GOVERNOR OF THE BANK OF ENGLAND

HC Deb 09 November 1967 vol 753 cc1241-4

Q1. Mr. Frank Allaun

asked the Prime Minister if he will dismiss the Governor of the Bank of England.

The Prime Minister (Mr. Harold Wilson)

No, Sir.

Mr. Allaun

Will my right hon. Friend now repudiate Sir Leslie O'Brien's statement that the Government have accepted that there must be a larger margin of unemployed than in the 1940s and 1950s?

The Prime Minister

I dealt with this in the debate on the Gracious Speech and I want to make the position clear again. We regard the present transitional level of unemployment as unacceptable. We do not seek a pool or reserve of unemployment and no one in any official position has ever suggested it.

As I explained to the House last week, and as my right hon. Friend the Chancellor of the Exchequer repeated on Tuesday, the "stop" phases of recent years and the consequent unemployment have resulted from over-heating and labour famine in the prosperous areas, where unemployment had fallen to figures around 0.5 and 0.6 per cent.

Our regional policies mean that we will be able to operate in future on much lower figures of unemployment in the development areas, where unemployment is and has been concentrated, and on a more realistic figure in the prosperous areas.

This will mean that total national unemployment will then be no more than what is justified by the frictional movement of workers from one job to another, seasonal factors and the short-term effects of structural change.

Mr. Hugh Fraser

In view of the reported promotion of the Paymaster-General, will the Prime Minister consider appointing the Governor of the Bank of England to fill the vacancy? Alternatively, will he consider appointing a—[Interruption.]—real horse—[Interruption.]

The Prime Minister

I have no comment to make on reports about my right hon. Friend the Paymaster-General because no submission has been made to Her Majesty, but anything which might occur in future would not be dismissal but redeployment.

Mr. Michael Foot

Does my right hon. Friend accept that in the speech of the Governor of the Bank of England, for which we ask repudiation, there is no reference whatever to regional policies? Does not my right hon. Friend recognise that, when the Governor, and the Chancellor, say that they have to have a larger margin of unused resources, this means more unemployed, and that is what we will not have?

The Prime Minister

No, Sir. The speech is not to be interpreted in that way. The Governor was not speaking in Rio de Janeiro about regional policies in this country. Since my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) is saying with authority what he thinks the Governor was talking about, I wish that, in his Motion on the Order Paper, he had not put what is quite inaccurate—that the Governor advocated a permanent pool of unemployment. In no report of the Governor's speech have I read any such suggestion. If my hon. Friend has seen a different report, I would be glad to look into it.

Mr. Iain Macleod

Can the Prime Minister tell us simply whether the speech of the Chancellor of the Exchequer on Tuesday represents Government policy?

The Prime Minister

Yes, Sir. My right hon. Friend was speaking in the regional context. It is true that there were some interruptions which made it a little difficult for him to develop his argument, but he said exactly on Tuesday what I said in the debate the week before.

Mr. Ashley

Would the Prime Minister agree that it is misleading to speak of a general level of unemployment in view of regional variations, and would he further agree that no Member of this House has done more than the Chancellor of the Exchequer to tackle the real long-term problem of unemployment, which is the economic malnutrition of the regions?

The Prime Minister

I certainly pay my full tribute to my right hon. Friend, at a time of financial stringency, for the very great resources, financial and otherwise, that he has made it possible to devote to regional regeneration. I certainly agree that one cannot look on this problem except on a regional basis, as I made clear a number of times at Scarborough and elsewhere. The whole basis of our re-expansion programme is as a regional expansion programme.

Mr. Thorpe

Since the Prime Minister declines either to dismiss or disown the Governor, would he agree that it is unfair to criticise the Governor for making remarks which are merely a reflection of those expressed by the Chancellor of the Exchequer on Tuesday?

The Prime Minister

Criticism of the Governor has been unfair. Critics entirely fail to take account of the tremendous contribution to our national wellbeing made by a very devoted and highly professional servant of the State.

Mr. Heffer

Is my right hon. Friend aware that while Members on this side of the House fully applaud the concept of tackling the regions—in any case a principle upon which we were elected—we will not accept the idea of a general overall level of unemployment of about 2 per cent. to 2½ per cent. which covers the whole country? Does he realise that this is not acceptable to the Labour movement?

The Prime Minister

My hon. Friend will agree that that is what I said in answer to the first supplementary question this afternoon. The position is, however, that if one has a great differentiation between prosperous and other regions, then one has to take action. This is the whole history of the "stop" phases under successive Governments. One has to take action when the prosperous areas get into a state of total famine of labour, skilled and unskilled. In every case when this has been done under successive Governments, including our own, the fact that there was already a pretty chilly atmosphere in the development areas has meant that unemployment there reached figures which we regarded as intolerable.

If one can get the two more into balance, which is the purpose of our policies, one can have a somewhat higher figure in the prosperous areas—and no one could complain about that, because it would not mean any people being involuntarily unemployed, apart from the cases that I have mentioned—while the development areas would be down to a tolerable level. The closer we can bring them together the lower the national average of unemployment will be.

Mr. Heath

Will it help the Prime Minister in these circumstances to be precise? Does he adhere to his statement of July 20th last year that after the redeployment, after the reabsorption, after the regional distribution, then a pool of up to 2 per cent.—470,000—unemployed is acceptable?

The Prime Minister

Not a pool. Not as a permanent figure. I said after the redeployment. The right hon. Gentleman once, inadvertently, quoted me in a public speech as saying that I looked on this figure as permanent. I do not. When we have got the proper balance between the regions we will be able to operate on lower figures. Since the right hon. Gentleman referred to the measures of last year, it is right to say that one of the main reasons, perhaps the reason, for the present level of unemployment, is the fact that, as every hon. and right hon. Gentleman knows, business firms are much more cost-conscious than they were. They have eliminated a lot of wasteful labour practices because production is now running above last year, whereas unemployment is higher. What has happened is that a number of men who were under-employed have been dismissed by firms and this is the problem that we have to deal with.