§ 3.41 p.m.
§ THE LORD PRIVY SEAL (THE EARL OF LONGFORD)My Lords, with permission of the House I should like to repeat a Statement on the economic position which my right honourable friend the Prime Minister is making in another place. The Statement is as follows:
"I feel it right before the House rises for the Recess to make a full statement of the Government's intentions about the way in which we are now engaged in deciding on the measures necessary to ensure that industry, trade, agriculture, indeed the country as a whole, take full advantage of the opportunity presented by devaluation.
"The Government have made clear that, in order to achieve a progressive and massive swing in our balance of payments over the next two years, a substantial diversion of resources will be needed to exports, to import replacement and to investment.
"The Statement of my right honourable friend the Home Secretary on November 20 outlined the first package of measures directed to this end.
"The Government have made clear that progressively up to the Budget, and indeed at any time afterwards, when this becomes necessary, steps will be taken to ensure that home demand, including Government expenditure, is not allowed to develop to a point where the necessary shift of resources to the 1288 priority purposes of earning a payments surplus is for one moment endangered.
"As my right honourable friend the Chancellor of the Exchequer made clear the intention is to ensure beyond all doubt that as exports, import-saving and investment build up, the resources will be available to meet them.
"It is our intention to maintain economic growth and rising employment, taking progressively the measures needed to shift the emphasis from a consumer-led expansion to an export-led expansion. At the same time it will be the determination of Her Majesty's Government not to allow that steady expansion, as it develops over the next year and into 1969, to degenerate into a situation of inflation and excessive pressure on resources and capacity.
"As the policy develops through the period of the Estimates, the Budget and subsequently, it will mean reductions in the growth of personal expenditure and reductions in the growth of public expenditure. On personal expenditure, the success of the Government's prices and incomes policy is of crucial importance. While I cannot anticipate my right honourable friend's Budget statement or any other measures which may be needed to restrain consumption, the severity of such restraint will clearly depend on the co-operation which the Government receive in implementing their prices and incomes policy.
"So far as public expenditure is concerned, the House will be aware, through long experience, that expenditure programmes take several years to mature and that decisions taken at any moment of time may have little impact on immediate Estimates. But decisions taken now can in certain spending areas have a growing effect in the second year and a decisive effect in the third and subsequent years, provided that the decisions are taken now.
"The examination of spending programmes which this involves is being tackled in a mood of urgency. While I should have liked to give the House all the necessary details before the Recess, honourable Members will I think agree, in view of the important nature of the expenditure areas to be 1289 considered, that it would be wrong to press on with over-hasty decisions without considering all the implications. Full details will be given to the House and the decisions which have to be taken will be taken in time to govern the 1968–69 Estimates, as well as subsequent Estimates.
"But I should tell the House this.
"First, we are not approaching this expenditure review, whether in respect of home or overseas expenditure, on the basis of candle-ends or simply on the basis of minor administrative economies, though we shall not of course neglect any opportunities here. Neither are we looking for prospects of under-spending or the shifting of expenditure from one financial year to another. We are bringing under stringent review all major areas of policy, both at home and overseas, where substantial expenditure is involved.
"Secondly, no area of expenditure can be regarded as sacrosanct for the purposes of the searching examination we are making; no spending commitment, whether inherited three years ago or incurred since.
"Thirdly, it will cover local government expenditure as well as Central Government expenditure.
"Fourthly, as I have made clear, the review will cover defence and overseas expenditure as well as home civil expenditure.
"The review as a whole is being related to what is essential in expenditure here at home and to what is appropriate at a time when we have been, and are, reassessing Britain's role in the world. This must involve overseas policy. In this connection the Government have completed their examination of the question of the supply of defence equipment to South Africa and have decided that their policy on this matter—namely, to conform to the Security Council resolution of June 18, 1964—remains unchanged.
"I should add that I have the authority of the whole Cabinet categorically to repudiate as inaccurate reported statements about the position taken by the Cabinet as a whole, by a Cabinet Committee which met a week earlier, and also about the position 1290 taken by the Prime Minister and other individual Ministers.
"When next month the House is given the results of our examination of all the expenditure programmes—and indeed throughout the further development of all our policies—I intend to ensure that the totality of decisions taken will be fair as between citizen and citizen; that while everyone must bear burdens, the burdens will be fairly shared; and that, while established assumptions and traditional spending commitments will have to be called in question and in appropriate cases sacrificed, the questioning and the sacrifices equally will be fairly borne.
"At the end of the day the Government will be responsible for achieving a fair balance, whether of economic or political sacrifice, and submitting it to this House. They will then call on the House to take its full responsibility in endorsing it."
My Lords, that concludes the Statement being made by the Prime Minister.
§ 3.47 p.m.
§ LORD CARRINGTONMy Lords, we must thank the noble Earl the Leader of the House for repeating this extraordinary Statement. Wherever we sit in this House, all of us have made it clear that our first interest is the state of the economy and the strength of our currency, for the national wellbeing of all of us and of our country is involved. But I believe that this Statement will have precisely the opposite effect to that intended. This is so transparently a device to try to obscure the issue of arms to South Africa by wrapping it up in an economic Statement.
This economic Statement, which incidentally we were told was not going to come until after Christmas except in an emergency (we were told that last week by the Leader of another place), really says nothing. It makes no definite economic proposals and takes no decisions save one—that is, that we are forgoing the large export order to South Africa. May I ask the noble Earl, in passing, what value can he place on that export order? I do not believe that this Statement is the right way to restore confidence. It may paper over the cracks in the Labour Party, but devices of this kind are in the long run very damaging to the country.
§ BARONESS ASQUITH OF YARNBURYMy Lords, I shall not attempt to comment, as the noble Lord, Lord Carrington, has done, on the long and complex economic statement which preceded the statement we were all waiting to hear—namely, that on the embargo of arms to South Africa. I rise, on behalf of my noble friends who sit on these Benches, to say with what wholehearted relief we have heard that statement. I am not attempting to speak for noble Lords below the gangway, but speaking, as I say, only for those who sit on these Benches. We heard with wholehearted relief that this country intends to stand by its pledged word, given at the United Nations in June. 1964, and also to uphold its long tradition of the challenge to human rights wherever they are in danger. We should like to congratulate the Prime Minister on his victory over those elements, whether in his own Party or outside it, who have attempted to persuade him to devalue our pledged word and our great tradition in defence of human rights.
§ THE EARL OF LONGFORDMy Lords, I am grateful to the noble Baroness for putting into those words her strong moral support for the line that we have taken in regard to arms for South Africa. I do not think it would be right (I must say this as she used a certain expression) to talk of enemies inside the Government; nor, except in a purely political sense, of enemies outside. There have been difficult problems here, and I do not think one need apologise that it has taken us a little time and some argument to make up our minds. In that respect we have no reason to feel inferior to those who make up their minds more easily. I am grateful for the general line the noble Baroness has taken, knowing what confidence her words on any large moral or political question command not only here, but so widely.
I am sorry that the noble Lord, Lord Carrington, was not able to agree with the noble Baroness and felt bound to disparage this Statement. I think when he has had time to read it more carefully—I realise that he has had only a moment or so—he will consider that it is of real economic importance. The noble Lord shakes his head; but the matters are not exactly where they were left on November 1292 20. Therefore I hope that, on reflection, he will feel that he was somewhat hasty.
§ LORD CARRINGTONMy Lords, I did ask the noble Earl a question about the value of the order from South Africa. Could he answer that?
§ THE EARL OF LONGFORDMy Lords, there was an inquiry but I am not sure that the full extent of the inquiry has been published.
§ LORD CARRINGTONMy Lords, surely the Government must know what they have refused. Surely the House is entitled to know what the Government have decided not to export.
§ THE EARL OF LONGFORDMy Lords, the Government certainly know what it amounts to, and I can say that it was an order which would have run over ten years. Whether the precise amount has been or will be published I am not certain at the moment. I can easily let the noble Lord know.
§ 3.54 p.m.
§ LORD GRIMSTON OF WESTBURYMy Lords, is the noble Earl aware—I think he must be—of the protests which have been made at the United Nations over many months past by the noble Lord, Lord Caradon, who is Her Majesty's representative there, in which he has pointed out "the prejudice, discrimination and double-talk" (these are his words) which go on in the framing of United Nations resolutions? Only last week he had to protest at the resolution on Gibraltar, described by him as "a disgrace, partial, misguided and contrary to the principles of the U.N.". How much longer, I would ask the noble Earl, are they going to allow resolutions passed under this sort of background as a cover for the sabotaging of British exports at a time when we are fighting for our lives in the export field?
§ THE EARL OF LONGFORDMy Lords, the resolution which was passed on June 18, 1964—I will read it, in case the noble Lord has not got it in mind—ran as follows:
That the Security Council reaffirms its call upon all States to cease forthwith the sale and shipment to South Africa of arms, ammunition of all types, military vehicles and equipment and materials for the manufacture and maintenance of arms and ammunition in South Africa.1293 May I point out to the noble Lord that this resolution was passed in June, 1964, before the present Government came in, and is one for which the United Kingdom actually voted?
§ LORD GRIMSTON OF WESTBURYMy Lords, I am aware of that; and if the noble Lord would like to join me in declaring that it was a great mistake to give that vote, I will come with him. But will he also remember that at that time it was pointed out that we were not going to use that vote to prevent arms for the defence of South Africa from being exported from this country. It is the noble Earl's Government who have refused these exports worth hundreds of millions of pounds. So do not let him try to get away with it by blaming the Tories for refusing these exports. They did not.
§ THE EARL OF LONGFORDMy Lords, I was not blaming the Tories. I do not think it is valuable to cast blame in serious matters of this kind. I was pointing out that this was a resolution, in the terms I have mentioned, which was carried by the United Nations in June, 1964; that we voted for it, and we in this Government intend to honour our word.
§ LORD MERRIVALEMy Lords, can the noble Earl say whether France voted for this 1964 resolution; and if France did not vote for it, does the noble Earl not feel that, in effect, we are making France a present of an order of £200 million?
§ THE EARL OF LONGFORDMy Lords, I do not work out my equations of international morality in quite that way. On the subject of France, I think we can all take a good deal of instruction and inspiration from the noble Baroness, Lady Asquith of Yarnbury, in view of some of the things she has been saying over the weekend. The answer to the noble Lord's question is that France, Czechoslovakia, and the U.S.S.R. abstained.
§ LORD ALPORTMy Lords, may I ask the noble Earl whether he realises that the Statement which he has read out will increase the cynicism with which people in this country regard politicians in general, and the Government in particular? Would he say what element in 1294 the economic content to which he has referred in the Statement is new. And would he say when there will be a Statement by the Government filling in the details promised in the Statement that we have just heard in regard to the action the Government intend to take, quite apart from the vague prophecies which the Statement appears to propound?
§ THE EARL OF LONGFORDMy Lords, if the noble Lord will allow me to say so, I often find myself more in agreement with him than do some of his colleagues. Therefore I am sorry to receive this statement of his about increasing cynicism in regard to the present Government. He asked me what is new. It indicates a new approach, a new expenditure review; and it does in that sense go further than the Statement of November 20, in which £400 million worth of cuts were indicated. The noble Lord wants to know what it does, and I tell him that it takes us beyond the Statement of November 20. I am sorry that he should talk about cynicism. I do not think that helps anybody.
§ LORD OGMOREMy Lords, while we naturally support the Government—
§ LORD OGMOREWhat is wrong with that? I said that "we"—I am talking about the Liberals—support the Government in carrying out the pledged word of the Government of the day. I cannot understand the Opposition objecting to the Government's carrying out something which they entered into. I think that the cynicism is on the Conservative Benches. But I want to ask one question that I think is important. What steps are the Government going to take to make sure that other countries who also either voted for or did not vote against this resolution will carry out their obligations, too? Are we going to be left as the only people who carry out our pledged word, or are we going to see that others do the same.
§ THE EARL OF LONGFORDMy Lords, it would be wrong to suggest that most other countries are breaking the revolution, but, as was pointed out by the noble Lord, Lord Merrivale, three countries abstained; and they might not feel the same degree of obligation. I sympathise with the noble Lord's point 1295 of view, and if he has any suggestions for persuading these other countries to behave correctly, Her Majesty's Government will be glad to receive them. But we are not omnipotent in matters of this kind.
§ LORD CONESFORDMy Lords, may I ask the noble Earl the Leader of the House two questions? Is it the policy and intention of Her Majesty's Government that the South African Government should not be able to defend their country against external aggression? If that is not the object, can he say what purpose of morality is served by the South African Government's having to obtain supplies from other countries? The second question is this. Can he say what effect this decision will have on the fate of Simonstown?
§ THE EARL OF LONGFORDMy Lords, I cannot answer the second question, because no one could answer it at this moment. But, as regards the first question—I am not quite sure whether the noble Lord was here when I made my Statement—
§ LORD CONESFORDMy Lords, I am afraid that I was coming across from another place. I apologise for that. I thought that the Statement made here was the same as that made there.
§ THE EARL OF LONGFORDThe noble Lord and I are very old friends, and he is a much-respected Member of the House, but I deprecate the course of hearing Statements there, picking up some supplementaries, and bringing them here.
§ LORD BARNBYMy Lords, arising out of the noble Earl's reply, in which two points were particularly made—that no policies would be sacrosanct and exports particularly were to be given support—may I ask this question? Is he aware that in the National Export Council, whose expenses are borne to the extent of 50 per cent. by Her Majesty's Government, the Central Council Chairman, and the President and Chairman and the whole of the Committee of the Southern African Area have all made representations to the appropriate Ministers as to the dangers that may be attracted to our civilian exports to our third biggest customer by this decision? Secondly, has he noted that the dollar 1296 premium, by which foreign financial interests are accustomed to measure the strength or weakness of sterling, has already again, since devaluation, risen to 32 per cent., and therefore presents a sad picture of the measurement of the effect of the Government's policies on sterling in the money markets of the world?
§ THE EARL OF LONGFORDMy Lords, with great respect to the noble Lord, I do not think that the last point arises to-day, certainly not in the form of a question. If we have an economics debate, he would no doubt wish to bring those points forward. If the noble Lord asks me whether I am aware that certain gentlemen helping this country a great deal in regard to exports might have come to a different decision, I am ready to believe that it is so. This is not an easy question, because the economic arguments lie in one direction and the moral and political arguments lie in another. A balance has to be struck by the Government of the day, and not by any particular group of businessmen, however patriotic.
§ LORD CONESFORDMy Lords, since the noble Earl implied that my questions were prompted by something I heard in another place, may I say that neither of the questions I asked was raised at any time while I was there?
§ THE EARL OF LONGFORDMy Lords, I am quite ready to believe it. I just wondered whether the custom of Members listening to a Statement there and then putting questions here would help this House.
EARL JELLICOEMy Lords, may I ask the noble Earl two questions? I was a little surprised to hear what he had to say about the Simonstown Agreement. I should have thought that the Government would have weighed very carefully this decision which they have just made about arms to South Africa and the repercussions of that on the Simonstown Base and the Simonstown Agreement. Would he not agree with me that the closure of the Suez Canal has greatly enhanced the importance of the Base and, indeed, of the Agreement? Secondly, I think I heard aright that the Statement said that the Government were bringing under stringent review all major areas of policy at home and abroad. Only a few months 1297 ago we were told that the long-continuing process of review of defence policy was at an end. May I take it that the Statement means that this review of defence policy is once again to be re-reviewed?
§ THE EARL OF LONGFORDMy Lords, as regards Simonstown, I hope I did not give the noble Earl the impression that this matter has been dealt with lightly. Those most directly concerned have weighed it up very carefully. But I am not in a position this afternoon to make a forecast of the effect, if any, on the situation there. But I should not like to give the impression that one did not treat it as a serious matter. The short answer to the last point of the noble Earl's question is, I believe, contained in the Statement, which he will see when he has more time to study it. All forms of expenditure will come under careful review.
§ THE EARL OF LONGFORDMy Lords, if the noble Earl likes to frame a question and then to answer it, he may do so. I prefer to fall back on words in the Statement, which I think will be more enlightening.
§ LORD GIFFORDMy Lords, may I say that we are heartily glad that the Government have stuck to their principles on the question of arms to South Africa? May I ask the noble Earl whether he can assure the House that, as a result of the further defence review, further cuts of outmoded defence commitments and expenditure will be made, so that this country has a foreign policy which it can afford and which is based on morality?
§ THE EARL OF LONGFORDMy Lords, I am grateful to the noble Lord for what he has said. I know how deeply this goes to the heart of the Labour Party and what it stands for, and to the hearts of many people, such as the noble Baroness, Lady Asquith of Yarnbury, and others in no way connected with the Labour Party. About defence, I can only repeat what I said to the noble Earl, Lord Jellicoe. Everything will be reviewed. I should not like to give the impression that, without this further review, we are landed with a lot of outmoded equipment which is inefficient.
§ LORD OAKSHOTTMy Lords, will the noble Earl accept that there is no monopoly anywhere of moral feeling and moral principles? Many of us feel that, particularly in the context of this South African problem. None the less, is he aware that, hand in hand with growing prosperity of the Republic, the material wellbeing of the African population has shown, and continues to show, marked improvement? Therefore, both in their interests and in view of our own economic plight, surely there is everything to be said for pursuing all markets, even defence markets—though perhaps on a selective basis—in order to broaden our trade with them and expand the volume of it in both directions.
§ THE EARL OF LONGFORDMy Lords, the noble Lord is entitled to put that point of view, but obviously the Government do not consider that, on balance, it prevails. I quite agree that when we are talking about South Africa we must think about all the people in South Africa and consider the effect on them. But, weighing everything up, we do not consider that a step in complete defiance of the United Nations would be calculated to improve relations between white and black people in the long run in arty part of the world.
§ VISCOUNT MASSEREENE AND FERRARDMy Lords, may I put a very short question? How does the Prime Minister expect a growth in the economy and soaring export trade, with bank rate at 8 per cent., the most crushing taxation of any country in the world, and apparently, as we have heard, a trade policy tied to the political ideologies of the Socialist Party?
§ THE EARL OF LONGFORDMy Lords, the noble Viscount will not expect a Socialist to answer that, because he will feel that a policy which is tied to Socialist principles has an ultimate and obvious condemnation, while I, of course, take pride in it.
§ LORD HANKEYMy Lords, in applying the extra squeeze now forecast, will the Government bear in mind the necessity for a greatly increased rate of production investment in this country, particularly, for example, in power stations and communications, which are vital for expansion of production in future? Will they also bear in mind that, unless some 1299 protection can be given to the right to work and to produce, we shall have a permanent excess of demand over supply and the squeeze will be entirely frustrated?
§ THE EARL OF LONGFORDMy Lords, I assure the noble Lord that the very sensible points he has just brought forward will be borne very carefully in mind.
§ LORD BARNBYMy Lords, may I apologise to the noble Earl for interrupting him? But arising out of the earlier question, on which I misunderstood him, may I ask whether there is any precedent for a general financial Statement being made just before the Recess, without an opportunity for a general discussion?
§ THE EARL OF LONGFORDMy Lords, I should hesitate to answer that question offhand, but I should be very surprised if there were not precedents.