Orders of the Day — Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 22nd November 1967.

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Photo of Mr Edward Fletcher Mr Edward Fletcher , Darlington 12:00 am, 22nd November 1967

I do not intend to take up the points mentioned by the hon. Member for Perth and East Perthshire (Mr. MacArthur). He says that my right hon. Friend the Prime Minister uses colourful language, but I am afraid that that cannot be said of the hon. Gentleman in his speech, which I thought was very drab and unenlightening.

I want to refer to a significant speech made by the hon. and learned Member for Darwen (Mr. Fletcher-Cooke), who spoke about the advisability of wielding the Geddes axe. My memory goes back to the financial crisis of 1931, when the £ was under attack and, as a condition of lending money to the Government, the international bankers stipulated that there should be cuts in unemployment pay. Some hon. Members will recall the establishment of the May Committee and the introduction of the means test, which is an emotive phrase even today in our Labour movement. Married men on 17s. a week were thrown off the Labour Exchange and had to be kept by their sons and daughters who were at work. That is the effect of the Geddes axe. One had thought that we had made some progress since those days. Keynes and other economists have told us that mass unemployment is not the answer. Yet we had a backwoodsman from the party opposite expressing what I think to be a substantially-held point of view on that side of the House that once again the answer to our problems is the creation of more unemployment.

On every occasion the working class has had to take full responsibility on its shoulders for solving the crises of capitalism. I see in devaluation a way out of this log-jam, so that once again we can get vitality into the economy and escape from the straitjacket of being in pawn to international financiers—I use the phrase deliberately.

I agree with the Government's general measures, but I want to concentrate specifically on the economies they intend to make in military expenditure, which, we are told, they intend to cut by £100 million. We were told, in reply to a question by my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot), that it is not a paper cut but will mean a real economy. That is welcomed by many hon. Members on this side of the House. But we must ask whether it is possible to cut more than £100 million. We have orders worth £1,000 million for military equipment in the United States, and devaluation has meant that that bill will rise by £150 million. Is it not possible to review our military purchases from the United States? For example, is it too late to do something about the F111A? We might well have to make some financial sacrifices, but in the last analysis it will be cheaper to cut these expensive commitments and evolve a military strategy designed not to police the world but to defend our shores from attack.

Have the Government appointed a committee to review the terms of our contracts with the United States for the purchase of weapons? When we are talking of defence, we must ask ourselves whether we intend to do anything to bring troops back from Germany. We have entered into commitments to station four divisions in Germany until the year 2000. It now costs us 15 per cent. more to keep every airman and soldier in Germany. Is this not an ideal opportunity for the Government to accelerate the withdrawal of troops from Germany? Are any conversations being carried on with the Germans with a view to offsetting the additional costs of 15 per cent.? Here is an ideal opportunity for us to scale down our commitments in Germany. Anyone with any military knowledge knows that our troops are stationed in Germany in a situation in which they will not be needed because the possibility of a European war is remote.

I was very pleased when the Prime Minister announced that we are not going forward with the expenditure on Aldabra, which my hon. Friend the Member for West Lothian (Mr. Dalyell) has said could be as much as £20 million. That is welcome news, certainly on this side of the House. I wonder whether similar action is being taken with regard to the base at Bahrain when we leave Aden? Do we still intend to pour money into a military settlement there when in a few years' time we may be operating in a hostile climate, in the midst of local people who do not want us, and have to face the same problems as we are facing in Aden. May this be looked into?

I am devoting these few minutes to the subject of defence expenditure because I believe that it is the root of our balance of payments troubles. Look at the situation in Europe. France has no balance of payments problems. She has probably the biggest balance of payments of any country in Europe. The reason is plain. France spends 4 per cent. of her national gross product on armaments. We spend 6½ per cent., more than half as much again. The French have no international commitments, having pulled out of Algeria and Indo-China, as a consequence of which they do not have to face the problem of policing the world. This applies to West Germany, and also to Italy, which is spending less than 4 per cent. of the gross national product on arms. Our difficulty has been that we have overstretched our resources and have not come to terms with the twentieth century. We think in the military terms of the nineteenth century and of policing the world.

It seems to me that we ought to examine our military commitments and recognise that policing the world is a collective responsibility and that our responsibility lies in defending these shores. So I believe we must look again at our military expenditure. We are told—this is a glib phrase from the economists—that we are consuming more than we are earning. This is true. But when this is put to the man in the street as a consumer, he thinks that one is referring to the food that he consumes, his television set and his refrigerator. But as a nation we also consume the Polaris submarine at £34 million; that is part of our national consumption. When we talk about consuming more than we are earning, let us look at these items of consumer spending that do so much damage to the mass of our people. This is a form of consumer expenditure that we can well do without.

Speaking about speculation, the hon. Member for the Cities of London and Westminster (Mr. John Smith) made the point, with his vast experience of the City, that it was a good idea to encourage hot money to come into the City of London. I intervened to ask him who had gained the money if Britain had lost £300 million or £150 million as a result of speculation, and the answer was that it had been gained by the speculators, a good many of them British speculators, perhaps dealing through their brokers in Switzerland or the Lebanon.