Economic and Energy Situation

Part of the debate – in the House of Commons at 12:00 am on 18th December 1973.

Alert me about debates like this

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00 am, 18th December 1973

Further to that non-point of order, I was quoting from the minutes of evidence before the Expenditure Committee which have been published by the Committee. I was asking whether there is a bogus element in the cut in expenditure because of the Treasury claiming credit for unspent margins. I wish I could feel that that was the answer, but if the Chancellor's statement means anything at all—and he intended it to mean something—he has used this crisis to force on the country a series of grave cuts in social expenditure.

There is a cut of £19 million on "Trade, Industry and Employment". We should like to know more about this, especially after what I regarded as the sinister warning about the regions that the chancellor gave in answer to my right hon. Friend the Member for Birkenhead (Mr. Dell). We should like to know more about the cut in "other environmental services" of £148 million. What do these cuts constitute? There is a cut of £182 million in education. There are threats to cut the rate support grant, which can only mean an additional rate burden on millions of householders. There is the cut of £111 million in health, social services, hospitals, health centres and other personal services. We recall the Prime Minister in his extra-parliamentary mini-Budget at Lancaster House announcing cut-backs in school building, hospital building, old people's homes, nursery schools and classes. Does yesterday's announcement mean a further cut over and above the Prime Minister's cut, or are they one and the same?

Apart from the surtax surcharge, other action was open to the Chancellor. Last Friday, in setting out the proposals that I felt could form part of a national programme for fighting the crisis, I said that the Chancellor should retrieve for the public purse the £300 million handed out as a supplement to the take-home pay of the wealthier taxpayers and the at-home pay of those living on investment income. I said that he should retrieve for the public purse the tax remissions granted in his decisions about the aggregation of child income within wealthy families, and the grant of tax deduction in respect of interest on overdrafts so much of which is incurred for speculative purposes.

I know that a Chancellor when producing a Budget has to balance at the margin his proposed changes in public expenditure against prospective changes in tax revenue. The condemnation of the Chancellor's Budget yesterday means that when he was juggling his respective proposals for revenue and expenditure he decided not to revoke his previous over-generous tax concessions to the rich but to reduce an equivalent amount of essential social spending on education, health, law and order—and environmental services, which when spelt out in detail are related to the quality of life in our cities and towns and the countryside. This he has done at a time of national crisis when he should have been seeking to unify the country. That this was his value judgment suggests to me that he has learnt nothing and forgotten nothing since his divisive mini-Budget of October 1970—milk-snatching and the rest. It means that when the Government are up against it and unable to rely upon printed money it is "Selsdon man" all over again.

The Chancellor had a margin of between £400 million and £500 million to meet. It could have come from a reversal of concessions to wealthier taxpayers. He chose to cut it from education, health, environmental and municipal services. We wonder why this is a divided country. If the Chancellor needed some symbolic, or more than symbolic, cuts in public expenditure to impress our creditors abroad, why not Maplin? I know that the Government tell us that it is only £1 million this year and £2 million the next, but that is how big spending programmes begin. If he had announced that Maplin had been postponed he might have been more impressive. Why not put an immediate stop on the current version of the Channel Tunnel, a project which the Government are falling over themselves to start?

My final comment on the Chancellor's statement is that its frivolity is proved by the fact that he has not swept away the farce of organised anarchy in the City which he set up in 1971 under the heading of competition and credit control. Farce it is, though for young families seeking a mortgage it is a tragedy. He should restore orderly borrowing control based on priorities, as carried out under successive Governments in different periods, including capital issues, and at the same time clean up the underworld of secondary banking. So the Chancellor missed a great opportunity yesterday. Instead of rising to the occasion, he reduced it to his level and rode it. There is nothing in yesterday's statement to unite the country.

I think that the whole House will agree that whenever before Britain has been faced with crisis and danger we have faced it as one national community working for the good of the nation as a whole. For that spirit and determination to be invoked today, there are three overriding requirements.

First, there must be a common, nationwide effort. No one can be allowed to opt out. No one can sit back and enjoy the fruits of the labours of others.

Second, that effort must be directed to maintaining full employment within the limits set by our energy supplies. No one, whether for private profit or for any other motive, has the right to exploit our national difficulties for sectional advantage. That includes the property speculators.

Third—[Interruption.] Conservative hon. Members are getting upset. I am talking about the conditions for a united country and not a divided country. Third, a common nation-wide effort must be directed to fighting inflation as an overriding task. That means Government policies specifically directed to dealing with food prices, the cost of housing and all other household essentials. It means that the old, the sick, the disabled and others unable to withstand economic pressures should be protected. It means that the greatest burdens and sacrifices must be borne by those with the broadest backs.

The programme which I put to the Prime Minister is, first, the breaking of the cycle of inflationary costs, claims and counter-claims. There must be subsidies on main essential foods. There must be much stricter control of essential foods and other prices at all levels—namely, production, wholesale and retail. Gross retail percentage margins conceded in stage 2 must be replaced by strictly controlled cash margins.

Second, rents and mortgage interest rates must be put under strict control. Repeal or sterilisation must take place of those parts of the Housing Finance Act which require the imposition of steadily increasing house rents. There must be control of the flow of funds in the City to ensure that borrowing for essential purposes takes priority over borrowing for speculation or monetary manoeuvring, second mortgage rackets and the rest. High in the priority categories must be provision for all funds needed for mortgages for owner-occupiers, for local authority house building and for all the houses in a programme based on need and related to the supply of materials and manpower available. There must be Government action to ensure that the land is available at or near existing use values. Building costs must be controlled by outlawing labour-only subcontracting.

Third, the poison must be extracted from the industrial scene by repealing or sterilising the provocative sections of the Industrial Relations Act. Pending that, the Government must regularise their existing policy by announcing that no Minister will activate any section of the Act involving recourse to penal provisions. In fact, they have been trying not to do so for a long time. They must announce that that will be their policy. The Act must be placed beyond the reach of private entrepreneurs. That is what we ask the Government to do with the Act before a Labour Government cuts its dirty throat.

Fourth, there must be protection from inflation for everyone covered by social security legislation. The Prime Minister knows that it is my proposal that pensioners and others should now be brought within the threshold provisions of stage 3. They should be entitled to weekly increases in pensions for every percentage increase in the retail price index beyond 7 per cent. over the October 1973 level. Most commentators think that that will occur in the early spring.

Fifth, to get the necessary taxation to enable such measures to be made, and for food subsidies, the Government must claw back the 1971–73 handouts to the very wealthy. They must introduce a tax, not a tickle, on the land and property speculators.

Sixth, we have urged on the Prime Minister to appoint a senior Cabinet Minister as Minister of Fuel and Energy, responsible only to the Prime Minister. His directive should include full responsibility for North Sea and Celtic Seas gas and oil, with the use of quasi-wartime powers to ensure speedy construction and exploitation; the development of new coal seams; the construction of oil from coal plants; and the power to issue directions to multi-national companies.

I now turn to the major issue of stage 3 and the current damaging industrial action. Stage 3 has become the Maginot Line of the Government's defences. Far from providing national protection, it has become, as we warned it would, a national liability. I do not intend to go over all the reasons which we gave for opposing it. The Government must know, as British and American experience has shown, that it is possible to institute a total freeze for a limited time. That can be done just once. In fact, last year's freeze was a wage freeze only. Food prices, rents, house prices, land and property costs soared during that so-called freeze. Such a freeze can be succeeded by a period of severe restraint, but every month brings fresh anomalies, strains and injustices.

Both sides of the House have had such experience. Every nation finds that the second or third succession of freeze, severe restraints and norms is harder to impose and to make succeed than the first. Stage 3 is dead as an effective instrument. It is breaking down, first, because during stage 3 prices and the cost of living of an ordinary family rose faster than ever. It is breaking down because it is creating more anomalies than it removes.

I understand that the Government hoped that the power station staffs' dispute, which is a real and serious dispute, could be resolved with the long-awaited Pay Board anomalies report. That report has now been deferred for a further month. The dispute continues. I put to the Prime Minister, with respect, that he cannot remove from Parliament all control over vital and central sections of our national life and welfare, and transfer the responsibility to an extra-parliamentary administrative tribunal which is not accountable to Parliament, and then suffer delays of this kind over which no one has any control, not even the Government, while Parliament is in balk and a waiting Britain shivers.

Hon. Members will have read evidence last week that the Pay Board itself recognises that it can exercise only a short-run responsibility until accumulated anomalies and injustices overwhelm its work.

Stage 3 is breaking down because the Pay Board's statutory mandate confines its activities to a legalistic code.

There is no provision, for example, as there was in the mandate which we gave to the National Prices and Incomes Board to have regard to the problem of manpower shortage, wastage and recruitment. Not only did we do that in the 1960s, but in Sir Stafford Cripps' first White Paper in 1948 there was, as a first instruction to the authorities concerned, the matter of manning-up all under-manned industries. That is excluded from all the Government's instructions to the Pay Board, which is an extra-parliamentary body. If there had been such an instruction to the Pay Board it would be inconceivable that, with the present energy situation, with coal prices going up, with a shortage of trained manpower and——