UNEMPLOYMENT.

HC Deb 22 March 1933 vol 276 cc333-466

3.15 p.m.

Mr. RHYS DAVIES

I propose to deal in the main with unemployment and its very tragic human consequences. I hope to touch on the financial crisis which has come upon municipalities, more particularly in the North of England, and then ask the Government to tell the House and the country what is their reply to the challenge recently made by a group of economists to the financial policy of the Government. We are very pleased to see the Chancellor of the Exchequer in his place, because the issues that we propose to raise are mainly financial, and the golden key which can open the door to better times is in his pocket. We shall want to know what he intends to do with it and whether he proposes to use it at all. [Interruption.] The right hon. Gentleman indicates that he has not got it. We are accustomed in this country to gloomy weather, and we have been accustomed to a gloomy Dean for many years past, but this is the first time in our political history that we have had thrust upon us a gloomy Chancellor of the Exchequer. When he tells us he has not got the key to better times, he must really be a pessimist. His speech some time ago was the most gloomy statement I have heard from that Box in the 12 years that I have been in the House of Commons. When the Chancellor of the Exchequer of this great nation can tell us that for 10 long years we cannot hope for very much better times—

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I did not say that.

Mr. DAVIES

The right hon. Gentleman will have an opportunity to-day of explaining exactly what he meant on that occasion, because I am sure the vast majority of the people of the country were thrown into pessimism and gloom by his statement. We make no apology at all for raising the question of unemployment once again. Statesmen are not measured to-day by what they do at Disarmament Conferences, or even World Economic Conferences. Their success or failure is measured in the main by their attitude towards this domestic problem of unemployment. This Government, too, will fall on this issue when the time comes. When a man suffers agony from a, dread disease, or a plague afflicts a nation, silence is criminal, and so it is with unemployment. It is a comparatively modern curse that has come upon industrial nations, and its effects naturally fall heaviest upon those who are accustomed to toil for their bread.

The causes of this new disease are well known, but it will be well to reiterate them to-day in order to try and induce those in power to remove them. I want to make a confession right away. No person in his senses will accuse any Government of being entirely responsible for all the unemployment that is upon us, but we make the very definite charge against the Government not only that they declared that their tariff policy would help to solve the problem and it has failed to achieve that object, but that, in fact, they are failing ignominiously to attempt anything at all to deal with it. The Government seem to have reached a stand-still state. They do not appear to move at all in relation to this matter. We shall want to know to-day what the right hon. Gentleman has in his mind —if he has anything at all—by way of plans for the future to deal with the perilous scourge of unemployment.

There are of course causes beyond the control of Governments which have brought about unemployment. The Great War destroyed the channels of international trade and disturbed international commercial relations. The problem in many respects is an international one. The Peace Treaties not only upset the equilibrium of nations but tore some of them up into fragments. The Treaties brought ruin into the economics of Europe by extending frontiers by thousands of trifles and thereby giving an impetus to customs and tariff barriers, where such had never existed before. The charge which I personally make against the Government is that they have joined hands with those countries in Europe who have been accustomed to put up tariff barriers against each other with the deliberate object of restricting trade. The nations have forgotten that when they shut out the foreigner they shut themselves in at the same time. I have recently been abroad and have found out what terrible things can happen in connection with the trade of nations. I hope that the Government, at any rate, will have seen by this time that their tariff policy has been an abject failure as far as helping to find employment for our people is concerned.

We are charged on occasions with a tendency to exaggerate the problem of unemployment. In reply, I would say that it is better that we should do that and so keep the national conscience awake than allow the smallest section of our community to rot in squalor consequent upon enforced idleness. Some people talk of revolution consequent upon unemployment and the economic depression. I have never been afraid of revolution in this country, but I have feared something quite as terrible as a revolution, and that is, the destruction of the spirit of adventure, a distaste for life in general, and a weakening of that personal independence in mankind whereby men can demand their rights in society.

Viscountess ASTOR

Come over here.

Mr. DAVIES

The Noble Lady does not suggest that in order to be a Socialist, you must be a soft sort of individual.

Viscountess ASTOR

Well, it looks Like it.

Mr. DAVIES

The Noble Lady always talks Socialism and votes Tory. Unemployment is no longer peculiar to what is generally termed the working class. It is at last creeping into the middle class and despoiling the youth in those homes. I am not willing that those who handle statistics in relation to unemployment should take it for granted that the figures of the unemployment register are any longer an indication of the number of people who are out of work in this country. I can almost imagine the day when we shall have as many people outside the register unemployed as we have on the register itself. I have come across many cases of young men—accountants, surveyors, architects and well-educated young men from the universities who cannot find work. Some of them, unfortunately, have had to become peddlers and cheap-jacks in order to secure a livelihood. That is as terrible a state of affairs as to find a million working folk unemployed.

I would call the special attention of the Government to that new feature of unemployment in this country. A large number of boys who have passed through the secondary school cannot get work at 16 or 17 years of age because the employer turns round and declares: "I cannot afford to pay the Unemployment and National Health Insurance contributions in respect of them." There must he, not tens of thousands, but scores of thousands of young men and women in this country who have never yet done a day's work from 14 years of age probably up to 21. I do not know their number. I do not think that anybody can tell their number, but it is not inconceivable that including those our unemployment figures may, in fact, be nearer 4,000,000 than 3,000,000. When you consider those who have never come within the ambit of the Unemployment Insurance Scheme, the number out of work must be very large indeed.

If this nation were smitten with cholera, typhoid or leprosy, no statesman on those benches would dare get up and say that we could not afford to try and prevent it. The economic consequences of a long period of unemployment are every bit as terrible as the economic consequences of one of those dread diseases. Therefore, if any Government sits still and does nothing at all, as this Government is doing, then we are entitled to raise this issue once again and to call the attention of the public outside to what is happening.

It is proper here to pause to ask the Chancellor of the Exchequer whether the Government have any plans at all. Do they intend to allow the nation to drift, as it is doing, with an increasing number of unemployed persons on the register and outside the register, by merely offering £30,000 for social service? Have they any plans at all. Will the right hon. Gentleman tell us to-day? Can they do nothing about housing? Can they do nothing about the reclamation of land?

What is their reply to the request for a 40-hour week? Have they ever considered the question of raising the school-leaving age? Have they looked into the question of completing the unfinished roads which were stopped about 12 months ago? It is not a question as to whether there is work to be done. There is any amount of work to be done, and we should like the Chancellor of the Exchequer to tell us the policy of the Government with regard to that subject. There is plenty of money available, too. I would quote a statement which was made recently by a prominent American citizen, which describes the position of the individual in relation to the State better than any language that I can command myself. He said: Full opportunity for personal development is the inalienable right of all. He who denies it is a tyrant. He who does not demand it is a coward. He who is indifferent to it is a slave, and he who does not desire it is already dead. We shall be asked, and rightly so: What are our suggestions to relieve unemployment? We shall be told, "You were here before we came; there was a Labour Government before we came into power" and, of course, the right hon. Gentleman will probably go to the pigeon-holes of the Treasury and bring out arguments against the late Labour Government and all the rest of it. But that will avail nothing. I will therefore put one question which affects this Government alone. Let me deal with the figures in relation to emigration. Some people argue that if emigration had proceeded throughout the years since as it did prior to the Great War there would have been no unemployment in Europe, if all other conditions were equal. I have never believed in using the slightest compulsion upon a man to emigrate for the purpose of dealing with the problem of unemployment. We were told the other day that there are 50,000 persons in this country who, of their own volition, desire to emigrate to the Dominions. But emigration has completely stopped. I should have thought that in the arrangements made at Ottawa some time ago, when the Government representatives were there, one of the issues they would have dealt with, irrespective of employment or unemployment was the free passage of human beings from one part of the Empire to another. We are, therefore, entitled to ask the right hon. Gentleman what he has to say on that question.

It is not commonly known that the population of Europe has grown from 180,000,000 in 1870 to 485,000,000 in 1930. I am not going to argue that this country is over-populated, because I have come to the conclusion, strange as it may seem, that we have become a richer nation as the population has increased within our own shores. Therefore, it is not correct to say that we are becoming poorer because we are over-populated. The principle of the free movement of peoples between one country and another is, however, a principle that affects both employment and unemployment. We heard to-day from the Tory benches protests against German domestic servants coming to this country. But nothing was said about English domestic servants working in Germany. That would seem to suggest that we are going to put up barriers not merely against merchandise but against human beings, as if that policy would land us anywhere.

If we are asked what are our proposals, we can only repeat them—land reclamation, house building, the reduction of hours of labour and so on. I should imagine the Treasury must have looked at some of these problems during the last few months, especially in view of the very powerful plea in the "Times" the other day signed by a group of eminent economists, to which I shall refer later. We shall probably be told to-day: "Wait until the World Economic Conference, and everything will be settled." I would be the last to argue against international action. There are certain things which we cannot do until we secure international action, especially in relation to the customs barriers that exist between most of the countries of Europe. I cannot conceive, however, that the World Economic Conference will have anything to do with clearing our slums, or will affect in the least the flooding of the Doncaster area, or will touch the problem of house building in this country.

What has astonished me recently has been that in Vienna, the town council, are not only clearing their slums, but building magnificent working class dwellings at the expense of a loan guaranteed by the British Government, who decline to do the same thing for Manchester and other towns. They have refused grants to local authorities in our own country, and representatives of our local authorities are constantly going to Vienna to study how they have built those magnificent working class dwellings, at the expense, in the main, of the British taxpayer.

Captain CAZALET

Is the hon. Member aware that no portion of the English loan to Austria has been spent in building in Vienna? The Socialist Municipal Council of Vienna did borrow 6,000,000 dollars from America a long time ago but they have publicly stated that not one cent. of that has been spent on housing in Vienna.

Mr. DAVIES

The hon. Member is not right in looking at it in that way. May I put this point to him, that if the Government of Austria, as a whole, is financed from outside, surely it is much easier for their municipalities to finance their housing schemes.

Mr. HOROBIN

Does the hon. Member suggest that instead of America lending this money to Austria we should have insisted on America lending it to us. That is what his argument comes to.

Mr. DAVIES

I have been too long in this Assembly to be drawn aside in that way. I was not dealing with loans. I was using the Vienna case as an illustration. We shall, of course, be very pleased to hear what the right hon. Gentleman has to say about these international and domestic economic problems. Let me now come however to the second point which I wish to raise. I represent a district in Lancashire. Lancashire is feeling the depression very much. The financial paralysis that is creeping over some of the largest municipalities in the North of England is very tragic. Let me give the case of the City of Manchester. In January, 1932, the number of persons in receipt of outdoor relief was 16,002. For the week ending 14th January this year the figure had gone up to 20,248, an increase of 32.78 per cent. in one year. I do not know what is going to happen next year. There was a meeting yesterday of Members of Parliament of all parties, and I welcomed very much the unanimity that prevailed there in asking the Government to take very serious note of the financial problems facing the municipalities in the North.

Let me give an example of how I see the problem. I relate the tariff policy of the Government to some of the issues of municipal finance, and I will give Liverpool as an illustration. In Liverpool, the second largest port in the country, the rates have been increased recently by 1s. 8d. in the pound. On the other hand, in Birmingham the rates declined last year by 6d. in the pound. The reason for that seems to be pretty obvious. When you institute a tariff policy, what happens is that in the tinsel trade, the small jewellery trade, the razor blade trade, you protect trade in the area where these things are manufactured; but you save those small industries at the expense of almost destroying the port towns. That is what has happened as between Birmingham and Manchester and Liverpool. Be it remembered that Manchester is an important port. Let me give the increased cost of Poor Law to the rates in the municipality of Manchester. This illustration is typical of a large number of other municipalities. There was a meeting held the other day on this subject and it is proposed to send a deputation to the right hon. Gentleman. In giving the figures of the cost of Poor Law in Manchester it must be borne in mind that in that city the scale of relief has already been reduced. Yet in spite of that reduction we find that the cost to Manchester for the year ended 31st March, 1930, was £364,000, while the estimates for the current year amount to £639,000. The result is that the rates have gone up 1s. in the pound in order to meet the increase. A city like that cannot proceed on these lines for very many more years. What has happened is this. A Conservative Government de-rated industrial property and the rates have been put on cottage property and shops. You can walk through the city of Manchester and see hundreds of shops closed. Not only is the value of property declining but the burden of rates on cottage property has increased enormously. We cannot go on doing that very much longer.

Poor Law relief, public assistance, is a very heavy charge on municipalities. Take the case of the meanest of all local authorities in the land in its administration of the means test—the Lancashire County Council. In spite of the fact that they are the meanest they have had to estimate this year for an increase of £129,000 in order to meet the additional cost of public assistance. The north of England is really getting into a very perilous financial position as far as municipalities are concerned, and I was pleased indeed to note what happened yesterday upstairs when Members of Parliament from the north of England, representing all political parties, joined together and for once were of one mind.

Mr. BATEY

But would they vote against the Government?

Mr. DAVIES

Liverpool, however, is in a worse predicament than Manchester. The President of the Board of Trade knows the value of shipping as an instrument of bringing revenue to a port. Let me give the figures for Liverpool. The expenditure on ordinary and unemployment relief for the year ending 31st March, 1931, amounted to £495,817, but the estimate for this year, on that account alone, is £1,236,000. Surely the Government cannot sit still much longer and allow these municipalities to go down and down, because poverty begets poverty quicker than riches beget wealth. Let me indicate what has happened in relation to shipping, because the ports of Liverpool and Manchester are feeling the effect of reduced shipping and a decrease in overseas traffic consequent on tariffs. British ships, cleared at our ports, in February, 1931, numbered 2,681, but they had declined in February, 1933, to 2,220. The effect of that is to increase unemployment in the ports. There is no better barometer of the success of any Government in this country than the amount of our exports. Let me give the export figures from official returns. In February, 1931, the exports were £37,000,000, in 1932, £35,000,000; and in 1933 £32,000,000. There is a downward movement in every walk of life since this Government took power, and I am prepared to make this addition, that not only are we going down in our trade, in our wages and in the degradation that comes with poverty since they came into office, we are going down because they came into office.

An HON. MEMBER

Can the hon. Member give us the volume as well as the value of our export trade?

Mr. DAVIES

I could if I had an opportunity of looking them up; they are all in the official returns. But the volume of the export trade does not reflect much credit on the Government.

Sir ARTHUR MICHAEL SAMUEL

There has been a fall in prices.

Mr. DAVIES

Hon. Members opposite can get the figures for themselves if they desire.

Sir A. M. SAMUEL

It is misleading the House if the hon. Member does not give the volume of the trade.

Mr. DAVIES

There is plenty of opportunity for the hon. Member to address the House; and we all look forward to hearing his views. Let me come to the most important point of all. I do not think I am exaggerating when I say that the letter sent to the "Times" the other day by a group of economists has made a large number of people in this country do some hard thinking. There has also been published in the "Times" a series of articles by Mr. J. M. Keynes. I have never believed that all the wisdom of the world rests in any set of economists. They have been proved over and over again to be wrong, but there is one thing which can be stated without contradiction, and that is that when a municipality, like an individual, spends money by way of wages in creating an asset you cannot calculate, as has been done on many occasions, that the amount they spent in creating the asset is money thrown away. That argument has been put very forcibly by some of these gentlemen. They say that if we are anxious to raise the price level of commodities we must create more assets in this country. An ordinary individual like myself does not understand very much about these great problems—

Sir A. M. SAMUEL

Hear, hear!

Mr. DAVIES

I am not alone in that respect, and in any case I have never claimed that I know more than I do know. But there is one point which seems strange to the ordinary individual. The present Government have set their face against any capital expenditure because they say they must balance the Budget. I should like to ask how it comes about that in the United States of America, where the Budget is unbalanced to the tune of several hundred million dollars, the new President has already declared that he is prepared to spend millions and millions of pounds on capital expenditure in order to find work for the unemployed? That is a point which must engage the attention of the Chancellor of the Exchequer. We in this small country can do things very much more effectively than they can in a, big country like the United States. We are of the same stock and are much more disciplined to the law, and I am sure we are as competent to do these things, if not more so, as the American people. Mr. Keynes came to the House of Commons the other day and addressed a meeting of hon. Members. I have chosen one or two sentences from his speech on that occasion. In one place he said: If we maintain the old rule of keeping every year in a watertight compartment we shall be in a vicious position, because anything done to balance this year's Budget would unbalance the next. I am not competent to argue whether he is right or wrong, but it is as well that a humble person like myself should put that point to the Chancellor of the Exchequer, because the Treasury ought to tell the nation what it thinks about these proposals. In dealing with these financial problems Mr. Keynes goes further in his new booklet and makes this astonishing statement: Our predicament comes from some failure in the immaterial devices of the mind, in the working of the motives which should lead to decisions and acts of will necessary to put in movement the resources and technical means we already possess. Then this is very pertinent: It is as though two motor drivers meeting in the middle of a highway were unable to pass one another because neither knows the rule of the road. That is very well put to the ordinary mind, because we have been told by eminent gentlemen in this House that there is plenty of money in the country and any amount of idle labour standing by, and that all we have to do is to find some machinery to bring the two together. The statement that I have quoted puts that point very eloquently indeed.

The municipalities are complaining that they are not permitted to proceed with work within their own areas as they have done in the past. The Ministry of Health has declared more than once, and I have quotations here showing that the Minister has laid it down, that schemes brought forward by municipalities have not been turned down by the Ministry, provided that they conform to certain restrictions of the Ministry. Will the Chancellor of the Exchequer tell us today whether the restrictions of the Ministry of Health on local authorities' expenditure are stricter to-day than they were before, whether there are any new rules in existence, whether the financial policy of the Government has been changed, or whether the municipalities are still free to carry on their work in order to find employment, as was the case before the new financial policy of the Government was declared?

I have done my task as well as I could in raising these three big points. The volume of unemployment is really getting very terrible. Unless hon. Members come into intimate contact or family relationship with the unemployed they cannot have the slightest comprehension of what enforced idleness means. I am sure that that is the case. There is nothing in the world like experience of poverty to teach one what poverty means. On that score I trust that the Chancellor of the Exchequer will be able to help us to-day. With regard to the financial conditions of the great municipalities of the North, I ask him whether he can say anything to bring hope to them in order to help them in the future. Finally, will he say what the Treasury thinks of the new proposal made by the economists who are studying these problems in our universities? Unless their proposals are taken into account and are considered by Governments, all our university education is of no avail. I hope that the Chancellor will be able to do more to-day than tell us of another 10 years of gloom; that he will speak more optimistic words which will help the nation along in its task of recovery.

3.55 p.m.

Mr. MACMILLAN

I do not think anyone can complain of the temper in which the hon. Gentleman who has just spoken has addressed the House. He has made a very interesting speech and has raised a large number of points of the greatest importance. It may have escaped many Members of the House that a somewhat new technique of Parliamentary method is gradually developing. Some observers have maintained that the power of the Executive has become so great in recent years that Parliamentary discussion and debate have lost any interest that they once had, and that we are being gradually reduced to a mere machine to register the decrees of Governments of the day. I think that anyone who looks below the surface will see that that is not wholly true. Whereas it is true that with the greater rigidity of policies in the last generation it is very difficult for alterations to be made in the decisions of the Government of the day when once they have been taken, yet there are recurring periods when policy is, as it were, in a state of flux, when the Governments themselves have not yet reached their final conclusion, and that in these periods Parliamentary Debates such as we have had in recent weeks and months are of the highest usefulness, and may have great importance in the final decision as to policy. Such a period, I think, is the one in which we now are.

I think it will be true to say that, both in Parliament and outside Parliament, on all these questions there has been during the last few weeks and months a great movement and development of opinion, and that in the general Debates, such as is afforded by the Bill before us to-day, there is a proper opportunity for private Members to attempt to take a small part in influencing the decisions ultimately to be arrived at by the Executive. I think we ought to pay some tribute to the function of a great national newspaper in providing its columns as a forum for such discussions. Perhaps we have all been able to clear our minds and to learn a good deal of the details and the principles which we have to discuss to-day. It may be said without exaggeration that while we are not all in agreement, yet there is now a general agreement, first of all, as to the main objective that lies before us. That objective is a rise in the price level, to be coupled with the re-employment of a large body of those who are now unemployed. The Chancellor of the Exchequer on several occasions has declared the attitude of the Government towards a rise in price level. On 16th February he made this declaration: We must raise gold prices if we can, and, in any case, we must raise sterling prices."—[OFFICIAL REPORT, 16th February, 1933; col. 1227, Vol. 274.] It is true that, in reply to a question put yesterday by the hon. Member for Huddersfield (Mr. Mabane), he appeared to recede from that view, but I think it was only in the form of words. He then stated: I never made any statement that the Government would raise sterling prices. My statement was that the Government desired to see sterling prices rise." —[OFFICIAL RE- PORT, 21st March, 1933; col. 179, Vol. 276.] Previously, he said that we must raise them.

Mr. CHAMBERLAIN

There is really no inconsistency between the original statement and that which I made yesterday. I am speaking from memory. The use of the words, "must raise" does not mean that we know we have power to raise, but that we must make that our aim.

Mr. MACMILLAN

There is no inconsistency, but at any rate we are not merely to be, as it were, optimistic spectators of the rise; we are to take, as far as possible, energetic measures to promote such a rise. That has been generally agreed. There is general agreement that such objective can only be attained by increase in demand, and we have now, I think, reached the general conclusion that there are only two ways in which increase in demand can be brought about: first of all, by a reduction of taxation other than by mere economies which transfer purchasing power from one part of the people to another—what one might call an inflationary reduction of taxation to the extent that Government expenditure in a given year will exceed the revenue. That is the first way. The second way is by loan expenditure for the promotion of public and private works on capital account.

By a happy chance, those two methods are not only not mutually exclusive, but they are in many respects complementary. The first method—the reduction of taxation—has the advantage that it operates from the word "Go." You can start it in the Budget year with which you are dealing. With regard to the second method—expenditure on loan account—there is, of course, a large time gap between the time we decide upon that policy and the time that any large amount of money can be spent in that way. We all know the immense time that is necessarily taken in the working out of schemes, the development of plans, so that, while the reduction of taxation would operate effectively in the year 1933–34, a decision taken to-day to begin very large schemes of capital expenditure on public works and the like would not probably get into effective operation until the financial year 1934–35.

With regard to the reduction of taxation, it has been suggested that we could produce a Budget which might be nominally balanced, but that such a reduction could be met either by the abolition of the Sinking Fund or by the transference of certain items now in the Estimates, and carried on the ordinary income and expenditure account, to capital account. I do not think, however, having tried to make some examination of the Estimates, that there is very much to be done in that way. There is not a great deal of expenditure now carried on the Estimates which could really be transferred to capital account, for the very good reason that it is just in this item of capital expenditure that the savings have been made by the Departments. Departments are not now spending a great deal of money that could properly or justifiably be transferred to capital account. I, myself, do not think, as far as I can see in going through the Estimates, that we would be able to claw back, as it were, more than £5,000,000 or £10,000,000 on that account alone; and, as regards the Sinking Fund, of course, we are not in the position of having any figures or estimates to work upon. The right hon. Gentleman has, of course, official figures, and he would probably already have some view of the estimated revenue for next year. But I am inclined to think that the revenue and expenditure of next year, probably, will not do much more than balance at the present rate of taxation. That is, of course, not allowing for any expenditure in repayment of the American Debt. I should say that probably it would balance with something for Sinking Fund, but not as large a sum as the present Sinking Fund.

Therefore, the Chancellor of the Exchequer will have to make up his mind as to whether he is prepared to introduce what, in fact, will be, to some extent, an unbalanced Budget for 1933–34, both by reducing the Sinking Fund to nil and by making such reduction in taxation that the Government expenditure for that year will exceed the revenue which they extract from the taxpayers. Of course, that is a very unorthodox plan, one which could really not be recommended except in a time of great crisis. But, as the hon. Gentleman who has just spoken reminded the House, it may be true that you are just as likely to lead to unbalanced Budgets in the succeeding years by too arbitrarily sticking to the orthodox doctrine as by the other method, and I do not think that it is necessary to change the actual procedure of yearly Budgets, which, of course, could not be done without a complete upset of all our procedure in this House. It is not necessary to do that in order to justify what might be called a three-year plan for the Budget, and in defence of an unbalanced Budget in 1933–34, in the expectation of a renewed buoyancy of revenue in the succeeding year, if demand should be stimulated and prices rise.

After all, in the first nine months of the year we always spend more than we get in, and we recoup ourselves in the last three months. There is nothing in principle differentiating the plan of spending foe two years something more than you get, in the expectation of recouping yourselves in the last year of the period. But, whatever may be said of this policy —I only suggest it to the House—I think we have got to recognise that there is, in fact, no chance of reduction of taxation by any other means, that reduction by economies would not mean an increase in demand, but merely a transfer of purchasing power. You have to take the chance of reducing taxation in the hope of so stimulating enterprise that the revenue will increase, and the large estimated expenditure on the relief of unemployment will, in fact, be smaller; because, after all, there is one item in the Budget Estimate which is always uncertain. We can tell almost exactly what the expenditure will be on the Army, Navy and various other Votes, but one of the largest items on which no one, not even the Ministers, can tell what the expenditure will be, is the expenditure on the relief of unemployment. That depends entirely on the state of trade during that period which no one can foresee, and, if the effect of a reduction of taxation and an increase of demand is substantially to reduce the charges on national revenue for the relief of unemployment, then, in fact, you may find that you have introduced a balanced Budget which will be very much more of an orthodox Budget, because of the great relief in unemployment payments during the year.

It must be remembered, in defence of any such policy, that since there is a large time-lag between the collection of direct taxation and the year upon which it is assessed, there is some justification for saying that you are to take some credit for Income Tax and Surtax. There being a time-lag in one year in respect of Income Tax and of two years in respect of Surtax, you have to take some credit for the better conditions you would be able to introduce, although that advantage would not reflect itself in the actual Budget until this period of one or two years, owing to the technical methods for the assessing and collection of direct taxation. It seems to me, therefore, that what the Government have to do—what we all have to do, is to decide whether this is one of those cases in which courage may, in fact, prove less dangerous than caution, and where, if we take a, more speculative and optimistic attitude, we are not more likely to get home in the long run. I think there is no doubt that a, reduction in taxation, both direct and indirect, would do more to stimulate private enterprise, the total amount of purchasing power and, what is very important, the velocity of money than any other method it is possible now to devise.

If it were possible by that means to make this expansion of demand in the first year, and to a somewhat less extent in the second year, in the hope of recouping yourself in the third year, and if, concurrently with that, a policy of loan expenditure on public works and the like were brought into play, then at the period when the Budget could again be balanced, the plans would be ready and the large expenditure on capital work could begin to become effective. I would like to say something upon the second barrel of the gun, so to speak, which we are priming and levelling at the great enemy, depression—the expansion by loan expenditure on public and private works.

Mr. AUSTIN HOPKINSON

For the purpose of suicide, is not one barrel enough?

Mr. MACMILLAN

My hon. Friend has long decided to commit suicide by starving himself. We are now enjoying that happy method imposed upon us, but I would prefer to try to get some kind of food, instead of sitting down to starve to death. The second method is not one for which I am alone responsible, and, if my hon. Friend has any quarrel with anyone, it must be the Chancellor of the Exchequer, because in the Debate on 8th March, the Chancellor of the Exchequer, referring to this question of public expenditure, said: Other hon. Members…have said that the Government should now use their credit to start a new programme to stimulate industry, by the commencement of public work or the encouragement of private enterprise where this stimulus is needed to give the necessary start. That is the policy of the Government."—[OFFICIAL REPORT, 8th March, 1933; col. 1307, Vol. 275.] Although there will always be minorities, and minorities will always be deeply respected in this House as elsewhere, that is the policy of the Government, and the only difficulty which many of us are in, and the Government themselves are in, is how to translate that policy, accepted in theory, into actual working, that is to say, the difficulty of choosing the right schemes, and of putting into practice what is accepted by the Chancellor of the Exchequer, speaking on behalf of the Government, and accepted, I think, by the great majority of the House as a desirable course.

I would venture to make a few observations upon that aspect of the problem. Of course, I realise that for a Government to embark on such a policy involves some risk, and we fully realise that there is a danger, even if we might obtain by such a policy the reduction of taxation and an increase in prices. Even if we could obtain initial advantages, there is a danger of relapse into further depression, and, therefore, any such plan of capital expenditure should be directed with the primary object of creating and maintaining a new equilibrium of production. Clearly we ought to concentrate upon those things, expenditure for good development, desirable work, and fresh resources which will restore that lack of balance between different kinds of production from which we have been largely suffering.

Therefore, under the first of such heads, I would put capital expenditure which aims definitely at bringing about a new balance of production in the light of world changes and in the light of the new policy upon which we have embarked in the present year. There is the development of agricultural production in all its forms. As far as I can ascertain, large sums could profitably be invested in land drainage, in the reclamation of land at present unfit for use, and in preventing land which is at present good, getting into bad condition. It is estimated by the Ministry of Agriculture that a sum in the region of from £30,000,000 to 40,000,000 might be spent in that direction.

In addition, there is the possibility of a large extension of the allotment system. I know that in the neighbourhood of the constituency which I represent we could achieve the dual object of producing something for the people who work the allotments and providing them with employment and training. For a comparatively small sum it would be possible to organise a transport system from the industrial towns into the country. Land could be rented quite close to some of these towns and by these means and a relatively small expenditure on tools and seeds, we could not only perform a useful work in providing employment, but we could bring into relationship with the land and bring into some kind of agricultural training a population that might be suitable for land settlement on a larger scale when land settlement becomes more possible as a result of the agricultural policy of the Government represented by the Agricultural Marketing Bill.

I realise that land settlement on a large scale is not possible until the marketing organisation and the other provisions of the Agricultural Marketing Bill are at work, but I think the allotments represent a useful initial work and perform a very useful function in training the kind of people who will be suitable for land setlement at a later stage. Dealing with the same category of expenditure for useful economic purposes, I think we ought to inquire into the possibility of reviving in a new form the old Trade Facilities scheme. One of the great objections to the old Trade Facilities scheme was that there was danger of undue advantage being given to a particular firm or business over its competitors. I was interested to see that the National Federation of Iron and Steel Manufacturers passed a resolution urging on the Government the necessity for the revival of the Trade Facilities system with a view to the reorganisation of the industry. The resolution stated: The federation would welcome the introduction of credit guarantees for the purpose of capital expenditure analogous to those provided by the Trade Facilities Act, with additional provisions that no application for such guarantee would be considered by the appropriate authority unless it was endorsed by the representative organisation of the trade or industry in which the applicant was engaged, approving of the application and stating that there was no objection thereto. I think such a proviso as that would remove one of the main difficulties found in the working of the old trade facilities system, the possibility of fresh capital expenditure being employed to put down redundant plant or plant which was unsuited to the development of the industry concerned. If capital were made avail able on a system which operated in conformity with the planning, the arrangement, the organisation of the industry concerned, that objection would be removed. The Government ought also to consider the possibility of organising a credit system which would meet the real need existing to-day for machinery to provide something in between the short term credit given by banks on full security and the long-term credit which is given on no security but the hope of a future profit. There is a need for five year or 10-year loans to be given in particular to the smaller industries which are not able to obtain credits under the ordinary banking system. Indeed, it is not one of the functions of the banking system to give them such credits. I think almost every industrialist and banker recognises that need—so much so that I understand that the governor of the Bank of England has made several attempts to organise such a system. All these methods—capital expenditure ion agriculture, revival of trade facilities and the organisation of finance corporations to perform the functions which I have indicated—are methods whereby expenditure might be directed in conformity with a definite economic plan.

Then we come to another category of capital expenditure which may be defended as socially desirable, and I think in this category comes the most useful and the largest part of such expenditure. I hope that the Minister of Health will be able to tell us something more about the committee which he has appointed to deal with the problem of slum clearance. Many of us think that a national organisation would be more effective than the efforts of local authorities under existing legislation and that under such an organisation it should be possible to deal in a very bold and widely-planned manner with this problem. Very large sums it is considered could, justifiably, be spent in the course of the next three years on an audacious plan of slum clearance. Added to that, many people feel that, in spite of all we learned during the passage of the recent Housing Act, there is a possibility, indeed a grave danger, of a gap being created between the people who are building the houses, the building societies—the people who are guaranteeing the building—and the people who are prepared to own the houses and to let them at small rents. Our policy has been and is definitely to accelerate the building of houses to be let at low rents to working-class people. It is true that we have raised the power to give mortgages up to 90 per cent., but I am not sure that we are going to fill the gap in that manner. What we want now is an authority prepared to act as landlord, a nationally controlled and regionally organised public utility body for the purpose of fulfilling the functions of a landlord and owning property to be let at small rents. This would not only employ a very large capital amount, but would also aid a desirable social development.

There is also the host of schemes, local and national, which have been held up by the very proper reduction of capital expenditure during and immediately following the financial crisis of 1931. There are national schemes into which inquiry has been made already but in regard to which some greater activity might be shown in ascertaining whether they are practicable or not. There 'are gas and water schemes of various kinds. It is almost a scandal to a civilised country that the water supply in our rural areas should be as backward as it is in many areas. If we talk about getting people back to the land, some attempt must be made to develop amenities in rural areas, more or less on the scale of those enjoyed in urban areas. There is some possibility of developing a system of land drainage for the purpose of preventing flooding such as we dealt with the other day in the Doncaster Bill. Large sums of money are now wasted as the result of the present lack of drainage system. As I have said, a host of local schemes were partially completed when the crisis came, or have been held up as a result of the crisis. In many cases, probably, within the knowledge of hon. Members, there are schemes now half-finished which, clearly, ought to be completed. There are schemes which in the ordinary course of the development of a great nation ought to go ahead. There are many cases in which the Government can stimulate local authorities to continue those development schemes.

In general, I frankly 'admit that the method of increasing demand by capital expenditure presents many difficulties. It is easy to show the difficulty of producing schemes which are watertight. It is easy to pick holes in any schemes which are put forward. But a good deal depends upon whether the Administration is anxious to proceed with the schemes or is anxious to criticise them, and we are much encouraged by the direct statement of the Chancellor of the Exchequer on 8th March that it is the policy of the Government to proceed. That means, I take it, that 'all schemes put before the Government are examined with the intention and the hope that they may be made practicable and possible. The Government, of course, have other duties than that of merely examining schemes which are put before them. The Government are not merely a body of examiners. The Government have a duty to initiate and I have no doubt they will initiate.

I am sure that the country as a whole expects that some effort will be made to raise it from its present position. I do not think there are any ways of doing so except, first, even though some risks are involved, a stimulation of demand by re duction of taxation; and, secondly, a determination to encourage instead of to discourage public expenditure. I do not say that these two methods will achieve all we need. Of course not. We must all agree with the Chancellor of the Exchequer that until the world recovers as a whole, until the World Economic Conference has achieved desirable and fruitful results, there can be no general recovery. I am not putting the case too high. I am not saying that you will produce a sudden prosperity, either by a gambling Budget or by vast schemes of public expenditure. I only say that you can do something on the lines I have suggested. You will not do everything, but you can give an example, and it is possible that if we could raise sterling prices, gold prices would follow. It is possible that if we could do something for ourselves other countries would follow our lead.

At any rate, do not let us think that this is one of the cases in which all the risks are on one side, or that the orthodox, strict, austere policy is, necessarily, the cautious policy. There are grave risks in that policy too. You may put too great a strain on the social system. You are already in a position in which masses of the people, good hard-working people, are broken-hearted. If you can put some of them into employment, if you can at least let them see, in their own towns and districts, that 10 per cent. or 20 per cent. are getting back to work, you would give them moral energy and enable them to get through the frightful hardships which unemployment entails. Without putting the case too high, without saying that by a reduction of taxation in such a Budget system as I have tried to describe, or by large public expenditure you could achieve everything, yet I think you could achieve something. You could do what is eminently desirable—put heart into the people and make them feel that there is a good chance of a recovery, a recovery in which we may be the leaders, followed by a general movement throughout the civilised world.

4.30 p.m.

Sir PERCY HARRIS

We have just listened to a very interesting and stimulating speech. The hon. Member for Stockton-on-Tees (Mr. Macmillan) always brings an original mind to our Debates and never looks on any problem, if I may say so, from an ordinary party point of view. With the last part of his speech I especially agree, and I am glad he emphasised the difference between long-term and short-term methods. I am going to join him in putting forward palliative proposals for dealing with the immediate problem, but you have always to keep in view, in the interests of everybody concerned, and particularly in the interests of the unemployed themselves, that there is no real remedy in this country or in the world except a revival of industry and a return to ordinary industrial activities. There appear, in the draft annotated agenda of the London Economic Conference, which is apparently the adopted policy of the Government, signed by our two representatives, as well as by the representatives of every country concerned, these words: Failure in this critical undertaking threatens a world wide adoption of ideals of national self-sufficiency which cut unmistakably athwart the lines of economic development. Such a choice would shake the whole system of international finance to its foundations, standards of living would be lowered, and the social system as we know it could hardly survive. These developments, if they occur, will be the result, not of any inevitable natural law, but of the failure of human will and intelligence to devise the necessary guarantees of political and economic international order. Then there is this final sentence: The responsibility of Governments is clear and inescapable. I am glad the right hon. Gentleman the Chancellor of the Exchequer has come back into the House. I was referring to page 6 of the agenda of the London Economic Conference, and I was about to say that I was rather surprised, in face of that momentous statement, to find the right hon. Gentleman in the congenial atmosphere of Birmingham, and excusably there, for a silver wedding celebration, I understand, or something of that kind, saying: For my part, it seems to me that as long as we live in a world in which any nation, by the use of modern machines can produce anything it likes, but where so profound a difference exists between rates of wages and conditions of labour we cannot go back to Free Trade not even if all the world adopted it. In other words, the tariff policy is not to bring the world to its senses, as we thought, is not a weapon to lower tariffs, to persuade other countries to sanity, to restore international trade, but it is a policy to isolate us from the rest of the world. It is adopting the very policy that has brought the world to disaster and this country very near to the verge of ruin. I am one of those who are quite convinced that this small island, with its teeming millions, must have world trade, that we cannot maintain a population of 45,000,000 in the present economic standard of comfort unless we are able to exchange goods with other countries. We understood that this tariff policy was to be used as a weapon for trading, but instead of that it is apparently to be made permanent. This larger problem was dealt with very ably by my hon. Friend the Member for East Birkenhead (Mr. Graham White) last week, but unfortunately the Government did not see their way to accept his Motion. In the meantime, as I understand it, from the lead given to us by the hon. Member opposite, we are to discuss palliatives; we cannot wait for a long-period policy. Immediate remedies, I quite agree, are essential. The patience of the people is exhausted, and they look to Parliament and to the Government to find remedies which will not merely be a permanent cure, but will alleviate their immediate difficulties.

I am convinced that it is essential that the Government should give a real lead. What we want is a kind of Committee of Public Safety, composed of all the Ministers concerned—at least four, if not five, of them—who should co-operate and work together, if possible, through the machinery of the local authorities. The first of them should be the Minister of Labour, whom I see in the distance. He disarms criticism by his frankness and his obvious sincerity. He always appears in the garb of a mediaeval saint, and he has a charming personality, but in these days of economic upheaval it is not enough to be passive; we want a more active policy. In other words, instead of the right hon. Gentleman being a Minister of Labour, we want him to be what his Department was originally created to be, namely, a Minister of Employment. More and more the Ministry of Labour is becoming a mere bank to pay out benefits, and it has been overwhelmed, snowed under, by the financial calls which have been made upon it. The original idea was that the Labour Exchange should be a kind of market where employers and employés should be brought together and where, under the influence of the Department, the whole industrial army should be organised and manipulated and moved according to the needs and requirements of trade.

My right hon. Friend the Member for Darwen (Sir H. Samuel) suggested that there should be Commissioners to deal with the whole problem of unemployment and public works on scientific and progressive lines. That proposal was obviously sound. It was that they should work through the machinery of the Ministry of Labour and that they should be in constant contact with the factories, industries, and workshops in their areas. If they found, after full inquiry, that it was not possible to bring together idle hands and idle plant, they should devise, preferably with the local authorities, schemes to be put forward to the appropriate Departments, the Ministry of Labour, the Ministry of Health, the Board of Education, and the Ministry of Transport, to absorb the idle labour that was drawing money from the State. Of course, in working out those schemes, they would see whether it was at all possible to find constructive schemes of betterment to absorb the labour without additional cost to the State.

One thing, it is quite clear, should be revived, and that is the Unemployment Grants Committee. That Committee was swept away as a result of the May Report, although actually the May Report never went so far as to suggest that it should be abolished. On page 140 the May Report merely indicated that its contributions towards schemes of public works should be limited to 25 per cent. In the exploration by the representatives of the Minister of Labour on the spot, in the locality, the merits of these public works, whether of a small character or on a large scale, should be examined.

I understand to-day that a very significant Circular has been issued to the local authorities by the Minister of Health, in reply to what is known as the Ray Report, another economy report applying the axe to local authorities in the same way as the May Report applied the axe to State expenditure. This new Circular is Circular 1311. It is very long, but not very illuminating, and the policy behind it is not clear. It deals more with details than with general policy. The Circular that influenced local authorities last year was Circular 1222, dated the 31st September, 1931, issued immediately after the May Report, which asked that all authorities should consider whether the development of any services cannot safely and properly be slowed down till better times. Unfortunately, many local authorities, though by no means all, took that Circular as an instruction to dry up, as far as possible, all schemes of capital expenditure, and in the case of most of the great authorities, particularly in London, many schemes that had actually been contracted for and let were cancelled. Circumstances now have changed; money is cheap, material is plentiful, and there is labour in abundance. The question is now whether there should not be a more emphatic lead. I will give this credit to the Chancellor of the Exchequer, when he was Minister of Health, that a lot was read into his Circular that it never meant. It certainly was not emphatic, and I have no complaint to make either of its tone or temper or of what it actually contained, but I suggest that a direction from the Minister of Health, and particularly from the Chancellor of the Exchequer, that a forward policy of constructive works that are now held up would be approved by them would have a remarkable effect on all the local authorities concerned.

In August of 1930, under the Housing Act of that year, the London County Council put forward proposals for dealing, under the quinquennial scheme contained in the Act, with the whole housing needs of London. They put forward a budget in detail, representing an expenditure of £21,000,000, or over £4,000,000 a year, but as a result of the change of policy in the country practically the whole of that scheme was abandoned. At the moment there is an expenditure allowed for of something like £1,500,000, and that means a tremendous drop in employment and a slowing down of the whole housing policy. I suggest that here again the Minister of Health should give a lead to the local authorities.

Slum clearance alone is not enough. I was recently speaking to a high official, who told me that in his experience it is wrong to house people under slum clearance schemes as compared with other housing methods. Slum clearance is too slow. It involves public inquiries, buying houses, shifting families from one place to another. The machinery is slow, clumsy, expensive, and cumbersome, and I would suggest that, even now that the subsidy has gone, as money is cheap and the cost of building is enormously down, the local authorities might still be encouraged, where they can satisfy themselves that the two ends can be met, to go on doing their primary duty under the Act of 1890 for the housing of the work- ing classes. This would be a very substantial contribution to employment, and there is no better instrument for the employment of labour than housing, because it is not merely that it employs a number of men directly, but it means a lot of work in other industries, such as brick-making, joinery, and so on.

First, then, there is the Minister of Labour, next there is the Minister of Health, and then there is the President of the Board of Education. Here, in education, is a tremendous leeway to be made up. Some 18 months ago school contracts were cancelled wholesale. Schools which were to have been built have been abandoned, and schools which were to be reconstructed were left in their derelict state, and I suggest that this is the time above all in which to go in for a forward policy in education. Never has there been a better time to build cheaply, to build quickly, and at the same time to make a substantial contribution towards solving the unemployment problem.

If I might, while referring to education, refer to another matter that was referred to by the hon. Member opposite, it is worth seriously considering whether, at any rate in some areas, it might not be profitable to get children off the labour market. After all, an unemployed man on an average costs something like £50, and it would cost very much less to keep a child at school. I have suggested that the President of the Board of Education might very well circularise local authorities, in the necessitous areas at any rate, asking them to persuade parents voluntarily to keep their children at school. A lead from the President of the Board of Education might have a very great effect, and a small subsidy from the State might have a greater effect. Not only is it a matter of large policy, quite apart from the larger principles of a general raising of the school age or of the creation of continuation schools or any revolutionary change in education, but as a contribution to the unemployment problem at a time like this it would be a great thing for a few months to keep some Children off the labour market, so as to enable a few more adults or juveniles to be retained longer in the factory or the workshop.

The fourth Minister that I should like to see on this Committee of Public Safety is the Minister of Transport. We have a new Minister of Transport, yet to be tried arid tested out. The Ministry of Transport obviously lends itself to useful public works. I am not going to suggest any great embarkation on Yellow Book schemes—my hon. Friend opposite has obviously absorbed the Yellow Book, the mere mention of which still remains to many people like a red flag and alarms them, as indicating vast schemes leading to national bankruptcy—but I am going to suggest to the Minister proposals contained in Government reports and schemes already approved by local authorities or passed by the Ministry of Transport itself 18 months ago, and abandoned because of the economic stringency.

The Royal Commission on Transport, in its final report, issued in 1931, suggested a whole series of necessary, overdue, constructional schemes, all of which will require a large amount of labour and very little capital expenditure in the purchase of land. These schemes include the reconstruction of the surface of existing roads, the widening and straightening of existing roads, the improvement of road junctions, and the construction of by-pass roads. Many of the arterial roads have largely been wasted because the work of making them round big cities has been held up for the last 18 months. Then there is the provision of footpaths, an expenditure for the safety of pedestrians long overdue and strongly recommended by the Royal Commission on Transport, in the interests both of pedestrians and road traffic; and, of course, assistance from the Ministry of Transport would be a tremendous help to the local authorities concerned.

Then there are the bridges. There was to be a big scheme of bridge construction, and the Royal Commission pointed out that there were probably 7,000 bridges, scattered all over the country, which were badly required. Bridges, of course, mean not merely unskilled labour, but the employment of engineers, mechanics, and many kindred tradesmen. The Royal Commission pointed out that they ought to be done at the rate of not less than 1,000 a year. We could go straight ahead with these bridges if only the Minister of Transport would give the necessary stimulus by releasing a certain amount of capital to enable the local authorities to get on with the work.

There are two schemes in which I am particularly interested, because they apply to London. The first is the Dartford and Purfleet Tunnel, for which an Act of Parliament was passed only a couple of years ago, after a long discussion and debate. That scheme would employ an enormous amount of labour, almost the greater part of which would go in skilled engineering. There it is, ready planned, with an Act of Parliament behind it, and it only wants the veto to be removed for work to be begun at once. Next there is the Charing Cross Bridge, which has been recommended by half-adozen Royal Commissions in the past. The Charing Cross Bridge has also been through the House of Commons, but it was thrown out by a Special Committee because the particular scheme recommended was obviously too expensive. Then there is the construction of a tube through which the Southern Railway would take its trains, which would be a splendid way of spending money and would employ a large amount of labour. When the tube was constructed, you could clear away your railway bridge and make a new road bridge within easy reach of South London, without a large expenditure of money and without injury to the amenities of the southern side of the river. On page 138 of the Royal Commission it is stated: Many of the ports most used by and most useful to coastwise shipping are in a state of decay. … We would point out, however, that work of this nature would not only assist the two transport agencies for which it is primarily intended, but would help our unemployment problem. The shipping interests are behind this and ask that the port facilities of the country shall be improved, and they claim that it would be a justifiable expenditure of public money. My hon. Friend referred to the suggestion that the Government should lend a helping hand by devising schemes to absorb the unemployed, but there is still a problem of finance. In, their summary the Royal Commission refer to canals and say they were informed that: Many of the canals were made in pre-railway days; though they were useful then they can never be useful now, and a good many ought to be scrapped. … Nevertheless we are of the opinion that certain canals still possess considerable value as a means of transport, and that properly nationalised, and developed, they can be made to render much useful service to the community. There are many schemes which, under Government direction and Government stimulus, could absorb a large amount of labour without involving any unreasonable cost, and at the same time we should help the country to improve its communications and cheapen the transport of certain essential commodities like coal and timber. Lastly, there is the question of the electrification of the railways. The electrification of the Southern line to Brighton is an example of what can be done, and there is no doubt that many of the main trunk railways will follow suit and electrify their suburban traffic. Unfortunately, the bad position of the railways makes railway investment unattractive to the public, and it is open to discussion whether the Government should not guarantee, in the same way as it guaranteed the extension of the tube to North London, the electrification of certain suburban lines not only in London but, as the Royal Commission points out, in every district where there is intensive surburban passenger traffic. In that way useful employment, which would not be in the nature of relief works, could be provided, and we should be adding at the same time to the wealth of the country.

It may be said that these are schemes which are Socialistic in character. As I understand Socialism it means the nationalisation of industry. These schemes are merely public works such as we have recognised to be the duty and the responsibility of local authorities or the State for the past 50 years. What I suggest is that this time the Government would be well advised to work not through Government Departments but through local authorities. Let them have their commissioners, let them use the machinery of the Employment Exchanges under the direction of the Ministry of Labour, but let the work actually be carried out by the local authorities. In nearly every case the local authorities will provide a check against extravagance; they have a responsibility to the ratepayers, and they would have the incentive of the desire to absorb their unemployed. At the same time they would have the supervision and direction of the Government Department concerned. I hope these suggestions will be considered. For a long time the country has displayed an unexampled fortitude in the situation in which it has found itself. Our people have been an example and a surprise to all the world. In America there have been riots and other disturbances, and in Germany unemployment and industrial distress have brought the country to the verge of revolution; but this country has patiently endured for 10 or 12 years, and the people now have the right to demand that the Government should change its policy.

5.0 p.m.

Dr. McLEAN

We have been dealing this afternoon with the subject of public works, and I wish to direct the attention of the House to the economics of this rather important matter. In using public works as a palliative—where you have development schemes on a town, regional or national scale, and these schemes contain projects of public works—you may advance them in times of depression and retard them in times of prosperity. I would like to point out that in this country we have already used up many of these schemes, and it is extremely doubtful whether there exists any considerable number of public works which can be usefully carried out. In the old days of expansion, we used to construct works on the assumption that they were more or less economic. We were usually justified in this, but, from my own particular experience as an engineer, I know that much construction, although technically sound, may be economically unsound. Take, for example, certain railways. I have known railways constructed for expansion and development of traffic which has never eventuated, for reasons which might have been foreseen. Again, the failure of some port and harbour facilities provided is remarked upon, for the same reason, in one of the first reports of the Imperial Shipping Committee.

In the complex conditions of to-day, public works should only be constructed if they are found to be justified by an economic background. It is the determination of that background which is not always so simple. The public works considered are usually those of communication. I will treat such things as slum clearances, and other matters of public health, as being in a different category. The economic background would be ascertained by consideration of the capital expenditure, the annual cost of main- tenance, interest, and other charges, on the one hand, and, on the other hand, by the direct and indirect return from the development for which these schemes were designed—development of trade, industry, traffic and, of course, in the employment provided. There is no doubt that the false assumption that trade, traffic and industry would grow in the future at the same rate as in the past has resulted in a great deal of uneconomic construction. With regard to many public works proposed in recent years, it has never been made known if these works have a sufficient economic background to justify the Government either in undertaking them, or facilitating their construction. The Forth Bridge, the Humber Bridge, the Forth and Clyde Shipping Canal, main-line railway electrification, and some other schemes enumerated by the hon. Member for Bethnal Green, South-West (Sir P. Harris) I would put in that category.

The recent report of the Severn Barrage Committee recognises clearly, in the last paragraph, the necessity for investigation of this economic background before a decision can be taken whether, or not, to construct the barrage. In the case of land reclamation proposals, you will find that they are very often not related to the value of the land, economically, when reclaimed. It has been assumed that there is a large number of public works, the construction of which would assist our return to prosperity. Schemes may exist, but there does not appear any authority for the assumption that they have sufficient economic background. In many cases it may even prove a financial disaster to undertake them.

In a number of local authorities' schemes, which investigation may show to be economic, I think the Government might give some assistance. Other schemes might entail consideration of national matters. As a constructive proposal, I would humbly suggest to the Government a means of carrying out this investigation. The Government might gather, in a National Survey Committee, representatives of the Ministries of Health, Agriculture, Transport and Labour, the Board of Trade and the Scottish Office. To these I would add the Electricity, Forestry and Development Commissions, and also the Economic Advisory Council. This Committee would correlate all the information available on trade and development matters. It would take into account the national resources, national industries and the reorganisation which has been, and is now, taking place. It would make a general survey, and gain a picture of production, markets, and the prospects for the future. A great deal of the information already exists, but being unrelated, it is of rather limited value. This committee would assist the Government, and also the local authorities, in estimating the effects of the prevailing social and economic tendencies on the schemes which they must provide for under the new Town and Country Planning Act.

There is no doubt that large public work projects, which form part of planning schemes so prepared, if done at the proper time, would justify their construction. From my experience in preparing a national development plan for Egypt, and many regional and town plans, I feel that this proposal is a practicable one. Although the difficulties of such a scheme in a highly developed country such as this are undoubtedly very great, that is no reason for making no investigation at all, but rather is a reason for producing what will give us a basis for our planning, and also give us something definite to go upon in making proposals for the return of prosperity to the country.

5.9 p.m.

Mr. BANFIELD

I want to draw the attention of the House, for a moment or two, to the tremendous change which has taken place among the supporters of the Government in the rather short space of 18 months. At the beginning of this Government, the supporters of it came here with an avowed policy of economy. That policy has had the result of cutting down all public works. It is a policy which has resulted in wholesale reductions of wages all over the country. The effect of that policy has been that, after 18 months, those who were, at the beginning, its strongest supporters are now coming to the conclusion that this economy business has gone a lot too far. It is common knowledge that, instead of employment being better, it has got considerably worse. I venture to suggest that one of the reasons why unemployment is still worse is because of the drastic reduction in the purchasing power of a great number of our people. I want to suggest, as a practical proposition to the Government, that it would not be a very bad thing if they were to take steps to say that there should be no further reductions in wages, and that they should revive the powers the Government had immediately after the War; that, instead of any further reduction in wages, a court should be set up for hearing applications for increased wages. That would lead to more purchasing power and inevitably to more employment.

The example of the Government in imposing these 10 per cent, cuts was followed extensively, all over the country, by local authorities. It had not only the effect of reducing the salaries and wages of people, but it became a kind of fashion among all kinds of employers—those who were doing well as well as those who were not doing so well—to follow the example of the Government. I know, in my own experience here in London, that a firm, doing very well indeed and paying no less than 25 per cent. dividend even in these hard times, called their employés together and said they had now come to the conclusion that wages must be cut, because, owing to the tariffs imposed, certain articles were going up, and they were unable to pass the increase on to their customers. They said there must be 2s. 6d. off the men's wages, and 1s. off the girls' wages. That is one of the results of the lead given by the Government so far as economy is concerned.

This reduction in wages has been a very serious matter indeed for millions of our people. In the two months of January and February of this year, 600,000 people have had their wages reduced, according to the Ministry of Labour Gazette. This continual reduction of wages more and more causes unemployment to increase. Surely the time has come when the Government should stand for something more than being a Government which has set itself, deliberately, to depress the standard of life for the majority of our people. A circular was issued to the local authorities in 1931 pointing out the necessity for economy. Building and all kinds of work were stopped, and there has been no resumption of work by local authorities. Local authorities in the South, where unemployment is not so bad, think that they have done something remarkably fine if they reduce their rates, as they did last year, by a penny or twopence in the pound. As a matter of fact, they are adding nothing whatever to the prosperity of the nation, but rather they are carrying on a policy which must inevitably depress the nation and make things considerably worse.

I want to refer to the £6,000,000 which has been paid by way of wheat deficiency payments. I understand that when those payments were granted, one of the arguments put forward was that it would bring more employment to the farming community in rural areas. Now £6,000,000 is a fairly large sum. It is not one of those little odds and ends like £10,000 to be divided among 3,000,000 unemployed. The argument was not only that the money would make work and would help to revive agriculture, but that it would enable the farmer to grow wheat which would be of a quality suitable for milling, suitable, in other words, for turning into bread. What has happened? I am informed on pretty good authority that the deficiency payments are working in a way which is far from satisfactory. Certificates are being given for wheat which is of very indifferent quality and not fit for milling, and where the wheat is fit for milling the industry are refusing to use it in the manufacture of bread. If we are to pay £6,000,000 a year to farmers, we are at least entitled to ask that we should get value for the money that we are pouring out. I very much doubt whether we are getting that value. If it is possible to produce an English wheat capable of being turned into bread, and if the policy to which I am referring can be pursued with success, we shall have done a very great thing, not only for agriculture but for the country as a whole; but not if the only object in the minds of the farmers and millers is to secure the £6,000,000 per year, irrespective of how the wheat is grown and how it is used.

I wish to ask whether we are to be faced with the continual reductions in wages which are making the condition of the people who are employed anything but what it should be. There is a very great deal of dissatisfaction in the great towns of the provinces on the question of Poor Law relief, and there is a great deal of feeling that the Government should do something to equalise the burden. There is a point in connection with transitional payments. In two towns, three miles from each other but under different bodies, there is a difference of as much as 2s. 6d. or 3s. 6d. per week in the transitional payment allowance. The consequence of that is tremendous dissatisfaction and a sense of injustice. Poor people cannot understand how, if it is fair and just to give a certain amount in one area three miles away, it is not fair and just to give the same amount in the other area. Few hon. Members realise what an important thing the addition of 2s. 6d. a week is, in the circumstances in which those people are placed. The money does not sound very much, but I can assure hon. Members that the 12 pence that make the shilling are of the utmost value and importance in the homes of people who are compelled to live on transitional payments. If the Government have no desire to interfere with what they call the authority and the rights of public assistance committees who deal with those matters, they can do something to put the payments upon something like an equal footing. That is a point that should appeal to all hon. Members, irrespective of their politics or their party, because it is a simple matter of justice. The difference is breeding a tremendous amount of discontent, out of all proportion to the insignificant sum which is involved, and I trust that the matter may receive consideration.

May I draw the attention of the Minister of Health to what is going to be the terrible plight of Men who have been unemployed for the last three or four years, who have still no chance of employment, and who, at the end of this year, will be out of all cash benefits, so far as National Health Insurance is concerned? I want to emphasise this point; I made it in this House the other week, and I think that it is worth repeating. These men are being asked to make a tremendous sacrifice to keep their National Health Insurance cards clear. They are asked to pay 18s., which is a tremendous sum for men who have been unemployed for three or four years. They are being told: "If you pay these arrears, you will still be a member of a society, and you will be all right." Unfortunately, that is not the case. It ought to be made crystal clear that insurance benefits are not prolonged as a conse- quence of paying the 18s. What will happen will be that those poor people, who have made unheard-of sacrifices to pay the 18s., will be told, when they fall sick and need benefit, that, in spite of the fact that they paid the 18s., they are out of insurance, because they have been in no insurable occupation for the past three years. There will be 100,000 people who, by the end of this year, even if they have paid their 18s., will not be entitled to cash benefits. Their case next year will be considerably worse; they will then not even be able to claim medical benefit. The year after, whether they pay or whether they do not pay, they will be out of all connection with National Health Insurance.

This is going to mean an added burden upon local authorities. When those people fall sick, they will be unable to claim transitional payments and they are bound to fall upon poor relief. They are bound to have medical attention. Many of the men are now unemployed because a machine is doing the job which they used to do in the past. Many of them are highly-skilled men who have spent their lives in their trade, and who now find that a machine has absolutely displaced them. They will have a tremendous sense of injustice that, after they have been 20 or 25 years in industry, they should be out of benefit through no fault of their own. Men who are now getting on in years have contributed those years of service to the State, and they will find themselves without any benefit in the way of pension or anything else. I hope that the Government will, in some way or other, try to make the position very clear to those poor fellows who are unable to speak for themselves. It is all very well for the Minister to say: "We issued a circular on so-and-so, which explained this position to them." Very often hon. Members of this House cannot understand the circulars which are issued by Government Departments, so how on earth are poor people, who have the utmost difficulty in understanding the phraseology of Government circulars, to understand precisely what is meant by circular number so-and-so 4 It should be made quite clear to them in a plain, straight way, precisely where they stand under the new health insurance legislation.

We have heard a good deal about development schemes as a possible method of finding employment. In the short time that I have been a Member of this House I have heard Minister after Minister declare that the Government's policy was not in favour of development schemes but was opposed to them; it was cheaper on the whole to find money for the Employment Exchanges and doles than actually to find work by means of development schemes. I am satisfied that there is a rising public opinion which will not tolerate that position much longer, and it is not confined to Members of my party. That public opinion believes that economy has gone much too far. The Government are paying £120,000,000 or £130,000,000 a year in unemployment pay, and there is now the era of cheap money which they have desired for a very long time. Surely it is not beyond their ability to bring the cheap money, the unemployed man, and the scheme together, and in that way to set people to work, instead of paying so much in unemployment pay. That is not the opinion of Members of this side of the House altogether, but it is a generally expressed opinion up and down the country.

I hope that we may get a ray of hope out of this Debate to-day. The hon. Member for Westhoughton (Mr. Rhys Davies) said that the Chancellor had opened up a period of gloom and depression by the remark made the other day about it being possibly 10 years before there would be any material drop in the numbers of the unemployed. I can tell the House that there is gloom and depression outside among millions of men who are feeling that it is hopeless to expect that anything will be done to better their conditions. It is a feeling of despair. A year or two ago they were hoping and hoping. They said, "We have been out of work before, and we have got back again. Good times will come again." They tried to keep up their hearts and their spirits, but I put it to hon. Members that there is nothing so heart-breaking to a man as walking the streets year after year, unable to get a job, and not seeing any hope of getting a job. What is to become of these men? Do hon. Members think that this kind of thing can always go on—that they will always be quiet, that they will always be satisfied with a dole which is semi-starvation? I suggest that it is the business of this Government at any rate to realise that it is not the question of unemployment pay that we want to argue, but the question of the provision of work for millions of men whose only cry from morning to night is, "Give me a job; that is all I want; give me a chance to work." For the Government to say, as they have said so many times, that it is cheaper to pay doles than to provide money for development schemes, shows, I submit, an absolute bankruptcy of ideas. Therefore, I trust that out of this Debate some ray of hope may come to the millions of men and women who are looking for something to do.

5.32 p.m.

Mr. HOROBIN

I do not propose to follow the hon. Member for Wednesbury (Mr. Banfield) on the topic of the major portion of his speech, but I must say, if he will allow me, that I think there was considerable justification for the gibe which he levelled, at the beginning of his speech, at some of the speeches to which we have listened this Afternoon from these benches. As I listened to the earlier part of the speech of my hon. Friend the Member for Stockton-on-Tees (Mr. Macmillan), who, I think, is not in his place at the moment, I began to wonder whether I had lost my sense of direction, and was myself sitting on the Labour benches. I asked myself whether there has ever been a time, since my hon. Friend or I had taken an interest in public affairs, when ingenious sophistries of that sort could not have been put forward in favour of unbalancing the Budget, or, in plain English, spending money that we have not got. To his eternal credit, the late Chancellor of the Exchequer broke his party rather than listen to that kind of advice. I sincerely trust that the present Chancellor of the Exchequer, though I am quite certain he has equal courage if necessary to do the same thing, will never be called upon to make such an unfortunate choice.

I want to refer to the subject of the alleged cure of unemployment by public works and such methods—reflation, inflation, and various other "flations." I have ventured to make certain criticisms of those methods elsewhere, but the principal new contribution along those lines, to which reference has already been made this afternoon, is contained in the recent articles of Mr. Keynes in the "Times." I do not propose, and this would hardly be the proper place to do so, to give a detailed reply as far as one can to the views there set forth. I am, however, a little sad not to see in his place the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), who has in this House made himself responsible for supporting somewhat similar proposals, because I do not think it is unfair or irrelevant to remind hon. Members in this House of the quarter from which those proposals come, and of the past record in finance of those hon. and right hon. Gentlemen. It is, perhaps, significant that Mr. Keynes himself is unable to get a calculation correct which extends over more than one column of the "Times," and the right hon. Gentleman the Member for Carnarvon Boroughs delivered himself of what seems to me to be a typical account of the kind of finance into which this House is likely to be led if we follow this advice. The right hon. Gentleman said—I read from the OFFICIAL REPORT of Wednesday, the 15th February— What are you going to do to develop your resources here? Have you any idea? You have £2,000,000,000 lying idle in the banks."—[OFFICIAL REPORT, 15th February, 1933; col. 1072, Vol. 274.] I suppose that none of us have any illusion that the right hon. Gentleman really meant £2,000,000,000—but that is the whole point. The whole trouble is that he never really means anything by any figure that he quotes—it is just a nice, fat noise. We had the same thing from the same right hon. Gentleman over reparations. The whole history of all these gentlemen who propose this loan policy consists in finding ingenious ways of getting something for nothing and leaving us to foot the bill. We have had "ninepence for fourpence" before, but, since the great reparation days, we think in millions. After all, ninepence is a very paltry thing. I submit, however, that it is a fair warning to give to ourselves to remember that this whole type of proposals for curing our evils by a subcutaneous injection of noughts comes from very suspect quarters. We have heard that story before, and I would venture to make my first appeal to the House not to be taken in once again by the same story, which will infallibly have once again, if it is tried, the same result.

I think that others as well as myself must have been somewhat puzzled in their minds by another aspect of such argu- ments as those that are used in the "Times." Others as well as myself must, I am sure, have asked themselves: Why is it really necessary, according to this account, if you are to find work for people, to keep on adding to your indebtedness? If a company sets up in business with a capital of, say, £4,000,000, and employs, say, 10,000 or any other given number of men, it does not have to double its capital the next year in order to keep them employed; it does not have to raise more capital in the following year in order to keep them employed. Surely it must be rather curious that it is only this particular kind of finance which has to water its capital every year. I submit to the House the deduction that Mr. Keynes, the right hon. Gentleman the Member for Carnarvon Boroughs, and others, are really in the good old Farrow's Bank tradition—paying their wages and dividends out of new capital subscriptions. That can go on for a time—one at least of them has been at the Exchequer, so it has gone on for a time—but it cannot go on for ever.

That is the second point that I would like to put before the House this afternoon—that there is something, if I may say so, instinctively "fishy" about this idea that you can only find employment for your people by running up, to use what I think is the correct phrase, imaginative borrowings. The "Times" used a very significant phrase the other day. It spoke of "capturing the fancy of the public." How many times has the fancy of the public been captured by various schemes in the City which have not always been very profitable to the people whose fancy was captured? I submit that the same methods of finance come to the same results even if you add, in the manner of the right hon. Gentleman the Member for Carnarvon Boroughs, three or four noughts at the end, and perform your operations, not at some high-sounding address in Threadneedle Street, but at Treasury Chambers.

I believe it will not have escaped the notice of those who have carefully read the argument submitted in the "Times"—and I merely use that without any discourtesy to its distinguished author, but merely because it has already been referred to, and is the most recent authoritative exposition of imagination in money matters—it cannot, I am sure, have escaped the notice of Members of this House that all this talk of public works is sheer camouflage so far as the author of these articles is concerned. If he has proved anything, his argument applies word for word to using that money for digging a hole and filling it up again. There is nothing in his argument which depends on the value of the purposes for which the money is used. He has taken the back of an envelope and worked out an ingenious piece of arithmetic, dividing 100 into 3,000,000 unemployed, and has told us to spend that money because, by a series of repercussions, people will be got back into work. His argument does not in the least depend on the fact that you may or may not have used that money for purposes which would appeal to hon. Gentlemen on those benches, or anyone else anywhere in the House.

The position is even worse than that. His argument, if it will hold water at all—and, Heaven knows, it has a lot of water to hold—would apply equally well if you borrowed the money and used it for paying the salaries of additional Government staffs. But that, of course, is inflation, and is not respectable; and so Mr. Keynes, hoping he can bamboozle the public—because all imaginative finance has that as its principal assumption—pretends that what he is saying is something quite different from naughty inflation, or naughty increases of Government staffs and using borrowed money to pay their wages. He covers it all up with a lot of words, and hon. Members in this House have done the same, about the value of the purpose to which the money is to be put. They have said what I think every Member of the House would immediately disregard as an argument if it were put in this form, though it is exactly the same—that they claim to be able to cure unemployment merely by the Government borrowing money and paying it away in wages.

I come now to another and more fundamental criticism of these proposals for solving our unemployment problem. We have been told for some years now that the unemployment problem will never be solved unless wholesale prices rise—that the one essential condition, the sine qua non, for the solution of unemployment is a rise in wholesale prices; and, indeed, the pundits even declared the holy year: "Back to 1926" was the slogan. Now these gentlemen, inside and outside this House, say that that is all wrong, that there is a mistake, that that is not what they mean. If you just borrow, they say, a little bit of money—they are not quite certain of the amount, and they cannot make the answer the same twice running—if you borrow a certain amount of money and spend it in this way, all the unemployed will come trooping back to work directly and indirectly, in unexpected hordes, pouring into jobs, and are justified, if I may so say, not by faith but by public works; and, they say, only in so far as that policy is unsuccessful will prices rise.

According to the new doctrine, it is only in so far as you fail to solve unemployment, and it is only when everyone is back at work, that prices begin to rise. The hon. Gentleman cannot have it both ways. We are simple, unlettered men in this House and we will try to believe anything, even the answers to our supplementary questions, but we cannot believe both those things at the same time. Either you have to raise prices in order to solve the unemployment problem or, once you solve the unemployment problem, that is the only way in which the Government can do what it wants to do, namely, raise prices. They cannot both be true. We cannot swallow both at once. As a matter of fact, I believe they are both false, but that is for the moment irrelevant. They cannot both be true, for these two or three different reasons and, therefore, these elaborately argued and much welcomed proposals are neither very new nor very soundly based and are not a very good ground for criticism of His Majesty's Government's policy and actions.

I want to make one or two observations upon this matter of price levels, and policies to raise prices, because I believe the Government in this matter are very much wiser than they have yet perhaps seen fit to argue at length to the House, and they are laying themselves open to a great deal of criticism which is really ill-founded. Is it so certain, either in theory or in the light of experience, that the doctrine that is now becoming almost orthodox—it is almost blasphemous to doubt it—that you can first of all raise prices to a fixed level by some monetary jiggery-pokery and then persuade the world that you are never going to do the same thing again, is the beginning and end of financial wisdom? May I direct attention to a thing which I believe will always weigh, rightly, more with the English people than theory, namely, the little practice that we have had in the last few years. The American experience in the matter is exceedingly significant, not only because of what has happened but because their policy was quite deliberate. I have here the actual figures of wholesale prices in the United States over the period of six or seven years prior to the very satisfactory crash which resulted from their indulgence in these imaginative methods of finance. I will not read them at length, but the House may take it that there was never more than a 5 per cent. change in the wholesale level of prices in all that time when the pot was boiling and was ready to boil over. That experience in America strengthens the possibility that the Government are very wise in not tying themselves too tightly to a doctrinaire view. Everyone of us will agree that, if you can get prices more or less stable, it is an advantage, just as we would agree that, if you can get some rise in prices, it is an advantage. That is all that the Government say and I cordially support them for not saying more than that.

Not only does the experience of attempting to stabilise prices, in the light of experience, not appear to be very satisfactory, but may I ask the House to consider a little how prices were situated in the year 1929 and thereabouts, which the Government are being so criticised for not straight away, by all and any means in their power, getting back to. There is no particular virtue in an index number. If all the prices that go to make an index number are bad, the index number is bad. I shall be within the memory of many Members if I recall what was the actual condition of wholesale prices. Take wheat. The Federal Farm Board and the Canadian Wheat pool had arbitrarily fixed the price and were having such a difficulty with it that, when it finally broke down, the Canadian Wheat pool had something like 80,000,000 bushels of wheat held off the market by borrowed money. That was the only way they kept the price at that level. In Brazil the stocks of coffee were four times the normal. It was all held with American borrowed money put at their disposal by inflationary methods. When it broke down, the natural result was that in three months prices fell 30 per cent. In rubber we all remember that Stevenson scheme. In 1929 stocks increased at the rate of 50,000 tons a year. There is a Tin Producers' Association and there is artificial control of copper. In the case of tin, the producers were able to strengthen their control in the following year, but copper, where there was a control of 90 per cent. of production, broke down. It is on that sort of rocky foundation that we are asked to base our currencies and to disorganise our finance. The Government have been very wise in confining themselves to what some people have blamed them for—being content with merely pious declarations. They will be very ill-advised to allow any supposed need for interfering with the wholesale price level to derogate in any way from increased confidence in Government finance.

I think many Members of the House will agree with me that, in regard to these very difficult economic problems, one does one's best to understand them and come to some conclusion, but ultimately we must base our policy upon rather different considerations. I have no doubt whatever that, if the Government went to a World Economic Conference with an attractive programme of advising foreign Governments to borrow more money and attractive suggestions, such as we had before, of evading the real issues by one or other ingenious financial device, they could get some sort of agreement, but I have a doubt, and I believe that doubt will he shared by many Members, whether that is the right way, if there be any right way, out of our serious problems. I venture to prophesy that, when we get out, as eventually we must, of this period of unemployment, it will come, not by any ingenuities, but by having the courage to continue long enough in certain very old-fashioned and unexciting conceptions of rectitude in finance, of steadiness and of willingness patiently to unravel one after another the whole series of difficulties, whether of a particular industry which has gone wrong or a particular nation whose finances or tariffs or exchange restrictions are a hindrance to the world at large. That is not an exciting programme. It is slow. There will be many, disappointments, I have no doubt, but there are no alternatives. There are no short cuts. I believe that only by following what may appear to be at first sight a grim and unencouraging lead, such as that given by the Chancellor of the Exchequer, steadily, with a willingness to make sacrifices and without any turnings aside after mirages such as lead too many countries, even this country, into a morass—it is only by following out the conclusions of such a policy in such a spirit that we may perhaps, after such a very long period of trial and disappointment, come to the fruition of all those rich gifts of man's inventiveness, gifts which the world has so long and so sadly abused.

5.56 p.m.

Mr. CHAMBERLAIN

Unless my memory deceives me, this is not the first occasion on which we have discussed the subject of unemployment. So recently as the middle of last month we had a Debate on this very topic. The hon. Gentleman who opened the Debate to-day began by saying that I made the most gloomy speech he had ever heard a Chancellor of the Exchequer deliver since he came into the House. It is very hard, because I remember the right hon. Gentleman the Member for Darwen (Sir H. Samuel) criticising the same speech and accusing me of undue optimism. He reminded me that a former Chancellor of Exchequer earned the nickname of "Prosperity Robinson." He referred to "Prosperity Hoover" and he bade me beware that I did not earn a similar nickname. It is evident that there was something in the attitude of those who listened to the speech that determined the impression that was derived from it. But as the hon. Gentleman opposite founded his statement on a particular passage of my speech which he said had occasioned the feeling of pessimism to which he referred, and as I think, perhaps, that passage was misunderstood by some other Members of the House, I will take the opportunity of explaining, as he invited me to do, exactly what I meant when I said I did not anticipate that we should reduce unemployment to small or trifling figures in a less period than 10 years—[HON. MEMBERS: "Normal."] I will read the exact words. It is quite bad enough to have to answer for the words one does use, without being responsible for words put into one's mouth by other people: I do not think that any thoughtful Member of this House now believes that the mal-adjustments which have brought about this world-wide unemployment are likely to be corrected so rapidly and so completely that we can look forward with any confidence to the reduction of unemployment to a comparatively small figure, within, shall I say, the next 10 years."—[OFFICIAL REPORT, 16th February, 1933: col. 1215, Vol. 274.] The particular feature that I had in my mind when I made that statement I developed at somewhat greater length in a later portion of the speech, when I alluded to quotations by the Leader of the Opposition from a certain American report on the subject of the displacement of labour by modern industrial invention. I said that there had been a dislocation of equilibrium, and somehow or other a new adjustment had got to be arrived at, and I went on to say that that was one of the most difficult problems we had to deal with, and it was not a matter that could be dealt with in five minutes. That is, in fact, what I meant. I did not mean to say that we could not expect good times for 10 years. I did not mean to say that there would be no reduction in unemployment for 10 years. What I did mean to say was, that as prosperity came back again we should not be able to employ the same number of people in producing the same number of articles as we could have done, say, 10 years ago or before the introduction of these new industrial or mechanical devices. This statement should be repeated. It is not everybody who agrees with it. There are some who say that an adjustment will take place so rapidly that it does not present any really serious problem. I cannot, make up my mind to accept that view. Although I do not doubt that adjustment will ultimately come, yet it seems to me that the transitional stage is going to be one which will add very materially to the difficulties of the situation with which we have to deal.

It is incumbent, not only upon the Government, but upon those who are engaged in industry, employers and employed alike, to think very carefully and sympathetically about this problem and to see whether they cannot make some contribution towards a solution. My right hon. Friend the Minister of Labour has already begun some discussions upon this matter with representatives of employers and employed, and, I believe, in particular in connection with the proposal for a 40-hour week. I think that one thing is quite clear. It is impossible for this country to impose upon its own industry some fresh handicap in the matter of hours which is not accepted by other countries, because the only effect of that would be so much to increase the cost of production here that it would eventually lead to greater unemployment than exists to-day. What we have to do is to find some means, if we can, of employing a larger number of people to do the same amount of work without at the same time putting up the cost of the industry.

I leave that point, and I come to the more general line which has been followed in the course of the Debate. It is very clear that the Labour party have assumed too much when they attempt to suggest that they have now converted a large section of the Conservative party, or of the supporters of the National Government, or of the economists, indeed, to the sort of policy which is advocated, shall I say, by the "Daily Herald" today—a policy frankly of returning to extravagance, the abolition of all cuts, the assumption that the crisis is over, that we can go on as we were before, and that relief works should be started in full swing. We must state very definitely as a Government that that policy has been tried, and, in our opinion, it has failed, and we do not intend to resume it. I do not understand that either my hon. Friend the Member for Stockton (Mr. Macmillan) or any other Member who has spoken in this Debate, advocates a return to that policy.

What is now suggested is something different. My hon. Friend who gave us, perhaps, the most complete exposition of it divided it into two parts, or, shall I say, he separated it into two barrels. One was to be a reduction of taxation and the other an expansionist policy in public expenditure. As to reduction of taxation, those who have listened to my hon. Friend heard what he proposed, a method which has been somewhat summarily treated in the amusing and brilliant speech to which we have just listened from my hon. Friend the Member for Central Southwark (Mr. Horobin). My hon. Friend the Member for Stockton will not expect me, however tempting it might be, to enter upon a dis- cussion of the subject of taxation at this stage. There is, of course, a great difference between the Chancellor of the Exchequer and other Members of the House at this time o f the year. They can ad libitum indulge in discussions, arguments or speculations about the course of taxation, because they will have no responsibility for the proposals, but the Chancellor of the Exchequer is not in that position. He is responsible for the proposals which he makes to this House, and my hon. Friend will not expect me to anticipate my Budget statement.

With regard to the other barrel of his gun—the expansionist policy—he truly said that I had already declared that that was the policy of the Government. Where the difference arises between him and us, or between those for whom he speaks and us, is that they appear to think that a policy of that kind can, in practice, be put into operation to an extent and with a rapidity which, in our view, is altogether out of the question. Those who listened to my hon. Friend will, I think, have derived the impression that the more he had looked into the question the more he had become convinced of the truth of what I have just said. He was very halting in his advocacy of the suggestions which he made to us. He qualified his hopes on more than one occasion. He said that he recognised that these things could not be done quickly, that they required care in preparation, and that everybody knew that they could only be developed slowly. That is, of course, the fact. What we have said was, where schemes, well thought out and justified on their merits, were presented to the Government, that not only would we put no obstacle in their way, but we would, if help were required, be perfectly prepared to consider giving Government assistance in one form or another. Let me consider the various forms of expenditure which would answer to the description of my hon. Friend. First of all, direct expenditure by the Government itself. One easy way in which the Government can increase direct expenditure is in Naval construction, and yet only two or three days ago the hon. Member for Aberdare (Mr. G. Hall) was criticising the Government for the small amount of construction which they are going to carry out. The hon. Member was begging that the construction of cruisers should be delayed.

Sir STAFFORD CRIPPS

You said he was complaining of the small amount.

Mr. CHAMBERLAIN

He was complaining of any amount. He was asking whether it was not possible for the Government to delay the construction and to postpone the expenditure. The one thing which, I venture to say, will give satisfaction to some hon. Members is the amount of construction which will be placed in the Glasgow yards.

Mr. NEIL MACLEAN

The Clyde.

Mr. CHAMBERLAIN

Yes, the Clyde. Of course, there is the possibility of the erection of certain Government buildings. I have already spoken of that. There are Employment Exchanges, for instance, in different parts of the country which are undoubtedly inconvenient, ineffective, and in some cases one might say that they hold back the efficiency of the work which is being carried on by the Ministry. The Government are reviewing all those cases, and where a good case is made out, the work will be carried out. There is a project for a considerable scheme of building in London—new Government offices in Whitehall. I do not think that this is a time when it will be appropriate to build new offices in Whitehall, but there is no reason why we should delay the preparation of the schemes so that we may not have to wait when the time comes and this properly can be undertaken. As a matter of fact, the Government are engaged on the preparation of the necessary plans for schemes of that kind. There are certain works in the Post Office which can, to some extent, be accelerated, and I have been in conversation with my right hon. Friend the Postmaster-General and given my approval to proposals which he has put before me for speeding up the work on the substitution of automatic telephone exchanges.

Mr. DUNCAN GRAHAM

What about the buildings in Edinburgh?

Mr. CHAMBERLAIN

The hon. Member asks me, "What about the buildings in Edinburgh?" We are waiting for schemes. We must have schemes before we can spend money. When schemes are put forward the Government will be prepared to examine them and try to have everything ready for the time when the money can be spent. Then, again, what can be done in the way of the encouragement of private enterprise and expenditure by private firms? The hon. Member spoke in particular of the work which has to be done in connection with agricultural development. There, again, it is not ready. First of all, we have to get our Bills through this House, and, after our Bills are through, plans have to be prepared, drawings made and arrangements settled for the erection of the processing factories or for other means of spending money. The Government are doing all they possibly can to forward those schemes and to bring them along as quickly as possible. In each of these cases it is not that the Government are putting any block in the way. It is that these schemes must necessarily take some time before they come to a position in which they can actually be made to operate.

Take another scheme in which the hon. Member for Dumbarton Burghs (Mr. Kirkwood) is particularly interested—the scheme for the completion of the Cunarder. The Government are not putting any block in the way. We have made it clear that if certain preliminary conditions which we consider to be essential were fulfilled, the Government were prepared to consider the granting of financial assistance to enable that ship to be completed. It is perfectly obvious that it is no use thinking that we can carry on effectively our shipping trade in the North Atlantic if we have two great concerns competing with one another and indubitably weakening their powers to compete in that trade. It has been argued, therefore, that it is an essential preliminary that these great concerns should make some satisfactory arrangements with one another in order that an end can be put to that weakening. We are doing all we can to forward the negotiations, and we will help in any way we possibly can, but until the conversations which are now going on have actually reached a conclusion, it is obvious that it is impossible for the ship to be started.

This sort of thing applies to the question of electrification of railways. The Government are not against the electrification of railways, but as, I think, most Members of the House are aware, the electrification of the suburban railways has been waiting for the passing of the London Passenger Transport Bill. Now that the way is clear, I suppose that the scheme for the electrification of those railways will proceed. If Government assistance is required, let us see what the scheme is and what is the necessity for Government assistance. It cannot be said that the Government have put any block in the way of procedure on schemes of that kind. And so I can go on with almost any scheme for reorganisation by private enterprise. In every ease it is not for the Government to make the schemes; it is for the enterprise or industry itself to make them. When they have made them, when they have done the staff work, if they find that they will require Government assistance, we must examine into it. Without suggesting that I think Government assistance ought to be required, probably most of those schemes can be done without Government assistance at all. It must not be thought that I am inviting requests for Government assistance, but, if we are satisfied that Government assistance is necessary, to act as a sort of self-starter to get the engine going, we are prepared to examine those schemes with an open mind.

My hon. Friend spoke about stopping work by local authorities, and used a phrase which has always been used in one form or another, namely, that there are hosts of schemes that are being held up. I am often told that there are hosts or many schemes of all kinds that are being held up, but, when I ask for examples, I am generally told that there is reclamation of land, land drainage, housing and a host of other schemes. There are not hosts of schemes. Here I must repeat what has been so often repeated by my right hon. Friend the Minister of Health, that the alleged blockade by the Government does not exist. I do not think the hon. Member can have fully realised what has been happening in connection with the local authorities in the past or the sort of feeling that exists among local ratepayers to-day. In the first place, it must be remembered that there has been a sort of forced draught among local authorities for a very considerable period, during which they were not only bribed but almost coerced into putting forward schemes before they themselves were ready for them, in the hope that thereby they might find employment for the unemployed. They responded in very great measure to the pressure put upon them and the temptations offered to them.

A very large programme of public works has been put forward in recent years and actually carried out. It is inevitable that such a period of activity should be followed by a period of reaction in which there were no schemes coming forward, because there were no schemes to come forward. That is gradually being overtaken, and schemes will be initiated again. Schemes will be prepared and, as there is no blockade at the Ministry of Health, they will in due course be presented, and, if they are proper schemes, they will be accepted by the Ministry of Health as suitable for loans. I would also emphasise the fact that in most of the large towns of this country there is a very strong feeling among the ratepayers that, whatever happens, the rates must not be further raised. Councillors and aldermen are well aware of that feeling, and it is for that reason that they are extremely shy of putting forward schemes which offer the probability of a further increase in the rates. Add to that the recollection that the increase in the population is continually slowing down, that the peak of the population is now within sight and that within a few years time we shall have got the greatest population that we shall ever achieve in these islands. Those are considerations which no prudent local authority can leave out of account, because it must necessarily slow down the pressure on local authorities to build schools and start new schemes of expansion of one sort or another at a time when the population was increasing.

We may take it that my right hon. Friend the Minister of Health will not refuse his sanction for any work of reasonable utility by a local authority provided that he is satisfied that the financial condition of that authority is such as to justify his sanction. He can hardly be asked to do anything more than that. Many of the schemes which the hon. Member for Stockton has in mind, schemes which he said were put forward at an earlier date and then withdrawn, are schemes which only would go through if they had a very extensive Exchequer grant-in-aid, but those are not schemes which he is anxious that the Government should now assist.

Mr. MACMILLAN

Yes, they are. I referred to specific schemes which I said were half finished. I have in mind a scheme in my own constituency where the local authority incurred very heavy expenditure in connection with housing and the making of a road which has not been proceeded with, and the local authority has been left to carry all the expense. This is an example of cases where the Exchequer grant was cut off.

Mr. CHAMBERLAIN

I am much obliged to my hon. Friend for his interruption, because it enables me to make my position clear. I was not referring to half-finished schemes. I agree that there are half-finished schemes which it is uneconomic to leave in an unfinished state. These schemes are being judged by the Government on their merits, and when they are approved on their merits arrangements are being made to allow them to be completed. But there are other schemes which have never got beyond vague ideas and plans and could not be financed by the local authorities unless they were assisted by heavy grants from the Exchequer. Those are not such schemes as we are prepared now to approve.

In considering the question of unemployment, I do not think it can be established that the increase in the number' of the unemployed is largely due to the falling off in public works. I have got out some figures to illustrate that point and to see exactly where the difficulty has arisen. It is perfectly true that, owing to the imposition of tariffs and the depreciation of the pound, a number of industries have very much improved their position and are now employing a good many more people than they did before. I have tried to see what are the differences in the figures of unemployment to-day as compared with four years ago, when unemployment was almost exactly half what it is to-day. In February, 1929, unemployment amounted to 1,413,000, and to-day the figures are 2,836,000, almost exactly double. Where has the great increase in unemployment taken place? Curiously enough, if you compare these two dates, the largest figure of increase is precisely in the special group of manufacturing industries which have now come under the tariffs. They include a large number of trades. I might mention as an illustration, motor vehicles, silk, artificial silk, carpets, lace, hosiery, iron and steel, pottery, glass, chemicals, and electrical engineering. The increase is 480,000. The increase of unemployment in coal mining is 130,000, in transport 84,000, while the increase in the public works groups is 214,000–214,000 out of a total unemployment increase of 1,423,000.

That, I think, clearly shows that the increase in unemployment is not due so much to the falling off in public works as it is to the loss of our export trade. That is where the great trouble has been. In some of those industries to-day, I speak now of what I call the special group where a great increase in unemployment has taken place since 1929, there nevertheless has been a considerable decrease in unemployment since this Government cam into office. I will give one or two figures. In general engineering tike unemployment has gone down from 171,000 to 161,000, in iron and steel from 83,000 to 74,000, in the metal trades from 131,000 to 127,000, in chemicals from 33,500 to under 30,000, in wool from 84,000 to 46,000, and in cotton from 252,000 to 126,000.

Mr. N. MACLEAN

What has been the decrease of unemployment in shipbuilding?

Mr. CHAMBERLAIN

It has gone down since this Government came into office. In September, 1931, the unemployment in shipbuilding was 108,000 and to-day it is 107,000. There are other figures which I can give to the House. It is interesting to note that although there may be considerable stagnation in some trades there is considerable activity in others.

Viscountess AST0R

What about the building trade?

Mr. CHAMBERLAIN

Building and public contracting are included in the public works group. I will give the figures of the export of motor cars. In 1931, the number of cars exported was 17,144, and in 1932 27,178. The value of the exports rose from £2,650,000 to £3,445,000. That improvement seems to be continuing, for I find that in January and February of this year the exports were one-fourth, both in number and in value, of the total exports for the whole of last year. In two months we had done as much trade as we did in three months last year. I have one more figure in regard to motor cars, namely, small chassis, with engines of under 28 cwts. In January and February, 1932, the exports were 648, and in January and February this year 2,132, while the value has increased from £63,000 to £203,000. It may be interesting to observe that the Indian situation seems to be improving. I mention that because particular attention was called to the condition of Loncashire. I find that in January and February of last year the exports of piece goods of all kinds to India amounted in value to £1,119,000, and this year for the same month £1,472,600. I hope those figures will be further increased as the effects of the Ottawa Agreements come to be realised.

But, as I am trying to point out, in my view the main hope of recovery both in employment and in the prosperity of industry lies in the restoration of our export trade. The export trade to-day is hampered by exchange control, by quotas, by prohibitions and by excessive tariffs. It is a formidable task to induce other countries to remove or to modify their existing tariffs, and all the more so because the situation is to some extent complicated by political considerations; but it would be altogether a mistake to take too unhopeful a view of the prospects in this regard. I have heard some people speak as though it were quire hopeless to expect anything from international co-operation, but if we look around the world to-day we must see in several directions indications which may give us reason to suppose that the situation is likely to improve in the course of the next few months. Only a few weeks ago anybody looking at the situation in the United States could only have done so with feelings of the gravest anxiety. To-day, thanks to the initiative, courage and wisdom of the new President, a change has taken place which we might almost call miraculous. Confidence has largely been restored, people who had withdrawn their deposits from the banks are bringing their hoardings back, and a new sense of hope and anticipation for the future is coming back to the American people. That confidence is being reflected over here in the City of London, in the stock markets and financial markets on this side of the Atlantic. The European situation a little while ago might have been thought to be quite desperate. I do not want to anticipate the statement which the Prime Minister is going to make to-morrow, but everybody can see from what they read in the newspapers that the situation has undergone a most remarkable and beneficial change.

Then there is the World Economic Conference. It may be the fashion to sneer at these international conferences, and I know there are some people in this House who have genuinely wondered whether it was intended to hold this Conference at all. I can see no reason, except some entirely unforeseen occurrence arising, why the Conference should not take place in the course of the next few months. Meantime, preparations for the Conference are going on all round. It is always best, when you are going to a conference, to agree as much as possible before you get there. Conversations between the parties principally interested save an indefinite amount of time and trouble when you come to sit round the conference table. I had the pleasure last week of a long conversation, in company with the President of the Board of Trade, with the French Minister of Finance, and I hope shortly to have a similar conversation with the Italian Minister. I must say that after that conversation I do not think at any time since the War there has been a closer approximation between the views of the British and French Governments upon the important subjects which will have to be discussed when we come to the World Economic Conference.

When one sees so many hopeful signs, when one sees that the very severity of the crisis through which the countries have been passing have made them feel that something must be done, that we cannot be satisfied with pious resolutions but must take joint and wise action to get some actual mitigation of the evils from which we are all suffering, then I say it is altogether a mistaken pessimism to think that there is no chance of making progress at the World Economic Conference. I say to my hon. Friend, and to those who think with him, that there is no scheme which can be justified upon its merits which the Government would desire to block. It is their desire that such schemes should be put forward. What is wanted to-day is not good will on the part of the Government—that is there. What is wanted is staff work, investigation, thorough examination and preparation. We must be certain that the schemes which are presented to us are schemes which we can approve with a good conscience and without feeling that hereafter they are going to be a burden on the nation.

6.35 p.m.

Mr. COCKS

The Chancellor of the Exchequer, in the very interesting speech to which we have just listened, has not given very much hope to the unemployed. He has explained his original statement, to which such wide publicity has been given, and has said that what he actually said was that there was very little hope that unemployment in this country would be reduced to a comparatively small figure within 10 years. It all depends what the right hon. Gentleman means by "a comparatively small figure." The Prime Minister has said that when the trade of the country is restored there will still be 2,000,000 unemployed. Is it the suggestion of the Chancellor of the Exchequer that in 10 years' time a total of 2,000,000 unemployed will be a comparatively small figure? When he tried to fortify his reasons by certain arguments, I thought he was a little optimistic. He said that the great problem was the displacement of labour by machinery, and that, even when trade recovers, there will still be this great mass of unemployment due to the invention of laboursaving machinery. It must be remembered that in another 10 years there will be far more labour-saving machinery in operation than there is to-day. The invention of new devices for throwing people out of work has not stopped. Indeed, we are only at the beginning of the machine age. I remember Mr. Henry Ford saying that we were only at the ox-cart stage of the machine age, and, therefore, the number of people who are now being thrown out of work by machinery is nothing like the number who will be thrown out in the future if present developments continue. It is not a static problem; it is a progressive one. The problem is not likely to get narrower but bigger, as science advances.

The Chancellor says that he will not restore the cuts or go back to the unemployment scales of benefit which were in operation two years ago, and that, as far as schemes for giving people employ- ment are concerned, there is very little to be done. The question of land reclamation was mentioned. Some hon. Members smile at the proposal—I do not know why. Across the sea, in Holland, you will find land reclamation being carried out on an extensive scale, and I do not see why such work should not be done in this country. The Chancellor of the Exchequer says that there is one gleam of hope in certain naval construction, which will bring hope to some shipbuilding centres, but he did not mention the possibility of giving employment by the construction of two million houses, which everybody admits are needed, or the destruction of those festering slums which the Minister of Health has recently inspected, and which he desires to demolish.

Apart from that, the right hon. Gentleman mentioned only two gleams of hone. One was that the population would cease to increase, owing, I suppose, to mothers being very reluctant to bring children into a National Government world, and the second was the restoration of our export trade. The handling of our export trade by the Government has not been attended by conspicuous success. There are only two countries in which they have done anything regarding our export trade—Ireland and Russia. The result in the case of Ireland has been greatly to reduce our exports and, in Russia, if we understand the situation aright, the prospect is that the Russian market is to be closed for the time being. If you are going to increase exports, you must also increase imports, otherwise you cannot pay for them, but that is not a slogan which appeals very much to the right hon. Gentleman and his supporters in their policy of tariffs.

Let me get back to the great problem which confronts us, that of people being thrown out of work by machinery. Everyone will admit that we are living in the most extraordinary era in the world's history. So great is the distress all over the world to-day that the Pope has said that he can only compare the present calamity to the flood in the time of Noah. Figures issued by the Economic Committee of the League of Nations show that during the last three years the trade of the world has gone down by one-half and the number of people unemployed has doubled. The International Labour Office has stated that at the present time there are 30,000,000 people out of work in Europe alone, and if you take into account those who are dependent upon them, they represent an army of 100,000,000 people, under-fed, badly clothed and suffering much privation. What is really important is that they represent a loss in wages, in earning power, and that is purchasing power, of £4,000,000,000 a year. That is most important, because if you are losing purchasing power to the extent of £4,000,000,000 a year, it means that goods to that amount cannot be sold at all; and it is certainly one of the reasons why the people who would otherwise be making these goods are now out of work. Here in England the figure of unemployed is nearly 2,900,000; a few weeks ago it was over that figure, the highest peak of unemployment ever reached in this country, under this or any other Government.

The Prime Minister the other day said that the rising tide of unemployment had been stayed. The figures show that it is still rising, and one of these days that rising tide of unemployment will sweep the Government and their supporters away. The Government have broken one record, the record of the total of unemployed in this country. We must be very careful to see that they do not break the nation. I have said that, in my view, nothing like this has ever occurred in the world before. Everyone knows that there have been in history periods of distress, periods when millions of people have starved. They starved because the crops failed, or because a murrain fell on the cattle and a pestilence on the people. We are told that the people cried to Pharaoh for bread because the harvest had failed. I believe it is true that Europe was populated as a result of the great failure of harvests and of water in Central Asia. The drying up of Central Asia caused people in wave after wave to come westward for food. No doubt millions of people perished at that time, starved to death. But never before has there been a period when people were starving amidst fields of waving corn. That is the position to-day. There is an abundance of everything. The harvest is more abundant to-day, and more land is producing food, than ever before in the world's history. Not only that, but as the result of the machinery of which we have heard this evening, wealth can be produced to-day far more abundantly than before—can be produced a thousand-fold and even ten thousand-fold more abundantly. We are richer than ever, yet we have millions of people underfed because they have not the money to purchase the good things which science produces in such abundance. Why is that? A constituent of mine who is a big industrialist but not a supporter of mine, Sir Harold Bowden, wrote to the "Times" the other day: In an age of cheap production and ample supply millions are suffering from want. They are deprived of purchasing power, not through any fault of their own, but because our statesmen, financiers and economists, have been able to devise no other pretext for giving it to them except in exchange for work, and their work is not needed. Why is their work not needed? Because, says Sir Harold Bowden, machinery has been for many years visibly displacing men from employment in all industries. I was much struck the other day by a speech in which the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) mentioned the plight of the black-coated workers, the clerks, who in many cases do not come into unemployment statistics. There is no doubt that tens of thousands of clerks and bookkeepers have been thrown out of work owing to the introduction of labour saving devices in offices, machines which calculate, machines which open letters, and so on, more rapidly than human beings can do. There was an exhibition in Nottingham the other day of some of these office devices, and I saw in one of the Nottingham evening papers this passage: In half an hour to-day a reporter saw office routine work carried through that would have taken a staff, unassisted by the various machines, at least a week to perform. If you put in an advertisement for a clerk or a book-keeper to-day you do not get a dozen but thousands of applications. Many of these people have no prospect whatever of getting employment again. That is the result of machinery. One feels very sorry for this class of people although through their own weakness or folly in the past they have not a trade union to protect them. They are suffering terrible distress at the moment, and in the little villas where they live despair is now encamped. The same thing has occurred in practically every industry. Hon. Members will recall the statement of a Rayon machine that can work for 24 hours without anyone looking after it; it requires no human superintendence. There is a machine in glass factories which enables the work formerly done by 4,000 people to be done by 400. I have seen a statement by the American Ministry of Labour that as a result of the use of this device all the glass required in the United States can be manufactured in 17 days. That is not a statement from the technocrats, but from the American Ministry of Labour itself.

Take the case of the British mining industry. In my own constituency there is a good deal of unemployment due to the introduction of coal-cutters and conveyers. Since the War the number of conveyers has increased from 359 to 3,953 two years ago, and the coal-cutters have increased from 2,895 to 7,637. This mechanisation of the pits is rapidly increasing and so miners are being thrown out of work. One of the most astounding statements I have ever read was issued by the Hoover Commission. Dealing with agriculture it said that owing to the development of mechanisation, American agricultural production had increased 25 per cent., but that no fewer than 3,000,000 people had left the soil. The other day it was stated on high authority that even when American prosperity was restored, when production went back to the peak point of 1929, they could reabsorb only half the people who are now unemployed. In this country it is exactly the same. We have not speeded up quite as much as the Americans, but we shall do, and the Prime Minister says he is afraid that in the end there will be a hard core of 2,000,000 people who will still be unemployed. The Government are not facing that problem at all. On 22nd November, the Prime Minister said in this House: The Government have to face this problem in a way that no Government has hitherto faced it."—[OFFICIAL REPORT. 22nd November, 1932; col. 35, Vol. 272.] How is he facing it? He is certainly doing it in a way that no other Government have faced it, because he is turning his hack to it altogether. Henry Ford said, "We are still only in the oxcart stage of the machine age." What is required is an entire change in the national outlook on these problems. The problem is not a problem of a shortage of things, but a problem of abundance. Methods applicable to a problem due to shortage are entirely inappropriate for dealing with an excess of things. What is happening is that a great change is coming over the nation. It is a change very much like that which took place in the Middle Ages, of which Froude wrote in a famous passage in his "History of England": The paths trodden by the footsteps of ages were broken up, old things were passing away and the faith and life of 10 centuries were dissolving like a dream. We are in precisely the same sort of period to-day. There is a great chasm opening between us and the generation of a few years ago. We are crossing it now, although the bridge seems a very precarious one. What we need is new statesmen to solve new problems. We want bold and constructive leadership. Instead of that we get the bored and weary voice of the Prime Minister over the wireless, suggesting that unemployed miners should get bits of rope and make mats, or that they should construct paddling pools or repair an old Roman bridge. He is absolutely unqualified to lead the country in a great crisis. Such a speech is an insult to the nation. It is a strong condemnation of a Government which has allowed that sort of thing to be put forward as a policy. The only thing I can compare it with is the truly historical thing that happened with the imbecile ministers who surrounded the Tsar before the Revolution. When the whole of Russia was cracking and crashing around them, they were engaged in holding seances to raise the ghost of Rasputin to tell them what to do.

It is not merely against the futility of the Prime Minister's proposals that we protest to-day. We protest against the whole policy of the Government, the cuts they have made by means of the means test, the cuts in unemployment benefit and wages and salaries all round. Inasmuch as the problem is one of increased production the only way to solve it is by increased consumption. Every time you cut down wages or salaries or unemployment benefits you decrease the consuming power of the people, and you intensify the problem rather than solve it. Mr. Keynes has been mentioned to-night. He said that the Government in making these cuts and also cutting down work schemes of expenditure by £75,000,000, in his opinion had added 250,000 people to the number of unemployed. That damage has been already done. Now the Government seem to be threatening to do more, in which case the situation will become worse. They are obeying the orders of the Federation of British Industries, and of the bankers who, as the right hon. Member for Carnarvon Boroughs once said, are always wrong. They certainly have always been wrong in the advice they have given to the Government in the last 10 or 12 years. Last autumn there was a manifesto issued by the Federation of British Industries, in which they demanded more economies and more sacrifices in order that money should be saved for capital investment, yet the banks are overstuffed with money which nobody can invest. Following that there was a committee of Conservative Members of Parliament which recommended further cuts to the extent of £100,000,000. I understand there was a good deal of division among several Members as to whether those recommendations should be published. Possibly some of them did not want their constituents to know what they had been recommending, but published they were. Following that again was the Ray Committee, which recommended cuts of £70,000,000 in local and municipal expenditure. Finally, we have the Chancellor of the Exchequer, in a speech the other day, saying that, although he would not like to do it, although it would be the very last resort and certainly he was not in favour of it, the possibility of reducing pensions might have to be considered if the economic situation became graver.

What folly all this is. What absolute madness. We know the saying, "Whom the gods would destroy, they first make mad," but when you have a mad Cabinet they do not destroy themselves; they may destroy the country. What we demand is a complete reversal of this policy of false and foolish economy; we demand the abolition of the means test and restoration of the unemployment benefit to its former level. We believe that, in spite of what the Chancellor of the Exchequer has said, now is the time for great works of national reconstruction, for destroying the slums and for building the 2,000,000 houses which are required, for reclaiming the land, and reconditioning the national State. Whether this is to be done by raising a loan or by the issue of new money it is not for me to say, but, whichever way it is done, it will give more work and so restore to some extent the purchasing power of the people.

7.4 p.m.

Mr. ALBERY

The hon. Member has been drawing attention to the fact that machinery has not only been putting people out of work, but has made some decrease in the hours of labour imperative. That aspect of the problem was also referred to by the Chancellor of the Exchequer in the following words: What we need to find is a method for the employers to employ a larger number of people on the same amount of work without putting up the costs of industry. I understood him to say in the same speech that the Minister of Labour was at present considering with the employers the question of a 40-hour week. I hope they may reach some satisfactory solution, but I find it difficult to think that they will in the immediate future be able to get much help along these lines. It is obvious that as the use of machinery has increased the hours of labour have steadily decreased, but to bring about an important change like that without international co-operation seems to me impossible. Although I believe something of that kind will eventually be achieved with international co-operation, I cannot see it happening in the immediate future.

I want to offer the Government another suggestion for their consideration. It is certainly a more modest one, but I think it might be of some help. It has always seemed to me a desirable thing that every worker, whether he be black-coated or manual, should have a, period of holiday, and I want the Government to consider whether it would not be possible to frame some scheme in conjunction with unemployment insurance by which insured workers should go on "holiday benefit" for two periods each of two weeks during the year. They would go on holiday benefit by rota for two weeks in the summer half of the year and for two weeks in the winter half. I suggest that they should draw during that period the money they would draw if they were unemployed as unemployment benefit, but draw it not as such but as holiday benefit. They might make some further small contribution towards the holiday benefit during the year over and above their present insurance, and draw that money out in addition to the unemployment holiday benefit. It is true that a scheme of that kind will not save money for the Unemployment Insurance Fund, but on the other hand it will not be any additional cost on the fund. If we estimate there are something like 10,000,000 insured workers, it would mean that some 800,000 extra workers could be employed if such a scheme could be put into effect in a manner that would benefit all insured workers. I realise it is quite impossible to apply it universally, however, and there are many trades where many men have been continually unemployed and are getting more holidays than they want. But I do believe that under such a scheme 300,000 or 400,000 more men might be put into employment than there are employed to-day. I would ask the Minister of Health if he would kindly bring that suggestion to the notice of the Ministry of Labour, and, if he could say anything about it when he replies, I should be grateful.

7.8 p.m.

Mr. MACLEAN

The Chancellor of the Exchequer, when he was replying to this discussion, dealt rather briefly with the question of reducing the hours of labour under conditions in which there was to be no loss to the firm which put such a reduction into operation, but he merely touched on that subject and then jumped away from it. It seems to me that we are now getting to the stage when we are beginning to realise the productivity of the labour of a man applied to machinery. Lord Leverhulme recognised that prior to the War, and in a preface to a book published in 1919 he stated that it was possible, with the machinery then in existence, to produce all that was required in a 6-hour working day. It has taken the past 14 years for the Chancellor of the Exchequer merely to toy with the idea of a reduction in hours, and for the Minister of Labour to talk about approaching the various organisation to see whether anything can be done with a view to bringing about a 40-hour week. We have been advocating that for a long time, not as a solution for unemployment, but as one thing which would absorb a number of the unemployed.

There is another matter which could be considered. The Chancellor was taking great credit to himself or to his Government because unemployment had decreased. I asked him what were the figures for shipbuilding, and I submit that the figures he gave, in reply, were not the right figures. The shipbuilding figures show an increase in unemployment over the last few years. One has only to look at the Ministry of Labour Gazette issued this month and compare the figures with those of February last year to see the increase there has been over the period of 12 months alone in the shipbuilding and ship-repairing industry. The right hon. Gentleman quoted a figure something like 109,000, but that given in the Ministry of Labour Gazette is 115,000, an increase over last year of practically 6,000. There is a percentage of more than 50 per cent. unemployed in one trade connected with shipbuilding and ship-repairing. The figures have gone up even during the last month or two. In 1932 the number of insured workers in the industry was given as 195,390, and out of that number there were unemployed 109,359. It seems to me that it was last year's figures that were supplied to the right hon. Gentleman and that he read to the House. The percentage of unemployed in 1932 was 59.5. In the year ending February, 1933, the number of insured workers in the industry was 181,930. Fourteen thousand people had dropped out of the industry, and the number of unemployed, 115,474, is an increase as I said of 6,000 in the 12 months from February last year. The percentage of the unemployed in the industry has also increased over last year, and is now 63.5 as against 59.5. Yet the Chancellor tells us the figures of unemployment have gone down. One of the trades I refer to in the shipbuilding industry has a trade union membership of 54,094, and there are 27,071 of these unemployed according to the record issued this month, more than one-half of the total membership of that union.

It is playing with the House for the Chancellor to come here and talk about the schemes that have been brought into being by this Government and that have brought down the numbers of un- employed. The numbers have been fluctuating for some time, but in the main they have been showing a steady increase taken over a period, and consequently there is no credit to be attached to the Government for any of the schemes they have been putting into operation.

I would like to have the attention of some Member of the Government who is concerned with Scottish affairs while I refer to the position of unemployment in Scotland and to the lack of schemes in Scotland. There has been a very large increase both in unemployment and in the number of people transferred to the public assistance committees in that country. We have the figures for the counties of Dumbarton, Renfrew and Lanark, which are the three industrial counties of Scotland. The survey made of industrial conditions in the South of Scotland dealt mainly with those three counties which contain roughly, 40 per cent., or almost one-half, of the population of Scotland, and most of the industrial towns of Scotland. When unemployment strikes the staple industries of Scotland those counties are affected, probably more than any other parts of Scotland.

Figures were given in reply to the hon. Member for Hamilton (Mr. D. Graham) only last week showing the amounts paid in unemployment benefit and in transitional payments in those counties and also the amounts paid in public assistance relief. In the County of Dumbarton in 1931 insurance and transitional benefit amounted to £626,270 and transitional payments under the scheme inaugurated by this Government, to £38,080, a total of £664,350. In 1932 direct insurance benefit dropped from £626,000 to £263,683 but transitional payments rose from £38,000—that was for seven weeks—to £435,000, a total for 1932 of £699,000 as against £664,000 in the previous year—that is combining both statutory and transitional benefit. In the County of Lanark, which includes Glasgow, the total paid in unemployment insurance and transitional benefit was £6,435,000 and transitional payments—for the seven weeks—were £426,000, a total for 1931 of £6,861,000. In 1932 the figures were: Insurance benefit, £2,303,000; transitional payments, £3,768,000; total, £6,072,000. I do not go into the figures for Renfrew because I merely desire to give the House an idea of how the local authorities in these areas stand, but I may say that the figures for Renfrew bear out my argument in the same degree as the other figures.

These local authorities are having the burden placed upon their shoulders. The Chancellor of the Exchequer, as a reason for the Government not considering or carrying out any scheme of public work for the relief of unemployment, referred to protests as coming from the local authorities but the protest from the local authorities and the citizens in those areas is not so much a protest against public works, as a protest against the burden of unemployment being thrown upon their localities. The protest of the citizens in these local authority areas is not against national money being spent on public works, it is against local rates having to be raised for the purpose of maintaining people for whom no work can be found and for whom, once they have passed out of unemployment insurance the Government seem to have no further care or interest and do not desire any further responsibility. The public assistance figures for the same localities bear out my point. In Dumbarton county including Clydebank and Dumbarton Burghs in 1931 the amount paid by public assistance authority was £21,253 against £41,700 in 1932 or an increase in the latter year of 96 per cent. in the actual amount paid. In the County of Lanark the total for 1931 was £415,021, which, in 1932, jumped to £604,744. In Glasgow alone the figure in 1931 was £382,780 which in 1932 jumped to £549,000, an increase of almost £200,000, in one city alone.

That is being spent mainly upon maintaining unemployed men and women whom the National Government have cut adrift from any possibility of further unemployment insurance, and for whom the Chancellor of the Exchequer says he is not going to entertain any scheme practically unless it is going to show a profit. The Government throw the burden on the rates and yet the Chancellor of the Exchequer will come here in a week or two and proclaim that he has balanced the Budget. Any Chancellor of the Exchequer could balance the Budget when the national burden is being placed on local authorities in crowded areas and people living in scattered areas are not having to bear their full share of the national responsibility for maintaining the unemployed. I am sorry to give the House so many figures but after the figures quoted by the Chancellor of the Exchequer it is right to present the other side of the picture. These figures are taken from the Government's own publication and we must, therefore, accept them as accurate but they can be used to show that the National Government has not done the things which it claims to have done. In the whole of Scotland in February, 1932, the number of unemployed was 373,188 and in 1933 the figure was 398,740, an increase of 25,552 and the figures of 1932 showed an increase of 23,567 over those of 1931.

Thus, in two years there has been an increase of almost 50,000 in the number of unemployed in Scotland. Then, the Chancellor of the Exchequer tells us of the wonderful things which tariffs are doing to reduce unemployment. Well, tariffs are applied to goods coming into Scotland as well as England and the Under-Secretary knows that if tariffs were going to be of any benefit to us, some part of this total of unemployed ought to be absorbed by now in the industries which we were told were going to flourish as a result of the shutting out of foreign goods under tariffs. In Glasgow there were 126,091 unemployed in 1932, or an increase of 11,400 over the figure for 1931. In 1933 there were 134,803 unemployed, an increase of 8,712 over 1932, or, for the two years, an increase of practically 20,000 unemployed, or two-fifths of the total increase in Scotland, in one city. Other figures which I have here deal with other towns. They are taken from the Employment Exchange returns published in the Ministry of Labour Gazette. Increases are shown for every one of these Exchanges in 1932 over 1931 and in only three places are there decreases in the figures for 1933 as compared with those of 1932.

The public assistance figures are also remarkable. I take the case of Glasgow, where the indoor poor in 1932 numbered 5,363—that is those placed in institutions—while the out-door poor numbered 80,445, a total of 85,808. In 1933 the figures were, in-door, 5,569; out-door, 111,508; total, 117,077, or, practically a 30,000 increase in the number placed on the poor rates of Glasgow in one year. For the four burghs of Edinburgh, Dundee, Aberdeen and Glasgow the figures for 1932 were, in-door, 7,567; outdoor, 107,000, or a total of 115,000. In 1933 there were 157,000, an increase of 42,000 for these four industrial towns alone, placed upon the Poor Law, the great bulk of them on out-door relief, unemployed workers, no longer receiving unemployment benefit, not qualifying for standard benefit, refused anything under the means test, and having to go to the public assistance committee, because the present Government refuse to face their national responsibility and place it upon the localities. What is the use of being a National Government if you are getting the localities to shoulder the burden of maintaining your Government? I am blaming the Government, because the figures that I have just given are of people who have never been under the public assistance committees in Scotland until the present Government came into power. Therefore, I think I have a right, when they pass laws under the name of a National Government to prevent these people getting unemployment benefit, to blame the Government.

Whenever matters affecting Scotland are raised in this House, they are treated by some Members as a joke, and the seriousness with which some of the Scottish Members approach these questions is looked upon as something which should not be done in this House. It is thought it should be done in a more matter-of-fact and probably more gentlemanly manner. But the figures that I have given do not represent what is actually happening. If one could look behind the figures and see the lives of these people who have been thrust upon public assistance, if one could go down into some of these districts and see the lives that are being lived there by these people, I suggest that one would understand why some of us Scottish Members from industrial constituencies, who pass most of the time when we are away from this House among our constituents, feel so strongly against the Government, when week after week, when we go home, we see the sad spectacle of these people confronting us in the streets of our constituencies.

If the Government cannot do something more for the people than is being suggested to-day, it is high time they gave up governing this country. What have they promised to-day? A possibility, after consultation with some leaders of industry, of a reduction in the hours of labour. The possibility, if it can be done without any loss of profit, of some time, somehow, considering the granting of a subsidy to help to finish the Cunarder if two companies will come to terms. What terms? Who are behind the two companies? What is the reason for this sudden earnestness on the part of the Government to amalgamate two large businesses and prevent competition? Are these the only two companies that have a maritime trade? Are the Government going to carry out the same principle and compel other shipping companies to amalgamate, as they are compelling the Cunard Company and, I take it, the White Star Line? What is behind it, or, rather, who is behind it? The answer to that question would probably be more interesting to the country than the answer to the question, What is behind it?

Again, I want to ask why it is that the same policy cannot be pursued with the Cunard Company as was pursued in 1924 with regard to the three ships for which the Trade Facilities Act was used, to enable them to complete ships that had been lying with their keels laid for three years, since 1921. A sum of £1,600,000 was guaranteed by the then Government. Why cannot that be done now? There has been no loss there, and practically no loss under the old Trade Facilities Act of any large amount, so why cannot the same thing be done here, and why cannot public works be engaged in? You must show a profit. No money can be granted unless it is going to be profitable, but what is profit? Is it the mere 5 per cent., or 8 per cent., or 10 per cent. that is going to be shown in the balance sheet that is to be looked upon as the only thing that matters? Is it not more profitable to the nation to have two or three million men or women, formerly employed, regaining their self-respect and their manhood and womanhood, getting back into their hands and their brains the old love of, and skill in, the work which they were formerly capable of doing? Which is the more profitable? Look at the money that is being saved by the National Government in refusing to support these schemes.

I submit that the Government, in what they have done during their 18 months of office, have failed. There are such things as glorious failures; there are such things as endeavouring to do something and failing, the failure being probably to your credit instead of to your blame, but the present Government have not failed gloriously, they have failed ingloriously, and they will go down, not merely in blame, but with shame for the things that they have left undone that could have been done. I wish the Government would take a little more interest in the conditions of the people. Let them not consider that the conditions of the people of this country are to be seen when you walk through the streets of London, particularly in the West End. There are other places than the shopping centres of London. These do not represent the coup try, and I would suggest that a little more interest be taken in the working-class areas of the country.

Something should be done to assist production and reduce unemployment, and we should not be content with the Chancellor of the Exchequer giving us an explanation of his pessimistic speech of a month or two ago, and trying to make it appear now that he did not mean that we were to look forward to a period of 10 years' terrific unemployment. He did not contradict the Prime Minister's fear that, no matter how you looked upon it, you must envisage an army of 2,000,000 unemployed for some years to come. The Government consider they can sit on those benches with complacency and view 2,000,000 unemployed in this country for several years to come. I think I am safe in saying that the people outside will not permit them to sit there, but, on the very first opportunity, will consider it necessary to be rid of them, and in being rid of them will hope that at least those who take their place will do more for the people of this country and for the world than is even being attempted by this Government.

7.41 p.m.

Mr. PEAT

I find myself very largely in accord with the speech of my hon. and gallant Friend the Member for Stockton (Captain Macmillan); in fact, that speech to a certain extent represented the views of Northern Members, although with some exceptions, in that some Members could not give it their wholehearted support. Northern Members in this House represent, probably, approximately 30 per cent. of the unemployed people in the United Kingdom. Some of the basic trades in which unemployment is greatest are situated in the areas which we have the honour to represent. These trades are the old trades, which have, in my opinion, permanently contracted themselves—the iron and steel industry, shipbuilding, coal-mining and the iron-stone and ore mining industries. We believe that the unemployed one-time workers in those industries will not be affected by any improvement in trade, or not affected to any large extent. Their problem is something quite apart from anything which has been mentioned by the Chancellor of the Exchequer in his speech this afternoon. Therefore, we feel very strongly that some other measures must be taken to meet the dire straits in which these men and women find themselves. With that in mind we support some effort by the Government towards capital expenditure, and I personally would like to have a declaration from the Government that they do realise the position of these unemployed people, who cannot be touched by a normal recovery in trade and must have some other methods applied to their case.

When I had the privilege of last addressing this House it was also on unemployment, which is a nightmare to all of us, and I suggested that the system of guaranteeing industry might be once more applied by the Government. I referred to a revival of trade facilities. The Chancellor, although vaguely hinting at Government assistance in many ways, did not state specifically whether he was in favour of any declaration by the Government that they would encourage trade facilities once more if approached by organised industry; and humbly and respectfully I say that I should like to have some statement of that character. To put it in a nutshell, I feel that the country is like a person recovering from a very serious disease who gets to a point in his convalescence when no further recovery is made, and perhaps a relapse is in the offing. At a time like that some transfusion of blood or credit should be made. Before I leave this subject I would like to refer to what, in my opinion, is a very dangerous point of view, an insidious point of view, which I almost detect in the mind of the Chancellor—I may be wrong—and that is that in future improvement in machinery or production must be discouraged. It is called "technocracy" in the United States of America, and I thought, until fairly recently, that it was almost a stunt which would be confined to the United States.

I was discussing this matter outside this Chamber and I put up this proposition: "If the iron and steel industry"—which, as all Members know, has prepared and submitted a scheme for reorganization—"should come to the Treasury and ask for trade facilities, a guarantee for say £20,000,000 of money which it proposed to spend in modernising the industry as a whole, would the Chancellor of the Exchequer turn round to the industry and say, 'Yes, we will help you with regard to your £20,000,000 of capital expenditure but on one condition—that you do not displace one workman by that expenditure '?" Whatever the future of the world may be, and I think very few people in this House dare to make prophecies, I do not think that at this stage we can possibly adopt Samuel Butler's ideal in "Erewhon" and throw a man into gaol if he is found to be in possession of a watch, or, generally, to put all kinds of machinery into museums. Man is to some extent still a monkey. He must go on, working with his hands, he must go on, evolving material things to the highest possible extent, and if at this stage of the development of the world we say we are to go thus far and no farther it will only worsen the disease and in the end delay the correct remedy.

I do not know whether any of us really care to throw our minds forward in an effort to visualise this world as it may be, but—I am not a prophet, it is my attempt to be logical—I can see that production which has been fostered from decade to decade on a competitive basis, and largely fostered also by a mass of advertisement, which to a very large extent is unnecessary, must cease to exist on its former basis. I believe that the major forms of mechanical production will cease to be competitive, slowly and steadily, and that the majority of mankind will go back to where they started, and that is to the land. I believe that is the eventual solution of the difficulties with which we find ourselves faced today, particularly in some industries, say the coal-mining industry. The solution is that we must get these men, or rather their great-great-grandchildren, back eventually to the land. We must regulate production on the most efficient basis so that it becomes the servant of mankind instead of its master. Again I would like to emphasise the point that the Government should make some more definite statement of what they are going to do for a man who has been out of employment for a year or more. I do not want to repeat what I said in the House some weeks ago about his position from the point of view of health insurance, the amount he draws per week in dole, his physical condition and his mental condition, but there is a problem which must be faced frankly and without fear—even if we have to borrow or even to unbalance the Budget. I go so far as that.

Next I would like to ask the Government to consider two Acts of Parliament which were introduced in 1929. I consider myself a truly National Member of this House, and for that reason I am not at all ashamed of taking Acts of Parliament introduced by the Socialist Government and making the best of them. I think that in very many cases there is a tremendous lot of good in the Acts they passed. The Acts I have in mind are the Development (Loan Guarantees and Grants) Act, 1929, and the Colonial Development Act, 1929. Both those Acts have ceased to operate. The Development Act referred to public utility corporations, unemployed grants, acceleration of schemes seen in the offing but which had been postponed, and also the Road Fund. There were various methods of giving Government help to these activities. I think, if the Government gave a guarantee, that money could be raised at a maximum of 3 per cent., and, if that is so, a statement should be made that the Government are willing to do that, and defining the sort of work they would be prepared to guarantee and the conditions to be made. With regard to the Colonial Development Act, it was intended to put at the disposal of Colonial Governments £1,000,000 a year to provide a fund from which advances might be made on the recommendation of an Advisory Committee set up under the Act to the Governments of Colonies, Protectorates and mandated territories for the purpose of aiding and developing agriculture and industry, and thereby promoting commerce with or industry in the United Kingdom. I think the Government should seriously consider the provisions of that Act, and make a definite statement on the subject.

I would also like to refer to Government expenditure on its own businesses—as the Chancellor of the Exchequer said, on post offices and on buildings in Whitehall and in Edinburgh. We were told by the Chancellor to-day that he, the Government—I do not know whether when he said "the Government" he meant the Treasury or not—was waiting for schemes. I presume, as an ignorant back bencher, that the Government comprises all the Departments of State and so if the Treasury is waiting for a scheme from the Office of Works and the Office of Works is waiting for some statement from the Air Ministry, it is really all the Government. To say that one part of the Government is waiting for another part of the Government to do something before it can do anything, and for another part to say that it is waiting for sanction before it can put up a scheme, is playing Box and Cox with the whole business. I do pray and beseech the Government really to get a move on in these things. If a building has to be put up in Whitehall—and I am prepared to leave it to the Treasury or to the Government as a whole to say whether that building is a good one or not—this time next year or three or four years hence—if it has got to be put up sooner or later would it not be better that it should be put up now? I cannot believe that the difficulty of apportioning the accommodation required is so great. The modern steel frame building is of a very expanding nature—I mean that it is not necessary to ask Mr. So-and-So exactly what rooms he wants for his typists and staff. That can easily be arranged in a steel-frame building. Get it going, get on with the foundations and the contract, and then get hold of Mr. So-and-So and find out what rooms he wants, and they can be provided for him with the greatest possible ease.

One other point I have to deal with is slum clearance. By the grace of God I represent a constituency which has no slums, although it is an industrial constituency, and for that remarkable fact I have to thank the government of that borough, which has always been good and far-sighted. But although that is my happy position, I live within almost a stone's throw of some of the foulest slums that besmirch this country, and I cannot sit here, certainly not complacently, and envisage an almost interminable period before this matter is really grappled. The Ministry of Health may make, and I know that they are making, the very biggest effort they possibly can. I am not saying anything against the effort of the Ministry of Health in this matter. I know they are giving it their whole attention, and are concentrating on it to an extent which Members of this House probably do not realise, but I suggest to them that they should put a time limit on slum clearance. They ought to go to the local authorities and say, "Now, this time six months"—or better still three months—"we want you to produce to us a scheme." They have been at this job for years, and if they have not got some ideas in the backs of their minds by now it is time they got them. If they are going to start all over again from the beginning and say "We want two years or six months or 18 months to think this thing out, to get on the right side of the property owners and to find that accommodation," it is a scandal. I suggest to the Minister that he should apply a time limit, and if at the end of that time limit a scheme had not been put forward the Government should step in and do the job themselves.

Personally, I would like to see the formation of a public utility corporation to take the whole thing in hand and spend £100,000,000 on rehousing the people who are now living in the slums of this country. The future is vague, but we all feel, as a previous speaker said, that there is a great gap slowly and steadily separating us from everything that has gone before. The old, old ways were sound, and have done their work, but we have got to be prepared to look to new methods, and take new risks. We have, I believe, saved this country for better things. Our greatest effort now is to stop the rest of the world from committing suicide.

8.1 p.m.

Mr. TINKER

I can agree with practically all that has been stated by the hon. Member who preceded me. I do not however think we can stop the advancement of mechanisation. Mechanisation is all for the benefit of mankind. It only wants to be taken charge of by the State in order that everyone may get the benefit of it. During the war in Palestine—that was before mechanisation got there—I saw the old methods of agriculture—just a little bit of a plough drawn by two oxen, and sometimes a donkey and ox, just scratching the surface of the ground. Palestine has now taken over modern methods of mechanisation. No one can stop the inventive genius of mankind. It is all for the benefit of mankind. One does not want miners to go back to long hours—and terrible conditions even worse than those of the present time. Machinery in the mine, in the form of conveyers, and all that sort of thing, is for the benefit of those in the mine. If that machinery can help to produce three or four tons extra per man, what is wanted is to prevent the benefits going to the owner.

We have been pressing the Government to accept that point of view. Sooner or later it will be accepted by this House and by the Government. This terrible chaos is all due to our not having the wit to grasp the opportunity, and one wonders what the result will be before we do get that wit. The Leader of the Opposition brought in to-day a petition signed by thousands of men, and backed up by the legions of the trade union movement and the Labour party. In his humble way he was explaining what it meant. There were jeers and derision. Hon. Members must realise that that kind of thing will not be tolerated by men and women outside.

Mr. GODFREY NICHOLSON

I do not think the House jeered at the petition. They did not mock at the object of the petition, but they could not help laughing because it was such an omnibus petition. It aimed at correcting every human ill. I do not think hon. Members can be accused of lack of sincerity in tackling grave social evils.

Mr. TINKER

It struck me as that, and it struck the Leader of the Opposition in that way. It was not a time to make fun of him. In a time of crisis hon. Members should forbear to laugh on such occasions. Take the next instance. We had the Chancellor of the Exchequer in a sardonic, pedantic humour. It was as if he were saying "I have got my way. This is what I intend to do." He gave practically nothing; he was cheered by practically the whole of the Members of the House. He got approbation and approval. He said he was sticking to the policy he had adopted. That kind of approval will not meet the wishes of the people outside. One thing which has not been suggested to-day, although it has been suggested before, is that hon. Members might go the round of their divisions, see employers of labour, and try to push one or two men into work. I am glad that has not been mentioned, because it is impossible. When you ask employers to take on one or two men, you are, in effect, saying to them that they are not working their industry as they ought to do, and that they should take on men and increase expenses.

It is the duty of the State to provide the work wanted for the benefit of the people. It is no use asking the private employer to do it. He is working up to the full extent of his capacity, and carrying the burden as well as he can. I will put it this way. The National Government believe that their policy is right. They say that eventually the position which this country has taken up must result in world revival. They say we are giving a lead to the world, and that the world will see that our policy is a right one. The Government further say that our tariff is only for the purpose of getting other countries to lower their tariffs; that when we get tariffs lowered all round there will be a freer play of commodities, that work will revive and that we shall get over the difficulty. If they believe in that policy, then it is the duty of the Government, while that policy is maturing to say to the men and women out of work—some for 12 months —"Something will be done for you while the revival is taking place." It cannot be too much to ask the Government to use the resources they have for the benefit of these unemployed people.

People out of work for 12 months, or over, are not only suffering from being unemployed, but from the additional burden of transitional payments. For the moment I am not dealing with that. While this revival is taking place the Government ought to see that the unemployed person is found work, or adequately treated. I want to repeat one or two things which have been said, for in matters of importance repetition is sometimes good. The shorter work- ing day has been touched upon. I understand the Minister of Labour is meeting representatives of the trade union movement, and employers, with regard to this subject. I hope he will be successful, as I know of no more important matter. This country, I trust, will give a lead, and try to get back into industry many men and women. Another point, which may be expensive, is that I ask for the consideration of the lowering of the age for pension rights. Along these lines much can be done. It is unfair to retain in industry those of 65 years of age when young men and women are out of work. It will cost something to the State. The raising of the school age has been put on one side. It is time something was done in that direction for by this, coupled with the lowering of the age for pension rights, industry could absorb many vigorous men and women.

Mention has been made of the industrial part of the North of England. In many places industry has scarred the face of the earth, and left unsightly heaps and depressions all over the land. Having done that, industries have fled. The men who have made the money have gone. We have derelict places there. We talk about reclaiming land. Could not something be done there? Could not some help be given to the municipalities to deal with this difficulty? Could not the Minister of Labour send someone down to talk this matter over with the townships who are faced with this burden? If it is privately-owned land which is running to waste, could not the Government say to the landlord that he must either put it right or that the Government would take it over? It could be handed over to the municipality, which would be given a grant to make the land so that it could be cultivated. Not only would that make the land more sightly, but it would do good to England and provide employment.

The condition of housing is a terrible calamity. Almost daily I get letters about overcrowding in my constituency, pointing out the terrible conditions under which people a re living. One has talked about housing here until one is almost tired. Things like this, however, must be repeated. We feel that something ought to be done, and we would be failing in our duty if we did not, on every occasion, draw attention to the matter, and make an appeal to the Conservative Members. I am very pleased that the hon. Member who spoke before me stressed this important point. He felt very keenly about the matter. I would have been glad if the Minister of Health had been here to hear that speech. Coming from the hon. Member, in such a tone of sincerity, it must have made an impression even upon—I had almost said the hard—Minister of Health. The right hon. Gentleman is certainly a stern Minister of Health in sticking to economy. The right hon. Gentleman might take the advice of my hon. Friend that, if slum clearances are not proceeded with as quickly as they ought to be by the municipalities, the Government ought to be bold and deal with the matter themselves.

I want to remind this House of the grave feeling of unrest in the country. The last time I spoke I referred to the setting up of unemployment centres having a good effect upon the men. I went to one of these places, which the mayor had organised to allow the men to congregate together. This is the question they put to me: "It is all very well this being done for us, but where is it leading us? Are the Members of the House of Commons doing anything more on this matter, or do they think that we are satisfied with this kind of thing, being kept here month after month and year after year? Is it the wish of the House of Commons, because they have given £10,000 or £15,000, that we should rest content? "That is the feeling prevailing amongst these men. I want to warn the House of Commons—and in doing so I am speaking to every hon. Member—that it is not merely sufficient for us to Debate these things in a kind of academic manner and to leave it at that. If these Debates go on without any tangible results, something serious will take place. We remember that there was an emperor who fiddled while Rome was burning. I do not want this National Government to occupy the place of Nero. I am one who wishes well to the country and who is desirous of the unemployed having a fair deal from the House of Commons. I believe that it can be done. There are money and wealth enough in this country to provide everyone with a decent standard of life. We are sent here as legislators, and it is our bounden duty to see that that is carried out.

8.17 p.m.

Mr. G. NICHOLSON

I hope that the hon. Member for Leigh (Mr. Tinker) will forgive me for having interrupted him. I did so with some warmth, because I felt very strongly what I said, that it is very easy to be in opposition when your constituents are suffering material want, and it is very unpleasant, when one is feeling a responsibility for the suffering of one's constituents, to be supporting the Government. I also interrupted him with some warmth because I quite admit in my heart of hearts that this House is often inconsiderate, and that we are wrong in laughing when we see something funny if the laugh is likely to be misinterpreted by those who are in close contact with the want and unhappiness in this country, as we are ourselves. I entirely accept every word that was said by the hon. Member for Darlington (Mr. Peat), and I should like to associate myself with what he said.

I propose to deal with some of the implications of the speech of the Chancellor of the Exchequer. I am thankful that there is a small House, because I have come to the conclusion that, in matters of economics and finance, everything that is said is either a heresy or a platitude. If I am to be convicted of heresy I am glad that there is a small congregation, and if I am to utter platitudes I am glad that there are few, and not many, hon. Members to hear me. The Chancellor pays a compliment to the intelligence of the House in speaking in a Debate on unemployment, because he shows that he realises that the House and the country are beginning to understand that just as the cause of unemployment is to be sought in finance and currency matters, so the cure for unemployment must be sought there. It is all very well throwing the burden upon, say, the Board of Trade or the Ministry of Labour; it is not there that the burden of responsibility must lie, and it is not from those quarters by way of tariffs, doles or insurance schemes that salvation will come. I am going on the assumption that the Chancellor meant his speech to be taken seriously. It is an equally arguable assumption that the speech was a blind in order not to give away Budget secrets. I do not think that it is impertinent of me to say that he may have been doing that. It would be perfectly legitimate. I am going on the assumption that the Chancellor was perfectly serious in what he said. I reach this conclusion, either that the Chancellor is gravely deluded by his advisers, or that the great body of economists in this country are gravely deluded. I do not think that the Chancellor can be aware of the extraordinary wave of opinion, and change of opinion, that has swept over the informed, intelligent and thinking sections of the public, and I think, of this House, too, during the last two months. People are afraid of the word "inflation," but you may call it what you like. I do not see any point of being afraid of it. If a motor tyre is flat I do not hesitate to inflate it; in the same way, if the finances of this country are flat, I do not hesitate to say that a strong case has been made out to inflate them. I do not necessarily associate myself with the idea, but I say that a strong case has been made out.

The wave of opinion was first noticeable in the early part of February when a letter appeared in the "Times" written by the right hon. Gentleman the Member for Hillhead (Sir R. Horne). Then there was a letter from the right hon. and gallant Member for Ripon (Major Hills), who, I hope, will speak later to-night, letters from professors of economics at the Universities and then articles from Mr. Maynard Keynes, accompanied by striking leading-articles. It is well known that Sir Arthur Salter and Sir Basil Blackett have associated themselves, not in detail, but in main principles, with this movement. It is a very remarkable state of affairs, but the Chancellor of the Exchequer, judging from his speech, has never heard of the main points that are being raised, or of what is rumoured to have been the advice of the Economic Advisory Council of the Government. It has been rumoured that their advice was much on the same lines. I have put down, very shortly, what I consider are the main points generally agreed upon by the great body of economists, and I should like to read them to the House, first stating that I am not necessarily in agreement with them and that I do not necessarily accept them. My contention is that a very strong case has been made out on the inflationist side, and that it is folly, if nothing else, of the Government, to ignore that case and not to answer it with arguments equally strong and cogent. Either that case is right or it is wrong; in any case, it deserves to be answered. That is why I say that I was completely mystified by the Chancellor's speech, if he meant it as a serious contribution to the problems with which we are faced.

The first point upon which I claim that there is general agreement is that the only hope of arresting the trend of the depression, to say nothing of converting it into a movement in the contrary direction, lies in a rise of Sterling prices. I think that the Chancellor totally misunderstood the arguments that are being used against the Treasury point of view. He thought that those arguments chiefly were that large loan expenditure ought to be made on relief schemes. Certain speeches, for instance that of the hon. Baronet for South-West Bethnal Green (Sir P. Harris) just brought out various ways in which one might spend money, and he might just as well have said: "Get all the money that you can and dump it into the sea." That is not the case against the Treasury view. The case is that, just as the fall in world prices is the major cause of the depression, so to-day, in this country, in a rise in Sterling prices lies the main hope of extrication from the depression.

The second point is that in present conditions it is unlikely that the rise in sterling prices will occur without some form of artificial stimulus such as general restriction of output, or inflation. That may be said partly to depend upon whether we are at the bottom of the depression or not, on the analogy that, if you can only give a stimulant once to a sick man, you choose a time when he is at his worst, or is apparently dying. There is very strong evidence for saying that we are at the bottom of the depression, now. My third point is that controlled inflation is far the sounder and more practical method. I think that that goes without saying. A restriction of output merely has the effect of directing more of what money there is into particular channels, to the detriment of other channels of expenditure. The fourth point is that controlled inflation can best be brought about by a combination of remission of taxation and increase in loan expenditure, upon objects preferably remunerative, but such as would in any case create definite assets. I am rather inclined to dissociate myself from the last part of this point, but I still claim that, as I have put it down, it represents what is more or less generally accepted by the economists.

As far as remission of taxation is concerned, I should like to say that personally I would include in it a more generous administration of the means test, and, if possible, a restoration of some of the cuts suffered by the poorest of the community. I do not say that merely for political ends. I would like to take the opportunity of saying that I do not think that anyone who lives in the south realises what the northern industrial districts are going through. I say that in all sincerity. Thank Heaven, my own constituency is not suffering so much as those in County Durham. I should like southern Members to come to County Durham and see what is going on there.

This last point about loan expenditure—and again I say that I do not accept it completely—is based on the assumption that it is the duty of the State, in moments of boom and depression, to do exactly the opposite of what the private individual would do, to act as a sort of counterweight in moments of boom, to prevent the boom soaring up out of control, and to pin it down by taking the opportunity of paying off capital charges and economising; while, on the other hand, in moments of depression it is the duty of the State to try to prevent the depression from becoming a sort of chronic slump, by using the resources previously accumulated during the boom, to inject stimulus into the veins of trade and industry.

My fifth point, upon which I think there is general agreement, is that, unless active steps are taken to raise prices, there will be a tendency for sterling prices to fall even lower than they are at present, in which case the Budget a year hence will be hopelessly unbalanced and all taxes are bound to yield less. I think that that goes absolutely without saying, and it is amazing to see that apparently this is not recognised officially. Take the case of my own trade, the distilling trade. The tax on spirits is subject to the law of diminishing returns, and I think that that is true of every tax. If you put on a tax above a certain figure, every year you get less from it. If that is continued without there being a rise in sterling prices, and, above all, if a fall is allowed to take place, every year taxation will be proportionately heavier in quantities of commodities. That, I think, is axiomatic.

My sixth point is that sterling is so strong that a rise in sterling prices will lead to some rise in world prices. That is how I have put it down, but I would rather say, "It might well lead to some rise in world prices." This point, I admit, is more contestable, but it is a fact that sterling prices succeeded in bringing down gold prices, and it is at least arguable that they would exercise an elevating influence on world prices if they rose. My last point is more debatable, but still it is accepted by economists. It is that it is essential that the Chancellor of the Exchequer should this year suspend the Sinking Fund and budget for a deficit, on the deliberate assumption that the loss would be recovered in the next two or three years. That is the climax of the whole argument, and that is the case which the Chancellor of the Exchequer sooner or later will have to answer, unless he is converted, as I still hope he may be.

It will be seen that, in making these deductions from the recent correspondence and articles in the newspapers, I am placing in the forefront the question of raising sterling prices. I believe that, if that fails, any other measure that we may take will, at the best, only be putting off the evil day—and will only be palliatives. I am also assuming that to wait for concerted international action may well be waiting for the Greek Kalends. I think it was A. P. Herbert who said the other day that international conditions made the same excuse for the statesman as the sub-conscious mind did for the individual. I think the Government are laying themselves open to the charge of regarding financial rectitude as an end in itself, which it is not. All the financial rectitude in the world, in certain conditions, will only end in the immobilisation of all our capital in the form of deposits in the banks, and in the immobilisation at the same time of all our men, outside the Employment Exchanges. I am not saying that the Government are guilty on that charge, but I think that they have a case to answer in defence of themselves against it. My underlying principle is, of course, that the real gamble consists, not in a policy of action, but in waiting for Providence or for some Deus ex machina like the World Economic Conference to see us through. I am firmly of opinion that it is by our own efforts in this country—with the hope, of course, that they will spread to the whole sterling bloc, but primarily by our own efforts in this country to secure a rise in sterling prices—that we shall get the machine going in the right direction.

8.33 p.m.

Major HILLS

I agree very heartily with one sentence of the hon. Member for Leigh (Mr. Tinker). He said that we had to do something for the unemployed; and, although I differ from him as to methods, still, as this Debate has developed, it has shown a division of opinion in the House which does not run on party lines. That division is between those Members whom I may call the expansionists, on the one hand, and, on the other, those who stand pat by what my hon. Friend the Member for Morpeth (Mr. G. Nicholson) has just called financial rectitude. Among the expansionists are my hon. Friends the Member of Stockton (Mr. Macmillan) and the Member for Darlington (Mr. Peat), and on the other side we have had a very powerful speech from my hon. Friend the Member for Central Southwark (Mr. Horobin). I belong to the school of the expansionists on this occasion. I believe that, when the Government in 1931 cut down all expenditure, cut salaries, cut the dole, and balanced the Budget, they were entirely right; but, just because I think they were right then, I believe that another policy is called for now. Time runs very quickly, and I am not sure that the Government are paying full attention to the time factor. The Chancellor of the Exchequer, all through his speech was giving reasons for deferring, for pushing off this expenditure. He said that enterprises of a proper character might be considered, but that those who pleaded for them did not realise the time they would take to put into operation. If that is the real reason, why not start them sooner?

To-day we are considering a long-term policy, and, therefore, I think we ought to take long views. Then the Chancellor talked about preparation for action when the time comes, starting work, planning, and so on. I think the time has come when we ought to make up our minds. I hope the Minister of Health will tell us by what rule he will judge the admissibility of schemes of capital expenditure and their rejection. I take it that he cannot demand that every scheme should show a commercial return and show that interest will come back to the Treasury, for that is an impossible rule to adopt. I suggest that the proper rule is works of national utility even although they do not show a return in dividends. The hon. Member for Broxstowe (Mr. Cocks) pleaded for 2,000,000 new houses, and my hon. Friend the Member for Darlington pleaded for slum clearance. There you get an approximation between Members of different parties which I have very rarely seen in a Debate on unemployment.

I hope my right hon. Friend will tell us how you can deal with the unemployed unless you go in for a change of policy. I believe we as a party will be judged entirely by what we do for the unemployed, and time is not so very long. If at the end of our time there are still 2,000,000 or 3,000,000 out of work, we shall be justly condemned. To get men in employment I pray in aid every word the Chancellor said about the difficulty of getting schemes into operation, and I use that argument to reinforce the demand that a beginning shall be made at once. Things have changed. A great gulf separates the old world from the new, and we must be very careful that we do not allow the older ideas, which were perfectly valuable at one time, still to prevail in our minds. I think if you want to raise prices you have to spend money. I want prices to rise, because I want employers to make a profit. Until they make a profit, they will not employ men.

Men are out of work for one reason only, because employers cannot make a profit, and until you get a rise of prices I see no means of getting men back to work. It is not that we think these individual schemes themselves will employ so many men—all experience shows that they will not—but someone must break the block that we are in. You cannot expect the private investor to do it. The Government must spend money not so much for the purpose of getting men back to work on a drainage scheme, excellent and necessary as that is, or a big slum clearance scheme, as for the reason that the expenditure of money will start the ball and will start industry and give private industry a means of recovering itself. I believe that is an essential part of capital expenditure.

Then I also want a big reduction of Income Tax. I do not plead so much for the private taxpayer. It is no good for the Government to talk of all the millions that they claim to have saved until that economy is translated into the pockets of the taxpayer. He does not appreciate it. He says, "You say you have paid so much and yet my Income Tax is as high as ever." The small taxpayer has been very heavily cut in his salary, and he expects some reward for what he has suffered. I mention that, but I do not base my case on it. I base my case on industry, and the effect of an improvement in industry on employment. It seems to me that the Government, who have pleaded for rationalisation in all branches of our commercial life, have overlooked the rationalisation of taxation. They go on applying the same canons, which are quite justified, canons like equality of sacrifice and ease of collection, but they seem to me to overlook the one outstanding canon of the reaction of taxation on industry.

If I were a dictator, I should cut Income Tax and I should cut Surtax. I should cut Surtax from no soft-heartedness towards the millionaire, but because I do not see how any man in his senses can be asked to risk his money on a new enterprise of a doubtful character when, if that enterprise fails, he loses his money and, if it succeeds, all he gets is 6s. 9d. in the pound. I believe a man of wealth is a valuable national asset. I do not expect to convert the Chancellor of the Exchequer. I do not expect to see a lowering of Surtax, but I plead for a lowering of Income Tax. It presses heavily on industry.

Another case in which the rationalisation of taxation would make a change is that of company or business reserves. Profits that are put back into business increase the wealth of the country and employ labour. Their exemption from taxation has been pleaded for over and over again. I do not at all agree with the much quoted statement in the Colwyn Report that Income Tax does not affect industry. It affects it in many ways, and we must consider now not only the direct but the indirect effects of lowering taxation. I may be told that I am looking to an imaginary benefit. I do not think imagination is a bad quality for a statesman to possess, and it is very hard to over-estimate the optimism and the hope that would be engendered if a substantial reduction were made in Income Tax, and I think it might cause a business revival which would more than recoup any loss that you might suffer from a reduction in the yield.

The House must not forget that Income Tax is not the only tax. It constitutes a very large portion of our taxes, but taxes on consumption and on stamps respond to prosperity, and it is possible that if or more was taken off Income Tax the Budget might not be unbalanced. Everything depends upon the future. No one can tell what the effect will be. After the American Revolution, William Pitt, in his first Budget, was urged by all the economists and all the pundits to increase taxation, but he reduced taxation and was called a traitor for so doing, but he got in twice the income obtained on the old basis. I do not say that things are as they were in the time of William Pitt, but there are certain similarities. We are living in times when actual economic causes and the results of economic action are very hard to foretell. I am not sure that the opinion of ordinary people and of the back benchers of the House of Commons is not a matter to which weight ought not to be given.

I do not think that I exaggerate when I say that my hon. Friend the Member for Farnham (Sir A. M. Samuel) and the hon. Member for Central Southwark (Mr. Horobin), and, I believe the whole of the National party, and perhaps part of the Opposition, would welcome a, reduction in taxation. Yet I am very much afraid that the Government will stand fast. We are told that if you Budget for a deficit and do not Budget for a balance all sorts of things occur. Government credit is damaged, and it costs more to borrow money. Government credit is damaged, you cannot convert your loans cheaply, the future of sterling is at stake, and foreign countries and foreign lenders will not deposit money here in our banks. There is a very easy answer to all those considerations. Sterling has been getting too high lately, and the whole activity of the Government has been directed to keeping down the price of sterling. Our big conversions are over, and they have been very successful. The foreign balances which move about the world, going from central bank to central bank, do infinite harm. It is just like a rolling ship. As the ship rolls the bilge water comes from one side to the other and increases the danger. We should be better off if we did not have this shifting money in our banks. It is always withdrawn just when it might be useful.

I plead for a reduction of Income Tax because I want to get more money into circulation, raise wholesale prices and get men back to work, and above all I want to give some hope. The present policy is unimaginative and unhopeful. You have to deal with human beings and you have to take account of them even though they may be mistaken. The Government are forgetting that a great many people are expecting them to do something, especially with regard to unemployment. The Minister of Agriculture said the other day that the country would forgive everything except inaction. The whole of the future of the Government lies in the hands, not of the House of Commons or of the National party, but of the occupants of the Front Government Bench. If when the Chancellor of the Exchequer opens his Budget next month he says that he cannot reduce taxation, his party will vote for the Budget but they will not do it by conviction, and in many cases they will do it with very grave doubts and misgivings. People feel instinctively that the policy of the Government is wrong and that they are not taking account of the change, that they are not looking at the world as it is, and that they are applying old rules to conditions which have long ceased to operate. My hon. Friend the Member for Central Southwark has just come in. I am glad he was not here at the beginning of my speech as I should have felt his stern eye upon me. I listened with immense pleasure to what he said, but I wonder whether he analysed the past and the present as a guide to the future. The future is unknown and nobody can tell what will happen, but the worst state of all is to do nothing and let the future take care of itself.

8.52 p.m.

Mr. R. T. EVANS

I shall detain the House for only a short period as the ground has been traversed pretty thoroughly. I will say nothing of the suggestion which has been made with regard to schemes for the using up of our idle labour power and our idle capital resources, except call the attention of the Minister of Health, as representing the Government, to a matter which has not been discussed at all today—the position of juveniles. I have looked up the figures. We have to-day on the live register something like 140,000 boys and girls under 18 who are unemployed. That does not exhaust the whole number, and probably I am on safe ground when I say that we have well over 200,000 youths under 18 who have never done a day's work and who lack discipline during the most formative period in the growth of their characters. There is a further point I would stress. During the next four years the number will increase. Youths of 17 and 18 are, in 1933, at their minimum. In 1934–35–36–37 we shall find a very considerable increase in the number of youths appearing on the labour market. Although certain things have been done, I would appeal to the Minister of Labour to pay serious attention to the problem of saving youths from demoralisation and degradation.

The right hon. and gallant Member for Ripon (Major Hills) and others to-day have stressed the monetary factor in our industrial and economic situation, and I think that they were right in doing so. We had an extraordinarily brilliant speech from the hon. Member for Central Southwark (Mr. Horobin), coruscatingly brilliant. Some of his phrases were scintillating. But when he sat down I wondered whether, apart from destructive criticism, he had made any contribution to the solution of our problems. When he had sat down and when the Chancellor of the Exchequer had sat down I felt like scratching my head and wondering whether we had any unemployment problem.

While we are engaging in these academic discussions—and I do not minimise the importance of the monetary factor, we have to remember that the number of the unemployed has been steadily in- creasing. In 1930 16.1 of insured workers were unemployed, in 1931, 21.3 were unemployed, and in 1932 21.1 were unemployed. The Chancellor of the Exchequer said that it all depends upon the recovery of our overseas markets. In 1930 our coal exports were £45,500,000 and in 1932 £31,500,000, our iron and steel exports dropped from £51,000,000 to £28,000,000, machinery from £46,750,000 to £29,500,000, cotton yarns and manufactures from £87,750,000 to £62,750,000, and wool exports from £36,750,000 to £24,000,000. There we have the stark realities of the situation. Our markets have been and are being lost and unless something happens, if the present drift continues, we shall continue to lose our markets. I recognise the importance of short-term schemes. I recognise the importance of our internal situation, the need for housing development, the need for the development of our national resources, for the raising of the school age and so on, but the Chancellor of the Exchequer was right when he focussed attention upon the need for the recovery of our overseas markets.

Britain has lived and still lives in a large measure upon her export trade. The crux of the whole question is whether the Government's economic policy is such as conduces to the expansion of world trade and to an increase in our share of that world trade. The right hon. Gentleman was right when he stressed the importance of the World Economic Conference, but we are not going to get much out of that conference unless we have pretty clear opinions as to the future of the world's currencies. The big drop in wholesale prices throughout the world is due to two causes. First, to the vast increase in the production of foodstuffs, raw materials and manufactured goods. Coincident with that development, from 1913 to 1925 the world's population increased by 5 per cent., the world's production of foodstuffs increased by 10 per cent., and the world's production of raw materials by 25 per cent. From 1925 to 1929 there was the same tendency at work, only in a less pronounced degree. The population increased by 4 per cent., the production of foodstuffs by 5 per cent. and the production of raw materials by 20 per cent. Let me take specific items from the manufacturing industries of the world. Pig iron production increased in four years by 28 per cent., steel by 33⅓ per cent., machine tools by 87 per cent. and foundry equipment by 48 per cent. We had these vast increases in the output of our primary and secondary industries, and coincident with that we had a deflationary policy throughout the world.

From 1924 to 1927 a number of countries reverted to the Gold Standard, and they were faced with the difficult problem of determining the level on which they should re-attach their depreciated curriencies to gold. Britain anchored at the wrong level. The re-attachment to gold of our currency in 1925 involved a very considerable measure of deflation. It is very significant that the two countries, France and Belgium, that reattached on a different level and did not appreciate the value of their currency in terms of gold have come off best in the last few years. They have received the fewest number of industrial shocks. Therefore, it is obvious that currency policy must be one clearly thought-out and one that is relevant to the world's problems. Whether it is going to come about through inflation or deflation I do not know.

I am rather torn between the views of the great protagonists of the status quo in the matter of finance, and the inflationists who sit behind me. Some time ago I put in parallel columns the volume of currency in circulation in Britain from 1919 onwards, and the indices of production. I found that as the volume of currency in circulation shrank, as it did from 1921, the index of production shrank in almost direct ratio. The question that I could not solve and that no one can solve is this, did the total volume of currency shrink because of the shrinkage in production or did production shrink because of the shrinkage in the volume of currency? I suggest that both are cause and effect that there is a close interconnection between them. The Government must have some clearly defined views in regard to the restoration of world currencies if any good is going to emerge from the World Economic Conference.

A further point that I want to make is that the Government have to consider the anchoring of our currency and the world's currencies to something stable. At the moment we are not the only country that is trying to stabilize the position of its currency unit by arbitral methods. Other countries even if they have not what we call an Exchange Equalisation Fund have something comparable to it. We hear from all quarters that trade is paralysed, that enterprise is being stifled and strangled and that all countries are resorting to artificial and adventitious methods in order to stabilise currencies. If we are to have any sort of development in international trade we must find something stable to which we can anchor our currency. Something quite unlike anything we have had before will have to come about.

More than one hon. Member has said to-day that we cannot wait for international co-operation; the world has been hesitating between economic nationalism and international co-operation; you have all these political ascerbities and all sorts of national aspirations making economic co-operation impossible. May be that is true. It may be that in the Succession States the pestilence of economic nationalism, which has developed since the War, is largely political in its origin. It may be that these Succession States, which were carved out of the ramshackle Empires of Austria and Hungary, have been developing industries for which there is no sort of economic justification and are the result of political considerations. But if you are going to wait for the assuaging of these rivalries and ascerbities you are going to wait a long time, and it may be that those people are right who say, "Let the rest of the world go to blazes; we will develop our own resources, put up tariff barriers and stew in our own juice."

I think it is possible to have, straight away, a commercial union, a Zollverein, at any rate, of English-speaking countries, probably with South American and Scandinavian countries. You have Germany with its political future uncertain, France fearful, and central and south eastern Europe torn with all sorts of rivalries and hatreds. I do not think you are going to do much there with all these political hindrances to economic co-operation, but I am certain that if the Government, instead of being woolly-headed and diffuse, would say that they are prepared to enter a Zollverein for reciprocal trading with other countries, there would be a considerable response, and that before long you would find other countries begging to be allowed to come in. That kind of Zollverein would probably be on a low tariff basis, I think that would be inevitable for some time, but it would husband its reserves in gold and it could have its clearing house for international balances of trade. It is possible, I think, to build up something of that character and get together the nations which have no political differences and no political antagonisms, and it is the only thing which will help us. Otherwise our civilisation is going to collapse.

A year ago, when in the United States of America, I met one of the keenest intellects in Japan, a man whose books are frequently quoted. He prophesied the aggression on the part of Japan. He foresaw the developments in China. He told me that what the Western mind forgot was the background of Japanese thought and action. He said: "We have sent our students to America and to Western Europe, and they have come back and are proclaiming everywhere that Western civilisation, the white man's civilisation, is going to commit suicide." They see the preparation of a great diversity of lethal weapons; they realise that the white man's civilisation has not solved the first problem of civilisation, how to settle differences without killing one another. They see that while it may have solved the problem of producing abundantly it has not solved the problem of spreading out the wealth so as to secure an abundant life for all. This man, who is probably one of the most potent and informative agents in Japan to-day, said that the Japanese are convinced that the white man's civilisation is going to commit suicide and is determined to have as its successor the yellow man's civilisation, the potential man power of China, led by the virile and aggressive intellects of Japan. That may be all nonsense, but we cannot forget that our civilisation looks as if it is going to crash.

We shall not drift into salvation. We need to-day dynamic leadership, courageous leadership; which has not been too manifest in the last year or two. If the Government do not face these problems, dire consequences will follow. It has a responsibility not merely to this House or to this country. Britain must take the moral leadership of the world; whether she does so or does not will determine the fate of the white man's civilisation. Let the Government get on with the job. The talks which the Government give us, the lectures they give us about the causes of our situation, indicate with great clearness that they see through things. My quarrel is that they do not see things though.

9.13 p.m.

Sir NAIRNE STEWART SANDE-MAN

We have listened to an interesting lecture from the hon. Member for Carmarthen (Mr. R. T. Evans), but I could not make out whether he was in favour of Japanese civilisation or not. I was much more interested in the speech of the right hon. and gallant Member for Ripon (Major Hills). He talked about the reduction of taxation and the effect it had on unemployment. When unemployment figures were much lower than they are to-day 1s. taken off the Income Tax made an immediate difference of 100,000 men finding work; and the same thing happened when 6d. was taken off. Whenever you increase taxation unemployment figures go up. Hon. Members of the Labour party seem to forget that about 60 per cent. of the people are working in luxury or semi-luxury trades, and what is happening is that many of the richer people are having to do without many things. That is causing a great deal of unemployment. I say that the more millionaires we have in this country the better it will be for employment, and the better chance the Chancellor of the Exchequer will have of collecting his revenue.

I have just come from my constituency where I saw many of the people who are out of work. They do not want the dole. What they want is work. They are nearly all cotton operatives. I cannot see much hope in sending cotton operatives out to make roads and docks and canals. I would like to get them working in the cotton mills, to which they are accustomed. They have been brought up to spinning and weaving and have the hereditary touch in them, the spinning feeling and the weaving feeling in their fingers. One man said to me, "Cannot you give the employers a subsidy so that we can get back to work and have some hope of not losing our skill?" There was a good deal to be said for him. What I ask is, has the question of subsidies been really gone into closely? Has anyone tried to work out a scheme just to find whether it is possible? If we could get our Lancashire spinners working it would be a great help. I know that to a great many people the proposals of a subsidy is just anathema. They say that it is the thin end of the wedge and this, that and the next thing. I would stretch my economies a good long way to get people into work.

I think it is the duty of every Member of the House to try to think of something that will employ some people. I would make a proposition. It is not a new one. The Government offices are very large buyers indeed, and they put out tenders to manufacturers for any goods that they want to buy, and they also, I am sorry to say, have to put out tenders to manufacturers on the Continent. I am very glad that the Minister of Labour is present because this statement applies to him. Suppose that the India Office gets through an inquiry for something that is wanted in India. Why should not the India Office put on the notice to the home manufacturer a statement saying that if his tender is accepted by the India Office he can at once put so many people into employment for so many months? It would be a perfectly simple thing for the India Office to go to the Ministry of Labour and say, "How does this look? Is it going to pay? Is it going to be cheaper for us, instead of paying the dole, to hand over so much money to the India Office to cover the difference between the price of the foreign-made article and the price of the British-made article?" I cannot see any difficulty in that. It would not put up the quotation of the manufacturer in this country, because he would not know what his opponents were quoting.

With the leave of the House I propose to read a minute—it is not a Cabinet Minute, so hon. Members need not be alarmed—that was sent by the chairman of Armstrong Whitworth's to the Lord Privy Seal in the last Government, a Government which came in with a statement from "Labour and the Nation" that it would cure unemployment. It is not a very long document, but it is very interesting to everybody who is interested in the engineering trade. It is dated 1929: In the course of the first three-quarters of the current year very large orders for locomotives and locomotive boilers have been placed by the Indian Stores Department outside the United Kingdom. Full records as to spare part orders, wheels and axles, etc., are not available, though it is known that the spare part orders placed on the Continent are considerable. But in any case the full value of these orders placed by the Indian Stores Department, and which the firms in the United Kingdom have been unable to obtain, amounts during this period approximately to £1,000,000. Of the above the total value of the contracts known to have been placed by the Indian Stores Department in Germany during the 41 weeks from 1st January to 15th October, 1929, is £897,838. In the same period the total orders from all sources placed with United Kingdom firms was about 367 locomotives and 407 boilers, representing only 18.35 per cent. of the locomotive capacity and 40.7 per cent. of the boiler capacity of those firms. The Indian orders which have been lost would have represented a further 6.75 per cent. of the locomotive capacity, and 21.6 per cent. of the boiler capacity. Thus if the Indian orders had been placed in the United Kingdom the United Kingdom firms would have been able to increase their output from 18.35 to 25.10 per cent. of their locomotive capacity, and from 40.7 to 62.30 per cent. of their boiler capacity. The securing of the Indian orders would, in fact, have increased their total locomotive output by more than 33 per cent., and their boiler output by more than 50 per cent., with so great an advantage in respect of absorption of overhead charges alone as would have made all the difference to their successful operations. In order to establish an effective comparison between the United Kingdom costs and the German costs, upon which the respective tenders were built up, the contracts which actually went to German firms at known prices and for which Armstrong Whitworth's tendered at higher prices, will be taken as a basis; thus so far as possible eliminating unknown factors. The total of the tenders submitted by Armstrong Whit-worth's in respect of orders which were eventually placed in Germany amounted in the period to £1,077,336. These orders actually went to German firms for £897,838. That is £179,498 lower than Armstrong Whitworth's were able to quote. In the foregoing Armstrong Whitworth's labour costs figure is £348,216. The German labour costs cannot have figured as more than £278,573. Nors.—The actual earnings for all grades of workmen in Germany, in the trades concerned, is approximately 20 per cent. less than the earnings of British workmen. If the United Kingdom firms, therefore, instead of the Germans, obtained the whole of the Indian orders the former would have paid in wages to labour in the United Kingdom over £348,000, which in the actual circumstances was lost to British labour. The total output capacity of the United Kingdom firms is about 2,000 locomotives and 1,000 spare boilers annually. Of this total Armstrong Whitworth's capacity is about one-eighth. Now, if Armstrong Whitworth's, representing one-eighth of the United Kingdom capacity, had obtained their proportionate share of the Indian orders placed with the Germans, the firm would have employed between 400 and 450 additional workmen in the following categories: Fitters and turners, boiler-makers, Platers, machine men and unskilled men. It may he assumed, then, that if the United Kingdom firms had obtained the whole of the orders, the result would have been the employment of, say, 3,500 additional workmen in -the above categories who are at present unemployed, but indirectly the effect would have been far more widespread. The numbers employed and the wages total would have been very largely increased, owing to the labour value of the materials employed in locomotive construction and the resultant stimulus to ancillary and auxiliary trades. For the locomotive builder there are three main elements which make up the total cost of the finished locomotive, namely, materials, direct labour and overhead charges. The proportions of these are approximately 50 per cent. material and 50 per cent. direct labour and overhead charges. To appreciate the full extent of the influence of lost orders on employment it is necessary to analyse the materials which in most cases are the finished products of other industries. In the last analysis it will be found that some 80 per cent. of the total value of the materials entering into the construction of the locomotive is represented by British labour. Taking this figure (i.e., 80 per cent. of 50 per cent. of the locomotive—40 per cent.) and, adding to it the direct labour element (in the case of the Indian orders under discussion a known factor), we obtain the remarkable result which follows in calculating the 'wages value' of the locomotive orders placed by India in Germany: Direct labour (see above), £348,216. Materials—value represented by British labour (40 per cent, of £1,077,338), £430,934, a total of £779,150. This is a very interesting statement and it deserves to be circulated in order that the Government should get it into their heads that they have got to get that sum of £779,150 into the pockets of the working men of this country. This astonishing figure is based, of course, on Armstrong Whitworth's tender prices, the German prices being subject to the reduction of 20 per cent., representing the cheaper cost of German labour. Thus, however, an approximation to the sum of £750,000 may be taken as representing the loss in wages to British workmen in the period 1st January to 15th October, 1929, in this one branch of one industry. In other words, while the direct loss to British labour in the locomotive firms alone amounted, in this one series of orders, to over £348,000 as shown above, the further loss in respect of the 'wages value' of the locomotive firms' materials amounted to more than an additional £430,000. At present the additional labour which the locomotive factories could have employed directly is unemployed, and is estimated to be costing in Unemployed Benefits, say, £4,400 per week, or, for the period, say £180,000. If the above sum, instead of being paid in unemployment Benefit could have been by some means used in adjustment of the difference between the British and German tenders for the Indian orders the result would have been equivalent to a reduction of over 17 per cent, in the British prices, and, other things being equal, would have enabled the United Kingdom firms to have obtained the orders which were placed in Germany. That is a very illuminating statement. When the Lord Privy Seal got it, he said he would show it to the Chancellor of the Exchequer, who, as we all know, is very stubborn when he has made up his mind. I hope when a case occurs again of the same sort—and I have no doubt the same kind of thing is going on all the time—the various Departments will put their heads together and consult with the Chancellor of the Exchequer, and see whether it would not be cheaper in the long run to use the dole money to subsidise the firms concerned. One should consider the added health and happiness of the thousands of people who would be employed and who would get decent wages every week instead of a wretched dole in making up one's mind whether it is worth it or not.

9.30 p.m.

Mr. BUCHANAN

I have listened to most of the speeches to-day, and it seems to me there are really three schools of thought represented in this House. The first school consists of those who hold orthodox Government views, namely that rivid economy ought to be practised at the present time and that nothing should be done to render the balancing of the Budget in any way dangerous for the future. According to this school, the great thing at the moment is to see that our financial position as a country is made stable and secure, and that nothing is done to cause the Budget to be unbalanced and to unsettle our credit abroad. That is the view which was put up by the hon. Member for Central Southwark (Mr. Horobin) in a speech which is recognised as a very brilliant speech. Some Members say that speech was not constructive, but, at any rate, it was an honest speech which faced the situation as he at least saw it. The next school of thought is represented by Members who put the point of view of schemes of work. They say that it is important to balance the Budget, but more important still for the nation to try to see by every means at its disposal that men and women should be placed at work on schemes of national development. That second school of thought is mostly composed of Government supporters. The third school of thought advocates schemes of work and adds to them such matters as raising the school age, reducing the age for old age pensions, increasing the pensions, restoring unemployment benefit and abolishing the means test.

Those, roughly, are the schools of thought which I have heard represented here to-day. Personally, I do not think -the Government have failed because they are a bad Government or a heartless Government. Since I first came here in 1922 every Government has failed on the unemployment problem. No Government has succeeded. Each, Government in turn saw the figures rise more or less. Each Government in turn had the same type of Front Bench Leader who told us the figures and got consolation in proving that they were not so bad as they were at some other time and were therefore something better than some other figures. Each in turn failed as far as the unemployment problem is concerned and did not even achieve a partial solution. These Governments did not fail because they were incapable men. I do not believe that the Government presided over by the Lord Privy Seal in 1922 was incapable, or the Labour Government of 1924. Neither were the Conservative and Labour Governments that followed. Those men were faced with a position of running a system. You may elect as clever a set of men as you like. After all, it is the same officials that are running the country to-day as ran the country with Labour. Even if the Government are not efficient themselves, they have the pick of the best brains the country can produce. It was not the men that failed and it is not the men that are failing now. Alter the Government as much as you like and you will find that no Government, whether Conservative or Socialist, can run capitalism any more succesfully than this Government can.

The problem with which we are faced therefore is not a problem of a scheme of work. On this I differ with the Labour Members, not personally but on principle. I would like them to face the issue of schemes of work. Personally I have almost a contempt for that method. I have no faith in schemes of work and I wish to try to apply socialist reasoning to this question, not with any personal bias, but coldly, and on the facts as I see them. What are schemes of work in the main? They are the making of roads and canals, the building of ships, electrical development and electrification of railways. Let us analyse the situation. Everybody agrees that if a scheme of work is to be of any advantage it must do more than merely get a man into a job now. If a scheme is going to employ a certain number now, and is going to throw a larger number out of work in the future, it is much better for the worker that it should never be started at all. If a scheme to-day can put 100 men into work but in five years time is going to throw 1,000 men out of work then, as far as the workers are concerned, it would be better if it were not started at all. All the schemes of work applied under capitalism, so far from solving this problem, make the problem worse for the worker in the future.

There is no difference between the Labour party and myself on this point —that the machine ought to be a good thing. There is not a miner here who does not believe that it is better for humanity that coal should be cut by a machine and easily brought to the surface. But the thing which ought to have been good has proved to be bad. The machine has turned men out of work and men, naturally, have said, "The machine ought to be a good thing, but we would sooner have the old method and keep our jobs." We say that that result comes about because the machine is privately owned. With communal ownership the machine immediately becomes an instrument of public service and not of private use. A road is the same as a machine. A road is part of the machinery for the development of wealth production in a nation. It allows of the free transfer of wealth from one place to another. The Labour Government built a, road from Glasgow to Edinburgh in 1924. It was opened by the late Mr. Gosling then Minister of Transport. It was started with the best intentions and for the purpose of giving work and almost £3,000,000 of public money, local and national, was spent on that road. It did provide employment for a few thousand men but the numbers were not great.

I was on an advisory committee with the late Mr. John Wheatley in connection with that work, and we attended meetings with representatives of the local authorities. One Conservative, a very decent fellow although a Conservative, was very much annoyed. The local authorities expected that for this £3,000,000, so many thousands of men would be employed, but, when the work was started, a large proportion failed to get jobs. The contractors, Shanks and McEwan brought a "steam navvy," with the result that less than one-third of the expected number of men were required. The Conservative to whom I refer came to the meeting and said that this was not good enough, and that the contractors ought to be asked to take off the steam navvy, and go back to the pick and shovel in order to give the men employment. One Irishman there who had more humour than the rest of us suggested that, as resort to the pick and shovel method would only employ a few thousand more, and, as he desired that all should have work, a deputation should be sent to the contractors to ask them to abolish not only the machine but also the use of picks and shovels and let the men get down to using their hands.

That road has been made and it is a great road, and what has been the result? To-day, the railways are being smashed. It is just as if you had made a new machine. The transport of wealth between Edinburgh and Glasgow can take place more rapidly than ever before. Roads built with public money constitute as much a subsidy to the rich as if, for instance, you granted a direct subsidy to locomotive makers. It is the use of public money for the purpose of allowing private wealth to be more rapidly produced. Frankly, I have never taken the view that these schemes even get near solving the problem. I take the reverse view, and I can never understand why men and women shout for schemes of work. Go to the Employment Exchanges and speak to the men there and you find that they do not want roads, they do not want schemes—I exclude housing. I am coming to that point. They want jobs, and what they are really after is the income from the jobs, and the income represents boots and clothes among other things. I can never understand why, instead of putting people to work at making boots and clothes, you put them to work at making a road in order to give them the boots and clothes. Why not make the boots and clothes without the road. Why must they get the boots and clothes through the medium of making a road? I take the view that these schemes do not even touch the problem.

Take the case of the Cunarder—and I want to make my personal position on that matter clear. I am not in favour of granting public money for the Cunarder. The Cunarder is to be a rich man's ship. It will not be used by the working people. I could see some reason for a subsidy to the boats plying between the Clyde and Ireland, because working people use them, but when this Cunarder is built not one working-class person will enter it because the fares will be prohibitive. [An HON. MEMBER: "What about the sailors?"] Yes, they will enter it as workmen. Every mansion house that is built carries with it its working people too, but there is no one in this House who would tolerate subsidising the building of a mansion; and this is a rich man's ship. It is only to be built on condition that other companies unite, which means in effect that when the other companies unite they are to unite to scrap ships that are now running, and this ship will only mean that other people must be consequently flung out of work. I say, therefore, that your schemes of work are travelling round a mere cruel and vicious system, with this result, that I think is shocking, that they are holding out hopes that must in the end be falsified.

On the Treasury Bench honest men have stood, from the Labour party, as anxious to do the right thing for the poor as even I was, and I have heard them state all manner of reasons for the coming of good trade. Cheap money was to bring it, confidence was to bring it, no strikes were to bring it. We have not had a real strike in Britain since 1926, apart from the cotton industry. The miners have given them peace, although they have had many reasons to break it, and we have heard in this House hundreds of times that if the miners would only give them peace, their conditions would greatly improve. Cheap money was to be another thing, and confidence restored, but every one of these things they have got, together with low prices. I was told, when I first entered the House, "Give us low prices, and people will buy goods." Now it is, "Give us high prices, and they will buy goods." Each thing in turn is proving itself absolutely false.

Whoever runs the Government is not going to get the Government to run Socialism. They are going to run Capitalism, and I want them to face this proposition. If you raise the school-leaving age, if costs you money; if you lower the pension age, it costs you money; if you restore the cuts, it costs you money; if you abolish the means test, it costs you money; to build houses costs you money; and then you have the last thing that is demanded by the right hon. and gallant Member for Ripon (Major Hills), that you should reduce taxation. Is there anybody in this House who would take over that Government to-morrow and say they would do these things? I have only one mission left in this House, and it is not to get work at all. It may be curious to say that, but even housing leaves me very cold. I have said often, and I will repeat it, that I represent as badly housed a divison as anybody in Britain. The people there are piled up.

I addressed a meeting in my division the other week of at least 2,000 souls, packed together, and not one of them had a good house, in the sense that most of us would mean a decent house. Every one of them should be asking for a good house, yet not one of them was much concerned about houses. What they were more concerned with than housing was to keep the awful house they had got, never mind looking for a new one. What does a new house mean to them? It means more misery. In my division the poor people curse the day when they are given a new house, because you move them in at a higher rent and you make their running cost greater, yet their income remains low. The consequence is that they do not demand houses. It is inevitable that every day there will be more and more out of work. For a period of years that must increase. Try schemes as you may, foreign trade must grow less. Each nation can now produce its own requirements and does not need your goods.

The consequence is that there is only one demand that I make or, rather, two demands. One is this: I can see no way of increasing the amount of work to be done. Therefore, I say that as reasonable men, instead of keeping 3,000,000 people out of work and others doing nothing, you should simply share whatever work has to be done among all the people. The second thing is to give them an income and let them live. I say that 15s. 3d. was defensible only if it was for a short period, for a month or two months, but 15s. 3d. is indefensible when it is their income for life, and that is what it is now—their income for years, for five, six, seven, eight, nine, 10 years. It is their income, and it is the first duty of the Government, not to hunt for schemes that are not there, which, even if they paid, must by their nature displace men under a private capitalist system. I know it is hopeless in this House to demand my Socialism, but I make a human demand, and it is that this Government, before dealing with the Income Tax payer, or anybody else, should set about dealing with the incomes of those people who have been deprived of work, and see that they are raised to such a level as will secure to them not luxury, nor even great living, but a decent, a happy, a full and a secure home life.

9.55 p.m.

Sir ARTHUR STEEL-MAITLAND

I am always interested, as I am sure every Member of the House is interested, when the hon. Member for Gorbals (Mr. Buchanan) speaks about the people in Glasgow whom he knows so well. Whether we agree with his views or not, we know that he feels their case personally and sincerely—at least as sincerely as anybody else in this House—. and therefore there is not one of us who is not affected by the way in which he presents their cause to us. On the other hand, he himself knows perfectly well that it is not really a possibility for him to bring about the state of society which he would so gladly produce in this country. Some of us think that if he did bring it about, affairs would not be better in a crisis such as we are passing through at present. do not wish to raise invidious feelings by referring to the one other great country which has a different order of society, and for that reason I do not even mention its name, but I would only say that its experience does give us reason for caution. When a great Government, which has got an entirely different order of society, makes a mistake we see, by what happened there this autumn, that it inflicts a greater amount of misery on the millions of inhabitants in its country than has been inflicted by all the hardships which have been endured in this country, great as they have been during the present trade depression.

The main theme this afternoon has been those scUemes of work for which the hon. Member for Gorbals has so profound a contempt. Two opposinng views have been put frward. The hon. Member for Stockton (Mr. Macmillan), in one of those speeches which are always interesting to those who listen to it, put forward the case for a comparatively free expenditure of loan money on public works on a large scale. He suggested it as a means of raising prices, and from that point of view the value of the actual work produced is a matter of minor importance. From the same point of view, we have had, as we expected, the usual proposals from the benches opposite for a much more generous expenditure of public money on a, large number of social objects very good and desirable in themselves. The other point of view was put, to begin with, in a very brilliant and amusing speech by the hon. Member for Central Southwark (Mr. Horobin), and again, in a naturally guarded reply, by the Chancellor of the Exchequer. That reply, though differing somewhat in tone from his answer of a few weeks ago, did not indicate any change in essence, I think, in the general attitude of the Government.

I am going to take what is not often a very popular course, and that is to suggest that there is a proper mean between the two which can be followed with advantage. I remember a description of the late Lord Goschen which was once given to me by Lord Milner. Lord Milner said of him that he was the only man whom he had known who could get into a white heat of passion in favour of a moderate and sensible course. I put it to the House that a medium course, clearly realised and resolutely pursued, is one which, probably, would most fit the circumstances of the country at this moment. I have one or two suggestions which I hope will be constructive in nature. Take the idea of loan expenditure without much regard to the value of the object attained. I think such expenditure of public money will have precisely the effect which the hon. Member for Gorbals has anticipated that it may have, namely, that the amount of unemployment, created indirectly, which will result will be greater than the amount of employment provided.

Suppose that a scheme which is not actually wanted on business grounds is put in hand. The immediate effect is that we see a greater or a lesser number of men employed on it, but what we do not see is the burden of taxation which has been created. We do not see at once that this person or that, because of the burden of taxation, reduces his expenditure, it may be on boots or clothing for his family, or that possibly some firm which has just been struggling along closes its doors and throws its employés out of work. To my mind it is neither sense nor justice to put men to work on roads or similar undertakings if those are not actually needed and thereby, indirectly, but none the less surely put men out of work in the trades at which they are accustomed to earn their living. I earnestly wish to bring this view before the House this evening, because the danger is really a very great one. We have had experience of it in times past.

In the 10 years before this slump began other great European countries were enjoying comparative prosperity, and we alone were in the doldrums. Though there was not unemployment to the extent that at present exists, the unemployment figure was running always between 1,000,000 and 1,500,000. We suffered because of our own mistakes, mistakes which we now realise, but which were probably difficult to foresee and to prevent. To-day the situation is again made worse because of the mistakes then made. Taxation to-day is a heavy burden upon industry, increasing the effects of the slump, and in that taxation are considerable sums for interest and sinking fund on works that were not actually needed when previously undertaken. I beg the House and the Government to realise that we must have a double object in view. We have to have the object of doing what can be done by domestic measures to alleviate the present state of affairs, and we also must keep in view what will be the experience of the country in what I may call the post-depression time. I doubt whether there is anyone here who really does not believe in his heart—I certainly believe it—that we shall get through this depression. The world will get through this depression. I am not an incurable optimist in thinking that, but I have little doubt that before a long time is past—

Mr. BUCHANAN

Do not be wrong again in your prophecies.

Sir A. STEEL-MAITLAND

I have little doubt about this. I may be wrong, but I doubt if there are many other people who will think I am wrong. There is one thing which I am sure would appeal to the hon. Member, just as much as to me when we reach that period, and that is that when the rest of the world has recovered its prosperity we should not be back in the pre-slump position; that we should not see the rest of the world in the trade wind while we are still in the doldrums. That is clearly a danger we are running if to-day we increase our public expenditure to such an extent as results in industry in the coming years being weighed down by a burden of taxation due to the interest and the Sinking Fund which has to be paid. If we make a mistake like that now, then five or six years hence people will be entitled to think how criminally short-sighted we have been. [An HON. MEMBER: "Say that in Newcastle!"] I would say it in any place in England—in any place in the world. That is the case against public works not justified on business calculations.

On the other hand, I wish to put the point of view that, if that is the case as regards public works which are not justified, there is a proportionate duty to consider putting in hand those public works which can really be justified as earning their value, and worth what is spent upon them. The Chancellor of the Exchequer this afternoon told us that he was ready to consider, on their merits, any schemes which may be put before him. He told us that Government help might be given, but could only be given—I think I remember his phrase rightly—as a "self-starter' in order to enable work to begin. My own feeling is that, if we resist uneconomic public works, there is the greater obligation upon us to see, if there are schemes which are thoroughly justified on economic grounds, that there should be no question whatever and no difficulty put in the way of their being taken in hand. The phrase "self-starter" is a most ingenious one, and may have some inwardness. When a self-starter is used, it consumes an infinitesimal amount of electricity, compared with the total generated in the course of an ordinary journey. If the proportion of Government help to any proper scheme amounts only to that fraction, there are very few public authorities, or individuals, who will be inclined, by that degree of subsidy, to enter upon schemes they would not otherwise have undertaken. If the Government have before them genuinely reproductive schemes, as distinct from those for which there is no such justification, I trust the Government will be ready to help them more freely.

May I state what I mean by "genuinely reproductive." It is that they should be worth the money spent upon them—worth the total spent less the amount of unemployment benefit saved directly and indirectly. That is a perfectly legitimate allowance to deduct from the money spent. Subject to that amount, they should be revenue-producing to cover the interest and sinking fund, or they ought to increase the taxable capacity of the country to an extent at least as great as that of the interest and sinking fund. I think that, to the extent of the unemployment benefit, the Government ought to give them a subsidy. The Government, otherwise, will themselves have to pay the amount of unemployment benefit out of income for the year. It would pay them handsomely to give a subsidy equivalent to that amount to schemes of such a character.

The other question I wish to ask the Minister of Health is this: The Chancellor of the Exchequer told us that, while the Government are ready to consider such schemes, the point at the moment is that the schemes themselves had not been before the Government. I do not wish to misinterpret what he said. I understood the schemes themselves had not yet been sent in. I should imagine that he was not referring to the schemes which had been stopped before being completed. I would ask the Minister of Health whether, in fact, there have not been other schemes sent in, also. I dare-ay many Members of the House have seen mentioned in the newspapers of a scheme sent from Newquay. I have no doubt that the delay in that case may be quite exceptional, and there may have been some mistake or accident with regard to that, or some other reason. We do not know. There certainly are other schemes which, I think, are quite unexceptional from the economic point of view, and which are well worth consideration by the Government.

One scheme occurs to my mind, and there are others, probably, of a similar kind. I give it as an instance, to illustrate what I have in mind. It is the drainage and reclamation of land at Rye and Winchelsea. There is a proposal to build a big barrier, costing probably £40,000 or £50,000. It will reclaim from the sea many acres of very valuable grazing land, and a considerable amount of land, not so good for grazing, which may have value for building. It will save the silting up of the stream, and avoid the depreciation of a further large acreage of excellent land. That seems to be a scheme which ought to be carried out. It would be thoroughly reproductive, judging by any ordinary business considerations. That is the type of scheme I have in mind. I feel quite sure that when either individuals, or municipalities, know that if they send in these schemes they will be considered on their merits—and I trust the merits will be those which I have tried to state—a number of these schemes will come in. It is on this point I would like to make a suggestion to the Government. It is impossible to expect Government Ministers, busy as they are, to give their personal attention to any large number of these schemes, unless, perhaps, it may he that some particular scheme is of exceptional size or importance. But if they are to be of value, part of the work of these schemes consists in their being dealt with quickly and effectively, so that, if they are judged good, they can be put in hand with the minimum of delay.

It might be worth while to appoint for this purpose, definitely, a small board of three or four persons of good business experience, removed from politics, whose sole business would be to consider these schemes and deal with them effectively and at once. They should be people of the same kind of personnel as those who were appointed to the Tariff Advisory Committee. On the other hand, there should probably be some difference in the functions of such a body from that of the Tariff Advisory Committee. To start with, the Government should lay down the principles which are to guide them in pronouncing their decisions as to whether a scheme was in fact reproductive and good, and whether it gave really material return which would justify the money spent on it. I think they should be allowed to employ professional advisers and then, when they had reached a conclusion, that should be put before the competent Department again to give a decision. By having the matter examined in this way, it might be possible to reach decisions on many of these schemes effectively and with the minimum of delay. I suggest to the Government, if they are willing to consider those schemes, that some such machinery as that should be established in order to make their willingness largely effective from the point of view of the public interest.

There is one more point, and one only, to which I would ask the House to give a favourable hearing. There are some other kinds of schemes which could not be put before a board, because they need exceptional consideration. May I refer once again to a proposal which I made in this House on a previous occasion, and which was mentioned this afternoon by the hon. Member for Stockton-on-Tees, and that is to make provision for intermediate credits for businesses which wish for them in order to renew their plant, or, in whatever way necessary, to bring that plant up to the most modern standards. There is ample evidence to show that, if such intermediate credits were forthcoming, and if business men knew that they were forthcoming and were familiarised with them, advantage might be taken of them. It would be of infinite value in a number of ways. It would give employment, especially in the engineering, iron and steel and coal trades in which such employment is most needed. In the second place, it would mean a greater consumption of capital goods, exactly the kind of consumption which it is most necessary to stimulate. In the third place, not only would it do good from the point of view of the present, but it would do good in the future, by enabling us to meet the future competition, when it comes, in the post-depression time, and to meet it with the greatest possible effect.

I ask the Government earnestly to consider whether they can get such a scheme developed and to use their influence to that end. The Chancellor of the Exchequer may not think that it is advisable, because of his view with regard to what may happen when this depression lifts. I know that upon that point he and I differ, but I am quite sure that he realises that it is not out of any wish for hostile criticism, but merely to put ideas into the common pool, that I say that I take a more optimistic view than he has done of what may happen when the depression lifts. In his previous speech, when he used the phrase about 10 years, what he said was largely exaggerated and misinterpreted in many parts of the country. At any rate, the Chancellor of file Exchequer and other people do take the view that the development of machinery is so great, and the consequent dislocation is so great, that the world, even when the depression lifts, will only gradually recover, and that unemployment will only gradually, and over a period, come back to the comparatively small dimensions that it was, at any rate on the Continent, during the pre-War slump. If that was so, then I can imagine that it would be no good inducement to men of business in this country to venture what savings they still have in bringing their works up-to-date. But I cannot bring myself to believe in that view. I am not saying so simply on my own ideas, but after talking to as many persons as I can who are competent to take a view of the situation. I do not believe for one moment that complete recovery will be long in coining, once the depression begins to lift.

It is true that processes and machinery have been enormously improved, but, on the other hand, continued experience in past days is also a guide to the present. Even though machinery may be improved, you get in many cases a vastly increased demand for the actual product of the trade in which that improvement has taken place. It was so in the motor trade, and it will be so in other trades. Or, again, you get a demand for a better product than was produced before, and that means that some of the labour is taken up. You get new demands, new needs, which were unknown before. Throughout the last 20 years we have seen growing up demands and needs for new articles which were not known 20 years ago. The manufacture of wireless apparatus to-day employs thousands of hands, and so do other kinds of manufactures which were hardly known before the War; and the development of wireless itself is only in its infancy.

That is not all. As anyone who studies the question will know, improvement in transport, and improvement in transport and improvement in selling—in the merchant trades and in the retail trades—go very much more slowly, on the whole, than does improvement in manufacture. The result will be that, with a larger body of manufacture, a greater number of men, and not a less number, will be employed in transport and in the merchant and retail trades. Anyone who has studied the figures of the changes in employment will realise that that is a natural process which is going on.

My own belief is that we may have an infinitely greater hope for the more rapid recovery of trade in this country and generally; but in this country it can only take place if we fit ourselves to take the greatest advantage of it. When I urge this provision of intermediate credits for industry, I do so because I am convinced that we have to prepare now for what we shall have to face when the slump ends. That preparation is just as important as the taking of what measures we can to alleviate the present conditions. During the 10 years before the slump began, we suffered from an excess of unemployment in this country which was entirely our own fault. It was not due to decreased emigration, but to other causes which were our own fault, and, if we suffer from it again, it will again be due to our own fault. That is why I beg the Government, in addition to taking such measures as are possible to alleviate the present state of affairs, to keep in mind the double object, of which the second half is to make sure that, when the slump does end, we shall be in an effec- tive position to give this country its full and free share of the recovery.

10.24 p.m.

Mr. MORGAN JONES

I think that Members in all parts of the House will agree that the discussion which has proceeded to-day since a quarter to four, or rather earlier, has been well worth while. All of us, from whatever quarter of the House we have spoken, have been concerning ourselves with discovering what the function of the Government should be in relation to this vast problem of unemployment. It is true that, as was said by the right hon. and gallant Gentleman the Member for Ripon (Major Hills), broadly speaking, Members of the House have been divided into two groups. There are those whom he called the expansionists, and there are the others who align themselves with the Government, and who may be described —I am not sure whether he used this phrase, but perhaps I may use it—as those who wish to "stand pat," the "stand-patters." We have had from the right hon. Gentleman the Member for Tamworth (Sir A. Steel-Maitland) a somewhat more precise definition of what he regarded as the function of the Government. A definition was given by the Chancellor of the Exchequer, who said that the function of the Government in these matters should be the function that a self-starter performs in a motor car. I am no motorist, but I believe a self-starter is a machine of very small power which only acts when you stamp on it. There has been a good deal of stamping this evening. I wonder if the machine will move now. The trouble is that it will neither move of its own accord nor will it, apparently, move in spite of any amount of stamping.

The Chancellor of the Exchequer took the opportunity to remove what he regards as a misapprehension concerning a speech that he made on a previous occasion when he made a reference to a 10-year period of unemployment. Even taking his explanation of the phrase that he then used, I can only say it is just a little less gloomy than it was some few weeks ago. Indeed, as far as I can see, he is only a little more hopeful than if he were in a state of entire hopelessness. He said that what he meant was that we should not reduce unemployment to a comparatively small figure within 10 years. The question is what he means by a comparatively small figure. Is 1,000,000 or 1,500,000 a comparatively small figure? Taking that explanation in relation to the process of mechanisation, which is going on on every hand, I imagine that, unless something is done, some big plan of reconstruction initiated by the Government, or unless some big change comes over the face of industry and economic prospects generally, the small figure that the right hon Gentleman referred to is very likely to remain something in the neighbourhood of perhaps 2,000,000 to 3,000,000 because, as the hon. Member for Gorbals (Mr. Buchanan) said—I agree with him though I did not agree with his conclusions entirely—mechanisation is undoubtedly throwing more and more people on to the unemployment market and, consequently, unless we can induce the Government to initiate some well-considered and well-developed plan, we cannot confidently contemplate a reduction of the number of unemployed to much below something like 2,000,000. The right hon. Gentleman quite rightly, therefore, said that we need a new adjustment to this new situation. What I felt about his speech to-day, though not perhaps to as great a degree as his previous speech, was that the Government qua Government—and a National Government at that—has no more plan at its disposal to-night for dealing with this economic crisis represented by grave unemployment than it had when it came into office.

I agree with the hon. Member for Gorbals broadly—it is an article of my political and economic faith—that you cannot deal with our present economic disorders without a fundamental readjustment of the social order under which we have to live. It is obviously of no use for me to appeal to the Government to initiate a condition of Socialism, but I submit to the right hon. Gentleman who is to reply presently that even under capitalism it is possible to do more than this Government has done. The right hon. Gentleman the Chancellor of the Exchequer directed our attention to what is going on in the United States of America at this very moment, and he said that since the coming of the new President into office there has been such a change in the outlook in America owing to the initiative of the new President that it has been almost miraculous in its results. There has been no miracle here. There has been no change whatever as far as I can see, except a change for the worse. [An HON. MEMBER: "oh."] I say what I honestly believe to be the truth. I am not stating it for political purposes or for the purpose of scoring a political point. I say that in my honest judgment the Government have done nothing which entitles them even to compare their efforts with what the President of America has done in about a fortnight, and they have been in power for a year and nine months. That was challenged by the right hon. Gentleman a minute ago. I will ask the right hon. Gentleman, What has the Government done? Where have they been active in developing a real plan on comprehensive lines? I will make a concession, even though it be a limited one, in one respect. We have been presented this week with the suggestions of the Government in regard to agriculture. The Government, I take it, lay great store by this new plan, but the complaint of their own followers in regard to that plan—I do not agree that it is necessarily true—is that in essence it is Socialistic in character.

Sir JOSEPH LAMB

No.

Mr. JONES

I know that the hon. Gentleman denies it, but a great number of his friends in this House assert and reassert it, and the persons who support the Government are constantly pointing out the fact as well. It is true that in order to deal with the difficulties of the most highly individualistic industry in the land—agriculture—you are mobilising, within limits, the resources of the State for its support and assistance. To that degree it is Socialistic. You have granted to agriculture on other occasions —you do got call them doles—subsidies of one sort or another. You have brought to the help of agriculture in one way or another national financial assistance. Apart from that—and I will grant them all the credit in regard to it—what else have the Government tried? Where else have they made a single attempt to develop a constructive plan for dealing with the vast problem represented by the economic crisis? The Chancellor of the Exchequer this afternoon said that there are two ways in which we can approach this problem. One of them he naturally and quite properly—I did not blame him for it—did not discuss at all beyond mentioning it, namely, the question of a reduction of taxation. We could not expect him to discuss that this afternoon, but he did discuss at considerable length the second point, namely, the expansion of public works.

I should like to direct the attention of the House to the spirit in which the Chancellor of the Exchequer approached the problem of the development of public works, for it is a fundamental issue not merely to my hon. Friends on this side of the House but to the Government supporters and to the Government themselves. Let me take one illustration, the Whitehall buildings. I took down the words used by the Chancellor of the Exchequer. I hope that I have them correctly. He said: "I do not think this is the proper time." What is the proper time? Hon. Members who are acquainted with the condition of affairs in Whitehall will know the position. Let me give my own experience. I had the privilege of being a member of the Government in 1921. I was at the Board of Education. On one occasion I went down into the nether regions of the Board of Education, the lower floor. True, it was at a time following a period of very wet weather. There I found a dozen or two dozen civil servants working on a floor that was largely covered with water. I dare say that is an extreme illustration of the situation, but everyone will agree that there are many of the buildings in Whitehall grossly overcrowded.

There is an overwhelming case for the development of the buildings in Whitehall. If there is to be a time for going ahead with the re-distribution of the offices in Whitehall now, clearly, is the time. Money has never been as cheap as it is now and labour is plentiful. There are thousands of men who are unemployed in the building trade, longing for work, and yet the Chancellor of the Exchequer says that this is not the time. What is the time? What is the criterion which enables him to determine what is the proper time?

Mr. HOWARD

When the taxpayers can afford it.

Mr. JONES

I cannot follow my hon. Friend into that question, because the Chancellor of the Exchequer has invited us to postpone discussion of it for, a fortnight or three weeks. The right hon. Gentleman gave us a criterion. Speaking of public works by local authorities he said that well-thought-out schemes must be justified on their merits. If I may say so without offence, hon. Members who are anxious to be apologists for the Government to-night are extraordinarily glad of that phrase, "justified on their merits." The last speaker used it. What do they mean by "justified on their merits"? Do they mean that every single scheme put up by local authorities to the Government must first of all prove beyond the shadow of doubt that it will be financially stable and will bring in a definite revenue? I gather that that is the view of the right hon. Gentleman who preceded me. Is that the view of the Government? If so, they are applying to the activities of local authorities what speaker after speaker has been saying private enterprise cannot do. They want public works to do what they are saying that private enterprise cannot do. Unless public business can prove beyond peradventure that its proposals will be paying proposals, they are not to be considered by Whitehall.

Suppose the other is the answer, namely, that you are not going to insist that they shall be paying propositions, then I ask why an area like my own, an area which comes within that dreadful category "necessitous areas," cannot be considered if you are not going to insist upon the criterion that every proposition shall pay for itself? Hon. Members on all sides of the House over and over again have pointed to the movement of industry from the north to the environs of London. I think a good case could be made in support of the proposition that the movement of industry from the north and west to the environs of London—perhaps it cannot be stopped—is uneconomical from the national point of view. Take my own area of Merthyr Tydvil. There you have a modern steelworks, the Dowlais Steel Works, entirely closed down. You have collieries immediately adjacent, but in spite of all the investment of capital in these areas they are allowed to be closed down, to become derelict, and tens of thousands of people lose their livelihood, not for a day or a month or a year, but for ever.

There is another point. You remove the industries from the neighbourhood and what remains? The public services have to be maintained, schools have to be maintained, roads and health services have to be paid for. The productive industries which are left have been excused three-quarters of their rates, and small householders in consequence have to bear a burden which has been pushed from the shoulders of productive industry on to the unfortunate small householder and small shopkeeper. I do not complain. I admit freely and frankly that the rates are heavy in many parts of the country, but, as far as I know, there is no Member on this side of the House who rejoices because of high rates anywhere. We should be glad to see rates reduced, and hon. Members opposite must not suppose that they are entirely due to the activities of hon. Members on this side of the House or to our supporters in the country.

In 1911 I was a member of one of the largest urban district councils in South Wales. We had to embark on two big schemes, one the construction of a big sewer scheme and the other the construction of a big reservoir. For the sewer scheme we joined our forces with five other authorities and covered the whole of the valley. For the water scheme we associated ourselves with the Merthyr Tydvil Corporation. The sewer scheme before the War was to cost £250,000. We were caught by the War and it cost us £800,000. The water scheme was to cost £500,000. We were caught by the War and it cost us nearly £2,000,000. That money was borrowed at War prices. The other day I went with our Chief Whip the hon. Member for Bedwellty (Mr. C. Edwards) to interview an insurance company in London with whom we had negotiated a loan. But because of the difficulty of getting loans they saw their opportunity—I do not blame them—and they pinned us down to a loan that will last until 1960, and the loan will remain for all that time at 6½ per cent.

That is where our money is going. I admit there are difficulties and that the Minister had no control over them, but I submit to the Minister of Health that if he wants to help these distressed areas he can first of all bring his own personal influence—here he can act—on the Public Works Loans Commissioners to reduce the rate of interest charged to authorities for money lent; and, secondly, he ought to use his great influence with the big insurance companies to induce them to give local authorities some of the benefits of cheap money which others are enjoying. If he could only give us that he would take shillings in the pound off the rates in my own area, and if we get shillings in the pound off the rates, that might mean all the difference in the world between keeping a pit closed and reopening it and giving employment to thousands.

I invite the House to realise that there are reasons why our rates are high, apart altogether from the incidence of social services in these localities. My hon. and learned Friend the Member for East Bristol (Sir S. Cripps) reminds me of the incidence due very largely to the policy of the Government itself, the incidence of Poor Law costs. It is an emphasis of the big gulf that lies between us in regard to ideas and ideals. It is not that we think that right hon. Gentlemen opposite are more vicious than we are—not at all. It is that we differ fundamentally from them concerning the appropriate policy for improving the present situation. We shall be told by the right hon. Gentleman, "Oh, but a policy of this sort, of spending money on public works, diverts money." That is the whole issue that has been raised, as to one part of his argument, by Professor Keynes in the "Times" last week. It was referred to by Sir Arthur Salter yesterday in an article in the "Manchester Guardian," and perhaps I may quote one passage from that article: There is little difference of economic opinion as to the proper relation of public expenditure to the movement of a trade cycle. In time of boom public works should contract and a surplus should be formed, by increase of sinking fund allocation or otherwise, for use later; but in time of slump those reserves should be used for expansion of public work. In my judgment broadly the proposition is right, that if there is a case at all for special devotion to expansion of public expenditure it is in a condition such as this, a condition of extreme slump. I would challenge the proposition which the Chancellor of the Exchequer advanced this afternoon. It is really no good arguing that many of the schemes advanced are uneconomic. Let me take one in- stance. He spoke of building schools. As a matter of fact, the building of schools and the urge that was applied in that matter were not related merely to the raising of the school age. It was concerned with a very big piece of educational reconstruction, namely, the Hadow reorganisation. No one in this House who has studied our educational system will deny my proposition that if there is a fault in our educational system it is our lack of technical education and technical arrangements. That is a provision for the future. There is ample opportunity for building technical schools so as to equip our nation, not for to-morrow but for 10 years, 20 years and 30 years hence.

I want to add one other word. I would invite those who argue in favour of the policy of a restriction of expenditure to look at it in this way. The Chancellor of the Exchequer finds comfort in the fact—I do not accept his proposition —that expenditure which we undertook in 1929–31 did not, in point of fact, affect very seriously the unemployment problem. May I take it that that is an argument against the expansionist policy? Will the right hon. Gentleman tell me what direct value came to this country through the restrictionist policy which followed the Geddes Committee? Remember that the Geddes Committee's proposals which cut down the social services and so on, came within two or three years of the beginning of the slump. You only had nine months of the Labour Government succeeding them until 1929, and yet so completely did the Geddes proposals, as applied, fail, that the Tory Government of 1927 had to apply special measures so as to assist productive industry by means of the de-rating proposals. If you can argue that the expenditure of money in 1929–31 failed in its object, equally I can argue that the Geddes proposals of 1922 failed similarly.

The real truth is that we are up against a fundamental problem, the failure of our economic system. Hon. Gentlemen opposite must forgive us if we remind them that this economic system is not the one which we would have. It is the system which they have, and it is their job to say why this system does not suit the present world needs. It is not our job. They have to prove that this present system is equal to its job, and how can they argue that it is equal to its job when it gives us 2,000,000 or 3,000,000 unemployed 7 The plain truth is, in our judgment, that you cannot turn the mill with water that has passed. The present system may have served other generations well. It has done many big things, and excellent things. It has helped us to create wealth, but it has not succeded in distributing it. A new system has to come, for the system we now have is working unequally and ineffectively and creates social maladjustments, economic disorder and intellectual unrest. It is the business of the Government of the day, and especially of this National Government, to face that problem and to act, as its name implies, in the national interest.

10.55 p.m.

The MINISTER of HEALTH (Sir Hilton Young)

I am confident that everyone who, like myself, is an ardent House of Commons man and who has heard this Debate throughout, will feel a warm glow of pleasure in realising the value which a Debate of this kind in the Commons may have. I have noted with admiration, as a spectator, the careful information and the deep sincerity which have marked many of the speeches to-day and the sense of the importance of the subject shown by the speakers in their contributions. One particular note apparent throughout the Debate, has been the sense of hopefulness, the forward-looking inclination which has manifested itself. The hon. Member for Caerphilly (Mr. M. Jones) asks what is there new in the situation of the country? I would say that this is new —that this Debate is possible. Would such a Debate have been possible a year or 18 months ago? Most decidedly not. That is a tribute to the common sense and resolution of the country which have brought us into a position in which we can once more talk hopefully of the future, and it is, to some extent, a tribute to the work of the National Government which has given expression to that feeling.

Has there been any change? There has been all the change in the world since a year ago. We can, to-day, discuss how fast we ought to go ahead, instead of how hard we ought to try to prevent ourselves from slipping back. Practical suggestions have been made in the course of the Debate to which I am sure the Ministers concerned will give interested attention. There was the suggestion of my hon. Friend the Member for Gravesend (Mr. Albery) as to the institution of a holiday scheme. There was the suggestion of my hon. Friend the Member for Darlington (Mr. Peat) as to a revival of trade facilities, which is a matter for the Chancellor of the Exchequer, and there was the very interesting speech—coming from that quarter—of my right hon. and gallant Friend the Member for Ripon (Major Hills) who expounded the psychological arguments in favour of an unbalanced Budget. There was also the suggestion of my hon. Friend the Member for Carmarthen (Mr. R. T. Evans) as regards the employment of juveniles, and lastly the concrete suggestions of my hon. Friend the Member for Middleton (Sir N. Stewart Sande-man). Throughout the Debate we have been shown another vivifying influence in the sense that on this occasion Members are making their contributions to the establishment of a national policy in a state of affairs which is in transition. When the state of affairs is in transition, policy must be in transition too and when policy is in transition it is of particular interest that we should all make what contribution we can of a formative character, rather than merely support or attack an established position.

What is the transition? I do not want to be unduly controversial or to aim unnecessary shots at hon. Members opposite, but we are conscious of what the transition is. We have passed from the period in which it seemed to us that expenditure for its own sake was the object of the Socialist Government. We have passed from the period in which we realised the disastrous consequences of that policy and we have passed into a period in which we are seeking to establish a policy under which expenditure will not be an object for its own sake, but will be judged as good or bad simply in regard to the results which it achieves. During such a period as that it is essentially useful and desirable that there should be frequent explanations of what the policy of the Government is. At times of development of policy, or transitions of policy, without such explanations, misunderstandings are apt to grow, and such occasions as this, on which one can remove misunderstandings and spread the fullest possible knowledge both in the country and the House, of what the thoughts of the Government are, are of exceptional utility.

To-day the Debate has been in the form of a high contention between two schools of thought, as has been rightly said by several Members, two schools of thought to which we may, for convenience sake, give the nicknames of the expansionist school and the restrictionist school. I know those are only very rough and ready and that there are many shades of opinion which would not assent to either denomination, but still I think we know what we mean by the two descriptions. I have come to this conclusion—and may I not ask whether many other Members of the House have not come to the same conclusion?—that if we had to wait for action until we could attain absolute intellectual certainty as to which of those two arguments deserved to prevail, we should have to wait a very long time, and the country would not be getting the government which it deserved in the meantime. We are bound undoubtedly to stretch our minds, to the utmost limits to which those unfortunate implements are capable of being stretched, to follow the arguments of the economists, but in the meanwhile we have to stick to the practical course which we are to follow in order to get the country on, to keep it well governed, and to give expression to those courageous, forward-looking thoughts to which we have referred to-day.

Let me devote the very short time during which I will occupy the House to trying to describe what is the practical attitude of the Government upon these matters under present conditions. Let me say, in the first place, what it is not. I think the word used to-day by my right hon. Friend the Chancellor of the Exchequer will have done very much indeed in order to give information upon that, and to clear away misapprehensions which were current as to the attitude of the Government towards the undertaking of fresh works. Let me amplify it, in the only manner in which I can amplify it, by a reference to my own Department, the Ministry of Health. Undoubtedly that Department is deeply concerned, because it is the Department which has to provide counsel and guidance to great enterprises in this regard by the local authorities.

I think some hon. Members have in their minds a picture of the Ministry of Health as if there was an inquisition proceeding there, over which perhaps I preside as a Grand Inquisitor, applying some stern, almost theological doctrine, which has for the only article of its creed that all expenditure is always bad, and which condemns every possible proposal of any sort or kind that is put up to it immediately to the stake. That picture is, of course, a picture entirely of the imagination, and it has no relation to the facts at all. I have sought to remove that impression, both in this House on previous occasions and also by direct address to the local authorities, and to point out the true attitude of the Department in reference to this sphere of administration. In the first place I do not believe there is any hon. Member of this House, with the possible exception of hon. Members opposite, who still would maintain that there should be expenditure of public money on work provided simply for the purpose of giving work, without regard to its utility.

Mr. MORGAN JONES

The right hon. Gentleman is not pointing to any document issued by us in support of that theory, is he?

Sir H. YOUNG

No, I am not claiming that I can point to any document, but I can claim that I can hear it between the lines of every speech they make—a pathetic belief in the old, old fallacy that you measure your success in benefiting the people by the amount of your expenditure. In the second place, I do not believe there is any real dissent from this basis of policy, too, that whatever you decide to do you cannot afford to waste money in doing it, that you must be ceaselessly on the look out to see that the services you are rendering are performed with the least cost, and that is the special task which many Ministers have to perform. At a time like this, when owing to the inadequacy of the national revenue we are disappointed in many legitimate expectations of the expansion of national services, it is more than ever the sacred duty of all those entrusted with public administration, to make sere that the public money is made to go to the very limits of what it can be made to achieve. Those two bases of policy are not, I believe, open to contradiction.

Let us look at the other side and see what principle should guide us not only in the approval but in the promotion of fresh public works of the sort referred to by the hon. Member for Stockton and by many other Members. Here I would Like to define the matter in popular phrase—not to seek a legal formula or such a formula as would satisfy the economists. To put the matter as broadly as possible I would say that you should only agree to seek out and promote work that is useful. I cannot believe that you can get behind that word "useful" for the purpose of providing an efficient definition. It must not only have its use but be full of use in relation to the amount of money which it costs. If it satisfies those two conditions it should be promoted by local authorities at the present time and assented to by the Ministry of Health. I am asked, Does this mean only work which can be proved to be remunerative on commercial account? Not at all. The nation has many ledgers. There are other ledgers than the cash ledger—the ledger of health, the ledger of amenities, the ledger of education. Values cannot always be estimated in cash, and the social services must be reckoned in the same way by their uses to the community. There is not only the development of capital assets measurable in money, but there is also the development of assets of the nation not measurable in money. I will mention one to which particular attention has been devoted by me, that is the maternity services. They are not at present sufficiently adequate. The powers that local authorities have to supply these services are not fully used, and we are in consequence wasting health in some of the most important particulars. We cannot afford that waste.

The hon. Member for Stockton referred to unfinished works by local authorities. In considering these works from the point of view of whether they are remunerative and useful in the sense to which I have referred, this circumstance also has to be considered—the commitment and the amount of capital already put into them. You cannot consider you have a clean slate if you have committed yourself, and you have to reckon in your sum that if you do not go on you will waste what you have already put in. That of course is an extremely important material consideration. In this connection I would like to refer to the matter of public expenditure on water supply, which has been referred to by several Members of the House. This is a matter which long before my time was occupying the close attention of the Ministry of Health and my predecessors, and a continuous survey was instituted by them of which I am now reaping the benefit. The result of that investigation teaches me now that there are very few, if any, big works of water supply which still require promotion. On the other hand, there are works of this type which do still require promotion—that is small works in rural areas. There is work which is useful and remunerative in the sense to which I have referred, either on the cash account or the social account, which might be promoted. I propose to promote it by encouraging the county councils to make a freer use of their powers to contribute to the finances of parochial water services.

I must devote a, few more minutes to the other chief objects of public works, and perhaps the chief object of all which has been referred to in the course of this Debate is housing. This evening I do not intend to detain the House again with the general housing position. I think the policy of the Government is known and understood. It is definitely a policy of expansion, because I firmly believe that by getting rid of the competition of subsidised houses you are opening the way to housing forces which will occupy more capital and labour than were ever occupied under the subsidy system. That is the basis of the policy, that by means of this freeing of the field to the normal forces of supply you will get a more rapid absorption of the capital and labour available for housing than you are getting at present, and therefore you are making a good movement.

It is to another aspect of the housing question that I would refer to-night. The Government have in the last few months seen an opportunity, and have without hesitation seized it. It is an opportunity to call upon the forces concerned for a concentrated national effort to get rid of that deep national stain, the stain of the slums. The opportunity is in the Bill which is now before Parliament and which puts the housing authorities in a position far more favourable than they have ever been in, within recent practical politics. That is the opportunity. One obstacle is that the housing authorities of the nation have, in a way, got used to the existence of the slums. They have come to look upon them almost as an irremovable evil. It is true that we have seen a great uprising of national opinion during the last few weeks, since the subject was mooted. We have the obstacle of a certain slowness in the proceedings which is necessary. It is necessary that there should be some deliberation of procedure, because we have to consider the position of private interests. We have not to let them stand in our way, but to understand what they are. Then you have to provide alternative accommodation.

There is another obstacle, a most pathetic obstacle, and that is the reluctance in many cases of those who have so long lived in these dreadful conditions, to the taking up of some other way of life. I know of no more harrowing evidence of the evil effect of slums than that people should get used to them and actively reject any better way of life. One has to recognise that that stands in the way. We have also to get a perfectly clear mind as to what are some of the conditions of success in this effort, to which we call the nation. We shall have to confront a larger measure of rehousing on the site of the slums than we have had in the past. We must recognise the living stuff of life. It is often an intolerable hardship to people to move away from the place where they have lived and grown up, where their friends are, and where their roots are deep in the soil. That will undoubtedly cost rather more than the previous method which was almost always that of rehousing on cheaper sites. You must have a perfectly clear mind as to the extent to which you have to follow the radical method of clearing the slums, and the extent to which you have to adopt reconditioning. A committee, under the distinguished chairmanship of Lord Moyne, is now gathering the essential evidence of the housing experts of the country, as to what may be done with regard to reconditioning. What I would particularly emphasise is that for success in this national effort there is one condition that is more vital than any other; it is that we should be absolutely resolved to succeed, and to succeed within a limited time. I believe from the bottom of my heart that the reason why Ministers of Health in the past have struggled, and gallantly struggled, with this problem, and why they have not managed to remove it from our path is because they were never in a position to say, "It shall be done on a time-programme," and to be definitely determined to carry it out so that each step was an advance to a limited end, to be reached at such and such a date. I have, as it were, committed myself to accepting that principle. It is putting a big stake into the matter. It is staking very high confidence on the good will and determination of local authorities. It is putting a high stake on the good will of this House to see the matter through, because this is not a programme for a year; it is not a programme for two years; it is a programme which, if carried out at the earliest possible moment, cannot be carried to its first terminal date except in about five years.

That is pledging the future. It is pledging the good-will of other Governments that follow after, to see the matter through but I think one can have confidence. I think it is not wrong to stake one's confidence on the determination of the country to see the effort through. It is not wrong to depend on any and every other Minister or Government that may be concerned in this problem not to let the effort, once started, fade away, as it has faded away in the past, into failure and disappointment.

It is a marvellous tribute to the courage, the resolution, the elasticity, the power for recovery of this country that at such a time as this, with the encouragement of film whole country and of this House, one should be making use of the very distress and difficulties in which we are, and turning them to an effort for the future of so much magnitude. Let us not blink the fact that this is an effort of a very great nature. We have been discussing little schemes of this and that sort this evening for getting work done, but if we can really occupy the full housing activities of the local authorities, in a determined effort at slum clearance, it is 10 times, 100 times larger than almost every other effort. It can occupy capital and labour in a degree infinitely greater than many of the other minor things we have been considering. It is a marvellous thing that we should be able at the present time to propose such an effort to the country, burdened as it is with its difficulties and harassed by distractions, and not only to propose it, but to propose it with absolute confidence that it will be accepted and that it will be seen through.

It is a sign of that undying confidence in our own future which is so much the asset upon which we depend in hard times. The confidence that we are using for this purpose in the works to which I have referred is a confidence which has to a very large extent been earned by that determined turning away from un sound rules some two years ago—that determined resolution to rebase the finances of the social order of the State so as to make them strong enough to bear such efforts of social reform as that which we have in mind.

Question put, and agreed to.

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