The Economy

Part of the debate – in the House of Commons at 11:38 am on 12th March 1993.

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Photo of Quentin Davies Quentin Davies , Stamford and Spalding 11:38 am, 12th March 1993

No. I must continue. I do not think anyone could criticise me for not having given way. What is more, I said to the hon. Gentleman that, though I would give way to him, I would not continue to give way after his intervention. I must return to my argument and not take any more of the time of the House than it would wish me to take.

In the 1980s, for the first time, we escaped from the continuing relative decline of our economy over the previous decades of the century. That was because we had, for the first time since the war, a Government who were prepared to identify and to address with considerable courage and consistency the great weaknesses of our economy.

There was the industrial relations issue. We all know what a terrible incubus that was to us during the 1960s and 1970s. We all know that we now have one of the better industrial relations records in the world instead of far and away the worst among OECD countries. That was an immense achievement in a vital area of the economy.

There was a failure of entrepreneurship in the United Kingdom in relation to the more dynamic economies of France, Germany and Japan, for example. That issue was addressed by the programme of tax reform and deregulation which was introduced in the 1980s, or when the Conservative Government came to power in 1979, and which is still continuing. I know that my hon. Friend the Minister will understand that it has never been more urgent to maintain the momentum of such an extremely important reform of the economy. The results are there to be seen.

During the 1980s, more than 1 million more businesses were created than the number that disappeared. Even last year, at a time of international recession, and a painful one, 400,000 businesses were created. That should give us some comfort. It should make us determined to continue to create the conditions in which people innovate, take risks, invest in the long term and generate the employment and prosperity that our nation will require in future.

The Government tackled another area of the economy where the records of Governments of both parties had been pretty lamentable. We were able to make a substantial change in the 1980s and establish a clear framework for monetary policy. We were able to get away from the debilitating cycle of devaluation that the hon. Member for Dagenham liked so much. It was one of inflation followed by foreign exchange crisis, retrenchment, recession, inflation and further devaluation. I refer to the miserable history of stop-go that characterised the years between 1945 and 1979.

Thereafter, we had the medium-term financial strategy, with its explicit commitment to certain monetary targets. That worked well for much of the 1980s. The framework over most of the past three years has centred on our membership of the exchange rate mechanism. There can be no doubt that our commitment to the medium-term financial strategy and the ERM brought about the reduction in our inflation rate that was so striking in the 1980s, and it has been striking again in the past two years.

We know that one of the great shortcomings or handicaps of the British economy in relation to our competitors—France, Germany, Japan and the United States—has been the constantly high levels of inflation that we have suffered over the decades. It has increased uncertainty, which has undermined investment and confidence in the economy.