4.28 pm
Mr. Roy Hattersley (Birmingham, Sparkbrook)
I beg to move,
That this House condemns the Government's wilful refusal to implement policies which would result in a reduction in unemployment from its present record level and from the even higher total to which it will rise in 1985; and calls upon Her Majesty's Government to concentrate the resources at its disposal on the public sector, thus providing the stimulus which the economy needs in a way which creates the largest number of jobs.
Today's debate concerns three issues, about which the Government and the Opposition are fundamentally and, perhaps, irrevocably divided. For the Opposition the first is a matter of principle. We believe that the overwhelmingly most important national priority at this time is a reduction in unemployment. Unemployment is at a record level and was set to rise even before yesterday's fiasco, and it will rise further and faster because of the increase in interest rates that was announced yesterday afternoon.
To the Opposition, a reduction in unemployment is an objective towards which every aspect of economic policy should be directed. I have no doubt that in his speech the Chancellor of the Exchequer will say that he, too, regards a reduction in unemployment as essential, and that he is working towards that end. If the Chancellor says that in good faith, the Government's policy on unemployment is as ghastly a failure as are their policies in every other economic area. If that is their intention, they have signally, indeed spectacularly, failed to realise it during the past five and a half years. For five and a half years we have been promised that a rigorous application of the medium term financial strategy will produce a certain and irreversible reduction in unemployment. Yet for five and a half years that strategy has produced the diametrically opposite result: a continued and unremitting increase in the number of men and women who are without work. But after five years during which that strategy has failed completely and palpably, all that the Government offer in their amendment today is a repeat of the same old discredited economic clichés. Conservative Members who vote for the amendment will be voting for more of the same; and it is more of the same that has pushed up unemployment, on an accurate and honest assessment, to a figure approaching 4 million. [column 198]
For us to believe that the Chancellor is remotely sincere in what will be his expressed concern for the unemployed, he must answer one simple question: when does he judge that his chosen strategy for the eventual reduction of unemployment will begin to work? When will the total begin to level off, let alone to fall? When will the unhappy Secretary of State for Employment no longer have to appear on television month after month and describe himself as surprised and disappointed by the monthly unemployment figures? Indeed, the successive disappointments of the Secretary of State, matched only by successive surprises on the same occasions, say little for his judgment but much for his gullibility. We want an honest statement about when the Chancellor expects the strategy, which he has insisted for five years will eventually work, to begin to work.
I suspect that the Chancellor will refuse to give even an estimate of when unemployment will begin to decrease, so let me tell the House what the honest answer would be. On an accurate and honest measurement of present unemployment, it will still be at or above 3 million at the time of the next general election. Several things will happen before then. Lord Young will perform his duties of manipulating the statistics to make the published figures look more acceptable. The Chancellor will invent new excuses. The Prime Minister will counterfeit concern. But by the next general election, we shall have endured almost a full decade of increasing unemployment, and the real figure will still be 3 million or more.
Four years ago, the Prime Minister would have said brashly that unemployment is the short-term price that we must pay for long-term economic success. I should describe some of that success to her today in honest terms, not in the sort of terms that she trotted out at the Dispatch Box an hour ago. Putting aside the present record unemployment, and the fact that her success must be measured against higher unemployment than Britain has ever known, the success about which she spoke includes an annual tax bill that is £22.5 billion more than it was when she took office, manufacturing imports exceeding manufacturing exports for the first time in our history, interest rates still at their 1979 levels despite all the promises of reductions, and the pound at its lowest ever value. We have become—this is one success about which the Prime Minister could legitimately boast—what one commentator described yesterday as a one-commodity economy, saved from national bankruptcy by the gratuitous benefit of North sea oil revenues.
Whenever the Chancellor is reminded of the position in which the public sector borrowing requirement, his hopes for tax cuts, and public expenditure would be were it not for the boon and benefit of North sea oil, for which he can take no credit, he always replies, as he did yesterday, that North sea oil revenues will continue for a good time yet.
Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)
So they will.
Mr. Hattersley
The hon. Gentleman is perceptive to say that, but that is hardly the point. The point is—perhaps even the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) has noticed this—that North sea oil revenues have peaked during this financial year. From now on they will be a wasting asset, and to rely on those revenues to balance our books instead of using them to [column 199]invest in our industrial base and our infrastructure is to make the British economy tragically vulnerable to every external pressure.
The true state of our economy is eloquently demonstrated by the way in which the Prime Minister is driven to the most disreputable use of statistics to give a fraudulent impression that at least part of her policy is working. I shall give three examples. On 10 January, she told me that public investment is at the same level as it was in 1978–79—a claim that is statistically plausible only because the Government have changed the definition of public investment. They have been condemned for doing so by the Treasury and Civil Service Select Committee. That is the value of the Prime Minister's honesty in such matters. Another example from the same day——
Mr. Alan Howarth (Stratford-on-Avon)
The right hon. Gentleman has rightly stressed the importance of honesty in this debate. What contribution to increased unemployment does he believe has been caused by the worst recession for 50 years, by the advent of an extra 1 million people in the labour force in the 1980s, and by the impact of new technology—all factors which are beyond the scope of this or any Government to control?
Mr. Hattersley
I assure the hon. Gentleman that it is my judgment, and the judgment of almost all objective commentators—[Interruption]—many of whom I shall quote as the afternoon continues—that were the reduction of unemployment the Government's highest priority, the figure would be lower than it is today. When Conservative Members scoff at that fact, they are not just scoffing at me, which is par for the course between Government and Opposition, but are scoffing at the right hon. Member for Old Bexley and Sidcup (Mr. Heath), under whom they were proud to serve when he was Prime Minister.
However, I shall not be diverted from giving two further examples of the weakness of the Prime Minister's case, which she manipulates in a way that I can describe only as statistically fraudulent. On 10 January she said that investment in the economy as a whole is at a peak, but she did not add that it is certain to fall next year as a direct result of Government policy. Investment is high now because of the impending changes in investment allowances, which have brought forward investment, but the policy that increases it this year will be the policy that decreases it next year. It is a sign of the weakness of her case that she takes refuge in such subterfuge.
The Prime Minister did it again today when she told us about the great investment record and the booming economy. I wish that she could have brought herself to answer the question honestly and to admit that, during the past four years, net investment in manufacturing and transport has been in a negative rather than a positive form. These are the facts about the economy, and the Prime Minister does herself no credit by trying to pretend anything different.
These are statistics that the Prime Minister polishes, hones and manipulates to impress her weaker-minded Back Benchers, but on the evidence of the recent past, they do not impress international opinion or fool international confidence, for the collapse of the pound is in no small measure due to the recognition of the debility of the British economy, for which the Tory Government are responsible.
[column 200]Mr. George Walden (Buckingham)
rose——
Mr. Michael Howard (Folkestone and Hythe)
rose——
Mr. Hattersley
I shall give way to the hon. Member for Buckingham (Mr. Walden), who is pointing at me with his left hand.
Mr. Walden
Earlier today, the Leader of the Opposition said the speculation against the pound was irrational. The right hon. Gentleman is now saying that it is an expression of no confidence in the Government's economic policy. Could he elucidate?
Mr. Hattersley
As I understand it, the hon. Gentleman shares my view that John Maynard Keynes had something important to say about economics. The hon. Gentleman will recall that half of Keynes's general theory was an explanation that psychology and economics could not be adequately divided and that what people thought was happening and their impression of what was happening had an enormous effect on the markets, on confidence and on investment. Therefore, the two things go together.
Of course there was a great deal of irrationality about the frantic activity on the exchanges last week and the week before, but equally that irrationality was in part based on what was only to be regarded as a rational judgment about investment prospects. I can explain why that is. Many reasons have been given for the run on the pound. The Chancellor acknowledges only two, the instability in oil prices and the strength of the dollar, but there are two more. I know that my right hon. Friend the Leader of the Opposition will agree with me that these are the rational judgments of hard-headed men who have seen the Chancellor and come to some conclusions, not only from his performance but from what he said.
First, until 11 o'clock on Friday morning, the Government had no exchange rate policy and therefore the market had no idea at what point the Chancellor and the Government would stand and fight. Secondly, and perhaps more importantly, the Government in general and the Chancellor in particular have openly boasted that a continual depreciation, matched with the dollar denomination of the price of oil, would increase the financial adjustment that would enable him to cut taxes. As the Chancellor said that, and as his economic adviser explained in great detail to the Select Committee that continued depreciation and oil being denominated in dollars meant that the Chancellor had more money in his fiscal deficit with which to finance tax cuts, there was a suspicion that the right hon. Gentleman wanted that massive depreciation to meet the demands of his Back Benchers for massive tax cuts.
Mr. Richard Ryder (Mid-Norfolk)
In order to meet his own high standards in honesty, will the right hon. Gentleman say whether he wants a higher or lower exchange rate?
Mr. Hattersley
The hon. Gentleman should not play such palpable games. What I want, and I freely acknowledge that I shall not get, is a different economic policy from the Government. Anybody who believes that I, or any of my hon. Friends will fall into the trap of offering tinkerings within the disaster area of the Government's economic policy should improve his tactics. We are calling for a radical shift and change of [column 201]economic policy. Asking whether there is a better or worse exchange rate, different by 10 per cent. either way, is like asking me where I would like the deck-chair to be placed on the Titanic before it hits the iceberg.
The run on sterling was in part caused by the Chancellor's boast that depreciation gave him more money for tax cuts, but it was caused by other things as well. Just before Christmas, the Chancellor was talking about having £3 billion to distribute. Yesterday, he was not even sure whether he could maintain the £1.5 billion boast. The fact that he has said so many conflicting things and that hardly anybody outside this country as well as inside trusts either his judgment or his statements has had a deeply damaging influence on our prospects.
The Chancellor of the Exchequer (Mr. Nigel Lawson)
Will the right hon. Gentleman quote the occasion, with references, on which he alleges that I said that there would be a £3 billion fiscal adjustment? I have never said anything of the sort on any occasion.
Mr. Hattersley
Immediately after the last debate on public expenditure, the right hon. Gentleman, or his agent, briefed every newspaper saying that he hoped for twice as much as he had previously hoped for. The right hon. Gentleman now only adds to his reputation for saying different things on different days. That reputation has done deep damage to the prospects of our economic recovery. The problems of the sterling depreciation were enormously intensified—building on the absence of any exchange policy and the boast about the advantages of depreciation for tax cuts—by the nervous paralysis that inflicted the Chancellor last week. They were then multiplied by the contradictory briefings that were given one day by the Treasury and on the following day by Downing street.
If the right hon. Gentleman wishes to contradict that, I hope that he will tell me of the errors made in the article by Mr. Samuel Brittan, not always the most devoted supporter of Socialism, which set out the names of the officials who have given the contrary briefings that caused the problem to accelerate towards the end of last week.
The problem was brought to a head by the Chancellor's in decision running up to yesterday morning. About an hour and half ago the Prime Minister changed tack again and tried to brush the problem aside, saying that this was not a sterling crisis but a crisis for all currencies and a crisis from which all countries similarly suffered. Some right hon. and hon. Members might ask what all the fuss and panic yesterday was about. If the crisis were as small as the Prime Minister had suggested. Others will ask whether the Prime Minister did not know, or whether she simply chose not to tell the House, that when she said that Britain's currency has depreciated against the dollar but so, too, had the European currencies, that sterling has depreciated against European currencies as well. That is the essential, and, I fear intentional error in the Prime Minister's answer. Sterling has depreciated by one-third against all currencies, not just against the dollar, and for the Prime Minister to pretend that the dollar strength is what caused the crisis on Friday and Monday is to deceive herself or to attempt to delude the country.
The underlying cause for the collapse of sterling is the basic weakness of the economy. This leads to the Opposition's second contention—another contention that divides us from the Government—that the abandonment of the medium-term financial strategy would both reduce [column 202]unemployment and strengthen the economy. There should be positive measures to improve the employment prospects of the country.
That is why the leader of the Social Democratic party, the right hon. Member for Plymouth, Devonport (Dr. Owen), was silly to spend Sunday afternoon, if the newspapers are to be believed, frantically phoning journalists to denounce what he described as diversions from the assault on the Government. The diversion to which he took particular exception was my proposal for repatriating British capital invested abroad, for increasing investment in British industry, and indirectly as a result of those two things, stabilising sterling values. I say to the right hon. Gentleman that anybody can abuse the Chancellor, as the Daily Mail proved adequately this morning, but what we now need are some positive statements of alternative policy to what the Government are pursuing. We shall certainly not get them from the leader of the SDP since he supports the Government's economic policy. He said on television last night—and I hope that Conservative Members are prepared to cheer—that the economy is now being run better than it has been run for 25 years. He is, in fact, the crypto-Thatcherite against whom the leader of the Liberal party warned.
Dr. David Owen (Plymouth, Devonport)
Will the right hon. Gentleman give us the chapter and verse of this extraordinary statement that was made on television last night? Since I was on television last night and since I said nothing of the sort, I should be grateful to be told the reference. If not, the right hon. Gentleman should withdraw.
Mr. Hattersley
I offer two pieces of evidence. First, I and many of my hon. Friends saw the right hon. Gentleman; secondly, it is reported in detail in today's Daily Mail.
Dr. Owen
If the right hon. Gentleman finds when he looks at a transcript of what I said on television that he is wrong, will he withdraw it tomorrow?
Mr. Hattersley
Of course. In that unlikely event I shall certainly withdraw it, and I take it that the right hon. Gentleman will take appropriate action against the Daily Mail. That is a bargain, is it not, Mr. Speaker? If I can make a sporting metaphor, I think that I have no takers in this.
I want to make one other point to the right hon. Gentleman. He was complaining that the assault on the Government's management of sterling was not adequate. An assault of some sort we made yesterday afternoon. Unfortunately, the right hon. Gentleman was not present to take part in it. I know exactly where the right hon. Gentleman was. He was down the road arguing that he should be allowed to appear on television more often.
Putting aside these irrelevancies, I repeat that it is the Labour Party's view, although apparently not the view of the alliance, that the whole economy would benefit from an increase in real demand.
On 13 December 1984 the Prime Minister appeared momentarily to endorse that view. At the time she was extolling the virtues of tax cuts that the Government were then proposing, and no doubt as the afternoon wears on we shall hear whether the Government's proposition remains. The right hon. Lady said:
“Reduction of tax can lead to extra jobs, as it leads to extra demand.” —[Official Report, 13 December 1984; Vol. 69, c. 1202.]
[column 203]May we be told categorically whether that was one of the Prime Minister's slips or whether, at least at that moment, she meant that an increase in demand was a desirable way of changing the Government's economic posture?— [Interruption.] I think that the Prime Minister is saying something—perhaps she would like to say it to the whole House.
The Prime Minister (Mrs. Margaret Thatcher)
An increase in demand as used by the right Roy Hattersleyhon.Gentleman usually means printing money. As he knows, I completely and utterly reject that.
Mr. Hattersley
That is an answer to a question. It is not an answer to my question, but it is an answer to a question. My question was: did the Prime Minister mean it when she said that an increase in demand would create more jobs? On previous occasions she has merely gone on about mini cars being sold, but not enough of them being British. The demand is there, she said. But on 13 December she changed tack and the House, the country and perhaps even the markets are entitled to know whether that was an error, whether it was then intended or whether it has since been withdrawn.
I ask the Chancellor that question specifically: does he believe that an increase in demand is desirable? I must tell the Chancellor——
Mr. Patrick Nicholls (Teignbridge)
Will the right hon. Gentleman give way?
Mr. Hattersley
I have given way a great deal. I look forward enormously to giving way more in a moment, but I think that for the time being I ought to obey the Speaker's strictures and press on so that other hon. Members may contribute.
In the past we have always been told that what would improve employment in the country is not a shift in demand, but a shift in the supply side of the economy. I tell the Chancellor at once that I share his view that radical alterations are needed in the structure of the economy. I want a tougher competition policy. I want new forms of industrial investment. I want more effective training programmes.
Indeed, my complaint about what the Chancellor has to say about the supply side is that the changes that he proposes are so unambitious. They amount to two things. They amount to arcane tax adjustments and to a call for lower real wages. He will tell us—because he always tells us—that lower real wages are the sovereign and certain cure for unemployment. If the Government choose to make a massive boost to demand, I say, as I have always said, that a moderation of wage claims would ensure or help to ensure that the new resources were concentrated on job creation, but in present circumstances when demand is inadequate—and on 13 December 1984 it was inadequate even by the Prime Minister's judgment—a reduction in real wages is an unreasonable proposition and an unattainable objective. To my regret, I suppose there is one area where it may be achieved and that is the public sector where the Government are pressing their own employees to accept a wage increase of 3 per cent. even though the inflation forecast is 5 per cent. or more. But in the public sector a reduction in real wages will not produce any more jobs because the Government will make sure that there is a reduction of jobs throughout that sector. [column 204]
The Chancellor of the Exchequer knows very well the truth about a reduction of wages in the private sector. It will not happen and it is not worthwhile for him to demand it except, of course, for the fact that to the Government the beauty of advocating wage cuts is the knowledge that they will not come about and the consequent opportunity that provides the Government to blame somebody else for their own failures to reduce unemployment.
Mr. Tim Yeo (Suffolk, South)
Will the right hon. Gentleman say whether he favours higher wage increases and more inflation, and will he further say what effect that will have on unemployment?
Mr. Hattersley
This must be the last time I give way because of the fatuous questions that I am asked. That is not so much a fatuous statement as an admission of inattention. Two moments ago I made it absolutely clear—and I gladly repeat the exact words—that I want to see a massive boost in demand and a moderation of wages which ensures that that boost in demand is concentrated on job creation rather than an increase in money wages. But without the massive boost in demand the wage increases will not be moderated and it is unreasonable to expect that they would be.
Having explained that to the hon. Gentleman simply as I can, let me go on to say that I suspect that this afternoon in this very area—the supply side of the economy—the Chancellor will tell us that it is necessary to do what we can to cut taxes in a way that is tantamount to holding down wages in order to make possible certain adjustments to the economy. He will go on to say that it is also necessary to cut taxes to alleviate what is fashionably called the poverty and unemployment trap and therefore encourage individuals who previously would have chosen not to work to find jobs. I find that a rather offensive analysis of the psychology of the unemployed.
If the Chancellor is to advocate the view that the unemployment and poverty trap has to be alleviated not by increases in child benefit but by cuts in taxes, I hope that he will read with some care the work done on this subject by the Institute of Fiscal Studies. I shall read its conclusion on this very point:
“… any Chancellor who rises on Budget Day and claims that by increasing income tax allowances he has made significant inroads into the poverty and employment traps, or started to sort out the nonsensical interactions between the tax and benefit systems, is simply talking ill-informed nonsense.”
I look forward to hearing the Chancellor of the Exchequer on the subject. In the light of that I ask him whether, as he can best judge today, he intends to pursue the policy of tax cuts which he outlined in the debate on the Estimates. If so, is he doing so solely to influence the supply side of the economy, or is he still claiming—as he and the Prime Minister have claimed—that by cutting taxes there will be a boost to demand that improves job prospects more substantially, pound for pound, than using the available resources in any alternative way.
We know, of course, that the primary purpose of a cut in income tax rates is to boost the popularity of the Tory party, but I must ask the right hon. Gentleman how he believes that his proposed tax cuts will affect the unemployment figures. Does he believe that there is a better way of using the money at his disposal? I do not think that cutting taxes and letting the unemployed fend for themselves will have the political result that the right hon. Gentleman hopes for and the Prime Minister expects. [column 205]I share the view expressed or implied by the right hon. Member for Old Bexley and Sidcup that to choose that course would be an insult to the unemployed. I believe that there are millions of voters, including Conservative voters, who have grown more prosperous over the past five years and who would benefit from tax cuts, but who would be revolted by the prospect of their being made more prosperous while the unemployed are left to remain without work.
In my concluding passages I hope to demonstrate that cutting taxes cannot remotely reduce unemployment in the way that the Prime Minister has now taken it upon herself to pretend. I have always argued—and will continue to argue—that direct investment in jobs is a far better way of achieving that aim, pound for pound, than tax cuts. But before I demonstrate that as best I can, I shall consider how much there is available to spend on tax cuts or alternatively on direct job creation.
I assume—I have no doubt that the statement by the Secretary of State for Trade and Industry is intended to contribute to this end—that when the Budget comes along the Chancellor of the Exchequer will find it possible to provide the £1.5 billion fiscal adjustment that is, on his present plans, to be devoted to tax reductions. If the Chancellor wished, he could of course retain the public sector borrowing requirement at its present level—still an appreciably smaller percentage of gross domestic product than is the case with many of our more successful competitors.
After running a long interview with the right hon. Gentleman and a long article by him, The Sunday Times then went on to advocate quite a different course of action which he could take—the spending of £3 billion on job creation and the like. But today I am not even advocating that proposal or cross-examining the Chancellor on it. I am saying that within his own parameters and the terms that he has set himself—or had set himself until Friday—there was £1.5 billion to spend. Conservative Back Benchers who have prepared speeches on the profligacy of the Labour party's proposals had better tear them up for this debate at least, because this afternoon I seek only to argue about how the Chancellor proposes to spend the money that he himself says is at the nation's disposal.
Within the terms of the Chancellor's own policy he could, if he thought it sufficiently important, use the money to act directly against unemployment. As a byproduct of that, without changing the tax income a penny or a pound, he could use some of the £3 billion annual reliefs that have been enjoyed by the better-off to carry out a redistribution within the tax budget and to do something about taking the lowest paid out of tax altogether.
But the Chancellor always chooses the high unemployment option when deciding how to spend his money. When I urged that some of the £1.5 billion should be spent on job creation and when, at a recent Prime Minister's Question Time, I urged that it should be spent on direct investment, the Prime Minister said, “Well that's all very well, but it would create more jobs if it was devoted to the direct employment creation measures.” That might be true but the Prime Minister does not propose to spend the money on that either, but to use it to cut taxes.
There is overwhelming evidence to show that to use the money available to cut taxes would not reduce unemployment by anything like the amount by which it would be reduced if the money was used for direct job [column 206]creation in two forms. First, the money should be used on the infrastructure. It should be spent on the public sector housing stock and on roads. To spend the money in that way would have two automatic and parallel benefits. Our depleting and collapsing capital stock and our infrastructure would be renewed—and while there was time to do so at a massive but not overwhelming cost. If the Government do not respond to the recommendations of the National Economic Development Office report, the deterioriation will continue to such a degree that it will become impossible to restore our infrastructure.
In spending money on building houses, recreating roads, moving the docks into the second half of the 20th century and on all the other desirable projects that are in themselves necessary and right, the Prime Minister would be restoring and creating jobs. She could also do that—and should do it—by a programme of direct job creation in the public sector that would similarly have double benefits. This country needs more nurses, more home helps and more people working in the inner cities. To employ them both rehabilitates our social services and puts the men and women thus employed back into jobs.
Mr. Richard Tracey (Surbiton)
I am grateful to the right hon. Gentleman for giving way, because I am mindful that he has now been speaking for more than half an hour. Will he address his mind to the terms of the motion to which he has put his name and tell us what the “largest number of jobs” , which is to be found in the motion, means? How many jobs is he talking about? The Labour party has talked of creating 1 million extra jobs. Surely the cash that he has mentioned could not produce that number of jobs. Where will he obtain the extra cash from? What will it cost in extra taxation?
Mr. Hattersley
The hon. Gentleman has not been listening either. I have told him exactly what money I was discussing and what money I was asking the Chancellor of the Exchequer to comment on. The point is not that the hon. Gentleman does me no courtesy but that he does the House no courtesy in wasting time with such frivolous interventions.
I am dealing with the £1.5 billion that the Chancellor of the Exchequer claims to have at his disposal. I am arguing, with the London Business School—once the repository of all economic wisdom—the Institute of Fiscal Studies, the National Institute of Social and Economic Research and even with the figures worked out on the Treasury's own model, that to spend that £1.5 billion to cut unemployment by direct means would in two years cut it by 73,000, whereas to use it to cut taxes would reduce the unemployment total by only rather less than half of that—35,000.
The evidence that I wish to draw to the attention of the House goes further than that. There is a lot of evidence within the Government, from the Department of Trade and Industry, to show that by using the money for direct job creation one is spending the money more directly in the United Kingdom and not dissipating it on imports that create jobs for other people in other countries. The figures of the Department of Trade and Industry demonstrate two or three conclusive points. If money is invested in construction only 15 per cent. of it finds its way abroad into competitor economies. If money is spent on domestic electrical equipment or textiles, 40 per cent. of it ends up abroad. Those are the sorts of items on which the money will be spent if it is used to reduce taxes. [column 207]
When the Chancellor of the Exchequer had that point to deal with in his article in The Sunday Times two weeks ago he did not deal with the figures or with the input/output tables of the Department of Trade and Industry. He merely took refuge in some sort of sentimental chauvinism saying that he had hopes and beliefs that the British people would not spend their money on foreign textiles and videos. Before the right hon. Gentleman expresses such hopes and boasts, I wish that he would talk to some of my hon. Friends who represent Lancashire constituencies. They would tell him that the increase in expenditure on textiles that is likely to come about by a reduction in taxes and increased consumption would be forced into foreign markets because of the collapse of the Lancashire textile industry which has been brought about largely by his Government during the past four years. There is no alternative, and to dismiss that fact by romanticism about faith in the character of the British people is to fly in the face of the facts. That is a habit indulged in by weak-minded Chancellors and even weaker-minded boards of prejudiced opinion dressed up to look like objectivity.
The Institute of Directors' policy unit has produced a paper on this subject. The institute says that to allege that taxes contribute more to imports than any other form of public increase in expenditure is a counsel of despair. It may be a counsel of despair, but it is also true. If the Chancellor wants to invest in jobs he will, therefore, use his money in the way that every authority demonstrates creates the most jobs—what the Prime Minister calls the “measures” and what other people want to see by way of direct investment.
My conclusion—I say this with no pleasure but with deep regret for constituencies such as mine in the northern half of which unemployment runs at 50 per cent. among adult males—is that the Chancellor will not change his ways, because they conform to his policy to choose the high unemployment policy and regard the unemployed as a low economic and low political priority.
Two weeks ago, the Chancellor promised the country a budget for jobs. That was not a wholly original phrase, because last year the Chancellor promised the country a budget for jobs. Unemployment has risen remorselessly. I do not know whether the Chancellor's habit of boast one day and counter-boast the next, claim one day and counter-claim the next, is the result of his wish to deceive, the product of the economy being wholly outside his control, or the outcome of his personality which oscillates from the manically aggressive to the depressively incoherent. Having seen one phase of his character yesterday, I assume that the right hon. Gentleman will be breaking the furniture this afternoon. Whatever the Chancellor's mood happens to be, I tell him that it is now widely accepted, as the right hon. Gentleman must know if he has read a single newspaper today, that his Chancellorship has been a disaster for this country. While he remains in office, combining strategic ineptitude with technical incompetence, there is no hope of reducing unemployment.