I am sorry if I put any gloss on what the right hon. Gentleman said. It is quite possible that it is a little habit of both of us from time to time to put a little gloss on what the other side has said, but, if I did, the right hon. Gentleman has taken the gloss off, and it is for the House to decide what is the broad conclusion between my gloss and the right hon. Gentleman's anti-gloss.
I must first impress upon the House that the import programme provisionally decided upon for the period from the middle of 1947 until the middle of 1948 is, I agree, only an interim programme. The facts about it were circulated by my right hon. Friend the Chancellor of the Exchequer last Thursday. The programme for the year mid-1947 to mid-1948 is, as the right hon. Gentleman opposite said, £1,700 million. This is an advance in money of £232 million, or about 18 per cent. on the programme for 1947 set out in the Economic Survey. The volume of imports envisaged for the year mid-1947 to mid-1948 is much the same as for the calendar year 1947. The great expansion in cost is, as the House will readily conclude, attributable to prices. The policy adopted in framing this programme has been to provide what is required for the health of the people and for the growth of industrial production, but to cut out less essentials ruthlessly. Tobacco, films, and consumer goods will represent only £85 million out of £1,700 million—a mere 5 per cent. will go in those three items, according to our estimates. Of the consumer goods, only a small proportion come from hard currency countries.
Now I turn to the criticisms of the Government's balance of payments policy. They boil down to five. The first argument against us is—this is quite often heard even now, though I agree it did not come from the right hon. Gentleman today—that the American loan was a mistake, and that we ought to have done without it. There are some people who believe that now, and did at the time. Considering the difficulty we have had in keeping going, even by drawing on the loan, it is up to those who use this extraordinary argument to show how adequate alternative supplies could have been found in the time. Some of those critics thought that the answer lay in a more extensive development of British Commonwealth and Empire resources. To them, I would say this—that if the people who have been talking so energetically about developing the Empire had taken as practical and vigorous steps to develop it in all the years that they were in power as this Government have already taken since V-J day, there might have been some shred of hope that Empire resources could have been mobilised adequately in time. But, owing to past neglect, this, unfortunately, is not the case. Others said we ought to have refused wider international commitments and relied on driving hard bargains, country by country. It must now be clear to all that even if such a policy had been justifiable, the immediate bargaining strength of this country would not have supported such a line of action.
The second line of attack has been that the credits and resources available to carry us over the transition from the war have been inadequate. That we freely admit. When our representatives went to Washington for the loan negotiations we estimated we should need 5,000 million United States dollars to see us through until our production had recovered sufficiently to enable us to pay our way. What we actually got was three-quarters of this sum—1,250 million dollars less than our estimated needs. Again, the purchasing power of this already reduced sum was further reduced by a rise which we estimate to be 40 per cent. in United States prices. The persistent boom conditions further compelled us to accept second, third and fourth choices at high prices, instead of what we most urgently wanted. Then we were compelled by events to assume a cripplingly high proportion of the common burden arising from the war. As one example, no less than 8 per cent. of our expenditure in the United States in the past year has gone to feed the Germans. The Government agree with their critics that the hard-pressed British economy has been weighed down further since the war by additional burdens and misfortunes, which we were entitled to hope we might be spared. But no Government could have avoided these evils without running into even greater ones.
The third line of criticism is that the loan has been frittered away on nonessentials—and that, I think, we have already heard some observations about. The loan was, of course, always intended to aid in financing our normal import programmes, until our exports rose sufficiently to pay for them. That was the purpose. The loan has, therefore, been spent on items in the programme. The smallness of the cuts which we have been able to make without threatening national production and health is evidence of the relatively small proportion of the loan which has been going on nonessentials. Those who say the loan should have been spent on such items as steel, mining and manufacturing machinery, entirely overlook the supply conditions in the United States, where these things are almost unobtainable.
The Government did not feel it right to impose, shortly after the war, any greater degree of austerity than actually had to be imposed on this country. Many who are now criticising us for not having cut down more drastically on what they call inessential imports are the very people who, a year ago, were carrying on campaigns against the rationing of bread —which, incidentally has saved us a tidy sum in dollars—and in favour of un-rationed petrol, which would have cost us a great many more dollars, not only directly, but indirectly, by creating extra home demand on our engineering and other industries at the expense of exports. People who took this line, who decried the need for maintaining controls through this critical period, and sought in every way to represent the Government as enforcing unnecessary austerities, really have no right to turn round now and criticise us for not having enforced even sharper austerity earlier.
Some critics take the line that we should have made faster progress in expanding production and achieving our export targets. There is room for fair difference of opinion here, and certainly the Government would not claim to have been perfect. Undoubtedly, mistakes have been made, and things have been done more slowly than we should have liked to see them done. On the other hand, if some of those who are now such fervent champions of greater production had, while they had control of the destinies of this country before the war, thought fit to bring our basic industries up to date, to make reasonable provision for research and training, and had been more active in combating the mass of restrictive practices and habits of mind so common at that time, the task of the Government in securing a greater expansion in production today would have been infinitely easier.
If production is now universally recognised as national duty No. I that is because the Government, without as much help from others as I should have liked, have placed it firmly in that position on the national agenda by a sustained campaign. Not that we have done so badly in production. Demand has been im- mense, and the difficulties of meeting it have been unparalleled. How many people even now realise, for example, that in the first five months of this year, when load shedding and electricity restrictions were in full force, we consumed 6 per cent. more electricity in Great Britain than last year, and 61 per cent. more than in the record prewar year? Without direction of labour, without ample supplies of the raw materials and foodstuffs to which we are accustomed, we have done more to restore and to outstrip prewar production than any other country which felt the impact of enemy explosives and revolutionised also its whole economy for war, as we did. Of course, we must and will intensify our production drive to meet this emergency. Every extra ton of home production of foodstuffs can save us a ton of imports. Every extra ton of coal above home needs is a vital contribution to exports.
Every increase of manufacturing output adds, directly or indirectly, to the margin which we can squeeze out for export. We have squeezed such a margin out of textiles. The raising of the export rate of textiles to £250 million a year will mean that on the present rate of production the amount of textiles available will not permit of more than four coupons a month being left to the home consumer. But the President of the Board of Trade informs me that, owing to the good recovery of the textile industries from the fuel crisis, he will be able to start the new ration period on 1st October instead of 1st November as he previously announced. But he asked me to add that, unless, however, the present slight rate of increase in textile production is not only maintained but accelerated, there can be no increase in the home clothing ration. The Government are well aware of the urgent need for comprehensive and drastic action to break bottlenecks and to get the national output moving upwards in a big way. But although that is all very relevant to the subject of our import programme, it is a matter which was debated in the House of Commons last week, and I do not propose to dwell further on it today.
The point I want to make now is, that while an immediate increase in output would do much to simplify our balance of payments problem, increased British output alone could not solve it. For one thing, it would not, in the short run, increase the capacity of most other countries either to pay for our exports to them or to supply us with the additional food and raw materials which our increasing economic activity requires. For another thing, the gap in our balance of payments is at present far too wide to be closed by any increase in production and exports that can be expected in the early future. The plain truth is this: increased production and exports are unquestionably the long-term solution; but, equally certainly, they cannot provide the entire short-term solution. They cannot enable us to pay our way in time. On a short-term basis, unless other means are found of closing the trade gap, further cuts will be inevitable. We may even have to face some cuts which will reduce our economic activity greatly, and so themselves prevent the rise in production for which we are all striving.
That brings me to the final criticism that has been made of the Government's import policy—that the cuts in our import programme are too little and too late. If one looks only at the arithmetic of dollars, that criticism is unanswerable, but, important as subtraction sums in dollars have, unfortunately, 'become, there are other important things to be considered. The first duty of this Government to our own people, and also to the world, is to keep Britain in full production, in full employment, in good health and in good heart. To starve our industries or our workers, or to take the heart out of the British people, or to throw overboard abruptly a number of our most expensive overseas commitments, would be to play into the hands of the trouble makers and the enemies of democracy, and to strike a blow against world recovery and the prospects of world peace. The Government are quite clear, having given deep and prolonged thought to this matter, that they should not impose cuts of a scale which would require a drastic adjustment of our standard of living until it is perfectly clear and certain that this is the only course open to us.
The problem which confronts us is this. The deficit for the year mid-1947 to mid-1948 is of the order of £450 million.