Orders of the Day — Budget Proposals and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 9th April 1959.

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Photo of Mr David Eccles Mr David Eccles , Chippenham 12:00 am, 9th April 1959

The point from which I was starting was the point at which we saw that it was necessary to check inflation. [Hon. MEMBERS: "When? "] It was round about September, 1957. I am talking about the very good measures taken by my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft). He was quite right to take strong measures against inflation in September, 1957.

Indeed, it is known, and if right hon. Gentlemen opposite will consult their friends in the engineering industry they will know, that what I have said is a correct account of the facts. One reason for the rather exceptional fall in orders for plant and machinery last year is precisely because industry has discovered how to get more out of the plant which it has, and is, therefore, ready now, as it was not then, to expand without raising unit costs. That is an immensely important gain to the economy, and it had to be secured before we could go ahead with safety.

Then, I think that the Opposition say that, even if an earlier expansion had raised prices, and had made it harder to earn an adequate surplus on overseas account, they would have been able to correct this by the use of controls. They would have imposed restrictions on the conversion of sterling into other currencies, and would have curtailed the imports, production and consumption of goods which Labour Ministers chose to call inessentials. A policy of stopping people exchanging their pounds and buying what they wanted to buy would not have worked.

The right hon. Member for Huyton did well to remind us yesterday that it is fourteen years since the war ended, and a return to physical and financial controls now would, I believe, have been deeply resented by our own people. That is a matter of judgment, but I am certain that it would be taken as a red light for sterling by the outside world. There are more eyes on our gold reserves than on the gold reserves of any country in the world. If we so manage our affairs that our export prices look likely to become uncompetitive, we cannot stop the rest of the world drawing the conclusion that Britain is heading for an exchange crisis.

After all, they saw it happen in 1948 and in 1951. [An HON. MEMBER: "What about 1956?"] Measures were is ken then, and nothing happened. If any British Government now introduced stern measures of exchange control in a world where there is so much more freedom than there was in the immediate post-war period, that in itself would damage confidence in the £. Overseas holders of our money would say to themselves, " It is better to get out as soon as; we can."

On these benches, we have had these considerations in mind when timing the expansion of the economy. We thought that it was right to wait for two conditions to be fulfilled. First, we had to ask ourselves whether export prices would remain competitive while output began to rise again; and, secondly, given steady export prices, whether the prospects were good enough for selling abroad that much more to pay for the additional imports that would come in. A year ago, these two conditions were not present, but they are now, and that leads me to say a word about the second one, which is the prospect for selling more abroad.

As my right hon. Friend the Chancellor said yesterday, we have had a very difficult year in the export field, and in spite of the ability of our exporters to quote steady prices and to offer much shorter delivery dates, exports have gone down last year, and we have only just, or hardly just, held our own. I may say from our experience in the Board of Trade that, because home demand was restrained last year, British exporters put more time and more skill into selling abroad than they have ever done before, and Board of Trade Ministers have seen for themselves in the many countries which we have visited the growing effort that industry is making to expand its old markets and find new ones.

We have received many favorable comments on the work of our commercial officers and trade commissioners. When the Minister of State or I have visited these officers in their posts, we have been astonished at the amount of their knowledge of conditions in the area in which they work. Everywhere they told us the same story — that in 1958 the number of inquiries they have had to deal with in connection with exporters trying to sell goods in these markets has gone up more than they have ever known before. All the same, it is true that our business men make very uneven use of our commercial services, and I am confident that it would pay all of them every time they go abroad to go and see the commercial officer or trade commissioner concerned.

But we also want the business man's help. He can give our officers information about local conditions which, whether it concerns his own business or not, helps to make the service which the mission concerned can render to our people in general more valuable. I should like to say a word for the local market officer, who is a man or woman engaged locally, who very often serves for many years on the staff of the mission, and accumulates a knowledge about local conditions that is quite invaluable to the professional officers who come and go on their tours of duty. These people are very valuable indeed, and I am concerned —and the Chancellor of the Exchequer knows it —about whether we give them as much in pay and conditions as they ought to have for this work.

Going back to last year —