ECONOMIC SITUATION.

HC Deb 11 July 1932 vol 268 cc923-1047

Sir STAFFORD CRIPPS

Before coming to deal with the domestic situation in this country since the National Government took office, I want, if I may, to refer for a moment to the international situation, especially in view of the recent agreements at Lausanne. I am sure that everyone in this country who cares for the future of civilisation will congratulate the French and German statesmen on their wisdom in arriving at a final compromise upon the reparations question, and I am sure, too, that all parties in this country will be grateful that our representatives at the Conference were able to give real assistance in arriving at that settlement. We have always said that, if the National Government were prepared to take enlightened and progressive views of any matter, whether national or international, we would support their views, and certainly, so far as the Lausanne agreements are concerned, we give those steps that have been taken our whole-hearted support. We look upon them as the first steps towards clearing away the tangle of financial and political injustices which had their origin in the spirit of hatred and revenge that arose out of the War.

Since the Treaty of Versailles, and even before, the Labour party have always urged that the policy of reparations was madness and was suicidal to the whole future of Europe, and, at long last, after some 13 years of gradually increasing hardship and misery to the peoples of Europe, the half-strangled victims of that mad policy have seen reason and have come to some form of agreement. We believe that the results, though important, will not, of course, settle the financial or industrial difficulties of the world, and we hope that the peoples of Germany and France will ratify these proposals and will give their direct sanction to the initiation of a policy of friendship and mutual help between those two great nations, whose mutual misunderstandings have led to so many difficulties in the past. Those who are engaged in clearing away this wreckage, which has been created by the system that has pervaded Europe in the past, will realise that it is useless to clear away the wreckage unless some better system is put in its place, a system which is going to bring justice, happiness and employment to the peoples of Europe.

I want for a few moments to examine the domestic situation of this country, and to point out that in our view we are convinced that the whole policy of the Government as it has been followed through during the last nine months has completely failed to take any constructive step to initiate any ideas or plans which will solve the difficulties in which this country finds itself. We seem to have been engaged in a futile attempt to get back to that very system, the system of private enterprise, which, even though it may be temporarily revived, will, we believe, bring again difficulties, sufferings and injustices to the people of this country if it is allowed to be perpetuated.

The Government came into power some nine months ago, in the middle of what was undoubtedly the most serious industrial crisis in the history of the world. For some years prior to last autumn, there had been a steady volume of unemployment throughout the world. That volume had been imperceptibly increasing, until, in 1930, there was a sudden reversal of the previous tendency of world trade. That sudden reversal led to an acceleration of the difficulties in industry in all countries of the world. Between the years 1927 and 1929, there had been a small annual increase in the volume of world trade, which, although accompanied by a gradual fall in prices, had yet resulted in an increase, though a diminishing increase, in the total values of world trade. But in 1930, not only did prices fall catastrophically, but the quantum of world trade fell as well. The fall in that volume was a fall of from 7 to 8 per cent., while the fall in prices was over 12 per cent., resulting in that year in a total fall in values of just over 20 per cent. As the House knows, in 1931 that tendency increased, and has continued increasing up to the present day.

The effect of that increase has been shown, not only in the figures of unemployment in this country, but in the figures of unemployment throughout the world, and one will realise the gravity of the situation if one examines the percentage increases of unemployment during 1931 in some of the chief countries of the world. For instance, in Germany and Belgium there was a 42 per cent. increase of unemployment; in the United States and Canada, a 21 per cent. increase; and in this country an increase of 18 per cent. Accompanying that fall in the value of world trade and in its volume, there went along side by side with it the normal increase of productive power in the world. Apart altogether from the great strides made in production by Russia, which one can regard as a special circumstance, the normal tendency towards an annual increase in productive power was gradually accentuated by the struggle of competitive interests to survive on a profit-earning basis. As prices fell, more and more pressure was put upon the producer to bring forward measures of rationalisation, which not only maintained, but even increased, productive capacity, but with a rapidly diminishing consumption of man-power; and it is that feature, the rapidly diminishing consumption of man-power, which has been to a great extent responsible for the present position as regards unemployment.

In the world, therefore, there was this rapid contraction of markets in the Autumn of last year, there was an expanding production, and there was an enormously increased competition among the industrial countries for the neutral markets of the world. The most signal feature of that increase in competition was the intense economic nationalism, restricting international exchange of every kind of commodity, creating new industries in all sorts of countries—industries which were to produce commodities of which the world already had an over-supply—and increasing the struggle of every country to become self-contained and to obtain as great a share as possible of the diminishing markets of the world. This led to the high tariffs, quotas, licences and exchange restrictions which everyone admits have done more than anything else, perhaps, to hamper international trade. In fact, one might say that by this progressive decline, which brought about such restrictions and rationalisation, the industry of the world had got into a spinning nose-dive. It was in that state of affairs that the National Government drove this country into a policy of economic nationalism from which, to its great advantage, it had hitherto been free.

The Government's programme when they came into power was designed to accomplish three things—first of all, to maintain sterling on a gold basis; secondly, to balance the Budget by economies; and, thirdly, to balance payments to and from this country by a restriction of imports. Fortunately, as everyone now thinks, they completely failed in their first object, and going off the Gold Standard brought an immediate, though temporary, advantage to the industrialists of this country. But that advantage was very soon nullified to a considerable extent by the imposition of import duties, and also by the artificial maintenance of money at a high price, which made it almost impossible for industries, even if they would, to get access to credit facilities. The import duties and the budgetary economies further acted as a restriction upon the available market, which was already so heavily restricted in other directions.

The economies, which largely consisted in the breaking of contracts by the Government out of hand and without notice, immediately reduced the consuming power of this country by over £1,000,000 sterling a week, and thereby had a serious effect upon the industrial situation. The effect of sterling going off the Gold Standard was to accelerate the fall in gold prices, and gold prices, from January to August, 1931, in eight months, fell 8.9 points, while from August, 1931, to April, 1932 they fell by 17 points, or twice as fast as the previous fall. As seems to be admitted by the economists, the greater part of that fall was caused by the competition of sterling prices in neutral markets, causing gold prices to be brought down rapidly, while commodity prices in sterling, during the same period, only rose by four points to meet the fall in gold prices. All these steps which were taken by the National Government led, not to an alleviation, but to an intensification of the difficulties. When the fall of sterling might have reacted favourably—it being the only feature which could have done so—upon the industries of this country, the Bank of England—on its own account, of course, uncontrolled by the Government as it is—saw to it that no credit should be available for industry. That was a policy which was carried through until late in the spring. The Government, further, themselves, through the Export Credits scheme, severely restricted the export credits which were available, and further diminished the opportunities which this country had for doing export trade with those countries, such as Russia, which desired as a condition of that export trade to have facilities for placing orders and for long-term credits. When, later on, the Bank of England decided, presumably with a view to the conversion scheme which followed, to cheapen money, industry was then unable to absorb the cheap credit which was provided, and for two main reasons—firstly, because the joint-stock banks, acting independently and not in the least in the national interest, took steps to maintain an exorbitant charge for credit, even though the Bank of England had cheapened money; and, secondly, industry could then see no outlet for its goods in a market which the Government had taken every possible step to contract domestically, and which, in its external trade, was being contracted by world conditions and the fall in gold prices.

It was not only the Government's direct economies that led to contraction of consuming power, but also their admonitions to the local authorities—that reiterated demand for economy which has been made so often by the Government. Tens of millions of pounds of useful expenditure were entirely stopped and those who would have benefited by doing the work necessary to meet that expenditure were relegated to unemployment insurance benefit and had, naturally, a greatly reduced power of consuming commodities. Then we have the iniquitous policy of the means test. It not only impoverished the families and the relations of the unemployed by compelling them, out of their meagre earnings or savings or pensions, to support the unemployed, who should have been a charge upon the State, but they made the position such that the local authorities, in the distressed areas in par- ticular, had greatly reduced power of expenditure and it is hardly to be wondered at that one gets resolutions passed and forwarded to the Government such as I have had sent me from the Bristol Public Assistance Committee the day before yesterday. Let me read it to the House: The Bristol Public Assistance Committee, being concerned at the heavy increase in the numbers receiving Poor Relief and the consequent increased cost to ratepayers of that city, urge the Government immediately to deal with the case of unemployment and to make every effort to find remedies. That is a thought that is probably behind every local authority in England which finds itself saddled, through the policy of the Government, with a vastly increased expenditure upon the maintenance of the unemployed. Then, too, we have the feature which has been emphasised in the unemployment figures which have been read out to-day of the terrible effect upon the great export trades, and particularly coal, that the tariff policy has had. I should myself have condemned the tariff policy as a failure, but it is unnecessary for me to do so when one who is a member of the Cabinet, and has inside information to which I could never get access, on the consideration of that confidential inside information makes the statement to the whole country that the tariff policy has been a failure. Let me remind the House what Lord Snowden said the other day: He did not like to rub it in when a person was conscious of the mistakes that he had made and the failure of his expectations, but he thought that for the moment they might leave the Protectionists to contemplate the failure of their own policy, because the failure of that policy was unmistakably clear everywhere. I do not think anyone could more admirably express the result of the tariff policy. I have no doubt Lord Snowden has earned the gratitude of his Cabinet colleagues for placing so clearly before the country what must be the result of his own personal investigation into the confidential documents available to the Cabinet.

Lord Snowden's statement seems to us to be about as strong an indictment as one could have of the one single point of major policy that the Government have brought forward in practically the year of Parliamentary time which they have had at their disposal. There are only two other steps that they have taken at all that could be called constructive. Firstly, there is the setting up of the Foreign Exchange Fund. We supported the setting up of that fund because we thought it was a valuable acknowledgment by the Government of their responsibility for controlling the vital financial operations of the country and, secondly, because we were convinced that it was bound to lead in the not very far distant future to the nationalisation of the Bank of England, which we look upon as a vitally important matter of policy, especially in view of the experience that the public have had of the operations of that body in the last decade. But, till that control has been made complete over the whole of the functions of the Central Bank, I quite agree with some critics that there is a serious risk of the Government losing their £150,000,000 in the gamble on the Exchange. Secondly, there is the War Loan conversion. That is a measure for which we have pressed continuously. [Interruption.] The right hon. Gentleman laughs. He need not lie ashamed of having done something which we consider right. I hope he will not be discouraged by our commendation from going forward to more conversion, compulsory if necessary, in order to bring about a reduction of national expenditure. But we look upon this conversion as just another attempt to clear away some of this jungle growth of capitalism. We shall be interested to know from what point of view the other party look upon it because, if they are logically capitalist, there can be no reason for starting to get rid of either international or national indebtedness. We believe that the piling up of debt burdens upon producers for the purpose of providing an income for people who are not producers is one of the factors which have led to the present unemployment throughout the world and, had the policy of the Labour party to bring about a Capital Levy immediately after the War been followed, every single Member of the House would look back upon it with gratitude.

4.0 p.m.

The Government's action and their failure to act in the past nine months show, as far as we can see, a complete lack of appreciation of the fundamental difficulties that are besetting the country. It reminds me a little of the old test for lunacy. When a subject who was suspected was shown a. bath in which a tap was running and was given a spoon and was instructed to stop it overflowing, if he tried to bale it out with a spoon he was adjudged a lunatic. If he turned the tap off, he was passed as being sensible. The Government seem to us to be trying to bale it out with a spoon. They have not got the conception of turning off the tap. The Government are unwilling to face the necessity for immediate and urgent action which will lead to the over-riding of private interests in the interests of the community. With this ever-growing capacity for production, and with the ever-diminishing man-power which is demanded to produce the commodities that are required, the problem, as we see it, is to devise some method of matching this country's and the world's consuming power to its producing power. Not only is the productive power increasing, but many people seem to fail to observe that it has very largely changed its character in this century. Since the beginning of this century mass production 4.0 p.m. has been introduced in more and more industries, and mass production calls essentially for mass consumption. The period during which a comparatively few wealthy persons could absorb a large part of the manufactured products of this or any other country has gone. In the 19th century the profit-earners were able, either by the investment of their profits in capital goods, or by the consumption of comparatively expensive articles, to provide a very large market for the industries of the world; but, owing to the increased industrialisation throughout Europe, and, indeed, in other parts of the world, and through the development of world resources by others from capital assets which were created in the 19th century, one finds now that the whole tendency of trade has gone from producing articles for which the profit-earner was the market, and, in the attempt to cheapen goods, has been driven to producing masses of commodities for which the markets are far wider but for which individually less wealth is required. If we give in, we shall see a vista of unending mass unemployment, unless we are prepared to agree to a reduction of population as being the one solution for the unemployment problem. We believe that, it is necessary, although the Government have taken no steps in that direction, to increase mass consumption, not by economies, which is the very reverse of the right policy, nor by any system which depends for its motive power upon the inducement of high profit offered to private enterprise. Those two factors, we believe, are essentially fatal to producing circumstances in which one can get employment again.

If one looks at the figures of national income for the year 1931, one sees that the receivers of rents, debenture interest and profits absorb almost exactly the same amount as the receivers of wages—both of them about £1,400,000,000—the rest going to the salaried classes, whose income was about £750,000,000. From that joint fund the State has drawn in the past, and does now draw, the whole of its budgetary income, and it has attempted to redistribute that fund among wage-earners and salary-earners by expenditure upon social services, and other State expenditures. But as long as the community has to rely for the development of industry and fresh capital upon the surplus of the profit-owners, that is, those who receive £1,400,000,000, a surplus which the profit-owner can use as he wishes, not necessarily in British industry, but invested abroad or in any other way, so long will it be said—and truly said—that that profit fund cannot, in practice, be reduced below a certain limit, because there must be available the money for reinvestment in industry. Because of that, we hear so often the statement that direct taxation has reached the limit; but, somehow or other, the national income must be divided in some new way so as to provide the necessary consuming market for mass-produced articles, and also so as to provide, when required by the State, and not at the will of the individual, the necessary fresh capital for British enterprise and British industry.

One day, when that idea sinks in, and when such a re-arrangement can be brought about, it will, we hope, be possible for everyone to obtain at least some hours work every day, and a decent standard of living, because it is ridiculous in this period, when there are over 25,000,000 unemployed in the world, that we should insist upon long hours of labour, and even insist, from the point of view of economy, upon child labour. Nothing seems to us to be more symptomatic of the complete failure of the existing system to cope with the existing circumstances. The idea of re-distribution by taxation of this fund of the national income has been tried by successive Governments in varying degrees. It was started long ago by Liberal and Conservative Governments, and the late Labour Government tried to accelerate it. It was Lord Snowden's theory, which he may, or may not, still hold—I do not know—but whoever has attempted it has always failed, and as long as the system of private enterprise and capitalism continues, it seems to us that it is necessarily a failure to try to bring about by taxation a re-distribution of the national income.

From a purely economic point of view, apart altogether from the inherent injustice of the present situation, we shall certainly continue to urge that this situation should be treated as an emergency by the Government, that they should be prepared to do everything they were prepared to do in 1914, taking complete control, if necessary, of everything that is useful as a resource for national prosperity. If, for the purpose of meeting a great war, it was necessary to do that, surely for the purpose of meeting a great industrial crisis like the present it is just as necessary, and just as wise? As long as the community of this country is dependent upon the whim of the profit-owner for its industrial existence, so long, we believe, unemployment will continue.

I cannot, on this occasion, discuss measures or methods, but I do desire to emphasise the fact that we believe that War Loan conversion, or Conferences at Lausanne, Ottawa or elsewhere, will never even begin to solve the difficulties constructively. There is a great deal of wreckage which has to be wiped away first, but, while that wreckage is being wiped away, it is, in our view, essential to start upon a constructive system for curing the actual ills which exist, and, during the term which the present Government have been in power, they have so far done nothing in that direction. Indeed, their whole psychology, the psychology of the profit-owner clinging to his profit, is one which never will, and never can, lead to a solution. Some of the papers nowadays speak of the boom of the Stock Exchange following the conversion of the War Loan as if it were a solution of the unemployment problem. That will never give employment to any- one except, possibly, a few stockbrokers; nor, indeed, if we could now return to the conditions of 1929 or 1930 could we solve the problem of unemployment.

Few people, perhaps, realise fully the results of rationalisation which has taken place under the extreme pressure of competition in private enterprise. To take one figure alone, in a single year in the motor industry in this country unemployment doubled while the output remained the same. That will give some idea of the amount of labour which is disposed of by rationalisation, and even if we were to get back to what is regarded now as the comparative prosperity of 1929, we should still have vast hordes of unemployed in this country, and throughout the world. It is that aspect of the matter, more particularly, which, we believe, demands some fundamental change, because we believe that neither the people of this country nor the people of any other country in the world will continue to tolerate a system which necessitates millions of people living on the verge of starvation in a world where productive power vastly exceeds consuming power, and where there is no valid reason that we can see why everybody should not have an opportunity of work, accompanied by a decent standard of life. We believe that the only solution lies along the road of social planning and social control, a scheme which we have put forward in the past, and we shall await with confidence the coming of that solution, in the hope that neither this country nor Europe will be thrown into the chaos of revolution before the solution materialises.

Mr. CHURCHILL

The sermon to which we have just listened showed that the hon. and learned Member has all the capacity, which one would expect from his profession, of getting up, at comparatively short notice, a complicated brief, and of presenting it in solemn, impressive tones and lucid phrases. I trust that his performance to-day will give the fullest satisfaction to his teachers—for we understand that his first political speech was made only a year ago—and that it will be beneficial to that career to which his talents, no doubt, entitle him, and which his ambitions have probably long selected. I understood that the hon. and learned Gentleman was to speak upon the record of the Government, and, of course, I expected that some formidable indictment would be presented; but, apart from his Fabian essay, with all the old, cheap, threadbare, discredited rigmarole of bankrupt and democratically censured Socialism, there has been no sort of constructive suggestion or solution, and only appeals to prejudice against all who work for profit, and contempt of the profit-maker, which comes so glibly from the lips of a late Law Officer of the Crown who, in a few undistinguished months of office, gobbled up the salaries of four or five Cabinet Ministers, and probably the livelihood of 20 or 30 working-class homes. [An HON. MEMBER: "What are you gobbling up?"] Well, I am not gobbling up any public money, except my salary as Member of Parliament, which, I believe, is the rate of wages current in the district, and subject to the regular cuts.

The hon. and learned Member's indictment was tempered, modest as it was, by praise of the Government's principal and most recent actions—the Conversion Loan and the treaty at Lausanne. It was not very generous praise, it is true. It was more on the lines of "We did it. We, the Socialist party, did it. You have only done what we told you to do, but what we did not do ourselves. In fact, we did the opposite." They did the opposite. [Interruption.] Certainly, they left the whole process of conversion utterly untouched, and, as far as the Lausanne Convention is concerned, I shall have a word to say before I sit down about Lord Snowden's conduct at The Hague and the tribute paid to him on that occasion.

I should like to congratulate my right hon. Friend the Chancellor of the Exchequer—I was not in the House the other day when he made his statement—upon the success of his Conversion scheme. The timing, the secrecy, the scale, the boldness of this plan will, I venture to think, constitute a model for such operations. Of course, for years the Treasury have always looked longingly at the 5 per cent. War Loan and eagerly sought all chances of converting. The chance has come. The decay of world trade, the paralysis of enterprise through the fall in prices and through high taxation, the flight of capital, seeking safety in the gilt-edged stocks of solid and stable Britain—these are the evils out of which opportunity has been born, and the right hon. Gentleman has seized that opportunity—and we are grateful to him for it—to carry through an immense and salutary financial operation which has not only yielded an immediate important saving to the expenditure of the country, but, from the skilful way in which it has been handled amid these many mysteries of finance, seems to have stimulated temporarily at any rate, almost the whole of the British market.

I have only one general comment to make upon the Conversion Loan on this occasion. In all our discussions at the Treasury in my time—and we had, of course, discussions every year and examined any number of schemes, but unhappily the high price of money was such as to render action inopportune and unacceptable—it was always considered that conversion should be accompanied by a proportionate reduction of the Income Tax. I ask the House to remember that when, in the Parliament before the last, I established the fixed Debt charge of £355,000,000 I expressly reserved any economy arising from conversion to a lower rate of interest for the purpose, not of accumulating the fixed Debt charge, but of reducing its extent, and I made it clear that the sinking fund should be reduced accordingly. So there is no doubt whatever that my right hon. Friend has greater freedom now in dealing with the various sinking funds, such as the earmarked statutory sinking funds, than any Chancellor of the Exchequer has had for many years, and in my opinion the relief should be given to the taxpayer.

The saving which has been achieved through the reduction of interest should be returned to the taxpayer in the form of reduction of direct taxation. Without that, I must point out that this great operation is essentially and definitely deflationary in character unless it is unsuccessful, and, of course, it must not and will not be unsuccessful. If it is successful, it is definitely deflationary in character, apart, that is to say, from the £20,000,000 bonus. The national spending power is reduced by the £23,000,000 per annum, and it can only be restored to its old level by a corresponding reduction in the weight of taxation. There is another deflationary aspect which I will just mention, because it should attract the attention—and I have no doubt that it has—of the right hon. Gentleman and the Treasury. With the fixed charge of 5 per cent. interest upon loans of all kinds, there must be a widespread tendency for debtors to the banks who own either assented or non-assented stock to sell out their 3½ per cent. holdings and pay off their 5 per cent. loans with the proceeds. This seems to be a point which ought certainly to engage increasingly the attention of my right hon. Friend.

I return to the general argument employed by the hon. and learned Member on what he called the record of the Government, or what we may say may be called the state of the nation, which is especially suitable and relevant to these general Debates upon the Appropriation Bill. Last autumn we were confronted by a financial panic which was stemmed, stopped, and even reversed by the displacement of a Socialist Government and by the establishment in their stead of a National Government, and, above all, by the mighty vote of the nation against those very doctrines which we have heard so thinly paraded here this afternoon. The mere arrival of this new Parliament—and I always thought that Parliament had a lot to do with what happened since the election—was decisive in ending the financial panic. We may say, "We came, we were looked at, and we conquered." The mere presence of a new Parliament produced a remarkable psychological result. Fear, unjustifiable fear in many cases, was harrying the mind of the nation. The fear was removed, and once the fear was removed the inherent wealth and strength of Britain and of the Empire asserted itself in the minds of all nations. But the other underlying causes of difficulty and danger which were operative last autumn have not been removed. Let me mention the four grim evils by which we are now harried—over-taxation, unemployment, the fall in prices through gold cornering, and the obstruction of the channels of world trade.

Mr. MAXTON

And poverty.

Mr. CHURCHILL

I am talking of the evils which are causing all the trouble. [Interruption.] My hon. Friend will do well to let me deploy my argument, and he will see how his ingenious and picturesque though somewhat disorderly mind can best address itself to its task. I have said that there are these four evils, and I venture to think—and I am afraid it is painfully true—that every single one of them is definitely worse now than at this time last year. We had the harsh October Budget introduced through no fault of the right hon. Gentleman the present Chancellor of the Exchequer under which we languish at the present time, with an enormous increase of taxation and with taxation reaching levels where it is now known and proved that it is destructive of trades and of the sources of revenue.

With regard to unemployment, I was rather relieved at the figure read out at Question Time. I understood that the rate was going to be somewhat worse. But unemployment has increased since last year and is increasing, and everyone knows that in the forthcoming winter it must stand at probably record levels for this country, except in a period of general strike. The price of gold is higher than it was a year ago and is still rising steadily. As for the obstructions to international trade, they have greatly increased. They have increased through tariffs, quotas and licences, as has been mentioned. They have increased to an unprecedented condition. They are injurious to all countries, but they are specially injurious to this crowded island which was so largely the world's carrier and commission agent. I am a supporter of the British tariff for various reasons, but among those reasons there is none which weighs with me more than the reason which may force a situation upon the world which will eventually lead to a universal lowering of tariffs and to a greater measure of exchange of commodities throughout the world, to a greater measure of true Free Trade in which we shall share, and to a greater measure of the exchange of commodities throughout the British Empire and to what is called Empire Free Trade, in which we shall not only share but have a central position.

For those reasons, I consider that in the circumstances in which we stand we must he armed and defended by this tariff. But, of course, the actual adoption of the tariff is an addition to the tariffs of the world, whatever its advantages and however great its needs, and behind it at the moment, in foreign countries, in the principal countries with which we deal, there has sprung up a whole new network of quotas and licences which, in a manner much more irritating even than the tariffs of foreign countries, have hampered the flow of our goods, Therefore, taking these four evils which I have mentioned to the House, these four dark horsemen of the economic Apocalypse have become more formidable—no one can deny it, for we have to look at the facts—and more appressive than they were at this time last year.

4.30 p.m.

I make no apology to the House for referring to the topic which my right hon. Friend the Member for Hillhead (Sir R. Horne) and I have on various occasions brought into the Debates of this House this year. I believe that there is one process, and only one process, which will dissolve this frightful fourfold confederacy of evils, and which will give to the world and to mankind a speedy chance of sharing joys instead of miseries. That process is the restoration by the united action of the leading nations of the world of a fair measure of value and exchange. I do not see any other way. There are many contributory ways, but I do not see any other direct ways, practical, positive, which could he taken by which we could escape from this vicious circle in which we are gripped and which month after month is strangling the expanding energies of mankind. So far the high price of gold—I think that that is a much better expression to use than the low price of commodities—the lengthening of the measure from 12 to 20 inches, has only reached the working people of this island, at any rate, in the shape of unemployment. The material evil of unemployment has been largely mitigated in this country by the enormous expenditure upon relief which is provided from that very high, over-taxation which is in turn working its evil upon our affairs. There is, I must admit, healing balm in low prices to the general consumer. Even if the low prices are produced, as these are, unhealthily and unnaturally, nevertheless for what it is worth there is a certain relief and balm to the general consumer. Therefore, this crisis in its material aspect has not yet reached the masses of the people. In the moral aspect I agree that unemployment is a terrible evil, and I cannot challenge the observation of my hon. Friend opposite that there are 25,000,000 or 30,000,000 of people in this world to-day, many of them skilled, most of them willing to work, for whom there is no employment of any kind. I cannot help feeling that that is a terrible challenge to our system of society. It is terrible to say to millions of men, the heads of families, many of them: "It were better had you never been born." It is an awful blow to a man who is capable of and willing to work, an honest man, to feel that in the society in which he lives his services are not required.

Therefore, I am by no means treating that matter as if it was something that can be taken as a matter of course, one of those necessary evils to which we have to submit, on the contrary; but I say that the crisis through which we are passing, in which we are, and into which I am afraid we are still moving, is in the main in this country, at any rate, with its incomparable social services, with its vast compassionate machinery, less acute upon the working people than it is upon the financial institutions of the country. It is the crisis of the financial institutions. No one knows better than the Chancellor of the Exchequer how grevious that crisis is. Even the first pristine stimulus of the tariff has not been able to make headway against the increasing distortion of our weights and measures which has so prodigiously increased the difficulties of creating new wealth wherewith to pay off old debts and charges. Enterprise and industry are prostrate beneath the burden of taxes, overhead and fixed charges, and the financial institutions themselves, far from profiting by this state of affairs—they certainly have not brought it about by their own conscious will or action—are every month exposed to greater tension and strain from the collapse of their indispensable industrial partners.

It seems to me that the leaders of the financial institutions had better, before it is too late, address themselves with mental vigour, for this is no time for mental sloth, to these questions, and not fob us off with airy statements about currency cranks and so forth, and endeavour to restore a fair standard measure. During the last two years, and before that, I have listened to everything I could hear upon this subject and, if I select one point, it is not because I have not considered an enormous number of others. It is the measure that dominates everything. Unless the measure is restored, unless the increasing distortion of the measure is arrested, all the sacrifices, however painful, however enormous, however well meant, will be in vain. Interest may be reduced, rents may be re- duced, workmen may be persuaded to reduce their wages, taxes may increase, budgets may be balanced by heroic efforts, debts may be forgiven at terrible cost for those who counted on them, yet in a few months a further rise in the price of gold, due to circumstances which are unconnected with the economic conditions of the world, due to national ambitions of hoarding and to artificial circumstances, will make it necessary for the whole bitter tribulation to be gone through all over again.

Even now I expect my right hon. Friend the Chancellor of the Exchequer to say, in reply to my suggestion that he should reduce the Income Tax by the proportion of the savings made from the Conversion Loan: "How can I reduce taxes through the saving on conversion? You will be lucky if you do not find that I have to augment them." There you are. These conditions reproduce themselves, it must be remembered, in many of the most civilised countries of the globe, and yet never was the desire of mankind to consume greater, and never was the capacity to produce greater. Grave is the responsibility of those who are at the head of affairs. The responsibility is grave not only on the politicians but also on the leaders of our financial institutions. They cannot leave these great. questions unanswered, they cannot leave these great problems unsolved, and imagine that merely the process of tightening the belt and the practising of high moral and political wisdom is going to enable the world to get out of the quagmire into which it is sinking. Therefore, however successful the record of the National Government has been—and if you wish to measure its virtues you will read them in foreign eyes almost as readily as you read them in the eyes of our own fellow countrymen—successful as its efforts have been in many ways, as we all agree, there is plenty more work for them to do.

I come to the other topic which was mentioned by the hon. and learned Member, the Treaty which was concluded two days ago at Lausanne. There is to be a Debate to-morrow on that subject, and I would not touch upon it to-day at any length were it not for the fact that there are some aspects of this Treaty which require immediate clarification. The public, as far as I can see, is completely bewildered as to what has taken place. There can he no good reason why a full statement should not be made to the House and to outdoors. I am afraid that I cannot associate myself with the spokesman of the Socialist Opposition in applauding the settlement of Lausanne or in joining in the apparent jubilation which that event has caused. Of course, anything which removes friction between Germany and France is all to the good, and I congratulate the Prime Minister on that. I am sorry that he is not here, but I quite understand the cause. He must have rest and prepare himself for tomorrow. After all, when one has saved Europe a day's rest is not an extravagant demand. I congratulate him upon this feature of the settlement, and I also congratulate him upon the personal address which he has shown and the influence which he evidently commands in the councils of Europe.

But it seems to me that it is Germany which is most to be felicitated upon what has taken place. Within less than 15 years of the Great War Germany has been virtually freed from all burden of repairing the awful injuries which she wrought upon her neighbours. True, there are 3,000,000,000 marks which are to be payable by Germany, but I notice that Herr Hitler, who is the moving impulse behind the German Government and may be more than that very soon, took occasion to state yesterday that within a few months that amount would not be worth three marks. That is a very appalling statement to be made while the ink is yet damp upon the parchment of the Treaty. Therefore, I say that apart from that Germany has been virtually freed from all reparations. What has become of the Carthaginian peace of which we used to hear so much? That has gone. Some of it may have been written down in the Versailles Treaty, but its clauses have never been put into operation. There has been no Carthaginian peace. Neither is there to be any bleeding of Germany white or any bleeding of her to death by the conquerors. The exact opposite has taken place. The loans which Britain and the United States particularly, and also other countries have poured into the lap of Germany since the firing stopped far exceed the sum of reparations which she has paid; nearly double.

It is a fact that if the plight of Germany is hard—and the plight of every country is hard at the present time—it is not because there has been any drain of her life's blood or of valuable commodities from Germany to the victors. On the contrary, the tide has flown the other way. It is Germany that has received an infusion of blood from the nations with whom she went to war and by whom she was decisively defeated. Even these loans, which almost double the payments Germany has made in reparations, are now in jeopardy. They are subject to a moratorium. Let me give one striking instance which came to my notice when I was crossing the Atlantic Ocean. We and America took under the Peace Treaty three great liners from Germany. The Germans surrendered them at a valuation and then borrowed money to build three very much better ones. They captured immediately the Blue Riband of the Atlantic, and they have it still. Now, the loans with which the Germans built these ships are subject to a moratorium, while we are unable to go on with our new Cunarder because of our financial crisis. That is typical of what I mean when I say that Germany has not nearly so much reason to complain as some people suppose.

Absolved from all the burden of reparations, with a moratorium upon all commercial debts, with her factories equipped to the very latest point of science with British and American money, freed from internal debt, mortgages, fixed charges, debentures and so forth, by the original flight from the mark, in these conditions her measureless efficiency and competitive power only await trade revival to gain an immense mercantile ascendancy throughout the world. I think that we are entitled to felicitate Germany on what has taken place, and I am sorry to see, as far as any information has reached us, that the only reaction is that, like Oliver Twist, she asks for more. England—I may mention England—or, if you like, the Government of the United Kingdom of Great Britain and Northern Ireland, has not done quite so well out of the whole business. As usual, it has been our part to make the sacrifices; and we seem to have done it most thoroughly and most cheerfully.

May I remind the House that not only did we pay for every farthing of our war expenditure, but that we lent £2,000,000,000 to various Allies. We reduced this immense sum by a settlement, at which I was much concerned, until we received £19,000,000 on reparations from Germany and £19,000,000 of war debts from our Allies. The principle of this settlement was the well-known principle of the Balfour Note; that we would take no more from Europe than was asked from us by those on the other side of the Atlantic. We nearly succeeded in achieving that balance of payments as between our debtors and creditors. There is £134,000,000 of arrears; that is, we have paid more by this amount in the payment of our debts to our creditors than we have received under this agreement; and it has always been considered a matter of immense importance by the people of this country. I hope the House will give me a little time to develop this most important case, because it is to be debated to-morrow, and I am most anxious to put the main issues before the House.

My settlement with France and Italy was made on the sole credit of those two countries, irrespective of whether they obtained any benefit from German Reparations or not. The Cabinet were invited to take a higher figure contingent on the payment of Reparations or a much lower figure on the sole credit of France and Italy, and they decided that it should be the lower figure. That was an honourable and expressed undertaking made with the representatives of these countries, and the express stipulation we put forward—

Mr. THORNE

May I ask the right hon. Gentleman whether it was he who gave £1,000,000,000 to France and Italy?

Mr. CHURCHILL

I am coming to that; but I must tell the hon. Member that he is terribly behind the thought of the times. He has reproached me with not exacting more from the Continent, while at the same time he is applauding a settlement which abandons all claims. I am afraid that I cannot have a great regard for him; I am anxious that he should keep up with the march of political things. It is terrible if he is to be left two or three years behind. These are very important rights and assets for this country. What is the feature of last year's finance? It is the enormous financial strength of France, the gigantic hoards of gold which they have gathered at great detriment to the trade of the world; the large balances in London which have excited grave anxiety because of the probability that they might be withdrawn. It is no use pretending that there is any difficulty in making payments as between France and Great Britain at the present time. There is no difficulty whatever. It would be a mere adjusting of accounts, writing off certain balances here as against, balances on the other side, or the shipment of bullion, which would be liberated and come once more into circulation as the foundation for world credit. An adjustment between two partners thus situated raises none of the difficulties which are present when there are no other means of paying War Debts and Reparations except by exporting goods across tariff frontiers which do not desire to receive them. How does all this stand now? I think we should have from the Government a clear and full account how the Churchill-Caillaux settlement stands under the new arrangement.

I must pause to reflect on the extreme changeableness of public opinion. Where are all those who used to demand that we should extract the last penny of war debts and reparations from Germany. There still rings in my ears the abuse and criticism to which I was subjected, an echo of which came from the benches opposite just now, because I did not get more out of France and Italy, when the policy of His Majesty's Government was to limit our pressure upon Europe, under the principle of the Balfour Note, to the minimum claimed from us by the United States of America. I was not in the country at the time, but I read in the newspapers of the spectacle, which rises in my imagination, of the scene at Liverpool Street Station, less than three years ago, when the late Chancellor of the Exchequer, who was supposed to be stark and stiff in comparison with his predecessor in reclaiming war debts and reparations, was received by rapturous crowds, who saluted him with tremendous cheers as the Iron Chancellor, and how he was conducted with the Prime Minister, the same Prime Minister, to the Guildhall to receive the freedom of the City. All this was because he was supposed to have secured half-a-million pounds more. The late Sir Laming Worthington-Evans, who was good at details and figures, used to dispute vigorously whether or not that half-million pounds had been claimed, but, at any rate, the mere assertion that it had been claimed was sufficient to bring crowds to Liverpool Street Station, as fast as they came last night to Victoria.

I well remember the calculations which the late Chancellor of the Exchequer used to make about the burden I had placed on British shoulders by my misjudged leniency to France and Italy. I have always held the view that these war debts and reparations have been a great curse. I was with the Balfour Note from its inception, a cordial supporter of it, and I have always held the view that the sooner we could free ourselves from them and the less we exacted the better for the whole world, always provided that we were not left in the position of shouldering the whole burden. I have not changed my view. Now we have the act of Lausanne. No longer returning from the Hague but from Lausanne we have the same Prime Minister, the same crowd, or similar crowds, the same cheers, a different railway station it is true, with a policy, so far as they can tell us, which is the exact opposite of the policy of the Hague.

I am forced to ask, in honest doubt and some degree of bewilderment, what is our policy to-day? Until this morning's newspapers we were led to believe that we had forgiven Europe all debts and reparations irrespective of our obligations to the United States. From a study of the newspapers that was the impression on my mind; and very shocked I was at it. It was the opinion of others with whom I consulted—that we had forgiven all our debts and reparations irrespective of anything which may happen to us; that we had opened a new book; begun a new era; Europe had been saved once again at British expense. That was the impression of all the reports given from all Government sources and by all newspapers yesterday. Now I have been reading the "Times" this morning, and tucked away in a rather insignificant column there is some information which completely and fundamentally alters that impression; revolutionises it. We are told that after the Act was signed a general agreement was arrived at that it was not to come into operation until it was ratified by all the nations, and that it was not to be ratified until the signatory Powers had arranged with their own creditors. Is that true, or is it not? I think we must assume that it is true. It is inconceivable that such a statement would have been left uncontradicted; and I have no doubt that it is true. A very amusing phrase is used. It speaks of a "semi-secret" arrangement. I do not like the phrase "semi-secret." We have heard of secret diplomacy and how wicked it is, but this semi-secret diplomacy is a new term of art. It says: If it should, however, become clear that the Lausanne Agreement is not going to be ratified, it is understood that, strictly speaking, there will be a return to the previous legal basis—namely, the Young Plan. I am reading from the paragraph in the "Times." Really, if anyone in his senses supposes that we are going to get back to the Young Plan in Germany, they really deserve special medical attention. If the settlement at Lausanne is contingent upon a settlement of our debts to the United States, and, if ratification is to be delayed until then, then the whole of this Lausanne Act drops to a vastly lower plane and shrinks greatly in scale and importance. You may say that Europe is saved, but you can only say that Europe is saved subject to ratification. Indeed, I do not see, quite frankly, how in fact or in principle the policy affirmed at Lausanne differs from the Balfour Note. We have always said that we would like to see the end of debts and reparations, and take no more from our debtors than is demanded of us by our creditors. I shall be glad to hear from the Prime Minister to-morrow how there has been a sensible and material advance on that position. I want to know what was the purpose of this fanfaronade, this trumpeting and proclaiming round the world that a new era has begun, that a new book has been opened. I cannot see that it has been attended by any solid benefits if, after an agreement is made, another agreement is made which renders everything contingent on negotiations with the United States of which the outcome is unknown at present.

5.0 p.m.

I think that this agreement must greatly prejudice our lawful claims upon our debtors. I am glad to know that the Young payments are in suspense. I feared that we had been left utterly defenceless. If the Chancellor of the Exchequer had anything to do with that our gratitude goes to him on that account, but we have undoubtedly prejudiced those claims. The Young Plan never can be revived and, therefore, it may be that the debts which depend on German payments under the Young Plan will be held to have fallen in consequence of its non-revival. I do not think it has benefited us at all in our position with our debtors. But how will it help us with our creditors? I have some knowledge, I think, of the realities of opinion in the United States on this question at the present time. I say deliberately that I believe no more unfortunate approach towards debt cancellation could have been made than the procedure adopted at Lausanne. First of all, there is the time. When I spoke six weeks ago on this subject in the House I begged the Government not to bring this debt question to an issue, to a head, until after the Presidential election campaign had ended in the United States. [Laughter.] I said "bring it to a head." Do not laugh until I have finished my point, because I think you will be in agreement. I thought that to bring this question out now in the frenzied advent of the election would be disastrous to the ever-growing number of friends of debt revision in America, and still more difficult for that very large body of the people who are in favour of special debt revision for the British on account of the unfair manner in which they have hitherto been treated. I think that the waiving of our claim against Germany—that, I take it, is the one operative part of the arrangement made—can only mean that the German voters in the States will not be concerned any more with helping their old race in their Fatherland, because they are out of it anyhow, and will be free to vote against the cancellation of the debts which are owed to the land of their adoption by the enemies of the land of their origin, a very serious factor and one which should not be ignored.

If it be true that we have entered into a special contract with France, or with France and Italy, to present a joint attitude to the United States, all I can say is that that will make it far more difficult to obtain a British revision. The growth of good will between England and the United States has been tremendous in late years, and everywhere there is admiration and affection for us. At the same time a very bitter quarrel has been in progress in these years on financial matters between France and the United States, about the withdrawal of gold credits and so on. I cannot see that we have gained the slightest advantage in any respect by this decision, and I think we may very conceivably have inflicted upon ourselves an injury which will cost us dear. Why could not our representatives and the Prime Minister rest upon the wise and prudent resolution of a moratorium, which opened the Conference, and allow the latest stages of the settlement of debts and reparations to follow the development of the World Conference which is expected to be held in London, and which for the first time will bring all the nations together? If we have hampered that development for the sake of this one day's wonder, all I can say is that we have purchased that advantage far too dearly.

I would ask one question of the Chancellor of the Exchequer. What is the position of the War Debts, nearly £114,000,000, owed to us by the Dominions? Surely you are not going to wipe the slate of friends and allies and foes alike completely, and at the same time exact the payment from your valient and beloved children? It is impossible, absolutely impossible. I had always contemplated that some day that would be dealt with. I should have thought that it would have been well to have withheld this announcement and to have proceeded on the basis of the moratorium, which is after all the only practical step you have taken and the basis on which you are actually proceeding—it would have been well worth while to have withhold the announcement and to have brought the whole of this question into the great effort to make an Empire pact in the near future at Ottawa. Then it would have been done with grace instead of being a mere consequential result of a foreign bargain. I need hardly add that the addition of £114,000,000 to the British dead-weight Debt more than wipes out all the sinking funds of the last two years. I am bound to say that I hope we shall hear how all this matter is to be treated.

For good or for ill Lausanne is over. Something, we trust, may emerge from the grimacings and counter-grimacings which are taking place at Geneva, which have now become very complicated in character. But Lausanne and Geneva recede, and all our hopes just now are centred on Ottawa. I will only say how ardently we all wish the utmost good fortune and success to the distinguished delegation of representatives of the British Government who are setting sail in two days for Ottawa. I am only sorry that the economic state of the world is not more propitious, and that there is so much distress and stringency in the Dominions themselves. Still, I have no doubt that the Government have thoroughly explored the scene and know exactly the limits within which practical action can be taken, and that they have taken pains beforehand to make sure that there will be a satisfactory result. But there is one aspect of the discussions—here I end where I began—which might conceivably be more fruitful and more potent than any other business likely to be transacted there. I understand that the Government have decided that the money problem and the position of sterling are to be resolutely explored by the representatives of the British Government. Certainly some of the financial experts they have chosen are men who would command the greatest confidence and even excite the enthusiasm of some of those who consider that the alteration in the price of gold is the main cause of our troubles. It may well be that the exploration of the money question at Ottawa will lead to definite conclusions, and that these conclusions in their turn will serve as an invaluable basis for the further World Conference in London, which still remains the most practical step open to us to take.

Since last I spoke on this subject the invitation of His Majesty's Government has been accepted by the United States. The policy of attending such a conference in Europe has actually been adopted as a plank in the platforms of both political parties in America, and I believe that even funds have been voted by the Legislature for that purpose. Do not let the Government cavil at the agenda. Do not let us be told that War Debts and reparations are excluded from the agenda. They cannot be excluded from the minds of those who meet around the table. Neither can the clearance of the seas from the obstruction to international trade, from which we have suffered, be absent from their minds. Here for the first time the greatest financial authorities, the representatives of the nations of the world, will meet together and consider something which involves no sacrifice from any, which offers benefits to all, which for the first time gives them a common interest. They can all rise from that table, if there has been a revaluation of commodities, with the sense that prosperity will return to every country. If an agreement were to be reached on such a basis is it not conceivable that the return to prosperity will draw out an impulse towards the clearing away of many of the other difficulties and evils which now beset us and under whose grip we writhe so powerlessly? If it were not for this World Conference, following as it does upon Ottawa, upon the money problem, upon the attempt to restore a fair measure of value of exchange to all the nations of the world, the outlook for us all would be bleak and drear indeed.

Sir GODFREY COLLINS

The House has listened to a masterly survey of the present position of the world. The right hon. Gentleman, in picturesque language and in a perfect House of Commons manner, has directed the minds of Members of this House not only to the internal problems at home but to the international situation abroad. If I understood him correctly the right hon. Gentleman takes exception to the settlement at Lausanne because the question of War debts has been brought to a head. But Europe, it appears to me, cannot wait; it cannot wait until a settlement which may be arrived at later in the year with other nations. Surely the spectacle of France and Germany coming together round the table at Lausanne will point the way to the final settlement of this problem when other nations meet the Chancellor of the Exchequer in London in the autumn. I for one rejoice that the Government have succeeded in bringing this problem nearer to a finish by their negotiations at Lausanne. The right hon. Gentleman at the beginning of his speech dealt with the internal problems at home, and advocated that steps should be taken to secure a rise in the price of commodities. Surely our statesmen at home would be well advised, rather than take steps to increase the price of commodities, to take steps to reverse what has brought about a rise in prices during the last 10 years. By that I mean War debts, reparations, and excessive taxation. I hope that the Government will continue to pursue the policy which they have pursued since they took office last October.

I wish to direct the attention of the House to a much more prosaic problem than that mentioned by the right hon. Gentleman. I have risen to draw the attention of the Chancellor of the Exchequer to a Resolution on the Order Paper in the names of several hon. Members and myself, inviting the Government to submit estimates in the coming autumn showing a reduction of £40,000,000 in comparison with the Estimates of this year. The Chancellor of the Exchequer has a unique opportunity to-day. Consider for one moment the composition of the present House of Commons. The majority of hon. Members were elected, not to increase our national expenditure, but were elected by vast majorities to reduce expenditure, and by that means to lighten the burden on trade and increase employment at home. It is true to say that no House of Commons during the last generation has had a more direct mandate to reduce national expenditure than the present House of Commons. How can this problem be tackled? It is not an easy one. The Chancellor of the Exchequer on the Third Reading of the Finance Bill told us that much hard thinking was necessary, and I am sure that I shall express what was in the right hon. Gentleman's mind at that time if I say that what is required is hard thinking with sympathy and understanding. I hope that that will be his attitude to this problem in the coming months.

Since the War there have been two big movements to reduce national expenditure. They were the Geddes Committee and the May Committee. Both were helpful. The May report lifted the curtain and revealed the facts to the people and enabled the nation to save itself. But neither of those movements was completely successful and it seems that the problem must be attacked from another quarter. The suggestion which I am about to make was made by my late chief, Lord Oxford, many years ago, when he urged that the Chancellor of the Exchequer should first fix the rate of taxation which the nation could afford, and, having fixed it, and having secured a certain revenue, should then ration every State Department according to the in- comings of the Exchequer. The late Lord Oxford developed that argument at some length seven years ago in another place, and I submit that the policy which he then advocated indicates the only way in which this question can be strictly tackled.

It may be argued that such a practice would be in too sharp conflict with the past practice of this House, which is, first, to settle the Estimates of the year, and then to determine the level of taxation which is necessary to meet the expenditure of the year. But we need new methods. We live to-day in a time when old ideas are being discarded, and my plea to the Chancellor of the Exchequer is that he should act boldly as he did a few days ago with his Conversion Loan. He should settle first what the nation can afford, in view of the state of trade and employment, and then proceed to ration the Departments of State.

Let me submit several broad considerations which I hope will influence the Government to reduce expenditure in the coming year. During the last 10 years every business man, every trader, every manufacturer has been working day and night to reduce his costs so as to cater successfully for the reduced purchasing power of the public. But while that has been going on in every business in Great Britain, business men noticed that Government expenditure until September, 1931, was steadily mounting. There was a different policy in the minds of the Government, during that 10 years, from the policy which every business man had to pursue in his own business. The policy which the nation has had to follow in its own private life might be developed further by the Government in the coming autumn. We have witnessed in the last few days a cut in the rate of interest on the War Loan made by the Chancellor of the Exchequer. We witnessed last autumn cuts in several of the social services. Is it not now even more incumbent of the Government, in view of those facts, to lighten the burden of the cuts by reducing expenditure and so reducing taxation?

The National Government consisting as it does of all parties in the State, can afford to fight sectional interests in this matter. I think it is true to say that no party Government to-day can ruthlessly and fairly cut down the rate of ex- penditure, but a National Government interpreting correctly the national mind, can ignore sectional interests while thinking of the interests of the whole. This Parliament is still young and, four years hence, this Parliament will be judged by one standard only. The test will be, "Has it succeeded by its policy in reducing the rate of unemployment?" What more fruitful way can a Chancellor of the Exchequer adopt to increase employment than by reducing the taxation which presses so heavily upon all? The maintenance of our social services and of unemployment relief depends upon the productivity of the Income Tax. If the yield declines it may not be possible to maintain those services at their present level. The State to-day is the largest shareholder in industry, taking some. 25 per cent. of industry's profits, and, if the State cannot get out of industry what it needs for its Estimates, that may be because the State has been laying an excessive burden upon industry and drying up the sources of revenue. In no country in the world has direct taxation been so high as it has been in Great Britain during the last 10 years. Let me add what I think even hon. Members opposite will agree with, that in no country in the world has wealth paid so readily and cheerfully as the wealthy classes in Great Britain have done during the same period. This heavy direct taxation has brought as its natural corollary acute unemployment. The increase of unemployment in our country has been largely attributable to the heavy direct taxation imposed by various Governments during the last 10 years.

Before I come to definite suggestions as to the economy of £40,000,000 which I have already mentioned there is one other general consideration which I should like to mention. Much has been written about the House of Commons control of expenditure. How illusory is that phrase I According to an article in "The Nineteenth Century" only 17 per cent. of our Supply Services are reviewed yearly by the House of Commons. In 1914 the percentage was not 17 but 50. I mention that fact for this reason. In order to secure a saving of £40,000,000, departmental economies will be quite insufficient. A new policy will be required to secure that economy. The Chancellor of the Exchequer is aware of the intense interest taken by the House of Commons in this matter and of the fact that a large number of Members are themselves investigating the question. May I ask the right hon. Gentleman in order that those Members may be enabled to study the problem more effectively, to issue before the Recess a statement showing the recommendations of the May Report which were adopted, those which were refused and those which were left over for further consideration. Hon. Members would thus have better opportunities of grasping the whole problem.

I come now to the means by which, it is suggested, this £40,000,000 might be saved. I do not wish to shirk facing ugly and awkward facts but I can do no more than indicate where cuts may be made and naturally, in speaking of those cuts I speak only for myself. I realise that departmental chiefs speaking from the Treasury Bench can make an arguable case for every item in their Estimates, but necessity demands a big cut in the coming year. Pressure for reform always comes from without, but reform to be effective must come from within, and the Government alone are capable of deciding how these cuts should be made. I turn to the yearly statement for 1932 in order to analyse briefly the position in regard to the Supply Services for the year. First, I take the Road Fund. The average expenditure in the years from 1921 to 1924 was £12,500,000 per year. During the War and since the War a sum of £500,000,000 has been spent on the roads. The May Committee recommended that the amount should not exceed £20,000,000 a year. The actual figure this year is £23,000,000. Since the years 1921–1924, during which the Road Fund cost an average of £12,500,000 a year, wages and the cost of materials have fallen but the amount of traffic on the roads has increased. Would it be unreasonable to suggest that, in the coming year, we should allot to the Road Fund a sum 20 per cent. above the average for the years 1921–1924? Does that proposal not seem reasonable in view of the fall in wages and in the price of materials? If that proposal were carried out, it would represent a saving of £8,000,000.

The Education Estimates this year represent a total of about £52,000,000. The average in the years 1922–1924 was £43,000,000 and for the years 1928–1929 £45,000,000. The average cost per child has risen from £12 4s. to £15. Would it be unreasonable for the Government to fix the cost of education for the coming year at 5 per cent. above the average cost for the years 1922–1924, and not exceeding the figures of 1928–1929? There is a growing feeling that certain items of expenditure are unnecessary and that some are actually wasted. The figure which I suggest seems not unreasonable in view of the average cost during the years 1922–1924. This economy would represent £6,000,000 a year.

5.30 p.m.

I turn now to the defence forces. I observe in the "Times" of 1st July that the French Government propose to reduce their expenditure on their defence forces in the coming year by 1,500,000,000 francs or about £15,000,000. Our Navy Estimates this year are only about £500,000 less than last year's. The size of the Navy Estimates is determined by two broad considerations—one, the number of personnel and, the other, the amount of Votes 8, 9 and 10, which are the shipbuilding Votes. As a layman, it is impossible to me to make any comments as to the number of men required by the Navy but I turn to the report of the Geddes Committee which was presided over by an ex-First Lord of the Admiralty and included the late Lord Inchape and Lord Maclay who was Minister of Shipping during the War. I think it would be accurate to say that each of these individuals supported the idea of a big Navy, but what did they say 10 years ago? They recommended that the personnel should be 83,000. Yet 10 years later although the navies of the world have not increased the Admiralty to-day are asking for 91,000. I submit in view of that report that there could be large reductions in personnel. As to Votes 8, 9 and 10, in 1930 these Votes have absorbed £21,700,000 and this year 21,300,000, or a small reduction, but, in view of the falling cost of materials and wages, surely, big reductions could be made without in any sense jeopardising the strength of the Navy for its Imperial responsibilities. An analysis of the Army and Air Votes 5.30 p.m. reveals similar figures, with which I do not wish to weary the House, but in view of these facts it seems to me that the Defence Forces might be reduced by £13,500,000 in the coming year.

I turn to works and subsidies, and here I ask any hon. Member, Has the policy of subsidies since the War been successful? Has the outpouring of public money been justifiable in view of the results? I venture to think that, subsidies having been tried and their results having been shown as uneconomic, the Government might well decide in the coming year to abolish subsidies altogether.

Lord EUSTACE PERCY

Does the hon. Gentleman mean that he would abolish subsidies on past houses, houses already built?

Sir G. COLLINS

Naturally I do not suggest abolishing all subsidies or rather that the money borrowed for the erection of subsidised houses should be revoked by His Majesty's Government, but works and subsidies, I think, might be reduced by £3,000,000. That is how I get my total figure of £30,500,000, made up of Road Fund £8,000,000, education £6,000,000, defence £13,500,000, works and subsidies £3,000,000, a total of £30,500,000 out of a possible £40,000,000. I will not weary the House with further figures, otherwise I could show how the other £9,500,000 could be secured, but the Estimates of Departments to which I have not referred absorb £270,000,000, and a small reduction on those, of less than 4 per cent., is all that is necessary to make up the total of £40,000,000. I am fully conscious of the acute difficulties and the political difficulties which would face the Government in any such effort, but is it not true to say that taxation must be reduced to enable employment to be created? I appeal 10 the Government correctly to interpret the mind of the British public, their political sense. There is a feeling abroad that not only national but local expenditure should be reduced. Let the Government in the coming months give a lead in this matter, and so give hope to industry and increased employment to our people in Great Britain.

Lord E. PERCY

The hon. Member for Greenock (Sir G. Collins), who has just sat down, is to be congratulated by the House on having ventured on the most difficult and dangerous task of suggesting actual detailed economies. He will expect, and so will we all, that against his actual suggestions in detail it might be possible to advance arguments, but it is that effort to suggest economies in the lump which alone can produce a real policy of economy. I feel, however, that there is some danger of the Debate today being split into two halves, the first two speeches, and especially the first speech, concerning themselves especially with wide questions as to the state of the nation—rather, as regards the first speech, a chaotic view of the state of the nation, but still an effort to summarise the state of the nation—and then the latter half of the Debate jumping on to the subject of economy, as if there was no particular connection between the state of the nation and the policy of economy.

I should like to bring these two ends of the Debate together, but I confess that when I listened to the first two speeches I wondered whether I ought to intervene in this Debate, for I wondered whether I could include my own murky past in company so immaculate as that of the hon. and learned Member for East Bristol (Sir S. Cripps), who spoke for the Opposition, or even that of my right hon. Friend the Member for Epping (Mr. Churchill). We understood at any rate that the Labour party had nothing to regret, that they had suggested all the good things that have never been done since the War, that they had resisted all the evil things, and that they were, in short, like that animal known to the poet: A milk-white hind, immortal and unchanged, Fed on the lawns, and in the forest ranged, Without unspotted, innocent within, She feared no danger, for she knew no sin. But, may one ask, is that really the case? Is it not rather true that every party and every Government since the end of the War has fundamentally misjudged the situation? The hon. and learned Gentleman himself admitted that the policy of redistributing wealth by taxation, which has been the cause of nine-tenths of our high. expenditure, has failed. Do hon. Members opposite bear no responsibility for that failure? Is it not the fact that, in spite of these rather chaotic attempts to review the state of the nation, all parties in this House ever since the War, and even before, have had a policy of expenditure or a policy of economy quite independent of any considered estimate as to what was the economic trend of the nation for whom they were legislating? After all, just as a business man has to manufacture for a market which will demand his goods, so, in much the same way, a Government's social policy must depend upon its judgment of the trend of economic conditions, of economic conditions not of to-day or yesterday, but of 20 years hence.

Now mark why the policy of redistributing wealth by taxation has failed. In 1919 we assumed—I think every section of opinion in this country assumed—that the increased standard of living, the increase in real wages due to the war, which was an increase in real wages rather than an increased standard of living, must be maintained, could be maintained, and that we must base our social policy on the maintenance of that standard of living. Consequently, we built houses for people who were going to earn real wages at those rates, with the result to-day that we have built houses for the wrong people, we have built houses for the better-to-do working man, aye, for the stockbroker, the professor, and the teacher, who were perfectly able to provide their houses for themselves, and we have not provided houses for the very men for whom we desired to provide houses, but whose need we have fundamentally misjudged.

Again, in education, we assumed that the result of the War would be to maintain, to raise, the level of professional earnings in a comparable degree with the rise in the earnings of the wage-earner. We increased teachers' salaries to a level which to-day is seen to be, broadly speaking, out of relation to the earnings of comparable professions. It is one thing to create a standard of living like that; it is a very different thing to have to break into that standard of living. You have a profession which, having got that increased standard of living, has committed itself, by insurances, by investments in building societies, and so on, up to the hilt, and it is extremely difficult to reduce, to go back on your mistake, without creating the gravest hardships.

But what has been the effect on education? I would ask hon. Members opposite.to consider this question. It has been that while our education is not more expensive than in other countries—not, at any rate, more expensive than in a good many other countries—yet, in spite of that fact, we are doing less education than other countries, not less in quality—I do not agree with all the wild criticisms made of the quality of our education—but less in amount. We have not got the technical education system, or the day continuation school system, or the extended secondary school system that other nations have, and the development of our education is stifled in every direction by the effort to maintain running costs which are out of relation to the general standard of living in the country.

The same thing applies throughout almost the whole range of our municipal services. It applies, I think, to the salaries of our doctors in public service. It certainly applies, without any doubt, to the scale of wages in municipal businesses, in those sheltered businesses run by municipalities. In short, we have fundamentally misjudged the whole trend of economic conditions. We have misjudged our market. Of course, that does not matter if you take the comfortable view of the hon. and learned Member for East Bristol, that, contrary to what Mr. Gladstone used to say, that wealth would always fructify best in the pockets of the people, wealth will always fructify best in the pockets of Government contractors and Government servants and that, therefore, any economy reduces the consuming power of the population. But that view is not seriously put forward, though it was stated in passing by the hon. and learned Member.

Well then, if this be so, what is the market for which we have to plan our social policy? There is one piece of legislation, and one alone, during the last 10 years which has been directly related to the future economic trend of Western civilisation, and that was the old age pensions provision of the Act of 1925. Some argue that we cannot afford these heavy insurance premiums to insure ourselves against old age, 20, 30, 40 or 50 years hence, but we have in that Act of Parliament a statement in cold figures of the risk which we, in common with the whole of Western Europe and America, with the exception of Italy, are running—the risk of a violent shifting of the weights in the balance of life and an. enormous increase, steady and continuous, of idle mouths which have to be fed by the work of fewer active hands. These are the vital statistics of the future, and it seems to me madness for us to base an estimate of future economic conditions on the assumption that a. population with a falling birth rate, a population which has to meet intense competition to-day from the very markets in Asia which used to consume its goods, that a civilisation of that kind, can expect to continue the same rapid accumulation of wealth as the earlier civilisation of the 19th century with a rapidly expanding population, a rapidly rising birth rate, and a continuous opening up of new markets.

Really, the hon. and learned Gentleman's explanation of the prosperity of the 19th century, based on the theory that the demand for goods came from the profit-earner, is the most extraordinary excursion into economic history that I have ever heard from a politician. Does the hon. and learned Member think that Mr. Stiggins used to sell his moral pocket handkerchiefs for little niggers to the profit-earners of the West Indies? It was the constant opening up of new markets and the constant rise in the birthrate that produced the rapid accumulation of wealth of the 19th century; and the calm, happy assumption that that will go on in the future as in the past is surely the most unjustifiable assumption that has ever been made by a politician. But if that accumulation of wealth, that continual rise in the standard of living, is not going to continue in future, what becomes of the whole finance of the social services? The increase of the social services was based on the assumption that we would always be able to tap tomorrow as we could tap in the 19th century those great accumulations of wealth, that we would always have a large fund from which the central Government could give grants in aid of local rates; but if the whole conditions which made those great capitalist accumulations have fundamentally changed we are tending in the direction of a civilisation where we shall have a far greater equality of wealth, a far more stationary condition of wealth, and where we shall have to finance our social services, if we finance them at all, not by taxing the vast accumulations of wealth but by the co-operative effort of hundreds of thousands of people with small incomes.

The future finance of the social services is a finance based upon local contributions, upon local rating. That, whether in the form of the present rating system or in an analogous form, is the main source from which we shall have to draw the finance of our social services in future. To go on, even while you are clamouring for a redistribution of wealth and an equalisation of income, building up the social services on a scale which can only be supported if we are still able to draw on these great accumulations with which ex hypothesi you want to deal—that attitude of mind can only be likened to the Gadarene swine. The really desperate danger as I see it at the present day is that the whole structure of our social services, the efficient working of which has already been arrested by the failure to provide a sufficient amount of money, will collapse unless we can re-erect it on a very different basis from that to which we have been accustomed. That is the real significance of the conference of local authorities which the Chancellor of the Exchequer has summoned.

I should like, if I may, to welcome that action of the Chancellor of the Exchequer. Such a conference of local authorities was desperately required. It is a more effective way—in the first instance, at any rate—of reviewing the statutory duties of local authorities than a Select Committee such as I originally proposed, but if there is any truth in the view that I hold, clearly the work of that conference is far more difficult and far more fundamental than any mere review of the onerous duties of local authorities or the petty restrictions on the actions of local authorities. It is neither more nor less than a preparation for a Parliamentary review of the whole structure of the social services, and an attempt to relate them directly to future conditions and not to base them on the economic conditions of an era which is already passing. I am a little afraid that the Government Departments concerned—for there are many—will leave the initiative too much to that conference and will fail to put before it the proposals for the change which it alone can draw up, but I am sure that the conference like every other committee, will never have a real power of initiative unless it is actively used as an instrument by the Government and not merely treated as a sort of panel of outside advisers who can make representations to the Government if they feel so inclined. We should all welcome an assurance, which I am sure that the Chancellor of the Exchequer will be prepared to give us, that the conference will be used actively by the Government as an instrument for this review of the present statutory duties of local authorities.

Perhaps I may make a few suggestions as to the work of the conference, dealing first with a number of purely administrative questions, and later saying a few words about the actual social services which I believe have to be reconstructed. In the first place, do let us consider getting rid once and for all of the purely nonsensical, obsolescent provisions of the Statutes which have now no basis in common sense at all. I do not know whether the House knows that one of the bulwarks which protect the liberty of conscience of the elementary scholars of this nation is that the Church in a church school should pay for the heating apparatus, but that the local authority should pay for the fuel. Let us get rid of idiocies of that kind, which can have no basis in any sensible or reasonable policy. I apologise to the House for talking platitudes, but it seems necessary to reiterate platitudes at the present moment. Secondly, we must adapt our machinery of administration to the thing we are trying to administer. I believe that one of the greatest roots of expenditure at the present time is the fact that we treat a particular type of local authority as a maid-of-all-work for all possible subjects, and the tendency in recent years has been to concentrate more and more work in the hands of a particular type of local authority, namely, the county and county borough council. That body is an extremely efficient unit for certain purposes, but I think that I am right in saying that it is much too small for a proper system of road administration and much too large for a proper system of administration of elementary schools. The elementary school is an intimately local thing, and yet we expect the county council to run these schools as mere regimental units in an enormous system of education spreading over the country.

That leads me to the third point. Where you have an administrative body of any kind, give it responsibility. That is surely a platitude, but look at the elementary school managers who cannot even close a school in cases of infectious disease for three days without writing to the county council, and having a doctor down from the county council, and setting in motion the whole cumbrous paraphernalia of Government officials in order to do something which we might surely leave to the school managers and the local panel doctor. The same consideration applies to the control by Government Departments of the local authorities themselves. There is a great deal to be said for close control of local authorities by Government Departments if that control represents a continuous policy, but what has been the history of the control of local authorities by the Board of Education and by the Ministry of Health during the last few years? It has been a history of chops and changes of the most absurd description. Even within the last 12 months local authorities have been urged to spend more on public hospitals and so on, and, a few months afterwards, urged to spend less.

Where there is no continuity of policy Government control is pure extravagance. Here I agree with my hon. Friend the Member for Greenock that what we want to do in the way of controlling local authorities is to control their programmes of capital and revenue expenditure over a period of years. Let these authorities commit themselves to a limited programme, and that is all the control there need really be over borrowing or over local expenditure out of revenue. This enormous machinery of control which has been built up in Whitehall is, I believe, wholly ineffective, and I can speak of this one point from some personal experience, because a system which I tried to introduce of programmes of education was followed by a reduction of something like 30 per cent. in the staff of the Board of Education over a period of six or seven years. The staff of the Board of Education is to-day actually smaller than it was before the War. The attempt to duplicate control all the way down the ladder of administration is the cause of much petty extravagance which, in its accumulation, adds a large sum to the rates and taxes.

6.0 p.m.

May I add another administrative point—the old principle that the expert should be on tap and not on top? There is no doubt that the system in our local government of having every department run by an expert—the education department by an ex-teacher and the health department by a doctor, leads to the most and the worst kind of bureaucracy. There is no bureacrat like an expert bureaucrat. I have another suggestion which is more fundamental. The whole of our system of Government at the centre in this country has been based upon the principle that elected persons should have no patronage, and Members of this House have been rigidly excluded from any responsibility for the detailed work of executive administration, in order that we might get rid of the scandal which always results when elected persons are able to fix salaries and rates of wages and determine the terms and conditions of employment. But ever since the great growth of local government in this country, ever since the Act setting up the county councils, we have accepted without question the dangerous fact that we have set up in local government a body which is both an elected legislature and an administrative department, or a series of administrative departments.

I have no doubt that the greatest reform necessary in the direction of a properly planned national economy in this country is that all municipal trading services, and housing, should be taken out of the hands of elected bodies and put into the hands of appointed bodies of the public utility type. The present organisation of municipal trading services has done more than anything else to dislocate the wage scales in this country by giving, for example, the tramwaymen a wage altogether out of relation with that of the skilled artisans of the country. It is that same influence which is at the present moment preventing the restoration of any sort of coherence in the wage scales of this country.

May I conclude the administrative section of my remarks by making two suggestions, one about local government and one about central government? They are suggestions which have been urged upon me from outside this House by persons of some experience. The first is that the Minister of Health should maintain—at this moment, certainly—a panel of advisers, persons experienced in local administration, who could be called in by local authorities to advise them on the organisation of our whole administration. We should probably need for each local authority a man experienced in inside administration and a man experienced in outside work—street cleaning, transport and so on. There are many local authorities who urgently want advice, who believe that a better organisation of the services is possible, but find it very difficult to get the responsible administrative advice which they require. My second point is an analogous one about central government. Some Departments can deal with their internal economic reorganisation for themselves, it has been done; but as a general rule we want a joint committee of civil servants, only one of whom is drawn from the Department concerned, to review the administrative arrangements of that Department. A series of committees of that kind would, I believe, do a great deal of good.

May I add this before leaving the administrative side? In any policy of economy proper structure and administration at the centre is of great importance. Outside critics seize upon the Ministry of Transport and the Ministry of Mines as Departments to be abolished. I do not wholly agree with that, and for this reason. I am quite sure that the correct organisation of government needs a few very large Departments, each with a Cabinet Minister at its head; and as Cabinet Ministers have very little time to devote to the detailed administration of their Departments, they should have under them Parliamentary Secretaries definitely responsible for certain sections of the work of the Department, though not as a kind of fifth wheel to the coach, as a Parliamentary Secretary too often is under the present organisation. The organisation at the Board of Trade, with the Ministry of Mines and the Ministry of Transport, is, broadly speaking, the right organisation; but the trouble there has been that instead of keeping the statutory powers and duties in the hands of the President of the Board of Trade as the supreme head of the Department, responsible for policy, we have divided his statutory powers with the Minister of Transport and the Minister of Mines, with the result that they are no longer Under-Secretaries under the authority of a Cabinet Minister but have become semi-independent Ministers of their own. However, I feel convinced that that is the proper organisation.

As has been frequently urged, and as I have pointed out, no administrative economies, far reaching as they may be, of that kind can possibly produce economies of the order mentioned by my hon. Friend the Member for Greenock, let alone greater economies such as are of ten demanded. I would advise the House not to concentrate too much on an economy of £40,000,000 in next year's Budget. Quick economies are generally temporary economies, and temporary economies are all we have made up to now. All the May Committee economies of last year were temporary economies, which cannot be held for any length of time. If we are to economise permanently in the way I have suggested, in the direction of a new set of economic conditions in the future, we must be content to plan economies progressively, for what is wanted is not so much immediate savings in any particular year as a permanent saving by the end of this Parliament, a permanent saving related to the economic conditions of the future.

All I would say on the particular question of the social services is this: If I am right that the services cannot in the future be financed out of large accumulations of capital, out of large incomes, they must increasingly be financed, as Canada has to finance her social services, on the basis almost exclusively of local rates, or at any rate of taxes levied on people of small incomes. If that is so, the whole complexion of our social services is changed. Take the question of housing subsidies. The fact that housing subsidies to-day come largely from the pockets of the working class themselves is obscured by these big grants from the central Government, but when once it is realised that a housing subsidy is merely a tax levied on one working man to provide a house for another working man, when that is on the face of our system, then, of course, we shall come to the conclusion that subsidised rents can only be justified as a form of public assistance; and that is a principle that we have got to recognise. Further, if we are going to have either an active policy of slum clearance or a proper administration of our existing housing estates, we need to put the work in the hands of appointed commissioners and not in the hands of elected members of local authorities. I do not believe that housing, and still less town planning, is a function which can be properly discharged by most elected local authorities.

As to education, if the organisation of education in the future is going to be local in the sense that I have suggested, if the money for education has to come mainly out of the pockets of the people whose children are being educated in the schools, as it does to a, large extent today, a very different complexion will be put upon the elementary school in the local area. Moreover, we must get rid of this absurdity in education, that a local authority may, indeed must, maintain an elementary school, but must not make any contribution towards any school not maintained by it if it is an elementary school. That system, by which we give a certain sacrosanctity to the fact of a school being supported out of the rates instead of out of the voluntary contributions of the parents—that distinction will disappear in the future.

I have said enough to indicate at any rate the line upon which I think this country has to go. We have got to plan our social services on the assumption of a far simpler if not a lower standard of living than the past, a far more stationary civilisation. We have got to forget those ambitious, money-grubbing assumptions on which too much of our present system of social services is based. It is only in that way that we can bring, as we must bring, the policy of economy in Government expenditure into direct relation with the whole economic policy and economic conditions of the nation. It is in that way alone that we shall get not merely temporary economies in the way of wage cuts and the postponement of developments that we have to restore in three years' time, but a permanent economy and a permanent reconstruction of our social services.

Mr. DAGGAR

I shall not be expected to follow the speech of the Noble Lord. I am not for the moment interested in Church schools and the question of economy and I want, if I may, to narrow the discussion. My justification for that is that in a very short time this House will be adjourning, and our people who live in areas where there are as many as 95 per cent. of the men unemployed will be interested to know what the Government propose to do. I want to make reference to the condition of things in those areas where there is such a large percentage of unemployed. When this question was raised last the Board of Trade promised that the condition of the depressed areas should have consideration immediately upon the publication of two reports that were then being considered by the Board of Trade. Those two industrial surveys have been issued. One covers the whole of South Wales and shows that, including my own area, South Wales has permitted the transference and migration of 242,000 men between the years 1921 and 1931. The report also points out that at the present moment there is a visible surplus of over 70,000 men in South Wales. We are anxious to know what the Government propose to do with reference to those individuals. Have they got to exist or vegetate in those areas upon the receipt of Poor Law relief? The other survey to which I have referred deals with the South of Scotland. We find that it is anticipated that in two years time there will be a surplus of 117,000 workers, a total for both areas of 187,000. We are anxious to ascertain from the Government whether it is their intention to permit the transference of those men from those areas, in view of the fact that the Government boast of having a free hand, and that the report to which I have referred makes no recommendation.

We were told last week by the Secretary for Mines that since 1st October last, 68 pits in South Wales and Monmouthshire, employing over 13,000 wage earners, had been closed and not reopened. As I. said on a previous occasion, my district is typical of the whole of South Wales. I have since been forwarded a copy of the report of the medical officer of health for my division. It covers the area known as the Abertillery Urban District. This statement by the medical officer of health is of considerable importance, and is more valuable than a discussion upon the question of economy in public finance. He says: Sixteen boys and 13 girls were found at school whose footgear was in a very bad state of repair. In most of these eases the little children had practically no boots at all, so bad was the condition of their footgear. The large number of children attending school in canvas shoes was specially noted. This is to be accounted for by the very trying economic conditions existing in your area. There was a considerable falling off in the condition of the boots and clothing, especially underclothing, of girls and boys as compared with previous years. On inquiring into the absences of children from school, one finds the reason given us that the children had not got boots in such a state of repair as to enable them to attend school, especially in inclement weather. The school attendance officers' monthly reports also bring out the fact very vividly. It is a most unfortunate position, as the Education Authority lose considerably in grants from those absences, and the health of the little children suffers considerably from lack of suitable footgear and clothing. I often think it would be greatly to the advantage of Education Authorities if the Board of Education would allow them to supply hoots after due inquiry, and with considerable discretion, to those deserving cases who are the victims of economic circumstances. This would be to the advantage of the children, also the authority. Boots and clothing were supplied to children of the unemployed through a local distress fund. I submit that these questions are of more interest than those that have been previously discussed. In these areas we are pleased to note an effort which has been made by the Government to assist these people. The Prime Minister, as I have said, continues to take a special interest in the depressed industrial areas. Evidence of that fact, is to be found in a letter which he recently wrote to Lady Londonderry, the chairman of the Personal Service League. In a portion of that letter he says: In places where unemployment has been long and severe there are families who are in need of boots and clothing. Recognising this need, men and women in various parts of the country have formed local organisations for collecting and supplying garments, and for raising money to buy boots to distribute in the depressed industrial areas. I think that this movement deserves every encouragement; it may be very helpful next winter, if by then it can be organised and coordinated on a systematic basis. That is an entirely new role for the Prime Minister of this country. When we are disposed to criticise him, it is assumed that we have more regard for his political activities than for his versatility, which is entirely incorrect. It is an entirely new role for a Prime Minister to act as an agent in advance for the collection of old boots and clothes for the people in industrial areas.

We have been informed by the President of the Board of Trade and by his Secretary that since the imposition of tariffs there have been established in this country 144 new undertakings that have given employment to 5,000 of our people. At the same time, many of our industries and their workers are idle. The complaint is that the Government are doing nothing to attract those industries, if they are of any value, to the depressed areas. I want to point out the difference that exists between the information supplied to us by the Parliamentary Secretary to the Board of Trade and a public declaration made by the Lord President of the Council. The Lord President of the Council made this public declaration: We do want to get into this country any industries that are actually new, or are technically more perfect than our own. But I do not want to encourage them to come into this country supposing they are merely part of industries in which we are underemployed now, or in which we are perfectly efficient and need no more help. That is, broadly, the difference between the industries we want and the industries we do not want. The Parliamentary Secretary to the Board of Trade will not deny that some of these new undertakings are parts of industries in which there is underemployment at the present time, or in which we are perfectly efficient and need no more help. The Lord President has also made this statement: I hope that those who are interested in these districts either by administration or being the leaders of trade unions may do what they can to get in touch themselves"— Those are the words that I want to impress upon the House— with those who would consider the introduction of new industries, and do all they can to help the introduction of them into parts of England and Wales where they would really bring untold benefits to people whose sufferings have already been too long and too hard. That was the advice of the Lord President of the Council on 10th April this year, and which appeared in the "Times." On 26th April this year a question was put to the President of the Board of Trade as to whether he would send to the Stroud District Development Committee the names and addresses of the 390 foreign firms which were contemplating establishing factories in this country, and the President replied: The particulars available to the Board of Trade regarding the establishment of new undertakings have been received in circumstances which make it necessary to regard them as confidential, and I regret therefore, that I am unable to comply with my lion. Friend's request."—[OFFICIAL REPORT, 26th April, 1932; col. 219, Vol. 265.] It is a remarkable position, to be advised by the Lord President of the Council to get into touch with these people, who are anxious to establish new industries in this country, and then to be told by the President of the Board of Trade, when he is asked for the names of those individuals, that the names have been supplied in confidence. I may be per- mitted to refer to a statement made by the Parliamentary Secretary to the Board of Trade when this matter was recently under discussion. In making reference to the observations made by Members sitting on these benches he said: I quite understand the dilemma in which hon. Members opposite find themselves. In the first place they disapprove of these industries altogether. In the second place they plead, 'Why do they not come into our constituencies? In so far as hon. Gentlemen have been disappointed at not receiving new industries in their constituencies, I can only say that there are no sanctions possessed by the Government to oblige any particular undertaking to establish itself at any particular spot"—[OFFICIAL REPORT, 14th April, 1932; col. 1120, Vol. 264.] The only thing that has happened is that if there is a dilemma it has been created by the Parliamentary Secretary himself, and while this may be clever, the statement is incorrect, because no Member sitting on the Labour benches has been opposed to new industries being established in depressed areas. All we have contended is—and I do not think it will be disputed—that the establishment of a few new industries will not solve the unemployment problem, and, as far as the workers are concerned, our view is that it is just as well for the workers to be exploited by foreign capital as by British capital. The Government, in our opinion, should assist the establishment of those industries in areas where they are wanted, and if there be any benefit to be derived, those who represent depressed areas should share in whatever prosperity these new industries might bring.

6.30 p.m.

We on these benches have always said that a mere change in the method of production will not meet the difficulty. A mere change in the method of doing up a lady's hair would have a greater effect upon unemployment in this country than the establishment of those 144 factories. We have been told that the turnover in money caused by the change in doing ladies' hair was £20,000,000 last year, which is a much greater turnover than we can expect from the establishment of 144 factories. We contend that it is better to establish those factories or new undertakings in the depressed areas than to permit people to migrate from the depressed areas to places where the new factories are established at a cost of at least £450 or £500 each. Even the "Times," which is certainly not a Labour newspaper, agrees with our contention because the "Times" said in a leading article on Friday last: It is manifestly far better, if it be possible, that new industries should be started where towns and idle workpeople are than that new towns should be built and workpeople transported to them. Most of the people with whom I have come into contact have always argued that once the Conservative party were put into power there would be a considerable improvement in the trade of the country. That has not been borne out, notwithstanding the imposition of tariffs. We find that the exports in May—and we all agree that the Government have no interest in the reduction in imports—have decreased, and that has obviously shown itself in an increase in the number of unemployed in this country. We find that the exports in May, as 6.30 p.m. compared with April, are down by £4,500,000. Even if we compare the five months from January to May of this year with the five months from January to May, 1931, we find that there has been a decrease in the export trade of this country, in produce and manufacture alone, of £12,500,000, while as compared with the same five months in 1930 there has been a decrease of £104,000,000. My chief reason for rising is to get some assurance that assistance will be given to people in these depressed areas. I consider that, if it be possible, it should be an obligation on the Government to attract new industries to those areas, instead of permitting people to vegetate on Poor Law relief, as is the case at the present time.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I hope that the hon. Member for Abertillery (Mr. Daggar) will not think me discourteous if I do not on this occasion follow him in his examination of a particular and local problem. With the general proposition that it would be better that new industries should be established in depressed areas than that people in those areas should migrate elsewhere, I think everyone would be in agreement but, unfortunately, these matters are not merely decided by abstract views of what would be the best on the whole, but by the question whether in fact it suits a particular industry to go to one district rather than to another. When that matter has to be considered, there are a large number of considerations which must necessarily be taken into account by the industry in question before making up its mind where it shall make its future home.

I understood that the Debate, so far as the Opposition was concerned, was to take the form of a general attack upon the record of the Government. I must say that, listening to the hon. and learned Member for East Bristol (Sir S. Cripps), and hearing his unconvinced and unconvincing statement that this Government had been a failure, and having come here fresh from contact with representatives of nearly all the countries of Europe and from hearing what their opinion of the position of the country has been since this Government came into office, I find it very difficult to take a remark of that kind seriously. Nothing could be more striking, nothing could be more gratifying to anyone, whether a Member of the Government or not, who is a citizen of this country, than to hear the almost universally expressed admiration and astonishment at the manner in which this country has recovered her position in the world. Of course we cannot expect that in a few months we are going to stem the tide that has been setting so strongly, not in this country alone but throughout the world, against prosperity. We cannot expect, when other countries are tottering far worse than we are at the present time from depression and from unemployment, that we alone are going to be prosperous; but we can at least say this, that, in a general diminution of the international trade of the world, we can compare favourably with any other country, that we are to-day obtaining an increased proportion of that international trade, and that, so far as credit, influence, and respect engendered in other countries are concerned, our position is incomparably better than it was when this Government took office.

I think, however, that the purpose of to-day's discussion was understood to revolve around the question of economy. The hon. and learned Member for East Bristol said that economy was the reverse of the right policy far the Government of this country, from which I conclude that the converse is true, and that in his opinion the right policy for this country is one of extravagance. But, before I touch upon the policy.of economy, I must devote a few observations to the incursion of my right hon. Friend the Member for Epping (Mr. Churchill) into another subject. My right hon. Friend has taken this opportunity to make a studied attack upon the settlement which has been arrived at at Lausanne, and which has had the immediate effect of raising prices on all the stock exchanges of Europe. He gave us a picture of the situation as he saw it, from which it appeared that Germany was the only country that had really come off with the spoils, and that England was the one country which was going to bear all the sacrifice.

I understood that that was the attitude which he thought it desirable to take up on his first impression of the reports of the results of the Lausanne Conference; but then he had seen in the papers this morning some passages which led him to suppose that perhaps he had done the Government an injustice, and that possibly those who represented this country at Lausanne had not been so entirely neglectful of her interests as he had at first imagined. Then he went on to say, if that were so, why all this trumpeting and fanfaronade about it, for, after all, all that we had obtained was a moratorium? I must say that my right hon. Friend's observations have caused me some embarrassment, because it is well known that the Debate on Lausanne was to be reserved until tomorrow, when my right hon. Friend the Prime Minister was to make a report to the House. Therefore, I am in this dilemma, that either I must anticipate the statement of my right hon. Friend the Prime Minister, or I must leave unanswered the criticisms which my right hon. Friend the. Member for Epping has seen fit to make.

I am not going to break into the Debate to-morrow; I think the House will perhaps be content to wait until the Prime Minister himself can make his statement, and to suspend all judgment upon what has or has not been achieved until to-morrow; but I would say this in passing, that my right hon. Friend the Member for Epping has clone no service to this country in endeavouring to undermine any confidence which may have been a-roused by this settlement, and in suggesting that we have in any way made more difficult or more embarrassing the relations with our own creditors elsewhere. After all, we have been in touch at. Lausanne not only with European representatives, but we have had the opportunity of conversations with the representatives of the United States, and I would ask the House to believe that, in this rather delicate situation, we have no reason to think that the course we have taken is one which is going to lead to any of those unfortunate results which the right hon. Gentleman anticipates.

As to the possibility of adopting what he called the wise and prudent course of simply contenting ourselves with a moratorium until some time late in this year, I can only say that I cannot believe that a suggestion of that kind would be seriously made by anyone who was intimately familiar with the critical conditions which exist in Europe to-day. Europe simply could not wait. The whole world was expecting that some sort of settlement would be made at Lausanne. If we had broken up with nothing but a moratorium, it would have been said that that was because we are unable to agree, and that a settlement was further off than ever, and we should have seen the results in a general depression of prices to-day instead of a rise, and, perhaps, in disasters of which it would be difficult to measure the extent.

To return to the question of economy, the House has on many occasions made it perfectly clear that that is a subject in which it takes the most profound interest, and, naturally, to the Chancellor of the Exchequer it can only be a matter of the greatest gratification that so many hon. Members should be seized of the necessity for a reduction, not merely of extravagances, but of expenditure which in ordinary times would be more than justified, because everyone sees that what the country now wants is, if possible, a reduction of taxation. I sometimes have an idea that some hon. Members have it in their minds that the Government are less keen about economy than hon. Members are themselves. The fact that the suggestion is made that economies, if they are to be substantial, must be carefully weighed and considered in all their bearings before they are embarked upon, has occasionally given rise to an idea that that was only a pretext for putting off an unpopular operation. If that idea has ever entered anybody's mind, I would ask them to consider the record of the Government, which I think does show that it is not afraid to face conclusions when it has once come to a definite decision that certain steps ought to be taken.

I remember that at the time of the last Debate in which I took part and in which this matter of economy was discussed—I think it was some time near the beginning of last month—even then plans were being formulated and prepared for that great conversion scheme which I had the honour of announcing to the House when I came back from Lausanne a few days ago. I wish very much that it had been possible for me to-day to give the House some figures as to the amount of continuance applications which we have received up to date, but the inflow of letters into the Bank of England and the Post Office has been on such a tremendous scale that, working at high pressure as they are, it has not been possible for them to give me figures sufficiently recent for me to care to put them to the House. All I can say is that the applications in the first week exceeded all our anticipations, and that the response from the really large holders of War Loan has been particularly gratifying. I should like to add to that that the proportion of assents which we have received from foreign holders is also extremely gratifying to us. The only figure that I can give at the moment is that we have received up to date, including the first post this morning, over 650,000 letters, and that the proportion of dissentients up to date has been trifling. All the same, this is not a moment for relaxing our efforts. I am sure I shall have the support of all Members when I ask them to use any influence that they may have to bring about the complete and striking success of this great operation. The beneficial results of it have already shown themselves in the extraordinary rise in British gilt-edged securities, which are now on a far higher level than they have reached since the early days of the War.

There is one other matter which I should mention in this connection. When I was speaking about the actual terms of the conversion, I said that I hoped that persons desiring to make new issues at the present time would forbear for a little while while this operation was going through. I am not in a position to forgo that request at present, but the time will come when issues of that kind will be possible again, and they will be possible, when they can be made, on terms far more favourable than could have been entertained before the conversion operation. I am certain that in this way, that is, by the ability to borrow fresh capital on reasonable terms, industry is going to benefit very greatly from the conversion scheme and it is, of course, important that that benefit should not be jeopardised by premature speculation.

Since I spoke last, there have been two other directions in which the problems of economy have been attacked. First of all, there is the appointment by the invitation of the Government of a committee representing the great associations of local authorities. There has also been the movement, of which I only recently heard in consequence of my absence abroad, but of which I have heard a great deal, namely, the setting up of an unofficial committee of private Members of this House who desire to study the subject for themselves. I welcome most heartily that movement among private Members. One of the great difficulties of Chancellors of the Exchequer in the past when they have tried to effect economies has been that they have had to address themselves to an uninformed House, and I am confident that the very fact that so large a number of Members intend themselves to take up the study of this question will mean that, when the Government put forward their proposals for economies or reductions in one form or another, there will be a much larger proportion of the House that is fully equipped to appreciate both the difficulties and the possibilities of the situation than there ever has been before in my recollection. To-day is not the time to put forward new proposals. That must come later in the year when further material has been accumulated, and further consideration has been given to the subject. But, in the meantime, do not let hon. Members think that the scrutiny of expenditure in all Departments, by the Treasury and by the Departments themselves, is not continuing. There have been reports made by the Select Committees on Estimates and on Public Accounts which contain most important recommendations, and those recommendations are under consideration now. Just to give the House an instance of the way in which this study is being continually not only made but acted upon, I should like to mention that, taking the period between 1st October, 1931, and 1st April in this year, in spite of the fact that we have had to employ 1,129 more people in order to deal with the additional fields of Income Tax and Import Duties, there has been a net reduction in Government staffs, after taking that into account, of no less than 2,635 persons.

In a few days Members will be separating and, no doubt, they will be spending some time in their constituencies and in studying this question of economy themselves. I have been wondering whether there was anything that I could say to-day which might help them in their study. It seems to me that, if I were to give them some sort of an analysis of our national expenditure, that might at least help them to see what was the scope and what was the nature of the fields in which economies can be made and would enable them to see, therefore, what were the main problems with which the Government have to deal. The total expenditure for this year is £2848,000,000. That is made up of three items. There is the Sinking Fund,£32,500,000; there are the self-supporting services, which account for £82,000,000; and there is the ordinary expenditure, which is,£733,500,000. think everyone will agree that we cannot reduce the Sinking Fund below the £32,500,000, which is barely sufficient for our statutory requirements. As for the two items of self-supporting services, in the case of the Post Office at any rate, increased expenditure is off-set by increased income. That is not quite the case with the Road Fund and that, of course is a subject which will have to be carefully reviewed. The ordinary expenditure of £733,500,000 may be divided into two parts. First, there are the services nationally administered, which amount to £587,800,000. Then there are the grant services to local authorities and others, which come to £145,700,000, those two figures making up the total of ordinary expenditure.

Let me now analyse the figure of the nationally administered services. First of all there is Debt Interest and Management, £276,000,000; Defence, £106,100,000; War Pensions, £47,600,000; Old Age and Widows' Pensions, Health and Unem- ployment Insurance, £122,200,000; and All Other Expenses amounting to £35,900,000. Those figures in themselves show a considerable decrease upon the estimates of expenditure that were made before the economy measures of the Government were taken last year. Perhaps I might remind the House what the reductions were that were effected by these economies. £8,000,000 was taken off Defence; an amended estimate of what War Pensions were likely to cost showed a figure reduced by £900,000, the figure of Old Age and Widows' Pensions and the two insurances was reduced by £50,100,000, and All Other Expenses by £1,500,000. Altogether there were £60,500,000 of reductions in those figures.

Debt Interest and Management has, of course, already been dealt with by the conversion scheme. I notice that my right hon. Friend the Member for Epping, in paying his compliments for the conversion scheme, for which I thank him, said that, when he was considering this matter, it was always connected with a reduction of Income Tax and he said, if it was not, a deflationary effect would be produced. I did not quite follow his argument because, if you save a sum of £30,000,000, either you are going to take £30,000,000 less from the taxpayers' pockets or you are going to spend it on something else. In either case it does not seem to me that any deflationary effect would be produced. Then he want on to say that these two things ought to be connected now. I am not quite sure what he intended to convey by that. Did he mean to suggest that I ought now to reduce the Income Tax by the amount of the savings effected by the reduction in the interest upon the 5 per cent. War Loan? If so, I should, of course, point out that none of the savings will be effected in this financial year. I said that when I was making the announcement. The whole of the saving will accrue next year. But, as to what I do then, I am sure my right hon. Friend will not expect me to anticipate the Budget of next year.

As for the question of defence, my hon. Friend the Member for Greenock (Sir G. Collins) indicated that defence might still be reduced by something like £13,500,000. I would remind the House that defence has already been reduced from what it was in 1924, which was the lowest point since the War, by nearly £11,000,000. It stands at a figure now at which it is doubtful whether we are in a position to carry out the duties and responsibilities which fall upon the defence forces, and I see very little chance of making any reductions, much less £13,500,000, in the figure now assigned to defence unless as part of a general scheme of disarmament in which other nations also take their share. I, like all the rest of the House, am hoping that from Geneva we may presently get results which will allow of further reductions, but we cannot build upon anticipated savings in defence until we know what other nations are prepared to do.

7.0. p.m.

Now I should like to come to that figure of All Other Expenses, amounting to £35,900,000. What is that composed of? I will read the principal items. Expenses of Tax Collection Departments, £12,800,000—not any room for big reductions there—Foreign and Imperial services, which include the War Graves Commission, Overseas Settlement, Empire Marketing, etc., £4,200,000; Works, Buildings and Stationery, £5,100,000, Prisons, £1,000,000; Scientific Investigation, £1,100,000; Civil Service Pensions, £1,900,000; Trade Facilities, £1,000,000; and Training of the Unemployed, £400,000. That makes a total of £27,500,000, none of the items of which are of any large size unless one excepts the Tax Collection Departments, about £13,000,000, and it leaves, therefore, £8,400,000 for all administrative costs in the civil Departments—except War Pensions, the Tax Collection Departments and the Post Office, which does not come into the ordinary Budget—as well as the Salaries of the Judiciary, the Civil List, and a number of minor items, including Salaries of Members of Parliament. I often get letters from correspondents, as I dare say others do, saying, "Whitehall is full of bureaucrats who would he much better away and, if you sweep them out of London altogether, you would save hundreds of millions of pounds." I want to point out to hon. Members that if the suggestions in regard to the Civil Departments were completely adopted, with the exceptions that I 'have mentioned, namely, tax collection, War Pensions administration and the Post Office, the total direct saving to the Budget would be less than £8,000,000. Therefore, we are left among the national administrative services with one other item which I mentioned, namely, the group of Widows' and Orphans' and Old Age Pensions, and National Health and Unemployment Insurance, which I may point out, show an increase over the 1924 figures of £77,000,000, after taking account of the £50,000,000 reduction on the Estimate before economy action was taken. I hope that the House will bear in mind that I am not now suggesting that we are even contemplating any particular economy. I am merely showing what the field is in which economy is possible, and I am not in any way prejudicing the question by suggesting that economy should or ought to be made in one or another direction. It will be clear that I was right in what I said, that hard thinking would be required before we made up our minds what economies of a substantial character could be carried out in the near future.

Now I turn to the other items, the other part of this ordinary expenditure, the £145,700,000 which is devoted to Grant Services. In that item, there is an increase over the figure of 1924 of £49,200,000, but the figure has been reduced, as compared with the Estimates framed last year before economy action was taken, by £17,500,000. These are the principal items which go to make up that increase of £49,200,000. First of all, there is the Exchequer contribution. That, of course, is due to the arrangement under the Local Government Act, 1929. Increases also include education, £2,600,000; loans to the Road Fund, £2,700,000, and housing, with an increase of £6,300,000. Then come a number of minor items, which altogether only amount to £4,400,000. That makes up the total of £49,200,000 over the figures of 1924.

Lord E. PERCY

What is the total of the Exchequer contribution?

Mr. CHAMBERLAIN

The Exchequer contribution to-day is £45,900,000, which is an increase over the figure of 1924 of £33,200,000.

Mr. LANSBURY

Can the right hon. Gentleman tell us what the derating figure may be?

Mr. CHAMBERLAIN

I am afraid I have not got that. I may be able to obtain it for the right hon. Gentleman before I have finished my speech. I would like to remind the House once again that, in those two major divisions of the national expenditure, we have already effected economics amounting, in the case of the national administrative services, to £60,500,000, and, in the case of the Grant Services, to £17,500,000, making a total of £78,000,000. Next year we shall be able to add to that figure the £30,000,000 that we shall have saved by the recent conversion of the War Loan, making a total reduction of £108,000,000. That analysis, I think, shows that, while minor economies can be found in various directions which, added together, may indeed amount to quite a substantial sum, really big reductions of expenditure can only be effected in the fields of pensions and insurance, among the national administrative services, or in grants to local authorities.

Now we come to the local expenditure. The House is aware of the setting up of the committee of the main Associations of Local Authorities. I think that that will be the first time that any general survey has been made over the whole field of local administration and local expenditure. I listened with a great deal of interest to the speech of my Noble Friend the Member for Hastings (Lord E. Percy), who has great personal knowledge and experience, both of the general field of local government, and in the particular field of education. He made a number of extremely interesting suggestions, some of which, no doubt, will be considered at the meetings of this committee, and some of which I should like to go over a little more myself. I am inclined to believe, with him, that we do not want to leave entirely to the local authorities the whole burden of taking the initiative in the direction in which economies can be made, but we do want the local authorities to be free to make any suggestions that seem to them to be of a practical character, without the fear that they may be told that their suggestions are trenching upon legislation and cannot be considered. I think that nothing that they may do or may recommend will take the initiative out of the hands of the Government, or the ultimate decision out of the hands of this House. Questions of policy must, of course, always remain in the hands of hon. Members; at the same time, I do not think that any useful work could be done in the investigation of the expenditure of local authorities generally, unless we enlisted in the work those who are themselves engaged in doing that work, and who have the opportunity of seeing from day to day where the shoe pinches, and where pressure is put upon them to spend money which they do not feel it is necessary or desirable to spend. There may be obsolete or obsolescent regulations, or Statutes that stand in the way of reforms which the local authorities themselves may desire to see carried out. I am hoping that the Committee on Local Expenditure will have their report available by the end of October, in order that we may review our policy in the light of any recommendations that they may make.

To indicate to the House the vast sums of money which are involved in this kind of public expenditure, I would remind them that in the year ended March, 1932, the total expenditure of local authorities amounted to as much as £318,000,000. That expenditure was met partly out of the rates, by the sum of £165,000,000, and there was a sum of £153,000,000 which was represented in the form of grants for services. Then, of course, there are the loan debts of local authorities. In the last eight years, local indebtedness has increased by nearly £400,000,000. A large part of that loan debt is represented by productive assets, such as trading services; therefore, it must not be taken as a sort of dead-weight debt. Nevertheless, one cannot help thinking that a careful investigation of the whole matter by the Committee will result in the disclosure that some greater amount of regulation of the borrowings of local authorities has become desirable. I do not think that there is anything more that I can say to the House to-day. I repeat again that this question of economy is, in the mind of the Government, one of the most important questions that remain to be dealt with this year. The analysis which I have given to the House may be helpful to hon. Members in their study of the question, and I desire again—

Earl WINTERT0N

Will the right hon. Gentleman now give us the de-rating figure?

Mr. CHAMBERLAIN

I do not think that the information which I have is very helpful. I prefer to get the figure myself, and then I will hand it to anybody who is interested.

Mr. CHURCHILL

Is it not £35,000,000?

Mr. CHAMBERLAIN

The total of the Exchequer contribution is £45,900,000. I only wanted to say to the Committee once again that I am very glad that hon. Members are taking this matter up so seriously, and I assure them that Ministers will be only too glad to help them in their efforts.

Mr. ATTLEE

The right hon. Gentleman has given us a very interesting survey of national finance. The chief point of it was to show us the very narrow scope for possible economies. I was rather surprised that he devoted so much time to this economy stunt, the hollowness of which he so well demonstrated. I remember the right hon. Gentleman the Member for Epping (Mr. Churchill) giving us a very interesting lecture on economy. He brought up tables, he surveyed the whole field, and he came to the same conclusion as the right hon. Gentleman the present Chancellor of the Exchequer, that while it is all very well for hon. Members to talk about the huge weight of national expenditure and the desirability of economies, they have to remember the point of view of a Chancellor of the Exchequer, and that the field within which he was able to move was extremely limited. I noticed that the right hon. Gentleman laid most stress on the proposed savings in regard to local authorities. I hope, if he is going to meet these local authorities to talk about economy and about the control of borrowings, that he will give them the interesting document which was sent to me to-day, and which is an account of the Birmingham Municipal Bank. The document shows how excellent and economical it is for municipalities to mind their own financial business. Even those municipalities that escaped the hands of Mr. Hatry and his associates, still have to pay pretty highly for their financial accommodation. The Birmingham Municipal Bank shows the better way by which local authorities can mind their own financial business.

I also noted in the right hon. Gentleman's speech the extraordinary fact that he did not deal with the situation in which this country finds itself. The only speaker who has done that so far has been the right hon. Gentleman the Member for Epping. I thought that he spoke less from a general point of view than from a strenuous endeavour to remove some of the gilt from the Prime Minister's Lausanne gingerbread. I gathered that his speech was addressed more to the internal situation of politics in this country than to the situation abroad. He was very free with his advice to the Government. He has always been free with advice, and the Government must rather doubt whether his advice this time will be as sound as on former occasions. I have read with a very great deal of pleasure the biography which the right hon. Gentleman wrote in which he described his early life. I came across a passage which, I confess, surprised me. It was that at one time the right hon. Gentleman was not very quick at his books, and, in view of his present capabilities, I was surprised. But he told us that though he was rather slow to learn he was tenacious of what he learned. He described, in the breezy style which we all enjoy so much, the way he had been "put through it" by a certain master at Harrow school.

The right hon. Gentleman has taken a long time to learn other things, though he learns them very well. For instance, there is the question of deflation and sticking to the Gold Standard. No one was a greater upholder of the Gold Standard and deflation in times past, but he has now learned his lesson, and every time he comes to this House he preaches the virtues of reflation. He was one of the most open-handed of men in casting aside the debts owed to this country. He made the Churchill-Caillaux Agreement and it was regarded as a fine gesture at the time, but he has rather regretted since that he threw away a very valuable bargaining point. But he is prepared to learn. He comes down to the House to-day and chides the present Government with the fact that they are giving away everything. He anticipated a part of the Debate which is to come on tomorrow and with which, therefore, I will not deal. The Chancellor of the Exchequer naturally left the Lausanne question alone, but he told us one or two things. He stated that our credit stood higher than it did 12 months ago, and that people thought better of us, but he must remember that his Government have the advantage of not having an Opposition and an Opposition Press engaged in a steady attempt to decry everything in this country, such as was experienced 12 months ago. The bulk of the Press of this country is behind the present Government, and is not engaged in a campaign of depreciation, and we have not peripatetic politicians going to America and elsewhere telling the people that this country is down and out. That is a very great advantage.

Yet what is the right hon. Gentleman's measure of prosperity of this country He has to admit that we have to-day a serious state of unemployment in: this country, but he does not deal with our present state. We all know the state of trade. You can ask any business man the state of business, but the only information. Which the right hon. Gentleman can give is that the Stock Exchange prices have rallied. I do not think that information will be received with very great enthusiasm in the Durham and Northumberland or the South Wales coalfields, or among the bulk of business men in this country. Finally, he gave us, for the third time of asking, the old story that although we are all going to ruin we are a little better off than any other nation. I have no doubt that he holds with the Bellman in the "Hunting of the Snark," "When I say it three times, it is true." The right hon. Gentleman is not unlike that Bellman in other aspects. He does not seem to have any economic plan at all. The Government are extraordinarily like that crew. I do not know if they have the Beaver on board.

The right hon. Gentleman entirely avoided answering my hon. and learned Friend upon any of the real points in regard to which this House ought to have an answer. We want to know the kind of hope he is going to give us for the times ahead in the autumn and winter. We have had a gloomy prognostication from the right hon. Gentleman the Member for Epping. We have no semblance of a plan or suggestion as to what is to be done with regard to our industries. If these things, unemployment and so forth, are like this in summer, what is the position going to be in the winter? One might have imagined that the right hon. Gentleman was going to have some wonderful plan of economy, but he has poured a good deal of cold water upon the cam- paign. He has, of course, his Protectionist plan, which, we understand from one of his colleagues, is a total failure. The Lord Privy Seal, the former sparring partner of the right hon. Gentleman the Member for Epping, has declared that the whole of that side of the policy of the Government is entirely futile and is not accomplishing any of the things it was intended to do. Are the Government pursuing the policy of Protection? The Lord Privy Seal, I suppose, is still thinking about Free Trade. There is not a vestige of any policy for this country. We say that you have to look a good deal deeper than into mere questions of superficial economy.

The speech of the Noble Lord the Member for Hastings (Lord E. Percy) was one of the most monumental efforts of muddled thinking I have ever heard. He gave us a sort of "Alice in Wonderland" picture. He started off by drawing a contrast between real wages and the standard of living. I always thought that when you were dealing between nominal and real wages, real wages would be the standard of living. He drew an amusing contrast and put forward the most wonderful economics of which I have ever heard. He seemed to imagine that what we live by is not the products of labour but the accumulations of past labour in certain hands. He said that during the Nineteenth Century people had very large families, and that therefore they were prosperous; that now people were having smaller families and were living longer, and that therefore we were coming into a cold and bitter time, and we should all have to draw in our belts. I never heard anything so muddled, and this at a time when the powers of the productivity of the world are immense. One would think from the Noble Lord that our problem was to get enough hands to do the work in this country or the world. He must know that there are nearly 3,000,000 unemployed in this country, and something like 30,000,000 unemployed in the world, and that the problem is to get rid of the goods produced in such abundant quantities by modern science. The Noble Lord says, "Oh, no, the problem is that we shall not have sufficient people to do the work as we had when our forefathers had so many children." So we are going to come down and lower our resources.

The Noble Lord went on to make a most amazing statement. He seemed to be under an illusion that Members on this side of the House thought that the only way to get money for social services was by taking the accumulations of the rich. [Interruption.] If hon. Members had listened to or read anything of our Socialist propaganda they would know that we have stood for a more equal division of wealth, and that wealth distributed more evenly among the mass of the people does not lessen its amount, but only its distribution. When the Noble Lord the Member for Hastings drew a terrible picture that at some time in the future we might find the ordinary citizen having to rely upon his own local rates, his own taxes, or deductions from his own income to furnish the social services instead of drawing upon the accumulations of the very rich, he was really making a ludicrous statement.

Sir ARTHUR MICHAEL SAMUEL

The hon. Gentleman says that he is out for an equal distribution of wealth. It sounds all right. Let us see what it means. We have been told by Sir Josiah Stamp that if you took all the great salaries, wages and incomes of all those paying Surtax on incomes of £560,000,000 a year and divided them up it would not make a difference of a shilling a day to the wage-earners of the country.

Mr. ATTLEE

That is a very old point. I remember it 25 years ago. The point is that you organise your production and distribution so that if you divide all the wealth in the country you would not produce a great excess to the individual family. This is where the hon. Member does not use his imagination sufficiently, because although the sum seems to be so small, it would be a very considerable addition to the incomes of most people in this country. The short point is, that you have the potentiality of a vastly increased standard of life. I do not think that that fact can be denied. The whole difficulty in the world to-day is to relate production and consumption. Even before the War the mass of industrial plant in the world was running short time, and there were masses of people unemployed. There was a tremendous wastage because of bad organisation. That is the short answer. The interruption of the hon. Member really does not deal with the point. I was trying to correct the Noble Lord by showing that if you have a certain amount of wealth, whether it belongs to two people or to six people, whatever effect the distribution may have, it does not affect the amount. The Noble Lord is under the illusion that we thought that you could draw taxes only from very wealthy people.

Lord E. PERCY

May I ask what is the anticipation of the hon. Gentleman? Is it that local rates will in the future form the whole or practically the whole of the finances of the social services?

7.30 p.m.

Mr. ATTLEE

Certainly not. I do not believe in the system of local rating. I am riot such a devotee of the parish pump as the Noble Lord. In fact, the system of local rating is not equitable between district and district. You have to bring in, through the nation, the larger unit. The Noble Lord, who has been in a Government Department, knows perfectly well that the tendency in this country is to have people dumped down into the cities of the rich and the cities of the poor, and because you have those particular local government boundaries it does not mean, to say that you are going to leave the poor to stew in their own juice without any help from the richer parts. I do not know where the Noble Lord got his experience, but 7.30 p.m. I may tell him that for many years I lived in the borough of Stepney, where we were next door to the City, and it was a great help to Stepney that under the Poor Law we had a fund which spread the burden over the City, Stepney and other boroughs. I understood the Noble Lord to say that we must have a spreading out of taxation over everybody and that in future instead of depending upon large amounts of taxes from the very rich we should have more contributions from the masses of the people. If that is so, well and good; we are moving towards a more equalitarian state, but I dissent from the Noble Lord in his suggestion that the world is getting terribly poor and that we shall not be able to afford a higher standard of life. There is every indication to the contrary. But for the lunacy with which the world's affairs are carried on we should have a far higher standard than we have at the present time.

The Noble Lord went on to say that after the War we did wrong things. We did not put up the right class of house, we did not give the right class of education and so on. He would have been a very active reformer a hundred years ago, but to-day his type of mind is out of place, talking of working-class dwellings instead of houses for the workers, and talking of working-class education and so on. He says that we have gone wrong, that we have built the kind of house for the technician and the professional man and not the type of house suitable for the working man. We demand that you should not build slum houses again. The Noble Lord wants public utility societies to take over housing. If he will come with me I will show him some public utility houses. He need go no farther than Bethnal Green. There, he will see the sort of houses that our grandfathers thought was the sort of house to put up. Let him go to Bethnal Green station and see the houses about there. That is an example of public utility housing, the 5 per cent. charity kind of house. We are out for something different. The Noble Lord takes an entirely different line.

I was struck by the extraordinary perverted sense of value that he has. He shares it with most of the economy mongers, because they always demand economy from those people who can least afford it. He would take away goods and services from those to whom they are of the greatest utility whilst paying those to whom they are of the least utility. If he really thinks that we are in such a state as he depicted and that there is such urgent need for economy, and if he had a true sense of value he would not say that the first people at whose expense economy should be carried out must be working people and children. If he wants to go in for rigorous economy he might suppress a great deal of the luxury that is going on at the present time. Until we see something done in that direction I do not think we can take very seriously the Noble Lord's idea that we cannot afford all this expenditure on social services.

The Noble Lord dealt with the wage scales of municipalities and put forward several interesting suggestions, with some of which I agree. I agree that we need a larger local government unit for such things as main roads, main drainage, water and so on. I agree with him that we need a change in the organisation of local government offices. But the Noble Lord has many curious illusions. One curious illusion is that the wages of the workers in municipal employment are too high because of popular election to the municipalities. He means that they are too high compared with other workers. It never occurred to him that the wages of the other workers are too low. If he had been engaged in active work before the War he would have known that the wages of municipal employés were below the ordinary wages of other workers. What has happened in the meantime? The wages of the coal miners have been brought down. The skilled worker, the engineer, has had his wages brought down disgracefully. The Noble Lord thinks that the wages of the municipal workers should be brought down. I would rather bring the other workers up to the standard of life, which is not too high, of the municipal workers.

For these reasons we on this side see a great gulf between us and the Noble Lord and those who think with him. I am not saying that the Noble Lord is representative of everyone on the other side. I think he has a very peculiar philosophy and a peculiar sense of values all his own. We believe that this country can be and should be developed in order to give the highest possible standard of life to all. The Noble Lord does not share that view. He belongs to a different order of ideas altogether. He belongs to the idea of classes, one man in this place another man in that place and that they should keep their own places. We challenge the record of this Government on broad, general lines. We say that they are not facing the realities of the situation. The realities of the situation are not those of the Noble Lord, that the world is now very poor and impoverished that the worker must take low wages and work long hours, that we must cut down on education and on the Civil Service—

Lord E. PERCY

When did I mention long hours?

Mr. ATTLEE

I did not say that the Noble Lord said it, but that is his definite philosophy.

Lord E. PERCY

The hon. Member must not attribute things to me that I did not say. So far from that being my view, if the hon. Member had devoted a little more attention to what I did say he would know that the whole course of my argument tended to very much shorter hours of labour than at the present time.

Mr. ATTLEE

I did not observe that statement, but I accept what the Noble Lord has said. He did, however, say that as the population was stationary we should not have enough hands to make wealth for this country. That goes clear against, the argument put forward by most people that the only way for people to get along is by reducing hours. With regard to wages, the Noble Lord suggested that the wages of municipal employés were too high. If he had been taking the other line he would have said that the wages of other employés are too low and that they should be brought up to the standard of the municipal employés. He did not take that line. I think that was a very fair indication of what was in his mind. We say that the Government are giving way to the economy stunt, that they are failing to take the steps necessary in this crisis, that they are not giving a lead to the world in what is really necessary, and that is to see how we can get together and build up a high standard of life in this country and a higher standard of life in the world, with the greatest possible interchange of commodities and services. On the contrary, their whole policy has been directed to breaking up the world into economic national units and to place obstacles in the way of international trade.

It is not surprising to hear people of all sorts and conditions who are deploring the failure of this Government. Their failure is that they have not diagnosed what is the world situation. They are not prepared to face up to the fact that you cannot get on in the old way with the old competitive capitalism. The only way is to adopt the new method, the Socialist method.

Viscountess ASTOR

What is the Socialist method?

Mr. ATTLEE

I should not like to occupy the time that would be necessary to answer the Noble Lady, but I should be pleased to explain it to her at some other time. Meanwhile she might read, as she is qualified to do, "The Intelligent Woman's guide to Socialism."

Mrs. SHAW

The embarrassment which is inevitable in a maiden speech is some- what lightened for me to-night when I realise the privilege that I have of being called upon to speak in a Debate on such an important question as economy. I ask the indulgence of the House while I make a few remarks on a very costly national service, that of education, a question on which there are many idealists and a service on which to effect economy is extremely difficult without doing injury to the fabric itself. It is with feelings of some trepidation that I venture to speak on education, because I have no university qualification for doing so. My alma mater is the university of public service, which does not confer degrees. In these circumstances, I should not presume to criticise individual idealism on education, but I speak to-night merely from the experience I have gained and the opinions I have formed both of education and its possible economies after 13 years service as a member of an education authority and, since the reform of local government, as a county councillor.

We have made great advances in education and travelled a very long way since the days, not very long ago, when a knowledge of the three R's was all the intellectual equipment considered necessary for starting out on life's journey. Fortunately, times have changed. Our policy is no longer based on a knowledge of the three R's but on the rightness of giving every child an opportunity to develop a. fitness of body, mind, spirit and character, a training in endurance, concentration and self-control, all of which constitute the foundations of high moral value, and by building up vitality, interest and capacity, ever bearing in mind the fact that every fit child we make, mentally and physically, we add to the wealth of the nation.

Within the confines of a maiden speech I will not attempt to dilate upon the wide ramifications of education, of which we can never see the end. Education is a constant process which never finishes, the breadth of it, the quality, the colour, the arrangement of its subjects and the depth into which category I should venture to put its cost. Sufficient here to say that the school curriculum has been so much enlarged and extended and now embraces so many subjects that it gives the widest opportunity for the development of ability and capacity. Indeed, so far as our secondary education is concerned it is no exaggeration to say that the ladder from the day school to the university is well-nigh complete for those who will climb. This is all progress and reform of which we as a nation are justly proud. But with all our advance in education and the great steps forward that have been taken, allowing for all the progress and reform there is still ground for some criticism of our elementary system, and having regard to the increased cost of education to-day there is still room for the question: Are we better educated? Are we wiser than we were in the unreformed days? I know this is controversial ground. There may be many opinions on this subject, and there may be many answers to the question, but I believe that a decisive answer is given by the non-climbers of the education ladder. Those children who leave our schools at 14 years of age who do not mount many rungs of the ladder, in my humble opinion, they answer in the negative. These children constitute the larger proportion of those who pass through our schools, and while it may be said that some of them go for one, two or even three years to the secondary department, figures show that every year the number is decreasing of those who finish the full secondary course; which would seem to suggest that our secondary education is too academic in character, aiming too much at preparation for professional life while having too little regard for those who are not qualified to take up that work.

I should like to see less time given to what I may call the frills of education and more time devoted to vocational training, to have some system of closer co-operation between industry and the schools. I know that the difficulties are many, and I am well aware of the steps that have already been taken in this direction, but if education is to fulfil its main object, which is the preparation far life after school, these potential wage earning boys and girls must be brought into closer co-operation and contact with the industries whose future they represent. I represent an industrial constituency, perhaps one of the most depressed areas in Scotland, and I have for some time viewed with much apprehension the changed outlook on life of so many of our young people, Which is consequent upon the effects of prolonged unemployment. If the House will bear with me and pardon my being personal I should like to state a little incident which has given me food for much reflection.

Recently, while visiting a school, I spoke to a small boy of seven years of age. I asked him several questions which he answered brightly and sharply. Then I said, "What are you going to do when you grow up?" The child looked at me in blank astonishment. I said, "What are you going to work at when you are a man?" Still the child looked at me, and then I said: "Will you ever work at all?" and immediately and most emphatically the child answered "No." I was so much impressed by the incident that I made inquiries, and I discovered that the child had never known his father to work. One cannot blame the father, himself the unfortunate victim of industrial depression, or the innocent ignorance of the child, a creature of environment susceptible to the demoralising influence of the atmosphere of depression. But that little episode of the school-room should give to those engaged in the work of education some cause for consideration as to our educational system, which I suggest is too standardised and does not teach children sufficient to think for themselves. It is time that we thought less of how much to teach and a little more of how to educate not only scholars but men. Let us try to inculcate in the mind of these young people something of the joy and happiness that come from healthy and useful occupations and instil into their mind the love and desire for something to do. It would cost no further expenditure of money, it would be merely a case of fitting education to the needs of the child.

Now as to the depth of it, the tremendous cost and its possible economies. Economy in education is much like economy in everything else, it is very much easier in theory than in practice. It is largely at the jurisdiction of local authorities, and, unfortunately, they cannot always be applauded for economy in administration. Although the Estimates for this year show a reduction I cannot agree with the view sometimes expressed that because of the reduction education has suffered. If we classify expenditure on education under two heads, productive and unproductive, then I can agree that on the productive side, which I shall call teachers' salaries, there have been drastic cuts, and I hope that no further economies will be considered in that direction until every other source of economy has been explored.

Another item on what I may call the productive side, and where I think great economies could be effected, is the bursaries scheme. No one would grudge a grant to pupils of ability and capacity, but I suggest that a much higher standard of efficiency and attainment in examinations should be demanded before a bursary is granted, and while it is always necessary to take into account the income of the parent, I do not think it should altogether be a guide. The real determining factor in the granting of a bursary ought to be the child's own intrinsic capacity. On the unproductive side I will only mention one item, and that is the extravagance that has gone on in school buildings. It is interesting to note the advance and reform we have made along this line.

I do not wish to dwell in the retrospect to-night, but I have been to some little trouble in looking up former estimates, and I find in the year 1833 there was voted £20,000 for the erection of schools in Great Britain. To-day something like £20,000 and £30,000 up to £50,000 has been spent on one school building. Much of this is possibly necessary, and good school buildings have a good effect on the pupils. There are many roads into our hearts as well as by our ears and brains, many a sight of which we never thought at all sinks into our memories and helps to shape our character; and thus children who are educated in good surroundings will naturally show the fruits of their education by thoughtfulness and nobleness of mind in after life. But surely this desired effect could be obtained with the expenditure of a little less of the country's money. I would suggest that the expenditure of increasing millions on magnificent school buildings does not guarantee a well educated people. The test of our education comes when we have left school, and that is why to-day I put in a plea for the non-climbers in education. For the lad of parts we need have no thought; the facilities exist, and the urge of his natural abilities and intuition will compel him to take advantage of the facilities. The country needs the best that every citizen can give, and if by the teaching and training we give to the non-climbers we can fit them better to take their part in the reconstruction of national life, we shall be ever rolling a great white gathering snowball, larger and larger and higher and higher up the alps of human power and knowledge.

8.0 p.m.

Mr. PRICE

I should like first of all to congratulate the hon. Lady who has just addressed the House. She has undoubtedly given us a most interesting speech, showing that she knows the subject upon which she has been speaking, and I am sure that the House will be pleased to hear her take part in our future deliberations. I want to deal with the general problems which are before the House. The results of the activities of the Government, when analysed in cool consideration, prove that their efforts had been an entire failure so far as the problems of this country and the world are concerned. There is no need for me to go into the sphere of international problems, because the right hon. Member for Epping (Mr. Churchill) a supporter of the National Government and a Member of the late Conservative Government, has ridiculed the settlement at Lausanne. We on this side, therefore, can leave the question of international politics to members of the Conservative party. Let me deal with domestic affairs. Immediately the Government took office they commenced to alter the fiscal policy of this country and to put duties on the importation of all kinds of articles and foodstuffs, thus attacking the wages of the poorest people in the country. The large industries, the coal-mining 8.0 p.m. and steel industries, have been totally ignored from the point of view of reorganisation in any shape that is likely to benefit the men working in those industries. Unemployment figures have gone up by thousands since the present; Government took office. That is concrete proof that the policy of the Government has been definitely against the general interests of the working classes. All that the Government have talked about is economy. It is strange that all supporters of the Government this afternoon have been agreed about one thing, and that is that we have arrived at a state of civilisation in which the problem of productivity is solved, that with science and machinery and the labour and brains of men and women we can produce more than we need. In face of that admission the only attitude the Government can take up to deal with domestic and world problems, is to introduce further demands for public economy.

Is it not quite reasonable to suggest that the poverty from which the people are suffering at the moment is due to the fact that their spending capacity is so low, that their standard of life has been considerably reduced since the Government took office, because of reductions in wages and in unemployment benefits, and the application of the means test. Thousands and thousands have been added to the total of unemployed. The world is bursting with goods of every possible kind, and yet the only policy of the Government is to economise, to spend less, to lengthen hours and to reduce wages. We say that that policy will not deal with the situation. It is false economy. And economy in what? Every speech made from the Government side to-day has attacked the social services of the poorest people, public health and education. I have been a member of an education committee for 14 years, and I do not want any Member of the National party to tell me whether education is better to-day than it was when I was at school. We know it is better. We have done our best to make it better. We strongly object to the Government taking any further steps that will lower the standard of education of the working classes.

The Noble Lord the Member for Hastings (Lord E. Percy) spoke about education, and suggested that fees should be charged to the parents whose children attend elementary schools. He would have the country believe that these parents now send their children to school free, and that the rates and taxes that provide our public elementary schools all come from, the rich. As a matter of fact all taxation, whether local or national, comes from working men and women. It can come from only one source, and that is the men and women who are producing. We are not going to stand such humbug as the suggestion from the Noble Lord that the payment of fees by parents for children attending elementary schools would be a start in the way of payments by them for education. They are making such payments now. They are making payments not only to educate their own children, but to educate the children of hon. Members opposite, the children of rich people. It is not true, and we cannot tolerate such a statement, that simply because our public elementary schools are carried on with local rates and Government grants, the only people who make any contribution to those rates and grants are the rich of the country. That is quite false. The facts are that all money in national and local taxation, from the very start, comes from the use of the picks and tools of the men who work, and from working people generally. We cannot stand that bunkum of the Noble Lord, and we do not intend to do so.

Moreover, we suggest very seriously that as far as education is concerned, the Almighty has given to the poorest child in the humblest cottage brains equal to those of the children from the mansion and the palace. We stand for no further economy in education. Already economies have gone far enough. Children in my district have suffered even since the Government have been in office. The Education Committee of the West Riding of Yorkshire, one of the most progressive in the country until the Government began to circularise them to reduce expenditure, has become less progressive. This year many sad stories are coming to me of children whose parents have made tremendous sacrifices in taking them through the secondary schools, under the impression that their children would be allowed some remuneration or help to go on to the colleges and universities; but since the present Government took office those facilities have been withdrawn. Our county mining scholarships, our bursary examination, our county exhibitions, have been reduced, and thousands of boys and girls in the West Riding are going to be disappointed because they cannot go on to the universities and colleges.

There are other ways in which the Government could economise without touching the social services of the poorest people in the country. Nothing is said by Government supporters about economy when this House is dealing with the Estimates of the fighting Services. £104,000,000 was passed in glorification when the Service Estimates were passed, but when education and public health are under consideration there is a cry for reduction in expenditure. What have the Government done with regard to unemployment? Nothing. They have made no attempt to deal with the unemployment problem, except to tell the unemployed man that he must have a reduced allowance, and that at the end of a certain period he must face a means test, which means that relatives and friends must take on what is a national responsibility. We contend that there has been a splendid field of activity for the Government, with its tremendous majority, to begin to do something in this country and in international politics which would help to minimise some of the world's difficulties; but the Government have done nothing except to carry out the policy of the Conservative party in building up bulwarks intended to preserve the rights and privileges of the rich, and to secure that the poor are sent further back than they were when the Government took office.

There is nothing upon which I can offer the Government the slightest congratulation. There are many things that they have done, that I and the people I represent must condemn. There was sufficient poverty in the mining areas last year, but that poverty has been terrifically increased because of the activities of the Government. Miners and their families are to-day going through more dire distress than there has ever been in the last 50 years. Speeches of hon. Members opposite so far have not proved that the Government have improved the condition of the working-class people of the country. The only true analysis of any Government policy is to examine the comfort in the homes of the working classes. Unless that is improved the Government have failed. The wealth and the strength of the nation can only be estimated in the happiness and well being of working-class people. In our opinion there is only one cure for the world crisis and the national crisis, and that is to eliminate capitalism entirely, to bring under the control and management of the nation the industries and the land of the country, to produce for use and not for profit. Then I think we should have a condition of affairs where men and

women could look to the future with the expectations of a far better and brighter life.

Captain J. O. MacANDREW

In rising to address the House for the first time I ask for that indulgence which is usually given on these special occasions. The publicity that has been given to the very important subject of economy should be treated very seriously, because it appears to me that if every form of taxation is taken into consideration, including Death Duties, we are in reality balancing our Budget to a certain extent out of capital. Our ancestors showed thrift. They saved money to a great extent and handed it down for the benefit of this generation. But it does not appear to me that we are following their very good example. In-stead of handing on assets to the next generation we are in reality to a certain extent living on the capital that we have received. I do not believe that the people of the country would wish to continue such a policy if they realised that by so doing we might be impoverishing the coming generation.

The particular subject about which I wish to speak is the question of Government schemes of assistance for industry. It is a very difficult thing to introduce economies at any time, particularly in a slump. There is nothing particularly new about a slump. In fact, as I understand it, the normal position of trade is over-production. When it becomes advantageous for a man to pro-duce a particular commodity he soon draws competition in that trade and com-petition eventually reduces the price, which gives an advantage to another trade. Others join in to share this advantage. Trade leads to trade which might lead to a boom. In the past it has nearly always happened that certain influences have then crept in to alter the position and industries then find them-selves suffering from over-production. When they put their goods on to the market the price dropped considerably and in some cases they were unable to continue producing profitably at the reduced price. Consequently, they closed their doors, thus creating unemployment and dislocation of trade which, in turn, led to further dislocation and eventually we found ourselves in a slump. But as long as we managed to keep the financial position of the country sound it gave people confidence and there were always some ambitious people who came along and took the advantages of cheap labour, cheap commodities which they could use as raw materials and cheap money characteristic of most slumps, and started manufacturing something which people wanted at a price cheap enough to allow the people to buy.

In fact it might be that a new industry would result from a slump, so it might well be that slumps were not without their uses as well as their disadvantages. But invariably in the past influences crept in to alter the position—influences such as war. There are many extreme disadvantages resulting from war but one of the main disadvantages is that wars have to be run by Governments. Governments have to get munitions and material of war; they cannot afford to have any form of dislocation, and, consequently, are willing to pay whatever is demanded, with the result that people come to look to the Government for assistance and for improvement in their position. But in the past, after great wars, we invariably had the good fortune to find some new discovery or invention which elevated the industrial plane of the country and not only enabled us partially to pay the cost of the war but to improve industry in such a way that people looked more to industry than to the Government for their benefit. Unfortunately since the last war there has been no really big invention or discovery. Nothing has arisen to lift us out of the unfortunate position which we are in and people are still looking to the Government for assistance in various ways.

The Government have introduced certain schemes and various forms of assistance for people who have demanded it but, in view of what I understand to be the future policy or intention of the Government, namely, to get a larger measure of freer trade throughout the world, I think we ought to look into the question very seriously both of the schemes which are in existence and those which are in contemplation. We are in a position just now if the Government choose to do so, to offer to the other countries a reduced rate of duties for their imports, provided that they give the same benefit to our goods and it may be that if the Government pursue that policy, it would meet with a certain amount of success. But, as regards the alteration of the industrial field, in respect of a larger measure of world free trade, there are many important factors to be considered.

In the first place, although we have been a Free Trade country, in the near past, the existence of various world tariff barriers gave what may be described as an indirect form of protection to some industries of this country. I mean by that, there were strong influences to make exports and imports balance. As the rest of the world put up tariff barriers, that reduced our exports and, at the same time, our imports adjusted themselves accordingly in the downward direction leaving more of the home market to the home producer. In the reverse case if there was a reduction in world tariff barriers our exports would go up and at the same time our imports also would go up making the competition for the home market greater. I would not like to say what the position of the country would be as a result of the success of such a scheme as I have mentioned, if it is the Government's intention to pursue it, but it might alter the position considerably, and some of the schemes which we have just now for various industries might prove unnecessary as a result of the advantages of freer trade throughout the world or a big alteration of that kind. In other cases it might be discovered to be impossible, or at least to be only possible at great expense, to introduce schemes for preserving particular industries in this country. In fact, the money saved from other economies might easily be spent on schemes to keep some industries going, and at the same time might not be sufficient, and the schemes might fail in their original intention. I think if such a polcy were pursued however there would be a tremendous benefit to the country and might be a solution of many of our problems but, as a means of economising the whole question of Government schemes ought to come under review, both as to their general effect in the past and the possible conditions in the future.

Mr. STOURTON

If I may do so with humility I would like to congratulate the Chancellor of the Exchequer on the great conversion scheme upon which the Government have embarked and upon the pluck which the Government have shown in reducing the rate of interest from 5 per cent. to 3½ per cent. Whereas the great majority of holders of War Loan, will, I have no doubt, convert willingly, there is, I regret to say a small minority who maintain that they have been unfairly treated. To those people I would like to address a few words. To begin with I would say that they have been in a privileged position. Whereas the Government have been in a position to buy out the holders of 5 per cent. loan at par, as long as three years since, they have in point of fact delayed until the present time. Where else could any holder of securities obtain the same return on anything like the same security as in 3½ per cent. War Loan?

I have no doubt that the people who have complained will realise, when they examine the matter, that their position is extraordinarily favourable compared with that of Government stockholders in foreign countries. Take the Government stocks of the other victorious Powers. It will be found that at the value of their currencies to-day, those stocks are only worth from 20 to 25 per cent. of their original value. In the case of the Powers who suffered defeat the rentier class of such Powers have been completely wiped out. Their currencies were reduced to nil. The holders of 5 per cent. War Loan have no cause for complaint at the Government's action in converting that debt. There are many excellent reasons why it should have been converted and I venture to mention two. The first is that by placing credit on a 3½ per cent. basis you will enable industry to re-finance itself and to pay off some of its heavily burdensome debentures and commitments bearing 6 per cent., and some even 7 per cent. I believe that the country is ready for sacrifices, and I hope the Government will not fear to continue with drastic economies, which I am sure both the country and the overwhelming majority of Members of this House desire to see put forward.

We shall never restore confidence and bring industry back to prosperity until we see drastic curtailment of national expenditure, not only to achieve the balancing of the Budget, but a drastic reduction of taxation as well. I do not believe that the Chancellor's estimates for revenue for the current financial year will be realised. I think he has been too sanguine in his estimate of our Income Tax yield, also for Surtax; moreover, I do not see how he can get the £11,000,000 extra which he expects to get from Death Duties over last year's realisation, nor do I see how he will secure the £6,000,000 extra that he anticipates obtaining out of the Stamp Duties. Again, the outlook for the winter is grim, and we must anticipate this winter that the unemployment figures will approach the 4,000,000 mark. The cost to the Exchequer will therefore be enormous, and it behoves the Government to consider such economy measures as may be brought about with celerity and to carry them out unhesitatingly.

I regret the whole trend of post-War finance by successive Governments. There has been a reckless wooing of the electorate by mass bribery and the grossest display of opportunism in order to win votes. All parties have indulged in this reprehensible conduct, and I hope we have seen the last of it. I feel that we have, and that there are better things to look forward to. When the people know the truth, as they were told it at the last election, they are prepared to make sacrifices. I believe they object to being bribed, and I think the proof of that is that After the 1924–1929 Conservative Government had been in power for nearly five years, when they appealed to the electorate, they suffered the defeat at the polls which they deserved to meet, because they carried out, not a Conservative policy, but what I can only describe AS a pale pink Socialism.

The national wealth of this country is rapidly declining. I do not think there is any man who would attempt to lay down exactly what the national wealth is to-day, but I very much doubt if it exceeds £2,500,000,000, and if that hypothesis is good, I do not believe our Budget should exceed £600,000,000 a year. I believe that the framing of the Budget is carried out on entirely wrong lines. What is done at present is something like this: The Government say, "What do we want?" and then, having considered what they want to spend money on, and how much they need, they decide how they will get it. I maintain that that is all wrong. If a private individual worked his expenditure not on what he had but on what he wanted, he would soon end in the bankruptcy court, and that is precisely where the nation is heading for today. I believe we should work on entirely different lines. We should ask ourselves, not how much we want to spend, but how much is available for expenditure, and having decided that, we should decide next on how the best value could be obtained for the spending of that sum. Then the money should be spread out proportionately among the Departments according to their needs. That seems to me a great deal sounder than the present basis of estimating national expenditure.

8.30 p.m.

If I were to attempt to lay down a detailed statement of how the Government could economise, I might detain the House for hours, but, of course, I will not presume to do so. I 8.30 p.m. would just make one or two brief suggestions, and the first is with regard to roads. In the last 10 years or so, on road expenditure, we have squandered the gigantic sum of £500,000,000, and to what purpose 2 The roads are not needed in the opulence and magnificence that we see to-day, and yet they have been so created, regardless of cost. We have not only made them, but we have created a liability as well as an asset, because they have to be maintained, and these enormous trunk roads are exceedingly expensive to keep up. I think expenditure on roads should therefore be reduced to a minimum.

Then there is the controversial question of education. I believe that enormous economies could be made there, and I would respectfully ask the Government not to be put off making cuts in this direction by the threats or blandishments of that powerful organisation, the National Union of Teachers. Since I have been a Member of this House, I have noticed that that organisation appears to carry great weight with Members of this House. When the teachers received their 10 per cent. cut last autumn they showed great resentment. I can only reply to them that many Members of this House, and in fact people of all classes throughout the country, have had to make much greater sacrifices than a 10 per cent. reduction in income. They have had to make great sacrifices in losses of capital and income and in increased taxation, and I believe that drastic cuts could still be made in the educational services without destroying efficiency by any means.

A word about local authorities. I think the percentage grants should be abolished. The system is utterly vicious. To begin with, it is obvious that if you base expenditure on percentage grants, local authorities will engage in every form of wildcat schemes, because they know that a large portion of their expenditure will come from the Government. It has been my experience, such as it is, that there has been a great scaling down of the standard of life of many of the poorer paid employés of county councils and borough councils, but I have not noticed that same enthusiasm for scaling down among the highly paid officials in either the urban or rural districts. I could mention, had the desire to do so, certainly one county where the clerk of the county council had his salary raised during the last year or two to the handsome figure of £2,500 a year. I maintain that these are no times for increasing salaries, but rather for reducing them, and it is the same in the urban areas. Officials such as town clerks draw substantial salaries of £1,000 or £3,000 a year, and I have not come across any instance where these have been reduced. When considering the question of reducing local government expenditure, the highly paid officials both in rural and urban areas should be considered.

There are many other directions in which economies can be brought about, such as the abolition or amalgamation of Ministries and Government Departments, and I believe that now is the time that people will accept such economies in a spirit of sacrifice and contentment, because they realise that it is for the general benefit and ultimate prosperity of the country. Therefore I would urge the Government to proceed with drastic economies without further delay and to tackle the question boldly, as they have tackled the question of the National Debt. If the Government do this. if they will economise really effectively and reduce expenditure by £100,000.000, I believe that they will have the overwhelming support of practically every Member of the House and the backing of the whole country.

Mr. EDWARD WILLIAMS

I am sure that I am expressing the opinion of the House when I congratulate the hon. and gallant Member for South Ayrshire (Captain J. O. MacAndrew) on his maiden speech. We have heard much in the Debate about economy. The Members who occupy the Opposition Benches have their views on that subject, and they differ very materially from the views that have been expressed by Members on the other side. Although the Conversion Loan project had the backing of all Members of the House, we believe that there is still a substantial sum of money being paid in interest to the rentier class and that it should be greatly reduced. We should proceed on that line and on the line of reducing expenditure upon the defence services. This party will bitterly oppose to the utmost of its speaking and voting capacity any attack that may be made upon education, unemployment benefit, public assistance, or anything that will fall more harshly on the shoulders of the poor. I am amazed to find that we have in the House such a large number of young Conservatives—you do not expect anything else from the old—who do not give us anything that indicates that their ideology is something different from what we have heard from the older Members.

We expect the younger Members of the Conservative party to put up something that indicates that they have been thinking about the world and about the sociological factors that operate in the world. We expect them to put up something like a great plan to remove chaos and bring about economic order. But we do not hear anything from them that gives us any hope—and perhaps I ought to be pleased of this because it indicates that the Conservative party has no future. We hear nothing from them to show that they have really been thinking seriously of this problem, and their speeches manifest that they have got here by really tricking the electorate and that they have no business here at all.

Duchess of ATHOLL

On a point of Order. May I ask if it is in order for one hon. Member to accuse other hon. Members of tricking the electors?

Mr. DEPUTY-SPEAKER (Captain Bourne)

I do not think that the phrase is disorderly. I have heard similar phrases used in many Debates.

Mr. WILLIAMS

I have heard similar statements made from the Treasury Bench about Members of the Opposition. What I have just said is the only conclusion that I can draw from the speeches that we have heard from most of the younger Members of the Conservative party. There is, however, one young Member in the House who has issued a pamphlet, which I have read, and he is certainly among the most progressive Members of the Conservative party. I believe that he will participate in the Debate and enunciate what he has written in his pamphlet. He and a very few others are perhaps the only Conservatives who have really given some thought to this subject.

Reference was made by the last speaker to the War period. That was an experience upon which every Member of the House ought to reflect seriously, for it manifested clearly the enormous potentialities of the nation, productively and socially. Millions were engaged in service of a non-productive and purely destructive character, that is, in the Army, Navy and Air Force, millions were engaged in munition work and all kinds of industries specificially for the purpose of prosecuting the War, and they and the rest of the people were maintained by less than 50 per cent of the normal number engaged in industry in a working day of not more than nine hours on the average. The fact that it was possible for 50 per cent. of the working-class to maintain themselves and the other 50 per cent. who were engaged in the purely destructive work of war, and to produce the plethora of profiteering that obtained during the War period, ought of itself to be food for reflection for every Conservative Member. It revealed the enormous productive potentialities that we have to-day with the aid of the science and technique that is at our disposal. The fact that we have roughly 3,000,000 unemployed and that they can be maintained either by unemployment benefit or by public assistance, reveals the enormous potentialities of labour with the aid of science and technique. One would think hon. Members would endeavour to address themselves to the problem of how to use this enormous reservoir of labour, of skill and of craftsmanship which is now running to waste in the country.

I shall leave the international aspect alone. The right hon. Member for Epping (Mr. Churchill) has delivered a speech which is about the greatest indictment I have heard in this House against private enterprise and the conduct of this and other Governments. Instead of facing up to planning, in other words, endeavouring to assess first the enormous productive capacity of each of the staple industries of the country and relating that to the consumptive demand in the country, the Government have been adopting a kind of fleeting policy of living from hand to mouth, and reducing that demand which it is essential to have in order to consume the enormous quantity of goods produced and to occupy the potential capacity of the people in any industry. In that way the Government are digging the grave of this economic system—I see no way of avoiding a crash—and that because it is almost impossible to coordinate all the conflicting interests in the system.

We have had speeches from the other side which have clearly revealed the diversity of interests as between finance capital and industrial capital. We know that in the realm of finance the Conversion Loan is postulated as being essentially necessary in order that people should put less money into gilt-edged securities and more into industrials. It is essentially necessary to this Government that more capital should flow into industry, because lately the people who believe in the present industrial system have nevertheless had so little confidence in it that when they have had spare cash it has gone into gilt-edged securities rather than into industrials. The Conversion Loan will be successful if it can achieve the redistribution of capital from gilt-edged securities into industrials, and if it does not do that, and in that way give more employment, then it will not be an economic success. It will have reduced the amount paid in interest by £30,000,000; but the tangible achievement looked for by great industrialists and financiers is that less money should go into gilt-edged and more into industrials.

The Government have just one achievement, and from that much has been taken away to-day. Until this very morning we had thought that Lausanne was an abounding success, but after the speech of the right hon. Member for Epping we cannot look upon it as something about which we should be distinctly elated. Hon. Members on this side of the House will not endeavour to depreciate anything that may be achieved upon the inter-national field, though for the last 10[...] 12 years some of us have been [...] very badly for suggesting [...] Versailles Treaty, the Young Plan, and other international agreements would really avail us nothing in the way of getting restoration of prosperity in this country. We have no desire to remind the House that what we predicted has proved to be true, we do not desire to waste time by talking of what was said in 1918, 1922, 1924 and in still later elections, but, except for Lausanne, this Government cannot claim one single achievement. I have here "Kemp's Gazette," the paper which, as business men will know, reveals the number of judgments given in county courts every month. I could deal with what is happening in Glamorganshire and Monmouthshire. In "Kemp's Gazette" we have evidence, drawn from a dispassionate source, of the enormous number of bankruptcies taking place, of the large number of small, and even large, businesses which are going out of commission.

When we have to consider the position of mining, iron and steel, cotton and shipbuilding, the industries that really matter, in measuring the extent of the prosperity of the country, it is admitted on all hands by the spokesmen of those industries, whether employers or representatives of labour, that each of them is distinctly worse than it was nine months ago. The number of the unemployed in the mining industry has increased by 50,000. In the whole of my constituency not a single colliery worked for more than two days last week, and in some of the valleys the collieries did not work at all. That is not an exaggerated position, but is typical of all the mining valleys of South Wales, and, according to the reports we get through the Miners' Federation, it is typical of Durham, Northumberland, Cumberland and Scotland, the exporting areas. The position is becoming more grave in the best coalfield in this country, Yorkshire. If the reports we get are correct, it is practically impossible for Lancashire to live. We must remember that the mining industry caters for big blocks of humanity, in places where there is no alternative employment. In each of the areas where collieries are faced with liquidation and heavy depression there are whole communities who find it practically impossible to secure another means of livelihood.

We want to know when the Government are going to tackle this serious situation. It is no use telling us in answer to questions that 144 foreign factories have started in this country, and that the total number of persons who have been engaged in those 144 factories since tariffs have been applied is 5,000 people. There are more than that number in one coalfield every week unemployed. Surely the Government should not be congratulated for the way in which the means test is being applied in depressed areas, upon cutting down the miserable benefits of the unemployed, or for economising at the expense of the poorest of the poor, while landlords are drawing 7½d. upon every ton of coal produced in South Wales. Hon. Members may have come here in order to save the Gold Standard, or to protect the savings of the poor in the Post Office Savings Bank, but we have had from the Chancellor of the Exchequer to-day an indication that £147,000,000 of economies are likely to take place from those sources, which means from pensions. Again, the poor have to pay the price for returning this Government. We have had a Budget which put a tax on tea, increased the measure of poverty and decreased the purchasing-power of the poorest of the people. Surely a Government that is being driven by hon. Members who have more regard for their particular vested interests than they have for the state of economy of the nation should deserve the utmost condemnation from every dispassionate-minded man and woman.

Mr. PIKE

Does the hon. Gentleman pay regard to the fact that the whole of the economies effected by the Government during its period of office had the complete sanction of the electorate at the last General Election?

Mr. WILLIAMS

The hon. Member must know that the means test did not commence to apply until the Government was elected.

Mr. PIKE

I said that it had the sanction of the electorate.

9.0 p.m.

Mr. WILLIAMS

It seems rather singular that a Government which came into existence before the means test commenced to apply, should be considered as having had sanction. The electorate certainly had not the chance to sanction those things. Most hon. Members who are now supporting the National Government know quite well that they were elected upon a dodge, and the elec- torate knows it. The electorate believed that you would save the nation and give them employment, and that they would have better times, instead of which they now realise that they are expected to pay an additional price, while 9.0 p.m. the very rich in this country are doing exceedingly well from the National Government. It is very obvious that there is no evidence of poverty in this House, or in London. We see enormous waste of wealth and evidence of luxury on every hand.

We condemn the Government because they have not actually endeavoured to face up to the problem of planning the economy of this nation. They have not yet considered how to tackle the staple industries in order that those industries might yield the maximum product, and at the same time yield the maximum amount of employment for those who are normally engaged in it. Until you can give employment to those who are unemployed, and until you can so redistribute the commodities that are produced as to enable those who are down at the bottom to have more, this Government stands condemned, and the country, when it has the opportunity, will indicate that the Government stands condemned and that all its promises were made to fool the electorate.

From the statements that have been made by hon. Members from the other side, we realise that they are reaching a greater stage of desperation. They want to economise by attacking secondary education. I have at my disposal the report of a. secondary school giving the charges that have to be made to parents in. order that their children may continue in a secondary school in Maesteg, where parents are being obliged to withdraw their children from school because they cannot maintain those charges. Every hon. Member who has sat upon an education authority must know that the authorities are, on the whole, very careful before they incur expenditure. Sixty per cent. of the block grant for elementary education, and for secondary purposes also, goes to the local authorities, but these are nevertheless very careful before they incur the other portion of the expenditure, for the obvious reason that they will have to bear the full brunt of the difference of expenditure between the block grant and what they incur for the construction of buildings and the maintenance of teachers and staff.

I heartily concur with the suggestion that was made by an hon. Member in her maiden speech to-day, namely, that there might be some room to discover whether secondary education is not becoming too academic and not sufficiently vocational in character. I heartily concur with her in that. Human beings have to be useful, either with their hands or with their heads. They have to be accustomed to books, which is purely a matter of academics, or to crafts, which is purely vocational or band-work. There are children in our secondary schools who are given a purely academic curriculum for which they are not fitted, They may not have a bent in that direction, and they might make a much better mark in the world, and be very much better in the schools, if they had hand-work to do and more vocational training in our secondary schools. There is really no room for economy in our secondary schools.

The Noble Lord the Member for Hastings (Lord E. Percy) has had a great deal of experience in the educational world, and he will know that we have endeavoured to do our best in Glamorganshire, but he will know that there are secondary schools that are really not fit for educational purposes. I might refer to the one in the town in which I reside. He will know the Bridgend County Schools, and he will know that the children there have for years been housed in old Army huts, where they freeze in winter and roast in summer. In these huts, covered with corrugated sheeting, children have to be taught in accordance with the secondary curriculum. When that kind of thing exists, not only in Glamorganshire but in Monmouthshire and other parts of the country of which the Noble Lord may have more knowledge than I, to talk about economising at-the expense of secondary education, or at the expense of the child in any way, is really an absurdity. We should tackle the question of national planning, and we should realise that, so long as wages are low, so long as there are millions of people with the ability, the capacity and the desire to work left to be demoralised at street corners and to run to waste physically, morally and spiritually, this Government as such will stand condemned.

Lieut.-Colonel Sir VIVIAN HENDERSON

I do not propose to follow the hon. Member for Ogmore (Mr. E. Williams) at any length into the discussion which he has given us on the existing order society. His Socialist tirade would perhaps have impressed me a little more if I had not remembered that, during the two periods when his party held office—not power, it is true, but office—they never brought forward a single constructive proposal for dealing with the unemployment problem. Until they do so, it is really only waste of time for hon. Members opposite to tell us that we stand condemned because we have not done anything to help to solve the unemployment problem. I represent what is to a large extent a farming constituency, and many farmers tell me that this Government, in the short period of months for which they have been in office, have done more to help the farming community back on to an economic basis than all the Governments of the last 50 years. I am not, therefore, greatly impressed by the tirade of the hon. Member opposite.

I would, however, like to correct one definite misstatement that he made. He said that the electorate were not aware at the last election that the Government proposed to enforce the means test. That is not correct. The Government announced their major proposals for economy when the National Government was formed before the election took place, and I, like many other Members, was bombarded with questions on the subject of the means test and the Government's position in the matter. Therefore, it is quite wrong for the hon. Member to say that the electorate were not aware of the Government's proposals. They were well aware of them, and yet the electorate were not anxious to vote for the hon. Member's party.

The Chancellor of the Exchequer gave us a very interesting analysis of the national expenditure, and showed the House how very difficult it is to economise. It is not the first time that an analysis of that kind has been made. I recollect that the right hon. Gentleman the Member for Epping made a somewhat similar analysis, when he was Chancellor of the Exchequer, about the year 1926 or 1927. The actual field for practical economies is very much smaller than many people realise, particularly critics outside this House who never take the trouble really to study the figures for themselves. It seems to me that there are two ways of analysing these figures. We might, first of all, analyse them by saying that possible economies can be divided into five heads. There are economies to be made by conversion, such a s the Government have so courageously undertaken. There are economies to be made on unemployment—I do not mean in rates of benefit, but in the expenditure on unemployment, by means which can be taken to improve employment in this country. We on this side of the House believe that the Government are following the right policy in that respect by means of tariffs and safeguarding, and that, as soon as world trade improves, we shall see the full effect of that policy. There are also economies to be made in the Defence Services, but, as far as this country is concerned, I do not see how we are going to make any further material economies in that direction until we can induce other nations to follow the very excellent example which we have given.

Apart from those three aspects, there are two other means by which we can effect economies. There is the possibility of effecting economies which involve matters of policy, and, lastly, there is the possibility of economies which are purely administrative. The May Committee covered practically the whole field of what I would call economies which involve policy, and to a considerable extent the Government have carried out the May Committee's recommendations, but not entirely. In one respect I hope the Government will tell the House what they propose to do, at any rate not later than when we reassemble in the autumn. I refer to the question of housing subsidies. The House will recollect, or at any rate those Members who were in the 1924 Parliament will recollect, that the present Chancellor of the Exchequer, when Minister of Health, made an Order as far back as 1928 reducing the housing subsidy on houses built under the Act of 1924; but that Order was never carried into effect, because of the result of the 1929 election; it was reversed by his successor in office. Last year, the May Committee again recommended a reduc- tion in the subsidy on houses built under the Act of 1924, but a greater reduction than was recommended by the present Chancellor of the Exchequer three years before, but which was never carried out.

Now we see a huge conversion scheme brought into operation by the Government, which, if it is successful, as I believe it will be, will have an immediate effect on money rates and rates of interest on loans borrowed by local authorities. That makes the question of the revision of housing subsidies still more urgent, and I hope the Government will let the House know, without too great a delay, what they propose to do in this matter. It applies, of course, not only to the Act of 1924, but to future Government commitments under the Act of 1930. I cannot help thinking also, that the Government would be well advised to give some consideration to the possibility of encouraging or permitting the sale of many of the existing subsidised houses. There are a number of people living in subsidised houses who can well afford to buy their own houses or to live in unsubsidised houses. I believe, if the Government considered this question, and also considered the possibility of asking the assistance of the big building societies in solving the problem, they might possibly be able to do a good deal to relieve the future burden on the Exchequer. It is quite wrong that people should be allowed to live in subsidised houses when they can quite well afford to buy their own houses, just as it is wrong that you should bring up the working classes to assume that they are entitled to subsidised houses irrespective of their wages, or allow people to live in houses at lower rents than their economic value, and that is the case with all subsidised houses. It is not only wrong from the point of view of the State but it is grossly unfair to many people no better off than they are who are living alongside them.

The Chancellor of the Exchequer has informed us that he has hopes of the outcome of this committee representing local authorities which he has called together. I should like to ask him to consider whether it is not possible to ask them to review the whole question of standardisation of articles purchased by local authorities and some measure of co-ordination in purchases by local authorities. Before the War there was very little co-ordination in purchases by Government Departments. After the War, as the result of the Mond-Weir Committee, a number of coordinating committees were set up, some of which dealt with the question of standardisation and some with the question of co-ordination of purchases. We have now, by means of examination and recommendation, brought those committees to a pitch of efficiency by means of which we have saved a great deal of money to Government Departments and, if that scheme of coordinating Government purchases has succeeded, I see no reason why it should not be extended to municipal purchases and the standardisation of articles used by many local authorities.

I said there was a last class of savings that we should consider, and that was administrative savings which do not touch questions of policy. That type of saving is relatively small but it is none the less very important, and the Public Accounts Committee and the Estimates Committee do a. great deal of valuable work in that field. Some people are under the curious impression that those two committees are really of very little value and that their reports merely go into thin air and are never heard of again. That it quite untrue. The reports must be replied to by the Treasury. The Treasury reports to the committees as to what action is taken on each of their recommendations, and it is very seldom that a recommendation made by either is not acted upon.

The strength of the Public Accounts Committee lies in the fact that they can, if they wish to do so, refuse to pass the accounts of any Department that are brought in front of them. They have formally to sanction every single account that is submitted to them, and it would be a very serious thing for any Government Department if they were faced with the position that the Public Accounts Committee refused to pass their accounts. It is from that fact that the committee derives such tremendous strength and power and is able to ensure that its recommendations are treated with respect. I believe it would be perfectly possible, if the House or the Government desired it, to get the Estimates Committee to pass an estimate from the administrative point of view in exactly the same way as the accounts are passed by the Public Accounts Committee. It would require certain adjustments with regard to the time when the committee met and the date when they were allowed to receive the Estimates, but it would be a perfectly feasible proposition. I do not suggest that large sums of money would be saved, but it would possibly in some ways have a more powerful effect in encouraging administrative economies amongst Government Departments than the present scheme, by which the Estimates Committee can take any Department they like and no Department knows whether it will be taken or not.

On the Second Reading of the Finance Bill, I made some reference to the very small amount of money which the House controls in detail. Taking the Estimates for 1930–31, and taking civil expenditure only, I pointed out that out of the total of £335,763,000, only some £51,994,000 was voted in detail by the House. The rest of that sum is composed either of block grants under the Local Government Acts, Unemployment Insurance contributions, Pensions, Beet Sugar Subsidy and two other items which I have grouped together, block grants, of which few or no details are given, which amount to no less than £74,000,000, and grants-in-aid, of which again no details are practically ever given, which amount to some £20,750,000. If we are going to save money from an administrative point of view, it is in the direction of reducing the number of small grants-in-aid and small block grants which we vote year in and year out without ever really being aware of how the money is being spent.

The Public Accounts Committee in their report the other day drew attention to the statutory powers of the Ministry of Labour and said they find that large sums are included in the Vote for the Ministry for training and resettlement of unemployed men and women on no clearly defined terms. If any hon. Member likes to examine the Estimates of the Ministry of Labour he will discover that there are no less than nine sub-heads under which varying amounts of money, from £4,000 to £500,000, are voted for administrative expenses of unemployment schemes or training of unemployed men and women, without details of any kind. The Board of Education present a memorandum to this House every year which does explain in considerable detail how their money is spent but we do not get any such memorandum from the Board of Agriculture, which spends money on grants in a somewhat similar way to the Board of Education. We do not get a memorandum from the Home Office, although they ask for some £10,000,000 or £11,000,000, with about three lines of explanation that the money is used for grants towards police expenditure. As long as the House is satisfied to vote money in that way without explanation, we cannot expect large administrative economies under these heads. If a Government Department is not asked to explain in detail how it is spending money, it is not likely to take the trouble to reduce its expenditure. If, on the other hand, a Department is continually worried and asked to explain this and that item, it will probably take a good deal more trouble to prepare Estimates, with perhaps greater economy.

When we go from the system of block grants to the group of other grants known as grants-in-aid, we get quite a different form of extravagance, if I may use the word, as opposed to economy. A number of different grants are made to a number of different bodies, or funds, or committees, which in many cases are voted for almost similar purposes. Once you set up a committee or fund, automatically that committee or fund establishes for itself a vested interest. The chairman of the committee, the secretary, the members of the staff immediately assume that they are indispensable to the welfare of the State. It is essential, if we are really to save money, that we should be very careful not to allow committees to be set up if there is 'already some existing fund or committee which can administer the grant that the House wishes to make. The Estimates Committee, in their first report this year, drew attention to that particular subject, and pointed out that you have now got an Empire Marketing Fund, a Colonial Development Fund, and a Development Fund, and the Ministry of Agriculture and the Colonial Office, all making grants for similar purposes, and in every case overlapping each other.

In conclusion, may I say that we have also got to get back to the old practice by which this House cannot be committed to future expenditure without its specific sanction? In the second report of the Estimates Committee, presented to this House a week or so ago, they dealt almost entirely with this question and the question of the Road Fund and borrowing by local authorities. I am extremely glad that the Chancellor of the Exchequer, in his speech to-day, made special reference to both these subjects, because I am convinced that, until we can once more establish in this House central control over expenditure, we are never going to establish any real economies.

9.30 p.m.

Miss LLOYD GEORGE

The hon. and gallant Member for Chelmsford (Sir V. Henderson) said the community of farmers he represents were of opinion that this Government had done more for agriculture than any other Government for 50 years. I have always understood it was said that no Government had done any-thing, or, at any rate, practically nothing, for agriculture, so that I am not quite sure that he is putting the achievements of this Government very high. I, too, represent a community of farmers, and I may say that never in the memory, at any rate, of present inhabitants of the island has unemployment or depression been as great as it is to-day. Many Members in different parts of the House were relieved to hear from the Chancellor of the Exchequer this afternoon that he is not going to be hurried into economy. It was not very difficult to gather the opinion of hon. Members on the benches opposite as to the form that economies should take. I noticed the favour that greeted the suggestions that grants for local authorities should be reduced and that it was difficult, if not impossible, to reduce armaments at the present time. Two words, "economy" and "extravagance," seem to me to have been continually used in this Debate to-day, as though they were the only two alternatives before us. I believe there is another alternative. We hear a good deal about the disastrous effect of Government expenditure, but we have heard very little about the inevitable results from wholesale and indiscriminate economy.

The Lord President of the Council, in answer to a question put to him some weeks ago, said it was the duty of private citizens and employers to maintain, as far as possible, the employment that they gave to labour, and that wise and courageous expenditure by private citizens, where their incomes could bear it, should be regarded by them as an obliga- tion which they must not avoid. If it is important for citizens to spend wisely and courageously, how much more important is it for the State, one of the largest employers in the country. I know quite well that hon. Members opposite have always doubted the wisdom of public works as a means of providing employment, but whether they agree with that policy or not, the fact is that we have embarked on that policy and we must face the consequences of changing it. The hon. and learned Member for East Bristol (Sir S. Cripps) referred to some of the consequences when he opened the Debase this afternoon. It is obvious that each time you cut down schemes, whether on roads, housing, telephones or drainage or other form of public works, you are throwing people out of work, and that means that at each stage the spending power of those people is reduced. They are thrown from a wage on to unemployment insurance, and then a good many of them eventually on to Poor Law relief.

Since Protection has been introduced, we have made ourselves almost entirely dependent on the home market for any increase in trade, and by reducing purchasing power you are contracting the home market. The Economy Act of last September has already reduced the purchasing power of great sections of the community, policemen, teachers, the unemployed and so on. You may say that prices have gone down since last Autumn. As a matter of fact, they rose after last September, but it is true also to say that now they are only a very little lower than what they were last September. Still, it is true to say that a great community of people have had their purchasing power reduced. Authorities of all kinds inside this House and outside refuse to make any prediction as to when employment may return, or as to when we may expect to have a revival in world trade. Our complaint against the Government is that they are making no provision for what I should call the transitional period. Like the foolish virgins, they are making no provision to carry us through the night. The Government have no policy on trimming, although they have one or two trimmers.

I remember quite well that in 1920, when the Liberal party brought out its scheme for national development by means of a public loan, one of the many objections raised by hon. Gentlemen opposite was that we should be diverting money from industry into other channels. At that time the country was doing comparatively well. Since then investment has slumped heavily. The confidence which the Tariff was to inspire in us has not yet induced people to put their money into industry, and experiences which investors have had in the past year have made them scared of putting their money into industrial concerns either here or abroad. Is there any wonder when they have seen the most reputable and unsullied concerns either crashing or failing to pay a return? As a result, we have millions of money lying idle, and about as serviceable as far as I can see, as the gold of the "Egypt" before the enterprising divers started their operations. I hope that the Government may be induced to do a similar operation, though they might come across forces as formidable as the divers did.

It seems true to say that all authorities, great and small are agreed with the right hon. Gentleman the Member for Hillhead (Sir R. Horne), that it is vital to get more money into circulation. Differences of opinion arise when we come to discuss ways and means. The method which the right hon. Gentleman favoured has been tried in America with not very successful results, and we are told that it failed there because no industry would take advantage of the credits. No industry wished to embark upon new enterprises in present conditions, and it would indeed seem useless to expand your business unless you had a reasonable prospect of your orders expanding as well. We are a little bewildered as to the method the right hon. Gentleman would have applied over here. I am not quite sure whether he would dispense it like largesse. If he did, some of it might fall on good ground and might produce one hundred-fold, but a great part might fall upon stony ground, and, I think, that some of it might be caught up by national manipulators before it came into contact with the ground. But there is no certainty that it would go into productive industry. Let me say here, in case the right hon. Gentleman the Member for Epping (Mr. Churchill) may think that all this opinion which I am quoting now is also the crazy opinion of a disordered mind. I should like to quote what Sir Arthur Salter, the man whose counsel has recently been sought by the Government, wrote in the "Times" on 30th June when dealing with this problem. He said: First, I suggest, let us, if possible, get conversion out of the way"— That the Government are doing— and then boldly reverse the policy of discouraging the most useful forms of public expenditure—for example, on the normal requirements of local authorities financed by loans. I hope that the Government will also take his opinion and his advice about this matter. If you put the money into national development it will be bound sooner or later to find employment, because you cannot make bricks without straw, and you cannot build houses without bricks. If you put money into housing, telephones, roads, land settlement, and land reclamation you would be employing men at a wage who previously had been receiving Unemployment Insurance. They, in turn, would buy more from other industries, and those industries, in turn, would ask for more credit. I imagine that there would be little difficulty in securing credit if any concern could show orders. That seems to me to be what was once called in this House the "virtuous circle," and the other is definitely the vicious one.

Another complaint hon. Members opposite have invariably made is that this particular form of expenditure is a very expensive way of providing employment. The right hon. Gentleman the Member for Epping this afternoon spoke about the healing balm of low prices. In 1921 we were told that prices were so high that housing, land settlement, and so forth could only be carried out at exorbitant prices. Now that prices are down, why not turn our misfortunes and adversities to good purpose? Why not take the opportunity when prices are down of building houses and providing equipment, and so on? I know very well that hon. Members opposite are intolerant—although they have been very tolerant to-night—of even a mention of public works, but I feel, however, that there is not one of them who would not admit that the test is their usefulness and their influence from a national point of view. I take, first of all, housing. I think that if we realise that there are something like 220,000 building operatives out of work, that the need for housing is great and the number of insanitary houses is such that no civilised country should tolerate it, that is a vital public service which we ought not, even in present circumstances, to cut down. I have often wondered whether work will be given to a large number of these unemployed building operatives in building those factoreis which the hon. Member for Devon-port (Mr. Hore-Belisha) told us of, some of which I strongly suspect have turned out to be factories in Spain.

Then there is the question of agriculture. I do not want to detain the House too long, therefore I will only say a few words on that subject. If we want to see the need for true economy in the national interest we can see it in the deserted village, in the waterlogged land and in the derelict tracts of land which are fast becoming man-made deserts. I believe that is mostly land which if it were reclaimed and drained could provide a fair proportion of that food which we now buy from abroad. Would not that have an effect upon the balance of trade I Here we are dealing with the largest single item in our foreign bill, food. Surely, if we could reduce that item in our foreign bill we could do something really effective towards adjusting the balance of our trade. But we are told that we cannot afford money for this purpose. Members of all parties are agreed that something should be done to settle people on the land, but it should be something which is to be done to-morrow—always to-morrow. Hon. Members opposite are not prepared to spend money in settling people upon the land. I do not believe that you can do it unless you do spend money, and it is far hotter and more honest to say so. You cannot get something for nothing. [Interruption.] I do not think I have ever said that. Even under ideal conditions you had to pay 4d. to get 9d.

Other countries are putting in hand schemes of this kind. In Italy, the Government has spent and is spending millions of money upon these schemes, and they have a far larger proportion of their people on the land than we have in this country. [An HON. MEMBER: "Protection."] I should be very interested to see what the result of Protection would be in this country in settling people on the land. I decline to believe that a 10 per cent. tariff is going to be a great inducement to thousands of people to settle on the land. We have 93 per cent. of our population in the towns and only about 7 per cent. in the countryside. If I were a Socialist I would support wholeheartedly the policy of the present Government in this respect, because as a Liberal I can see nothing which will hasten more quickly the days of the capitalist collapse than this neglect of the agricultural problem and the welfare of our population.

We are told that we cannot afford agricultural research. We have had to cut that down. We cannot afford the Land Utilisation Act. The May Committee, reporting on that Act, say that the nation cannot afford an investment which only brings in 2 or 2½per cent. I believe that there are many hon. Members in this House who would be very glad to know that they would be able to receive 2 or 2½per cent. on the money which they have invested. Certainly the money in the banks does not yield that. At any rate, we are told that we cannot afford to put that Act in operation. We cannot afford the operative provisions of the Marketing Act, which is the only way in the opinion of many of us to increase the money which the farmer is to receive without raising the cost to the consumer. But we cannot afford that. All I can say is: "Oh, economy! What crimes are committed in thy name"

Whatever happens in the future, whether we have to face greater adversities or whether we are rising towards prosperity, I believe that a policy of the kind that I have outlined would be of enormous advantage. If you have a man who is producing steel rails or girders and he has no market for them, he is thrown out of work, but if a man is living on the land and does not get a remunerative price for his produce at least he can feed himself and his family, and that is a tremendous thing. I know that hon. Members in all parts of the House have no desire to cub down the social services or the services which are essential to the lives of the community. I do not believe that there is a conflict of interests on that point. We believe that great economies can be effected without touching these vital services. For one thing, if the Hoover proposals were adopted and it were possible to cut down our armaments by one-third we could save something like £35,000,000, but I do not believe that those proposals are likely to be accepted if we, who have a great moral concern in this particular matter of disarmament, haggle over the details of the scheme and neglect the large principle which lies behind it.

There is only one further subject—I apologise for keeping the House so long—and that is that we think that economies can be made in many of the public services which, admittedly, are over-manned and extravagant. Some of them have actually increased their expenditure since last year. There is also the question of the provision for the Sinking Fund. I believe it is true to say that the great Chancellors of the Exchequer of the past, including Mr. Gladstone and Mr. Goschen, never made provision for the Sinking Fund during a time of depression. Therefore, I do not think the right hon. Gentleman need be afraid of following their example in that respect, because they were the models of frugal finance and the apostles of cheese-paring. We have been constantly told by the party opposite that this country is better off at the moment than any other country in the world and that its credit is sounder than that of any other country. In times past we have used that credit to develop the resources of foreign lands, and that was considered to be sound business. Is it not sound business to use the credit of the country to develop the national resources for the benefit of all its citizens? It is vital and essential that we should do so. I implore the Chancellor of the Exchequer not to be driven to a policy of sterile economy, not to abandon a policy of national development which, whether we are advancing towards prosperity or whether we have still to face greater adversities, will be of infinite permanent service to the nation.

Sir REGINALD BANKS

It was very reassuring to hear from the Chancellor of the Exchequer this afternoon that the opinion, so long prevalent in this country, that the Departments cost us more than they need and employ more people than they need is not based upon solid foundations. I am sure the House will agree that, whatever qualities or defects the Chancellor of the Exchequer has, his is not a character prone to profusion and prodigality. We may say of him as was said of Mrs. Gilpin that, though on pleasure bent, he has a frugal mind. Nevertheless, that idea prevails and it will be a good thing if it were substantiated or dismissed for good on a thorough and competent examination of the facts. One of the most unpleasant things in the world is to suggest that the honest, competent and industrial members of our Civil Service should be diminished, and of course, the Circumlocution Office which Dickens has described in "Little Dorrit" is a thing of the past. They were always telling the people of this country how not to do it, but the officials of to-day are generally telling the Government how to do it. But still there is that feeling abroad, and, as I say, it would be as well to settle the matter one way or the other. There may still be members of the old-time Tite Barnacle family clinging to one rock or occasionally transferring to another, and I would remind hon. Members that in that immemorial volume Dickens describes a distinguished member of the Tite Barnacle family who died defending his post with his drawn salary in his hand.

10.0 p.m.

One of the large items in our departmental expenditure appears to be in connection with the Stationery Department. We have read of Members of this House who have been notorious for one thing and another. They have been notorious for being at the opening of the House of Commons much earlier than anybody else. Some of them have their private dug-outs in one part and another of these benches. I have one record. I have been a Member of this House for 10 years and I have never put down a single question on the Order Paper. I must have saved the country hundreds of pounds, and I think it should be taken into consideration in regard to my Income Tax. There were 78 questions on the Order Paper for to-day, and I am told that they cost from 30s. to £2 each, which is enough to keep 25 working-class family for a week. I really think, making all allowances for the necessity of getting information from the Government, that when it comes to the kind of self advertising silly questions, such as "What is the percentage of schoolmasters in the North of Scotland who wear ready-made ties," and that sort of absurdity, which are put down because the hon. Member has not the ear of the House when he speaks and wants to see his name in the paper as "Mr. X asked the Chancellor of the Exchequer a question," it is time it was stopped. The public has discovered that this is a fraud and a scandal, and I suggest that a wholesome practical economy would be that none of us should ask questions unless we really want an answer; and then it is better to have five minutes confidential talk with the Secretary of State.

To all those hon. Members who hare survived the heat and the drudge of this afternoon I have a confession to make. When T was jotting down a few impromptu observations on the Debate I made a note about the speech of the hon. and learned Member for East Bristol (Sir S. Cripps) who opened the Debate. I was prepared to say that the hon. and learned Member does not realise that he is not briefed by the nation to prosecute us but that he stands in the dock him- self. When I jotted that down on my notes as the hon. and learned Member was opening the Debate I expected a vigorous and full-blooded speech for the prosecution, but what I heard was a speech which recalled to my mind the inexperienced country solicitor prosecuting a perfectly respectable person upon insufficient evidence for riding a bicycle on the footpath; and I realised that I should have to alter the beginning of my speech. But still the rest of it was all right and, as the newspapers would say of a person in the dock, the hon. and learned Member was acutely conscious of his position. He and his friends have two or three previous convictions recorded against them, and the difference between a court of law and this House is that you are not allowed to mention these previous convictions in a court of law but in this House we know all about them.

Tried fairly by a, jury of the nation—and we have not been able to discover a better tribunal—they have been convicted of three offences. I take the most trivial first. The most trivial offence is that of incompetence. May I ask the House to remember the profuse promises of 1929. I do not mean to say that all parties have not been guilty from time to time of a little optimism but, after all, our efforts to reassure the nation as to what we were going to do were positively amateurish in comparison with the efforts of the Labour party; they had us beaten to a frazzle in 1929, and they did not redeem one of their promises. And after two and a-half years in office the nation was in danger of imminent financial collapse. Now the hon. and learned Member says: "What have you been doing about it? You have been behaving like a lot of lunatics trying to bale out the bath with the aid of a spoon." [Interruption.] When it comes to considerations of sanity what dad they do? They turned on both taps, ran out of the bathroom and left them running. And then they said to the nation "This is the right policy. Let them go on running and in the meanwhile we will build 16 or 20 new expensive nationalised bathrooms." There may be doubts about the sanity of some people, but there can be no doubt about the sanity of persons who behave like that; and you do not need two magistrates to certify them.

Mr. LANSBURY

Would the hon. and learned Gentleman allow me to say that the party opposite has taken over four of the chief lunatics?

Sir R. BANKS

What?

Mr. LANSBURY

C—h—e—i—f. [Laughter.] I am sorry. I believe I spelt it wrongly, but that does not matter. The chief lunatics, you have taken them over, and one of them had a great reception yesterday.

Sir R. BANKS

The right hon. Gentleman has verified a statement made to me long ago by a distinguished medical man. That medical man said that there are some forms of lunacy which are curable and others which are absolutely incurable. The second charge upon which the Socialists were convicted is a little more serious than the first. It is lack of courage. I do not mean lack of courage about other people's money and business, but in this sense: they thoroughly realised at the end of 1931 what the situation was, and as everyone knows they were prepared to accept nine-tenths of the inevitable remedies for the inevitable consequences of their prodigality. Then what happened? They would not face up, and so they went to the nation and were convicted at the last trial at the last assizes of what, in my opinion, is the gravest charge of all. By way of being reasonable I will call it insincerity.

What did they do? They would have adopted nine-tenths of the programme, as I have said, but though their record is preserved, though there are witnesses whom we believe in this House and whom the nation believes to-day, in their election manifesto they said that the fall of the Labour Government was due to the sinister intrigues of bankers and financiers. And so they went back, or proposed to go back, to the very methods which had brought us all to the brink of disaster. "Let the taps go on running." And more. Not only to go back to those methods, but to embark upon an even more colossal programme of extravagance. And that at a time when the pound was falling, when the Budget was unbalanced, when the balance of trade was adverse to us, when unemployment was increasing, when the public confidence of the world in our credit had fallen so low that we had to go cap in hand and borrow money to keep British credit afloat. That was the time when the Socialists proposed to embark upon a grandiose project to nationalise the banks, nationalise the railways, nationalise industry, nationalise the land, nationalise every blessed thing and reconstruct the whole of the world according to Socialistic ideas without counting the cost at all. That, we were told, would instantly restore our credit, expand our trade and put the pound sterling upon a reasonable basis. Well might Mr. Snowden have said "Bolshevism run mad." That is where we were in September, 1931. [Interruption.] What was that interruption? I did not catch it.

HON. MEMBERS

Nothing.

Sir R. BANKS

Hon. Members on the Opposition Benches are so extremely shy that it is with the utmost difficulty one can goad them into an explanation, and then it has something to do with currency or high finance, which they never understand. What happened in September last? All the effective leaders and most of the rank and file of the Socialist party either joined the National Government or were swallowed up by the earthquake. And here sits the rump of the Socialist party, having the effrontery to bring the Government's record of the last nine months into account. All this insanity was disguised, as it always is, by a sort of pompous jargon. I thought that nothing could exceed the pompous verbosity of "Labour's Call to the Nation" in 1931, until I heard the speeches from the Socialist benches this afternoon. Let me cull a few flowers, a few delicate and faded blossoms: A decisive opportunity is given to the Nation to reconstruct the foundations of its life. Not a "Hear, hear." Is that right? The answer to that bit of nonsense is, that that is what everyone who goes to the bankruptcy court has to do: Measures of Socialist reconstruction must be vigorously pressed forward. That is the task to which Labour will lay its hands. Unfortunately the electors laid their feet to the posterior of Labour. The necessary machinery must he set up to make possible that comprehensive plan of development under which alone agriculture can become a prosperous industry. They were in office for two years and they produced a Land Utilisation Act and an Agricultural Marketing Act. The second was a trifle better than the first. It was not a bad bucket, but it had a bole halfway up, so that when the price of British products rose above the price of dumped foreign stuff all the water ran out of the bucket. I do not think I need make more detailed comment on the public view of their agricultural policy than to say that once more, after many years,.I represent the Swindon Division of Wiltshire. Finally, here is another quotation: The Labour party offers to the people of this country planned reconstruction, national and international, instead of chaos and anarchy which are the parents of disaster. Then we shall all have a fuller and richer life. Yet the Unemployment Insurance Fund ran up a debt of £115,000,000, the unemployed rose from 1,000,000 to 2,800,000, the pound was crashing and our credit was practically at zero. [HON. MEMBERS: "It has since gone!"] No, it has not; it has been sustained. That is what the Socialists said. What a sublime doctrine! I am afraid I was on the verge of using the old and threadbare comparison of Nero fiddling while Rome was burning. But that would be a mistake, not only because it is threadbare but because it is inapt. There was something tragic and sublime about Nero but this was comic. It reminds me very much more of another personage of whom my children are constantly singing to-day, one Captain Brown: Who played his ukulele while the ship went down. But that is the usual specific—verbosity and gravity to conceal your own sterility and incompetence. I encountered in the course of some of my readings of 18th century literature, which is rather a weakness with me, a passage from "Tristram Shandy," which seems to be an apposite citation for this occasion and to portray admirably the official Opposition when they accuse us of not having done very much. Hon. Members may recall the case of "my father's bull" in "Tristram Shandy": Now the parish being very large, my father's Bull, to speak the truth of him, was no way equal to the department; he had, however, got himself somehow or other, thrust into employment—and as he went through the business with a grave face, my father had a high opinion of him. But there was no calf—and the local cows were accused of sterility. Hon. Members of the Opposition when they were in office were equally sterile and incompetent. I am not going to bore the House with figures. [HON. MEMBERS: "Go on!"] Well I shall mention just one. We are told that we have not done our best for unemployment; that we have not pulled down the figure and that it is growing. That comes very ill indeed from those who, in two and a half years of office, have had that figure rise from 1,150,000 to 2,824,000. Our record surely is not as bad as that? When they were in office they pleaded that there was an economic blizzard and a world depression and all sorts of things. If they plead those things in mitigation of their own offence, they must be equally generous in considering our shortcomings. The blizzard has grown more fiercely since and the world depression has grown blacker. The only beacon still showing—"a light to lighten the Gentiles"—is this country, which has, under the National Government, done what hon. Members of the Opposition were too much poltroons to do when they were in office. It has faced the unpalatable and the awkward. It has balanced its Budget and restored its credit. [HON. MEMBERS: "No!"] Yes it has. There is no difficulty about our credit to-day. It stands as high as ever it did, and it has enabled this great conversion scheme, to which the Chancellor of the Exchequer has referred already, to exceed expectations. We know that ultimately that scheme is going to be a success in every way.

After nine months we can say that if we have not reduced unemployment, at least we have checked the increase of unemployment and corrected the adverse balance of trade. [HON. MEMBERS: "Where is it now?"] Where was it when they were in office? They changed it from about £100,000,000 in our favour so about £100,000,000 against it—or, let us be fair, if they did not change it at least the change happened under their regime. Now we all know from the figures, month by month, that the balance is being restored. I do not think I shall hear anything said from the Opposition about disarmament or our treatment of War Debts and Reparations. Everybody knows that I am not an enthusiast for conferences and I am bound to say whenever I hear the Leader of the Opposition talk about seeing the other fellow's point of view, and being sweetly reasonable, and about Christian ethics, and about remembering that the other fellow has his problems just as we have ours, and so forth., I sometimes wonder why, for 10 years, I should have been waiting to hear the right hon. Gentleman deliver one of those sermons to one of the adversaries of this country.

When I was a, small boy and was taken to church, after an eloquent sermon my relatives would say to me, "Reginald, will you not think about selfishness? Will you remember what the minister said about your disobedience and bad temper?" I used to think, "I wonder why they should go to church at all. It seems to me that the man is occupied with me all the time." I have waited 10 years, and I think I shall wait another 10 years, if I have the luck, and then I shall not hear one of those sanctimonious sermonettes, the true Labour prescription, one half Pecksniff and the other half Aimée Macpherson, addressed by the right bon. Gentleman to anybody who is opposing England at the moment. I can understand my hon. Friends who occupy the Front Bench below the Gangway here. They have the courage of their convictions. Communism is only Socialism with the courage of its convictions, and although I know my hon. Friend the Member for Bridgeton (Mr. Maxton) will not take it amiss if I say that sometimes in the night watches I consider whether it would not be for the peace and benefit of the world if he were translated to another sphere, and though I know he thinks that my extinction, possibly by means of the guillotine, would remove another obstacle in the path of progress, pending that consummation we can understand and respect one another. But Oh, Mr. Speaker, the Church of Laodicea, the descendants of Tomlinson, of Berkeley Square, who never had the essential guts to do anything good enough to get him into heaven or wicked enough to get him into hell. I am bound to say that it is a little difficult for a man with a large family to be accused of impotence and sterility by a group of political eunuchs.

This is one more in this long series of sham fights. Heaven forbid that I should be misunderstood, but most of our Debates in this House of Commons are not fruitful and necessary, but these Votes of Censure are hollow, futile, and artificial, and if there is one reason why the people of this country sent a National Government back to power, it was that they were sick to death of some of the bad old traditions of the party system, and one of the worst of those traditions is enshrined in the old abominable maxim that the whole duty of an Opposition is to oppose. One right hon. Gentleman during the Debate on Ireland the other day, when asked what his alternative was, said with a smug smile of self-complacency, "I am not called in to prescribe"—the answer of every quack who has seen suffering humanity since the beginning of the world. He may or may not have been called in to prescribe, but when there is a tragedy, when there is a great railway accident, does the doctor who happens to be on the spot await a formal instruction to prescribe for the injured and wounded? No. his duty is to put his skill at the disposal of suffering humanity, and one of the worst features of this procedure is the loss of time and waste of money caused by these artificial Votes of Censure. The doctrine that it is the duty of the Opposition solely to oppose, always to criticise, always to discredit, may have done well enough for Pitt 'or Walpole, but it is as out-of-date as the vin ordinaire Socialism of the right hon. Gentleman. There are many varieties of Socialism, varying from the acidulated vin ordinaire of the right hon. Gentleman to the full-blooded vintage of my hon. Friend the Member for Bridgeton, full of body and beeswing.

Sometimes I have sat up there, listening to these Votes of Censure, direct or indirect, in what I suppose I might refer to, having a foible for architecture, as the triforium. In repose or in meditation you hear below you a kind of low murmur as it were of the sea, varied by the occasional crash of a great wave. It is the sea. It is the sound of the great ocean of bosh that you hear. The day after, in the OFFICIAL REPORT, you may pick up, as upon the sea shore, the dead starfish, the dried seaweed and the old pickle corks, but not a bit of good edible food for the needy and starving. It is time these futile, artificial attacks came to an end. If people can help the country, then for God's sake let them help. If they are solicitous for the workers, let them suggest something concrete for the workers; not marvellous plans of reconstruction which will make life richer and fuller, but something specific. The hon. Member for Bridgeton has his remedy. I think that it means curing a headache by the decapitation of the patient, but at any rate it is specific. Mere verbosity, high and exalted moral platitudes—they are all further contributions to the sea wrack of the ocean of bosh. In the name of economy, in the name of common sense, let us have an end of it.

Major MILNER

I understand that non-stop vaudeville performances are very popular nowadays, and I am sure that the House will wish me to congratulate the hon. and learned Member for Swindon (Sir R. Banks) on making such a delightful contribution in that direction to-night. I am sorry that I cannot say so much for the constructive thought which he put into his speech. The hon. and learned Gentleman was good enough to tell us that he had not asked a question since he came into the House 10 years ago, and I suggest without offence that perhaps the House would not receive it with great regret if the hon. and learned Gentleman followed suit with regard to his speeches. I do not rise to deal with the verbosity of the hon. and learned Member or with the bosh which we have heard him utter. I rise to deal with the question which has been mentioned in passing by my hon. and learned Friend, the late Solicitor-General, with regard to trade with Russia. In my constituency of South-East Leeds there are a number of heavy engineering works. I am glad to see other hon. Members present who represent constituencies which have engineering works and who are interested in this subject.

10.30 p.m.

I am assured by my constituents who have those works that very large orders are now awaiting British engineers and manufacturers if the Government will do their duty and advance the necessary credit to enable that business to be done. I am further told that, while in my own constituency orders are awaiting the heavy engineering industries to the amount of something like £500,000, there is something like £20,000,000 worth of orders awaiting manufacturers in other parts of the country. I am at a loss to understand why, when so much is said about our adverse balance of trade generally, and our adverse balance of trade with Russia in particular, this Government, of all Governments, does not see fit to take steps by way of export credits to see that this business which is waiting comes to this country. I am assured that if we can get a substantial footing in one of the three largest undeveloped markets which exist in the world, that of Russia, there is work which would keep our mills, factories and engineering shops going for a great many years—I am told at least 50 years. There are at present three large potential markets in the world—China, India and Russia.

Mr. SMITHERS

What about the Empire?

Major MILNER

I am quite happy that business should be done with other parts of the Empire, but unfortunately they have not the large populations or the natural resources which some of these other countries possess. It is perfectly true that owing to the disturbed factors in China it is not possible, perhaps, to do a very great deal more trade there at present; and with India, again, owing to recent political action, particularly the action of the present Government, it is probably not possible to-day to do a great deal more trade, though we hope it will be in the time to come. In Russia, on the other hand, where we have the nearest market of all, there is a population of something like 150,000,000 people and there are immense natural resources. That country is almost undeveloped and certainly unindustrialised, and requires above all things the machinery and other things which are made in our engineering shops. Therefore, I hope the Government will take this matter in hand. In 1922 the present Russian Government had to pay cash for all the goods it ordered, "Cash with order" was the rule. A little later the rule was "Cash on delivery." Prior to 1929 Germany and America and various other countries had extended long periods of credit–18 to 24 months, and sometimes more—to Russia, and I am assured that the manufacturers of Germany were giving those credits with money actually advanced by our own bankers in this country. The result was that they were getting all the business, and we, certainly for some time after the Arcos raid, got little or none.

In August, 1929, the Labour Government introduced the Export Credits scheme in its new form. Originally credits were given for a comparatively short period and for comparatively small amounts. It is interesting to note the increase in business resulting from the introduction of the new credit system. In 1928 this country received orders from Russia amounting to £6,374,000. In August, 1929, the new credit scheme was introduced, with the result that orders at once increased very considerably, and the total for that year was more than double, amounting to almost £13,000,000.

Mr. SMITHERS

On tick!

Major MILNER

I will deal with "on tick" in a moment. Whatever can be said, this country has not lost one single penny as the result of the credits it has given to Russia since 1922, and that is more than can be said of some of the hon. Gentleman's friends in Poland and other countries where we are losing a very great deal. The real truth is that the profits of the Export Credits Department, which have come largely from Russian sources, have made up the losses on credits given to other parts of the world. I have given the figures in 1928 and 1929. In July, 1931, the Labour Government greatly improved and extended the terms previously offered to exporters to Russia. In the period January-June, 1931, orders were received in this country amounting to over £5,000,000, the monthly average being £861,000. The new terms were introduced in July, 1931, and in the months of July, August and September the orders received from Russia amounted to over £6,560,000, considerably in excess of the figure for the previous six months, and the monthly average, instead of being £861,000, jumped to over £2,000,000, showing conclusively the advantage of those credits to this country, in respect of which not one single penny has been lost and on which very large profits have been made by the Export Credits Department. Immediately upon the advent of the National Government in 1931, credits were reduced and the period was also shortened, with the result that Russian business has almost entirely disappeared, and is getting less month by month.

I would remind the House that it is not only the visible exports which have to be taken into account in this matter; there is a very large annual sum which has to be credited to this country by reason of ale invisible exports, represented by shipping, insurance, and various commercial transactions. I am assured that the invisible exports amount to almost as much as the visible exports. There is no excuse. If those facts are correct—otherwise I have no doubt that anyone who is going to reply will be in a position to contradict me in those particulars—it is positively criminal not to take advantage of the system which has been so successful, and to extend those credits, the amount of which, I am told, is almost entirely exhausted. That would provide work for the unemployed, or, what may appeal more to right hon. and hon. Members on the other side, would improve the trade balance with Russia. I respectfully submit that the right way to improve the trade balance is not to stop imports, but to increase exports, and that is what would happen if credits were given in the way that I have indicated.

I have heard it suggested that one reason why the Government are hanging fire for the moment is that it is alleged there is a small harvest in Russia this year, and that Russia may not have the means to pay all her maturing liabilities. I have made inquiries during the course of to-day, and I find, in point of fact, that the Russian harvest is likely to be much greater than it was last year, and that the Russians are likely to be in a much better position this year to meet their liabilities. I suggest that there is no excuse for refusing to provide these credits, which will make work for our industrialists and manufacturers. If business is to be done, I want to see us doing it, and in particular I want to see my own unemployed constituents return to work in those large engineering shops, and do the work that lies ready to their hand, if this Government will only take the appropriate steps by providing the credits.

It is not for me to elaborate upon the allegations and suggestions which have been made by my hon. Friend the Member for Limehouse (Mr. Attlee). I would, however, remark upon one fact, which is that it is a strange thing in these days when, on every hand we are assured that we can produce everything that human nature can demand and that the one thing that is required is consuming power, that this Government should take it upon itself to cut down that very consuming power of the masses of the people. We all know in our hearts that consuming power is the one thing that is required. In the action the Government have taken with regard to the means test, and in the economies upon which the Government still insist—though we were assured last December that, when opportunity permitted, all the cuts which were then made would be adjusted—they are acting directly contrary to the interests of the great mass of the people in this country. In my part of the country feeling is rampant, in the form of disappointment at the action or lack of action of the Government, and very soon, if indeed it has not already set in, there will be a reaction that, long before five years have passed, will sweep this Government out of power. The people will put a Government in power which, if it did nothing else, at all times took every possible step to raise the standard of living or to deal with health, housing and other matters which, apart from the financial field in which the present Government are apparently so expert, particularly affect the man and woman in the street.

I would remind the hon. and learned Member for Swindon that this is not, as he suggested, a Vote of Censure. Notwithstanding the fact that he has been in the House for some 10 years, he apparently was not aware of the precise course which is adopted in regard to the Appropriation Bill. I will only conclude by suggesting to him and to the Govern ment that they would do well to adopt some more of the remedies which are so frequently prescribed from these benches —to take steps to convert more War Loan, and, above all things, to do away with the tariffs which, as we heard at Question Time this afternoon, have during the last month caused no less than 87,000 miners to become unemployed. [interruption.] Those were the figures given in answer to a question put by one of my hon. Friends this afternoon. [Interruption.] The result of the Government's tariff policy—[HON. MEMBERS: "No!"]—the result of the Government's policy, whether it is their tariff policy or otherwise—[Interruption]—if you like to put it so, in spite of your policy, which was going to revolutionise the world, and this country in particular, the result has been that in the past month, in the midst of summer, when work ought to be plentiful, 87,000 men have been thrown out of work in the mines alone. That in itself is a sufficient commentary upon the discredit which this Government have brought upon themselves.

The FINANCIAL SECRETARY to the TREASURY (Major Elliot)

We have had an interesting and instructive Debate, and it would be a pity if it were allowed to flicker out in the riotous mass of misrepresentation to which the hon. and gallant Member for South-East Leeds (Major Milner) has descended. I should have thought that he had, from his own point of view, a strong enough case to develop it without dragging in the patent absurdities of his concluding sentences. If he himself had been in the House at Question. Time, he would have heard the Parliamentary Secretary to the Ministry of Labour give the figures specially in order that they might be available for Members in this Debate, and point out that these 87,000 miners were temporarily stopped, and that that fact was very largely due to the count having taken place in the last days of the quarter.

Major MILNER

I was in the House at Question Time, and the Parliamentary Secretary did not say that it was very largely due to that. He said that it might be that the date might have something to do with it, but he certainly did not suggest that it was very largely due to the count being taken at the end of the quarter.

Major ELLIOT

I certainly do not wish to fall into the same error which I have attributed to my hon. and gallant Friend, and, therefore, I will say no more than that it is agreed on both sides of the House that the fact that the count was taken in the concluding stages of the quarter undoubtedly had a very considerable distorting effect upon the figures. I will put it no higher than that, because, in a Debate of this importance, taking place at such a time, it is very desirable that we should so far as possible avoid an over-stressing of figures in one direction or another. The first Session of the National Government's work is about to close. No one can pretend that it has been completely successful in all respects. Our unemployment policy has certainly not succeeded in putting a great number of persons rapidly and immediately back into work, but we claim that time must be given for the development of that policy. The events of the last ten days however show a Government case that is perfectly capable of standing up to any attack that is likely to come against us from the benches opposite, from the benches below the Gangway, or from the constituencies. Achievement and fulfilment of British policy such as the last 10 days has shown, has not been shown by a British Government since the days of the War. The success of our domestic policy in the Conversion Loan, and the success of our foreign policy, a long-continued foreign policy, in the Lausanne Agreement—to bring those two great things to fruition by means of a Government composed of all parties of the State is an achievement of which any Government might be proud. Therefore, when we are coming towards the closing stages of this Session and reviewing our work, do not let us exaggerate the figures for or against us, because on a similar examination next Session of the policy that we have undertaken will depend a very great deal on the future direction of the Government of this country.

Three main lines of argument have emerged from the Debate. There has been the criticism of policy, there has been the appeal for further economy and there has been the criticism of administration in its details. Of the three, perhaps I have more sympathy with the criticism of administration in details than the criticism of either the other two that have been brought forward, for it all comes down to the prosperity or lack of prosperity of the common people of the country—whether the people are employed or unemployed, whether their health is improving or diminishing and whether their attitude of mind is hopeful or despairing. If it were true, as hon. Members opposite say, that despair is the mood of the people, I verily believe that even great material achievement would not compensate them. It is because I believe that the people are not in a mood of despair, even after so many disappointments, that I confidently recommend to the House a conclusion to the Debate favourable to the Goverment. The acceptance by the people of the country, high and low, of the unpalatable, stern and harsh measures which the Government have found themselves compelled to take is a testimony to the boldness of the mood in which the people find themselves. Let us preserve and encourage that mood, for it is greatly needed. The problem of our modern civilisation is the problem of the self-contained State, the nations building around themselves higher and higher barriers and seeking to be completely self-controlled, and such is the gigantic, terrible power of modern machinery, science, and organisation, that they are capable of doing it. It is said that the world is becoming interdependent, and that one State is becoming more dependent upon another. I do not see that. I see States becoming less dependent upon one another. There is the great State of Chile on which the whole world relied for its nitrate supplies plunged into bankruptcy because a scientist has discovered a new way of obtaining nitrate from the air, passing a spark through and making nitrate fall from the atmosphere to fertilise our fields. Whether it will ever recover its position no one knows. The world is not more interdependent but less interdependent, and it is that which is the fundamental problem of our days.

That is the problem we are going to confront, and which seven Cabinet Ministers from this country are sailing to Ottawa to attack this very week. It may be that they will succeed, and it may be that they will fail, or that they will partially succeed, or partially fail, but they are going forward to attack a problem which has baffled almost every other coun- try or series of countries in the world, unless they are stamped into uniformity by methods such as those employed by the Soviet Government of Russia. The division of labour, which was the great discovery of the 19th century, has been torn up before our eyes. Every country attempts to be self-contained and self-furnished and to cut itself off more and more from the trade of every other country. We do not need to look further than across the St. George's Channel to see the latest and fiercest example of this new philosophy and the realisation of this new policy of tearing up the bonds of trade which had existed for hundreds of years between the two communities, and by the use of which both countries have become prosperous and increasingly bound to each other by the bonds of free and favourable trade.

How long does Free Trade last when nationalism gets to work upon it l It is useless to talk to the nations about its blessings. When nationalism comes into the arena, Free Trade disappears altogether from the minds of men and all considerations and the ideals of prosperity, good will, and comfort which the nineteenth century preached almost as a gospel are thrown away by men. That is the problem which we are going forward to tackle and for which a bold and confident spirit among the peoples is needed indeed and in which our statesmen deserve the blessings rather than the whines of this great House of Commons when they set sail. The policy which this country is embarking on is the policy of bringing into a single equation the double problem of independence and inter-dependence of our modern civilised industrial States and whether they succeed or fail, that is a very great task.

So much for policy. I believe that the Government, with their success in the War Loan conversion and in their foreign policy, are entitled to be considered as competent architects of fortune. Success or failure is not only a matter of planning, it is a matter of luck, and statesmen and nations need luck, as well as individuals. Without that favouring touch, it may be they will not be successful. Let us hope they may be successful, carrying with them so much strength and so much skill. What is left? We at home have to consider whether our base is strong enough and sound enough and whether we can stand firmly on our foundations at home while our friends go forth to these tremendous tasks. That brings me to a further accusation brought by the Opposition. I listened very closely. The hon. Member for Ogmore (Mr. E. Williams) brought forward- the accusation that his people were ill-shod and not merely unemployed but suffering hunger. The hon. Member for Abertillery (Mr. Daggar) brought forward the contention that his people were deteriorating in health. For four years I studied closely the health position of Scotland during a terrible period of unemployment when the shrinkage of our old staple trades and the closing of the new markets brought to Scotland, as to South Wales, severe and lasting unemployment in advance of the wave which later reached the rest of the country. Are our social services sufficient, and are the indispensable rations for the people of this country maintained? It is of vital importance to the nation that your base should not collapse before your marching army can make its conquests and return. Every piece of information on that is of the greatest importance Here, for instance is a report of the Scottish Board of Health giving the average height and weight of the children of five, nine and 13 years for the years 1907, 1924 and 1931. The report shows that the nine and 13 year children, growing children who are more particularly affected by contractions in the earning-power of the breadwinner which have taken place within recent years, the height and weight of children from one-apartment houses in 1931 surpassed those of the children from the two-apartment and three-apartment houses in the year 1907. [Interruption.]

Mr. MAXTON

Does that figure apply at all to the period since the means test and the cuts of unemployment benefit were applied?

Major ELLIOT

Obviously, it cannot apply to that period. I now come to the next question of whether the recent economies have, in fact, injured as has been frequently suggested, the standard of living of the people, and whether the cuts which have taken place have sensibly impaired health, because that is the accusation which has been made by hon. Members opposite. If the accusation is true, it is a very grave accusation indeed. I have had some figures taken out for the House which may be of interest, though it is merely the restating in another way of figures so frequently given about the fall in the cost of living and the consequent rise in the real value of benefits and relief, It is interesting to note that the 1922 unemployment benefit for a man, wife and two children was 22s., and in that year it could buy, calculated in terms of wheat, 250 lbs. of wheat for the week. In 1932 the benefit for the same man, wife and two children had not only doubled but more than doubled in terms of that one commodity, wheat, and the relief given to those poor people would purchase 500 lbs. of wheat for the week. People do not live by bread alone nor do they, of course, merely eat wheat, but the fact that the relief for a man, his wife and two children has risen since comparatively recent times from 250 lbs. a week to over 500 lbs. a week, indicates in a flash the great fall in the price of staple foods which has taken place. That is why the effect of decreased unemployment benefit and other things has not been so serious as had been feared. Further, in spite of the prophecies about the coming effect of the tariffs and their effect on the standard of living of the working class, the cost of living has continued to fall for the last six months, and is now lower than it has ever been since the War.

11.0 p.m.

With regard to the accusation as to the means test that has been made against the Government, I do not intend to go in detail into this question. I believe the figures will be examined on Wednesday. But there is a recent report on the means test in Glasgow by Mr. Reynard, the Director of Public Assistance there. I quote it from "The Forward." No doubt the hon. Member for Bridgeton (Mr. Max-ton) has read it. It is very interesting reading and examines in detail the cases which have been deprived of benefit. The cases quoted have family incomes ranging from 12 15s. to £15 a week. It deals with cases of single persons who have been struck off transitional benefit with private means ranging from £300 to £2,000. We say that if an examination of means is to be made it is inevitable that cases such as these must have their transitional payment refused. Since it is not a case of insurance benefit but a question of whether relief is to be given by tax-payers who are often far poorer than those receiving it, persons who may not be themselves in an insured trade and are therefore incapable[...] ever receiving this transitional payment.

We have had a long Debate and interesting speeches, including a notable maiden speech by the hon. Member for the Bothwell division (Mrs. Shaw) and I suggest that the House might now find it possible to come to a decision on this stage of the Bill. The discussion can be resumed to-morrow, when further opportunities will be given for examining the case put forward by the Chancellor of the Exchequer, and the more powerfully by events. The Government is entitled to the confidence and not the censure of the House and to the Second Reading of this Bill for the services of this country, even of so large a sum as £304,000,000 out of the Consolidated Fund.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time, and committed to a Committee of the Whole House for To-morrow.