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Although demand has remained constant, import penetration has continued to be high and British industry has not been able to meet the needs of its home market. It will not be sufficient for us to increase our export success if we cannot supply our home market to a considerable extent.The Government should be investing in training a more skilled work force. Yet some of the most significant cuts outlined in this year's public expenditure statement were cuts in training--in the budget of the Department of Employment. The Government express pride that they have reduced expenditure in this vital area when they should be increasing expenditure on training.
The Government claim that because fewer people are out of work, we do not need as much training. What nonsense. The main aim of training should be to provide those in employment with better skills. We need to train unemployed people so that they can get jobs, but that is not the end of the story. There is an urgent need for investment in training. Industry must play a part in that investment but it will not take place unless the Government make more effort to play their part in the process.
We shall need much more transport investment than the Government are committed to, to enable industry to get to the market--especially the industries of the north of England, Scotland and Wales, which will be denied effective access to the Channel tunnel and east coast ports unless we invest more in transport. The measures are available. The Government have the means at their disposal. They have the means to turn round the balance of payments. If those measures can be combined with the lowering of interest rates we shall have some prospect of improving our economic situation. The Queen's Speech does not live up to that challenge.
On Europe, the Gracious Speech speaks with the voice of a Prime Minister who cannot accept any external discipline on her policies. Was it not striking that, when the former Chancellor revealed in his resignation speech that he had proposed to the Prime Minister that there should be a more independent central bank, the Prime Minister moved swiftly to make it clear that the proposal had been consigned to the wastepaper basket? She is a Prime Minister who can brook no discipline over her conduct and control of power. She demands the freedom to devalue the currency and to print more money--the freedoms that would be restricted if we became full members of the European monetary system and had a more independent central bank, whether British or European. Why does the Prime Minister want the freedom to devalue the currency and to print money? It shows that she rates the retention of power more highly than the achievement of policy objectives that she is supposed to hold.
The Liberal Democrats have tabled an amendment to the Loyal Address. I hope that many hon. Members will find it attractive, because it moves on from the vague phrases of the Gracious Speech and sets out clearly our aims-- that we ought to have
"a clear commitment to early entry into the exchange rate mechanism to provide a firm framework for the exchange rate and the battle against inflation, to permit lower interest rates and to ensure that this nation is the leader rather than a spectator in the development of European unity."
I expect the hon. Member for Clwyd, North-West (Sir A. Meyer)--the stalking horse--to be first through the
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Lobby in support of the amendment. Perhaps he could conduct his campaign meeting in the Division Lobby if other hon. Members who support him go with him.I fear, however, that the pressure on some Conservative Members and the letters to their constituency chairmen, may mean that some of them dare not vote in favour, even though it is such an explicit commitment to something of which the Government were once in favour. Therefore, I am prepared to offer a certificate to any right hon. and hon. Member who comes through our Lobby tonight, to say that it will not be taken as a sign that they intend to vote for the Prime Minister in the subsequent secret ballot. The certificate can be sent to their constituency chairmen to protect Conservative hon. Members. I hope to see many Conservative Members in our Lobby. I expect to see the right hon. Member for Blaby (Mr. Lawson) and the right hon. Member for Old Bexley and Sidcup (Mr. Heath). The right hon. Member for Blaby has spoken recently in favour of the principles behind the amendment and the right hon. Member for Old Bexley and Sidcup has been in favour of them for many years.
I do not see why the official Opposition should not vote for the amendment. I welcome their conversion, and particularly that of the Labour Front Bench to the European monetary system.
The right hon. and learned Member for Monklands, East (Mr. Smith) did not say whether he was prepared to support the amendment. He did not say anything about the EMS in his speech. Perhaps the conversion process is not complete, and I am asking too much. It is not too much to ask the hon. Member for Durham, North (Mr. Radice), but it may be too much to ask the hon. Member for Dagenham (Mr. Gould) to vote in favour of the principle that we should get into the European monetary system quickly.
I hope to see many of those right hon. and hon. Members in the Division Lobby tonight--or are they prepared to sit back and watch Britain miss the boat again, as it has done so many times on European issues?
I think that discussions on this matter may be taking place on the Opposition Front Bench now--
Mr. Ron Brown (Edinburgh, Leith) : Will the hon. Gentleman give way?
Mr. Beith : I would rather save any intervention for the right hon. and learned Member for Monklands, East. Perhaps he is able to clarify the position, but I think that discussions may still be continuing as to whether they are allowed to vote for the amendments tonight--
Mr. Ron Brown : Will the hon. Gentleman give way?
Madam Deputy Speaker : Order. The hon. Gentleman who has the Floor has made it clear that he does not intend to give way at this stage.
Mr. Beith : Since the debate on the Gracious Speech began a few days ago, and since the opening speeches, there have been further dramatic changes in eastern Europe. The Prime Minister welcomed those changes, as we all did. Indeed, she goes further--she claims credit for most of them, and that may seem strange to the people in eastern Europe who have fought so hard for many years. What a strange picture that conjures up. We all welcome the changes : multi-party politics ; the prospect of coalition
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Governments ; decentralised power ; protection for human rights and new constitutions ; demonstrations in the streets ; strikes ; trade union activity in support of political causes ; freedom of information, including press conferences given by the security forces ; church leaders becoming involved in politics ; challenges to the existing party leadership. The Prime Minister welcomes all of them, but only as long as they do not happen here. Those things should also be happening in Britain.In eastern Europe there is a move away from repression towards liberal democracy. There is a long way to go, but it is an important move. In Britain, under this Prime Minister, we are moving in the opposite direction.
5.12 pm
Mr. Edward Heath (Old Bexley and Sidcup) : I offer my warmest congratulations to my right hon. Friend the Chancellor of the Exchequer on his appointment. He holds one of the three great departmental offices in Britain, and that is an immense responsibility.
I cannot help wondering what the millions of people who will see the Chamber tonight on television will think. People with mortgages, who find that the interest rate has almost doubled since they took out their mortgages--what will they think? All those people who have to give up their houses, or have them seized from them--
Mr. Barry Field : Will my right hon. Friend give way?
Mr. Heath : No, I shall not. I propose to carry on my own speech in my own way throughout.
What do those individuals, whom we have encouraged to start their own enterprises, think as the bankruptcy rate goes ever higher? What did the business men from larger enterprises think, when they left the Confederation of British Industry conference, about their future and what the Government are doing about it?
The public will watch a knockabout show once, but they do not usually go back to the same show again. They are not interested in what the Labour Government were doing from 1964 to 1979, or in what the Government were doing 10 years ago, as detailed by Opposition Members. They want to know in detail what their future will be, and how they should respond to it--that is natural. I suggest that it is our responsibility to deal with the problems in that way. When my right hon. Friend the Chancellor refers to the past, or when Opposition Members intervene on that basis, they should be accurate. It is not accurate to say that the regional development schemes put forward directly after the second world war and carried through until the present Government, were a failure. It is complete nonsense. I see my right hon. Friend the Chancellor shaking his head, but I must tell him that it is indeed nonsense.
One of the most successful parts of British industry at the moment is the high technology industry in new towns in Scotland, and Scotland should have every credit for that. That industry would not be there without the incentives that were offered to business men to go there. The decisions as to which industries went to those places, how they set up firms and how they are run were taken by business men and not by Governments or Departments. We gave them the incentive that made it profitable to carry on a business and to provide jobs. I ask my right hon. Friend the Chancellor not to repeat accusations which can
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so easily be disproved. I am sorry to see that he still shakes his head--he took no part in those operations and obviously did not see what happened.The hon. Member for Tyne Bridge (Mr. Clelland) mentioned inflation in 1973. It would have been more accurate to point out that we had to cope with a quadruple increase in oil prices which followed us through the 1970s, and the highest price for imported raw materials that we have ever known in Britain. It is ridiculous to try to learn lessons from that unless we take account of all the circumstances as they occurred.
There are two things which disappoint me in my right hon. Friend the Chancellor. First, he has boxed himself in on two vital aspects of policy. One is interest rates, which are said to be the only way to deal with the economy, and the other is going for lower taxation than we have at present. Most observers analysing the situation agree that the sudden descent to a 25 per cent. tax rate by the previous Chancellor had a considerable amount to do with the position in which we now find ourselves. There is a lesson to be learned from that.
Mr. Neil Hamilton (Tatton) : Will my right hon. Friend give way?
Madam Deputy Speaker : Order. The right hon. Member made it clear at the beginning of his speech that he was not prepared to give way.
Mr. Heath : Until my right hon. Friend's predecessor did so, no Chancellor has declared in the House that he would not increase taxation under any circumstance and that he was determined to reduce it. Other Finance Ministers recognise that circumstances may arise when it is necessary to increase taxation so as to influence the economy in the way that they wish. I am sorry that my right hon. Friend has boxed himself in on those two issues, which are important for the handling of the economy.
The other methods of handling the economy which my right hon. Friend the Chancellor dismissed so bluntly are limitation of credit and influence on the amounts of credit available. It is untrue to say that that policy was a failure--at the time, it was immensely effective. My right hon. Friend says that he no longer has the means to do that, but I disagree with him. Perhaps the Governor of the Bank of England no longer exerts influence in the City. That may be why my right hon. Friend's predecessor put forward the argument that there should be an independent Bank of England, similar to the independent Bundesbank, but I do not accept the whole of that argument. I believe that it is still possible for the Governor of the Bank of England to use his influence in the City. People say that that is no longer possible because of the abolition of exchange control, but that is a simplification of the situation. There are many foreign banks in London now, but if the Governor wishes to exert his influence they have to accept it. They know perfectly well that they are licensed, and if they do not do as the Governor insists their licence will be in danger. [Hon. Members : "Rubbish!"] I ask my hon. Friends to stop their chattering. If they think it is possible to live here and get the credit they want anywhere in the world, let my right hon. Friend the Chancellor try doing it--it just does not work in the way that has been described. If he was determined to deal with the excess of credit through action by the Governor of the Bank of England and allied means, I believe that he could be effective. He has asked for proposals. He should
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consider that one in detail and not dismiss it out of hand as having failed for the first 40 years, since the war. We should also consider other means of dealing with the problem.There are two aspects of the emphasis on the repayment of debt that I wish to mention. First, if there is repayment of debt, the money goes back into circulation. It is the repayment of gilts. Unless it is borrowed to the same extent, that puts pressure on the economy as a whole. It is bound to do so. Everyone with whom I have discussed the matter agrees. That is another issue that could be dealt with perfectly well by my right hon. Friend the Chancellor.
The second thing that worries me is that those borrowings were made by our predecessors to insure for our future. The boast now is that we are not doing that. We are not insuring the future for other generations. Anyone who has travelled around Europe and North America knows that Britain has the worst infrastructure in the western world. I welcome my right hon. Friend's contribution through the expansion that he announced in his Autumn Statement, but when we compare that with the rate of inflation--and when we compare what that money can achieve with what is required--we see how much is lacking. I stress the comparison with how much is required. That is why the citizen says, "Yes, I get all these increases, and I am told that there are billions of pounds more, but my needs are not being met." Yesterday, the Secretary of State for Health mentioned my constituency and said that a consultant had complained. In fact, the management committee of the Bexleyheath health authority complained. For the next three months, until next year, only emergency cases are being taken for operations. My constituents say that that is not good enough. In the summer, my attention was drawn to the case of a lady who has lost the sight of one eye and whose sight in the other is failing. Her doctor told her that he would consult the hospital and get her an appointment. She duly got one--for 16 June 1990.
Mr. Brian Sedgemore (Hackney, South and Shoreditch) : That is unacceptable.
Mr. Heath : I have to point out that that lady is 95 years old. Despite what we are doing, the genuine requirements of the citizen are not being met. We as a party must show that we are following a course which will ensure that they are met.
There is another fundamental fallacy here--that everyone must become more efficient. The usual answer is to pluck someone who knows nothing about the job and put him in, saying that he is now a manager. In the hospital service, the more efficient one becomes--in my constituency, Queen Mary's hospital is immensely efficient and acknowledged to be so--the more money one requires, as more patients are seen and they spend a shorter time in hospital. The result is a need for more money-- [Interruption.] I am sorry if my hon. Friends are not interested in Bexley-- [Hon. Members :- - "We are."] I have described a fundamental misunderstanding concerning the NHS. Another thing that worries me immensely about the attitude towards money concerns privatisation. I imagine that most right hon. and hon. Members were horrified when, after the Deal tragedy when the Royal Marines band was bombed, we heard that the guards had been privatised. To me, that is utterly unacceptable. As a party,
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we have always believed in effective defence. If someone is in the Army, his job is to defend himself and not to get private citizens to do it, even in peace. I do not believe that the change is justified, and I am even more horrified to learn the extent to which it is going on. This cannot possibly continue if we are to have an effective answer to the terrorism that we face.For my right hon. Friend the Prime Minister to say, "Don't blame us for not having a proper military guard--blame the IRA for attacking us" is not justified in a war of terrorism against the British people. We cannot say, "They will not go for the soft spots," because we know that they will go for any spot they can find. That is clear from recent experiences in Europe and especially in Germany. Italy and Germany have dealt with terrorism. We have had it for 20 years, but we have still not dealt with it, and the information that we have for dealing with it is inadequate, as proved by the number of occasions when we have been taken off guard and people have suffered. That is what is happening in Northern Ireland, in mainland Britain and in Europe.
Mr. Ian Bruce : Will my right hon. Friend give way?
For the past 10 years I have urged that this country should become a full member of the European monetary system. I still urge that course-- [Interruption.]
Mr. Giles Radice (Durham, North) : On a point of order, Madam Deputy Speaker. Is it right for Conservative Members who do not like what the former Prime Minister is saying to barrack and heckle when they are sitting directly behind him?
Madam Deputy Speaker : The hon. Member is quite right. I hope that the House will settle down. We need only one debate at a time in the Chamber.
Mr. Heath : My right hon. Friend the Chancellor says that he wants to keep inflation down. He is absolutely right to want that but the policies being pursued at present are increasing inflation. Becoming a full member of the European monetary system even five years ago would have helped to decrease inflation. Looking back five years, on the criteria that have been laid down it would have been perfectly possible for us to join.
Mr. William Cash (Stafford) : Will my right hon. Friend give way?
Mr. Heath : I have already said that I shall not give way. Had we been in the European monetary system, the pressure on inflation would have been far greater. When the Prime Minister lists so many conditions that have to be met, she is saying that we are worse than the lowest of the 11 who have accepted the situation-- [Interruption.] She is saying that we cannot go in, but that they can go in and be successful. She is saying that Germany can be immensely successful, that France can be successful, that the others can be successful but that we cannot and that we must wait until the last moment.
Then we are told that joining the EMS affects our sovereignty. Christopher Johnson, one of the best commentators on economic affairs, said in an article :
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"if sovereignty is nothing more than the right to make one's mistakes in ignominious isolation, then it is hardly a prize worth having."That is right.
Mr. Ron Brown (Edinburgh, Leith) : Will the right hon. Gentleman give way?
Mr. Brown rose--
Madam Deputy Speaker : Order. The right hon. Member for Old Bexley and Sidcup (Mr. Heath) has made it absolutely clear many times that he will not give way.
Mr. Brown rose--
Mr. Heath : I assure the hon. Member that I am not a stalking horse in any sense.
Now we are told that to be isolated is to be leader. I can say in all modesty in those circumstances that I must be the greatest leader of all time--and it is not a position that appeals to me. It is obvious that the greater part of our organisations and the greater part of the Cabinet believe that we should already be in the EMS, that we are being held out for only one reason and that the quicker we get in, the better.
I was glad to hear the Foreign Secretary say that we would not go back to an EFTA position. He had to say that only because the whole line of the Bruges speech was about going to EFTA. Chancellor Kohl and President Mitterrand saw that clearly, and that was the reason for President Mitterrand's statement. They are determined to go on their own, regardless of us, unless we are prepared to make our contribution to a full Community.
For me, a full Community is a situation in which we do all that we can together for our own advantage. Why should we have turned down help for our old age pensioners merely so that we could say, "No, we are not forced to do it, so we shall insist on doing it or not doing it ourselves"? The result is that we do not do it, and we all suffer. I believe that the great majority of people in Britain want us to be in a Community in which we can share as far as we possibly can. As the hon. Member for Berwick-upon-Tweed (Mr. Beith) said, the developments in eastern Europe have been remarkable, and we cannot judge how it will all finish. Already the question of the unification of Germany has arisen. I use the word "unification" rather than "reunification" because reunification raises the question of going back to pre-1939 boundaries, and that strikes fear into the hearts of the Poles and Czechs. On unification, however, Chancellor Kohl has today set out the three stages on which he believes that it can be achieved. He obviously cannot set a timetable, but he has stated what West Germany will do.
Mr. Skinner : Who follows Kohl?
Mr. Heath : At present, a large part of the German public.
Mr. Skinner : The right hon. Gentleman knows the meaning of my question.
Mr. Heath : We shall see what happens after the next election. If anything, the SDP is more strongly in favour because it does not believe that eastern Germany will be
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Christian Democrat. It believes that it will be non-Communist but Socialist, and that would greatly increase its influence. So it is a united country wanting to have Germany united.Mr. Heath : I shall explain why to the hon. Member for Bolsover (Mr. Skinner), who always listens to me with great patience. Many people in Europe and in the United States will be intensely worried about such developments and from the defence point of view some will ask whether it is a clever move by Mr. Gorbachev to get eastern Germany into a position from which it can tell western Germany, "Yes, we will join you, if we both become neutral." The impact of that on NATO and on the defence of Europe would be immense, but I do not believe that he is as clever as that. When we look at the other situation, in which western Germany is still in NATO and in the Community, people then worry lest Germany have a dominant economic position in the Community and in Europe.
The only answer to the fears of those in Europe and elsewhere about a united Germany is to have a stronger, more tightly bound Community. That involves all aspect, of the Community. It also involves Britain taking a lead now and playing a constructive part in the formulation of the Community and its policies to ensure that a western Germany, even an enlarged united Germany, cannot be considered a danger to the rest of us. It concerns those of us who lived through the 1930s and who fought through six years of war as much as anybody else that that should not happen. Nor are we prepared to see a situation in which we again split up into a mass of little nation states. There are those who say, "Hold up Community progress, let eastern Europe get its own house sorted out individually, and then we shall be a nice lot of individual countries again." I am not prepared to accept that. Nor do I believe the British people are willing to accept it. The risks are far too great.
I repeat that the answer is a stronger, more united Community, and we must play our part in achieving that. It has proved to be the attraction for eastern Europe and is one reason why they have thrown off Communism. They want to adopt a system closer to that of the Community and they want to get the benefits that they see. The people of East Berlin and East Germany saw that more clearly than anyone else because it was going on next door in West Berlin and West Germany.
For those reasons, I urge the British Government and the Chancellor to play their part in going for full membership of the European monetary system. If we have a common currency, West Germany will be more tightly bound into our system. If we have a central bank--with, as I believe, democratic control-- western Germany, or a united Germany, will be more tightly bound into the Community and into our continent. That is the next stage. We have no time to waste if we are to go on to help the people of eastern Europe when they become democractic. We can help them. The Americans will not like giving them a great deal of investment--they never have--but we can help. We must not, however, allow that to take our minds off the problems of the Third world, which is the other big danger because the problems of the Third world are emerging again. In Ethiopia there are again hundreds of
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thousands of starving people. The Third world still needs the attention of the Community, but we must become more prosperous so that we can help eastern Europe in its development. Above all, we must have a Community which is tightly bound together so that later we can consider the future membership of what will then be free and democratic countries.5.36 pm
Mr. Alan Williams (Swansea, West) : It is more of a pleasure to speak following the right hon. Member for Old Bexley and Sidcup (Mr. Heath) as a speaker than as a Minister. When I went to the Department of Prices and Consumer Protection in 1974, I had to pick up the results of the accelerating inflation that the right hon. Gentleman had left us, with his threshold agreements.
Indeed, it amused me to hear the Chancellor trying today--as did the Secretary of State for Trade and Industry last week--to rewrite history, trying to pose horrors of the 1960s as being implicit in the programme that the Labour party is putting forward. The Chancellor referred to the Department of Economic Affairs and to the National Enterprise Board. We heard the same last week from the Secretary of State for Trade and Industry, who said :
"Does the Labour party remember the Department of Economic Affairs?"
I remember it. I was in it. He went on :
"Does it remember the National Enterprise Board? They, too, were set up to develop strategies and identify priorities for industry'. Where did they leave British industry?"--[ Official Report, 22 November 1989 ; Vol. 162, c. 122.]
I am happy to tell the House where they left British industry. At today's prices, they left British industry with a balance of payments surplus of £5 billion a year, and the Conservatives were the beneficiaries of that. Not only did they leave the advantage of the equivalent at today's prices of a £5 billion a year balance of payments surplus, but they did it having inherited from the Conservatives a deficit of £5 billion. So if the Government want to go back to the days of the Department of Economic Affairs and the National Enterprise Board, we should not run from that but run to the record books and throw the figures back at the Government. I am today having a fascinating maiden speech experience, in that I am making my first Back-Bench speech after 22 years on the Front Bench, where I served mainly in economic areas. I therefore feel it appropriate to contribute on a narrow aspect of the issues that are dominating our worries today. I want to talk about what I see as the squandering of a unique and unrepeatable opportunity that Britain had during the 1980s.
I want to fit the events about which we are now worried into a longer-term context, as I genuinely believe we are seeing the return to a problem that has beset the United Kingdom since the second world war--the stop-go syndrome. For the Chancellor and other Ministers to describe what is happening now as a blip either reveals that they have been grossly misled or is an attempt by them to grossly mislead.
We are facing a balance of payments crisis of unprecedented proportion. We must remember that we emerged fom the second world war into an era of balance of payments crises for reasons that I do not need to go into, and which most of us understand. So intransigent were the problems that we faced, as far back as the mid-1940s, that for the next 35 years they beset successive
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Governments. Every time there was a bid for growth, the drawing in of raw materials and semi-manufactures led to pressure first on the balance of trade, then on sterling, then on the Bank of England to inervene, next on the Government to raise interest rates and then on the Government to introduce credit squeezes. After the go, the stop would inexorably be applied, and we would be in a period of deflation.That was bad enough, but the consequences produced what we have all come to know as the British malaise--low investment, bad industrial relations and low growth. They produced low investment because manufacturers were determined that they would not be caught again. They were told by successive Chancellors and Prime Ministers that if they invested, this time the dash for growth would be the real one, and then subsequently, as the brakes were applied, they found that they had surplus capacity and high servicing charges. As a result, they became cautious and in turn created the second problem--poor industrial relations. They began to use labour as a capital substitute. As we went for growth, instead of investing, as our competitors were doing, we took on labour and started overtime. When there was a cut back and deflation, we cut labour and overtime. Consequently, the era of industrial confrontation was born. Out of that hire and fire economy emerged the British sickness--low investment, bad industrial relations, lack of skills and low growth. While we were trapped in that syndrome, our competitors--the United States, the EEC and Japan--were enjoying continuing growth. Every time we touched the accelerator and our gear slipped--as inevitably happened as the brake had to be applied--the gap between us and our competitors widened.
Nowhere was that gap revealed more clearly than in the car industry. Over a period of 30 years, as was revealed in The Sunday Times this weekend, car production in western Europe increased by 375 per cent., whereas in Britain it increased by 15 per cent. Until the late 1970s, we were always bedevilled by the threat of a balance of payments crisis and of stop-go.
Then came a unique fortuitous but finite opportunity for us. It came in the form of North sea oil which brought the double boom of resources, but more importantly--although this has tended to be ignored or not recognised--a shield for the first time against the very balance of payments pressures which had forced every Chancellor to apply the brake.
For the first time, we had time--we had a decade. During those 10 years, which are just expiring, as a result of the overseas sale of North sea oil and gas and the import substitution that it represents, we have had a balance of payments windfall of £128 billion. It was our only chance to go for growth. In addition, it provided resources for the first time-- which the Government could use if they wished--of an extra £70 billion in windfall revenue. That money could have been used to modernise industry and update technology, for innovation, growth and investment.
The Government inherited that possibility in 1980, at a time when manufacturing investment in Britain was already at the highest level it had ever attained in the entire post-war period. They had the platform on which to build. Manufacturing investment was at an unprecedented high
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and the resources were available to boost that investment further. What more could any British Government have asked for? What an opportunity was presented to them.How did they use that opportunity? The guilty man is sitting on the Treasury Bench. How did the present Leader of the House use it in what he described as his first "opportunity Budget"? This Government, like so many Governments, made their errors in the first six months and spent the rest of their term trying to undo them.
In his first Budget, the present Leader of the House unleashed policies that cut manufacturing industry by 20 per cent. and manufacturing investment by 41 per cent. We had the resources to sustain output at that time, but he cut it. For the entire life of this Government, while they have had that finite resource, instead of manufacturing investment soaring it has only just got back to where it started. In the process, that manufacturing industry, which, as I said, had already been cut back by 20 per cent. in capacity, lost £18 billion in investment which it would have had if the Government had sustained the level of investment applying when they took office. No Government since the war have ever had such an opportunity. Now, 10 years on, the Thatcher miracle can be seen for what it is--the miracle that never was. Despite that £128 billion balance of payments windfall--it is important to emphasise that figure--at the end of this year the Government will have a net balance of payments deficit for the decade of £15 billion. The existing £15 billion deficit and the £128 billion balance of payments bonus that they had show that the Government have under-produced goods and services on a monumental scale-- £143 billion. That is the cover that they have had from the North sea. It is the price which we have had to pay for the destruction of industry and the cutting of investment. The other day the Secretary of State for Trade and Industry had the cheek to say that there was no supply side problem--there is just a gap of £143 billion.
Now oil is declining. Britain has never known failure on such a scale. Future historians will look with wonder and horror at the Government's failure and at the failure of the right hon. and learned Gentleman the present Leader of the House and the Prime Minister to seize the one and only opportunity we have had since the war to break out of the vicious stop -go cycle. It was not a decade of lost opportunity because "lost" implies that there might have been an element of chance in it. It was a decade of squandered opportunity. The Prime Minister and the Leader of the House are like a family who won the football pools and two years later were bankrupt. Britain won the pools when we found North sea oil and that £128 billion-worth of resources for the country. However, because of doctrinal bigotry, lack of understanding, refusal to consider alternatives and a neglect of the evidence, the Government in their blindness allowed the North sea oil--all the £128 billion--to run back into the sand from whence it came. Now, £128 billion later, we are back where we started : there is pressure on sterling, a brake on growth and firms are revising investment programmes downwards.
The peak riches of the North sea are behind us. There is no rescue for the Government. I submit that we are seeing not an isolated blip, but a return to that inexorable cycle : thanks to the Government's ineptitude, we are back on to the old stop-go treadmill.
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5.50 pmMr. Michael Grylls (Surrey, North-West) : The right hon. Member for Swansea, West (Mr. Williams) was a very distinguished and charming Labour Minister. He has made a very interesting speech, as we would have expected ; he has been a friend of mine in the House for some time and I hope that he always will be. Although his historical analysis was right when he referred to the British disease of the 1970s, he was on dangerous ground when he carried his analysis through to the present day.
Some Opposition Front-Bench spokesmen, including the right hon. and learned Member for Monklands, East (Mr. Smith) today and the hon. Member for Dunfermline, East (Mr. Brown) in the debate on industry last week, have tried to decry what some people, although not I, have described as the British miracle. It was foolish to do that, and inaccurate.
It would be more accurate to refer to the changes that we can contrast today with the scene described by the right hon. Member for Swansea, West. Those changes have occurred not as a result of a miracle, but thanks to sensible and practical policies. Those policies have been followed in many other countries with great success over the years. However, somehow Britain failed to follow them in the decades before the 1980s.
We owe a great debt of gratitude to my right hon. and learned Friend the Leader of the House. When he was Chancellor of the Exchequer, he laid the foundation for the first conquering of inflation and for the many tax changes that he introduced on the supply side. Those have been important factors in strengthening the British economy.
I know that this is a partisan debate ; that is normal, and probably right. However, it does not do the debate any good for the Opposition to decry any or all of the Government's achievements. Perhaps people do not want to give the Government credit, because that is not within the partisan mood, but they should at least give credit to British industry, which has changed itself beyond recognition within the past 10 years. That does not mean that everything has been done, because there is plenty more to do. Perhaps there should be almost a bipartisan view about what needs to be done in future.
The right hon. Member for Swansea, West tried to accuse my right hon. and learned Friend the Leader of the House, a former Chancellor of the Exchequer, of squandering an inheritance. That is lunacy. The right hon. Gentleman is normally a very good debater, but such accusations do him no good.
We must consider the fact that British industry has quadrupled its productivity. It has doubled its profits, and 1,500 new firms are starting up every week. Before, we were losing small firms. There was a net loss, but there is now a net gain. That is the sign of a very successful economy.
No doubt Opposition Members would say that that is not enough, and I would agree. I want to see British industry double and treble those figures. However, if we continue the policies that we have pursued over the past 10 years, we are entitled to state that those figures will rise. Those figures have been achieved because the economy has been growing and we have made important supply side changes. There have been changes in taxation and unnecessary regulations have been removed to encourage entrepreneurs to get up and start new businesses.
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