I hope that if I speak very quickly my hon. Friend the Member for Islington, North (Mr. Fienburgh) will not attribute to me the same qualities that he attributed to the Economic Secretary to the Treasury. I want, however, to limit myself to a very short time in order to give to other Members an opportunity of speaking before half-past nine.
First, I congratulate the Chancellor of the Exchequer on his ability to make his case sound reasonable. I think he could get away with murder. At any rate, if he were going to murder someone and allowed his victim a choice of deaths, he would make it sound as if he were conferring a favour upon his victim.
I was perturbed when I heard the Chancellor refer to the Budget as an incentive Budget. We had an incentive Budget last year, and what happened? We had a fall in production, a fall in exports, an increase in unemployment and an increase in the cost of living. We want no more incentive Budgets of that kind. I suppose that last year it was an incentive Budget to improve upon what had happened before. This year it is an incentive Budget to try to catch up with where we ought to have been had we not fallen back in the past year.
I want to refer more particularly and in some detail to the balance of payments and the gold and dollar reserves, and to examine these so that we may understand exactly the position. I do not want to rob the Government of any credit that they claim because of the balance of payments. Quite naturally, they claim the credit for it, and I suppose it is only right, because if it had not been balanced we would have blamed them. It is important, however, to realise how precarious the position is and that, if we do not examine it in detail, we are likely to fall into a dangerous complacency that has been so obvious in some hon. Members opposite. If we do not examine the position in detail we shall not appreciate the precariousness of the present position. It ought to be noted that we are not today in as strong a position to meet an economic crisis as we were in October, 1951.
Turning to the gold and dollar reserves, according to the figure given by the Chancellor of £774 million, the gold and dollar reserves on 31st March were about 56 per cent. of what they were in June, 1951. At that date our reserves were £1,381 million. At 30th September, 1951, they had fallen to £1,167 million, by 31st December, 1951, to £833 million, and in June, 1951, to £601 million. At 31st December, 1952, the figure was £659 million. They had begun to go up, and then by 31st March they had gone up again to £774 million.
As everyone knows, in the third quarter of 1951 there began a serious drain on our reserves. The recovery has been in stopping the drain and in beginning to build up again, but the position is still not one that we can view with any complacency. I have listened to some of the speeches from hon. Members opposite and it is clear that quite a number of them still do not understand what was the reason for the economic crisis. I suggest seriously to a number of hon. Members opposite that it would pay them to read the speech of the Chancellor of the Exchequer in November, 1951.
When the gold and dollar reserves began running out, my right hon. Friend the Leader of the Opposition, who was then Prime Minister, quite rightly decided to appeal to the country. The phrase from the other side of the Committee this afternoon about rats leaving a sinking ship was most objectionable. With the record of achievement that the Labour Government had, my right hon. Friend had every reason to believe that he would retain the confidence of the people.
We had been fighting with a very slender majority and a non-co-operative Opposition. I am told that even when my right hon. Friend went to America on important business connected with the welfare of the country and the peace of the world generally, the Conservative Party would not even give him a pair. Our majority was maintained merely by bringing sick people out of hospital, and obviously, when important decisions had to be made, such a state of affairs could not have been allowed to continue.
One of the advantages that the present Government have had is that there had been no people going abroad denigrating their own country. In addition, they have had the Press on their side. The importance of this is not only that the Press is read in this country, but that it is read also in other countries and perhaps too much attention is sometimes paid to it.
Turning to the balance of payments problem, paragraph 14 of the Economic Survey says:
It is impossible to say exactly how much of the improvement in the balance of payments in 1952 was due to better terms of trade, but price changes were probably responsible for something like half of the improvement of £657 million in the visible trade balance shown in Table 4…
The improvement claimed by the Economic Survey is due half to improvement of the terms of trade and half to reduction of imports, but the improvement in the terms of trade, in spite of what the Economic Secretary said, is something over which the Government have very little control. According to the Economic Survey, import prices were 2 per cent. less during 1952 and export prices were 5 per cent. higher. As my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) said yesterday, the terms of trade in 1951 were £500 million against us, whereas in 1952 they were £350 million in our favour.
There is also another matter which has not been referred to. There was an advantage in 1952 of £250 million because of different accounting periods. If stocks were not increased during the year there was not the expenditure which the Labour Government had. Some hon. Members opposite seem to forget that those stocks were accumulated partly in accordance with the re-armament programme.
Reduction of imports was direct action taken by the Government, but I should point out that in the reduction of imports the import of raw cotton and raw wool decreased by £200 million in 1952. Therefore, it was the misfortunes of the textile workers of my constituency of Stalybridge and Hyde and other textile constituencies which contributed to this reduction in imports. But surely we are not expecting that to continue for another year. This year we are expecting that the improvement which has taken place in the textile industry will continue and that therefore it will put up the import bill by another £200 million.
Turning to the matter of exports, the Economic Survey says:
The driving force behind our export expansion can come only from industry, but it is the Government's duty to create and maintain economic conditions favourable to such an expansion.
My complaint is that the Government are not doing that. I wish to refer to two complaints from industrialists in my constituency which show the slackness of the Government in taking the urgent measures which are necessary.
First there is the question of the balances in Brazil. The Secretary for Overseas Trade yesterday answered a Question from an hon. Member opposite about money owing by Brazil. He referred the hon. Member to a reply he had given in January. In January, after the problem had been in existence about 12 months, his answer was that there had been talks with the Ambassador and the Government were hoping to have more formal talks later. Now we are in April and there have been talks, not only with the Ambassador here, but also with our Ambassador in Rio de Janeiro. That is as far as they have gone; there have not yet been formal talks.
The second complaint was in regard to shipments to Mombassa. When I raised the question why there was a delay of nine months in our shipping compared with that of the Continent, it was not helpful to be told that the Port of Mombassa was not big enough for our shipping.
A very serious matter is raised on the export problem by the export of armaments. I would refer the Committee to paragraph 50 of the White Paper on Defence and paragraph 111 in the Economic Survey. It is a definite policy of the Government to try to balance our payments by the export of armaments. To me that is crazy economics. If we are making more armaments than we need and exporting them we are thereby losing markets for our traditional exports. I am not arguing against the rearmament programme, but I say it is wrong that we should be trying to build up our balance of payments on a short term by exporting armaments. We are losing ground all the time; we are leaving it open to Germany and Japan to get in.
Secondly, we may find ourselves in a position where a general reduction in armaments could cause a slump here. The trouble is, in the matter of the export of armaments, that we are strengthening a group whose financial interests would be antagonistic to disarmament. I should like to follow that up by dealing with the internal position of the country, but in view of the pledge I gave that I would restrict my comments to a space of 10 minutes, I had better leave to some future occasion any other comments that I have to make on the Budget.