Michael Heseltine – 1992 Speech on Recessions and Unemployment

The speech made by Michael Heseltine, the Secretary of State of Environment, on 19 February 1992.

I beg to move, To leave out from “House” to the end of the Question and to add instead thereof: congratulates Her Majesty’s Government on its success in winning the battle against inflation and in bringing interest rates down; welcomes the recent reduction in the balance of payments deficit and the fact that exports are at record levels; notes that the United Kingdom has some of the most competitive tax rates in the world, including the lowest level of corporation tax in either the G7 or the European Community and that Government spending on training has increased by two and a half times over and above the rate of inflation since 1979; recognises that the foundations for economic recovery are now firmly laid; and rejects totally the policies of the Opposition, which would lead to soaring inflation, greater public sector borrowing, higher taxation, increased unemployment, rising interest rates, declining investment and a spiralling cycle of higher wages and prices which would destroy any prospect of recovery and plunge Britain into perpetual recession.”. You, Mr. Deputy Speaker, will of course identify the speech of the right hon. and learned Member for Edinburgh, Monklands—[Interruption.]

Mr. John Smith

Monklands, East.

Mr. Heseltine

—the right hon. and learned Member for Monklands, East (Mr. Smith). You, Mr. Deputy Speaker, will know that the main thrust of the right hon. and learned Gentleman’s argument was to suggest that the recession in this country was the responsibility of the Government, and of the Government alone.

Nobody questions the nature of the recession with which we have to grapple. It has never been disputed by my colleagues or by myself. It is interesting that in this morning’s newspapers the effect on the German economy is so adequately described—to indicate as clearly as possible the effect of recession on that economy.

I fear that this morning’s newspapers reveal another casualty of the recession. Labour’s campaign, as The Guardian reveals, has quite failed to convince the British people that the British Government are to blame. Only 9 per cent. of the British people believe that the recession here is the fault of the British Government.

If the right hon. and learned Member for Monklands, East has scanned this morning’s newspapers, what he will have found interesting is not the uncritical columns of the Daily Mail or the Daily Express, but what he might have found in the uncritical columns of The Guardian. The Labour party, dismayed by the right hon. and learned Gentleman’s failure to pin the blame on the Tory Government, is looking for a scapegoat.

I read with some surprise that, despite the onslaught from the Labour party, its members have already lost faith in the man at the front end of the attack. No Conservative Member would say such things, but I understand that the right hon. and learned Gentleman’s colleagues, loyal to a man, are concerned that he is not radical enough on the economy”. I gather that it is felt—dare I say it—that he is ” less clever than he thinks and less busy than he should be”. There is even a suspicion growing—only on the Labour side, of course—that he has left Labour boxed in”, and that his policies are deflationary and offer little comfort for the unemployed or for debt-laden firms”. [AN HON. MEMBER:”Is that The Guardian?”] Yes, that was The Guardian. The tumbrils are rolling. This evening’s Evening Standard carries the headline: Labour’s knives out for Smith”. The debate began as a vote of confidence in the Government’s economic policies; it has rapidly become a vote of confidence in the shadow Chancellor. I find no difficulty in agreeing with some of the anxieties that flow from the whispers on the Labour Benches, although I totally reject the implication that what is needed is not less but more of them.

Nothing more reveals the willingness of the Labour party to misread the harsh nature of present events than the accusation by the Leader of the Opposition in the House two weeks ago that the Government are “inventing recessions abroad”. The report of the Bundesbank—the right hon. and learned Member for Monklands, East will not feel that I am undermining his position in saying that I trust the Bundesbank’s views on the German economy rather than his—is that the main reason for three successive quarters of negative growth in Germany is the international recession which is reflected in particularly low investment activity”. Perhaps the right hon. and learned Gentleman should think again. Inventing recessions? How does he explain unemployment in Germany of 3 million? Did we invent the fact that in the past three months, industrial production fell by more in the United States, in Japan and in Germany than it did in the United Kingdom? Did we invent the fact that there are economic problems across the world, from Stockholm to Sydney? Did we invent the comment on Japan by Russell Jones of Phillips and Drew? He said: There’s no doubt in my mind that the manufacturing sector is in recession”.

Mr. Nigel Griffiths (Edinburgh, South)

The right hon. Gentleman talks about inventions. Let us bring him to the facts. Do he and the Government take responsibility for the tens of thousands of people who have lost their houses? Does he take any responsibility for or feel any guilt about the 2.5 million people who have lost their jobs? Let him deal with the facts for which he is responsible.

Mr. Heseltine

We shall come to the policies that will affect those who have lost their jobs. The hon. Gentleman will welcome as much as I do the fact that houses are now beginning to sell and that the starts are 2 per cent. up.

The issue that we must recognise is that there is one particular reason why the world economy is especially difficult for this country. Britain’s economy is one of the world’s most dependent on exports. The right hon. and learned Member for Monklands, East knows that Scotland alone exports more manufactured goods per head of population than do Germany, America or Japan. He knows that Britain exports a greater proportion of our gross national product than Japan does. If there is difficulty in the world economy, our economy will suffer disproportionately as a consequence. If all our principal overseas markets are sluggish, we cannot avoid the consequences at home.

The question that must concern us is the nature of the policies that we need to fight our way out of the present international difficulties. In stark contrast to the right hon. and learned Gentleman, let me set out the policies that are essential for us to fight our way out of our present position.

Mr. Tony Benn (Chesterfield)

When there are so many unmet needs in Britain and so many unemployed people who could meet those needs, why cannot the two be put together to create prosperity for the 1990s?

Mr. Heseltine

The reason is that, unlike the right hon. Gentleman’s right hon. and hon. Friends, we are not prepared to direct labour, as all the most ineffective economies in the world have tried to do at some stage.

The question with which we must concern ourselves concerns the essential policies which we believe we must follow to fight our way out of our present circumstances. The first essential ingredient is that we must pursue the drive for competitiveness in every aspect of the domestic economy. That is critical in the battle to contain public expenditure, to reduce inflation, to keep interest rates under control, to attract inward investment, to stimulate new enterprise and to keep our tax rates competitive. Those economic policies are essential to our policies, as are those for improving education and training, and for the safeguarding of the environment.

The right hon. and learned Member for Monklands, East said that we were doing nothing. All that reveals is that he does not understand what must be done. During the past 16 months, interest rates have been cut eight times and inflation has fallen from 10.9 per cent. to 4.1 per cent. The contradiction in everything that the right hon. and learned Gentlemen says is displayed no more eloquently than in the words of the man who is something of a hero figure to the right hon. and learned Gentleman—Jacques Delors. He said that Britain is fast becoming a paradise for foreign investment. That is why, in spite of the world downturn, we have seen in recent months Toyota’s announcement of further investment in Derbyshire bringing 3,000 more jobs, Nissan’s additional £150 million in Sunderland and other inward investment projects from Kimberley Clarke on Humberside to Toshiba in Plymouth.

The objectives are clear. The question that we must debate today is how we are to achieve those objectives. To be fair to the right hon. and learned Gentleman, I do not think that he would have too much difficulty in accepting many of the priorities that I have listed. Nobody should be especially surprised about that. He is one of the few Labour Members who has served in a Government with a basic rate of 35p in the pound, a top rate of 98p in the pound, inflation running out of control at 27 per cent. and more days lost in strikes in just one month in the winter of discontent than were lost in the whole of last year. I understand that he is not leaping up and down to restore the record of a Government among whom he was prepared to serve without complaint.

The right hon. and learned Gentleman’s problem is that most of his right hon. and hon. Friends are positively enthusiastic to restore, piece by piece, the regime that Labour left behind in 1979. What is at issue this afternoon is not the debate across—[interruption.]

Mr. Deputy Speaker

Order. I very much hope that the hon. Member for Vale of Glamorgan (Mr. Smith) will show a little more restraint.

Mr. Heseltine

What is at stake this afternoon is not the debate across the Floor of the House; it is in reality the debate within the Labour party and, even worse, the debate within the shadow Cabinet. On the one hand, we have the much vaunted prudence of the shadow Chancellor and on the other, the irresponsible extravagance of his shadow Cabinet colleagues.

I hear wherever I go that the right hon. and learned Gentleman has become a star attraction in the City. Lunch after lunch, dinner after dinner, the assurances flow. The prawns are consumed and there are soft shells, soft words and soft lights. Not a discordant crumb falls on to the thick pile. “All will be well,” is the message that the right hon. and learned Gentleman conveys. “The shadow Cabinet? Don’t you worry,” is the message. “I’ve stitched them up.” The words are no sooner uttered than up pops the hon. Member for Oldham, West (Mr. Meacher), the shadow Secretary of State for Social Security, who said: If you took a poll on Labour’s public expenditure commitments in the City, you would find it almost 100 per cent. against”. Think of the tragedy, Mr. Deputy Speaker. All those prawn cocktails for nothing. Never have so many crustaceans died in vain. With all the authority that I can command as Secretary of State for the Environment, let me say to the right hon. and learned Member for Monklands, East, “Save the prawns.”

Mr. John Smith

I forgive the Secretary of State for not knowing that Monklands is not in Edinburgh. It was very revealing about Conservative attitudes to Scotland. [Interruption.] I hear the right hon. Gentleman asking his hon. Friend where it is. It is in Lanarkshire. However, I ought not to badger the right hon. Gentleman about his lack of knowledge of his country. While we are of divisions within parties, does the Secretary of State hold to the view expressed in his article in November 1989 in The Times that Britain should sign the social charter?

Mr. Heseltine

The right hon. and learned Gentleman knows full well that the matter was then negotiated brilliantly by my right hon. Friend the Prime Minister [Interruption.] The Labour party has been duped on the social charter. Labour Members all know that the Germans want to export their high costs, that the French cannot resist the social charter because they have a socialist Government, and that other countries will not take any notice of it. The Labour party has been duped into signing up to that extravagant impost on our industrial economy.
I have to recognise that there is another lacuna in the dilemma that we on this side of the House face. Up to now I have discussed the unlikely hypothesis of the right hon. and learned Member for Monklands, East being the Chancellor of the Exchequer should a Labour Government emerge. I assumed that we should enjoy the bespectacled geniality of the right hon. and learned Gentleman. But there is even dispute about that. The hon. Member for Livingston (Mr. Cook) tells us: Once we have a Scottish Parliament handling Scottish home rule affairs in Scotland, it is not possible for me to act as Minister of Health administering health in England and Wales. At a stroke, the shadow Health Secretary—a Scot—is gone. By the same standards, the shadow Chancellor—a Scot—is gone; the shadow Trade and Industry Secretary 364—another Scot—is gone. All Scots, all gone. Never have I heard so convincingly and eloquently made the case for devolution.

Let us assume that the right hon. and learned Member for Monklands, East survived the scenario sketched by the hon. Member for Livingston. The right hon. and learned Gentleman may think that he has trouble now, but in those circumstances his trouble would hardly have begun. Not a day passes when his protestations of economic constraint are not shot to pieces by his colleagues. As each Labour spokesman promises a new priority, urgent action, immediate initiative—

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Will the Secretary of State give way?

Mr. Tam Dalyell (Linlithgow)

Will the Secretary of State give way?

Mr. Heseltine

No.

Each Labour spokesman has his own variant of a crash programme. That is exactly what it would be—the biggest crash programme in British economic history.

Let us look at the heart of the matter. Only two weeks ago, Labour’s housing spokesman, the hon. Member for Hammersmith (Mr. Soley) tried to cook the books by redefining public borrowing. He promised—his phrase was eloquent—a phased release of up to £8 billion of capital receipts, without, of course, increasing the public sector borrowing requirement. Consternation in the Opposition camp. Urgent telephone calls. But they were all abroad somewhere out there across the continent. Dramatic disruption of the grand tour. Then, before we knew where we were, the climbdown.

Mr. Clive Soley (Hammersmith)

Will the Secretary of State give way?

Mr. Heseltine

No. I am not giving way. In order that the hon. Gentleman does not get the quotation wrong, it might be helpful to provide the House with the quotation from The Times of 6 February this year in which he continued his saga of this phased release. He said: There is no plan to revise the PSBR. I was wrong. I withdraw it. This is not really about the phased release of capital receipts. We have witnessed the phased release of the Opposition spokesman on housing. The whole House will wish to join me in saying, “Good luck, good fortune and goodbye.”

Mr. Soley

I have the advantage over the Secretary of State of having the script available to me with the exact words. What I said, as the hon. Member for Ealing, Acton (Sir George Young) will tell him, was that there should be a phased release of capital receipts and that that would have an impact on the PSBR. That is precisely what I said. The interesting thing, as the hon. Member for Acton will agree, is that he went on to say that the Government were also keeping that very option under review.

Mr. Heseltine

The Times now joins the list, along with the Daily Mail, the Daily Express and The Guardian, of unprincipled misrepresentation of Labour’s policies.

Mr. George Howarth (Knowsley, North)

On a point of order, Madam Deputy Speaker. A few moments ago, the Secretary of State wilfully and deliberately misquoted comments attributed to my hon. Friend the Member for Hammersmith (Mr. Soley) who, with the benefit of his script, has corrected him. Should not the Secretary of State apologise to my hon. Friend?

Madam Deputy Speaker (Miss Betty Boothroyd)

I fear that that is a point of frustration, rather than a point of order. [Interruption.] Order. These are matters for debate, not for points of order.

Mr. Heseltine

Without taking issue with you, Madam Deputy Speaker, it is not frustrating me, it is frustrating them. All that I want to know is, if the transatlantic or trans-European phone calls produced a result, how much did they add to public expenditure as a consequence? Opposition Members cannot have it both ways.

Mr. Soley

I am willing to give the Secretary of State a copy of the script. I have the exact words, as taken down at the time. I am happy to give them to him either in half an hour or later. If I give them to him, will he give an apology to the House?

Mr. Heseltine

I am just old-fashioned: I believe what I read in The Times. I, the House and the country want to know what deal the hon. Gentleman did with the right hon. and learned member for Monklands, East. How much public expenditure was slid under the carpet which they thought that no one would see?

Mr. George Howarth

Apologise.

Mr. Heseltine

I had not intended to raise the matter, but as I hear the hon. Member for Knowsley, South (Mr. Howarth) interrupting from a sedentary position, I tell him to go back to Knowsley and look at Cantrill farm, as it once was. It was one of the great housing slums of Europe. It took a Tory Government to rescue it.

Mr. Howarth rose—

Mr. Heseltine

I will not give way.

Mr. Robert N. Wareing (Liverpool, West Derby)

On a point of order, Madam Deputy Speaker. Is it not one of the conventions of the House—[Interruption.]—there are such things—that when a Member names another Member as part of a speech, he is willing to give way when requested to do so?

Madam Deputy Speaker

It is certainly up to the hon. Member who has the Floor whether he gives way, but I am afraid that many of the common courtesies which we used to extend to each other in the House were forgotten a long time ago.

Mr. Heseltine rose—

Mr. George Howarth

At least because of you, Madam Deputy Speaker, the Secretary of State has learnt some courtesy. He mentioned Stockbridge village. Will he confirm that the Stockbridge Village Trust has been technically bankrupt for the past three years and that, without the guarantees which have been provided by the Labour council in Knowsley, it would have been in the hands of the receiver?

Mr. Heseltine

The Labour council of Knowsley begged me to rescue that estate. The hon. Member should never forget that the Abbey National and Barclays bank made it all possible.

If I may leave the junior spokesman for the environment, I should like to come to the hon. Member for Dagenham (Mr. Gould)—no slouch he, when it comes to egging up the public expenditure ante. Within the past few months, by his team alone we have been asked to support: local authority bids for an extra £2 billion a year; the full release of all those capital receipts; the unfettered discretion of local authorities to clobber the business rate payer.

That is just part of the hon. Gentleman’s programme. Then there is the problem of renationalising the water industry. In the past few weeks—this is why there has been so much muttering on the Labour Back Benches—we have heard about the £1 billion so-called recovery package, about the £800 million that Labour wants to spend on training and the £50 million that it wants to spend on the national health service by cancelling private health insurance.

But hold on: not to he outdone, the hon. Member for Dagenham says that renationalising the water industry is a “priority” for Labour. What will all that cost—about £4 billion, just to get control of it. That will cost about four times the size of Labour’s recovery package; five times the amount that it proposes to spend on training; and 80 times what it deems to be essential for the national health service. All for one purpose—to buy off the hard left of the Labour party. The consequence would be a return to the regime when Labour cut water investment. That was Labour’s contribution to the environmental enhancement of that vital industry.

Before the day is out, the hon. Member for Dagenham will be back on his feet, defending the higher tax rate plans of the Labour party, which overnight would do more to destroy the housing market than any other single thing one could do.

Mr. Bryan Gould (Dagenham)

I know that the Secretary of State can hardly wait for me to get to my feet. When I do so, I shall attack the Government’s record on the recession—something which the right hon. Gentleman has so far notably failed to defend.

Mr. Heseltine

My colleagues and I tremble on our feet. I promise the hon. Gentleman that we shall all be here waiting for the great hour when the hon. Member for Dagenham flattens us. I confess that I had intended to go out to dinner tonight, but I shall not do so now.
I do not want to be unfair to the hon. Member for Dagenham. Why should he respect the shadow Chancellor’s edict, when the leader of the Labour party designs policies over Luigi’s pasta, late at night—economics bolognaise?

Several Hon. Members rose—

Madam Deputy Speaker

Order. The Secretary of State has made it abundantly clear to me that he is not giving way.

Mr. Heseltine

I do not want to pretend that the Leader of the Opposition isolates himself from advice, to act alone. He does not act alone—he does it with the aid and assistance of some of Britain’s leading economists, even if they are heavily disguised as journalists from the Galleries of the parliamentary Lobby.

There was the leader of the Labour party—wrestling with the twin complexities of national insurance on the one hand, and how to carve up the shadow Chancellor on the other. Picture the scene. The Leader of the Opposition, fighting to prevent long strings of spaghetti from slipping through the prongs of his fork, while the minutiae of national insurance were slipping through the caverns of his mind.

Mr. Foulkes

On a point of order, Madam Deputy Speaker.

Mr. D. N. Campbell-Savours (Workington)

On a point of order, Madam Deputy Speaker.

Mr. Heseltine rose—

Madam Deputy Speaker

Order. There are points of order.

Mr. Foulkes

In my constituency, the level of unemployment is more than 20 per cent. Is it therefore in order for the Secretary of State to give us nothing other than a music hall turn?

Madam Deputy Speaker

The hon. Gentleman knows that that is not a point of order for the chair.

Mr. Heseltine

So, there we were, it was the politics of Bedlam—fork-twisting, head-spinning, mind-boggling—the right hon. Member for Islywn (Mr. Kinnock) firmly in charge. He would have been better employed wrestling with the damaging consequences of his tax policies on the national economy.

The right hon. and learned Member for Monklands, East is not that far apart from his leader on putting up tax rates. In a recent interview, David Frost put it to him that The Economist had pointed out that, under his proposals, Britain would have the highest tax rates for middle managers anywhere in the world. Quick as a flash, the right hon. and learned Member for Monklands, East said, “Ah.”—[HON. MEMBERS: “Ah!”]—I paused because it is so awful that I had to check it before I read it. He said, by way of excuse, “Ah, what they took was not all the countries in the world; what they took were the G7 industrial countries.”

So, there it is, on the record, staring us in the face. Put the right hon. and learned Member for Monklands, East in the Treasury and, as long as he can find some clapped-out, down-at-heel, fly-blown socialist economy with higher tax rates than we have in this country, he will be content to point his lawyer’s finger and say that someone, somewhere is suffering more than we are.

The Opposition have the effrontery to come to the House and talk of job creation. They talk of better education. They did so when they were in government. They called for a great debate, which consisted of agonising over the collapse of education standards that the worst excesses of Labour’s social engineering had delivered.

Twelve years ago, only one in eight of our young people went through higher education. Today, that figure is one in four and it is heading for one in three. The Government are investing £2.8 billion in training, enterprise and vocational education—that is two and a half times as much in real terms as was invested in the final year of the last Labour Government. In addition, the private sector is spending £20 billion on training its employees; exports are at an all time high; inflation is at 4.1 per cent., below the average of the European Community and that of the G7 countries. Interest rates are down by 4.5 per cent. in just over a year. We have some of the most competitive tax rates in the world and the lowest level of corporation tax in either the G7 countries or the European Community. All the Labour party can do is talk about taxing the rich, as though that will help the economy.

The Labour party does not understand that there is a whole generation of young people out there—the skilled, the talented and the enterprising—who need to believe that there is a future for them here, in Britain, where energy and initiative will be rewarded.

We want to see young teachers seek the initiative to assume responsibilities as head teachers. We want young engineers to believe that it is worth their while to be promoted to production managers. We want young doctors to stay and practice in Britain and aim for the privilege and reward of running our hospitals. We want young scientists to relish the opportunities to explore tomorrow’s frontiers in our laboratories and research establishments.

Mr. Giles Radice (Durham, North)

On a point of order, Madam Deputy Speaker. Is it in order for someone who is making a speech to the House to speak only to those on his Benches? Is this a leadership bid?

Mr. Heseltine

Why should I not speak to my own Benches? We are the governing party and we will stay that way because the Labour party is out of date, out of touch and out of office. We will keep them there.