Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 17th April 1978.

Alert me about debates like this

Photo of Mr Julian Ridsdale Mr Julian Ridsdale , Harwich 12:00 am, 17th April 1978

The hon. Member for Birmingham, Erdington (Mr. Silverman) talked about the Bonn summit and international trade. I hope to be able to deal with some of the important points that he raised. There is an alternative way to the fortress economy which has been advocated by members of the Left wing of the Labour Party. That alternative way involves international agreement between industry and industry and a freer movement of capital. That would mean that the capital could be invested in those countries which were showing a deficit. If that is to be done, it behoves those on the Left wing of the Labour Party not to react in the way that they did to the investment possibilities of Hitachi when that company wished to invest here.

The hon. Member for Erdington accused Conservatives of wishing to cut back on the National Health Service and other Government services and of not wishing to pay correct wages to Service men and those involved in defence. We are anxious to get investment out of capital from the countries that are in surplus so that we can increase our production.

The sad thing about our economy since 1964 has been the failure to increase our productivity. As a result we have not been able to improve the Health Service, nor to build more hospitals and schools. A switch of resources to productive industry from unproductive industry is vital if we are to succeed.

I agree with the right hon. Member for Western Isles (Mr. Stewart) that the Government should try to shorten the period between announcing and implementing pension increases.

I am concerned about the Budget itself. When I listened to the Chancellor of the Exchequer, I thought that I was listening, as usual, to a great conjuror. In his Budget Statement the Chancellor tried to hide the 1 per cent. increase in the minimum lending rate. It came out eventually, but this was an important factor in the Budget. How the Chancellor must wish that he could have hidden the alarming balance of payments deficit that was announced on Thursday. Were the figures available to him when he made his Budget Statement? Is not the £8½ billion public service borrowing requirement extremely large? Does not this mean rising interest rates and, once again, the familiar Socialist pattern of pressure on sterling and prices?

It is obvious in the Budget and in the fear of things to come that the Prime Minister will rush to get the General Election out of the way by November. Where did the Chancellor and the Government go wrong? Why did we have this big deficit in our balance of payments? Wage settlements have been a factor. The Government have boasted that the settlement is 10 per cent., but it is higher. It created the demand which led to the balance of payments crisis.

World trade has turned down. Our production in industry, particularly in the motor car industry, has been bad. Our strike record has been appalling, in spite of high unemployment. The Prime Minister and the Government should have been more honest with the country about the reality of competition from abroad. They should have warned of the danger of increasing wages by 190 per cent. since 1974 without any increase in productivity. Since 1964, when the Socialists came into power after 13 years of Conservative rule, the Americans, Germans and the Japanese, by relying on the market economy, achieved increased productivity.

The hon. Member for Tottenham (Mr. Atkinson) asked how it was possible to achieve that in a market economy. It happened in those countries and it happened whilst our economy remained static during the years of Socialist rule. What effect has this had on the welfare of our country, particularly on the National Health Service? Because we have not had increased production we have not been able to increase expenditure on welfare and we have not been able to pay our Service men the right wages. The Germans and Japanese and others now have welfare services twice as good as ours. We have been unable to improve our services because of the failure of Socialism to produce.

What a challenge it is that since the Socialists came to power our share of world trade dropped from 7·2 per cent. in 1964 to 4·7 per cent. in 1976, the latest date for which figures are available. Yet world trade during that period increased by 150 per cent. This is the sum of and the answer to the failure of Socialism in these years.

Why do not the Government tell us more about why our performance has been so dismal? Our fall in these years has been equal to nearly £14,000 million in exports. What a hefty surplus in the balance of payments that would have given us, even without the advantages of North Sea oil.

What should be done? I know what the answer will be from certain sectors of the Left wing of the Labour Party. Wage increases and tax deductions should be more selective to encourage the vital increase in production. There should be a move from direct to indirect taxation, as outlined so ably by my hon. Friend the Member for Blaby (Mr. Lawson) this afternoon. Bearing in mind our failure to increase production, the Government are doing too much. That is why we are criticising Government expenditure. Anyone who knows how low our social services have become at present wants to see them improved. But we must put first things first. The first thing that we must do is to put everything into increasing productivity as much as possible.

In all sections of industry our tax is higher than that of our competitors. The average worker on the shop floor in Britain pays over 20 per cent. of the average wage. I listened to my hon. Friend the Member for Blaby saying what the present tax position was. It is disturbing when considered in comparison with the tax position of a person on the average wage on the shop floor in Japan, whose tax on the direct wage is below 1 per cent., as it is in France as well.

It is no wonder that as one has gone around small industries in Britain—although I welcome some of the what the Chancellor of the Duchy of Lancaster said about small industries today—time and again in the last year the answer has been "I am working three days for myself and then two days for the Government." That does not necessarily apply for just the person on the shop floor in industry.

We must support our successful industries, such as agriculture, energy, and tourism, and the City, and we must move ahead with advanced technology. The help that the Government have given to agriculture should have been given much sooner. That is why I say that, because of our adverse balance of trade with the other countries in the EEC, not enough has been done early enough to encourage production in agriculture.

We must do everything we can to encourage our invisibles. The high rates of taxation that are applied against workers in the City particularly will cause a great challenge to some of their competitiveness in comparison with some other countries that are earning great surpluses and whose currencies are appreciating very much. The Government must look very carefully indeed at this matter, otherwise our invisibles will come under great attack.

I welcome, of course, the help given to small industries, but, as I said to the Chancellor earlier today, I hope that the Government will pay more attention to certain of the sections in the Employment Protection Act, which are preventing expansion in some of the smaller industries.

Of course, I welcome the profit-sharing Bill. I am awaiting its publication to see whether its clauses will be exactly the same as those in the Employee Investment Bill which I attempted to introduce in February last year but in relation to which the Government told me then of every possible reason why it could not be introduced.

We must also encourage foreign investment. As the Minister of State, Department of Industry, said when he returned from Japan the other day, we have 1,000 American companies in this country but only six Japanese companies. We must try to ensure that we get more investment from the surplus countries, and not only for the developing world, which is one answer, again, to the problem of expanding world trade. It does not mean reflation. It means proper investment and trying to get the surpluses invested here in joint ventures. I hope that they will not be opposed by certain reactionary people who merely say "We wish to put up the barriers. We wish to have our tariffs. We wish to have protection." As a trading nation, we cannot survive in a protectionist world.

I have listened so many times to the Chancellor of the Exchequer that I can understand how the Left wing of the Labour Party has reacted to him. It is really time for the Chancellor of the Exchequer to go. We must remember the bad advice that he gave when he was in opposition, when he encouraged the Conservative Government to reflate, and that in 1974 he had the huge wages explosion and a vast increase in Government spending. Our inflation is twice as bad as that of any other country. We call the Chancellor "Mr. 8·4 per cent." I would call him "Mr. Inflation himself." What a pity it is that Mr. Roy Jenkins went to Brussels and that now no one, apparently, is on the Labour side to do what is necessary, and we have possibly to wait for the Chancellor to introduce a fourteenth Budget. I only hope that we shall have the General Election before then. If I may paraphrase the words of Kipling about the present Prime Minister and Labour Government, I would say: Waiting some easy wonder,Hoping some saving sign,He saw that industry lay idle,And he let the months go by.Idle except for your boasting,And what is your boasting worth,If you cannot tell the truth,To the most realistic country on earth?