We’re celebrating National Democracy Week! Find out more

Amendment of Law

Part of Orders of the Day — Ways and Means – in the House of Commons at 12:00 am on 17th April 1947.

Alert me about debates like this

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby 12:00 am, 17th April 1947

The hon. Member for South Cardiff (Mr. Callaghan) has given us an interesting and vigorous speech, as, indeed, he always does. However unfortunate I may think his general view I generally find myself in agreement with, at least one point in his speeches, and today's is no exception. I do so much agree with what he said, that we should take the sternest possible attitude with regard to sterling balances. But I would point out to him, in respect of what he said about our not having yet paid anything thereby implying that there was no reflection on the Chancellor for past omissions, that we have paid out large quantities of exports which our housewives here would only too gladly have had, and which ought to have been used to obtain, in return, raw materials and machinery we so urgently need. But I must leave the hon. Member's speech, because if I follow him further, I shall go on too long.

I think that on all sides of the Committee we should not deny the Chancellor a tribute for the physical feat he performed on Tuesday. In his speech of three hours and three minutes, there was, so far as I could see, no alteration in the quality of the plausibility of every sentence he uttered. But I do not think that on any side there was any conviction that he was substituting a real plan for the policy of drift which we have had in the last year. It may have been the Chancellor's high spirits, which we all admire; but there seemed to be a touch of complacency or self-satisfaction in his speech, and it is for that reason that I am venturing to read to him a sentence or two from a leading article which appeared in a quite important paper a few weeks ago. I know the right hon. Gentleman is very fond of reading the national Press, and of quoting it to us, but this, perhaps, is a paper that he does not read. The article said: Frankly, we think that several of the Ministers deceive themselves; they regard the whole electorate as enthusiastic converts to Socialism. They believe that however trying and irksome our present troubles may be men will blissfully murmur: 'Attlee's in 10, Downing Street. All's right with the world'. That is a treacherous delusion. Is the Government doing this part of its job—informing the people, explaining to the people—as well as it could be done? The 'Daily Herald' thinks not. I did not read the "Daily Herald" yesterday. I normally read it every day, and take it in; but I have not had time to do so, and I did not see what was said in the leading article. But if it was as penetrating as the leading article on "Telling the People" it may have referred to the comment of my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson) on the Chancellor's so-called surplus. The right hon. Gentleman, with that studied moderation he always uses, said he could not say that that surplus was wholly genuine. I think that the "Daily Herald" might have pointed out that a surplus of this sort was no real way of indicating to the country the real situation of the nation's finances, nor was it any contribution to the checking of excessive spending power. It seemed to me that the right hon. Gentleman the Chancellor, in his hankering after financial purity, was modelling himself more on Mr. Gladstone than on Lord Keynes. What Mr. Gladstone did in 1880—if that was the date—was, no doubt, all very well for those days. But at that time the object of the Budget was to raise revenue, whereas now we look upon it as an instrument for economic planning; and I would, with all diffidence, suggest that the Budget speeches of my right hon. Friend the Member for the Scottish Universities showed more clear indication of the modern outlook of budgetary planning than any of the present Chancellor's.

I now come to the point that has been raised by so many of my hon. Friends. Though they have said it so often and so well, the gravity of the situation seems to me so serious that it cannot be repeated too often. I am, of course, thinking of the balance of payments. I suggest that it is so much the most urgent objective today, that everything else should bow before it. Obviously, we can achieve that only by a surplus of production over consumption sufficient to enable us to export enough to obtain our vital imports. It is quite clear that the American loan, on which we have been living so much during the last year, is going to run out far ahead of the time in which we can repay it. It has been suggested that we may have to ask for another; that we may have to consider accepting another loan from the United States. I would suggest that, perhaps, the favour of lending is more important than the favour of receiving. We may have to consider more what the United States will do than what we can expect. I do not for one moment suggest that the United States would take into consideration what party was in power in this country, but I do suggest they would take into consideration the degree of progress we were making towards recovery. I do not believe they lent us this money in order that we should die easily, but in order that, in our period of convalesence, we should have enough to emerge successfully. I believe that enlightened self-interest in the United States, is now convinced that a prosperous Great Britain is of advantage to the United States. For that reason, I feel that it is vital that we should make far greater progress towards standing on our own legs. Even if we have to go back and ask for another loan, it must be because we need it for continued recovery, and not because we are dying.

Production is failing catastrophically in this country today. It has had the misfortune of the fuel crisis, which, I believe, was a crisis that might well have been avoided. It accentuated that difficulty very much indeed, but, as a matter of fact, our production was ceasing to rise before that crisis occurred. I think it worth while examining why we are failing in our production. I believe it is directly due to the Government's policy. I take hope from that, because if there is a reason that we can cure, then we can hope that, even with this Government, things may get better, when the Government realise their misdeeds. I have no doubt it is partly due to the fact that men are not working hard enough, and I wish that the Chancellor could have seen his way to increasing the incentives more than he has done. It is, no doubt, in part due to inadequate machinery, because of our inability to renew it during the war. But I do not believe that either of those two reasons is the real cause of the failure in production. I believe the real cause is the failure of the flow of stocks and component parts in factories.

The "Manchester Guardian" had a survey made of the industry of the country a few weeks ago, and in case hon. Members did not see its report, I am going to quote five instances of failure in factories. There was one large factory held up entirely for want of one machine. Another factory was having to cease production because there was no boxes for the goods it produced. In a third factory a conveyor belt was working at one-third of the normal speed because otherwise it would run out of component parts. In a fourth case, 3,000 men were idle in a motor-car factory, because no door hinges were available, and the final instance is of a cement factory which had to halve its exports because there were no paper bags in which to send them. Labour is being wasted in some factories, while it is urgently wanted in others. There are jobs for everyone, but everyone has not got work, and many men are in the wrong job. I believe it is essential to secure continuity of supply to vital production, even at the expense of reducing other production. A friend of mine who is well known to the right hon. Gentleman, and who is the chairman of a great industrial company employing many thousands of men, and making an article for which there is the greatest demand for export, tells me that they are working at part-time; that his men are working only 34 hours a week; that there is a hold up of necessary parts and that production is being entirely held up on that account.

I suggest that that failure of the flow of stocks to the right places has been having a catastrophic effect in holding up production, and that it is due, to some extent, to the financial policy of the Chancellor. There is this tremendous pressure by purchasers which is first dammed up one side and then breaks out on another. As one financial paper put it, the song in the Chancellor's heart is wind on the nation's stomach. Goods are being made which people do not really need. We often buy goods we do not really need because we cannot get what we really do need, and that is a fearful waste. Men are being retained in industry who are not working full time, because of this inflationary situation. The employers knows that rising costs do not really matter, because he can add them on to his prices, and, consequently, he keeps his men on part time and there is a huge concealed unemployment. Men are employed in the wrong industries, in football pools and in all sorts of other activities, when they are urgently needed in agriculture and the manufacturing industries. All this is a product of an inflationary situation.

Finally, we have the insistent demand for higher wages. Higher wages merely mean greater prices, unless they are accompanied by greater production. I do not think it is sufficiently realised that a fight for higher wages, unless accompanied by increased output, is not a fight against the employer, but a fight against the consumer. I suggest that, unless the Chancellor can adopt a financial policy which will act as an astringent and take the water out of the system, he will be forced to adopt a wages policy which might be difficult to get over with the trade unions.

What plans have the Government made in regard to the expenditure of our precious dollars on machinery? It seems to me that it is most unwise to be buying machinery, however good dividends it will pay in years to come, unless it is going to pay dividends immediately. We cannot afford to wait several years for results in our present day position. I understand that we have bought a large quantity of machinery for the cotton trade. It might well be most valuable in years to come—indeed, I think it will—but it is not likely to produce any results for the next year or two, and that is the time that matters to us. The Government should have a clearer plan. Secondly, what is their plan in regard to the disposal of machinery from this country? Last year, we sent out of this country three times as many turbines as we sent out in 1938. In 1945 and 1946, we sent out of this country several times the value of generating plant sent to Russia as in 1938. In 1938, we sent out £44,000 worth; in 1945, £860,000 worth; and, in 1946, £940,000 worth of generating plant. This I believe is one of our crucial bottlenecks which so disastrously interferes with the production of the power stations.

Finally, I want to say a word about the Chancellor's abuse of deflation. If I remember rightly, the right hon. Gentleman referred to certain people in the Press as "baleful Bourbons" who had forgotten nothing and learned nothing. I do not know to whom he referred, but those who have been most prominent in that direction are Lord Brand, Professor Robins, Sir Herbert Henderson and the editor of the "Economist." The first two served the State during the war with such distinction that I think their opinions are entitled to consideration and the third is an important ex-Treasury official. I think it was a little confusing that the Chancellor should have expressed such a poor intellectual opinion of these gentlemen—I think those were his words—when he was making a pretence of adopting just the policy they were recommending. But, on further investigation, I found that there was a rather human explanation of this, because the journal most prominent in urging this policy had also stated that Ministers like the Chancellor, who misled the people, should either be muzzled or removed. I suggest to the Chancellor that there is nothing essentially bad about an inflationary policy or a deflation policy. It is entirely a question of the conditions existing at the time it is applied. A medicine which is good for a man with a temperature of 105, is a bad one when he has a temperature of 95. Before the war, we suffered from the condition that there was a far greater supply of goods than there was demand, and the result was a slump. At the present time, we are suffering from a greater demand than there is supply, and there we have inflation. Before the war, we did not, apparently, know how to arrive at equilibrium. We did not know that, until Lord Keynes published his work on the general theory of unemployment in 1937. It was then left to chance. Now, the Government, unlike any of their predecessors in this country in peace time, have the chance.

I suggest to the Chancellor that he should not advance into totalitarianism in the form of regulation of wages and direction of labour, although I think that might be vitally necessary if something is not done, and would be logical, even though it would be distasteful. Nor, I suggest, should he retreat to laissez faire. There is another pair of trousers he should put on; he should get a clear picture of what total expenditure will be, and what the total resources are, and see that they meet. So far there has been in none of his speeches any clear estimate of 'what total production is to be and what total consumption is to be. By that I mean expenditure by the State, by capitalists on equipment, and by consumers. After all, that is the balance that has to take place. The balancing of the Budget is not a vital matter. What is absolutely necessary is a balance of total production and total consumption. I would like to refer to something that was said by the President of the Board of Trade: Total resources and total needs must automatically balance. If they do not do so in accordance with some plan, then they will by deficience appearing perhaps on the very things of which there is the most vita] need. It seems to me that, at the present time, the Chancellor should be exerting the greatest possible disinflationary pressure. I remember that when Lord Keynes first joined the Bank of England, surprise was expressed that one who had been so critical of that institution should have joined it. His reply was; "Orthodoxy has picked me up." It almost looks to me as though orthodoxy on its move forward had overlooked the Chancellor. The Government have repeatedly stated that the resources are not available for all that they want to do. Has not the time come when they should make up their minds on priorities? If they do not do so, they are indeed abdicating from their responsibilities. I would like to quote a short passage from the "Economist" of 15th February: There is an over-all shortage, and unless drastic steps are taken to establish priorities there may be a general breakdown. But the establishing of priorities involves the cutting down of those programmes that do not get the first priority, and cutting down is unpopular. So everything is allowed to go ahead indiscriminately—nationalisation, social welfare, housing, health, education, industrial reconstruction, exports, and defence The danger is not that the devil will take the hindmost, but that the devil will suddenly swoop and take the lot. That is the point I want to press home. It is not a question of giving up something that we need; it is the case that unless the Government choose which they will give up, all may be lost. Last year the Government were still spending 28 per cent. of total expenditure, which I think is about double the proportion of before the war. I am not sure whether the State can continue indefinitely at that rate and retain its vitality, and even its morality.

In conclusion, I urge upon the Chancellor to put first things first, and to think more than anything else about what financial policy can be adopted so as to increase production, to cut down expenditure by the Government, and to cut down expenditure by the public in any degree that is necessary. I believe the sands are running out. I do not take the alarmist view that we shall be "on the rocks" in a year's time, but I say that at this rate within two years we shall not have the raw materials and food necessary to maintain a decent standard of living in this country. If we do not get right by that time, the future will be a very black one. I do not ask the Government to give up their plans of nationalisation, but I suggest that they defer them both because of the dislocation they cause, and because, I believe, the pace of legislation is in danger of causing a breakdown in the administrative machine. I know that hon. Members opposite can say they have a mandate; they are fond of talking about their mandate; but I suggest that there has been a change in conditions since they got that mandate. A doctor may prescribe a certain treatment for a patient in one condition, but only a lunatic would continue that treatment a year and a half later when the disease had entirely changed. We are in a very different position today from what the electorate in June, 1945, thought we would be in. Unless the Government make a contribution towards bringing about conditions in which production can be expanded, I believe we shall suffer in this country a poverty which we have never before experienced, and one in which the workers in this country will be the first to suffer