postponing yet another crisis.

The other frightening thing is the way that overseas opinion is concerned about the failure of public opinion in the country to recognise how difficult and tight is the situation facing the Government today. Hon. Members can go out of the House and ask people in their constituencies—people do not yet really believe the true basic seriousness of the crisis. It has not come home to ordinary people; they do not believe it. The Prime Minister has helped in the past to create the myth that by verbal sides-stepping one can deal with economic problems. There is a duty on all hon. Members to impress on the people in their constituencies the great seriousness of the situation and the need to face up to it and to the changes which the Government are making.

I was horrified this afternoon by the Prime Minister's suggestion that the nation had been caught by surprise by this economic crisis. That suggestion does not bear examination. I read the newspapers, and it had been clear since at least the beginning of this year that an economic blizzard was approaching. Anyone reading the Press and examining the level of the gilt-edged market would have seen all the danger signals. They were accumulating, and by the beginning of July they must have been sitting around the Treasury door in squadrons, because they were there to be seen.

The Prime Minister said that they caught him by surprise. The real trouble was that he saw them coming early in the year and rushed a General Election at the end of March because he knew that after the measures which were presented last week he could not have faced the country this autumn. The Prime Minister's argument that perhaps, he was naïve and a little simple and that it was a bit of bad luck simply does not wash. The right hon. Gentleman has been caught out on this occasion, and the electorate will not forget it when their next opportunity comes to express dissatisfaction through the ballot box.

I come now to the Prime Minister's handling of Press relations during the crisis. Hon. Members will recall that, on the Saturday, 9th and Sunday, 10th July the Press was very bleak as the crisis blew up, and it was quite clear—I shall not read all the cuttings—on Monday 11th July that guidance had been given from an official source to the Press as to the Government's interpretation of the crisis. I invite hon. Members to look at the newspapers for Monday, 11th July; they all told the same story. The best summary of what had happened appeared in the "Insight" column of the Sunday Times on 24th July: Trevor Lloyd Hughes, Wilson's Press officer, issued strong denials that the situation needed such measures…. But thrughout Monday the guidance to journalists from No. 10 remained sanguine: no mini-budget, no need for deflation. The article adds that dealers in foreign exchange had gradually ceased to believe what the Government were putting out.

It is justifiable for the Government Press Office to put out guidance to the Press on certain issues, but, in order to be clear about the composition of the crisis, it is essential that we be given the facts. I want the First Secretary of State to tell us exactly what was done by the Government Press officer on this occasion and to give us his judgment of its effect upon the development of the crisis.

Now, the rôle of the Chancellor of the Exchequer. We often see the right hon. Gentleman in the House, smiling and confident—and virtually always wrong. History will say that his judgment is so bad that he must go down as the most complacent and incompetent Chancellor of the century. I shall not quote them to the House, but I invite hon. Members opposite to look through the economic predictions of the Chancellor of the Exchequer since he took office. Virtually invariably, his judgment has been wrong. Overseas opinion has very little faith in anything he says.

There is a strong case now for the Prime Minister to get rid of him and appoint a new Chancellor of the Exchequer. This could be a vital factor in helping to restore foreign confidence. Moreover, the Prime Minister must give an assurance that he will not for ever be sitting on the desk of the new Chancellor. Let us have a strong Chancellor and one who is not dictated to by the Prime Minister.

There is much more I should like to add, but I conclude in this way. The Prime Minister's statement means, inevitably, a cut in investment. This is so clear that I need not elaborate the point. It will mean unemployment in areas like Northern Ireland and in the development areas. It is a fact that men will be thrown out of jobs, whether or not the Prime Minister calls it redeployment or uses the old-fashioned word "unemployment". This, together with the Selective Employment Tax, will increase our difficulties in Northern Ireland.

Yet the right hon. Gentleman talked today of sheltering the development areas. This is hypocrisy, for the combined effect of the Selective Employment Tax and the rundown of industrial investment will be fewer jobs in areas of that kind. The right hon. Gentleman promised us other things at the election. When the next election comes in Northern Ireland, his record will be remembered. The measures he introduced will be remembered. His incompetence and mismanagement of the economy will be remembered. He will go down in history as one of the worst Prime Ministers of the century.