Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 11th October 1976.

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Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey 12:00 am, 11th October 1976

If the right hon. Gentleman does not like the record of his Government, which he still supports in his present office, being pointed out, I am sorry. I shall come very quickly to the constructive points.

The right hon. Gentleman knows and the Prime Minister knows what has to be done to put the nation back on the road. The question is whether the Prime Minister will do it. The day after he declared that we could not go on living on borrowed money he authorised his Chancellor of the Exchequer to apply for the last brass farthing available from the International Monetary Fund. The Chancellor described that as prudence. If that is the hallmark of prudence, God save us from his folly. The Prime Minister continues to refuse to cut a single penny from his party's spending programme, and by so doing he has done his best to prove that he did not mean a word of what he said.

The day after the party which he leads voted overwhelmingly to nationalise the banks and insurance companies, what did the Prime Minister then do? He spoke to its National Executive Committee and, without a word of argument to suggest—as is the case—that such proposals would be disastrous to the nation, he merely pointed out that they would be an electoral albatross for the Labour Party. It is too much in line with the conduct that we fear from the Prime Minister—too great a tendency, even in this present hour of desperate need, to put the interests of party unity before the interests of the nation.

That is the Prime Minister's real dilemma. His party is now so deeply divided—we see it here on the Benches opposite—that he dare not do what the nation needs. The Prime Minister should not be worried so much as the Chancellor is about riots in the streets as about riots on the Benches below the Gangway on his own side. It is now beyond the capacity of this Government to retain the confidence of our overseas creditors on the one hand and their own left wing on the other. The time has come for the Prime Minister to choose whether he will serve the interests of his party or the interests of the nation.

In the interests of the nation, there is only one course left to the Prime Minister—to give overriding priority not to the advancement of Socialism but to the restoration of national solvency and self-respect. Let him realise, even if members of his party do not realise, that he has no choice about these matters. Let him realise the truth of his position—that beggars cannot be choosers.

That is the situation facing the Government. If they are to retain the support of the House, let alone the support of the country and the rest of the world, every policy and every action which is not directed to the restoration of national solvency should be ruthlessly set aside, and those members of the Labour Party who understand it should act to ensure that that is what happens.

By those standards let the Prime Minister now act. Let him determine to bring the money supply back under proper control, to restore a proper balance to the economy—not through higher taxes, through endless Government spending and through Dickensian money rates, but by making the large cuts in public spending that are now inescapable. Let the Prime Minister set out now to reduce the huge and indiscriminate subsidies on food, housing and transport to which his Government are still committed. The fruitless expense of those subsidy programmes has raised the cost of borrowing and cut the value of the pound by far more than in the end it has reduced the cost of living.

Let the Prime Minister subject to ruthless reduction every aspect of Government spending except defence, police and help to those in real need. Let him now abandon the expensive and destructive commitment to the nationalisation of the land; he cannot afford it, and the nation does not want it. Let him this week drop the Bill to nationalise the aircraft and shipbuilding industries. Let him listen to the pleas of many in his own party and abandon the Dock Work Regulation Bill. Let him cease the disruption of the school and health services by calling off the vendetta against pay beds and the grammar schools.

The nation is far more ready than many in the Labour Party to recognise the harsh realities of our position. People are looking to the Government to do what is necessary. Indeed, I believe that the majority of right hon. and hon. Members would wish the Government to act in the interests of the nation and to abandon their Socialism. So, possibly, does the Prime Minister. But if the Prime Minister's Government are unwilling or unable to take the action which is necessary in the interests of the nation and nobody else, to let actions match his words, it is high time for them and him to make way for a Government who will.