I am anxious not to give way too much, because four speeches are to be made from the Front Benches today. This was not a mistake. I shall be dealing later in my speech with the question of shopping baskets.
The main theme of the speech of the right hon. Member for Blyth and of that of the right hon. Member for Smethwick was that the Government were deliberately and misguidedly holding back the expansion of the economy; that on the contrary, and in priority to other aims, they ought by every means to take positive steps to secure an expansion in demand which—so the argument runs—would result in an increase in production, and a general improvement in the economy and in the well-being of the people. What is the reality? This is not a choice between one objective and another. It is not a difference between absolutes: in government it so rarely is. It is rather a question of deciding in which direction we should lean. The right hon. Member for Blyth and his hon. Friends have no monopoly of belief in expansion.
My right hon. Friend the Chancellor re-emphasised on Tuesday that:
as a Government, we are convinced that the long-term welfare of this country demands a
steady expansion of our national economy. That is the objective of all our policies."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 55.]
On the other hand, we on this side of the Committee do not claim any monopoly of belief in the importance of maintaining the strength of sterling and the value of our currency. On the contrary, we welcome the assurances which Opposition spokesmen have given in that regard.
The dispute, in so far as it is a genuine dispute, is whether the object of the Government's other economic measures lean too far in the direction of safeguarding the currency at the expense of some production forgone. Production last year continued to rise—by less than one would like if combined with stable prices—but still by 1½ per cent., and this was at a time when production in the United States was falling.
Secondly, as to the dangers on the currency side. Our external financial state, although it is stronger, still inspires caution. That is the view of the right hon. Member for Huyton (Mr. H. Wilson) himself. He said:
Our reserves are still too low.
If that is the correct starting point, and I entirely agree that it is, and if, as he went on to say,
we must expect a falling off in our sterling area dollar earnings and, … growing difficulties in our export trade
and if, as he also said, we must
make sterling the first priority in all our calculations and actions."—[OFFICIAL REPORT, 16th April, 1958; Vol. 586, c. 176–87.]
surely it is not merely inconsistency, but irresponsibility to advocate a massive expansion now in home demand, for that is the only expansion over which the Government have any control.
The right hon. Member for Smethwick said:
… the top priority must be to push up exports."—[OFFICIAL REPORT, 17th April, 1958; Vol. 586. c. 389.]
Does anybody doubt that a massive expansion in home demand would draw goods away again from the export markets which are already getting increasingly difficult? Yet that is the inevitable consequence of the policy advocated by right hon. Gentlemen opposite, and we would get right away a fresh balance of payments crisis.
Let us remember that we are not only concerned with our own money here. We are concerned with that of others as well. We hold in this country the sterling balances of the rest of the sterling area, and many of those countries enjoy a standard of living far lower than ours. Many of them are primary producing countries whose economies have been hard pressed by the fall in commodity prices. Their development plans, on which they rely so very greatly, as the Committee knows, are running into difficulties. They count absolutely, and later in the year will increasingly depend, on drawing on the balances which we hold here. We owe them a very considerable duty not to prejudice their position.
It is not only a question of our external position, but a question of prices at home. The issue of price stability is still in the balance. It is heavily dependent on the moderation of all concerned in fixing the level of wages and salaries. Again, does anybody doubt for a moment that a massive expansion of demand at home would be bound to raise the general level of prices. Have we really forgotten so soon the miseries and injustices of the inflation? The right hon. Gentleman mentioned social justice. Have we forgotten so soon the hardships of those who were not organised to compete in the scramble? Have we forgotten the pensioners, the sick, the disabled, the widows, and those living on small fixed investment incomes?
Nor, in fact, would the working population necessarily remain immune. Have we really so soon forgotten that between June, 1947, and October, 1951, prices were rising faster than wage rates, so that the working man found his standards eroded by inflation. Is that social justice?