Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 3:56 pm on 6th July 1983.

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Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs) 3:56 pm, 6th July 1983

I can see no circumstances in which an increase in interest rates and cuts in public spending, in the depths of a recession, should be welcome to any hon. Member. The prospect from the catalogue of bad news which we can see before us, as even the most sympathetic Government supporters must admit, is of dole queues continuing to lengthen, with many more thousands of people of all ages who want to work — who are desperate to enjoy the dignity of work to the point when many of them would do it for washers—being denied that chance.

The prospect is of any recovery — as the Prime Minister has admitted with her new-found post-election candour — being only patchy, and of being wrecked altogether by the looming balance of payments crisis, with a major fall in sterling, a rise in interest rates and a tight consumer squeeze. As I say, we are likely to see a depressing hike in interest rates in the wake of rises in the United States as part of the Government's response to the money supply figures.

The prospect is also of rising inflation, with almost all the forecasters predicting an increase of 6 per cent. by the end of this year and of 7 per cent. to 8 per cent. by the end of next year. In short—to answer the intervention of the Financial Secretary—Labour Members will shortly see confirmed our worst fears and predictions about the economy.

The Government know what a terrible state the economy is in, but what has been their response since the election? Has the response of the Prime Minister been to heed the words of the right hon. Member for Cambridgeshire, South-East (Mr. Pym) and use, as he suggested she should, her formidable talents to serve all the people of the country—not only those able to stand on their own feet, but those who cannot?

Have the Government given a moment's sympathetic thought to the worsening plight of our once-prosperous regions of Merseyside, the north-east and north-west, Scotland, Wales and the west midlands, which are facing more and more closures? Have they given a moment's sympathetic thought to the poverty and deprivation that those on the dole and their children now face? Have they given a moment's sympathetic thought to the increasing burden which unemployment, poverty and the growing population of the elderly place on health, education and social services? Have they given a moment's consideration to the hardship which millions of pensioners will face this winter?

The answer to all those questions is no. Instead, what thought has been given to the economic and social life of that part of the nation which cannot stand on its own feet has made matters worse, and for many of those who are still standing the decisions which have been made may cripple them for life.

The responses to the mounting crisis in the regions has been for the Secretary of State for Trade and Industry to announce a review of industry aid, savagely cut back once in 1979, with the undisguised prospect of still more cuts. Those already on the dole have seen a dramatic reduction in their standard of living with the abolition of the earnings-related supplement, and now they face not the prospect but the certainty that from November 1984 unemployment benefit will be cut. I add my prediction that not only will the real rate of benefit be cut but that the period for unemployment benefit will be reduced from one year to six months and that the wage stop will be reintroduced.

The response to the increasing pressure on the education, social and housing services was seen yesterday, with cuts of £280 million being imposed on local authorities, especially those struggling with the greatest concentration of social and economic problems. That figure should be noted and savoured, for the figure of £280 million which was yesterday cut from the budgets of local authorities struggling to maintain their social and education services in our towns and cities is exactly the cost of the tax handouts to the very rich which we are today being invited to approve. Somehow the Government can find money when it comes to lining the pockets of their friends, but when it comes to providing money for desperately needed services they say that there is no more.

The response to the crisis in the Health Service has been to announce—behind an entirely fraudulent claim of a 0·5 per cent. growth — real and effective cuts in provision of 1·2 per cent. for the next five years. In response to the hardship which pensioners would, in any event, face this winter, the Government have taken away at least £50 from each pensioner by setting their increase at May's level of inflation instead of at November's.

All that has been bad enough. But, in Al Jolson's immortal words, "You ain't heard nothin' yet." Trapped in the web of monetarist dogma which Treasury Ministers have wound round themslves, the Chancellor now sees his only way out as further and large cuts in public spending, as presaged in this morning's newspapers.

My hon. Friends and I draw great significance from the fact that, when pressed first by my hon. Friend the Member for Livingston (Mr. Cook) and then by my hon. Friend the Member for Workington (Mr. Campbell-Savours) to say whether the stories in today's Guardian and Times about looming major cuts in public expenditure and a major review of public spending were correct, not once but twice the Chief Secretary ducked the question.

We can read the signs, and the nation should be prepared for a statement this autumn which will lead to savage cuts in every major spending Department, apart from defence. Those cuts will affect the constituents of every Conservative Member elected on 9 June—I think I see the hon. Member for Loughborough (Mr. Dorrell) nodding in assent—as well as the constituents of every Opposition Member.