§ I have been talking about 1961–62, but it would be wrong to form a judgment about the coming year without taking into account some of the longer-term trends in the economy. It would be quite wrong to think that the solution to our problem lies simply in stimulating higher and higher investment. Nor can it be found by the Government giving priority to economic growth over the balance of payments and the maintenance of price stability. I have said in a previous speech that we have the capacity to raise our national production by at least 3 per cent. per annum over a period of years, but it is a condition for doing so that our exports should increase by a much larger percentage. The key to this double achievement is the strengthening of our competitive power.
§ It is wrong to think of more rapid growth and a healthy balance of payments as being, in the last resort, competing objectives. The problem before us is not whether we should sacrifice the balance of payments to achieve a faster economic growth, or alternatively accept economic stagnation in order to safeguard our external position. The question, to my mind, is whether our economy is sufficiently resilient and flexible to cope with the demand of the home market and the need for increase exports. The ordinary processes of political controversy make the public discussion of this sort of question often less objective than it might be. If the Government of the day say anything is good, they are accused of complacency. If they say anything is bad, they are accused of admitting the failure of their own policies, and whatever criticism the Opposition of the day may make, the Government always accuse them of irresponsibility. Trying, however, to be objective, I would answer my question along these lines.
§ It is true, of course, that we have to carry our world-wide political and economic responsibilities, which are relatively greater than those of almost any other country in the world, and that this has been a very serious constraint upon our freedom of manœuvre. But, after 801 making all allowances for this, there are things that are wrong in our approach to our economic problems. There is the danger that we try to do too much at the same time—a high and growing level of consumption, a large defence effort, expanding social services and high levels of investment in the public and private sectors—all the time knowing that we have to earn our living in the world by exports. Our productivity is held down by shortages of skilled labour.
§ I am not satisfied that in all cases the two sides of industry are tackling this problem with sufficient energy. There are too few scientists and technologists. There are features in our tax system which make for inadequate rewards for initiative and enterprise. Again, some of our industries are insufficiently accustomed to competition and insufficiently aware of the need for technical improvement if they are to hold their own with their overseas competitors. The reduction in tariffs, for which we are working, may have a beneficial effect in this respect. Labour relations, standards of management, techniques of selling, are, in some cases, below what is needed in the present day world. Certain industries are still, in my view, handicapped by restrictive practices which are completely out of date. There is much that is good about British industry, but there is quite a lot that is not good enough.