Budget Strategy

HC Deb 21 February 1980 vol 979 cc638-40

8. Mr. Leighton

asked the Chancellor of the Exchequer if he is satisfied with the way in which his Budget strategy is working.

Sir Geoffrey Howe

The Budget measures were an important first step in tackling the difficult economic situation we inherited. The money supply had been allowed to grow rapidly, inflation was accelerating, and output was stagnant. It will take time to overcome these handicaps.

Mr. Leighton

Is the Chancellor of the Exchequer aware that few of us have noticed the advent of the entrepreneurs who were to be unleashed by his alleged incentive Budget? Instead we have a declining growth rate—the lowest in the Western world—the highest inflation rate and the highest interest rate, I believe, since the battle of Waterloo.

Mr. Speaker

Order. The hon. Gentleman was called to ask a question, not to give information.

Mr. Leighton

May I end by saying that the chamber of commerce in my constituency has approached me saying that the high interest rates are killing off businesses?

Sir G. Howe

I hope that in those circumstances I shall have the unqualified support of the hon. Gentleman for the Government's attempts to reduce public spending, and so public borrowing and interest rates.

Mr. Bob Dunn

Does my right hon. and learned Friend accept that one of the most important side effects of the Budget is the degree of understanding by British workers of the economic realities, as witnessed by the ballots at Longbridge yesterday and at the Welsh pitheads earlier today?

Sir G. Howe

I am as encouraged as my hon. Friend by the extent to which the wisdom of the working people of this country is becoming increasingly apparent in the way in which they are overruling the wishes purported to be expressed by some of those who claim to speak on their behalf.

Mr. John Garrett

What is the Chancellor of the Exchequer's opinion of the report from the United States Council of Economic Advisers, an extremely distinguished body advising the President and Congress, that the British Government's policies are driving the British economy into a deeper recession than exists in any other country in Western Europe?

Sir G. Howe

I am not particularly impressed by comments quoted out of context from other countries. I confess that it is more than one can do to keep abreast of the advice that is tendered in one's own country. I cannot regard that diagnosis or verdict as having any foundation in fact.

Mr. Bruce-Gardyne

Does not my right hon. and learned Friend agree that it is a bit rich for the Opposition to launch into the sort of comments they are making this afternoon when, in 1975, they presided over rates of inflation far in excess of those we are experiencing today and blamed the situation wholly on the monetary policies of the previous Government? Is not the evidence that the same is true today and that what we are facing today are the pure consequences of the misbehaviour of the right hon. Member for Leeds, East (Mr. Healey)?

Sir G. Howe

It would be unfair to blame the right hon. Member for Leeds, East for every aspect of our economic misfortunes. But, subject to that generous qualification, I agree entirely with my hon. Friend.

Mr. Buchan

Did the Chancellor notice the article in The Observer on Sunday written by one of his colleagues which appeared to reflect the gradual awakening of his own party to the disastrous effects of his Budget? The Budget was described as A-level economics. I wonder how many marks the Chancellor of the Exchequer would award himself?

Sir G. Howe

I notice that, as always, the former Chancellor of the Exchequer is unable to remember a quotation even four or five days old. If I may comment on the quotation, one of the facts that has struck me about the progress of our economy in recent years is that the larger the number of economists employed close to the machinery of government, the less conspicuous has been our economic success. I am content to rest our economic policies on the broad programme of common sense which secures the overwhelming support of most people.