HC Deb 08 November 1979 vol 973 cc600-2
9. Mr. Radice

asked the Chancellor of the Exchequer whether he is satisfied with the progress of the economy.

Sir Geoffrey Howe

I shall not be satisfied with the progress of the economy until our industrial performance has improved, the rate of inflation has been brought down and sustainable long-term growth has been resumed.

Mr. Radice

Does the Chancellor of the Exchequer agree that the economic outlook is grim? Inflation has risen by 6 per cent. since the general election, the Government forecast that there will be 300,000 more unemployed by the end of the next financial year, the interest rate is likely to rise and the CBI predicts an economic recession. Is it not time that the Government made up their mind, took their courage in both hands and put the country first, by changing their policies?

Sir G. Howe

I admire the enthusiastic fortitude of the hon. Gentleman urging us to change our policies. He might have noted that the CBI, when commenting on the difficult economic circumstances that lie ahead, made it clear that it looks for no change in policy. It recognises that our policies are necessary to correct the economic decline caused by the previous Administration. It is remarkable that in all the flannel from the Opposition and the demands for the Government to change their policies we have no evidence that the Opposition have a constructive alternative to offer.

Mr. John Townend

In order to reduce the percentage of gross national product taken up by the public sector, will my right hon. and learned Friend consider putting a ceiling on inflation-proof pensions in the public sector? Does he agree that they are likely to accelerate in the next decade?

Sir G. Howe

My hon. Friend assumes that inflation will continue to accelerate in the next decade. I do not accept that. I recognise that attention should be given to the recommendations made by the Expenditure Committee on the way in which and the basis on which the cost of inflation-proof pensions should be paid for by those involved.

Mr. Jay

Since it is many months since the Chancellor's incentive Budget, does the right hon. and learned Gentleman yet detect any sign of national revival as a result of his incentive policies?

Sir G. Howe

If the right hon. Gentleman were to travel round the country, as I do, he would find many firms, workers, employers and many who have returned to the country since the Budget—[HON. MEMBERS: "Who has returned?"]—who see a great deal more sense now in taking decisions to invest, expand and take risks than they did under the previous Government.

Mr. McCrindle

The CBI has indicated its satisfaction with the Government's policies. Is my right hon. and learned Friend satisfied with the response from industry in terms of investment, following his incentive Budget?

Sir G. Howe

It is not appropriate for me to criticise, attack or pass judgment on the scale of response. My hon. Friend must realise that decisions to invest, on the future of businesses and on movements in the pattern of the economy take place over a long period. I am satisfied that there is a great deal more optimism about the future of the economy now than there was before the last election.

Mr. Healey

Does the Chancellor of the Exchequer agree that the CBI is not putting its money where its mouth is? Is the right hon. and learned Gentleman aware that the CBI's last survey of investment intentions showed a collapse in investment, following a collapse of confidence? If the right hon. and learned Gentleman will not listen to his friends in the CBI, will he examine the stock market and watch it giving the thumbs down to his policies?

Sir G. Howe

The right hon. Gentleman is far too enthusiastic in passing judgment on the economy over which he presided until recently. He must recognise that the effective judgment of the CBI on our policies lies in its continued support for the total rightness of those policies in the absence of any alternative being proffered by the Opposition.