Case for a Socialist Budget

Part of the debate – in the House of Commons at 12:00 am on 6 March 1970.

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Photo of Mr Russell Kerr Mr Russell Kerr , Feltham 12:00, 6 March 1970

In the world of show business there is a piece of advice—"Never follow a good act". I am in the difficulty of following no fewer than three good acts. I refer, of course, to the speeches of my hon. Friends the Members for Salford, West (Mr. Orme), Lewisham, West (Mr. Dickens) and Liverpool, Walton (Mr. Heffer), each of whom made an excellent contribution to the debate.

My hon. Friend the Member for Salford, West, by his initiative in introducing the Motion, has done a signal service to the cause of free discussion and democracy. I would like to see this initiative reflected in a more permanent arrangement as we approach the budgets of 1971–72 and thereafter. By the internationally recognised criteria for judging the speeches of Chancellors of the Exchequer, namely, the number of useful and/or productive ideas per 30 minutes of oratory, I rate the contribution of my hon. Friend the Member for Salford, West as being of the highest calibre.

I am anxious that my hon. Friend the Member for Norwood (Mr. John Fraser) should have time to introduce the Motion in his name, if he catches your eye, Mr. Speaker, so I shall be brief.

I am the last person to want to take away the credit that the Government can justifiably claim for the remarkable switch in the balance of payments position from an approximate £400 million deficit in 1968 to an approximate current surplus of £500 million plus, but we must keep a sense of perspective. We have come a long way round to do this, and the solvency which we have achieved has been at considerable cost.

Maq I look briefly at several factors which have been responsible for the present situation? Following devaluation in 1967, there was an increase in exports between 1968 and 1969 of 14 per cent. Over the same period, our imports rose by a modest 5 per cent. Whereas in 1968 our imports exceeded exports by nearly £700 million, by the second half of 1969 the positive balance of exports over imports was happily about £50 million.

We should look a little deeper at the reasons lying behind this situation. When we consider the main reason that limited the level of our imports, we reach a rather less satisfactory explanation. There is no doubt that the generally righ rate of taxation, high interest rates and the high level unemployment have been the major deflationary factors at work. They have undoubtedly kept down the public capacity to buy imported goods. Also, it is true that manufacturers have allowed their stocks to run down so that during the third quarter of 1969, for example, they were running down at a rate of about £80 million per annum.

Another factor which has contributed to the happy balance of payments situation has been the fact that world trade over the last year or so has increased at a rate of about 14 per cent. The trade in manufacturers has increased rather more than that figure. In world terms, it is about 17 per cent. What is significant is that, despite this large rate of growth in manufactures and in trade generally, Britain's increase has been rather less than average, amounting to only 14 per cent. It is certainly less than the growth in trade achieved by our principal economic competitors, mainly West Germany, the United States and Japan.

In a pamphlet published in October, 1966, entitled "Beyond the Freeze", appeals were made by a number of my hon. Friends and myself in the Tribune Group for the use of selective import controls. The Government have turned a deaf ear to those suggestions. The result of the Government's refusal to accept this piece of helpful advice has been that, to avoid our import bill going over the top, it has been necessary to keep the rate of growth of our economy at the modest level we have seen over the last three or four years, that is to say, 2 or 3 per cent., or something of that level.

I should like to urge the Chancellor of the Exchequer, when he comes to present his Budget next month, to look again at his refusal to use a full range of direct import controls. So long as he sets his face against this particular solution as one of a number of steps that could usefully be taken, then our chances of reaching the type of growth which alone will solve this country's economic problem will be greatly diminished.

We must not underestimate the tremendous loss of production as a result of this very low rate of growth, a rate which, under Governments of whatever complexion, has been a feature of our economic life since the war. On the basis of even a modest 5 per cent. assumed growth rate over the years 1966–70, it would be my guess that about £7,000 or £8,000 million of production has been lost. It is easy for the hon. Member for Oswestry (Mr. Biffen) to pooh-pooh this idea, but whatever figure one takes, there has been an enormous loss to the people in production as a result of these continually low growth rates—incidentally, rates which no other advanced Western country seems to find any difficulty in far exceeding.

Another fact to bear in mind is that this kind of low growth rate inevitably means that we shall have the greatest difficulty in shifting this quite offensive level of unemployment which has been with us for a number of years. Two-thirds of a million people unemployed in this country is certainly an obscenity in the eyes of myself and most of my hon. Friends, and it is not a situation which a Labour Government should have to countenance. This underlines all the more the plea made by my hon. Friends the Members for Salford, West and for Lewisham, West for pressing on vigorously with wage claims in order that this lack in the economy, this under-use of our resources, should be put right by increasing the general body of demand and maintaining expansion.

If we do as I have suggested and go for growth, as the Trades Union Congress recommended, of up to 6 per cent., a number of hon. Members will, no doubt ask how we intend to safeguard our payments position. I should like quickly, so as not to duplicate remarks made by other hon. Members, to outline four or five proposals some of which have been mentioned already in the debate. I have already mentioned the question of selective import controls or possibly quotas in some circumstances. But, in addition, and despite the recent cuts in our overseas military expenditure, the drain on our exchanges for defence expenditure, so-called, is still of the order of £237 million which compares with £258 million in 1968. Also, we could usefully do some heavy cutting in terms of our overseas capital investment, and, in particular, our private overseas portfolio investment. The hon. Member for Weston-super-Mare (Mr. Wiggin) referred to the Australian mining share situation. I must say, as one of the two Australian Members in this House, that it has been a source of no pride to me to see the kind of things which have been going on there.

Another thing I should like to see is the reintroduction of the export rebates scheme which hit the dust at the time of devaluation. But, above all, I should like the Chancellor to try by direct action to control the imports situation and I should like a general moving away from reliance on blind market forces as a means of holding the situation.

I wanted to make several other points. However, in fairness to the hon. Member for Norwood, who has an important Motion to move, I should like to conclude my remarks by again expressing my own gratitude to my hon. Friend the Member for Salford, West for what is an interesting and extremely worth while initiative which, as I say, I hope will be repeated in the years to come, perhaps in a more formal sense.