Debate on the Address

Part of Orders of the Day — Queen's Speech – in the House of Commons at 12:00 am on 3 November 1959.

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Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South 12:00, 3 November 1959

I entirely agree with my hon. Friend and had I the time, I would gladly go into that matter.

I wish to make the point that it is quite wrong to assume that the nationalised industries are the ones which are always coming for help. Private industry is very much holding out its hand at the present time.

I now turn to the first part of the Amendment to which the Chancellor of the Exchequer devoted the greater part of his speech. The right hon. Gentleman criticised our temerity in questioning the ability of the Government to maintain at the same time full employment and stable prices. He said that when we were in power we had killed all incentive to earn. The simple answer to that is to compare the production figures when we were in power with the production figures since then. The increase in output was twice as fast between 1946 and 1951 than between 1951 and 1955, and some five times as fast as it has been between 1955 and 1959. If the right hon. Gentleman doubts that, I would refer him to the Report of the Royal Commission on Taxation which stated clearly that there was no shadow of evidence to prove that the taxation of earned income had a serious effect on output.

The right hon. Gentleman complained about our record on prices. I am perfectly prepared to set our record side by side with the record of the Conservative Government. While we were in power import prices doubled, and home prices went up by one-third. They have gone up by about one-third since 1951 as well, but during that period import prices have not been doubled; they have fallen. There is the difference.

I now come to the claim which was made by the Government during the Election and which was repeated by the right hon. Gentleman this afternoon, what is called "bringing off the double", that is to say, achieving both price stability and full employment. What exactly does this mean? So far as price stability is concerned, it is certainly true that for the past eighteen months the Retail Price Index has, broadly speaking, been stable. I admit that straight away.

What is the position about full employment? What does the right hon. Gentleman mean when he speaks about "bringing off the double" in the case of full employment? Does he mean that full employment has obtained during the whole of the last eighteen months? Does it apply when the figures in January, 1958, showed that 395,000 were out of work, or in April, 1958, when they had risen to 443,000; or in September with 476,000; or January, 1959, with 620,000; or even in April this year with 530,000; or in September with 420,000? We should like to know what the right hon. Gentleman means when he claims that the Government have brought about full employment. Does he mean that that is the position now? I would willingly admit having gone through a recession, which in our opinion was largely created by Government policy, but the Government have now reversed their policies and we are getting out of the recession.

I admit that and go further. I think it likely that for the next two months expansion will continue and it is quite likely that it will be accompanied—and I hope and believe that it will be—by further expansion and stable prices for the time being. However, I do not think that we can leave the matter there. We cannot accept the invitation of the right hon. Gentleman not to inquire why there is price stability. That really is rather an obscurantist point of view. If we want to find out how to achieve these objects, surely we want to know whether this is an accident, or whether in some way the Government have found a magic formula for achieving what everybody agrees to be necessary.

I venture to say that there are two reasons why we have had price stability. First, there is not the slightest doubt that the fall in import prices by about 10 per cent. since 1957 has played the major part. It is absurd for the Chancellor of the Exchequer to deny that that is so. Of course there has been a time lag, because the fall was in 1957, but equally it has been affecting us ever since. Does the right hon. Gentleman believe that it would have made no difference at all if, instead of a fall of 10 per cent. there had been a rise of 10 per cent. in import prices? Does he think that there would be no difference if we woke up tomorrow and found that because of some world incident there had been a sharp increase in world prices? Of course these things affect us as a trading nation.

The other reason why I think there has been price stability is, quite frankly, the trade recession. We have never denied that if we have unemployment and damp down production there is a very real prospect that if we are prepared to make that sacrifice and pay that price we may in time get a certain degree of price stability. I do not deny that probably the increase in wage rates has not been so great as a result of this. I freely admit, too, that while productivity first of all fell, as one would expect during the recession, in recent months it has been rising.

All that is perfectly true, but what is the lesson of it? Surely it is that at the moment we have a very favourable situation because we are recovering from the recession, because, therefore, productivity is going up, because we still have the benefit of favourable terms of trade and low import prices. But we have to face the question, how long are we to maintain the expansion without inflation as soon as we have got back to full employment again, because the problem is not just to get expansion to full employment, but to get expansion with full employment.

What do the Government think has really altered? They speak as though something fundamental has changed in the last two years which enables us to view the future with a great deal more confidence than we had in the past as far as this problem is concerned, but I cannot myself see that there is any reason to believe that underlying causes have been affected at all. Why should we, why can we, why dare we assume that as we come back to full employment, as the slack is taken up, costs will not begin to rise again? It is all very well for the Chancellor of the Exchequer to indulge in pious exhortations—which, incidentally, is a sign that he is not quite so confident of the situation as he appears to be. Pious exhortations no doubt are appropriate enough, but they are not sufficient by themselves. When the right hon. Gentleman begs firms to use their profits for reinvestment, I would ask him why he altered the system of taxation so as to encourage them to increase dividends.

The real key to this—and I am very surprised that he made no reference to it at all in his speech, or only a bare reference—is, of course, whether we are to have rising productivity. Here I must again remind the House how deplorable our record has been over the past years. I will give one quotation from the Financial Times of 16th January this year. It states: The problem still remains that the long-term rate of progress of the British economy is too low. Between 1953 and the third quarter of 1958 industrial output per man-hour increased by 41 per cent. in France, 37 per cent. in Italy, and 32 per cent. in West Germany, but only 11 per cent. in this country. It cannot be denied, as hon. Members must see, that during virtually the whole of the last decade this country has been lagging behind almost every other industrial country in the world.

The key to this, I have little doubt, is a high rate of investment, and it is unfortunate that this is the feature where, I think, the Government themselves admit that the prospect is least good. The Board of Trade, as recently as just over a month ago, published a survey on investment intentions in private manufacturing industry, a survey which shows that business men expect to spend about 10 per cent. less in 1959 than in 1958, and their forward estimate for 1960 indicates a further fall of 5 per cent. in investment as compared with that in 1959. This is the Government Department's own survey. There is nothing amateur about it and the plain fact is, whatever hon. Members may say on the hustings, that if it had not been for public investment—and they are relying on that—we should be in a very much worse position today than we are.

We have doubts about the claims of the Government to achieve prosperity, expansion and higher investment without rising prices, unless they are prepared to adopt much firmer economic priorities and to give investment a much higher priority than it has so far had. We must also take issue with them over social priorities.

It is our view that the rest of us in the community have a special obligation to those who are living in less fortunate conditions than we are. I know that this was sometimes described in the Election battle as a bribe. I cannot see that. I can only say that in most of my speeches on the subject I simply put it that here are a minority who are decidedly worse off than the rest of us, for no particular reason, and that we therefore owe them a certain debt and should help them as one of the first things to be done. It has been estimated, by the way, to be a minority of about 8 million people; that is to say, between one-fifth and one-sixth of the total population.

I have no time to go into this in detail tonight and I will say only one thing about one class: one of these classes of people living in less fortunate conditions than the rest of us are those who are living in bad housing conditions. Here I must point to the slow rate at which slum clearance is proceeding. [HON. MEMBERS: "Oh."] If hon. Members want the figures they can have them. The local authorities' estimate of the number of unfit houses was 850,000, and their plan was to demolish about half that number, 375,000, in five years between 1956 and 1961. That is at a rate of 75,000 a year. In the three years since this programme was started the rate has been not 75,000 a year but 45,000 a year. I can only say, as a Member who sits for an industrial constituency, that all of us in that position are tired of having to meet our constituents who have housing problems and to tell them again and again that we can do nothing for them. It is not good enough that the rate of council house building is falling steadily year by year. This afternoon we heard that the rate of fall is continuing even in the latest quarter of 1959.

There is also the question of the other classes specifically mentioned in the Amendment—the old people, the widows, the disabled and others who are suffering from some hardship. The Government propose to review the earnings rule. I am glad that they intend to do this, but let us have no illusions about it: out of 5,400,000 retirement pensioners, only 80,000 will be affected by this, and out of 386,000 widows, only 60,000 will be affected by it. In round figures, only one person of this class in forty will be affected by a change in the earnings rule.

That is, therefore, not the answer to the problem. Our view is simple. The more that hon. Members opposite talk to us about prosperity and the more they hold out hopes, which in the immediate future I concede are quite reasonable, that living standards will continue to rise, the more we shall insist that something better must be done for this large minority. I know that hon. Members opposite may think that it is enough if we raise the National Assistance scale, because that will take care of the people who are living in the most extreme poverty, and that we need not bother about the rest. We differ from hon. Members opposite on that. We certainly think that those who are living in the worst conditions need help, but we also believe that the greater part of this large minority of 8 million people are living in circumstances so much worse than the rest of us that the whole level should be raised and not only that of those who are living at the margin.

My right hon. Friend this afternoon made a plea to the Government, which I reinforce, to do something about this. It does not matter that in a sense the election was largely fought about it and that at the time hon. Members opposite would not pledge themselves to make an increase. I hope that they will put that out of their minds and that they will approach this matter anew and look at the facts as they are. If we have this prosperity, as I think we can have and for the immediate future shall have, then I beg them to do something to ameliorate and improve the conditions of our fellow citizens living in these conditions.

I will not delay over the familiar argument on the cost. I will only say that everybody who has studied this question knows perfectly well that if we have anything like the rate of increase in production to which hon. Members opposite are themselves committed, there will be no difficulty about raising the revenue for this without any increase in taxation.

Hon. Members opposite have won the General Election; but, as my right hon. Friend said, they as well as we must look to the future. The great test which they face, as indeed do the Government of any democratic State today, is whether we under democratic conditions can achieve as rapid an economic progress as the Communist bloc is achieving and whether at the same time we can apply the right social priorities. This can be done only if we have both economic and social priorities decided by the Government. On our ability to do this, on our ability to jack the economy on to a higher level, on our ability to take care of those less fortunate than ourselves, we shall judge the Government; and I believe that history too will be their judge.