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 put to my right hon. Friends on the Government Front Bench whether we ought to allow the City of London to accept money on very short-term rates. For instance, the Swiss banks have kept themselves out of the rates of interest war because they do not accept money on deposit unless it is left for 28 days. If someone withdraws a deposit before the 28 days are up he has to pay a penalty. But in the City of London one can deposit money for one day or three days. As a consequence the speculators are making a harvest out of our financial difficulties. I suggest that the Chancellor of the Exchequer might look into this and tell the City of London that we must do the same as the Swiss bankers and financiers and not accept the hot money.

I want now to say a word about our regional problems. I believe that devaluation will give us the spur necessary to increase our exports so that we may have an export boom and full employment and maintain and increase the standard of living of the mass of the workers. I do not agree with hon. Members opposite who say that devaluation must necessarily lead to deflation. The trade unions will see that it does not. If the cost of living goes up the trade unions will want an increase in wages. No mistake should be made about that. The trade unions will, rightly, want a share in any increased prosperity.

I believe that devaluation can give us an increased standard of living if we put our backs into the export drive and seize our opportunities of producing at competitive prices things that we have bought abroad in the past. I believe that an opportunity will exist for a big expansion in our economy. The trade unions will no doubt fight to keep wage rates in line with increases in the cost of living and get some part for their members in this fight for increased prosperity. I believe that this will be done. But in the regions —I speak as a representative of a constituency in the North East—our industries are basic ones and not based to the same extent as those in the Midlands and the South on durable goods that can be exported, such as motor cars. We recognise that if the economy suffers a setback the regions are the first to feel it. The Government have for three years tried to induce private industry to go to the regions. I believe that the Government must as quickly as possible go in for capitalised State industries. State-owned industries should now be operating in the regions. Ministers should have in their offices committees looking into the possi- bilities of capitalising State-owned industries, how to capitalise them, what workers are needed, what the prospects are for selling the goods, and so on. This is a priority in the regions.

We have endured a long period when Ministers have been pursuing policies that have received support from the Opposition. This disturbs me very much. I had a grandfather who was a pioneer in the Socialist movement, and in my youth he warned me, "If the Tory Party ever praises Labour Party policy, then you must look at Labour Party policy again because you are on the wrong lines." He was not a theoretician, but that was wisdom. We have had a long period of Butskellism. We seem to be in danger of getting in the immediate future what I would call Callamacleodism. We had a consensus between the two Front Benches about what was needed to save the £. I am very glad that at least one thing to have come out of devaluation is that we have started fighting again.

We have said that it is intolerable to have a system of industry in which, at least until a few months ago, 98 out of every 100 people are employed in gainful industry, digging the coal, making the steel and driving the trains, and yet, because some small Arab country withdraws its reserves from the Bank of England, or 10,000 people strike, out of a working population of 23 million, the £ is endangered and the whole gearing of the economy goes wrong and we have to talk about falling back and deflation and high Bank Rates and stopping production and so on. What a crazy society we live in. One of the good things to come from devaluation is that we are beginning to realise that the producers are the people who matter, whether manufacturers or workers, and not the people who deal in scrip, whether in the City of London or in Switzerland.

I think that it was Aneurin Bevan who said that if one coal miner died, the country would suffer the loss of the coal which he would have produced, but that if all the financiers died tomorrow, industry would still go on. That is perfectly true. We have made a fetish of the £ and of the importance of the man producing the scrip. It is like trying to run a railway and, having engaged all the engineers and drivers, saying that the most important man in the system is the man who prints the tickets for the passengers.

That is exactly the position of our economy when, because of the self-importance of the City of London, which has been established by subtle propaganda year after year—and some of my right hon. Friends have fallen for this propaganda—it is believed that the financiers are the important people in our society. The important people are the miners and the people in the factories and in the communication industries. It is those who produce the real wealth. They are the people who have to struggle hard, as the dockers and seamen have had to do, in disputes about 6s. a week and who have read in the newspapers about financiers making in 24 hours a profit of £150 million as a minimum and, according to the right hon. Member for Enfield, West (Mr. Iain Macleod), perhaps as much as £1,000 million over the past two or three weeks. These people can pick up a telephone and on speculation and guesswork can suddenly find themselves worth hundreds of thousands of pounds more the following day.

What sort of casino society is it when a docker has to strike for eight weeks over 4s. and we tell him that he is damaging the economy? The people damaging the economy are those who are speculating and making profits out of the dilemma in which my right hon. Friends find themselves. These are the super patriots who put profits and earning a dishonest penny before the benefit of the country. Devaluation will put these people in their place. We can forget financiers and the balance of payments—we cannot forget the balance of payments, but we can certainly forget raids on sterling, at least if our economic priorities are right.

I am fully behind the Government's decision to devalue, although I think that they have done so too late. I ask them to do two other things. First they should consider putting a further restriction on the export of capital to developed countries such as Australia and South Africa. Secondly, I ask them to consider imports of things like comics from the United States or gambling machines, the one-armed bandits, imports amounting to £17 million a year. Is it not possible to stop such imports for which we have to pay dollars? We may be bound by international agreements, but there are more ways of killing a cat than strangling it. Why should there not be heavy taxes on these items? Why cannot Purchase Tax on gambling machines be increased?

I wish the Government well and I shall be behind their striving to increase the export drive. I hope that they will consider some of the things which my hon. Friends and I are advising and I hope that a consequence of devaluation will be that we will have that vital starting-off base from which to make our economy viable again.