Although I have only about five minutes in which to speak, I want to ask some questions of the Chancellor about the balance of payments. We have had a debate in which the Chancellor began by speaking about the supreme importance of the balance of payments. He did not give us an estimate, during the rest of his speech, of what is to happen to the balance of payments in the next 12 months. I want to ask him to be kind enough to tell us how he expects the position to work out in the coming year.
During the last 12 months there has been a peculiarly fortunate combination of figures. Exports, imports, consumption and investment and production have been in a peculiarly satisfactory ratio and relationship for the balance of payments. Indeed, the Chancellor himself said:
Put in the simplest terms, we kept the exports rising while we checked imports.… The price we paid was a check to the growth of total industrial production and of personal consumption."— [OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 967.]
What does the right hon. Gentleman expect to happen in 1957? So far as I see, the outlook is not at all as hopeful as it might be. Far from continuing in their fortunate combination, it is quite possible that these factors will move back into what was the relatively unfortunate combination of previous years. Indeed, the figures are already starting to move that way.
Roughly speaking, so far as we can estimate from the figures in the Economic Survey and those mentioned by the Chancellor it seems quite likely that production this year as compared with last year will be up by about £500 million. But we have now started off with January and February of this year at an enormously increased rate of personal consumption. The Economist this week estimates that we might end the year quite easily with an increase in consumption of about £350 million.
That, of course, will make an immediate effect on what is left to improve our balance of payments surplus. Some of what is left, however, will be needed to go out extra in exports to pay for the extra imports of materials and so on that the advance in production will demand. Therefore, we shall be back in a very difficult situation: if we have an increase in production, it will draw in more imports; we shall have an increase in consumption, which might well be £350 million out of £500 million; and at the end, as far as one can see, there will be nothing left to improve the balance of payments surplus. This, of course, is crucial.
This is what I want to ask the Chancellor. He has said that so far he does not know what will happen this year, but now that consumption is rising again, now that his fortunate factors are beginning to disappear and consumption is beginning to rise and production is starting to rise, have we any real prospect of that £350 million surplus on the balance of payments which we have set out to achieve?
My own feeling is that we shall do very well indeed if we can hold on to the £230 million that we achieved this year. Indeed, it is not even £230 million. One thing that the Chancellor has managed to get away with throughout these debates is the impression that there was a surplus of £233 million. There certainly was not, because included in the £233 million is the £37 million which we should have paid in interest on the American loan and the real current surplus is just over £180 million in the last 12 months. That is only halfway towards our target surplus in this balance of payments and yet consumption is beginning to rise, imports are beginning to flow in at an increasing rate and production is going up and drawing in more imports and, possibly, preventing more exports from going abroad.
Even though it is a late hour at which to put questions to the Chancellor, I ask him to treat the Committee at least to some estimates on this very vital problem. We have all paid lip-service to it. I can think of a dozen hon. Members through these debates who have said how crucial the balance of payments surplus is and yet nobody on the Government side, at least, seems to have made an estimate of what might happen now that the Chancellor is allowing these factors which influence it to get hack into the 1954 and 1955 relationship. It is a great dilemma which confronts him once he has had this pause in our economy in 1955 and now that things are starting to move again.
Once we start on expansion, once we start the thing going again, how does the Chancellor plan to avoid the balance of payments crisis which we had when this happened previously? I suggest to him that the figures we have had so far are by no means adequate to explain the situation, and I join with the Economist and other newspapers which have been pressing the Chancellor in saying that even though his estimates are tentative, he ought to tell us what they are.
Does the Chancellor really expect that we will get the £350 million surplus in the next two years? Is it not more likely that this year we will only hold what we have got and that the pressure from behind the Chancellor next year will demand the demolition of the remainder of the credit squeeze— he has held on to half of it this year—and that then we will be nowhere near getting the £350 million surplus that the country needs?