Orders of the Day — Economic Affairs

Part of the debate – in the House of Commons at 12:00 am on 4th November 1964.

Alert me about debates like this

Photo of Mr Anthony Crosland Mr Anthony Crosland , Grimsby 12:00 am, 4th November 1964

I must start by apologising to the House for not having sat throughout the whole debate, but, as I think hon. Members know. I went to Strasbourg to try to explain to our friends in the Consultative Assembly of the Council of Europe the reasons why we had taken the measures we have taken. In consequence, I missed a large part of the debate.

In particular, I was very sorry to miss a number of maiden speeches, which, I understand, were very well received—I think almost all by my hon. Friends the Members for Wolverhampton, North-East (Mrs. Short), Carlisle (Mr. R. Lewis), Liverpool, Walton (Mr. Heffer), Norfolk, North (Mr. Hazell), and Birkenhead (Mr. Dell).

I heard the speech of my hon. Friend the Member for Birkenhead, an old friend of mine, who speaks with great authority on matters concerned with South America. He made a number of very important suggestions which the Government will certainly take up. Only one of his suggestions seemed to me to be dangerous. He seemed to suggest that ambassadors should be judged by the amount by which exports to their countries increased or decreased, in which case we might perhaps find that our redundancy proposals would need to be enlarged very rapidly.

We were also very pleased to welcome back, not as a maiden speaker but as a very experienced ex-Member of this House, my right hon. Friend the Member for South Shields (Mr. Blenkinsop) and also, although more curiously, the hon. Member for Dorset, South (Mr. Evelyn King). I am not quite clear at what point in the political spectrum he now rests. At one time he was a leading member of the Labour Party. Then he went over to the Right wing of the Conservative Party, but the whole of his speech this evening was a blistering attack on his own party when they were in office. So it is not quite clear where he will come to rest.

The debate today—and I have been told all points which have been made—like the debate in Strasbourg, has largely centred round the questions, first, were we right to impose the import charges, and, if we were, could we not have consulted other countries before we did so?

The hon. Member for Wycombe (Mr. John Hall) addressed himself to some extent to this point. I am sorry that he did not welcome at least one thing which the Government have done. He shares with me an interest in Grimsby, for he once stood as the Conservative candidate there. I am happy to say that he was unsuccessful and that Mr. Kenneth Younger was elected. He shares an interest in the fishing industry and he might have mentioned the striking innovation brought about by this Government, which is the first to appoint a Parliamentary Secretary with special responsibility for the interests of the fishing industry.

The debate here and in Strasbourg has centred round two aspects: were we right to introduce the charge on imports, and, even if we were, should we not have consulted our friends more closely beforehand? On the first question it is necessary to remind the House of the position we found when we came into power. We were faced with a deficit on the balance of payments for this year running at a rate somewhere between £700 million and £800 million. Had that deficit been one which was likely to disappear in a few months' time, the situation might have been perfectly manageable, but all the advice we were given was that the deficit, although it might diminish, would certainly not disappear and, therefore, something had to be done.

The hon. Member for Wycombe rather gave the impression that despite this he would have continued either to have done nothing or very little and would have relied on borrowing facilities. Luckily—and we have said this publicly and I hope that we are not mean on this point—our borrowing facilities are perfectly ample, much more than a few years ago, but in our view there could have been no question at all of the Government simply going on borrowing and covering the deficit in that way. I personally think that had we done so, even for the month or two referred to by the right hon. Member for Barnet (Mr. Maudling) there would certainly have been increasing speculation against the £ and a rapidly growing volume of forestalling imports. Almost all importers would have guessed that something would happen at some point and would have tried to forestall it. The position would rapidly have become quite untenable.

We are not faced with a situation which is self-correcting. It may be perfectly reasonable to go on borrowing if the deficit would somehow remove itself. The hon. Member for Wycombe gave the impression that imports would decline naturally and exports would rise. There is no indication that this would happen to the point at which the deficit would disappear. The advice given to us, by the same people who advised the former Chancellor of the Exchequer, was that if nothing were done the deficit, although less, would next year be at a still unacceptable level, and the Government had to do something. The question was: what? There were various ways open to us, as would have been open to any Government, for correcting this very large deficit.

We rejected any policy which would have threatened the strength or stability of sterling. One thing we share with the former Government is a profound belief in the strength and stability of sterling in the growth of international trade. A fact which perhaps is not recognised abroad is that some measures which are open to a smaller country cannot be open to a large country which operates a reserve currency as we do. This rules out any measures which might threaten sterling. Secondly, we ruled out the classical Conservative method of the past few years of stop-and-go. We rejected this because we are totally committed to a period of continuous growth instead of stop-and-go.

We rejected it also because, for the reasons which my right hon. Friend the Prime Minister pointed out in his speech yesterday, stop-go is nut good for competitive efficiency, but bad for it. It discourages investment. It encourages restrictive attitudes everywhere. We rejected it also because there was no clear evidence that the economy was heavily overheated or overburdened. Indeed, the Tory Government have achieved a rather remarkable combination of putting us in a position of an enormous balance of payments crisis without even the promised boom, because the fact is that industrial production has been stagnant since the beginning of 1964. So we got the crisis without even having the boom.

At any rate, it is clear,—I do not think that the former Chancellor of the Exchequer would disagree with this—that there was no obvious sign of overheating, of excessive pressures on our resources, which would call in itself for a return to stop-go or deflationary action. It is quite true that, in so far as we eliminate the deficit and also in so far as we carry on with the social programmes which were announced in the Gracious Speech, an additional pressure will be put on our resources. It is for this reason that it has already been announced that my right hon. Friend the Chancellor of the Exchequer will introduce an autumn Budget next week to correct that additional pressure. That is something quite different from the idea of creating additional unemployment or reducing the pressure on home demand.