Budget Proposals and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 28th October 1955.

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Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00 am, 28th October 1955

All I would say to the right hon. Gentleman is that whatever happened in this instance—and this has been raised many times, and we have never had any suggestion of this kind before—it was certainly overshadowed by all the events of the 1955 Election.

I hope that the Chancellor will tell us this afternoon the real effect of his dear money policy on overseas expenditure. Last year the White Paper showed an increase of £80 million compared with 1951 in interest paid on sterling balances and other loans in this country. In July, the Chancellor told us that he thought the increases this year would add a further £30 million to our interest burdens overseas. Will the right hon. Gentleman say whether he still stands by that estimate. because here we have a commitment of £110 million a year for which we get nothing at all?

The Chancellor will appreciate that the arguments for dear money at a time when we were world creditors are very different now that we have become world debtors. One result of a dear money policy in a debtor position is, of course, a loss of £110 million a year over foreign exchange. The trouble that we are facing at present has arisen, of course, because the Chancellor has thrown away any control over the international economic situation as it affects this country. We have seen the shufflings and wobblings about the position of sterling.

My right hon. Friend referred to the Chancellor's misleading account of what happened in Paris. and this week the Chancellor claimed credit for the speech which he made at Istanbul. The trouble is that the right hon. Gentleman has been reduced to a kind of double-talk. It is a crisis, and it is not a crisis. He has to impress the Stock Exchange and, he hopes, the T.U.C. with the idea that there is a crisis. At the same time, he has to impress the international monetary speculators with confidence that there is not a crisis likely to affect sterling. So we get this two-faced Chancellor scowling at the Stock Exchange at one moment and smiling at the foreign exchange market at another, and these facial contortions are producing the painful effects we have seen this week. With low reserves and the danger of a crisis of confidence, the right hon. Gentleman has to go to extraordinary lengths to impress the foreign speculators.

"The Times" says this morning that the Budget has pleased the foreign operators. Of course it has. The foreign market is now dictating the Chancellor's economic and social policy on the home front and every time he comes along and carves off another hunk of flesh from the Welfare State and throws it to the wolves to buy time for a few months. He did it with food subsidies in 1952, and he did it again this week, but it does not solve the basic problem.

There is not time to deal with the social effects of the Budget or with the statement of the Minister of Housing and Local Government, the most evil pronouncement in a week of evil pronouncements. We all know only too well from our own constituencies, from our "surgeries," that by far the greatest number of people who come to see us are housing cases—urgent cases of hardship, broken marriages, grave injury to health. In my constituency we have some of the worst examples of overcrowding in the country. The most generous of housing authorities in my area does not allow people to be considered for a house unless they have been married for three years, and in another area the condition is that applicants must have lived in the area for five years.

There is a fine new housing estate on the outskirts of Liverpool. It is a beautiful estate, fine houses. But the people who come to my "surgeries" say that they cannot pay rents of 32s. and 34s. a week, plus travelling expenses. Some ask to go back to Liverpool, and others to go back even to the slums, because of the existing level of rents.

A Budget, we submit, must be judged not only by what it does, but by what it fails to do. Nothing has been done at this critical time for the old-age pensioners. The Chancellor said at Bournemouth: it will be, and must be, the first aim of our Government to look after those on fixed incomes. It is clear that of what he gave away in April, not a penny went to the old-age pensioners and those living on National Assistance. All they have had is 2s. 6d. extra a week since April, 1952, at a time when prices have been rapidly rising. especially of the goods which old-age pensioners and others on National Assistance have to buy.

The Chancellor knows—and I hope that he will not deny it this afternoon—that we are now seeing, after the Election, the naked Tory policy which some of us warned our constituents to expect if the Tories won the Election. That Election was fought on the thesis that Tory freedom works. This debate is taking place upon the thesis that Tory freedom has broken down. The Chancellor knows only too well that if the Government went to the country now they would lose—and lose heavily. He knows also—I do not think he will deny it—that if he had given the country, last May, any idea of the steps that have been announced this week, his party would have lost. He stands before the Committee and the country today devalued, and with his policies discredited.

But that is not the worst thing. There is one very serious aspect which has become clear this week—concerning not merely the personal policy of the Chancellor. The only cheers we heard this week from the benches opposite were for the statement of the Minister of Housing and Local Government yesterday. The Chancellor's party wanted him to go further. If he has no friend in the Tory Party today, it is because he has not gone as far as it wanted him to.