SCHEMES FOR UNEMPLOYED.

HC Deb 15 February 1933 vol 274 cc1037-91

4.11 p.m.

Colonel BALDWIN-WEBB

I beg to move, That this House, while endorsing the action of His Majesty's Government in limiting expenditure on local authorities schemes of a non-productive nature, urges His Majesty's Government to keep under constant and active review the means of reducing the number of unemployed by assisting local authorities to undertake essential works of a revenue producing nature and by encouraging productive industry in general, whereby men and women can be employed in their own crafts. The problem of unemployment is still the most serious one before the country, and must of necessity engage the attention of this House a great deal during the year. I, therefore, make no apology for initiating this discussion, because I feel that by this means Members may have an opportunity of bringing forward ideas and suggestions that may be fruitful to the Government when dealing with this most terrible problem. The patience with which the unemployed are submitting to continued inaction must appeal to us, and I do suggest that we must give prompt attention to the subject. I would like to say that, in my opinion, the House ought to have frequent opportunities of discussing this subject, and I hope that this may be the case during the year. The country is still in a state of emergency. When the National Government were returned 18 months ago they were asked to balance the Budget, to balance the trade, or, at least, to reduce considerably the adverse trade balance, and they were asked to take every possible step to reduce unemployment. These problems have been tackled and great progress has been made under heads 1 and 2, and it is necessary that progress should be made under those two heads in order to be able to approach satisfactorily this third problem.

How far better off we are than we were when the Government were forced to stop expenditure on non-productive public relief works, and on other schemes that might be considered revenue-producing, only the Government are in a position to know. I suggest that they are the only people who can know the true facts and can give a decision. Therefore, I sincerely hope that this afternoon we may be able to receive a statement to guide the country, the municipalities and all those others who are waiting to hear what is the position. It has been proved conclusively during the last 10 years that to provide work merely by subsidising public works does not have the effect of giving employment. It has the reverse effect. It throws more and more men out of work. This kind of policy was mainly responsible for the crisis 18 months ago. The previous crisis, that of 1922, did bring along, among other palliatives, the system of relief schemes, the effect of which upon unemployment was very trifling.

It was the reduction of Income Tax from 6s. to 5s. in 1922, and then to 4s. 6d. in 1923, that had the effect, of stimulating trade and employment, and of helping the country generally. In 1924 we had a Socialist administration, and their policy led to a reaction. After that the Conservative Government of 1924 had to deal with the difficult problem of the coal dispute and then the general strike, but by 1928 the folly of relief schemes had been practically abandoned, and trade was improving. The year 1929 came in well; trade began to expand and commerce improved. Then we had a Socialist administration, with an exaggerated expenditure on all forms of relief schemes, and confidence departed. This, coupled with the Stock Exchange collapse in America, brought about a second crisis. The policy of public extravagance, in which the financing of relief schemes played a large part, aggravated the commercial and trade conditions, and resulted in the crisis which brought about the formation of the National Government.

The gap which had to be filled in the Budget, necessitating increased taxation, has had the effect of reducing the possibility of commercial activity for a time, but we are now in the interesting point when it is necessary for a decision to be taken; not a decision as to whether we should repeat the follies and mistakes of the past hut whether we can continue to proceed on normal healthy lines of expansion and development, both by the way of municipal enterprise in those public works of a revenue-earning character and those that are essential to the public health and well-being, money is cheap; credit is ample: but confidence will not return unless it is made clear that the follies of the past will not be repeated. The patient, having partaken of those drugs that are so injurious, has survived a long regime and is now able to take moderate stimulants, but must avoid at all costs the drugs that were responsible for his collapse. It is interesting to note the position of the industry which is supposed to have benefited more than any other from these unnecessary public schemes: public 'works contracting. The figures show that from July, 1929, to July, 1932, when public works were still in full swing, the number of men attracted to the industry had gone up from 164,000 to 270,000 while unemployment had gone from 44,000 in 1930, 27 per cent., to 115,000 in 1932, or 42 per cent. It reached a figure of 128,000 in December, 1932, or 44 per cent.

In the building industry, from June to December, 1929, unemployment rose from 72,000, or 8.9 per cent., to 139,000, or 17 per cent. That was during the time when the Socialist Government was supposed to be building as fast as they could. Let me quote figures which are already widely known. Whilst the Socialist Government were in office we spent £200,000,000 and unemployment went from 1,100,000 to 2,700,000, and the number of men directly employed on relief schemes was only 114,000. There is no doubt that the dangling of Government loans and subsidies before public authorities has led to their undertaking many costly and unnecessary schemes, and in this way local rates have been increased until they have become an intolerable burden on industry and a fruitful source of further unemployment. In the House last week the Minister of Health said that he intended to bring in the building societies to assist in housing because they have the money and experience. I understand it is necessary, in Whitehall and in the country, to replace Government buildings which are now obsolete, and that to save money in administration other buildings are required. But this cannot be done because of the Treasury policy that money for Government buildings must be found from revenue. Therefore, this natural development is held up. I understand that insurance companies and other bodies are prepared to finance any Government building if allowed to do so. The question of giving a lease to the Departments concerned should be quite a" simple" matter. By that means we should be able to build these necessary buildings and employ men in their own trade.

With reference to housing, we are still far behind in the type of house to let at a rent between 8s. and 9s., including rates, per week. I prefer the lower figure; but it is to be noted that whilst we have made an advance of 60 per cent. in the better-class house we have only made an advance of 13 per cent, in this particular class of house. Some assistance in this direction could be given by removing some of the restrictions on housing. At present the average density is 13 per acre, I suggest that we should go to 20; and also that we should put in cheaper fittings and make the houses quite comfortable, yet plain. I would also suggest that where a builder is prepared to build the type of house I have mentioned he should be granted facilities to acquire the land at a reasonable rate. If this was done I am convinced that money would be forthcoming. Private investors would invest in this kind of property, because solid bricks and mortar is still one of the best investments.

Let me turn to industry for a moment. I asked a tile manufacturer in my constituency the other day what form of Government action, if any, he would recommend in order to get his men at work again, and he informed me that his industry had been exporting tiles to South America for the last nine months at a loss of 10 per cent., in order to retain that market against the competition of Germany, where both the exports and shipping are subsidised by the Government. That is the case of a private subsidy having to fight a subsidy from a Government. In my opinion there should be more adequate protection at home or some measure to counteract these foreign subsidies.

Just a few words about the industries allied to the brewing trade. That industry has been taxed more than any other, and it is our greatest revenue producer. Unemployment is beginning to become acute, particularly in the ancillary trades, and unless something is done we shall be faced with a good deal of unemployment. During four recent years the brewers have rebuilt 13,542 inns at a cost of £12,300,000. There are some 79,000 public houses in England. The work of improvement, and in most cases even of necessary decoration, has stopped. In Birmingham alone, during the last ten years, there have never been less than ten or a dozen annual applications for new buildings where new licences have been granted, involving an annual expenditure of roughly £100,000 to £120,000. Last year only one application was made, and even that was abandoned owing to the fact that the brewer concerned was not able to find the money. At the next Brewster Sessions in March there was again only one application, and that of a special kind because it was the result of a contract with the corporation. It shows that the necessary development in that industry is at a standstill. I should mention that a licence for a new building in Birmingham is only granted in exchange for three old ones, and it therefore means a reduction in the number of public houses.

Agriculture also is suffering from the excessive taxation of the brewing industry, particularly arable farming, and I urge that this is a case where special inquiry should be made to see whether employment in the industry may be regained quickly. It is unpleasant to note that in one midland town there has been a reduction of 18 per cent, in the gross rateable value of public houses, and it is estimated that next year the reductions will go down to 30 per cent. In Liverpool an increase of 1½d. in the £ has been necessary owing to the revaluation of this kind of property. A good deal of harm has been done to this industry by unfair taxation and steps should be taken to remedy the position. The Government should be courageous. It should be bullish, not bearish.

The figures concerning road transport employment also show that a worsening is taking place, and definite steps should be taken immediately to clear up the indecision in regard to the Salter Report. It is not for the general good that road transport should be so embarrassed as to remove initiative and competition. The policy of the Minister of Transport in supporting the railways against road transport has come very forcibly to my notice in my own constituency during the last few days. There, the Road Traffic Commissioners refused an application by local omnibus companies who desired to reduce their fares to meet a reduction recently made in local rail rates. Between two towns in my division, Oaken-gates and Wellington, the railway companies recently reduced the fare from 4½d. single to 3d. return against a rate fixed of 4d. single journey by road. The result of this will be that the road transport services will be stopped and men thrown out of work.

If this policy is followed throughout the country I can imagine a serious reduction in an industry that has employed as many as 1,000,000 people in making and operating public service vehicles. It is interesting to note that the railway companies are allowed to make special representations to the Commissioners in respect of road fares whilst the road transport interests are denied a corresponding right. This is a matter which should be put right without delay. It is wrong to subordinate road interests to rail interests, and we must not forget the part which road transport played in the general strike. The effect of the Salter Report has been very damaging to manufacturers of road service vehicles. In Birmingham we have held up the purchase of 50 electric trolley omnibuses for the last nine months because of the threatened excessive and crushing taxation on these vehicles.

The final report of the Commission on Road Transport Services stated that tramways were an obsolete form of transport, and that they should ultimately disappear in the interests of other road users, and they made very strong representations for railless vehicles. If, however, the recommendations of the Salter Conference become law tramways will enter on a new lease of life, and if the tax on railless vehicles and omnibuses is to be the same, any economy in the use of railless vehicles will be wiped out, to the further discouragement of the coalmining industry. It has been urged by many that railless vehicles by using electricity in addition to helping coal-mining avoid the necessity of purchasing large quantities of petrol from abroad. Employment can be assisted materially in this direction. I am compelled to mention Birmingham as an example of the places where unemployment is being created by the Salter report, because the facts are within my own knowledge. I understand that the silk industry is engaging the attention of the Government. Here the raw material tax has practically nullified the advantage of the import duties. I gather that some 70,000 men could be employed in the industry in addition to those already employed if proper measures of protection were granted.

I await with interest the results of the Government's policy on agriculture. I sincerely hope that their efforts will be successful. If they are not, particularly as regards the pig industry, steps should be taken to subsidise the production of bacon in this country or a tariff on imports should be imposed. I suggest that our imports of bacon and pig products should be reduced by at least one-half. The question of Government assistance in the shipping world is, I hope, to be discussed, and I trust we may find means to employ men in building those Cunarders that are now at a standstill. The cotton industry has been dealt a severe blow by the abolition of the preferences in Ceylon. This is a case for energetic and immediate action by the Government. I believe that we should reduce the imports from any country that does not give us equal trading facilities. In regard to the wool industry, we might make representations to Canada.

It is interesting to note that while the general position in unemployment may not have improved during the last 18 months, there has been a marked advance in the position of manufacturing industries. The monthly return of men employed during 1932, compared with 1931, showed an average increase per month of 111,000. Comparing December last with January, 1932, there were engaged in the manufacturing industry 160,000 more persons. That is a step in the right direction. I hope that tariffs will be obtained and modified as suits the situation, because it is due to these instruments that that great improvement has taken place. Let me say a few words in reference to the voluntary schemes for helping the unemployed. A scheme was started in Bristol and followed in Birmingham for getting people to carry out necessary repairs and to do what they could to create employment locally during the bad time of the year. I hope that all districts and organisations, and political parties of every kind, which have not, up to now, joined in this campaign will do their best to help the general position.

My purpose in moving this Motion has been to point out the need for courageous action by the Government throughout the whole field of industry and municipal enterprise. Trade is convalescent and it wants a tonic. The Government are in a position to give that tonic. It will not be by a return to the profligacy of the past; that would be fatal. The finest remedy would be a bold reduction of Income Tax. I believe that the time is ripe for prompt and decisive action, according to the needs of each industry scientifically surveyed in turn, whether that action takes the form of a repeal of legislation that has proved harmful to industry, or of a freeing of restrictions similarly harmful, or the mobilising of the resources of private finance and energy for the development of productive schemes of public utility. The criterion of such action must be its capacity to create new wealth, the aim not to find non-productive work for the unemployed but to re-employ men and women in their own industries and at their own crafts.

4.35 p.m.

Sir ISIDORE SALMON

I beg to second the Motion.

There have been many Debates in this Chamber on the important question of unemployment, but I am bound to say that we have made but very little headway. Members of all schools of thought have given us their views from time to time, but we have had very little real product from their suggestions or observations. In reviewing the position we have to recognise that since they have been in office the National Government have done an immense amount of good work in the country. We have also to recognise that the problem that faces the country to-day is not wholly within the hands of the Government. It is true that world conditions have very largely contributed to the large amount of unemployment we have in this country. I suggest that it is important that the Government should take a big view of the position. The Government say to industry, "Take a long view. We think it is desirable that you should do this, that and the other." I say to the Government, "I would like to see you practise what you are preach- ing, and the best way in which that can be done would be by coming out with a big and bold policy and by taking the long view."

Let me for a moment try to assume that a large and progressive company or firm found that their business was static, or that the turnover was falling. The first thing that that firm would do would be to say, "We will make a bid for trade. We will reduce our prices, because we hope that in a short time we shall more than recoup the business by the reduction in prices." I ask the Government to take a view similar to that which would be taken in a successful business organisation. In my mind the long view is that the Government should say that they are prepared in the next Budget to reduce Income Tax by a shilling in the pound. The effect of that would be to reduce the revenue by £60,000,000, but that money could be found by suspending the Sinking Fund, and it would still be possible to balance the Budget. The point I make in that connection is that the effect of such a policy would be very striking. It would be found that industry would have the confidence that is so essential, and it would at once get a move on by increasing work and by employing more people.

The real problem that we are up against to-day is a human problem, the problem of how we are to find work, permanent work, and not work by mere palliative methods. The Prime Minister and other Ministers have very truly said that palliative work, State-aided work, is of no real use in dealing with this problem. It is a truism to say that the very breath of this country depends upon trade. Therefore what better can the Government do than to give a stimulus to the trade of the country? The way to give that stimulus is the way I have suggested, by boldness. It is true that the Government say it will cost that sum of money, but if the nation can get that money back, as I believe it would within two years, by increased revenue from Income Tax and Surtax, the Government would be more than justified in spending that money on a remunerative proposition. If this relief were given to taxation I do not think any business man in the country would deny that the effect would be not only gratifying to the people of the country, but gratifying to the Chancellor of the Exchequer himself, because within a reasonable period he would more than recoup himself for the money that he had foregone. And he would still balance his Budget. It is essential that the Budget should be balanced.

A second point I wish to make is this: I realise that it is of no use to spend money on unremunerative and unproductive work. On the other hand one must weigh up and deal with problems as one finds them. I would call attention to the fact that in the building industry to-day the costs of building are lower than they have been for years or are likely to be in the near future. I was an unfortunate member, if I may say so, of an unofficial committee that had an opportunity of studying one or two problems in connection with Government offices. I was amazed to find that in one particular Government Department they had six different offices scattered all over London—it was a very important Ministry—and they were paying something in the region of £45,000 to £50,000 a year in rentals. If that were capitalised at 3½ per cent, the sum would be £1,350,000. The Government could build on a site which they have, a building suitable for these offices and that would have three effects. First, there would be the saving of more than the capital sum that it would be necessary to find for the building, because we are paying more than that sum in rental at the present time. Secondly, there would be a more efficient organisation and there would be, unquestionably, a saving of staff. Thirdly, the Department would be better run if it were concentrated instead of being spread over six different places.

Similar observations might be directed towards Employment Exchanges. I would remind the House that as long ago as 1927 the Government of that time had a programme for dealing with temporary Employment Exchanges throughout the country. They had taken then and they still hold certain premises as offices in busy districts—generally shops turned into offices. They had army huts and so forth and it was intended within a few years to substitute for those premises offices of a more permanent character. I venture to say that this is the psychological moment for rebuilding those places which are of a necessary and should be of a permanent character.

The point then arises as to how money for these purposes is to be found without affecting the Budget. I suggest that the money can be obtained from the National Debt Commissioners or from other suitable available funds without affecting the Budget. It has been no novelty in the past for a Government to use such funds for the building of Government offices. I think I am correct in saying that Governments have spent £2,000,000 or £3,000,000 on buildings such as the Admiralty, the extension of the British Museum and part of the Patent Office out of money borrowed on the lines that I suggest. The only reason, I believe, why the Government or the Departments, or the Treasury, hesitate to-day to adopt this method of finance is the report made by the Public Accounts Committee as long ago as 1904 expressing the view that it would be better in order to maintain efficient control over expenditure if those services were included, as formerly, in the annual Estimates. But that was in 1904 and we live in different times to-day. We have to consider the position as it is now.

Much water has flowed under London Bridge since the date of that report and there are two important considerations to be borne in mind. First, by adopting this building method we could avoid the kind of serious mistake that was made by a very important local authority some few years ago. I regret to think, although the experience is useful, that I was one of those who took the view that it was desirable to postpone the building of the new London County Hall. We did postpone the building; we built the Hall some years later with the result that the cost was over double what it would have been had it been built at the time originally proposed. My right hon. Friend the Leader of the Opposition will probably remember that occasion because I think he was a member of the London County Council at the time. Secondly, as I have said, to-day is the psychological moment for providing these essential buildings at an economic figure. Not only will it be economic to do so, but it will also have the effect of finding real work for a large number of individuals for whom it is very desirable to find employment and the Government at the same time would save transitional benefit.

I recommend the Government to review the position to-day and to see what is essential, not from the point of view of finding work merely for the sake of giving an occupation to those who are unfortunately unemployed, but as a sound business and economic proposition. If they did so it would give a great fillip to the country as a whole. I recognise and realise that the Government have many serious problems to consider. One can sympathise with Ministers when certain Members want one thing and certain other Members want something else. I suggest that they ought to take a big broad view. It is necessary of course to avoid going into those extravagant methods which were prevalent until the economy campaign began. I think it was a very good thing that everything was stopped dead at that time but I also think that it would be wise and prudent to review the position to-day because the situation now differs from what it was 18 months or two years ago. Therefore, in seconding this Motion I hope that it will receive the support and consideration of His Majesty's Government.

4.53 p.m.

Mr. BATEY

I beg to move, in line 1, to leave out from the word "House" to the end of the Question, and to add instead thereof the words: recognises that unemployment is a national responsibility which should not be thrown upon impoverished localities by expenditure upon Poor Law relief, and urges His Majesty's Government to render such financial assistance as will enable local authorities, particularly those in necessitous areas, to undertakes works of a useful character, in order to reduce the number of unemployed and stimulate employment in other industries. I wish to thank the hon. and gallant Member for the Wrekin (Colonel Baldwin-Webb) for having selected this question for discussion to-day. There are two points on which I agree with the hon. and gallant Member. One is the importance of this matter. What we want is work for the unemployed. Work is preferable to doles. The second point on which I agree with him is that the Government need courage. As a matter of fact the Government's failure and the increase of unemployment are due to lack of courage on the Government's part, and therefore we are not at all surprised that Members supporting the National Government have at last been forced, by that lack of courage on the part of the Government, into coming forward with a Motion urging the Government to do something.

I like the word "urges" in the Motion. I think it was never more necessary than now for supporters of the National Government to urge upon that Government to do something. After 16 months, during which the National Government have done nothing except to make things worse and increase unemployment, I am glad that the supporters of the Government are coming along now and urging the Government to get a move on. [An HON. MEMBER: "Get on or get out."] I am glad to thank another supporter of the National Government for supplying me with those words "Get on or get out." They come not from the Labour benches but from a supporter of the National Government, and the Government have done so badly in the past 16 months that they ought either to get a move on or to get out of office.

There are three important points in this Amendment. We desire to stress, first, the fact that unemployment is a national responsibility. Secondly, we desire that expenditure on Poor Law relief owing to unemployment should not be thrown on the local authorities. The Minister of Health could give the Prime Minister a very useful lesson as to the increased cost of Poor Law relief owing to the unemployment policy of the Government. All over the country, especially in the distressed areas, especially in the North of England Poor Law relief is increasing enormously. In this Amendment we urge that the burden ought not to be thrown on the local authorities but ought to be borne by the National Exchequer. The third point which we desire to stress is that the Government should render financial assistance to enable local authorities, particularly in distressed areas, to undertake works of a useful character. I know that in urging that third proposition we are running up against the view expressed by the Prime Minister in the letter which he sent to Bethnal Green, and in which he said: State-assisted public works as a policy for the relief of unemployment hare been abandoned by the Government. I hope the Government are not going to stick there. It is all very well to say that, even at the peak, in 1929, there were only a certain number of unemployed men who could be employed. What is essential to-day is that unemployed men should be assisted as far as possible to get work or at least that local authorities should be assisted to employ men as far as possible. When the Prime Minister writes to Bethnal Green to the effect that State assistance for the provision of employment is to cease I ask him to tell us what is he going to do? Is he going to stop there? Does that simply mean that the Government are not going to assist the local authorities. I think the Prime Minister is not entitled to leave such an important matter just there. If it is his view that the Government should not spend any more money to assist the local authorities in that way then he ought to tell the House what the Government are prepared to do. One of the Prime Minister's late colleagues Lord Snowden has been urging that owing to this policy there is going to be no help for slum clearance, for improved water supplies, for land drainage, for smallholdings and allotments. [HON. MEMBERS: "NO."] Lord Snowden has said so. The Prime Minister himself is here and I want to give the Prime Minister an opportunity of saying whether Lord Snowden is right or wrong.

I want the Prime Minister to tell us what really is the policy of the Government. Are we to understand from his letter that the Government are not going to assist local authorities in the least to do any of this work? I am glad to see the Prime Minister here. It gives us an opportunity that we do not often get. While we are dealing with letters, he sent another to the Labour party at the More-ton Colliery in the division that he represents. He said the Government were doing their very hardest to relieve distress. Our difficulty is that we cannot see where the Government are doing anything to relieve distress in the miners' homes or to provide work for them. Instead of helping the unemployed, I submit that the policy of the Government has been to injure trade and industry and to increase unemployment. They have certainly done that in the North of England with the trade in which the people are employed whom the Prime Minister represents. The policy of the Government in the last six months has certainly injured the coal industry. If we compare last year with 1930, when Labour was in office for the full year, we find that in the former year we sold 54,000,000 tons of coal to foreign countries while last year we sold only 38,000,000 tons.

Viscountess ASTOR

Why?

Mr. BATEY

Because of the policy of the Government. The Prime Minister in his Bethnal Green letter praised the tariff policy of the Government and the Ottawa Agreements. The tariff policy of the Government and the Ottawa Agreements are the answer to the "Why?" Because they have destroyed the coal industry in foreign markets by upsetting foreign countries. In 1932 we sold to France only 8,000,000 tons. In 1930 we sold 12,000,000 tons. To Germany last year we sold only 2,000,000 tons and in 1930 we sold 4,000,000 tons. To Italy last year we sold only 5,000,000 tons while in 1930 we sold 7,000,000 tons. Last year we sold to Belgium only 1,500,000 tons while we sold in 1930 2,500,000 tons. There is the answer to the "Why?" The Government policy has upset Germany, France, Belgium and Italy. There is no question about it. You may laugh as much as you like. The fact is there, that the Government policy so upset these countries that they retaliated on the coal industry.

Mr. GODFREY NICHOLSON

The French Government started their quota system when the Labour Government were in power.

Mrs. WARD

May I ask the hon. Member if it did not start at the time the Labour Government passed the Coal Mines Act?

Mr. BATEY

It started many years ago. It is no use talking about when it started. It is no use for the Prime Minister to say this Government is helping to solve the unemployed question. The Government have simply made unemployment worse, and, until they make up their minds to put some of the important basic trades upon their feet, we shall be no better. I am glad that at last the Admiralty have done a small thing in purchasing oil taken from British coal. That is a small but an important step. Here is an experience that ought to teach the Government the possibility of solving unemployment in the mining industry. I want the Prime Minister to tell us whether they are prepared to go further and assist in. the extraction of oil from coal and so help to put the industry on its feet again. One of the things that surprises me is that so many supporters of the National Government, especially in the North of England, are starting what they call a wise spending campaign. I never heard or read such humbug in my life. I have here a letter which tells me that a campaign has been set on foot to find work for as many unemployed as possible during February, March and April, when unemployment is usually at its worst. There is a list of 80 things that have been done to assist unemployment. One of them is umbrella covering. That will not solve unemployment. But even that is better than what the Government are doing. Another suggestion is that people who have gardens should have crazy-paving done. Another is new carpets in motor cars. The Government do not want to feel that they can do nothing, and they let their supporters in the country go forward with this wise spending campaign, hut the responsibility still lies upon the Government.

We stand for maintenance of the unemployed, and what we want is work for the unemployed. We believe that the authority which is responsible and which could best find work is the Government. We have been born into a wonderfully planned world. It may be turned upside down to-day, but to-morrow it will be all right. We may be in winter now but the winter will he followed by spring, the spring by summer and summer by autumn. It is a wonderfully organised and well-planned world. All that is needed is that industry and trade should be planned and organised, but we cannot do that. We have been prepared to leave trade and industry to a small section of the community, and they have failed miserably to organise it so that no one can find work. Where that small section has failed, we ought to say to the Government that they should take this matter up and should plan and reorganise industry so that men can find work and live by work rather than by the dole.

5.11 p.m.

Mr. TINKER

I beg to second the Amendment.

I am glad to see the Prime Minister here, because the subject is well worthy of his attention. I am also glad that the Minister of Health is here, as there are points to which we wish to draw his attention. The Mover of the Motion must have been in some difficulty, because the first part of it attempts to praise the Government for limiting expenditure by local authorities on nonproductive schemes and then it goes on to ask for money to be spent on revenue-making schemes. I have been, listening to the arguments brought forward to find out the difference between one scheme and another, but I have not been able to find out what the Mover and Seconder actually meant. What they said was that money is cheap and plentiful, and something ought to be done. They say that relief schemes only throw men out of work. They may cost a lot of money, but they do not throw men out of work. For a certain length of time they put men in work and give them some idea of their work.

The Mover said something about putting up buildings. Putting up more houses for people would be far better than putting up buildings. He also advocated a reduction of taxation on the brewing industry. Most of us on these benches attempted on the last Budget to get that carried against the Government, but we failed because their supporters did not help. One would not have expected Income Tax reduction to be brought into this Debate. That is the last thing that should be attempted until the unemployed are better looked after. If one section of the community can bear their pockets being touched more than another, it is those who can afford to pay Income Tax rather than those who have no incomes. Most of us on these benches have to pay Income Tax, and we are very lucky to be able to pay it compared with those who are not. I am prepared, so long as my pocket will stand it, to pay Income Tax rather than make the burden on the poor greater than it is. I could not follow exactly what these hon. Members asked the Government to do apart from these points.

I find that the Secretary of State for War has taken a very strong stand on this kind of thing. He said that one of the difficulties of the present Government is that they had done so well up to the present that they have been too successful. Why he should say that, I do not know, in view of the speeches of the two hon. Members who moved and seconded this Motion against the Government. However, the Prime Minister, by being present to-day, is helping us somewhat, and I would like him to answer some questions. Is it the Government's intention now not to provide any more money to municipal authorities for any of these schemes at all, and can the Prime Minister defend that portion of his letter to Bethnal Green in which he says that the National Government have stemmed the rising tide of unemployment Can he honestly back that up to-day in this Debate? If so, then the figures given out by the Minister of Labour must be wrong. The hard core of unemployment, as it is called, which means the number of men who have been out of work for a long period, is greater now than it has ever been in our history. The increase in the numbers unemployed for a year or longer was one of 125,000 in 1932. In January, 1932, they numbered 337,500, and in December, 1932, they had grown to 460,000. In the aggregate we have a growing volume of unemployment and in what is termed the hard core of unemployment there has also been an increase. I therefore want to know whether the Prime Minister can tell us how he justifies the statement in his letter to Bethnal Green that the Government have stemmed the rising tide of unemployment.

To-day we stand for organised planning of our national life. We think that that is the only way to deal with the present situation, and we claim that until the Government can make that effective, whoever is in power ought to see to it that those who are out of work are provided with some kind of employment. There are many useful schemes that could be put in hand. Will anyone opposite say that housing is adequately dealt with at the present time? I am glad that the Minister of Health is in his place. He has recently brought in two Bills dealing with housing, an English Bill and a Scottish Bill. In the first Bill he practically takes away all subsidies, apart from those for slum clearance, and I understand that in the Scottish Bill some subsidy is being left. Does that not mean that housing will be slowed up and, therefore, that unemployment in what may be termed a necessary occupation will be greater? We should have expected that at least the Government would have kept on the subsidy under the Wheatley Act, so that building could have gone on until the Government were in a position to feel satisfied about the position.

Will anyone say that road-making is not a necessary thing? We have in Lancashire the Liverpool-Manchester road, 26 miles long, and it cannot be said that that is revenue-bearing. I do not think any road can be made revenue-bearing in a direct sense, but by improving conditions of transport it can be made a general benefit to the whole community, and we shall have that benefit from Manchester to Liverpool through the cheaper transit that will be possible owing to a good road being made. It also employs a large number of men on very useful work. Then there are many hundreds of bridges in this country that could be taken in hand and reconditioned; and until the Government are quite satisfied that they can alter existing conditions, they ought to start all the relief works possible and give all the help they can to those poor people who are at present unemployed.

To refer again to the Prime Minister's letter, he speaks in it about help being given by the council that he has called into action in providing schemes of recreation for the unemployed. I want to pay a word of credit to that activity. During the Recess I have been to several meetings of the unemployed, where the local men are getting them together, organising them, having concerts, and helping them to recognise that someone is taking notice of their plight. It is doing a good work in that way for the time being, but any prominent man who goes to these meetings is asked Before he leaves by scores of the people if there is any chance of getting a job through the council. For the time being the unemployed are glad of these central attempts, because they feel that someone is paying attention to them.

It is doing good in this respect, that men are seeing the plight of other men, and there is a common bond of feeling between them, from which there is arising a keen desire to help, but they are ask ing, "How long has this to continue? How long have you and I to be out of work?" And if something is not done within a few months' time which will show to these people that at least the Government have some idea of finding them work, it may be that that co-ordinated effort may be turned in another direction. Could anyone blame men, meeting together like that, if they see no hope under the present system, deciding to do something more drastic? No one could say that they were doing wrong. When we speak to them, we urge them to recognise their position and to try to get some alteration of it if they can. The question is a burning question, but will they wait long enough until society recognises their claims? I am just afraid that they will not.

In his letter to Bethnal Green the Prime Minister said he was confident in the Government's work. The Government have had nearly 18 months in office, and they may go on for four or five years. If they fail in their allotted task of bringing confidence to this country, it will be a sad state of affairs when the people recognise that they cannot do anything. We on these benches do not believe any good can come from the present Government's work, but we hope that every effort will be made by the Government while they are in office; and no Government can rest content while there is this big volume of unemployment in the country. I would advise the Government to try to give some hope to the unemployed by providing some work, some help, while their plans for trade recovery are being put into effect. It is not fair to allow things to remain for so long in their present condition.

I think something could be done with regard to research work in the mining industry. More grants could be given to help that position. In reply to a question yesterday, the Government said what they were doing in that direction, but they should do more, because the only hope of the coal industry is to get from the coal all the by-products possible. I think the time has now come to recognise that the coal mining industry can never recover its position by trying to out-sell our competitors in the foreign markets. I saw in to-day's paper that in Nova Scotia, I think it was, or somewhere in Canada, they are objecting to our under-selling them in. their own markets. When we take foreign markets in that way, it is only done by underselling them, and it only hits us back in the long run. But there is hope in research work, and in trying to produce the valuable by-products contained in British coal. I ask the Government not to set about trying to under-sell our foreign competitors in the markets of the world, but to enable us to produce our own oil arid to see if we can do without buying it from oversea.

We move this Amendment believing that the Motion before the House cannot help our present position. We think that nation-wide unemployment cannot be left to be dealt with by any particular part of the country, but must be treated as a whole by the country, and that the burden must be borne equally by all.

5.28 p.m.

The MINISTER of HEALTH (Sir Hilton Young)

I should like to congratulate, in the first place, my hon. and gallant Friend the Member for the Wrekin (Colonel Baldwin-Webb) upon raising an interesting Debate in an interesting speech, which was welcome above all because it was full of practical suggestions which ranged over so wide a field that I could not deal with them all. I can only assure him and my hon. and gallant Friend the Member for Harrow (Sir I. Salmon), who seconded the Motion in a speech which equally dwelt on the practical side of affairs, that those suggestions shall not fall upon infertile ground. They dealt in particular with the advantages of a reduction in the Income Tax this year. Even if the Chancellor of the Exchequer were replying, I know my hon. and gallant Friends would not expect an answer to those representations to-day, and in his absence I can only say that what they have said will no doubt attract his interested attention.

The hon. Member for Leigh (Mr. Tinker) struck a note which is the one that I would desire to repeat, a note of warm concern at the growing gravity of some of the aspects of the ill-effects of unemployment. How well we realise it, those of us who have had an opportunity of seeing those effects at work in the most depressed areas of the country, in particular those bad effects, upon the minds of people who desire nothing more than honourable toil, which come with a prolongation of the inability to earn their living in the way in which they desire to do it. This prolongation is the source of the worst evil with which we realise we have to grapple. May we not assume in these Debates, then, that we agree upon the gravity of the condition with which we have to deal? We are agreed upon the necessity of wasting no energy and no opportunity in seeking a remedy for these evils, and our differences are only the differences of reasonable beings as to the best course to adopt in order to secure that cure which we desire.

I am glad that the House is presented with so sharp a choice on the matter of policy for remedying unemployment— the choice between the Motion and the Amendment. The Mover of the Motion made an appeal to the courage of the Government. Let us remind ourselves, however, that courage is as necessary to continue long-term policy steadfastly against the temptation to turn aside as it is for the strenuous tasks of the moment. It is to that courage in the heart of the House and the nation that the Government appeal in their present policy, because the choice before the House to-day is a choice between the long-term policy of the reconstruction of productive industry from the foundations upwards, so that men and women may find their occupations honourably in their own toil and the continuation of the policy of hon. Members opposite, the policy of subsidy, of relief works, and of other artificial aids.

The question has been thrashed out in long theoretical arguments between the champions of the long-term policy and the champions of the short. We have had speeches, papers, books and articles by experts on the one side and the other, and by partisans on the one side and the other, and by experts disguised as partisans and partisans disguised as experts. Amidst these contending forces, naturally, the common sense of the nation may find it hard to decide on a theoretical basis, but fortunately the justification of the policy which we are pursuing is set in no theoretical basis, but in the actual experience of the country. We have tried the policy of artificial relief, subsidies and relief works, and we have found it fail. To the nation we can appeal for the judgment of actual experience, and I am confident the Government will continue to receive support for their long-range policy. The policy of subsidies, of relief works, has been tried, and it has failed. As the hon. Member who moved the Motion said, it was tried during the tenure of office of the last Government, which spent nearly £200,000,000 upon it, and unemployment increased by over 1,500,000 persons. That disastrous fact, disastrous to the theorist, to the official Opposition and to the nation, has to be overcome before we can persuade the nation to turn again to such a process.

On the other hand, although it is yet early days, we have actual experience that the long-range policy of the Government for the reconstruction of industry, without resort to these artificial aids, is showing signs of success. The hon. Member for Spennymoor (Mr. Batey) pointed to the positive increase in unemployment, but we say, "Look abroad; see what has been happening in other countries during the last 18 months, and you will see there such a state of affairs as to satisfy you that something has already been achieved in the way of the protection of our people from these evils by the policy which we have pursued." There unemployment is worse than here. The depression of international trade is worse than it is here, and we see the confusion and doubt, the depression of mind and material, worse there than we have it in this country. There are, then, these two facts to which we point with confidence to encourage this country in deciding, namely, the fact that the short-range policy has been tried and failed, and the fact that the long-range policy is being tried and that it shows encouraging signs of success.

The Motion points in particular to the policy of the Government in relation to the work of local authorities. I should like to take this opportunity of dealing with the matters raised by my hon. and gallant Friend who moved the Motion by dwelling upon the policy of the Government in relation to the matter which is of so much concern and interest at the present time, namely, the promotion of public works by local authorities. I find the expressions of the Motion are very pertinent and just, and let me say, both on this matter and on the larger matter of policy, that the Motion is so much in accordance with the views of the Government that we propose to accept it. On the matter of local authorities' works, the Motion is particularly just. It refers to the necessity of promoting essential works and revenue-producing works. There is, I believe, a very widespread misconception about the policy of the Government in relation to the undertaking of public works on borrowed money by local authorities—a widespread misconception amounting at times to what I might call positive misrepresentation.

The misconception is that there is a definite blockade, based upon Government policy and carried out by the Ministry of Health, against the undertaking of fresh expenditure by local authorities on borrowed money. Of course, it is only with the expenditure on borrowed money that we are concerned; expenditure out of revenue is entirely within the control of the local authorities themselves. Let me say as clearly as I can that the idea that there is this iron, arbitrary blockade imposed upon local authorities by Government policy through the Ministry of Health is a complete misconception. It is not so. There is no such arbitrary blockade at all. As proof of that circumstance, I point to the most revealing figures of the actual applications which have been received from local authorities for loans for public works, and the amount which has been refused by the Ministry of Health. The amount actually applied for in the last 16 months by local authorities amounted to £32,500,000. Of this, the amount refused was only £2,500,000.

Mr. LAWSON

Did they get anything from the unemployment grants in aid of that?

Sir H. YOUNG

That is completely irrelevant to my present purpose.

Mr. MACMILLAN

Could the right hon. Gentleman give figures of applications during the previous 16 months?

Sir H. YOUNG

I will if my hon. Friend will allow me to expound the matter. The amount refused represented only 7 per cent. There were substantially no refusals for trading services and half the refusals were for expenses on public offices. In the year before, the amount applied for, in comparison with the estimated £41,000,000 for the 12 months ending next March, was £57,000,000; and the year before that £80,000,000. The House must realise that that £80,000,000 came at a time when under the Labour Government every effort was made to force expenditure upon the local authorities, so that if there is a reduction in the amount which they have applied for, it is simply the cessation of that artificial effort on the part of the central Government to stimulate the expenditure of local authorities. It may be said that it is true that of the applications we have received, we have refused a negligible amount, but what about the applications we have not received?

It may be said that, owing to the belief in this blockade against public works, the local authorities did not send in applications. Let me at once remove all misapprehensions on that score. I do not believe that the local authorities are under that misapprehension, but, if there be such a misapprehension, let me remove it. The Government policy in this matter is still controlled by the circular issued in September, 1931. Let me remind the House of its terms in order to show the absence of any blockade. In the first place, the circular recommended to local authorities that they should not embark upon any wholesale or ill-considered course of cutting down expenditure whatever be its character; such a policy would seem neither necessary nor desirable. That is a general caution against indiscriminate and harmful cutting down. Then the circular, which is still the governing document in this matter, recommends a general survey on the part of local authorities of their expenditure and directs attention to the question whether a service is or is not likely to be remunerative. Secondly, whether it is required on urgent grounds of public health or similar grounds of public urgency. The Minister of Health would naturally be expected to put the grounds of public health in the foreground of matters to be considered by local authorities in deciding what expenditure is essential. Lastly, the Circular refers to the necessity of considering whether expenditure is justifiable on the grounds of the contribution which it makes to the provision of employment for local workmen. That is, as I understand it, precisely the kind of matter which hon. Members opposite would put in the forefront of the consideration of local authorities.

I believe that that Circular can allow-no grounds for misconception on the part of the local authorities as to the policy of the Government in promoting works of that sort. In the first place, it is that in regard to remunerative works which, will support themselves there is not now, and there was at no time, any bar at all on the part of Government policy. On the contrary, it is the policy of the Government to promote such works and to recommend them to the attention of local authorities. If there be any possibility of misunderstanding on the part of the local authorities such as would lead them to hold back works which might otherwise be brought forward, it may arise from misconception of the word "urgency." It is not the intention that loans should be sanctioned in the case only of works which must be undertaken immediately. If public services are to be maintained at a proper standard, works of this kind are obviously necessary, but there is much work outside that category which can properly be regarded as urgent also. Urgency is intended to imply that a good case can be shown for proceeding with the work at once either on the ground that to do it now would, in the long run, be more economical, or that the execution of the work will meet a real and a present need. Each case must, of course, be considered on its merits and in the light of that description of the word "urgency."

I would like to give two examples to illustrate the policy in the application of the word "urgency." Among urgent public health requirements should certainly be classed maternity and child welfare services, which cover the questions of maternal mortality and morbidity. Further, there is the provision of general hospital accommodation where that is necessary, and institutional provision for the needs of the mentally deranged where a shortage of accommodation is in sight. Another example of the proper application of the word "urgency" in the case of the authorisation of loans is found in the interests of the numerous seaside towns and other popular resorts which have a town's business to conduct as resorts. In considering their needs attention must always be paid to the business of the town, and the necessity of maintaining its business as a popular resort, and the indirect effect on that of public services and works which tend to promote the town's welfare and prosperity.

To summarise this matter, I believe that in the interpretation of the actual phrases of the circular and the manner in which they are to be applied, and are applied, by the Ministry of Health, it will be found that they impose no bar on all those useful and remunerative works which have been advocated by various people.

Let me turn to the other side of the picture, the position of the local authorities at the present time. I ask the House to realise their anxieties and their difficulties. Just as we are struggling, in bad times, with a difficult financial position, so the local authorities have their difficulties and anxieties, and attention must be paid to them when consideration is being given to the degree of expenditure which they can confront. When the great crisis came two years ago we stopped in caution and regarded all aspects of national solvency and national credit, and in the same way local authorities stopped and regarded the situation from the point of view of their own budgets and reviewed the expenditure which would add to the accumulated burdens upon the assets of the rates, and they were prudent in doing so. Let me remind the House of a very striking caution expressed about that period by the Estimates Committee of the House, which had had under review the accumulation of debt by local authorities. Their words of caution could not be disregarded either by this House or the local authorities. In their report for 1931 they called attention to the fact that the total outstanding loan debt of local authorities in the United Kingdom amounted to £1,300,000,000, and they noted that in the years immediately preceding the financial crisis borrowing by local authorities had been taking place at the average rate of more than £100,000,000 a year. The Committee stated that some remedy must be found for that unsatisfactory state of affairs, and suggested measures to ensure that a local authority did not incur liabilities in excess of its capacity to meet the consequential charges and to ensure that the aggregate of all local authority borrowing during any period did not overstrain the lending capacity of the country. I only mention that to remind the House that local authorities before undertaking fresh expenditure with borrowed money have anxious matters to take into consideration, and there is an anxious responsibility also upon the Ministry of Health to go into those cares with them.

There is another matter to consider on the other side when we are contemplating what expenditure can be prudently undertaken by local authorities. The trading undertakings of local authorities are subject to the same depressed outlook as other undertakings. A return on the capital invested in municipal electricity and gas enterprises is as doubtful as if it were invested in private enterprise undertakings. A local authority may not be able to see their way to getting a remunerative return on their money when there is so little demand for those services in the present general depression in trade and industry. Therefore, there must be anxious consideration before they bring forward gas and electricity undertakings, because enterprises which may be lightly judged to be remunerative may not, on a careful examination, turn out to be so remunerative under present conditions. Another aspect of affairs to be considered by local authorities concerns the question of the future of our population. Estimates may have been made in connection with capital expenditure which provide for a certain increase in the population, but statisticians now warn us that that increase may not be realised. That is another influence making for caution on the part of local authorities.

Lastly, the House will reflect that local authorities are representative bodies, that they are bound to represent the public opinion of their constituents, just as we represent the public opinion of ours. Local authorities realise that they are bound to reflect any strong opinion among their constituents against anything in the form of needless or luxury expenditure. The House will realise, therefore, the necessity of looking at the other side of the picture when considering what can be done for the promotion of useful outlay by local authorities. We must hold the scales equally. The Minister of Health in particular has a high responsibility to hold the scales equally. In the first place, he must be practically and deeply concerned for the maintenance and the proper development of essential services which are of the first importance to the nation—the great health services. At such a time as this he must be deeply concerned to join with all others responsible in the common task of promoting useful work in order to assist in reducing unemployment. That is, perhaps, the first and most important aspect of his duties, and a responsibility of this House; but there is another aspect of them, and that is to act as a watch-dog, to ensure prudent economy on the part of a local authority, and to remember the benefits and the stimulus to be derived by the community as a whole from a reduction of the burden of rates as well as the burden of taxes. Of late, owing to a policy of economy on the part of local authorities, there has been some alleviation of the burden of the rates. There has been some actual reduction of rates. The number of local authorities levying rates higher than 15s. in the £ has fallen, and a number of authorities levying rates under 10s. has risen; and, more important than the actual reduction, there has been a cessation of that constant increase of the rate burden which has been the subject of incessant complaints from trade and industry in the last 30 years.

When we are looking in this direction for further work, useful work though it may be for assistance in our national difficulty, we must remember that we cannot eat our cake and have it, that we cannot promote expenditure and at the same time expect not to see an increase of the burden of rates. The wise policy consists in a proper co-ordination of the two interests. That can be found in this direction: first, the promotion of all work which is of a remunerative nature —and that there is any bar against such work is a complete misconception—and, secondly, the promotion, with the assistance of the organisation of the Ministry of Health, of all normal development on the part of local authorities to the fullest extent compatible with the present financial condition. The third essential foundation stone of a wise policy in this matter is the steadfast maintenance of a reasoned and systematic economy in the sense of the prevention of wasteful expenditure and the avoidance of mere relief work of a sort which is contrary to the general policy of the Government. I trust that the House will remember how necessary it is to support the local authorities in maintaining those same standards of reasoned economy and the avoidance of waste on expenditure as we desire to see in the nation's central budget.

Those are the aspects of the relations with local authorities which are specially raised by to-day's Motion. "With regard to the general principles, there should be a sharp and clear choice between the long-range policy of the Government, the policy of the re-creation of productive industry in its manifold forms through the normal courses which alone can permanently maintain it, and, on the other hand, the policy of artificial aid to tide us over, again to tide us over and ever to tide us over, and all the time the tiding-over process is exhausting those resources which ought to be employed for the permanent re-creation of our productive system. When I came down to the House this afternoon, I saw an old broken-down horse towing along a magnificent motor-car. I said to myself "What a type of Socialist policy, in regard to our productive system." While our productive system is being towed along by subsidies, doles and relief works, it is not worth while to devote energy, time and money to speeding up the horse. What you need to do is to get the motorcar back to work.

6.2 p.m.

Mr. LLOYD GEORGE

The House is to be congratulated on the fact that two days are to be devoted—or at least a day and a half—to the examination of the gravest economic and social problem of our time. To-day is the day for private Members, and therefore I thought that it was an appropriate time for me to intervene. The right hon. Gentleman who has just sat down has devoted the greater part of his speech to a careful and detailed analysis of the attitude of his Department towards the expenditure of local authorities. I shall have a word to say about that later on. The first part of what was in many respects a most interesting speech was the survey which he gave us of the position, and also of the general attitude of the Government towards it. There can be no doubt about the gravity of the position. There can be no doubt about its growing gravity. Since the last Debate that we had on unemployment, initiated by my right hon. Friend the Member for Bow and Bromley (Mr. Lansbury) it has got worse. The condition is viewed in some exalted quarters with great complacency. The general public are afflicted with a sort of stupor. They do not know what to think.

We have heard from the right hon. Gentleman to-night that there were encouraging signs. I have heard that certainly for some time. What I have noticed is this: that every prediction of that kind is followed by a steady deterioration in the conditions. Take every test. Take the numbers of the unemployed. I have heard the Chancellor of the Exchequer—I think it was in the Debate on my right hon. Friend's Motion —say in this House—I think it was in November or December—that in a few weeks he expected to see, in regard to the numbers of the unemployed, that there would be a change in the contrary direction. The change has been in an adverse direction. The numbers have gone up. The numbers, since the right hon. Gentleman the Minister of Health came into office, have gone up by hundreds of thousands, and not far from' half-a-million. If you take into account the elements of change in the methods of registration, and if you take the addition not merely of the registered unemployed but of the number of paupers, you are not far off half-a-million. I would not call that an encouraging sign.

There is an aspect which is hardly ever introduced into a discussion of this subject, but which must be present to the mind of every hon. Member who examines his correspondence. I can appeal to their experience as to the number of black-coated unemployed who are not on the register and who are in sheer, dire distress. The Postmaster-General every day carries in his mail-bags some of the most poignant appeals for help from people of that character. They are on the increase, I notice. I have talked to business men who are in great concerns, and they have told me that they have made a very great effort to keep their staffs together when there was no real need for their services, and it is very much to their credit that they should do so, but you cannot carry a burden of that kind, when things are bad, beyond a certain point. Now, here and there, you can hear accounts of the way in which those staffs are dropped in batches into the abyss of worklessness, without any national scheme for keeping them and their children from utter and abject penury.

There is far more of that kind of distress in this country than we care to recognise. The hon. Gentleman who opened the Debate referred I think to the transport figures. They are not a bad test. I have called attention to them repeatedly. On the whole, they are not a bad thermometer of the state and condition of trade. You must make an allowance for increasing motor traffic, but that has not been very considerable the last year or two. On the whole, I think that the figures have gone down. In 1930 as compared with 1929 there was a decrease, and a substantial decrease, in the goods and merchandise carried on the railways. In 1931, compared with 1930, there was a still further decrease. In 1932, compared with 1931, there was still a startling decrease. I ask hon. and right hon. Gentlemen to look at that corner in the "Economist" and "Statist" each week and find out what is happening now. There is not a week in this year where, in comparison with January and February last year, there is not a substantial drop. At the present rate, there will be a drop which will be represented by something like £8,000,000 or £9,000,000 of traffic.

I cannot see—I wish I could—these encouraging signs, that make the right hon. Gentleman feel that you need not hurry, and can take the long policy. It has gone on during 1929, 1930, 1931 and 1932; it is still going on. Will he mind telling me how long? I have asked a great many people who know all about it, and they say that here and there you get a flutter, but that beyond that they cannot see any real improvement. One very reliable City paper the other day said about the railway traffic returns that "they were too bad to be true." Let us just look at them. I wish that the Government would tell us what are their plans to meet that situation. I have asked repeatedly and quite candidly I cannot see that they have taken a comprehensive view of the whole situation and that they are prepared for some bold, and—to use the phrase of the right hon. Gentleman the Minister of Health— courageous scheme for grappling with it. I know that they say that you must do this gradually. I remember very well in the middle of the War, when we were not doing too well and when I had some sort of feeling about the rather sporadic way in which it was being conducted, that I ventured to ask a very distinguished general: "Would you mind telling me what is your idea as to how this terrible war is to be brought to a successful end?" He looked at me as though he thought it was just the sort of question that a civilian would ask, and he was rather startled with it. He said: "We must keep pegging away." So far as I can see, the Government's policy is a policy which is described by them as a step by step, and a long policy. Do this little thing, then the next and then the next.. That is the long policy. What does it mean? May I just summarise it?

Their first step was the pegging of the Gold Standard, the pegging of the sovereign up to an artificial value. That was the first step that they undertook. It was very costly. I do not know if anybody has the actual figures, but it certainly cost us £50,000,000. When they failed and the sovereign went, this country was all unstable. It would have been far better to have let it go. It gave an advantage to our trade. Now we have put aside £150,000,000 in order to see that it does not go too high. That was the first step. There was a gentleman the other day speaking in Manchester, the President of the Manchester Chamber of Commerce, and he said how he hailed the joyous mom when we went off the Gold Standard. £50,000,000 to prevent the dawn ! That was the first step, spending £50,000,000 in order to keep the sovereign at its artificial value. It was thrown away. The first step taken by the Government was a goose-step. Then comes the balancing of the Budget; that is the next step. It is alluded to as a great triumph, I observe, in one or two of the official organs that give the Government uncritical support. The "Daily Mail" and the "Times" walk arm in arm. The other day they were pleading for unbalancing the Budget. They said that what was wanted was lower taxation with a deficit. That is their particular view of the second step, but it does not commend it- self to all the supporters of the Government.

Then there are the methods that are known as economy—the methods which have been defended so ingeniously and persistently, and in such detail, by the right hon. Gentleman who has just spoken, in his own Department—the cutting down of grants for research, afforestation, drainage, land settlement, housing. These methods are adopted, and they are producing a revolt at the present moment, which has been reflected in a very tentative way by the hon. and gallant Member who moved the Motion, though he was not very bold about it. So far as I could follow his speech, he clearly wanted expansion—he wanted money spent on housing, and so on. And the revolt against that policy is not coming merely from hon. and right hon. 'Gentlemen on these benches; it is coming from Conservatives, it is coming from some bankers, and from some business men. For instance, a very remarkable speech was delivered by Mr. Rupert Beckett the other day. I always read his speeches with great interest, because he has far less jargon and shows more virile sense in his annual addresses than all the other bankers put together. He criticised this policy, and appealed to the Government to be a little more enterprising, to utilise more fully the enormous reserves that are lying idle in the banks at the present moment. That step, they are beginning to discover, was wrong. The next was that the adverse trade balance must be reduced, and the way to do it was to reduce imports. Then it was curiously discovered, apparently for the first time by some right hon. Gentlemen here, that if you reduce imports you also reduce exports; and you reduce re-exports and you reduce invisible exports; so you are no better off—as a matter of fact you are worse off. Unfortunately, invisible balances can be adjusted when the accounts are presented. That is what has been done so far.

Then it was said that international debts must be settled. Yes; we said so in 1922–11 years ago—but we did not get very much support then. Now we are told that they are standing in the way of the trade of the world. We have tried to settle international debts without the one big creditor who mattered, and we came to an agreement which was hailed with enthusiasm; but there were conditions, conjectural, subjunctive, full of "ifs." The agreement was a good one if all the Parliaments concerned ratified it —not one of them has ratified it yet; if France, Italy, Great Britain and Belgium could come to an agreement with the United States of America—not one has come to any agreement, or started to come to an agreement; if France and Italy could come to an agreement with us —it has not even been discussed; if Germany paid £150,000,000 in reparations— does anyone believe it? It is a steeplechase with a great succession of "ifs," and we have not even cleared the first obstacle. It will be found that the United States of America has her "ifs" —if you buy more of her goods; if you disarm to suit her; if you reduce tariffs against her; if you go back to the gold standard. Now it has all to be gone over again.

The question of international debts has to be settled—I thought it was settled already at Lausanne. The Chancellor of the Exchequer thought it had been settled. Honestly, it was a great surprise to him to get a demand for £24,000,000 from the United States of America—a really genuine, honest surprise. It was such a surprise to him that he had not even taken the precaution of giving notice that he was going to ask for an extension of the moratorium. Now it has all to be gone over again; and it is interesting to note that the "Times" to-day says that you must send someone to America, not to transact the business, but to have a friendly talk around the subject with Mr. Roosevelt. He must not come to grips with the subject; he must settle nothing; he must decide nothing; and the "Times" says that the one man who is obviously fitted to do that is the Prime Minister. The "Morning Post," on the other hand, says: "You must not send the Prime Minister; we cannot spare him—our Socialist Prime Minister. We must keep him here for emergencies." There was an. idea of sending two guardian angels with him, the Chancellor of the Exchequer and the President of the Board of Trade. Where the matter stands at the present moment I do not know; we may hear either to- day or to-morrow how it is situated. It is interesting from the personal point of view as well as the broader aspects of the situation. But one thing is clear: you have not settled international debts; you have not even begun to settle them. The policy is: Take the long view— every step in the wrong direction, but take your time and you will get there.

The next step is to be an international conference. I wonder whether one dare ask in this House what line we are going to take there? I am told by the Ministerial spokesmen and by the Ministerial Press that it is to be on the model of Lausanne. Heaven defend it! Nothing decided except subject to conditions, if certain events happen and so on. "We are forced to settle these things; what you want is a provisional agreement that will look like a settlement." Or is it, perhaps, to be modelled on the Disarmament Conference, which has gone on for five, six, seven or eight years? Can anyone in this House tell me what is going to be settled, what it is proposed to settle 1 What is important is whether the Government have any clear idea as to what they are going to propose to that Conference. I am not going to say that, if they have, they should tell us in the House the limits of the concessions which they are prepared to make, because I can well understand' that they would say that that would embarrass them in bargaining. Therefore, I do not press it. But I would like to know whether they really have a clear plan—clear ideas; whether they have been thinking it out. Or is there one section of the Cabinet who are proposing one thing, and another section of the Cabinet who are going in exactly the opposite direction?

I will say at once what I mean. What are the issues that are to be settled there? There are the debts—a very important issue. The United States of America have made quite clear what they mean. They mean to exact a very substantial payment from us. They are prepared to offer a reduction, as far as I can see, but on definite conditions—with regard to tariffs, with regard to restrictions, with regard to allowing their goods to come here, with regard to disarmament. What is the other great issue, and, perhaps, the most important? Here I rather agree with President Hoover that perhaps, on the whole, the debts part may very well be exaggerated, that there are far more important issues. I think that that is true. What are they? The tariff barriers and restrictions that are, to use the phrase, I think, of a very expert economist, squeezing the life out of international trade. What is our policy there? Then there is currency— what is. our policy about that? Are we going back to the gold standard? It is an obvious advantage to us not to go back to the gold standard; it is an obvious disadvantage to France and Germany and the United States of America that they should be fastened on to gold.

Then there is the point raised by my right hon. Friend about the hours of labour, a matter which, in my judgment. you cannot settle except on an international basis; it is quite impossible. I should like to ask the Government with regard to tariffs, have we really decided upon what we are going to propose at the Conference? If so, have we consulted the Dominions? They have, obviously, a say in the matter. All nations are going to this International Conference to secure conditions which will improve their international trade. America wants restrictions against her goods reduced. So do we. So do the Germans. They all want to improve their exports, and nobody seems to realise that you cannot increase the exports of every country without increasing the imports. Can we ask America to reduce her tariffs against us unless we are prepared to lower our tariffs against her goods? Are the Government prepared to go there definitely with a policy which will increase the imports of manufactured goods from the United States of America to this country? I will ask them another question. Are they prepared to go there to propose the removal of the restrictions and the reduction of the tariffs which keep the raw material and the food supplies of America from our markets? If not, for what purpose are we going there? Unless we are prepared to do it does anyone imagine that we can come to terms there? The trouble of this International Conference is that everybody is going there to demand concessions and nobody is going there to make them. I ask the right hon. Gentleman this question. We have been bound by an arrangement at Ottawa in such a way that I very much doubt whether what is known as the bargaining weapon of tariffs can effectively be used. It is. no use having a sword if your sword arm is tied. That is what is happening, and it is one reason why I am not very sanguine as to what may happen at the International Conference.

Two years and a-half have passed since this terrible world slump. The nations have never yet met to examine the causes and to consider how they can be removed. They have been too busy carrying measures to increase the difficulties to have had time to spare to find a way to get them removed. You are going to meet this summer. The Prime Minister thought they were going to meet in November, and, as he was chairman, we all thought that he knew. The preliminary speeches were to be over by Christmas, and then we were to have a business meeting. When will they meet? In the summer? How long have we to wait? It is a gigantic task, and if at the end of it you come back, and all nations come back, from that fateful Conference, towards which everybody is looking, with nothing accomplished except a provisional agreement which does not materialise in any way, what will be the condition then? You may have something before the summer or before that Conference is over so catastrophic—I will not say here; it may be in America; it-may be in Germany; it may be elsewhere —that the nations will be frightened. And sanity is not an attribute of panic. You are now considering the Conference. You may have a complete success. Do you anticipate it? You may have a partial success. You may have a substantial failure, They are all possibilities. I would not like to say which of them is the probability. But none of them is unlikely except the first—a complete success. I ask the Government in all solemnity, Have they thought out what they will do in that case? What next? Long policy? Wait and see? You can go to that Conference on two assumptions, but it must be one or the other.

You are a tariff Government. You believe in it. You have made it. The right hon. Gentleman the Leader of the Conservative party said, "Give it a trial." You can go there and say, "We stand by that policy, and we are going to wait and find out how it works." That is one thing. The other is that you can say, "Tariffs are shattering the trade of the world. You cannot conduct business with all these barriers on the road. You must remove them, and we are prepared to set the example by doing so." I am putting these as the alternatives. I will draw my conclusion in a moment. I say that you are a tariff party. I see your difficulties with regard to the second. It is this to which I am coming. If you say, "We are going to stand by the tariff policy, stand by Ottawa, stand by tariffs which will keep the manufactured goods of the United States of America, France, Germany and Italy from this country; we are not going to have any reduction in these tariffs at the International Conference which will increase the imports of those goods," you ought to prepare the next step. I am putting that alternative. I am not arguing the proposition of tariffs, because I know that it would be futile with such an overwhelming majority. What next? You ought to be prepared for it. What is it? What is your proposal to face it? You will have 3,000,000 unemployed. Are you quite sure that you will have only 3,000,000? You are boasting that you are better off than other countries. Do not boast prematurely. The figures for January are not among the encouraging signs to which the right hon. Gentleman was alluding, probably. You will, therefore, be thrown upon your own resources in this country. You may be in a state of siege. You must remember that if we are better off in some respects than some countries, we are worse off in other respects. We have had chronic unemployment for over 12 years when other countries had not enough labour.

We are more dependent for our food supplies upon overseas trade than any other country in the world, and we have to pay for them in exports, re-exports or invisible exports. There is no country in such a position in that respect, and if you are prepared, if that is your policy, work it out courageously. The right hon. Gentleman gave us a definition of courage, and there is no man in this House who has a better right to give a definition of courage than the right hon. Gentleman. He may be confronted before this year is out with a tremendous decision if the Conference fails. What are you going to do to develop your resources here? Have you any idea? You have £2,000,000,000 lying idle in the banks. The banks say that we cannot use it, and the shrewdest of them say that this is the time to use it. This is the answer. We get the speech of the right hon. Gentleman. I do ask the Government to consider a little more carefully what the Prime Minister said the other day, that even if this thing were a success, you would have a long period of unemployment. It is quite right. I think he gave the figure of 2,000,000 as being the possible number of unemployed. That is, if it is a success. What are you spending now on unemployment? £130,000,000 a year. At the present rate, if the claim of the Prime Minister is going to be made good that you have arrested the growth, before this Parliament is out, you will have spent over £600,000,000, and have nothing to show for it. The right hon. Gentleman says: "What is the good of spending all this money on relief work? The Labour Government spent £200,000,000. They did nothing." I can tell the story why. They committed themselves to great schemes. They did not spend one-sixth of that amount. What is the good of talking of their spending £200,000,000?

I remember in the last Parliament asking the Prime Minister a question when he came in with a long string of things which they were going to do, and he gave a tremendous figure. I said to him, "Would you mind answering me two questions. The first is, how much is that expenditure above the normal, and the second is, over how many years is it to be spread?" The Prime Minister said: "That is the sort of spiteful and mischievous question that he would put." He said, in effect: "I refer him to my subordinates." There were great commitments, but there was no expenditure. I look at the speech delivered by the Prime Minister in June, 1931, before he came into a state of grace. He said then that the peak of our figures is 114,000 men. Does anyone imagine that the Labour Government spent £200,000,000 on relief works? That would mean 800,000 men at work. It is no use saying that we have had experience of these things. Your plans were not brought into fruition. You did not start them in time. When you had a big scheme of land settlement, you scrapped it.

You really must face the problem of the possibility of the failure of your International Conference. You must have some plans to deal with the unemployed. You cannot keep 3,000,000 sturdy strong men in idleness year by year. I am opposed to relief work. What is relief work? Relief work is made work, work with no purpose, work with no profit. You ought to anticipate the work that ought to be done, that must be done and, sooner or later, will be done if this country is to become healthy, efficient and prosperous. Do not invent work. Find the work that, sooner or later, you must do, and then utilise the reserves of this country for the purpose of carrying it out, now. Why do I say that? Because at the present moment you have plenty of labour, you have plenty of cash, which is lying idle and which you can borrow cheaply. You have got, in addition to that, a thing which is of vital moment to-day, raw material, which is cheaper than it has been since the War, and some of it cheaper than it was before the War. When we built houses and settled some of the ex-service men on the land, it cost us more than twice, and sometimes three times as much as it would cost today. Your houses cost now 45 per cent. less than they did between 1919 and 1922.

What is the work that must be done? Does anyone doubt that you have to clear all the slums sooner or later? Then why not do it now? Surely, the right hon. Gentleman does not think that his scheme is going to clear all these slums. You cannot do it. The very simile that he used in his speech is appropriate. He has been feeding up an old crock of a horse, to put it in front of a great scheme to clear the slums. It must have petrol in it. [HON. MEMBERS: "Oh!"] I mean, petrol in the motor car. You cannot clear your slums unless you are prepared to put cash into the work. What about the telephones? We are about the seventh or the eighth on the list. We ought to be the second, if not the first. Let the Postmaster-General undertake that task. There is nobody who could make a better job of it than he could, but he cannot do it unless you give him some of the profits of his own Department for that purpose.

The railways want electrification, they want great improvement in their wagons, they want improvement in their sidings. They have been starved for lack of capital for a great many years. What about the roads? The Road Fund exists for the purpose of dealing with the roads. Then there is land reclamation, reconditioning, drainage, afforestation, rural housing, land settlement and allotments. This is the time to do these things. Every other country in the world is doing them at this moment. Take the great scheme of the President of the American Republic, the Mississippi Valley scheme. Even in a country where there is 30 to 40 per cent. of the population on the land they are promoting a scheme which, he says, will find settlement for 800,000 people in the Mississippi Valley. It is a bold, strong scheme, but in this country, where we have more uncultivated and under-cultivated land than any other civilised country in the world, we have actually withdrawn grants that we were making for allotments, and we offer a £10,000 subscription. It is a mockery.

The right hon. Gentleman said that the local authorities are burdened with debt. Yes, but it is not quite fair to refer to the £1,300,000,000 of their debt without saying that most of it represents assets—houses, gas and electricity undertakings, trams, in some cases omnibuses, waterworks, schools. There are enormous assets against that indebtedness. The £1,300,000,000 of local debt is about one-fifth of the burden that the War has left upon our shoulders. I am going to make this suggestion for the consideration of the Government. If they come to the conclusion that they are not going to undertake the task as a national undertaking—which is the right way to do it, because they have the credit and they could organise it as a great plan—why do not they allow some of the local authorities to make an experiment? I will tell them how they could do it. They could say to a local authority: "If you have any scheme of drainage, or reclamation, or housing, or whatnot, for your area, for every unemployed man who is put on we will pass the dole on to you towards his wages.". They could do more than that. Every man that you put on for a direct job represents another man who is employed behind him. The Government could give double the dole in respect of every man put on, and they would be actually saving on the £130,000,000 which they are spending to-day.

If they allowed a few of the local authorities to submit schemes to them and gave them encouragement, I believe it would succeed. Further encouragement would have to be given. The local authorities would have to borrow for the purchase of materials and to meet whatever cost there was over and above the grant from the Unemployment Insurance Fund. The Government should enable them to borrow the money at the price which the Government are paying. What would happen? This is not relief work. If you put a scheme of that kind in hand you would take throughout the whole of England hundreds of thousands of people off the dole, and turn them on to something which would be useful, profitable and valuable. You could judge each scheme as it came before you. No wildcat scheme would go through. The schemes would have to be submitted to the Government of the day for examination, and at the end what would happen? You would have lands which are now absolutely waste, cultivated, you would have houses built and productive work done, you would have land which was under-cultivated growing crops. You have your agricultural policy to secure prices. Here is the opportunity for building upon that plan a great reconstructive policy for reviving and regenerating the rural life of Britain. Instead of having 7 per cent, of your population on the land, a condition of things which is not comparable with the condition of things in any other country, you would be gradually putting people on to the land and you would be employing more and more people.

This is a time of opportunity and not of disaster. This is a chance and not a moment of fear and of panic. Seize it. Seize it like men. Take your chance. This is an opportunity that you may never get again. The country is calm and quiet; it is a marvel to everybody that it is so, whether it is stupefication, whether it is despair or whether it is hope. This is the time for well-considered, thoughtful schemes, worked out with all the machinery that the Government have at their disposal. It is the best opportunity you have. Pray God, it may not be lost.

6.59 p.m.

Mr. MACMILLAN

The right hon. Gentleman holds so high a place in the esteem of the House that he is a law unto himself. But I think he will forgive me for saying that a great part of his speech, vastly interesting as it has been to the House, has ranged over a very wide field not wholly germane to the Motion with which we began this afternoon's discussion. The right hon. Gentleman cannot, at any rate, be accused of being too late. In fact, he is a day too early, because the greater part of his speech would have been very much more appropriate to the Motion that will come on to-morrow. Therefore, I hope he will not think it disrespectful on my part if I confine my remarks to the comparatively reduced scope of the actual terms of the Motion which we are debating, instead of ranging over the whole field of international affairs.

The Mover of the Motion observed that he hoped the Government would show a "bullish" spirit. We have had only one statement from the Government, and I do not think anyone could make the accusation that the speech of the Minister of Health was the speech of a bull. It had a distinctly "bearish" tendency. He gave us a very detailed account of the attitude of the Government, and there were certain passages in it which may cause some alarm to many who hoped that the Government would take a much more courageous and expansive view than they have taken. I cannot help thinking that the Minister of Health, although he has discarded Liberalism, has not yet discarded laissez faire. He is a kind of natural deflationist. I hope that the effect of the great change of opinion which is, clearly, sweeping over the country will not be lost upon his Department, as upon the rest of the Government.

We did, however, get from the Minister a statement of the present meaning of the famous circular of September, 1931, which was very hopeful. It is a well-known fact that a work of art, a piece of music, or any created effort of that kind, depends for its effect on its interpretation. The Minister to-day gave us a fresh interpretation of the circular which was certainly more hopeful than its original form. We were told that there was no intention of preventing the local authorities from undertaking works if they would be re- munerative, and the word "urgent." was held not to rule out a large number of works which might have been held by the local authorities to be ruled out under the terms of the circular. We are grateful for this rather wider interpretation than it has ordinarily received from the local authorities. At the same time, the figures he gave as to the proportion of applications for loans for capital expenditure which had been refused did not seem very convincing. The whole point is not what proportion of the loans was refused, but what was the total of the loan application as compared with previous years. There we have to face the fact that, in comparison with the total applications for £32,500,000, we had two years ago applications for £80,000,000 of capital expenditure from the local authorities.

While I would venture to differ from. the views put forward by the right hon. Gentleman who spoke last, I think there is a very strong case for a new attitude in this matter. The right hon. Gentleman gave us an account of the history of the last two years—1931 "and all that." The right hon. Gentleman's great difficulty about the history of these years is that the right hon. Gentleman was not a member of the Government. It is one of the most terrible tragedies of the crisis that, at the moment, the right hon. Gentleman was, unfortunately, prevented by physical considerations—deplored by the whole nation—from taking his part in the national effort required at that time. When what is generally admitted to be the weakest and most ineffective Government of modern times broke down it was the great misfortune of the country that the right hon. Gentleman was hors de combat. But he was understood to give support through the deputy-leader of his party to all the acts of the National Government during the first three months. At any rate, he never protested against these acts, until he protested against the act of the National Government in seeking a dissolution.

Mr. LLOYD GEORGE

The hon. Member is inaccurate.

Mr. MACMILLAN

I regret if I have misrepresented the right hon. Gentleman. But certainly the then Home Secretary was believed to represent the views of the Liberal party, and took part in all the acts of the first National Government. Up to that point it seemed to me that the Liberal party, from which the right hon. Gentleman had not completely disassociated himself, was equally responsible. The defence for a change of policy now is the very success of the Government's policy during the last year. I am not attacking them; I am supporting them. One of the reasons why I am asking the Government to take a more hopeful and courageous view is that they are now in a position to do it. This country was not, by the circumstances of the time, in a position to do it under the Government which held office in 1931. There is now a balanced Budget and there is a re-establishment of the strength of British finance in the eyes of the world. At that time there was a possibility of a flight from the pound. There is more likelihood to-day of a flight from the franc or the dollar. The whole technical situation in the banking world is different from what it was in 1931. We have the great advantage of no longer being tied to the policy we had followed since 1925—of trying to maintain at all costs a stable rate of exchange, even at the cost of letting the internal price level go.

Since we left the Gold Standard we need no longer fear its dangers, the capital expenditure and expansion in this country which operated when we were on the Gold Standard. We have by conversion of debt cleared the way, and we are now in a position to do things we could not do then. Lastly, and most important of all, by the policy of balancing imports and exports, the policy of Protection, we have provided a situation by which it is now possible to make an attempt to raise the internal price level without the certainty that the greater part of the freshly created money will go in fresh imports. The trouble of the late Government was not that they did not spend public money. Their trouble was that they were in the position of trying to fill a bath with hot water without having put the plug in the bottom of the bath. As long as you had the Gold Standard, and tried to balance exchanges rather than the price level, and failed to achieve some relation between imports and exports—as long as you had the old laissez faire, free market policy, and no planned economy, it was no good pouring out money, because you could not avoid the fact that, if you created £50,000,000, £200,000,000 or £300,000,000 of credit, you would not necessarily raise the internal price level. All you did was to dislocate further the lack of balance between exports and imports. We have changed that policy. There I am coming to agreement with the last sentence in the right hon. Gentleman's speech. I think the free market policy and orthodox financial policy must go together, for the Gold Standard and a free market are bound together. But I have never understood the Labour party's fiscal policy. The Motion put down for to-morrow is a pure Free Trade Motion with a view to trying to catch the votes of some of the Members opposite.

Mr. ANEURIN BEVAN

At the time did not the hon. Member approve of going on with the Gold Standard?

Mr. MACMILLAN

I am not talking of what I approved. I am not arguing that there is not a great deal to be said for it. It would be foolish to say there were no tremendous arguments in favour of free markets or othodox financial policy. But we must pursue a logical course. Having got a new system on which to work I ask, and with a feeling of great confidence, that the Government will proceed with a policy which is a logical sequence of the policy they have already put into effect. The official Opposition's attitude is to put down a Free Trade Motion when they want to attract a few Liberal votes to their Lobby, but in their agricultural policy of 1932 we have suggested a complete system of import boards and regulated imports, a system of protection even more complete than any upon which we have ever ventured to embark. The point of course is that, in the present circumstances, we have to raise the internal price level and to distribute more purchasing power, but not by employing men making consumption goods. Men employed in making consumption goods must produce somewhat more than they consume. There is a margin for profit and interest. If some wealthy millionaire were to spend money giving work to 100,000 people to produce consumption goods he would only add to unemployment. We want the production of capital goods, because the men employed on producing capital goods are, by receiving purchasing power, spending on consumption without adding to the total volume of consumption goods. The total of consumption must thus rise and a rise in prices is regarded as desirable in every quarter of the House.

As a result of the Government's policy we can more easily do that than ever before. The point was never more happily put than in Manchester two days ago where Sir Arthur Salter is reported to have stated that last year the bank deposits had increased by £246,000,000 and the bank advances by £130,000,000. He said that it was the demand for consumption and how to stimulate it that was important. There was one way which had been suggested by Mr. Rupert Beckett, and it was the only method by which we could act quickly and decisively. It represented in his view the most fruitful issue, and that was an immediate and profound modification of the policy of restricting public expenditure. That is public expenditure on capital account. That is what is desired. Public expenditure which, if possible, shall be remunerative and revenue producing. For if you spend £100,000,000 and get £3,500,000 revenue you are balancing your account, but remember, even if you get only £3,000,000 or £2,000,000 your budget is only disturbed by the difference between that amount and £3,500,000.

We want to get capital sums into circulation, and we must choose the best and most useful schemes. Obviously, housing comes first. It is not only revenue producing but health producing and life producing. We must choose that first. It must be the declared policy of the Government. We have put the plug in the bath, but we have turned off the hot water. We have been having cold baths for two years, let us now turn on the hot water. Do not let us plug the bath and forget to turn it on at all. I am certain that the justification for the policy of the Government is the success which attended it last year, and I beg the Government to pursue its logical sequence with strength and vigour, because every economic authority in the country is agreed upon it and the demand of the people is that strong measures should be taken by which consumption can be increased, prices rise, and large numbers of people be re-employed as they deserve to be.

7.18 p.m.

Mr. KINGSLEY GRIFFITH

No one on these benches would attempt to blame the Government, when it was first formed in the moment of crisis, for adopting an extremely Conservative policy with regard to expenditure on public works, as in other matters. There was a crisis, and it was necessary to act in order to avoid positive danger. As action had to be taken in a hurry it was necessarily indiscriminate and some things which were closed down were right and others, probably, wrong. Now, after a time of testing, there is an opportunity to review what has been done, and that is what the Government should do now. I hope they will listen to the eloquent plea made by my hon. Friend the Member for Stockton-on-Tees (Mr. Macmillan) who represents a district where the circumstances are very much like those in my own constituency.

It is the justifiable pride of the Government that they have restored financial credit to such a remarkable extent that in that matter, at any rate, we need not fear comparison with any other country. This has not been secured alone by statesmen or by municipalities. It has been secured by actual sacrifice by people who produce various kinds of things. They made the sacrifice willingly in the belief that it was for the good of the nation, but unless this credit is used for the general good of the country they will begin to think that they were deluded in the first case. Wise statesmanship should know not only when to use the brake but also when to use the accelerator. In the changed circumstances I think that a forward policy is demanded. That is why the epistle to Bethnal Green, as the hon. Member for Spennymoor (Mr. Batey) described it, was extremely un-fortunate in its terms. It may not have meant what it said; communications from that quarter very often do not, but it has produced an effect. The denunciation of relief works in that letter is extremely misleading. No one on these benches, or on the benches opposite has ever demanded relief works, and certainly not the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George). Relief works mean digging a hole and filling it up again. No one has suggested anything like that.

If I have to choose I prefer the language of the Amendment moved by the hon. Member for Spennymoor to that of the original Motion. The original Motion confines itself to works which are proved to be directly revenue producing, whereas the hon. Member for Spennymoor uses the word "useful." That is the better definition. If you restrict yourself to revenue producing works it means that you can start a swimming bath, if you charge an entrance fee, but that you will not be able to construct a sewer. You will be able to construct a new tunnel, if you charge a toll, but you will not be able to repair an old bridge. Distinctions of that kind cannot be defended. We should be able to do work which is for the good of the community, for the benefit of its health, and not necessarily to see cash as the result of the operation. That kind of work is part of the equipment of the nation, and should be undertaken. This is not the demand of a few irresponsible Liberals or Socialists, it is the demand of what the right hon. Member for Bow and Bromley (Mr. Lansbury) would call quite decent people. I have a letter from a most respectable source, which was communicated to the Government but receiving no satisfactory reply it was communicated to the Press. In the letter it is stated: There is not, in our opinion, adequate justification for a complete abandonment of the policy of financial co-operation between the Government and local authorities. With a full sense of responsibility, we assert that there are at present civil engineering and building projects (sewerage, houses, schools etc.) which could be put into operation if assistance is forthcoming. That letter is signed by the Mayor of the county borough of Middlesbrough and the Mayors of Stockton-on-Tees, Hartlepool, Thornaby-on-Tees and Red-car. The first name, the Mayor of Middlesbrough, will be well known to many hon. Members because Mr. Wesley Brown sat in this House as Conservative Member for Middlesbrough East. For this year he has laid his politics aside, but from what I know of him his Conservative views will be unchanged when his year of office expires. It is people like that who are demanding from the Government a policy which is not that outlined by the Prime Minister in his letter to Bethnal Green. The Government will be making the greatest mistake if they do not realise that the policy of closing down adopted in an emergency may become a danger to the nation if it becomes a permanent feature of our national policy. If you are never going to spend you will never be able to build up. I remember the speeches made by the Prime Minister in 1928 when he was still under the Red Flag and had not come out under the Gold Standard. I remember how he urged us to come out with him into the fields of the country— it was picturesque, and he took no notice of boundaries—where he said he could show us how the nation could be developed. I wish he could remember something of the same kind now.

The need for development is as great now. I could take him to some back streets in Middlesbrough and show him people who have been waiting for a revival of trade, which he says is the thing for which we must all hope, during six successive Governments, three of which have been headed by himself. The most tragic thing I have read recently was the statement of Sir Arthur Salter, when he dealt with the remarkable way in which we had recovered from the War, how our losses were soon made up, and how by 1929 we had reached what he called the peak year of prosperity for the world and for this country. I thought of the condition of things which existed at that time in Middlesbrough, and in the coal mining districts and in Lancashire, and imagined that a full recovery of trade would still leave us only as we were then, a condition of things which broke the heart of my predecessor Mr. Trevelyan Thomson. We have to face facts on that basis. In 1928 there was a report from the Industrial Transference Board. They found that there were 200,000 people in the coal mining industry, 100,000 in iron and steel, and 100,000 in textiles, whom they regarded as a permanent surplus to the requirements of those industries. There, at the peak of our prosperity, were 400,000 men to be dealt with as a permanent surplus to the requirements of industry; and if that committee were to report now they would make the figure larger.

There must be some constructive suggestion, some plan, a five-years plan if you like, but a plan of some kind for bringing these people back into the service of the country. It is not impossible. Housing has been mentioned. That ques- tion need not cut across the plans of the Government. The plan put forward by Sir Tudor Walters, for rural housing, could be put into force without interfering with the plans of the Government. Take bridges, only a small matter, but in the opinion of the Traffic Commission 1,000 bridges need reconditioning every year. That is the kind of work to which the Government should lend their hand. It is work which would bring people back into their own trade. I want them to drive out that spirit which denies, that imp which seems to come from Whitehall with every red box the Minister brings to this House and which makes the most optimistic and courageous Minister the most discouraged and despairing Minister when on the Front Bench. They must show a spirit of courage and determination to make the best possible use of the genuine achievement they have to their credit, that of restoring the financial position of this nation. There is the opportunity; and I beg the Government to use it without any fear at all.

7.29 p.m.

Mr. G. NICHOLSON

Only one minute is left to me, and I desire to put to the Government one single question. They have heard many plans and suggestions from all quarters of the House. There is one point in common between them all. What the nation is demanding is some sign that the Government have a plan for the future.

Colonel BALDWIN-WEBB rose in his place and claimed to move, "That the Question be now put," but Mr. DEPUTY-SPEAKER withheld his assent and declined then to put that Question.

Mr. NICHOLSON

The whole nation is demanding not that the Government should put a large scale plan in operation, but for some evidence that the Government have a plan; that they realise that in dealing with unemployment there is a residue of unemployment which will always remain, and that they have some plan for dealing with it.

Colonel BALDWIN-WEBB

rose in his place and claimed to move, "That the Question be now put," but Mr. DEPUTY-SPEAKERwithheld his assent and declined then to put that Question.

HON. MEMBERS

Go on with your speech.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 242; Noes, 58.

Division No. 46.]	AYES.	[7.30 p.m.
Acland-Troyte, Lieut.-Colonel	Ganzoni, Sir John	Ormsby-Gore, Rt. Hon. William G. A.
Agnew, Lieut.-Com. P. G.	Glossop, C. W. H.	Palmer, Francis Noel
Alnsworth, Lieut.-Colonel Charles	Gluckstein, Louis Halle	Patrick, Colin M.
Allen, Sir J. Sandeman (Liverp'l, W.)	Glyn, Major Ralph G. C.	Peake, Captain Osbert
Allen, William (Stoke-on-Trent)	Goff, Sir Park	Pearson, William G.
Anstruther-Gray, W. J.	Goodman, Colonel Albert W.	Penny, Sir George
Apsley, Lord	Grattan-Doyle, Sir Nicholas	Percy, Lord Eustace
Astbury, Lieut.-Com. Frederick Wolfe	Gretton, Colonel Rt. Hon. John	Perkins, Walter R. D.
Atholl, Duchess of	Grimston, R. V.	Peters, Dr. Sidney John
Atkinson, Cyril	Guinness, Thomas L. E, B.	Petherick, M.
Baillie, Sir Adrian W. M.	Gunston, Captain D. W.	Peto, Sir Basil E. (Devon, B'nstaple)
Baldwin, Rt. Hon. Stanley	Guy, J. C. Morrison	Peto, Geoffrey K. (W'verh'pt'n, Bilston)
Balfour, George (Hampstead)	Harbord, Arthur	Potter, John
Balniel, Lord	Harvey, Major S. E. (Devon, Totnes)	Procter, Major Henry Adam
Banks, Sir Reginald Mitchell	Headlam, Lieut.-Col. Cuthbert M.	Pybus, Percy John
Barclay-Harvey, C. M.	Heilgers, Captain F. F. A.	Raikes, Henry V. A. M.
Barton, Capt. Basil Kelsey	Henderson, Sir Vivian L. (Chelmsford)	Ramsay, Capt. A. H. M. (Midlothian)
Beauchamp, sir Brograve Campbell	Heneage, Lieut.-Colonel Arthur P.	Ramsay, T. B. W. (Western Isles)
Beaumont, Hon. R. E. B. (Portam'th, C.)	Hepworth, Joseph	Ramsbotham, Herwald
Belt, Sir Alfred L.	Hills, Major Rt. Hon. John Waller	Ray, Sir William
Birchall, Major Sir John Dearman	Hopkinson, Austin	Remer, John R.
Bird, Ernest Roy (Yorks., Skipton)	Hore-Belisha, Leslie	Renwick, Major Gustav A.
Blindell, James	Hornby, Frank	Roberts, Sir Samuel (Ecclesall)
Boothby, Robert John Granam	Horsbrugh, Florence	Robinson, John Roland
Borodale, Viscount	Hudson, Capt. A, U. M. (Hackney, N.)	Ropner, Colonel L.
Braithwaite, J. G. (Hillsborough)	Hudson, Robert Spear (Southport)	Bosbotham, Sir Samuel
Broadbent, Colonel John	Hume, Sir George Hopwood	Ross, Ronald D.
Brown, Col. D. C. (N'th'l'd, Hexham)	Hurd, Sir Percy	Rose Taylor, Walter (Woodbridge)
Brown, Ernest (Leith)	Inskip, Rt. Hon. Sir Thomas W. H.	Runge, Norah Cecil
Browne, Captain A. C.	Jackson, Sir Henry (Wandsworth, C.)	Russell, Richard John (Eddisbury)
Burnett, John George	James, Wing-Corn. A. W. H.	Rutherford, Sir John Hugo (Liverp'l)
Butt, Sir Alfred	Joel, Dudley J. Barnato	Salt, Edward W.
Campbell, Edward Taswell (Bromley)	Johnston, J. W. (Clackmannan)	Sandeman, Sir A. N. Stewart
Campbell, Vice-Admiral G. (Burnley)	Jones, Lewis (Swansea, West)	Sanderson, Sir Frank Barnard
Carver, Major William H.	Kerr, Hamilton W.	Savery, Samuel Servington
Castlereagh, Viscount	Lennox-Boyd, A. T.	Shakespeare, Geoffrey H.
Cayzer, Sir Charles (Chester, City)	Levy, Thomas	Shaw, Helen B. (Lanark, Bothwell)
Cazalet, Thelma (Islington, E.)	Llewellin, Major John J.	Shaw, Captain William T. (Forfar)
Cazalet, Capt. V. A. (Chippenham)	Lloyd, Geoffrey	Shute, Colonel J, J.
Chapman, Col. R. (Houghton-le-Spring)	Lockwood, Capt. J. H. (Shipley)	Simmonds, Oliver Edwin
Charlton, Alan Ernest Leofric	Mabane, William	Slater, John
Christie, James Archibald	MacAndrew, Lieut.-Col. C. G. (Partick)	Smiles, Lieut.-Col. Sir Walter D.
Clarry, Reginald George	MacAndrew, Capt. J.O. (Ayr)	Smith, Louis W. (Sheffield, Hallam)
Cochrane, Commander Hon. A. D.	McConnell, Sir Joseph	Somervell, Donald Bradley
Cook, Thomas A.	MacDonald, Rt. Hon. J. R. (Seaham)	Somerville, D. G. (Willesden, East)
Cooke, Douglas	McEwen, Captain J. H. F.	Soper, Richard
Cooper, A. Dun"	McKie, John Hamilton	Sotheron-Estcourt, Captain T. E.
Craddock, Sir Reginald Henry	Maclay, Hon. Joseph Paton	Southby, Commander Archibald R. J.
Croft, Brigadier-General Sir H.	McLean, Major Sir Alan	Spencer, Captain Richard A.
Crooke, J. Smedley	McLean, Dr. W. H. (Tradeston)	Stanley, Lord (Lancaster, Fylde)
Crookshank, Capt. H. C. (Gainsb'ro)	Macmillan, Maurice Harold	Stanley, Hon. O. F. G. (Westmorland)
Croom-Johnson, R. P.	Magnay, Thomas	Stewart, J. H. (Fife, E.)
Crossley, A. C.	Manningham-Buller, Lt.-Col. Sir M.	Stones, James
Cruddas, Lieut.-Colonel Bernard	Margesson, Capt. Rt. Hon. H. D. R.	Storey, Samuel
Culverwell, Cyril Tom	Marsden, Commander Arthur	Stourton, Hon. John J.
Dawson, Sir Philip	Martin, Thomas B.	Strauss, Edward A.
Denville, Alfred	Mason, David M. (Edinburgh, E.)	Strickland, Captain W. F.
Dickie, John P.	Mason, Col. Glyn K. (Croydon, N.)	Stuart, Hon. J. (Moray and Nairn)
Dixon, Rt. Hon. Herbert	Merriman, Sir F. Boyd	Stuart, Lord C. Crichton-
Donner, P. W.	Mills, Major J. D. (New Forest)	Summersby, Charles H.
Doran, Edward	Mitcheson, G. G.	Sutcliffe, Harold
Drewe, Cedric	Molson, A. Hugh Elsdale	Templeton, William P.
Duckworth, George A. V.	Monsell, Rt. Hon. Sir B. Eyres	Thomson, Sir Frederick Charles
Dugdale, Captain Thomas Lionel	Morris, John Patrick (Salford, N.)	Thorp, Linton Theodore
Duncan, James A. L. (Kensington, N.)	Morris-Jones, Dr. J. H. (Denbigh)	Titchfield, Major the Marques of
Eastwood, John Francis	Morrison, William Shepherd	Todd, Capt. A. J. K. (B'wick-on-T.)
Ellis, Sir R. Geoffrey	Moss, Captain H. J.	Train, John
Elmley, Viscount	Muirhead, Major A. J.	Tryon, Rt. Hon. George Clement
Emmott, Charles E. G. C.	Munro, Patrick	Turton, Robert Hugh
Emrys- Evans, P. V.	Nall, Sir Joseph	Wallace, John (Dunfermline)
Erskine, Lord (Weston-super-Mare)	Nation, Brigadier-General J. J. H.	Ward, Lt.-Col. Sir A. L. (Hull)
Essenhigh, Reginald Clare	Nicholson, Godfrey (Morpeth)	Ward, Sarah Adelaide (Cannock)
Evans, Capt. Arthur (Cardiff, S.)	Normand, Wilfrid Guild	Warrender, Sir Victor A. G,
Everard, W. Lindsay	North, Captain Edward T.	Weymouth, Viscount
Fielden, Edward Brocklehurst	Nunn, William	Whiteside, Borras Noel H.
Ford, Sir Patrick J.	O'Connor, Terence James	Williams, Charles (Devon, Torquay)
Forestier-Walker, Sir Leolin	O'Donovan, Dr. William James	Williams, Herbert G. (Croydon, S.)
Fuller, Captain A. G.	Oman, Sir Charles William C.	Wills, Wilfrid D.
Wilson, G. H. A. (Cambridge U.)	Womersley, Walter James	TELLERS FOR THE AYES.—
Windsor-Clive, Lieut-Colonel George	Wood, Rt. Hon. Sir H. Kingsley	Colonel Baldwin-Webb and Mr.
Wise, Alfred R.	Worthington, Dr. John V.	Brocklebank.
Withers, Sir John James	Young, Rt. Hon. Sir Hilton (S'V'noaks)
NOES.
Acland, Rt. Hon. Sir Francis Dyke	Grenfell, David Rees (Glamorgan)	McKeag, William
Attlee, Clement Richard	Griffith, F. Kingsley (Middlesbro'.W.)	Maclean, Nell (Glasgow, Govan)
Banfield, John William	Griffiths, T. (Monmouth, Pontypool)	Mallalieu, Edward Lancelot
Bevan, Aneurin (Ebbw vale)	Groves, Thomas E.	Mander, Geoffrey le M.
Buchanan, George	Hall, F. (York, W.R., Normanton)	Maxton, James
Cape, Thomas	Hall, George H. (Merthyr Tydvil)	Nathan, Major H. L.
Cocks, Frederick Seymour	Harris, Sir Percy	Owen, Major Goronwy
Cripps, Sir Stafford	Holdsworth, Herbert	Parkinson, John Allen
Daggar, George	Jenkins, Sir William	Price, Gabriel
Davies, David L. (Pontypridd)	Jones, Henry Haydn (Merioneth)	Rathbone, Eleanor
Davies, Rhys John (Westhoughton)	Jones, J. J. (West Ham, Silvertown)	Roberts, Aled (Wrexham)
Edwards, Charles	Kirkwood, David	Salter, Dr. Alfred
Evans, David Owen (Cardigan)	Lansbury, Rt. Hon. George	Thorne, William James
Evans, Capt. Ernest (Welsh Univ.)	Lawson, John James	Wedgwood, Rt. Hon. Josiah
Evans, R. T. (Carmarthen)	Leonard, William	White, Henry Graham
Foot, Dingle (Dundee)	Llewellyn-Jones, Frederick	Williams, Edward John (Ogmore)
George, Rt. Hon. D. Lloyd (Carn'v'n)	Logan, David Gilbert	Williams, Thomas (York, Don Valley)
George, Major G. Lloyd (Pembroke)	Macdonald, Gordon (Ince)	Young, Ernest J. (Middlesbrough, E.)
Graham, D. M. (Lanark, Hamilton)	McEntee, Valentine L.
Greenwood, Rt. Hon. Arthur	McGovern, John	TELLERS FOR THE NOES.—
		Mr. Batey and Mr. Tinker.

Question put, and agreed to.

Resolved, That this House, while endorsing the action of His Majesty's Government in limiting expenditure on local authorities' schemes of a non-productive nature, urges His Majesty's Government to keep under constant and active review the means of reducing the number of unemployed by assisting local authorities to undertake essential works of a revenue-producing nature and by encouraging productive industry in general, whereby men and women can be employed in their own crafts.