Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 8th April 1965.

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Photo of Mr Peter Shore Mr Peter Shore , Stepney 12:00 am, 8th April 1965

Well, really! In October, 215 million dollars left. In November, 270 million dollars left, and in December —unless I have the figure wrong—about 400 million dollars left the United Kingdom. In other words, over the whole four months there was a considerable movement of funds.

In the first six weeks of that period—I am trying to be serious even though hon. Members opposite are not—there was not a Labour Government, but there was a growing realisation abroad that, to put it frankly, we were running into the biggest underlying balance of payments problem we had had since the war. It is no good right hon. and hon. Members opposite saying that foreign bankers are not worried if the British Government, in a single year, manage to incur a balance of payments deficit equal to the whole of our gold and dollar reserves. Of course they are concerned, and rightly so. In fact, one can say about this confidence crisis and what happened this year that it is probably the first time since the war when foreign bankers had genuine reason to be concerned about the safety of the £.

As soon as the facts were known, the Labour Government made their decision, and in many ways it must have been the most difficult decision that my right hon. Friends had to take. They decided to tell the truth about the balance of payments deficit and its size instead of evading the issue. From the previous Administration we have had no suggestion of a figure between £750 million and £800 million. Nothing like that was ever indicated by right hon. Members opposite during their last months in office—not a whisper. I can remember when the National Institute published its first estimate saying that it looked as though the balance of payments deficit in the course of 1964 would be between £550 million and £600 million. It was pooh-poohed by all the official briefers in the Treasury and the Board of Trade at the time. Every month's figures were scorned and ridiculed by those now sitting on the Front Bench opposite. This attitude is just not good enough. In fact, there was a genuine confidence factor, and there was bound to be, arising out of the basic weakness of the British economy at that time.