The right hon. Gentleman the Member for Battersea, North (Mr. Jay) devoted a considerable proportion of his time to talking about 1950 and 1951. I must say that I have never felt that the events of 1951 were perhaps the happiest advertisement for what the right hon. Gentleman called the "purposive steering of the economy", but I will devote most of my time to talking about 1955 and 1956 in the spirit of "Let Us Face the Future" which, after all, was the right hon. Gentleman's Election address in 1945.
There is one comment which I would make at the start and one charge which I would completely rebut. The right hon. Gentleman seemed to be implying that my right hon. Friend the Lord Privy Seal had not been frank with the House at one stage last year about the state of the gold and dollar reserve. I assure the House that my right hon. Friend kept the House and the country fully informed of what was happening to the gold and dollar reserve all through last year. Though I have no desire to spend too much time on the past, I think that in this respect my right hon. Friend's record compares very favourably indeed with that of the right hon. Gentleman opposite in 1951.
As I reminded the House last October—and I will do so again now—in October, 1951, the former leader of the party opposite, Earl Attlee, gave a party political broadcast just before polling day in which he made not one single reference to the economic crisis then facing the country. The only public statement at that time on this subject was by the right hon. Gentleman the present Leader of the Opposition at the Mansion House, when he said that it would be:
…wrong to pretend that a serious problem does not exist for the sterling area.
As I reminded the House last October, it certainly did. When we got back to power, fortunately, in October, 1951, we discovered that the losses of gold and dollars in October alone amounted to 320 million dollars, and for the last quarter of that year 940 million dollars. I think that, on the whole, that was not perhaps the happiest advertisement for "purposive steering."
Yesterday afternoon, after the brilliant speech of my right hon. Friend the Chancellor—[HON. MEMBERS: "Oh."] Perhaps my next remark will be more generally acceptable. After the brilliant speech of the Chancellor, we had a speech from the right hon. Gentleman the Mem ber for Huyton (Mr. H. Wilson) to which the whole House paid very close attention. Those of us who have been in the habit of attending these economic debates will all agree, wherever we sit in the House, that the right hon. Gentleman the Member for Huyton had a difficult task in following the right hon. Gentleman the Leader of the Opposition as "shadow Chancellor." I should like to say quite simply, and quite deliberately, that I have never heard the right hon. Gentleman the Member for Huyton make a better speech in this House. I am sure that the House did not grudge him any of the time he took.
We were also privileged yesterday to hear three excellent maiden speeches by the hon. Member for Preston, South (Mr. Green), the hon. Member for Carlisle (Dr. D. Johnson), and the hon. Member for Greenock (Dr. Mabon). When we hear maiden speeches here many of us think of the hon. or right hon. Member who represented that constituency before. I should like to say, as one who knew the late Mr. Hector McNeil only very slightly, that I am sure that all of us felt yesterday that he would have been delighted to know how admirably his successor acquitted himself in this House.
The right hon. Gentleman the Member for Huyton asked yesterday for what he called a "calm, sober appraisal" of the present economic situation. I will do my best to meet that request. There are two things which I should like to say by way of introduction. The first is this: no one realises more clearly than I do that to the ordinary man and woman in this country there are only two statistics that really matter. The first is their own personal income, whether it takes the form of a wage or a salary; and the second is the price level—especially the price of food, if some of what I shall say today seems a little remote from the economics of the ordinary household, I beg the House to believe that that certainly is not due to any indifference on my part to their problems.
The other point I wish to make at the outset is that people tend to think that "rising prices" and "inflation" mean exactly the same thing. That is not quite true. No doubt hon. Members will say a lot about inflation and about rising prices in this debate, but it is important to realise that rising prices are always the result of an inflationary situation in which too much money is chasing too few goods. Therefore, if we want to secure more stable prices we must first take the necessary measures to see that there is a proper balance between our resources of manpower and materials and the claims made on them by the Government, business men and ordinary consumers. We will not get more stable prices until this balance has been achieved.
I was very glad to hear the right hon. Member for Huyton say yesterday—and I entirely agree with him—that there were a number of objectives which were absolutely common ground between the two sides of the House, however much we may disagree about some of the means of attaining them. The right hon. Gentleman began his speech by pledging the support of his party to the declared policy of the Government to maintain the exchange parity of the £ at 2·80 dollars.
I was very glad indeed to hear this. The Government have always put in the forefront of their economic objectives the maintenance of a strong sterling currency. Britain is a trading nation, and if our currency collapses our standard of living must fall sharply at the same time. Furthermore, a strong sterling currency is not simply just a British interest. We must remember the rest of the sterling area as well. It is my belief that a collapse of the sterling system would amount for this country to a major defeat in the cold war.
I do not think there is much dispute in the House on the basic cause of our present difficulties; namely, that our economy is overloaded and that the total demands that we are making on our resources of manpower and materials are greater than the volume of resources which we have available. A number of hon. Members, including my hon. Friend the Member for Oldham, East (Sir I. Horobin), asked yesterday for some figures about the present position. It will not be very long before hon. Members will have all the figures before them in the Economic Survey for 1956, but I ask for the indulgence of the House for a few minutes while I give some, as it were, provisional statistics about the present situation.
These must of necessity be provisional, and I promise that I will go over this part of my speech, which is statistical, as fast as I reasonably can. In 1955, the volume of industrial production in this country rose by between 4½ and 5 per cent., compared with a rise of 7 per cent. in 1954. The fact that we had a considerable, but slightly reduced, rise in the volume of industrial production meant that we also had a slower rise in the gross domestic product, which rose by about 3½ per cent., or approximately £500 million, in 1955, compared with £600 million in 1954. I think that my hon. Friend the Member for Oldham, East quoted that figure.
However, while output rose less in 1955 than in 1954, domestic expenditure rose more, and the increase in total domestic expenditure that is to say, consumption, public authorities' expenditure, fixed investment and investment in stocks and work in progress—amounted to well over £600 million in 1955—at 1954 factor cost—compared with a figure of nearer £500 million in 1954.