Public Expenditure

Part of the debate – in the House of Commons at 12:00 am on 9th March 1976.

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Photo of Mr David Marquand Mr David Marquand , Ashfield 12:00 am, 9th March 1976

We have had a very entertaining speech from the hon. Member for Blaby (Mr. Lawson)—a good speech, but somewhat inconsequential when it came to the concluding paragraphs. No doubt on a subsequent occasion we will hear the nub of the argument and learn exactly what cuts the hon. Gentleman wants and in what way they will contribute to the economic strength of the country. All the same, he made a serious and important point when he said that lurking within the White Paper was an assumption that an economic miracle may come in this country. I have been very critical of the Chancellor of the Exchequer in past months, but I am bound to say that I believe the strategy behind this White Paper is right. It is right, because I believe it is possible that we may at last get something approaching an economic miracle if we can hold to the course it lays out.

What is the central cause of Britain's steady economic decline over the past 25 years? We have been held in a vicious circle of low growth and declining competitiveness. Successive Chancellors of the Exchequer have tried to break out of the vicious circle by means of a consumption-led domestic boom, and each time that has been tried it has made the disease even worse than before. That was what happened under the noble Lord, Lord Barber—one of the reasons why anybody with even a short political memory finds it somewhat extraordinary to hear purist, tough, rigorous speeches from the Opposition Benches now. The noble Lord tried it and so did the right hon. Member for Chipping Barnet (Mr. Maudling) in 1964. On both occasions, a consumption-led boom in this country led to a balance of payments crisis and to a further weakening of the British economy. Everybody with any economic knowledge in this House knows perfectly well that the only way in which we can escape from the vicious circle that has held us back for 25 years is through export-led growth. Somehow we have to repeat the experience of West Germany in the 1950s, when the Germans enjoyed sustained export-led growth on the basis of an undervalued currency.

I welcomed what happened in the currency market at the end of last week and yesterday, because this shows that the authorities in this country are now, at last, managing the exchange rate in a way that will make it possible to have export-led growth. For we are now beginning to see an upturn in world trade when the British economy is still depressed. This is exactly the ideal conjunction for an economic miracle, if one is ever to take place in this country and if we are ever to reverse the steady decline of the last 25 years.