§ 14. Mr. Ovendenasked the Chancellor of the Exchequer what representations he has received concerning his announcement on 22nd July of reductions in public expenditure; and what replies he has sent.
§ Mr. HealeyI have received a considerable number of letters about the measures announced on 22nd July, and my replies have explained the Government's purpose in introducing them.
§ Mr. OvendenDoes my right hon. Friend accept that the strongest and most important representations he has received have come from the TUC and the Labour Party Conference? What reply does he intend to send to constituency Labour parties which will be writing to him in the coming months asking him to take note of the Labour Party Conference's resolution and drop these cuts, which are damaging to the social contract and to employment?
§ Mr. HealeyI suspect, although I would not commit myself absolutely, that I shall be sending them replies along the lines of replies to letters I have already received, explaining that it is essential that the Government should have made these cuts and should stick to the public expenditure levels they have set if we are to avoid a renewal of inflation and the choking-off of investment in manufacturing industry.
§ Mr. FairbairnIf the right hon. Gentleman cannot entirely anticipate the inflation rate, can he answer a simple question about the bond he announced on Monday? If one puts in £5 now and in four years' time gets out £7, does the Chancellor expect that the £7 will be worth more or less than the £5 today?
§ Mr. HealeyI suspect that it will be worth more. There is no question about the fact that, for the many who will be taking it out, the bond offers a very much better return than most other investment opportunities.
§ Mr. George RodgersDoes my right hon. Friend agree that, though it is important to keep down the rate of inflation, that in itself will not of necessity 620 cure unemployment? Is he further aware that West Germany has the lowest inflation rate in Western Europe yet still has a substantial unemployment problem, with over 1 million out of work?
§ Mr. HealeyMy hon. Friend has made a very important point. It is the case that the United States, for example, which has a much lower inflation rate than we have, has a substantially higher level of unemployment. On the other hand, we have learnt through bitter experience over many years that unless we can get inflation under control we have no chance of reducing the rate of unemployment. That is well understood by all sections of the Labour movement at this time. That is why the trade union movement for the second year running has accepted limits on settlements reached in pay negotiations, which has contributed so much to the fall in the rate of inflation in the last 12 months.
§ Sir G. HoweIn view of the importance that the right hon. Gentleman rightly attaches to getting the inflation rate down, can he take a little further the confession made by the Chief Secretary just now? Will he confirm that the target of getting inflation below 10 per cent. has passed entirely out of sight and that the Government in their own calculations for next year are currently proceeding, as reported in the Press today, on the assumption of 15 per cent.? Does not that of itself underline the necessity for further economic measures?
§ Mr. HealeyThe Press report to which the right hon. and learned Gentleman refers is totally wrong. There is no ground whatever for that belief. What the Government have said—and my right hon. Friend the Prime Minister repeated it on Monday—is that our objective, which we intend to ensure is achieved, is to bring our inflation rate down to that of the mean of our international competitors by the end of next year. But the right hon. and learned Gentleman well knows that one of the major factors in the progress we, like France and other countries, have made in bringing down the rate of inflation is the unexpectedly high increase in commodity prices in the early part of this year, an increase which has latterly resumed.