The right hon. Member for Chingford (Mr. Tebbit) started his speech with typical charm but, without being patronising, his speech then became worth listening to. His analysis of the trend of the present recession is faulty. He said that the recession is hitting first in the south of England and has not yet hit as hard in the rest of the country. That is natural when we are dealing with a deflation that is consumer based. It is not generally realised that Oxford street has the retailing turnover of Leeds. Therefore, when the Government decide that to achieve their recessionary impact they will hit consumer spending, inevitably it is the main retailing centres that feel the first blows.
There is nothing novel or different about that. Indeed, even during the problems caused by the oil price increases, the north-east of England retained its employment levels far longer than the rest of the country. That was not because it was healthier but because it had long lead industries such as power plant and so on where existing contracts take time to work through. When the contracts had worked through, the recession hit. When there was an upturn, it was not felt in that area. Therefore, there is no solace for the regions in the pattern that is being followed in this recession. It is a natural consequence of the economic policy that has been adopted by the Government.
Many of us have known the right hon. and learned Member for Surrey, East (Sir G. Howe) for a great many years. Without any hypocrisy, I should say that hon. Members on both sides of the House listened to his speech yesterday with great sympathy, because we understand the humiliations that have been heaped upon him by the Prime Minister. However, it was a limited sense of sympathy because, as a fellow Welshman, my hon. Friend the Member for Warrington, North (Mr. Hoyle), and my hon. Friends who represent the north and Scotland all remember that it was the right hon. and learned Gentleman's 1979 Budget that unleashed the industrial carnage that destroyed one third of the jobs in our manufacturing industry.
When I was at the Department of Trade and Industry, Keith Joseph, now the noble Lord Joseph, and the right hon. and learned Member for Surrey, East, who then spoke for the Opposition, were the architects of British monetarism. They were the only people foolish enough to absorb the nonsenses of the Chicago school that had been the joke of economists for decades. We were the only country to adopt those nonsensical policies. Galbraith thanked heaven that it started in Britain because they then knew that they should not try it in the United States.
The right hon. and learned Member for Surrey, East together with Lord Joseph convinced the Prime Minister that she should adopt monetarism. It was a conquest of persuasion over comprehension. In his speech yesterday, the right hon. and learned Gentleman was somewhat selective about history. He said, quite rightly, that he had brought inflation down from 22 per cent. to 4 per cent. However, I remember that he put inflation up to 22 per cent. in the first place. It was his opportunity Budget and his doubling of VAT that led to us having to have high interest rates and high sterling for many years. That made it impossible for us to sell abroad, compete or invest. He was rather like the captain who is claiming credit for getting off the rocks the ship that he put on the rocks in the first place. He tried to ignore the fact that he lost 2 million of his industrial crew along the route and severely damaged the engine room at the same time.
This may be the last year of the Government. What do we find? We have rising unemployment again, inflation is higher than when they came to office and we have a balance of payments crisis. It is a measure of the mess in which we find ourselves that the Chancellor was boasting that the balance of payments deficit next year will be "only" £11 billion. That is the third highest in our history. That is the measure of 11 years of achievement by the Government. All that is left to them and their Thatcherite revolution—the Prime Minister, the Chancellor and others keep returning to it—are claims relating to improving fundamentally Britain's productivity. However, even that was laid to rest on Monday.
There was a fascinating article in The Guardian by Victor Keegan, based on a 20-year study by academics at Aston and Leicester It showed that nearly all the productivity gain that is claimed by the Government is actually technological productivity. Before Conservative Members say, "Good, that is what we want," I warn them that it is not necessarily in their favour. Nearly all the productivity that has been gained since the Government came to office is technology-based rather than labour-based. The Government have not produced the enormous turnaround in attitudes and so on that they talk about. That was not the problem. As my hon. Friend the Member for Warrington, North, with his union background, will no doubt tell the House later, we do not have the back-up in capital, equipment, machinery and labour that our competitors have.