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 Alexander Fletcher Mr Alexander Fletcher , Edinburgh North 12:00 am, 30th November 1976

It cannot be a matter of national pride that the financial world, in the form of the IMF, is once again taking stock of Britain's creditworthiness and considering the viability of our forward budgetary plans. Apart from the IMF examination of our books, our financial plight is being considered by Presidents and Prime Ministers all over the Western world.

The reason is simply that since March 1974, when Labour took office, it has persistently refused to face the facts of economic life and economic reality. Labour fell into the trap of believing its February 1974 propaganda by then claiming that there was no serious economic problem to worry about. It clung to power in October 1974 with promises that not even the Chancellor, with his renowned brass neck, would dare to defend today. The IMF doctors may prescribe medicine, but they will not force it down our throats. They do not have to lend us money. That is something which Labour Members should bear in mind when they make their criticisms.

The question now is whether the Government have the sense and strength to take the medicine which should have been prescribed in the first of the Chancellor's many Budget Statements since March 1974. It is, perhaps, our last opportunity to take the necessary, if painful, steps towards Britain's economic recovery following the horrific rates of inflation that have been inflicted on the country since Labour came into office.

I endorse the hopes, so eloquently expressed by the hon. Member for Berwick and East Lothian (Mr. Mackintosh), that we will have from the Government an effective and final package of economic measures. Judging from the Chancellor's remarks this afternoon it looks as if the watering-down process is very much in hand in the Cabinet and will, no doubt, be seen in the Parliamentary Labour Party.

There are two matters of particular concern that I would like to raise. The first is the inevitable bewilderment and disappointment that public expenditure cuts will bring to people in those areas of the country where public investment is so chronically needed. I am referring to areas of urban deprivation, mainly in the inner cities. There are parts of our cities, for example Glasgow, where, in the space of just a few streets, one crosses a social border between one kind of society or civilisation and another, but one is not crossing into a different political regime; it cannot be compared with crossing politically from the West into East Berlin; but physically the environmental sight is much worse than that encounterd when crossing from the West into East Berlin.

I therefore hope that, in whatever package the Government try to produce in the course of the next few days, they will appreciate that, in addition to cuts which, in public expenditure, most people are agreed are necessary, there must also be a disciplined reallocation of public resources to meet the desperate needs of areas that have been neglected for many years. The future for the people in those areas can only be bleaker still if in the present economic crisis there is not an attempt to reallocate public sector spending in favour of people who for far too long have suffered from a depressing environment.

Local government could help by encouraging private enterprise projects in those areas. It would also help if EEC grants and loans from the Regional Fund and the Social Fund were allocated entirely to those areas of particular deprivation throughout the country.

I want to obey your request, Mr. Deputy Speaker, that speeches should be brief.

My next point concerns the impediment to investment, from which we all suffer because of the economic situation, not just in Britain but in Scotland, as stated by the hon. Member for Perth and East Perthshire (Mr. Crawford).

I believe that this impediment arises from the devolution proposals, the demands for a separate Scottish economy within a devolved context, and the demands for a separate Scotland—a completely independent Scotland going far beyond any proposals tabled today by the Lord President of the Council and Leader of the House of Commons.

It does not take too great an imagination to understand that people in business and elsewhere who make investment decisions must pay close attention to political pronouncements, and not least the political pronouncements of the Government of the United Kingdom regarding their plans for devolution in Scotland and, to a certain extent, to the political pronouncements of people such as the hon. Member for Perth and East Perthshire who has recited again something of the economic philosophy which he hopes to introduce in Scotland. Some people, quite rightly, pay attention to this.

When I travel abroad, I find that there is a constant need, as a Scottish Member, to try to explain to people what is happening in Britain and to stress that Britain is not on the point of breaking up its unity, that there will not be a separate Scottish economy within the United Kingdom with a separate method of operating its money supply and its general economic affairs. If this is likely to happen—I hope that the hon. Member for Perth and East Perthshire will agree with this—people will make different investment decisions in this context than if the decisions were taken within a unified economic structure of the United Kingdom.

In Scotland itself Scottish and British companies are hesitating about investment in Scotland, and their hesitations arise for precisely the same reasons. I have had a number of letters from British companies as well as regular conversations with Scottish companies which have asked my opinion about what is likely to happen in Scotland. I do not doubt that the hon. Gentleman has had similar conservations. Our stories will be different, but essentially we are trying to answer the same questions. It is up to the recipients of our answers to decide precisely what they think is likely to happen.