Unemployment and Economic Policy

Part of the debate – in the House of Commons at 12:00 am on 4th February 1963.

Alert me about debates like this

Photo of Mr James Callaghan Mr James Callaghan Shadow Chancellor of the Exchequer, Member, Labour Party National Executive Committee 12:00 am, 4th February 1963

The hon. Member has not been here all day. He will find out tomorrow if he reads my speech.

Everybody saw this crisis coming. Everybody knew that unemployment would mount. Everybody knew that industry was depressed—including, as I understand it, the Government; for when I asked the Minister of Labour this afternoon why they had not taken action earlier, he said, "We could not take action earlier because the Chancellor of the Exchequer did not want to do something which he might have to undo later."

Is it the Government's position, then, to say, "We knew that it was coming. We saw it approaching. But because we were strong and stern in our policies, we refused to be budged from the policies which we were following"? Have I the argument right? Is that the Government's position? Because if that is the Government's position today, it is a lie. I will tell the Government what their attitude was during 1962. In January, the Chancellor said: I do not believe that a depression is round the corner". In April, he said: Do not believe the prophets of woe. Addressing the Sheffield Cutlers' Feast, he said—and these are his words about his critics— The critics say demand at home is sagging and there is a recession ahead". Indeed, we did say that; we made the point throughout the whole Budget debate. He continued: 'You ought in your Budget', they say, to have pumped a whole lot more purchasing power into the domestic economy. You missed an opportunity." My answer"— said the Chancellor— is simple. I did not do that because I expect to see Production expand in 1962 without any additional stimulation.… He was still saying the same thing in May, when he said: The upturn in the economy is beginning". The Prime Minister joined in: "Production is rising". As late as 3rd October the Chancellor was telling us: Looking at the broad trend underlying the monthly figures, industrial production has been rising at an annual rate of about 7 per cent. What is this nonsense about the Government seeing it coming? They did not see it coming. In the teeth of every piece of advice given them from their own back benchers, from this side of the House, from industry, and from trade unionists, they walked blindfold into this crisis. There has not been an exhibition like it since the day of Ethelred the Unready.

I will tell hon. Members opposite why we are in this mess today. We are in this mess because the Government insisted that 1962 was a year of inflation, when every sign and portent showed that it was a year of deflation. They increased taxes at the time of the pay pause, and last April, instead of relieving the nation of those taxes, they reinforced them and turned the screw down even heavier.

My hon. Friends and I protested about this at the time. We told the Government that their expectations of an export boom and an upsurge in domestic con- sumption, which was what they based their policy on, was falsified by every practical consideration we knew, but the Government insisted on believing the experts in the Treasury rather than the evidence of their own eyes and their own common sense.

The Government are responsible for the present recession. They are responsible for the level of unemployment. Let there be no doubt about that in the country. The result, according to the I.L.O., is that Great Britain was the only country in 1962 which registered an increase in unemployment, and the Government are the culprits. One of the financial pundits said the other day, "We are paying heavily for these mistakes". We are not, but the unemployed are. We will do our best to bring it home to the Government to ensure that they pay in due course.

"Let us not be mealy-mouthed", says the Prime Minister, always watching for an alibi, always willing to splash in the gutter and spread the mud over everybody else. He says that what the people are really troubled about and the reason for it all is the fear of the result of the next General Election. I do not know whether the Prime Minister believes that, but, if so, I can assure him that nobody else does. The only fear people have about the next General Election is that the Government might trick themselves back into office once again.

The Government have taken certain measures now. They have taken them belatedly, but they have taken them. They have repaid the post-war credits. They have reduced Purchase Tax. They have cut the Bank Rate. They have made borrowing easier. They have increased tax allowances for new plant. They have increased pensioners' earnings allowance. They have increased pensions and insurance benefits. They have increased public investment. I am sure that all this will have an effect, but we have seen this bit of the film played before.

In the autumn of 1958 and the spring of 1959 unemployment was at a high level and the Government took certain measures then to put the situation right. What were those measures? I must read the last page again! Every one of the measures the Government have taken this time they took in the autumn of 1958 and the spring of 1959, but there were three other things they did, also. In the spring of 1959 they made a substantial and whacking reduction in Income Tax, they cut the Beer Duty and they held a General Election.

We must wait for the forthcoming Budget for the cut in Income Tax, the solace to Schedule A taxpayers, no doubt something for the beer drinker, and then it is off to the polls again. In the autumn, if we are to follow form, the Government will increase the duty on tobacco, impose restrictions on hire purchase, restrict bank borrowing, increase the Bank Rate, and increase Purchase Tax.

One question remains unanswered. Can the Government tell us the answer? How soon after all this rigmarole do they expect the next balance of payments crisis? How soon after the election are we to go through, once again, the pay pause, cuts, and the appeals for sacrifices, with "phoney" national incomes commissions heavily weighted on one side with the pretence of independence? The Chancellor has not produced a single new vestige of policy or instrument to avoid this country going through the cycle of events culminating, of course, in a Conservative victory at the General Election, other than they did before the 1959 Election.

The great need, the overwhelming need, is for increased exports. The hon. Member for Louth (Sir C. Osborne) asked me to come to this point. I will. I regret that that hon. Member was not in the House to hear my hon. Friend the Member for Burnley (Mr. D. Jones), for he said many things about exports which the hon. Member for Louth and other hon. Members would have appreciated. If we are to maintain the 4 per cent. growth rate in this country, to which the Government are pledged, we need an increase in expansion of 5·7 per cent. per annum. Last year it was less than 3 per cent.

The President of the Board of Trade seems to be very coy about taking part in these debates nowadays. He was expecting a great upsurge. I do not know why we always get the Minister of Labour speaking in these debates. His job is to count the number of unemployed. The President of the Board of Trade's job is to find the jobs. My hon. Friend the Member for Burnley told us about his experience in Nigeria and of the pitifully small supply of exports from this country being sold there today as against exports from Germany and Italy. This is quite true. It is an absolute lie to tell us that Commonwealth trade is decreasing. Commonwealth trade is increasing. What is decreasing is Britain's share of it.

One thing I can never understand is why it is that we do not sell our goods in the Commonwealth as against Germany and Italy while we can beat Germany and Italy in their own home markets. Why is it, if we can beat them in their own markets in Europe, that we cannot sell our exports in Nigeria and the other countries? My hon. Friend asked that question and we would like the answer from the President of the Board of Trade. I believe that this insistence by Ministers, this concentration on the Common Market negotiations over the last eighteen months, has meant that many of our valuable and traditional markets have had less emphasis placed on them than they should have had, and it is high time we got back to them.

Private investment is down. The public sector is going to take it up, and I hope so. I have no doubt—and I can assure the hon. Member for Louth on this score—that we shall need another debate, and perhaps the Common Market inquest will provide the opportunity, to deal with the problems of exports, productivity, balance of payments and how to expand world trade. Only by increasing our exports and productivity will we solve permanently the problem of unemployment in this country. Let there be no doubt about that.

I have listened to the whole of today's debate. I think that everyone has lambasted everyone else. The trade unions have come under fire for restrictive practices. Managements—and this has come from hon. Members opposite—have lacked initiative for their inadequacy of top training in management and poor communications with the workers. Monopolies and restrictive practices have not been mentioned as much as I would have liked, but I am certain that if we are to get out of the present situation a much tougher attitude will have to be taken towards monopolies than the President of the Board of Trade has taken towards British Oxygen and others over the last few years.

Some hon. Members have thought that the way to achieve a solution—to fire the British people with zeal once again—is to indulge in space research. Others have thought that more concentration on the basic needs of housing and sanitation might do the trick at less cost and with more satisfaction. There is no doubt that there is great unease about Britain's rôle in the world.

There is no doubt that a great many people feel that the rôle which we fulfilled for several centuries has come to an end and has been inadequately replaced and that our present course is uncertain. We have been told that we are insular and maritime. I do not resent being told that I am insular and maritime. It is a function of my geographical position to be so. The fact that we are insular and maritime, however, has never allowed us to become narrow-minded. If "insular" is used in that sense as a term of reproach, we should start to examine ourselves. As an insular and maritime nation we have voyaged over every ocean, taking treasure and ideas from wherever we might find them. But I think that it is true that we have become insular in the narrow-minded sense over the last ten years.

Over the last decade, particularly, a smog of complacency has been allowed to settle on us. It is that leadership that we want to see which will drive the fog away. I like the Minister of Labour but, with the best will in the world, could one imagine that, arising out of his speech today, there would be great zest and determination on the part of everybody to come out and make sure that Britain has a great rôle in the future? I do not look to that Front Bench opposite for the great leadership we need. A great many young people today, to the discomfiture of some of those of us who are older, are examining current morality and the conventional beliefs which many of us have held for a long time.

It is very uncomfortable to be rather older when this process is happening. But I do not attack them for doing this. I believe that they are blowing away a sham of hypocrisy which has overtaken the country over the last few years. What I would ask of them is that they should not confine their attack merely to conventional morals and conventional social attitudes and that they should expand their attack and turn their attention to political and economic problems. Most of us here belong to a different generation, but I believe that if these young people attack the sham and hypocrisy in that field they will bring under attack a different set of shams in our political and economic life.

If they do that, I believe that they will render a very great service to the country, because I have no doubt that once our course is clear, once we have stripped ourselves of our illusions, a closely knit, highly inventive, tough-minded, hard-working family of people such as we are has a great rôle to play in the world, depending on none and ready to co-operate with all.