Economic Situation

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

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Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West 12:00, 23 January 1958

The House has listened to a very courageous speech. It was one of the most honest speeches it has been my privilege to listen to in my short period in this House. The present Chancellor of the Exchequer when speaking today said—and I think his words were these—that the present situation had left his colleagues surprised and perplexed. Not only are his colleagues surprised and perplexed by the situation which has occurred with the resignation of the former Chancellor of the Exchequer: I believe many in the country are still baffled by it. Possibly the speech which the late Chancellor has made today may help to clear up some of the perplexity and bewilderment in the country.

The right hon. Gentleman went down to his constituency and made a very clear statement of his views, but he indicated at the same time that it was not his intention, apparently, to carry his views in any campaign either quietly in the Tory Party or in the country, and I think that what has baffled the country, as to some extent it still perplexes me, is whether the argument in the Cabinet was between policies which would bring about varying degrees of success, or whether it was an argument about policies which the late Chancellor believed would result in failure, whereas he believed his policies would result in success.

It is most important that the country should be told very precisely which of these two it was, for if it was merely an argument about degrees of success many people will wonder whether the late Chancellor was justified in resigning, for, after all, if there would have been some success from the policies recommended by the rest of the Cabinet, at least he would have had the honour of being the first Chancellor to preside over success in handling the problem of inflation since the war. On the other hand, if the argument was between policies, between those advocated by the Cabinet which in the opinion of the late Chancellor would result only in failure, and his which would result in success, a very different situation arises.

I remind the right hon. Gentleman of words he used in his speech at Newport, where he referred to the last crisis in September, and said that had it not been checked it could have led to the economic disintegration of the Commonwealth, and that it could have resulted in irreparable injury to the economy. The right hon. Gentleman used similar words this afternoon when he said that since the war we have been going along the road to ruin. This is not some small matter. This is a matter which I believe the country wants solved.

If it is the case that the late Chancellor is convinced that his policies alone would have stopped us going along the road to ruin, can he really say in his conscience that he must now take a back seat on the Conservative Party benches and do no more about it? Can he really sit there and mildly give support to a Cabinet which he is convinced is pursuing economic policies that will continue to take the country along the road to ruin? I am not the keeper of the right hon. Gentleman's conscience. I do not wish to be its keeper, but it is only fair to put to him that this is why so many people in the country are baffled.

It is not an easy matter for an hon. Member of any party to resign a great office, such as that which the right hon. Gentleman has resigned. It is perhaps an even more difficult thing to carry on one's campaign either privately within the party or outside in the country, but if the right hon. Gentleman is convinced that the policies with which he disagrees will lead the Government along the road to ruin he should at least consider again, on behalf of the many people who think as he does, whether he should not take more active steps to convince the country that he is right.

I am convinced, and I believe that my party is convinced, that, to use the words of the hon. Member for Flint, West (Mr. Birch), the campaign against inflation must be won. We must not just go on fighting it year in and year out in a rather easy-going way, as has been done in the last ten years. The campaign must be won, and I am convinced that the country, having been taken as far as it has been by the late Chancellor along the road to winning it, will be furious if it finds again that the battle is not won because of the weak and shilly-shallying policies pursued by the Government.

Let there be no question about it that there will be retribution. It will be a scandal of the first order if, after all the attempts to get the trade unions to moderate their wage claims and to get everybody else to moderate their demands on the economy, at this vital, crucial moment the Government again weaken in their policies, as they have done on so many occasions—and not only this Government but other Governments in the last ten years.

If any criticism can be made of the speech of the right hon. Member for Monmouth (Mr. Thorneycroft) it is that he was not strict enough, if that is the right word to emphasise the matter about which we are so concerned. We are convinced that this problem of inflation will not be solved without a considerable reduction in Government expenditure, followed later by a reduction in taxation. There can be no doubt that at present the height of taxation alone is an infringement of personal liberty. It is an encouragement to waste and a discouragement to industrious people.

It makes the achievement of a surplus for investment abroad, and particularly in the Commonwealth, extremely difficult. In that respect, if there is to be any relaxation of tension abroad and any softening in the rigidity of the attitudes which are being taken up between East and West, they can be brought about only by trying to move the cold war on to the economic front and by Britain having a greater surplus to invest in the backward countries of the world, to raise their standard of living and to remove the causes on which Communism and the like grow so rapidly. That will never be done while we go on sublimely pretending that this or any other Government can continue to take a huge proportion of tile wealth of the nation to themselves, as they do today.

The new Chancellor of the Exchequer indicated that there had been a reduction from 33 per cent. to 27 per cent. in the proportion of the total national income taken for expenditure above the line. That is not good enough, because taxation has been taken, particularly this year, to cover nearly the whole of expenditure below the line as well. The Chancellor also left out the £400 million taken by local government expenditure. I believe that the proportion is still near 40 per cent. of the national income, and that is an amount which the country just cannot afford.

There are many problems in connection with the reform of the Welfare State. If we can find other ways and means of financing many of the things that we want to do, they must certainly be sought out, but there is a problem which can be faced and dealt with now. It is the problem of defence. I do not wish to read anything into the remarks which the right hon. Member for Monmouth made about our being a nuclear Power, but my party said over a year ago and has repeated it this week, and I repeat it now, that it is an utter waste of money for the country to try to set itself up as a nuclear Power in its own right.

This is no pacifist line. We are in no sense less concerned than others to keep the solidity of the North Atlantic Treaty Organisation. That is an essential part of the defence of the West, but it is an utter waste of money to duplicate the great, massive deterrent which is already possessed by our American allies. If we only recognise this, if we do not go in for our own nuclear bombs, if we review again the suggestion that we should have missile bases in this country—which we in the Liberal Party think are also nonsense—a large sum of money can be saved. I would put the figure at between £200 million and £250 million.