Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 12th March 1973.

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Photo of Mr David Marquand Mr David Marquand , Ashfield 12:00 am, 12th March 1973

At this stage of the evening I hope that the hon. Member for Enfield, West (Mr. Parkinson) will forgive me if I do not take up his argument in detail. I hope also that he will acquit me of discourtesy if I say that the most welcome of his remarks came towards the end of his speech, when he said "In conclusion, Mr. Deputy Speaker".

There has been a curious sense of unreality about this debate during most of the past four days in that we are debating the Chancellor's Budget judgment and the economic strategy for the coming year in the shadow of one of the most serious international crises which the world financial system has known for a considerable time. We still do not know what will come out of it. I do not think that any hon. Member believes that the situation as it is now is likely to last for very long. I am sure that we are likely to see more such crises in the next few months. I hope that the hon. Member for Enfield, West will acquit me of being too pessimistic when I say that, since I am sure it must be common ground between the two sides.

A rather depressing piece of conventional wisdom seems to have developed—it has been evident on both sides throughout the debate—in relation to the European aspects of the present international financial crisis. Everyone seems to agree that it would have been undesirable if the Chancellor had been able to achieve success in the negotiations and had been able to take part in a combined float. I do not agree. It is entirely right that the Chancellor could not possibly take part in any combined float save upon the terms he tried to secure, but I believe that the situation we are in now has clearly demonstrated that a nation State of the size of this country, or the size of any of our counterparts in Western Europe, can no longer control its own economic affairs because international capital has escaped from the the control of democratically elected Governments. That is a fact of life.

Every major currency has been toppled in the past few years, or, alternatively, has been forced into revaluation against the wishes of the Government concerned, because international finance is no longer controllable by national Governments. It has happened even to the United States, the strongest economic power in human history.

Against that background, it seems to me to be foolish for hon. Members—if I may say so, I apply this especially to us on this side, who believe in the necessity for democratic government to control economic power—to turn their backs on the whole concept of economic and monetary union in Western Europe. I believe that the only chance for a Socialist movement in Europe ever to be able to control international capitalism lies in developing a monetary union eventually in a Socialist direction.

All sorts of preconditions must be insisted upon, of course. It would be insanity for this country to take part in any kind of monetary union unless it secured as a quid pro quo a far more effective and far more generous regional policy than has yet been contemplated. I do not think that what was agreed upon at the Paris summit meeting last autumn can be regarded as being in any way more than a small first step towards an effective Community regional policy.

I would remind hon. Members, however, and hon. Members on this side of the House particularly, that if we could get an effective Community regional policy, this country and the depressed regions particularly would have a very great deal to gain from it. There is only one region in the United Kingdom which has a per capita income higher than the EEC average, whereas all regions, even the most depressed regions, in the Federal Republic of Germany have a per capita income above the EEC average.

If we could get an effective regional policy which involved a really significant transfer of resources from the prosperous regions of the enlarged Community to the less prosperous regions of the enlarged Community, this country would benefit more than any other member of the EEC, except for Italy. [Interruption.] My hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) thinks that this is impossible. I think he takes too pessimistic a view. We have some leverage inside the Common Market, and if we fought hard enough for it—it would take too long now to explain in detail how we could do it—we could get the kind of regional policy which would make membership of a monetary union not something to be feared but something to be looked forward to by people in this country.

The second point that I want to make will be less acceptable to hon. Members opposite. It proceeds from what the hon. Member for Enfield, West was saying when he was criticising my right hon. Friend the Member for Bristol, South-East (Mr. Benn) for what he had said about the causes of inflation. I think that the Conservative Party has simply failed to understand what is really behind the inflationary pressure that exists in our society today. All over the Western world—not only in this country, not only in countries where there are dangerous firebrands like my right hon. Friend egging on the working class—I say that in quotation marks—there has been the same phenomenon. In fact, the rate of inflation has been a lot worse in some other countries than it has been here.

Why has that happened? It is because all over the Western world, and not only in this country, because of the effect of the mass media and the effect of improved educational standards and a whole host of other standards, working people have realised the extent of the inequalities in society in a way which they never did before. They are no longer prepared to support them. Therefore, they have taken the only way out which exists for them, and that is the way out—I believe it to be a self-defeating way out—of pressing for ever higher money wages. That is the real social background to the present inflationary explosion.

Therefore, it follows—and this is the point which hon. Members on the Government side have failed to understand—that one cannot hope to deal with the real pressures lying behind inflation unless one attacks inequality in society at its roots. It is not a matter of what has to be done to make a bargain with the trade union leaders. It is a matter of what one has to do to change society so that the resentments and the frustrations which have piled up no longer exist.

That is the real charge against the Conservative Party. This is what the Government have failed to do in every single Budget which they have presented. They have made inequalities in our society worse than they were before. They have added to the resentments. They have created greater social injustice and a greater sense of social injustice. That is the real charge against them, and that is why their policies will collapse in ruins.