Economic Policy

Part of the debate – in the House of Commons at 5:40 pm on 28 November 1979.

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Photo of Mr Enoch Powell Mr Enoch Powell , South Down 5:40, 28 November 1979

I can only say, with the Chancellor of the Exchequer, that the supposed alternatives—and presumably this must logically apply equally to subsidiaries—are a delusion. They have so been proved: it has been proved that if we build up the money supply, we may seek as we please, either by preaching or by controls, to hold prices and wages down, but we shall fail.

However, the Government have one consolation. It is the consolation which I have just quoted. It is the consolation which I thought was reinforced by the speech the former Chancellor of the Exchequer, the right hon. Member for Leeds, East, made this afternoon. The Government's consolation—their fortification, if they require it, in the course upon which they have embarked—is that there is no alternative to it. Anyone who listened to the speech of the right hon. Gentleman would have realised that it was a sustained plea for a resumption of inflation. [HON. MEMBERS: "Resumption?"] I shall not quarrel over words: for higher inflation—for an increase in inflation. I will accept any formulation which the right hon. Gentleman's colleagues prefer. At any rate, it was a plea for inflation.

For what did the right hon. Gentleman say? He said that he wanted a higher public sector borrowing requirement. He did not mean a higher public sector borrowing requirement that would be met by the savings of the public; for he also said that he did not want the money supply to be restrained as the Government intended to restrain it. He wanted the money supply to be increased to match whatever was the going rate of inflation, assured that if he increases the public sector borrowing requirement he will have no difficulty in finding money supply to match the going rate of inflation.

The whole speech of the right hon. Gentleman, which purported to be an alternative to the policy enunciated from the Government Front Bench, was a plea for inflation—a plea with which all Chancellors of the Exchequer, certainly back to 1957, have been met at a certain point: "Give it up, old chap; it is easier if we resort to inflation again. Do not bother about the size of the public sector borrowing requirement if, in a period when there are so many difficulties, you ease the economy with additions to the money supply. Let's go back to inflation."

That is no true alternative. The future of this country depends upon a return to honest money, even if we are the first or the only nation in the world to achieve it. The Government have to stay with the plough to which they have set their hand, which means that, next year and the year after, their priority will not be tax reductions but a continuing and large reduction of Government borrowing. In fact, the Government must be able to govern without recourse to borrowing.