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1979-1987 - Mr Major’s Commons Speech on Economic and Monetarist Policies

Below is the text of Mr Major’s Commons speech on Economic and Monetarist Policies, made on 15th January 1981.


Mr. John Major (Huntingdonshire) As a number of other hon. Gentlemen still wish to speak, I shall shorten my remarks as much as I can.

There is one aspect of the debate and the asides within it that worry me considerably. So far as I can gather from what has been said, appear to be the only Member in the Chamber who has received a letter from the leader of the Liberal Party in the past week. If the right hon. Gentleman would care to write to me again and explain why I am so signally honoured and what I have done to deserve that honour, I shall seek never to do it again.

The charge that the Opposition have sought to sustain this afternoon is serious. It does not call for any degree of flippancy. I have listened to the debate throughout and I do not believe that they have substantiated that charge in the fashion that they would wish.

The right hon. Member for Stepney and Poplar (Mr. Shore) spoke with his usual charm but with startling simplicity about many of the underlying causes of what has happened. He spoke with greater simplicity and, in some cases, omission when it came to alternative policies that the Opposition would promote. Many of those omissions have been referred to by my hon. Friends and I shall therefore elaborate on only one.

A remarkable speech was made at the Lord Mayor's banquet in 1976 by the right hon. Member for Leeds, East (Mr. Healey), who was then Chancellor. It is correct to paraphrase the right hon. Gentleman as saying that there is a substantial time lag between economic cause and effect. He put that time lag at 18 months and possibly longer. If we are to have a mature debate on the problems we face we must accept that, if the right hon. Gentleman was right then - to the best of my knowledge he has never indicated that he was wrong then or any other occasion - many of the root causes of unemployment and inflation in the past two years were built into the system long before the present Government took office. I hope that Labour Members will bear that in mind when they speak.

The right hon. Member for Stepney and Poplar spoke about lack of demand in the economy. There will be much sympathy for that outside. My hon. Friend the Member for Macclesfield (Mr. Winterton) has just touched on it. How would the Opposition expand demand in the economy, however? They certainly would not do it, judging from their present rhetoric and past history, by cutting taxes. They have never promised to do that. It would be credible for them to promise to expand Government investment, to let loose the printing presses yet again, and to borrow money with an expanding public sector borrowing requirement. It would not be credible, however, for them to advance a policy of expanding public investment by enlarging the borrowing requirement while promising to reduce the level of MLR at the same time.

Shortly before the leadership election translated the right hon. Member for Leeds, East to other responsibilities - after his defeat by a lesser man - he was speaking of expanding the borrowing requirement by £7 billion and reducing the MLR by 4 per cent. It defeats me to determine how he proposes to achieve that trick. We have had no indication of that from the Opposition. If it is to be funded by taxation - and I hope that the right hon. Member for Chesterfield (Mr. Varley), will deal with that - and if my calculations are correct that will lead to an addition in direct taxation of about 11p in the pound.

From what we have heard from the Opposition today, it is clear that they oppose what is happening, that they deny logic, and that they seem to deny reality as well. The Opposition also seem to ask us to believe that, if they were in charge, it would be all right on the night. "I will fill in the details later", said the right hon. Member for Stepney and Poplar, implying that it would be all right on the night. I recall the expression "It will be all right on the night" being referred to as the bridegroom's plea. I am bound to say - I hope that it will be taken in the spirit in which it is intended - that when the chief bridesmaid falls over so often and breaks his leg on the way to the chamber, I doubt whether I would accept that sort of plea as a guarantee of future policies.

I do not deride the genuine anxiety that many Opposition Members feel about unemployment. I resent, however, the way in which they seem to regard Conservative Members as having no care and simply paying lip service to the need to resolve this problem. I concede immediately that my constituency does not have the unemployment problem faced in many hon. Members' constituencies week in and week out. Nevertheless, the unemployment rate in the northern part of my constituency is about 9 per cent. and in the southern part 6 per cent. In both, it is rising dramatically. Another 150 jobs have been lost in the last week at Samuel Jones, an excellently run and managed firm.

Hon. Members on the Conservative Benches have a practical and realistic understanding of what is happening. I hope that the Opposition will not charge us again with being neither knowledgeable nor concerned about current events. We can differ and argue about the relative importance of the causes of the unemployment and inflation and the industrial decline seen in recent years. In the round, the causes are clearly identifiable - international recession and a domestic recession, inflation - with the measures necessary to cure it themselves deflating demand - excessive over-manning, excessive pay settlements and technological advances that so often destroy jobs. Above all, perhaps, there has been an enormous transfer of resources from the industrial West to the Middle East oil producers, occasioned by the increase in oil prices since 1973–74. Not all these problems are within the cure of even the most dynamic and forceful Government, not even one led by the right hon. Member for Ebbw Vale (Mr. Foot).

I should like to illustrate with some figures the enormous deflation in the whole of the industrial West created by the change in oil prices. The current account surplus of the OPEC countries in 1973-74, expressed in United States dollars, was $6 million. In 1979, it was $80 billion. In 1980, it is estimated to be about $120 billion. That is a deflation in the West that makes any public expenditure cuts by this Government seem like petty cash from the piggy bank. We must recognise that the effect is not just a temporary change but a permanent and continuing change in our trade patterns unless we can deal with the problem of recycling the surpluses built up by the OPEC countries. At the moment, they are being recycled in an unsatisfactory way, frequently as hot money, and frequently they do great damage to the system

I should like to mention one point to which I hope the Minister will direct himself. I do not believe that any Government will be able unilaterally to take sufficient initiatives to encourage a greater recycling of the oil surpluses. I should like to know, however, what initiatives the Government have in mind, in company with our partners in Europe or other trading nations, collectively to seek a greater recycling of these funds. Unless we are successful, I doubt whether we shall attain the increased demand that most hon. Members recognise that we need and without which the regeneration of manufacturing industry is unlikely to take place on the scale that we believe necessary in the foreseeable future,

I believe that the Government will be right if they decide selectively - I emphasise "selectively" - to intervene in industry to help areas where the problems are clearly temporary and clearly the result of the present unsettled trading conditions in the world. Selective intervention will have my total support from these Back Benches.

Where I would not wish to see the Government spending taxpayers' money is in those industries and areas that we believe - and there is much evidence in many cases to support this - are practically in terminal decline. I do not believe that that would be a good use of Government funds and neither would it be fair to the next generation of children who would inherit those jobs in the years to come.

Many tens of thousands of workers today know that they are working in jobs that do not really exist and that may vanish at any time. It will be no help to the next generation to leave those jobs for them to inherit. It may perhaps be a short-term kindness but certainly no real benefit for those who will be inheriting those jobs in the next few years.

Mr. Nicholas Winterton What industries?

Mr. Major My hon. Friend asks from a sedentary position "What industries"? Specifically, if I may give one example, it would be a great mistake if we were not to permit the steel industry to find its relevant level in this country, where it is producing a sufficient quantity of goods to meet the demand that exists. We cannot continue over-producing in steel and other industries as well, a subject with which we may deal on another occasion.

What I hope that my right hon. Friend can direct his speech to when he replies is, first, the question of what initiatives the Government will be taking over recycling the oil surpluses. Secondly and equally important, what proposals do the Government have for seeking over a period of years the provision and growth of new industries and employment in those areas where industries can be identified as being in terminal decline? That will be an ongoing problem and policy for Government after Government in the years to come. The sooner that we can direct our minds to it with a positive plan for what is proposed, the sooner we can encourage those who are working in declining industries to recognise that there will be a future for their area, even if the industries in which they are working are at present in decline. I will end on that point, as I am aware that other hon. Members wish to speak.

Mr. Arthur Lewis (Newham, North-West) I hope that the hon. Gentleman will not leave the matter there. I am not arguing with him, but is he not aware that the situation occurred under both Governments? We had Beeching, who ruined our railways, and now we are paying the price. We had Robens, who ruined the coal mines, and now we are paying the price. How can we get the experts to advise us? We cannot use the Treasury experts, because they are always wrong. Mostly the civil servants are wrong, too. I do not believe that Ministers of either party can be complimented on their knowledge. Who is to decide?

Mr. Major The hon. Gentleman tempts me to follow him. Contrary to tradition, this Government have brought in at least two people from outside who are experts in their field to advise them on precisely such matters. I hope, therefore, that the hon. Gentleman will be prepared to support that.

Let me deal with one final matter that the hon. Gentleman may agree with, so he may care to listen for just one moment. My hon. Friend the Member for Macclesfield said that he had visited many factories and areas during the parliamentary recess. I did, too. There is one matter to which I hope that we can direct concern and expenditure in the foreseeable future, which I do not believe will involve large sums. Archaic and appalling conditions exist in many unemployment offices.

I attended one such unemployment office recently on a Monday morning, and found a large number of middle-aged or quite elderly men and women who were attending for the first day of unemployment in order to register for their unemployment benefit. They found themselves queueing in the unemployment benefit office, or outside in some cases, for four or five hours. They were then interviewed by girls who were no doubt splendid but were often young enough to be their grand-daughters. I hope that as a small human gesture we can send some directions from the Department of Employment to try to improve those archaic and humiliating conditions. I hope that my right hon. Friend will take that message on board.