Ways and Means

Part of the debate – in the House of Commons at on 26 April 1944.

Alert me about debates like this

Photo of Mr Robert Boothby Mr Robert Boothby , Aberdeenshire and Kincardineshire Eastern

I would like to make a brief reference to the speech of my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite) and to say how much I agree with him when he pointed out, at the conclusion of his remarks, that it was the duty of this' House to scrutinise expenditure very closely. I am sure he will agree with me that such scrutiny is by no means incompatible with a general policy of expansion. Indeed, a careful scrutiny of the actual details of expenditure, by this House, is an essential condition of a policy of expansion. My hon. and gallant Friend accused me, by implication, of facilitating the return of this country to the Gold Standard in 1925; but I hasten to assure him that I was one of four Members who opposed this action in debate in this House. There are limits to the burdens I can bring myself to bear. I do not know whether I should have been able to influence policy if I had been Parliamentary Private Secretary to the Chancellor at that time; but at least I can claim that I was not. As my hon. and gallant Friend said, the then Chancellor, the present Prime Minister, lived to rue his action and to regret that he had done it.

I have only one other reference to make to my hon. and gallant Friend's speech, and that was when he referred to what the Secretary of State for War said about the effects of an increase of pay and allowances to the Services. When the Secretary of State said that an additional expenditure of the order of £200,000,000 a year would produce a wild inflation, he was talking the most utter nonsense; and, as he has since been vehemently repudiated by every economist of repute in this country, we need not bother very much about that.

With regard to the Budget itself, the greatest tribute that the Chancellor could have paid to his predecessor was to repeat, practically without substantial alteration, his financial proposals of last year. It shows more clearly than anything else how well founded and well considered those proposals were. I was glad also to hear the Chancellor pay a tribute to another innovation of Sir Kingsley Wood, namely, the White Paper on national income and expenditure. That will have repercussions of profound importance in the years that lie ahead. It is of immense significance, so important that I am going to quote my right hon. Friend's words yesterday. He said: For the purpose of a policy of full employment it will be necessary, year by year, to bring under review the income and expenditure not only of the Exchequer, but of the country as a whole, and not only its income but its capital expenditure and its savings."—[OFFICIAL REPORT, 25th April, 1944; col. 653, Vol. 399.] This is a clear recognition on the part of the Chancellor of the Exchequer of the fact that the modern Budget is a great instrument of economic policy, and that it should therefore give effect not merely to a short-term but also to a long-term prograrmne.

The cause of the breakdown of our economic system, in so far as it broke down between the two world wars, is now generally admitted on both sides. It was the failure of distribution. It was not the failure of production or of productive capacity. It was simply that the power to consume all over the world failed to keep pace with the power to produce. The lesson that I hope we have all learnt is that in future distribution must no longer be subordinated entirely to production for profit, but must also be related to human needs; and that in time of peace the productivity of the modern world must be balanced with adequate purchasing power. We know now that production can only be maintained through the expenditure of incomes previously earned. The key-note of prosperity is expansion; and, from an economic point of view, contraction, such as was deliberately imposed over a large part of the globe between 1930 and 1940, is death.

We have solved our economic problem during the war because the Government have decided that certain things had to be produced, and have seen to it that money has been available to purchase them up to the limit of our productive capacity; and we shall solve our economic problems after the war if, but only if, the people and the Government of this country decide that the social objectives of peace are of equal importance to the military objectives of war. In other words, that full employment, adequate food, housing and clothing, and light, heat and water for the masses of the people, are of equally vital importance as victory. If we decide that, we can get all these things, just as we are going to get victory. In time of war, thrift on the part of the individual is essential, and I am sure the Committee was well satisfied with the figures of consumption given yesterday. Not the least satisfactory part of the Budget statement was that consumption had actually gone down during the past 12 months. In time of peace thrift is often socially desirable; but when depression threatens, mass hoarding, as Lord Home used frequently to point out, may be fatal to recovery. It has been so in the past, and it might be so again. This Budget is in essence a preparation for post-war policy; and the price of giving to the individual the right to save what he wants, and to the extent that he wishes, is that the State must have the power to ensure that the aggregate savings of the community are offset by a total expenditure sufficient to absorb the available factors of production. Otherwise we shall not achieve full employment in the years that follow the war.

The Chancellor said that the loss of export trade was the main cause of the long continued unemployment in our depressed areas before the war. Strictly that statement is true; but I maintain that it need not have been so, if we had pursued a sane instead of an insane economic policy. It would not have been so if we had not allowed our policies and our lives to be dominated by an abstract economic theory which, in the conditions of the 10th century, has ceased to have validity. Trade is of course a vital topic, which is related to the Budget, but can perhaps be better discussed when we consider the currency proposals of the experts. Nevertheless, I think it would now be generally agreed that the object of trade should not be the piling up of export surpluses, which get a number of countries into unpayable debt and sooner or later freeze up the economy of the entire world. The object of trade should be the mutually advantageous exchange of goods between countries. In other words, our object must be to get goods into this country and not out of it; whereas the main object- tive of the Governments both of the United States and of this country during the years between the wars was to get goods out of their respective countries at almost any cost, in an attempt to export their own unemployment.

This was the beggar-my-neighbour policy referred to by the hon. Member for Birkenhead, East (Mr. Graham White), which in the long run does not affect the total volume of world employment, and does not do any good to any one. Incidentally, the beggar-my-neighbour policy is implicit in the policy of free imports, free trade, and laissez-faire. It is part of that game. But, as the hon. Member is not here, I will not argue the point. Our object as far as international trade is concerned after the war must be to get into the country the raw materials and the food that we require to maintain, and as far as possible and practicable increase, our standard of living. It is not, and should not be, to give goods away to people all over the world, in order to pile up an export surplus which in the long run cannot do us or anyone else any good.