§ 16. Mr. Woolmer
asked the Chancellor of the Exchequer what views were expressed by the Trades Union Congress and the Confederation of British Industry to the May meeting of the National Economic Development Council on how North Sea oil and gas revenues could best be used to benefit the economy; and what is his policy on the matter.
§ Sir Geoffrey Howe
Use of the North Sea revenues was not discussed in detail during the May meeting. These revenues will constitute an increasingly important part of the Government's income, permitting lower levels of Government borrowing and of taxation than would otherwise have been needed. This will help to achieve a lower level of interest rates and encourage a higher level of investment.
§ Mr. Woolmer
Does the Chancellor agree with the Director General of the National Economic Development office that North Sea oil revenues should be the basis of a positive industrial policy? Does the Chancellor further agree that North Sea oil revenues are currently being spent on consumption instead of on investment? When will the Government bring forward a proposal to the House to show the use of North Sea oil revenues as strengthening British industry instead of destroying it as at present?
§ Sir G. Howe
One of the principal arguments advanced earlier this afternoon was that the most significant contribution one could make to strengthening British industry would be to achieve lower interest rates. One of the most formidable contributions now being made by North Sea oil revenues is to help reduce public borrowing to precisely that end.
§ Mr. Healey
Is it not the case that the £4,000 million of tax revenue which the Chancellor told us he expects this year from North Sea oil will be spent entirely on financing a rise in unemployment and making good the loss of revenue due to the recession produced largely by the policies of the present Government?
§ Sir G. Howe
That question represents the most curiously perverse and naive analysis of economic facts.
§ Mr. Douglas
Will the Chancellor inform the NEDC of the effects of our having a petro-currency, an over-valued pound, high interest rates and high unemployment and will he indicate to the NEDC where we would be if we did not have these revenues?
§ Sir G. Howe
In that question the hon. Gentleman has succeeded in aptly summarising the argument that the possession of North Sea oil contributes advantages and disadvantages. It contributes advantages in the way of higher revenue which would not otherwise be available. On the other hand, it does have the effect upon our currency about which several hon. Members have complained.