HC Deb 27 July 1978 vol 954 cc1774-7
3. Mr. Flannery

asked the Chancellor of the Exchequer if he is satisfied with the present functioning of the economy; and if he will make a statement.

Mr. Healey

I am satisfied that the economy remains broadly on the course charted in the economic forecasts published at the time of the Budget. Recent figures suggest that, on most indicators of economic performance, we are doing at least as well as predicted in the forecasts.

Mr. Flannery

Does my right hon. Friend agree that, if there were a Tory Government led by the right hon. Lady who made that awful flop of a speech on Tuesday—which the Tories have now had second thoughts about—unemployment would be at least twice as high and the economy would be in chaos because of the confrontation tactics that they favour? Will my right hon. Friend also accept from me that the 5 per cent. limit plays right into the hands of the Tories, electorally and in many other ways? Will he not take into account the criticisms of the TUC and of individual unions and think closely about this causing more unemployment?

Mr. Healey

I find myself in agreement with some of my hon. Friend's remarks and in disagreement with others. On the first part, of course it is absolutely right that if the policies proposed by the Tory Front Bench were put into effect we should have a massive and rapid increase in unemployment and a deterioration in our economic performance in almost every area. However, I cannot share my hon. Friend's view about the 5 per cent. limit. Our disagreement with the TUC here is confined solely to methods. On the question of keeping inflation in single figures, we are in agreement, and I have no doubt that we shall have the same co-operation from working men and women next year as we have had during the current pay round in achieving the Government's objectives.

Mr. William Clark

Does not the right hon. Gentleman agree that, if there has been any improvement in the economy, it has been due to the regulations and stipulations laid down by the International Monetary Fund?

Mr. Healey

No, Sir, I would not agree with that. However, at least it enables me to remind Conservative Members of the point honestly made by the hon. Member for Oswestry (Mr. Biffen), who found the company he kept in the Shadow Cabinet totally intolerable and therefore retired to the Back Benches. The hon. Member for Oswestry made the very fair point that Opposition Members cannot at the same time claim that the Government have been following a mistaken policy for the last 18 months and also that their successes are due solely to the right policies which they followed after the agreement with the IMF.

Mr. Hooley

Does my right hon. Friend agree that the economy is not functioning satisfactorily in relation to unemployment and that we need a substantial stimulus to new jobs by using the great range of public corporations that we now possess and by means of the housing sector, where much could be done without putting any strain on the balance of payments?

Mr. Healey

I agree that the unemployment situation is unsatisfactory, but the trend of unemployment has been steadily downwards since last September. My hon. Friend will no doubt have seen the figures published yesterday, which show an increase of 28,000 in employment in the first quarter of this year.

Mr. Lawson

Apart from the many ways in which hon. Members have already demonstrated that the economy is far from satisfactory, does the right hon. Gentleman recall that, on 14th June last in the debate on his salary, he confidently forecast that minimum lending rate—bank rate—would be reduced within a matter of days? That is now six weeks ago. What went wrong?

Mr. Healey

What went wrong, of course, is the hon. Member's recollection of what I said. I never said that the MLR would be down in a matter of days, and I ask the hon. Gentleman to withdraw that false statement.

Mr. Skinner

Is not the truth of the matter that the Trades Union Congress finance committee yesterday took a decision almost exactly in line with the line that some of us pursued on Monday, when we refused to support the Government's attempt to impose a 5 per cent. incomes policy next year and presumably a permanent incomes policy after that, and that it is completely in direct contradistinction to the line which is pursued by the man who supposedly heads the manifesto group, who should be wearing a pair of knee-pads because of the many times that he crawls up and down the corridors trying to get a job in the Government?

Mr. Healey

My hon. Friend has a colourful but usually inaccurate turn of phrase. What the TUC did yesterday so far as pay policy goes was to repeat the opposition that it expressed last year to the setting of a numerical guideline by the Government. However, I am confident that the TUC members will adhere to the guidelines set down, at least to the degree that they have over the last 12 months. My hon. Friend will have seen that at the same meeting the TUC committed itself to the same collective objectives as the Government have accepted for economic policy over the coming years. I hope that it will have the support of my hon. Friend in pursuing those objectives.