Attlee Warns 'slackers'

Part of the debate – in the House of Commons at 12:00 am on 11th April 1949.

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Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire 12:00 am, 11th April 1949

The hon. and gallant Member for North Portsmouth (Major Bruce) shows himself an active student of White Papers, Tory pamphlets, talks on the wireless, and the "News of the World." The only thing on which I think he got astray was when he said that we on this side of the Committee had never criticised the investment programme of nationalised civil aviation. If he will add HANSARD to his other studies he will find that he is wrong in that. His remarks upon the investment State, I will refer to later in my speech.

I think it is agreed that this Budget might be described as a climacteric Budget. For a few moments I should like to look back to see how we have got where we have got, and the consequences that follow from the route that we have pursued. I suppose that many hon. Members opposite regret the Chancellor of the Duchy of Lancaster, who first put our feet on the broad way which has led where in fact it has led. The trouble about his policy was not only that expenditure was extremely high but that our economy was wholly unbalanced. In spite of many efforts made by myself and my hon. Friends we never could persuade him to agree that there was any connection whatever between external and internal finance.

Where this policy led was to a major foreign exchange crisis. In 1947 in gold and dollars we lost £1,025 million. In 1947 and 1948 we lost a total of £1,447 million. The way that we met this deficit is of immense significance for our present and future policy. In those two years 1947 and 1948 we only met that deficit by gifts to quite a small extent, to the extent of £169 million. We met it from the American and Canadian credits to the extent of £889 million, all of which we should remember will have to be repaid one day; to the extent of £80 million from the South African gold loan, which we are already beginning to repay; and to the extent of £75 million by drawings on the International Monetary Fund. That was a serious thing to do, because those who set up the International Monetary Fund conceived drawings on it as in the nature of iron rations, only to be consumed in the last extremity.

On top of this, we have run down our gold and dollar holdings by £207 million. As well as dealings in dollars and gold we have sold foreign assets outside the sterling area of £51 million in 1947 and £155 million in 1948. In 1948, that total included the Argentine Railways. It is as well to remember that the reason why we got cheap meat from the Argentine last year was because we sold them something solid in exchange for it, and at a low price. As an indication of the way in which things are still going, in recent trade agreements with Yugoslavia and Poland, in each case our remaining assets in those countries were liquidated and thrown into the current balance. When we bought Canadair aircraft in July last year we did not pay but added the price to the interest-free loan we have from Canada and said that we would look at the total again in 1951. To sum up, we have sold all the assets on which we could lay our hands, borrowed all the money we could get, taken all the gifts we could get. The only reserve which is realisable we have left is £471 million in gold which largely belongs to sterling area countries and not to us.

I think my hon. Friend the Member for Chippenham (Mr. Eccles) was right to talk about the difficulty we shall have in applying Keynesian policy if we are faced with unemployment because we have so very little fat left. One can only remove the railings around one's house once and those railings have been removed. Some hon. Members who have spoken today and who have said in their constituencies when they were fighting by-elections, that the Socialist Party have solved the problem of unemployment, have gone rather far. If I might venture advice I would say to them, "Stick to the faked photos; they will not bounce so high."

In the autumn of 1947 there was a sharp change in policy. The President of the Board of Trade, speaking today, said what a strange thing it was that the Tory Party did not always make the same criticisms. It is rather foolish to make the same criticism of a different policy. I noticed a most interesting article in "Tribune" a few weeks ago attempting to "rebunk" the right hon. Member for Bishop Auckland (Mr. Dalton). So foolish and question-begging was the article, that I could not help feeling that he must have written the article himself. That may or may not be the case, but the article gave credit to him for the policy pursued by the present Chancellor of the Exchequer. I would say to both right hon. Gentlemen that very little credit is due to either, because the policy had to be changed. If one runs through £1,025 million of gold and foreign exchange in one year, that pace is too hot for anyone, even the right hon. Member for Bishop Auckland, to keep up.

Given our present level of expenditure, I do not think the present Chancellor of the Exchequer had any alternative but to pursue the policy he has pursued. I do not want to step between him and his critics behind him—they have been many and bitter and have said he was an austere man and "The east wind made flesh" and so on—but I would say to them that in this country, dependent as we are on our foreign trade and wholly without reserves, poised as we are on a razor edge, any improvidence in our Budget now will be immediately and drastically punished.

Some of the right hon. and learned Gentleman's critics remind me of Mr. Justice Piddington's Commission in Australia in 1920–21. That was a Commission set up to decide what the basic wage in Australia ought to be and this distinguished man, Mr. Justice Piddington, and his friends went exactly into what beer and cigarettes a man ought to have and how many times he should go to the cinema and so on. But, when they added up all the basic wages, they found they came to far more than the total national income of Australia. The argument that they ought to have had this wage is just the same as the arguments of hon. Gentlemen behind the Chancellor. They say that we ought to have this and that, without regard to what is possible.

I do not think I should leave the Chancellor of the Exchequer without giving him credit for certain things. I think we can give him credit for the recognition, at long last, after most desperate efforts from this side of the Committee, of the pre-eminence of financial budgetary and monetary control. Those are the real ways in which we can direct our economy. The President of the Board of Trade was today taking great credit for physical controls. Our attitude to physical controls has always been perfectly simple. We say that we may sometimes have to have them in the same way that one sometimes has to have a bandage or make use of crutches. They are not a sign of progress but a sign of inefficiency or disease in our economy. When one gets out of one's difficulties, one can do away with them as the Chancellor is doing, but very slowly and much behind the facts. Secondly, I think we can congratulate ourselves on having very much better accounts. The Chancellor has not gone as far as Professor Hicks would like him to go. I should have liked him to go most of the way with Professor Hicks. The people of this country, however, now have some tenuous thread through the maze into which the right hon. Member for Bishop Auckland led them. They can see some sense in the Budget accounts which they were previously not able to discern.

We can, too, take some satisfaction, as did my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson) in our overall balance of payments. I think that in 1946 we should have said that it would be quite easy to have an overall balance of payments in 1948. In 1947 we should have said that it was quite impossible. In the event it came off, but it is a thinnish reed on which to lean. The test of whether we have a balance is whether we can buy the things we need in order to live. We shall always be able to sell unrequited exports; we shall always be able to sell goods under bilateral agreements if we give for the goods which we receive in exchange more than they are worth in the world market. We shall always be able to sell for weak or valueless currency. I do not think that it will be much consolation in 1952, if the Chancellor were unfortunately still in office, and he were to come to the House and say "It is splendid. We are in overall balance but we cannot buy any meat or feedingstuffs or any raw materials." The pleasure which our people would derive from being in overall balance, would be severely tempered if that occurred.

But with all the credit which we can give the Chancellor, the fact remains that last year, a year of good harvests, a year of a sellers' market, a year when our main competitors, Germany and Japan, were only beginning to creep back into world trade, we still had a deficit of hard currency of £360 million. Not only did we have this large deficit; we still do not look like being able to close it. But the solution to this great problem of how we are to deal with our balance of payments is greatly prejudiced by the fact that our taxation at 40 per cent. of our national income is, I profoundly believe, freezing and ossifying our economy, making all possible solutions far more difficult and preventing that upsurge in our national income and production which ought to take place.

If I heard the President of the Board of Trade aright, he said today that our physical production was 40 per cent. above what it was in 1935. I do not know from where he got those figures. The Central Office of Statistics uses 1947 as a base year and does not go back so far as that. The London and Cambridge Economic Service, taking the index of production in 1935 as 99, has an index of production in 1948 of 119. The Monthly Bulletin of Statistics of the United Nations, using 1937 as a base year with an index of 100, puts production in 1947 at 98, and the highest month this year October, at 115.