Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 23rd January 1958.

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Photo of Mr Peter Thorneycroft Mr Peter Thorneycroft , Monmouth 12:00 am, 23rd January 1958

The House, which understands about these things, is sometimes a little tolerant to people who speak in my position. Hon. Members know that this is not an easy speech to make. It will have the one merit—and perhaps the only one—that it will be a very short speech.

I have already said everything that I had to say about my reasons for resignation in a letter which I wrote to my right hon. Friend the Prime Minister and in a speech which I made to my constituents in Monmouth. I have no wish in any way to add to or detract from what I said on those occasions.

What, it seems, matters now is not personalities; it is not why I resigned or why my right hon. Friend the Member for Flint, West (Mr. Birch) and my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) resigned at the same time. What matters now is the future. I therefore want to speak for a few moments in this debate to support the Motion, which, indeed, seems to be couched in quite unexceptionable terms, and to say something about what I regard as the basic economic problem of the country. I can say it very shortly.

I can claim to say it without rancour or recrimination and from an experience of six years as an economic Minister. Indeed, it may be said that having been for six years an economic Minister, I can share some of the blame for some of the problems that exist. That will not bother me at all, because it may well he that no party and very few people in this country could escape all responsibility for bearing some share of the economic problems that face us at the present time.

The point I want to put is the quite simple one that for twelve years we have been attempting to do more than our resources could manage, and in the process we have been gravely weakening ourselves. We have, in a sense, been trying to do two things at the same time. First, we have sought to be a nuclear power, matching missile with missile and anti-missile with anti-missile, and with large—I am not suggesting that economies have not been made—conventional forces in the Far East, the Middle East and the Atlantic at the same time. That is one branch of endeavour which we have attempted. At the same time, we have sought to maintain a Welfare State at as high a level as—sometimes at an even higher level than—that of the United States of America.

We have been trying to do those things against the background of having to repay debt abroad during the next eight years of a total equal to the whole of our existing reserves; against the background of having to meet maturing debt in this country next year at a higher level even than the very high level of business; against the background of seeking to conduct a great international banking business and against a background of sustaining our position of one of the world's major overseas investors. In those circumstances, it is small wonder that we find some difficulties.

I do not deride the men, nor do I invite anyone else to deride them, who urged large expenditure in all these fields. It is not a mean thing to wish to be independent in nuclear power of both the East and the West, although it may be that in the West in future no one really will be independent in nuclear power. It is not a mean thing to attempt that or to attempt to have the great conventional forces to match our world-wide responsibilities. It is not a mean thing to advocate and seek to sustain a Welfare State which stretches from education to health, from family allowances to old-age pensions.

Those are not unworthy aims, but let no politician, of any party, be under any illusions as to what all this has meant. It has meant that over twelve years we have slithered from one crisis to another. Sometimes it has been a balance of payments crisis and sometimes it has been an exchange crisis, but always it has been a crisis. It has meant a £ sterling which has sunk from 20s. to 12s. That is not a picture of the nation we would wish to see. It is a picture of a nation in full retreat from its responsibilities. That is not the path to greatness. It is the road to ruin.

I am not here to criticise my colleagues, or indeed my political opponents. Indeed, if we look back we see no Chancellor has been wholly successful in this—Sir Stafford Cripps, for all his courage and conviction, the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), and my right hon. Friend the Lord Privy Seal who is to reply to this debate, I myself. There is no man who would say he had won in this particularly difficult and desperate battle. Now my right hon. Friend the Chancellor is in charge of these affairs. I know that I myself wish him well, and I believe the whole House and the country wish him well, in the task which lies ahead of him, but he might just ponder for a moment why it is that his predecessors—and heaven knows, they tried a wide variety of policies—have so far failed.

I would say in all humility that I do not believe the problem is technical at all. I do not believe it lies in an answer to the question whether we should use Bank Rate or physical controls. To tell the truth, neither of them works very well. The Bank Rate is only one part of a very much more complicated monetary mechanism, and physical controls are well known to crack under any real pressure. The simple truth is that we have been spending more money than we should. That is the simple truth. If I may attempt a metaphor, it is not the sluice gate which is at fault. It is the plain fact that the water is coming over the top of the dam.

Our basic problem, whether it is in the Welfare State or whether it is in arms, or whether it is in both, is that we should plan to spend less than we are planning to spend at the present time, and unless we do so the £ sterling will continue to decline in value. Nothing else will serve. Higher taxation? It has already reached a point where I should think most men would admit it is inflationary in its effect. A buoyant revenue, which is a comfort so often extended to a Chancellor of the Exchequer, is a reflection of and not a cure for inflation. A new method of paying for the social services may well be right, but it is only a new form of taxation in reality.

It is not that there is not agreement about the aim. We are all agreed about the aim. Of course we are. Any hon. Member in this House would say he was against inflation, as men say they are against sin. The question is where and when we choose to stand and fight it.

All I want to say is this. I believe that there is an England which would prefer to face these facts and make the necessary decisions now. I believe that living within our resources is neither unfair nor unjust, nor, perhaps, in the long run even unpopular. There are millions of men and women in this country, in the Commonwealth, and in many other countries of the world who depend for the whole of their future on sustaining the value of our money. Self-interest and honour alike demand that we should take the necessary steps to hold it.

The right hon. Gentleman has my full support. My resignation will not have weakened his hand in what he has to do. But he has something more than my support. I believe he has the willingness of many people in this country to put the battle against inflation first, to face the truth, however hard the truth may be. He has an opportunity. With all my heart I wish him well in it.