NATIONAL ECONOMIC DEVELOPMENT COUNCIL

HC Deb 19 April 1973 vol 855 cc664-8

Q4. Mr. Carter

asked the Prime Minister if he will take the chair at the next meeting of the National Economic Development Council.

Q5. Mr. Meacher

asked the Prime Minister when next he plans to take the chair at an NEDC meeting.

The Prime Minister

I refer the hon. Gentlemen to the reply which I gave on 12th April to my hon. Friend the Member for Hertfordshire, South-West (Sir Gilbert Longden.)—[Vol. 854, c. 338.]

Mr. Carter

Can the right hon. Gentleman tell the House what the views of the NEDC are likely to be about yesterday's appalling trade figures? Can he further tell the House how the Government seem to be set to achieve the impossible, of moving from a £1,000 million balance of payments surplus to a £1,000 million balance of payments deficit in the space of two years?

The Prime Minister

It is not for me to prejudge what the members of the NEDC will say. If I may be allowed to venture an opinion, they will say "We have constantly urged you as a Government since 1970 to expand the economy. This is now taking place at the rate of something over 5 per cent. and the consequences are a steady increase in our imports to meet the demands of an expanding economy". That is what "Neddy" will say. Right hon. and hon. Gentlemen opposite have to make up their minds about whether they want an expanding economy. In the circumstances which the hon. Gentleman mentioned there was stagnation and no expansion.

Mr. Meacher

Although the Prime Minister was reluctant to sanction an investigation into the payment of wages below the poverty datum line in South Africa, may I ask whether he will investigate the payment of wages below the British poverty datum line by British firms in Britain? Is he aware that one of his Ministers said recently that there are in Britain more than one-third of a million people living in the families of those in full-time work earning a poverty wage below the supplementary benefit line? Since his own policies have mani- festly failed to help these poverty wage earners, will the right hon. Gentleman set up a commitee of inquiry?

The Prime Minister

No, Sir.

Mr. Healey

Would not the right hon. Gentleman agree that the disturbing trade figures for March at least underline the great difficulty which this or any other Government in these circumstances will face in maintaining a 5 per cent. growth rate without a substantial increase in inflation? Is he aware that although the figures already published by the Government show that we have had 5 per cent. growth, throughout the freeze there has been a fall in real earnings because the cost of living has risen by nearly 8 per cent while earnings have gone up by only 2 per cent.? Is he further aware that there will be no chance of getting co-operation within the NEDC on a policy against inflation unless the working people who have helped to create the increase in the nation's wealth are also allowed to share in it?

The Prime Minister

I agree with the right hon. Gentleman in that the figures obviously show the vital necessity of dealing with inflation. This is what the Government's policies are designed to do, and they are meeting with success. What I welcome is that those who the right hon. Gentleman described as the working people of this country have co-operated fully with stage 1 of the standstill. We are now out of that and the awards of £1 plus 4 per cent. are quite substantial by any criteria—between 7 per cent. and 8 per cent., with earnings rising in an expanding economy. This is the reason why, again, they are co-operating with stage 2.

Mr. Norman Lamont

Would not my right hon. Friend agree that one of the worrying features about Britain's international trading position has been our continuing decline in the share of the export market? Does he not further agree that while the value figures for imports announced yesterday increased sharply, largely because of increases in commodity prices, the volume figures for exports are increasing even faster? Does not that provide some ground for long-term optimism about the balance of payments?

The Prime Minister

In volume terms imports and exports have risen at about the same rate. But the fact that stage 1 and stage 2 are operating successfully gives us grounds, with the floating pound, for believing that exports can increase faster and that we can then stabilise the situation.

Mr. Bidwell

Since the Prime Minister obviously is not worried about the growth rate, is he not worried at all about the trade figures or does he regard alarming trade figures of this kind as an inevitability and a consequence of the growth rate? Is not he concerned at all about the trade figures?

The Prime Minister

I have said that in an expanding economy—this applies especially to the British economy because such a large part of our raw materials comes from overseas—we must expect at a time of expansion and when private investment is beginning to expand that imports of raw materials will increase and that our general import figures will increase. That is to be expected. At the same time, with a floating pound, we shall see a lag in time before exports themselves increase still faster. In volume, imports and exports are moving roughly together. If we are to have sustained expansion instead of the series of stop-go which we have seen since 1945, we must see it through.

Mr. Healey

Does not the Prime Minister agree that there is little evidence that the appalling increase in imports is due to investment? Does not the evidence put out by the Department of Trade and Industry suggest that it is due largely to imports of consumer goods or goods for consumer industries and the rebuilding of stocks? The big increase in the import bill due to investment, if we get investment, is still to come and will still further worsen the balance of payment figures.

The Prime Minister

The figures show that imports of raw materials have increased substantially. That is essential if we are to expand output. There is also an element of stocking up in this because industry has been working on low stocks. When industry sees that in certain raw materials, for instance copper, world prices are rising, naturally it begins to stock up further. Those are the important elements. I agree with the right hon. Gentleman that when investment in plant and machinery comes about —and all the forecasts now are that it is coming about—if the plant and machinery comes from overseas countries it is bound to affect imports. On the other hand, when it is made here it will be the raw material side which is affected. One has to achieve a balance of these, taken over time.