Orders of the Day — Budget Proposals and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 7 April 1960.

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Photo of Mr Fred Mulley Mr Fred Mulley , Sheffield Park 12:00, 7 April 1960

I accept that from the headmaster, the hon. Member for Kidderminster. This is a serious point Which needs examination, because unless we can get people to go into difficult export markets, like North America, rather than switch all our effort on to the home market in a temporary boom, we shall have this up and down, year in, year out.

Behind the talk about the balance of payments there is a recognition by the Government of their failure over the last few years to solve the central economic problem of our time, namely, our relations with Europe. Undoubtedly we shall face after 1st July, unless reasonable understanding can be achieved, very serious difficulties in some of our export markets. While we are likely to restrict production, from the figures it is apparent that all the Common Market countries are quite naturally advancing. Apart from losing the exports into Germany—for example, with washing machines and motor cars, to which my right hon. Friend the Member for Huyton referred on Tuesday—we shall also feel stiffer price competition from some of the Common Market members in the markets of third countries. If we succeed, as now seems possible, in postponing the date from 1st July, we shall achieve only a deferment of the problem.

We must come to grips with the question whether we can achieve some association in economic terms with the European economy. It is largely our own fault that we are in this situation. For far too long we have persisted in the idea that somehow or other, by some majority decision, we could achieve the free trade area of the original Maudling Plan. We took far too long to be convinced that that was a non-starter. I still think that it is possible to achieve some understanding, provided that we are prepared to give tangible evidence to the countries in the Community that we not only want to be associated with them, but are prepared to make some political and defence sacrifices as well as take such economic advantages as flow from that association.

As I have stated on previous occasions, I believe that there is room for associate members as well as full members in the Community club, provided that if the associate members pay lower subscriptions they will then receive lower benefits. But we have definitely to subscribe to the rules of the club. We must commit ourselves to Europe in a way that so far Her Majesty's Government have not been prepared to do. I put forward what I thought was a helpful suggestion in connection with defence policy at the Assembly of Western European Union. It would have been instrumental in showing our willingness to associate with Europe politically and in defence. We shall certainly not achieve the association which we want unless we make real efforts in the next few months.

As I think the hon. Member for Eastleigh (Mr. D. Price) indicated earlier, there is a minority of hon. Members who would say, "Let us join the Common Market." I certainly think that, if we could persuade the whole of the E.F.T.A. countries to make application to join the Common Market, we should. I believe that the forming of E.F.T.A. was probably a mistake, but, having formed it, we cannot now, before it has begun to operate, walk out on the other six countries. When the Chancellor replies tonight on this central point, as I see it, in our economic problems, I hope that he will tell us the Government's policy on it. We have as yet, as my hon. Friend the Member for Stechford said this afternoon, heard very little about it.

It is in the balance of payments field rather than in terms of internal inflation that the Government can expect difficulties. If we could have a franker and more realistic appraisal of these problems instead of the kind of complaisancy with which the Financial Secretary concluded an otherwise moderate and reasonable speech, I think that we should make more progress more quickly.