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Mr. Prescott: No, I want to make some progress. I have given way to several hon. Members.
Mr. Jacques Arnold (Gravesham) rose--
Mr. Prescott: I never give way to that hon. Gentleman.
Mr. Prescott: The hon. Gentleman will not be here much longer.
We have heard lots of talk about a successful economy. But despite all that talk, which we heard yet again from the Deputy Prime Minister today, the past 18 years have not been as successful as he claims. In the Budget debate, the Chief Secretary to the Treasury attacked what he called the European social model. The right hon. Gentleman's idea of the countries that could be considered part of that model was a bit limited. Nevertheless, I believe that the European social model in the post-war period, to its credit, was the most successful economic model that we have witnessed in any developed economy--successful in growth, in investment and in prosperity, while at the same time securing full employment and social justice. That is to the eternal credit of a European social model that was managed both by the left and by the right. It was not a socialist creation: it was managed by Governments of all political parties, and it secured full employment and social justice.
Mr. Waldegrave:
The right hon. Gentleman is making a serious and correct point. When the Germans, in particular, followed the economic advice of Ludwig Erhard, which nowadays would be called Thatcherism, they did extremely well.
Mr. Prescott:
The right hon. Gentleman could also look to other European social models under socialist
Of course there are great difficulties for that model at the moment. [Interruption.] I am trying to make a point about that. At the heart of the argument, as with Keynes, is the amount of money that is put into the economy and into public expenditure. What might have been all right in the 1950s, 1960s and 1970s is in grave difficulties in the 1990s, with a different global economy and all sorts of other factors that are changing.
It is important for us to recognise that fact, because the restraints that affect our public expenditure are considerable when one seeks to balance inflation, employment, borrowing and public expenditure. That is the problem for all Governments today, and I concede that it has changed. However, that model was far more successful than the competitive pre-war model that gave us mass unemployment and great poverty. The deregulated model that the Government are beginning to develop carries with it mass unemployment on a scale associated with the pre-war period.
That argument will go on between us. We are debating the role of public expenditure. I have no doubt that public expenditure--the total amount of it and its quality--can affect prosperity and levels of employment and has some relationship to economic activity in the country.
Mr. Michael Stephen (Shoreham):
The right hon. Gentleman complains about the national debt. Is he aware that the entire western world is even now just recovering from the worst economic recession since 1929? I trust that even he does not seek to lay the blame for that at the door of the British Government. Yes, it has been necessary to borrow, but does the right hon. Gentleman accept that it has been possible only because we paid off most of the national debt during the early years of the Conservative Government?
Mr. Prescott:
That is confusing. During three years of apparently successful growth, we have been borrowing more heavily. In the cycle of decline and expansion, a country usually borrows less when it is growing faster. Why has the debt increased at what is claimed to be a time of great growth?
All world economies are faced with considerable debt. In a global economy, there are billions flooding around. There are real problems in dealing with that kind of flexibility. Time and again--
Mr. Prescott:
No; I want to make some progress.
Time and again, we hear from the Tories that the British economy has outperformed other European models. The argument is that we have discovered the ideal
model, which is far better than the European social model. I recognise that there are difficulties for which we have to make some adjustments.
Mr. Michael Fabricant (Mid-Staffordshire):
On a point of order, Mr. Deputy Speaker.
Mr. Deputy Speaker (Mr. Michael Morris):
I hope that it is a point of order for the Chair.
Mr. Fabricant:
It is, Mr. Deputy Speaker. I would like some clarification. I notice that while the deputy leader of the Labour party is talking about the European social model, only half a dozen Labour Back Benchers--
Mr. Fabricant:
Are we quorate?
Mr. Deputy Speaker:
Order. That has nothing to do with the Chair.
Mr. Fabricant:
I thought that we might not be quorate.
Mr. Prescott:
I hope that the hon. Gentleman is not losing his hair in this debate.
I should like to deal with the argument that somehow Britain has produced an economic model that is leading the way and is better than what we see in the European economy. I took the trouble to look at some of the figures from the Organisation for Economic Co-operation and Development, Eurostat, the House of Commons Library and parliamentary answers. In the latest European prosperity league, we are ninth out of 15. Our growth rate since 1979 puts us 13th out of 15. On investment, we are 15th out of 15. On inflation--the issue on which the Government make considerable claims--the United Kingdom lies 11th out of 15. On long-term interest rates, we are 11th out of 15. Our record on unemployment since 1979 puts us ninth out of 15. On those six key economic indicators, the UK remains in the bottom half, if not the relegation zone.
Those statistics do not reflect the success of the British model. The Government have failed on so many counts that they should withdraw Chris Woodhead from the schools and send the Office for Standards in Education inspectors into the Tory Cabinet to look at its competence. That is what happens in education to those at the bottom of the league.
If Conservative Members do not like those foreign figures, we can draw on the evidence of the Deputy Prime Minister's competitiveness White Paper. It shows that on purchasing power parities, we have fallen from 13th to 16th in the world prosperity league. Those are the Government's figures. That is a great boast. The Government somehow claim that in 18 years we have produced a successful British model and have the audacity to tell the rest of the world to follow it.
Mr. Riddick:
Will the right hon. Gentleman give way?
Mr. Prescott:
No, I must make progress. I am already behind time.
Stability is important in modern economies. We all agree that the cycle of boom and bust damages the economy. We have had two deep recessions during the Government's period of office. The February edition of the Lloyds bank economic bulletin says that
The one thing that the Tories might claim to have increased is exports. The audacity of that claim is that exports have increased since they devalued the economy. The Prime Minister said:
"since 1980, the UK has the worst record for economic stability amongst the 14 largest industrial countries."
That seems to be a pretty damning indictment of a Government from a bank that is not anti-Tory. The Tories have had 18 years to put the economy on an even keel. The record is not as given to us by the Deputy Prime Minister.
"The devaluer's option would be a betrayal of our future and it is not the Government's policy."
He called it a soft option. That seemed like a pretty clear policy. Did he con people when he said that the Conservatives would not devalue? Within days of that promise, he devalued the pound. Exports went up, but so did imports, because we did not have the capacity to deal with the demand that came from devaluation. We were taken to the bottom of the trade deficit league, with the exception of Spain. Does the Chief Secretary disagree? No. Okay. However one measures them, the Tories' claims for the economy are far from proven and their policies have been expensive for the taxpayer. The devaluation cost something like £2 billion.
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