Orders of the Day — Economic Affairs

Part of the debate – in the House of Commons at 12:00 am on 30th November 1976.

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Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey 12:00 am, 30th November 1976

I beg to move, at the end of the Question, to add: But humbly regret that the Gracious Speech provides no grounds for confidence in the economic policies of Her Majesty's Government. I begin by seeking to secure quite shortly the agreement of the Chancellor about the economic prospect that immediately faces us. It was described quite shortly by the Prime Minister last Wednesday when he said that the prospect for unemployment was a further increase. We have seen surveys suggesting that it could rise from its present 1¼ million to 1½ million and, in one survey, beyond 2 million. I should like to hear the Chancellor's comments on that.

The Prime Minister told us that there was likely to be no improvement in the rate of inflation for some time ahead. Again, the figures we have seen seem to suggest that it could be running above 13 per cent. and in some cases at 17 per cent. next year. The Prime Minister said that the prospect for growth in the economy was "slight". Other forecasters talk in terms of 2 per cent., 1 per cent. and even a negative growth in the economy. Beyond that, looking to 1978, one cannot foresee any substantial increase in growth. The forecasters also suggest an increase rather than a decrease in unemployment and little change in the outlook for price inflation.

I want the Chancellor to give us his own assessment, so far as he can, of these matters. I want him also to agree that the outlook described by the Prime Minister last week is in total and complete conflict with the forecast given by the Chancellor to the House a few months—indeed, even a few weeks—ago. As recently as the end of September he was talking about the likelihood of growth in the economy of 4½ per cent. per annum, about the prospect of a 10 per cent. inflation rate next year, and about the outlook of falling employment; and in the debate in the House on 11th October he expressed the view that everything suggested that the economy was still on course.

The reality is in contrast with that of other economies, with the prospect of high and still rising unemployment, of low and still sagging growth—the consequences of the attempt in which the Chancellor has persisted on a diet of false expectations to avoid the consequences of the 5 per cent. cut in real living standards for the people of this country that followed from the oil crisis of three years ago. It is no wonder that the Prime Minister has wrenched from the Chancellor the rôle of economic forecaster and no wonder that the Prime Minister himself added in his speech at the Guildhall the other day that we should no longer believe that forecasts were facts.

According to the Press of the last few days, the Chancellor appears before us today rather in the guise of a boy standing on a burning deck from which almost all but he has fled.