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Naturally we would be affected by the fall of the value of the pound.
It is against the background of the Conservatives repaying debt and Labour incurring it that one can understand that, whereas the value of the pound against the dollar at the close of play on 19th May was …1·8082, that compared with …2·3988, and …2·3945 on 1st June 1970 and 29th March 1974 respectively. In other words, during the time of Conservative Government there was a fall of only 0·2 per cent. in the value of the pound against the dollar. The figures are not so good in relation to the basket of currencies, but they are very much better than the fall of over 30 per cent. which has taken place under the Labour Government.
The …5,000 million standby credit has meant only that there has been some improvement in the value of the pound to something less than it was on 19th May when it was already lower than ever before. It is still more than 30 per cent. lower than it was when the Labour Government took over. Even as we speak we hear that it is not back to …1·80. The rate was …1·77 while the Prime Minister was speaking and by now it may be …1·75. It is no good having headlines in these circumstances saying that the pound is rallying. People cannot understand the crisis when they are told first that the pound is under pressure and then that it is rallying. Nevertheless, all the time there is the persistent downward trend.
Why is this happening? It is not just that the Government borrow so much money. It is also that they are spending so much. The Government are now spending £25,000 million a year more than in March 1974. Putting it another way, and allowing for the fall in the value of money, that is 60 per cent. of the gross domestic product compared with 51·1 per cent. in 1973. That cannot be justified in present economic circumstances. It is that which has encouraged inflation and which is creating unemployment. It is that which has raised the Government's borrowing requirement to £12,000 million this year, and that does not encourage people to hold sterling.
That increase in public expenditure and the increased borrowing requirement have led the Government to impose an additional £2,000 million of taxation, whereas the Conservative Government reduced taxation by £2,500 million. We lowered direct taxes. I do not believe that we can get this country moving unless we restore the differentials at every level, and that means allowing people to retain a higher proportion of their direct income.
Even at this stage the Prime Minister said nothing about a fresh look at the level of public expenditure. I do not think that it will be two years before we feel the effect of the further borrowing and further expenditure. We shall have to do something about it. Nations, like individuals, can live for a time first on capital and then on aid from benevolent friends, but a nation which sets out, as we have done, consciously and willingly on such a course is doomed to disaster.
So the sooner the Government quit the scene the better, but whatever happens we must all try to work together. That does not mean we must have a coalition Government—I do not think that that would work—but it means that we should in a debate of this kind show a common objective in dealing with the situation. That means cutting borrowing and spending as fast as we can. The initiative lies with the Government. If they fail to take it they should give way to those who will.