Economic Affairs

Part of the debate – in the House of Commons at 12:00 am on 24th July 1967.

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Photo of Mr Edward Heath Mr Edward Heath , Bexley 12:00 am, 24th July 1967

No one in this debate has challenged the fundamental seriousness of the present position. In this respect the debate has reflected the anxiety now prevalent in the country. The Chancellor of the Exchequer very fairly said that he thought there were justifiable reasons for understandable anxiety about aspects of the economy. It was exactly this seriousness of the situation that I analysed in the first half of the speech that I made recently at Carshalton.

The Chancellor of the Exchequer immediately stepped in to repeat publicly that the Labour Party is the party of high taxation, wants it, likes it, believes in it and is going to make certain that everybody else likes it whether they want it or not. But the Chancellor was very careful in his intervention two hours after my speech not to challenge one single part of the analysis of the present economic situation. Nor in his speech today has he challenged any single item in it. Nor do I believe that the President of the Board of Trade, when he winds up—it is perhaps a little strange that the First Secretary is not even here, let alone winding-up—can challenge any part of it.

I can summarise it very briefly by saying that the trend of unemployment is still steadily upwards, with the highest figure for July for nearly 30 years. The winter is to be at a very high level. Then the Prime Minister's specious comparisons with the figures for 1962 will stand him in precious little stead. Production is back to 1964 and still falling, although productivity may be rising.

But if the Chancellor had really wanted to talk about productivity he ought also to have admitted that in 1963 and 1964, the years which he was criticising, productivity was rising even faster and total production—the total wealth of the country—was rising faster whereas now there is no increase in wealth at all. Private industrial investment is down and still falling. Prices are up and still rising—the largest jump between May and June since 1962. The most Astonishing fact of all is that in the nearly three years in which the Labour Government have been in power real incomes—the real incomes for the people of the country—have fallen, and where people are maintaining their standard of living they are doing it by drawing on savings. I do not believe that anybody in the House can recall any period since the war in which real incomes throughout such a period were falling. These are the results of nearly three years of the Labour Government.

But there might be some who would say that this was being done for two purposes and that if the purposes were successful then it could all be borne. The purposes were to secure a surplus on the balance of payments and to keep sterling strong. The plain fact today is that the policy has not succeeded in either of those two purposes, and that is the fundamental cause of the anxiety in the House and outside it. The Government's policies have been costly and they have not achieved their purpose.

So we have put down this Motion of no confidence in those policies and the hon. Member for Poplar (Mr. Mikardo) has put down an Amendment of no confidence in them. Whatever happens in the Lobbies tonight, the plain fact is that the Government and their supporters do not have a majority in this House of confidence in their policies. The Chancellor today conceded the case of those who have put down the Motion and the Amendment. He told us that unemployment will rise to fresh peaks in January. What will the figure be? He did not say. Will it be 750,000 or more, with the commensurate loss of production as a whole?

The right hon. Gentleman said that the growth rate of 3 per cent. will not be reached this year. He is now being frank. He has admitted the misjudgment. He set out to get 3 per cent. and is not going to get it. He has conceded the case.

Nor is the right hon. Gentleman going to get his expected surplus on the balance of payments this year. He may not get a surplus at all, and he knows it. First, it was to be a balance of payments surplus in 1966. Then it was to be a surplus by the end of 1966. Then it was to be a surplus in 1967 of £200 million. Now it is to be a surplus in 1968 without a surplus in 1967. Always tomorrow and never today.

What is more, the fault is always somebody else's. Last time, in the Prime Minister's dramatic words, the Government were "blown off course" by the non-existent ships in the shipping strike. This time the Government are stranded in the Suez Canal. But the Chancellor knows full well that before the Middle East crisis could have any effect his balance of payments surplus had gone and that the deficit on current account for the first six months of this year was greater than the total deficit on current account for the whole of last year; that is, on trading account.

This is the latest of the list of illusions under which the Government have laboured for three years. It all started, as my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) pointed out, when the Government, having taken over and looked at the books, said that there was no undue pressure on resources calling for action. Then, in 1965, the Prime Minister said that the decks had been cleared for action—another dramatic naval metaphor. This was before the Government were blown off course.

Then the present Foreign Secretary said, "We are winning through". Later he said, "The decline is over". Not to be outdone, in February, the Prime Minister said that the economic crisis was over. What have we been debating for three years? He added: Production is now picking up again. The Chancellor's finest hour was when he said to the nation, I think that we are round the corner. A moment later, he added: At least, turning the corner. Then the Prime Minister again: The economy is getting better … Britain is on the move again. The Prime Minister castigated the Press for its "defeatist cries", "wet editorials" and as "moaning Minnies".