Class Iii Vote 4, Economic and Financial Administration: Treasury

Part of Orders of the Day — Supply – in the House of Commons at 12:00 am on 2nd August 1976.

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Photo of Sir Peter Emery Sir Peter Emery , Honiton 12:00 am, 2nd August 1976

I have seldom heard from a Chancellor of the Exchequer a speech with so much spleen and spite as that of the Chancellor today. At the slightest sign of criticism he showed a refusal to believe that any point could be made by the critic, to the extent that he even refused to give way to his right hon. Friend the Member for Blackburn (Mrs. Castle), when he had palpably refused to answer her question and had postponed dealing with it until later in his speech. That was an illustration of how the right hon. Gentleman believes that no criticism is to be made of him.

Of the Chancellor's measures to improve the economy, I would say only that it is better that they have been done than that they should not have been done. When one has said that, one has said everything favourable that can be said about the cuts. The right hon. Member for Battersea, North (Mr. Jay) said with great courage that the basic truth was that a major reason for unemployment was the size of pay awards in 1974 and 1975.

I should like to follow the example given by my right hon. Friend the Member for Taunton (Mr. du Cann) by trying to make concrete suggestions about ways in which we can benefit the nation as a whole, rather than take part in a party charade across the Floor of the House. Most economists, business men and even politicians have known for months—many have known for a year or so—that profligacy in public expenditure had to be brought under control. The tragedy of the Government's refusal to act, their postponement of a reduction in public expenditure, is that for each month that passed without action the greater became the need, and the bigger had to be the cuts that we are now suffering.

In an analysis three things clearly emerge. Were the cuts early enough? My answer is an emphatic "No". Are the cuts adequate? Again the answer is in the negative. Certainly some public expenditure should be pruned from the financial expenditure this year. International reaction to the Chancellor's statement is absolute and continued proof of that fact. The pressure on the pound continues, and it would not do so if the levels of cuts were sufficient. Thirdly, are the overall effects of the package pointed in the right direction? Again, I believe that the answer is in the negative.

What worries me is that in face of a golden opportunity to put the country economically in the right direction, the members of the Treasury Bench are so obviously turning their backs on the real problem. It is to that aspect of the matter that I wish to draw attention in my brief remarks.

Treasury officials have produced the right analysis of the problem. They believe that it is only by productive industry that we shall get our nation out of its downward inflationary spiral, and Ministers have accepted that. The Treasury believes that it is only by productive industry and the efficiency of the wealth-creating industries—nearly all of them within the private sector—that a cure can be found to our problems. Therefore, when the Prime Minister and the Chancellor of the Exchequer appear to propound this policy themselves, why is the overall effect of this package another massive attack on the profitability of the private sector? That is the very area from which the Chancellor is begging for greater and greater investment.

I wish to discuss two aspects of the package—first, the madness of the Left wing—perhaps it is not madness but cunning—and, secondly, alternative steps that could be taken. The Tribune Group and the 70 hon. Members whose names appear on the Order Paper advocate no reduction in Government spending, unless by way of defence cuts. Some Labour Members have even gone into print advocating increases in public commitments. Their argument is that the level of unemployment is so high that nothing must be done to decrease public expenditure which, in true Keynesian fashion, creates jobs. Theoretically that is correct as far as it goes, but the greatest creater of unemployment is inflation itself. As money values fall so does the job level that public expenditure can maintain.

Let me cite as an example the subject of education. The average amount of money spent on education has increased by £84 million on 1970 survey prices, but this year the number of teachers who can be employed by education authorities for each 20 pupils is likely to fall by as much as 1 per cent.—not because the education authorities do not want to employ teachers, but because inflation has ensured that there will be fewer jobs in the vital task of education. Fewer jobs and a worsening of public services is the inevitable outcome of galloping inflation. Unless inflation is brought under control, the situation is bound to get worse. Unemployment figures will rise and industry will not be able to proceed fast enough, and we shall find our industrial markets at home being squeezed, inevitably leading to fewer jobs for Britain's workers.

Is that a situation that some hon. Members would like to see—namely, an ever weaker private sector, with industry having to call for more and more Government aid and support? Do they envisage larger sections of private industry falling into the net of public ownership? That is the dream of the Marxist Socialist. He envisages more and more turning to the State economy rather than the mixed economy. The nation needs to wake up to the truth.

I wish to try to expose the facts which I believe have for too long been thrust aside or conveniently forgotten because they are thought by politicians to be unpopular, to lose votes and to run contrary to the way the electorate thinks.

However, at this time of financial crisis, I believe that ordinary people will not give a "Thank you" to any of us for being misled. What the average elector wants is the truth, with all its unpleasant realism—and he wants to be told with absolute clarity so that he can understand the real situation, even though it hurts. The more I move round the country the more I find that the average person does not understand what the Labour Government are doing.

The people are constantly told that we are living beyond our means. I believe that fact is understood by most workers wherever one may go in industry, and indeed that situation is understood by the people. Everybody says that we must do something about the situation, but it always appears that in most instances it is the other chap who is tightening his belt. Likewise, I believe that politicians, because it does not win popularity contests, do not like telling the nation what it does not want to hear.

It seems to me that the facts speak for themselves. Only through the efforts of private industry are we likely to reduce inflation to a realistic level. Only by the profits of private industry shall we achieve real investment to embrace the new growth that will lead to more jobs, which in turn will reduce the ghastly level of unemployment that is so wasteful and so soul destroying.