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Mr. Smith : It is not my intention to delay the proceedings of the House, Mr. Speaker, but, as I am a new Member, I wonder whether you can help me. It appears that the Ministry of Defence has refused me permission to hold constituency surgeries on the RAF camp in my constituency, which has a large community. I believe that service families have the right to the same access to their Member of Parliament as other citizens. I also believe that a United States Congress man or woman has the right to take up his or her constituents' complaints on a United States military base in this country. Can you help me, Mr. Speaker, and rule on this matter?
Mr. Speaker : Order. That is not a decision that I can take. I hope that, since the hon. Gentleman has raised the matter in the Chamber, it has been heard by the Leader of the House and others and that some solution may be found to his problem.
Mr. Jeremy Corbyn (Islington, North) rose--
Mr. Corbyn : On a point of order, Mr. Speaker. You will be aware that, last Thursday, the Guildford Four were acquitted at the High Court. Could you tell me how I can best raise in the House with the Northern Ireland Secretary, the treatment that Gerard Conlon is receiving? He is being harassed by Royal Ulster Constabulary officers in his street and today he was dragged into a car for questioning because he was acquitted last Thursday at the High Court in England.
That the draft Apple and Pear Development Council (Dissolution) Order 1989 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Apple and Pear Research Council Order 1989 be referred to a Standing Committee on Statutory Instruments, &c.-- [Mr. John M. Taylor.]
That leave be given to bring in a Bill to revise and amend the London Squares Preservation Act 1931.
My Bill modestly builds on the wisdom of our grandfathers and great grandfathers and adds another thin layer to the lacquer of legislation that protects London's heritage.
When London exploded into the world's largest city our predecessors saw the need to infuse a few patches of green into the urban sprawl before anyone had heard of people being environmentally conscious. It is interesting that it was the Victorian developers who bequeathed London its squares, voluntarily giving up building land to improve the urban landscape. Parliament took the lead then, as it should now.
There was the Kensington Improvement Act 1851, the Town Gardens Protection Act 1863 and, in 1927, when London's population was near its height and the city was choking in pea-soup smogs, there was nothing less than a Royal Commission into the protection of garden squares. That led to the London Squares Preservation Act 1931. It was a fine Act for Parliament to have passed in the dark days of depression to make London's green corners safe from overdevelopment. The Act specified some 460 enclosures that were to be permanently preserved as open spaces.
The London Squares Preservation Act 1931 is now more than half a century old and showing its age. That is why I should like to update it and to bring in adequate protection for the half century ahead. The 1931 Act forbids development on protected garden squares, but, because it was unthinkable at the time, the Act gave no thought to development under or over squares. Today, many squares are threatened with underground car parks, and the new possibilities of cantilevered architecture make development over an open space a commercial prospect.
The 1931 Act, if contravened, carries the "heavy" penalty of £20. I propose to update that to a maximum daily penalty rate of £1,000. The 1931 Act is particularly inadequate because there were only 460 squares listed at that time--and that number cannot now be added to. The list is closed. New squares are being created all the time in the capital and elsewhere. Such spaces are protected only by the leaky planning laws and not by Acts of Parliament. My Bill would open a new register, to which any enclosure could be added at the behest of its owner. These owners are the successors of the Victorian builders. Sometimes they are local authorities or trusts, or ownership may be divided equally between the residents of the 100 or so dwellings that surround a square.
Column 684Some squares are still owned by a single individual. Good--I have no complaint about such diversity. Owners who wish to set down their squares in the new register would have them protected from any development, on, under or over.
My Bill, if I can get support for it, would try to take the process a stage further. Why should it be only squares relating to London that are given the protection I have described? Does not the great cities of Bristol, Norwich Birmingham and Manchester have "enclosures" too? There should be a national register that extends a national umbrella of protection to the urban garden landscape throughout England and Wales.
The new squares that could be entered are manifold. Some of the better new council housing estates, for example, are built around a garden square. Should not those spaces be protected as their Victorian predecessorswere? The Government, however, are not altogether sympathetic to these proposals. One of their objections is that a ban on car parks under garden squares would rob the owners of their property rights. My scheme of a voluntary register would get round that problem. There is indeed a place for underground car parks : it is in new building developments, not under green
long-established residential squares.
The Government have yet to work out their community charge provisions on London's semi-private squares. Since the middle of the previous century those squares have, for the most part, been kept up by a special rate levied on the houses around or near them. The residents of those houses then hold the right to use the squares. No such provision has been made under the community charge. Clearly, if everyone in a local authority area pays equally for the upkeep of every garden square, then everybody, in fairness, must have access. That, of course, would mean the end of the squares. Their fragile environments would soon be broken down. Their upkeep, if it came from the general community charge, would soon fall into disrepair--victims of local government politics. Those garden squares would then become the refuge not of the many residents, but of a few strangers : the drug dealer, the vagrant and the mugger.
The Government cannot intend such a thing, so they must do some fresh thinking. I hope that my Bill will help that process and, more importantly, will help the hundreds of London garden squares. Question put and agreed to.
Bill ordered to be brought in by Mr. Dudley Fishburn, Mr. John Wheeler, Mr. Gerald Bowden, Mr. Matthew Carrington, Mr. John Bowis and Mr. Paul Boateng.
Mr. Dudley Fishburn accordingly presented a Bill to revise and amend the London Squares Preservation Act 1931 : And the same was read the First time ; and ordered to be read a Second time upon Friday 10 November and to be printed. [Bill 207.]
That this House deplores Government economic policies which have resulted in the highest interest rates and the highest level of inflation among the leading industrial nations and have caused the largest balance of payments deficit in this country's history ; expresses its deep concern at the impact of the savage increases in mortgage repayments on millions of home buyers and the erosion of living standards of the less well off, including poor families and pensioners ; regrets the extra burdens being placed on British businesses and industry as a result of increased borrowing costs and the exclusive reliance on high interest rates as the sole instrument of economic policy ; repudiates the absurd claim that a huge balance of payments deficit is not a crucial concern ; and calls on the Government to adopt a strategy to reduce the balance of payments deficit by increasing industrial investment and by ending the decade-long neglect of education and training, new technology and regional development.
Mr. Speaker : I must announce to the House that I have selected the amendment in the name of the Prime Minister. I repeat what I said previously : a large number of right hon. and hon. Members have already notified their wish to participate in the debate. Therefore, I shall need to put a limit of 10 minutes on speeches made between 7 and 9 o'clock. I appeal again to those called before that time, particularly to Privy Councillors, to bear that limit in mind.
Mr. Smith : As we meet today to debate the condition of the British economy, there is a deepening concern throughout the nation at the consequences of 10 years of Thatcherism. The extravagant claims of a so- called economic miracle to which we have been so persistently subjected are compared by our constituents with the facts of the economic situation and the impact of those facts upon their lives. The ineluctable and unavoidable facts are that, 10 years on, at the end of a decade during which the Government have had at their disposal £78 billion of North sea oil revenues and all the added strengths that North sea oil resources provided for the trade balance, Britain now has the highest rate of inflation and the highest interest rates among the leading industrial nations and, as the trade figures today sadly confirm, the highest balance of payments deficit in our history. Nor should we forget that unemployment, even using the Government's massaged figures, is 1.7 million and, on the basis of previous calculation which was changed by the present Government, would amount to 2.3 million. It remains a deep-seated problem in many of our regions.
Throughout the end of the Thatcher decade and in the light of these facts our constituents, not unnaturally, query what sort of strange new form of miracle has led us to such a position. Such consideration brings them face to face with two outstanding characteristics of the Thatcher Administration : its totally non-self critical and wildly extravagant claims to success, and its habitual tendency to
Column 686blame others for its failures. It was this same Chancellor of the Exchequer, whose candy floss boom is melting before our eyes, who, in the Budget debate of March 1988, said :
"This country is now experiencing an economic miracle, comparable in significance to that previously enjoyed by West Germany and still enjoyed by Japan."--[ Official Report, 21 March 1988 ; Vol. 130, c. 109.]
Note the complacent arrogance of the phrase "previously enjoyed by West Germany" and the pretentiousness of the claim to rank with the Japanese level of success.
In Britain today inflation is 7.6 per cent. ; in West Germany it is 3 per cent. In Britain today interest rates are 15 per cent. ; in West Germany they are 8 per cent. In Britain today, as we know, we have a huge trade deficit and West Germany has an immense trade surplus. Most revealing of all, when the present Government took office in 1979 our trade deficit with West Germany was £1 billion. In the 10 years since, it has increased by almost nine times to the record and alarming level of nearly £9 billion.
Earlier this year the Prime Minister saw fit to give some economic advice to the Japanese on a visit to their country. The trade deficit between Britain and Japan when she took office was £1 billion ; today it is £5 billion. Until recently it was fashionable for Government members to patronise the West Germans. We were told that their economy was sclerotic, hidebound, over-rigid and badly in need of a touch of the Thatcher market magic. However, who in his or her right mind would trade our economic position with theirs? Who would swap their dedication to education and training, their success in social partnership, their strength and depth in manufacturing industry for the problems which Britain faces today?
The facts do not fit the hype. Who is to blame? After 10 years of this Government in power, in which the wealth of the North sea has been available to them, in which they have had assured parliamentary majorities and in which they can hardly claim that they have not had sufficient economic and political leeway and opportunity, who is to blame for the failure? Is it the unions, the previous Labour Government or the nasty foreigners? As each year has passed those excuses, so readily on the lips of the Government apologists in the House and elsewhere, have become relentlessly less convincing. The most obvious fact about Britain after 10 years of Thatcherism is that this Government and their economic policies are to blame for our present position.
The Government can no longer evade or avoid their personal responsibility. The balance of payments deficit is, at heart, for this country, a balance of trade deficit. Throughout this decade, and never more so than under the present Chancellor, the importance of the balance of payments has been persistently underestimated. The Chancellor has a lamentable record on prediction. It is almost as though the wish to avoid the problem suppresses the capacity for intelligent assessment. For 1988 he predicted a deficit of £4 billion. It was over £14 billion. For 1989, by which time he should have become a little wiser, he predicted £14.5 billion for the year as a whole. Today it was announced that for the first nine months of this year we have already passed £15 billion--well past his total for the whole of the year and with a full quarter still to come--so we are probably heading, on those figures, for a deficit of between £19 billion and £20 billion, compared with his prediction of £14.5 billion.
Column 687The right hon. Gentleman's response is not to seek to reduce the deficit so much as to pretend that it does not matter. Time and again he has told us that a balance of payments deficit, even one of this magnitude, does not matter provided that it is readily financable. The right hon. Member for Henley (Mr. Heseltine), his former Cabinet colleague, observed in his sideshow speech at Blackpool when dealing with this issue :
"I beg our party"--
referring to the Conservative party--
"not to argue that a deficit on overseas trade is of incidental importance- -self-correcting and easily financed. I do not believe a word of it."
Nor should we. Our balance of payments deficit has been caused by two principal acts of Government--the appalling recession of 1979 to 1982, when the mismanagement of, among other things, exchange rate policy eliminated about 20 per cent. of British manufacturing capacity, and the credit boom let loose from 1985 onwards, which recklessly expanded demand well beyond the capacity of a weakened industrial sector to supply.
When the Chancellor said that a balance of payments deficit did not matter if it was readily financable, he did not mention the price of that financing. That price is the price of his priorities. It is interest rates of 15 per cent., and it is being paid not by him but by millions of home buyers, who have faced crippling increases in their mortgage repayments. It is being paid by business and industry, particularly small businesses, which find the cost of investment and the unexpected burdens of repaying loans, often taken out in a totally different climate, intolerably high.
Consider the cost for mortgage payers. As a result of 11 increases in interest rates from May 1988 until now, a family on average earnings with two children paying off a typical £34,000 mortgage is paying an extra £88 each month. In Greater London, the increase in payments on an average mortgage of £55,000 is a massive £162 each month. Is it any wonder that about 400,000 families have mortgage arrears extending to two months or more?
Consider the price being paid by businesses. Today the CBI produced its forecast for business, and gloomy reading it is, predicting a fall in orders and a drop in investment. It is one of the gloomiest predictions that the CBI has made for many years. It has been the practice of Ministers constantly to quote CBI figures in these debates. I suspect that that may not happen today.
Mr. Edward Leigh (Gainsborough and Horncastle) : As the right hon. and learned Gentleman referred to the balance of payments deficit, may I ask him to say whether he believes in import controls? Will he answer that question yes or no? While he is thinking of how to answer that, will he say, in connection with mortgages, whether he agrees with the hon. Member for Dagenham (Mr. Gould) about the curbing of mortgage credit?
Mr. Smith : I assure the hon. Gentleman that it need not take me long to think of the answer to his questions, the answer being no. I do not agree with import controls, and I shall deal with the question of how we would impose credit controls when I reach that part of my speech.
Small businesses and mortgage payers are not the only people who have been hit hard by Government economic
Column 688policies, which now adversely affect almost the whole population--with the exception of a small group of the well-off, whose bounty under this Government has been so great that they are well protected against the Chancellor's policies, as they probably lend rather than borrow and thus benefit from high interest rates. But what of the others, particularly those in the poorer sections of society, who have had to face economic difficulties with no consideration from the Government? Retirement pensioners whose pensions have fallen so badly behind the rise in incomes of others have to face the same price increases as everyone else. We heard only today of the miserable decision once again to freeze child benefit--a shameful denial of essential support for millions of poorer parents. So we know all too well the price that is paid for the Chancellor's folly by nearly all sections of society, and people are entitled to feel that they have been deceived. Were they not told that the medium-term financial strategy would put paid to disturbing uncertainties in financial policy? It was only last year that the former Chief Secretary to the Treasury told us :
"Government policy now operates in the medium-term framework which gives individuals and firms the confidence to plan ahead." Let us take an individual or a firm attempting to plan ahead in May 1988 when interest rates were 7.5 per cent. What bit of the medium-term financial strategy told them that over 18 months later, after 11 increases in interest rates, they would be paying 15 per cent. for the loans that they took out in May 1988? How do they know what Government policy will be next?
I admit that the Chancellor has some problems which are not entirely of his own making. Fairness requires that we take account of some of his difficulties in an understanding way--the present Foreign Secretary is already learning all about how the Prime Minister treats colleagues. The Chancellor could have given him a crash course before he left for Malaysia. The Chancellor was hardly back from Blackpool, where he was portrayed with others as part of the right team of people working together for Britain-- [Hon. Members : "Where are they?"] No doubt the chairman will have taken careful note of those of the team who are not present. As I was saying, the Chancellor was hardly back from Blackpool when the man who was missing from Blackpool, Sir Alan Walters, struck again.
One can be naive, I suppose, about Sir Alan. One can believe that it was an accident that an article that he wrote for an American publication most unfortunately and quite unaccountably appeared in the press--an article, moreover, which described the European monetary system as half-baked. If that were not enough, he went on to deride it as not having even a minimum level of plausibility--I checked this again : he was referring not to the Government's economic policy but to the European monetary system. I do not imagine that the Chancellor thinks that it was an accident, because he has suffered before. He knows how, month after month, the unelected and unappointed alternative Chancellor in No. 10 has thwarted his policies and contradicted his purposes--sometimes an allegedly indiscreet remark, sometimes a word in a City dining room, and on occasion even a friendly reference to the need of the Chancellor to move on to other things.
Column 689These are not the antics of some eccentric outsider ; they are the work of a specially appointed insider in No. 10. When assessing this happy bond between Nos. 10 and 11 Downing street, one extracts the true flavour of the team approach and a proper understanding of why no one in his right mind will believe that a team approach to anything is ever possible under the present Prime Minister. Isolated in Europe, isolated in the Commonwealth, at home she is increasingly isolated by the deference and lack of courage of a Cabinet who dare not challenge her overwhelming pretensions. These Ministers know the lessons of the reshuffle : "If you lose your job, you get another house, but if you keep your job, you lose your house."-- [Laughter.] "If you are not careful, you might lose both."
Whatever happens, Mr. Bernard Ingham--that other unaccountable source of power in Britain--will be waiting to give a friendly benediction as one moves on. I used to feel sorry for the Chancellor of the Exchequer, but it is time that he did something for himself. It is time for enterprise and individual responsibility. It is time that he told the Prime Minister that the moment has come to end the confusion and disarray in the formulation and explanation of Government economic policy. It is time that he said, "Either back me or sack me."
Mr. Tim Yeo (Suffolk, South) rose --
Mr. Smith : The Chancellor should know that at least one volunteer for his job on the Conservative Back Benches is rising to his feet. I advise the Chancellor to make an early decision on the important question of whether he will jump or be pushed, because the Prime Minister has a plan for him. It is that he should attract the hostility and contumely of the public for the unpopularity of his economic policies and then be discarded when someone else--perhaps the Secretary of State for Transport--is invited to herald a new approach during the run-up to the next general election. It might be more dignified for the Chancellor to jump before he is pushed. I give him a word of friendly advice before he jumps. He should make sure that his parachute has not been packed by Mr. Bernard Ingham.
Mr. Ian Taylor (Esher) : The right hon. and learned Gentleman raises laughter among his right hon. and hon. Friends--[ Hon. Members-- : "Among Conservative Members, too."]--but the laughter should be reserved for his inadequate attempt to explain his own economic policy. Is the battle against inflation part of the Labour party's objectives? How will that battle be conducted if at the same time we are to have lower interest rates and a lower exchange rate against other currencies?
Mr. Smith : The hon. Member should listen. Occasionally, we are entitled to indulge ourselves in the odd spot of amusement, when we have characters such as Sir Alan Walters, Mr. Bernard Ingham, and others decorating public life--and who would cause endless mischief and annoyance were they but free to speak. Their lips are sealed now by vows of confidentiality, but let us wait until the memoirs are published. Let us see what the Chancellor--a handy man with a pen if not with figures--writes in his memoirs and his views on Sir Alan Walters as serialised in The Sun.
The Chancellor should take an early initiative to end the muddle over the exchange rate mechanism. Under the terms of the Madrid summit declaration, Britain has
Column 690apparently agreed to stage one of the Delors report, which envisages full participation in the ERM. We are told that that will happen when the time is ripe, but what if the time is not ripe when the timescale apparently agreed at Madrid has passed? How can the Government's position have any credibility when Sir Alan says that the system does not even have minimum plausibility and writes in an article published only last week that "thus far" he has taken the Prime Minister with him?
The Chancellor must assert himself to end needless confusion and misery. Our advice is that he should negotiate to join the ERM under the important and prudent conditions that the Labour party has outlined. He should listen, and ask the Prime Minister to listen, to the advice that he received from not only the Confederation of British Industry but the annual conference of the Trades Union Congress. If the Chancellor and his colleagues believe that it is right to join, they should fight for their policies, rather than sit like cowed and frightened schoolboys whenever the farrago frowns in their direction. They should uphold the minimum requirement of proper government that Ministers of the Crown should not tolerate the undermining of their policies by unelected part-time advisers, however highly placed and with whomsoever they are connected. Ministers must face the need for alternative policies to take us forward from the economic morass in which we are stranded. It is the height of arrogance for the Government to claim, as they frequently do, that there is no alternative. That is merely another way of saying that the Government cannot be wrong. We believe that the first requirement of an alternative approach is to adopt an industrial strategy that puts the promotion of our wealth-creating manufacturing industry at the top of the national agenda for recovery. It is the weakness of our manufacturing sector--the internationally tradeable part of our economy--that is the fundamental reason for the balance of trade and balance of payments deficits. It is not --this is our fundamental disagreement with the Government--a matter of simply attenuating demand so that the deficit comes round. There is a structural problem in the British balance of trade and payments deficits that only determined supply-side policies can improve. I wish that the Government would listen to the growing anxiety being expressed throughout the nation and industry that our manufacturing sector is not well enough placed to face the 1990s or the intense competition, as well as the opportunities, that the single market will create. We have argued that case repeatedly, and we shall continue to do so.
I shall content myself today with drawing the attention of the House to a report prepared for the Employment Institute which, from an objective standpoint, endorses our approach. I quote the summary of its conclusions :
"The British disease stems from a combination of poor workforce skills and slow application of design and technology.
Upgrading the quality of British products remains an urgent priority ; cost reductions alone will not suffice.
Manufacturing matters, because this sector is the source of the vast majority of innovative products.
Manufacturing matters also for jobs ; despite providing a falling share of total employment, manufacturing's demand for services and intermediate products generates jobs in other sectors.
The authors conclude that extra spending in the fields of vocational training, research and development and greater
Column 691support for innovative producers is urgently needed if Britain is not to be relegated to Europe's second division of low wage, low quality producers after 1992."
Mr. Tony Marlow (Northampton, North) : I am sorry to take the right hon. and learned Gentleman back, but he was going to tell us the circumstances under which the Opposition would favour joining the exchange rate mechanism. Will the right hon. and learned Gentleman tell the House what those circumstances would be?
Mr. Smith : I am sure that the hon. Gentleman knows them well. They are conditions relating to proper swap arrangements between the central banks, a policy for growth rather than deflation, and consideration of the right point at which entry to the ERM should be effected. [ Hon. Members :-- "What will that point be?"] It will be at the right and appropriate rate for the success of British industry. I should have thought that that would be blindingly obvious to Conservative Members. I have given the hon. Gentleman the answer to his question.
The time to start that industrial strategy is now. Every month that we delay is a month in which the risks of 1992 become even greater.
Sir Peter Hordern (Horsham) : The right hon. and learned Gentleman has just made a most important statement to the House. He said that the Labour party rests for the success of its policies on a very considerable devaluation. His statement cannot conceivably mean anything else. What size of devaluation has he in mind?
Mr. Smith : The hon. Gentleman is mistaken. I did not propose a considerable devaluation. He should bear in mind the fact that the Chancellor, who said at the Tory party conference that the Government never stood for devaluation, has seen the pound devalue by 10 per cent. in the course of this year. So much for the party of non-devaluation.
I refer the hon. Gentleman to the interesting speech made by the right hon. Member for Henley.
Several Hon. Members rose--
Mr. Smith : I refer the House to an interesting passage in the speech in Blackpool by the right hon. Member for Henley. It is highly relevant-- [Interruption.] I am sorry if hon. Gentlemen do not like to hear this information, but I shall give it to them. The right hon. Member for Henley said :
"We could accept a lower parity as part of a decision to join because it would be coupled with the disciplines of the Exchange Rate Mechanism."
I interpret that as entering at a rate which is lower than the present rate of exchange. That is a quite understandable point of view.
Mr. Michael Heseltine (Henley) : Is not the essence of the challenge how it is possible to satisfy the financial world that the disciplines will be in place to sustain whatever lower parity we accept? Is not the weakness in everything that the right hon. and learned Gentleman says
Column 692that all the policies in which he believes will undermine the strength of management of the British economy and stoke up inflation, not reduce it?
Mr. Smith : I am grateful to the right hon. Gentleman for confirming the thrust of the policy contained in his speech. I totally disagree with the qualification in the second part of his question. Our policies to put manufacturing on its feet are ones with which I know he has some sympathy because he mentioned them in that speech. Those policies will strengthen the country, not weaken it. How on earth are we to create the wealth with which to sustain our prosperity, let alone improve our public services, if we do not have a strong and vital manufacturing sector? I thought that the right hon. Gentleman agreed with that.
Mr. Heseltine : This is at the heart of the matter. I agree that there is a need for public expenditure programmes to deal with education and training of the sort that the right hon. and learned Gentleman mentions, but those programmes have to be paid for. They cannot be paid for by rising levels of public expenditure. What cuts would the right hon. and learned Gentleman introduce?
Mr. Smith : The right hon. Gentleman knows perfectly well that the crucial decision in government is how much of the extra resources created by economic growth should be allocated to the public sector and how much to the private sector. The Government of which the right hon. Gentleman used to be a Front-Bench member say on every conceivable occasion that a declining proportion of GDP must be allocated to the public sector because public sector investment is inherently unvirtuous while private sector investment is virtuous. It is as though it was virtuous to invest in a casino but somehow malign to invest in a health clinic. That is the approach of the Conservative party. If the right hon. Gentleman were not in a particularly difficult and sophisticated political position, the restraints of which I fully understand, he would agree more fully with the arguments advanced by the Opposition.
Mr. Heseltine : If the right hon. and learned Gentleman is saying that his policies could be implemented over a significant period only by diverting future and as yet unavailable growth, he is saying that he has no policies today.
Mr. Smith : I do not know why I should give way so often to the right hon. Gentleman. I do not know whether I should be helping him in his election campaign, but I feel that in all innocence I am being drawn into it. He knows perfectly well that every Government have to take a decision about whether to raise more money by taxation or whether to use funds available because of the buoyancy of the economy. The Government also have to make decisions about how much they should allocate to the public sector.
The right hon. Gentleman knows perfectly well, because he has written about it, of the decline in our public services. He knows the state of our education system and he knows about the problems in the regions. I understand that he is sympathetic to the Labour party policy on development agencies. I am sorry if that upsets the right hon. Gentleman's campaign, but I can tell the House that he supports many items in the Labour party's policy review. I cannot say that we advertise that when we seek to persuade the public about the merits of the policies, but
Column 693candour requres me to say that we are on all fours with the right hon. Gentleman on many important subjects. I hope that that puts the right hon. Gentleman's election campaign to bed for a little. Mr. Yeo rose --
Mr. Smith : I am not giving way to that hon. Gentleman. The second leg of our approach is to lessen the exclusive reliance on high interest rates by the adoption of sensible controls on the availability of credit. I did not plan to give the right hon. Member for Henley so much attention in my speech. However, in his important Blackpool speech he also said :
"The central problem is an excessive supply of credit. The money may have been expensive but the public has been more attracted by its availability than it has been deterred by its cost. We are all aware of it. Not a day goes by but someone somewhere is urging us to borrow."
That is perfectly true. People can hardly open their mail without receiving more invitations to borrow.
The Chancellor should seek to restrain the amount of credit made available by the banks. First, he should invite their co-operation in restraining lending. I hope that we do not get any horse laughs about that. Why on earth should the Chancellor not invite the banks to co-operate? Only people who are as narrowly partisan as members of the Conservative party would think that such a suggestion was in the remotest degree odd. Any sensible Government would invite such co-operation and sensible bankers would respond. I believe that the banks would co-operate and I shall continue to believe that until I see evidence that they would not. If they do not, what will happen?
Mr. Smith : Is the hon. Gentleman saying that the banks would refuse to co-operate with a Government who sought to place some limit on lending? Which bank is the hon. Gentleman making that accusation about? I wonder whether the Committee of London and Scottish Bankers will be pleased to read that in Hansard. If the banks do not co-operate, the Government can require them to make deposits with the Bank of England, and that would have the effect of limiting the amount available for lending. I do not see anything impractical in such a proposition. I am fortified in that view by the comments of Mr. Christopher Dow, the former economics director of the Bank of England and economic adviser to the Governor, in his recent book "A Critique of Monetary Policy". He said :
"A call for voluntary restraint by banks could perhaps be effective for a while. It might be worth considering such a proposition." An added advantage of this approach would be that it could affect the psychology of borrowing by sending a clear signal that it was intended to be limited. In a nation awash with unnecessary and damaging credit, such a signal could most appropriately come from the Government and I suggest that it would not go amiss.