Sterling Area (Closer Co-Operation)

Part of the debate – in the House of Commons at 12:00 am on 22nd February 1952.

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Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00 am, 22nd February 1952

The hon. Gentleman ignores the fact that during this time our trade was increasing, and our export trade reached the highest figure—measured by value—in the history of the country, and a higher proportion of that went to the Empire and Commonwealth than ever before.

In the matter of Commonwealth development, great progress was made. I am certain that hon. Gentleman opposite —particularly the hon. Member for Croydon, East (Sir H. Williams), a pathetic specimen who can say nothing in a debate like this except grumble about Gambia eggs—could not tell us about even five or six other projects that have succeeded. They know all about Gambia eggs and groundnuts from the speeches of Lord Woolton, but I doubt whether they have given the same kind of attention to the reports of the Colonial Development Corporation in regard to the 60 or 70 other schemes in all parts of the world, on which the whole House, I am sure, wishes the Corporation every success and gives it full backing.

With regard to the important question of preference, I should like to express my warm agreement with the speech of the hon. Member for Uxbridge (Mr. Beswick), who referred to a Customs Union. In Geneva in 1947, I made that suggestion to all the Commonwealth delegates present. It was made the subject of a great speech to the T.U.C. by Mr. Ernest Bevin: it was pushed by Sir Stafford Cripps. We have to face the fact, as the hon. Member for Wembley, South (Mr. Russell), said, that we cannot dictate to the rest of the Commonwealth. None of us wants to do that.

We have to face the fact that some Commonwealth countries do not want a Customs Union. We all regret that; we think it is wrong. There is a great element of protectionism in Australia. That is no reflection on the present Australian Government; there was also a great deal of protectionism in the minds of the previous Government. That protectionism affects not only goods from foreign countries but goods from the United Kingdom. Because of that, there is not the will, in Australia, Canada and certain other countries, for the Commonwealth-wide Customs Union which I am sure hon. Members on both sides of the House would like to see and do all in their power to promote.

On the question of Imperial Preference, I agree with the hon. Member for Billericay. I think that the conditions connected with the American loan were irrelevant, very doctrinaire and most regrettable. I have said this scores of times to leaders of American delegations. I believe that they were designed to impede the progress of world recovery and not to promote it. I said that publicly in Geneva on 23rd August, 1947, when I took the crisis of 1947 as a text to show that we needed more Commonwealth development, more Imperial Preference, and not less.

Last year, at Torquay, at a time when we had failed to reach agreement with the United States because they were demanding what we considered to be unacceptable proposals for whittling away Imperial Preference, I explained to them, at three o'clock in the morning, that as far as His Majesty's Government at that time were concerned, we would never be a party to making permanent an agreement on tariffs and trade unless those unacceptable conditions about Imperial Preference were removed. In saying that, I said that I was speaking for all parties in the House, because I knew that the Conservatives would take the same view. That was reiterated by the right hon. and learned Member for St. Helens (Sir H. Shawcross), and I trust that it will shortly be reiterated from the Front Bench by Her Majesty's present Government.

I do not agree with the hon. Gentleman that the General Agreement on Tariffs and Trade is wrong. I think that to a great trading nation such as ourselves there are very many elements in that agreement which are of great value and which will prevent other countries from putting on various kinds of protectionism and barriers against the exports which are necessary to us. The hon. Gentleman on two occasions said that we must be free to regulate our own trade. What did he mean by that? Did he mean quotas? Did he mean the Australian beef policy followed by the party opposite before the war? I do not think he meant that; I think he meant that we must be free to put on tariffs, and so on.

I should like to remind the hon. Gentleman that we are free, as long as we are in balance of payment difficulties, to put on something far more effective than a tariff, and that is a quota on American goods. The Chancellor of the Exchequer and the President of the Board of Trade, are doing it every day because of the present economic crisis. They have no alternative. That is a much more effective instrument than tariff protection, which carries behind it far more vested interests than are concerned in the balance of payments.

I suggest to the hon. Member that he should look at the problem from the point of view of the interests of the country as a whole—of all our trade, and not merely that vitally important part, Commonwealth trade. His desire to regulate our own trade might be emulated by a lot of other protectionist-minded people in other Parliaments and Governments. They want to be free to regulate their trade. They want to be free to put a tariff, possibly an insurmountable tariff, on British goods, and if we set them free to do so because we want to be free ourselves, that may mean death to many important British export industries—and I am glad to notice that I have the support here of hon. Members opposite.

I would say one other thing to the hon. Member. Preference is not the only means of developing trade within the Commonwealth. Even if we had agreed on it, I do not think Preference would have been anything like so important in the last six years as such things as long-term contracts and bulk purchase. These are the things which give confidence to the producers in Commonwealth countries —confidence that when they have expanded production they will not find themselves without a market. It was the party opposite who had quotas on Australian beef, which killed trade in beef from Australia to this country.

Although long-term contracts take many years to become effective, they are much more important in the development of certain kinds of foodstuffs than any Preference. I am not saying, however, that these are the only methods. All the methods suggested are important and we should follow all of them if we mean to have the success for which we hope.

Turning to Commonwealth development, we all welcome that there was yet another meeting of the Commonwealth Finance Ministers. We welcome the appointment of two sub-committees, one under the right hon. Gentleman the Minister of State and one under the Under-Secretary of State for Commonwealth Relations. But the Under-Secretary will have discovered by now, if he did not know them before, one or two things about the development of Commonwealth trade. Commonwealth development is not achieved by speeches in the House of Commons. It is not achieved by committees. It is not even achieved by leading articles in the "Daily Express."

Commonwealth development requires a number of things, and most of all it requires technical assistance which, as my hon. Friend said, this country is well equipped to give; it requires finance, which we are not so well equipped to give; even more important, it requires steel and capital equipment. Unless the Under-Secretary is able to allocate steel for Commonwealth development from our very scarce resources—and we did when steel was scarce in 1948—unless he does something to release capital equipment for Commonwealth development, his committee and, more important even than his committee, the whole future of Colonial development will be faced with disaster.

What we should be discussing today—although we are to have a debate on it next week, so perhaps I will not do so—is the White Paper issued yesterday, which says we are to spend £300 million more on re-armament. Before the White Paper was issued, did the Under-Secretary state what effect it would have on the possibility of Colonial development? As I have said before, we cannot develop these great Commonwealth areas with exports of asprin tablets, and non-utility clothing. What we have to send is capital equipment, and we are being prevented from sending it at present by rearmament; and it looks as though the situation will become a good deal worse rather than better.

We must not be smug or complacent about what has been achieved or is being achieved in development. Anything the Under-Secretary is able to do this year will not yield great quantities of food and raw materials for the Western nations. He will do extremely well if he can develop at a rate sufficiently fast to meet the needs of the rising populations of the areas with which he is dealing. For many years there will not be a surplus or dividend of food and raw materials for the Western Powers. We have seen that even in Australia, where the development of meat production will cover only the increased requirements of our Australian friends and will not provide great surpluses for this country.

I think it is vital that we should not be smug or complacent about the Colombo Plan. The Colombo Plan was a great conception—one of the greatest conceptions in Commonwealth development or, indeed, in the development of underdeveloped areas—for it covers non Commonwealth areas as well—in the history of the world. I think credit should be given to all those concerned, from every Commonwealth Government, who took their part in it. It involves a good deal of development, costing, at 1949 prices, £1,868 million in six years, designed to increase the area of land under cultivation by 13 million acres—3½ per cent.; the area of irrigated land by 13 million acres—17 per cent.; the production of food grains by 6 million tons —10 per cent.; and the production of electricity generating capacity by 1,100,000 kilowatts—67 per cent.—in those areas.

Yet, great as these increases are, they will not be enough, as the Report makes clear, to raise the living standards in the areas covered by the Colombo Plan. All they can hope to do in the light of increasing populations is to maintain the present standards of living in those areas, even if the Colombo Plan is put into effect fully. I hope we shall soon have a whole day's debate on the progress of the Colombo Plan. It is of vital importance. Perhaps I may offer one or two thoughts about it; I have been putting some rather longer thoughts on paper, which I hope hon. Members will read when they are published, but these are a few short thoughts.

First of all, although this is a great scheme, it is on far too small a scale to do what is required. The £1,860 million in six years is spread over an area with a population of 570 million people—one quarter of the earth's population. That represents an expenditure of about 11s. per head per annum on capital development. It is a pathetically small figure.

The Report of the United Nations experts on the development of underdeveloped areas, published last year—and I think the finest thing put out by the United Nations on this question—calculates that for that area, or broadly that area, if we are to develop at a rate sufficient to raise the national income per head by 2 per cent. per annum, it will require something like 87s. per head on development in the area and not the 11s. proposed under the Colombo Plan. The Colombo Plan, therefore, great as it is, provides only one eighth of the rate required to achieve a very modest 2 per cent. increase in the national income per head per annum in these areas.

The second point is this. The Colombo Plan remains an aspiration as far as finance is concerned. It said that a sum of over £1,000 million was required for the six years, but it did not reach any conclusions about where the finance would come from. Some was to come from running down the sterling balances—and we must not take too much satisfaction about that; we must not think that we are making a major contribution to Commonwealth development by it, because it involves a rate of running down the sterling balances which is only one-half the rate at which they were run down from 1946 to 1949.

There was, therefore, a great and yawning financial gap, and the Report made a hopeful nod of the head in the direction of the United States and left the matter there. Of course, from that time the United States were caught up with re-armament on a prodigious scale, and there is no prospect of getting from the United States anything like the financial assistance required, nor, indeed, is there prospect of it from this country.

From the financial point of view, therefore, we must conclude that the Colombo Plan is in very great danger—the more so because the calculations were based on certain assumptions about the earning power of those areas in regard to their raw material exports which were made in a very good year. In present conditions, and in probable future conditions, therefore, the financial problems of the Colombo Plan will be even greater than those set out, which themselves were not solved in the Report.