Budget Proposals

Part of the debate – in the House of Commons at 12:00 am on 20th April 1953.

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Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale 12:00 am, 20th April 1953

It is also correct to say that not one single new steel works was built or reconditioned before the war without the bankers' Industrial Development Corporation, established by Philip Snowden. Hon. Members opposite ought to learn the elementary facts of industrial life.

What we have learned is this. It is perfectly true, first, that by a reduction of Purchase Tax the Government can stimulate the consumption of certain products and, therefore, can make the industries producing them more prosperous. It is also true that theoretically the time can arrive when that stimulus has passed by a series of chain reactions to the heavy industries, but long before it has effectively reached the heavy industries the stimulus dies down, and we get no expansion of the heavy industries.

That is why we on this side of the Committee—our philosophy is entirely different from that of the party opposite—believe in the case of these industries in direct State intervention, because only by that sort of State action can we get an expansion of the broad base of modern industry. Only by that means can we get an increase of production of heavy goods which enables an expansion of the light industries to take place.

That is why we think—this is our view —that if we leave the whole of the British economy to the initiative of the private investor alone, there is no hope whatsoever of adding to the industrial equipment of Great Britain where it is most required. That is why in those years between 1945 and 1950, under the leadership of Labour Chancellors of the Exchequer—and if I may be allowed to discriminate, particularly under the leadership of Sir Stafford Cripps, who was jeered in this House—a higher percentage of the British national income was ploughed back into new industrial equipment than at any other time in the recorded history of Great Britain.

Year after year more than 20 per cent. of the total national income was ploughed back into new investment. In fact, in those years, we had very high Income Tax, high employment, high profits, higher wages and better health—and I notice now that no one says "Marshall Aid." We do not now have the familiar jeer of "Marshall Aid." Why not? Because the Government have got Marshall Aid. When the British Labour Government had Marshall Aid, they used that Marshall Aid in order to repair the damage done by the Tories before the war. Now the Tories use their Marshall Aid gifts from the American people in order to reduce the standard rate of Income Tax.

If we take into account—and last week an answer was given on this from the Treasury Bench—what we were spending in those years overseas by way of direct gifts to other nations, by way of overseas military expenditure, by way of the releases of sterling credits, the British Labour Government spent £320-odd million more than they received. At the moment the Chancellor of the Exchequer reckons upon the receipt of assistance from the United States for the military equipment of Great Britain.

I say solemnly and sincerely, speaking for myself in this Committee, that I consider it is an humiliation for the British nation to continue its economic dependence upon the United States in this way. I believe that the people of this country want British economic independence, whereas the Tory Chancellor of the Exchequer reckons the assistance from America as part of his income.

Indeed the situation is even worse than it is made to appear. What happens? I was speaking the other day to an industrialist—[HON. MEMBERS: "Oh."] He happened to be a Member of this House, a Member of the party opposite. He was telling me that he had tried hard to win markets in Australia, that he had sought to displace dollar purchases by Australia for certain types of machinery, and that he had succeeded in doing so; at last, and under severely competitive conditions, he had won a considerable foothold in the Australian market. Just after he had succeeded in doing that, the Ministry of Supply approached him and said they wanted him to switch his factory to the production of parts of tanks. He replied, "No, I do not want to do that. I have just won this very valuable Australian market where we are no longer having to pay in dollars for this equipment."

The Ministry of Supply said, "But we need the tanks; the nation's security requires more tanks; and therefore we ask you to switch over." He did so. Then the Australians, no longer able to obtain the machinery in Great Britain, bought it from the U.S.A. As a result of that there was a greater expenditure of dollars. Now we are selling Centurion tanks to the U.S.A. in order to get the dollars back again. That is regarded by the party opposite as organising a healthy pattern of trade. We have put the Americans in possession of a peace-time permanent market, and in exchange for it we have merely the impermanent and highly precarious market of selling arms.

It seems to us that that is a dangerous state of affairs, and that, therefore, this situation ought to be re-examined as quickly as possible, because I believe it to be unwise for us to hope that we can ever get a sufficient lodgment in the American market as to make the foundations of British exchange secure. I believe that markets have to be found elsewhere, because the markets in Great Britain and America are not mutually complementary, whereas markets in other parts of the world are.

Accordingly, the difference between hon. Members opposite and ourselves is very clear. We believe that the only way in which we can get a safe expansion of industry in Great Britain is by returning to the measures and the policy that rescued Great Britain from 1945 to 1951. Furthermore, we also believe that the policy now being pursued by the Government holds some dangerous results for us in this country. As I said, we believe in qualitative investment, that is, in redirecting the flow of investment where it is most required.

The Chancellor of the Exchequer has made only one discriminatory relief in his Budget, that is the 40 per cent. relief for the first two years for mining exploration, which is a characteristic example, in my view, of how not to do it. The most effective way of doing exploration of that sort is for the nation itself, for the Government, to assemble geophysical teams and send them out to explore. [HON. MEMBERS: "Groundnuts!"] It is no use hon. Members talking about groundnuts. As my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) said the other day, the fact is that the Chancellor of the Exchequer has given more money away to the moneylenders than was lost on groundnuts.

Now I come to one aspect of the Budget to which I must refer. The Chancellor in his speech—[Interruption]—I warn hon. Members that I propose to make my speech. This is a repetition of what we had before. The Chancellor of the Exchequer desires to rise at about a quarter past nine. I wish to honour my arrangement with him. but I propose to finish what I have to say.

In his speech the Chancellor spoke of his plans to give certain reliefs. He relieved certain categories of consumers of certain goods and he relieved the taxpayer of his standard rate of Income Tax. At the same time he defended the decision of the Minister of Health to send the structure—[HON. MEMBERS: "Oh!"]—yes, to send the structure and the organisation of the National Health Service to a committee. I have no objection to that, not the slightest. In fact I would support an investigation into the organisation of the National Health Service—[HON. MEMBERS: "Hear, hear."] What is wrong with that? But why has not the right hon. Gentleman the Minister of Health been doing it? What is he paid for? After all, be has nothing else to do. He has plenty of machinery at his disposal; why has he not used it?

I invite the attention of hon. Members to these figures, because there is obviously on the other side of the Committee a deep antipathy towards the National Health Service—[HON. MEMBERS: "Nonsense."] They are seeking, by every means at their disposal, to try to undermine the structure of the National Health Service. They have created the impression that the finances of the National Health Service are out of hand. They are creating the impression that there is extravagance, that there is universal abuse, and that some means ought to be found for bringing it under control. That is the impression they are creating.

The fact is that if all the charges on the National Health Service were abolished, if the whole of the Danckwerts Award were set against the expenditure made on the Service, the expenditure in 1952–53 would still be a smaller proportion of the national income than it was in 1950. In other words, it is not true to say that the expenditure on the National Health Service is going up or is out of control. The fact of the matter is that there is a climate of opinion being created in order to facilitate another cut in the National Health Service.

If the Chancellor of the Exchequer had any reliefs to give, here was a field in which they ought first to have been given. From all over the country we are receiving letters of complaint from hospital management committees that they are very short of money and are having to threaten to close down wards. In the last few days I have had letters of complaint from old age pensioners all over the country who have been harassed by the charge for prescriptions.

It seems to us on this side of the Committee that the Chancellor of the Exchequer got his priorities all wrong, and that if he wanted to relieve any body of taxpayers at present the people to relieve were first of all the aged and the sick. Instead of that, it is noteworthy that in the first Budget where the Tories had what they thought was money to disperse, the money did not go in the first instance to the sick and the poor: it went first of all to the rich. And as these facts are becoming known the Budget is of course becoming more and more unpopular in the country.

Instead of directing their attack against the dollar ill-balance, they are using dollars to buy sugar. They are reducing the extraction rate of wheat in order to provide white bread—condemned by every nutritional expert in the country. I want to change my metaphor from last night. Last night I said that the Prime Minister had converted John Bull into a gigolo. He has now converted him into a sugar daddy, hoping to win favours that his own virility cannot command.

We on this side of the Committee think that the economics of the Budget are unsound. We believe that it is unjust. We believe that it does not make any effort to assist in the economic recovery of Great Britain. Furthermore, the Chancellor of the Exchequer makes no attempt at all to deal with one of the most flagrant weaknesses in the British system, and that is that whenever we have a balance of payments crisis there is £400 million or £500 million of funk money in the City which immediately takes flight abroad and increases the anxieties and difficulties of the country.

In fact what the Chancellor has done has been to put the moneylender in the heart of the British economic system. He has therefore failed, dismally failed, to live up to the opportunities that he had. He has not pursued realistically and courageously what his predecessors did. I can see in my mind's eye the sombre and reproachful figure of Stafford Cripps sitting by his side, because all of us here agree that all we have got from the Tory Party at present is a resumption of those policies and those values which brought this great nation to the edge of disaster in the years 1935 to 1939.