Orders of the Day — Economic and Energy Situation

Part of the debate – in the House of Commons at 12:00 am on 19th December 1973.

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Photo of Mr Roy Jenkins Mr Roy Jenkins , Birmingham Stechford 12:00 am, 19th December 1973

The House has just listened with considerable attention to my hon. Friend the Member for Newcastle-upon-Tyne, (Mr. Robert C. Brown) who speaks with great authority, as he has done this evening, on regional problems, to which, as was clear from the exchange on Monday, no attention has been given in the Chancellor's Budget.

There have, in general, been fluctuating responses to the Chancellor's statement in the past two-and-a-half days. At first the general mood was a combination of relief, of unease, of anti-climax. It was almost exactly the wrong mood to have created in a period of national crisis. However, it was combined, as we read the next morning, with some considerable satisfaction on the Government benches that the Chancellor had once again done a skilful party political job, but I do not believe that that remains—if ever it was the case—anything like the unanimous view on the Government benches.

We have heard a number of interesting speeches today. I heard the hon. Member for Cannock (Mr. Cormack), who spoke forthrightly, and the hon. Member for Oxford (Mr. Woodhouse), both of whom, amongst other matters, spoke of the Industrial Relations Act. They would like to see it go. It is clear that there is now nothing standing between its effective repeal but the vanity of some members of the Government. It is time it went.

There are, in addition, too many Government supporters who know that the time for skilful political jobs is over, who know that the methods of the past few years have been responsible for the slither into a financial mess at home and abroad which was there before the oil crisis, before the coal crisis and, as the Chancellor made clear in a perhaps unguarded reply on Monday, would still be there if the immediate issues were fully resolved.

The pattern of leadership which the Government have chosen to present in the past couple of weeks has been fluctuating and confused. It was barely a few weeks ago that, long after the miners' overtime ban had started, the Secretary of State for Trade and Industry was still exuding the uncomprehending optimism of a professional salesman. It was only 14 days ago that the Chancellor of the Exchequer was petulantly and publicly rebuking the Director General of NEDO for daring to suggest that the 3½ per cent. growth target for next year was no longer valid. It was only on Wednesday of last week that the Home Secretary was rejecting, with all the comfortable blanket indignation of a Minister largely detached from central economic policy-making, my charge that the Government were complacent rather than realistic.

Then on Thursday, without warning or consultation, the Prime Minister suddenly lurched into the announcement of the most serious crisis since the war, accompanied by the most drastic and damaging measures for a 40 per cent. shut-down of industry and by the news that the Chancellor was to break his clearly given pledge of 27th July—repeated by the Leader of the House on 15th November—and introduce an autumn Budget. I do not accuse the Prime Minister—[Interruption.] Yes, it is just within the time. Even phase 3 does not change the calendar! I do not accuse the Prime Minister of manufacturing an artificial crisis. I think it is a real crisis.

What is almost impossible, in view of the chronology, is to escape the view that he made a sudden tactical decision, for whatever motives, to move from a posture of reassurance to one of presenting it in the starkest possible terms. What also is impossible is to escape the conviction that were he not seeking a scapegoat, were he not blaming a circumstance which he believes can be to his political advantage, he would have sought to mitigate and postpone the consequences. The contrast between the Government's approach to petrol rationing and that to electricity allocation, even allowing for some inherent difference in the supply position, is too sharp for any other explanation.

Following this sombre and sudden plunging of the country into a half-time economy, we awaited the Chancellor's Budget. We heard the appeals for national unity—re-echoed, quite rightly, by my right hon. Friend the Leader of the Opposition last Friday. We read the Government briefing in The Times of Monday morning, foreshadowing the toughest of measures, but measures also which would endeavour to create a new climate, to right some of the major injustices of the past, to take a grip on the most oppressive of price increases. It was a moment for a fundamental reappraisal of social priorities—a moment maybe for new and considerable burdens, a forbidding task for a Chancellor of the Exchequer, but a moment, too, out of which a new hope might have been born.

When the Chancellor came into the House on Monday afternoon, I must confess that I felt for him a considerable amount of sympathy. Of course, he has brought a lot of it on himself. He has trodden the primrose path only too blithely. He dodged the issue last April. But, God knows, we all make mistakes, and I have advanced too often upon the Government Despatch Box with a heavy task to discharge not to have some fellow feeling. But then, as the Chancellor proceeded, the sympathy died within me. It died first because of the sheer lack of logic of his proposals, a lack of logic arising not by accident but out of his determination, as so often in the past, to do everything behind a smokescreen—to make false excuses for his actions.

It died further as I heard the irrelevance and triviality of his measures.

And then there was the beginning of a smile which came over the Chancellor's face when he thought that he saw the possibility of making a party point against my right hon. Friend the Member for Leeds, East (Mr. Healey). He was beginning to get on secure party ground. Then we had the typical and sought-for reaction afterwards. "Tory MPs believe package good for early Election" was the headline in the Financial Times on Tuesday morning. So much for the appeals for national unity. So much for the Chancellor's attempt to be a statesman.

I come now to why the Budget is trivial and wrong. Presumably it is meant to deal with the mammoth imbalance both in our external trading account and in our internal public accounts. It does practically nothing about the former and it makes a much more modest contribution to the latter than some Government supporters have suggested, including, I thought, the right hon. Member for Wolverhampton, Southwest (Mr. Powell).

The public sector deficit is not and will not be eliminated. The need for very high interest rates or the resort to money printing does not disappear. There is only the prospect of a reduction from the £4,300 million public sector deficit to the hitherto unprecedented level of perhaps £3,000 million or something below. But that will not come effectively into operation until the fourth quarter of 1974. By the same token, there will not be much—even indirect—effect upon the balance of payments until then, when it ought in any event to be improving.

It is suggested that the Western countries as a whole will be in deficit because of oil prices and that it would be a mistake if we all attempted, possibly in a self-defeating and damaging way, to correct that deficit. There is a good deal in that. But what is unique in our position is that, thanks to the Chancellor, we start with a deficit currently running at more than £2,000 million a year. Other countries start as the right hon. Gentleman started three years ago, in some cases from a large surplus, in others from a balance, in one or two from a small deficit. To take a £500 million unavoidable oil burden on top of £2,000 million or more arising quite independently and before the oil trouble had bitten is quite different from absorbing it into a strong or even a neutral position. That is why the Chancellor's special contribution has been to leave us appallingly exposed.

I find the view of the Prime Minister, reiterated yesterday, that this deficit was necessary for growth quite unconvincing. It may be that it would have been necessary to pass through a period of moderate deficit. But to have plunged into this trough, unprecedented in its depth, for this or any other country of similar size, is altogether another matter and cannot have been in accordance with common sense or expectation.

Let us be clear, furthermore, how limited and short-lived has been the Government's growth record so far. The Prime Minister talks constantly as though he had a great store of achievement behind him and that it was to be contrasted, so he implies, to our record. He has nothing of the sort. The yearly growth of the gross domestic product calculated on an average of three possible methods for the 2½ years from the 1967 devaluation to the 1970 election was 2·7 per cent. The average from the election until the last quarter for which figures are available, since when it has tailed down of its own accord, was 2·6 per cent. Like the investment boom, when we are still not back to 1969 figures, it has been a doubtful promise for the future, not solid achievement from the record. The future has now been postponed, if not cancelled.

Almost the only one of Monday's measures which will make any yearly impact on the balance of payments are the hire-purchase controls. It does not need a Budget, mini or otherwise, to introduce them. The attempts at equality of sacrifice window dressing are derisory.

The property development tax, which, to be effective, should have dealt with unrealised gains—this is the real scandal—and, perhaps as a lesser issue, with unlet premises, has all the effectiveness of a feather duster fingered with the distaste which comes from a repugnance to pick it up at all. The total expected revenue is not enough to impose an adequate deterrent upon even a single big property company.

The surtax surcharge takes altogether only a tenth of what has been given away. In more serious circumstances its impact, allowing for the change in the value of money, is barely a quarter that of the special charge that we introduced in the 1968 Budget. To continue in present monetary circumstances, as is now widely recognised, even in the City, with the relief against tax of personal borrowings is a mixture of economic lunacy and fiscal inequity.

Then there is the central issue of the Chancellor's decision to allow the public sector in a broadly, not wholly, undifferentiated way to bear almost the whole brunt. In the first place, it is the easy way out. Generalised cuts, without their policy consequences clearly spelled out, are another example of using the smoke screen. In the second place, it is the postponed way out. Nobody feels anything for some time to time—nor, indeed, does the economy.

In the third place, it is the wrong way out. No one can look at Britain today without realising that for the majority it is not in private spending but in the public services where the weakness, the squalor and the pressures lie. It is not the shops and the restaurants which are breaking down but public transport, schools, and parts of the Health Service.

Can it be right to make those areas bear the burden, particularly without singling out the big, prestige, money squanderers? Can it be right to talk piously, as we have done from both sides of the House, about the devastating problems of the cities and then make it overwhelmingly likely that a grinding shortage of money will be added to all the other difficulties?

The Chancellor has therefore made the wrong basic decisions, both economically and socially. He has also almost certainly left himself or his successor with more to do in an April or an earlier Budget. He has thrown away a great opportunity to make a new beginning, a real impact on the divisive forces in our society. He has shown himself incapable, even at this juncture, of appreciating what fairness means. He has left the President of the CBI, to judge from his speech of 10 days ago, standing out, compared with himself, as an apostle of radical egalitarianism. The Chancellor has become a prisoner of his own tax-hand-out past.

I read with amazement of the Chancellor's unctuous Monday night statement that when he met his fellow Western Finance Ministers he felt a sense of shame for his country. Because of what? Because of two industrial disputes leading to an overtime ban. That shows at once a remarkable personal brazenness and a national lack of proportion. Who does the right hon. Gentleman think that he was meeting then? Was he meeting the Finance Minister of France, whose country went to the verge of civil war five years ago; the Finance Minister of Italy, who has had far worse industrial troubles with which to deal; or the United States Secretary of the Treasury, who came from a city sunk in political scandal?

The sense of shame that the Chancellor should have felt is far more personal. It is a sense of shame for having taken over an economy with a £1,000 million surplus and running it to a £2,000 million deficit. It is a sense of shame for having conducted our internal financial affairs with such profligacy that our public accounts are out of balance as never before. It is a sense of shame for having presided over the greatest depreciation of the currency, both at home and abroad, in our history. It is a sense of shame for having left us at a moment of test far weaker than most of our neighbours.

Whatever is the fate of the present Government, I believe that the Chancellor ought now to go from his present office. He sits surrounded by the wreckage of successive layers of his policy. I believe that by both temperament and outlook he is profoundly unsuited to the hard struggles which lie ahead. It is no longer a question of waiting for the old policies to come right. We need new policies to create hope out of dismay. The Chancellor had a last chance on Monday. He failed to take it. He showed himself tied to the past. He ought now to let a new man try.

Hon. Members on both sides of the House may think that a General Election will help to solve this problem. But whether or not the Prime Minister decides to have a General Election, and whatever the result may be, it will certainly not solve our national problems. The country will still need to be governed, and governed in difficult circumstances. Not only is there the present crisis, which is real in spite of the Government's manipulation of it. Not only is there the underlying weakness which the Government have largely created. There is, I believe, a greater threat to the effective working of our democratic institutions than most of us have seen in our adult lifetimes. I do not believe that it springs primarily from the machinations of subversively-minded men, although no doubt they are there and are anxious to exploit exploitable situations. It comes much more dangerously from a widespread cynicism with the processes of our political system. I believe that the Chancellor contributed to that on Monday. I believe that it poses a serious challenge to us all.

What in these circumstances does the national interest mean? It means, in the first place, that we must all live together to preserve our livelihoods and our tolerance in this crowded and precariously placed island. It does not mean that we abandon our party system, stifle our criticisms or speak to each other and the nation in muted and unconvincing voices. The electorate is entitled to a choice. That means that there is upon us all a responsibility to make that choice real and not contrived. There is upon the Government a duty to reconcile and not to alienate. There is upon the Opposition a duty to offer constructive criticism in accordance with the way in which we could and would govern.

None of us should seek salvation through chaos. There is a duty too to recognise that we could slip into a still worse rate of inflation and a world spiral-ling downwards towards slump, unemployment and falling standards, with our selves, temporarily at least, well in the vanguard. What is required is neither an imposed solution nor an open hand at the till. The alternative to reaching a settlement with the miners is paralysis-I ask the Prime Minister to read the moving and constructive speech made by my right hon. Friend the Member for Barnsley (Mr. Mason). The task of statesmanship is to reach a settlement but to do it in a way which opens no floodgates for if they were opened, it would not only damage everyone but it would undermine the differential which the miners deserve and which the nation now needs them to have.

Few people doubt that the Prime Minister has determination or stubbornness, whichever way it is considered. The question is whether he has judgment, persuasiveness or imagination sufficient to see into the minds of others. That is an essential part of democratic leadership.

We cannot begin to find our way out of the present position without a fairer society. That is appreciated by millions across party lines. The Government have failed for three and a half years to provide such a society. They failed again on Monday. That is why we shall vote against them tonight.