I warn my hon. Friends...that once we cut defence expenditure to the extent where our security is imperilled, we have no houses, we have no hospitals… - Denis Healey

The central problem of our economy for more than a generation has been that, although our productivity has grown more slowly than that of our competitors, we have seen annual wage increases of the same order as theirs. So our inflation has risen faster than in other countries and we have been able to maintain price competitiveness and full employment only by a series of devaluations which have further added to inflation and increased the pressure for excessive wage increases. In the era of North Sea oil it will be more difficult to devalue our currency to maintain price competitiveness. So unless we can keep wage increases close to the level of productivity increase we shall face rising unemployment and a further erosion of our industrial base.

Britain's economic problem is fundamentally far greater than France's since France is much less dependent on foreign trade and imported raw materials. Moreover Britain has economic relations with her Commonwealth whose importance outweighs the potential benefits of economic co-operation with Europe. For example, by 1952 over half Britain's foreign trade will be with the Commonwealth as against 22 per cent with Europe. Also Britain's imports from the Commonwealth are mainly indispensable raw materials, whereas her imports from Europe are less essential.

By his conduct of the campaign against the Labour Government Aneurin Bevan has destroyed a good chance of succeeding the Party's leadership. Whereas Bevan's proletarian virility has always hypnotised many middle-class intellectuals, the trade unionists tend to see in him the familiar figure of the self-seeking agitator... Bevanism is essentially a flight from reality into dogma. But its opponents have had little to offer as a positive alternative. The Great Debate in British Socialism has so far consisted in one side talking nonsense and the other side keeping mum.
The Labour Party may hope to carry the Welfare State and planning further than the Tories, but for a long time physical and psychological factors will fix rigid limits. Further 'soaking the rich' will no longer benefit the poor to any noticeable extent. Further nationalisation no longer attracts more than a tiny fringe of the Labour Party itself; it positively repels the electorate as a whole. Even among Labour economists there is a growing revolt against physical controls in favour of the price mechanism. A policy based on class war cannot have a wide appeal when the difference between classes is so small as Labour made it.