Orders of the Day — Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 25th November 1968.

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Photo of Mr Roy Jenkins Mr Roy Jenkins , Birmingham Stechford 12:00 am, 25th November 1968

I take the point of my hon. Friend, even though he was not able to complete his intervention, but I think, if I may say so, that I shall manage to get along with the Opposition without his help, grateful as I am.

Before I come to the present and future international scene, which is clearly a crucial factor at present, there are two further points which have been put forward by the right hon. Gentleman, one, as I understand it, in his speech at Derby on Saturday afternoon and one which occupied a considerable part of his speech here this afternoon.

First, the right hon. Gentleman implied at Derby that it was one of the faults of the Government that the crisis affecting the franc and the mark should have had a serious backlash against us. That, I must say, seemed to me to be a very narrow and partisan view, and also a most extraordinary statement coming from one who was a Minister in office in 1961. Then we had a crisis of speculation in favour of the Deutsch-mark before and after its small revaluation, but it was as nothing compared with last week's trouble. The franc was not at issue and the world monetary system was in much better shape. But what hap- pened? Did we sail through? On the contrary, we had a major British crisis, with all the restrictive measures associated with the right hon. and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd).

The second point, and it was made strongly by the right hon. Gentleman this afternoon, and was also made by the right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) on Friday afternoon, is that it is public consumption, public expenditure, rather than private consumption, which should have been cut. I do not agree in present circumstances. Throughout this year I have taken a very tough attitude towards public expenditure, sometimes a little too much so for some of my hon. Friends—and for some hon. Members opposite. If necessary, I shall continue to do so. No doubt, also, the party opposite will continue to talk in general terms about public expenditure—and oppose every specific proposal for reduction.

What I can tell the House is that we are right on our January target, right on the figure laid down by the Prime Minister on 16th January. The figure in real terms for 1968–69 will be almost exactly what the January White Paper stated. For 1969–70, which is the only year we could affect at this time, we are also close to target, and we are working on an increase of only 1 per cent., substantially less than the likely growth of the national income.

I should add that this does not mean that there will be no Supplementary Estimates this year. [Laughter.] If the right hon. Gentleman will think before he laughs so much, he will realise that it is not possible to avoid these, partly for prices increases, and partly because, as is inevitable with a big total, we have some necessary increases, many of which he has advocated, offset, as we have done, by some savings and the savings do not show in the Supplementaries, but the increases are bound to show in the Supplementaries. But it is consumption and not public expenditure which is out of line, and I have attacked, and as I believe was right to do, in the right sector and not indiscriminately.

Let us get away from the senseless view that public expenditure, properly controlled, is a luxury, a sort of self-indulgence benefiting civil servants, Ministers, and noboby else. Public expenditure is essential to our national performance and welfare it means our schools, our roads, our defence, our protection for the worst off, our regional policy.

As I understand, the right hon. Gentleman had a good deal of rather curious things to say about defence. He certainly did not leave us clear whether he was advocating that defence expenditure should be put up or brought down, but I am perfectly sure, unless his plans are meaningless, that it will mean a substantial increase in expenditure indeed.

What was his main proposal in this connection? It was a recasting of agricultural subsidies. I am not saying that the agricultural subsidies position is always perfect. In the earlier part of his speech the right hon. Gentleman talked about the silent revolt of the consumer. The consumer, in his view—I do not agree with him—would not put up with price increases, and would defeat them. What does he think the advantage for the management of the economy will be if these hundreds of millions of pounds are put on to the consumers? How does he think that they will react?

The right hon. Gentleman said that what we need above all is a stable currency. What is his policy for public expenditure? It is higher rents and higher food prices. Moreover, it has been suggested that as General de Gaulle is proceeding by this method we should, also. There is a very different position in our respective countries. General de Gaulle is coping with a huge Budget deficit. Our position in this respect is incomparably better. Public expenditure in France—also on a broad view—is probably 6 per cent. higher in proportion to the national income than it is in this country.

I come back to the central problem. During the past few days we have seen the continuing fragile nature of the world monetary system—