Budget Proposals and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 13th April 1959.

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Photo of Mr Patrick Gordon Walker Mr Patrick Gordon Walker , Smethwick 12:00 am, 13th April 1959

I am grateful to the hon. Member for Bodmin (Mr. D. Marshall) for finishing his speech on or before nine o'clock.

We have had an excellent debate, and it has taken a good deal of the gilt off the gingerbread of the Budget. The prevailing attitude today is very different from the first fine careless rapture that the Budget at first evoked on that side of the House. This has been caused by a series of very effective speeches by my right hon. and hon. Friends, but what is, perhaps, unusual about this debate is the extent to which we have been helped to second and more sober thoughts about the Budget by speeches from the other side of the House.

Today, there has been some briefing up of hon. Members and, of course, Mr. Christ's Weekly Newsletter has come out just in time. Those of us who read it recognised a good deal of it in the speeches to which we have listened today from hon. Members opposite. However, we can understand why this has been done, because in the first two days of the debate the pattern of the speeches from hon. Members opposite was practically uniform. There was, first, a brief tribute to the Chancellor's Budget, then a long and uninterrupted passage of doubts, criticisms, fears and warnings, and then, at the end again, a brief formal word of praise.

The strongest criticism came from the hon. Member for Louth (Mr. Osborne), who said that as a result of the Budget we faced the risk of a wild inflationary movement that would make 1957 look like child's play. But I thought that the most telling of the speeches from the benches opposite against the Budget came from the right hon. Gentleman the President of the Board of Trade. He made a nostalgic defence of restrictive policies as practised in recent years, but wholly neglected to point out in what way the situation today differed from the situation then.

The Paymaster-General, who last year gave us a classic statement of the case for permanent stagnation, certainly tried this year to show that things were different, but I thought that his arguments were demolished in the very well-argued speech of my hon. Friend the Member for Birmingham, Stetchford (Mr. Roy Jenkins).

The striking thing about the Chancellor's Budget statement is that of the eight years in which this Government have been responsible for the country's affairs, in only two of them have Chancellors found it to be in the public interest to take an optimistic view of the economy—and both of those years happen to be, by chance, Election years.

In this respect, I do not equate the Lord Privy Seal whose absence from our debates on this occasion seems to have been almost studied; perhaps he is a little weary of hearing back-handed compliments from his colleagues—I think that he likes to have a monopoly of them for himself—I do not equate the Lord Privy Seal with the Chancellor. In his pre-Election Budget, the Lord Privy Seal risked—and caused—an economic crisis for electoral advantage. The main charge against the Chancellor is that he has postponed to an Election year the policy of expansion that he should have started last year. I hope that he will attempt a somewhat clearer answer to that charge than we have yet received.

The Paymaster-General obscured the issue—no doubt unintentionally—by giving global figures for 1958, but, of course, the real point is the sharp contrast between the first and second halves of 1958. I want to ask the Chancellor precisely how far the prospects in regard to balance of payments, exports and reserves are better now than they were in the first half of 1958 when he was putting through his last Budget. I do not think that he can really prove that there was any substantial difference. Certainly there was a great deal of slack in the economy last year.

The Financial Secretary gave a franker and more forthright explanation than did the Paymaster-General of why there was no expansion last year. He said that one reason was that last year the country had been shaken by fever for twelve years—he used some such phrase as that—but, of course, eight of those years were under a Conservative Government. His main and most important reason—and a new one—was that, last year, wage demands were still pending, and had not been settled.

Behind those words, there is the unspoken and underlying thought that alone gives it meaning—that, in their view, the Government had to wait until they had 100,000 more unemployed. They had to wait until there were 223,000 less in civil employment. That, certainly, is the difference between this year and last and, though I can hardly believe it, I should like to ask the Chancellor—because it seems to be the only way in which the hon. and learned Gentleman's remarks make sense—if the fact that there was not enough unemployment was the only reason why there was no expansion last year.

One thing is certain. We had to pay a very sad price in material waste and human suffering for the Chancellor's delay. As my hon. Friend the Member for Bootle (Mr. Mahon) pointed out in a very impressive speech, the Chancellor has caused unnecessary unemployment. The Chancellor has condemned hundreds of thousands of our countrymen to unnecessary unemployment by his policy of delay, and we have lost immense potential wealth which we as a nation could have had.

The Paymaster-General scoffed, as he has before, at the Labour claim that with a decent rate of expansion we might have had £1,700 million more of national output. I would like to quote from the Economic Review of the National Institute. I do not think the Paymaster-General will easily refute that authority because he quoted from it himself. As the Paymaster-General quoted from the Economic Review, I assume he regards its view as being valuable.

On page 10 of the Economic Review of the National Institute it is argued that there is sufficient idle capacity and labour to increase industrial production by between 10 and 15 per cent. in about two years. It goes on to say that that is the equivalent of an increase in the total national output of between £1,500 million and £2,000 million a year. The Review gives a higher rate than the Labour Party.