Economic Affairs

Part of the debate – in the House of Commons at 12:00 am on 26th July 1966.

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Photo of Mr Ian Gilmour Mr Ian Gilmour , Norfolk Central 12:00 am, 26th July 1966

The hon. Member for Ince (Mr. McGuire) has given a most comprehensive and competent condemnation of all the Government's measures. From his speech, I assume that he will be voting for the Motion.

I sympathise a great deal with what he said, particularly about economists and the folly of thinking like Boy Scouts. This afternoon, the Chancellor said that the best way to answer abuse was to give the facts. In fact, he has not been abused, though I intend to abuse him.

The Chancellor conspicuously did not give the facts. No less than three times he talked about the rise in import prices. What he failed to mention was the rise in export prices. It is true that the price of imports has risen 3 per cent. since January of this year, but the price of exports has risen by 2 per cent. During the time that the Government have been in office, the terms of trade have been singularly in their favour. Export prices have gone up by 5 per cent., whereas import prices have gone up by only 3 per cent.

When he replies to the debate I hope that the President of the Board of Trade will repudiate the idea that the Government have been hard done by as a result of the terms of trade and the rise in import prices, because they have been well favoured by the terms of trade. Rather belatedly, the Prime Minister has also become very much in favour of facts. During his television broadcast he said: All our history proclaims that in the British people there are deep reserves of strength and power which are brought out to the full when the people of this country are told the facts and when they are told what has got to be done. What were the fact which the Prime Minister was telling people only 16 weeks ago in order to bring out these deep reserves of strength? In his constituency, he said: A new Labour Government's action will strengthen our financial position and make sure that ' never again do we drift into debt'. We have not drifted, we have plunged.

The right hon. Gentleman was addressing a small audience then, but in a party political broadcast he said: And the success we have achieved so far in a bare 17 months towards paying our way, towards achieving a lasting economic strength and independence, let this not be underrated. It would be difficult to underrate it.

This may have been due to the hurly-burly of the election, but a deeply considered statement—and he must have considered it very carefully indeed—appeared in the party manifesto, part of which the Chancellor read this afternoon. He did not read the bit which was rather bizarrely entitled, "Facing the Facts". It said: During the past 18 months Britain has faced, fought and overcome its toughest crisis since the war. That may have made our foreign creditors a little surprised.

But even when the Prime Minister was returned with a majority of 100, he still did not face the facts. Even when he was telling the British people what ought to be done, he did not give them the facts. He used the bogus import prices argument again. He said that people had started buying more and more goods from abroad. That is correct, but he did not say that the reason was that the Government had held down production, that it had been utterly stagnant. He referred, also, to the seamen's strike. That argument has also been exploded today. His fourth reason was that the dollar had been having a difficult time.

The Prime Minister is at last learning. This is better than he did last year. In his explanation for the economic crisis last summer, in his statement on 29th July, be blamed the effect of Japan's grave dollar shortage on her purchases from Australia ", and also the impact of the Chinese gold buying spree." —[OFFICIAL REPORT, 29th July, 1966; Vol. 717, c. 747.] Last year, it was Japan and China. This year, it is America. I wonder which country it will be next year. Judging from the excellent maiden speech of the hon. Member for Carmarthen (Mr. Gwynfor Evans), next year it will very likely be Wales.

The Prime Minister has already been strenuously attacked for his handling of the economy, but it sometimes seems to be forgotten that the man in charge of the economy is the Chancellor of the Exchequer. He is responsible for the nation's finances and it is his bungling that has landed us in this situation. There has been some speculation in the Press because the Prime Minister has been devalued about his future, and the Chancellor of the Exchequer has been mentioned as a likely successor. This seems remarkably unfair when one considers the Chancellor's record. As the right hon. Member for Orkney and Shetland (Mr. Grimond) said, the Government's financial record is wholly bad, and is quite clear.

The Chancellor of the Exchequer does not have much in the way of credentials for becoming Prime Minister. It is often said that he is very much concerned about his place in history. If he is not to have a place in history rather like the utterly incompetent Whig Chancellors of the 1830s, the right hon. Gentleman will have to do a great deal more than doctor the record in HANSARD. He will have to doctor almost every speech that he has made, both inside and outside the House, and he will have to blot out almost entirely his two Finance Bills the latest one of which, as the hon. Member for Ashton-under-Lyne (Mr. Sheldon) said, is already irrelevant.

The Chancellor has boasted about his new fingertip controls for the economy, but it is not much use having fingertip controls if one operates them with one's feet. That is what the Chancellor has been doing. It is sometimes said that the Budget is out of date and that the economy should not be controlled by a once-and-for-all Budget each year. The Chancellor has certainly brought in that reform.

We all know how badly the latest crisis was handled during the last fortnight. The situation was already serious, but the Government talked us into a crisis. The Chancellor and the Prime Minister, as a result of their delay, had to do a demolition job not only upon all their promises and loud words of the last four years and the last two elections, but also on the economy. As an economist—not at all unfavourable to the party opposite—pointed out, they now have a policy of "stop-go-reverse".

What makes matters worse is that the Chancellor has not been able to mitigate his own follies by preventing or taking advantage of the follies of his colleagues. He has been unable to prevent the introduction of the Iron and Steel Bill, and he has been unable to cash in on our special relationship with America. As Mr. Walter Lippmann recently pointed out, this special relationship is one of satellitism to Washington. One advantage of this special relationship might be that we should be able to sell arms to America—but we cannot sell arms to America because hon. Members below the Gangway opposite object to their being used in Vietnam, which is the only place that the Americans would want to use them. Therefore, we do not get any advantage out of our satellitism. We get our debts guaranteed, but are unable to make any money by doing business with our masters.

The Chancellor's excursion into foreign policy has already been commented upon. He has put forward the idea of housing the British Army of the Rhine under canvas in this country, together, I suppose, with the wives and children, but most hon. Members on this side of the House and many hon. Members opposite think that Britain's future lies in Europe, and it is not the best way of convincing Germany and the other European countries that we would be a suitable member of the European Community for the Chancellor, having broken a lot of treaties in the past, to go around threatening to break all our obligations in Germany.

At the weekend the First Secretary said that doctors often disagree about diagnosis and prescription. That is true, but they do not usually agree to end up butchering the patient, which is what has been happening in the last few days. All that the Chancellor is prescribing may make the symptoms less obvious, but it will certainly make the patient a good deal more ill, and make it more difficult for him to recover in future.

After the 1964 election, the Prime Minister, at the Labour Party Conference, said: The way to a strong £ is through a strong economy, not by creating unemployment, not by holding production down, raising costs, deterring investment and creating the insecurity which breeds restrictive practices on both sides of industry. Those sentiments have been echoed by hon. Members today. They were wise words. But the Chancellor has so mismanaged the economy since those words were spoken that the Government now feel compelled to do all the things that the Prime Minister then denounced, and with a severity and relish absolutely unparalleled previously.

I was going to follow the suggestion of hon. Members opposite and say what should be done, but they have had a great deal of advice, and as other Members wants to speak I will spare them my advice. The Chancellor has done more damage to the British economy in his tenure of office than he can ever undo. But he could mitigate it by resigning. It is not the First Secretary who should resign, but the Chancellor of the Exchequer.