Orders of the Day — The Economy

Part of the debate – in the House of Commons at 7:57 pm on 28th November 1989.

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Photo of Mr Brian Sedgemore Mr Brian Sedgemore , Hackney South and Shoreditch 7:57 pm, 28th November 1989

I congratulate the right hon. Member for Huntingdon (Mr. Major)—who, alas, is not here at the moment—on his appointment as Chancellor of the Exchequer at the Treasury, and as juvenile lead to the Prime Minister in the Cabinet.

As I listened to the right hon. Gentleman today, I was reminded of the assertion of George Jean Nathan; politics is the diversion of trivial men who when they succeed at it become important in the eyes of even more trivial men behind them". That is a little unfair. I shall analyse, in a moment, the view of the Chancellor that he is unfit for the job—and there are others who agree with him.

The recent Whitehall farce at the Treasury has its more serious side. It has forced us to re-examine our understanding of the English language. When the previous Chancellor was driven from office, we had to redefine words such as "brilliant" and "unassailable". Now the closest friends of the new Chancellor and his most fervent admirers describe him as dull, boring, ignorant and grey. Therefore we will have to redefine such words as "loyalty" and "hagiography."

Quite the most fulsome praise that I have heard about the Chancellor came from a neutral observer on "The Money Programme" last Sunday week. He said: The Chancellor has a lot to learn in many policy areas". I suppose that the alternative view is that the Chancellor has a lot to learn in every policy area.

One thing worries everyone: who is in charge at the Treasury? To judge from the 4 per cent. depreciation in the pound that has occurred in the few weeks since the Chancellor took office, the dealers on the foreign exchanges do not believe that anyone is in charge. Phillips and Drew, the city experts, take a rather different view. In their bulletin, describing the Chancellor's policies as grim and grisly, they argue that the right hon. Gentleman is in the pocket of his civil servants. Bill Martin, their leading economist, puts it rather delphically: More than Mr. Lawson, the current Chancellor is likely to be sensitive to the natural fiscal conservatism of his Treasury officials. If there are Conservative Members present who hope for tax cuts, perhaps I should read them another sentence: It is probably right then to think in terms of a mean Budget, incorporating perhaps an implicit tax increase of £ 1·2 bn". I do not agree with the foreign exchange dealers or with the City experts. I believe that the power in the Treasury still resides at No. 10. Why did the Chancellor spend last evening at No. 11, which I understand is not customary? I understand that he does not normally sleep there. I am told that he woke up last night in a cold sweat, turned towards No. 10 and, in a whispered cry, was heard to mutter: Oh! Why does the wind blow upon me so wild?Is it because I am nobody's child—Margaret? We know that the Chancellor is the son of a trapeze artist. As such, he will know that, when a child falls from dizzy heights, it has a hard landing. The Chancellor's non-oil forecast of three quarters of 1 per cent. for the economy next year means that all the rest of us are in for a hard landing. On television on Sunday, and here at the Dispatch Box today, the Chancellor told us that he is a monetarist with a one-eyed view of the economy. With his one eye, he sees only one problem—inflation. And he has only one weapon to deal with it—interest rates. His sadly misplaced approach reminds me of Mr. Kremlin in Disraeli's "Lothair": Mr. Kremlin was distinguished for ignorance for he had only one idea—and that was wrong. The famous economist John Maynard Keynes was certainly not a monetarist. He has been dead for a long time, yet in his "Essays in Persuasion", written in the inter-war years, he had the prescience to anticipate the recent shambolic hysteria at the Treasury. He said: The Economic Problem, as one may call it … is nothing but a frightful muddle, a transitory and unnecessary muddle". Did not the Chancellor's appointment to his new office arise out of a transitory and unnecessary muddle? It was unnecessary because the Prime Minister put her pride before her country; it was transitory because, even if the Chancellor stays in office for two years until the next general election, my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) will take over from him.

The Chancellor talks to us on television and in the House today about sound finance and threatens, as though it has some sort of macho symbolism, to raise interest rates to 16 per cent. The Keynesian retort— 'Sound' finance may be right psychologically—but it is a depressing influence"— is as apposite today as ever it was.

The recession that is inherent in the Autumn Statement is depressing, as indeed are the Chancellor's words. Delving into deep and difficult psychoanalytic theory, not to mention sado-masochism, he tells us that, if the policy is not hurting, it is not working. But the people who will be hurt are not the Chancellor's own class but the working people of Britain.

Behind this ludicrous language and the pain and despair of recession lies a profound and tragic ignorance of economic management on the part of the Chancellor. When he made his Autumn Statement on 15 November, I asked him why the warranted rate of growth in 1989 was less than it was in 1979. As his answer moved from guff to persiflage, it was clear that he did not have a clue what I was talking about. It is a bit like the neurosurgeon, taken before the medical disciplinary tribunal, saying, when asked why he operated on the patient's leg, "Nobody told me that the brain was in the head."

We should have realised what was going on when the Treasury and Civil Service Select Committee heard the Chancellor's pathetic outburst on 3 February 1988. You know how it is, Mr. Deputy Speaker when, in this place, we hide our true selves, we bottle it up inside and we pull a mask over our face—until there is a cathartic event and we have to blurt out the truth and a little tear rolls down our cheek. That is what happened to the Chancellor on 3 February. I shall quote him extensively.

I asked him what would happen to public expenditure if we had a disastrous balance of payments crisis. He flipped and refused to answer the question. He answered: While undoubtedly you were at university learning to become an academic, I was outside digging roads learning how to earn my living". I yield to no one in my admiration for those versed in the theory and practice of digging roads. I would even be prepared to accept that, as an economist, the Chancellor makes a first-class navvy but, summoning up all my reserves of logic, I have to say that being good at digging roads is not being good at being Chancellor of the Exchequer.