I would go along with a great deal of what the hon. Gentleman said. I was saying, in effect, that one can make too much of the fine tuning, based, as it must be, on experts' estimates. We have nothing else to base it on, except hunches, which, for example, the former Governor of the Bank of England used when he was brought in to counter the present Governor.
I make no apologies for the fact that the amendment in effect turns the debate away from the sort we have had in the past, because we are today discussing something which is right at the centre of economic strategy followed by any Government. It is, indeed, one half of what the Government do—expenditure. In our amendment we condemn the White Paper in conjunction with the cuts of 17th December for failing to deal with the serious economic crisis facing the nation.
Let me first list some, if not all, of the serious economic problems facing the nation. We might at least all agree on the problems if we do not agree on the cure. On the balance of payments no one can doubt we are faced with a serious problem. Even if the Chief Secretary is right and it was all planned it is still a serious problem when in the last quarter of 1973 the visible trade deficit was running at an annual rate of £3,000 million with very little to do with the oil crisis. Maybe it was all planned. The Chief Secretary tried to tell us that it was planned, or at least partially planned, but that it was blown off course by the various factors he mentioned.
The second urgent problem is that inflation in 1974 will certainly be in double figures and very likely up to as high as 15 per cent. or more. We have seen totally inadequate industrial investment which is still not as high as it was in 1970. The pound is floating lower and lower against the dollar, even though it is doing slightly better against some of the other currencies. Nevertheless, few will deny the seriousness of the situation. I do not know whether the Chief Secretary is right that it proves the foresight of the Chancellor of the Exchequer, but I doubt whether many will agree with him even from his own side of the House.
These then are the serious problems. The Chancellor's answer was to rely almost entirely on public expenditure cuts and, as he put it last month
there will be some automatic fall in private demand as incomes fall because of the short-time working and temporary unemployment".—[OFFICIAL REPORT, 17th December 1973; Vol. 866, c. 963.]
We also know from what the Chief Secretary said today and from what had been said previously that one of the other measures the Chancellor has in mind is to increase the price of gas and electricity by reducing the size of the subsidies. The Chancellor therefore intends to make use of both inflation and short-time working.
First, let me deal with the three-day working week. The trouble with that of course is that while it will reduce private demand it will also reduce production at a time when we need a switch from personal consumption to exports. It is tragic that export demand exists because of the highly competitive position inadvertently created by the Chancellor's devaluation and yet our manufacturers cannot meet that demand substantially because their production is going to satisfy personal consumption at home.
No one can like cuts in personal consumption but the great advantage of them over cuts in public expenditure in current circumstances is that they make more room available for exports. More important, however, they reduce imports at a much faster rate, and rising imports are one of our main troubles, as the monthly trade figures indicate. According to the Central Statistical Office the import content of public expenditure is 11·6 per cent. while the import content of consumer expenditure is 15·9 per cent.—over 35 per cent. higher.