House of Commons Hansard Debates for 31 Oct 1989

Column 189

official had forced entry to her property without a warrant and disconnected her meter, leaving her and her child without any source of heat.

The same kind of indifference and lack of concern for the welfare of customers is shown by the electricity industry, which, in the process of clawing back arrears from low-income groups, requires them to feed between £5 and £7 per week into a meter before they receive any electricity for heating or cooking. A recent survey showed that, in more than 90 per cent. of the cases examined, the electricity boards did not know whether the customer's household included pensioners, benefit recipients, sick or disabled persons or young children. The survey concluded that such information has not been sought by the boards.

Because of the lack of time, my Bill will fail to address those problems in this Session of Parliament. In the meantime, local authorities can demonstrate their concern for the many people who spend most of every 24 hours trapped in homes which they cannot heat because they are too poor, because they fear the bill that the postman may bring or because in their desperation they lose sight of what they are doing and an equally sightless bureaucracy disconnects them. Perhaps those homes with ill-fitting windows and doors and poor insulation, which were designed when fuel was cheap, simply will not hold the heat. The heating appliances used may be old or inefficient or require too much of the wrong fuel. Some people are just too poor. Whatever the reason, I believe that more can be done.

Sometimes it is simply a question of knowing what can be done to help. The labyrinth of social services departments, social security officers and advice centres is simply too much for someone who is struggling to keep warm. It is easier to huddle in front of the warm gas fire radiant or the bars of an electric fire than to face the queues and the smug-faced young people who seem to be too busy and who talk too quickly when they explain that it is not really a matter for their department.

I believe that councils across the country can help to resolve that problem. I suggest that councils, under the auspices of the Lord Mayor should form watchdog committees with representatives from the local offices of the Department of Social Security, the gas board, the electricity supply services, welfare workers and a general practitioner. The committee's purpose would primarily be to examine individual cases to see what assistance could be

Column 190

given to people in need. To do that job properly, a freephone helpline would be necessary, so that immediate advice could be sought and so that watchful neighbours could report their worries and be sure of a prompt investigation. I imagine that the committee would need to meet once a week during the critical months. To give the issue the full weight that it deserves, I suggest that the committee should be chaired by the chairman of the local authority, the mayor or his deputy.

Such a service would need publicity, and I am certain that the local media would be only too willing to help. Publicity would have a dual purpose. It would serve people in their homes by involving politicians and local council officials, and it would offer them advice. The advice could be of a general nature, such as stating the principles which govern the help that is available-- [Interruption.]

Mr. Speaker : It is 4.16 pm. Will the hon. Gentleman bring now his remarks to a close?

Mr. Hughes : I think that we need the assistance of Dr. Dolittle. I am not excepting myself from the amount of work that the committees would generate. I shall be available at any time to assist with their development and work.

The Fuel and Energy Provision Bill will offer a life certificate rather than a death certificate to the elderly. I request that while we are in the process of using or examining the use--

Mr. Speaker : Order. I shall now put the Question.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Hughes, Mr. Dave Nellist, Mr. Ronnie Campbell, Mrs. Alice Mahon, Mrs. Audrey Wise, Mr. Don Dixon, Mr. Pat Wall, Mr. Terry Fields, Mr. Bob Cryer, Ms. Mildred Gordon, Mr. Harry Barnes and Mr. Tony Banks.

Fuel and Energy Provision

Mr. John Hughes accordingly presented a Bill to require the provision of essential fuel and energy to each home, to guarantee appliances, to prevent the entry to premises without prior recorded legally authorised notice ; to prevent the unauthorised removal of a fuel measuring device ; to abolish standing charges ; to establish local authority monitoring committees ; and for connected purposes : And the same was read the First time ; and ordered to be read a Second time upon Friday 3 November and to be printed. [Bill 210.]

Column 191

Opposition Day

[20th Allotted Day]

Economic Policy

Mr. Speaker : I must announce to the House that I have selected the amendment in the name of the Prime Minister. In view of the number of right hon. and hon. Members who wish to participate, I propose to put a limit on speeches of 10 minutes between 7 and 9 o'clock.

Mr. Dick Douglas (Dunfermline, West) : On a point of order, Mr. Speaker. I hesitate to interrupt the flow of remarks, but when you impose that stricture, will you take cognisance of the fact that on recent occasions Front Bench spokesmen have consumed large proportions of the time allocated? Therefore, if Back Benchers are properly to be constrained by your ruling, Mr. Speaker, the same strictures should apply to Front Bench spokesmen.

Mr. Speaker : As the House knows, I have no authority at the moment to limit the length of speeches made by Front Bench spokesmen. Nevertheless, I hope that what the hon. Gentleman has said will be borne in mind today.

4.19 pm

Mr. John Smith (Monklands, East) : I beg to move,

"That this House condemns the continuing confusion and disarray in the content and conduct of government economic policy ; notes with deep concern the absence of full agreement on economic policy between the Prime Minister and the former Chancellor of the Exchequer ; and deplores the continuing commitment to high interest rates which are causing such harm to industry and to the people of Britain." Since we last discussed economic policy in the House only a week ago, there have been some changes--some changes in the team. It was only a few weeks ago that the Chancellor of the Duchy of Lancaster--the chairman of the Conservative party--gave us the theme for the period to the next election. In his speech--the speech before Agincourt --he said :

"We must work together as a team. A team in the Cabinet : a team in Government."

That was at the beginning of his speech. More attention appears to have been taken of an ominously prophetic quotation towards the end of his speech--in his peroration. He said :

"He which hath no stomach to this fight,Let him depart." We know that there has been a departure--the departure of the former Chancellor. He departed because he found it impossible to work in a team in which the captain does not support the leading player. In his resignation letter, the right hon. Member for Blaby (Mr. Lawson) said :

"The successful conduct of economic policy is possible only if there is, and is seen to be, full agreement between the Prime Minister and the Chancellor of the Exchequer."

We should do the right hon. Gentleman the credit of accepting completely what he said. Although his letter was short, it contained a terse but electric message : no Chancellor can carry out his arduous duties without the full support of the Prime Minister. In the case of the right hon. Gentleman, that support was withheld because of a preference for a part- time unelected adviser who spent only a minority of his time in this country. We are invited

Column 192

to believe--if we are to accept some of the curious answers given in the Prime Minister's Walden interview on Sunday-- that the right hon. Member for Blaby resigned because his head had apparently been turned by tittle-tattle got up by the press and that in that confused condition he had unaccountably and quite irrationally abandoned an unassailable position to leave the Government for no good reason. The truth--as the former Chancellor told us--was that he was entitled to expect "full agreement" on economic policy and proper support. In this curious Government, he neither got it nor was seen to receive it, and not unnaturally he went--a victim of the confusion and disarray which is, in my submission, the inevitable consequence of the subversion of Cabinet government in which the Prime Minister has been engaged for the past 10 years.

There are two crucial areas of economic policy in which the acute divisions of policy are all too sadly evident and destructive of the public interest. Those are the approach to the possible accession of Britain to the exchange rate mechanism of the EMS and domestic economic policy, particularly in relation to the management of the exchange rate. For some time, the official stance has been that the Government would join the ERM when the time was right.

The Deputy Prime Minister restated that in an important speech on Saturday night. He said :

"Thus the position that we took in Madrid--one which the Prime Minister, Nigel Lawson and I all agreed--was the right one. We said yes' we want the existing EMS to be strengthened, yes' Britain should join and will join the exchange rate mechanism. We defined the conditions that would make the time right : Liberalisation of capital movements in the Community, headway in the battle against inflation--itself the crucial objective--and substantial progress on the single market."

He added :

"We committed ourselves to stage one of the Delors report." As we all know, that envisages all member states participating in the exchange rate mechanism.

The right hon. and learned Gentleman went on :

"That was the position in June. As the Prime Minister, Nigel Lawson and I have repeatedly stressed in the House of Commons, it remains the position now. It is of the highest importance that Her Majesty's Government is seen to remain committed to that position, clearly and in good faith."

He added for emphasis :

"It is important--not just for the credibility of our common European commitment but for the economic health and political strength of Britain".

Note how important he envisages good faith--crucial to our economic health and our political strength.

I dare say that that speech in any normal situation would not have attracted as much notice as it did, as many observers would have believed it to be a perhaps enthusiastic, but certainly not inaccurate, statement of what Government policy was thought to be. The Deputy Prime Minister, however, must have felt some twinge that it might be more significant. He apparently consulted the new Foreign Secretary and the new Chancellor of the Exchequer, but he did not consult the Prime Minister ; nor did he issue the speech through his Government office or even through the Conservative party news service. He issued it on plain, unheaded notepaper.

I hazard the guess that the right hon. and learned Gentleman did not consult the Prime Minister or use official or party channels because he did not wish there to be any impediment to the delivery of his message. His

Column 193

instincts were probably correct because, not long before he had spoken the words at 9 pm on Saturday night, on Saturday afternoon the Prime Minister had recorded the interview on the Walden programme, which we saw on television on Sunday.

As we all know, that interview was an event of enormous political significance, a revelation of the Prime Minister's style and approach to the problems of government, as an example of which it could not be bettered. It will be as indispensable to historians as it is to those of us who view these matters in a more contemporary frame. But it is also acutely relevant to the Prime Minister's, and therefore the Government's approach to accession to the exchange rate mechanism. At first the Prime Minister appeared to take the normal line : "We shall join the European Monetary System on the conditions we laid down in Madrid. There was nothing fudged about them"-- curiously, no one alleged that there was anything fudged about them--

"they were quite clear."

Let us recollect that the Deputy Prime Minister had told us--and he was Foreign Secretary at the time--that there were three conditions : liberalisation of capital movements, progress on reducing inflation and substantial progress--no more than that--on the single market. That was not enough for the Prime Minister. On she went, throughout almost the entire second section of her interview, expanding conditions and extending time scales with gay abandon. Not only are exchange controls to be removed, but investment requirements on pension funds and insurance funds in all member states have to go. What is called-- [Interruption.] Hold on. What is called liberal economics--with a small "l" ; I suppose that we might call it Manchester school liberal economics--must be practised in all countries. A "higgledy-piggledy" system in which no one else plays by the rules must be transformed.

It can all be summed up by saying that, if all the other member states have adopted Thatcherite policies and the Prime Minister has personally inspected them all, looked to see that all the economic fingernails are clean, we might, just might, consider joining the exchange rate mechanism.

I observe in passing that the Prime Minister has noticed that Thatcherism has not crossed the English channel--how fortunate they are--and nor is it likely to do so. Why on earth would the other Community countries want to import the equivalent of a £20 billion balance of payments deficit and rates of inflation and interest rates much higher than obtain in their countries? But the clear message that the Prime Minister is giving is that, so long as she is Prime Minister--and that is until the next general election--Britain will not join the exchange rate mechanism.

Mr. Tony Marlow (Northampton, North) : The right hon. and learned Gentleman deservedly has a high reputation. Would he care to enhance that reputation by putting on one side the humour and tittle-tattle and telling the House which of the Government's conditions precedent to joining the ERM --conditions that have been set out at various times by the Government and on Sunday by the Prime Minister--the Labour party accepts and with which it disagrees?

Column 194

Mr. Smith : The hon. Gentleman knows well that we have repeatedly set out the conditions--[ Hon. Members-- : "Answer."] He knows perfectly well that time and again we have proposed that Britain should join the ERM on certain prudent conditions which the Labour party--[ Hon. Members-- : "Answer."] The difference between the two sides of the House is that we are clear about what those conditions are, whereas the Government side-- [Interruption.]

Several Hon. Members rose--[Interruption]

Mr. Speaker : Order. The right hon. and learned Member for Monklands, East (Mr. Smith) is clearly not giving way.

Mr. Smith : We do not know, on the Government side, what the conditions are, or what time scales are in operation.

Mr. Robin Maxwell-Hyslop (Tiverton) : Answer the question.

Mr. Smith : I can understand why the Conservative party wants to-- [Interruption.]

Mr. Speaker : Order. There is great pressure to speak in the debate. Hon. Members should allow the right hon. and learned Gentleman to get on with his speech.

Mr. Neil Hamilton (Tatton) rose--

Mr. Cranley Onslow (Woking) rose--

Mr. Smith : The fundamental problem--[ Hon. Members-- : "Answer."]

Mr. Speaker : Order. The House knows the rules.

Several Hon. Members rose--

Mr. Speaker : Order. I say to the Government Benches that if the right hon. and learned Gentleman does not give way, hon. Members who are attempting to intervene must resume their seats.

Mr Maxwell-Hyslop : Further to that point of order, Mr. Speaker.

Mr. Speaker : Order. There was no point of order. I was reinforcing a ruling.

Mr. Maxwell-Hyslop : Further to the point that was raised with you, Mr. Speaker. May I ask if it is not a fact

Mr. Speaker : Order. No point of order was raised with me. I rose to say, and I repeat, that if the right hon. and learned Member for Monklands, East does not give way, hon. Members who are standing must resume their seats.

Mr. Maxwell-Hyslop : On a point of order, Mr. Speaker. The right hon. and learned Member for Monklands East (Mr. Smith) gave way. Questions were asked and certain answers were given-- [Interruption.] You know as well as I do, Mr. Speaker, that if a Front Bench spokesman--[ Hon. Members :-- "Sit Down."]

Mr. Speaker : Order. The hon. Member for Tiverton (Mr. Maxwell- Hyslop) has been in the House for a long time and knows as well as I do that I am not responsible for questions that are asked, provided they are in order, and answers that are given, provided they also are in order.

Column 195

Mr. Maxwell-Hyslop : Further to my point of order, Mr. Speaker-- [Interruption.]

Mr. Speaker : Order. [ Hon. Members :-- "Name him."] I will hear what the hon. Gentleman has to say if it is a point order, but not if it is a point of argument.

Mr. Maxwell-Hyslop : I assure you that I rise on a point of order, Mr. Speaker-- [Interruption.]

Mr. Speaker : Order.

Mr. Maxwell-Hyslop : I will continue when you can hear me, Mr. Speaker. We are all aware that if an hon. Member is speaking and gives way and is asked a question-- [Interruption.] I will wait until you can hear me, Mr. Speaker.

Mr. Speaker : Order. I get the drift of the point that the hon. Gentleman is making. It does not appear to be a matter of order for me. I suggest that we get on now.

Mr. Maxwell-Hyslop rose --

Mr. Speaker : Order. I ask the hon. Gentleman to sit down. Mr. Maxwell-Hyslop rose --

Mr. Speaker : Order. For the final time, I ask the hon. Member for Tiverton (Mr. Maxwell-Hyslop) to resume his seat.

Mr. Smith : It is a great pity that the House is not currently being televised, so that the whole nation could observe the organised wrecking tactics used by the Conservative party against the Opposition. [Interruption.]

Sir William Clark (Croydon, South) rose --

Mr. Speaker : Order. I repeat to the House-- [Interruption.] Leave it to me, please. There is great pressure to speak today. I ask the House to listen without interruption. to what the right hon. Member for Monklands, East (Mr. Smith) is saying.

Mr. Smith : The hon. Member for Northampton, North (Mr. Marlow) asked me about our conditions. Perhaps I may be allowed the opportunity which I have been trying to take for some time, of addressing that question, despite deliberate wrecking tactics from Conservative Members. The conditions applied by the Government will frustrate our efforts to join the exchange rate mechanism. The conditions that the Labour party attaches, apart from the important question of joining at the effective rate, are that there should be adequate swap arrangements between the central banks, that there must be a well-organised regional policy within the Community, and that the thrust of the economic policies within the Community should be for growth and not for deflation.

That approach has not only been approved by the other countries in Europe, but was substantially approved by the resolution of the European Parliament last week, for which the Conservative MEPs voted. Those MEPs, of course, have a problem in the European Parliament ; no other MEPs will have them as part of their group. They feel a little detached from the Conservative party on this side of the Channel. No wonder! Perhaps "semi-detached" is an expression that may carry more menace for them.

In her interview, the Prime Minister's clear message was that she had no intention of joining the exchange rate

Column 196

mechanism. She said of the timing that there had to be major changes by our errant partners--all the people who do not play by the rules and who are up to all kinds of dirty tricks. She said : "Now all that should happen during what is called the Delors first stage, the first stage coming towards monetary union. I hope it will but other countries have to catch up a long way before it happens."

As she knows, there is no time limit to stage 1 of the Delors plan and she knows that the deadline for the single market is 1 January 1993. In so far as she claims that her conditions relate to completion of the single market, it would hardly be likely that she could make the judgment on their performance--a crucial part of her approach--before 1 January 1993. Let us remember that the last date for the next general election is June 1992.

I submit that the only reasonable conclusion to be drawn from that seminal interview is that there is no question of the Prime Minister agreeing to join the exchange rate mechanism before the next election. That position is hopelessly at odds with the view of the Deputy Prime Minister. Is it the Prime Minister's policy that the Government do not anticipate joining the exchange rate mechanism? Is that the view of the Deputy Prime Minister, the Foreign Secretary or the new Chancellor of the Exchequer? The new Chancellor has an opportunity today to spell out his policy. If he does not, I fear that confusion will remain.

Let me remind the House of that crucial sentence in the speech of the Deputy Prime Minister :

"It is of the highest importance that Her Majesty's Government is seen to remain committed to that position clearly and in good faith."

The Prime Minister's response may be clearer than the Deputy Prime Minister anticipated. However, does he believe that it can conceivably accord with the good faith that he believes to be of the highest importance and which is so important to our economy and our political strength? If it does not, can he accept what the former Chancellor could not--that a Government policy is undermined, and seen to be undermined, by the Prime Minister on national television? When the Deputy Prime Minister refers to good faith, I believe that he has in mind good faith within the Government--rare though such a commodity must be--and good faith in relation to the other member states in the Community. It is worth reflecting on what those member states thought when they considered the patronising tone of the Prime Minister's Walden interview. We can rest assured that there is one person who will not be worried by that. If the Prime Minister can feel sorry for all 48 other countries of the Commonwealth, why bother about a mere 11 in the European Community?

I referrred earlier to divisions on domestic economic policy. To be fair, I believe that all members of the Government began with much the same position. In those early days, when monetarism was unchallenged within their ranks, the belief was firm that the exchange rate could be left to the market and that just controlling the money supply would keep inflation in check. Even the former Chancellor was in line then.

In a famous reply on 3 July 1980, when asked by my hon. Friend the Member for Liverpool, Riverside (Mr. Parry) what mechanism existed for medium or long-term alteration of the exchange rate, the former Chancellor replied simply, "Market forces." That was the era of free floating when it was said that there was

Column 197

"no stable or reliable relationship between interest rates and the exchange rate."--[ Official Report, 4 November 1980 ; Vol. 991, c. 537. ]

However, the former Chancellor learned by hard experience. He saw the irrational and wild oscillation in the exchange rates and began to move towards the position that he had adopted by the time of his resignation-- that is, managing the exchange rate and participating in international agreements to stabilise exchange rates among the G7 nations through the Plaza and Louvre accords.

On the basis of his experience, the former Chancellor began increasingly to realise the potential value of participating in the exchange rate mechanism. Clearly he moved a long way, but the Prime Minister has not. The lady did not turn. She believed and she still believes, as she has told the House, "You cannot buck the markets." That was her reason for demolishing the Chancellor's policy of shadowing the deutschmark. It was also the reason why she summoned Sir Alan Walters back from the United States to be her adviser earlier this year. She apprehended that two issues were coming to the forefront on which, if she did not strengthen her position, she might lose out. Those were the arguments over the exchange rate mechanism and the desirability of seeking to manage the exchange rate. The Prime Minister also knew, as she told us eight times on Sunday, that the former Chancellor was "unassailable". I could hardly believe it when she said that again today during Prime Minister's Question Time. However, it was precisely because the Prime Minister assessed the Chancellor as unassailable that she set out to undermine him. Only the truly innocent believe that Sir Alan Walters was just another adviser--one of those people who advise while Ministers decide. He was more than that. He was a crucial ally of the Prime Minister. In the knowledge of his fierce opposition to joining the exchange rate mechanism, frequently and publicly expressed on both sides of the Atlantic, he was recalled to serve in No. 10. It did not take long for Sir Alan to become the alternative Chancellor, and we know the sad eventual outcome of all that. The new Chancellor will not have Sir Alan around.

Mr. David Tredinnick (Bosworth) : Will the right hon. and learned Gentleman give way?

Mr. Smith : No ; I hope that the hon. Gentleman will forgive me. If the new Chancellor seeks to develop a policy of which the Prime Minister does not approve, he will encounter the same problems as were encountered by the former Chancellor. The new Chancellor must make up his mind, and he should tell us today whether he follows the previous Chancellor's policy or whether he takes sides with the Prime Minister and believes that the markets cannot be bucked.

While the new Chancellor carries out his duties, I urge him to be careful about the Prime Minister's praises. If she calls him brilliant, he should be wary. If he hears the words, "brilliant, brilliant", especially if the call is uttered shrilly, he should be worried. If he is ever described as unassailable, he should start to tidy his desk.

There are echoes of the Westland affair in all this. Once again, there is a serious dispute over a European policy

Column 198

question. The right hon. Member for Henley (Mr. Heseltine) wanted a European solution to the Westland affair. The Prime Minister did not. The right hon. Member for Henley was undermined by the leaking of a Law Officers' letter--a process assisted by unelected officials in No. 10. Business as usual, one might say.

In the Westland affair, the Prime Minister lost two Ministers. In the present crisis, she has lost thus far only one, albeit the most senior Minister in her Government. The Deputy Prime Minister, who lost his old job in the reshuffle earlier this year, should take especial care. So should the new Chancellor.

The new Chancellor's crucial training for his new post was not so much the two years that he spent as Chief Secretary to the Treasury ; rather, it was his three months as Foreign Secretary. After he had negotiated an agreed communique with the representatives of the other 48 Commonwealth countries at Kuala Lumpur, his efforts were completely overturned by the Prime Minister's lengthy denunciation of the views of those very countries.

As we approach the Council of Europe meeting to be held in Strasbourg in December, the new Chancellor should be especially vigilant ; otherwise he might have been Kuala Lumpured in October only to be Strasbourged in December.

As the new Chancellor faces the task of steering British economic policy over the next year or so, I beg him to abandon the foolish notion that a balance of payments deficit now running at an annual rate approaching £20 billion does not matter provided that it can be financed. We know to our cost the price of such financing--interest rates of 15 per cent. which are doing such deadly damage to business and industry and causing such misery for home owners from one end of the country to the other.

Sooner or later--I earnestly hope that it will be sooner--the balance of payments deficit must begin to be reduced. In debate after debate, and only last Tuesday, Labour Members have urged the urgent need for an industrial strategy to begin the task of refashioning and rebuilding manufacturing industry. Manufacturing industry is the indispensable wealth creator and the crucially international tradeable part of our economy.

It is interesting that, whenever we urge the adoption of an industrial strategy for manufacturing industry, the Conservatives do not believe that that is a policy. That says far more about them than it does about us. Right across the political spectrum, people are deeply worried about the future of our industry. Those who work in it, manage it, and advise it are all deeply worried. The only people who do not seem to worry about the crisis in manufacturing industry--it must be a crisis, if we have a £20 billion balance of payments deficit--are the Conservatives, and the Ministers responsible for the conduct of our economic policy.

We will urge this alternative again and again until the message gets home-- not only the Labour party, but the whole of Britain wants a strategy for manufacturing industry.

Next Section

Home Page