Her Majesty's Government (Opposition Motion)

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

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Photo of Mrs Margaret Thatcher Mrs Margaret Thatcher Leader of Her Majesty's Official Opposition, Leader of the Conservative Party 12:00 am, 9th June 1976

I beg to move, That this House has no confidence in Her Majesty's Government. This is the first Conservative Opposition motion of no confidence in the Government since 1967. There have been two Socialist motions of no confidence, one in 1972 and one in 1973. I want to make it quite clear that this motion was not put down lightly. The specific occasion arose from the economic situation, but that is not the only subject of our criticism. There is plenty else to criticise in the Government's handling of the nation's affairs.

The debate is about more than a set of statistics, about more than the one figure of 4½ per cent. It is about a whole way of life of which economic policies are but a part. It is about values and standards which are beyond economics. It is about freedom under a just law. It is about parliamentary democracy and about Parliament as the only forum of the whole nation—[HON. MEMBERS: "Hear, hear."] The Government will be voting for us soon. 'The debate is about people who are all equally important but who are all different. Indeed, one can tell a free society from one that is not free by the extent to which variety is cultivated within it.

In the past two years, under the policies of this Government, we have seen a retreat from freedom, a retreat from the rule of law, a retreat from parliamentary democracy, a retreat from a mixed and free enterprise economy and a retreat from living within the nation's means. I note also that it takes a Socialist Government to boast that the pound has now risen to …1·77. It was …1·87 a few weeks ago when the Chancellor of the Exchequer announced his Budget. It takes a Socialist Government to boast that the annual rate of inflation is now down to 18·9 per cent. Such is the state we have arrived at under Socialism.

Under the Socialists, rapid strides have been taken towards the Iron Curtain State. We have seen increased nationalisation measures, increased powers of central Government over both large and small companies, increased levels of tax on the pay packet and on savings alike, and an increased proportion of the national income spent not by the wage-earner but by the Government or Government agencies.

In the result, the Prime Minister has become the first Socialist Minister since the Chancellor of the Exchequer in 1951 to say that his policies will mean a reduced standard of living for our people. As an accurate prediction I do not quarrel with that. But it is clear that Socialist systems are not good at creating wealth; they can only spend the wealth that others create.

The first charge we make against the Government is their mismanagement of the economy. The common characteristic of Socialist Governments is that their expenditure rapidly exceeds the taxpayers' capacity and will to pay. That does not quench the Government's appetite for spending. When the Chancellor runs through the pound in the pocket he goes to the moneylenders. We have a Chancellor who has elevated bluster into a principle of economic policy and borrowing into a way of life.

The Chancellor's Budget continued the course of overspending which he has followed ever since he came to office. He continued his series of spiteful gestures against those very managers he claimed that he wanted to help. However, he included one innovation, for he surrendered the power to decide fiscal policy and the power to determine the course of the economy to an outside body. He left it to the TUC to decide the level of taxes for this year; and in some measure he left it to the TUC to determine the value of the pound. Not surprisingly, the nine weeks since Budget day have been weeks of near disaster, with the reserves depleted and the pound sinking week by week to new lows.

We warned the Chancellor when he introduced his Budget that it was a recipe for disaster, and the whole nation has watched that disaster unfold day by day. Finally, the extent of the potential catastrophe penetrated even his complacency and he took action. It was not thoughtful action, it was reflex action, the action of every Labour Government since the war faced with the consequences of their own policies. The Chancellor fixed up an enormous loan. Once again, a Socialist Government have bought time, or rather have borrowed time, to enable them to postpone the hard decisions, time to enable them to carry on for another six months with policies which have failed. They have borrowed time to get us deeper and deeper into debt.

The Chancellor chooses to claim that the loan that he has been able to fix up is a sign of the confidence that the rest of the world has in his policies. It is not a sign of confidence, it is a sign of patience. The world have given us a little more time. But unless the Government are removed from office we are doomed to see this money going down the drain as so much has before. The Chancellor made the borrowings, not to give us time to make fundamental changes, but to get time to avoid fundamental changes.

The Government dare not tell the truth to their own followers, let alone to the country. At all costs nothing must be done before the special TUC Congress next week.

Already some trade union leaders are getting restive. Indeed only this week, I see from The Times, Alan Fisher warned that if the Government announce fresh public expenditure cuts after the June 16 special Congress, unions would no longer honour the new wage bargaining rules, due to take effect on August 1. Therefore, the Chancellor dare not act before next week. But then he dare not act before the autumn either, because there is a Labour Party conference coming up. So we have the miracle cure—more borrowing while the overspending and the nationalisation goes on. Drift, debt and decay are the whole course of this Government. [HON. MEMBERS: "Shocking."] Yes, that depicts a shocking performance by the Government.

All the time that the Government are staggering in the short term from financial crisis to financial crisis they are damaging the long-term economic prospects of this country. They are putting far too much into the public sector and starving the private sector.

Yesterday, while the Prime Minister at Bournemouth was saying that the private sector had to put its scoop into the same pool as the public sector, the Chancellor was busy announcing a new loan—a loan at a 14 per cent. annual rate of interest. Other nations which handle their affairs competently and prudently can bring their interest rates down, thereby helping their manufacturers to invest. We cannot. We are borrowing so much at such high rates that debt interest is becoming a major problem. It now amounts to 10 per cent. of Government expenditure. It absorbs the whole yield of VAT and corporation tax to finance the debt interest alone. Put another way, half the public sector borrowing requirement goes not to repaying debt but to paying interest on past debt.

The other day the Prime Minister spoke to the CBI about investment and the Price Code. The Price Code is now so complex that one of our major companies recently said that it cast it £500,000 a year to operate it. If industry now has to pay 14 per cent. interest, its profit margins will not be big enough to service the loans.

Will the Prime Minister's promise to improve the profit margins sufficiently to encourage investment be yet another broken pledge? Will the promise to allow prices to increase sufficiently to give a good return on investment be another broken pledge? One thing is certain, as the CBI pointed out to the Prime Minister and the Chancellor: either we have a price code which allows enough profitability or we do not get jobs tomorrow. The choice is as clear as that.

Of course, both the Chancellor and the Prime Minister always pay lip service to profitability, but, when the time comes they fail to take the requisite action. However, they know that it is the key to future prosperity.

Two of the most prosperous countries in the world with two of the strongest free enterprise systems are countries where the role of profit in building pros- perity is encouraged and acknowledged. They are usually two of the countries from which this Government have to borrow money when they need it.

Both the Prime Minister and the Chancellor also pay lip service to the need to encourage small businesses. They know that they will get new jobs from the small businesses of today. They know that they get more jobs from the expansion of small businesses. Yet, although they pay lip service to them, they do not hesitate to put enormous new taxes upon them which penalise and discourage them from expanding. Such taxes encourage a one-generation society and prevent people from passing on the fruits of their labours to their families. If we cut off the continuity of society from the efforts of the past and cut off the continuity to the future we shall get a selfish society. [Interruption.] Of course we shall, because we shall have no incentive to build for future generations.

The Prime Minister and the Chancellor also pay lip service to taxation incentives. They pay lip service to the need for middle management to have more rewards. They pay lip service to their grievances. But what do they do about it? Nothing. These people are the discarded section of society under a Labour Government.

The Government know that people need incentives and rewards. They know, for example, that the middle management person on about £5,000 a year will, after tax, take home about £500 a year more in France than he will in Britain. The Government know full well that the queues of these people to go abroad are increasing; yet they do nothing to help. They do nothing, except pay lip service to their grievances.

It is not only those people who have suffered from the high taxation of a Labour Government. We have the highest rate of taxation on the lowest incomes in the whole of the EEC. We also have the highest rate of taxation on the highest incomes in the whole of the EEC. In fact, we have the highest rate of direct taxation in Europe. It is little wonder that many European countries are forging ahead much faster than we are, because they offer incentives. People in those countries keep more of their pay packets than is kept by our people here.

The Government pay lip service to the mixed economy, but they put up enormous threats of future nationalisation. The Shipbuilding and Aircraft Industries Bill is a total irrelevance to the needs of our modern society. Nothing could be less justified than the pretence that the Government need this measure to save jobs in the shipbuilding and aircraft industries. The Government have all the power that they need. But they are nationalising out of dogma. They pay lip service to the mixed society, but in practice they reduce the mixed society as fast and as far as they can so that in fact we become the fixed society and the complete Socialist state.

Added to that, vast new sections of industry are threatened under Labour's new draft programme for Britain, which has been called a plan for national ruin. Pharmaceuticals, banks, insurance and land are under the threat of nationalisation. As I said earlier, that is a recipe for the complete Iron Curtain State.

We note that the Prime Minister has not disowned, but has only postponed, the programme. The Prime Minister has postponed the extra public expenditure for which the plan called, but yesterday the Leader of the House seemed to want more public expenditure. For him it is the red badge of Socialist courage. For the country it is the red badge of bankruptcy.

Mismanagement of the economy leads not only to economic problems but to falling standards in the social services. Socialists pretend that they are the protectors of the social services, but, by damaging the economy, they are damaging our capacity to help those in need.

Our social services are poorer than in many other countries in Europe, because they have concentrated on increasing prosperity and creating wealth. They have better pension schemes and better unemployment benefit. They spend more on health. They know that every welfare payment, every improved pension help to the elderly, every improved aid to the disabled, every child benefit depends in the last resort on the wealth-creating capacity of industry and the earnings of those who work in it. Therefore, it is not surprising that, with this Government's attitude towards the productive sector of the economy, pensions and child benefit proposals have been adversely affected. Because they had not laid the foundations for increased prosperity this Government have done a deal with pensions, which effectively eliminated increases for six months when price increases were at their peak. They shelved the child benefit scheme. We would have thought that they would at least introduce a scheme under which the same amount as they spend now could be handed to the mother and not to the father. But they did not do so. Apparently fear of the unions paralysed their capacity to act.

If the devaluation of our currency is not enough in itself to justify the motion of no confidence—and I believe that it is —there is a second charge against the Government. They have devalued liberties as well. These days, having a job depends not only on joining a trade union but on joining a particular trade union. Labour would rather throw a person out of a job than let him continue in his job without joining the union.