19th November1967: Wilson defends 'pound in your pocket'


Since the last Thursday took its unanimous to devalue sterling, it has impossible for me to speak you because of the need secrecy while this tremendous international operation was being carried through. I can tell you why have taken this action and important what it means. Because had to maintain silence, there inevitably been rumours, some of very strong, that we were a different course.

It have been possible to ride this present tide of foreign against the pound by borrowing central banks and governments abroad, and governments to whom I tribute for their help and over these past years. In view it would have been to go on dealing with successive waves of speculation by for three months, six months, a time without attacking the cause of the speculation. Failure attack the root cause would meant trying to borrow this in conditions in which our abroad might well insist on about this or that aspect our national policy. Last weekend government decided that we were prepared to accept any solution placed rigid limitations on the of our people and government solve our problems by our exertions, that we could not restrictions on our national growth, industrial expansion, on our determination achieve and maintain full employment. are determined to break out the straightjacket which has constricted under successive governments now for years. A straightjacket which meant every time we tried to our problems by expanding production, mobilising the efforts and skill our people on the basis full employment, the immediate result a desperate trade and payments . The deficit we inherited three ago, over eight hundred million , was itself the result of attempt by our predecessors to their way out of this by an unrestrained boom. And three years we have fought it was our duty to to overcome that deficit to the external value of sterling. no one could doubt, at or abroad, our determination to through. No one will underrate we've had to do in fight, nor the heavy price have paid and we've had ask the country to pay. by our policies, by the of our people, we'd reduced deficit last year to less a quarter. Our exports had at about double the rate the past few years and were all set to get balance, indeed into surplus this . But there was never enough to meet the chance and of world events, nor to the repayment of the vast we'd incurred to pay for deficit that we found on office.

I'm not going go into all the details the events which this year once again put us in red, the heavy costs to trade and payments of the in the Middle East, the disruption of our exports by dock strike, and tonight is the time to attribute blame the policies of the last or this government or to strikers or to the manoeuvring speculators at home and abroad. all along, we've had to this: exports, even our increasing , could not earn enough to the successive waves of speculation sterling. Time was needed to and modernise our industries, to up our trade, and we've doing this at a rate double what was previously achieved. was needed to cut down overseas defence commitment. But that was denied us. Whenever Britain into short-term difficulties, there were who sold sterling in a and there were others who against us in the hope a quick gain. And all , even though our basic position showing a steady improvement. Take seamen's strike last year. There a tidal wave of pressure the pound, and yet, grievous that strike was, it did prevent us, over the year a whole, from reducing our to less than two hundred pounds against the eight hundred pound deficit we took over years earlier. Even so, we to take the measures of 1966. And the problem is : we, Britain, are a major country, and like any business , our trading position depends on much we sell to others. because we're also an international , because sterling is an international , it's subject to speculative attacks short run reasons which have to do with Britain's trading . Now, our decision to devalue our problems at the root that is why the international community have rallied round with display of formidable strength to the operation. This backing is, course, to deter the speculators, for us to live on. that's why it doesn't involve conditions.

Tonight, we must a new situation. Fist, what means. From now on the abroad is worth fourteen percent so less in terms of currencies. That does not mean, course, that the pound here Britain, in your pocket or or in your bank, has devalued. What it does mean that we shall now be to sell more goods abroad a competitive basis. This is tremendous opportunity for all our and for many who have yet started to sell their overseas. But it will also that the goods we buy abroad will be dearer and for many of these goods will be cheaper to buy . Because one of the great we in Britain have had these past five or six has been a great increase by year in imports of manufactured abroad. Then farm production be stimulated. We'll be able do more to replace food from abroad. Saving imports and, more, the export drive will that industrial production will go . Many industries and firms, which now working below capacity, will a chance to get into production. This means more work, jobs in the development areas we intend to be ruthless diverting new enterprise to those .

But all this will at a cost, at any for a time. The needs the export drive will mean we've got to shift five million pounds of our national into exports and into import . That is why we're tightening control on bank lending except priority borrowers such as exporters. bank rate is being raised eight percent for as long is necessary. Higher purchase is tightened on cars, an industry can now go out and an immediate boost in its . We're cutting back public expenditure. 're making further sharp cuts in spending, effective in this coming . There'll be cuts in the expenditure programmes of some of publicly owned industries. And the cuts in public expenditure the announced last month. But the programmes of housing, school building hospital building will be safeguarded all these measures and the of bringing work to development will be given a still priority than it's had.

've said that imports will more and this means higher over a period for some our imports including some of basic foods. And it's vital price rises are limited to cases where increased import costs this unavoidable. Our people will tolerate traders who are not by import costs trying to in by unjustifiable price increases. shall keep a very tight on prices and we shall the powers we have under prices and incomes act. And 's just as vital that any that do go up are used as an excuse for wage demands because that would increase our export costs and would cut into the benefit export industries have now got all that would mean for and at the end of day for employment.

government, for our part, in to our policy for prices, keep a strict watch on , the corporation tax on profits to be increased. And we'll everything in our power to the climate in which an prices and incomes policy can pursued by those whose job is. And this must mean . The government have decided to to the national board for and incomes certain council rent and we're particularly after those where the increases seem exceptionally and provocative.

It's duty of the government to by special measures that when have to be borne, those are liable to be hardest are protected. And your government fulfil that duty.

This been, devaluation has been, a decision. And some of its will themselves be hard for time. But now the decision been taken, all of us, , must now make a success it. We must take with hands the opportunity that's now presented to us. Our exporters, industrial managers, our salesmen, what chance they've got now, our in every industry, our scientists engineers, our designers, the professionals for our invisible earnings, are on their mettle. And any fail, through laziness or self , any who frustrate the work others by unofficial strikes, will the right to work, not of themselves, but of the .

I've told you tonight led to this decision. I you the alternative which we have sought and why we that alternative. This is a nation. As I've said, we the chance now to break from the straightjacket of these years. We're on our own . It means Britain first.