Sterling Exchange Rate

Part of the debate – in the House of Commons at 12:00 am on 27 September 1949.

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Photo of Mr Ian Mikardo Mr Ian Mikardo , Reading 12:00, 27 September 1949

I do not mind the Chancellor asking me not to do this, that or the other, but I have eyes to see and ears to hear, and I was at the T.U.C. at Southport, and my right hon. and learned Friend was not, when the Foreign Secretary came along and absolutely pooh-poohed any suggestion of any working together. It was just at the critical moment when Europe was ready for a lead in economic co-operation, and in his speech the Foreign Secretary revealed with absolute clarity that he did not know the difference between economic union and an economic closed shop. He poured the iciest of cold water on the whole concept of European economic co-operation, and set back by two years the opportunity of achieving that, and made the Chancellor's difficulties all the greater now that he is trying to do it through O.E.E.C.

The second example of the way in which Government policy, itself was a contributory cause has already been referred to. It is the lifting of controls and the spring-time optimism of the President of the Board of Trade which tried to induce us to believe that by letting people go where they wanted and make what they wanted, we could somehow harness the nation's industries to the national need.

The third way in which Government policies have contributed is that all the time we have been cutting this and cutting that and tightening the belt this notch and tightening the belt that notch, we have gone on and on increasing our military commitments and our military expenditure, just like people who do without their Sunday dinner or give up smoking cigarettes but nevertheless buy a new set of plush curtains for the front window in order to impress the neighbours. That is the way we have been behaving. We take on these commitments in order that the Foreign Secretary may make grandiloquent speeches and so that we can delude ourselves into thinking that we are still in our 19th century economic situation.

That increased military expenditure is terribly relevant to our present discussion in two different ways. Firstly, some external currency is involved. I believe that since the end of the war we have spent much more than £1,000 million of external currencies upon our military commitments. Secondly, the circumstance which the Chancellor himself poses more clearly than anyone else in the House could pose it, is that if we are to have more exports we can only do this by cutting social services, capital expenditure, home consumption or military expenditure. All men of goodwill will support him to the hilt when he said that we must not cut social services. I sincerely hope the Government will not be so crazy as to cut capital expenditure in a way which will weaken the improvement in the efficiency of British industry and make it still more difficult for us to compete with the Americans and the Germans.

I cannot see where capital expenditure is going to be cut if it is not cut out of social services like hospitals or schools or out of industrial re-equipment, and I believe that both of those would be equally wrong. "Home consumption," says the Chancellor, "let us tighten our belts a notch or two"; but one thing which is never called into question is the constantly increasing military expenditure. It is considered to be heresy and blasphemy even to begin to call into question whether the money devoted to that expenditure is used with the same efficiency and the same economy of manpower that we expect from the rest of the national economy.

The Chancellor goes to the microphone and says—how much we all agree with him—that nobody must jump the queue and that this devaluation will be no good if any section of the community seeks to escape bearing its fair share of the burden. Good enough. Now the people who live on wages will have to bear a share of the burden, so will the people who live on salaries, so will the people who live on profits, so will the civil servants in Government Departments and so will industry; so will everybody except the generals the admirals and the air marshals, who are not being asked to bear any share of the burden. I have no information at all but I have a horrible suspicion that they will come and ask us for some more money.

I am not an expert in military strategy and costs, but it seems to me, as the veriest and most simple layman, that we cannot have short-service men distributed in penny packets all over the world throughout the Foreign Secretary's commitments and cannot have, as we now have, more men being carted round in troopships than at any previous time in history except during war, without our military Estimates going up higher than the figures for which we have budgeted this year. I am greatly encouraged to see two hon. and gallant Gentlemen opposite, who must know much more about these things than I do, nodding their heads in agreement with me.