HC Deb 24 January 1980 vol 977 cc628-30
6. Mr. Dormand

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

Sir Geoffrey Howe

Of course not. It will take time—[Interruption.] Opposition Members are readily amused. It will take time, as the House should understand, for our policies to check the long-run decline of the economy.

Mr. Dormand

Does the right hon. and learned Gentleman agree that there have been recent changes in two respects that might considerably affect what he has said? First, there has been the big fall in the number of notified vacancies that has occurred for the second month running. Secondly, there has been a big fall in the index of long-term indicators. Is that not further evidence that the right hon. and learned Gentleman's policies are adding to the economic recession? Is it not time that we had a U-turn? Will he deal specifically with the two points that I have mentioned?

Sir G. Howe

Of course it is right that a reduction in the number of notified vacancies and a downturn in the long-term indicators are manifestations of the continuing decline in the economy. There are many causes for that, and many of those are of long standing. A most recent cause is the doubling of oil prices in the last 12 months. That will have effected a reduction of around 3 per cent. in the likely growth of our economy. There is no way that we, by the management of our economy, can, by injecting additional demand, manufacture additional job vacancies. They have to be manufactured by the skill and success of both sides of British industry.

Mr. Alan Clark

Has my right hon. and learned Friend made any systematic studies or analyses of the probable effects of import controls on the economy?

Sir G. Howe

The question of import controls is a matter that has been frequently canvassed by my hon. Friend and others. The conclusion arrived at by successive Administrations—if one addresses one's mind to it as a central recommendation—is that it is likely to be counter productive, to lead to retaliatory action and that for Britain, with such a large dependence on international trade, it is least likely to be a successful prescription.

Mr. Jay

As it is now seven months since the Chancellor's incentive Budget, does he yet detect any signs of industrial revival resulting from those incentives?

Sir G. Howe

I am quite confident that, had the economy continued under its previous management, the confidence on both sides of industry, especially management, would have been significantly less than it is today. Without the consequences of the substantial reductions in personal taxation, especially at middle and higher levels, morale in industry would be a great deal worse than it is today.

Mr. Dorrell

Does my right hon. and learned Friend accept that there is a danger of economic progress being impeded by an exchange rate that is endangering many export orders and bringing about a position where we are losing our domestic market share?

Sir G. Howe

The exchange rate can have a number of effects on the competitiveness of our goods and services. The matter raised by my hon. Friend is one of the factors, but not the only one, that justifies our decision to abolish the remaining aspects of exchange controls.

Mr. Healey

Will the right hon. and learned Gentleman explain why he did not tell the electorate eight months ago that if a Conservative Government were elected the country would be in for three years of unparalleled austerity—to quote his right hon. Friend the Chief Secretary? Why are we to face three years of unparalleled austerity when these are the first three years in British history when we are completely independent in terms of our major source of energy and when the increase in oil prices will bring us immense benefits, both in revenue and the balance of payments, which none of our competitors will enjoy?

Sir G. Howe

As always, the right hon. Gentleman is capable of exaggerating benefits that he fancies he sees. He must know that the increase in oil prices world-wide—although it has some effect on us in a helpful direction, for the reasons that I have already stated—retards and depresses the market, in which we have to sell as much as any other country. In the campaign that we fought at the last election we made it entirely clear to the country that we were facing economic conditions more serious than at any time since the end of the war. We made it plain also that the task of reconstructing our economy was a task for a decade. We do not intend to be deflected from the difficult and harsh measures that are necessary.

Mr. Healey

rose—

Mr. Speaker

Order. It is not fair to Back Benchers if Front Benchers rise twice to ask supplementary questions. I try to treat every hon. Member alike, and I hope that the right hon. Gentleman will accept my advice in the spirit in which it is given—but it is certainly given.

Mr. Healey

indicated assent.