Belfast Telegraph

Thursday 17 April 2014

The bitter pill to swallow when paying off our debt

Labour takes credit for the health service. But does anyone remember what it cost, asks Eric Waugh

October 20 is the date when we shall know the worst. As it draws nearer, our ministers shuttle between Stormont and Whitehall.

They know we shall have to take our medicine with the rest. Cries of mounting pain are to be heard from Dublin.

But are some politicians still living in fairyland? At the Labour Party conference, Ed Miliband drew defiant applause when he recalled how the party had created the health service in 1945.

But does he — or his audience — realise what it cost? Actually, it took the Labour Government three years of hard graft to get the NHS going.

But the voters — used to the misery of being bombed, to sudden death and to the hardness of service life — were ready to face the brutal cuts which alone made possible the NHS in 1948.

The question facing Miliband is whether his cheering audience — including trade union leaders who finance Labour — are as ready as their grandfathers were in the years after 1945 to take the medicine.

Make no mistake: it was a bitter brew. But the union leaders of the day, led by the great Ernest Bevin of the T&GWU, tightened their belts and summoned the remainder of the courage which won the war. Miliband's cohorts, though, threaten national strikes.

When the war in Europe ended in May 1945, I was still at school. We were told the country was in hock to the United States. On August 14, the Treasury sent a memo to Downing Street warning that the country faced a “financial Dunkirk”.

A fortnight later President Harry Truman abruptly ended Roosevelt's wartime Lease-Lend which had financed Britain's war effort. The UK had to go cap-in-hand to Washington to seek a new loan.

In fact, we were on our uppers, with an external debt of nearly £3bn. It does not sound much now; but it was vast sum then.

The UK got its loan — but only on condition that it restored the convertibility of sterling. The inevitable run on the pound ensued; convertibility had to be abandoned and, in 1949, the pound had to be devalued — from just over $4 to $2.80.

For years, every penny of our taxes which could be spared went towards paying off the American debt. New cars were only for export — to dollar markets.

If you wanted a new one, you went onto a waiting list for two years. A second hand car sold for hundreds more than a new one.

Petrol, in any case, was allowed for business users only. Foreign holidays were out. No holidaymaker was allowed foreign currency.

In March 1946, I sat in the gallery of the House of Commons for the first time to hear the Chancellor, Hugh Dalton, announce, of all things, bread rationing. The following year potatoes were rationed. We were taxed to the hilt. I remember building a small library of what we then called gramophone records. The best classical ones cost six shillings — but there was ‘purchase tax' of nearly four shillings.

A 10 shilling note — 50p today — was real money then. Meantime, the rationing of nearly everything else continued unabated.

The trains from Belfast to Dublin were crowded with Northerners shopping for hams, Hafner's famed sausages from Henry Street, chocolates, sugar and tea in the well-stocked grocers of what many still called the Free State.

I went to work in the United States in 1953. When I came back the following year, I found that rationing of butter, fats, bacon and meat had only just disappeared while I was away.

So much for the price of paying for the new health service and repaying our debts last time. It was the only way ahead. We gritted our teeth. We paid. For eight years after the war ended.

I wonder what will happen when we hear the worst on October 20.

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