First, may I say how glad I am to congratulate my hon. Friend the Member for Blyth (Mr. Milne) and the hon. Member for Birmingham, Sparkbrook (Mr. Seymour), who made excellent, well-informed speeches. I only regret that they had to make their maiden speeches in such an extremely gloomy debate, one of the gloomiest that I have ever heard in the House. I hope that we shall hear them again on a rather gayer occasion.
I am rather astonished that the Chancellor of the Exchequer has not put in an appearance throughout the whole of the debate. He is, after all, responsible for the Purchase Tax, and it was the Chancellor's predecessor who announced the hire-purchase restrictions last summer. It is rather extraordinary that the present Chancellor, even if he no longer has any co-ordinating authority over Government economic policy, should be completely indifferent to the fate of 100,000 workers now on short time in various parts of the country.
I admit that I have a good deal of sympathy with the present Chancellor. He does not get a very good deal from his colleagues. They made him Foreign Secretary in 1956 and now they make him Chancellor of the Exchequer in 1960. I daresay that there is about as much trouble ahead of him now as there was then. Nevertheless, I think that the Chancellor's predecessor, Lord Amory, has shown a very intelligent sense of timing in drifting away at this period from the job in which he was previously occupied. I suppose that he is now sitting placidly contemplating the flooded Devon countryside and grumbling happily at the follies of the Government and the perversities of nature.
After all, this "phoney" electioneering boom of 1959, after barely twelve months, has now—just as happened in 1955—turned out to be completely unsound, and this time it was largely a hire-purchase motor car boom, and its collapse this year has left the country's economy completely unbalanced. This time the Government have made the aftermath even worse to the economy as a whole by having swept away practically all controls on imports last year and managed incidentally to make the £ convertible into the bargain at the same time.
The whole of this story is another proof that if we are not prepared to have any planning at all, we cannot have expansion in this country without getting into a balance of payments crisis. And so what do we find? We find that the Government fall back on the only two ideas they have—hire-purchase restrictions and a high Bank Rate. What this does in the motor car industry and in other industries is to hold down production and employment without assisting the balance of payments or exports in any way at all.
There has been no recovery in motor car exports since we had these restrictions put on this summer, and so I am not surprised to find the National Institute of Economic Research, which is a very respectable authority, now predicting—and this is gloomy again—that we are heading for a balance of payments deficit of at least £100 million a few months ahead. What is so astonishing is that we have got into this jam this time when not merely is there no dollar shortage in the world, but the situation is exactly the reverse.
How the late Sir Stafford Cripps or the present Home Secretary would have welcomed a situation in which there was no dollar problem for this country! I think that it is a marvellous achievement of Her Majesty's present Ministers to have created a large balance of payments deficit, with a 5 per cent. Bank Rate, with the most favourable terms of trade since the war and with no dollar shortage in the world. I am not at all surprised that in this situation the previous Chancellor has discreetly vanished away to another place.
It may be that it is the balance of payments situation which explains why the Government were in such an extraordinary hurry to snatch some foreign exchange out of the Ford transaction. The hurry was so great, we now discover, that the Chancellor gave his permission for this deal without even waiting to find out whether the American Government were in favour of it. We accused the Government a fortnight ago of acting hastily, and we now find that they had not even troubled to ascertain the American Government's view before they reached this decision. The Chancellor told us at Question Time today that he now had an assurance from the American Government that they would not stand in the way of the Ford deal, but will the Minister of State say whether Her Majesty's Government knew that before they gave their permission?
It is a curious story, because the United States Secretary of the Treasury saw the Chancellor in London on 25th November after permission had been given and then went home to the United States and tried to stop Mr. Henry Ford going forward with this transaction. It is a curious sequence of events that Mr. Henry Ford came to London in October and saw the President of the Board of Trade, but they did not discuss the issue at all, and then Mr. Anderson, the American Secretary of the Treasury, came here himself and saw the Chancellor and then both followed exactly opposite policies.
I do not know whether the Prime Minister would call that interdependence or Atlantic union, but the House is entitled to answers to two questions. First, is it certain that our gold and dollar reserves will benefit to the full extent from the Ford deal? The Chancellor gave an answer on this subject at Question Time today, but it was too brief and too involved for me to feel sure that that would be the case. I hope that the Minister of State, with the help of the President of the Board of Trade, who is now muttering to him, will be able to assure us tonight that if the deal goes through at least we will get that addition to our reserves.
Secondly, has there been any assurance from the American Government that, supposing the British Ford Company becomes wholly owned by the American company, American law will not be used to interfere with the British Ford Company selling motor vehicles to China, or any other country on the other side of the Iron Curtain?
I understand, and I think that it has not been denied, that it is possible under American law for the American Government to put pressure on a parent company in the United States to prevent it selling the products of a subsidiary in this country to countries to which the United States does not wish to export. We ought to have a precise answer to that question. Is that the case, and did the Government get an assurance about that issue before they gave permission for the deal to go through?
The main victims of all these shifts, changes and confusions of Government policy are the motor industry and other engineering industries which have thousands of people on short time. Because all other methods of steering the economy have been thrown away, those industries now have to be violently jolted about whenever the Government get into difficulties. First, when an election is coming they are encouraged to expand without limit and to take on new workers and to sell goods on hire purchase for only a nominal deposit; new factories are developed in new areas, and so on; the banks are launched into the hire-purchase business and all sorts of finance companies borrow from the public at 7 per cent. or 8 per cent. to encourage hire-purchase transactions almost without limit. The election posters, at this stage in the cycle, tell us that the secret of perpetual prosperity has been discovered by the Tory Party.
Then we get to the next stage, when the election is over and when demand is cut down—the Bank Rate goes up; hire-purchase restrictions are clamped on again, and, within a few months, overtime stops, production falls and new cars, T.V. sets, refrigerators, and all the other symbols of the windfall State pile up in the warehouses, and, as I am told at the moment, overflow into the rain outside in various parts of the Midlands. The finance companies find that their customers cannot repay their debts and we get financial troubles as well.
What a way to run the economy! It is grossly unfair to the motor industry and other industries which are singled out as guinea pigs for these political experiments. I do not blame the motor industry for the present fiasco. I blame the Government, for their only policy—and I do not know whether the Chancellor takes responsibility for this, because he will not even come to the House—is to create such a depression in the home market that they hope that the car firms will be forced to export. That, in effect, is what the President of the Board of Trade was saying. The Chancellor himself said, in a speech at Liverpool to some accountants the other day, that the only alternative to this policy was physical controls. He is quite right. So, of course, it is.
I believe that the motor industry, if it were given a chance of steady employment and planned growth could contribute very handsomely to an expansionist policy. After all, the industry and its workers have some considerable achievements to their credit since the war, both in production and in exports.
As many cars were produced in the second quarter of this year as in a whole year ten years before—that was before the guillotine came down, of course. Even exports in 1959 were double those in 1953, and in the earlier months of this year they were even higher than they were in 1959. The present slump has been sudden and sharp because the Government forced these restrictions on the home market just at the moment when exports were falling. That has been the source of the trouble.
I am not quite so pessimistic as my hon. Friend the Member for Hammersmith, North (Mr. Tomney), though he made a realistic and interesting speech. If we look rather further ahead, we find that the whole world wants motor vehicles—and not merely cars but lorries, tractors and all the other things which the industry produces.
I think it is true that the United States has about reached the saturation point with, I believe, one and a half cars per family—after which one cannot expect production to rise at the previous rate. This country has not come near to that level, and there are a great many countries in every continent which have not yet reached the point where the demand begins to rise.
I believe that it is true that there are more cars in Los Angeles than there are in Asia. If that is so, it is a solemn thought for the future of our industry. Surely over the next thirty years we shall see roads built all over Asia, Africa and South America, where there are no roads at the present time.