HC Deb 23 May 1972 vol 837 cc1202-3
6. Mr. Knox

asked the Chancellor of the Exchequer if he will make a statement on the operation of his reflationary measures introduced in July, 1971; and what estimate he has made of the extent to which they have worked through the economy.

Mr. Barber

As a result of the July measures, together with the steps taken in the Budget last year to reflate the economy, the rate of growth of domestic product rose sharply to an annual rate of about 4½ per cent. between the first and second halves of 1971. Because of the dislocating effects of the coal strike, it is not possible to provide an estimate of the effects of the July measures in the current half-year, but the latest unemployment figures show that the increased demand is now working through to the labour market.

Mr. Knox

Would my right hon. Friend care to estimate the time lag between the introduction of reflationary measures and the point when they are fully effective, particularly in relation to unemployment? Does he agree that it is important that the length of this time lag should be established if the standard of demand management in Britain is to be improved?

Mr. Barber

I only wish that in regard to both restrictionist and expansionist policies it were possible to estimate a little more accurately what the time lag is, but this is a very difficult area.

Dr. Gilbert

As the Chancellor has made great play of the recent reduction in unemployment, will he confirm that most of the benefit has so far been confined to the most prosperous parts of the country, namely, the South-East? Will he repudiate the smug reply of his hon. Friend the Chief Secretary to my right hon. Friend the Member for Leeds. East (Mr. Healey) about the rise in prices? We read in the Financial Times of a meeting at Chequers over the weekend where prices were supposed to be the main issue of concern. If they are not to the right hon. Gentleman, they certainly are to the public.

Mr. Barber

My hon. Friend was absolutely right, and the hon. Gentleman was wrong. The country will note the Opposition's somewhat glum reaction to the fall in unemployment, which is in marked contrast to their political glee when the trend was upwards.