Economic Affairs

Part of the debate – in the House of Commons at 12:00 am on 17th November 1965.

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Photo of Mr Patrick Duffy Mr Patrick Duffy , Colne Valley 12:00 am, 17th November 1965

Yes, that is so. I was going on to make that point. Nevertheless, the significance of this continued rise in the price level over the period for other reasons, which I need not go into because of what my right hon. Friend is trying to do through the National Board for Prices and Incomes, cannot be overlooked. These increased resources were used by the Opposition when they were in government to raise the rate of fixed capital formation in the economy. The cumulative effect of 10 years of investment is a rise in capital stock by about one-third. Despite this, home costs per unit of output have risen by 37 per cent., which shows that we have not been getting the full benefit of this investment and the right level of productivity during those years which the Opposition properly remind us now we are not achieving.

The volume of exports of goods and services increased faster than the G.D.P. for which the Oppposition can take credit —37 per cent. as against 33 per cent. on the other hand, Britain's share of world's exports of manufactures over this period fell from 20 to 13·7 per cent. The amount of imports which these exports would buy rose by 48 per cent. with the aid of improved terms of trade. It might also have been said, by way of balancing the picture, that the volume of imports has grown faster than the purchasing power of exports—56 per cent. as against 48 per cent. and much faster than the G.D.P., namely, 33 per cent.

I think it is not surprising, in view of this, that the balance of payments on current account at the end of this period, though favourable for most years, gave us only an aggregate of £389 million by way of surplus, and this, as we know, was achieved only at the cost of exchange control, at the cost of "stop" policies, at the cost of a certain amount of growth. Moreover, the reserves of gold and convertible currencies were consistently lower in relation to our short-term liabilities and we had at the end of the period a net deficiency of nearly £600 million.

I am not saying that at the end of this period, about which the right hon. Gentleman was talking with such pride an hour ago, there were not achievements, substantial achievements, to the credit of his party, but the fact that a man has added to his net assets during a period does not mean he had not some difficulty in living within his income during that period, and that pretty well sums up, I think, the record of the Opposition over the last decade.

If we now come to the position at the eve of the election we find that the cumulative current account was just in balance, but it was making no contribution—and this is something of which the hon. Member for Ormskirk needs to be reminded— to the financing of long-term capital exports which were averaging then about £175 million a year, and, indeed, had done for some years. The reason why this current account was only just in balance was that our export performance was not satisfactory. It was not satisfactory when we recall the comparative cost position of this country at the time, and when we recall the difficulties of other countries in Western Europe on account of the scarcity of labour. It was not satisfactory, either, when we remember that the exports of manufactured goods, which make up the bulk of United Kingdom exports, were rising less than those of other industrial countries taken as a whole. It was not satisfactory, also, of course, when we remember that our gold and foreign currency reserves were under £1,000 million for the previous seven years. It certainly was not satisfactory when we also recall that the United Kingdom, the United States apart, was the only industrial country not to increase its reserves during that period.

I wonder, therefore, how the right hon. Member for Enfield, West could possibly have said during his speech And so we came to the election of 1964 without any crisis of confidence." Of course, there was a latent crisis of confidence. We felt it all that year. We all knew that corrective measures were not being taken sooner. No one was in any doubt at all that there was a need for corrective measures and that the delay in taking them, as we all know, was due to the need for careful election timing.