EMPLOYMENT AND PRODUCTION

HC Deb 27 April 1951 vol 487 cc705-801

11.6 a.m.

Mr. Hayman (Falmouth and Camborne)

I beg to move, That this House urges His Majesty's Government to take all possible steps to ensure the maintenance of full employment and increasing production, in order to carry out the defence programme while maintaining the nation's economic strength and independence with the minimum sacrifice of the standard of living. I feel that this Motion is very applicable to the critical situation in which our country finds itself at the present time. The maintenance of full employment and production is vital to the stability of our national life and democracy. We know what serious consequences there have been in the past because of mass unemployment in the countries of Europe. I feel that my generation has fought for economic freedom and the supplementing of the political freedom for which our forefathers fought through the centuries.

It seemed to us that political freedom could never be a reality unless there was economic freedom. We believed, too, that one of the surest ways to economic freedom was full employment. Obviously, if there is to be full employment, there must be full production. The goal seemed unattainable in the dark years between the war when there was mass unemployment throughout Britain. In my home town, as I shall proceed to show, it was almost as bad as anywhere else in Britain. Indeed, it seemed to some of us in those days that mass unemployment had come to be accepted as a feature of our society. I feel that there were many people of good will who never realised the suffering which mass unemployment entailed. Mass unemployment to a great extent affected the lowest sections of the community—not that the technicians were exempt from it or that business people were immune from its terrible consequences. All suffered, but none so much as the workers, the old people, the sick, the widows and the orphans.

I feel, therefore, that I am justified in considering the alternative to my Motion and in dwelling for a time on what the effects of unemployment were in the lifetime of all of us here today. In my maiden speech in the House, I said that the prime political objective of my life had been to strive to obtain freedom from want for all our people. I suffered from the privations of poverty in my youth, and, therefore, I know something of what it entails. There are in history some outstanding documents. Most outstanding, perhaps are Magna Carta, the American Declaration of Independence, and, in these times, the Universal Declaration of Human Rights. I feel that another declaration, which was made during the years of the war, has some effect today on our deliberations, and that is the Atlantic Charter.

The Atlantic Charter promised that our people should have a chance of freedom from want and of social security. In the War Memoirs of the right hon. Gentleman the Member for Woodford (Mr. Churchill), he makes it clear that when he sent the draft of the Charter to the War Cabinet from Newfoundland he asked that it should be dealt with urgently. The War Cabinet was called in the middle of the night. Within two hours its deliberations had reached the Prime Minister, and the War Cabinet had added the clause about social security. I feel, therefore, that since the present Prime Minister was the Chairman of the War Cabinet in the absence of the Premier we can be proud of the share which our party played in that declaration.

During the war there was another famous report, the Beveridge Report, which came out in 1942. That marked a great stage in our social history. In speaking of unemployment, the Report anticipated that after the war we should expect to have an annual rate of unemployment of 8½ per cent. In the inter-war years the annual average was nearly 15 per cent. Today, it is about 1½ per cent.; and so we can claim on this side that our Governments have implemented their promise of full employment for the people of the country.

That is the story, but the need for the continuance of full employment is demonstrated in the Economic Survey for 1951. All of us are aware that re-armament cannot be carried forward unless we have full employment. The House was almost unanimous in supporting rearmament, and almost the whole House was satisfied with the scale of re-armament. To maintain or to bring about the re-armament that we have set ourselves, we must not only maintain our production but increase it. Certainly, we must increase it substantially if we are to maintain our present standard of living. We must also maintain our nation's economic strength and independence. That is absolutely essential if our people are to bear the sacrifices they are called upon to bear.

As a Private Member, I think that perhaps I might say that the country will not be bullied by any other country and that we are the satellite of no country. No other country in the world has made greater sacrifices for the freedom and well-being of the peoples of the world than ours. We made them during the war, and we have made them since the war. Our soldiers were in battle long before the Korean war started; and we have borne our part in that war, too. We have undertaken to keep the stability of peace in the different parts of the world since 1945. But re-armament is unproductive. That must never be over-looked.

Today, we are spending, or expecting to spend no less than £1,100 million on re-armament, and in five years' time that money will have completely gone. There will be scarcely anything of worth that is left to us. That amount means one-quarter of the Budget and one-tenth of our national income. The nations of the world and the Atlantic Treaty Organisation must recognise this great sacrifice which our people are undertaking. Some people speak at times as though war were a kind of game, something like a football match, after which life can continue just as before.

We know, and the ordinary people know, that war entails immense sacrifices and that it takes years to recover even some part of what has been sacrificed. Because we know that so well, I think we can claim credit for the scale of re-armament we have now undertaken. But in doing this, we must protect the poorest section of the community. We were glad to hear the Minister of National Insurance give some indications along those lines yesterday. Full production can ensure re-armament, and can also ensure that the sacrifices which must be borne shall be as limited as possible. To get full employment we must have raw materials. I do not intend to comment on the events of this week, but I should like to thank the Foreign Secretary for what he has said about our need for raw materials. We thank the American people and the American Government for the additional allocation of sulphur announced this week, but we do ask the United States to take a realistic attitude about this stockpiling of raw materials. We realise that some stockpiling is essential, but the industries of our country cannot survive unless we get the raw materials.

At this stage, I should like to quote from the Atlantic Charter. Article 4 states: They will endeavour, with due respect for their existing obligations, to further enjoyment by all states, great or small, victor or vanquished, of access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity. We need not remind the United States Government that their famous President, President Roosevelt, was one of those who drew up that Charter. The Article was intended for peace conditions; but today we live in a war atmosphere and, therefore, it is essential that it should be implemented.

Hitherto, I have been speaking in general, and I should now like to be more specific and refer to my constituency, because I think that I can prove that it is a fair sample of Britain today. Cornwall had trade with the Levant before Julius Caesar came to this country, and mining machinery from my constituency goes to the Levant today. We export mining machinery, textiles and safety fuses from my constituency, and great exports of china clay go from the adjoining constituency of Truro. But until the Wall Street gamble crash, in 1929, the greatest export from our country was its young men, because they could not find employment at home. There are thousands of people in the United States who were born in Cornwall.

In the inter-war years we had tragic unemployment. Miners' choirs toured the country like those of South Wales. From 1929 to 1938 the average unemployment in my town of Redruth was 32.9, one-third of the insurable population for 10 years. For three years in succession the average percentage was 50. In Hayle it was 28.4; in Camborne 22.1; and in Falmouth 14.1 per cent. All these are in my constituency. Thus, my constituency had an average unemployment figure, over 10 years, of 24.3 per cent. compared with 14.8 per cent. for Britain as a whole. The total sum of misery which that unemployment entailed is incalculable. Only those who have lived among it can understand it.

Thanks to the Government's full employment policy there is a very different state of affairs today. New industries have come to our town, and I am glad to be able to report that the latest figure for unemployment in West Cornwall is 3.2 per cent. What an improvement. It is easy to see why we feel that full employment was essential. We have had such a bitter experience of its alternative, unemployment.

I am concerned at the shortage of raw materials because it affects our engineering works, over 80 per cent. of whose products are for export. It also affects the ship-repairing yard at Falmouth. In January of this year redundancy came about there, and 900 men were unemployed, or 40 per cent. of the labour force at the docks. When I say that the nearest big ship-repairing port is 180 miles away it can be seen what redundancy means in my constituency. There are no alternative places where men can go to work and live at home. The latest unemployment figure is 166 shipyard workers, but the tragedy is that ships are being turned away from the port because of the shortage of steel plates, an agonising experience in view of what we have gone through in recent months. Prolonged unemployment in the ship-repairing docks at Falmouth would spell ruin for the town and West Cornwall.

The Amendment which stands in the name of some hon. Members opposite implies that joint consultation in industry should take place, and I shall await their speeches with some interest. I agree that such consultation is essential, but it must be full and frank. My experience in recent months has been that some big employers have been extremely cooperative, but that others have not been so co-operative. Employers are not the only people to invest capital in their industries. The employees, in most cases, invest all that they have, including their homes and their furniture. Some of them may own their houses; some of them may be buying them and their investment is there. Local authorities invest money in schools, hospitals, roads and in many other ways. The business community sink capital in that town, and, therefore, all have a stake in the welfare of the chief industries.

In agriculture in Cornwall there was a drop of 28 per cent. in the number of agricultural workers employed in the 10 years 1929 to 1938. Farms went out of cultivation. Things are very different now. There is a big queue clamouring for smallholdings. Heath and moorland have been brought under the plough, and we hope that the Ministers concerned will see that there is a proper adjustment and timing of import licences for horticultural produce so that the grower will be protected. On the grower's part, he must be expected to see that the produce is properly graded and packed.

The Government can claim some credit in regard to fishing in having passed the Sea Fish Industry Bill. Cornwall has the longest coastline of any county in Britain and its inshore fisheries are very important. But there is another industry in my constituency about which I am concerned, and this is the granite industry. Granite for the wall of the South Bank of the Festival of Britain Exhibition came from the quarries of Cornwall and some of those quarries are in my constituency. However, skilled granite workers are unemployed and are drifting away from the industry because of imports from Scandinavia. All I can say is that we ought not to sacrifice an industry on the altar of liberalised trade. There must be some successful adjustment by which the workers and the industry can be afforded some measure of security.

My division was once known as the mining division, because mining was its most important industry, as indeed it was throughout West Cornwall and other parts of the county. In July, 1949, the Westwood Committee submitted its report. I can appreciate that at this stage the Government do not feel able to set up a mineral development commission, but I ask the Government to do these two things: first, to assist in every reasonable way small enterprises which can be invaluable in testing assertions and prophecies of mining engineers and geologists; second, to implement immediately the recommendation about the preservation of old mining records, which will save immense sums later if we come to prospect for minerals.

I congratulate the Prime Minister in appointing my right hon. Friend the Member for Ipswich (Mr. Stokes) to be Lord Privy Seal, with the job of securing and allocating raw materials. I would draw attention to the fact that sulphur pyrites was once largely extracted from Cornwall, and that there are still quantities available in my constituency. I am informed that within one and a half miles of my own home, zinc-blende ore can be recovered in useful quantities. I ask the Minister to investigate that.

I cannot pass from tin mining without reference to silicosis. We have had an experiment in aluminium dust protection at the Geevor mine at St. Just, in the constituency of the hon. Member for St. Ives (Mr. Howard). As there are only a few mines in Cornwall, I am sure the hon. Member will not object to my having gone down the mine at Christmas at the invitation of the management to see it. It is exceedingly well run, and the management have done everything possible to make this experiment, in connection with the inhaling of aluminium dust, successful. It has been carried out under the auspices of the Medical Research Council, and splendid voluntary work has been done by Dr. Hale, but the Medical Research Council feel that the plan is too much of a long-term nature and they have withdrawn their recognition of it.

I ask them to reconsider their decision, because this experiment has had a great psychological effect upon the miners. Tin mining has carried the highest incidence of silicosis in any industry, and the difficulty in future will be to find new recruits because miners are frightened of silicosis. The skill of the tin miners will soon have been lost unless something is done. The skill, resourcefulness and knowledge of the ordinary tin miner are often better than those of the academic geologist, and I could give many instances to prove my point.

I apologise for the length of time I have been speaking about my own constituency, but it is an epitome of the problem with which we have to deal. I claim that the Government's full employment policy has been successful. In the post-war years, unemployment has been only one-tenth of what it was during the 20 inter-war years, when, as we ought to recall, the unemployment figure never fell below 800,000. This policy of the Government was questioned by the hon. Member for Chippenham (Mr. Eccles) in the debate on the King's Speech in March of last year. The hon. Member praised the policy of price stabilisation in Belgium, and said: I fully admit…that some people will get hurt in this process…"—[OFFICIAL REPORT, 7th March, 1950; Vol. 472, c. 185.] Yes, some people did get hurt in the process—11 per cent. of the workers of Belgium at that time were unemployed.

What is the position there today? My latest figure, for February, 1951, is 11.6 per cent. In January, 1951, it was 20.9 per cent. Taking the latest figure of 11.6 per cent., if our ratio of unemployment was equal to that of Belgium we should have 2,500,000 people out of work. That there may be full shop windows in Belgium is no consolation to their unemployed.

I turn to production. In 1950 we had increased our production by 30 per cent. over 1947. That, I claim, is no mean achievement. There has been an annual increase of 7 per cent. in the last three years; there may be a lower rate this year because of defence preparations. Any increase is dependent on raw materials being available, but I think that if they are available at all times, the estimate of a 4 per cent. increase may be exceeded, to the advantage of all our people and of our standard of life.

It is vital that we should maintain a high level of exports, because the very survival of the country depends upon our exports. In 1944, our exports were only 31 per cent. of what they were in 1938, a clear indication of the great sacrifices made by the country during the war; but never again can we agree to such a unilateral sacrifice of our export trade, and this ought to be made perfectly clear. We have made a marvellous postwar recovery. Taking 1947 as 100, our exports in 1950 had reached the figure of 162.

I pass now to the stockpiling of raw materials, about which my hon. Friend the Member for the Park Division of Sheffield (Mr. Mulley) intends to speak when he seconds the Motion. Stockpiling used to be known as hoarding, a very ugly word about which we knew a lot at the beginning of both the 1914 and 1939 wars. We must not allow this hoarding to smash the Atlantic Treaty Organisation, as unregulated public or private hoarding will spell ruin for us and will result in mass unemployment.

Mass unemployment would strangle rearmament. It would create a bitterness which it would take generations to live down, and the people of Britain would never forgive America if that were to happen. It has been said that some people in the U.S.A. would not regard six million unemployed there as serious. On the same scale, our unemployed would number two million, and that would be mass unemployment. Let everyone remember that mass unemployment in Weimar Germany in the inter-war years produced Hitler, whose aim was the domination of the world; and had it not been for the sacrifices which this country made, he would have dominated the world. We welcome the appointment of the new Lord Privy Seal to find and share the raw materials, and we wish him well.

I conclude by saying that armaments alone will not preserve Western Europe for democracy. We want to be friends with all countries; we are the enemies of none. The spirit of our people must be kept high. Nothing can ensure that, more than the maintenance of full employment and of our hardly won improved standards of life.

11.38 a.m.

Mr. Mulley (Sheffield, Park)

I beg to second the Motion.

I am sure that the House will join with me in congratulating my hon. Friend the Member for Falmouth and Camborne (Mr. Hayman) on his good fortune in the Ballot, on his selection of the Motion for our debate today, and particularly on the very able way in which he moved the Motion. It is quite clear that his constituency suffered very greatly from unemployment between the wars, and there is no question but that it has benefited from the policy of full employment since 1945.

We on this side are not ashamed that we have made full employment the keystone of our economic policy, for social as well as economic reasons. It is often said that our emphasis on full employment has been too great. The right hon. Member for Ormskirk (Sir A. Salter), for instance, has said that full employment should not be the objective of economic policy, but should be a by-product of a healthy economy. Not only do we consider any economy without full employment to be unhealthy; we claim that through full employment we have raised the efficiency and output of the British economy to levels never before attained.

In the last three years we have increased productivity at an average rate of 7 per cent. per year. The increase of industrial production is 40 per cent. above 1946 and it is even higher in manufacturing industries. Last year we attained a record volume of exports, as my hon. Friend the Member for Falmouth and Camborne said—62 per cent. above 1947—and last year we attained the biggest surplus on our balance of payments for the last 30 years. The target of post-war recovery was attained and we were able to dispense with Marshall Aid and Canadian credits much sooner than was expected.

It is only because of full employment and the healthy state of the economy that we can tackle the huge defence programme before us today without sacrifice of exports or of our own economic strength and independence. Clearly, unless we can maintain full employment and continue to increase production we shall fail to attain the defence programme and we shall also suffer a serious fall in our standard of living.

The theory of full employment, of course, is quite easy. It is the practice which is difficult. Since 1936 there has been broad agreement on the principles of maintaining full employment. They were set out in the Coalition White Paper in 1944 and I think my hon. Friend the Financial Secretary to the Treasury would agree that the budget today is the corner stone of full employment policy and is no longer merely a matter of balancing expenditure and revenue.

But while the "Savings equal investments" equation is simple to state it is the most difficult economic formula to evaluate and control; and without the economic mechanism of planning and control which was set up in 1945 and which has been developed since by this Government it would have been impossible to maintain full employment even with the best of good intentions. It must not be forgotten that the party opposite has constantly advocated the abolition of this mechanism of economic planning and control. In fact, we have heard hon. Gentlemen opposite attempt to explain away our success in full employment by two self-contradictory arguments.

First, it has been said that in the postwar situation there was a sellers' market and anyone could have maintained full employment. That was said a week or two ago in the Budget debate by the hon. Member for Harwich (Sir Stanley Holmes). Secondly, there was the contradictory argument that without Marshall Aid full employment could not have been achieved. I do not dispute the value of American aid. We on this side of the House have never disputed it. But the fact is that with Marshall Aid every country which has adopted the economic policy of the party opposite has had to contend with serious unemployment problems in this post-war situation. My hon. Friend the Member for Falmouth and Camborne referred to Belgium. What he said is equally true of Western Germany and of Italy, and it was true in 1949 of the United States. Without economic planning and control the practice of full employment is quite impossible.

While, in general terms, the cause of the chronic unemployment of pre-war years—the lack of purchasing power and the poverty in the midst of plenty—can be dealt with and has now largely disappeared, the problem of ensuring an even flow of work geographically and industry by industry has to be achieved by Socialist planning. The right hon. Gentleman the Member for Southport (Mr. R. S. Hudson) may laugh, but if he ever goes to South Wales or to the constituency of my hon. Friend the Member for Falmouth and Camborne, he will find a different story.

The policy of taking work to the workers has been devised for the development areas to build up balanced economic units and to prevent the reappearance of the black festering economic sores that were South Wales, Durham, Lancashire, the Clyde, and, in fact, even Cornwall which most of us, I am afraid, tend to view in the rosy hues of railway posters. The whole country was affected by the serious concentration of unemployment in certain areas. It was not only the high level of unemployment that caused distress before the war but the concentration of unemployment in certain industries and in certain areas.

To maintain an average level of unemployment below 2 per cent. for six years in a time of peace, in an industrial economy, is a unique record in the history of the world; it has been done without direction of labour and by strengthening rather than by diminishing the democratic structure of our society. It is even a greater record of labour and by strengthening rather than by diminishing the democratic structure of our society. It is even a greater record when we reflect upon our special dependence upon other countries for imports and exports and the consequent difficulty of controlling our own economic destiny. In fact, the chief danger to our full employment is the failure of other countries also to maintain it.

Unemployment, as we saw in the 1930's, is the easiest commodity of all to export and import and, therefore, we are vitally interested in the establishment of an international full employment policy. Both in the United Nations and in the Council of Europe we have played a leading role in the commissions concerned with this problem. We have adopted an international standard of 3 per cent. unemployment. That is a bold lead we have given to the rest of the world. It is our dependence on international supplies of raw materials which, of course, threatened us in the immediate post-war situation and which today again threatens not only full employment but our defence programme and, indeed, our whole economic policy.

The first problem we had to solve was that we could not pay in dollars for the necessary raw materials to keep our industries going because of the running down of our reserves in the war and because of the neglect of the inter-war years. These we solved by our own exertions and with American assistance. The problem today is more serious, because it is not our inability to pay for raw materials but the physical inability to obtain supplies which threatens us and which is largely beyond our control. It endangers not only our defence production, but our civilian and export industries as well.

In my own constituency, in Sheffield, we have, in the cutlery and silver ware, important export industries. They are unable to get adequate supplies of metal for export orders and none at all for home civilian use. The steel industry is affected by the serious shortage of nickel and the difficulties with steel scrap. It is because of raw materials difficulties that the Economic Survey this year only predicted an increase of production of 4 per cent. over 1950, which is no more than holding the production position as it was at the end of 1950.

This is only half the increase of productivity of the last three years, but even so it may prove to be an optimistic forecast. The consequence both to defence and civilian production will be very serious. While this may be the same diagnosis as that of certain of my hon. Friends, I draw quite a different conclusion from it. It may be that the defence programme will not be attained, but if it is not there will be not only a reduction of expenditure: there will surely also be a reduction of revenue, and because of greater consequences in respect of civilian production there will be a shortage of goods and a danger of demand-induced inflation. In short, the prescription for such a situation is a tougher and not an easier Budget.

The question of increased raw material prices is equally serious. Between August, 1950, and February last the cost of our imports rose by 25 per cent. in six months. Those prices are not affected seriously by our re-armament programme, and we should in any case have to pay them. As the Chancellor made quite clear in his Budget speech, we can only deal with the rise in prices due to increased demand, in the old phrase, "Too much money chasing too few goods" or, in the technical jargon, demand-induced inflation. The other type of inflation due to rising costs is beyond our own control.

The only serious criticism of the Government that has been made is that they neglected to stockpile quantities of these essential raw materials in 1950 instead of building up our gold and dollar reserves. It was well stated by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), in the Budget debate, when he said: In traders' parlance, they"— the Government— are now long of money and short of goods at a time when the skilful trader would be short of money and long of goods."—[OFFICIAL REPORT, 11th April, 1951; Vol. 486, c. 1053.] The right hon. Gentleman's financial advice is always worthy of serious consideration as that of a shadow Chancellor, and it is particularly so on this subject because in speaking of non-ferrous metals, etc., he draws upon wide business experience.

Yet one wonders when he would have bought these raw materials, because if we refer to a speech which he made last November in the House, he said: I fear that to urge greater dollar purchases now, upon the results of the last year, may be rather superficial, or rather premature. He went on to say: The purpose of my argument is to try to show that, until we can calculate the effect of a rise in prices of raw materials, we should be slow to rush into very much relaxation of dollar purchases. I am sure the Chancellor of the Exchequer will agree with me, and I assure him of support in this matter. These, after all, are not the only uncertainties."—[OFFICIAL REPORT, 16th November, 1950; Vol. 480, c. 1924–5.] That was as recently as 16th November last. Quite clearly, neither the right hon. Gentleman nor the trade thought that we should have bought more stocks of non-ferrous metals last year. In fact, the only demand we have had from Gentlemen opposite for increased dollar expenditure was for timber and newsprint. There was no mention of sulphur, non-ferrous metals or anything at all until December last.

Sir Peter Bennett (Birmingham, Edgbaston)

The unfortunate thing is that we do not know what the stocks are. It is for the man who knows what they are to decide when and how much to pay for them.

Mr. Mulley

The fact that hon. Members have recently complained that they do not know what the stocks are, has not prevented them from making this type of criticism. Generally speaking, to buy, no matter how much one has in stock when prices are rising, is sound.

Mr. Walter Fletcher (Bury and Radcliffe)

Many, including myself, urged a long time before that, after devaluation, and after the Prime Minister's statements in July and September last year, that stockpiling of all these commodities should then take place, whether from the sterling or the dollar area. The hon. Member left out of his argument a whole series of commodities obtainable from the sterling area into which the dollar argument does not enter.

Mr. Mulley

I am grateful for the hon. Member's intervention, but he will remember that whereas he, possibly for the economic welfare of those parts of the sterling area concerned, advocated stockpiling, he was a lone voice on the Opposition benches at that time. [HON. MEMBERS: "No."].

The prophet whom we are told about is the right hon. Gentleman the Member for Ormskirk (Sir A. Salter), whom I am glad to see in his place. We are told that in a letter to "The Times" on 18th August, 1950, he advocated this policy, even if he did not succeed in convincing his right hon. Friend the Member for Aldershot. I have taken the trouble of re-reading that famous letter. In fact, it says no such thing. If this is the only criticism that the Opposition have of the Government, it is just as "phoney" as the Zinoviev Letter, which we all remember. The letter advocates the building up of stocks of raw materials, not for use now to ensure continuity of production or to save money, but as part of antisubmarine defence. It is quite clear from the letter that the construction recently placed upon it by the right hon. Member for Aldershot in his speech on the Budget never entered into the head of the right hon. Member for Ormskirk. The only materials mentioned in the letter were iron ore and timber. The right hon. Gentleman wrote: In both the great wars of this century we were at one stage, in 1917 and 1941, in danger of defeat through the submarine. The existence of stocks which could have been accumulated with comparative ease before the outbreak of hostilities would have been of inestimable value. The right hon. Gentleman went on: If, happily, the international tension should lessen, stocks of essential imports would be a safeguard against the worse danger of unemployment—an inability to buy enough raw materials for our factories. Does anyone suggest that the international tension has since lessened? That letter was written before the Chinese intervention in Korea. Further, if the purpose of the stockpiling was anti-submarine defence, would we be sensible to use the commodities now?

Sir Arthur Salter (Ormskirk)

I thank the hon. Gentleman for his courtesy in informing me that he intended to refer to what I wrote last year. I cannot understand what he complains of or why he calls my letter a "phoney" one. In it, in August last year, I strongly urged that instead of continuing to pile up dollars in our reserves, we should do much better to buy the things that dollars could then have bought. It would have even strengthened our dollar reserve position if we had had dollar goods instead of dollars in the reserve. Surely that was correct advice. As far as I can calculate we should then have been able to obtain for about half the price, the goods which we are now attempting to get under the Government's present stockpiling programme. What there is about that which is "phoney," I cannot understand.

Mr. Mulley

I am grateful for the right hon. Gentleman's intervention. This is a very important matter. What I said was "phoney" was not the letter or the intention of the right hon. Gentleman. But I do say that it is "phoney" to use that letter now to suggest that the Opposition foresaw the strategic bottlenecks in raw materials that are endangering the economy. I will agree with the right hon. Gentleman that it was wise to make a strategic stockpile in August. If he refers to the speech of the Financial Secretary in the Budget debate—the right hon. Gentleman was in the House at the time—he will see that my hon. Friend told him that the Government had already begun to do that early in July, five weeks before the right hon. Gentleman's letter. It was only physical limitations of supply that prevented them from buying even more.

Sir A. Salter

Does the hon. Member really assert that there was a physical shortage in August of last year as serious as there is now?

Mr. Mulley

The right hon. Gentleman suggested that we bought timber and things like iron ore. What I will not have is that in August of last year he foresaw quite clearly the economic situation today——

Sir A. Salter rose——

Mr. Mulley

If the right hon. Gentleman will permit me to elaborate that, I will then willingly give way to him. In his article in the National Provincial Bank Review, dated 3rd July and published on 31st August, he was then dealing with an economic situation, the paying for our imports as a consequence of the recession of 1949. That economic situation was already out of date.

Sir A. Salter

The article to which the hon. Member refers specifically states that It was written before the beginning of the attack in North Korea and I do not think it is relevant to the present situation. We are now dealing with a situation of last August. Then I advocated a wide range of purchases of raw materials, including those of which we are now critically short. Even in the short extract of my letter which he gave, the hon. Member recognised that I referred to the shortage of raw materials not only as an additional difficulty in war but the principal danger of large-scale unemployment in the future.

Mr. Mulley

I object very strongly to that interpretation. I have here a copy of the letter. The right hon. Gentleman prefaces his remark with an excuse, by saying: If, happily, the international tension should lessen and then gives this use of stocks as a buffer against unemployment. If the right hon. Gentleman thinks that the international tension has lessened since August I can only congratulate him on his optimistic outlook.

Sir P. Bennett

To be quite fair it should be said that the hon. Member has over-looked a statement made by the Ministry—not the Minister—of Supply in August, when we were told that stocks of non-ferrous metals were ample, and that we need have no fear of a shortage of what we required. A statement like that does rather disarm us.

Mr. Mulley

I cannot accept that without chapter and verse.

I would like to make another reference to the letter of the right hon. Member for Ormskirk. I think it important and I think it reinforces my interpretation of the letter; that it was stockpiling for wartime defence purposes and not in anticipation of the present situation. It does, also, as he says, prove that when the international supply situation was much easier the Conservative Government neglected to take these steps, prior to 1939.

The whole suggestion that the Opposition are now making, that they had vision and foresaw the difficulties in which we now find ourselves, reminds me of the story of the young man with poor eyesight. He wished to impress his girl friend with his remarkable powers of vision, so he planted a drawing pin in a tree. Later, when they were walking together he said to her, "Look at that pin in the tree." Of course, the young lady was unable to see it and so he went boldly forward to demonstrate his remarkable powers of vision. The only fault with his performance was that he tripped over a cow on the way.

The truth is that the Government have been constantly seeking these raw materials, and I would urge them to continue to press the Americans for a proper allocation and to continue their initiative in the International Commodity Committee.

I join with my hon. Friend in warmly commending the appointment of my right hon. Friend the Member for Ipswich (Mr. Stokes) as Lord Privy Seal. We wish him well in this very difficult and important job which he will now have to undertake, Full employment, defence and our standard of living depends on the success of the Government in achieving a proper allocation of raw materials. I am sure that they have done, and will continue to do, all that they possibly can to ensure these objectives.

12.6 p.m.

Mr. Watkinson (Woking)

The whole House listened with great sympathy to the hon. Member for Falmouth and Camborne (Mr. Hayman), who moved the Motion. I, personally, listened with great sympathy indeed to his remarks about the bad years of unemployment. Here at least is one Conservative who knows as well as the hon. Member for Falmouth and Camborne some of the tragedies and heartbreaks of those years. Here also is a Conservative, I would remind the hon. Member, who does not disagree with him that a policy of full employment is essential to this country. Our whole fabric can be supported today only on full employment. That is something which his colleagues on the Front Bench could turn their minds to a little more often. If we had any serious degree of unemployment in this country today, the whole fabric of our social services, with their complicated demands from every one of us, would crash to the ground.

Where I differ from the hon. Member is not on this question of whether or not full employment is desirable, but how we may best achieve it. I differ entirely, not so much from the hon. Member for Falmouth and Camborne as from the hon. Member for Sheffield, Park (Mr. Mulley). He has done a grave disservice to the country as a whole in trying to disguise the hard facts of our present situation, and he wasted quite a lot of time trying to prepare an alibi for the future——

Mr. Mulley

I think I made clear, as my hon. Friends in other speeches have also made clear, the serious view which we take of the raw material situation today, and how very concerned we are about it.

Mr. Watkinson

I am glad the hon. Gentleman has corrected what was perhaps a misapprehension on my part. I hoped that the purpose of this debate was to call attention to the grave situation which lies ahead of us. What is behind us is of no interest to me.

Mr. Mulley

It is to us.

Mr. Watkinson

I have already said that I have the utmost sympathy with the hon. Member for Falmouth and Camborne when he looks back to the conditions which he knew—and which I knew, though perhaps not quite so long ago as he did. He drew certain conclusions which are perfectly acceptable. But what is in front of us in this country today is the problem of what we are to do in the future. I would recommend to both the hon. Member for Falmouth and Camborne and the hon. Member for Sheffield, Park, to read something produced by Transport House and published by the Trades Union Congress—I am sure they will accept that—called, "Trade Unions and Productivity"——

Mr. Mulley

I have read it.

Mr. Watkinson

I wish the hon. Member had referred to it in his speech and had taken some note of what it states. I wish that, in particular, he had referred to the passage which says that the basis of our security in the future must be to seek a rising standard of life for all, achieved through increasing industrial productivity or output per man hour. That is the problem which lies ahead.

Mr. Mulley

I do not want the hon. Gentleman to think that I did not refer to productivity; I did. With the indulgence of the House, I would willingly make another speech about it.

Mr. Watkinson

There is no mention in the Motion of raw materials, but there is a reference in the Amendment on the Order Paper in the name of myself and some of my hon. Friends, to add at the end of the Motion the words: and to this end to make more effective use of the committees that act as a link between government and industry and can offer expert advice from both Trade Unions and Management to ensure that available raw materials are used efficiently and that the maximum productive effort is developed. But, as we are to have a full day's debate next week on raw materials, I do not propose to deal fully with that situation now.

The point with which I want to deal is a plain one. It is very well stated in another document which I hope hon. Gentlemen opposite will say that they have read—the Steel Founding Productivity Report. I note that one hon. Gentleman opposite has read it. It is one of the greatest industrial documents produced in this country for a long time, and the greatest credit is due to the trade unionists and the managements who wrote it. I will not weary the House with an exact quotation. It says that in future in this country the alternative to high productivity is starvation. I would add a rider to that. In the present state of international affairs, the alternative is not only starvation: it is defeat. That is the hard fact which I hope this House will appreciate today.

While I have the greatest sympathy with the fears which so many hon. Gentlemen hold about the return of unemployment, I would say that the choice before us is not the sort of unemployment we ever knew before the war; it is the choice between full employment or no employment. That is the choice. We can never go back to the old days—and nobody wants to—of 500,000, one million or two million unemployed. We make or break this country today. Either we maintain full employment, which is the declared policy on both sides of the House, or we fail to maintain it, in which case we shall all be unemployed.

I come now to the main purpose of my remarks and they concern the question so ably posed in the Steel Founding Productivity Report: how do we achieve this level of productivity on which not only our future but the future of our children depends? It is an indictment of the present Government that hon. Gentlemen from the back benches opposite have had at this stage to move a Motion which says: That this House urges His Majesty's Government to take all possible steps to ensure the maintenance of full employment and increasing production. Hon. and right hon. Friends of mine have been urging this on the Government for six months or more. Do not let us go into alibis. I would merely mention the Motion which still stands on the Order Paper in my name and the names of some of my hon. Friends, and which was put on the Order Paper in November of last year, imploring the Government to translate more flexibly and more quickly their re-armament directives into detailed orders and instructions to industry. If only that had been done, the major portion of our raw material difficulties would have disappeared.

Mr. Harold Davies (Leek)

Rubbish.

Mr. Watkinson

If the hon. Gentleman wishes to intervene, I am willing to give way.

Mr. Davies

The hon. Gentleman has just made a statement that if a hypothetical placing of orders had been made in November, that would have solved our problems about the shortage of raw materials. The hon. Gentleman knows, if he analyses the statements of Mr. Charles Wilson, the mobilisation chief in the United States of America, that despite the fact that America had been giving long-term orders, there are shortages of vital raw materials, like nickel, molybdenum, chromite and tungsten, which are affecting the entire American armaments industry. To make that statement is to make a mere party point completely alien to the truth.

Mr. Watkinson

I was about to rise rather early during the hon. Gentleman's intervention, because he had already answered himself when he said that we were talking about hypothetical orders. That is my complaint against the Government. They were hypothetical orders. If they had been practical orders, industry would have known in detail its requirements of raw materials.

I want to deal with the question of the level of productivity mentioned by the hon. Member for Falmouth and Camborne and the hon. Member for Sheffield, Park. They seem to think that there was some great merit in getting a four per cent. increase in productivity this year. I grant that the hon. Member for Sheffield, Park said that a four per cent. increase was no increase at all, because that would be the maintenance of the December level. Let us see how we have been doing compared with other countries. We took great pride in an increase of seven per cent. last year. As a matter of fact the engineering industry did better than that. But France achieved seven per cent. and France is a country which was occupied and devastated during the war. What is more, France hopes to achieve seven per cent. again this year, which all of us now know is likely to be entirely beyond our capacity.

We should not be talking about seven per cent. in this country. We should have planned this year for a 10 per cent. increase in productivity, which is quite within the capacity of British industry, and a 15 per cent. increase next year. If we reckon, on a rough basis, that a one per cent. increase in productivity adds about £80 million to the value of the national product, it can be seen that if we achieved those figures, which I will justify in a few moments, we would take the major burden of the re-armament programme off our shoulders.

I do not at all disagree with the Motion we are discussing. I do not disagree that our future depends on carrying this load of re-armament and paralleling it with, at least, a slow increase in the standard of living. If we do not do that, we merely open the back door to the Communists; we merely give them the field without ever fighting for it. Where I quarrel with hon. Gentlemen opposite is in the fact that they are so busy fighting battles which were long ago decided by the inevitable advances of social progress, not only in this country but in all countries, that they do not turn their minds sufficiently to the future. They do not face the real hard facts which this country must overcome in the next year or so if we are to achieve this desirable end on which we all agree.

I posed a possible increase in production of 10 per cent. this year. I said that that does not appear to be unduly unfavourable compared with what was achieved in other countries. I should like to refer again to all the productivity reports. If there are any hon. Gentlemen opposite who have not read them all, I recommend the task to them as a labour well worth while. They will find that every one of these reports says that the level of productivity in American industry is 50 per cent. or more above the level of productivity in our own industry today. That is not achieved by harder work. I am convinced that we in industry in this country work as hard, or harder, and as skilfully, or more skilfully, than our counterparts in the United States of America. I am not in any doubt about that.

What is the mystery? The mystery is that they have a better level of mechanisation and perhaps the kind of Government that does not place impossible burdens on the back of industry—a Government that does not talk about planning but sometimes does it, which is a rather important distinction.

Mr. Mulley

I do not want to worry the hon. Gentleman, but I think, to put his remarks in perspective, it is important for him to tell us what the average rate of increased productivity was during the inter-war years.

Mr. Watkinson

I will not deal with that point, as I wish to be brief. There are many of my hon. Friends who wish to speak, and no doubt they will answer the hon. Gentleman.

I come to the final part of my remarks. I have just said that if we could have achieved a larger increase in productivity this year and next year, we could have taken the heavy burden of re-armament without disastrous effects on our standard of living. It is on record that in this House we pressed upon the Government to take earlier steps to face up to the reality of the situation. It is on record that the Trades Union Congress, in this document "The Trade Unions and Productivity," impressed upon the country, and, presumably, upon the Government, many months ago, the vital necessity of an increase in productivity, as did the Steel Founding Production Report and all the other productivity reports. It is a very great tragedy that all that advice was neglected.

May I refer briefly to the Amendment which stands in my name, and which has not been called. It asks—and this point was mentioned by the hon. Gentleman who moved the Motion—that there should be a greater use of the various committees which act as links between industry and the Government? I want to put to hon. Gentlemen on the Front Bench one point on this subject which I think is a constructive one.

In these committees, one has the best advice available from the trade unions and from industry. I wonder whether the maximum use is being made of that advice, and, more particularly, at what point is the advice taken. Is it taken at the stage when decisions have already been made, when it is useless, or at the stage when decisions are still under consideration? Is the best use being made of the National Productivity Advisory Council of Industry on which both the Government and the trade unions are equally represented? Is the best use being made today of the Emergency Committee on the defence programme? The Minister of Supply has 250 committees available to advise him, the Board of Trade have 40, and the Treasury have quite a large number. Then, there are the Regional Boards for Industry, and there are many directions in which their advice is not properly consulted or their warnings heeded, which also has a very practical bearing on the shortage of raw materials.

I ask the Government if they will consider giving an undertaking today, in reply to this debate, that more use will be made of these committees, and that their advice will be taken at the earliest possible moment. If that had been done, then the present shortage of raw materials could have been greatly eased. I hope they will listen to the advice of people whose livelihood depends upon these raw materials, rather than upon over-all planning, which has not always such an intimate relation with the shortages of things to be used in industry. I hope that assurance will be given.

There is one other point on the Ministerial level. I wish every success to the right hon. Gentleman who was Minister of Works and who now has to undertake the thankless task of trying to catch up the leeway in the lack of raw materials. May I make a suggestion to him? When an industrialist is short of the things that are used in his industry, he does not just sit down and write a letter to his suppliers, saying: "Please can you supply me with things I want?" He gets no satisfaction that way. Instead, he goes to see them, and he sits on their doorsteps, and says to them "Look here, I have got to have these things." I hope the Minister will do the same thing. Let him go to the countries that have these raw materials, sit on their doorsteps and say, "Our economy and our defence effort depends upon them." Certainly, if he will do that, I think he will get the raw materials, and, if that had been done six months ago, we might not have been in this situation.

Mr. Ellis Smith (Stoke-on-Trent, South)

Nobody knows that better than the new Minister.

Mr. Watkinson

I wish him every success.

A great many of us in industry feel that the Ministry of Supply are at fault. There are far too long delays in translating Government planning into directives to industry, and industry itself also finds that it takes far too long to make its own requirements known to the Government. I hope the Minister will be able to achieve a considerable degree of streamlining in this procedure. There are several instances of which I have personal knowledge, concerning various Ministries, which illustrate this difficulty over delay and the enormous time-lag in the Government communicating practical orders to industry, or in translating directives into action.

Lastly, I would say a word or two to my own side of industry—the employers—because, after all, this is a Private Members' day and I do not speak from any party angle, but from one point of view only, that of increasing productivity. I am entirely in sympathy with the mover of the Motion in that. We want to see this re-armament programme carried through successfully so that it does not unduly affect the standard of life of our people. We want to regain our armed strength, but also to maintain our standard of living in order to defeat Communism.

Both sides of industry have to play a part in that plan, and I would say to my fellow employers, that they should take the workers into their full confidence. They should not be afraid of disclosing to them how manufacturing costs are made up. If they do not want to put up enormous diagrams, they might draw a picture of a cake and divide it into slices, with roughly one-third for wages, one-third for raw materials, and show that, out of the other third, many other things have to come, including taxation and about 7½ per cent. for profits. If they could do that sort of thing, they would find that their workpeople would be less inclined to say that there was something funny in the set-up of the management, or that the firm was making too much money. They would get better co-operation, and therefore better productivity, and I urge that, with all the sincerity at my command, on all employers in this country.

They should also make the maximum use of joint production committees, or whatever kind of works committees they have. If we explain to our workpeople the situation of their country and how our manufacturing or production costs are made up, as well as the present situation regarding raw materials, I would say, from personal experience, that they will accept it and bring about a great increase in productivity from the team work and unity which can result from that kind of thing.

I end as I began. We have to face the fact that what we are talking about today, with all respect to the debates which have been held in recent weeks and months, is the most important thing which is likely to confront this country in the years to come. I say again that it is either high productivity for us or starvation in peace and defeat in war. There can be no great argument about that.

My own sincere feeling is that, in the grave situation that confronts us, a new Government should face this new problem, and the electorate should be given the chance to decide the kind of people and the kind of Government which it wants to deal with this new situation. Until that comes about, I say with all sincerity that the Government must place this question of productivity on the highest possible plane. I hope they will try to perform the task with all the sincerity, all the drive and all the knowledge which they have at their command, because on it depends not only our lives—and perhaps they are not very important—but those of our children and their children afterwards.

12.30 p.m.

Mr. Booth (Bolton, East)

I want to say how pleased I was with the presentation of this Motion by my hon. Friend the Member for Falmouth and Camborne (Mr. Hayman) and to pay a tribute to him on the way he commended it to the House. I am concerned about this matter because I know from experience that in a time of re-armament there is not much danger of full employment not being maintained. I am concerned about it quite apart from re-armament. After all, it may be asked, "Why worry about full employment in the spring of 1951 when there is a re-armament programme in the offing?"

We have had full employment since 1939. Six years of war inevitably gave it to us. I want to be fair. I believe that a world which was short of goods after the war and denuded of supplies for another six years, plus a Government that was wise in its planning, and was concerned about full employment—I believe that has done the trick in the past 10 to 12 years. I am speaking today because so many people do not know what unemployment means. There are young men in employment today who were at school in the war years. They have never known anything but full employment. They do not think about it as a charter but as a part of normal life which is theirs without effort, without planning, without control, and without regard to circumstances.

I hope that we shall never go back to the days of unemployment. I was accused during the election campaign of what the hon. Member for Woking (Mr. Watkinson) has accused us of today, namely, looking too much at the battles of the past. Well, the Highway Code does tell us to look both ways and I always reckon to look to the right as well as to the left. I remember only too well the ravages of unemployment. I do not know whether there was more in Durham or in the Rhondda Valley and I am not concerned about championships in this respect. It was bad enough in Lancashire, as I can remember from stark experience.

I remember, for instance, a dismal Sunday afternoon in November—and parts of Lancashire can be dismal, especially in November. This was in a mining village. I was going to speak at a service in a little Methodist chapel in a small village in the minefields of Lancashire. As we went round a corner, the man driving me pointed out a block of 14 cottages. He said, "Do you see those 14 cottages?" I said I did. He said, "There are 13 unemployed miners living in 13 of those cottages." There was a lot of misery there, as one could see from the tattered curtains—apologies for curtains. Because of that misery, I welcome this Motion.

In 1935 the International Housing Congress held its meeting in this country and a delegation came to Bolton. We broke up into little parties and took them to our municipal housing estates. We went into a small cottage, one of the latest, and, the people having been apprised of our visit, put on a good show in the Lancashire fashion. I went into the cottage with a Dutchman, an American, and a Spaniard. The Spaniard thrilled me, by the way, by telling me that the best motor buses they had ever used in Madrid, came from Leyland's. It is not my purpose to advertise them, of course. The fourth member of the party was a German woman who was a member of the Berlin Civic Council. We went into the living room. She was interested in the range and asked, "Do you think the housing director of Bolton would give me the specifications?" I said I was sure he would do so. I could not resist the temptation to ask this German woman—she was a model of what I would call a good woman—a question. So when the Dutchman was not looking and the American was not listening, I asked her, "What is your opinion of Hitler?" I knew I was asking quite a lot. I shall never forget the reply of that German woman in that little cottage in Bolton. She said, "Well, Mr. Booth, before Hitler came into power my man was unemployed. After Hitler came into power, he brought me home a wage every week."

That is what full employment means, and that is what we have to realise, and that is what we have to maintain. I am worried because after the first war I remember the vultures from this capital city coming to Lancashire and buying up spinning mills. It was a common thing for offers of £20 to be made for £1 shares.

Mr. Ellis Smith

They are doing it again.

Mr. Booth

And I remember the aftermath of it. I remember the people who came to pick and, when they had picked, like birds of that character, they flew back again. I can see the same signs again. It is because this Government is concerned about planning and is also concerned about employment, apart from the need for re-armament, that I welcome this Motion.

It is a pet theory of mine that the United Nations Organisation has more to do than to deal with war. It should deal with the allocation of raw materials. I should like the United Nations not only to have something to say about the invasion of Korea but something to say about the wool prices in Australia and something to say about the two great Powers—the Soviet Union and the Great Republic of the West—bidding against one another. In spite of all that the right hon. Gentleman the Member for Ormskirk (Sir A. Salter) says about what we ought to have done, I wonder what we could have done? With the two greatest material Powers in the world trying to get the wool, the tin, the zinc, and with our denuded resources as a result of the ravages of war, I fail to see, with all the will in the world, how we could have done what the right hon. Member suggested.

There is an instance in sulphur. We are to get sulphur, but how many of us knew—not only the people outside this House but many Members of Parliament—what sulphur meant to the economy of this country? [An HON. MEMBER: "Quite a lot."] Well, self-praise is, of course, no self-raising flour. I know a lot of people. I am one of the ordinary people from Lancashire, which is a hive of industry, but I was not so well acquainted with what sulphur meant to the industries of this country.

Squadron Leader A. E. Cooper (Ilford, South)

If the hon. Gentleman will allow me to interrupt, I do not think he should feel proud of the fact that he did not know the effect of sulphur in his own division. I was in Bolton only yesterday and I can assure him that the effects of a lack of sulphur in Bolton are very severe.

Mr. Booth

Yes, I know the effects of that now, but I say that, by and large, except for what I would call the interested people, very few knew the impact of the lack of sulphur on the industry of this country. I think the hon. and gallant Member will accept that. When we come to the need of sulphur for the war effort; when we see its effect on the internal economy of this country, and then when we see the more ready attitude of the Americans to accommodate us, it makes us all realise that we shall have to do more. We shall have to get together not only for the needs of war, but also for the needs of peace.

The only point on which I did not agree with my hon. Friend the Member for Falmouth and Camborne was when he talked about stockpiling being hoarding. I do not look at it in that way. It could be, but, as events have proved it is more like the wise man who built barns in the days of plenty and set about putting something into the barns in order to be ready for the days of shortage.

I may not know much about sulphur—I hope I never do, certainly in the afterlife—but I do know a bit about cotton, because I worked in the cotton industry. Of course, if we are to get results and maintain full employment, both sides of industry must be in on this, not only the man at the mill but the man who brings the job to the mill. In Lancashire we are distressed about the allocation of cotton to the mills, and there is a certainty of unemployment when we consider where it is going——

Mr. Harold Davies

Japan.

Mr. Booth

It is indeed going to Japan, which was the great competitor of Lancashire. Hon. Members would hardly credit it that in the 'thirties, when there were unemployed spinners in Bolton, there were Japanese shirts on the markets of Bolton for 10d. Today there are the same people, with the same minds and the same urge, who are getting the raw material with which they can again do that to the people of Lancashire, and I protest. If we are to maintain full employment, we must not only have the cooperation of master and man—which is really the wrong term for the two sides of industry—but we must also get that higher consultation which in the past has brought out the best only for war purposes. We must have that consultation in order to bring out the best for peace purposes.

If this Government ever did a good job, it was when they introduced the distribution of industry. I have known what it has meant in Lancashire to ask men to uproot themselves, to take up their belongings and go perhaps 100 miles away from Lancashire. It causes the age-old dissension in the home, when the woman says to the man "It is all right for you. You go out to the works every day and soon make friends, but I have to stay at home." I saw all that on the Tredegar Estate. I say that it is easier to move bricks than to move men; it is easier to move concrete than to move the bedstead, the dresser and the wardrobe. In future, the Government, whatever party is in power, must move the inanimate things and have regard to the feelings of our people who have borne the burden and paid the price, and to whom the world now looks not only for material advancement but for the maintenance of our moral values.

It is the right of a man to have employment. He does not ask too much when he says "Will you use me?" Surely that is not asking too much. Any means that can be devised and any effort that can be made, and any lengths to which we can go must be undertaken, not only for re-armament but in order that our people shall live the life they are entitled to and have earned by their past efforts.

12.44 p.m.

Mr. Shepherd (Cheadle)

The hon. Member for Bolton, East (Mr. Booth) made a very agreeable speech, as indeed have all those who have so far taken part in this debate. The hon. Gentleman referred, as did the hon. Member for Sheffield, Park (Mr. Mulley), to the distribution of industry—which, I would remind them, is not exactly a Socialist conception. It is easy to over-estimate the success of the distribution of industry and what it has achieved. I have been immensely disappointed, looking at the number of men who have been employed in factories established under Government schemes and comparing it with the enormous cost at which it has been achieved. It shows very clearly what we all ought to understand today, that if we go against the main stream of the economy we shall have a very hard task. If we are to achieve full employedment we must try to do so, as far as possible, by running with the stream.

I do not think there is any more important subject than that of full employment, and I am only sorry that so far in this debate, hon. Members have concentrated on the raw materials side and the immediate problem rather than upon the broad aspects of the problem, which, I think, demand and justify attention. I say at once that I regard unemployment as the greatest affliction from which man can suffer, in this sense, that for many of the afflictions, such as ill-health and blindness, very often we can do nothing, but to refuse a man the right to work imposes upon him an affliction which we ought to avoid if at all possible. The sapping of the moral fibre which unemployment brings is a distressing thing to witness, and I am annoyed at times to hear people say that the social services, as we have them, are in danger of sapping our moral fibre.

What greater danger is there than the sapping of moral fibre that took place when we had an enormous number of unemployed. Nothing we can do is too much in endeavouring to achieve full employment. The best of people rot if they are unemployed. In South Wales, before the war, young men and boys stood at street corners, and for years did nothing; many of them would not even move up to Birmingham where they might have had some chance of employment. Such was the terrible hold that unemployment had on them, that they were no longer capable of exerting themselves as they ought to have done.

I hope that all parties will try to avoid making political capital out of unemployment. We have abolished from our patent medicine advertising the gruesome effects which once used to distort the pages of our newspapers. But we still have to face the gruesome bogies raised by hon. Members opposite when talking of possible unemployment under a Tory Government. It causes unnecessary concern and anxiety to people when hon. Members opposite represent, as they do for electoral purposes, the view that the Tory Party is not keen on preserving full employment but want to see unemployment returned. That is not so, and they all know it. If they indulge in that sort of propaganda, they will only cause needless distress. I am well aware that there will be a great temptation for them to use that sort of propaganda at the next General Election. They will then have to use everything; they will have to throw in everything, including the kitchen sink, if they are to have any chance of success during that contest. But I urge them to have regard to the needless anxiety which that sort of propaganda may cause to the mass of our people.

From the purely material aspect, unemployment is a waste of a national asset. It is not economic to have people unemployed, and, therefore, from the material aspect we must maintain full employment as far as we can. We must realise that the right of a man to a job and to bring up his family free from the fear of insecurity is the minimum he might reasonably expect from society. That is the least society can give to a man. We have travelled far in the last 10 or 20 years. Not very long ago a balance in the Budget was regarded as the most important thing in our existence, and anybody who suggested that the Budget ought not to be balanced, would have been regarded as a heretic. We have gone a long way since then, and it is now realised that the economic machine must be fashioned to serve the needs of man, and that man must not be put for long periods at the mercy of forces which he cannot control.

I should now like to deal with one or two of the broader aspects of full employment, because it is not easy to obtain, and is particularly difficult to obtain in this country. Hon. Members opposite have been saying how wonderfully well the Government have done, but that is a lot of nonsense. Nobody in this country since 1945 has really been faced with the problem of providing full employment. What they have been faced with is the problem of meeting an excessive demand, and our machinery for maintaining full employment is not put into operation until such time as we arrive at a situation where there is a shortage of demand. Therefore, it is wrong—indeed, it is doing a disservice to the implementation of full employment—to say that we have achieved it today. It is not really so easy as that.

Mr. Ellis Smith

While I do not go as far as many people in this matter of full employment, because I do not think we have really planned as I understand planning, is it not fair to say that as a result of the regulation of our economy we have maintained full employment, contrasting this country, for example, with places like Belgium?

Mr. Shepherd

I do not want to go into detail in this. I think there is an answer to what the hon. Gentleman says, and I should think that the régime of the Minister of Local Government and Planning, for example, was as much directed against full employment as any could be. I do not want to labour that point because it is to some extent extraneous to what I am saying.

Full employment presupposes a number of things. First, it presupposes a higher sense of social responsibility, both from workers and employers. The problem of the workers—I do not mention them first, because I think they are more deserving—is more difficult in this sense than the problem of the employers, because the worker suffers from fear of what has happened in the past, and although he has many admirable qualities, perhaps foresight is not one of them. If a man depends upon his weekly wage as the sole means of his existence and he has no capital, long sight is, perhaps, not a thing which is easily induced in him.

It is true to say that many workers today have not got the sense of social responsibility which they ought to have, and they make full employment very difficult. Look at this business of the Festival. That is an example of a lack of social responsibility which is evident today, and which must be cured if we are to make the best of full employment. It is no good buying full employment at the cost of lowered efficiency, and that is something about which I want to say a word or two in a moment.

Employers, too, have shown a need of a new sense of social responsibility, and they are progressing very well indeed. Sometimes I am amazed at the attacks made by Socialists upon employers today, because there is no doubt that employers have made immense progress in their whole attitude towards their relations with their workers, and they have, to some extent, conditioned themselves to the new state of affairs. Full employment essentially demands a new sense of social responsibility from both employer and employee. It presupposes a certain element of control or direction of the economy.

Some hon. Members opposite imagine that we on this side of the House take exception to any control or direction of economy, but that is quite wrong. What we take exception to is the kind of detailed control or interference which hon. Members opposite regard as proper. We do not believe that a completely unregulated capitalism or private enterprise is the answer to the problem of the 20th century. We want a broad, overall direction of affairs, because, without it, there is little possibility of maintaining full employment. We want direction of the use of the budgetary machinery for the stimulation of demand when necessary through the various agencies we have, and of the social contributions and other things which can affect the total amount of purchasing power. We may have occasion to take advantage of the fact that the State now controls so many utilities. That is an instrument for maintaining full employment under adverse conditions of which, perhaps, a Conservative Government may have to take advantage in the future.

Full employment in a free society is by no means an easy proposition, and a mere sympathetic regard for full employment is not enough. We have to be very careful about the dangers of inflation that flow from full employment. I hope the House appreciates that with full employment we always have incipient inflation, and we must be very careful to establish machinery which is capable of dealing with that situation. Our position today is particularly dangerous, and will continue to be, because we have to send out of this country, through the alteration in the terms of trade, £600 million worth more of goods a year to pay for our imports than in 1938. That tends to inflation. A redistribution of wealth is a factor which tends to be inflationary, too. Therefore, as a nation we have serious difficulties to face arising from the possibilities of inflation.

Another difficulty is this. We are dependent upon world trade. I hope it is appreciated that we have to find an increasing share for our manufacturers in world trade. In an era when nations are being more and more industrialised, our task becomes more and more difficult. It means we have to devote more of our energies to the manufacture of capital goods. That is all very well, because it is using our skill to the maximum, but the danger is that if there is a change in the climate of economy throughout the world, it is the capital goods which are going to suffer first. Therefore, we have in this country a very grave problem indeed in maintaining full employment on a long-term basis.

Full employment cannot be maintained on a purely national basis. It is like trying to shore up the wall of a house to protect it against an earthquake. The maintenance of full employment has to be based upon international effort. Hon. Members opposite have not been sufficiently appreciative of the international efforts and particularly those of the United States since the end of the war. I do not mean merely in respect of Marshall Aid; I mean in many other respects. If one could conceive, for example, the attitude of the United States of America in 1919 translated to 1945, what a disastrous world we should have had since 1945. Hon. Members opposite who now say how well they have done would have been tossed into the sea without any means of getting to shore. They would have faced complete and utter disaster.

Since the end of the war there has been a spirit of international co-operation, headed, in the main, by the United States—sometimes, we think, a bit off the beam, but always with very good intentions—which has made possible the economy which we now enjoy. Hon. Members opposite ought not to under-rate it, because unless there was this degree of international co-operation, national efforts to maintain full employment would be of no value at all.

I want to be as brief as I can and, therefore, I do not want to go into the mechanism of international measures to preserve full employment. But we have to get a balance of world trade, develop backward territories and facilitate world lending. Indeed, when one looks at the degree of international co-operation since the war, and what it could mean, one gets a tantalising glimpse of a bright horizon. It is hurtful to reflect that only the Soviet Union stand between this achievement and that bright horizon. We only hope that a situation will come about when we can get back to the real purpose of mankind, which is to improve the welfare of our fellows, and to increase human happiness.

I want to say a word about full employment and efficiency. It is important that we should not lose our efficiency under full employment. If we do, we shall be in a very serious position. If we lose efficiency, there is not much point in employing people to the full. There is an optimum point in full employment at which we shall get the maximum national production. I do not know what that point is, but it is important to experiment at the present time. It will depend on a number of things. We cannot afford to have full employment at a point where it leads to very much lower efficiency.

The right hon. Gentleman who is now the Foreign Secretary once said that he believed there ought to be a situation in which there were many more jobs than there were men to fill them. He has altered his opinion in recent years. He now talks very properly about "overfull" employment. I am not going to say what is the optimum point of full employment, but it is at that point where we have the maximum production with the greatest amount of individual efficiency. We in this country have to study that question very carefully. Full employment means that we must have an entirely new outlook so far as labour relations are concerned. If the threat of the sack is to be no longer operative—and we look forward to that time—we must have, first of all, much better leadership in industry than before. Leadership in industry under full employment becomes of the maximum value. We must have real leaders in industry down to the n.c.o. level.

I am glad to see that many organisations, like the Industrial Welfare Society, and many firms and trade associations are now beginning to train charge-hands and foremen. They realise that the day when a charge-hand or a foreman was chosen because he could work well or swear well are past. If we are to have effective leadership, it must not only be at the level of the managing director but effective leadership down to the factory floor level. That is a lesson which we must learn. We have in part learnt it, but we must study this matter even more if we are to get the efficiency in industry which we must have under full employment.

Consultation has been mentioned, and it is of vital importance. We are, I think. making progress in that respect. Full employment demands more of a society than any other form of existence. I am satisfied that if anybody can make it work we can in this country. We have not only the best employers, but we have easily the best workers in the world, and the most responsible workers, despite that element which is letting us down at present. I am sure that we can face the problems inherited in full employment better than most other nations.

I conclude by saying that full employment is a challenge to a virile society. Those who, like some hon. Members, have said that it is here to stay, are oversimplifying. It is a grievously difficult thing to put into operation for a long time. I am convinced that we have here the means of achieving it. It means sacrifices of position and, to some extent, of rights by all sections of the community, but I believe that we are the people who can do it. I sincerely hope that this debate will contribute to our thoughts on full employment, because we have not thought enough about the fundamentals with which it is connected. I hope that the House, in spending the time which it has done today on this subject, will have done some service to the cause of full employment.

1.5 p.m.

Mr. Harold Davies (Leek)

I am sure that the House listened with interest to the speech of the hon. Member for Cheadle (Mr. Shepherd). I think that on both sides of the House most of us can agree with about 90 or 95 per cent. of what he said. I am sure that thinking people in society—and much has been written before, during and after the war on this problem of full employment in a free society—realise the importance of this subject. An illustration was given by an hon. Member who spoke from these benches when he told of his conversation with a German woman who was satisfied because under the Hitler régime her husband was in full employment.

In Britain—whatever acrimony may enter into our debates across the Floor of the House and sometimes on this side of the House—there is one thing which is axiomatic, and that is that we as a people like to be free. I think that the man in the street would not like to win full employment at the expense of those liberties which he has inherited. The problem, therefore—I am talking of a sophisticated democracy such as we consider ourselves to be—is how can a Government, whatever Government is in power, find a system of employment which can give those liberties without having too much direction of labour and without having too many controls, and in which a man can move freely from point A to point B and feel that he is living a full and good life? Therefore, I agree very much with what has been said on the need to study this problem of full employment in a free society.

I now come to one or two points which have been made in the debate. The hon. Member for Woking (Mr. Watkinson)—whom I was sorry to interrupt, but I could not resist doing so because I thought that he was making his point a little unfairly—believes that we could get a 10 per cent. increase in productivity. Frankly, I believe that is beyond the capabilities of Britain at the present moment in the exigencies of the situation. An hon. Member opposite said that the problem of full employment not only depends on national policy but on allocations of raw materials in the world. One could—and I am very interested in this problem—talk about this matter for a long time, but as there are other Members who wish to speak, I will restrict my remarks.

I believe that there are certain things which we must learn. While I accept the new philosophy of the Opposition—because I believe that they mean it and now accept that full employment is necessary in modern society if we can establish it—I am convinced that unemployment in the past was looked upon as a necessary discipline in the society that we had. There is an important lesson there for us to learn. It is that the only time that Britain had full employment in the past 100 years was when it was at war or preparing for war.

On this side of the House, we used to challenge, as we still do, capitalism with the fact that the only time when it could provide full employment was when the nation was at war or preparing for war. Between 1814 and 1914, Britain was at war for 64 years, either engaged in major wars or colonial episodes which gave the necessary impetus to our economic system. It was only in those periods that we had full employment.

Today, how can we discover the solution to this problem unless Governments everywhere engage in scientific and economic planning? Much more attention should be paid to the new types of industry that are growing up. The British oil industry, for instance, has made one of the greatest contributions to Britain's position at the present moment. I have tried to get the facts from the Treasury, but it seems almost impossible to get a straight answer to any questions connected with oil. I have tried to get the Treasury to break down the tables in order to find out what this industry has been doing. There has been a tendency in the past always to look upon the tycoons of the industry as being people working against the interests of the world, but today the workers in this industry have been making a splendid contribution.

The Government should consider fully the possibilities of the new chemical developments in the oil industry. The Government's policy in regard to the oil industry has been one of its most excellent points in the last five years. I refer to the build-up of the refineries. I hope that the Government are looking into these new types of industry that are coming along. The Economic Survey was sadly silent about the contribution of the British oil industry.

I agree with Members on both sides who have been putting pressure on our Ministers to stand on the doorstep of the United States to make them see that if they want unity in building up democratic life in this country and in Western Europe, we must be allowed to get a fair share of the raw materials necessary to enable us to maintain full employment and a defensive democracy.

We are all aware of the sulphur problem. I believe that I was one of the first Members to raise this question of the shortage of sulphur. One of the main industries contributing dollars for this country is the rayon industry. This virile industry in Leek is already having increased calls from North America for its goods. But the industry needs sulphur as a basic material for its products. I am told that the Leek and Macclesfield rayon industries have already chiselled out a little niche in the North American market. America is calling upon this part of Britain for the production of nylon goods. I believe that the day will come when fibre will be probably as outmoded as the silkworm—sheep and the silkworm will then take their place in the economic history of the world.

I notice that Egypt is beginning to put a tax on the export of raw cotton. I believe that the British Rayon and Synthetic Fibre Federation are beginning to give publicity to the production of a mixture of rayon and wool for the manufacture of new fibres. Although this may not be practicable at the moment, the Government should encourage these industries that are launching out into the production of different types of fibre which can detach the economy of British and Western Europe more and more from dependence on overseas markets for their basic raw materials. I hope that encouragement will be given to the scientific researches that are going on in regard to substitutes for raw materials.

Full employment demands a sense of responsibility on all sides of society. Nothing would help us more, when we have only our own boot straps to work with, if we can break down the old differences between employers and employees. One of the most patriotic contributions today would be if the worker with his skilled fingers and the employer would break down that "ca'canny" in the belief that both sides of industry are working for the future to give a squarer deal to the common man.

1.17 p.m.

Mr. Deedes (Ashford)

As might have been expected, a good deal of weight has been given in this debate to the international factors that affect full employment and productivity. There are, however, one or two domestic factors which also affect that situation, and it is on one of these factors that I wish to say a word or two. A factor which is perhaps the hardest of all to measure, and which is in some danger of being over-looked, is the mobility or immobility of labour at the present time. To some extent it is a factor which has been with us since the war. It is a concomitant of the housing problem which we all know exists, and it has been inevitably aggravated by the re-armament programme.

The "economics of tension," as I prefer to call it, may continue for longer than some of us dare to think. No one knows how long industry will have to carry the double load of re-armament, on the one hand, and need to uphold or improve the standard of living on the other. Very little can be foreseen with certainty, but there is one thing that can be seen, and that is the desirability of keeping labour as fluid as possible—certainly achieving rather more fluidity than we have at the present moment. The problem was admirably summed up by the Minister of Transport during the debate we had this week on railway freight charges, when he said, speaking of the railway industry: Of course, the housing difficulty prevents, to a very large extent, a good many changes that would take place if the Railway Executive were able to move their staff about, even in their own railway houses, but although the railway companies in the past had over 50,000 houses for the use of their staff, the conditions today have immobilised a lot of that property, and there is not the fluidity which would assist this staff problem. Therefore, it is uneven, and we have surpluses in some directions and deficiencies in others."—[OFFICIAL REPORT, 23rd April, 1951; Vol. 487, c. 147.] In that sentence the right hon. Gentleman put his finger on one of the major problems which now confront the industry of railways and, indeed, transport generally.

He also called attention to a problem which affects a disquietingly large field of other industries as well, and has a very real bearing upon the future of full employment in this country. To me, full employment means not only holding down a job and having a steady job; it means also the choice of other jobs for a man who wishes to better himself. To deny him that alternative is to deny him the fruits of full employment. Yet if he is denied the access to that alternative, such as an alternative home, he is denied the alternative. That is a situation which many people at all levels in industry find themselves in today.

The shortage of housing—and I am not making a party point out of this—has taken away half the fruits of full employment, particularly from those who might better themselves. It applies particularly to men with families, for whom a change of job is always a risk, but a change of home today creates a double hazard. It affects the individual, because he loses the chance of bettering himself. It also makes it more difficult to remove the large quantities of dead wood, which exists in some places, and more difficult to move labour from areas where it is not so much required to areas where it is required. That is an aspect from the individual's point of view of which hon. Members opposite, I am sure, are not unmindful.

Looked at from the point of view of "economics of tension," it has a far more serious effect on the re-armament programme. We shall hear a great deal more about the immobility of labour as the programme gets under way. We have all heard employers say that they could get the men they want if they could only get the houses for the men. That applies particularly to skilled men. Housing allocations at the moment—and quite rightly—are in the hands of the local authorities, and they will remain there. Yet it may be that we shall have to take more account of industrial needs, particularly industrial needs created by this situation, in considering the future housing programme. The Ministry of Local Government and Planning have concerned themselves with this problem in a general long-distance approach, and have done certain things, such as the creation of new towns, and so on, but that takes no account of the immediate problem we are debating at the moment.

I do not know how far our re-armament programme will involve a switching of machinery in factories and the switching of men from one factory to another. I have never seen it stated what the proportions are, and how far have men got to be moved as against machines. It will certainly not be all achieved by changing a factory making collar studs into a factory manufacturing armoured cars. There has to be a certain movement of labour, and to that extent I think we are in difficulty.

There is another minor factor, on which I will touch. It has a great bearing upon the subject. It would be most interesting to know how the time taken in moving between the home and the job compares with the time taken before the war. Here is a good job for the army of statisticians. I think we would be staggered by the increase in the amount of time taken by moving from home to work and then from work to home at the end of the day. I am sure that it involves a considerable loss of time and has a very big bearing on employment. I know men who move 20 to 30 miles in each direction daily because they cannot move their homes.

This problem of mobility is of fundamental importance. I find myself in good company in thinking that, because at one time it exercised the mind of a former Minister of Health, the right hon. Member for Ebbw Vale (Mr. Bevan). He expressed concern on more than one occasion on that aspect of the private ownership of houses. He said that private ownership might interfere with the mobility of labour. He may well have been right to a certain extent, for he said that if a man owned his own home the chances were that he would want to stay there. It applies even more to a man trying to buy his own home by instalments. The chances are he would not want to leave, whereas if he rented a house his mobility would be improved. Today, paradoxically, the opposite prevails. If a man owns a house he can sell it at an inflated price, move his job, and buy another house also at an inflated price. If, however, he lives in a rent restricted house, he has no chance of finding alternative accommodation if he moves his job.

This is an immense factor. It is a blood clot in the arteries of industry, interfering with the circulation of labour in this country, with all the possibility of serious results that a blood clot entails. Basically, it is inevitable that industry will be the determining factor in the location of population, and the hon. Member for Leek (Mr. Harold Davies) said something about that. That may be a good thing or it may be a bad thing but when there is a switch of part of industry from one kind of production to another it is inevitable. I have some local experience of this problem. For my own local town of Ashford there are all kinds of industrial plans for future expansion. Some of them bear absolutely no relation at all to the housing situation, so that there is a great danger of industrial planning outstripping housing.

We have here a very serious limiting factor in the mobility and fluidity of labour, which I regard as an intrinsic part of the future of full employment and of productivity. It results, in many cases, in square pegs remaining in round holes. I should be the last to wish to see any attempt made in this country to create those sort of mass labour camps which have been known in other countries but, mercifully, not here, but if we are to tackle some of the production problems which are coming upon us, that is the kind of frightful alternative with which we may well be faced. I have spent some time trying to eliminate such camps as still exist here and I would be the last to want to see new ones created.

That is one measure of the problem we are up against. I do not pretend that I have any swift or sure solution. It might be helpful to get from local authorities of the areas, to which industry is to switch, some idea of how it will relate to the housing situation. The more information that is gathered about that possibility the better. I am certain that in this problem it will help if we all recognise more than we are doing now the bearing of mobility of labour upon the future of full employment and productivity.

1.30 p.m.

Mr. Macdonald (Roxburgh and Selkirk)

I am sure the House is very glad that the hon. Member for Ashford (Mr. Deedes) has raised the vital questions of the mobility of labour and of transport and housing, which are linked with the question of mobility. Obviously, our labour must be as mobile as possible if we are to secure the maximum production and to keep that production as flexible as we need it to be.

The House will join with me in saying how glad we are that the hon. Member for Falmouth and Camborne (Mr. Hayman) has been able to move this Motion today, with all its important implications, which are absolutely vital to the country. The points which the hon. Member has raised are: first, to ensure the maintenance of full employment and increasing production; second, to increase production; third, to maintain the nation's economic strength and independence with the minimum sacrifice of the standard of living; fourth, to carry out the defence programme, are, obviously, of the greatest importance, not only to the House and to the country, but to the world at large.

A good deal has been said by some of the previous speakers on the question of full employment. I say as a Liberal that full employment has been a subject to which we have given a good deal of consideration and upon which we have put forward a great many plans. Hon. Members will know of the Lloyd George plans of 1929 and 1931 to cure unemployment. Had those plans been implemented, although they might not have cured it entirely, they would have gone quite a long way towards reducing it. We are glad that the Socialist Government have seen the wisdom of adopting so much of the Beveridge Plan, which was first raised during the time of the Coalition Government. Beveridge, as a great Liberal, had the full support of our party in that plan.

I wish to deal with a few of the essentials which we must consider if we are to meet the four points which are raised in the Motion. First, on the question of raw materials. We must obtain sufficient raw materials, and at reasonable prices. It has been incredible that the United Nations have been bidding against one another in the markets of the world for the vital needs of war and peace, in wool, rubber, tin, cotton and other things. Surely, having built up an organisation such as the United Nations, we could have made the United Nations the sole buyer for the requirements of these countries in those vital materials, both for peace and war needs.

If any one of the United Nations—say, America—was taking too high a percentage of material I believe that America would quickly realise the folly of not allowing to the other United Nations sufficient materials, not only for their defence production, but also to maintain a reasonable standard of economic health; otherwise, she would defeat the very thing which she has done so magnificently throughout the world since the war: that is, to enable us to improve the standard of living by the assistance she has given, so that we could provide in that way the greatest bulwark to Communism. If, on the other hand, that economic health and strength is allowed to deteriorate through the lack of raw materials, the very evil against which we have been fighting will possibly overwhelm us.

The second point is the question of manpower. We have today, thank goodness, full employment, and I hope we always shall. That very fact of full employment means that practically everybody is gainfully employed for the country. There are, I know, differences of opinion; we sometimes think that the administrative side is, perhaps, overstaffed and that more people should be engaged in production. That is a debatable point, and there is substance in it, but if, on the other hand, we are to provide hundreds of thousands of men for our contribution to the United Nations Armed Forces, and at the same time we have to switch hundreds of thousands of people from productive industry to defence production, then a serious blow is struck at our economic strength.

I suggest, therefore, that as we are in the United Nations, we should, in our preparations to maintain peace, endeavour to standardise our equipment as much as possible. There is no country that can produce such a quantity of standardised equipment as the United States of America. I believe that American engineers and scientists, helped by the best brains of the United Nations, could produce the most magnificent equipment that the world has known. It would be standardised, so that, in the unhappy event of a war breaking out, should our men be in any other countries of Europe, they could pick up that equipment and know straight away how to deal with it.

On the other hand, if each country in Europe made its own arms and equipment, very much time would be lost by the Forces having to make themselves familiar with the equipment with which they find themselves supplied. There would be the great advantage also of less dislocation in the economic life of the country, and, therefore, we would be putting forward a stronger front against the greatest evil: the evil of Communism.

I am very glad also to see—this is something we have recommended to the Government, and I am sure that other parties have done the same—the offering of continued employment to old age pensioners. I do not believe, however, that the Government have gone far enough. I should like to have seen them encouraging old age pensioners of 65 and 60 to remain at work, not by penalising them by the reduction of their pensions when they earn more than £2 a week——

Mr. Deputy-Speaker (Colonel Sir Charles MacAndrew)

I think that the hon. Member is anticipating legislation that is before the House.

Mr. Macdonald

I was referring to yesterday's debate, Mr. Deputy-Speaker, and I apologise.

I am, however, very pleased to know that the House has considered the continued employment of old aged pensioner and I hope that the maximum encouragement will be given to them to continue at work, for these people, with their years of experience and craftsmanship, provide a very valuable source of manpower.

The third point with which I wish to deal is that Members on both sides have stated how necessary it is for all sides of industry to get together in a feeling of common purpose. One of the essentials towards this is to bring about at the earliest possible moment profit-sharing schemes throughout the whole of industry. The voluntary schemes which have been in operation for the last 60 years have for the most part produced magnificent results. But due, perhaps, to shortsightedness and greed on the part of some employers, and due to prejudice and suspicion by certain trade union officials, on the other hand, these schemes have not become general. In each case, these schemes have resulted in very much increased production.

During the last 10 years I have had the privilege of going through some hundreds of factories where different types of profit-sharing schemes were in operation, and in no case have I found that production did not increase as a result of their introduction. But these schemes fail unless they are generous, well organised, and are well and continually sold to the workers, so that they may realise the true partnership that exists.

In view of the fact that voluntary schemes affect only about 2 per cent. of the working population, the recent Budget, if it is eventually passed by the House, might provide a wonderful opportunity of inducement for the introduction of profit-sharing schemes. Under the Budget, distributed profits are to be taxed at 30 per cent. It might, however, be possible for the Government to consider reducing this amount of tax to firms which provide generous profit-sharing schemes. As a result of the increased effort and production which, I feel certain, would result, firms would find this to be a well worthwhile experiment. It would have the definite advantage that we should get past the cry, which has been quite understandable from many workers, "Why should I work harder to increase my boss's profits when I do not share in them?" If we are to have the maximum production, we must get rid of that suspicion which exists between capital and labour, and the only way to get rid of it is to give a fair proportion of the results of that labour to those who help to produce the goods.

I believe, also, that we must get rid of the restrictive practices on both sides of industry. Many price rings have only been made possible because they could shelter behind high tariffs that have protected them. Those tariffs must be reduced so as to break up these unscrupulous rings. If it is not possible to do that, the Monopolies Commission should be able to investigate these rings and break them down in the interest of the country. On the other side, there have been restrictive practices in trade unions. I can understand those practices existing before the war, with the spectre of unemployment facing men, but I cannot understand restrictive practices in trade unions today.

If it was possible for a man to lay 800 bricks a day before the war without killing himself, why is it not possible for him to lay more than 350 or 400 bricks today? I can understand it if it were the other way round, if he would not lay more than 350 or 400 bricks a day before the war because he did not want to finish the job quickly. Surely, today, with full employment, it is in the interest of everybody to do everything possible to finish jobs quickly.

We should ensure a united effort of all sections of the community in a true partnership of labour and capital, if necessary by a coalition of all the political parties on an agreed programme. I believe the times ahead are so serious, whether there be peace—and let us hope it is peace—or whether there be war, that this country can no longer afford the sniping of political parties. There are fine brains on both sides of the House which should be used for the common good of the country. I believe there should be a coalition of those brains on an agreed programme. I cannot believe that Conservatives would coalesce with Socialists on a Socialist programme or that Socialists would coalesce with Conservatives on a Conservative programme; but there must be common ground. Hon. Members are laughing, among them the noble Lord the Member for Horsham (Earl Winterton). Both the other parties are only too keen to claim in the newspapers and on their platforms that they are both inheritors of the great Liberal traditions of the past. Is it such a laughing matter——

Earl Winterton (Horsham)

The difficulty which both hon. and right hon. Gentlemen opposite and on this side of the House are in, is not knowing what is the Liberal programme, because the Liberals do not know themselves and are never found in the same Lobby.

Mr. Macdonald

It is an exaggeration to say that the Liberals are never found in the same Lobby. I think it is the other way. The noble Lord is not aware of the fact that we represent the only truly free element in the House. We, as Liberals, have the right individually to record our decision on every issue. It would be an extraordinary thing if nine free individuals found themselves agreed on every point. [Laughter.] Hon. Members may laugh, but they have never known that freedom. Whether hon. Members find it a laughing matter or not I think this question of coalition for the common good should be considered.

We shall succeed in the difficult times ahead only by co-operation in industry and by acquiring and safeguarding a sufficient quantity of raw materials at reasonable prices, so that labour is dislocated as little as possible in the general defence drive and so as not to endanger the objective of America and the other United Nations which try to build up and improve economic standards. We shall succeed only by the legislators of our country dropping their partisanship for the common good.

1.45 p.m.

Mr. G. R. Howard (St. Ives)

Since I intend to be very brief indeed, I will make no apology for confining my remarks mainly to the problems of West Cornwall. But before I deal with these, I should like to draw attention to one or two general points which have arisen as a result of the Motion we are debating.

First, I hope it will be accepted that old people must be allowed to choose whether they want to work or not; they must not be forced to work by necessity. I should like to join with the hon. Member for Falmouth and Camborne (Mr. Hayman) in the tribute he paid to those who have fought in two world wars and who have brought us safely through. I hope that in paying that tribute we shall not forget those people when they retire from the Services and try to obtain jobs. I know a man under whom I had the honour to serve at sea during the war. He had a very responsible command during the time of the invasion of France. When the time came for him to retire from the Royal Navy, the only job he was offered was that of a clerk in a food office. We must remember such men.

We must also remember our responsibilities to those men who served their country and who endured untold privations as prisoners of war. The hon. Member for Bolton, East (Mr. Booth) spoke about the cotton industry. I, too, have had experience of that industry. I know that before the war the Japanese were able to buy cotton in India, process it in Japan and re-export it to India underselling the mills which had processed Indian cotton in India. The hon. Member said quite rightly that we face that competition. What are we making the Japanese do towards paying their account to the men who spent years in prisoner-of-war camps under conditions of indescribable horror and cruelty?

Mr. Booth

Slave labour.

Mr. Howard

I agree; it was slave labour in many cases. Whatever the Japanese do, it is the responsibility of this country to see that those men are not forgotten.

I want to pay tribute to the farmers, because a great deal depended upon them during the war. They had a great share in feeding this country. I should also like to endorse and support what the hon. Member for Falmouth and Camborne said about giving those engaged in the horticultural industry an indication of what imports are to come in this year so that they can make their plans now in good time. The hon. Member also mentioned the queue for smallholdings. I have put forward a scheme to the Minister of Agriculture for the reclamation of land in West Cornwall. I hope the Government will soon come to a decision about this and make plans in what is excellent meat-raising country. I am thinking of the provision of smallholdings of 30 or 40 acres which a man can easily work. I have seen one worked by a man who retired from the Services after fighting for his country during the war.

Much has been said recently about the fishermen. I hope that the Ministry and the white fish authority will soon settle certain problems between them, such as the question of extending the subsidy to shell fishermen, about which I spoke the other day.

I should like to deal particularly with one or two matters in West Cornwall. The hon. Member for Falmouth and Camborne spoke about a visit he paid to Geevor Mine in my division. Had he signified his intention of coming, I would have been delighted to accompany him and make a second visit. I had already been down that mine. I have had experience of that process of using aluminium dust, having been through it myself, and I know the great confidence it gave to the miners. I should like to pay tribute to those who have worked so hard for so long to solve many problems connected with silicosis.

I wish to refer, if I may, to light industry in West Cornwall. A London firm has established a factory in a town in my division. I would say, at a guess, that the factory employs between 80 and 90 per cent. local labour, but a few key workers who come from outside the area are essential. The acute problem with which the firm is faced is that these key workers cannot be housed. Some have given notice to the firm that unless they are housed in the very near future they will have to leave.

The local authority approached me about what could be done. I advised them that it was quite wrong that these men should take precedence over the housing queue of local people who have been on the housing list for many years. What is the answer? I will come to that later when I speak about the question of increased allocations. A chamber of commerce in my division has been going into this problem very seriously, and I have a letter about a meeting at which they took a great deal of trouble to investigate its local causes. They say that it depends largely upon housing.

Before coming to my main suggestion, I have one other suggestion to make to the Government. A garage proprietor wrote to me the other day asking if it would be possible for his garage to do some sub-contracting work for the Government armament programme, in the same way as in the war garages up and down the country made small parts for fuses, etc. I hope that these kinds of jobs may be dispersed throughout the country where practicable so that employment can be provided in that way.

I have two suggestions to make to the Government about housing. The first is that, where possible, increased numbers of licences for adaptation work might be given not only for housing but also for business premises. I have recently been concerned with a case which had been turned down. I am glad to say that since I wrote to the Minister the decision has been reversed. In that case a man, by increasing his business premises, is providing employment.

In the case of housing there are instances in which licences for adaptation work could be given without causing much dislocation. Then there is the allocation of licences in the case of councils such as one which is well known to the Ministry, where there has been ample labour and material and the run of work has long been planned but where the allocations have been cut down. They have since been slightly increased as a result of pressure. Let the Ministry not be too hard and fast about these matters. If authorities have the labour and materials, and a run of work has been designed and planned, let the Ministry allow them to go ahead with it. Although raw materials constitute one vital element of the problem which we are now discussing, so does housing.

I am sure that all Members on both sides of the House will agree that this is not a statistical problem but a human problem. As the hon. Member for Bolton, East, has pointed out, it is far better to take the work to the people than to take the people to the work. Let the Government, therefore, consider what they can do not only in respect of raw materials but in increasing housing accommodation where possible so that the people who have been born and have lived all their lives in places such as West Cornwall can go about their work with the knowledge that in due time they can expect to be housed near their work.

1.55 p.m.

Mr. Dryden Brook (Halifax)

Like other speakers, I also wish to congratulate my hon. Friend the Member for Falmouth and Camborne (Mr. Hayman) on choosing the subject of full employment for today's debate. It has led to some very interesting speeches. I was particularly interested in the contribution by the hon. Member for Cheadle (Mr. Shepherd), who I wish was in his place because I wish to examine one or two of the points which he made. The central point of his speech was that full employment in a free society inevitably leads to pressure towards inflation, and that there is a very pressing danger of an inflationary tendency.

That statement brings us to grips with the real problem that is involved. That problem is how we are to counteract that inflationary pressure and that, in turn, brings us up against the problem of what we mean by free society. The hon. Member for Roxburgh and Selkirk (Mr. Macdonald) referred to the Liberal conception of a free society. What is this free society in relation to industry? Do we mean the old conception of industry as a self-adjusting mechanism in which the natural forces of supply and demand regulate all the relationships in industry or whether the price mechanism, to give it its new name, which has become rather popular on the other side of the House, shall be allowed to have its full sway.

If we mean that the inevitable result of trying to counteract this inflationary pressure means a reduction in purchasing power, particularly a reduction in the purchasing power of the mass of the people, or, in other words, the working people. That reduction in purchasing power cannot, under this conception of a free society, be accomplished without deliberately creating unemployment.

The hon. Member for Roxburgh and Selkirk raised this issue in relation to raw materials. One of the main features of a society which is to have full employment must be stability in the prices of raw materials. Let us look at the problem that, under a free price mechanism, has arisen in the last four years in the wool textile industry, in which I have spent many years of my life. Cross-bred wool, which was costing 1s. a lb. in 1939, touched 200d. a lb. about the beginning of this year. In six months wools which were costing probably 60d. a lb. last August touched 200d. a lb. in January.

That is not the end. A month ago came a halt, and in a fortnight those wools dropped by 40d. a lb. How can any industrialist or industry organise on an efficient basis and a basis of full employment if faced with the prospect of fluctuations in the values of raw materials such as those I have described? It inevitably means that the first standard, that of efficiency, in industrial organisation goes by the board. The industrialist and the industry must make their profit margin, if they are to satisfy social demands out of the efficiency of their organisation and the efficiency of their technical equipment and technical knowledge. But under conditions such as I have pictured all that is inevitably lost if the industrialist guesses wrong in the market for raw materials. So industrial efficiency tends to drift into second place, and the capacity to guess the market becomes the primary function in industry.

The hon. Member for Roxburgh and Selkirk suggested as a solution to that problem that the United Nations might have taken on the responsibility for purchasing the raw materials of the world and allocating them. That would be a step in the direction of bulk purchase which the House has never before envisaged. Certainly, hon. and right hon. Gentlemen opposite, including Members of the hon. Gentleman's party, have on innumerable occasions criticised the Government for engaging in bulk purchase in a comparatively small way compared with the suggestion to which I have just referred. I remember that when cotton control was discussed Members of the hon. Gentleman's party furiously attacked it as being against the principles of a free society.

Yet the hon. Member's suggestion now envisages something far more and far bigger than anything envisaged in the Cotton Control which we have in this country. It means not only control in this country, but, superimposed on that, international control. It would mean that we should depend not on a free market in the purchase of our commodities, but on allocations from some international organisation. That is carrying bulk purchase to the nth degree in this respect.

This gives rise to a further problem in relation to this "free society"—industrial free society. We have envisaged free society in terms of freedom of choice for the consumer. No one has ever suggested up to now that a like freedom of choice should be open to the producer. Never in all my experience have I heard any hon. Member on the opposite side of the House, either of the Conservative or the Liberal Party, give any attention to the problem of freedom of choice to the producer. It is only under full employment that the workman has ever had a real freedom of choice in his job. Before the war, with all the unemployment which existed, there was no freedom of choice for the worker. When we are talking of full employment let us be sure that we all mean the same thing.

Do we all mean the same thing? I noticed particularly at the time of the General Election that the right hon. Gentleman the Leader of the Opposition invented a new phase. Instead of talking so much about full employment he spoke about the "high level of employment." In the Beveridge Report, Lord Beveridge actuarially provided for 8½ per cent. unemployment. Does "a high level of employment" envisage 8½ per cent. of unemployment? "The Economist," over and over again, has pleaded for a moderate dose of unemployment. In the "Manchester Guardian" of 2nd January, 1950, in a leading article which assessed the prospects for the year, it states: We cannot face 1950 with so low a rate of unemployment as exists at the present time. The rate of unemployment then was 1½ to 2 per cent. What do we mean by "full employment"? What choice are we to make of all these choices I have mentioned? In our belief, full employment means the complete elimination of chronic unemployment. It means the elimination of unemployment except that which exists when a person is changing from one job to another. That is the only kind of unemployment which we are prepared to tolerate.

In the period between the two wars we had mass unemployment and most people looked upon it as being something in the nature of a bolt from the blue; that nobody had any control over it. I say now, as I have said before, that the unemployment which existed between the two wars was the result of a deliberate policy, ruthlessly implemented. If we want any confirmation of that I would quote some extracts from a speech made by Mr. J. M. Keynes—as he was then—who was speaking at a luncheon in his honour given by the Federation of British Industries in Manchester. This report was contained in the "Manchester Guardian" of 13th October, 1925. This is what he said: But when we come to the cure "— He is speaking about unemployment— one can distinguish three schools of opinion. The first school I will call the pious school. The pious school thinks that the monetary factor is not very important one way or the other. It stresses the high level of taxation and the high real wages of our workers, their relatively short hours, and their tendency to ca' canny. In its hysterical moments it is occupied with something said to be prevalent in this country which it calls Communism. According to this school, there is very little that the Government can do except to economise drastically in its own expenditure. Apart from Government economy there is nothing to be done except to exhort everybody in terms of copy book maximums. Then he comes to the second school: The second school is the strait-laced school. This school recognises the existence of monetary disequilibrium and would like to cure it by carrying out, pretty ruthlessly, the orthodox rules of the pre-war gold standard. If British prices are relatively too high, this means that credit is relatively too abundant. He goes on to say—and I would like to repeat it to the hon. Member for Roxburgh and Selkirk: The ablest exponent of this philosophy in the daily Press has been the distinguished and well-informed city editor of the 'Manchester Guardian'. That is typical of the Liberal school of thought.

That, as I see it, is the problem which we have to face. How often in this House have we heard the self-same sentiments expressed, particularly by the hon. Member for Chippenham (Mr. Eccles). In the last five years it has been his annual swan-song whenever the Budget was debated. No one who has listened to his speeches could doubt for one moment that if that hon. Gentleman had charge of the finances of this country, he would, on every occasion in the last five years when he had the opportunity, have set in operation a process of deflation. I defy anybody to set that process of deflation in action in this country without first deliberately creating unemployment to be able to do it.

How does the problem of full employment affect industrial relations. The hon. Member for Cheadle (Mr. Shepherd) pleaded for better relations in industry between employer and employee. We want better relations but those relations must be on the basis of equality and not, as they have been in the past, between somebody from above conferring a favour on those below. The only way in which we can get that is for the two sides to bargain on a basis of equality and the concomitant of that is inevitably, and must be, full employment.

I remember that in my own town, during the election, there was a discussion going on in the Press on some problem, and two employers of labour had taken part in the correspondence. A man who had a responsible position in the textile industry, an over-worker, wrote a letter and began by saying: I have worked for both these gentlemen in the course of my life and yet, prior to the war, I dare not have signed my name to this letter. That is a significant thing in industry. It is, I think, full employment which has given working men the right to be able to sign letters of that kind. But let us come back to this main problem. Employers have always prided themselves on being absolute bosses in their own shops. It is no use hon. Gentlemen opposite smiling. I remember a well-known business man in my own locality who was president of an employers' federation. When the federation attempted to interfere with his rights he said, "I will not tolerate any interference with my right to manage my own business in the way I think best." He used those words against his fellow employers. What would have been his attitude against any of his employees who attempted to infringe that right?

Mr. W. Robson-Brown (Esher)

In what year did that gentleman say that?

Mr. Brook

It does not seem to me to affect the problem what year it was I want to find out why it is.

Mr. Robson-Brown

There has been a great change of heart.

Mr. Brook

I know there has been a great change of heart, but it is not universal yet and it can only become universal because, at the present time, employees have the power to enforce it. They have the power to enforce it through full employment which has resulted from Labour policy.

Mr. Blackburn (Birmingham, Northfield)

I am in sympathy with what the hon. Gentleman is saying, but surely the trade union movement as a whole does not desire to interfere with the functions of management, and does not claim to do so.

Mr. Brook

The only way in which we can get a constitution in industry is by starting at the bottom and allowing the working man to accept some share of the responsibility of management. How far that will go will depend on the wishes of the working people and their capacity and willingness to accept responsibility.

The hon. Member for Cheadle stressed that the problem of full employment was international as well as national. I agree to a certain extent, but is it not rather remarkable that in a period when other countries have had bad spells of unemployment—including the United States—we have been able to maintain our position? I do not suggest that we shall always be able to maintain our position independently of the rest of the world. I agree that international action is necessary. However, the policy of the Labour Government during the past five years has been a great contributory factor towards the maintenance of full employment. That policy has given the working man, for the first time, real freedom. That policy cannot be accomplished by the mechanism of free industry, but must depend upon some kind of planning. It is on that kind of planning that future full employment depends, and with it the welfare of working people.

2.12 p.m.

The Financial Secretary to the Treasury (Mr. Douglas Jay)

My hon. Friend the Member for Falmouth and Camborne (Mr. Hayman), who represents a very enlivening and agreeable part of the country, made a very agreeable and enlivening speech in introducing this interesting debate today. He moved a Motion calling attention to the need for maintaining full employment and urging the Government to take all possible steps to increase production and maintain our standard of living. I gladly accept that Motion on behalf of the Government, because it is broadly a description of precisely the policy we have been following for the last few years, and, I would claim, we have been following it with some success. I can also assure my hon. Friend that the specific points he raised will be examined, indeed, they are being examined, by the Departments concerned.

There was, I think, nobody who would have predicted, at the time when the White Paper on Employment Policy was published in 1944, that we should hold employment as low as 1½ per cent. for five or six years. Indeed, as we know, the figure on which the National Insurance Act was based was actually as high as 8½ per cent. The achievement of maintaining 1½ per cent. in a free society, as has rightly been said this afternoon, is surely one of which all of us, whatever other national difficulties there may be, can be exceedingly proud today.

Some people would say, and the hon. Member for Woking (Mr. Watkinson) was arguing in this direction when he talked about the inevitable advance of production being responsible for these results——

Mr. Watkinson

Social progress.

Mr. Jay

The word "inevitable" suggested that it was nothing to do with a deliberate policy. Some people would suggest that this has not been achieved by Government policy but has been due to the general world situation. Obviously, of course, we have been living in a more inflationary world situation than we were in in the 'thirties. But those who argue, if any do, that deliberate Government policy has had nothing, or almost nothing, to do with it, are forgetting many facts. First of all, they forget that the specific policies put forward in the 1944 White Paper as designed to maintain full employment were supported by all parties at that time. I think the hon. Gentleman would agree——

Mr. Watkinson

I do not think that the hon. Gentleman has correctly represented my remarks which were that, if only hon. Gentlemen opposite would spend less time in fighting the battles of the past and concentrate more on dealing with the very great problems which we face, we might all get on a little faster.

Mr. Jay

That is a different point. I agree with my hon. Friend the Member for Bolton, East (Mr. Booth), and with the Highway Code, that it is wise to look in both directions. If there is anyone who thinks that our success in the last five years is hardly at all to be attributed to Government policy in planning, the evidence is against him.

I would only mention two points in support of that contention. As has been said today, there have been some other countries, including Western European industrial countries receiving Marshall Aid, which have suffered by our standards quite heavy unemployment in the last five years. One of my hon. Friends mentioned Belgium, and their experience is not irrelevant. If there is anybody else who is tempted to argue that the same degree of full employment could have been achieved here by a laissez faire policy, he would do well to study carefully the economic history of Western Germany in the last year or two.

Also, I think one should take note of the fact that, demonstrably, some part of our success since 1945 has been due to the deliberate internal policy of guiding new industries to parts of the country where unemployment was known to exist or was likely to exist. As one who had some part in drawing up the sections of the 1944 White Paper describing those aspects of policy, and indeed in initiating the policy itself, I am bound to say that the success of the development area effort has exceeded the expectations of anybody at that time. Actually, since 1945 up to date as many as 1,200, or rather more, new factory buildings have been built in those areas which were distressed before the war.

Mr. Shepherd

Can the hon. Gentleman tell us how many people are employed in these factories, and the capital cost of the factories?

Mr. Jay

I can give the hon. Gentleman precise figures later if he wishes to have them. The total number employed is already over 100,000. That is only one important part of the policy which has been carried out in those areas. The total number of people employed in those areas today exceeds by several hundred thousand the number employed in 1938. I do not think the hon. Gentleman would disagree with me when I claim that that improvement has clearly been due, in major part, to deliberate policies. As was pointed out, the most remarkable result is that, against the figures of 20 per cent. or 30 per cent. unemployed experienced there, and also in Cornwall, in pre-war years, we have got down to a figure of about 3 per cent. today.

This is also relevant to the defence programme. There are still some resources of labour in those areas with three per cent. unemployment as against 1½ per cent. in the rest of the country. It will be our policy, wherever possible, to steer new defence work to those areas, in the interest of defence production as well as in the interests of the people in the areas themselves. The hon. Member for Ash-ford (Mr. Deedes) made a perfectly good point when he emphasised the importance of mobility of labour in increasing our production and carrying out our programmes. It is equally important to encourage the mobility of industry, which he did not mention. Very often, one will get production quicker if new industrial extensions are put where the labour and the people are available than if one tries to move people from one place to another and to build large numbers of houses. I think the hon. Gentleman would agree with that.

My hon. Friend the Member for Falmouth and Camborne spoke in particular of his own area, and I can assure him that it has been the policy of the Government in these last few years, although that area is not specifically a development area under the Distribution of Industry Act, to steer new schemes into that district, and that has been done with quite a considerable measure of success. I would also like to pay tribute to the co-operation of employers and industry with the Government in this policy of steering new schemes into suitable areas. It is essentially a two-way effort, and could not have been achieved without a great deal of co-operation.

When hon. Members opposite argue that our present full employment is almost entirely due to general causes and not to policy, I also always recall this. In the General Election a year ago, when one began to talk about full employment, there was always somebody in the hall representing the Opposition who stood up and said "What about Marshall Aid?" They said that our full employment was entirely due to Marshall Aid. An hon. Gentleman opposite has said that some Members of the Government said the same thing. That was true in 1948 and in 1947, when there would have been considerable unemployment without Marshall Aid. But it had ceased to be true by 1950; and, of course, the outstanding fact today is that we have succeeded in freeing ourselves from the need for Marshall Aid and that unemployment is actually lower today than it was a year ago.

Several hon. Members today have, quite rightly and naturally argued that the real threat to full employment this year—and here I start looking forward—is in the scarcity of raw materials. It is also being suggested, as it was suggested, I think, in an intervention today by the hon. Member for Bury and Radcliffe (Mr. W. Fletcher), who is not now in his place, that it was due to a lack of foresight by the Government in allowing our imports of raw materials to fall too low in 1949 and 1950.

There is nothing new, of course, in saying that a possible shortage of raw materials is the real threat to employment today; indeed, in Economic Surveys and all sorts of publications during the last four or five years, we have been insisting that the main threat to our full employment in the present world situation was a lack of materials, and we have always put forward the need to secure raw materials as the reason for giving such high priority to the export drive. In fact, in the Economic Survey this year, the Government said very bluntly, and with all the authority of the Cabinet: The shortage of raw materials is, indeed, the largest and most serious of all the difficulties with which the United Kingdom is likely to be faced in the immediate future. When it is argued that either the Government or industry could or should have done much more at some time, presumably since devaluation, to build up stocks of raw materials, I do not think the critics are taking account of the facts. I have already said during the Budget Debate that it was as early as the spring of 1950, before the Korean war began, that we began to relax dollar economy as a restraint on purchases of raw materials, and it was as early as July, 1950, before the right hon. Gentleman the Member for Ormskirk (Sir A. Salter) wrote his letter to "The Times," that we decided to embark on a strategic stockpiling programme. Since the summer of 1950, the general limit on our purchases of raw materials has not been dollar or financial economies, but physical difficulties of supply, and, as it has been questioned today, I assure the House that these physical difficulties have been very real since the late summer of 1950.

Squadron Leader A. E. Cooper

I am sure the hon. Gentleman does not want to mislead the House, but I do assure him that the Board of Trade are still refusing licences to manufacturers who can get their raw materials in other countries, and are still refusing on the ground that it would require dollar expenditure. If he would like evidence on that point, I should be very happy to supply it.

Mr. Jay

It is naturally not the case that anybody can get a licence to buy what raw materials he likes at any time. I am talking of the main essential raw materials on which our industries depend. I should be very glad to discuss any particular case with the hon. and gallant Gentleman.

Mr. R. S. Hudson (Southport)

The hon. Gentleman has said that, as early as July, 1950, the Government started the policy of stockpiling. It would be very interesting to know what the particular items were.

Mr. Jay

I am not sure that it would be in the public interest; but, in any case, I have not got detailed information here at the moment. If it is in the public interest, I shall be glad to give it to the right hon. Gentleman, but I can assure him that the programme was a very real one.

I do not know whether it is being suggested that we ought to have made larger purchases before the spring of 1950 or afterwards. If the contention is that it should have been done afterwards, that is precisely the policy which we have been pursuing. If it is suggested that we should have embarked on a much bigger import programme earlier than the spring of 1950, then I think it has been forgotten that that was at the very time when we were being urged to indulge in greater dollar economy. Indeed, the official Opposition at that time, so far from urging us to spend dollars more freely, were, of course, warning us that another dollar crisis was likely.

I do not blame them for that, because it was quite a general view, but it is not consistent with saying now that we should have been spending dollars much more freely then. My hon. Friend the Member for Sheffield, Park (Mr. Mulley) quoted a statement by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), at a much later date—November 16th, 1950, four or five months after we had embarked on the policy of easier purchases—in which he said: The purpose of my argument is to try to show that, until we can calculate the effect of a rise in prices of raw materials, we should be slow to rush into very much relaxation of dollar purchases."—[OFFICIAL REPORT, 16th November, 1950; Vol. 480, c. 1925.] That should be borne in mind.

The picture which has been painted of tailing imports of raw materials in 1949 and 1950 is, in fact, false. The actual facts are these. If we take the volume of imports of raw materials into the United Kingdom in 1947 as 100, they rose in 1948 to 104, in 1949 to 117, and, in 1950, still further to 123.

Mr. Robson-Brown

In money or volume?

Mr. Jay

In volume, and the figures include non-dollar as well as dollar goods. That is not to say that we obtained last year, or are obtaining now, all the raw materials we could wish and need to have. I merely give these figures to refute the suggestion of a rapid fall in our imports.

Mr. Beresford Craddock (Spelthorne)

Is it not a fact that, in the Economic White Paper recently produced, it is said that one of the reasons for our favourable balance of trade last year was the actual running down of stocks in this country? If that is so, I do not see how we could have been building up stocks.

Mr. Jay

I am not denying that there was a fall in stocks. I am pointing out that there was also a rise in the volume of imports, so as to give the whole picture. We all agree, however, that unless we get more adequate allocations from the raw materials organisation now sitting in Washington, there will be a grave threat to our industrial production this year. It should be remembered, however, that it was on the initiative mainly of the British Government, when the Prime Minister visited Washington last December, nearly six months ago, that this organisation was set up. I think that was the most practical step that has been taken in these last few months to improve the raw materials situation.

Earl Winterton

May I ask one question—an entirely friendly one? Can we have an assurance from the hon. Gentleman that the fact that he has devoted such a large portion of his speech to raw materials will not cause the Government on Tuesday—when we are to have a first-class debate on this question instead of one on a Private Member's Motion—to refer anyone to what has been said today? In other words, can we have an assurance that this question will be dealt with fully on Tuesday and that the employment part, with which this Motion is concerned, will be dealt with today?

Mr. Jay

Certainly, but I was challenged by hon. Members opposite on the ground that I must look at the present and future prospects. However, I am not confining myself entirely to raw materials. I was saying that I think that was the most practical step that has been taken in the last two months to deal with this problem. I suppose Celtic eloquence might say, "I can call sulphur from the vasty deep," or something of that kind. But I think that one could reply as in Shakespeare's day, "But will it come when you do call for it?" I think the steps we have taken are, on the whole, more practical. We do not believe that the United States authorities will take so short-sighted a view of the common needs of the North Atlantic countries as to allow a serious situation to arise.

I think we should also try to keep the present issue in perspective. British industry is certainly hampered because of shortages of raw materials at present; but in the first three months of this year production as a whole has been just about 4 per cent. above the average level of last year, and that was the estimate we gave in the Economic Survey for the whole of 1951. It is perfectly true, of course, that, if the worst threats of material shortages are borne out, that estimate would still be falsified. That, at present, is a threat. It is a grave threat, but not yet a fact, and the outcome largely depends on the extent to which reasonable raw material allocations are made between the various countries now taking these decisions in Washington.

But let us be absolutely clear about this point, on which I fully agree with what my hon. Friend the Member for Sheffield, Park said. If, because of material shortages, production generally this year fails to rise by something like the 4 per cent. we have estimated, and if also, because of that, the defence programme falls short of its target, then it is quite certain that the Budget problem will be made harder and not easier as a result. In those circumstances, not merely would defence production fall but civilian production to some extent would be bound to fall also, because one could not—and one would not wish to—concentrate the fall on defence production. It is the last thing we should wish.

There would doubtless be lower profits, lower earnings, perhaps more unemployment and, therefore, lower Budget revenue. It is, therefore, quite incorrect to assume that, if the defence programme is not fully carried out, our defence expenditure falls and the rest of the Budget problem remains the same. In those circumstances, of course, the whole calculation of the budgetary gap would have to be made again. The only thing one could say with certainty of the result would be that, owing to the lower production and, therefore, lower incomes all round, the Budget problem would be harder and not easier, and the need for revenue would be greater and not less. At present, however, as I have said, it is too soon to say whether those fears will be realised or not.

Several hon. Members opposite have spoken to an Amendment which has not been called, asking the Government to make more effective use of the machinery of consultation in industry. I can assure hon. Gentlemen that the Government are entirely in favour of making the fullest use of the various advisory committees, and other bodies, of which they spoke. Although I could not accept any implication that we could in the past have made more use of them than we have done, I can certainly give the assurance, which was asked for, that we shall make the maximum use of those bodies in the future. There are a great number of such committees, of which the most important is the National Production Advisory Council for Industry and the regional boards which are linked with it. All those bodies meet regularly. There is a regular two-way traffic of information and guidance between the Government and industry; and, having, if I may say so, seen a good deal of their work both in war and in peace, I can assure the House that we attach the greatest importance to them. The practical value of these bodies always depends to some extent on the advantage which the members take of them and of the use they make of them, but I can assure hon. Members that our aims and policy are entirely in favour of the maximum consultation in these matters.

The hon. Member for Woking (Mr. Watkinson) and my hon. Friend the Member for Halifax (Mr. Brook), who speaks with knowledge of the woollen industry, pointed out that one of the problems thrown up by full employment has been the tendency, because of the demand created, for a slight inflationary pressure on the cost of living. That is perfectly true. If we are to have full employment, as successfully as we have had it over these last few years, there is perhaps bound to be some upward pressure on the cost of living. That problem has to be faced by price control and by all the other methods we have used.

Finally, as my hon. Friend the Member for Sheffield, Park, said, full employment in these recent years has gone hand in hand with record production and with rapidly increasing productivity. The old fears that full employment would destroy incentive, would produce idleness, and so forth, have, happily been shown to be unfounded. The actual result has turned out the other way. As a result of this very low level of unemployment, we have had higher production and rapidly rising productivity.

It also seems to have been the case that full employment has assisted us in weakening the old tendencies towards restrictive practices. I always think, when I hear people talk of getting rid of restrictive practices on both sides of industry, that the best way to get rid of such practices is to get rid of unemployment. It is not surprising that, when there is heavy unemployment, and when people are told that it is beyond the resources of human policy to get rid of that unemployment, they should seek to protect themselves in what seems the only way they can. I believe, therefore, that one of the benefits of our successful employment policy will be to make it easier to get rid of these practices on both sides of industry than it ever was in the past.

Therefore, it is just as much in the interests of production, of re-armament, and of exports, as it is of human welfare and human happiness, that I can accept this Motion today and pledge the Government to continue the policy of full employment which has borne such rich fruit in these post war years.

Mr. Beresford Craddock

Would the hon. Gentleman deal with one point to which his hon. Friend the Member for Bolton, East (Mr. Booth) referred, and that is the question of cotton supplies and American cotton going to Japan? Before 1939, a great deal of our East African grown cotton went to Japan. Could we have an assurance that none of that cotton grown in East Africa and in our Colonies will go to Japan, at least for some length of time?

Mr. Jay

The hon. Gentleman knows that the allocation of cotton is one of the matters covered by the raw materials organisation in Washington. There was a crop restriction in North America a year ago. That has, I understand, now been removed, but it will not be possible to be sure about further supplies until the present year's crop figures are available That is the present situation.

2.41 p.m.

Earl Winterton (Horsham)

I should like to make a few comments on this most interesting debate from the detached standpoint which I occupy, speaking only for myself, though I do not think my views will be in disaccord with those of my hon. Friends. There is one thing in this debate which in my experience is unique, and that is that although, in the last 46 years, I have heard a good many debates on unemployment this is the first one, in a sparsely populated House on a Friday afternoon, when there has been—if I may without impertinence pay the House the compliment—a very high level of fairness and justice on both sides of the House in approaching the problem. This is also almost the first debate on unemployment in which I have heard no reference to Ascot Races and I hope I shall not detract from that high level of impartiality.

The Financial Secretary to the Treasury, who, like me, is normally a controversial figure in the House, has, on the whole, attempted to deal fairly and objectively, if he will allow me to say so, with the points put before the House. I must, however, make one or two comments on something he said. I do not propose to follow him into the realms of raw materials—although he was perfectly entitled to answer the questions put to him—because I do not want to anticipate the very important debate we shall have on that matter on Tuesday. I hope I shall not be departing from today's standard of fairness and impartiality if I venture to make an assertion. I do not know whether it will be popular on either side of the House. It is not an assertion which in the past has been very popular with any set of politicians, but I nevertheless believe it to be accurate.

I assert that it is as untrue to say that there is any infallible preventive of unemployment on a large scale in any country—save in totalitarian countries where the Governments can order anyone to work at any job, whatever the wages—as it is to say that there is any infallible preventive of tuberculosis in any individual. I would say that in each case certain precautions can be taken and remedial treatment applied after the disease has appeared to prevent its spreading, and in an endeavour to cure it. I therefore say that it is unjust and absurd to place blame, as the House has often done in the past, upon particular Governments, or upon groups of employers or employees, when the cause of the tragedy of widespread unemployment cannot be cured by Britain alone.

Nobody but the historians will be able to say whether we of the Tory Party were correct in saying, in the 1929–31 Parliament, that the Socialist Government of that day, by their action or inaction, very largely contributed to, or were mainly responsible for, the calamitous state of affairs which resulted in 1931 in the greatest crisis we have ever had. Equally, only the historians will be able to say with any real accuracy whether hon. and right hon. Members opposite are entitled to claim, as they constantly do, that those who now sit on this side of the House were, when in office, mainly responsible for unemployment between the wars.

The truth of the matter is—and I say this with the greatest respect and diffidence—that in my opinion politicians are not always very accurate judges on the subject of economic causes, because it is such a great temptation to controversial politicians to say. "This state of affairs is due entirely to hon. Members on the other side of the House."

Mr. Mulley

The noble Lord drew an analogy between the causes of unemployment and the causes of tuberculosis. Does he not consider that by good food and good surroundings tuberculosis can be averted, and that the lack of infallible preventives of tuberculosis is not now so present in, for instance, Glasgow?

Earl Winterton

The hon. Gentleman is unfortunate in raising that question because the tuberculosis rate is increasing in this country at the present time. However, I do not want to develop that subject because I am not an authority upon it.

I want to call in aid of the contention I have just made—which I was delighted to see was not received with enthusiasm from either side of the House: I had hoped that it would not be—two quotations from an authority on this matter, no less a person than the right hon. Member for Ebbw Vale (Mr. Bevan). Reference has already been made to this well-known statement by the right hon. Gentleman: But for Marshall Aid we should have had 1,500,000 unemployed in Britain. One of the few points made by the Financial Secretary which I wish to take up is his rather strange accusation made against us that at the last election our supporters had been encouraged to call out at supporters of the party opposite "What about Marshall Aid?" when they claimed to have cured unemployment. Surely they were entitled to say that, considering that only two years earlier the then Minister of Health made exactly the same statement.

Mr. Jay

My point was that that was a perfectly correct statement to make in 1948, when I think it was made, but that it had—and this is the essential fact—become untrue by 1950.

Earl Winterton

If I may say so, I think that is rather a feeble rejoinder. The point the hon. Gentleman made was that when Labour Party candidates said in the election, as they did, holding the views they did and were entitled to hold, "We have found a remedy for unemployment," supporters of the Conservative Party called out "What about Marshall Aid?" The hon. Gentleman said that that was very unfair. Surely they were entitled to call that in aid, considering that two years before his right hon. colleague in the Government had made one of the gravest statements I have heard in the House about a delegated economy. Surely they were entitled to say that, after a Socialist Minister had said that but for the aid of a foreign country, we should have had 1,500,000 unemployed.

I will quote something else to support my original contention, which I do not want to elaborate unduly. Employment or unemployment in this country is frequently the result of action in another country over which we have no direct control. Let me say, before the Financial Secretary interrupts, that I am applying this not only to the present but to the past. Let me now quote what was said by the right hon. Member for Ebbw Vale in his resignation speech the other day. Referring to certain events overseas, which I do not want to go into now because they will be fully discussed next Tuesday, the right hon. Gentleman said: We shall have mass unemployment. We have already got in Great Britain underemployment. Already there is short-time working in many important parts of industry."—[OFFICIAL REPORT, 23rd April, 1951; Vol. 487, c. 37.] I conclude my observations in support of my assertion by saying that surely no one is so jejune or so deliberately inaccurate as to suggest that the chain of causation of employment here was governed, to a large extent, by world conditions for the first time since 1945. In other words—because that is rather a clumsy sentence—this chain of causation is no new thing in our country, and cannot be in the case of a country in the economic condition we are in. It existed, of course, before the war, and before 1914.

As I shall be retiring from this House at the next election, I can say something which might have been unpopular if I were standing for re-election. I suggest that in the course of the past few years there has been a good deal of unfruc-tuousness—if I may use a somewhat pompous term—in the mutual recriminations between politicians as to the governmental causes of unemployment, so far as they affect this country. They have frequently been world-wide, and if we have unemployment in this country, as we may have in the next few years, I say, as much to my hon. Friends as to hon. Gentlemen opposite——

Mr. Hayman

The right hon. Gentleman now admits that unemployment can be due to world causes. Will he therefore admit that the economic blizzard of 1931 was a result of the Wall Street crash?

Earl Winterton

I have already dealt with that point. The hon. Gentleman was not listening to what I was saying. I do not want to pursue this point, because the House has been very good so far in listening to me.

I should like to say one thing which I think will meet with general agreement. This is a matter which has not been sufficiently ventilated in our past debates. Quite apart from the present cause of shortage of raw materials, namely, rearmament, it is a profound mistake to suppose that other countries are, to put it bluntly, not going to continue as they have been doing for 30 or 40 years, in some respects with increasingly good results from their point of view, trying to prevent us being the workshop of the world as we were in the past, by sending us raw materials to be converted into manufactured goods which are sold back to them to enable us to buy their food.

An hon. Friend of mine has referred to that matter very pertinently, and I would impress upon hon. Members in all quarters of the House—for this is no party point—what I think is an admirable and well-phrased warning in a leading article in "The Times" newspaper a few days ago. It was referring not to the specific subject of this debate but to the meat ration. This is what "The Times" said: Declining imports and rising prices are not a passing or incidental misfortune. They reflect permanent and familiar trends. Agrarian countries and producers of bulky raw materials have decided to become more industrial; Let the House note those words, because they are of great potency and importance for us. Argentina and the rest remember past gluts, depression, and distress and importing countries' indifference, as they see it, to their plight. Those countries are not greatly interested in the differences between Socialist and Tories. They say, "A plague on both of you. You did not treat us particularly well in the past. You talk of your unemployment, but what about what we suffered from what you did? We are not going to treat you very well in the future." I am afraid we are far removed from the dream world to which the representative of the Liberal Party, who has now left the Chamber, referred in his speech in which, on the one hand, he advocated free trade and then made the astonishing suggestion that all purchases of raw materials should be made through the United Nations.

I cannot continue to discuss the important aspect of this huge subject without keeping the House an unduly long time, but I would like in a very few words to point out how in one way, at any rate, increasing employment can be found in this country. What I am about to say reflects in no way upon my right hon. Friend the former Minister of Agriculture, who is on this bench at the moment, nor to the present Minister of Agriculture. If I may pay them both a compliment, I should like to say that they had a wonderful partnership during the war and the contribution which they made in their respective offices to agricultural production in this country is very great.

Nevertheless, there is an astonishing state of affairs in this country, as I have pointed out before. There is more unutilised and unoccupied land in Britain than in any country in Europe, and yet no country in Europe can less afford to have such land. I can best introduce the point I want to make by quoting from a paper called "Rural Economy"——

Mr. Norman Smith (Nottingham, South)

Hear, hear.

Earl Winterton

I hope the hon. Gentleman has some editorial connection with the paper. If so, it is fortunate. It states that I asked the Minister of Agriculture: whether he was aware that hundreds of acres of derelict woodland, or land reverted to shrub in the Weald of Surrey and Sussex, has recently been cleared for food production with the aid of bulldozers by various landowners, and whether, in view of the amount of such land still remaining he would call the attention of the county agricultural executive committees to the matter. e Minister replied that this had already been done and that under the marginal production scheme a limited amount of financial assistance for this purpose was available to occupiers of farms. The quotation goes on to refer to a statement I made on the subject of common land.

Recently there has been published the Report of the Forestry Commission and I will give one or two figures because they were as astonishing to me as they will be to any Member of the House who has not read the Report. After saying that there are some 2,825,331 acres of woodlands, of which 623,031 acres belong to the Forestry Commission, it goes on to say—these are the astonishing figures—that there is an area of scrub in the three countries of England, Scotland and Wales totalling half a million acres—in other words an area of land which is fulfilling no productive purpose whatever.

Further, it says that, in addition, there are 151,000 acres of devastated woodlands and that 662,000 acres of felled woodland which have never been replanted. On my computation, adding together the amount of scrub land in the south of England, to which I referred in my question to the Minister of Agriculture, and the figures given in the Forestry Commission's Report. I would say that there are something like two million acres of land quite outside the marginal land area which have been dealt with under the policy of the present Minister of Agriculture—which was an extension of the policy of my right hon. Friend—and which are producing neither food nor timber and which could produce one or the other.

Parliament as a body has not shown very much interest in this question. It is true that thanks to my right hon. Friend and to the present Minister, and thanks also to the lead and initiative of the agricultural industry, we have some of the highest production per acre in this country of any country in the world. But that in no way excuses these huge areas of unoccupied land. If that land were planted and if there were an acceleration of the policy of the Forestry Commission or if it were turned into farm land as has been done successfully in the south of England and in other places, there would be a large accretion of employment both in the present and the future, both temporary and permanent employment.

In conclusion, may I refer to one illustration which I have used before in this House but not in this Parliament. One can go from London to Dover by rail, cross the Channel, get into a train and go to any part of the Continent in front of or behind the Iron Curtain, if one can get through the Iron Curtain, and one will see, in the journey from London to Dover, even though the county of Kent has been described as the garden of England, more land which is neither being put to profitable agriculture nor woodland use because it is neglected, than one will see in a journey four or five times that length on the Continent of Europe. Let us take Belgium—a country which has a delicately balanced economy like we have and just as dense a population—and it will be seen that, although the best Belgian farming is not equal to the best English, Welsh or Scottish farming, the Belgians cultivate every acre of soil, however poor it may be.

I am very grateful to the House for allowing me to put what may seem to some to be a somewhat boring point, but I cannot believe that, when discussing unemployment and the future productivity of this country, we should exclude the question of the unutilised land in Britain.

Miss Burton (Coventry, South)

We all know that the noble Lord wishes to be fair in what he has said. I think, however, with respect to him, that he made a mistake when he was speaking about the reactions on this side of the House to Marshall Aid. We do not deny the help of Marshall Aid in averting unemployment, but we believe that Italy, Belgium and France, with Marshall Aid and Tory Governments, did not prevent large-scale unemployment.

Earl Winterton

The hon. Lady used phrases in a perfectly proper political and personal sense so disarmingly that I almost wish I could agree with her. I cannot agree, however, with (a) her first statement, and (b) that the Prime Minister of Italy will be overjoyed to hear himself described as a Tory.

3.3 p.m.

Mr. Hector Hughes (Aberdeen, North)

I am sure that the House was sorry to hear the right hon. Member for Horsham (Earl Winterton) adversely compare the English countryside and its amenities with the countrysides of foreign countries. I was a little at a loss to discover the relevance of that to the Motion before the House. Therefore, I shall say nothing more about it.

I was glad to hear the Minister say that he will accept the Motion. I hope that the House will also accept it. The Motion is, in my submission, patriotic in aim, and I think that the House will agree that it was proposed and seconded persuasively and with great moderation.

I support the Motion because it calls attention to certain satisfactory features in the history of this country during the last five years, including full employment, record production and record exports. We on this side of the House hope they will be maintained, and I am constrained, by the speeches to which I have listened to from the other side of the House, to think that hon. Members and right hon. Members opposite, too, will support the Motion.

That being so, the Motion does not call for, and I do not intend to deliver, a controversial speech. I should like, however, to say that it would be easy to be discursive, to wander, as the noble Lord has done, over a very wide field of territory, not only in this country but on the Continent, and to make comparisons adverse to this country. I shall do nothing of the kind. I shall confine myself to one country and one industry—that of shipbuilding, ship conversion and ship reconditioning in the shipyards all round our coasts, employing tens of thousands of workers and supporting thousands of families. That industry has maintained full employment, has achieved records of production and is a fine example to the world of promise, planning and performance.

There is one overriding consideration which I ask the House to bear in mind in connection with the shipbuilding industry. It is this, put positively and negatively. Put positively, shipbuilding, repairing and reconditioning are in themselves a form of national defence. Therefore, that industry has, in a period of re-armament or otherwise, a very special claim on any raw materials available to the nation. Money spent on that industry, men employed in that industry and materials used in that industry are all devoted to creative and constructive work, which assists defence directly and indirectly and which, in times of war, can be readily converted to direct defence. Put negatively, I am sure the House will agree that its absence or diminution would in time of war be a handicap and loss to the nation. This I submit is self-evident and need not be argued.

The questions which are being asked anxiously in the shipbuilding industry today are: what effect will the rearmament drive have upon shipbuilding, repairing, reconditioning and adaptation; what steps are being taken for the implementation and completion of existing orders in the nation's shipyards; what steps are being taken to ensure a fair distribution of orders among all the shipyards available? I should say here that I have a special interest in this, because I am concerned with the shipbuilding yards of Aberdeen, which have a long and skilled tradition of excellent workmanship. These questions are being anxiously raised, not only in Aberdeen but elsewhere, by workers who have vivid recollections of the terrible conditions in the shipyards during the inter-war years.

At present, happily, the shipbuilding industry is doing well, and we all hope that it will continue to do so. If it can get sufficient raw materials it will be able to maintain full employment, it will be able to distribute the orders so as to co-ordinate orders with performance orders with completions and obviate delays in completions. Last March I had occasion to write to the First Lord of the Admiralty on this subject, and I got a reassuring reply from him as to the prospect with regard to merchant shipping and also naval shipping. I venture to quote a portion of his letter. He said: As regards merchant shipbuilding, the present position is that Aberdeen Yards have 25 ships on order or under construction, 11 at John Lewis; 9 at Hall Russell and 5 at Alexander Hall. It is hardly accurate, therefore, to refer to any one of the three as being 'practically bereft of orders'. It is also a fact that further enquiries are circulating for other ships of the types which the firms build, and there is no reason why they should not be able to book additional orders. The present position in these shipyards, therefore, seems to be reasonably satisfactory. As to naval work, I find that two further refits of boom defence vessels have been allocated to firms in Aberdeen to follow on three similar ships just completed. On the new construction side we have just placed a contract for three Admiralty tugs to be built by Alexander Hall. We have placed orders for two inshore minesweepers with firms in Buckie. This represents a very fair share of the available naval work. This industry has suffered from serious fluctuations and from the alterations from peace to war. Diversion of raw materials has affected employment, and, therefore, the lives of tens of thousands of workers in shipyards, engineering works, docks and harbours; also a great number more all over Great Britain in complementary industries where parts and accessories are made; and in transport industries which carry those materials to the appropriate shipyards, works and factories. Yet, despite this British shipbuilding has maintained world supremacy, and continues to do nearly one half of the world's shipbuilding, weathering all economic storms. This is a matter for considerable national pride, and it is astounding that the shipbuilding industry has maintained its strength and its resiliency, having regard to the difficulties it has had to face in the past.

In 1914 it was suddenly dislocated by being switched from peace to war. In 1918 it was again dislocated by the reverse process of switching from war to peace. During the inter-war years it was mismanaged, and I need not remind the House that it was the victim of vast unemployment. We had such tragedies as Jarrow, and in various other parts of the country shipyards were closed. In 1939 it was again re-vitalised by another switch to war by the vastly expanded programme of naval work, the conversion of ships for war purposes and of course, repairs.

In 1945 the country seemed to be faced once more with the shortage of raw materials. Vast problems faced industry. There was a tragic cut in naval construction and repairs. On the other hand, there was the compensating work of building for peace cargo and passenger vessels, reconversion, repairs and different kinds of reconditioning. Naturally, and fearfully, at that stage questions were asked by those who remembered the adverse conditions of the inter-war years. To these workers shortage of raw materials meant the chaos of the inter-war years, mass unemployment, more Jarrows, destitution, hunger and want. If the same economic conditions had obtained in these post-war years as obtained during the inter-war years probably the same result would have followed.

Happily, from 1945 onwards, instead of an absence of planning, which characterised the inter-war years, there was a system of planning, which brought about different results. The figures in the last five years show a great strengthening of the post-war demand for new ships. With this demand still continuing the shipbuilding industry looks like having a period of prosperity for at least two years ahead—probably longer.

The same figures also show that the shortage of raw materials is causing serious difficulties. The total orders booked during the last five years greatly exceeded the total tonnage completed, for the reason that the raw materials were not available in sufficient quantities. Let us compare the total orders with the tonnage actually completed during the last five years, and in this connection I venture to quote some figures for comparison from that authoritative publication "Lloyds Annual List." The list shows the orders received and completed during the last five years, and why the orders completed are so much smaller than the orders actually received.

I hope the House will bear with me if I give these five sets of figures. In September, 1946, the total order book of the nation was for 3,121,000 tons gross. Tonnage completed in the same year was only 1,009,000 tons. For 1947, orders received amounted to 3,485,000 tons gross, while completions were only 961,000 tons. In 1948, orders amounted to 4,477,000 tons, while completions were only 1,225,000. For 1949, the orders were 3,503,000, and completions only 1,375,000 tons. The orders for 1950 were 3,312,000 tons, while completions were only 1,400,000 tons. The figures for tonnage on order show the great strength of the post-war demand for new ships, and this demand has not yet ceased; while on the other hand, the smaller figure of completions was due to the absence of sufficient raw materials to carry out to the full the orders which were received.

It is constructive and helpful to note what the President of the Shipbuilding Conference, Mr. J. Ramsay Gebbie, says upon this. He attributes this state of affairs, not to anything wrong with Government policy, but to post-war dislocation. I quote what he said: These five post-war years have been full of problems and beset with difficulties. First, we had all the dislocation of the change-over from war to peacetime production and the competing demand for available capacity, not only by British, but by foreign shipowners also, owing to the temporary eclipse of shipbuilding in countries which had suffered actual physical damage to their shipyards, or which had been occupied by the enemy. He continues: We therefore had this heavy demand on our shipbuilding resources, coinciding with the country's great endeavour to repair the ravages of war and to carry on with the reconstruction of our major industries interrupted by the years of war; the result was that, just at the time when demand for new ships was greatest, supplies of materials were most restricted. There was a severe shortage of steel, timber, auxiliary machinery, electrical goods, and indeed of practically all the things required in the building of a modern ship, and shipbuilders were provided with the severest headaches in the industry's history. Confronted with these difficulties, the results show——

Earl Winterton

The hon. and learned Member was rather critical of me because I referred to the subject of greater production of raw materials for this country in the shape of timber. As he himself has said, one of the troubles of the shipbuilding trade is the lack of timber. That is the same purpose as my own remarks.

Mr. Hughes

I did not criticise the noble Lord adversely in that respect at all. What I said was that he compared our rural economy—the land of England—with the rural economy of Continental countries, and did so in a way adverse to this country. His interruption has nothing to do with my argument.

I now say a word or two about the bookings and orders for the future. In 1950, British shipyards have booked orders for new tonnage amounting to over three times the tonnage booked in 1949. New orders for 1950 amount to over 1½ million gross tons, compared with less than 500,000 gross tons in 1949. This increase may be due to a variety of causes—to strained international relations, to the defence programme, to current high freight levels, to optimism in the export trade, to the confidence of shipowners. But whatever may be the cause, it is eminently satisfactory to the shipbuilding industry.

I take your hint, Mr. Deputy-Speaker. I have a great deal more to say, but as I know there are other hon. Members waiting to address the House I shall content myself with saying that the shipbuilding industry of this country has every reason to be proud of its performance and have confidence in the programme and policy of planning which has brought about this happy result.

3.22 p.m.

Mr. W. Robson-Brown (Esher)

As I know that other hon. Members wish to speak, I intend to be as short as I can. Never in my short experience in this House have I listened to speeches of such high level and deep sincerity on both sides and to such informed opinion as we have had in this debate. There is no doubt whatever that this question of high productivity has almost lifted itself above the realm of politics. We appreciate that in war our existence depends upon it and that in peace the prosperity and well-being of our people rests solidly upon it.

I have to cut down my speech to a quarter of its length, but I am going to make play of the use of the word "stockpile" which is in the public eye all over the world. The most important necessity and most important stockpile for Great Britain today is the national prestige and confidence of its people. I believe that Britain in the war and since the war has displayed an almost inexhaustible stockpile of toughness and resilience against every difficulty and a capacity for battling through crisis after crisis in a most extraordinary fashion. The prestige and confidence of the people has not been disturbed or uplifted by the jittering Jeremiah from the Welsh hills who spoke here on Monday and cried, "Woe, woe, woe." I think the spirit of our people can rise above those things.

As to the shortage of raw materials, this disturbing factor has faced industrialists at all times. There is nothing new about it. But not only has there been lack of foresight in this country, there has been lack of foresight among the Western nations as a whole at this point. I believe that if there had been more foresight on an international basis during the last 12 months in this matter, our problems today would be very much easier.

This fear of a shortage of raw materials has not only an impact on the plants that go short but it disturbs almost every other industry in the country, because industrialists never know when or where the blow is going to fall next. At a time when we ask for higher productivity and for every effort in difficult circumstances, every worker in industry wonders when the axe is going to fall on him.

I do not think it is wise, proper or fair of us to throw the blame entirely on the United States with regard to stocks of raw materials. I understand, and indeed the Financial Secretary to the Treasury said, that the Prime Minister, when he went to the United States of America last autumn, made reference to it and made a strong point of it. I should have liked to have seen much more done. The United States might well criticise us.

Surely the most vital raw material in this country is coal. Only in the last month or two we have been asking the United States to come to our rescue in that vital commodity for British industry. Every Minister of the Crown dealing with trade knows perfectly well that industrialists of all kinds from every sort of industry have been importuning them in the last six or 12 months about supplies of raw materials.

Do not let us forget our own vulnerable position in regard to tin, rubber and wool. The United States might well turn to us and say "Where has been your judgment, your co-operation, in respect of these commodities, which perhaps meant so much to the restoring of the economy and of Great Britain and the readjustment of the dollar balance?" Do not forget also that the Treasury must take some share of responsibility because they have concentrated too much in the last 12 months in accumulating dollars and allowing at the same time a shortage of materials to grow in the workshops and warehouses of the country. Nor must we forget that the Treasury have put a cast-iron embargo on many occasions—one of my hon. Friends mentioned this today—on private traders themselves taking the initiative in the building up of vital raw materials for their own concerns.

We must recognise that the United States has in past months cut back its civilian demand in a positive fashion. It is quite clear that in these times we in this country must realise that there are three things that we cannot do in parallel. The first is to increase our civilian production, much as we would wish to do so, in every field and sphere. The second is to increase re-armament production, which we must do because we cannot put the National Health Service or any other kind of social service against the survival of the nation. The question of priority in these matters is beyond argument. The third is large-scale stockpiling One of the fundamental mistakes, in my view, is that every one of the Western countries is at this moment attempting to do all three. One hon. Member opposite rightly indicated all of us for allowing competition between the Eastern and the Western worlds to take place in Australia for wool and elsewhere for other raw materials.

The real limiting factor today is not raw materials but labour. In any field one cares to examine, labour is the key to the whole situation. In any event, it is wonderful what one can do when one makes up one's mind to do it in getting raw materials and substitutes, as we have shown in the last 10 years, particularly during the war. If we and the United States move together in unison, there may be some shortage of raw materials but it will not be of a kind such as that which has been portrayed, nor will it be of the magnitude suggested.

I wish to refer to the need for a stockpile of orders. This debate is on productivity, and one most important factor in obtaining the productivity we desire is confidence that there are orders behind the workers so that they know that if they go all out they will not work themselves out of a job. No greater contribution has been made to the recovery of this country than that made by the 75 per cent. sector of privately-owned enterprise in the last four or five years. We talk of a 4 per cent. increase in productivity. There is no limit. If we could secure in industry the confidence that we find on both sides of the House, the same understanding and comprehension of the problem, we would be able to break down restrictive practices and make a new kind of world in our time, which I believe is the sincere wish of hon. Members on both sides of the House. Another stockpile is the little pile in the stocking of this savings bank.

There can be no argument that we cannot have high incentive and high taxation running parallel. At this time one of our difficulties is high taxation which, however good or well intentioned its purpose may be, acts as a brake on incentive and the volume of work that a man does. A point is reached where taxation slows down production, when a man asks whether it is worth while his working any more, and when an employer asks whether he is being bled white, and when the answer in either case may well be that it is not worth while.

Finally, we must build up a stockpile of confidence in one another in this country, with less class hatred and less class distinction, more class pride and more respect for one another. After a long experience in industry I wish to subscribe to that view. In my heart also is a hatred of unemployment. I have seen it in the old days in South Wales and I never want to see it back in my country again. I have always found that where there has been individual class hatred it has been in the case of a man who has been outclassed. I have found in this country that men are not class conscious. The average Englishman always thinks he is in a class of his own. Let us keep that in front of us, never forgetting that the most important factor in our recovery is the human factor. We sometimes leave that out of our calculations. In our planning we must not forget the man, and in that way we shall bring back the prosperity and our way of living, which is the desire of us all.

3.30 p.m.

Mr. Blackburn (Birmingham, Northfield)

I will try to emulate the vigorous speech made by the hon. Member for Esher (Mr. W. Robson-Brown) and also make my remarks as short as possible in order to give other hon. Members an opportunity to speak.

I wish to support entirely the practical attitude which the hon. Member for Esher has just taken. He said something very revolutionary; that the real shortage is not so much of raw materials as of labour. Raw materials are there and can be got out of the ground. I do not altogether agree with his reference to the right hon. Member for Ebbw Vale (Mr. Bevan), whose sincerity and integrity of purpose I admire and respect enormously, but I do remember that among the other phrases which have been mentioned the right hon. Member for Ebbw Vale once said: This is an island made of coal, and surrounded by fish. None but an organising genius could create a shortage of both at the same time. The coal is there and can be got. I entirely support the principle of the nationalisation of coal and I recognise that a great deal has been done in this matter. Nevertheless, the present level of production of coal is exceedingly disappointing. Until that basic problem is tackled we cannot deal adequately with the main problem, which is full production.

We have been discussing full employment to some extent. When I was growing up the menace to full employment was over production. Today, the menace to full employment is under production. Therefore, I entirely agree with the hon. Member for Woking (Mr. Watkinson).

Earl Winterton

In the production of both raw materials and food.

Mr. Blackburn

In the production of raw materials and food, particularly in the case of India. It is particularly necessary to secure the maximum production and the cheapest production. I would remind the House that what Sir Frank Nixon, the President, said to the London Chamber of Commerce, that quite independent of the problem of rearmament, normal demand was steadily overhauling and sometimes already outstripping, supply. We must recognise that we are now in an entirely different situation from that which existed between 1918 and 1939. The problem is full production and I would say, therefore, that while it may be that the Socialist Government may be able to eliminate competition inside this country—and, personally, I do not agree with that—they can never eliminate the need for this country to compete with other countries throughout the world.

So far as planned economy is concerned it seems to me that the essential of planning should be brought home to the worker. Surely the great difficulty of our present planned economy is that the worker does not realise that we have a planned economy. The planned economy does not affect him. Take for example, the workers in Vauxhalls today. I am informed that Vauxhalls are working only a four-day week at the moment. There is under-employment, as the right hon. Member for Ebbw Vale rightly said, in British industry over very wide sectors at this moment, and there is, as the Government knows, a danger of it increasing. Under-employment may be almost as great a danger as unemployment to the economy of the country.

Surely it is essential that planning should be brought home to the worker; that targets should be given throughout industry, and that those targets should then be split up and applied to each factory, so that the workers in the factory will be able to obtain the benefits of achieving the targets. I have no time now to develop that theme very much. I do not believe that the Government are wholly in sympathy with the point of view I am putting forward. I have always campaigned for longer working hours throughout industry, upon terms to be agreed by the trade union movement. The Chancellor of the Exchequer, and previously the Prime Minister, have campaigned for it, but nothing effective or practical has yet been done.

I wish to say a few words on the subject of science. It is vital that we should have a greater application of science to industry generally. This is a point which I can only mention briefly. I strongly recommend the House to study the pamphlet "Productivity" published by the Parliamentary and Scientific Committee and consisting of a discussion at a meeting of the Committee in this House on 7th November, in which Sir Geoffrey Heyworth, Mr. Lincoln Evans, Sir Thomas Hutton and Sir Charles Colston took part, and which showed the importance of the application of scientific methods to the relationship between management and labour.

I want to return to what is the most immediate problem, namely, that of raw materials. It seems to me that we are in grave danger of adopting the wrong attitude towards this problem. To refer again from Sir Frank Nixon, he said that to meet the economic problems of the next 25 years, we should proceed to a much closer harmonising of our affairs with those of the Commonwealth and the sterling area. I agree with previous speakers, to some extent, that we do not sufficiently understand the attitude of the United States of America. It is disgraceful that we are today exporting raw materials of war to China at the very same time when our young men of 19 are being conscripted to fight against the Chinese. That is about the most abominable thing that has happened in my life, and I intend to bring that matter home to the Government.

I can well understand why there are many people in America who are becoming anti-British. That feeling there is dangerous. Nevertheless, on our side, the British Commonwealth and Empire as a whole is at least as great a world power as the United States of America. In relation to the discussions which are going on, I must say that I am horrified by cartoons like the cartoon by Low in the "Daily Herald" today where we see the President of the Board of Trade represented as Oliver Twist with his bowl, saying, "I want some more." Our attitude to the United States is not the attitude of beggars.

Our contribution to defence is greater relatively than the contribution of any other country in the world. We are at the moment the atomic base in Europe. We run greater dangers than anyone else. I welcome very much the appointment of my former right hon. Friend the Minister of Works as Lord Privy Seal. I feel certain that it is good that we should have a practical business man in a position of great importance on the Government Front Bench. I hope that I am speaking correctly when I say that he was one of those on the Labour side of the House who voted against the original American Loan.

Although much may be said on both sides about that, it is absolutely essential that, in dealing with the United States of America upon this problem of raw materials, we should not bargain from a position of inferiority. It is absolutely essential that we should approach the problem from the point of view of recognising that, through closer economic co-operation within the Commonwealth and Empire, we are capable of seeing that the sterling area can stand up to the dollar area, and that we have just as much to give to the common pool as the United States of America has to give to the common pool.

My last remarks will be that this problem of relations with the United States on economic matters, as well as upon defence matters, is one which, in my judgment, the Government have consistently mismanaged during the last six years. The reason why the Government have mismanaged it is that they have failed to appreciate that the correct method of dealing with the United States in this desperate world situation is the method used during the war when the then Prime Minister of England, the right hon. Gentleman the Member for Wood-ford (Mr. Churchill), got on the trans-Atlantic telephone to the President of the United States.

When the Prime Minister went to America, he did a great deal of good. The Financial Secretary to the Treasury said that he was responsible for the joint Raw Materials Board. What is now needed is a personal contact at the highest possible level, either between the Prime Minister and the President, between the Foreign Secretary and General Marshall, or possibly by a visit of the new Lord Privy Seal to America. The generous heart of the United States will respond, but it is not going to respond merely to official memoranda published privately and circulated between officials. We should tackle this problem at the highest possible level, and, thereby prevent Stalin winning, as he is continuing to win, the cold war.

The right hon. Member for Ebbw Vale is right about this. If we accept a reduction in our standard of life as a result of the armament programme, that is a victory for Stalin. It can be prevented by longer hours of work and by proper planning, which will make the best use of our raw materials, and, above all, by our coming to an agreement with the United States whereby we shall have all the raw materials necessary, not only for re-armament, but for maintaining our existing standard of life.

3.41 p.m.

Mr. James Johnson (Rugby)

I have given my word not to speak at length, so that I hope the hon. Member for Northfield (Mr. Blackburn) will forgive me if I do not follow him in his global excursion.

I want to comment for a few minutes on the earlier speech of the hon. Member for Woking (Mr. Watkinson), because I thought he was less than fair to the seconder of the Motion my hon. Friend the Member for Sheffield, Park (Mr. Mulley). I wish to speak on the theme of increased productivity, which is the most important issue today, but which has been glossed over in the last few hours of this debate. The hon. Member for Woking spoke from two angles. He said that the increased output in this country over the last few years was nothing which we should shout about, because higher figures—even 6, 8, or 10 per cent.—had been achieved in Continental countries, for instance, in France. His second point was that we in this country did not, as much as we might or should, copy or follow American methods to produce more efficient working in our factories.

When one compares the 4 per cent. increase this year with the 7½ per cent. last year in the increased output of our economy, and with that of the French, it is important to consider what was the norm or base. For example, I was in the Soviet Union before the war, and I was told of increased percentages running up to 1,000 per cent. When we are speaking either of French, Soviet or other astronomical increases in percentages, we ought to consider what was the basic figure from which the increases have been computed. I think we ought to be very careful about that.

The hon. Member's second point was that we were not in this country copying the most efficient methods used in America. It is no good the hon. Gentleman chiding the Government about that; he should speak to his own hon. Friend's in industry. The hon. Member for Esher (Mr. Robson-Brown) boasted that between 75 and 80 per cent. of our economy is still in the hands of private enterprise, and, therefore, they are the people to whom one should make these suggestions, and to whom the hon. Gentleman should address his comments. We have had the reports of 17 working parties, as well as a number of other reports on industry, and I think it is for the people in charge of industry to accept the advice in these reports. Let them "get cracking" in that direction. It would be awful if this Government were to blame for all the activities of this country. For instance, I should hate to think that if we lost a soccer match in the Argentine, we were left with the responsibility for the output of our 11 soccer men.

The main thesis of the hon. Member for Woking was that we should have increased production. I am all with him there. However, I should not be quite so melodramatic as he was in saying that we should either have full employment or starve.

Mr. Watkinson

Those were not my words. I was only quoting the Steel Foundry Productivity Committee.

Mr. Johnson

In that case I disagree with the Steel Foundry Productivity Committee. I do not want to look back because I was too near those bad days, but when we get these exhortations to our people to work, and be more efficient, the spotlight is usually cast upon a Bolton or Blackburn weaver at the loom, or a Rugby fitter at the bench. I would be happier to see advice and exhortation given to the entrepreneur and to people in managerial positions.

This Labour Government has given the entrepreneur much advice, much help, and enormous assistance in scientific, technical and managerial subjects. Speaking as a layman, I think our task is to close the gap between our best factories and our best entrepreneurs and our worst factories and our worst entrepreneurs. The best factories I know, particularly in the Midlands—for example, British Thomson Houston or English Electric—are as good as, if not better than, some of the alleged best in the U.S.A., but our worst are infinitely worse than the worst American.

Again, to take a sporting analogy, and to compare our English industry to our best cricket eleven, we want fewer centurions or fewer opening batsmen making 50's and centuries; we want some better numbers 8, 9, 10 and 11 going in to bat. It is the last three or four wickets which have to hold our end up, and not so much the Huttons and others, with the tail end following on. We also want much more mechanical power at the elbow of our workers. In other words, in America I am told that the average horse power in the factory behind the workers is 8 or 9 per cent., whereas here it is something like 2½per cent.

In conclusion, this Labour Government more than any other have given help, advice and assistance to industry. We should have fewer charges levelled at the Government about what has been done for industry. As I have said, we have had 17 industries with working parties. We have an Export Credit Guarantees Department which has given industry enormous help, particularly to small exporting businesses. This is really a nationalised industry which is making a profit, and that is perhaps why we do not hear so much about it in the newspapers. This help has been a boon to the smaller manufacturers in attempting to capture export markets.

In the scientific field help has been given to many firms through the Department of Scientific and Industrial Research and the Council of Industrial Design and also the Medical and Agricultural Research Councils. If industry would only put sectors of its house in order or would liquidate much of the obsolescence, this Government would be behind it all the way in its efforts for higher productivity.

3.50 p.m.

Mr. Nigel Davies (Epping)

The hon. Member for Rugby (Mr. J. Johnson) drew the analogy of runs and batting, so I will express my appreciation to him for keeping his innings fairly short. I shall try to do the same.

Mr. H. Hynd (Accrington)

The hon. Member will have to.

Mr. Davies

First I would like to express agreement with my hon. Friend the Member for Northfield (Mr. Blackburn), who said that we should not adopt a begging attitude towards the United States of America. From a practical point of view, if we want to get the raw materials we should be very careful not to imply that America should cut their standard of living while we insist on rigidly maintaining particular services or amenities which we enjoy. I should also like to comment on one statement of the Financial Secretary, who said that, of course, we had been stockpiling since last July but that it would not be in the public interest to reveal the materials. Our debates on raw materials and full employment will have little object if the Government are able to hide behind a veil of secrecy and mysticism about the materials they have been buying and what they have not bought. I think that the House should be taken into their confidence in these matters.

I say nothing further about how to get raw materials because that is for the Government, but I do refer to the question of allocation. I beg the Government not to pin much faith on official priorities, official controls and price fixing. I know that there must be some, but the situation in peace-time is very different from that in war-time. In peace, or in a time of not a full war-time economy, the Government official who allocates raw materials is largely having to choose between one civilian demand and another, whereas in war-time he chooses between goods that are being made for the Government and goods that are not. At best he is only making what may be a good guess, and what is a good guess for one firm will be a bad guess for another.

Bottlenecks often occur in quite small items which are a negligible part of the cost of production, and I urge that as far as possible the Government should tolerate a kind of two-tier allocation system; that is to say, there should be the official allocation of, say, zinc at the official price, but a reasonable toleration should be given to a free market as well so that, in order to maintain full employment and output, the firm will know that for items which are a small proportion of its cost of production it will get its allocation at the controlled price but can get some more to keep going, even if it has to pay double the price in certain instances, which may not largely affect the cost of production. For instance, higher priced supplies of sulphur may be obtained in various ways from the Continent, and also certain types of steel. I am sure that many firms would prefer to receive reduced supplies of raw materials at the official price if they knew that they could get something extra to keep them going elsewhere.

I should like to say a little about the long-term dangers to full employment which I, and I think most hon. Members, still see in terms of inflation rather than deflation, and in the difficulties in getting the raw materials and making the goods rather than in deficiencies in demand. I am certain that there is bound to return a situation in which we are in balance of payments difficulties, if we are not already, and where we again have difficulty not only in procuring but in paying for our raw materials.

We must face the fact that ahead of us, sooner or later, lies either a war, which we are not now discussing, or a trade recession. We do not know how great that recession will be or when it will come, but it must come one day, as it was beginning to come before the Korean war. We shall never sell our goods in that kind of market and keep full employment if our goods are high-priced, if we have a high cost economy. Hon. Members on both sides have emphasised that the most important thing of all is low-cost production and high productivity, but we shall never achieve it with a permanent inflationary economy. It might be argued that inflation is now world-wide, but that is all the more reason for avoiding self-engendered inflation at home.

We in this respect have started one leap ahead of nearly all the rest of the world, in that inflation had been checked and a certain measure of deflation had set in in many countries before the war in Korea, whereas deflation had never ceased to be a factor in our economy. In my opinion, we shall never attain or maintain for ourselves a low-cost high productivity economy on a £4,000 million a year Budget. It is an impossibility. That in itself is an inflationery factor and is bound to remain one.

The present crisis is one of the allocation of raw materials, but if in the long run we are to provide our people with work and the wherewithal to work beyond this crisis, there must be some end to these endless rises in Government expenditure, in order that we may build up and maintain an efficient output which is the only means of full employment.

3.56 p.m.

Lieut.-Colonel Upton (Brixton)

This debate has, in my view, emphasised the fact that our most precious raw material is the productive labour force of this country. In that connection, I should like very briefly, as I must, to refer to two points. One is the example that the Government should set to other employers of retaining as long as possible all their people in industry.

It so happens that just at the very moment when the Government were announcing various incentives for the purpose of inducing older men and women to stay on in industry, one of my constituents who had reached the age of 65 had his employment with the Ministry of Works terminated. I know there are difficulties in connection with this matter, such as the blocking of promotion for younger men, and all that sort of thing. These problems will have to be dealt with, of course, but in this instance my constituent was employed as a labourer and I cannot believe that his retention in his present job would have blocked the promotion of anyone else.

The other point to which I would refer is that more attention should be called to the economic as well as to the social significance of good health. In that connection, a case was brought to my notice the other day of a highly skilled worker who was having to wait some months before he could have a surgical operation performed. Until that operation is performed, he is drawing sickness benefit and is, therefore, a loss to industry. I know what the difficulties are in our hospitals, but if the medical authorities have to choose between a person whose health does not keep him out of industry and a case of the kind to which I have referred, I suggest that, other things being equal, some degree of priority should be given to those men and women whose ill health makes them a direct loss to the productive wealth of this country.

I hope that those two aspects of the matter will be borne in mind by the Parliamentary Secretary to the Ministry of Labour, who I am pleased to see here and who I hope has been listening to what I have said.

Question put, and agreed to.

Resolved: That this House urges His Majesty's Government to take all possible steps to ensure the maintenance of full employment and increasing production; in order to carry out the defence programme, while maintaining the nation's economic strength and independence with the minimum sacrifice of the standard of living.

Motion made, and Question proposed "That this House do now adjourn."—[Mr. Bowden.]