The right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) has tempted me greatly to embark upon a party speech, but I feel it is my duty to the House to lay before them the facts of the economic situation, to give them some account of the events of the last few months, and also some forecast as to the future, and I am afraid that I shall have to claim the indulgence of the House for a very considerable time, because this is a very considerable subject. I think it would be convenient if I were first to deal shortly with the happenings during what, curiously enough, from some of our points of view, is referred to as the vacation period, since the House last debated this subject, and so bring that situation up to date. After that, I propose to give some account of the various actions taken by the Government during this period, and then to pass on to the prospects that the future holds out for us and the further measures we shall have to take if we are to make as certain as we can in this uncertain world of our own economic survival.

The key to our whole problem is, of course, our overseas balance of payments, and particularly our balance with the dollar countries. As the House is aware, there are still many foodstuffs and raw materials which are only available from countries which demand either in whole or in part dollars or gold by way of payment. While, therefore, the problem of our overall balance of payments is in itself sufficiently difficult to resolve, that of our dollar balance of payments is very much more stubborn of solution, and is indeed the central problem with which we in this country, like so many other countries in the world today, face. I shall, therefore, rather concentrate on this special aspect of our balance of payment problem. When the House debated the state of the nation on 6th and 7th August last, it was announced that the Government had decided on certain readjustments of our buying programme from the hard currency countries in the matter of food, raw materials, films and other things, and a figure was then put on the projected annual rate of saving to be accomplished by those adjustments. That was actually the second reduction of our import programme that has been made, and it was then emphasised that there would have to be a sharp increase in our exports, again to hard currency markets as far as possible, if we were to achieve a balance of our overseas accounts.

I may remind the House that it was during the first six months of this year, with a rapidly rising price for imports, accompanied by our continuing inability to purchase the goods we required from outside the dollar area, that the lack of balance between the Western Hemisphere and the rest of the world showed itself as becoming increasingly serious. This lack of balance affected not only ourselves, but all other countries in the sterling area. The discussion which took place on 30th June and again on 8th July undoubtedly served to focus world attention on this dollar crisis, and on 6th August the Prime Minister announced certain dollar saving measures which we were going to take. I do not propose this afternoon to deal with any of the financial details of the situation, because they will be fully dealt with by my right hon. Friend the Chancellor of the exchequer when he speaks later in the Debate.

There was through this period a continuing review of our imports and invisible imports, and further adjustments were announced on 27th August, including the abolition of the basic petrol ration and of foreign private travel. The steps that had been taken up to that time were estimated to bring about a saving in our programme of imports and invisible imports at the annual rate of some £228 million overall. I am going to use sterling figures, I hope, throughout, so as not to get confused with dollars. Of that sum, £200 million was in dollar expenditure. Here I must explain, what is no doubt quite obvious to the House, that these reductions could not all take place immediately. There were many forward contracts placed for foodstuffs, for instance, which had to run on and against the deliveries under which dollars had to be paid in some cases for many months ahead. Similarly, the complete ban on foreign pleasure travel did not come into force until 1st October, and, likewise the petrol ration ran on until the end of September. Although, therefore, the reductions were at the rate of £228 million a year, it did not mean that in the year 30th June, 1947, to 30th June, 1948, that amount will be saved. Some of the savings on these reductions will not be realised until the latter half of next year.

While not in any way finalising the figures for imports adjustments, we then turned to the question of export expansion, and in a speech I made to both sides of industry on 12th September, I explained that we required another £370 million of exports to reach an approximate overall—and not, be it marked, dollar, but overall—balance of payments. I pointed out that within that wider problem of the overall balance of payments lay the harder core of the dollar deficit, which mean that every effort must be made to divert goods into the dollar markets, while at the same time doing our utmost to encourage dollar saving production in this country by increasing, for instance, agriculture, and also in the Colonies and in other parts of the world where we could more easily pay for supplies of foodstuffs and raw materials than in the dollar areas.

I should here mention as a most important factor in the situation the new agricultural programme which was forecast by the Prime Minister on 6th August, and given in detail by the Minister of Agriculture on 21st August. This was designed to enable a net saving oh food imports up to £100 million a year at present prices, but it was, of course, fully realised that that saving could not become effective except over a period of years. So that, important as it is in the medium term, the agricultural programme can have little effect upon the short-term problem of the next 18 months or so. All these devices were aimed at reducing our own adverse dollar balance with those countries to whom we were obliged to pay dollars.

During this period also the negotiations at Geneva were proceeding, and we hope that they are now well within sight of a successful conclusion. Though multilateral trading in the world might seem at present to be still some way off, we still hold the view that it is a desirable objective, as are the many helpful reforms in international trading methods suggested by the draft charter of the International Trade Organisation. This Charter is designed to maintain the level of world employment, a fundamental necessity for the future of the world, and one of the most constructive international conceptions ever incorporated in a world agreement. But the more important immediate effect, will come, we hope, from the tariff negotiations which have been proceeding side by side with the Charter discussions. Though it is not yet possible to disclose what has been done, it is important that we should not be misled by the quite erroneous impressions which have been created by certain statements which have appeared in the Press.

The value to us of these tariff arrangements will be the extra opportunity the reduced United States tariff will give us of selling our goods in dollar markets. They will be a permanent benefit so long as the lowered tariff persists. In order to achieve that we shall bargain certain reductions of our own tariffs, and, in agreement with the Dominions, some reductions and eliminations of Preferences, both as granted by us to the Dominions and as granted by the Dominions and Colonies to ourselves. We have proceeded in that bargaining, as we have always stated we should, upon the basis of a fair bargain on both sides, and though we have certainly gone to the limit of what is reasonable in order to achieve agreement with the various other parties, we believe that the general agreement, when its terms are disclosed, will show a fair balance in the lowering of trade barriers of all sides.