Orders of the Day — Economic Position

Part of the debate – in the House of Commons at 12:00 am on 29th July 1952.

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Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00 am, 29th July 1952

The hon. Gentleman is beginning to see a glimmering of the truth, that our dependence on the American economy is so great that even a small percentage move either way could have a disastrous effect on our situation in this country—[HON. MEMBERS: "Alibi."]. If there is even this slight deflation it will not only affect the raw material sales and prices, but this highly efficient and highly capitalised industrial machine will be competing with us in every market in the world.

They have built up their steel production in the last two years by an amount equal to the whole of the size of the steel industry in Britain. Belgium and Luxembourg. The increase in the size of their chemical industry is four times the total size of the British chemical industry. That is the size of the thing with which we are grappling. And, of course, we shall be facing competition from Germany and from Japan, driven into more ruthless competition with us because American policy denies them access to their normal markets in Eastern Europe and China.

We are not claiming—and I am not saying this for the first time—that rearmament is the cause of our difficulties. We have never claimed that it is. The causes are far older and deeper than that. But we are fighting the economic crisis with our hands tied behind our backs so long as we try to maintain this excessive re-armament programme. Now we have the economy cut along with this ludicrous scheme of arms exports. First the Chancellor of the Duchy of Lancaster says that exports must have priority over defence. The Prime Minister is doubtful about that, and then we find the Government putting defence considerations second to economic considerations, as in the running down of stocks. And now, to stem the flow of gold to Belgium, we are to export fighter aircraft to Belgium.

And this in 1952; the year we were told was the year of the greatest peril for this country. We are exporting fighters to Belgium, a country which is growing fat on the economic situation in Europe and a country which is doing far less in the way of armaments than we are in this country. The President of the Board of Trade announces that we are to export arms to Spain next. The idea appears to be, and it is a simple economic argument which the Government have got hold of, that by re-arming too fast in this country we are crippling the export trade. That is the first point the Government have made. "But we have got to do that," they say, "because we must have arms at all costs."

Having established that, they say, "We must export the armaments to make up for the loss of exports." That is the present economic policy of the Government. I do not know about Marx, but the Marx Brothers could not have invented anything crazier than that. The Government really ought to tell us more about this new economic policy. How many more arms shall we have to export abroad, and to what countries, in order to earn the gold we shall need to pay for the re-arming of Western Germany? There is no limit once they start on this economic policy.

Of course, it completely destroys the argument about priority needs for arms and aircraft. We could earn far more foreign exchange by setting the engineering industry free from the incubus of the present level of arms at this time. So here we are faced with a short-term and a long-term problem. We shall not solve the long-term problem without international planning of economic forces and raw materials. I hope that the United States will co-operate in these things and will get rid of some of their protectionist devices. If not, we shall have to go on alone, and face a siege economy in this country, and go in for a policy of ruthless discrimination against the dollar with all that that means, not only for our standard of life, but for our relations with Canada —and one could think of many other problems which will arise from it.

So far as we ourselves are concerned —and I am sorry the Chancellor of the Exchequer was so evasive about this this afternoon—it is essential that we reduce the burden of our own re-armament. The £4,700 million programme in three years is dead, as my right hon. Friend the Member for Ebbw Vale said in his resignation speech that it was dead in April, 1951. But what is now dead as well is the defence White Paper on which this House divided on 5th March. If the Government dare to come out honestly—and I hope that tomorrow the Prime Minister will—they will say that they have looked at the position and that the balance of payments problem has to come first; that my hon. Friend the Member for Coventry, East was right, and that we are having to make a cut of something like £250 million this year in the arms programme. That would he an honest appraisal by the Government, and I appeal to them to give the House and the country the facts.

What I am afraid of is that the Government have learned this, even if some of my hon. Friends have not, but they dare not admit the truth of it, and they dare not carry out a policy based on the truth —because they are afraid of admitting that somebody else was right. As a result of 18 months of trying to maintain an excessive programme we have had the worst of both worlds. We have not had the arms and our standard of living and economic situation have deteriorated. We have had neither the guns nor the butter. After 18 months we are not stronger, we are weaker—[HON. MEMBERS: No."]—yes. It is no use just allowing the programme to slow up naturally. It is no use just waiting for deliveries to stretch out. The effect on the economic situation of straining to do the impossible is just as serious. What we need is a clean cut in the volume of resources allocated for re-armament this year.

I hope that the Government, and especially the Prime Minister will realise what is at stake. It is not only our standard of living. It is not only even the satisfaction of paying our way. What is at stake in this question we are facing today is our survival and our independence of external aid. Because without independence of external aid there can be no real independence in foreign affairs and Britain will be prevented from exercising that great moral influence which she can exert in the councils of the world.