I listened to the constructive speech of the hon. Member for Twickenham (Mr. Gresham Cooke), as I always do, with very great interest. I listened particularly to his earlier comments about the import situation, with which I fully agree. I only regret that some of his hon. and right hon. Friends did not listen to his advice which, no doubt, he was proffering earlier about the situation, because I think that the national position today would have been a lot easier if people had hearkened to what he said.
I should like to begin by complimenting my right hon. Friend the Chancellor on his Budget, in particular with regard to its humanity. Speaking on behalf of my own constituents, I feel that there will be many thousands of people, having regard to what is proposed, who will bless the day that the Labour Government were returned to Westminster. Secondly, I should like to compliment him on his economic judgment. I do that a little more tentatively, because I am always rather more of an expansionist than the Treasury sometimes is. I was glad to notice that he struck a very fine balance in his Budget. He said that for the financial year 1964–65 he was going to take away £32 million.
Allowing for the fact that there will be improvements in certain social services before the end of the financial year, he is not affecting the level of demand in this country very seriously. I mention this because I think that it is right that the Committee should know, and the Government should notice, that the production figures are still rather static. The index of industrial production, inherited from the preceding Government, has not shown any improvement for a number of months. That is another thing which has not been discussed so far. I think that it would be rather dangerous to withdraw too much purchasing power from the economy until the Treasury Ministers are satisfied that the index of industrial production, that is, the demand for goods and services produced at home, is showing the lift that we should all like to see.
Thirdly, I should like to congratulate the Chancellor on the vision which he showed in his forthcoming tax proposals as a move towards incomes policy. It would be premature to debate this this evening. It is common ground, I hope, on both sides of the Committee that until this problem is solved it will be very difficult to move the British economy forward in the way we wish to move. The proposals which have been outlined this afternoon should make a constructive contribution in that direction.
Before I make some constructive comments, I want to say something about the responsibility of the last Government. When the former Chancellor, the right hon. Member for Barnet (Mr. Maudling), spoke during the debate on the Address in reply to the Queen's Speech, he suggested that his honour had been attacked. The honour of the last Chancellor is not in question. What I think is in question in this Committee are two things: first, his prudence, and secondly, his toughness. With regard to his prudence, I seriously submit that he played down the question of an economic crisis, certainly during the last week of the General Election campaign. There was talk a few minutes ago about newspaper headlines. I have a cutting from The Times, headed, "Troubles not crisis, says Chancellor". This was from The Times for Monday, 12th October. It said:
Mr. Maudling said at Sheffield, Bedfordshire, on Saturday: 'I have said that this country is suffering from economic problems, but not a crisis'".
He said this on the Saturday. It should also be noted that on the Friday, the day before, there were published in The Times some very interesting figures from the Institute of Export. I saw them in my constituency, and I am sure that the Chancellor had them brought to his notice, too. These figures showed that
manufacturing imports were up on the eight months by £312 million and that manufacturing imports, the lifeblood of this country, were up by only £137 million.
There was a very serious situation—a crisis, let us not mince words—on the eve of the General Election. The incoming Government had no option but to take the measures which they took in respect of the surcharge. If hon. Members really criticise the surcharge—and I am not happy about some of the details—they should back their criticism with their vote, and the Opposition did not.
My other quarrel with the former Chancellor of the Exchequer is about his toughness. I do not question his intellect. I respect it. I am sure that he knew the rough trends in the balance of payments statistics—the rough trends in imports. It is common knowledge, judging by the Press, that the former Chancellor of the Exchequer wanted a General Election last June. If he had had his way it would have given the incoming Government of the day, whatever political complexion produced by the election, the necessary breathing space and elbow room which were required in the national interest.
It is a fact for the record that the previous Chancellor was overruled by the Prime Minister of the day on political grounds. I would only add that a Chancellor of the Exchequer—and I respect the former Chancellor—is the custodian of the economy. He is more than a party politician. Chancellors of the Exchequer sometimes have to put their country before their party. My own private feeling is that if the Chancellor felt as he did about the economy, it was his duty to offer his resignation rather than to allow the Government to go on for several months with a policy which in my submission has done very serious damage to the British economy.
I turn to some more constructive remarks. Of course I support the Government's action over the surcharges. That is not to say that, like my hon. Friend the Member for King's Lynn (Mr. Derek Page), who made a very interesting maiden speech, and some hon. Members opposite, I have not certain detailed misgivings about the surcharge. But obviously something had to be done, and it was the least of all the evils.
But I return to a theme which I elaborated in the previous Parliament and which I wish to repeat: by no means the worst problems of our balance of payments are on the visible account. It should not be imagined that measures to stem the influx of manufactured imports will alone get Britain over her balance of payments problems. What the experts call the invisible account is in serious trouble. The fact that it is invisible is one reason why it never seems to be properly debated here and does not attract as much attention from the Government of the day as it ought to attract.
Anyone who has studied the balance of payments account of the United States in recent years will notice that the American balance of payments has been very seriously affected by Government spending abroad and by capital movements away from the United States. These factors in the American visible account are also very powerful factors in the present British economic situation.
I mention one figure which I hope that the Financial Secretary will notice. Net Government spending abroad—and I hope that he will correct me if I am wrong—is up by £200 million in the last five years. We have to provide this £200 million by greater exports before Britain can afford further imports of manufactured goods, raw materials or foodstuffs. This figure is made up of defence expenditure and of Government grants overseas. I hope that there will be a very searching examination by the new Government of both these items. I was very interested yesterday in the House to notice that this point had apparently been taken by the new Minister of Overseas Development. She seemed to be aware of the shortage, the increasing shortage, of financial resources there will be for overseas development because of the factors which I have mentioned.
Although I know this will not be easy, and that perhaps the present moment may not be an easy one, nevertheless I would suggest to the Government that they should consider initiating talks with some of the European countries about aid for underdeveloped areas, because unless one can get a co-ordinated international European approach to underdeveloped countries, unless one can get some of the other wealthier countries to contribute rather more, I suspect the strain on the British economy and the strain on the invisible balance will be increasingly hard, because it is not just Government grants which are involved. Government loans overseas in the last five years have gone up appreciably, I think by about £50 million, and private investment overseas is going up, too. It is not necessarily a bad thing, but we have to be frank and recognise the burdens which all this represents. I know it is a very tricky area for the Government to operate in, but, nevertheless, I think some action is necessary.
I want to mention just one other figure. Today one-fifth of all our exports are going to pay for these invisible exports overseas. Five years ago it was only about one-sixth. So we have a very serious problem to tackle. I think I can speak candidly on this topic because in the last Parliament I used to talk on this subject, pressing the former Prime Minister, Mr. Harold Macmillan, for some further information, which was resisted at the time. I notice that the new Government have an economic adviser charged with overseas financial affairs in the Cabinet Office, and I hope he will look at some of the topics I have mentioned.
I hope in particular that there will be a searching look and attempt at producing a realistic balance sheet of the net income received from abroad through the oil industry. It will be necessary—this is, again, a very complex exercise—to take into account the earnings of the oil industry for the balance of payments, but it will also be necessary to take into account some of the outgoings from this country and also some of the ancillary cost of Governmental operations, aid and defence, and it may well be felt that certain aspects of the oil industry's operation—I do not say all, but certain of them—do represent a less profitable form of economic activity than this country has hitherto realised.
Let me mention just one other item on the invisible account which, I hope, will receive attention from the new Government. Many years ago when my right hon. Friend the Prime Minister was president of the Board of Trade we operated in relative balance on the tourist account. Quite a lot was spent overseas by British subjects, but a lot was spent in this country by tourists and visitors from abroad. No one is suggesting that there should be restrictions on overseas spending, but I am suggesting that there should again be a searching examination by the Government of the problems of the domestic tourist industry. There are many steps which could be taken by administrative and legislative action to make this a more attractive country for tourists, and if that were done the balance of payments account would benefit very greatly indeed.
My other constructive comment is on the subject of Governmental planning. I hope to say a few words about the new Ministry of Economic Affairs, some of them a little critical. This is not a party issue, despite the comments yesterday of the right hon. Member for Bexley (Mr. Heath), because divergent views on the future of the Treasury have been held by many Labour and Conservative politicians. For example, Winston Churchill, when he was Prime Minister in 1951, felt that it was necessary to have a counter-weight to the comparatively restrictionist attitude of the Treasury, in the form of the then Paymaster-General, Lord Cherwell, backed up by the advice of Sir Donald MacDougall.
Furthermore, Mr. Harold Macmillan, a former Prime Minister, has long been on record on this subject. He was in favour of a Ministry of Economic Affairs before the war. He felt it necessary to intervene against the Treasury and Treasury Ministers twice during his period as Prime Minister, first when the Chancellor and his two aides resigned in 1957, and, secondly, when the right hon. and learned Member for Wirrall (Mr. Selwyn Lloyd) resigned, and important structural changes were undertaken at the Treasury at the same time. I feel, therefore, that in comment on this position the Opposition cannot really feel that they speak with a united voice at all.
During one of the economic debates, I think in 1961, I urged changes in the structure of the Treasury. My suggestion was resisted by the right hon. Member for Birmingham, Handsworth (Sir E. Boyle) who, I think, was Economic Secretary at the time. He apparently had the support of our Front Bench spokesman, my right hon. Friend the Member for Battersea, North (Mr. Jay), so we are in very good company. I hope that at some time we shall have an opportunity to debate the machinery of government and the machinery of economic planning in considerable detail.
Although I respect the people who work in the Treasury as individuals, I accept the criticism that the Treasury tends to be restrictionist in outlook. It is therefore necessary to create an inflence in the Governmental machine which is pro-growth, dynamic, and expansionist. But, having said that, I still have certain reservations about whether the split between the Treasury and the Ministry of Economic Affairs is at the right point. It may be that we shall find that more radical measures are needed.
I note that the Treasury still retains responsibility for monetary policy, the balance of payments, short-term economic policy, and budgetary policy. Despite the new Ministry, those responsibilities are the prerogative of the Treasury, and these are vital responsibilities for the implementation of the economic plan. I incline to the view that the Treasury as we know it today should eventually be restricted to the control of the Governmental machine, to the control of establishments and to the control of expenditure within the Government orbit. But I have a personal inclination to confess. I think that, in the long term, it may be necessary to transfer the more vital economic functions to the new Ministry.
I suspect, too, because we are living in a dynamic and changing world, that the Government and the House will have to look very very carefully at the sort of dividing line we should have between the Board of Trade and the Ministry of Economic Affairs. As I understand it, we have sponsoring Ministries in this country. The system has grown up whereby industries are sponsored by particular Departments. Now that economic planning has become so complex and extends to individual industries I feel that it may be necessary to review the way the borderline between the Ministry of Economic Affairs and the Board of Trade is drawn.
I do not apologise in any way for raising these last problems with regard to economic planning. This country faces a tremendous challenge in the years to come. I remember, as a new Member, listening to the last great speech of Aneurin Bevan here. He said that the solution of the problem of dynamic planning in a democratic society had eluded both major parties. I think that what he said was true. I think that my right hon. and hon. Friends have made a brave beginning in fashioning the policies and the institutions that are necessary to solve this vital problem, and I wish them Godspeed on their way.