Orders of the Day — The Economy

Part of the debate – in the House of Commons at 7:22 pm on 11th November 1981.

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Photo of Mr Ken Woolmer Mr Ken Woolmer , Batley and Morley 7:22 pm, 11th November 1981

I have great pleasure in following the hon. Member for Melton (Mr. Latham). Many people, both inside and outside the House, will agree with what he said.

People outside feel that we have become bemused by facts and figures and by concentration on the PSBR, monetary targets and so on. Those who are unemployed and are suffering the misery and helplessness of the lack of jobs or diminished wage packets are not concerned with such subtleties. They see the common sense in remarks such as those of the hon. Member for Melton.

When our people see unmade streets, long housing waiting lists with not a single house being built, homes with outside toilets, and baths that have not been replaced since the properties were built and roofs that are leaking because elderly people cannot maintain their own homes, they wonder whether politicians are mad when they say that we cannot afford expansion. When people see politicians crowding out the economy's ability to cope they think that we have lost touch with reality.

I shall look at problems from the basis of my own experiences and from the point of view of ordinary people, rather than the view of academics and analysts. I share the view of my right hon. Friend the Member for Battersea, North (Mr. Jay) that unemployment is not inevitable. It has been brought about because we have not found a way to bring together our undoubted resources and skills to produce the unlimited goods and services that people want.

It is madness to make cuts in our universities when the need for training and education has never been greater. Can anyone imagine the Japanese cutting higher education, research and development and investment at a time when the need for such investment has never been greater? The problem is man-made and such problems can be overcome by man, but not by giving up or by defeatism.

It is important to get a sense of urgency into our debates and policies. Suggesting that it will take many years to overcome the problems is no help to men in their fifties or to youngsters of 16 or 17. A programme spread over the next five or 10 years will be too late for 50-year-olds who have been hit by unemployment and for those in their late teens or early twenties who have no hope of a job.

It is essential that urgency is introduced into our consideration of the problems. It is no good hoping that long-term trends will pull us back. Even Conservative Members who support the Government will agree that, even on the most optimistic interpretation of the Government's policies, there is no prospect of getting unemployment below 2½ million in the foreseeable future. That fills me with horror. It is totally unacceptable and, whatever the costs of alternatives, they surely cannot be worse than the consequences of the present policies.

I do not wish to dwell on the problems of the textile and clothing industries, but I should like to draw some lessons from their experience. Those important industries still employ 600,000 people and they have a great deal to teach us.

When I visit those industries I do not see firms that have been brought down by militant trade unions, high wages or excessive wage claims. If anything, low wages have encouraged poor managements to be satisfied with low productivity and have enabled them to get away with poor marketing and design and poor management generally.

Instead of blaming workers or trade unions, we should look much more seriously at the causes of low productivity and low investment. I regard further Bills that are allegedly aimed at reforming trade unions as irrelevant to the problems of the textile and clothing industries. Such Bills will not bring a single extra job to those industries. Unions have co-operated for decades. They have accepted low wages and have not been militant, except in the early years of their history. We need a greater willingness by the Government to face up to the real problems of industry.

I agree with other hon. Members that when expansion comes through a change of policy, by this Government or the next, it should be directed to agreed areas of priority and not given away in tax cuts that will have no direct effect.

I do not share the view of some of my hon. Friends that we should cut the employers' national insurance contribution. Employers want increased sales for their products. If they can achieve that and use their capacity, they will get profits. At present, profits are low because sales are low. It is deplorable to suggest that cutting employers' contributions will make the necessary difference to industry.

If we can combine expansion with the type of approach mentioned by the hon. Member for Melton, which can produce the benefits that people want and will welcome, and which will at the same time enable our producers to sell more products and earn more profits, we shall be able to pay higher wages. That is a more sensible approach.

I will now look at the wider issues and relate them to specific problems. I welcome the speech of my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) who I felt, almost for the first time in this Parliament, had the Prime Minister and the Chancellor of the Exchequer on the defensive about their policies. It was the first time that I have seen the Prime Minister genuinely upset and reacting because she felt that her fundamental belief in herself was being successfully challenged. I agree with my right hon. Friend that, in order to have more perspective, we cannot ignore the fact that the Western world is still in the throes of solving the problems of the oil crisis of the 1970s. I do not think that we have recognised either that or the international aspect of the problem.

In the Queen's Speech and in many of the speeches that we have heard in the House in the economic debates of the last year or two, there has been a deplorable lack of perspective on the international action that is required.

In many ways this country has not come to terms with the developing competition between nations that has emerged over the last 15 to 20 years. Almost any product can be produced almost anywhere in the world. That is something with which GATT and various other international forums have to come to terms. The world today is a very different place from the world as it was at the end of the last war, when the last major agreements on trade and money were made. I hope that there will be action and development in that respect in the years ahead.

The international actions of the last few years seem to be very largely inadequate. It is extremely worrying that we are not coming to terms with the problem of how to deal with the substantial flows of oil funds between the surplus and deficit nations. American, British and other interest rates chase each other around in an unstable situation, with no semblance of reality, or relationship to the real resources and needs of the world.

If the unemployed in my constituency are baffled, what on earth do the starving millions of the world think? Despite the world's resources, millions of people are unemployed because we do not know how to deal with the very speculative and short-term money flows arising from a temporary dislocation in the relationships between the major countries of the world. It is a commentary upon ourselves and the nations' leaders.

In our own domestic policies two matters do not have sufficient recognition. One is the severity of the deflation that has occurred. The other—and more important—is the structural problem that has been brought about by the production of North Sea oil. This is a deep structural problem and we should not ignore the reality of the change in our economic system in such a short time. We have to deal with a change of several percentage points in the balance of the economy. It is something that many take for granted, particularly the Conservative Government, with their belief that market forces can deal with anything.

However, I was brought up as a young student of economics to accept the rule of arithmetic that any shift in the national resources of between 0·5 per cent. and 1 per cent. a year over a sustained number of years is a substantial shift to achieve, and that any attempt to achieve more than that would cause problems of an economic and political nature. We have, willy-nilly, destroyed much of our manufacturing industry, and that industry will not come back. We have been left historically with, among other things, an overvalued exchange rate, and we have still to come to terms with that problem.

It is a matter of grave concern that many hon. Members on both sides of the House, and some financial commentators, have begun to slip into the view that the pound is now not overvalued, and is in some way just about right; if anything, it could even go up a little to our advantage. That may be convenient for the Government of the day. It paid the Labour Government, in their last two years of office, to have a high interest rate, because kept inflation down in the run-up to the election.

The Government may well be tempted to keep up the exchange rate because it is politically important to them in their anti-inflation battle. But the consequence will be the continuing destruction of yet more of our manufacturing industry. The bulk of our companies—I exclude the most profitable ones—cannot compete in international markets with our present exchange rate.

The same comment applies to exchange controls. Can anyone maintain that it is sensible for billions of pounds of capital to be flowing abroad when our own people have not the capital or the demand for their products that they require? Conservative Members may shake their heads. I well understand that, from the point of view of people in the City of London who deal in high finance, it makes sense to be able to juggle money around the world, but the people in my constituency want the money that has been saved and put into pension funds and banks to be used to help to provide jobs in our country for our people.

It makes no sense, in a period of massive unemployment, deliberately to encourage and allow money to flow abroad. Of course, the money earns a higher rate of return abroad—that is the double tragedy of it—but the Government should listen to what the average person says and not to the people who have a financial interest in these matters.

I want now to refer briefly to the financial institutions. I regret the remarks of my right hon. Friend the Member for Bristol, South-East (Mr. Benn) in his speech last night, when he threw away the support inherent in the substantial public feeling that the North Sea oil and gas assets are the nation's assets. There is a strong feeling that the Government are acting wrongly, but he threw away that support, confusing the issue in people's minds by talking about confiscation. Confiscation is legalised theft. He threw away that strong card for the sake of a populist card within the Labour Party./

It was a serious mistake. I say that because I believe that there is an understanding among the public that our financial institutions are not doing a service to much of our industry. But if we start mixing that question with quarrels about nationalisation, it will be a great disservice, because there is much more common ground politically than most people are willing to admit.

The same may be said of our approach to the relationship between Government, industry and the trade unions. There is much good will and people want to be able to work together. They are ready to accept some State intervention and to accept priorities agreed with industry, as long as it is not seen as a monolithic dogmatism that removes choice and competition. Such intervention should strengthen competition, strengthen industry and increase the availability of jobs for our people.

In the run-up to the next election, I hope that my party is able to put away the harder dogmatism and to build on what the common sense of people will accept—that there is a case for intervention in our financial institutions, and for planning and State aid that is directed to priorities in industry. But that is not to be confused with facile arguments about confiscation and the direction of people in certain ways even if they do not want to go in those ways. The former is the approach that would find common cause across the Chamber, instead of us letting down the nation and ignoring the 3 million unemployed who want a change of policy so desperately.