Orders of the Day — State of the Nation

Part of the debate – in the House of Commons at 12:00 am on 7th August 1947.

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Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East 12:00 am, 7th August 1947

When I first entered the profession of the law, I was taught as an advocate that when one had no case one should attack one's opponent. I think that the speech of the right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden) is an extremely good example of that principle. In the early stages of his speech I recognised some familiar phrases, and for a moment I could not think from where he got them, but it then occurred to me that he might at last have been reading the Economic White Paper, so I sent for a copy, and I found reproduced, almost exactly as regards the capital equipment programme, the arguments which the right hon. Gentleman has put forward. I am delighted that at last he and his friends have woken up to a realisation of the problem which confronts the country. Not unnaturally, as with all new converts, they are very anxious that it should be understood by everybody that they have appreciated the point. If anybody is interested in realising whether that is a fact, they need only look through the records of HANSARD for the last two years to find continued pressure from the opposite side of the House against the policy of increasing exports, which we have pursued. There is hardly an article that we export concerning which it has not been suggested that we should retain more of it for the home market.

The right hon. Gentleman asked me one or two specific questions to which I would like to reply before coming to my main argument. First, he mentioned foodstuffs and gave the figure of 40 per cent as the cut. I think that he is under a complete misapprehension there. It is about 40 per cent. of the hard currency purchases, but that is less than one-sixth of the total. The question he put was how, with a cut of so much as 40 per cent., we could make up the ration? [Interruption.] I am only making it clear in order that it will not go out wrong. A cut of £12 million a month is one-sixth, or rather less than one-sixth, of the total expenditure upon food, and we have not, of course, suggested that the whole of that can be made up. What we have said is that we will make up what we can from soft currency countries, but large portions of it might have to be cut off, largely points foods, as was said by the Prime Minister yesterday.

With regard to agriculture, the right hon. Gentleman drew attention to the fall in production over the last two years, but he is conscious of the fact, as I am, that during the last two years feedingstuffs-have been unobtainable in the world. In fact, as everybody knows, the destruction of flocks of poultry, of pigs and of cattle as well has been necessary because of the shortage of feedingstuffs. It is easy to knock the total down in six months or three months, but to build it up, especially breeding stocks of cattle, must take a considerable number of years. As he said himself, the expansion has got to be chiefly on the livestock side.

The right hon. Gentleman also commented on the export of agricultural machinery. We have had to export something from this country, as he knows, and agricultural machinery is one of the most profitable exports in that it goes largely to soft currency areas, from which we can get food, as, for instance, the Colonies. It does not go, of course, to America and the hard currency areas, and therefore, in the development of the food supplies of the world, this agricultural machinery has played its part. It has also been of compensation to us and has given us exports for which we could get food in return.

With regard to coal, the right hon. Gentleman asked me a question about the extra half hour. As the Prime Minister said, the position was that we asked for an extra half hour, because in the Reid Report it is suggested there should be a five-day week with an eight-hour day, and the extra half-hour would bring it to that. We thought, therefore, that that would be a convenient way of doing it, and the matter is now being considered by the National Coal Board and the miners, in association with other suggestions, such as the Scottish suggestion for the 11-day fortnight. We hope that they will come to the wise decision which will give the greatest production, and that they will be willing, on behalf of the miners, to do these extra hours of work. How they should fit in and what is the best way in which it can be done, I think must be left to them to decide. As regards winter supplies, plans have been got up for dis- tribution upon the basis that there will be enough for industry in this country. As the right hon. Gentleman knows, the figure given by the Prime Minister was 4 million tons of deep-mined coal and a quarter of a million tons of opencast. If we get that, we shall certainly have enough for our industries and perhaps even a little to spare, and it is upon that basis that we are arranging the allocation, with a stand-by scheme in case we do not get enough, under which we could deal with a situation in which there was a considerable shortage. Therefore, I hope that that is properly planned and being looked at.

The whole course of this Debate has been an interesting one, and broadly speaking it has given support to the ideas of the Government and has signally failed to show any alternatives at all. It is easy enough to criticise and to say, "This is not drastic enough," but it is no good criticising in that way if, at the same time, you say, "You must not do the things you have proposed"—and that has been the nature of a good deal of the criticism. It seems to me that it would be most helpful if I could try to sum up the conclusions without attempting further to give individual answers to the points raised, although I hope that I shall cover most of them in the course of what I have to say.

There is one general consideration with which I should like to deal first. It is to emphasise that in the course of this Debate we have been dealing specifically with the short-term, immediate necessities to meet the present critical situation in our balance of payments. That does not mean that because we have not recapitulated in detail our general long-term programme we have, therefore, changed or abandoned that programme. My hon. Friend the Member for North-West Hull (Mr. R. Mackay), in a very remarkable contribution yesterday, seemed to me to realise more than many people both the full difficulties of our present situation and the inter-relation between our short-term and our long-term difficulties. It is this appreciation of the problem with which we are faced that I regard as of such very great importance—not the attaching of blame to one person or another, but the appreciation of what the situation is. I would, therefore, like to say a word or two on that.

It is the fact that the economic relationships of the world have vastly changed since before the first world war. As has already been remarked, the Western Hemisphere, which was by that time beginning to emerge as the greatest mass producer of manufactured articles—no longer merely of primary commodities although those were produced as well—has, during the two wars and the intervening years, leapt ahead in its producing power, while the rest of the world, including Great Britain, has been unable to make any such corresponding advance owing to the two world wars, and indeed, in these immediate post-war years, has suffered a considerable recession. This has emphasised the unbalance which was already showing itself markedly in the years between the two wars. In other words, there has been an upheaval in the world economic situation as the result of which the rôles of the Eastern and the Western Hemispheres have been completely changed over. Europe, which was the main source of supply of the world for manufactured articles in exchange for the raw materials and foodstuffs which it imported, now finds itself deficient in both manufactured goods and primary commodities, while the United States has become the great supplier of all these things and so, incomparably, the greatest creditor nation the world has ever known.

At the same time the spread of certain industries, in particular, has made available, or is making available in most countries throughout the world those manufactured consumer goods, such, particularly, as textiles, of which Europe again was once the main source. This is not a temporary phenomenon. It is an historical tendency in the light of which the older manufacturing countries must adjust their economies. It is the immediate' and excessive acceleration of these tendencies, due to the incidence of the two world wars, that has brought about the present acute crisis.

We must not allow ourselves to be blinded to long-term developments by the intensity of the short-term difficulties. Nothing that we can do will change this tendency because it is already an accomplished fact in the world, and no praise of our own capabilities or of our determination can reverse that historical development of world economy. We must, therefore, face long-term measures for adjusting the European economy and our economy, if we are ever to free Europe and our own country from a continuing dependence upon the generosity of the Western Hemisphere. As has been pointed out by hon. Members, the effects of this change in world economy have been cloaked first by the Lease-Lend provisions, then by U.N.R.R.A., and by the various credits that were granted by the United States, including, of course, our own credit.

These have enabled the rest of the world to absorb billions of dollars' worth of American goods without any immediate need to repay. The rest of the world has, of course, benefited enormously by that generosity on the part of the Americans, but it has almost completely obscured the true economic facts of the situation, which are now coming to light. The fact is that, on the present basis of world production and consumption, there is a balance of production in the United States of some 12 to 13 billion dollars a year, which must, however, be transferred somehow to the rest of the world, or else the rest of the world must go without. Nor, it must be remembered, does the U.S.A. require to import 12 billion dollars' worth of goods in exchange, even if, which is an impossibility, the rest of the world were able to supply commodities to that value at the present time.

These are, therefore, the inescapable facts of the situation. We had hoped, as hon. Members have pointed out, and as most countries had hoped, that somehow or other we should be able to achieve an expansionist world policy, based on multilateral trade. By increasing the volume of world trade it was hoped that we should be able to even up the productivity of the rest of the world so as to obtain at least an approximate balance with that of the Western Hemisphere. It has become quite obvious that such a balance is much further off than we had hoped and that far more fundamental measures than had been anticipated will be required if ever we are to attain that balance.

A great many small and economically separate nations cannot deal individually with this situation. None of us is large enough in ourselves to command the necessary resources. That is why the suggestion put forward by Mr. Marshall for an integration of European economy is to be welcomed, so that Europe as a whole can tackle this problem of the unbalance of trade and productivity. We have, let us remember, great resources in our Commonwealth, but their mobilisation, unfortunately, has been most sadly neglected in the past. We must now, through their development, place ourselves as a Commonwealth in the position not merely of exchanging manufactured goods for raw materials within the Commonwealth, but also of exchanging both the primary and manufactured commodities of the Commonwealth with the rest of the world, if, that is to say, we are to be in the position to acquire from the Western Hemisphere the goods we shall always need. It is not towards autarcky that we want to move, but towards the development, with other countries, such as those in Europe, for example, of increased exchanges of goods. All this is against a background of continuous and concerted efforts to expand the totality of world trade.

In the meanwhile, however, this integration of economies will have to be worked out and we have our own problem to deal with of the balance of payments, and the major part of that problem must be the increasing of our own production. The cutting down of imports can, and must, in the emergency make some contribution to easing the present situation, but we must not try to solve our difficulties by a permanent lowering standard of living of the people of this country, which, of course, such a cut implies.

Let us, however, have it quite clear in our own minds that nothing we can immediately do, either by saving imports or by increasing exports, can in the present world situation bring a permanent solution to our difficulties. So long as there is an unbalance of the order of 12 billion dollars a year between the exports and imports of the United States of America, no individual country which is compelled to purchase largely from that country can hope itself to bring about a balance of overseas payments. We may hope to bring the balance within manageable proportions, but that is the best we can do by short-term expedients, and the rest must be left to the longer-term and more fundamental action along lines such as I have already mentioned.

Let me turn now to the short-term expedients, especially the question of our productivity and our capacity to export. First, let me deal with exports, assuming for a moment that we can get the necessary production. The right hon. Gentle-man said that, taking our figure of 140 per cent., it would mean, excluding coal, 200 per cent. Figures that have so far been published are over-all over 1938. When we reach a figure of no per cent. it means over-all, including the fact that we used to export coal, but do not do so now. Say it is a figure of 140 per cent. Then we must not multiply that figure up and say it ought to be 200 per cent. or we shall get out of relation with the statistical figures which there are. What we are aiming at is 140 per cent.

The Prime Minister has already emphasised the difficulty with which we are faced in trying to build up to that figure and afterwards to 160 per cent. In July—the figure has just come to hand—we have reached a figure of rather over 120 per cent., but that is a particularly favourable figure, as the July figure always is just before the holidays, because of clearances; and also the import figure for July is unfortunately a new high record, which makes us worse on our balance of payments for July, despite the fact that we have got 120 per cent. of our 1938 exports. That is no doubt partly due to the exceptional shipments of Canadian wheat which my right hon. Friend has already mentioned, but the rest of the climb from now onwards is bound to be more and more difficult.

We are already beginning to suffer, as I have constantly warned the country, from the change of the sellers' to a buyers' market. We are already meeting the import blockages from countries which are suffering from just the same difficulty as we are—an acute shortage of foreign exchange. That makes it, of course, more and more difficult to expand our markets. In this state of affairs we may hope possibly to get some temporary help for sterling exports due to the very fact that there is an acute world shortage of dollars, but even then, unless there is some temporary invigoration of world trade by an injection of dollars or dollar goods, we are bound to find the greatest difficulty in expanding our own export trade and, in the long run, it will be impossible to maintain that expanded trade unless we find a long-term cure for this unbalance between the two hemispheres. Do what we will, therefore, our capacity to export must remain subject to world economic forces which we cannot ourselves alone control.

The working out of the export programme is, of course, a matter for consultation between the Government and industry, and that consultation has long been proceeding through a regular machinery, but it will require further and more intensive development in view of the need for greater exports. Arrangements will have to be made through the machinery for the allocation of materials and labour to see that exports get still further preferential treatment in raw materials and labour, and this will be made possible, we believe, by the reduction in the capital investments programme which will have to be severe, as my right hon. Friend the Prime Minister stated yesterday. However, that capital investments programme must not be done just as a percentage cut; it must be done by a careful examination of every single project to see whether or not it is such as is to be of immediate use to the purposes which we are now pursuing in our economy.

Now it is hoped that the longer hours which are to be worked in those industries which can be assured of supplies of raw materials, fuel and power—because it is no good having longer hours otherwise—will enable us to increase both exports of capital and consumer goods without an undue diversion from the home market, though there is bound to be some diversion for both the capital goods and the consumer goods. One thing that we must not permit, and which we can control of course, is that we must not allow our export programme to fall down because of our failure to produce. There is no doubt whatsoever that we are capable of producing more than we are doing now, both for own internal consumption and also for exports, and that applies to foodstuffs, raw materials and manufactured goods. I think everybody is agreed upon that proposition, but people are not so well agreed upon how we should proceed to implement the programme for getting that extra production.

I cannot emphasise too strongly that, however we manipulate our trade or finance, whatever political system we follow, and whatever arrangements we make with other countries, the fundamental fact must always remain that our standard of living as a people will and must depend upon the volume of our own production, and nothing can give us a higher standard than we can support by our own efforts. Do not let us, therefore, in a maze of conflicting policies and theories, ever forget that basic, fundamental truth. How we distribute that production through the mechanisation of individual incomes is a matter we can debate and decide when we have achieved the production; but no amount of increasing incomes or decreasing expenditure will give us more to divide than we actually produce. We are in a period of acute scarcity and of difficulty so far as our production is concerned on the home front, and none of us should attempt to use those circumstances for our own individual benefit, or to advantage our own position whether it be a matter of individual earnings by way of salaries, or wages, or profits, or rents, or in any other way, not excluding the forcing upon the country of our own pet theories—which does not mean not carrying out our political programme.

In order to get this increased production, we must carry out our planning in an orderly way. We must secure raw materials and sources of power first of all for producing things like coal, steel, transport, agricultural production, and those primary things that are the basis of the whole of our industrial life, and, having secured a sufficiency of those primary things, we can then turn to the semimanufactured goods of importance, and finally to the completely manufactured goods. I am sure there is no need for me to emphasise the stress we have to place upon coal, steel and transport as the fundamentals of our whole industrial production. I have no time to reiterate, nor would it be proper to, the details my right hon. Friend gave yesterday of the various factors we have to take into account, and upon which we must operate, but I would like to say a word or two upon what is perhaps the most important factor of the whole situation.

How are we to attain that programme of production? How are we to get our people to do that which we know them to be capable of doing, but which at the present moment they are not doing? That raises a number of important questions which can be divided under four main heads—political considerations, deployment of the total labour force, improvement of efficiency, and incentive. I would like to deal shortly with each of those in turn.

A number of persons, both inside and outside the House, have suggested that to get a united effort by the nation—the right hon. Gentleman suggested it this evening—for the time being we should set aside our political policy. Such an idea is based upon the profound fallacy that this is merely a temporary difficulty of short duration, and that we shall before long be returning once again to what we might refer to as normal circumstances. I hope I have been able to show that that is not the position. At the same time as we are dealing with the short-term aspect of our difficulties, one must deal with the long-term aspect as well. At the last General Election it was largely because of the economic difficulties then looming ahead that the people decided to give the Labour Party a large majority in Parliament, so that it could carry through its announced programme. That programme was, of course, long-term in character. It aimed principally at two things: first, to give the mass of the workers what they regard as their rightful place and influence in the economic life of the country, and, second, to make possible an economy which could be planned in the national interest, rather than for individual profit, by nationalising a limited range of essential industries and services, and by some forms of controls in a planning partnership with the other industries.

We believe that these are essential aims if we are to increase our standards of production, and so raise or even maintain our standard of living today. We cannot abandon these long-term aims because of the immediate difficulties, and, indeed, the difficulties are a reason for intensifying and not for abandoning what we regard as the only means of securing the maximum production, not of any or all goods but of the things that we as a nation most urgently need today. In times of economic crisis and difficulty it is essential to have a policy, and not to wait for it until we can get the Government servants to help us to make it. The one thing that would be fatal would be for all parties to abandon all their policies today, and so arrive at an amorphous negative attitude which would never get us anywhere. We must have some aim and some policy, and in a democracy that can only be the aim and policy of the majority party. There is, therefore, no question of the Government abandoning these broad, general policies.

We now come to the second point, the deployment of the total labour force. That involves two things, the utilisation of the total labour force on useful production work, and the full manning up of the more essential industries. The unemployment figure has got down to a low level, except in the development areas. Therefore, we must concentrate on finishing our job in the development areas, to provide the right type of employment to absorb the labour which is there. Secondly, it has been decided to stop, by negative control, further people from going into the less necessary industries. If, at some future date, further and more stringent measures become necessary, we can then consider the question of the direction of labour, but my right hon. Friend the Prime Minister said it was only in a marginal case connected with the negative control that that power might possibly be used under existing circumstances, not as a general proposition. The alternative, of course, is that we should persuade people, wherever possible, as we have been doing, to go into the more essential industries, and we hope that with the negative control, with the needs of the country made clear, we shall get a better and readier response.

The third point is the improvement of the efficiency of the existing production units. We are not thinking in terms of ultimate improvement by re-mechanisation, but of immediate improvement here and now. That means reconsideration of the allocation of material in the light of the new necessities, an assurance of full supplies of fuel and power and a redeployment of labour, wherever that is shown, as has been shown in the cotton industry, to increase production, together with the highest efficiency of management, in particular in the area of labour relations. To obtain these results from both sides of industry, they must show themselves flexibly minded, and must be prepared to give up theories or practices which are restrictive. That is absolutely essential, and is something which no Government can do, but which can be done by enlightened leadership in industry itself, and through a thorough appreciation of the facts of the situation by workers and managements alike. It means, too, the taking of the workers into the fullest consultation at all levels, and their treatment as responsible and interested citizens and not as mere bodies. Only in that way will their enthusiasm and interest be retained.

The fourth point is incentive. Here there are many suggestions, most of them on the material side, but we must avoid a competitive raising of wages and conditions in a scarce labour market, which raises prices. Secondly, we must avoid an increase in the general inflationary tendency, which has already been dealt with, where more money is available to purchase less and less goods. Prices, be it remembered, are an essential factor in our export programme. If we allow prices to rise because of internal costs rising, we shall lose and not gain our overseas markets, or at least not be able to gain new ones in the competition. Therefore, incentives must be strictly limited to increased production so that more earnings mean more production. We cannot in any circumstances afford to pay more for the same or less production. We must await the further raising of the levels of earnings until we can provide the goods upon which those earnings can be spent. In the same way, let me point out, that large profits drawn from industry today are just as inimical because they, too, raise the price levels and, furthermore, they offer an immediate temptation for the demand for greater salaries.

In summing up this Debate, I have attempted to give a broad sketch of the difficulties in short and long term and to show the essential interrelation between the two. I have dealt also with what is to my mind the kernel of the whole problem—how are we to produce more so as to have more to distribute amongst our people? But when we have considered broadly and in detail, as we have during the course of this Debate, the actual steps that we must take, we come back to the most important consideration of all: our failure or success will depend in the last resort upon the spirit of our people. The quality of effort that is needed in the next few years is not such that it can be evoked by mere material considerations or by the intensification of self-interest or competitive self-seeking. Employers, staffs, technicians, and workers alike must be fairly rewarded. We must do our utmost to minimise the difficulties and hardships of the housewives throughout the country. There must be no sense of injustice and no favouritism or privilege except as the reward for an honest contribution to the needs of the nation. The increase of money incentives, especially with a greater shortage of goods, cannot inspire the whole nation to the efforts that are now needed for our salvation. We must bring home to the people the seriousness of the country's present plight and the future problems that we face. We must convince them of their power to overcome all difficulties by common effort. We must draw out from people that courage and determination which have always been the hallmarks of the British character.

The time for the realisation of our aims and hopes has been set back by the inescapable economic facts of world development. We can offer no immediate prospect of relief. The struggle of production, the battle of the balance of payments, is as tough a proposition as