Motion made, and Question proposed,
That a Supplementary sum, not exceeding £20,140,000, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1953, for expenditure of the Ministry of Materials in connection with the procurement and maintenance of strategic reserves.
§ Sir A. Salter
I think this Estimate is less likely to be open to serious question. We are asking for an extra £20 million for strategic reserves. The reason for this is that during this year we have found better opportunities of obtaining certain strategic materials which we did not think we should be able to obtain this year, and we have taken advantage of these opportunities. I am sure the Committee will be glad that we have done so. The extra cash involved corresponds with real value in the commodities we have acquired. It involves no threat of inflation, for extra goods, corresponding to the expense, have been acquired and stored. 748 Though our reserves of foreign exchange are less than they would have been if we had purchased less, we have, as part of the country's real assets, the value of the extra goods bought. We have, therefore, real value for the extra money we have spent during the course of this financial year.
§ Mr. Stokes
I do not dispute the policy of holding a strategic reserve at all, nor do I dispute the question of what is or is not good value. Obviously, if there were a crisis it would all be very good value indeed. I am glad to hear the Minister say that it is all being done with due regard to what I call economic purchasing and that there is an avoidance of the quick rush that took place in the international market following the outbreak of the Korean conflict.
Despite the Minister's assurance, what puzzles me is how to tie this up with the assurance given by the Chancellor last year about his intentions. In a statement in the debate on the Address on 7th November, 1951, the Chancellor, talking about the reductions he was going to make to bring about adjustments of the balance of payments and so on and the spreading of the defence programme, said:Third, we propose to slow down the further carrying out of the strategic stockpiling programme instituted by the previous Government. Good progress has been made on this … and our hope would have been to maintain this progress."—[OFFICIAL REPORT, 7th November, 1951; Vol. 493, c. 199.]And four or five months later, on 11th March, 1952, the Chancellor said in his Budget speech:… the provision for strategic stockpiling is reduced from £143 million to £61 million in the current year."—[OFFICIAL REPORT, 11th March, 1952; Vol. 497, c. 1285.]I am trying to tie up those figures with the figures now before us. I know that they probably do not refer to the same thing, but the difficulty that I find is to reconcile these matters. Is the policy which the Minister is following in accord with what the Chancellor intended? I do not in the least mind if it is not, but I should like to know. The Chancellor said that he was going to run down stockpiling and here the Minister says, "I want a great deal more than I estimated that I wanted." Will the Minister make the position clear?
§ Sir A. Salter
As the right hon. Gentleman realises, the two sets of figures are quite different and cannot be related one to the other. He will remember that last March we were in a very desperate foreign exchange and particularly dollar crisis. What the Chancellor did, among other things, was to ease the strain by restricting dollar purchases of strategic materials. But there was not a similar and equal restriction of purchases of strategic reserves coming from other sources. If one takes the purpose of the Chancellor's original policy and statement and the actual course of what has been happening one will not find the inconsistency that the right hon. Gentleman suggests, although of course there has been a certain modification in the position as the emphasis in our balance of payments problem has changed.
§ Mr. Stokes
Let us agree that both the Minister and the Chancellor were acting in watertight compartments and that the Chancellor was not paying any regard to what the Minister was doing and the Minister was not paying any attention to the Chancellor, but what I find strange is that the Chancellor did not say that we were going to run up and increase strategic stockpiling but said that we were going to run it down. He said it twice in five months in that period, and in the latter part of 1951 the Ministry prepared estimates of stockpiling for 1952–53. Therefore, it comes as very surprising that the Estimate of £49 million is increased to £65 million. One would have expected the Estimate for 1953 to be something greater or the actuality to be something less.
§ Sir A. Salter
The right hon. Gentleman will realise that the Chancellor's purpose was to restrict foreign exchange, particularly dollars. He will also realise that there have been opportunities of moving some commodities from the public trading stock to a strategic reserve without involving increased importations from abroad. That is one of the factors, though not the whole explanation.
§ Mr. Osborne
On the question of price policy, could my right hon. Friend assure 750 us that the price he is paying for this unexpected windfall of materials, for which we are asked to vote an additional £16 million late in the financial year, is not greater than the price ruling at the beginning of the year when the original Estimate was brought before us? I ask for the reason that he said that we bought when things were dear. I should like to have an assurance that we have not paid through the nose for this.
§ Sir A. Salter
I thought that I had explained earlier, but it was misunderstood, about buying dear and selling cheap. Of course we do our utmost to buy these strategic materials when we have a certain choice and the opportunity is given to obtain the materials cheap. I could not make an exact answer to my hon. Friend the Member for Louth (Mr. Osborne) as regards every commodity without taking each one by one, but in general we are taking advantage of good opportunities of buying when the going is good.
§ Lieut.-Colonel Sir Walter Smiles (Down, North)
I agree with the right hon. Gentleman the Member for Ipswich (Mr. Stokes) when he throws compliments and bouquets at the two Ministers. As far as I can see, the impression was given abroad that the British Government were not in the market for strategic materials and the prices dropped. Then some other Minister comes in by the back door and buys these materials much cheaper. I commend that policy. It is bad policy indeed when one advertises to the whole world that the British Government are in the market for strategic materials and immediately prices go up. I hope that the Government will continue the policy of buying as cheaply as possible.
§ Question put, and agreed to.
§ That a Supplementary sum, not exceeding £20,140,000, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1953, for expenditure of the Ministry of Materials in connection with the procurement and maintenance of strategic reserves.