Debate on the Address

Part of the debate – in the House of Commons at 12:00 am on 21st April 1966.

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Photo of Captain Walter Elliot Captain Walter Elliot , Carshalton 12:00 am, 21st April 1966

I think that I am the first back-bench Member, Mr. Deputy Speaker, who has spoken in the present House with you in the Chair. May I, with respect, wish you the greatest success in that position. [HON. MEMBERS: "Hear, hear."] Following our acquaintance over the past Parliament, I assure you with the greatest respect that there are very few hon. Members I would prefer to have in the Chair.

I do not intend to follow closely the arguments of the hon. Member for Buckingham (Mr. Maxwell), but I want to take up one point which he made when he criticised Conservative proposals for legislation to compel unions—and I would point out that it would include employers' associations, too—to follow negotiating procedures. He said that they have this system in Australia and yet Australia has lost far more days in industrial disputes than we have lost in Britain. I lived in Australia for a few years, and although I was not in very close contact with the industrial side of the country, I saw something of it. What he said is true, but the days lost there are lost in official strikes. The days lost in unofficial strikes are practically negligible, and it is my view that it is the unofficial strikes which do the damage in this country. It is the unofficial strikes against which we are trying to legislate. The law in Australia compels the unions to order their men back to work, and they may be fined day by day if they are not successful. Such is their hold over their union members in Australia that they are usually successful in getting them back to work.

In addition, the legislation to compel adherence to the negotiating machinery is only part of our plan. There are other parts, too. That is very important to note. I hope that the hon. Member will forgive me if I do not follow his argument any further.

May I turn to one or two other points in the Gracious Speech. One or two hon. Members today—and many times in the past—have stressed that it is important for us to reduce our defence commitments, particularly east of Suez. I appreciate their approach to the problem, although I do not agree with it. Some of them have repeated the argument today. I do not know whether this is the beginning of a split in the Labour Party. It is very early in the Parliament for that to start. But we read in the Gracious Speech: They will continue to assist Malaysia and Singapore in their defence against Indonesia— They will also support Britain's other alliances for collective defence, and press forward with policies designed to enable Britain to play her full part in the promotion of peace throughout the world—. Personally, I agree with that. I appreciate the arguments of hon. Members who want to withdraw from these commitments, but I agree with the statement in the Gracious Speech. In view of their recent pronouncements on defence, I ask the Government how long they think they will be able to do this and with what. We are told that this Parliament may last its full five years—which is a long time. Shore bases are increasingly at risk. They have been at risk for many years. Perhaps the most famous base which we lost was Suez, but we have also seen Libya go and our bases in East Africa; Aden is to go in two years and there is even talk of moving out of Singapore in due course.

In the process it has given me enormous irritation to see the vast sums spent on these overseas bases—not only by this Government but under previous Governments, too—only for them to be surrendered because of a change in political circumstances. I believe that this tendency to lose our shore bases is continuing.

I read in a newspaper the other day that when the Minister of Defence was visiting Australia and was speaking of Singapore, he made the remark, "If we leave Singapore and we have nowhere else to go, then we shall have to go home." Of course that is not so. It is the case if we have no land bases, but if we have mobile bases we can operate in many parts of the world. Admittedly, we also need rear bases, perhaps thousands of miles from the operational areas. They will be very few in number. But provided that we had these rear bases, then with mobile bases we could operate in many areas and carry out our obligations. I believe that in the long run we could carry them out more cheaply than if we had permanent shore bases.

But the core of a mobile base is the carrier, and I ask the Government most sincerely to think again about the provision of a carrier for the Royal Navy, linking it with a need for mobile bases should our shore bases have to be given up. I hope that the Government will consider this and not get confused by talking about east or west of Suez. The Navy, without a carrier—the core of its defence and attack—is not a navy. If it has carrier forces then it becomes a navy, whether it operates east or west of Suez.

I turn to the question of our economic position. It is a cliché to say that our strength, whatever it is, depends on our economic strength. The Prime Minister said that electioneering is over. I agree. We should now admit that our economic situation is very grave, and it is stated in the Gracious Speech: My Government— will renew their efforts, in co-operation with trade unions and employers' organisations, to increase the productivity and competitive power of British industry We then read: —My Government will promote a more positive system of investment incentives to improve the efficiency of those parts of the economy which contribute most directly to the balance of payments—. How will the Government do this? We are always worrying about increasing incentives and we know that it is on this issue that our economic future largely depends. However, we should think more about why people invest. When in Opposition, the Prime Minister always talked about investment going to the wrong places. In one Measure, hon. Gentlemen opposite hoped to direct investment. For example, the construction and road haulage industries were left outside the investment allowances. The fact remains that industry invests because it is profitable to do so. The way to make industry invest is not constantly to offer incentives, financial or otherwise, but to try to ensure that those industries are profitable.

Investing a large sum of money is a risk. If it is not profitable, investment will not take place. One of the greatest disincentives to investment is that if a company or an individual is successful the profit is creamed off by taxation. Thus, the way to get investment is to stop talking about direct incentives in the sense of offering direct financial aid and to reduce direct taxation.

We heard a lot in the last Parliament about the Fairfield's shipbuilding yard. I do not know much about it, apart from what I have heard from hon. Members. I understand that although it had plenty of orders it went bankrupt. I believe that one reason for that was the amount of taxation on the company, including a heavy rate burden which was recently imposed on it. I believe that the same could be said of other shipbuilding yards which, I understand, are also in considerable financial difficulties, despite their efficiency.

At the end of 1964 the Chancellor of the Exchequer increased taxation. It had the effect of putting up prices, although I do not for a moment believe that it increased productivity and the competitive power of British industry. I hope that this time the right hon. Gentleman will resist the temptation to increase direct taxation again, although I am not very optimistic about that. We have had threats of increases, although it has been said that they will not be too severe. We have also been told that when they come they will be placed on the shoulders of those who are best able to bear them.

I recall the Chancellor stating in the last Parliament, rather sadly, I thought, that whatever he did, rising prices always seemed to be with us. They always will be as long as incomes continue to rise and as long as money is pumped back into the pockets of the people. It is there that we must tackle the problem. It is an extraordinarily difficult one to solve and the Government will need courage to tackle it.

The Government control a large sector of the working population. It is no good them giving way in that sector and expecting industry not to follow suit. Hon. Gentlemen opposite frequently criticised my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) for the measures which he took when Chancellor. I believe that he acted courageously and I urge the Government to study his example.

The Gracious Speech makes the future of the so-called incomes policy as we have known it in the last 18 months extremely vague. No one could have worked harder than the First Secretary in trying to implement that policy. However, despite his efforts, the incomes policy as we understood it during those months has received very much a back place, from what one can gather from the White Paper. We must admit that it has largely failed. Its failure has occurred not, I believe, because of the First Secretary's efforts but because of the failure of the Chancellor to operate on the level of demand. That, in effect, is what an incomes policy does; although the incomes policy as we have known it has endeavoured to make this rather more painless by making it voluntary.

The Chancellor must take over from the First Secretary and it is on this that the Government will be judged. If they fail, the results will be disastrous for the country. I do not believe that they will go to the country if there is a financial crisis, but they will almost certainly need the support of my hon. Friends. They will have the right to ask for that support if they act courageously. There must be no double-talk—there must be no telling the country one thing and the foreign bankers something different. There must be no remarks like the Chancellor made in the last Government when, on imposing the 7 per cent. Bank rate, he said he hoped that it would not work through the economy. He must make it clear that he intends to control the level of the economy. He must control the level of demand and the amount of money going into the pockets of the people. He must make that clear to the country as well as abroad what he is doing.

On the whole, the Gracious Speech is largely irrelevant to the main problem facing the country and I await the Budget with acute interest.