HL Deb 12 June 1984 vol 452 cc1011-8

3.42 p.m.

The Lord President of the Council (Viscount Whitelaw)

My Lords, with the leave of the House, I shall repeat a Statement which is being made in another place by my right honourable friend the Prime Minister about the Tenth Annual Economic Summit which was held in London from 7th to 9th June. The Statement is as follows:

"With permission, Mr. Speaker, I shall make a statement about the Tenth Annual Economic Summit which was held in London from 7th to 9th June. Heads of State or Government of the seven principal industrialised countries were present, accompanied by their Foreign and Finance or Economic Ministers, together with the President of the European Commission, who was accompanied by Monsieur Ortoli

"I have placed in the Library of the House copies of the Economic Declaration and of declarations issued on democratic values, East-West relations and terrorism, together with a statement about our discussions on the Iraq-Iran conflict.

"I shall deal first with the political issues. The Summit considered it timely to restate the values which bind the Western democracies, particularly at the end of a week when we had been remembering the very different conditions of forty years ago. Too often, we have seen the Western case go by default while governments which deny democracy maintain an unceasing flow of propaganda.

"At British initiative, we had a thorough discussion of the problems posed by terrorism. There was unanimous determination to confront and defeat international terrorism whatever forms it may take. We identified a number of detailed proposals which will be followed up in the working group of experts from the Summit countries.

"On East-West affairs the Summit, having stressed the need for resolve and solidarity, stated our readiness for dialogue and our hope that the Soviet Union will react constructively and positively. We expressed our belief that East and West have important common interests: in preserving peace; in enhancing confidence and security; in reducing the risks of surprise attack or war by accident; in improving crisis management techniques; and in preventing the spread of nuclear weapons.

"We also discussed the conflict between Iraq and Iran. We expressed our regret at the breaches of international humanitarian law which this conflict has brought, and called for freedom of navigation to be respected. As to oil supplies, we were satisfied that, given existing stocks of oil and the availability of other sources of energy, adequate supplies could be maintained for a substantial period of time by international co-operation and mutually supportive action.

"The primary purpose of the Summit was to discuss economic matters. On these we reached the following main conclusions. First: The declaration pointed out that economic recovery can now be seen to be established in the Summit countries. It is more soundly based than previous recoveries, thanks to the firm policies designed to bring down inflation. But to sustain recovery, and spread its benefits further, requires unremitting efforts. We agreed therefore to continue and where necessary strengthen policies to reduce inflation and interest rates, to control monetary growth and reduce budget deficits.

"Second: As unemployment in our countries remains high, we emphasised the need for sustained growth and the creation of new jobs; the need to ensure that industrial economies adapt and develop in response to demand and technological change, including in small and medium-sized businesses; and the need to encourage active job training policies and the efficient working of the labour market.

"Third: On international debt the problems will be easier to resolve if world recovery is sustained and policies are followed which are conducive to lower interest rates. We reaffirmed the case-by-case approach. We agreed that with the strategy we have adopted the problems are manageable. We identified a number of matters which require further attention. Among them: that where debtor countries have successfully made efforts to adjust their economies, we will encourage longer-term rescheduling of their debts; that we should like to see even closer co-operation between the Fund and the World Bank, whose role should be strengthened; that developing countries should be encouraged to open their economies to increased direct investment from the industrialised countries and to substitute longer-term direct and portfolio investment for short-term bank lending.

"Fourth: The Summit urged all countries to reduce trade barriers and to liberalise and expand international trade in manufactures, commodities and services. We agreed to consult GATT partners with a view to early decisions on the timing and objectives for a new negotiating round.

"And fifth: We agreed on a new programme of research and co-operation, the better to establish and deal with the causes of environmental pollution.

"To sum up, the Summit expressed the clear view that the economic strategy we have been following is right and that we should continue to pursue it. We did not leave it at that. We set out in the declaration a ten-point action programme for the next twelve months. This includes a series of specific measures for reducing obstacles to the creation of new jobs; and records our agreement to seek to maintain and wherever possible increase the flow of official aid to developing countries, particularly the poorest, and to encourage more openness towards private investment flows. The declaration as a whole sets out a global approach to the economic situation and deals comprehensively and positively with current needs and problems.

"Mr. Speaker, this was a workmanlike and constructive meeting which achieved a very large measure of agreement on the basic objectives of our respective policies, on both the economic and political fronts".

My Lords, that concludes the Statement.

3.49 p.m.

Lord Cledwyn of Penrhos

My Lords, we are grateful to the noble Viscount for repeating the Statement. It is a long one, and the communiqué, or economic declaration, is even longer. It contains many respectable aspirations and long-term objectives, such as a call for early and positive results in East-West arms control negotiations, encouragement of the new GATT talks, a new world study on acid rain, a declaration on international terrorism, a plea to Iran and Iraq to stop attacking each other, and so on. These aims are unexceptionable.

It was stated that there is a readiness for dialogue with the USSR, but can the noble Viscount say precisely what action is proposed? For example, is the USSR to be approached to return to the Geneva talks on nuclear arms limitation? Again, is anything further proposed, apart from a general appeal to Iran and Iraq? Will this conflict be discussed with the USSR? I regret to say that there is a lack of clarity and objective in the Statement and in the communiqué.

Is it not also the case—and this is the most serious defect in the communiqué—that the major economic problems facing the world were shunted on to a sideline with vague words and feeble half-measures? Is it not the case that the very acute problems facing the world are unemployment, the US budget deficit and high interest rates, and that in spite of all the high-flown words the summit's positive reaction to these is deeply disappointing?

For example, does not the case by case approach to the debt crisis—although we welcome the help to Mexico—leave a large number of poor countries in a parlous condition, with no hope whatsoever of assistance? The Statement says that the problems may not be unmanageable. Is not that a pious hope against the background of the case by case approach? I noted that point 8 of the economic plan stated the need for "adequate funds for world financial institutions", and the work of the World Bank was praised. Can the noble Viscount say whether the funding of the IDA, and especially the attitude of the US to the IDA, was discussed?

Finally, can the noble Viscount tell the House how the conclusions of the summit conference will in fact help to reduce the appalling unemployment problem in Western Europe in a practical way? For example, what was the reaction of President Reagan to the fervent pleas which we understand were made for some action by the USA on interest rates? There is a reference in the Statement to a 10-point programme, but the 10-point programme was not explained. Will the noble Viscount be good enough to tell the House at least what were the two most important points of the 10 points?

Baroness Seear

My Lords, we on these Benches also wish to thank the noble Viscount the Leader of the House for repeating the Statement. Of course, there are in the Statement many things with which we certainly agree, such as the desire to reduce interest rates, the attitude towards Iraq and Iran and the desire to reduce war. With all these we would go along. But I am bound to say after listening to the Statement that, in the face of the acute and terrifying problems which are facing the world at the present time, it seems a remarkably complacent Statement to come from a summit of the leading countries of the world.

The two overwhelming problems, leaving aside the need to get back to the negotiating table with the USSR, to which the noble Lord, Lord Cledwyn, referred, are surely unemployment spreading throughout the world and the debtor or low standard of living countries. We are living on a powder keg, so far as the debtor countries are concerned. A step by step, or case by case, approach sounds very fine; but surely what is needed is a recognition of the extreme urgency of this problem and of the need to find ways in which we can do something far more constructive and far more quickly. As the world surely knows, it needs only one or two of these countries to default and the whole economic situation would be in very considerable peril.

We also find the Statement singularly complacent to dwell so much on the strength of the recovery, while the level of unemployment remains what it is. The fact of the matter is that this Statement reflects a satisfaction with the monetarist approach to world economic problems which is very difficult to support. Surely it is clear that some sensible intervention is needed on the part of governments; for example, in our own country a determination at last to do something about capital investment in infrastructure, which would begin the creation of jobs.

The Statement talks about job creation. Surely it was realised at the summit and lower down, as regards job creation and job training, that job training without the realisation of a job at the end of it will not convince anybody and will not get any support. Unless there is Government intervention for job creation following job training, then job training, highly desirable though it is, will fail. We can only regret the complacency of the Statement.

3.56 p.m.

Viscount Whitelaw

My Lords, I am grateful to the noble Lord and the noble Baroness for their questions on this Statement following the economic summit. I am also grateful to both the noble Lord and the noble Baroness for accepting what they both described as the respectable aspirations of those who attended the economic summit. I am sure that is right. No one imagines that a short conference of a few days between economic leaders will solve the many problems of the world in detail. I do not think anybody expects that, and of course they did not do so.

On the particular points that the noble Lord raised with me, the first of which was the dialogue with the USSR, the willingness for further dialogue is surely very important. Of course, it is fair in this context to remember the Foreign Secretary's coming visit to Moscow, which was recognised by the summit and which indeed will give an opportunity to raise with the Soviet Union some of the matters which the noble Lord mentioned. There will be other opportunities with other leaders as well.

On the Iran and Iraq conflict, the countries did of course express to both sides their great concern at the continuance of the conflict. I do not think there is much more that they can do, except to urge both sides to realise the danger and to hope to get a wider acclaim in the world—and indeed in the Soviet Union—that this particular war is of the gravest danger to the world and to our supplies, and that it should come to a halt. I do not believe that the summit conference could do more than that; but that it most certainly did.

On the economic matters, and first the question of unemployment, it has to be said, both to the noble Lord and to the noble Baroness, that I think it is accepted in this country—and certainly in most others—that governments cannot by themselves deliberately reduce unemployment. It is the policies that they follow which will in the long run bring the markets which will provide the jobs. If they co-operate to that end, which they have designed and are determined to do, that is the best way to reduce unemployment. That, I believe, is the important contribution which the leaders made: that they are determined to work to that end, as they are on the question of high interest rates, and as indeed they are—I believe that this is also very important and I say it in answer to both the noble Lord and the noble Baroness —on the question of aid for the underdeveloped countries and the way in which that can be helped.

As I said at the start, in a short time it cannot be possible to gain a great deal of detailed advance, but I believe that very solid ground work for future action and future work was laid down. I believe, as my right honourable friend the Prime Minister said, that it was a workmanlike and constructive conference and it should be welcomed on that account.

Lord Beswick

My Lords, can the noble Viscount explain why, among all these superb aspirations, so far as one can gather there was absolutely no mention of the advisability of having fine weather and of being kind to one's mother-in-law?

Viscount Whitelaw

My Lords, the noble Lord can have his little joke, but there were some very important discussions and I think that the House would wish to recognise that.

Lord Gladwyn

My Lords, we understand from the press—though we may be wrong—that President Reagan was reproached by some of his colleagues —though not, apparently, by the Prime Minister—about the maintenance of the enormous US deficit of some 200 billion dollars, and the consequent maintenance of high interest rates which, according to some, are destroying us all. Was he reproached by any, including the Prime Minister, for the principal reason for this deficit, which is his vast expenditure on nuclear armaments, such as MX, the new Trident programme, thousands of cruise missiles, "Star Wars", "stealth" bombers and everything else, which, unless for "first use", are useless from the long-term political point of view, and at the same time are economically disastrous?

Viscount Whitelaw

My Lords, as I was not there I cannot say what discussions took place on the matters to which the noble Lord referred, but he has gone rather wide of the communiqué.

Lord Hatch of Lusby

My Lords, is the noble Viscount not aware that he is being less than fair in suggesting that this was just a one-off conference which lasted for a short period and that therefore it cannot be judged? This is the fifth conference which has taken place since the Government came into office and presumably it is the latest climax of the Government's policy. Is not the noble Viscount further aware that we have heard these pious hopes and platitudinous phrases five times since the Government came into office and that nothing has happened, except that unemployment has got worse and there have been a record number of bankruptcies?

May I ask the noble Viscount two practical questions arising from the Statement. He spoke about the international monetary crisis and the part to be played by the World Bank, and according to the communiqué by the IMF, too. May I ask the noble Viscount whether there were any discussions at the summit about the structure and policy of the IMF, which appears to be simultaneously impoverishing those nations that it is supposed to help and reducing employment in the industrialised countries because of the reduced purchasing power of those same developing nations? Secondly, the noble Viscount spoke about increasing official aid. How can he justify that when the official aid figure of Her Majesty's Government is now 0.35 per cent. of GDP whereas, when they took over, it was 0.52 per cent.? Is anything going to happen, or will there be the same story of pious hopes expressed in words but actions in the opposite direction?

Viscount Whitelaw

My Lords, since the noble Lord has suggested that I have been somewhat less than fair, may I say to him that he is perhaps being somewhat less than fair in his suggestion that an economic summit attended by many different nations should be particularly concerned with the economic problems of this country. The noble Lord seeks to use the Statement on the economic summit as a criticism of this Government's economic policies. That he is perfectly entitled to do, though not necessarily on this occasion, because I am dealing with a Statement relating to the consideration by the governments of the western nations of these particular problems. We played our part in those considerations. I have shown how we sought to gain the co-operation of the other countries at the summit in order to achieve the economic progress which the noble Lord wants to take place.

The noble Lord then dealt with aid, which is a different matter. I personally believe that the aid given by this country, both direct Government aid and industrial aid, which is so often forgotten, is of a very considerable order and does not deserve the criticism which the noble Lord and many other people are inclined to level at it.

Lord Barnett

My Lords, as the existing simple economic policy for bringing down the rate of inflation has had the disastrous effect of rapidly and massively increasing unemployment, could the noble Viscount give us one good reason why the continuation of that policy will now bring down the rate of unemployment?

Viscount Whitelaw

My Lords, I would not wish to cross economic swords with the noble Lord, who in the past had considerable responsibility for many policies which were exactly the same as those which are being followed at present, a matter about which he will be very well aware. I do not have with me the details of many of the statements which he made, so I cannot quote them to him at the moment; but perhaps the noble Lord will accept from me that in the past he said that if inflation is allowed to rise again and that if costs are allowed to rise again, unemployment will not be reduced. In fact, jobs will be destroyed and the situation will be made worse. That is what the noble Lord said in the past. I believe that he still believes this to be true today.

Lord Hatch of Lusby

My Lords, I am sure that the noble Viscount does not wish to be deliberately unfair, but I would suggest that he is again being unfair to me in his answer to my question. The Statement referred to the objective of increasing official Government aid, whenever possible. I am drawing the noble Viscount's attention to the fact that this objective has been repeated six times and that each time it has been followed by cuts in aid. Can the noble Viscount give us any assurance that the words of the Statement which he has read out will be followed this time by appropriate action rather than by further cuts in official aid?

Viscount Whitelaw

My Lords, if I have been in any way unfair to the noble Lord I regret it, because I have no desire to be unfair to him. Nor do I have any desire to cross swords with him about official Government aid. These, I admit freely, are aspirations in the communiqué. Despite the criticisms which are frequently levelled at this Government, as they have been levelled at the aid programmes of previous Governments, I believe that if one looks at both the Government's aid programme and at the aid given by industry all over the world, Britain has a very considerable record. I regret that instead of accepting that this is the position, we continue to run down what I believe to be a considerable contribution by our country.