Orders of the Day — Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 10th November 1952.

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Photo of Mr Richard Law Mr Richard Law , Kingston upon Hull Haltemprice 12:00 am, 10th November 1952

A possible explanation is that the conditions were entirely different. Nobody would deny that the tide was favourable immediately after, and for four or five years after the war. The tide turned just before the General Election of last year. That was why right hon. Gentlemen opposite abandoned their task, they knew the tide had turned. We cannot influence the tide but we can make the best use of it, whether the tide is adverse or favourable.

I ask the House to consider for a moment just what this Government have done in unfavourable conditions. It is not unfair or an exaggeration to say that my right hon. Friend the Chancellor of the Exchequer with great patience and skill, and using such luck as came his way, as he was entitled to do, has wrought a change in our position compared with a year ago which is almost miraculous. Our external payments are in balance. A year ago nobody would have dared prophesy such a thing, and when, in his Budget speech, my right hon. Friend made that prophecy he was jeered and mocked by the Opposition. Sterling is rising on the exchanges instead of moving steadily downwards. We have been given what a year ago none of us would have thought possible—a breathing space. The Chancellor of the Exchequer has given us what we perhaps need more than anything else at this juncture in our affairs—time.

I am not sure that time is not the main thing that he has given us. He has conducted an emergency operation with great skill as a surgeon, and with comparatively little pain to the patient. The patient still breathes and lives, but as yet he has no guarantee of recovery. As the right hon. Gentleman the Member for Lewisham, South pointed out, exports are going down and markets are becoming more difficult, and if it were not for the fact that we have successfully got through the immediate crisis an impartial observer might be forgiven for thinking that recovery was as far away as ever.

There is no real indication yet that the British economic system has the spring and resilience which will enable it to survive the buffetings it will certainly encounter in the next few years of difficult markets and increasing competition. I do not believe that our national economy can have the necessary resilience and spring unless we do something to remove from the shoulders of the weary industrial giant something of the load of high taxation and heavy Government expenditure which is bearing down upon him now.

It seems to me that the attitude of the whole House—and, for reasons that I may develop, particularly that of the Government side of the House—towards Government expenditure is very extraordinary. I am now about to say something which may give the right hon. Gentleman the Member for Lewisham, South an opportunity of pointing out a cleavage in the Tory Party, to which he was referring in his speech. Let me assure him that, at any rate, there are no competitors for the deputy leadership. There is no cleavage in the Conservative Party, but there are legitimate differences of opinion on this and other matters. After all, if there was not room for differences of opinion on these economic problems they would have been solved years ago, because we should all have agreed on the right method.

What seems to be extraordinary about our attitude towards public expenditure is that hon. Members on both sides of the House, and certainly some right hon. Gentlemen opposite, will admit that when 40 to 45 per cent. of the national income is taken in taxation the proportion is far too high. On this side of the House, at any rate, we know that it is public expenditure at this rate and the burden of taxation of this weight which makes recovery impossible. I believe we all know that, and yet some of us seem to have agreed that there is really nothing much to be done about it; administrative economies may be all right, but apparently any real reduction in expenditure is quite unthinkable.

My right hon. Friend the Chancellor of the Exchequer may have been right when he said at the Scarborough Conference that, in his opinion, big economies were impossible. But if he is right, then I tell him that economic recovery is impossible. In my judgment, there is no future for this country and no future for the British people with taxation at the present level or anything like the present level, and unless we can lift a substantial part of this burden, and unless we can do it fairly quickly, it is very easy to see what will happen to our country. We shall drift from one balance of payments crisis to another, and each will be resolved, or apparently resolved, at a lower level of consumption and production, until we attain our final equilibrium with the standard of life, and, I dare say, the political institutions as well, of a People's Democracy, like the Soviet Union or the Chinese People's Republic. That is not really an exaggeration.

If hon. Members on both sides of the House examine our position today, wherever they see a weakness in it they will find that it is due to too much Government expenditure or to too heavy a load of taxation which is a result of that expenditure. I shall not traverse the whole field, for it would take too long, but I should like the House to look at two aspects of our affairs in illustration of what I am saying.