HC Deb 13 December 1950 vol 482 cc1162-7
The Chancellor of the Exchequer (Mr. Gaitskell)

I wish to inform the House of a joint statement which is being issued today by the United States and United Kingdom Governments. The statement is as follows:

After discussions between the Chancellor of the Exchequer and Mr. William L. Batt, Minister in Charge of the E.C.A. Mission to the United Kingdom, the Governments of the United States and the United Kingdom have agreed to the suspension of Marshall Aid to the United Kingdom from 1st January, 1951. In reaching this decision, the Governments have been guided by two considerations. First, the economic recovery of Britain and the sterling area as a whole has made such good progress that the dollar deficit has in recent months disappeared—an achievement which, coming early in the third year of a four-year programme, is a source of profound satisfaction to both Governments. Secondly, the defence programme of the United States which includes the Mutual Defence Aid programme will now impose new and heavier demands upon her economy.

The total of allotments of aid to the United Kingdom for the six months ended 31st December, 1950, will remain at 175 million dollars, of which 150 million dollars represents conditional aid matching equal sterling grants made by the United Kingdom to other countries in the Organisation for European Economic Co-operation through the European Payments Union. The United Kingdom will continue to draw upon these and previous allotments of aid until they are exhausted. Goods and services so financed will, therefore, be reaching Britain for some months to come. In all, since the beginning of Marshall Aid, the United Kingdom has been allotted a total of 2,694.3 million dollars.

The United Kingdom will remain a full participant in the Organisation for European Economic Co-operation and the European Payments Union. Certain E.C.A. programmes, in particular those for fostering overseas development, for the production of scarce materials, and for the interchange of technical knowledge to encourage higher productivity, will be maintained. The United Kingdom will continue to be eligible for assistance under these programmes, and the Economic Co-operation Agreement between the Governments of the United Kingdom and the United States will remain in force for the time being.

The two Governments are not yet in a position to assess the ultimate economic impact of their mutual defence efforts, and the suspension of E.R.P. allotments to the United Kingdom will in no way affect the arrangements which are now being worked out in the North Atlantic Treaty Organisation for the assessment and distribution of the burden of the defence programmes of its members.

The suspension of aid under the European Recovery Programme does not mean that the recovery of the British economy is complete or that the financial resources of the sterling area are adequate. Both Governments recognise that part of the improvement in the position of the sterling area is due to external factors which may well be temporary. Furthermore, new difficulties and burdens are certain to fall upon the British economy and balance of payments in 1951 as a result of the increased defence programme and the impact of higher raw material prices and prospective shortages. This understanding, therefore, provides for the suspension, and not the termination, of E.R.P. aid and for reconsideration if necessary. Nevertheless, the extent of the recovery already achieved demonstrates alike the immense value of the European Recovery Programme and the success of the efforts of the British people to meet and overcome the grave problems which they have had to face. The United States Government is especially pleased to see so prominent an example of the success of the European Recovery Programme at this early date.

His Majesty's Government desires to express on behalf of the whole nation its deepest gratitude to the Government and people of the United States for their unprecedented generosity in giving freely to Britain at a critical moment in history the means to regain her economic independence and power. [HON. MEMBERS: "Hear, hear."]

That is the end of the statement. It only remains for me to add that I am sure the whole House will give its warm approval to the sentiments expressed in the last paragraph. We are not an emotional people and we are not always very articulate. But these characteristics should not be allowed to hide the very real and profound sense of gratitude which we feel towards the American people, not only for the material help they have given us but also for the spirit of understanding and friendship in which it has been given. [HON. MEMBERS: "Hear, hear."]

Mr. Eden

I am sure the whole House will endorse the concluding paragraphs of the Chancellor's statement. No generosity could have been more freely given, or more warmly appreciated, than that of the United States to us in this immediate post-war period, and not only to us, but to a much wider sphere in the world. Equally, I think we accept that in the light of the heavier burdens which the United States is now carrying in so many spheres, it would neither be pos- sible nor reasonable to ask of her a continuance of the aid on the same scale as we have enjoyed it. At the same time, may I ask whether the Government would agree—in fact, I think it is apparent from the terms of the statement that they do agree—first of all that this improved position is, in part at least—I would say an important part—due to fortuitous circumstances, the rise in the cost of certain raw materials, stock-piling and the consequence of that on the balance of payments? Therefore, while we rejoice that this is the position, we should not think it is due in a large part to circumstances other than passing circumstances—I do not know why that should amuse the hon. Member for Devonport (Mr. Foot).

Mr. Michael Foot

It amuses me very much because I was wondering when the right hon. Gentleman would pluck up courage to say that this remarkable economic recovery was due in part at least to the great productive effort of this country under a Labour Government.

Mr. Eden

Since the hon. Gentleman has seen fit to make that interjection, perhaps he has also done me the honour to read my speeches in which, over and over again, I have paid tribute to what has been done by our industry and, I have added, in the main by private enterprise industry.

Perhaps I may return to my topics which were not originally intended to be couched in a controversial tone. May I say that this is, in part at least, a temporary situation against which we must guard, and I have no doubt that the Government have this in mind. Finally, may I ask what will be the position as a result of this decision in respect of raw materials, some of which are indispensable to us, from the American continent, and upon which indeed, not only our national economy but our whole rearmament programme depend?

Mr. Gaitskell

The right hon. Gentleman is perfectly right, and I think the statement made it plain that there are undoubtedly temporary factors in the present situation. That is understood by the United States Government, and one, at least, of the reasons why Marshall Aid is suspended and not ended. We can if necessary, go back to them should the need arise, although, of course, we all hope it will not.

As regards raw materials, I think the right hon. Gentleman can be assured that the difficulty there will not arise, for the moment at any rate, from any scarcity of dollars, and will not therefore be affected by this decision. It is a problem of physical scarcities and one on which, as the Prime Minister said the other day, discussion took place in Washington.

Mr. Mikardo

Will my right hon. Friend give the House a list of those countries which were receiving Marshall Aid which have Conservative Governments, and which have been able to suspend it?

Mr. Gaitskell

The information is surely available to my hon. Friend. I should not have thought that it was necessary for me to publish a statement.

Mr. John Hynd

In view of the closing remarks of the right hon. Member for Warwick and Leamington (Mr. Eden) with reference to the importance of the raw materials situation, having regard to the efficiency with which private enterprise has brought us through this difficulty, will my right hon. Friend leave that question entirely alone and leave it to private enterprise?

Squadron Leader A. E. Cooper

Will the right hon. Gentleman bear in mind that in 1950, the chemical industry has imported very substantial quantities of goods under Marshall Aid? Can there be any assurance to the chemical industry that in view of this new announcement they will not suffer in any way during 1951?

Mr. Gaitskell

I think my answer to the right hon. Member for Warwick and Leamington really covers that point. As far as I can see at the moment, there should be no difficulty in finding the necessary dollars to pay for the imports of raw materials. The great difficulty is physical shortage.

Mr. Sydney Silverman

Does my right hon. Friend agree that his statement means that, quite apart from the defence programme, in spite of the gloomy prognostications of the Opposition for five years this country has, in fact, achieved its independence of exceptional aid well within the period that we set ourselves to achieve it in when we began our programme?

Mr. Gaitskell

I think we should all agree that with the very great assistance of Marshall Aid and the efforts of our own countrymen, we have achieved a remarkable recovery in a much shorter time than seemed possible.