Orders of the Day — Unemployment

Part of the debate – in the House of Commons at 12:00 am on 24 July 1978.

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Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham 12:00, 24 July 1978

I take the Prime Minister's view. I think that the right hon. Gentleman is right about that matter. I think that the Bremen conference was right in stressing the importance to a trading country such as Britain of a generally liberal trading policy. There are people who dissent, but that is my view.

For the rest, I think that the outcome of the Bremen meeting would have been more comforting if the Government had reacted more positively and constructively to the proposals for a zone of monetary stability. However, it appears that—no doubt this can be confirmed—having tried for a whole day to prevent the publication of the annex to the Bremen declaration, which covers this point and deals with the creation of a European currency unit and the establishment of a European montary fund, the Prime Minister finally gave his agreement in principle—and that despite pressures from certain London circles, notably the Treasury. Indeed, according to reports, it seems that at one point the to-ing and fro-ing between London and Bremen was so great that there was a communications breakdown.

The truth is that even those who are frightened about the idea of monetary union—which the creation of a European parallel currency does not entail—must recognise that we need in Europe a common monetary policy at the very least in the sense of accepted monetary disciplines. Therefore, I hope that the Labour Party will back the Prime Minister in his general welcome to this. It is a pity the Government were hot-footed over it, but in the end the Prime Minister seems to have taken the right general course.

These matters cannot be decided even in a European context. One must have a broader view. We need in Europe a strategy on a historic scale which will make a decisive impact on world trade expansion, to which the Minister referred, and three inter-related problems: first, the decline in industrial production and the consequently high level of unemployment; secondly, the commercial uncertainties which result in particular in the present instability in exchange rates; thirdly—and this is of fundamental pyschological importance—the general lack of faith in future economic development on the part of both Government and business.

Those problems cannot be solved in isolation. That is why I and my colleagues in the European Parliament have been arguing for many months for a European economic recovery plan on the scale of the Marshall Plan, carried out in conjunction with the elaboration of a European monetary co-operation built on a European exchange area, anchored to a European parallel currency. That involves co-operation with the other industrialised countries and the IMF, and therein lay the significance of the Bonn summit.

The communique is a bit depressing. If it had appeared in Punch it would have looked like a parody of all its predecessors. It is marvellous that the Japanese Prime Minister said that he would "strive" to increase imports. He does not have to "strive" too hard—he just has to allow them. However that may be, Bonn at least recognised the nature of the problems that we have to meet, including the almost unending consumer demand of the developing world.

It is only by taking a major international initiative based on our membership of the EEC that we can unblock both the GATT negotiations in Geneva and the North-South dialogue in Paris and so make a genuine move towards general economic recovery. That is what is entailed in the world trade expansion that the Minister so casually referred to as the answer.

There are timorous spirits who say that such a recovery plan would create added competition at a time of under-used capacity. The nature of the argument put forward by the protectionists is that we must put up the tariff barriers to protect our own industry. But that way failed disastrously in the 1930s and it would fail again. Indeed, the same fears were expressed by firms and industries in the United States at the time of the Marshall Plan and proved completely unfounded. In the event, the general economic growth and the added consumption which resulted created new markets and generated new exports.

That is what we should be thinking about in Europe today, particularly in the context of enlargement of the Community. If we raised the consumption of the countries which now seek to join the European family, we would find in the end that the act of generosity would benefit us as much as it did the developing countries of the world and the new applicants for entry into the EEC.

What I most regret about the Bonn summit is that it gave little sign of the surplus countries deploying their surpluses as part of the process of removing the imbalances of the deficit countries. There is no sign of our turning our eyes to the needs of the poorer countries so as to ensure their development and political stability, so creating new markets and new employment for ourselves. There is still no definite sign of a new monetary and economic security comparable to that enjoyed after the war under the Bretton Woods agreement.

The Minister of State referred to the present Chancellor of the Duchy of Lancaster, my distinguished successor in that office, and the contribution that he has made to small businesses. I wish that the Minister would look at what the Chancellor of the Duchy said in the debate on trade and industry on 26th June. The Chancellor of the Duchy—and this is rather anomalous—speaks like a Conservative while still voting as a Socialist—but he does make sensible remarks. For example, in that debate he said: Bretton Woods went out of date, but it is miles in advance of the near-anarchy that marks the system now prevailing in the world. The right hon. Gentleman ought to have a word with the Chancellor of the Exchequer and the Treasury about that be- cause their dismal reaction to the Bremen initiative was enough to strike terror into the bravest hearts and could have given comfort only to the Kremlin.

Above all, we do not have from this Government in their initiatives any sign of what the Chancellor of the Duchy called the vision and generosity that characterised the Marshall Plan. He went on to say in that debate: The great lesson of that plan is that though it was the most imaginative and generous act of enlightened self-interest in world economic history…there is not one citizen of the United States who is worse off economically or politically by that remarkable act of vision and generosity. Looking forward to the meeting at Bonn, the right hon. Gentleman added: The great lesson for the Summit is that vision and generosity between trading partners and allies pays in the modern world. It does not cost one money. It is that vision and generosity that I hope to see greatly in evidence as a result of the Summit deliberations".—[Official Report, 26th June 1978; Vol. 952, c. 1178.] By that test, I believe that the summit has failed.