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Part of the debate – in the House of Commons at 12:00 am on 10th December 1971.

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Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Enfield West 12:00 am, 10th December 1971

It has been admitted by the Leader of the Opposition. When Prime Minister, he flew to American and told them what a grand country we were. He was anxious to let them know how strong and rich we were. "Please do not take any notice of the speeches I have been making at home. They are for home consumption. We are basically a rich, sound nation" he said, in effect.

The Leader of the Opposition has made it clear that the "confidence factor", as it has been called, came into question after the Labour Party came to power rather than on its arrival. In fact, hon. Gentlemen opposite became the Government with the good will of many people, but by their actions squandered that good will. I implore the hon. Member for Walton please to continue making the sort of speech he made today. That will ensure that the Labour Party does not get its hands on the levers of power for a very long time to come.

The hon. Member for Ashton-under-Lyne (Mr. Sheldon) spoke of a crisis of confidence, the present economic crisis, as he called it, and the terrible state of the economy. I do not want to bore the House, but after the hon. Gentleman's remarks I obtained a copy of the Bank of England Quarterly Review, from which I will give a few facts to show the hon. Gentleman that things are not as bad as he seems to think they are.

First, our currency, the £, is riding at a record high. Second, our reserves are at a record level. Third, we are, according to the Quarterly Review, poised for a rate of growth of at least double that achieved by the Labour Government during their term of office. Fourth, company profitability, with the disappointing exception of I.C.I., has been moving ahead. Companies are beginning to generate the cash they need to finance their investment. Fifth, the banks are now anxious lenders. Instead of being reluctant lenders, they want to lend people money. In other words, people who have a good proposition can now find the finance for it. Sixth, interest rates are lower. Seventh, prices are steadying. Eighth, there is likely to be a 6 per cent. increase in productivity. Ninth, wages and the wage inflation show signs of abating.

Whichever way one looks at it, one can say—and I urge the hon. Member for Ashton-under-Lyne to agree—that these are signs that not too much is wrong with the economy. To talk about an economic crisis is to do what he deplores as much as anyone else, which is to damage the confidence factor, the very factor or missing link which the Government are seeking to improve.

I sympathised with the hon. Member for Ashton-under-Lyne as I listened to him talk in a rather puzzled way about the vast sums that have been spent in the regions, about the inability to measure the effect that they have had, about the inability to know whether the money had produced the jobs for which everyone hoped and about the fact that it had not transported to the regions the prosperity which we all want to achieve.

To my astonishment, the hon. Gentleman went on to speak about investment grants. If ever there was expenditure of which it is simply not possible to track the effectiveness, it is expenditure by way of investment grants. About £578 million was spent in the year to 31st March, 1970. The only thing one had to do to get the money was to prove that one had spent it. There was no machinery—it would have been virtually impossible to devise machinery—for measuring the effectiveness of the expenditure.

As I said in the debates on the Industrial Expansion Act, no Government have the right to pour out £578 million to people simply on the production of a chit showing that they incurred expenditure, without having any way of knowing whether it was producing any good; and there is no evidence to prove that investment increased during the time that investment grants were being paid.

It is interesting to note from the Survey of Investment Intentions that, given the choice, 60 per cent. of the people making 60 per cent. of the investment, prefer free depreciation.