Economic and Energy Situation

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

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Photo of Mr Tony Benn Mr Tony Benn , Bristol South East 12:00 am, 18th December 1973

My first task is to congratulate the hon. Member for Hove (Mr. Sainsbury) on his maiden speech, which was commented upon favourably by several hon. Members. He concentrated on the problems of the elderly and to that extent will have had the ear of hon. Members.

All the speakers in the debate have agreed with the Chancellor at least on one point, in that he admitted for the first time that this country faces the gravest crisis we have had since the war. We are not agreed about the nature of that crisis or its cause, and we are certainly not agreed about the measures that the Government propose. Even if there were not an election atmosphere—which there is—it would be our task in this debate to try to clarify the choices that will have to be made sooner or later when these issues go beyond the Chamber and are resolved, as they must be, in the ballot box.

The Government's case is a simple one. It is that the economic crisis justifies their measures, that the oil crisis has complicated the situation, that industrial disputes have made necessary the measures announced by the Prime Minister, and that the whole nation should now, in duty bound, support the Government. That is a gross over-simplification. The economic crisis, which the Chancellor for the first time admits to exist, did not begin with the oil crisis. There was a massive and growing balance of payments deficit, raging inflation and real poverty among millions of our people. What the Prime Minister was able until recently to dismiss as the 'problems of success' were for many of our people problems of real difficulty that can no longer be neglected.

During this period many of us uttered warnings about what was happening in the overall economic situation, but right up to the last minute the Secretary of State for Trade and Industry pretended that none of these problems existed. He never used his power and authority to warn the nation of what he must have known better than most lay just round the corner. That is the extent of his failure of trust. On the oil crisis, the right hon. Gentleman is the energy supremo. I often read in the newspapers that we need an energy supremo, but I remind the House, as did the Prime Minister this afternoon, that the prime responsibility for the energy situation rests upon the Secretary of State. If, day after day, he reads in the newspapers a demand for an energy supremo, he may well reflect upon what we think he has been doing throughout this developing situation.

The problems of oil supply did not begin with the Middle Eastern war. Anyone who has, even superficially, followed events throughout the summer knows that the likelihood of some cut-back in Arab supplies was evident some months ago.

The main emphasis of the Prime Minister's speech was that the industrial disputes made it necessary for him to introduce the measures that he introduced on Thursday—that what is really at stake is stage 3, and that every decent, honourable, patriotic citizen who believes in a prices and incomes policy must support stage 3.

If the Guardian is to be believed, the Prime Minister warned his colleagues in Copenhagen that Communist elements among the miners and the power engineers were at the root of Britain's problems. If the right hon. Gentleman really believes that the only difficulties he faces derive from the fact that some trade union leaders are members of the Communist Party, it confirms my suspicion that he has not the faintest idea of what is going on.

In the past three-and-a-half years the present Government have done more damage to the fabric of our society than the Communist Party has done in the 50 years of its existence. It is open to the Cabinet at any time it chooses to use the powers which it has taken to test its own theory by putting a ballot to the members of the trade unions to see if they are prepared to reject their leaders in favour of the Government's view. Of course, it has not done so. The Government know in their heart that the trade union leaders speak as best they can for the interests of their members.

In my opinion the three-day week has received less attention than should have been the case. From the point of view of our people it will the first consequence—and a devastating consequence—of the Government's policy. It will create massive cuts in living standards. The Chancellor announced yesterday that there would be no increase in direct taxation. Let the people calculate what the three-day week will mean to them and their wage packets. Let them remember that it may continue for some time. It is a decision that makes no economic sense. If we accept Professor Kaldor's calculation of £400 million cost to national output a week, it will certainly involve a grave dislocation of output and exports. It will be accompanied by a 50 per cent. cut in steel output. It was done without consultation with either the CBI or the TUC.

Therein lies the explanation for the three-day week. It was done as a political measure, in an attempt to pitch the British public against the miners in the present disputes. It is no good Conservative Members pretending otherwise. The Prime Minister proved it today when he said that the three-day week will continue while the ban on overtime continues. It will continue if there is enough coal at the power stations. It will continue regardless of the coal stock position. It is a political decision, introduced by the Prime Minister. There was no consultation.

The coal stock figures, which are available to those who study them, suggest that 20 million tons of distributed stocks were available at the power stations on 1st November, that 9 million tons are burned each month, and that 5 million tons are now being delivered each month. There is a 4 million ton shortfall which, allowing for a reduction in electricity use, would be enough to go through to March or April. I challenge the Minister to publish all the figures about the distributed coal stocks at power stations, and about the deliveries and the delays, so that the trade union movement and the industrial leaders can assess whether these Draconian measures are necessary.

It is my belief that this is deliberate psychological warfare, designed to bring pressure to bear upon the miners in their present situation.

In answer to a question from my right hon. and learned Friend the Member for Aberavon (Mr. John Morris), the Chancellor of the Exchequer said that his measures had nothing to do with the disputes. The omissions from the Chancellor's statement are interesting. There is nothing about food subsidies, rents or mortgages. There will be an increase in coal and electricity charges. The significant feature of the Chancellor's statement is that when, without reference to stage 3, it was open to the Government to make a conciliatory move to the trade union movement on issues which had been raised with it by the TUC since the beginning of stage 1, in September 1972, the Chancellor declined to make a movement in the direction of the TUC. That confirms my suspicion that the Government are trying to escape from their difficulties by heightening the confrontation. I do not believe that the new Secretary of State for Employment will be able to produce an answer by the exercise of personal talents, such as they may be, without regard to the policy which he will have to follow.

Nothing was done about profits. Declared profits have risen by 22 per cent. over the past 12 months. Let no one think, when talking to people who are paying higher prices in shops and in supermarkets, that they do not link in their minds the increase in prices that they pay with the profits of the stores and of the manufacturers from whom they buy their goods.

The second aspect of the Chancellor's statement concerned cuts in public expenditure, with severe cuts in education and in health, and notably in the regions. I mention the regions because this Government have concentrated their regional policy on infrastructure. Any cut-back on the infrastructure does real damage to the policy which the Government themselves have accepted as being the right approach to regional problems. The regional employment premium is to be phased out. The Common Market regional fund has turned out to be a fiasco. Unemployment will rise this year, apart from the three-day working week. Every hon. Member with a regional constituency knows that the first cut to be made when a firm runs into difficulties is its plant in Scotland, the North-West, Wales or the South-West.

The Chancellor of the Exchequer made something of the difference between what he called public expenditure and private individuals. For heaven's sake, does he not think that private individuals benefit from public expenditure? Are not the people who would be attending the health centres which are to be cut, private individuals? Are not the people sending their children to the schools for which the Government pay, private individuals? We had a sudden insight into the total vacuum of the Chancellor's mind. For him there is public expenditure on the one hand and there are private individuals on the other who have some human and almost spiritual merit.

It was the public expenditure cute which brought the right hon. Member for Wolverhampton, South-West (Mr. Powell) back into the fold. The prodigal son came back because he sniffed the fatted calf. He thought that it was there. When he got there he was told that it was not the fatted calf—[An HON. MEMBER: "The golden calf."] That would be speaking too harshly of the right hon. Gentleman. That is language best reserved for others. The right hon. Gentleman has been brought back into the fold because in the theme of the Chancellor's statement he sensed some measure of a return to Selsdon Park.

I come now to the changes announced by the Chancellor of the Exchequer. We have, first, the trifling sniff at the property speculator, with £85 million coming from the whole property market in a year, if those engaged in it pay. Yet one company Land Securities increased its property by £278 million in the six months of phase 2. That is the extent of the Government's bold measure against the offensive speculator.

Then there is to be an increase in surtax of 10 per cent., but not for old surtax payers. Hon. Members who follow their constituency problems will know how many of us have written to the Chancellor about the taxation of pensions only to be told that every bit of income must be seen as taxable, but now we are told that if the person concerned is very rich, then, of course, the surtax payment does not have to be made. This is a perfect example of the two nations applied right up to the moment of national crisis.

Those who think that they are lucky to have escaped higher taxation by means of a general increase in income tax will find themselves being milked in other ways. Incomes will be cut by the three-day week. People will be driven out of employment. The steady and planned erosion of their incomes by inflation will be the taxation that the Government have planned for them. But it is a taxation conveniently done for the Government by the shopkeeper without actually having to be put at the responsibility of the Chancellor of the Exchequer.

The House should ask itself why the nation should support such a policy, and on what grounds the Secretary of State for Employment can go to the country and ask working people to give him backing for a policy as manifestly unjust and unfair as the policy which he puts forward with his colleagues in the Cabinet. This is said to be due to stage 3, but stage 3 is totally out-dated by the very events that made the Chancellor bring his statement forward.

In any case, stage 3 is completely flexible. The right hon. Gentleman will have had time in his new Department to read the Counter-Inflation Act. He knows what its provisons are. A Minister, including himself—indeed, especially himself—can modify any pay deal to any extent at any time that he likes under stage 3 and can override the Pay Board at any time. The Minister is stage 3, if the House understands what I mean. To be told that there are 10 commandments or three stages that cannot be varied without bringing down the Lord Chancellor, together with Sir John Donaldson, like a ton of bricks is to deceive the people. There is no breach of the law in the miners' dispute. That at least is clear.

Since stage 3 came into operation the Government have removed from the Price Commission the responsibility for deciding the prices of all fuels. They have already made a major amendment to their own legislation in the last two weeks. Moreover, they have used that power of bringing the responsibility for coal and electricity back to Ministers not to keep down the price of coal and electricity but to raise it. Although the Prime Minister in an angry mood today denied it, it is absolutely clear that what the Chancellor said about coal and electricity prices is a direct breach of stage 3, because in the price and pay code was a pledge that the nationalised industries' prices would not go up more than allowable costs. So stage 3 has been broken. The truth is that the Prime Minister is set upon a confrontation with the miners.

I turn now not to the management or legislative aspects of this matter but to warn the Government solemnly that if they seek to resolve the issue with the miners by trying to stir public hatred against them they will not succeed. It is astonishing, as any Member of Parliament who is active in his own area will know, that even older people now feeling the effects of electricity cuts, people with no direct or indirect connection with the mining industry, are sympathetic with what the miners are trying to do. That is a fact that the Government had better recognise.

My hon. Friend the Member for Midlothian (Mr. Eadie) referred to the miners' case over the years. I shall not weary the House with it. But anyone who has read the miners' arguments on energy policy will know that—against a Labour as well as a Tory Government—they have argued their case on the ground of national interest. Public sympathy with the miners is hard for the Government to appreciate, because they do not understand either the miners or the public.

The miners are not allowed to be heroes in Fleet Street, except for those not too rare occasions when one or two lie underground in the dark and damp as the rescue teams try to reach them. Then, for a brief instant, the mining communities are heroes; but for the rest of the time they are described as dangerous, radical and undemocratic militants.

It says a great deal for the common sense of the British people that they do not accept what the Prime Minister and the Chancellor say about the miners. There is far wider public sympathy for the miners than the Government appreciate.

If the Government were to be true to the doctrine of demand and supply in which they once believed, we should expect the price of coal and the wages of the miners who mine it to rise in a fuel shortage. It does not escape public attention that when a young married couple want to buy a plot of land on which to build a house the Government do nothing to stop supply and demand operating against that young married couple. That is not described as exploiting the community, although the man who sells his land at the market price is doing individually exactly what the Government now seek to denounce the miners for doing in their more modest wage claim. If the Government try to win this battle, they will cost this country very dear. But in the end it is not a victory that can be won.

Underlying this whole debate is the fact that, from before they came to office, the Conservative Party, the Government of the day, had solemnly concluded that, until the power of the trade union movement could be tamed, they could not implement their policies. That is what the Inns of Court Conservative Association was about. That is what Selsdon was about. That is what the speech to the wives of Leicester was about—to separate the women from their trade union husbands. That is what the "lame duck" policy was about. That is what the Industrial Relations Act was about. Curiously, that is what part of the argument for the Common Market was about—that, in the wider disciplines of European capitalism, the British working class would more easily be brought to heel. In the Counter-Inflation Act and now stage 3, the Government think that they have found an issue on which they can try to go to the people and control the trade union movement.

But things have changed during their time in office. Although in 1970 some people were persuaded that the trade unions were the cause of inflation, and voted Conservative because prices would be cut at a stroke, it is now becoming obvious to more and more families that the only way to defend yourself and your living standards is by supporting the trade union movement. Indeed, where the pay is high, the unions are strong; where the pay is low, the unions are weak; and where starvation wages are paid, as in South Africa, the trade unions are illegal. Let us make no mistake—this is now becoming apparent to many people.

It will, of course, be a central theme of the Government in the election, whenever it comes, that this is a battle between the Government of the day and the trade union movement. But a great deal of sweat and effort and sacrifice and devotion has gone into the trade union movement. It will not be open to the Government. Whatever were to happen in the election—even, as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said, if the Government were to win an election against the miners—none of these problems would be solved.

At a terrible cost to our social fabric, an embittered work force would face a Government with a parliamentary majority who still had nothing but conciliation or confrontation available to them as a policy. The question that many would ask is: if they had an electoral victory behind them, at what stage would that Government move over the line into a dictatorial control of the trade union movement?

The main responsibility for all this lies on the Prime Minister personally. He has done terrible damage to this country in the policy that he has pursued in respect of the trade union movement. It is absolutely certain that the policy that he has followed has not been in the national interest.

I want to conclude by trying to identify as best I can what is the basis of the national interest upon which we should now proceed.

First, I do not believe that the Dunkirk spirit and buckets of fake patriotism constitute a good guide to what we should do. I believe that we must put first things first, and the first things that must come first are a matter of common sense. A settlement of current disputes by direct ministerial action is in the national interest. There is legislative power to do it. The Secretary of State for Employment should do it. Lord Kearton says that it should be done. There are many other industrialists who can understand the international energy crisis but cannot understand why there should be an unnecessary national energy crisis at the same time.

Secondly, there must be an allocation of fuels, in consultation with industry, by political decision and not by market forces. It is in the national interest that industry should receive priority and the steel industry should be preserved.

Thirdly, it is in the national interest that the Government should take control of the oil supply out of the hands of the multi-national companies and see that the information available to the oil companies is made available to both sides of industry.

Fourthly, it is in the national interest that we should now begin to plan a massive investment programme in domestic fuel, North Sea oil, the coal industry, shale oil, British reactors—which the Prime Minister promised would be British and not American reactors—and the necessary reorganisation of transport and fuel saving.