Debate on the Address

Part of Orders of the Day — Queen's Speech – in the House of Commons at 12:00 am on 10th June 1955.

Alert me about debates like this

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00 am, 10th June 1955

The debate which has already taken place on the Address has ranged very widely indeed. All hon. Members were gratified by the speeches made from this side of the House yesterday by two of my hon. Friends who were addressing the House for the first time, as well as by that of the hon. Member for Maldon (Mr. B. Harrison) who seconded the Motion. It is already clear from the maiden speeches that have been delivered and from the further maiden speeches which I gather will be coming along during this debate that this is certainly a new Parliament in which there are to be many changes.

One of those changes has been announced this morning. It is one which not only we on this side, but the whole House, will note with great regret. It is the decision of my right hon. Friend the Member for Blaydon (Mr. Whiteley) that he is unable to carry on in the position of chief Opposition Whip. I am certain that the deep respect and affection which we on this side of the House feel for my right hon. Friend is equally shared by hon. Members opposite, not least by the Government end of the usual channels.

Although there are obviously changes taking place all the time, the Gracious Speech itself shows very little change either in its matter or in its tone. We have a large number of miscellaneous Bills, some of which appear to be new. I can certainly assure the President of the Board of Trade that his proposals for countervailing duties will receive a hearty welcome from this side of the House. We shall, of course, want to see what is in the Bill, but I am quite sure that the Government are right to use the freedom which they now possess under the General Agreement on Tariffs and Trade to make this change in our statute law.

Then there are quite a number of hoary old friends from the last Parliament, including some Bills which were introduced, but which were dropped because of the Government's decision to press on with the General Election. In addition to the Bills there is, as my right hon. Friend the Leader of the Opposition pointed out yesterday, the usual assortment of pious aspirations and promises to continue studying problems to which the Government clearly have no hope of finding any solution.

My right hon. Friend referred to the passage in the Gracious Speech which relates to another place, and there is the usual pious aspiration, which I think we have had in every Speech from the Throne during the lifetime of the present Government, about the need to reduce Government expenditure. It is: My Ministers will not relax their efforts to secure the utmost economy in public expenditure … Of course, we all remember that when the Government were elected in 1951 the most lavish promises were given at that time that Government expenditure was to be cut by £600 million or £700 million.

There was the famous speech of the right hon. Gentleman who is now the Minister of Education which so impressed the then Leader of the Conservative Party that it was circulated to every Conservative candidate. It made the clear statement that it would be easy to cut Government expenditure by £600 million or £700 million without anybody noticing it. A commentary on that promise and indeed on the latest statement in the Gracious Speech was made by an answer given by the Financial Secretary to the Treasury to a Question which I put on Budget day to see how much Government expenditure had been reduced since 1951. He told us that the increase in Government expenditure in the last financial year compared with the last year under the administration of my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) was £1,048 million. So instead of a reduction of £600 million or £700 million, Government expenditure has increased by more than £1,000 million. We shall have to see how the Government will implement the pledge in the Gracious Speech.

The most serious thing about the Gracious Speech is the fact that it is characterised by a tone of great complacency about the economic situation. This properly follows the bloated, and one might almost say boastful, complacency which the Chancellor suddenly began to exude as soon as the date of the General Election was decided. We all recall his gloomy statement in February reflecting the gloomy trade figures which had just become available.

I am bound to say that despite the Chancellor's Election-time sunshine, the latest trade figures confirm the continued gravity of our overseas economic situation. I think that the Chancellor and his party—and this was shown by speeches of hon. Members opposite and unsuccessful Tory candidates all over the country—are too ready to assume that the measures announced by the Chancellor on 24th February have solved the problem we were then facing.

On that date, the right hon. Gentleman announced an increase in the Bank Rate which had taken place that morning; he announced that our gold and dollar reserves were to be used in the transferable sterling market in such a way as to introduce a sort of backdoor convertibility; and he announced restrictions on hire purchase. As far as I can see the only result of the restrictions on hire purchase has been short-time working and unemployment in the furniture industry.

It has become very obvious that had the Government really wanted to damp down internal expenditure they would not have concentrated their attention purely on the expenditure of that section of the community that buys some of its requirements by hire purchase methods—on deferred terms. Had they really wanted to damp down dangerous inflationary expenditure they would, I think, have dealt with the provocative and flamboyant expenditure resulting from capital gains, particularly on the Stock Exchange—those very large capital gains which continued throughout last year and which, after being damped down for a short time, are still going on.

In this connection it would be right to commend to the Chancellor, though doubtless he knows of it, the minority Report of the Royal Commission on the Taxation of Profits and Income, telling him exactly how to deal with this problem of capital gains. I hope that the President of the Board of Trade will bring this section of the Report to the Chancellor's attention.

I should like to ask the Government—and perhaps the Chancellor at some time on his return from Paris will answer it—whether they intend to introduce a second Finance Bill this summer or autumn. I am not asking whether the Government intend to introduce an autumn Budget—that will obviously depend on the Chancellor's assessment, in a few weeks' time, of the economic situation—but it is fair to ask whether we are to have a Finance Bill this autumn providing for amendments to the administration and details of tax structure of the country. We have not, in fact, had a Finance Bill this year. We had, of course, this very brief and sketchy Measure just before the General Election, but it was virtually impossible to put down Amendments to it—and certainly impossible to move new Clauses.

It would be a very serious thing if the accumulated balance of amendments which, I am sure, must be in the minds of hon. Members on both sides and probably also in the minds of the Inland Revenue and of the Customs and Excise Department, had to wait yet another year. Next year there will undoubtedly be a pretty hefty Finance Bill to take account of the Report of the Royal Commission, but there are many other aspects of taxation which I should have thought needed urgent attention.

To turn once again to the measures announced by the Chancellor on 24th February, we have to ask whether this experiment of increasing the Bank Rate to the highest level in a quarter of a century has worked. The movements of prices on the Stock Exchange do not sug- gest any damping down of internal activities such as he said he wanted. He claimed a short-run improvement in the balance of payments; that the serious bleeding of our gold and dollar reserves has been staunched by the measures taken on 24th February. In the debate which took place just before the General Election I was amazed at a speech made by the Minister of Supply, and at his extremely complacent attitude to the changes he thought had taken place with incredible speed as a result of those measures of 24th February.

In so far as there has been any improvement in the state of the gold and dollar reserves it has, I think, been due only to two things. The first is that, temporarily, more confidence has been given to the speculators, and therefore the run on sterling has temporarily stopped. It has been due secondly to a very sharp influx of "hot" money to take advantage of the high interest rates at present ruling in this country. We have seen evidence of that, not only as regards money coming in for the purpose of short-term lending but in the growth of long-term American purchases of industrial securities in this country—which I think is something to be watched.

Even so, since the main change that has taken place has been this influx of "hot" money, we are bound to agree that that creates an extremely vulnerable situation, and that money which comes in on the basis of easy-come can easily go—and go very quickly. It is very disturbing that even with this movement of short-term capital there has been no improvement in the state of our gold and dollar reserves. I was surprised yesterday when the Prime Minister described the fact that there was no change in the gold and dollar reserves as "a pretty satisfactory situation."

This is a time of year when we would expect, for purely seasonal reasons, that those reserves ought to be increasing. If we take the month of May, the latest Treasury returns show that for that month there was no change at all in the gold and dollar reserves—no increase and no decrease. May is always a good seasonal month, and if we look back to May, 1954, we find that the gold and dollar reserves increased then by 165 million dollars. In May, 1953, they increased by 48 million dollars. Even in May, 1952, when we were still facing a serious foreign exchange crisis, in that month—unlike the months preceding it and certain months following it—there was an increase in those reserves of 16 million dollars. Yet, in May, 1955, there is no increase at all: I should have thought that that represented a very serious state of affairs.

Of course, the basic facts and the underlying tendencies in our economic affairs are determined not by movements of "hot" money at all but by the trade figures. I am sure that now that he has got over the Election, the President of the Board of Trade will be frank and will tell us of the concern he feels about the development of the trade figures. I know that in the first four months of this year exports are up by 10 per cent. as compared with the same period in 1954. That is the figure of which we heard most during the Election. We also heard a lot of it from the President of the Board of Trade in his speech at the B.I.F. banquet. We heard it again in the speech of the Prime Minister yesterday.

What we do not hear quite so much about is that in those first four months imports were up by 20 per cent. and that the visible trade gap—and we all know the snags about it—has been running at a rate of £74 million a month as compared with £41 million a month during the first four months of 1954. If the President has any gloss to put on these figures I hope he will tell us, but comparing like with like those figures suggest a worsening in the position by £33 million a month, which represents a worsening of about £400 million a year. One must ask the Government if this is the success we are supposed to be investing in at this time.

There is no evidence that the measures which the Chancellor took on 24th February are either reducing imports or expanding exports. There was a measurable fall in imports in April, and yesterday the Prime Minister seemed to take satisfaction in that fact, but the Board of Trade statisticians have pointed out that the fall in imports in that month was purely seasonal—due to a fall in food purchases—and that there was no basic change in the rate of imports into the country.

Then we must ask what prospects the Government see of increasing our exports. We have to increase our exports very considerably if we are to wipe out this increased gap of £400 million a year. We all, on both sides of the House, welcome the recent improvement in our exports to dollar countries. That is a tribute to the work of the Dollar Exports Council, a tribute to both Governments and to both sides of industry, but the overall balance still remains disturbing. We should like the President of the Board of Trade's assessment of prospects in every market in the Commonwealth. There have been import cuts in Australia. and one read last week that the Australian Government are still concerned about their balance of payments position. We must fear, or expect, the danger of further cuts, which will have a serious effect on our trade—because Australia is now our biggest overseas market.

I should like to ask what prospects the President holds out in regard to improvements to East-West trade. No doubt he has seen the recent statement by the President of the United States, in which President Eisenhower, at a Press conference, was much more positive than ever before about the desirability of increasing East-West trade, and in which, for the first time, he seriously rebuked some of the more hysterical American politicians who wish to continue the blockade of trade between East and West.

I hope that the President of the Board of Trade will take account of this very important and, I think, welcome statement from Washington, and tell the House that he is prepared to enter into new negotiations for amending the strategic list. If the American Government who, to speak frankly, have been the stumbling block in this respect, are willing to see an increase in East-West trade, I hope that the President of the Board of Trade will not be backward in following that up.

I hope that the right hon. Gentleman will be prepared to do something about ending the now indefensible boycott of trade with China. I think it right to remind the Government that this question of East-West trade has not only a bearing on our economic position but on relations between East and West. We all welcome the improved prospects of high-level talks, and I hope that the Government are not holding back East-West trade as a bargaining point in these talks. That, I think, would be an entirely wrong way to go about it. It would not help in promoting confidence between East and West if the West maintained a somewhat surly attitude about the question of trade across the Iron Curtain. I hope that the Government approach to this problem will be dictated much more than it has been by the extremely statesmanlike comments of the right hon. Member for Woodford (Sir W. Churchill) when he talked, in his speech in February, 1954, about the value of East-West trade as a solvent in world diplomatic relations.

It is essential also, as reference has been made to markets, to ask the President from what industries he expects the expansion in exports to come. There have been some industries expanding their exports and I think that we on this side of the House are entitled to claim a great deal of credit for these increases. For example, exports of petroleum result from the imaginative programme carried out when my right hon. Friend the Member for Leeds, South was Minister of Fuel and Power. That was much criticised at the time but it has utterly removed the dependence of this country on imported refined petroleum and created one of our biggest export industries, The same is true of exports of chemicals, plastics and so on.

I think that we are all worried about the consequences in the export of engineering products. In April I drew the attention of the House to some very serious figures in the Economic Survey. They showed, that although there had been an increase in engineering output of capital goods of about £490,000,000 compared with 1951, whereas we would have expected most of that increase, if not all, to have gone to exports and capital investment, in fact, investment increased only by £25 million a year and exports of engineering goods had fallen by £30 million compared with 1951. That is a serious statement about the position of what is our major export industry, and these are Economic Survey figures.

When we inquire where the increase has gone we find that defence absorbed £190 million, but cars for the home market absorbed £135 million and consumer goods for the home market another £80 million. If this trend continues, we must warn the President of the Board of Trade that it will have a serious effect on the long-term development of our export trade; because unless there is to be a spectacular increase in engineering exports, such as occurred between 1946 and 1950, I think that there is no hope of our exports expanding at the required rate.

I do not need to draw attention—because other hon. Members have done so—to the effect on the road problem of this production of cars and the rise in the home market. Certainly the pace of the development of the road programme for this country will be affected, and I think it wrong that the problem should be unnecessarily added to by this influx of new vehicles coming on to the roads.

One thing that struck me during the General Election was the repeated statements by workers in the road haulage industry that since denationalisation began there has been a serious relaxation of safety standards on the private enterprise side of the road haulage industry. If we are to have the roads cluttered up with more and more lorries and vans, and if there is to be a relaxation of standards both within and outside the law, the Government will have to tackle the question of road safety in a manner which far transcends any ideas they have so far expressed in the Road Traffic Bill which we had before us last Session.

In the Gracious Speech there is a reference to the Sugar Agreement and this appeared also in the previous Gracious Speech, although we do not know what legislation was proposed. Perhaps the President of the Board of Trade will tell us something about it this morning. Although hon. Members on this side of the House are suspicious of what may be in that Bill, I think we welcome what appears to be the Government's acceptance now of the value of long-term contracts for colonial produce. Perhaps the President will say whether this new legislation means that the Government are now accepting that, in order to maintain colonial production and prosperity in the Colonies, it is desirable to have long-term contracts for their products. If that is what is meant, we must ask the right hon. Gentleman when he proposes to do something in respect of raw cotton and certain other materials.

Another important reference in the Gracious Speech relates to monopolies. We must ask the Government whether this means that they are really proposing to take action, or is it another of those annual bromides which we get from the Government? Yesterday the Prime Minister intervened on this question and gave to the House what I thought was a pretty serious distortion of recent political history. He informed the House that the Monopolies Commission was the invention of the present Lord Chancellor. Surely the Prime Minister remembers that it was under the war-time Coalition Government that this idea was first put forward, in the White Paper in 1943, as an agreed Measure. Why he should suggest that the present Lord Chancellor, who was then in a relatively junior capacity, should be singled out from all the Ministers as being the father of this particular idea, I do not know. If any Minister were responsible I should have thought it was my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), who was at that time President of the Board of Trade.

Then we were told by the Prime Minister that the Monopolies and Restrictive Practices Act, 1948, was an agreed Measure. He could not have been there to see the face of present Lord Chandos, then Mr. Oliver Lyttelton, or the very churlish way in which he accepted this attack on monopolies. Then Mr. Lyttelton seemed to be bitterly opposed to it and the present Lord Kilmuir, then Sir David Maxwell Fyfe, seemed on the whole rather to welcome it. But when it came to amending the Bill to give powers to the Government to make general references, such as the one the President made two or three years ago, that was bitterly attacked both by Lord Chandos and Lord Kilmuir, and was only forced through against the opposition of the Conservative Party.

During the Election campaign there was rather more enthusiasm from members of the Government on the subject of monopolies. The Chancellor of the Exchequer was reported as saying to his constituents, "You come along with any cases of monopolies which you wish to bring up, and we will refer them to the Monopolies Commission." That is a very significant change in monopoly policy. Indeed, a few cases have been brought out. The hon. Member for Lewisham, West (Mr. H. A. Price), in a speech yesterday which was welcomed by hon. Members on this side of the House, gave some pretty powerful examples from the paper industry. The hon. Member for Twickenham (Mr. Gresham Cooke) keeps pressing his complaints about the "Daily Express," though he is much quieter about the motor trade.

Already hon. Gentlemen on this side of the House have referred to the tenders for cement in Bristol, and we heard about the tenders for steel girders for educational structures, and all the rest of it. If the Chancellor's statement is correct, and if he was correctly reported, I take it that at least we can expect that the President of the Board of Trade will now refer the oil industry to the Monopolies Commission. I hope that the right hon. Gentleman will tell us whether the Chancellor's speech during the Election campaign means a new policy, and with what enthusiasm the President will follow up this new policy, or whether it was simply a piece of electioneering designed to mollify the anti-monopolists of Saffron Walden.

Of course, at this stage it is difficult to know what the President has in mind about monopoly legislation. Are we to take it that, now that he has the Report of the Monopolies Commission, the Government intend to introduce legislation to implement the views of the Commission? The President was so severe on me in the last monopolies debate on the question of the calico printing industry that I can only deduce that it is the view of this Government that they must automatically accept anything reported upon by the Monopolies Commission.

Because of the very serious state of affairs of the cotton industry at that time, I gave reasons for going slow on the question of calico printing, but, if the President is enunciating the principle that we must implement every Report of the Monopolies Commission, then I hope that he is going to tell us what he intends to do in relation to the last Report of the Commission. If the right hon. Gentleman is considering legislation, I would ask him to go even further and to say whether he has studied the proposals put forward by my right hon. Friend the Member for Leeds, South, by myself and by other hon. Members, including my hon. Friend the Member for Sheffield, Hillsborough (Mr. G. Darling) for the registration of all trade associations which have restrictive practices.

On that occasion, we gave some details of the success of this experiment in Sweden, not only in gradually reducing the number of trade associations with restrictive powers, but, as my right hon. Friend pointed out, in the establishment, in the Swedish equivalent of the F.B.I. of an anti-monopolies department for advising industry on how to get rid of restrictive practices. That would certainly be a revolution in this country, and I hope that the President will tell us that he has made a special study of this Swedish experience and that he intends to follow it in the legislation which is to be introduced during this Session.

I now turn from the economic part of the Gracious Speech to some of its social aspects. There is no reference in it to the cost of living. During the election I for one got the impression that the Government had given up the struggle so far as the cost of living was concerned. They no longer sought to pretend that it had not risen, but they tried to counter it by their unworthy stunt about ration books. For the rest, they said that if the cost of living had gone up, wages had gone up even more.

That is a very strange argument for a Conservative Government. We have not seen either the Government or their supporters noticeably enthusiastic about increased wages over the last three or four years. There may be great advantage in a high wage economy. High wages are certainly one of the ways in which to enforce greater capital investment and greater efficiency in British industry. We should like to know whether it is now Government policy to let the cost of living rise and to meet it by a policy of encouraging higher wages.

Of course, as my right hon. Friend the Leader of the Opposition pointed out, there is nothing in the Gracious Speech which provides for those living on National Assistance, the submerged tenth in this period of so-called Tory prosperity, the million who require supplementation from National Assistance. This Government, which only a few weeks ago was handing out £150 million in tax concessions, have only been able to find 2s. 6d. a week for a single person or 2s. a week for each of a married couple in addition to the National Assistance which they were receiving three months ago.

The "Economist" said that what we wanted from the Government was a two-decker economy. I am frightened of what will happen under such an economy, because those on the lower deck are already having a very rough time on it. I remember, at a public meeting in my division during the Election, a woman saying that she was speaking on behalf of her husband who could not come along because he had not a decent suit of clothes to wear. He was a blind man. He had received an increase of 14s. 6d. a week, but now the Government had taken away 9s. 6d. of that amount by the cut in National Assistance. If that is the sort of two-decker economy that we are going to get then I hope that the Government will think again about it. [Laughter.] I do assure the President of the Board of Trade that there is nothing funny in this.