Cost of Living

Part of Orders of the Day — Civil Estimates, 1964–65 – in the House of Commons at 12:00 am on 20th July 1964.

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Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire 12:00 am, 20th July 1964

I was not referring specifically to the question of housebuilding in 1951; just to the fact that the right hon. Gentleman made comparisons with that year which he should not have made. For example, he referred to the cost of living in 1951 and pointed out how it had risen during the term of the Labour Government. He completely ignored the vital facts. The right hon. Gentleman, who is an able economist, made some dishonest comparisons.

There can be no doubt that the problems facing the country are great. No hon. Member, on either side of the House, is suggesting that increasing productivity does not carry with it the risk of inflation. The Conservative Government have deliberately inflated the currency on several occasions, just prior to a General Election, and they are certainly taking the risk of doing that now. Just prior to the 1959 election the then Chancellor of the Exchequer gave a free rein on hire purchase, one of the fastest ways of stimulating purchasing. He encouraged the banks to give personal loans in a way never known before. The result was that the hire-purchase companies lost about £60 million—and, although the Conservatives regarded that as part of the cost for winning the election, that money was lost as a result of the hire-purchase companies taking risks to return the Conservatives to power.

If the Chancellor now suggests that currency is not being inflated, he must be the only person to believe that. It is being inflated and it is obvious that everything is going up in price. More wages are being sought, and the right hon. Gentleman is being less than fair, because nobody has yet discovered whether wages chase prices or prices chase wages. One method of dealing with this problem is to reduce expenditure on goods at home. When we were in power we had to face this difficulty, because at that time the motor car firms were prepared to sell all their cars at home and none abroad. We had to press and persuade them to export more vehicles and sell less at home so that the industry could pay for the steel it was using.

It is obvious that there must be a balance between the amount of goods consumed at home and those exported, bearing in mind our imports. The purchase of new motor cars in Britain has reached the point when the Government have an important problem to solve. Not only are we bringing on to our roads more vehicles than the roads can carry, we are having to spend vast sums to improve the roads and make more room for the extra vehicles. Common sense suggests that many people are buying new cars when their old ones are not necessarily worn out. There is a lot for saying that older cars should be run for an extra year or so. I do not want to give the impression that I would prevent people from having new cars. Nevertheless, we must do something to increase our exports.

The Secretary of State for Industry, Trade and Regional Development is setting up commissions to develop the exporting of goods, and I gather that one of the principal ones will be concerned with the export of whisky. From my travels abroad I have long realised the popularity of our whisky in other countries. Its consumption abroad has been rising steadily and it is without doubt an excellent export. It does not involve a great deal of labour in its manufacture, nature doing a great deal of the work in terms of fermentation and so on. Whisky production is a profitable business and, although the State does not get the lot, it collects a large amount. From the point of view of the Chancellor and the whisky industry, I can understand the enthusiasm for developing the export of this commodity.

The Chancellor did not say very much—and I have particularly in mind the proposed exports council—about exports to E.F.T.A. countries. Although those countries have been increasing trade with one another, they have not been buying very much from Britain recently and we are certainly not getting our share of their imports. As the right hon. Gentleman must know, the Scottish Council concerned with the development of industry and exports has been doing a great deal to make inroads into the E.F.T.A. countries from the exports point of view. I think that its efforts will be relatively successful. It has also been negotiating with Canada and the United States. I mention this because I would like to know whether the proposed new Council will either duplicate the efforts of the Scottish Council or compete with it, or co-operate with it, because there can be no doubt that it would be a good idea if more money were placed at the disposal of the Scottish Council, which has had considerable success.

It should also be remembered that there will be a great industrial fair in Scotland in the autumn. I hope that the Government will stimulate interest in that event, because the more people from abroad who can be attracted to it, the more our exports will be increased. I am not pushing the Scottish Nationalist Party in this connection, but a very important factor in industry is that there are 20 million Scots abroad who, whether or not they ever come back, have a nostalgia for their native country. Even from the purely business point of view there is no question that it is advantageous to use all this friendship that exists in other countries. The Scottish Council is able to do that in the United States and Canada, and in other countries, and I hope that something more can be done in that direction.

If we want to increase out exports we must try to reduce wasteful expenditure, of which there is a good deal. More and more people are being employed in gambling shops, casinos, and the like, as a result of recent Government legislation, and there is a great deal of other labour wasted on unnecessary work. A lot of that could be done away with to the advantage of really vital work.

Some inquiry will eventually have to be made into the distribution of rates between Government and local authorities. A wholesale investigation into the rating system is becoming urgently necessary. In Scotland, during their years of office, the Government have increased this financial load on local authorities from about £37 million to over £100 million. This expenditure is an element in the cost of living, and something will have to be done to adjust what is called the "burden", although I do not myself believe that rates are a burden or that taxation is a burden.

I believe that people get very good value for their rates and taxes, and if we eliminate the cost of war and of preparation for war it will be seen that everything spent by the Government—even by a Conservative Government—and by local authorities represents very good value for money for those who receive the services. If these same services were performed by any other agency the cost of living would rise much more rapidly. Nevertheless, I hope that the Government will see whether something can be done about this problem of rates.

The Chancellor of the Exchequer wound up by talking about national expenditure rising. We can reduce a lot of national expenditure if we make people pay privately. All we then do is to shift it from ourselves to the public. The reason why the Government spend our money is that they are doing it, I hope, more economically than otherwise would be the case. I am sure that the right hon. Gentleman will not say that during the last 13 years the Government have been wasting money, and if he says that the money has been spent wisely it means that the public have had a better advantage than they otherwise would have done.

The National Health Service is an example. Our expenditure on the Health Service is less than that of any other country. Drugs and everything else cost more in the United States and in nearly every other country. In other words, people get a better service here for less money than they would get anywhere else. Yet there is a great deal of nonsense talked about burdens; people are buying at wholesale prices and getting these drugs and services more cheaply than they would outside the service, but it is very difficult to make this clear.

People do not like paying taxes. One of the sad things of life is that people will rather pay more on cigarettes, beer and whisky and pay a much smaller Income Tax, with the result that much taxation has to be imposed by indirect rather than by direct means. We have to express our thanks to those who smoke and drink for their great generosity in making such a valuable contribution to the upkeep of the country and the national expenditure.

It is a pity, as I say, that so much of it has to go on war and the preparation of war, but we hope that by the time the next Government come in the world situation will have so altered that even that expenditure may be reduced and the saving put to better purpose.