Orders of the Day — Financial and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 31st January 1952.

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Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale 12:00 am, 31st January 1952

I must say that what the Financial Secretary said at the conclusion of his speech found an echo in my own heart—that we are facing a very serious situation, an extremely serious situation—and we are glad to hear that the Government are prepared to face up to their responsibilities.

I am bound to say at once, however, to follow that up, that it frightens me to think that these responsibilities are in the hands of persons like himself. Although we had a number of generalisations and "smart Alec" debating points, we received from him and, indeed, from the Chancellor of the Exchequer when he made his statement the other day, not one single contribution to deal with the underlying reasons for the economic crisis.

I could quote, but I do not wish to burden the House, from the speech that I made to the House last year on the occasion of my resignation, in which I warned the House and the country that there were underlying economic reasons, not financial but economic, which made our re-armament programme impracticable, and that those economic reasons would work themselves out in this country and in Western Europe by unemployment, by under-employment and by rising prices.

The Prime Minister, in what I thought was a most unworthy remark, said that we were right by accident and that our action was not taken for any very reputable reasons—a remark which was not only out of order at the time but which was a shameful remark for a right hon. Gentleman to make about another right hon. Gentleman who had seen fit, in the interest of the country, to put his resignation in the hands of the Prime Minister—[Interruption.] When hon. Members opposite jeer like that they should have read the American newspapers immediately afterwards and learned that a great deal of raw material reached us as a direct consequence of the alarm caused in America because of the British crisis.

I made on that occasion a statement to the House, and it was this: I said that, in my opinion—and when I say this I am not making any reflection upon the personality of the Chancellor of the Exchequer or of any of his colleagues—the responsibility for economic and industrial planning should be taken away from the Treasury. I wish to develop that point because I think that it is of underlying importance.

I hope that the Prime Minister will not be out of the Chamber all the time because I have a few observations to make which are strictly relevant to his functions. I am not myself going to argue today whether the arms programme is primarily responsible for our situation or whether it is not. I have never argued that the arms programme by itself was responsible for our situation. I agree with what many hon. Members have said, and that is that the arms programme of such intensity and on such a scale aggravates our economic situation; but, nevertheless, it is idle discussion, which some of my own colleagues also carry on, as to what extent the arms programme has aggravated the situation.

It reminds me of what used to happen quite frequently when I was a miner and had to represent the miners in the courts about workmen's compensation. When miners suddenly died of heart failure in the pits, the employers used to argue, and the lawyers, of course, on their behalf, with the utmost skill, that death was due not to exertion but to a weak heart. If it was a weak heart, no compensation: if it was exertion, compensation. We ultimately decided, in the words of a wise judge, that it was both—unnecessary and unprecedented impracticable exertion on a weak constitution. That is exactly what is happening in Europe at the present time. These physical facts reflect themselves quite naturally in the physical ill-balance between our own economy and that of the United States of America.

When I said in my speech that we were influenced by the lurchings of the American economy, I was derided by hon. Members opposite—[An HON. MEMBER: "And by your own side."]—but the Chancellor of the Exchequer used a much less elegant metaphor when he said, "The giant moves uneasily in bed." I said then, and I say now, that there is not only an ill-balance in the British economy, but there is a dangerous ill-balance between the economy of the United States and the economy of the Western world.

The physical consequences of these underlying economic facts express themselves in terms of the annual balance sheet, and then the Chancellor of the Exchequer makes a series of hysterical attempts to put the balance sheet right, leaving the underlying economic facts alone. That is why we have had financial crisis after financial crisis in the last six-and-a-half years. We had financial crises before the war, only the financial crises were not on the Floor of the House but in the domestic budgets of 2,000,000 unemployed.

All that happened before the war was that the underlying ill-health of the British economy was masked by the semi-starvation of millions of British people. What happened? I speak polemically and, therefore, I do not resent it when I am attacked—but these are irrefutable facts which have nothing to do with political party manifestos. The Conservative Party has to deal with them today; we had to deal with them yesterday; but it is to be said for the party to which I belong that in the six-and-a-half years in which we were in office we were bringing about a rectification of the physical ill-balance: that is the difference.

When the Leader of the Opposition complained today, as he so rightly did, about the Prime Minister's behaviour, he was quite justified. The party opposite inherits the balance of payments crisis; of course it does. It may say that it inherited it from us, but it inherited it from the British capitalist system. We were not in charge of the British economy; it was the F.B.I. [Laughter.] Oh, yes. I will do much worse than make the charge; I will prove it. I have some very interesting things to say to hon. Gentlemen opposite.

It is true, therefore, that they inherited the crisis, and it appears to them now as a financial crisis, but if we had not taken the steps that we did we should today be facing not a financial crisis of £450 million or £500 million on our balance of payments but stark, physical ruin. In the course of the last six and a half years, how many power stations did we build? The British industry is now consuming more than twice the current it did before the war. How many factories did we build? [HON. MEMBERS: "How many houses?"] Yes, and how many houses? According to the observations and comments of people in other countries, we have had a better housing programme than any other country in the world. I shall come to housing later.

If we go round the development areas of Great Britain, we see there millions of people having the physical means of production which they had been denied for 20 years. These figures are undeniable, and they are figures which were being registered at the time that the right hon. Gentleman the Prime Minister was making his frivolous speeches in the country about "Weary Willies" and "Tired Tims."

We were setting aside every year, for capital development, a higher proportion of the British production than had ever been known in British history, and the party opposite inherits that. Hon. Members opposite say that they inherit a deficit of £450 million on the balance of payments account, but they inherit a British physical economy in a more wholesome condition than it has been since the middle of the 19th century.

I know that the Prime Minister does not understand this. He does not understand also—hon. Members opposite must face this—that if we had not taken steps to drive the coal owners out we should not now be able to dispense with purchases of American coal. Hon. Members know that too, and these facts must be faced. We know, and they know, that if we had been able since 1945 to export from this country 30 million to 40 million tons of coal every year, not only would our economy have been healthy but our diplomacy would have been strong. Does anybody deny that?

But we cannot repair the past in a day. I remember going on deputation after deputation to coal owners begging them not to dismiss boys of 20 years of age from the pits. They used the boys from 14 to 20 and then sacked them. Miners leaders warned Sir Evan Williams, who was a bigger disaster to British industry than Hitler was, that it was undermining the roots of British industry and that the mining industry could not recruit manpower unless the young men were guaranteed continuity of employment. Is not that true? What is the result? The reputation of the mining industry was so blackened among the workers of Great Britain that we now have a mining force inadequate to the purpose, although, with men of a greater age we are producing more per head than before the war and are the only country in Europe doing that.

In other words, the party opposite has been rescued from utter ruin and political oblivion by the application by us of Socialist principles. If they are able to sit where they do today and enjoy the precarious sweets of office, it is because we have been able to repair some of the mischief which they did.

Those are some of the physical facts to which right hon. Gentleman opposite must have regard, but there are some others, and that is why I am not in favour of leaving economic planning to the Chancellor of the Exchequer. He is preoccupied with annual arithmetic, and not only that, for he is also preoccupied with a recurrent crisis; and then he comes along, like other Chancellors of the Exchequer—[Laughter.] Oh, yes, he is bound to do it; he is bound to get the figures right even if the facts are wrong.

In this country we have an annual Budget. Every year the figures are totted up and every year they have to balance. Why? Because we are still carrying on, in an industrial community, the conventions of a pastoral society. Just because the harvest occurs every year in an agricultural community, we must have an annual Budget, although in a modern industrial society the annual crops are an insignificant proportion of total production and no balance sheet today corresponds with the actual facts.

That is the reason why my right hon. Friend—I do not blame him for this; he was the inheritor of the convention, although he followed it with conspicuous enthusiasm—[Laughter.]—tried to push into one annual statement of accounts for 1951–52 machine tools which will not arrive until 1953. That is a fact, because the statement of accounts bears no relationship at all to the rhythm of industrial production.

So what will happen? The Chancellor will have about £100 million to spare this year. Where will it go? To reduce the National Debt. And just at the moment that the goods will be arriving and will have to be paid for, we shall have to increase the Debt again or increase taxa- tion. It is a criminally silly situation. Our annual balance sheet ought now to be adjusted to objective economic facts, and we ought not to have this business all the while of trying to balance so narrowly every year.

Let us take another illustration. The Prime Minister has stated that he proposes to give the steel industry back to private ownership. The steel industry of Great Britain is a monument of capitalist inefficiency. A steel works cannot be built overnight. Why is it that at the present time we are so short of steel in Great Britain? Because those in charge of the steel industry had not the nous to see that a time would arrive very shortly when German scrap would not be available, and, therefore, more pig iron production ought to have been arranged.

What is the result? We have to go begging to the American Government in order to try to repair the stupidity of the British steel masters. As a matter of fact, all this should have been done before the war. I will give the party opposite another figure. As far back as 1934, if we had been consuming steel at that time by as much per head as the United States of America, we ought to have been consuming 19 million tons. What were we consuming? Between nine and 10 million tons. In fact, successive Governments before the war—Conservative Governments—presided over a continuing decline of British industry.

When we came into power in 1945 we had to deal with this situation. Now it is even more critical than the right hon. Gentleman has told the House. As a consequence of the monster expansion of the American steel industry, the whole world is being starved of steel. In fact, American steel production today is at the expense of the production of Western Europe. It is not a total addition to production; it merely means the transfer of production from Europe to the United States. Even now the United States cannot maintain full production in their plants, because they have not got the raw materials.

There has just been an allocation of sulphur. We have got a very small bit from our Ally. The allocation is two million tons short of industrial requirements. That among other reasons is why our production this year is less than last year. What on earth is the good of right hon. and hon. Gentlemen opposite and chairmen of the banks getting up and preaching homilies to the British worker to work harder if he has got nothing to work with?

What is the use of asking the engineers for more production if they cannot get the raw materials to do it with? This is partly the result of not having a continuous economic concentration on the underlying facts, but merely spasmodic statements from Chancellors of the Exchequer who economically go to sleep when there is no crisis on.

That is the reason why I would take economic planning away from the Chancellor of the Exchequer and would immediately appoint a Minister of Production. I would not do it because the Chancellor of the Exchequer is not an extremely able man. We all know that he is, but the greatest possible ability cannot prevail against the myopia of the Treasury. That was why at the end of the last Cabinet my right hon. Friend, the then Prime Minister, appointed a Minister of Raw Materials. I thought then it was inadequate and entirely the wrong kind of appointment.

I apologise for taking up the time of the House for so long. [HON. MEMBERS: "Go on."] In this small island, dependent as we are on raw materials from all parts of the world, we have not yet made a geophysical survey of our own resources. I am sure if the Chancellor of the Exchequer had it suggested to him he would say, "Oh, no, it is too expensive. It would unbalance the Budget." We have been paying in this country on overseas account £3 million, £4 million and £5 million every year for potash, and even so we have consumed the least potash per acre than in any part of the Continent of Europe. Our farmers need potash badly. We all know that it is now elemental that the more we can send up our food production the healthier our economy would be.

We had made no surveys for potash in Great Britain but it has been discovered on the north-east coast by accident. Now we are informed that there is enough potash from that to last us 200 years. Once it is properly extracted—I.C.I. ought to get a move on as quickly as possible; it is too bureaucratic to move fast—we shall not be dependent upon supplies of potash from abroad. We shall have plenty for our own purpose and we might be able to export.

The same thing is true of Cornwall. Just because the Phoenicians scraped lead and tin from Cornwall, the superficial conclusion has been reached that there is not much tungsten and tin in Cornwall. Why do we not have proper surveys made? We have borings made by the Minister of Fuel and Power, who is continually discovering more coal than he can produce. Almost every week a new coalfield is being discovered. No new miners have been discovered.

I would have thought that the first thing to be done would be an exhaustive survey by modern methods of the raw material possibilities of Britain. It has not been done. [Interruption.] I am not making a party political speech at all. [Laughter.] If I am and if it shows signs of a party complexion, it is because the facts are so ominous.

What we have done is to leave these things in the hands of adventurous private enterprise. We have left this to right hon. and hon. Gentlemen opposite, and what have they done? They have gone to the four corners of the earth to get raw materials. Now they cannot get them because the native populations are rising against their past iniquities. We have not even surveyed our own resources at all. I am not saying that they are there. Some of them have been discovered; others ought to be sought for. Furthermore, a concentrated effort ought to be made to try to get these raw materials where they exist in our Dominions and in our Colonies overseas—a concentrated effort. But why does not private enterprise do it? Why is it that—