Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 18 June 1979.

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Photo of Mr David Steel Mr David Steel Leader of the Liberal Party 12:00, 18 June 1979

Until the hon. Member for Knutsford (Mr. Bruce-Gardyne) spoke, every speaker in today's debate has been either a Treasury Minister, an Industry Minister or a Trade Minister. The hon. Member for Knutsford might have been one—he was widely tipped to be one—but although he missed out he sounded like one, if that is any consolation.

I do not propose to follow him or the right hon. Member for Down, South (Mr. Powell) into economic theories of delusions and heresies, and so on. The hon. Member for Knutsford talked about the future hard luck stories of the local authorities. One of the features of the public expenditure cuts of this Government is that they fall disproportionately on the local authorities. It is as if the Government are afraid to do the dirty work themselves and have passed the responsibility on to the local authorities.

We cannot expect the local authorities to cut back on their programmes when we in this House, under successive Governments, have laid more and more responsibility upon them. Any attempt to do so will result only in the increased staffs, which we have seen in local authorities, being frustrated by being unable to have the cash to go ahead with the work with which they have been charged. I do not take lightly the prospect of the so-called hard luck stories, because I believe that will be very real difficulties facing local authorities in attempting to achieve Government targets.

I return to the opening words of the Chancellor of the Exchequer in his Budget speech. Unlike the right hon. Member for Down, South, I accept that his basic analysis is correct. Although I believe that it is very difficult to find precise comparative figures to draw up a league table of our standard of living compared with that of our European neighbours 15 years ago or 30 years ago, I can see with my own eyes that our standard of living in terms of our public services and individual affluence is not relatively as good as it was in the 1950s compared with the average Frenchman or German. My only quarrel with the Chancellor is that he chose the arbitrary period of 15 years because it happened to suit his case to go on to say that we have had Labour Governments for 11 of those years. This kind of superficial analysis demeans the Chancellor. The truth is that this has been a long-term decline in the economy in the post-war period.

It is no use blaming one Government or another. The fact that the decline has occurred is beyond doubt. The Chancellor's analysis of the lack of output per individual and the lack of money invested per employee is fairly familiar. But having made the right analysis the Chancellor then attempts to apply the earlier philosophy that was applied in 1970 and was found wanting. He starts the whole process again.

The shift in the burden of taxation is in the right direction. My party campaigned for it during the general election, as did the Conservatives. However, there are two or three major differences between us. It has never been part of our campaign that a shift in the burden of taxation itself would galvanise the economy. We saw this as part of an overall package of reforms. For example, the Government will have no form of pay policy at all. The argument they use against it is that any control over incomes is arbitrary and unfair. Yet the one form of pay policy which they refuse to rule out is a total pay freeze, which is the most arbitrary and unfair of all. That does not make any sense.

We, on the other hand, have argued that the successful management of the economy must include the Government dealing with the issue of pay and not dodging it. Related to pay policy we argued that there should be a greater development of policies of industrial partnership, industrial relations structures and profit-sharing schemes. We believe that these should play a greater part in the pay policy in the private sector.