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 1957.

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Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden 12:00 am, 12th November 1957

There is no need to talk about stagnation. Investment in the public sector in 1957–58 will be about £1,500 million as compared with £1,100 million in 1951. This is a comparable figure adjusted for price variation and it shows that in real terms public investment over this period has increased by no less than 37 per cent. Let me give some detailed figures. Investment in real terms in the fuel and power industries will have increased by two-thirds in 1957–58 compared with 1951. Investment in transport and communications has almost doubled over the period in question. I will give the figures.

When we assumed office, in 1951, the figures for fuel and power investment were £270 million, and in 1957–58 they will be £450 million. For transport and communications, the equivalent figures are £165 million in 1951 and £320 million in 1957–58. The scale of private investment has shown an equally large increase over the period 1951 to 1957 and is still at a very high level. All this investment is bearing, and will bear, fruit.

As for our overseas investment, which is running at over 1 per cent. of our gross national product, it is more than that of any other country in the European community at the present time. So much for the ridiculous charge that we are ravaging the seed corn. It is, however, only responsible to add that investment expenditure, however essential it may be, cannot be permitted to outrun available savings without aggravating inflation.

Before I come to the attitude that we have felt bound to adopt in the face of our present economic difficulties, I must ask the Opposition how they justify their own irresponsible policies. Our trade with the world, our standards of life, our savings for the future and our provision for the old could not be long maintained and honoured in the conditions of chronic inflation which the policies of right hon. Gentlemen opposite would undoubtedly bring about.

While I was away I was able to listen to the right hon. Gentleman the Leader of the Opposition on the air as well as to read him in "Industry and Society". Not only do hon. Gentlemen opposite propose to subject the steel industry and the road transport industry, with their long and successful record of industrial relations, to unnecessary and widespread dislocation, but what contribution do they imagine that they will make to productivity or better industrial relations with Labour's policy on future public ownership, "Industry and Society", a copy of which I have in my hand?

How can they expect the vast range of British industry to settle down single-mindedly to increase productivity when the reward for success and the penalty for failure alike consists in being cowed, confused and clipped by the Labour Party? If a firm is not doing well, what do we read of the intentions of the Labour Party on pages 56 and 57 of this document? The firm is told, "You are failing the nation and we shall take you over". If a firm is doing well they say, "The community must acquire a stake in the fruits of your enterprise. We must take over your shares". In other words, they do a take-over.

I wonder whether hon. Members opposite have ever counted the total cost of the proposals with which they apparently hope to bribe and drug the electorate. As far as I could follow the marathon speech of the hon. and learned Member for Kettering (Mr. Mitchison) yesterday, it appears that we shall have to take into account the interest charge on the capital sum of taking over a large proportion of the 5½ million municipalised council houses. We shall have to account for the abolition of the National Health Service charges. We shall have to pay the services compensation for nationalisation and take-over shares.

According to a remark of the Leader of the Opposition, his view in 1951 was that we should restore the food subsidies. I should like to ask him whether that is his view today. [HON. MEMBERS: "Answer."] I did not expect an answer.

I should like to ask the hon. Member for Coventry, East (Mr. Crossman) what will be the cost of the long-term pensions scheme envisaged at the Labour Party Conference at Brighton. When I look at this prospectus of the Opposition with the cost which is involved—I think it is very good for the country to remember these things—I am reminded of the words of that fine comedian of the Windmill, Mr. John Tilley, who in one of his famous sketches was reading out the auditors' report at a company meeting. The auditors' report, on the prospectus of right hon. Gentlemen opposite, runs as follows: We certify that everything in the accompanying balance sheet, with the exception of the figures, appears to be correct; and the business of the company, if any, appears to be on the incline. We cannot afford the extravagances of the Socialist programme. We must state quite simply that the sooner their policy comes back to what it was as expressed by the right hon. Gentleman the Leader of the Opposition in his own 1951 Budget speech the better. I quote his own words. He said that there must be no …increase in wages and salaries beyond what is justified by the growth of productivity…"—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 831.] That is sense, and that is precisely the policy that my right hon. Friend the Chancellor of the Exchequer is supporting.

The right hon. Gentleman the Member for Blyth asked me about production. I will try to give him the latest and most up-to-date assessment of production that I can. It so happens that the average production in the September quarter appears to have been the highest ever. It is about 3 per cent. higher than in the corresponding period of 1956. That is the answer to him. The right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) says that we had a 15 per cent. production increase in a period of five years. That is exactly what I said when I made my speech about doubling the standard of living in twenty-five years. I said that if our production could increase by 3 per cent. per annum—which is 15 per cent. in five years—we could achieve that result. I am very gratified that he should confirm my impression.

Not only have we a good figure for September but we also have good indications for certain industries. Motor car manufactures are up by about 62 per cent., and the production of plastics and machine tools, hosiery, radios, television sets, and in the chemical industry, are all going up.

I now want to tell the House the problem with which my right hon. Friend the Chancellor of the Exchequer is dealing. The problem with which he is dealing is that in the first six months of 1957—and this is the national problem with which we have to deal—the increase in production was approximately £180 million—about 2 per cent.—while wages and salaries were 6 per cent. up—about £300 million. That is a ratio of two to six. The ratio in 1956 was one of a 1 per cent. increase in production to a 9 per cent. increase in wages and salaries, and a nearly 4 per cent. increase on profit margins.

That is the problem with which we have to deal, and, in my opinion, my right hon. Friend had no alternative but to adopt the strict policy that he has adopted with the full approval of his colleagues in Her Majesty's Government. As is seen at present, and as is evidenced by the strength of sterling, he has had his first victory for sterling, for which we should all be thankful.

I can only say this from my own experience, that any Chancellor of the Exchequer dealing with an exchange crisis, whether it be of the type that I dealt with in 1951–52—which was of a different type, because that was a case of a bad balance of trade, and we had to cut imports—or a crisis such as this, where wages and salaries are frankly outrunning production and where profits are not up to the wages and salaries, can only deal with it by limiting the circulation of money, as my right hon. Friend has done.

I come to some of the other questions raised by the right hon. Member for Blyth. I would first reply to his reference to the White Paper of 1948, the Statement on Personal Incomes, Costs and Prices. There are one or more extracts in this that I should like to bring to the attention of right hon. Gentlemen opposite. In paragraph 5, it is said: It is essential, therefore, that there should be no further general increase in the level of personal incomes without at least a corresponding increase in the volume of production. It goes on to make clear that unless we follow that policy it will hurt our exports, That is precisely the policy that we are following today.

The only difference between our policy and that of right hon. and hon. Gentlemen opposite is that at that time, when the matter was discussed on 12th February, 1948, Sir Anthony Eden, who was then in charge of our side, said that if the White Paper was not aimed only at one section, be it wages, salaries or profits, it would have the support of the House and the nation. There was no vote of censure, there was no Division and the Opposition supported the Government. In face of our national difficulties today, the Opposition should not just pay lip-service to the need for joint collaboration in dealing with these problems but should copy our example on that occasion.

The right hon. Gentleman made reference to one of the leaders of our national life, namely, Mr. Jim Campbell who, together with Mr. Hollywood, was, to our great regret, killed in an accident in a far-off country, and I immediately take up the right hon. Gentleman's reference to these leaders of the trade union movement and express our own sympathy with their relatives in this great loss. [HON. MEMBERS: "Hear, hear."] I do not want to go on with that because I want to say that Mr. Campbell was a respected figure in the trade union movement. We respect his words, and it is no part of Government policy to seek to destroy the industrial relations or the collective bargaining which he did so much to foster. Nor do we intend to destroy the arbitration machinery. With my experience, having been for some long time Parliamentary Secretary and for a very short time Minister of Labour, and as a member of Her Majesty's Government, I would not myself support any such policy.

The case of the Health Service employees has been raised by the right hon. Gentleman and it would be wrong for me to allow the debate to close without referring to it. The Ministers in question—namely, the Secretary of State for Scotland and the Minister of Health—were acting in accordance with their statutory duty in a case where the Government are in effect, although not in form, the employer, because all the money for the wages in question comes direct from the Exchequer—that is, from the taxpayers' pocket.

I here take up a remark made by the Leader of the Opposition—"the man who decides whether to pay." The man who decides whether to pay in this question is the Chancellor of the Exchequer. It may be unfortunate that there is this confusion, arising from the right hon. Gentleman's reference to the Guillebaud Report, on the subject of the management side and the official side, but what is absolutely certain is that there was absolute rectitude on the part of my right hon. Friend the Minister of Health. His official representatives were instructed from the start to oppose the grant of this wage award and, what is equally clear, he and his right hon. Friend the Secretary of State for Scotland were acting in accordance with the policy announced by the Chancellor of the Exchequer on 29th October, namely, that where the Government are themselves the employer we must seek to follow policies similar to those which we urge on others. It is our intention to adhere to that policy, whatever opposition and whatever clamour we may meet.

The right hon. Gentleman talks about the private sector. I should have thought, looking at the effect on the Stock Exchange, looking at the very stiff Bank Rate, at the credit squeeze to which the private sector is being submitted at the present time, and at the relationship of profits to wages in the figures which I gave, the private sector is certainly suffering a sufficient squeeze from the Chancellor of the Exchequer at the present time. In answer to the Leader of the Opposition, I am satisfied that the policy is balanced as between the public and the private sector.

The position about the Transport Commission, in answer to the right hon. Gentleman, is not that there can be no question of wages agreements within the ambit of the railways. Of course, there can be wage negotiations, but what it is perfectly legitimate for the Government to do is to decide that they cannot make any more money available by subsidy to the Transport Commission, and to give them that warning ahead, so that the responsibility lies with them.

I will read one more extract from the White Paper of 1948, which says this: …the Government have decided…that if…remuneration is increased in any class of employment, whether in private industry or under a public authority, there can be no presumption, whatever may have been the practice in the past, that the resulting costs will be taken into account in… the various …financial matters requiring Government action. Taken with due regard to the different financial climate, price-fixing and so forth, to which reference is made, that is the equivalent in the country's economy, as we are running it now, of the policy which I have stated.

I want to make it quite clear that we intend, whatever the difficulty, to carry forward that policy. What is at stake, in fact, is this, and this is a problem which arises before every Chancellor of the Exchequer, before every Minister of Labour and probably also before every Government. At one time or other, the economy is so expanded that one has to hold back, and then the time comes when production lags and one has to go forward. We are at a moment now when production is actually showing signs of improving, but when wage claims and demands upon the products of the economy exceed by far the increase in productivity. We have, therefore, no alternative but to adopt a stiff policy.

That stiff policy has already been effective for sterling, and my right hon. Friend the Prime Minister has indicated