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Speech Archive

Leader's speech, London 1974

Harold Wilson (Labour)

Location: London


This conference was the first since the election of a minority Parliament in February 1974, and Labour’s victory in the general election held in the October of the same year. In this speech, Wilson argued that Labour’s Social Contract, which was intended to ensure a fairer distribution of resources and burdens throughout society, represented Britain’s best hope of economic recovery. The alternatives were a reduction in public spending or an increase in taxation. He also pledged to tackle the problem of insufficient investment in industry by reinstituting the Industrial Reorganisation Corporation under the ambit of the National Enterprise Board (NEB), and investing public money in Britain’s industrial assets.

Mr. Chairman, Fellow Delegates, I present to Conference the report of the Parlia­mentary Labour Party. This must be the first time in the history of our Party that the Parlia­mentary Report presented by the Leader spreads over not one, or two, but three Parliaments.

It covers the last dying months of the Con­servative majority Parliament (June 1970 to February 1974); the Parliament of minorities elected last February - the shortest Parliament in our history since 1886 - and now the Parlia­ment elected for five years, with a Labour majority. (Applause)

It has been a long 13 months, an historic 13 months, since Conference last met at Blackpool.

Those months spanned the greatest trade crisis of all time, not only for this country but for the whole of the industrialised world; the greatest industrial tragedy - unnecessary, utterly futile - in this country for nearly 50 years; and two General Elections which have transformed an outlook of despair into a prospect of hope for our country.

The Tories ran away from Government last February, but they ran away only just in time. Had they stayed any longer, disaster might have been inescapable.

You know, I am proud of our record in that short Parliament - not only of the good we have done but of the harm we have undone - beginning with the repeal of the Industrial Relations Act and the Housing Finance Acts and the scrapping of so many other measures by which the Tories had damaged the harmony and unity of our people. 

Despite the difficulties of that short Parlia­ment, despite a minority situation exploited in the division lobbies by our opponents with great bravery once they were sure that the holiday period prevented me from calling an immediate General Election - despite all these things - we moved faster to carry out the policies on which we had been elected than any Government since the War, not excluding the Attlee Govern­ment of 1945.

But not fast enough, apparently, for some. I was interested to read on the tape machine yesterday morning - at 8.17 a.m., 73 minutes before Conference began - a forecast of widespread attacks you were going to make upon the Government because, among other reasons, and I quote ‘the Manifesto on which the Election was won has not yet been implemented.’ (Laughter)

Well, I know we are quick workers, but it is only six weeks since we were elected. For once, I think I have the right to plead for a little more time.

The key to our success in October was that we were seen to be carrying out the pledges we gave to the people in February - pledges which were part of the programme on which the Party as a whole had worked so hard in the years of Opposition, the programme which produced the finest manifestos ever put before the electors of this country. (Applause)

But what October, the fourth election victory in less than ten years, means is this: that the Labour Party is now the natural patty of Government, not the natural party of Opposi­tion. (Applause)

Assuming that. this Parliament lasts its full course - and I do not see any reason why it should not, still less do I see any sign of a credible opposition to it - then of the 15 years from October 1964 to October 1979 Labour will have been in power for close on 11 years.

Today, this week, we have to examine - as the Parliamentary Labour Party has been doing since the election - the implications, the challenges and the responsibilities of having a Party no longer of Opposition only, no longer of protest only, but a Party of Government.

But let not that be taken by any of us, Cabinet or other party workers, Members of Parliament or local authority representatives, as meaning that we are no long a Party of protest. Were any of us to do so, then our position as a Party of power would wither at the roots, and it would deserve to do so. Labour is a Party of protest in Government as well as in Opposition. There is no one else. Protest against inequality, injustice, waste, the abuse of power, anti-democratic forces at home and abroad.

Should the Party abandon its posture of protest or its ability to make that protest effective within the democratic processes of the Party, then there is no future for us. And worse, no future for Britain.

I say this with a greater confidence because within our great national democracy I see displayed no qualifications for meaningful protest on the Opposition benches of the House of Commons. The principal Opposition party has become a territorial rump: rejected by Scotland, rejected by Wales, rejected by our main industrial and urban areas north of the Trent; they are now a regional party. (Applause)

It was because the nation remembered in October the Tory years leading up to last February. We had a Tory Government presid­ing over a Britain with the largest trade deficit in her history, a devastating trade deficit, four times greater than the one they left us in 1964 - the one we resolved.

And that deficit last autumn had accumulated before we felt - almost before we began to feel - the full impact of the oil price increases. 

It was a Britain where industrial growth had stopped.

Where prices were out of control.

Where Government-induced speculation was rampant, as house and land and commodity prices soared to all-time record levels.

Where, just before they lurched into the State of Emergency and the three-day week, their leader was proclaiming to the Institute of Directors last November that the only prob­lems Britain faced were ‘the problems of success.’

Today, with a Labour Government, now that the fight-back for Britain’s recovery is under way, it would appear that the Conservative Party consider they have a vested interest in national disaster, in talking Britain down, in exulting only when they perceive some event, some report, some statistics which can be turned to their own political advantage.

I regret seeing a once great and historic party now presenting an image of nothing so much as that well-known, down-at-heel, sandwich board character who parades down city streets proclaiming, ‘Prepare to Meet Thy Doom.’

Well, it’s a living. It has the advantage that no one can prove him wrong. (Laughter) Or right, either. But at least the sandwich man - I am talking about the trained one - does main­tain a day-to-day consistency. There is no record of anyone in that particular profession losing his credibility by proclaiming: ‘the world ends tomorrow, but I’ll see you get 9½ % mortgages by Christmas.’ (Laughter)

Mr. Chairman, having said that, I do not propose to spend any more words on the Con­servative Party. There are more important things this morning for us to discuss.

For this is the Conference where we accept, as the nation clearly wants us to accept, the obligation of being the Party of Government.

We have the duty to act responsibly, to tell the nation the facts, and what in our view must be done if the unparalleled problems and crises this country now faces are to be overcome, conquered, challenged, converted into oppor­tunity.

We have been elected on the policies that we have proclaimed with total clarity in two Manifestos within a single year.

We were elected because our record, even as a minority Government, in turning those pledges into reality, impressed all our people, and many others who had not traditionally supported Labour. We were elected, also, I think, because the country judged, setting one team of men and women against another, that we were the better team, the more experienced, the more compassionate and understanding.

Above all, I believe we were elected because the people of Britain recognised the nature and depth of the challenge we face as a nation.

They realise that the going from now on will be tougher than we have known in this genera­tion. They recognise that this national challenge can be met not by confrontation and divisive conflict, but only by comradeship and co-opera­tion and care and concern.

Our mandate is to ensure that as the going gets tougher and tougher up the hill - as it will - that, in the words of the old Socialist story about the stage-coach going up-hill, the order must go out to the nation … ‘Everybody who is able-bodied, regardless of rank or class, gets out and shoves. But if there are any among us who are unable to play their part through illness, age, infancy or disability, they, and they alone, are free to ride.’

Let it be absolutely clear: the problems we face are not what the Conservatives called ‘the problems of success.’ At home our industries have, for far too long, suffered from under­investment - in new and modern machinery, in the necessary expansion of the growth sectors of our economy.

In the world at large the balance of economic power has fundamentally changed almost before our eyes, particularly the balance of power between those who produce the raw materials of the industrialised world, and those who import and consume them.

In some respects, this was long overdue; the advanced industrial world had benefited at the expense of the primary producers.

But the change that has occurred with so much rapidity has created great inequality between developing countries. Some of them - oil producers, producers of copper and other raw materials - are receiving an uncovenanted benefit. Their balance of payments, their national income and the income of their pro­ducers have been greatly expanded.

But the other developing countries, the countries without the right raw materials, the countries of what is now known as the Fourth World - they have not only gained nothing from the commodity boom, they are actually crippled by all that this means in terms of further burdens on their already unbalanced trade and payments.

The standard of living of their people, already, abysmally low, falls even further, as they have to pay more for the raw materials they need and for their food.

For when the price of oil soared so astrono­mically it not only hit the powerful trading nations of Europe, of America and Japan. Still harder, it hit those Fourth World countries already facing famine, deprivation, disease, premature death, and natural disasters, flood and drought.

For Britain, what the economic crisis means is that oil alone has added an extra £2,500 million on our import bill every year. That is a surcharge of over £2 a week - £2 a week every week - upon every household in this country.

From there we start, and that oil increase came on top of a trade deficit which already approached £2,500 million in 1973. It came when prices were already soaring, in some cases forced upwards by deliberate Conserva­tive Government action. Inflation was not created by the oil crisis; it was aggravated by it to an unprecedented degree.

A year ago, as the country was moved into that disastrous confrontation with the miners, the political battle about inflation was to some extent an argument about wages and prices: which was the causal factor, wages forcing up prices, or prices forcing up wages? Since then, more and more it has been acknowledged that at that time it was prices which gave the twist to the inflationary spiral, with wages, statutorily controlled though they were, struggling to keep pace.

That was why we insisted, in Opposition, not only on stricter price controls of manufactured goods, but on much more effective action to deal with the main items entering into an ordinary family’s budget - above all, food prices and housing. That was why we demanded, in the February election, the introduction of food subsidies on the main essentials.

That was why we fought so bitterly against the so-called prices policy of the Conservative Government. That was why we reversed the Conservative housing policy which, so far from controlling the cost of housing, insisted with the force of law that reluctant local authorities must force up the rents of 5 million families - to say nothing of the action taken against those living in private rented homes.

Think how much more the cost of living of the average family since last February would have risen had we not so acted on food prices and housing.

But, just as we emphasised a year ago that it was prices and rents that were forcing up wage claims, so we warned even then - as we have warned in the two Elections - that as world prices other than oil began to moderate, the inflationary threat here in Britain would come more and more not from external prices but from our own incomes and wages.

In public and private industry now, it is wage costs which threaten to provide a new infla­tionary twist.

There are some - perhaps even within our own movement - who are tempted to ask, ‘Why all this fuss about inflation: why, if we cannot control it, don’t we relax and enjoy it?’

The short answer is that inflation is the enemy of everything we believe in, in this movement.

By its very nature, it is above all the enemy of democratic socialism, of everyone who seeks greater equality, full employment, and social justice.

When the Labour Party and the TUC met to hammer out the terms of its joint document, ‘Economic Policy and the Cost of Living’ - the Social Contract - we agreed from the outset that inflation is fundamentally arbitrary and unfair - a divisive redistribution of wealth and income.

It is a redistribution not according to any Socialist principles we recognise and pursue. Indeed, inflation can, and so often does, benefit the rich at the expense of the poor, because only those with power and financial resources can acquire and manipulate the kind of assets which actually increase in value with inflation.

The less well-off have no such protection from the remorseless squeeze which inflation puts on the cost of feeding and clothing a family, or on the value of a small nest-egg of savings, or on the millions, mainly the old, who are living on fixed incomes.

But inflation is not only capricious and inequitable in terms of redistribution of our national wealth and income. Inflation is the father and mother of unemployment for our people, and of insecurity for their families.

It is an illusion to believe that big money wage settlements protect you from rising prices. They make them rise faster. 

It is an illusion to believe that they are an instrument for maintaining social justice; on the contrary, they destroy social justice.

It is an illusion to believe that they protect you from the loss of a job. They make that loss more likely.

Inflation means that those who are concerned with the social wage, the family protection provided by the social services, those who are battling to create a decent social system, all these are fighting a losing battle because of inflation.

The Welfare State, on which the post-war Labour Government set Britain’s course, has provided, in terms of health, housing, educa­tion, and social security, benefits which are spread throughout the land and through the whole social scale.

Socialists have always preached that a civilised society can be judged above all by the social provision that it makes for the least favoured of our people, the standard of living it provides for those least able to help them­selves.

I am proud to have appointed Britain’s first ever Minister for the Disabled, whose social work through the Chronically Sick and Dis­abled Persons’ Act years ago had already begun to help millions of families and individuals. Everything Alf Morris and his chief, Barbara Castle, and her team, are trying to do in the whole field of social services is undermined by the threat of inflation, as are education and the people’s housing.

The social services, including the health service, are more labour intensive than almost any other sector of our national life. Wage and salary costs are a very high proportion of total costs.

The Social Contract means a fair division of our national resources, the fair sharing of sacrifices. It is not a scramble in which the big battalions, the powerful and wealthy, on both sides of industry, or in finance, or in any sector of the community, can exercise their power in order to get an unfair advantage.

No one should seek to take wealth for themselves which they have not earned, because that wealth will have been put into the national pool by somebody who did work.

For example, during the Stock Exchange panic in August, there were weevils at work, happily making money, out of shares that never belonged to them. The Sunday Times referred to a week of ‘pure senselessness in the stock market’ and went on ‘Bear selling was an important influence last week; men selling shares they do not own to drive the price down so that they can buy them back cheaper a few days later. Well-known merchant banks were at it. And so was at least one syndicate of stockbrokers, of the speculative sort most of us thought were wiped out.’

A day or two later, we read that someone had spread the rumour that a million ICI shares were going to he loaded on to the market and destroy the value. It was untrue and proved to be untrue, but somebody hoped to make a packet, and if they had it would have come from someone else’s sweat and skill and hard work, because these activities were creating and producing nothing.

Using power and ingenuity to avoid taxes also means that other members of the national family are worse off; and it has to be made up by higher taxes or reduced provision for the social services.

When, by selling shares overnight and buying them back the next morning to establish tax losses - the so-called ‘bed and breakfast’ fiddle - jobbers and brokers make a packet for themselves and the Exchequer is deprived of future tax revenue, it is an abuse of a fair society.

One big company was recently reported as scheming one of these bed and breakfast operations - a £30 million deal overnight. Just a couple of ’phone calls. A loss to the Revenue. An additional burden on other taxpayers, people much less well off. I wish it was always so easy for us in Government when money is desperately needed for a really worthwhile cause, like cars for the disabled.

The big battalions may feel they can protect themselves. They can. In the short-term but at a cost to those with less bargaining muscle. Ultimately, it would be at a heavy cost to themselves.

After all our experience in the previous Labour Governments - and the experience of democratic countries - I do not believe that in a democracy statutory control of wages can work for very long. And it cannot work twice. In no time at all you are having to deal with more problems than you ever solved by the statute.

And most of the problems we are facing today on the incomes front are an inheritance from Stage 1 and Stage 2 and Stage 3. Anomalies created by those rigid bureaucratic formulae. Members of our community who had been ignored for years - and for whom we are extending belated social justice - the nurses, the postal workers, workers in metropolitan transport services and, very soon, the teachers. And when our critics in politics, or press - and some of them are the same people - ponti­ficate about the wage rate or the earnings index, let them calculate how much of the increase they complain of represents the cost, the belated cost, of providing for those who had been left behind, and also the costs of the thresholds given statutory power a year ago.

But, Mr Chairman, if the law of the big battalions operates, it could break the Social Contract. Let there be no doubt about that. Then the only choices facing a democratic Government are grave: either deflationary measures involving a reduction in public expenditure, which means cutting the social wage, or an increase in taxation, taxation which, if it meant direct taxation, would be a straight cut in take-home pay, or, if it was by means of indirect taxation, would mean a cut in the purchasing power of the pay that was taken home. And both these remedies would result in unemployment for our people.

None of us, Mr Chairman, joined this Party, devoted our lives to this Party, to make it the Party of unemployment. We reject that solution, emphatically, decisively, once and for all.

But in rejecting it, every one of us carries the responsibility for ensuring that the Social Contract does succeed. Everyone of us. At work, in our constituency parties, in the trade unions.

It is a Contract between Government and people. All the people. It is a Contract under which this Government has pledged itself, as no other Government in British history has pledged itself, to the promotion of social and economic justice in Britain. Social and economic justice between the people and between the regions of our country.

It is a policy for social and economic equality. But it is a policy with obligations, with responsibilities as well as rewards. You cannot pick and choose. It is not a policy from which you can extract the parts you like and reject the parts you do not.

I believe all the British people, whether they like this Government or not, want to see Britain emerge strong and healthy from its present troubles. They all want to know what they can do to help speed the day of a new strength for Britain. What they can all do is to join with us, with the Government, the Party, the TUC, and make certain that the Social Contract succeeds.

Mr Chairman, in the February election, in the months which followed right up to the October election - and since - we have never for one moment disguised from our people that we cannot expect any measurable increase in the average standards of living for two years or more ahead. Yes, of course, there is the proverbial light at the end of the tunnel, when North Sea oil, on the basis of public participa­tion, begins to improve our balance of pay­ments, personal standards of living and the social wage.

But what we cannot afford to do is to mort­gage that North Sea income before we have it. For too long, complacent British governments encouraged our people to live on the investment of past decades, living on our fathers and prejudicing the future of our children. Time and again governments have not been prepared to set aside, out of current production, the seed corn for the investment of the future.

It is a charge against both major parties that, taking the whole period since the war, as well as in the years of depression before that, we have failed to invest adequately in strengthening our industrial capital and competitiveness.

We must not, in the years ahead, so load the burden on to the future that those vast treasures around our shores, first of the North Sea and then in the Celtic Seas, are mortgaged before they are ever brought to shore.

Out of its current earnings, the nation must provide for investment in the future. Investment is not for us, not for the nation just a matter of stocks and shares. Investment is new factories, and the services those factories need; investment is new pits to exploit the vast new seams of coal that have been discovered; it is new steelworks. It is public investment and it is private investment. It, and it alone, can provide new jobs and secure our people’s prosperity.

If we fail to tackle this problem of investment, then failure can become endemic, and fatal to all our hopes for the nation we hand on to our children.

The policies on which we were elected, the Manifestos of February and October, provide the best hope of a real drive for productive investment in British industry for a generation. For the conventional financial wisdom has failed the nation.

The Conservative solution was simple and, in its simplicity, totally ineffective.

The Conservative solution was based first on a reduction in taxation on wealthier people, so that with less pressure on their standard of living, they would save and invest more. Some­times they invested and sometimes they didn’t. When they did, their idea of investment was not to finance the production of new machine tools or factories, but to buy shares which gave the hope of the greatest profit, not those which strengthened the industrial base of the economy.

But the second part of the Conservative policy, of course, was that panic financial spree of the previous Government, the ending of capital controls and the release of money through the Bank of England’s ‘Competition and Credit Controls’ Paper of May 1971.

The hope was no doubt that, combined with the tax remissions, the money would flow into industrial investment. But instead some was invested in property in Europe - it has not done very well, some of it - a large proportion flowed into property speculation at home which has now gone wrong and which, more than any other factor, has created the current Doomsday psychosis in the City. Particularly in the banking and insurance sectors.

And throughout the years of that policy, manufacturing industry was the Cinderella, neglected by investors and badly hit by rocket­ing interest rates.

So reduced taxation on wealthier people, the printing of money which led to that massive misdirection of investment capital - these failed. But not only these. When Britain entered the Common Market on those futile terms so lightly entered into by our predecessors, this was widely hailed as providing a sure and guaranteed incentive to the biggest spate of investment in this century.

At the annual Guildhall speech in 1971 my predecessor said, I quote:

'The prospect of free access to the European market, combined with a revival of demand at home, cries out for a Major programme of investment in industrial expansion and modernisation... Let industry now take the long-term view of our future in Europe. We now have the chance to bring about the regeneration and re-equipping of British industry. We must make ourselves the most modern country in the Community.'

That was Mr. Heath in 1971.

Two and a half years later when we took office, industrial investment was still below the 1970 peak attained and bequeathed to them when we left office.

My main message to Conference today is this: that the future of this country, of the standard of living of our people, perhaps of democracy itself, depend upon the effort we put into investment in industry, public and private.

This is not a new problem.

My favourite quotation - I have even put it on the title page of a book I wrote not long ago - is from the last ever speech that Aneurin Bevan made in the House of Commons before he was taken ill, the speech of 3 November 1959.

‘There is,’ he said,

'one important problem facing representa­tive parliamentary government in the whole of the world where it exists. It is being asked to solve a problem which so far it has failed to solve: that is, how to reconcile parliamen­tary popularity with sound economic plan­ning.'

And he went on,

'I would describe the central problem falling upon representative government in the Western world as how to persuade the people to forego immediate satisfactions in order to build up the economic resources of the country… How can we persuade the ordinary man and woman that it is worth­while making sacrifices in their immediate standards or foregoing substantial rising standards to extend fixed capital equipment throughout the country?'

That was Aneurin Bevan in 1959. Fifteen years later - and we paid the price of what he was forecasting in 1970 - the problem has so far remained unsolved.

Mr. Chairman, you and other colleagues have made clear how faithfully the Labour Govern­ment has adhered to the Manifesto we pub­lished in February, even in a minority Parlia­ment, and how clearly also the legislative programme for the first session of the new Parliament, set out in the Queen’s Speech, follows the main priorities of the October Manifesto. What I think many delegates even will be surprised to note is how much of that programme, put before the nation for a five-year Parliament, is in our programme for implementation in the first year of this Parliament. Our social priorities, public participation in North Sea oil, public ownership of land, aircraft and shipbuilding and a host of other measures. This session.

And our electoral success, I believe, is owed not just to our faithfulness over those six or seven months in carrying out our Manifesto, but to the relevance and breadth of the policies set out in the Manifesto. And this, in its turn, is a tribute to the work which thousands of our people, in consultation with every affiliated organization, every constituency, the Parlia­mentary Labour Party, the Executive, under­took in those Opposition years.

I believe that our Manifesto - and that means our Parliamentary and Government programme - is the answer to Nye Bevan’s insis­tence on sound economic planning providing the industrial investment we need and on which we are acting as a matter of urgency.

I do not intend to deal in these closing minutes with the economic and financial inheritance of last March, or what has been done to deal with the problem in, now three successive Budgets. But the Chancellor in last month’s Budget made clear that in his deter­mination first - this is one of his difficulties he said - in his determination first to improve the cash position of industrial companies, and then to improve industrial investment, he was inhibited, the Government was inhibited, because he had to act by generalised measures without the more selective measures that were required.

As the economists would say, he could only act in a macro sense, when micro and selective measures were also needed. And in his Budget speech the Chancellor stressed in particular, as I stress again today, the relevance of the National Enterprise Board and of Planning Agreements with the major industrial com­panies; and the purpose being to ensure com­pliance with national objectives, particularly investment, prices, productivity, regional em­ployment, exports and import saving, product development, industrial relations and con­sumers’ interests. It is all in the book, or it is in the White Paper and it will soon be in the legislation.

The economic establishment represented by our opponents inside and outside Parliament continue to demonstrate their economic illi­teracy by their ideological attacks on the National Enterprise Board. But we have seen it all before. The Industrial Reorganization Corporation of 1966 was resisted as few measures have been resisted in the post-war world by those very same opponents, the Con­servative Party and the Conservative Press. By 1970 the IRC was acclaimed as a great advance in economic institutions, to the point where even Mr. John Davies recommended its con­tinuation, in 1970, only to be met by a doctri­naire decision at a higher level requiring him to introduce repealing legislation. How often even the Conservatives have wished that IRC had remained in existence.

We are therefore reinstituting IRC as one of the roles of the National Enterprise Board. A Cabinet Committee under my Chairmanship last week approved final instructions to Parliamentary draftsmen for the drafting of the Bill which I hope will be before Parliament early in the New Year and which Tony Benn will carry through Parliament with the united support of the Parliamentary Labour Party. (Applause) This measure enables the Government to pro­mote Planning Agreements and to establish the National Enterprise Board.

This is what I have been leading up to all this last half hour. It is in this, I believe, that we have found the right approach - which for a generation we failed to find - to the problem of securing enough investment and investment where it is most needed in the form in which it is needed.

This is a new - I do not think people have recognised this yet, including a lot of our own people - and selective instrument for creating and financing investment where more gener­alised financial policies of the kind I have described have failed. And where goes state money for investment goes also public account­ability and an appropriate public share in the equity.

In place of hit-or-miss financial measures such as we had from 1972 to 1973, based on vague hopes that somehow finance that has been created will find its way by some magic process into buildings and machinery and research and development - in place of all that, we shall inject public money, case by case, and plant by plant, where it is needed for exports or modernisation and to create new jobs in the regions.

Some of it will go inevitably to save essential firms and industries in danger of collapse in the free-for-all jungle that we inherited. Some of it will go to firms which have no difficulty about survival but can survive only at the expense of expansion, or by postponing essential modernisations or by ruthlessly cutting down essential means of production. Some of it will go to create new ventures, on the basis of joint partnership with Government.

All of it will go on the basis which other democratic countries have followed, that where there flows the regenerative public capital there goes with it a corresponding degree of public ownership and control. (Applause)

Good Socialist doctrine, yes; it is good capitalist doctrine too. When the City of London puts its money in, it usually wants a corresponding say in the business, in the profits of the business, and in the control of the business.

The life-giving investment British industry needs, and of which it has been so long starved, will, I believe, do more than anything else - except success in the battle against inflation itself - to overcome the crisis we are facing.

In doing this we shall make industry more vigorous, more profitable, more up-to-date and competitive, more able to benefit from the introduction of a greater measure of industrial democracy and worker participation than we have ever previously sought to create in this country.

This is the real answer to the cacophony of ignorance and malevolence of our opponents and the ideology masquerading as economic theory.

They say that public money invested in industrial assets, for the purpose of modernising those assets, is a charge on the taxpayer, or that economic stability will be endangered by borrowing. But we are warned daily that industrialists are scaling down their investment intentions, and that there will be a drying up of private borrowing anyway.

Those who argue in this way are, in fact, pre-Keynes, pre-John Maynard Keynes. While we have moved on from Keynes, vintage 1936, our opponents argue as though he never even existed. He said when private investment plans are inadequate there must be public investment to secure full employment. What he had in mind was public works, roads, sewage and drainage.

That is why I claim the National Enterprise Board is the biggest leap forward in economic thinking, as well as in economic policy, since the war. For where private investment falls away, or even if it is not falling is on a scale far too small to ensure a high level of employ­ment and modernisation, when that is the posi­tion public investment is enlisted.

Investment, not to produce goods which our customers do not want or cannot afford, but to make the goods with which we can pay our way in the world and modernise Britain.

This is where we move the nation forward by a whole generation in our thinking and in our policy. And public investment, in deference to the late John Maynard Keynes, is to be mobilised, not to turn engineers into road workers, or for constructing drainage and sewage, but specifically directed in terms of the machinery, the plant, the research and develop­ment we so urgently need for the regeneration of British industry and the creation of a sharper cutting edge in the markets of the world,

So, Mr. Chairman, at the outset of this Parliament the Labour Government, carrying as I believe the confidence of the nation, embarks on the greatest task any Government has faced in this country, certainly in peace time.

For a year or two, I repeat, unable to hold out any hope of a general increase in living standards, but determined to ensure that sacrifices shall be fairly shared, and the burdens borne by the broadest backs.

A Government determined that we shall no longer try to live on the production made by previous generation, and still less to mortgage the future which we want our people and our children to enjoy in full measure, as the treasures around our shores begin to raise our living standards.

A Government determined to ensure that the social income, the social wage, shall rise within the priorities we have set, priorities related to, but limited by, the increase in our production we are asking from our people.

A Government determined, even at a time when the increase in resources is constricted by external action, constricted as never before in the post-war world, on a clearly directed in­jection of investment into productive industry, to under-write our export drive and our industrial expansion alike, and not merely determined but now ready with the machinery through the National Enterprise Board, the Planning Agreements, and the rest of our policy, to make it a reality.

Mr. Chairman, we have a five-year Parliament ahead of us. Five years of challenge. Five years of Labour Government, with the regeneration of British industry at the heart of its programme.

It is a programme for the regeneration of Britain.

It involves restraints and sacrifices.

It means discipline and hard work through­out, in better times as well as in tough times.

It means everybody, all of us in Government, in the Party, and throughout the nation, striving to make sure that the Social Contract works.

But just as the burdens and sacrifices will be shared at the beginning, when the going is hard, so the future benefits will be shared with fairness and social justice among all our people. Shared according to socialist principles. Only a Labour Government can, and only this Labour Government - with your support - will carry those principles into action.

When next year I again present the Parlia­mentary Report to Conference you will see that we will have gone further, further than anyone - anyone in the October election, further perhaps than anyone here in this hall this week - would have expected in turning into reality in one single year so much of the policy laid down in our Manifesto. (Prolonged applause)

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