Ted Grant

Crisis in the British economy

Source: Socialist Fight, vol. 3 no. 5 (July 1961)
Transcription: Francesco 2009
Proofread: Fred 2009
Markup: Manuel 2009

Yet once again the British economy is lurching towards a crisis. Every two years since the war the same thing has happened. The government has proclaimed a crisis, exhorted the workers to greater exertions and sacrifices, only for them to be faced with the same situation in the next 2 years. Selwyn Lloyd, the Chancellor of the Exchequer, is preparing for new attacks on the standard of living, in the meantime the cost of the working man's solace, beer and tobacco, have already been increased. Various foodstuffs and petrol, which will increase the price of goods, have also increased in price. The national health contributions have been raised, subsidies on welfare foods have been cut. Now this month Selwyn Lloyd is preparing to increase purchase tax and other revenue duties, which will raise the price of furniture and other articles, to the tune of £200 million in order to "cut consumption".

While these measures of "indirect taxation" which hit hardest of all on the poorest sections of the population are being prepared, at the same time the budget cut surtax on the rich and powerful by £80 million. Thus the government takes from the poor with the right hand, while handing out largesse to the rich with the left.

During the last few years profits of the big companies have reached fabulous figures, while wages have lagged behind. The only way that the workers have been able to maintain a decent standard of living has been by overtime, wives working, piece work and bonus schemes.

Cuts in expenditure

At the same time as these attacks are being launched the government has announced "cuts" in government expenditure, the nationalised industries coming first. Government expenditure on building for houses, schools, hospitals, already meagre in comparison to the need, will be slashed. Necessary schemes for modernisation on the railways, mining, electricity and gas will also be cut. Private building and private investment which it is expected will increase by eight per cent, this year will not be affected. After all it might cut the profits of the capitalists!

Why these measures of "sacrifice"? The government pretends it is because of the "impossible" increases of wages, and the constant increases of wages in the last ten years. In fact wage increases have always followed price increases and not vice versa. At the same time the government proclaims that it is necessary in order to compete with her rivals on the continent, especially Germany.

Lagging Britain

Wages are lower on the continent and our goods are being priced out of the market the capitalist press and the propagandists of the employers never cease to proclaim. In fact wage increases in the last ten years in other Western European countries, have been greater in proportion than in Britain. In the field of social service, too, these countries have rapidly increased their expenditure in proportion to the national income, to as high or even higher level than in Britain. As far as hours worked and holidays are concerned Britain is now lagging behind. On equal pay France, which has a law on the question, is far in advance as far as women are concerned.

Yet in spite of these factors Britain has lagged behind. Her increase in industrial production, taking 1953 as the base year of 100, has only been 128 in 1960, that of France has been 179, West Germany 185, and even formerly backward Italy 187. Thus she has the worst record in Western Europe.

At the same time on expenditure on education, and numbers of secondary students, Britain has fallen behind the level of most of the countries of Western Europe, in proportion to the national income.


The main factor dictating these measures has been the deficit in the balance of payments. Last year this amounted to £344 million. Britain's share of world trade has fallen steadily in the last decade. As the Times Review of Industry dolefully comments in its June issue, "Both in the home market and abroad, the percentage of the demand for British goods has fallen persistently in recent years". The responsibility for this is entirely on the employers and their government. Yet they wish to load the burden onto the shoulders of the working class. The measures they are taking cannot solve the problem. As the Times Review of Industry quoted above complains, "What is more deplorable is to find the Chancellor coupling fine words about the dangers of cost inflation and the need to make ourselves competitive in world markets with a string of budgetary actions which raise costs." Thus the government staggers from one expedient to another.

Crippling burden

Meanwhile one of the real causes of the crisis is the crippling expenditure on arms by the government, to maintain the position of British imperialism abroad. Ten percent of the national income is devoted to wasteful expenditure on armaments. This is a crippling burden of £1,600 million. Now the government announces the need for marginal cuts on expenditure abroad.

While the government has been complaining about the excess of "demand", and the inflation of wages, in fact both in steel and the motor industries short time has been worked. Industrial capacity has been growing continuously over the last period of years, yet last year national output only increased fractionally. The capacity to produce the goods was there, but precisely the "demand" was absent, i.e. the working class did not have the necessary money to buy back the goods which could have been produced, but for which there was no "market".

A campaign

At the same time the productivity of labour, on the average, has increased by two percent a year for the last ten years. That is to say that the amount produced by each worker increased by more than a fifth in that time.

Thus the full responsibility for any crisis rests on the employers and their government. Let them make the sacrifices. In fact profits are leaping ahead. Cut profits, slash arms expenditure. Fight for increased wages to compensate for the steep increases in the cost of living.

The labour and trade union movement must conduct a campaign on these lines. A full scale offensive on these lines against the Tory government should be launched jointly by the trade unions and the Labour Party. It should be coupled with a campaign for the resignation of the government and the election of a Labour government pledged to carry out a socialist programme.