Autumn Statement

Part of the debate – in the House of Commons at 5:24 pm on 13th February 1991.

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Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury) 5:24 pm, 13th February 1991

The hon. Gentleman has not come to terms with the fact that the tendency to inflation within the British economy is the underlying problem, and the fact that our currency does not repose on price stability. As long as politicians continue to play around with the currency to suit their own short-term political ends, the currency will not do so. Germany's success by adopting another method of dealing with the problem—autonomous responsibility for price stability—is on the record as one of the achievements of post-war Germany.

I shall now mention some of the consequences of recession for other aspects of Government policy. Our present recession might not have been so severe in industry if the Government had taken a number of other steps that we have advocated for years, such as training measures; correcting the mistakes of the 1984 corporation tax reforms, which hit companies especially hard in times of high inflation; and legislation to counter late payment of bills, especially by large institutions, which has made the cash flow problems of small and medium-sized firms worse. I know that some Conservative Back Benchers have been sympathetic to the latter and that a Bill was brought in to deal with it.

Other steps would be to attack monopolies more vigorously to ensure that prices are driven as low as possible by competition, and to reduce the burden of employers' national insurance contributions, which would be a less inflationary type of tax cut than those that the Government have made in the past. As well as those steps, which might have helped industry, key investment decisions need to be taken. At the time of the autumn statement, the wrong decisions were taken—and they will not be changed now because of the curious practice that we operate in this country where we consider public expenditure at one end of the year and raising the money for it halfway through the year. Governments seem unable to relate the two.

Any Government could reasonably point out that the Gulf crisis has changed calculations and has to be taken into consideration, but it need not stop essential investment—indeed, it must not. The costs of the Gulf war, serious though they are, are containable, and other countries are contributing to them to a significant extent. The costs are not on a scale which ought to lead to the abandonment of other important spending. I was a little worried that the Chief Secretary, when he appeared before our Committee, gave some signs that savings would be sought in some areas to meet some of the increases that will arise because of the cost of the Gulf crisis.