HC Deb 17 April 1956 vol 551 cc874-6

I have now finished my account of the past year and my estimate of the prospects for the coming year, both in the financial and in the economic fields. I am grateful for the patience with which the Committee has listened to this necessary but somewhat arid exposition. I now turn to my main proposals. All of them, although in different senses of the word, may be regarded as having the same purpose; they may all be summarised by the word "Savings".

First, I would like to deal with personal savings. If we are to get our balance of payments "out of the red" and restore an adequate margin on the right side; if we are to press on with investment in the means of production at home and overseas, our first and most urgent need is to restore, maintain and develop, among all classes of our people, the habit of saving.

Some modern critics will, of course, tell us that the only prescription for inflation is a large Budget surplus. Does anyone read Dickens nowadays—except, of course, the Russians? If so, they will remember Mrs. Pardiggle in Bleak House. "My family," boasted this philanthropic lady, "are not frivolous. They spend the whole amount of their allowance in subscriptions, under my direction … they enrol their contributions, according to their ages, and their little means." Just so—first pay out far more money to the people than it is good for them to have. Then take it all off them again by taxation. It is as simple as shelling peas.

This method is called "public saving"—that is, an excess extracted from the citizens, singly or corporately, above what is necessary to carry on the work of Government. But what may be necessary for an emergency cannot be erected into a system. In war, we give up many of our liberties in order to secure them all. But if we make a habit of it, it will grow on us—or rather on our masters—and we shall never escape. Mrs. Pardiggle will reign in Treasury Chambers for ever.

I can—and in times of difficulty like this, I must—reinforce and sustain the efforts of private savers, individual or collective. But it will be a far better thing when the habit of saving has been so rebuilt and reinforced that a Chancellor can begin to reduce the terrible burden of taxation, so oppressive to energy and effort and enterprise in so many spheres, and when he feels that he can do this without risking a serious degree of increased consumption and a fresh inflationary crisis.

He will best be encouraged on such a course when he is confident that reduced taxation would largely and almost automatically pass into the increased savings of a prudent people. In the meantime, while I must continue to make use of the processes described by the hateful phrase, "public saving," I want to do all I can to encourage the efforts of the private savers. I have some plans for a start.

It is customary for the Chancellor to pay his tribute to the National Savings movement and its voluntary workers. This is no empty ceremony. With all our political differences, we in this Committee are united in our acceptance of the need for savings and our support of the savings movement. It has been a difficult year for the movement. A fine summer does not nourish savings; although, as I have already observed, it helps the Exchequer in other ways. Nor do rising prices help, even accompanied by rising wages. For these and other reasons, we cannot declare a net gain in the field of small savings in the last financial year. This is, I know, a disappointment to the movement and its leaders. But it has no cause to be discouraged. I have complete confidence in its ability to play a decisive part in my plan of campaign for 1956. For the news I have for Lord Mackintosh and his movement is that I am moving them right into the front line, with new objectives and equipped with new ideas and new weapons.

First, the objectives. The financial critics tell me that I must reduce bank deposits and the floating debt if I am to reduce the money supply. Very well. Let us see bank deposits turned into National Savings. As the National Savings rise the Treasury bills will fall. In this way, the National Savings movement will carry out a funding operation of the most effective and beneficial kind, and will prove itself a powerful ally in the battle against inflation, Therefore, I say, let its first slogan be, "Save to Fund: Save for Solvency: Save for Security."

There is, however, something more. One of the most important tasks before us today is to ensure that, while maintaining our world-wide approach to the problems of trade and finance, we should lose no opportunity of taking a lead in strengthening the economic ties between this country and the Commonwealth and between this country and Europe. Thus, we should aim at developing the mutual interests of these great groupings within the framework of our wider policies. For this, our position at home must be strong.

Nothing is more important than an accumulation of savings. We must have capital resources. We must have stability for our currency. We must have ammunition in the cold war, to develop other countries as well as our own, and to play our part in the struggle for the soul of the neutral world. So I say that we must save to be free. Aye, and I am not ashamed of it—save to be great!

So much for the new objectives. What are the new weapons? The first and greatest need of the Savings movement is confidence in the currency. The saver needs to be assured that money will not lose its value. In this, the Budget must play its part. But the thoughtful saver will also realise that this is a matter in which he is helping himself, because a vigorous Savings movement is itself the best protection that we can have against inflation. But if the movement is to be vigorous it must have new securities to sell, and I will try to give them.