Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 18th July 1961.

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Photo of Mr Stanley McMaster Mr Stanley McMaster , Belfast East 12:00 am, 18th July 1961

The hon. Member for Fife, West (Mr. W. Hamilton) and most Opposition speakers today have been having a real heyday. They have been crying "Woe, woe, woe!" The Leader of the Opposition gave an expert analysis of the situation today. He listed all the troubles that beset this country. But will he agree to any wage restraint? No. He put forward no remedy which could properly cure the position that we are in today.

If one examines the figures one finds that there is no doubt that our economy is buoyant. We have full employment in Great Britain though not in Northern Ireland, but even in Ulster we feel particular gratitude to the President of the Board of Trade. There are signs of expansion in Northern Ireland, with new industries being set up and a fall in the unemployment figures in the last few months. Even in Northern Ireland there are signs of growing prosperity and expansion.

However, these figures of an expanding economy at home and greater prosperity do not match the balance of payments crisis which has been the basis of this debate. There have been gloomy forecasts in the financial Press of what will happen in the autumn and what is to happen if sterling comes under increasing pressure. This is the fruit of borrowing short and lending long. The root of the trouble, as I think is accepted by hon. Members on both sides of the Committee, is the fact that we are importing more than we can pay for with our exports. A particularly regrettable feature is the fall in our invisible exports.

There was last year a deficit in our balance of payments of £344 million and the trend over the last few years has been one of increasing deficit and greater difficulty. In other words, this country is living beyond its means and on credit. This situation cannot, of course, continue. If an individual found himself in such a situation he would face bankruptcy, and for a country in such a position the final solution is the undesirable one of devaluing the currency.

Is this state of affairs a sufficient cause for the degree of alarm which has been expressed by hon. Members opposite? Is it the solution to our problems to decry British industry? The gross national product, as was said by my right hon. Friend the President of the Board of Trade, amounts to £20,000 million. Our deficit is £200 million—1 per cent. of the gross national product. If productivity throughout the economy could be increased by 1 per cent. or 2 per cent., which means a little more work from every person, we should not need to use these new regulators which the Chancellor has introduced.

The regulators are blunt weapons. They have been used frequently during the past ten years. First we use the accelerator, and then the brake. Now we have a better brake, perhaps a disc brake. I urge the Chancellor to be careful how he uses such a fierce brake lest the driver himself go through the windscreen. [Laughter.] Perhaps it is as well that we are not discussing motorcycles.

I should like my right hon. and learned Friend, before the announcement to be made next week, to consider how to protect areas where there is a high rate of unemployment, such as the north of Scotland, Wales, the North-East Coast and Northern Ireland. I was most grateful to my right hon. and learned Friend for accepting an Amendment to the Finance Bill relating to the payroll regulator. But it is unlikely that this regulator will be used and I am more concerned about the use of the other regulators which the Chancellor has; the Purchase Tax regulator and the money regulators, Bank Rate, special deposits and hire-purchase controls. All these regulators are blunt weapons and temporary expedients. It would be very much better if the Chancellor could find some fundamental remedy for the problems which face the country. This need applies not only to the Government but to hon. Members opposite.

Hon. Gentlemen opposite have admitted freely in their speeches in the debate that we are facing a severe crisis, and if they admit that and agree with it they must be prepared to join with the Government in taking the steps which will put it right. There is a task here for all classes in the economy which not only concerns employees but also employers—[HON. MEMBERS: "Surtax payers?"]—and Surtax payers as much as anyone else. I agree with what has been said already about profits being limited. Profits cannot be allowed to rise by 24 per cent. and wages by only 7 per cent. but I should like to see them transferring their attention from these regulators, which are so easy to put on but so difficult to take off, and very often, when we take them off, leave us in exactly the same state as when we started.

I should like to see the emphasis placed mainly on increased productivity and increased encouragement for exports. It has been said very often that it is impossible to encourage exports by giving direct inducements to the exporter. I should like my right hon. and learned Friend to consider whether there is not some way in which he could encourage exports directly by giving some inducement to the exporting industries and to the people who go out to find new markets for our goods. As one of my hon. Friends said in an earlier speech, one has to face facts, and exhortation is not sufficient to encourage the ordinary person, for the pure love of it, to work harder, increase his productivity and increase the amount he is doing in the export trade.

What we need now is some inducement of the same class as we know is being given in European exporting countries. They have very skilfully worked out devices in Italy, Germany and France for remitting part of the taxation to encourage exports. Unless we are prepared to take similar steps ourselves, we cannot right this balance of payments crisis as quickly, effectively and fundamentally as is required.

One other point. I ask the Chancellor, in considering the proposals which he is bringing forward next week, to see whether it would not be possible to use the labour resources of this country to better effect. I ask him whether it would not be possible to channel the defence expenditure, which has just been referred to by the hon. Member for Fife, West, into the development areas, and whether it is not possible to build some of the ships that we need for the Navy in the shipyards which, at the moment, are going through a very depressed time in order that those shipyards may be protected and the employees retained in them until the industry as a whole recovers from its present depression.