§ 4. Mr. Ashleyasked the Chancellor of the Exchequer what measures he now proposes to take to reduce the level of unemployment.
§ The Chancellor of the Exchequer (Mr. Anthony Barber)I would refer the hon. Member to the reply I gave to the hon. Member for Heywood and Royton (Mr. Barnett) on Tuesday, 27th April.—[Vol. 816, c. 211.]
§ Mr. AshleyIs the right hon. Gentleman aware that the success of other countries in maintaining a high level of employment together with a high level of wages has torpedoed his efforts to condemn British trade unions as being responsible for unemployment? Will the Government now accept responsibility for unemployment and take urgent steps to deal with it?
§ Mr. BarberThe level of real wages which a country can enjoy depends on a number of factors, in particular the level of productivity. The fact is that recently the growth of money wages in this country has far outstripped any conceivable increase in productivity, with damaging effects on prices, employment and our international competitive position. It is our objective to raise the level of productivity by means of the reforms we are introducing in taxation, public expenditure and industrial relations.
Mr. TaventeDo not the very disturbing figures for industrial production, which have just been published, show that the base on which the Budget judgment was made was wrong? In view of the amount of slack which evidently exists in the economy, is it not a mistake to suppose that increasing the pressure of demand to take up that slack will add demand inflation to cost inflation?
§ Mr. BarberNo, Sir. I do not draw the same conclusion as the hon. and learned Gentleman. The Financial Statement and Budget Report forecast a fall of output between the second half 1056 of 1970 and the first half of 1971, but an increase of just over 3 per cent. was forecast to follow between the first halves of 1971 and 1972. I am confident that a recovery in output will take place as the Budget and our other measures progressively take effect.