Economic Policy

Part of the debate – in the House of Commons at 8:31 pm on 28th November 1979.

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Photo of Mr Robert Brown Mr Robert Brown , Newcastle upon Tyne West 8:31 pm, 28th November 1979

The Government are fond of trying to give the House lessons in economics. Indeed, we have a Prime Minister who behaves like a headmistress. The only problem is that we have Billy Bunter as Chancellor of the Exchequer, and, like the original Bunter, the Chancellor seems to have problems in getting his sums right. Perhaps it is time that the Government learnt a few lessons about economics.

Like all bad pupils, the Government are bad listeners. They have never heeded the advice given to them by the Opposition and now, as a result, we are all paying a heavy price. But if the Government will not listen to us, perhaps they will listen to some facts instead.

The facts are that next year we shall have falling output and gross domestic product, a massive balance of payments deficit, inflation well into double figures, record interest and mortgage rates, a massive financial deficit in the industrial and commercial sectors, falling investment and, perhaps worst of all, record post-war unemployment.

The tragedy, of course, is that all this is completely unnecessary. We had real economic growth last year despite a far from settled international climate. We had the beginnings of a co-ordinated approach to an industrial strategy in which all sides of industry were involved. Above all, we had the large potential benefits of North Sea assets.

What has happened to all this? The Treasury is talking about a 2 per cent. drop next year in our GDP. Are the Government aware that if this forecast proves to be accurate—and, of course, hon. Members know that the Treasury never gets its figures wrong—we shall have experienced the largest single drop in national output in any year since the 1930s, larger even than the contraction which followed the 1973 oil crisis?

Looking at these figures, anyone would think that we were about to enter an international recession of major proportions, but I am sure that hon. Members will have read the Treasury forecasts very closely and they will know that this is not so. They will know that next year's trade in manufactures in the United Kingdom markets will actually increase by 4 per cent. That is what the Treasury forecast says.

Hon. Members will agree that that is not indicative of international recession. The West German economy, according to the most recent reports from its Council of Economic Advisers, is expected to achieve growth of up to 3 per cent. next year. Do the West Germans inhabit a different international economy from us? The truth is, surely, that the Government's own economic policies are at the root of our present crisis. The Government are pursuing doctrinaire monetary and fiscal policies. In combination, these will undermine our economic prospects as a nation.

The Government have the effrontery to pretend that their policies are aimed at a reduction in the rate of inflation. Such a pretence would be laughable if it were not so serious. Far from acting to reduce inflation, the Government's policies have actually stimulated it at every turn. The Government have almost doubled VAT on many essential goods and services. They have abolished the Price Commission, so giving free rein to monopoly corporations. They are forcing up council rents and rates, as well as charges for school meals and prescriptions. They are cutting financial support to the nationalised industries, leading to higher prices for essential services. They have raised interest rates to record levels, forcing up mortgages at the same time. Despite all this, the Chancellor seriously appears to believe that he is pursuing a counter-inflation policy. It can surely only be a matter of time before the little men in white coats come along to drag him from the House.

I make no apology for turning now to my own constituency. Latest figures show that 13,000 people were registered as unemployed in the city of Newcastle-upon-Tyne this month. This represents a male unemployment rate in the city of over 10 per cent. compared with figures of 6·3 per cent. for Great Britain as a whole and 9·5 per cent. for the Northern region. In certain areas of the city, unemployment rates are even higher. Newcastle is an inner city partnership area. In the inner city, male unemployment is 16 per cent. In the Scotswood ward of my constituency one in five men are out of work.

The most disturbing feature of unemployment in the city is the high level of unemployment among skilled craftsmen. The ratios of unemployed to unfilled vacancies in Tyneside among skilled engineering craftsmen are much higher than in the Northern region, which itself has higher ratios than the country as a whole. I want to give examples to show the situation on Tyneside. There are 13 men unemployed for every one vacancy for welders. The figures for machine tool operators are 39 men unemployed for every vacancy; for heavy goods drivers, 22 men unemployed for every vacancy; and for plumbers, 12 men unemployed for every vacancy. These figures make the point that it is virtually impossible for the less skilled man to find a job. There are 200 unskilled chasing every vacancy. In the case of women, the figure is 230.

I wish to examine how Government policy is affecting the city of Newcastle. We are suffering, like everyone else, the general effects of the slow-down in economic activity. If the level of unemployment nationally reaches 2 million, which I have no reason to doubt will happen shortly, Newcastle will have 18,000 unemployed. This represents an unemployment rate of 15 per cent. for men. Our manufacturing industries are concentrated in the traditional engineering activities such as shipbuilding, power engineering and armaments. All these basic industries have been under considerable pressure in recent years, and they face a difficult future. Many of them depend on public expenditure.

At the moment, 1,600 engineering workers in the defence division of Vickers are anxiously awaiting decisions by the Government on new armaments orders—decisions which could have been taken months ago. Tomorrow, my hon. Friend the Member for Newcastle, Central (Mr. Cowans) and I will take a deputation to the Ministry of Defence to demand an answer about the contract for 77 Chieftain tanks, on which, as I have told the Prime Minister more than once in the House, a decision could have been taken months ago if there had been any sense of urgency in the Ministry.

The predicted future for Newcastle is clearly difficult—not only increasing unemployment and reduced incomes in an area where unemployment is already well above the national average but a remarkable and tragic waste of skilled human resources. A recent survey of skilled engineering workers who were made redundant by the Tress engineering company in my constituency shows the extent of this waste of trained and experienced men one year after the closure. A third of them were still without work of any kind; four out of 10 had been unemployed for more than six months; less than half had found jobs in the engineering industry. I have no doubt that a worse fate will face the 750 workers that Vickers has just paid off at the Scotswood works.

Having systematically attempted to destroy the basis for co-operation between the Government and trade unions—at national, industry and local level—the Government are now trying to pin the blame for their own economic failure on the organised trade union movement. I say on behalf of my union—I am a sponsored member of the General and Municipal Workers Union—that that attack will not succeed.

I am amazed at the forbearance of the TUC in recent months. It has continued to seek to reason with the Government, at a time when it has been subjected to the most appalling provocations. The Government have done everything in their power to try to destroy the basis upon which a constructive dialogue might have been built. They have abandoned all pretence at controlling prices. Instead, they have deliberately and cold-bloodedly forced inflation towards the 20 per cent. mark. They have set cash limits in the public sector which will mean a substantial cut in union members' living standards, including the undermining of the principle of comparable wages for comparable work—a principle which was achieved only this year under the Clegg awards.

The Government have made brutal cuts in public services which will hit the most needy in our society and force public service workers into the dole queue. They have placed jobs at risk by their announcement of the sale of public assets. They have introduced inflationary fiscal and monetary measures which will push up unemployment by at least 500,000 next year—at a time when the unions are rightly saying that unemployment must be the priority issue. Last but by no means least, they are about to embark on an attack on the fundamental legal freedom which unions fought for and won decades ago.

In the face of those provocations, the trade union movement is apparently expected to sit back and do nothing. Apparently, it is supposed to stand by while its members' living standards and job prospects are attacked, and to remain silent while the most vulnerable and needy groups suffer—all for the sake of tax cuts for the rich. When the unions protest and try to protect their membership, they are condemned by the Government as the cause of all our problems.

There is no more gross injustice in this country than that directed against organised working people. The Government are simply trying to divert attention from the weakness of British capital and the bankruptcy of their policies. I am confident that ordinary people in this country have begun to see through the Government's manoeuvres and when the time comes will refuse to pay for the Government-induced recession.

I take no pleasure in saying this, but things will get a lot worse before they get better. The Government have some lessons to learn, and they are determined to do it the hard way. They are trying to abdicate from responsibilities that no modern Government, least of all in this country, can in the end escape. They are offering us policies the final implications of which are frightening. To put it mildly, they scare the hell out of me.

I do not know whether the Government have fully considered the consequences of 2 million unemployed, for example. Do they understand the damage that will be done to the public's confidence in the ability of this House to manage the economic affairs of this country? People are already beginning to feel that things are getting out of control.

I urge the Government to reconsider their proposals before it is too late. Moderate Members of the Conservative Party should try to change the mind of their Prime Minister. She is leading this nation to the edge of an abyss, and I appeal to reasonable men to drag her back before it is too late.