Industrial Situation

Part of the debate – in the House of Commons at 12:00 am on 16 January 1979.

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Photo of Mr Denis Healey Mr Denis Healey , Leeds East 12:00, 16 January 1979

The right hon. Member for Lowestoft (Mr. Prior) told the country on 3rd January: It is better in these matters to play a quiet game rather than to shout too much. He went on to say that it was better to take a balanced and reasonable view, and to look at the practical side rather than rush into statements which would be very difficult to fulfil and which would immediately result in less co-operation and less conciliation and lead hack once more to confrontation. Those are wise words, and I propose to accept the right hon. Gentleman's advice.

This has been mainly a quiet and certainly a very concerned debate and I shall try to observe the spirit in which most Members on both sides of the House have tried to deal with the problems. I know it is not easy to keep calm and to keep one's head when much of the country is gripped by a justifiable mood of anger, bitterness and frustration. That mood is easy to understand, but it will not assist the House of Commons in finding a solution to the problems if we allow it to infect our approach.

In spite of what the right hon. Gentleman said, we have just ended a year of exceptional achievement for Britain. I do not think that the country will agree with the jeers from the Opposition when I remind the House that we have halved the rate of inflation, we have had a higher rate of growth in Britain than any country in Europe except Ireland, we have reduced unemployment by over 100,000, the pound has been strong, the money supply is under control, and we are paying our way in the world despite the fact that our invisible earnings fell more than we gained from the increase in the production of North Sea oil.

The value of our exports last year rose twice as fast as the value of our imports and their volume rose 5¾ per cent. We maintained the increase in our share of world trade which was established in 1977. One of the consequences of this achievement was the biggest increase in living standards for the British people in one year than at any time since the war.

There were some areas of disappointment, and I shall face those as the right hon. Member for Lowestoft suggested I should. Pay increased somewhat faster than the Government had hoped and productivity somewhat less. Manufacturing output was well below the growth in national wealth as a whole. Like all Chancellors of the Exchequer, I am always under pressure from both sides of the House to take action to increase demand. But there is no point in increasing demand for goods in this country if British industry is not producing the goods to satisfy that demand.

It is true that the disappointing record in manufacturing industry has been concentrated in a few areas—above all in the motor car industry. Last year demand for motor cars and sales rose by over 20 per cent., but output actually fell over the year as a whole. It fell because there was widespread industrial disruption caused by strikes and stoppages which, until the Ford stoppage at the end of the year, were mainly unofficial.

This year we could get very close to last year's performance, provided that we deal with the rate of inflation and the number of industrial stoppages. We have started badly in both areas, and that is the subject of our debate today.

Several hon. Members, particularly the right hon. Member for Down, South (Mr. Powell), have pointed to some similarities between the beginning of 1979 and the beginning of 1974. But the right hon. Gentleman, of all hon. Members, should have drawn attention to one striking difference—that the country is not now awash with money which has been printed by the Government to accommodate inflation.

I remind the House of the words of the hon. Member for Oswestry (Mr. Biffen), who has recently rejoined the Opposition Front Bench. The other day he wrote: In the light of Conservative economic policy between 1971 and 1973 it is extremely difficult to mount a sustained and fundamental criticism of Labour's economic policy. The fact is that our money supply is still below the lower end of the range which I set for it in the middle of the fiscal year. Public expenditure is under firmer control than it has ever been in our history, due to the introduction of cash limits and a firm observance of the contingency reserve.

As a result, in spite of the difficulties we have faced in recent weeks, the pound remains strong. The stability of the pound is mostly a reflection of our performance on inflation and of our financial policies. Also, of course, it is a very important contribution to it.