Orders of the Day — Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 7th February 1961.

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Photo of Viscount  Hinchingbrooke Viscount Hinchingbrooke , South Dorset 12:00 am, 7th February 1961

I think that my right hon. and learned Friend the Chancellor of the Exchequer did well yesterday. I was in Africa for most of the Autumn, and for me this was his debut. At his positively next appearance, may he make the welkin ring.

The speech which my right hon. Friend treated the House to yesterday was a breezy, ebullient speech, and it blew to the four winds of heaven the rather turgid language that the Opposition have used in their Motion, as dark and terrifying as they try to prove the economy of the country to be: That this House, expressing its deep concern at the present grave balance of payments position facing the country and so on.

How the Opposition hanker for the old days. It is quite fascinating. Those endless speeches lasting one hour, one and a half hours, or two hours by Sir Stafford Cripps and Lord Dalton, and the present Leader of the Opposition, going meticulously into detail after detail, correlating and co-ordinating all the White Papers issued in the past six months, and then during the last half hour of it the trenchant punch as rules and orders were laid on, controls elaborated, and all the apparatus of Socialism extended. And then the poor country waiting patiently for the inevitable disaster—fuel crises, devaluation, shortages and rationing, and all the rest whioh went on right to the end of the period when they ran away in ignominy. It has taken us all these nine years to undo the fell deeds they perpetrated.

They create a crisis to produce a planned Socialist solution to it, and my right hon. Friend was quite right to indicate to the House and to the country that in a sense there is no crisis of that order. There is nothing of the sort that we had in 1931 or in 1951. There is nothing so serious that dire measures are needed to deal with it. Indeed, what is the Bank Rate for but to attract foreign funds to this country and to stave off a balance of payments crisis. This has only developed in the last six months. It is by no means deep seated.

We do not know what the next six months will bring. What my right hon. Friend said yesterday was rather encouraging. It may be that the whole situation will be restored in the next year, the Bank Rate can then be reduced. Foreign hot money can flow quietly away and we shall be back on an even keel. I cannot understand why the Opposition should try to get the country into the acute state of alarm that they are trying to get it into today.

I was pleased at the shortness of my right hon. Friend's speech, because the length of Ministerial speeches is in direct proportion to their addiction to planning. The ideal would be if no Chancellor of the Exchequer made a speech to the country at all. We would then have a completely laissez-faire society with no Government rules and orders and no control. We would be in that happy state which the poor Russian Moujiks are only too anxious to get to; the time when the Government melts away and they can have what they like whether they refuse to work or whether they are unable to work.

I draw from the brevity of the speech we heard yesterday this conclusion, that the Chancellor does not think that external fiscal measures, or strait jackets, or physical controls, or any of that sort of thing, are necessary to rectify the situation. He cannot anticipate the Budget statement, and if he thus acknowledges what many of us have tried to explain to the Government over the past year or two, and about which I shall say something in a few moments, that there is something lacking in our policy, some lack of opportunity, some shortage of idealism in society, then I think that the Budget represents an admirable occasion when he can rectify it.

I have not noticed in this debate much disposition for hon. Members to be little Chancellors of the Exchequer and to explain carefully to the Chancellor two months before the Budget what their solutions would be. That is perhaps an unattractive course for an hon. Member to take in a debate of this kind, and I will forbear to enumerate what I had hoped to put forward, if other people were going to do the same, as some of the things that might have been suggested.

I have never been one of those who wants to cut the standards of the Welfare State. Surely as a nation we glorify in the standards that we have obtained. What would our name be throughout the world if by Government retrenchment we seriously interfered with the high standards that we as a nation have conscientiously set up for so long?

Where I have always wanted the Government to curtail their activities and release consequential money to the taxpayer is in those aspects of society where the individual can take up any slack that is thus created. I am therefore pleased that my right hon. Friend the Minister of Health has introduced the changes that he has in the health service and done it for the reasons that he has given. I hope that this process will go on. It was a disappointment that only £65 million was called back in a full year. I would like to see something more than that.

I think that we might go on to education. About £100 million could be produced for the taxpayer if every family with a child at school paid five shillings a week, and who says that five shillings a week for a family in those circumstances is beyond its resources? Besides that I think the Government should make a growing attack on housing subsidies, and on agricultural subsidies.

It is clear that we need a whole recasting of the tax structure. We need to move from direct to indirect taxation. We need to consolidate Income Tax and Surtax for persons with an upper limit of about 10s. or 11s., and the same on death duties. Those are the kinds of proposals which my right hon. Friend should initiate if this country is to seize the opportunity of moving out of the lax, introspective situation into which we have now come.

I propose briefly to address my concluding remarks to two topics. First, the state of the trade unions. Secondly, the lack of emotional appeal before the country.

The trade unions are now the greatest engines of inflation that exist in our society. Every other entity, private person, business group, or profession, is controlled as to the salary increase by some superior organisation or body. It may be that the State is his employer. If he is a man of independent means, he is controlled by the price mechanism and taxation of one sort and another. The trade unions alone are rogue elephants in our society. They are absolutely uncontrolled. Like the old-time, large, private, note-issuing banks, they create money out of nothing.

Let us take the case of the National Union of Agricultural Workers, which is supposed to initiate the cycle of wage claims. The Agricultural Wages Board consists of a farmer, a representative of the union, and an independent person. The claim comes in from the union. The farmer has his eye on the Price Review, which is annually increased to take care of rising costs in the industry. He looks from one to the other of his colleagues, half knowing that his situation will ultimately be taken care of by the State. The independent member, seeing the other two winking assent at each other, cannot stand out against them, and so the thing goes through—this year without the slightest justification in a rise in the cost of living. Every other union habitually takes its cue from the National Union of Agricultural Workers.

When the Government, in all their weakness, decide to appoint a learned professor from Cambridge to inquire into railway wages, and that learned professor—not caring one jot or tittle for the interests of the ordinary taxpayer—recommends a substantial increase for railway workers, every other union which does not like seeing anybody jump the queue through Government assent to a professorial edict, immediately puts in its own wage claim so as to regain its former position in the hierarchy. That process still continues.

An enormous number of wage claims are in the queue to be dealt with in the coming year, which will be a very difficult one for our economy. What are the Government going to do about it? Will they allow those claims to go through? If they do, inflation is certain. The ordinary consumers and voters, who are not very much concerned with the machinery of wage negotiations, are getting heartily sick and tired of the whole process, and before long they will say—if they are not saying it now—that some form of control must be exercised over the ability of trade unions to put forward massive wage claims irrespective of the state of our economy.

There are two forms of control. The first is good, old-fashioned unemployment. I say "old-fashioned" advisedly, because, apart from its moral aspect, the British people are not prepared to wear the stark inefficiency of massive unemployment. I am sure that the country does not want inflation to return, and the trade unions are the ones who have promoted inflation since the war. Therefore, we will have to begin to think in terms of a new device, such as is applied to hire purchase and the control of bank credit, in order to regulate, in a period when the economy is very difficult, the amount of the annual increase in wages to be allowed to organised workers.

The Labour Party must find an answer. They must tell the country which choice it must make, and how the process should be conducted. People are not prepared to go through another ten, fifteen or twenty years of the kind of trade-union-sponsored wage increases that have taken place since the war.