Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 20th December 1956.

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Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North 12:00 am, 20th December 1956

I will come to that later if the hon. Member does not mind my continuing a little longer.

Worse still, industrial production has fallen by this amount at a time when it ought to be 4 to 5 per cent. higher than last year, if the economy were functioning properly. That means that our national output is nearly £1,000 million less than it should be. Think what we could do in terms of exports, investment, consumption or defence with an extra £1,000 million at this time. The Chancellor of the Exchequer pointed out what we could do with £700 million taken from defence, but we could do even more with £1,000 million extra production which we have not got.

Why is it that production had already fallen substantially this year before the oil shortage began to affect us at all? The Economic Secretary told me candidly, in answer to a Question on 5th December, that Some fall in production for the home market by certain industries was the necessary consequence of the measures taken to restrain home demand earlier this year."—[OFFICIAL REPORT, 5th December, 1956; Vol. 561, c. 144.] That is perfectly true. By deciding to check the balance of payments crisis by a general credit squeeze, by the blind man using a bludgeon, as the hon. Member for East Aberdeenshire (Sir R. Boothby) described it recently, and not by any selective controls, the Chancellor of the Exchequer made it inevitable that production would go down and that investment would flag.