Debate on the Address

Part of Orders of the Day — Queen's Speech – in the House of Commons at 12:00 am on 12th November 1956.

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Photo of Major Henry Spence Major Henry Spence , Aberdeenshire West 12:00 am, 12th November 1956

I am very glad to have caught your eye, Mr. Deputy-Speaker, because it allows me, on behalf of the House, to pay a tribute and offer our congratulations to the hon. Member for Chester-le-Street (Mr. Pentland), who has just delighted us with his maiden speech. His address was full of fact, and full of thought. It raised a number of most important issues, and I am sure that I speak for all hon. Members when I say that we shall look forward with interest to his future contributions to our debates.

The hon. Member called attention to the danger of people in the coal mining industry being made to feel that it was, in a sense, a dead-end industry, consequent upon the development of atomic power. He pointed out that by 1975 we hope to be producing atomic power equivalent to the consumption of 40 million tons of coal a year. I should like to add to that—for his comfort, I hope—that it is the declared intention of the National Coal Board to spend £1,000 million on coal mines in the next fifteen years or so.

Our annual consumption of coal for power is today 214 million tons; it is hoped to increase that to 240 million tons. Therefore, by 1975 atomic power will be producing only one-sixth of the total energy which we will require to sustain our industries and our standard of life. The hon. Member has done a useful service today by drawing public attention to the great, long-term future of the coal mining industry.

In speaking about our economic situation I want, in particular, to refer to that part of the Gracious Speech which says: It will be the aim of My Government to fortify the balance of payments and to extend oversea markets for our goods and services. My Ministers, while fostering the traditional and established Commonwealth preferential system, attach great importance to increasing and strengthening economic co-operation in Europe. To this end they are examining possible methods for creating in Europe an area within which restrictions on the free exchange of goods, other than foodstuffs, would be progressively removed. That we will all welcome anything that will strengthen Europe and the economic bonds that tie it together is, obviously, common ground, but this concept of a free trade area in Europe is one which we must approach with considerable reserve and with very great caution. It is clear that a number of tremendous difficulties will arise, and it was comforting to read in the Gracious Speech that the system of Empire preference will be retained.

Other problems, however, may arise. There is the problem of having a free interchange of goods between countries in which the social services and taxation burdens are unequal, giving obvious advantages to the countries with lower standards of living. Another problem which will have to be faced, if we are to have a free trade area in Europe, will be how to arrange rates of exchange. There will obviously be a flow of goods and payments in various directions. Under the old system of free trade, the correcting factor was a fluctuating rate of exchange, which automatically balanced different trading levels. If there is not such a fluctuating rate of exchange, it is difficult to see how free trade can operate without there being restrictions in the form either of tariffs or quotas. I hope that, before long, the Government will arrange a full-scale debate so that all views can be heard on this extremely complex problem.

I am sure that the fundamental principles of economic co-operation in Europe are correct, but I am not sure that limited free trade is the right method. From what was said at Strasbourg by the Joint Under-Secretary of State for Foreign Affairs, who quoted from the Chancellor's own speech made during the Recess, it seems that we have to discard any question of joining a European Customs Union, because by so doing we should have no self-determination about the level of tariffs which we should impose. I think that the Chancellor will be moving in the right direction if he can arrange for a debate on this issue.

I turn from the question of European free trade to the direct point of balance of payments. I have, on occasion, suggested that we should consider whether our present steps to increase our export trade are sufficient, and whether they are bringing about the results we desire. At the moment they consist mainly of what I call negative actions; applying Purchase Tax, and doing away with hire purchase, to reduce home consumption. There is also the action of the credit squeeze, which keeps down the spending of money.

There are all actions aimed at squeezing goods out of the home market and into overseas markets, and I suggest that the Chancellor should examine the possibility of applying some type of incentive to the exporter with a view to making him jump at the export market as one which will bring him some tangible result. As matters stand today, the exporter very often has to grant longer credits, and with a credit squeeze it is not always very easy to manage an increasing export trade.

A number of methods are used by our competitors abroad to give incentives to exports. One is to grant permisison to the exporters to retain a certain proportion of the foreign currency earned. It is only a small percentage, it is true, but something of that sort would not, I think, be any great strain on the Exchequer, and would be a great stimulus to the exporter to get the business. I suggest to the Chancellor that he should, by giving incentives to exports, reverse his rather negative policy of forcing goods overseas because there is no market for them at home.

I turn to one other matter which affects our economy. That is the part that agriculture can play. There is no better way of saving dollars and exchange than by producing our food at home. In a recent debate I asked the Government to consider the advisability of setting up a Select Committee of this House to examine the process and the means by which the products of agriculture, particularly meat, reach the consumer. Are these products being transferred in the most efficient way? Is the method that is being used correct in the light of the existing economic circumstances?

I feel that we are pursuing a method which was used and came into being forty or more years ago—a method which was all right when feeding stuffs were bought chiefly from abroad, when Britain was able to export 90 million tons of coal a year. But are they the right methods today? Today, in connection with meat, I think they are wrong because with the high cost of feeding stuffs we have to rely more and more upon grass for the main body-building materials and, therefore, meat tends increasingly to come on to the market in large quantities at certain times of the year and in small quantities at other times.

The fluctuations in price are tremendous. If one examines the records of the Fatstock Marketing Corporation for good quality breast carcass of lamb one finds a variation between 2s. 8d. and 4s. l½d. a lb. within six months. My suggestion is that a Select Committee of inquiry should look into all these matters. It should find out whether, by using modern means of refrigeration, we could spread our supplies of meat more easily through the year. This present method of booms and slumps invites the importation of meat at a time when prices are high, and that means again the use of foreign exchange. I ask the Government to consider whether it would not be a good plan to set up a Select Committee with powers to examine and report to the House, and to make recommendations.

I listened to the first two speeches today with great interest and it is not my intention to become embroiled in the rather party political atmosphere which was engendered. I would only say that, speaking for myself and for the part of Scotland from which I come, we have great confidence that the Government will be able to see us through the economic crisis that lies ahead, and we stand solidly behind the Prime Minister.