Orders of the Day — Budget Proposals and Economic Survey

Part of the debate – in the House of Commons at 12:00 am on 11th April 1951.

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Photo of Mr Oliver Lyttelton Mr Oliver Lyttelton , Aldershot 12:00 am, 11th April 1951

I think it will be necessary for me to devote a large part of my remarks to the general economic background of the problems which the Budget seeks to solve. The right hon. Gentleman, in his very lucid explanation yesterday, made quite clear how the incidence of the taxes would operate.

First of all, I should like to express some pleasure that the authors of the Economic Survey this year have decided to abandon the practice of prophesying. The authors have left the prophet's mantle in the cloakroom, and I think that, if they have not already lost the ticket, they are quite determined to lose it sometime. That is to be welcomed. Here and there in their historical retrospect they treated us to a delightful extravaganza in the art of special pleading. By suppressing all the inconvenient things like the fuel crisis—they did not have to go back to the Battle of Waterloo for that—the convertibility crisis, the Daltonian inflation, rising prices, and so forth, they have been able to dish the whole thing up in a sort of illuminated address to the Government—no doubt, all ready for the Dome of Discovery at the Festival of Britain.

I should like to begin by saying how delighted I am with the financial results for 1950–51. I make no bones about it that they are far better than I ever estimated that they would be in my greatest moments of optimism. If we could ignore the causes which led to so much of the recovery, I think that we should all have solid grounds for satisfaction. Everybody in the House is heartened by the achievements of our exporters. There again, they achieved figures which I do not think any of us expected. I get the added satisfaction from their achievements because exporters are, of course, all free enterprise undertakings, with the exception of coal, and there unfortunately our record was not quite so good.

Every Member of the Committee, I am sure, feels great satisfaction that at the beginning of 1951 we can stand on our own feet and do not have to rely any more upon external aid. A proper tribute is paid in the Economic Survey to the great help which the United States of America, the Dominions and Canada, in particular, have given us through loans and through Marshall Aid, and I think that we might pause at this moment to express our gratitude for one of the greatest and most unselfish acts of statesmanship—and I am thinking particularly of Marshall Aid—in history.

Judged by themselves, these achievements are a great tribute to the vitality of our people. I think that the results give solid ground for satisfaction, but, unfortunately, much of the success in restoring our balance of payments, for example, and much of the success even of our exporters has been due to causes which everyone in the House deplores. It is as well to remember that about this time last year the business outlook was uncertain and hesitant. Exporters were wondering whether the demand for their exports would be kept up. Profit margins were being cut and German and Japanese competition was beginning to be felt. Two months later, all this uncertainty was resolved by the outbreak of the Korean War.

We would have preferred to work out the problems for ourselves and not have had them worked out for us by such a terrible event. But there it is, and since the Korean War began we have seen the vast American re-armament budget of £25,000 million sterling, and the large contribution which we are rightly to make ourselves. This has led to rising prices of raw materials and manufactures the world over, but it has made it possible for the sterling area to achieve a large overall surplus, and has, temporarily at least, greatly altered for the better many of our balance of payments problems.

I am trying to deal with the broad issue. I would say that the first thing that strikes one about the Chancellor's Budget is the extraordinarily little elbow room or liberty of manœuvre which he had. In last year's Budget debate my right hon. and hon. Friends and I laid particular stress on the fact that in times of peace—and to most of us it has seemed a most uncertain kind of peace—the Government had committed themselves to spend almost all the money which they could possibly raise. There was nothing in hand for an emergency, and almost everyone except the Government saw that emergency looming ever nearer and nearer.

In 1950 the emergency came. The outbreak of the Korean War showed even the Government that it was necessary to start to re-arm on a big scale. How is that re-armament to be financed? Yesterday the Chancellor of the Exchequer spent some time in explaining that there is no form of Government expenditure which could possibly be reduced, and I shall have something to say about that later on. I should like the Committee, first of all, to address itself to that argument in the context of what I am now saying.

In this context, all that the Chancellor was saying is, "My predecessors had pledged every asset of the estate which I have just inherited, and I find that there are no possible reductions in the commitments which I can make." This argument, which is no doubt an excuse for himself, if a somewhat unjustifiable one, is one more condemnation of six years of Socialist management of our finances. "What can I do?" is the age-long cry of those who find themselves in a position out of which they have difficulty in manœuvring.

I said that I did not accept the Chancellor's statement that he could make no economies. He set out the problem very clearly and, I think, very fairly from his point of view. I should be the first to admit that economies in Government expenditure must be discussed under two categories. The first is administrative expenses, which are just the housekeeping expenses of keeping the Government and its servants going. I think—and I am going to put a figure to it—that about £50 million could be knocked off the cost of administration if the Government really tried.

It is impossible to do more than indicate the general lines upon which such economies should be made. I think that if he is fortunate enough to catch your eye, Major Milner, we shall have a speech from one of my hon. Friends on this side of the Committee who will go into great detail on some of these matters, but I want to say that there are a number of things which I wish the Chancellor would look into.

There is far too much inspection going on over industry and other things. We find that there are three or four inspectors where one would do. There is far too little economy in the use of Government clerical manpower, and I have with my own eyes frequently seen practices going on which, if they occurred in my own business, would lead to the immediate dismissal of the manager. One cannot raise the Government's stationery bill from £2 million in 1938 to £16 in 1950 without engaging a great many extra people to write on that paper. We have to pay not only for the paper but for all these extra people. Hon. Members opposite can think what they like, but I want to record my opinion that over the whole field of Government administration, which, after all, in this context accounts for about £2,500 million, ignoring defence and debt services, it is possible to lop £50 million off administration expenses.

The other category has, of course, changed as a result of policy. I was rather horrified by the Chancellor's statement or his acceptance that there could be no way of saving on the £1,500 million which was, by and large, the expenditure on armaments. I have been in the business myself. I was Minister of Production for over three years, and I can tell the Committee that there is no field of Government expenditure where greater waste is possible unless the most rigid control is kept over every item of expenditure. That, of course, will perhaps not produce the total sum—I do not want to be unfair—but it will accelerate our arms production.

For heaven's sake do not let the Chancellor genuflect to re-armament expenditure under the idea that the Treasury should keep their hands off this field. It is the very one in which they should be intrusive. Never in the past have they stifled the production of weapons, and I do not think there is any chance of them carrying it that far, but it is absolutely necessary for them to scrutinise and criticise and prune armament expenditure as one of the first contributions to the subject.

We have always said that the administration of the Health Services lent itself to abuse, not, of course, by the great majority of the people who use that service and benefit by it, but by the unpatriotic minority who were beginning to be seen. It is common knowledge that we have advocated making some charge for spectacles and false teeth as a means of economising and preventing abuses. In spite of some of the things that were said at the South Hammersmith by-election and others, the Government have now at long last come round to this unpleasant—and very unpleasant—but, I fear, necessary method of economy.

On this point I should like to ask why the Minister of Labour still finds himself a Member of His Majesty's Government. I have not the slightest doubt that there is some explanation, which at the present moment escapes me. According to my information, he was reported as saying—I hope he will correct me if I am wrong—that he would never be a Member of a Government which made charges on the National Health Service for a patient. Is his continued membership of the Government due to a definition of this word "patient"? That was suggested last night by the hon. Member for Warrington (Dr. Morgan).

I think the explanation must be that a man who gets very ill, has all his teeth out and gets a National Service denture is not a patient within the definition of the Minister of Labour. Am I right about that? Or, of course, it might be that a man whose sight is defective, who has to go to the oculist and is supplied with spectacles under the National Health Servise is not a patient within the definition of the Minister of Labour.

Whether that explanation is right or not—and I offer it to him with my compliments—surely we are entitled in this Committee to have a full account of the struggle which he has had with his conscience, and to learn the reasons why upon this occasion at least his conscience has not won. Whatever the explanation offered, we must now all realise that this rugged monolith of the Labour movement is now standing precariously balanced on the foundation of a verbal quibble.