Government Economic Policies

Part of Opposition Day – in the House of Commons at 6:25 pm on 20th January 1987.

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Photo of Mr Ian Wrigglesworth Mr Ian Wrigglesworth , Stockton South 6:25 pm, 20th January 1987

No, I really must not give way again.

The situation that I have described is not surprising. The manufacturing sector has been predominantly in the regions and it is from that sector that we have lost the most jobs.

There is an overwhelming case for devolving far more power, authority and resources to the regions. The City plays a very important role, but it could make a much greater contribution to the regions than it does today. The malaise in the City is debilitating the financial institutions and our economy. It is also debilitating industry and commerce. An honest and open City would be a national asset, but a corrupt City is a national liability. Alliance Members have said before that the Government have not given enough independence to the newly established Securities and Investments Board to enable it to carry out its role as the City watchdog. We should like it to have more independent members and I moved an amendment to the Financial Services Bill to that end. We should also like it to be financed and supported not by the City but by Government funds. It should be seen as a body that is independent of the City and not as one that belongs to and is dominated by the City.

In the light of recent events, the City is undoubtedly on trial. There have been too many scandals. I accept that a minority of people in the City are causing those scandals and behaving in an unacceptable way, but many people who have known the City for many years are becoming worried that that minority is too large and that too many people and institutions in the City have been infected by this sort of corruption. It is to be hoped that the Chancellor of the Exchequer and the Secretary of State for Trade and Industry will bring their investigations to a speedy conclusion so that this boil can be lanced and the good name of the City restored.

It is also important that the Civil Service should be above any reproach or doubt. I was disturbed by a report in The Times this morning that the investigation into insider trading and into the role of some civil servants had not led to the suspension of the civil servants involved. In my experience, that would have been the normal procedure in a case of this kind. I should be grateful if the Minister would clarify what is happening about the Government's investigation of their own staff.

What should be done to overcome the problems which I have outlined and which have been exacerbated by the Government's policies? The Government began their monetarist experiment when they came to office in 1979. That experiment, and the Government's attitude to industry, have led to the present levels of unemployment and to the decline in manufacturing industry. The only way the Government can get us out of this mess is by expanding the economy and investing any surplus cash that the Chancellor of the Exchequer may have under the fiscal adjustment in the forthcoming Budget so as to ensure that the industrial base of the country is strengthened.

That does not mean providing help only for research and development and for design and high technology, which the Government are now doing but were not doing when they first came to office. It means investing more money in education and training. The Secretary of State for Employment will doubtless tell us how much he is spending now on the youth training scheme, but that scheme has been spatchcocked together without any predetermined plan so it does not dovetail into the comprehensive training system that this country so desperately needs.

We need to bring together the remaining industrial training boards, the work being done in further education and with apprenticeship schemes as well as the youth training scheme so that they all fit into a comprehensive system to provide proper training opportunities and qualifications for young people. Young people in Germany and Japan are being provided with training opportunities and qualifications of that kind. We need investment not only in industry but in people. The Government should embark upon that investment in the forthcoming Budget rather than cutting taxes to help those already in work rather than the millions still out of work.

If we are to increase the output of manufacturing industry and the performance of the economy generally, the Government must do something about the uncompetitive nature of unit labour costs, which increased from 4·6 per cent. to 5·75 per cent. last year. They are not the lowest in Europe by any means and the forecast is that in 1987 they will increase by 5·25 per cent. If that happens, we shall lose out to our German, French and other competitors. That will simply make worse the looming balance of payments crisis due to what has happened to the price of oil.

There is only one way to reduce unit labour costs—by the Government having a clear incomes strategy and working with the Confederation of British Industry and the Trades Union Congress to ensure that pay settlements are brought down and are in line with productivity. For some years the Chancellor of the Exchequer has exhorted industry to bring pay settlements down to a reasonable level so that they are more in line with inflation and productivity, but he has invoked no policy to bring that about. Such a policy is absolutely essential if we are to get the expansion of the economy in the real world and not go into consumption in the way that the Government are presently engineering.

Present forecasts suggest that the Chancellor will make a fiscal adjustment of between £2·5 billion and £3 billion. It would be scandalous if he used that to generate more consumer expenditure in the economy, which will merely create jobs in Japan, in America and in France and other EEC countries rather than in Britain. It is scandalous that the Government have allowed pay increases to go way ahead of the levels of inflation and allowed consumer credit to increase beyond all imagination. They are now to compound that by giving further tax cuts which will further boost consumer spending and create jobs overseas but not in Britain.

We urge the Chancellor to adopt the approach that I have suggested so as to ensure a rapid decline in the levels of unemployment to which we have been subjected by the Government over the past seven years. For the people in the regions and in the north, it is urgent that the change in economic policy should take place. Without it there will be no hope of getting the unemployment figure below 3 million and keeping it there and manufacturing industry will continue in the decline that has been taking place throughout the Government's period of office to the detriment of the regions and of the country as a whole.