Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 5th November 1973.

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Photo of Mr David Ginsburg Mr David Ginsburg , Dewsbury 12:00 am, 5th November 1973

Lord Robens was right, my hon. Friend was right and I am on record as having been right. A fat lot of comfort that is now. Some of us have long advocated that the nation should carry a reserve of coal-producing capacity to meet emergencies. That was the view which some of us reached in 1967.

In my constituency, for example, there have been three pit closures in the last nine years. There was one closure only last year. On reflection, I feel that we need not have been so drastic or precipitate. That coal-producing capacity would have come in useful now. The country would be far better off with that capacity. At the very least it seems that the Government must re-examine the closure programme at once.

If we are to have the coal, we must pay the miners more. That is self-evident. We must pay them more even if they become—I say this quite brutally to the Government—an exceptional case under phase 3. It makes no sense in a free society, where there is no direction of labour, to hope that labour can be moved or retained by exhortation. It does not work. Young miners—and this is a fact which my colleagues can confirm—are leaving the pits in Yorkshire and Nottinghamshire because civil engineering contractors pay them more for comparable work. I hope that the Government will consider that aspect of our energy programme.

The other anxiety which is now in the public's mind is the balance of payments. It has been increasingly recognised that the Government's gamble for growth, which many support, could be a gambler's growth if there are not adequate defences. The key defence is the floating pound. It is worth bearing in mind that we are in a pre-election year running a balance of payments deficit which makes the achievements of the right hon. Member for Barnet (Mr. Maudling) in 1964 look like a positive balance of payments achievement.

The former Labour Government did well to build up a strong balance of payments in 1970. The Government could turn out to have been extremely foolish to have thrown it all away. The trouble is that imports have come in all right. We know that from the figures. However, the Government knows that exports have not gone out adequately.

Many hon. Members have said that there has been a devaluation and that that will help things along. That seems to be the view of Ministers. I do not agree. Those who were in the Labour Government will recall that when devaluations take place they are painful things. They need to be reinforced on the fiscal front. That the Government have not done. They have chosen to adopt what might be described as the South American method. I fear that devaluation—Ministers have not yet said this—has further to go.

There is no such thing as a natural level for currency. But I would remind the House that the United Kingdom's rate of exchange against the dollar is probably too high. The present parity rate is higher than it was at the beginning of the year. The crisis of confidence in the United States arising from Watergate may have something to do with that. But it is probable that in the fullness of time the Watergate crisis will pass.

We must recall that the United States dollar is now basically stronger and that the United States balance of payments is fast improving. The time will come when our American imports will cost a lot more and when our exports to the United States will earn us less.

The Government are deluding themselves if they think that our balance of payments will right itself that fast. Devaluation still has some way to go. The October reserve figures which have just been published confirm my view. We are keeping out of the red by borrowing abroad. Election years inevitably lead to greater financial uncertainties. At times like this prudence and not gambling is expected from a Government. The present Government, as the House knows, are down on their luck. However, I fear that they will gamble whatever the danger to the country in future.