HC Deb 25 February 1998 vol 307 cc366-7
Q11. Mr. Fabricant

What assessment he has made of the effects of the Government's policies on the people of Lichfield.

The Prime Minister

In relation to the hon. Gentleman's constituency, I would say, for example, that unemployment has fallen since the general election; that the South Staffordshire health authority is receiving a real-terms increase of £4.3 million for next year, with £1.7 million this winter; and, of course, that the poorest pensioners have been helped with their heating bills. All three things will be of enormous benefit to people in his constituency—and I am happy to give him more particulars.

Mr. Fabricant

I am grateful to the Prime Minister for that helpful answer; I am sure that the whole House will welcome the unemployment rate of 2.8 per cent. Does he accept that some businesses in my area feel that they are at risk and, more important, that the 2.8 per cent. unemployment rate in Lichfield is at risk? There have been five interest rate rises, and the pound has a high value, which means that businesses are facing great difficulties in exporting. More worryingly, the Organisation for Economic Co-operation and Development has reported that the economy—of the whole nation, let alone Lichfield—could go into recession at the end of this year as a consequence. What heart can the right hon. Gentleman give the people of Lichfield, and those from other parts of the country, who voted Labour?

The Prime Minister

I will say exactly what I would tell the hon. Gentleman on the interest rate rises and the management of the economy. As I said earlier, we inherited two significant problems on 1 May in relation to economic management. First, inflation was back in the system, as the Conservative Government had refused to raise interest rates despite being advised to do so. Secondly, there was a large structural budget deficit.

We know what happened when we did not tackle those problems at the end of the 1980s: two years on, we ended up with boom and bust under the Conservatives, 15 per cent. interest rates for a year or more and the largest borrowing requirement that the country has ever known. It is precisely to avoid the dangers of that boom and bust that we have ensured that we have sorted out the public finances and put monetary policy on a sound footing for the long term.

I say to the businesses in Lichfield and elsewhere, and to people in the country, that those measures are tough and difficult, but they are right for the country's long-term future. We shall not shrink from making the long-term decisions necessary to build British economic strength.