Orders of the Day — Budget Proposals and Economic Situation

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

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Photo of Mr Fred Mulley Mr Fred Mulley , Sheffield Park 12:00, 9 April 1959

The Chancellor has not only spent up to the hilt, he has mortgaged the future by the number of reductions which he has made.

The question of inflation has been referred to many times in this debate. I do not think that hon. Members opposite realise that we cannot have full employment, a stable £and a free market or unregulated economy. Of those three things we can have only any combination of two; it is impossible to have all three. One has to choose which of the three to throw overboard. We on this side of the Committee attach so much importance to the objectives of full employment, on the one hand, and a stable £, on the other, that we are prepared to throw overboard the unregulated economy. Because the Government are not prepared to do that we get a situation where there is expansion only in one year in four. It is that situation in which we are now.

While it is perhaps too much to ask that under the present Government we should have expansion at the rate equivalent to the average for the O.E.E.C. countries, it is interesting to realise what would be the Budget position had we such an advantage. Over the last four or five years the average increase in industrial production for the O.E.E.C. countries has been 5 per cent. per annum. Had we been able to maintain that increase over the last three years since the last election, we should now have a gross national product of £3,000 million more than it is, and the Chancellor would have an additional £1,000 million of revenue.

What would be the situation in this Budget if the Chancellor had that additional £1,000 million either to spend or to give away in tax reliefs? Old-age pensions could be increased, the whole of the post-war credits could be repaid and Income Tax reductions made, all at the same time, with an increase in social service expenditure or the restoration of various cuts. Also, had we been able to maintain that 5 per cent. over the last three years, in addition to the £1,000 million which the Chancellor would have had, the taxpayers would have had £2,000 million extra in their pockets. Five per cent. is a lot. In the election year 1955 even this Government were able to increase production by 5 per cent. If Government supporters say that 5 per cent. is too high, let them take 3 per cent. In his enthusiasm when talking about doubling of the standard of life in twenty-five years that figure must have been in the mind of the Lord Privy Seal.

Let us take an average of 3 per cent. increase in industrial productivity per annum, as compared with the third of 1 per cent, which has actually been achieved. On that basis, the Chancellor would now have an additional £500 million to spend or to give in relief, and the ordinary taxpayer would have more than £1,000 million extra in his pocket. Is it not obvious that we cannot possibly achieve our targets of increasing the standard of living at home and of discharging our responsibilities abroad and in the Colonies unless we can get an average increase in productivity of about 3 per cent? I agree that it means we must resolve to solve the problem of inflation.

We have to choose between two out of the three items that I enumerated earlier. It can only be done if the Chancellor is prepared to direct the economy and not merely to act as its accountant. In practice, even a Conservative Chancellor of the Exchequer must do this, in spite of protestations about a free economy. The balance-of-payments problem alone makes it a vital, inevitable and permanent feature of our economic life. Even the President of the Board of Trade, who is as doctrinaire a free-enterprise man as one knows, went so far today as to suggest that businessmen could be helped by the civil servants in the Board of Trade. That was an encouraging sign of wisdom.

We should have a permanent policy, not an expansionist Budget in one year out of four. There is a good case to be made out for having a Minister for Industrial Development. I hesitate to suggest that there should be yet another Minister on the Government Front Bench, but it would be an advantage to the administration of any Government and it would indicate to the people that the needs of industrial development are paramount. Such a Ministry should be supported by a national council representing both sides of industry. That would go a long way towards achieving our objectives.

The Government have failed to increase production, or have deliberately decided not to expand it, except in an election year. They have mortgaged the country's economic prosperity for their own political and electoral future. That is a hard thing to say, but I believe that, as in 1955, time will prove it to be true.