Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 11th July 1960.

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The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory):

The right hon. Member for Huyton (Mr. H. Wilson)—and we must congratulate him on it—earned three stars out of six in a contest in a newspaper this morning. He got stars for ambition, age and technique. I understand that he failed to satisfy the examiners in leadership, appeal and red blood. Today, he has made a great effort to get a star for red blood.

The right hon. Gentleman has a great capacity for enjoying his own performances, and always seems to entertain himself most when he speaks first. I remember hearing that Bernard Shaw was once asked by his wife, when he came back from a party, "Well, dear, did you enjoy yourself?" His answer was, "Yes. There was nothing else I found worth enjoying" The right hon. Gentleman is sometimes in that mood. He seems to erect imaginary cases and then to enjoy knocking them down. In musical parlance his performance would be called a fantasie impromptu.

The right hon. Gentleman said some kind things about me, and I thank him for it. He also criticised my right hon. Friend the Prime Minister, and I do not find those criticisms worth replying to today. I would only say that however long I live I shall always be proud of having had the privilege of serving under our present Prime Minister.

Today, we are debating the state of our economy and the Government's responsibility for its management. It is important at the start to be clear how far our general aims are in harmony. We all want a strong and expanding economy, leading to a rising standard of living and a strong currency. That is common ground among us. But do we equally agree as to the main dangers and obstacles? I am not so sure that we do. In my opinion, the main enemy over the next decade—as it has been in the last—is likely to be inflation and not deflation. Ever since Governments and Parliaments all over the world decided to take an active hand in economic affairs that has been so.

Right hon. and hon. Gentlemen opposite, whatever lip service they pay to a sound balance of payments and stability in the cost of living, show by their proposals and policies quite definitely that in fact they rate other priorities still more highly. During their term of office it was inflation which beat them every time, and if ever they get another chance to try their hand it will beat them again. Between 1945 and 1951 they tried State planning, nationalisation, price controls, subsidies and State trading, but these led only to continual crises, devaluation and high taxes, and, at the time they left office, a falling standard of living.

At the time of devaluation, Sir Stafford Cripps said: We have been trying to deal with the economic situation by a series of temporary expedients which have led to a series of crises as each expedient became exhausted. By 1951 the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) apparently had little faith in further physical controls but relied instead on fiscal measures and in April, 1951, he introduced the most burdensome Budget in British peace-time history. In the late summer of 1951 the third Social financial crisis developed and the right hon. Gentleman cut imports of cheese. In their despair hon. Gentlemen opposite blamed sometimes the wicked capitalist, sometimes the wicked foreigner, and sometimes the wicked consumer: the Government were good but everyone else was bad. I mention these excerpts from history only so that we can decide to what extent right hon. and hon. Gentlemen opposite are well qualified to criticise the management of the national economy.

The right hon. Gentleman the Member for Huyton, has criticised the management of the economy on, I think, the following grounds. We have switched our influence from restraint to stimulation and back again to restraint; we have discouraged investment, he seemed to imply; and we introduced an electioneering Budget last year. Let me deal with each of those points.

As regards the first charge, I readily agree that we have thrown our weight at one time on the side of stimulation and at another on the side of restraint. We should have utterly failed in our duty if we had not done so. That is precisely the Government's task, if they are to keep our economy, which in our circumstances must operate within very narrow limits, in balance. We have in fact been seeing how far we can raise the ceiling of production and employment with safety, and I would ask the Opposition whether they have any objection to our doing that.

How, hon. Gentlemen opposite cry, can business or anyone plan soundly when such changes in policy take place? That is what the right hon. Gentleman said. My answer would be, first, that they are not changes in policy but changes in action required to carry out a firm policy consistently. Secondly, sound planning can take place only against the background of an economy kept in proper balance. So those who plan for the future should plan on the assumption that fiscal and monetary action will be taken as circumstances require to keep that balance. Any planning which is not made on that basis is unlikely to be sound planning.