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 Julian Ridsdale Mr Julian Ridsdale , Harwich 12:00 am, 5th November 1973

I have listened carefully to the hon. Member for Dewsbury (Mr. Ginsburg)—particularly in respect of what he said about energy and nuclear power. With the difficulties that we are having over oil at present it is important that a Minister should be appointed to the Cabinet with responsibility for energy.

I want to deal with one problem that affects all of us—the cost of living and inflation. I welcome the fact that, even though the cost of living has been rising at a very severe rate, at least we have instituted an annual review of pensions, and that generally, particularly in the South-East—this may not be so in the North—earnings are keeping ahead of prices and overtime is being worked. We have today a position of full employment in the South-East and not the kind of very deflationary position that led to the lack of investment from which we suffered for so long.

In the context of the present position of full employment, I wish to make a plea to the Government to do something to improve the position in North-East Essex. In our smaller factories there, we have all the capabilities of exporting not only to America but to Nigeria and many other countries. This applies particularly to clothing. But there is a severe shortage of labour. We could so easily clear shortages of labour if the Government would abolish the earnings rule, at least in those areas where there is a shortage of labour. This could be done without a great deal of extra cost. It would mean 100 extra workers in some of the factories in North-East Essex. It would mean £100 million worth of extra exports. I have questioned my right hon. Friends the Prime Minister and the Chancellor of the Exchequer about this matter but I have had no further indication of Government policy. I hope that we shall hear something about the matter soon.

It is gloomy to find a shortage of labour when one visits the factories in North-East Essex and, particularly, two very enterprising shipbuilding yards. The British Steel Corporation cannot find two amounts of 600 tonnes of steel for two small firms until a date which will mean delaying considerably the export of ships to Africa and to other parts of the world. These ships would be earning foreign exchange. This shortage of steel underlines the fact that the steel industry, like so many other industries, has been a shuttlecock of politics, and has not had the necessary investment.

In Japan steel production is now running at between 120 million and 130 million tonnes a year. When one considers the performance of our steel industry one realises that it is the lack of investment in particular which is causing a great many of the problems that we face. This low rate of performance and investment, not only by the present Government but by previous Governments, is the key factor in our present poor economic performance. One should not necessarily blame private industry alone, because 38 per cent. of fixed investment is Government investment. We must step up our rate of investment even further.

I am sure that the Government were right to go for growth, but not growth at any price. Certainly I am glad to see that deficit financing is making way for a more reasonable rate of growth, which can be sustained. How right my right hon. Friend the Chancellor was today when he said that in order to sustain the rate of growth we had to watch Government spending, because otherwise we should not make way for investment as a whole. But the balance of payments position is being made worse by oil. I hope that the Government will see that a Minister is appointed to deal with that problem.

In all these problems the vital factor is labour relations. However much we may be shuttlecocks and talk about imports from Japan—Datsun cars, Toyota cars, Sanyo television sets—there is one key factor in the success of Japan i its present growth factor: there has been harmony in industrial relations and a spirit of determination. If only we had the harmony that exists in Japanese industry, if only we could settle a lot of the discord, we should find many of our problems melting away. But that problem rests with us. This moral factor is more important than many of the economic factors that we have discussed.