Orders of the Day — Budget Proposals and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 6th April 1960.

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Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough 12:00 am, 6th April 1960

I notice that the hon. Member for Manchester, Moss Side (Mr. Watts) rose to speak when I did. I would begin by apologising to him for cutting him out in this way. I would merely say that it has happened to me on two occasions as a back bencher and that I know precisely what he is thinking and thoroughly agree with him.

Earlier today I had a great deal of sympathy with the hon. Member for Belfast, North (Mr. Stratton Mills) and the hon. Member for Pudsey (Mr. Hiley). but now that they have made their maiden speeches—excellent 'speeches they were, too—I can only envy them.

I have had to examine the Budget on this occasion in greater detail than has been previously my custom. As a back bencher, like most back benchers who take part in our debates, I used to try to take part, not always very successfully, just to make one or two small points. However, the more I have examined this Budget the more interesting it has become to me. As my hon. Friend the Member for East Ham, North (Mr. Prentice) has just said, it has revealed the deep differences which exist in the Conservative Party on many of these fiscal and financial issues.

It will also, I think, be an historic Budget, because the historian will mark it as the first more or less public demonstration by the Conservative Party of its acceptance of the fact that to maintain full employment and the Welfare State in an expanding economy without inflation one has to inject doses of Socialism into the economy. The Conservatives have been doing this, of course, in a half-hearted way for some time; they have not been able to escape doing it. But their views on the matter never have been revealed so clearly as in the Budget and in the debate on the Budget.

As my hon. Friend has just more or less said, the Budget is like the curate's egg—good in parts. The good parts from our point of view are those which are the result of proposals made from this side of the House of Commons from time to time. However, hon. Members opposite who support the Government in these matters and the Government themselves have, with obvious reluctance, come to the conclusion that they must have some Socialism in the Budget. The Government's Socialist injections are rather weak. They are fumbling about and they are making some awful mistakes, with some of which I shall try to deal shortly.

There is a feeling among hon. Members opposite—and it has already been expressed—that if we must have Socialism, even weak doses of it, in this way, it is much better to leave the introduction of Socialist measures to the Socialists, which is something we would very much like to undertake. The astonished looks which came over hon. Members opposite when the Chancellor went on to reveal what to them were his somewhat strange proposals made me think that he had missed an opportunity of adding to the Revenue. I felt that a tax on tranquillisers would bring him in a substantial revenue.

I was very interested in the opening remarks of the President of the Board of Trade yesterday when he said that hon. Members on this side of the Committee were rather naive not to go into a full scale attack on the Budget. He did not explain what he meant by that, which was rather curious, as it was the first time that I have heard the right hon. Gentleman make a statement which he did not proceed thereupon to explain.

If he meant that our approach to the Budget and our acceptance of so much of it would fail to allow us to make any political capital out of it, he was greatly mistaken. We have been already presented with all the political gifts we need in the reports of meetings of hon. Members opposite upstairs immediately after the Budget. Incidentally, it is pleasant to us to see that the bloodhounds of the Press, having smelled the gore that was being spilled, are now turning their attentions to the private meetings of the party opposite.

We have had some political capital also from the speeches of the right hon. Member for Monmouth (Mr. Thorney-croft) and the hon. Member for Kidderminster (Mr. Nabarro). I am sure that we all enjoyed the speech of the right hon. Gentleman. Under my breath I was cheering him at many points, especially when he referred to defence expenditure. It has always seemed peculiar to me that many items in a Budget are cut down almost to pounds, shillings and pence, but that when we are dealing with defence expenditure £1 million here or £1 million there seems to make no difference to the big totals with which we have to deal. I agree with the right hon. Gentleman that there are economies to be made in defence expenditure which would not weaken our position. We are all agreed about the need for expenditure on defence, but I am sure that these large figures should be studied with far more care than they have been getting up to now.

I also agree with the right hon. Gentleman that any Government must view the economy as a whole instead of just adding together the claims of each individual spending Department. I profoundly agree with him that the Prime Minister, the Chancellor of the Exchequer and other Ministers ought to get down to the job of planning the country's spending. That is the kind of planning which we have been advocating from this side of the Committee for a long time while hon. Members opposite have been saying that they do not want that sort of planned economy.

Like my hon. Friend the Member for Grimsby (Mr. Crosland), I parted company with the right hon. Gentleman when, as my hon. Friend put it, he produced his emotional objections to public expenditure. My hon. Friend explained our views far more clearly and eloquently than I could. His was an excellent speech, and there is no need therefore for me again to cover the ground.

The right hon. Gentleman is now in a rather difficult and false position when he justifies, as he must on occasions like this, the restrictive measures which he introduced to check inflation when he was Chancellor. Some of those measures, at least in our view, were anti-social, that is, when dealing with what he said was the need to restrain wages, the right hon. Gentleman had to pick out an industry which was under his influence to use it as an example for wage restraint. Unfortunately, that was an industry in which the men had low wages.

I am sure that it was never the right hon. Gentleman's intention, either then or now, to say that the railways of this country should be run on cheap labour. But he was in a difficult position. This is again a point where we part company because we hold strongly to the view that we cannot put this country straight and we certainly cannot maintain its greatness by promoting that kind of social injustice. It was social injustice, in our view, to keep a low-wage industry stuck to that low-wage level.

I agree, although the hon. Member is not present, with some of the less declamatory observations of the hon. Member for Kidderminster. I agree with him, as I am sure every hon. Member of the Committee will, that we are an overtaxed nation. There is no question about that. He implied in his criticism of the Government that they had so misjudged our affairs, not just this year but over a succession of years, as to make it impossible for substantial tax reductions to be made. The hon. Member asked for tax reductions, but that was part of the propaganda operation. I would prefer to agree with the right hon. Gentleman that, in the circumstances of today, the tax reductions for which the hon. Member asked are impossible. When the hon. Member for Kidderminster went on to criticise the nationalised industries and to say that the Government's troubles were largely the result of over-investment in public enterprises, I felt that he did not expect us to take him seriously. That was just propaganda.

I remember when I first got up as a back bencher some eight years ago and said that the only way to avoid a coal and fuel crisis, which I felt would come from a too great dependence on imported oil, was to make full use of our indigenous fuel resources and to put a great deal of money quickly into the building of carbonisation plants so that we could get full value from the coal and a great increase in gas production. I suggested then that we should put the country on a gas grid so that as many industries as possible could take gas for their power fuel, which is a possible technical development.

I was going to ask the hon. Member for Kidderminster Whether I was correct in my recollection that when I was putting forward those views he supported me with his usual vociferous "Hear, hears". I was pleading then for an expansion in public expenditure for what I thought was a perfectly good technical purpose which, if carried out then, would have stood us in good stead now that we are faced with a fuel crisis.

We have had debates over the last few years on electricity supply and on gas supply, and in all those debates the hon. Member for Kidderminster has taken part. But never once have I heard him suggest that we should hold up the development of our electricity supply service. What we have to understand in these discussions on public expenditure for these public services is that our great industrial expansion has been made possible by the supply of cheap electric power on an expanding scale. We must continue that expansion of cheap electric power for the development of our industries. If we are to get rid of this tight situation in which we have no slack in the economy and no free or unused industrial capacity we must have far more cheap electric power than we have today. We can get it only by building more power stations; it does not come out of the air.

Therefore, to suggest that we should cut down expenditure on the nationalised industries is completely out of accord with the picture with which we are presented today—the picture of a country whose industrial resources are stretched to the limit. We must have far more investment in these industries in order that our industrial expansion can continue.

The same argument is true of transport and the railways. We must have a modern railway system in order that it can sustain our expanding economy. We can get it only by expenditure, and that expenditure is very heavy. Those hon. Members who travel to Manchester on the line from Euston day by day see the job of electrification that is being done there. This will eventually mean raising every bridge from Manchester to Euston, with new girders and all the expenditure involved in putting in the overhead cables. We cannot put all that stuff in at a cost of 1d. a foot. It is enormously expensive, but if the country wants a modern transport system it must pay for it. We need it, and the sooner we get it the better.

The hon. Member for Kidderminster has threatened us with an attack on the nationalised industries in the debates on the Finance Bill. Hon. Members on this side of the Committee are not altogether happy about the present methods of financing our public service industries; we have raised these matters before, but I will tell the hon. Member for Kidderminster and his friends—the "unofficial Opposition," as he describes it—that before we consider any of his proposals we want an honest disclosure of the motives behind these attacks on the nationalised industries. The hon. Member is not present, but if any of his hon. Friends who support him in this matter are present I must tell them that this constant sniping at our public industries has now gone so far as to become almost a succession of charges of negligence, incapacity and inefficiency directed against the public servants that we have put in charge of those industries. These baseless criticisms of public servants who are not in a position personally to reply reflect no credit upon the hon. Member and his friends.

However, I look forward to the debates which he has promised to initiate, because I am convinced—and I say this with all the emphasis that I can—that we shall have no difficulty in showing that our public service industries are well managed, efficient and, in the circumstances in which they have to operate, highly successful.

In his Budget speech the Chancellor referred to the financing of our railway system during the modernisation period. There is nothing new, revolutionary or reprehensible in the idea of cancelling a trading deficit of a public service rather than put a load of accumulated debts upon the enterprise. It has been done before. It is done by the German Federal Government for the German State Railways, which are very efficient and progressive, and give an excellent service. It is done by State railways in other countries. These deficits on railway operations seem to be endemic. After a Parliamentary debate and a thorough examination of the railway accounts the German Government take over the annual deficit and pay it off out of State revenues. It is not carried forward as a debt burden on the railways.

There is nothing new about that. It has been clear to everyone who has carefully examined our own railway operations, and the prospects for our railways over the last few years, that the method adopted by the Government for financing this vast essential reorganisation was completely unworkable. We said so in 1957 when the Transport Act was before us. We could see then that the Government were crippling the railways with an immense load of debts, and we felt that these debts would prevent the railways from ever being able to offer the public a competitive transport system.

If the annual deficits as a result of the reorganisation scheme had been allowed to go on piling up, the advantages of reorganisation would not accrue to the public in cheaper and better services, because they would be taken to pay off the debt charges for many long years to come.

The Chancellor is at last proposing to pay the railways a subsidy. As far as this Budget goes, it is a temporary subsidy. We shall have to decide future financial arrangements when we see the Government's proposals, but if those proposals are tied up with the commission of inquiry which we heard about today we shall get into a not very happy situation.

We think that the Minister of Transport is setting about this business in not quite the right way, but even the temporary subsidy is to us an important innovation. It has caused some alarm among the Chancellor's hon. Friends who paraded themselves as the last supporters of laissez-faire liberalism.

I cannot understand why this has not been done before. This is a step in the right direction. The Chancellor never has been opposed in principle to giving Government aid to industries in temporary or permanent difficulties. He has been responsible for paying enormous sums out of public funds to agriculture. He is to pay quite a lot of money to agriculture this year. We support these farming subsidies for a very good reason. We do not want prosperous urban communities to be surrounded by a derelict and poverty-stricken countryside.

That is why subsidies are paid. We thoroughly agree, but when the Chan- cellor goes on to express the view, as he did in his Budget speech, that our industrial prosperity must be fairly shared, he cannot give us a general expression of opinion of that kind and stop at the agricultural community. Just as we cannot have a poverty-stricken agricultural community in a land of prosperity, so we cannot have a poverty-stricken community of railwaymen and a debt-ridden railway system. We therefore welcome the Chancellor's step and also the Government's belated rejection of the idea that we ought to check inflation by trying to run the railway system on the cheap. If prosperity is to be fairly shared, then railwaymen and other people in difficulties must get their fair share.

There is the final aspect of nationalisation mentioned in the Budget, the sellout of Richard Thomas and Baldwins. We take the view that if we are to maintain full employment and the Welfare State—and the party opposite is pledged, as the hon. Member for Louth (Mr. C. Osborne) made clear, to maintain full employment and the Welfare State— there must be greater public control over the economy. We cannot do it without public control and a measure of public ownership. We are agreed about that because these public services about which we have been talking have not been sold out. It is only the steel industry which has been largely sold. For that reason we think that the Government are making a great mistake in surrendering their last holdings in the iron and steel industry. I think that the hon. Member for Shipley (Mr. Hirst) will agree that when debating questions of this kind it is very difficult to put political prejudices on one side, but there is a good unprejudiced case for the Government having at least one big steel plant in their possession. We on this side of the Committee would go further, of course, in our claims for public ownership. That, perhaps, is where the political prejudice comes in. My hon. Friend the Member for East Ham, North expressed it eloquently a few minutes ago, but let us put that aside and look at this problem.

Richard Thomas and Baldwins is efficient, well managed and prosperous under public ownership. There is no question about that. We have only to read the annual reports of the chairman of the concern and the references to his annual speech which have appeared in all the papers, including the Conservative financial papers. To sell out its equity holdings to private shareholders would not improve its efficiency, its opportunities for development, or its worker-management relations. As my hon. Friend said, the management of the steel industry is now in such a position that management has ceased to be responsive to shareholders. The shareholding is too diffuse. If we look at the shareholdings of United Steel companies we find that it would be quite impossible to get them all into one hall in the country. They have more shareholders than workers. Shareholders are scattered, individual holdings on the average are too small, and in practice the shareholders cannot exercise any control over the management.