§ 7. Mr. Canavanasked the Chancellor of the Exchequer whether he plans any new initiative to improve the economy.
§ 13. Mr. Winnickasked the Chancellor of the Exchequer if he will make a statement on the progress of the Government's economic policies.
§ Sir Geoffrey HoweWe shall continue with present policies to bring inflation down, and lay the foundations for sustainable economic growth.
§ Mr. CanavanWhat does the right hon. and learned Gentleman think of the remarks made yesterday by the right hon. Member for Sidcup (Mr. Heath) about the disastrous social consequences of the Government's monetarist polocies—[Interruption.]—especially the social cuts, with over 2½ million unemployed, which could breed racial hatred and juvenile crime? When even an ex-Tory Prime Minister tells us that some public spending cuts are more damaging than the savings justify, is not it about time that even this Tory Chancellor changed course and tried to regenerate the economy by means of more public investment instead of less?
§ Sir Geoffrey HoweI was proud to serve as a member of the Administration that was led by the right hon. Member for Sidcup (Mr. Heath). I still share entirely the same objectives as the right hon. Gentleman. However, like many of my right hon. and hon. Friends, I have drawn quite different conclusions as a result of my experience.
§ Mr. SkinnerOn a point of order, Mr. Speaker. I am inquiring whether the use of the phrase "nut case" by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) when he referred to the right hon. Member for Sidcup (Mr. Heath) the ex-Prime Minister, is in order.
§ Mr. SpeakerOrder. I do not believe that the hon. Member will find that word in the list in "Erskine May".
§ Mr. Beaumont-Darkrose—
§ Mr. SpeakerOrder. We do not want any proof of anything at all. If the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) wants to say something, I shall call him.
§ Mr. Beaumont-DarkI was only seeking clarification as to whether my right hon. Friend the Member for Sidcup (Mr. Heath) was a nut case.
§ Mr. SpeakerOrder. We must try to maintain parliamentary standards in this place. I deprecate such terms.
§ Mr. WinnickLeaving aside the crude abuse by Conservative Members about the right hon. Member for Sidcup (Mr. Heath), was not the speech which the right hon. Gentleman made yesterday the most damaging indictment of Government economic policies?
Is it not the case that far from there being any question of economic recovery round the corner there are continued redundancies, closures and short-time working, and British industry is being crippled?
§ Sir Geoffrey HoweThere are many signs—in the opposite sense to what the hon. Gentleman says—that recovery will be shortly under way. If one wishes to look for the causes of redundancy, I found some interesting examples when I visited the West Midlands, including the hon. Member's constituency, last week. I found that most businesses in that area were complaining at the increased redundancies following from the planned increase in expenditure by the West Midlands county council and the consequential rate increases.
§ Mr. DorrellDoes my right hon. and learned Friend agree that it is important that when investments in the public sector, particularly in its infrastructure, which only the public sector can undertake, offer an economic rate of return, it is important that they should not be artificially held back by the effect of the recession on the PSBR?
§ Sir Geoffrey HoweAs my right hon. and learned Friend the Chief Secretary has explained, that is why there has been a 15 per cent. increase, for example, in the projected capital spending, in real terms, on nationalised industries. To take one example, that is why British Telecommunications is expected, even in the public expenditure White Paper, to be spending more than £2 billion in each year up to 1983–84. That can hardly be described as a policy of holding back public sector investment.
§ Mr. JayWhich of his policies does the Chancellor of the Exchequer feel has been most successful so far?
§ Sir Geoffrey HoweCentrally, it is the policy of reducing the rate of inflation, which has fallen by 10 per cent. in the last 12 months—
§ Mr. CanavanTell us what it was when the Conservative Government came in?
§ Sir Geoffrey Howe—alongside a 5 per cent. reduction in the interest rates. I am content to go on listing such examples for some time.
§ Mr. Kenneth LewisDoes not my right hon. and learned Friend agree that his call in a speech the other day for no more than a 5 per cent. increase in pay and salaries next year would do much for the economy? Is he now moving towards a form of voluntary incomes policy?
§ Sir Geoffrey HoweNo, Sir. The experience of successive Governments of both parties has directly led to a rejection of that approach. It is clear that it is necessary for us to continue to improve our competitiveness and to reduce unit labour costs. For that purpose, moderation in pay settlements is essential in all parts of the economy. I was delighted that last week, in a broadcast commentary 995 on my speech, the right hon. Member for Stepney and Poplar (Mr. Shore) accepted that high pay settlements could have much to do with creating unemployment.
§ Mr. ShoreMay I come back to the original question? It is plain to me that the Chancellor of the Exchequer has no plans and will not announce any new initiatives to improve the economy. With regard to his Birmingham speech, is it not the case that he is envisaging not anything to do with a more orderly way of trying to relate pay and prices together in this country but an unprecedented reduction in real earnings during the coming year?
§ Sir Geoffrey HoweThe right hon. Gentleman knows well that over the last three years, when there was no matching increase in output, real personal earnings rose by 17 per cent. or 18 per cent. while the income of the corporate sector fell by 25 per cent. In those circumstances there must be a matching change in the opposite direction, and as part of that, if we are to secure a reduction in unemployment, there is an overwhelmingly strong case for pay moderation. I should be grateful if the right hon. Gentleman would endorse in this House the plain proposition that unduly high pay settlements mean unduly high unemployment.