Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.Donate to our crowdfunder
the speech of the hon. Member for Chesterfield (Mr. Benson) was the most realistic and certainly the most constructive speech which I have heard in this Debate. It was a real constructive effort to' understand the problem and to put forward suggestions for solving it. The Lord President of the Council began his speech by saying that this was a most important Debate. The occasion for it was the statement made by the Chancellor of the Exchequer on 30th June, that not only had we to regulate our imports, but that our position had now become so critical and serious that certain imports would have to be cut. One would have expected that the Government would today have directed the attention of this House and of the country to the problems that face them, to the reasons for them and to the way in which the Government propose to tackle them. One would have expected that all the more because as recently as yesterday, the Lord President of the Council announced to the House the names of a Planning Board, which it had long been suggested was one of the essential things to deal with the situation.
Not one word about the problem which has caused the situation, or the steps which are necessary to meet it, came from the Lord President of the Council this afternoon. It was an incredible speech. He divided it into three parts. The first part was what I might call the usual cut-and-thrust of Debate across the Table with the right hon. Member for Warwick and Leamington (Mr. Eden). Then came a very serious statement, probably the most serious that has been made at that Box since the termination of the war, that we may be face to face, in a very short but unnamed time, with a serious cut, both in food and in raw materials Then came the third part, an accurate summary and analysis of the world situation from 1939, ending, to my great joy, with a restatement of the best Cobdenite principles. But of what was to happen in regard to the immediate situation which is confronting us, which had led to the Government, through the Chancellor, making that announcement about the cutting of imports immediately—not a word.
There is not the slightest doubt that we are passing through a great economic crisis. It is obvious that the crisis is increasing in its seriousness. The hon. Member for Chesterfield was quite right in the warning he gave as to what might be the eventual crisis. We have been going on in this way, of being given, in successive periods of about three to six months, some kind of warning that a new crisis is facing us; there is some new factor or figure which gives a sudden jerk to the people of this country. We all know that this is due originally to the world war, its length and the upset it has caused, but this sort of jerky crisis, springing up every now and then, really condemns the Government for their failure to carry out a proper system of administration throughout the period they have been in office.
The first duty of a Government is to administer. They should then introduce such legislation as is necessary to make that administration more effective and more economical. It seems to me that what they have done is to clutter up themselves and the Government machine with a whole host of Measures. With a number of these I certainly agree in principle; I have said so and have voted for them, but I feel that it would have been better to postpone some of them to a more appropriate time. The Government themselves have had a tremendous burden put upon them individually, but they have also placed an even greater burden upon the Civil Service, which inevitably means that we shall not be able to have that effective administration which we should have with a fresh, active body of men.
Let us consider what is the position today. It is difficult to steer between the Scylla and Charybdis of optimism and pessimism. The "Economist" rightly pointed out the other day that while "pessimism overwhelms one's judgment, optimism stupefies it. It is right that we should first consider the position at home before we consider the position of this country face to face with other countries; its trade and what is the balance of its import and export trade. The first significant point is that in 1946 there was a drop in national income of something like £400 million. I have not the figures for the first six months of 1947, though I imagine that they are much more serious than those for 1946. In 1946 there was a drop of almost 5 per cent., in spite of the fact that something like 3½ million men and women were demobilised and the major part of them put back into industry. There they received higher wages than in the Armed Forces where we regard them not as adding to the wealth of the country but as taking it away.
Though there was a steep rise in wages of somewhere between 65 and 70 per cent., the total net investments in 1946 amounted to only £700 million. The gross investments were £1,300 million. The inevitable conclusion is that there has been a fall in productivity of something between 20 and 30 per cent. Despite the fall in national output, consumption increased during 1946 by nearly 10 per cent. and now it is nearly equal to what it was in 1938. That means that there has been a far greater increase in consumption than is compatible with effective industrial reconstruction. There has been a failure not only to carry out the proper reconstruction but to make known what is needed for reconstruction.
One turns next to the most important matter of coal. The least amount to see us through the winter is 200 million tons. I think that everyone feels that that in itself is not really enough to meet every situation. Now it appears that we shall not achieve even the 200 million tons this year. I agree that the recruiting for the mines has been quite remarkable, but that is not enough. There must be a real concentration upon coal production. The Government might with advantage pay attention to the remarkable report produced by the Parliamentary and Scientific Committee upon the proper utilisation of coal and not rely so much upon production. Steel is also in short supply. One does not really know which of the two commodities is the most important except that one realises that the supply of steel must depend upon the amount of coal available.
One or two hon. Members have already mentioned the shortage of labour in essential industries and the maldistribution of that which is available. The hon. Member for Chesterfield called attention to that point today and Mr. Will Lawther spoke about it yesterday. Something must be done about that. We are short not only of labour for the export trade but of labour for the manufacture of the necessary goods required for consumption in this country. Hon. Members must remember the possibilities of inflation. There are roughly £1,000 million available over and above the value of the goods and services which can be purchased, and the urge is tremendous. All these are major factors in relation to the position at home.
Let us turn to the position as it is affected by other countries. In 1946 we thought that what was necessary, in order that we might get back to normal and restore parity between exports and imports, was that we should boost our exports up to 175 per cent. of the 1939 volume. Some people thought that that was not enough for the good reason that, almost inevitably, prices were bound to rise. At any rate, that was the target figure set by the Government. We failed, and failed completely, to achieve that target in 1946. The best that was achieved was in the fourth quarter when we reached only 111 per cent.—64 per cent. below what we wanted. In the third quarter we reached only 104 per cent. That left us with an adverse balance of over £300 million. The only way in which we could get over that difficulty was by drawing upon the American loan.
Towards the end of 1946 the Government must have made their calculations for 1947. We got those figures from the Government in February and March. What they then said was that they hoped that in the coming year we would reach a. target of 140 per cent. by the last quarter. That would mean that there would be an adverse balance—because we could not reach the 175 per cent.—of somewhere between £350 million and £400 million. I am certain that the programme was drawn up before the fuel crisis and the blizzard. Those are probably the main reasons why we cannot possibly achieve the figure of 140 per cent. by the end of the year.
What have we achieved so far? In the first quarter we only got parity with 1938. In April we dropped to 98 per cent. and now in May we have gone up to 104 per cent. The Government are unduly optimistic if they think we can reach 140 per cent. by this time next year. What is the position? As has been pointed out, prices abroad are rising. One need only refer to the figures given by the Chancellor of the Exchequer. The value of the £ is decreasing. There is less faith in it in other countries. What has been the position since the Government made their estimate about what was required? In the White Paper, they estimated that what would be required this year to provide the same volume of imports as they proposed to buy was £1,380 million, but, owing to the increased prices, as the Lord President pointed out, that has now to be raised to £1,700 million, a difference of £320 million. Although there has been a slight drop in certain prices, and the Lord President is quite right that the sellers market is going, nevertheless, we cannot gamble. There has been too much gambling on hoping that all will go well in the future.
What does that mean? It means that, during the last two months, the adverse balance has been, not at the rate of £400 million, but at the rate of something like £700 million—£300 million worse than was estimated—and the overall adverse balance at the end of this year is expected to be £650 million. These figures are so appalling and so astronomical as to be almost meaningless. The drawings have been at the appalling rate of £900 million, so that, in one 12 months, we should have exhausted the whole of the original amount that we thought we were borrowing from America. The original amount we thought to get was £1,000 million, but, in truth, it has turned out to be something in the neighbourhood of £700 million. The position will be further aggravated beyond 15th July. The sellers' market is already disappearing, and it will be difficult then to find a ready market.
May I also add a word on export trade? It will be still more difficult to get markets in future unless the quality of our exports is maintained at the high standard which made our goods famous before the war. These are the factors and this is the position which faces us, and it is a formidable challenge which we have to face. What has been lacking, and what ought not to have been lacking, is the bold courage to say, as the hon. Member for Chesterfield (Mr. Benson) was saying a short time ago, and to do, if necessary, the unpopular thing now, to look forward and say that these things have to be done, however unpopular they may be, so as to save the situation from becoming worse month by month. What there has been, instead of that, is timidity and a great deal of contradiction. Very rightly, the right hon. Gentleman above the Gangway referred just now to the two voices —the voice of the Chancellor one day. almost contradicted by the speech of the Minister of Food the next day. One of the members of the Government, for example, the President of the Board of Trade, called attention to these very matters and was warning the country about the dangers and difficulties, only to be contradicted by somebody or other, speaking a day or two later, and saying: "Really, everything in the garden is lovely; we have never been as well off as we are today." Both cannot possibly be right, and I wish they would speak with one voice.
In March, when we had a Debate on this subject, the President of the Board of Trade announced—and this was the one concrete announcement which he made then—the appointment and strengthening of the Economic Planning Board. Incidentally, I blame the Government in allowing some of the finest planning material, if I can call them that, to be dispersed immediately after the war. We had the greatest difficulty in persuading the then Government of the need for a Ministry of Supply, and then we had the greatest difficulty again in persuading the Coalition Government to appoint a Ministry of Production. These experts did extraordinarily good work, and the Government got the finest men together, yet, when the war ended and they knew that the problems ahead were going to be far greater, they allowed them to disperse. Now, the President of the Board of Trade says, "We are really going to reconstruct this Economic Planning Board. What is really needed is an overall plan, and we are setting to work straight away with the appointment of this Board." Two weeks later, the right hon. and learned Gentleman announced the appointment of Sir Edwin Plowden, and said that the Board would be working by the end of that month. We heard no more about it until the Lord President mentioned it again later, and until yesterday, when he told us the names of those who have been appointed to the Board. It was perfectly obvious that they have not begun their work, and yet, on rath March, the President of the Board of Trade said that this was going to be done at once.
Why has there been this delay, when we were faced with the fuel crisis and the blizzard in February and March, and nothing seems to have been done until yesterday? The Lord President of the Council used one phrase which I remember; it was a most striking phrase: "Time is against us." Yet, who has been wasting all this time until the appointment of this Board? If the members of the Government, and those who support them, claim to be super-planners, here was their opportunity to give a lead to the country, but we have yet to know what the plan is. All we know is that a Board, which has not yet met, has been appointed.
The Chancellor has now announced these cuts, which one paper summed up like this:
Less tobacco, less news, less petrol, fewer clothes, more exports, more work, no plan and no policy and no promise.
I think that is a fair summary of it. We really want to know what the Government are proposing to do. What we are blaming them for is because, so far as we can see, there has been no planning, no direc-
tion and no guidance of any kind whatsoever. The cuts proposed by the Chancellor were also described, and perhaps best described, in a paper very friendly to the Government—a very lively weekly, "The Tribune"—as "fiddling palliatives. "If we stop the whole of tobacco and luxury imports, if we add the cost of all these things together as they appear in the statement made by the Chancellor of the Exchequer—petroleum products, £55 million; tobacco, £50 million; consumer goods, £35 million.— they do not come, all told, to £150 million, but the gap is £650 million. All that we are proposing to do is to cut out possibly something between £20 million and £25 million. This reminds me of a case where a great expert doctor is called in to a case of illness. He says, "Well, the patient is in a very bad state indeed. Something really radical has got to be done. The first thing I propose to do is to have his toe nails or finger nails cut. That is all. What I am going to do after that, I cannot tell you. But I will appoint a few more doctors, and, some day, they will say -what else should be done."
Far more than that is needed. We have no right to throw all our responsibilities on to America. Let us also remember that the great and generous offer—it is only a suggestion at the moment—which has come from Mr. Marshall depends, in the first place, upon our ability to draw up a real balance sheet of our assets and liabilities, and for every one of the countries of Europe to do the same, and not merely to leave it there. We should then put forward a new balance sheer on the footing that we will help one another, in so far as we possibly can. After that, we should then see what is needed from across the Atlantic to help us once more to get on to our feet and to get on with our work. But, even then, it is not Mr. Marshall who decides; it is Congress that decides, and, as the hon. Member for Chesterfield so rightly said, we have no right to gamble on the American offer. We must pull ourselves together, and see what we can do to help ourselves
We cannot cut down food and we cannot cut down our raw materials. If we cut down the food, and thus lower the standard and capability of men to produce the things we need, and if we cut down the raw materials needed for the manufacture of goods for export, then we are cutting our own throats. What, of course, we have to do, is to increase our production. But, in the meantime, we must put our own house in order. As the hon. Member for Chesterfield said, we are, at the present time, misusing a great deal of our labour and materials. Let us cut out the luxury articles, although they will not amount to much in any case. What has really happened is that we have undertaken to do more in this country than we can possibly carry out.
What I want the Planning Board to do, in the first place, is to consider whether the proposed capital outlay throughout the country cannot be very considerably reduced, and a good deal of it postponed. Secondly, I want them to consider whether it is possible to reduce our commitments abroad. There is not the slightest doubt that our commitments with regard to the Armed Forces are far more than this country can sustain. It is also necessary for the Planning Board to overhaul the many subsidies which are now being paid. I think that if they can be cut down without undue hardship—of course, there is bound to be a certain amount of hardship involved—it will help to balance our budget, which is not really balanced, and will reduce our inflationary position. We must bring down the demand until supplies are sufficient to meet it.
Because we have overplanned, and have undertaken to do more than we can carry out, we are having bottlenecks. In his address to the Economic Society, Sir Hubert Henderson, who has given a great deal of help to His Majesty's Government, said that the excess of demand over supply is, through consequent bottlenecks, lessening the output of the nation to an extent greater than that which was lost before the war through having more than a million people out of work. That is a serious matter. What has happened is that more has been planned than can be carried out, and there has been a consequent scattering both of labour and material. The result has been bottlenecks here and there, which, in turn, means that we have not been getting the amount of production we could have got. That eminent economist, who has given invaluable help to the Government both during and since the war, said:
The loss in the national output amount? to a million men.
We know that the Planning Board have been formed, and that they will get to work, and will work full time. I was surprised to learn yesterday that, apparently, the members of this Board will only charge their expenses. If they are doing national work, the nation should pay them; it should not be left to some individual private firm to do that. They should be full-time appointments. The first thing necessary for the raising of individual output is for everyone to know that such a raising of output will solve the problem. It was the deep consciousness of everyone of us of the perils that we were facing during the war, and, therefore, of what was required from us, which carried us through that war. We have got to instil into the people the deep consciousness of what this situation is going to mean. Give them the facts and the figures, and let them see what are the trends and what is happening.
We want closer co-operation between the management and the employees, and a better understanding. Where we find that obsolete systems of work or pay are stopping production, we should abolish them. Finally, we should consider again what incentives are needed in order to increase production. Above all, the Government should give us the overall plan. I do not mean that they should go into details on a low basis, but on an overall basis. We want the leadership and the guidance. If that is done, I have not the slightest doubt that it will be possible for us, to overcome our great difficulties and perils, as this country has always done in the past. Given proper guidance, proper direction, proper leadership and proper inspiration this country will pull through triumphantly.