That is the last gross abuse of an intervention to which I shall give way, but I shall answer the hon. Gentleman's question directly. To start with, we would spend the £1·5 billion which the Chancellor proposes to give away in tax cuts on direct job creation by investment in the infrastructure. Not only would the Labour party do that. Half the Tories below the Gangway would do the same, and I am delighted to see some of them nodding assent.
I return to the Prime Minister's amendment, which refers to "firm action". I hope that the Chancellor will tell us to what "firm action" the amendment refers. For instance, was it the "firm action" characterised by the two weeks of indecision before 11 January? Was it the firm briefing given by the Treasury on 12 January saying that the Government would not intervene? Was it the firm briefing given by No. 10 Downing street saying that the Government would not intervene? Was it the firm way in which the Chancellor intervened to increase interest rates in three nervous instalments, two of which did not work? Perhaps "firm action" is even the firm way in which the Chancellor persists in confusing the markets about his impressions and therefore undermining confidence.
So that the right hon. Gentleman may at last remedy that error, I ask him again: will he concede that the policy of the free float of sterling has now been abandoned? We all know that that policy has been abandoned and that it will be in the interests of sterling stability for the Chancellor to say so, but he will not acknowledge that change in policy, because what is good for the economy requires a formal denial of Tory dogma. It requires the right hon. Gentleman to say in public that the whole free market philosophy has failed. The Government now intervene to determine the exchange rate and now manage domestic interest rates, invariably upwards—upwards on 11 January, 13 January and on 28 January to the highest level of real interest in this country's history.
I concede at once something which the Prime Minister certainly never conceded when she was in opposition—that uncertainty about oil prices and the frenetic behaviour of the markets puts great pressure on our economy. However, it is the Government's proclaimed policy to allow those frenetic markets, and those markets alone, to determine sterling's value. The Government cannot convincingly bleat about the behaviour of the market's irresponsibility, while insisting that the exchange rate should be determined by those irrational markets, and those irrational markets alone, especially when the Government have added to the uncertainty, first, by refusing to confirm that there is any exchange rate for which they will stand and fight, and, secondly, by encouraging the markets to believe that the Government positively welcome depreciation because the increased size of the fiscal adjustment that depreciation brings about will provide more room for the tax cuts which are politically so necessary to the Government and their supporters.
The self-inflicted wounds of the last month are wholly characteristic of the Chancellor's economic performance. For the past three weeks he has been running about like Corporal Jones in "Dad's Army", hysterically crying, "Don't panic, don't panic. There is nothing to worry about." The right hon. Gentleman has behaved like that throughout his stewardship.
In the medium-term financial strategy, this Chancellor and his predecessor set the Government targets which the Government have constantly failed to achieve. The money supply consistently exceeds the Chancellor's intention. Public expenditure has been off course for four of the last five years, and it is now higher than when the Conservative party came to office. In fact, the Chancellor constructs his own hurdles, trips over them, falls flat on his face and then complains bitterly when international opinion notices what happens. Having made those blunders,
Their favourite … excuse is that their appalling record is all due to the oil crisis and the world-wide economic depression.
I have taken those words from the 1979 Conservative manifesto.
Let us look at the Government's appalling record as described in our motion. We have the highest level of unemployment and the highest level of interest rates in British history and the worst deficit in manufacturing trade since the industrial revolution. We could have added to our motion
the highest level of taxation and the highest level of company liquidations in British history.
The Government's answer to those charges comes in three humiliating parts — first, it is not their fault; secondly, some things have gone well; and, thirdly, it will all come right in the end. Let us look at each of those excuses. Let us examine what has gone right as listed in
the amendment, starting with "record output". That means that output is now rather higher than it was in 1979. Every Government since the war have increased output, except, that is, the first Thatcher Administration. In the past five years output has increased by 3 per cent. In the Labour Government's last five years it went up by 8 per cent. No doubt the Chancellor will tell us that the mining dispute is part of the reason for the current year's poor output. I think this part is right. That is why the Prime Minister should be assisting a solution to that dispute, rather than prolonging it for political reasons.
Secondly, the Government talk about record investment. That is true, but only if they talk about gross investment, rather then net investment. Net investment has been lower in every year of Conservative government than it was in any year of the previous Labour Government. In machinery, construction and transport — job-creating sectors—investment is now negative. Such selective use of statistics hardly strengthens the Prime Minister's case, nor does the Prime Minister's pathetic insistence that she deserves credit for reduced inflation but none of the blame for rising unemployment. Honest people know that the two trends cannot be separated.
The Government's inflation record is the statistical success that the Prime Minister describes, but prices have been held down by depressing the economy, by the intentional creation of unemployment, by the abandonment of regional aid, by the assault on local authority spending, by the destruction of the public sector building programme, by first allowing exchange rates to rise absurdly to a point where they prejudiced exports and then allowing them to collapse to the point where it was necessary to impose a massive increase in interest rates to prevent a major sterling crisis.
Over the past five and a half years, whenever the Government have had to make a choice between the real economy of work and jobs and the theoretical world of the medium-term financial strategy, they have always chosen theory in preference to the needs of the real economy.
The Government have justified their choice, as the Chancellor did yesterday, by insisting that the policies which have increased unemployment by over 2 million will soon begin to bring unemployment down. I therefore ask the Chancellor a simple question: when will that begin to happen? When will his certainty that the pursuit of the magic numbers enshrined in the medium-term financial strategy begin to produce the result that he has promised? How, as that strategy has gone so wrong for so long, can he have the effrontery to ask the people of this country to believe that one day all the indications will change, all the auguries will be different and all the results will be as he pretends?
There are people in this country who are not prepared to wait for as long as the Chancellor demands. It is convenient and comfortable for him at lunch or dinner in London to say that soon, as long as we are patient, unemployment levels will decline, but for the men and women in the north of my constituency, where adult unemployment is now running at more than 50 per cent., it is not such a conveniently comforting assurance, when we do not know when and do not believe that, the promises will be kept. The assurance is not comforting, in particular because we know that there is an alternative, in terms of unemployment. That alternative involves two things. It involves, first, what the Prime Minister used to deride as bogus jobs, but now euphemistically calls the measures—the conscious, considerate and continuous attempt by the Government — to provide direct forms of employment.
Secondly, it involves the Government using what money is at their disposal for investment in projects which are desirable in themselves and will directly create jobs.
When we debated the topic some weeks ago, the Chancellor said that his criticisms of a call for more public investment were based on the insistence that public investment must in itself be worth while. I believe that it is worth while to end homelessness, to end overcrowding and to rebuild slums. I believe that it is worth while to improve the decaying roads of our great cities and to renew the sewers which are literally collapsing under those cities. I believe that it is worth while, as well as investing in those great capital projects, to employ extra men and women in our social services to provide those aspects of life which make ours a civilised, compassionate and decent society. As well as being worth while in terms of social objectives, such expenditure would have the net result of creating jobs.
The Chancellor still has to defend his stubborn persistence in saying that what money is available will be spent not on job creation but on the reduction of direct taxation. I share the view that there are people at the bottom of the income scale who should pay no tax at all. If he wanted to, the Chancellor could find the money to help them by a simple process of fiscal redistribution.
What has happened during the right hon. Gentleman's chancellorship and that of his predecessor? The major tax benefits have been given to the families living on £18,000 a year or more. I tell the Chancellor, and all those who want hope for the prospects for employment, that even within the parameters of his policy he could spend £1·5 billion on job creation and, via a little redistribution—offensive to the right hon. Gentleman philosophically, but right for the nation as a whole — take the members of the lower income groups out of tax.