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was 8.8 per cent. and United Kingdom inflation was 10.3 per cent. He also said that inflation was on a declining trend, but it was not. It was on a sharply rising trend. In January 1979 it was 9.3 per cent., in February 9.6 per cent., in March 9.8 per cent., in April 10.1 per cent. and in May 10.3 per cent. Even the hon. Gentleman cannot say that there was a declining trend when the Labour party left office.

The hon. Gentleman also said that overall investment as a share of GDP was never lower than it is now. He is wrong again. I gloss over the fact that the figures for the current year, which has been a dramatic investment boom, are not yet available, so the hon. Gentleman cannot know the position. Even on the figures that are available, I suspect that he is wrong.

The hon. Member was also pressed to reveal his fiscal strategy and he gave a remarkable answer. He announced that he would--at one and the same time-- reduce inflation, allow interest rates to fall and reduce the balance of payments deficit. In other words, he would loosen monetary policy, expand fiscal policy and expect to reduce inflation. That is an interesting trick if he can do it, but he would have to defy most of the known laws of economics to achieve it. It that is the best that the hon. Gentleman can do, I understand entirely why he failed to answer the direct questions that my right hon. Friend the Chancellor asked him.

The hon. Member for Dunfermline, East also told us that he would increase spending on training, the environment, science, the regions and technology. He did not explain how increasing that spending would help to reduce inflation. What the hon. Gentleman effectively proposed was fiscal laxity- -not a fiscal strategy That is precisely what we expect from Labour spokesmen, because that is what we get from Labour Governments when we are unfortunate enough to have them. We did learn something about the Opposition tax strategy, and very interesting it was too. The hon. Member for Dunfermline, East said that it was unfair to tax any form of saving and he specifically instanced building society investments. I assume therefore- -I will give way to him if he wants to respond--that he would abolish the composite rate of tax, at a cost of around £3 billion in the short term and far more in the long term as people switch from shares into deposits. That is what the hon. Gentleman said and implied. Some time ago, the right hon. and learned Member for Monklands, East (Mr. Smith), whom we all look forward to welcoming back, said that he was careful about making pledges, because the Conservatives added up their costs. I may tell the hon. Member for Dunfermline, East that that is exactly what I shall do, because the Opposition are racking up the cost of their programme again and again. We shall keep a very close check on what they say.

The hon. Member for Dunfermline, East dismissed a reminder that the man on average earnings is £45 per week better off now than when the last Labour Government left office. He implied that living standards automatically rise. I remind him that under the last Labour Government, real take-home pay fell by more than £1 a week for a married man on average earnings. That is the record of shame

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which must be compared with the increase of £45 per week that has taken place as a result of the present Government's policies. The hon. Gentleman implied that the period at the end of the last Labour Government was a golden age, so I looked it up. To be strictly fair to the hon. Gentleman, I picked precisely today's date 10 years ago. I also picked the only newspaper that happened not to be on strike that day. I shall read the headlines to the hon. Gentleman. Under the headline "Regional trouble shooters' ", it reports : "The Prime Minister held back from declaring a full State of Emergency last night Instead, the Government is setting up regional emergency committees."

Is that the hon. Gentleman's idea of regional policy? It continues :

"Apparently, they will not have the power themselves to order the use of troops."

That power at least stayed with the Government.

Other headlines include :

"Grocers may close as stocks dwindle."

and :

"Walk-out hits water supplies."

That report continues :

"Water supplies and sewerage services covering 750,000 people in central Lancashire will be hit by an unofficial strike."

On that same day 10 years ago, in that golden age, an emergency was declared in Ulster, and British Airways pilots were on strike. However, those were not the main headlines. Those were the secondary stories. The main headline was :

"Nation on precipice, says Healey. Union spurns Cabinet plea. Lorry strike made official : food stocks will run out'."

That is the record of the golden age to which the hon. Gentleman refers. Those were the policies he advocated again today, however he described them. That would be the result of those policies, and that is why the country will have nothing to do with them.

Mr. Holland : Which newspaper was that?

Mr. Major : It was The Daily Telegraph, which was the only newspaper not on strike that day, so good were the activities of the Labour party. Those were the headlines of 10 years ago.

Many right hon. and hon. Members concentrated their remarks on their concern about inflation. I can understand why, and I reiterate the Government's well-known view that the reduction of inflation is the priority to which our policy must be directed, and that it will continue to be directed at that priority in the future. The Opposition's apparent policy of lower interest rates, lower exchange rates, more public spending and more public borrowing is a lethal concoction which is bound to lead yet again to spiralling inflation. My right hon. Friend the Chancellor of the Exchequer set out the economy's outstanding success over recent years, with growth of more than 3 per cent. per year in each of the last four years, investment rising faster than for years--and faster than consumption in six years out of the last seven. Both company profits and productivity have reached their highest levels since the 1960s.

Nor is there any doubt that supply-side reforms and the knock-on effect of the present investment boom will improve capacity and profitability in future. At present we face the particular problem of excess demand. That must and will be overcome with a strong fiscal position and a strong monetary policy to ensure that we do not jeopardise what has been achieved and our prospects for the future.

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But Labour Members seem not to understand what our policy is achieving. For some years our policy has been to seek a progressive reduction in inflation together with steady and sustainable growth, and we are achieving that with the right mix of monetary and fiscal policy.

Our present fiscal position is extremely strong--a large budget surplus and no increase in planned public expenditure. Therefore, the right method to deal with excess demand is short-term interest rates. The right, most appropriate and most effective method is short-term interest rates. I have no doubt that they will work on this occasion as they have done in the past.

In the odd world in which he lives, the hon. Member for Vauxhall may not have noticed that there is an investment boom this year and every projection shows that it will continue next year.

Mr. Holland : What about small business?

Mr. Major : Every week 1,000 new firms are being registered net of those that close down. When did that happen under the previous Labour Government?

There are already signs that house price rises are being curbed, that the demand for mortgages is falling and that consumer spending is slowing down. That is what we seek and that is what we need to see in the next few months.

Despite out lack of success when pressing the Opposition earlier, we now have some clues to some of the hidden policies that they have but choose not to talk about. For example, we know that they wish to reverse higher tax cuts, because they frequently tell us so. We know that they wish to increase basic rate taxes, because they regularly vote against reductions and pledge themselves to expenditure that would raise taxes. We know that they have traditionally been proud--boastful even--to be the high-tax, high -spending, high-borrowing and high-inflation party.

Inflation during our period of office has never approached half of the average it was under the Labour Government.

Mr. Holland rose --

Mr. Major : The hon. Gentleman has already taken up far too much of the time of the House.

Mr. Holland rose --

Mr. Speaker : Order.

Mr. Major : We know too that the Opposition want credit controls because they tell us so frequently. But that is all we know, because beyond that one needs second sight to divine their policies. What policies they do have are concealed with misleading language. Conviction has been replaced by camouflage in the Labour party's vocabulary. Nationalisation is out. That has now become social ownership, courtesy of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). Devaluation is out. That is now called seeking a realistic exchange rate, courtesy, I think, of the hon. Member for Dagenham (Mr. Gould). Government intervention and regulation is now out in the Labour party. That is now called supply-side Socialism, courtesy of the hon. Member for Dunfermline, East.

The Labour party is in hock to yesterday's ideas. They have different packages, but they have exactly the same poison in them that they always had.

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The concept of supply-side Socialism is breathtaking plagiarism ; another piece of yuppy camouflage by the hon. Gentlemen. It is about as realistic as horse-drawn hang gliding. The idea was first mooted by the hon. Member for Dunfermline, East, but no one has since come forward to claim credit for it. Frankly, I am not surprised, because higher taxes, more taxes and credit controls are an odd policy to encourage the supply-side. I will tell hon. Members what it is. It is a supply of Socialism, not a supply-side policy. It is also a gimmick, an idea, a jumble of words which do not add up to anything. The Opposition claim that they want to help the poor, but they have no policy for inflation. They want to help the low paid, but they vote against tax reductions. They hope that they will get power without policy, but they will not, because people understand the improvements in Britain. They know that the economy has been transformed and they want to keep it that way. That is why they will support the need for policies to achieve growth without inflation. The Autumn Statement is central to that and I commend it to the House.

Question put, That the amendment be made :--

The House divided : Ayes 212, Noes 276.

Division No. 32] [10 pm


Abbott, Ms Diane

Adams, Allen (Paisley N)

Allen, Graham

Alton, David

Archer, Rt Hon Peter

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashley, Rt Hon Jack

Ashton, Joe

Banks, Tony (Newham NW)

Barnes, Harry (Derbyshire NE)

Barnes, Mrs Rosie (Greenwich)

Barron, Kevin

Battle, John

Beckett, Margaret

Beith, A. J.

Bell, Stuart

Benn, Rt Hon Tony

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)

Buchan, Norman

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Canavan, Dennis

Cartwright, John

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Coleman, Donald

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Cousins, Jim

Crowther, Stan

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Cunningham, Dr John

Dalyell, Tam

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Dunnachie, Jimmy

Dunwoody, Hon Mrs Gwyneth

Eastham, Ken

Evans, John (St Helens N)

Ewing, Harry (Falkirk E)

Fatchett, Derek

Faulds, Andrew

Field, Frank (Birkenhead)

Fields, Terry (L'pool B G'n)

Fisher, Mark

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Foster, Derek

Foulkes, George

Fraser, John

Fyfe, Maria

Galloway, George

Garrett, John (Norwich South)

Garrett, Ted (Wallsend)

Godman, Dr Norman A.

Gordon, Mildred

Gould, Bryan

Grant, Bernie (Tottenham)

Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)

Hardy, Peter

Harman, Ms Harriet

Hattersley, Rt Hon Roy

Heffer, Eric S.

Henderson, Doug

Hinchliffe, David

Hogg, N. (C'nauld & Kilsyth)

Holland, Stuart

Home Robertson, John

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