HC Deb 28 April 1936 vol 311 cc816-80

Resolution reported: That it is expedient—

  1. I. To authorise the Treasury to make, with a company (hereinafter referred to as 'the company') to be established with the object (among other objects) of providing as a temporary and special expedient a means of affording financial facilities to persons setting up or carrying on business in the areas specified in the First Schedule to the Special Areas (Development and Improvement) Act, 1934, who satisfy the company that whilst having reasonable expectation of ultimate success on an economic basis they are not for the time being in a position to obtain financial facilities from banks or financial institutions primarily engaged in providing financial facilities for long or medium term periods, an agreement providing for the following among other matters, namely—
    1. (a) the payment by the Treasury of the preliminary expenses of the company and of the costs and expenses of and incidental to the winding up of the company;
    2. (b) the payment by the Treasury to the company in every year of the amount expended by the company in administration expenses in that year or of a contribution of twenty thousand pounds in respect of such expenses, whichever is the less
    3. (c) the setting aside by the company of reserves against losses, and the payment by the Treasury as a contribution to those reserves of sums equal to the amounts from time to time lent by the company up to a limit of one hundred thousand pounds;
    4. 817
    5. (d) the payment by the Treasury to the company upon the winding up of the company—
      1. (i) in respect of the first million pounds lent by the company (hereinafter referred to as 'the company's first loans'); and
      2. (ii) in respect of any amount lent by the company in addition to the company's first loans (hereinafter referred to as 'the company's additional loans');
      of sums equal to the amount, if any, by which the losses of capital attributable respectively to the company's first loans or to the company's additional loans (as the case may be) exceed the amount of the reserves mentioned in sub-paragraph (c) of this paragraph which is available to meet those losses so, however, that the sum payable by the Treasury under this paragraph in respect of the company's first loans and the sum so payable in respect of the company's additional loans shall neither of them exceed twenty-five per cent. of the amount of the loans in respect of which it is payable;
    6. (e) the payment to the Treasury upon the winding up of the company by way of refund of the sums paid by the Treasury in accordance with sub-paragraph (c) of this paragraph of a sum not exceeding one hundred thousand pounds out of the amount, if any, by which the assets of the company remaining after the discharge of the liabilities of the company exceed the paid-up share capital of the company;
  2. II. To authorise the payment out of moneys provided by Parliament of the sums to be paid annually by the Treasury under the said agreement in respect of the company's administration expenses, the issue out of the Consolidated Fund of any sums required for making any of the other payments aforesaid to he made by the Treasury under the said agreement, and the payment into the Exchequer of any payments to be made to the Treasury thereunder:
  3. III. To make certain provisions ancillary to the matters aforesaid."


I do not propose to take either of the Amendments on the Paper in the name of the hon. Member for Huddersfield (Mr. Mabane)—in line 2, leave out "with," and insert "an agreement with and provide certain moneys for"; and in line 7, leave out from "1934," to end of Resolution.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

7.29 p.m.


It is by no means a flattering testimony to the financial virtues of the Chancellor of the Exchequer or to the achievements of the Government that, after five successive Budgets and the restoration of what is called national prosperity, we should be discussing a proposal affecting distressed areas once more. In spite of the applause, the handshaking, the mutual admiration and the substitution of confidence for the crisis of 1931, the inescapable fact remains, that the problem of the distressed areas seems to persist. It is, in the judgment of my hon. Friends behind me, a reproach to our national life, a standing challenge to the whole nation and a severe condemnation of the Government and all its works. Of all the pettifogging, miserable, piffling and futile proposals that have ever come before this House this is the least effective, both in its intentions and in substance. It can bring no substantial relief to the people in the depressed areas. It cannot remove the despair that overwhelms Durham, South Wales, Cumberland and many parts of Scotland. It cannot deal with the problem of unemployment. It neither touches the roots nor the fringe of the problem. When the Government outlined their plans in the earlier part of the Session we were promised substantial measures of assistance. Thereby, the hopes of the people in the distressed areas were raised. Now, after this prolonged period of gestation, and after an infinity of travail and straining, this is the best that the Chancellor of the Exchequer and the Government produce. We now see what reliance we can place on the Government's promises.

Strange as it may seem, there will be many people in the distressed areas who will welcome this proposal. The plight of the people is so tragic that they are glad to accept almost anything. They are like drowning men clutching at straws, ready to cling to anything that offers the slightest relief. I venture to make the position of my hon. Friends beside me abundantly clear. We object in principle to the provision of public money for the purpose of bolstering up private enterprise, but in the pathetic circumstances with which we are confronted in the areas we represent we are ready to set aside our principles and to throw overboard the convictions upon which we have so long relied, in order to try out any measure which can re- establish the normal life of those areas. But we must be satisfied that whatever scheme is presented to the House on behalf of the depressed areas it must be of substantial value. Therefore, we avail ourselves of this opportunity to expose the futilities of the Government's policy and to lay bare the inadequacy of the proposals, while at the same time seeking for enlightenment.

Within the Rules of the House we are precluded from discussing all the issues affecting the distressed areas. Obviously, before we can assess the value of the scheme now under discussion we must consider the disease for which the remedy is prescribed. The Chancellor of the Exchequer in his Budget statement, and in particular in his broadcast utterance, talked at large of the recurrence of prosperity. Of course, there is prosperity in the country. There is prosperity to be found even in the distressed areas, but in the main there is unexampled distress, malnutrition of a serious character, the lowering of the physique of men, women and children, and in particular the steady decline of the coal trade, which is the main source of livelihood in those areas. Moreover, the Chancellor of the Exchequer has boasted of the decline in unemployment attributable, as he alleged, to the progressive programme of the Government in the last five years. He declared that unemployment has now declined to the level of a little above 14 per cent., but in Durham it is 34 per cent., in South Wales about the same, and in Scotland as a whole, good and bad, it is 28 per cent. But that is not the worst part of this tragic story. In Jarrow it is 70 per cent., in spite of the social service efforts that have been contributed by well-meaning people; in Bishop Auckland it is 52 per cent., and in some parts of Glamorgan 60 per cent.

Does the Chancellor of the Exchequer seriously suggest that this niggling, footling proposal is capable of dealing with such a situation? In the second speech that he made in the Budget Debate he complained petulently, even lugubriously, of the response which this proposal had evoked. He deplored the absence of a cordial response. What does he expect from us? Does he expect that we should go down on our hands and knees and worship at the shrine and that we should pay tribute to his sentiments and his financial policy for a scheme of this character? We thank him, but we thank him for nothing if this is all that he can offer. We are not disposed at this or any other time to go down on our hands and knees and offer the right hon. Gentleman the tribute which he expected would result from the submission of this proposal.

Recently, we had several reports presented by the Commissioners for the respective distressed areas. May I refer very briefly to an observation for which Mr. Malcolm Stewart was responsible. He said in his first report, dealing with the possibility of absorbing a large volume of the unemployed through the expenditure of public money: It may, therefore, be estimated that to reduce unemployment by 50,000 in the Special Areas for the period of the Commissioner's appointment would involve an expenditure of the order of £35,000,000. Let it be noted that £35,000,000, in the opinion of an expert, is capable of dealing with 50,000 unemployed, and that only for a short period, and yet £1,000,000 is what the right hon. Gentleman has to offer as a means of partially solving the problem of unemployment and distress that affects the areas with which we are now dealing. Obviously, if £35,000,000 is essential to deal with 50,000 unemployed, £1,000,000—if, indeed, it he £1,000,000, and I shall have something to say about that a little later—is clearly incapable of coming within a thousand miles of this problem.

It is proposed under the scheme, as I understand it, to create small business undertakings. The Chancellor of the Exchequer declared the other night that a demand of this kind had been made in several quarters. May I ask whether there are not plenty of these small undertakings already? In point of fact they are struggling for existence. They have the greatest difficulty in making both ends meet and in finding the necessary resources to compete with the larger business undertakings. The tendency in modern industrial times is not to create small business undertakings, but it has been in the reverse direction. It is the larger business undertakings which can thrive and flourish even in times of depression, when the smaller business undertakings go out of existence. Therefore, it is extremely doubtful whether it is desirable to promote and carry through a scheme which will perpetuate an evil and create business undertakings which in three or four years, certainly before this scheme has been properly wound up, will have gone headlong into bankruptcy.

I want to put to the Chancellor of the Exchequer a few questions on the main elements of the proposal. I inquire, quite properly in the circumstances, what is to be the nature of these undertakings. There is not a single line in the Resolution, and not a single word was uttered in the Budget Debate by the right hon. Gentleman or the Financial Secretary, which gives the least clue as to the precise character of the contemplated undertakings. Has the right hon. Gentleman any ideas to lay before us? Are these undertakings to be productive or distributive in character? Presumably, they are to be productive. What are the productive elements with which they are to he called upon to deal? What are they to produce? Before a scheme of this kind can be acceptable to the depressed areas or to this House we should be furnished with a clear and precise explanation of the nature, the form, and the substance of the contemplated industrial undertakings. We ask for some assurance on that head, because we desire to know whether there is the least likelihood that these industrial undertakings will prosper, and whether in the circumstances of the depressed areas, with reduced purchasing power, which is perhaps the most pregnant problem of all, there is any need for a multiplicity of small business undertakings. Unless we can have an assurance on these heads it would be wise for the House to reject this scheme and ask the Chancellor of the Exchequer for alternative proposals which would enable the £1,000,000, or whatever sum may be necessary, to be spent in a direct fashion by increasing the purchasing power of the community in the distressed areas.

Now I turn to the actual proposal before the House in order to ascertain what is intended. I feel that hon. Members will agree that the scheme as it appears in the Resolution is somewhat involved. I propose, in a humble and modest fashion, to see if we can make the scheme appear less obscure. There is, as I understand it, a company to be created and that company is to consist, presumably, of a number of directors. As to who the directors are to be and as to how they are to be appointed we are left completely in the dark. I think we are entitled to some enlightenment on those matters. It is exceedingly important that we should have information as to the calibre of the directorate, and some indication as to who is to be responsible for their appointment and dismissal if it be necessary at any time. Three main propositions are involved. The first is a proposal to provide a maximum of £20,000 for the company in connection with contemplated administrative expenses. The second proposal is that up to £100,000 is to be provided by the Treasury, in addition to the £20,000 for administration expenses, towards reserves, which are to be repaid to the Treasury on the winding-up of the company. The third main element in the scheme is a guarantee of 25 per cent. by the Treasury of the amount of losses on, loans made by the company in excess of the reserves at its disposal.

It will be noted that apart from the, £20,000 for administration expenses and. £100,000 from the Treasury towards the reserves of the company against possible losses, there is to be no further provision by the Treasury. That is a very remarkable feature of the scheme. It is true that there is a contemplated expenditure by the Treasury, apart from the items I have mentioned, of £1,000,000. The right hon. Gentleman in his Budget speech said that the Treasury cannot lose more than £1,000,000, but it will be noted that the money contributed by the Treasury towards the reserves and the £1,000,000 which are in part guaranteed are to be repaid to the Treasury on the winding-up of the company. Where is the initial capital of the company to come from? The company cannot commence operations without capital. Is it to come from the Treasury? If it is, in which part of the Resolution does it appear? On the other hand, can it be—and this I think is a more likely contingency—that the company, backed by a, Government guarantee of 25 per cent. of possible losses, will approach financial institutions and obtain from them the initial capital upon which these business undertakings are to be based? That seems to be more likely than that there will be any initial and substantial outlay by the Treasury itself. But, clearly, if that be the case—the right hon. Gentleman will correct me if I am wrong—why should it be necessary for the banks to require a 25 per cent. guarantee?

Take a likely example if the scheme goes through. The right hon. Gentleman provides, although this is not contained in the actual Resolution a reference was made to it in the Budget speech, that the maximum loan shall be £10,000 provided by the Treasury. Let us assume that that is a 25 per cent. guarantee. Then these business undertakings will require an initial capital of £40,000, and £30,000 must be raised by the companies on behalf of these undertakings through some financial institution. The financial institution will obviously require security. They will require collateral security. Surely the right hon. Gentleman does not seriously suggest that a financial institution will require a 25 per cent. guarantee from the Treasury for a company or a business undertaking which is able to provide collateral for 75 per cent.? At all events it is passing strange and not at all consistent with the usual and normal operations of financial institutions. On this point we require a good deal of enlightenment.

Now I come to the substance of the proposal itself. Let us assume that the whole £1,000,000 of guarantee to be provided is absorbed, although it is not certain that it will be. First of all, the company has to be created and the needs of the situation must be ascertained. The men have to come in and make applications. These applications have to be examined and approved. It will take some time before they can get going, if they ever get going at all. But is it likely that the whole £1,000,000 of guarantee will be absorbed? Assuming that it is—let us make the best of this bad job—then it represents a total expenditure of £4,000,000. Is it suggested that £4,000,000 can deal adequately with the situation in South Wales or in Durham, in the depressed parts of Scotland and in Cumberland? Surely the right hon. Gentleman does not mean that, unless we are to assume that it is £40,000,000 not £4,000,000, a sum more consistent with the needs of the case? But if that is intended perhaps the right hon. Gentleman will point out in which part of the Resolution or in his Budget Speech that reference appears?

I want to ask further questions. Will local authorities have any control over the operations of this company? The right hon. Gentleman appeared to indicate in his original speech that this might be the case. If it is, we ought to have some information as to the exact relationship between the company and local authorities. Will local authorities be asked for their advice or assistance? Will they have any measure of control over the operations These are questions which are worthy of an adequate reply. Is there any estimate in the Treasury as to the number likely to be employed through the scheme? How many men or women, or youths or girls, does the right hon. Gentleman expect will be absorbed as a result of the schemes? Reference was made in the Budget to the operations of the company for the production of oil from coal. I am not going to embark on that subject now, but I understand that the venture cost something in the region of £4,000,000 and employs something like 1,200 men. As it uses about 350,000 tons of coal per annum it gives employment, on the assumption that new workpeople are employed, to something like 1,500 miners. If a scheme which costs £4,000,000 only provides employment for these few men, what is this scheme likely to do? If the right hon. Gentleman submits this scheme for our approval he should back it up by a submission that it will provide something in the nature of adequate employment.

What is to be the rate of interest on the loan? The Treasury have to approve the loans or will have some control over the loans furnished by financial institutions. What is to be the rate of interest? We are entitled to be told this, because clearly the rate of interest is a substantial item in the working costs of these contemplated undertakings. How long is it to be before the scheme operates? That is the essence of the case. It may be thought that I have spoken with some acerbity. Let me assure hon. Members that I am not in the least animated by any feeling of personal antagonism towards the Chancellor of the Exchequer. I speak, as so many of my colleagues do, with, intensity of feeling. I go to my division now and again and I never return without a sense of worry and despair, sometimes—hon. Members may believe it or not—almost broken-hearted at the stories told to me. It is a painful and agonising experience for many hon. Members to visit their divisions. We dislike the situation intensely, and if we speak with feeling on these matters it is inevitable; it cannot be otherwise, and it is because we are keenly desirous of obtaining a speedy solution of this problem, or even a modest modicum of relief which would bring comfort to the people we represent.

I submit that I have not asked too many questions, nor have I exaggerated the situation in the slightest. But if it be alleged that I have committed any misdemeanour in this regard, my excuse is that this proposal seems to be the end of the Government's tether in relation to schemes on behalf of the distressed areas. We have had two Special Commissioner's reports, we have had social service schemes, we have had the efforts of well-intentioned people, men and women alike, we have had confidence and prosperity, we have had all these presumably glorious Budgets presented to us in recent years, we are told there is a decline in unemployment—all good things —and this seems to be the final effort on the part of the Government. They are at the end of their tether, and they have nothing more to offer. That, therefore, is our excuse for raising this Debate and for the observations which I have ventured to make, and upon the answer to the submissions which I have made depends our attitude.

Before I conclude, may I direct the attention of hon. Members to newspaper reports of two speeches delivered in the past few days? The first is a speech for which no Member of this party is responsible, a speech delivered by Sir Benjamin Dawson, Chairman of the Bradford Central Division Conservative Association, a man, presumably, of repute, a man whose word can be relied upon, a man whose utterances count for something, no mere Labour agitator, no wild, tearing, raging revolutionary, but a man of substance, a man who counts in the circles of the Conservative party. Hear what this estimable gentleman has to say of the Government. He was speaking of his experiences in the distressed areas, and he said: The pigs on my farm are better housed and fed than some of the people I saw that day. That is how it strikes the decent, observant, and discerning mind. Many of us have been a little hardened, although our feelings creep out now and again, but here is someone who is struck by the extraordinary phenomenon which presents itself in these areas. He proceeds: The cause of these terrible conditions is poverty, and poverty arises from unemployment. That is an observation which is very familiar to hon. Members on these benches. He goes on: There is a cure, and a simple one, but it is not applied because we in this country are steeped in greed and selfishness. To whom are those words directed? Not at us of the Labour party, but at the Government, because he proceeds: The cure for unemployment is to reduce the working hours. To keep up the standard of living, there must be no reduction of wages. Then, as regards the Government, he observes: The Government has done nothing towards a permanent reduction of this distress. It has deliberately thrown cold water on a scheme which would eventually have borne fruit. I refer to the 40-hour week, which was considered by 52 nations at Geneva. I hope the Parliamentary Secretary to the Ministry of Labour will take note of that, because it affects his Department. That is how this gentleman speaks of His Majesty's Government. Can it be wondered at that we are a little more crude in our methods and use the language that we do and speak with such intensity of feeling?

Now I will refer to a still more pregnant utterance. A speech was made by Lord Barnard in Durham. I have no acquaintance with the gentleman, nor am I familiar with his politics, if indeed he has any. Lord Barnard said: I believe we will get no Government to listen to us unless we do adopt Clydeside methods. The plight of the industry— Presumably he meant the coal industry or possibly allied industries: and of the people in this area is nothing new. It has been going on now for 10 years, during which the Government has had reports from two commissioners and many suggestions from other sources. These have never been acted on to any extent. Will the Financial Secretary to the Treasury please note? I think it is up to the Government to take action, but unless we directly challenge them to do something, or accuse them of funking the problem in a rather brutal manner, I do not think we shall have much success. Revolution in exclusive circles! Perhaps the Noble Lord was right. Perhaps it may be necessary for some of us to take a leaf out of his book. Perhaps it may be necessary in due course, much as we deplore it, to depart slightly from constitutional methods, to be a little less moderate and restrained. It may be that our people in the distressed areas are too subdued. When the Noble Lord speaks of Clydeside methods, what has he in mind? Not the constitutional process of building up, in a democratic fashion, step by step, each brick well and truly laid. No — something extra constitutional, something which may be revolutionary; otherwise, what did he mean by his reference to Clydeside methods?

I have some acquaintance with Clydeside methods, and, therefore, unless we can obtain from the Government unhappily in power, maybe to be in power for some considerable time ahead, some assurance that the claims of the people in the distressed areas will be adequately met, some indication that the hopes held out at the beginning of the Session will be fulfilled, unless there is some implementation of those promises, it may be necessary to create—and I put it no higher than this—a spirit of revolt in the distressed areas, to bring the Government, and for that matter the whole nation, to a conscious realisation of the issues involved, to make the nation face up to the inescapable fact that in spite of all the talk of progress this tragic problem still persists. But there is no possibility of a remedy so long as the Government produce these trifling and futile proposals. Therefore, while we have not yet decided what our action is to be at the end of this Debate, we, in spite of to-night's proceedings, will go on demanding from the Government from time to time more and more schemes of an adequate character to deal with this situation. We shall not rest content, and -we shall go to our depressed constituents, and we shall call upon them to fortify us in our efforts in this Assembly.

8.10 p.m.


I am not going to embark upon this discussion in any polemical spirit in the observations that I shall address to the House. The subject of unemployment is too sad for us to deal with except in a sympathetic and constructive way. The hon. Member for Seaham (Mr. Shiawell), who has just sat down, seemed to divide his speech into three portions. In the first portion he was scolding us for allowing, if not causing, the distress in these areas, or at any rate that we were responsible for the continuation of the trouble. I am not going to deal with that aspect of the matter. I dealt with it at some length about two months ago in a Ministry of Labour Vote Debate in this House. The other part of the hon. Member's speech with which I will deal, though briefly, was about the financial machinery in the Resolution. He asked how the money was to be provided for this proposal. I have no knowledge of what the Treasury will do. But as I had to operate the Government's Export Credits scheme started some years ago, I may say that we had an amount of credit or Government backing given to us with which to put the scheme into operation, and we did it very successfully. There was no providing of capital or Actual money. The Government lent its credit to traders who wanted the money for liquidating their customers' bills and they got it at small cost. In other words, with the Government's backing, the Government's signature, traders were able to raise the money for their sold goods from bankers at Treasury bill rates. I presume, although I have no authority for saying it, that this may be the answer to the hon. Member, that in some way the finance will be provided for this present scheme by use of the Government's guarantee. That would be, I think, very satisfactory to hon. Members opposite.

The main object of my rising, however, was to deal with the question which the last speaker posed as to how we are going to make the scheme operate. I should like to put into the common stock of discussion my views as to how the schemes might be got going. In my view, it is no good for us to provide credit unless the credit is put to work, and put to work successfully. When we now talk about capital, we mean Government credit, and it is no good having any credit facilities unless they are put to work, and put to work effectively. One thing I hope we shall be beware of, and that is the amateur scribblings of people who write books about "planning" and do not know what it means or what they are talking about.

The trouble lies in the selling of goods after they have been produced. I had to earn my living in selling goods before I came to this House. I know that goods have to be sold after they are made, and that unless you have skilled men who know how and where to sell goods by personal contacts you cannot turn your workmen's efforts into money. You cannot run an export business on "planning" or text-book theories. Few professors have ever run a prosperous manufacturing export trade. I seek to make the proposals of the Government work. I want to ask how we are going to make these credits operate, and in relation to what. That is the problem posed by the last speaker, and wisely posed too. I welcome it, because for one thing it gives me an opportunity to put forward my own views on these questions. The hon. Member talked about small businesses. I think we both agree that the credits ought not to be for-distribution, but rather for production, it may be for the export market; it is the best objective.

I do not agree with his view about small and big businesses. I have seen the small businesses work. I would prefer 50 small businesses, if they are going to be helped by this proposal, with £20,000 operating in each of them, than one business of £1,000,000. The wider you get your units of risk the less chance will there be of catastrophe. There is another thing, and that is that a small business can turn round and adapt itself to changing circumstances very much better and more swiftly than a big concern can. If you have a big business dominated by a proprietor or a board, one mistake may wreck the business, but you have to make 50 mistakes to wreck 50 businesses. I therefore suggest that hon. Members opposite should welcome small businesses rather than big concerns. The prosperity of the city of Birmingham, for instance, has been built up by small businesses in a variety of trades, and Birmingham has been able to weather the storm of the trade depression better than most other industrial centres in England. That brings us to the principle on which insurance companies have worked since long ago, the spreading of risks wide and in small amounts. Consequently I think the policy that ought to be adopted in administering this scheme is that the authorities responsible should look for small businesses, small amounts and for a great variety of different types of trades.

What are the trades that can be encouraged to go to these distressed areas? There are already in existence there more than a plenty of coal undertakings, shipyards and engineering works. The best possible thing would be the development of new inventions which would enable really new trades to start there; but I do not see where to get new inventions. I would like here to say that I am not in favour of attracting trade away from other districts into the distressed areas. That would only mean robbing one district of employment in order to give it to another. Additional total employment is what we must seek. But how is that to be obtained?

The hon. Gentleman the Member for Seaham said that Labour Members might have to put aside the anti-capitalist principles on which they have so long relied. Do not hon. Members opposite now see that in frightening private enterprise and threatening capitalists who might otherwise have tried to open businesses in these distressed areas they have, to some extent, prolonged the distress in them? [HON. MEMBERS "No, no."] I am entitled to have my own opinion about the effect of the persistent attacks on the principles of private enterprise in productive industry by Socialist leaders. Moreover, the chronic tendency to quarrel which exists in some places sometimes has a psychological effect on employers and makes them unwilling to open new enterprises there. I suggest that there is a test as to whether this desire to quarrel is a psychological hindrance to the opening of new factories or the extension of old factories in the distressed areas.


What did the Special Commissioner say about the subject which the hon. Member is now discussing? He said there was no truth in such a suggestion.


I do not say that what the Special Commissioner said is wrong, but I have my own opinion. Let us take Luton as a test. Luton is a very prosperous town, and is attracting workers from the distressed areas, very largely from the North. I think that the societies and organisations which deal with psychology in industry should proceed to find out whether the general mentality of working people in Luton has been in any way altered by the influx of people who have had industrial quarrelsomeness instilled into them in the distressed areas. Is the mentality of the newcomers as amenable as that of the natives of the Luton area? We can learn much by studying the new Luton. There is no doubt that for generations past there has been in the coal mining areas a great deal of unrest and strife. [HON. MEMBERS: "Why?"] Never mind why; there has been. The existence of that habit is one of the reasons why it has not been possible to redress the trouble in the distressed areas.

What has created this habitual discontent in Wales? I would like to be able to get behind the minds of some of the great employers, because I often wonder whether their desire to leave Wales, for instance, and to go into other parts of England, is not partly due to their wishing to have a change of industrial atmosphere and to get away from the habitual unrest. If that be the case, hon. Gentlemen opposite must make up their minds that if new or fresh industries are to be invited to go into the distressed areas, they must tell the people who trust and follow them that the attack on private enterprise and capitalism by the Socialist party must stop. If attack on private enterprise is to continue, it will not be possible to get people to open businesses in those areas. The responsibility lies with the Socialist party. Let them think it over.


May I ask the hon. Gentleman, in defence of the distressed areas, whether he has any evidence on which he bases his remarks?


It is our privilege in this House to make our individual contributions to the general stock of ideas. I submit that the reason I have given is one of the explanations why it has not been possible to get people from elsewhere to open new undertakings in the distressed areas.

I would like now to deal with the question of the fresh type of undertakings that could be started in those areas. I have already said that there is a superfluity of mines, shipyards and engineering works, and that I cannot see any new inventions, such as, formerly, coal tar products and the internal combustion engine, which would now enable new trades to be started. But when I was Minister for Overseas Trade and responsible for the British Pavilion in the Decorative Arts Exhibition in Paris in 1925, I visited the French portion of the exhibition and saw the large number of beautiful things made by the decorative luxury trade. I refer to luxury work in metals, wood, stone, decorative porcelain, glass, bronze and ormolu, such articles as are sold in Bond Street, Regent Street or Oxford Street, or in Mark et Street, Manchester. Many of those things might equally well be made in this country. They call for finger skill of the highest quality, and give employment to men, women and boys—in fact, they cover the whole craftsman population. As everybody knows, decorative goods are one of the main exports of France.

Moreover, we in this country used to make finer watches and clocks than are now made in and around Geneva. I do not see any reason why watches and clocks should be imported from abroad. We could revive the industry here. Those may seem far-fetched ideas, but I would remind the House that in 1924 there was a more far-fetched idea. It was this: Our exporting merchants had for long past found great difficulty in carrying on the export trade because of lack of insurance of credit. We set up an undertaking which was called the Exports Credit Scheme. But it was not accurately that. It was really insurance against risk of bad debts in the export market. It was administered by the Department of Overseas Trade and developed by the uncommonly efficient and enthusiastic staff of the Department of Overseas Trade. I went all over England in order to bring before the commercial community the advantage of the Export Credits scheme as providing a new tram line for trade. Previously insurance against bad debts in the export trade had been done a little by one or perhaps two insurance companies. As a result of the steps taken by the Department of Overseas Trade to explain the use and need for the scheme throughout the country, we have to-day a system of cover for exporters which is continuously in play. When one period of credit has run out other credits come on and the trader is always covered by the Export Credits scheme with the Government's guarantee behind it. We had a good deal of trouble at first in getting traders to see the advantages of that scheme. But to-day there is annually, in aggregate, a volume of export trade of £10,000,000 to £15,000,000 covered against risk of bad debt and the scheme pays its way.

Some such method of explanation might be adopted to get new decorative trades started in the Special Areas. We want new undertakings in those areas. The factories are there, the schools, the roads, the waterworks and the like. The large industries like artificial silk, iron and steel and engineering and chemicals can shift for themselves. They want no financial help and they will go into the areas anyhow if they want to do so. But the small trades have to be helped, and they have to be selected and shown which can find markets for their goods. I believe that it can be done. We have in England to-day industries which are making increasing kinds of decorative goods. We have for instance, captured the toy trade. Toys used to be made abroad and sent to this country, but we have a fine toy manufacturing industry of our own now. We have also captured the trade in what are known as fashion shoes. Years ago, if you went round the West End you saw that ladies' fashion shoes were mostly of French or Swiss make. Somehow or other more of these small decorative trades should be started in the Special Areas. An attempt should be made to persuade private capitalists to start to make more luxury goods.

In connection with the Export Credits scheme we received priceless help, without any payment by the State, from a body of leading bankers in the City of London and Chamber of Commerce leaders, men of the highest financial ability and public spirit. They helped us with their advice on how to work the scheme; it now deals in millions and is useful and self-supporting. I am sure that if you went round the great emporiums in the West End and in Manchester and in Liverpool you would find men who could and would eagerly give you much valuable information and advice towards the establishment of decorative industries. We should also get the Department of Overseas Trade to help. It could do a great deal. It would be possible, for instance, for it to provide samples of decorative goods which are now brought from abroad and which could be made here. It would be possible with the advice of the heads of West End firms and with the Government's help to get various factories reopened for making decorative goods in the distressed areas. Some of the manufacturers who are exhibitors at the British Industries Fair might be interrogated and encouraged by the advisory committee of retailers to take up the manufacture of more luxury and decorative articles. I believe that by approaching the problem in that way it would be possible to get a considerable number of people put to work.

It may seem to some hon. Members that it is a very far cry from the present position to such a possibility. Yet it seemed to me a very far cry from the time when the Export Credits scheme was first established until that new tram line for trade could be brought into working order. I had three years' experience of it and am now amazed at its success. We see in the national accounts what it is doing to-day. I am sure that the people of this country would help at every step that could he taken to put an end to the heartrending spectacle of the misery of the distressed areas. Each one of us is willing to put his hand to the plough in an effort to remedy the situation. I offer the suggestion I have made as my contribution to the proposals for fresh trades to deal with the unemployment, and I suggest to hon. Members opposite that the best thing they can do, in making their contribution, is to refrain from attacking capitalistic private enterprise.

We see what is happening in State enterprise in Italy and National-Socialist Germany to-day. There are no trade unions in those countries; there is no freedom of opinion or action there. We want to keep our trade unions and we want to keep our freedom of opinion and we want our people to go to work as free men. I do not think it is any good for us to accept these credit facilities unless we know how to make proper use of them. I see little or no possibility at the present time of much expan- sion in the export trade and I was brought up to work in it. On the other hand, I foresee at the end of the next two years a shrinkage in house building. These are additional reasons why we should seek to get new industries at work. I think there are possibilities in the luxury decorative household trades and for all these reasons I venture to offer these suggestions in order to make the provision of credit now proposed, effective and successful.

8.30 p.m.


The House will be grateful to the hon. Baronet for a very illuminating and interesting contribution to the Debate. I only wish that he had not included among so much that was helpful, the suggestion of trade being driven away from these areas by political agitation. He is, as he says, entitled to express his opinion but on a matter which reflects upon the atmosphere—if I may put it in that way—of those places where unemployment is so bad, I think it is better that evidence should be given by those who are in touch with the districts. The Commissioner who is dealing with the causes of the present distress finds no evidence of this factor as a contributory cause and it is better not to cloud our minds with suppositions which may seem possible at first, but when tested, prove to have nothing in them.

I agree emphatically with what the hon. Baronet said about small industries. The collapse of whole areas of our country has been largely due to the fact that they were dependent on one or two industries. With changing circumstances, such as the development of oil causing a reduced demand for coal, it was not this business or that which was affected, but whole towns and whole areas. There is greater resilience and elasticity in an area where there are various subsidiary trades able to bear some part of the strain when the strain comes. Because I think that the present proposals are on lines of that kind I am not going to take the attitude of scornful condemnation adopted by the hon. Member for Seaham (Mr. Shinwell). I do not think this is the occasion to go into the whole question of the distressed areas. My views on it have been given on many occasions and probably will be again. I want to deal with the proposal on its merits and I do not think we should criticise each brick that is brought forward because it is not the whole building. If I thought this was intended to be the whole building I might echo the sentiments of the hon. Member for Seaham, but we are to have a great many other suggestions besides this.

In the meantime we must remember that this is a suggestion put forward, I believe, by the Commissioner himself and advocated by the North-Eastern Development Board. Therefore, it was worth the Government's consideration and I am not going to throw cold water on it now that the Government have brought it forward in this form. I hope it will be a success. The criticism which I am bound, from my own point of view, to make is based on the words which limit it to the areas specified in the first Schedule of the Act of 1934. When that Schedule was before the House I pointed out that the harm of it was htat it was an unscientific and baseless list of places, not properly thought out. The whole of that Schedule limits the benefits that would accrue under that Bill. I do not think the benefits were very great, as a matter of fact, but the Schedule was almost bound to be taken as the basis of future legislation and proposals.

My words have been adequately borne out by the facts. In the London Passenger Transport Bill expenditure was limited to these areas, and now we find the limitation again in this Financial Resolution. If we part with the Resolution in this form we are trying our hands and it will not be possible afterwards to get other areas in, so that the point has to be dealt with now. I take it as a most unsatisfactory feature of this legislation that a definition of the Special Areas has been laid down as the result of pure accident when the present Secretary of the Overseas Trade Department, who was then Civil Lord, made his investigations, he had not time to get to the Tees-side and did not pretend to make any examination of it. The question whether it ought to be in the Special Areas has never even been considered by the Government, who took the Schedule of the places which the hon. and gallant Member visited and there they stopped. The result is that this area, which has a larger rate of unemployment than a good many important places which are inside the North-Eastern Special Area, is excluded from the benefits, such as they are, of the original Bill, from preferential treatment in regard to contracts under Bills such as that of the London Passenger Transport Board, and now it is ruled out of the possibility of getting further trade started by the kind of help which the Government are now offering.

I wish some representative of the Ministry of Labour were here because, in a sense, it is no good my addressing these remarks to the Financial Secretary to the Treasury. It is a matter for the Ministry of Labour primarily in consultation, of course, with the Treasury. Are they going on this false basis for ever? Is this wretched Schedule going to turn up like Banquo's ghost at any moment in our legislation? I suggest that it is ridiculous that a purely accidental piece of emergency drafting—because that is what it was—should perpetuate itself in legislation and largely cramp the possibility for good of measures such as this. It may be said by hon. Members who are inside the Special Areas that if others are to be taken in the butter will be spread even thinner and that this £1,000,000 will have to go further.

I want to believe, however, that the Government, in bringing forward this proposal, are conducting an experiment and are not delivering a final judgment, and that if they find expenditure along these lines on the scale in which they have laid it down here is successful, they will enlarge their experiment and go on. I hope I may receive some assurance that this is not the end of the chapter but that it is to be regarded as an experiment which will be pursued with energy and enthusiasm if it is found that its first steps are profitable. I have endeavoured to avoid in this speech any kind of language of recrimination. I think that hon. Members know that I have had acquaintance with distressed areas long enough to feel as much as anyone about them, and I desire to take advantage of everything which the Government propose to see it worked out properly and to hope the best for it.

8.40 p.m.


I often wonder as I sit in the House whether the Front Bench opposite really understands the problems that are vexing us in the Special Areas. Sometimes I would like to take a deputation from the Government side to Durham County and let them see for themselves the difficulties and disabilities under which thousands of our people are labouring. We in Durham and the people living in other Special Areas expected more from this Budget. We expected, when the Government decided to send investigators into the Special Areas, that something more would be done than the giving of a paltry £1,000,000 out of a Budget totalling £798,000,000. When economy was the craze, the promise was made that those who had made sacrifices would be rewarded by prosperity. Instead, the people are being asked to make further sacrifices. There is no sign of prosperity, but what is being asked for is an increased expenditure for armaments. The £1,000,000 which has been allocated in this scheme will not be sufficient to meet to any appreciable extent the problems by which we are surrounded. An hon. Member opposite suggested that there were certain factors operating in the distressed areas which prevented new industries being started and that it was perhaps owing to labour troubles. I was interested in reading a speech of the Chairman of the Federation of British Industries, Sir Francis Joseph. He was dealing with the question of new industries and the trek towards the southern counties, and he said: The southward trend of industry is a subject that ought to be commented on. It is suggested that with reasonable prosperity industry will soon have to tackle this problem. Along the great arteries that open up the country you can see long lines of new factories. They are attractive in appearance and economical in the cost of production. The cost of making goods in these new factories is lower than it is in the old ones. What is the lesson? It is that our old factories in our old towns have got to be pulled down and rebuilt. In my opinion that is the only way the trek of industry to the south can be arrested. It has got to be arrested because the population is reaching saturation point in the great London area. The Chancellor and the other Members of the Government know full well that what is needed in the Special Areas are new factories. We want to get rid of the old buildings and have new ones to attract new industries to the north-east coast instead of to the southern counties, but this £1,000,000 is not sufficient to clear the old sites and to build factories and get new industries going on the scale that is necessary. Hon. Mem- hers have suggested to-night that perhaps labour troubles and kindred causes explain why we do not get these new industries. I was interested in the report of the special invesigator, who was a member of the Government, I think. In that report he suggested that if there are to be new industries in Durham county the rate problem ought to be tackled, that as long as rates remain as high as they are we shall not get new industries started there. In Durham county there are more people per 1,000 in receipt of poor relief than in any other county in England and Wales. If we wish to get industries under way in that county we must give the county council a subsidy of £700,000 per year. That report has been submitted to the Government, but they are not acting on that submission.

The Commissioner for Special Areas also dealt with the question of high rates and of new industries, and pointed out that if we wanted anything done that was worth while we must consider the question of the 40-hour week. My hon. Friend who opened this discussion spoke of what has been done at Geneva about the 40-hour week, and the Special Commissioner has referred to the same question and suggested that in the interests of industry and of the unemployed the Government should give the question very serious consideration. To me it is alarming to find that in Durham County, with all that has been done by the Government —and they tell us they have done much—there are still 63,046 people who have been unemployed for over a year, 40,729 unemployed for more than three years, and 18,540 unemployed for more than five years. The Industrial Transference Board, which was expected to deal with this problem to a certain extent, has told us that there is no possibility of transferring people if they are over 35 years of age. There are in the county at the moment more than 52,000 people over that age who we cannot have transferred owing to their family commitments.

According to the return of the Board of Trade for 1934 the new industries started in the country numbered 478, but only seven were set up in the Special Areas, and of 144 extensions there were only seven extensions in the Special Areas, showing conclusively that industrialists are not prepared to start industries there at the moment. That being so, surely it is the responsibility of the Government to see that machinery is brought into being which will help to direct the trek of industry not to the southern counties but to the north-east coast and the Special Areas generally. The only way to do that, as has been suggested by the chairman of the Federation of British Industries, is to make it possible for new factories to be built. If new factories are set up, there may an opportunity of getting new industries into the areas.

Time and again we have asked the Government to come to our assistance in Durham county and do something worth while as a measure of relief to that hard-pressed industrial area. The burden may be gauged somewhat by a few facts which have been compiled by responsible officers of the Durham County Council. In Durham we are spending each week on able-bodied and ordinary relief £21,424, an annual amount of £1,114,048. If we deduct the estimated annual expenditure on cases to be taken over by the Unemployment Assistance Board it still leaves us with £851,597 to find out of the rates. If we add the contribution to the Unemployment Assistance Board, which is £62,320, it brings the gross total of the cost of public assistance in the county to £913,917. As I said a while ago, when the question of the burden of poor relief was gone into by the investigator and the commissioner, they suggested that we ought to have a grant from the National Exchequer to help the county to regain a little of its prosperity, but up to now nothing has been done by the Government, except to offer this £1,000,000 to cover the whole of the depressed areas, which will bring little or no relief to a county like Durham.

The hon. Member who opened the Debate this evening suggested that some of us dare not go back to our constituencies because we are beseiged by people pointing out to us the difficulties under which they are labouring and which this Government are not helping to any appreciable extent to alleviate. I know mining villages in Durham where people are living under appalling conditions; in many cases they have lost hope through prolonged unemployment. People sent there to make inquiries as to what has happened compiled a report on these lines: It is a most depressing fact that the results of this immense annual expenditure should amount at best to no more than the stabilisation of a state of affairs presenting so many undesirable features. Prolonged unemployment is destroying the confidence and self-respect of a large part of the population, their fitness for work is being steadily lost, and the anxiety of living always upon a bare minimum without any margin of resources or any hope of improvement is slowly sapping their nervous strength and their powers of resistance. Instances occur of men who have been out of employment for long periods being unable to stand the return to work. They find new conditions obtaining in the shops, they themselves are lacking in confidence and vitality…. That is not the result of anything that those people have done, but is owing to the fact that that great county is suffering from industrial stagnation. What obtains in the village mentioned by the investigator obtains in many villages in Durham county. I have gone into some of those villages and found people living under conditions which are a disgrace to this country and to twentieth century civilisation, and yet near by has been a colliery where industrialism, in the interests of profit, has wrested its profits out of the blood and sweat of the very people who are living under such appalling conditions.

Hon. Members on the other side of the House may seek to tinker with that problem and may give a little palliative here and there, hoping to tide over the difficulties that present themselves, but the time is not far distant in the North-West of England, and in the coalfields of South Wales, when there will arise a volume of indignation against you which will sweep you from those benches and will put into this House a group of men and women who understand the workers' position from the workers' point of view. You have had your opportunity in this Budget, and you have had it since 1931; up to now, as far as the workers are concerned, you have miserably failed. I come from the most hard-hit county in England and Wales. Its people have looked to you, with your big majority, to do something for them and at least to bring a ray of hope into their dark lives, but you have done nothing. You have sent your people up to investigate and they have compiled their report. You have had two reports from your Special Commissioner who has made suggestions along certain lines. If you had followed those suggestions, there would have been a certain measure of relief for those areas.

What are you going to do? What are your programme and your policy? Have you a policy to deal with the depressed areas? If you have not, and if you have made up your minds to do nothing, be honest enough to tell us. Then we can go back to those areas and tell the people that as a Government you are bankrupt in ideas of a constructive nature, and that you are not prepared to do anything in the interests of those people. I often wonder whether the time is near when the patience of our people will become exhausted. Do not try it too far. As we had demonstrations in 1934 which made the Government of the day sit up and take notice, so you may have demonstrations of greater dimensions, and meaning more, in the near future, of you do not rise to your responsibilities and do something for the people who are depressed, who are living in semi-starvation and whose homes are depleted. They have practically no home comforts, and their children are hindered from attending school for lack of boots and clothing, and they will demand of you something worth while. If you have it to offer to them, offer it; if not, tell them that you are not prepared to do anything more.

9.1 p.m.


I want to preface my very brief remarks to-night with a few words of thanks to the Government for undertaking this experiment, which arose out of the recommendation made, I understand, by Mr. Malcolm Stewart in his last report. Most of the speeches tonight have been speeches of criticism, so perhaps I may venture, if he requires any fortification, to fortify the Financial Secretary to the Treasury by saying that the Northern Group met to-night for the first time since the Budget was introduced, and passed a resolution of thanks to His Majesty's Government for undertaking this new financial experiment, to try to give one more piece of help to the distressed areas. It always interests me to listen to the criticism offered by hon. Gentlemen above the Gangway. Criticisms are very easy to make. It is not the making of promises which is difficult, but the translation of promises into reality. I shall offer one or two criticisms of the extent of the proposals which are put forward by my hon. and learned Friend, but that will not mean that I am not proud to think that the Government which I have the honour to support are prepared to make an experiment, although somewhat limited, in an entirely new direction.

Before I embark upon the criticisms which I have to offer, I must say one word to my hon. Friend the Member for Farnham (Sir A. M. Samuel). To those who do not come from the Special Areas I would observe that I quite appreciate that everybody in this House has the right to express opinions. It would be a sad thing if that province of Members were taken away. Although I am a believer in and a supporter of the National Government because I believe in their policy as opposed to the policy of hon. Members above the Gangway, I am first and foremost a representative of my area, and when I hear my hob. Friend refer to what he thinks is the attitude of the workers or of the employés in distressed areas, I say to him that it is a wonderful thing to me how the people in the distressed areas have remained as quiet as they have. I say that as a Conservative representing, not only my own point of view, but the point of view of hundreds, indeed thousands, of supporters of the National Government. It is not because we are not loyal to the Government, for we believe in their policy, and we know that the policy of hon. and right hon. Gentleman above the Gangway would be ruination for our area.

That, however, does not make us view the situation in any spirit of complacency, and, although I hate to use the word "resent," because I think it is rather a hard word to use, yet I must say that, when people make the kind of statements that were made in that speech, it does prove to me that they have no idea of the spirit which prevails in our areas, and the marvellous way in which people in those areas have put up with distress, wardship and unemployment for very many years. I hope that before the end of this Parliament I shall be in the happy position of congratulating His Majesty's Government on having really produced a policy which is of some benefit to those areas.


You will be disappointed.


My hon. Friend, who is always so interested in interrupting any speeches that I may make with the same words, says that I shall be disappointed, but the measure of my disappointment with my own Government will be nothing compared with the measure of disappointment that I should have felt had hon. Gentlemen above the Gangway been sitting on the benches opposite.

There are one or two points that I should like to mention. I took the trouble to telegraph to the North East Coast Development Board to ask them how far they were in support of the Government's proposals, that is to say, whether they had any real criticisms to offer, and whether they felt that the proposals put forward were satisfactory to them. Although I do not think my hon. Friend requires any reminding, I would just emphasise that for a very long period we have been pressing His Majesty's Government to experiment in this direction, and I have never quite understood why they had to wait until the introduction of the Budget to accept the recommendation of Mr. Malcolm Stewart, because, as the Chancellor himself pointed out in his Budget speech, it really had not anything to do with the Budget; but it was perhaps just an appropriate moment to introduce the subject. I regret that it has taken His Majesty's Government so long before they made up their minds and proposed the experiment. The reply that I received from the North East Coast Development Board was that they were not prepared to offer an opinion until they had heard more in detail what the proposals of the Chancellor really meant, and I hope that my hon. Friend to-night is going to tell us in very much more detail exactly what the proposals mean. One finds that so often legislation is passed before the real criticisms—it may be, of course, that that is what the Government desire—have been appreciated by the interested parties, and therefore I want a very full and frank explanation of all the details involved in this new undertaking, so that we may be in a position to press the Government in certain directions if their suggestions are not entirely satisfactory.

I must say that I am a little apprehensive as to the total amount of money involved, and I desire to emphasise this point to my hon. Friend. He will be aware that on the North East Coast— and I presume that the same applies to all development boards in the Special Areas, and, indeed, to development boards in counties which are not included in the Special Areas—the difficulty has been that, although they have raised a certain amount of money themselves through their own initiative, that is to say, by subscriptions from people interested in the area, the work of the Development Board over the past two years has been retarded because of the small amount of capital which they have had available. A million of money may sound quite a large sum, but it does not seem to me that it is a very large sum in relation to the possible drawings on it, and I should like an assurance from my hon. Friend that, if this proposal proves really successful, and there seems to be a real demand for the capital, then, governed always by principles of sound finance—because one does not want to waste public money in reckless expenditure on companies which are not going to be stable—I should like an assurance from my hon. Friend that, if it is a success, we shall not have a tremendous battle again with the Chancellor to get an increase. I should also like an assurance from my hon. Friend that the allocation of this capital is not going to be surrounded by restrictions and conditions in the same way in which the work of Mr. Malcolm Stewart under the Special Areas Act was restricted. Although it is sometimes glossed over by the Government, and even by supporters of the Government, and it is sometimes a little difficult to get all the necessary information, I have a very shrewd suspicion that a great deal of work which the Commissioner would have recommended has not been recommended because it was outside the scope of the Special Areas Act. I want to be assured that, if responsible bodies are set up with a full sense of responsibility, they will not be hampered if they are desirous of giving grants to companies which can run and should run efficiently for the benefit of the area. Another point that I want to make is as to the interpretation of what the Chancellor meant when he said: It is proposed that as a general rule advances will be limited to a maximum of £10,000 in the case of any one loan."—[OFFICIAL REPORT, 21st April, 1936; col 52, Vol. 311.] I should like an interpretation of what the right hon. Gentleman means by "a general rule." We are not so depressed on the North-East Coast that we cannot go out sometimes for big business, and, as the trade of the country improves and the general spirit of confidence which one can detect at the present time on the North-Fast Coast increases, so there is a greater chance for industry. I happened to hear the other day quite specifically—it was not just something in the air—of a company that was desirous of setting up on the North-East Coast, and wanted for the purpose a very much larger capital than £10,000. I should like to know whether, if the responsible body which is going to be set up comes forward with a proposal for the formation of a company which is going to give definite employment, and which desires an even larger capital than £10,000, but which, because of the circumstances of the Special Area, cannot run the finance in the ordinary way, the interpretation of the Chancellor's words is such that that company will be able to obtain any portion of the necessary capital from this special fund. I should very much like to obtain as much detail as possible about the fund.

I conclude my remarks by saying once more than we are grateful for this one step forward, but I should also like to take this opportunity—and I think I shall have behind me the good will and support of my colleagues in the Northern Group—of expressing the hope that, when the new Act is passed, the Government will not think they have done all that is necessary, because those of us who represent the Special Areas feel that we want a very great deal more, and, moreover, that when the country is in a much more prosperous state we shall not be prepared to wait quite as patiently as we have waited during the rather bad times when we realised that the Government were going through very heavy weather. It is very nice to hear and I am very proud of the Government that has produced such a result, but for my area we want a very great deal more.

9.15 p.m.


I should not have risen but for the intervention of the hon. Baronet the Member for Farnham (Sir A. M. Samuel), who referred to the disputes that have characterised some parts of the Special Areas as being a detriment to new industries coming into those areas. I remember the hon. Baronet raising the same question a month or more ago when he got what I thought a very handsome reply from the Prime Minister, who pointed out that from his own experience the industries in the Special Areas, and particularly in South Wales, other than the mining industry, had had a very long period of peace. That is characteristic of the great majority, if not all the industries in those areas. I frankly admit that it is unfortunate that the mining industry has been characterised by industrial stoppages more frequently than most of us would desire, but it is most unfortunate that any Member should make those charges. I listened attentively to the hon. Baronet to find out whether he would be able or not to adduce evidence of the statement he has made on two occasions, but no evidence was forthcoming.

There has been a great deal of talk recently in South Wales of one industry being removed to another part of the country, an industry in which there has not been an industrial dispute for at least 40 years. It is Richard Thomas and Company, who have operated quite successfully in tinplates for very many years. It is high time there was some authority in this land which could prevent owners of industries removing them from one part of the country to another as they think fit. Some industrialists show a total disregard for the welfare of those residing in their areas and for the enormous amount of social capital in those areas. We have all the requirements for carrying on the industry and for carrying on the social services, but nevertheless we get attempts on the part of some firms to remove their industries.

I listened intently to the Chancellor of the Exchequer one day last week when he was quite definite in his view that tariffs had in no way been responsible for the situation in South Wales. I do not think anyone would assert that tariffs are entirely responsible, but I do not think anyone would dispute that national policy throughout the years has to a very large extent been responsible for creating the present situation in South Wales and in other Special Areas. It is important to remember that the Special Areas have been growing upon us year after year. This is not a thing of recent growth. Long before I became a Member of the House, as far back as 1928, I took part in deputations waiting upon the Chancellor of the Exchequer, who was then Minister of Health, endeavouring to prevail upon him to take some definite action to prevent the situation that has arisen in these areas. Rates were bounding upwards and unemployment was increasing, and it was becoming increasingly difficult to meet the social services required in those areas. All the time the right hon. Gentleman has been pretty niggardly in facing up to that situation. We had great difficulty in getting a substantial contribution to the cost of the maintenance of the able-bodied unemployed. At the best we only got a 60–40 arrangement, and to-day that weighs very heavily upon these areas. In Glasgow, I believe the cost will be about £400,000, whereas the cost in Birmingham is £40,000. That shows the unfair incidence of an arrangement of that kind.

The hon. Member for Houghton-le-Spring (Mr. W. Joseph Stewart) in a very moving speech referred to the heavy burden that they are carrying in Durham. The same thing applies to the whole of the special areas. In the whole of the South Wales Special Area the public assistance rate liability is little less than 9s. in the £, but the average public assistance rate for the whole of the country is not in excess of 3s. in the £. If we are going to bring new industries into these areas, clearly the Government will have to face the responsibility of meeting these liabilities. I do not think that the reason for the failure of industries in coming to these areas is that referred to by the hon. Baronet, but I can understand the objection on the part of employers to coming into these areas when they have a heavy rate liability to meet and other heavy charges as well. That might influence anyone who desired to establish an industry there. One of the steps that the Government could easily take is to see to it that the local authorities in those areas should not be involved in a heavier rate liability in the maintenance of their services than the average for the whole country. That would be a substantial improvement.

I am not going to criticise the proposal for the establishment of a new company which will be able to use the Government guarantee up to £1,000,000 in order to establish new small industries. We are in the position of wanting all we can get. My criticism is that the Chancellor has not gone far enough and that he has been so slow in going as far as he has gone. He should have gone thus far years ago. Even now, in this proposal, he tells us again that it is an experiment. I have been looking at a speech made by the Chancellor of the Exchequer as far back as 1934, when he was speaking in the House on the Special Areas. That was two years ago, and the Chancellor then said: Although in the present case we need not describe the disease as desperate, it certainly is sufficiently exceptional to warrant exceptional treatment. What we want here, as it seems to us, is something more rapid, more direct, less orthodox if you like, than the ordinary plan."—[OFFICIAL REPORT, 14th November, 1934; cols. 1995–96, Vol. 293.] I should like to know whether anything at all has been done which is more rapid or less orthodox. We have had these areas growing on us from month to month and From year to year until at the present time our people are in the plight that we heard described from this side of the House a few minutes ago. In South Wales we have in the Special Area roughly 30 per cent. of our people unemployed and dependent on public funds. We have practically one-third of the people with a purchasing power which is dependent entirely on the amount they can get from public funds. That is a very serious detriment to any business coming there.

Now that the Chancellor has brought this proposal forward I think he should see to it that it is not limited to the £10,000 loans which have been referred to. That amount will be too small. Today I was talking to a man well versed in business who told me that in his opinion the £10,000 per business will not be very good; even for a small business a sum of £30,000 at least will be required. After we have got this scheme so that we can have some small businesses established what is going to be done by the Chancellor with a view to determining the location of the new industries that are to be developed? Are we to see the South go on building its factories, are we to see the Midlands go on extending, while these other areas are continuously contracting? The Chancellor has not told us that he will prevent that from being done. I am not quite sure that I fully understand how the new industries in the Special Areas will get any special or particular financial treatment. They will be able to borrow the money, it is true; but they will, I imagine, have to pay interest on the borrowed money in exactly the same way as if they got it from the banks. It is true that they will have certain guarantees if there are losses. But I have yet to learn what special advantage they will get from this new scheme, and I would like the Chancellor—or the Financial Secretary if he replies—to be more explicit as to how this new company is going to set up these new industries at the more rapid rate which the Chancellor in 1934 said was necessary. I am hoping that we shall have a clear statement in regard to that.

I do not wish to take up too much times on this question, but like others who have spoken to-night I have a good deal of feeling on this matter. I feel that quite a number of hon. Members on the opposite side will not have seen these Special Areas in the plight in which we see them. Some of us have worked in those pits with the men who are now idle and whose homes are in distress, and who cannot provide even the barest necessities for their wives and children. I would ask hon. Gentlemen opposite to go to their divisions at the week-end and to see the men with whom they have worked and lived in that plight: Then they would come to this House with a great deal of feeling too. These are the best men it is possible for one to meet and know, and they are left in that plight. I say that the onus is on the Government of the day, whatever Government it may be, to see to it that there shall be re-created in these areas industries that will give the people work at least on the basis of the average of the work that is available in the country.

9.32 p.m.


There is only one short point which I want to raise in connection with this Resolution. The actual proposal is a very interesting one upon which the Chancellor is to be congratulated, and I only hope that the experiment he is making will prove so successful and helpful that he will be able to extend it to other areas outside the Special Areas. I am sure that everyone will desire to do anything possible to take up any practicable scheme in an experimental way to help those areas; but we must be careful that in helping those areas we do not, incidentally, do something unfair to other areas which are not so badly off but which still require all the attention and support they can get. We must exercise a little care and the Government might be a little more explicit in their policy on this matter. May I give one example? There is in Wolverhampton a very active Industrial Development Association which spends a great deal of time and money in pointing out the advantages to manufacturers by coming to that town. That association has been not unsuccessful. Recently, in the course of that business, they were able to attract a very important steel plant. Everything was arranged, the land was bought, and employment would have been given to a very considerable number of men. But then, suddenly, it was understood that the Government had brought pressure to bear in other directions in the interest of the Special Areas and the factory was put up somewhere else.

That may have been a perfectly right decision to arrive at; it may have been that the Special Areas were the right place for it. That is not my point. One must not take a selfish view about a matter of that kind. But I do say that the Government ought to state explicitly what their policy is for the benefit of towns which are endeavouring to attract manufacturers. If influence is going to be used to draw them away, quite properly and quite wisely perhaps, then I think these other towns ought to be told and warned not to go beyond a certain stage. Possibly they should consult with some Government Department in order that they may devote their energies to something that is really going to come off and so that all their efforts should not be wasted. I hope that whoever is to reply for the Government will be able to give some guidance to many towns which are in this position, and which, while most anxious to do anything they can, not to stand in the way of the Special Areas are naturally looking after their own interests.

9.35 p.m.


I had not really intended to take any part in this Debate, but when I heard the speech of the hon. Gentleman the Member for Houghton-le-Spring (Mr. W. Joseph Stewart), who is a very near neighbour of mine in county Durham, I felt that perhaps it would be well if some hon. Member who came from those parts, and who sat on this side of the House, could put a view upon this question. The question of the Special areas should not be approached with the idea that it can be solved by any one remedy. That is where I would quarrel very strongly indeed with the hon. Member for Houghton-le-Spring. This problem will be solved by the application of a number of remedies, any one of which, by itself, might not be very effective. The problem with which we are faced in county Durham is really one which arises from the decay of two big industries upon which our prosperity was built up, that is, first of all, coal mining, and secondly, shipbuilding. Our problem, and the unemployment and distress in that county are not due to any fault at all of our own. It is due to the pressure of economic conditions, and particularly to the policy of economic nationalism which has been followed all over the world since the War, which has cut down the market for our coal and, by destroying the volume of international trade, has cut down the number of ships which are required. That is our problem. Unfortunately, that condition has resulted in a great wastage and shinkage of the capital available for investment within the county itself.

As anybody who is acquainted with the conditions will know, it is now, in some parts particularly of county Durham, very difficult to get any number of people to join in industrial development. Some of the people who had money have left, others have lost what, they had, and still others have become so discouraged that there is no spirit left in them. In the old days before the War in county Durham, it was easier to get industry started there than in any other part of the country. The people in county Durham had seen the growth of prosperity from year to year, and they were naturally adventurous and enterprising and were able to develop those great local industries which were developed so successfully. But in recent years the experience has been quite different. It is because this is one step towards helping us to get the financial aid which we need so badly, and which can no longer be obtained locally, that I welcome the proposal of the Chancellor of the Exchequer. I do not think that it will do very much in itself. I personally believe that we who, on both sides of this House, represent constituencies in the distressed areas have to fight a very stubborn battle. We have a great deal of ground to cover and we can only make an advance by making one step at a time. This is one more step forward, and I welcome it for that reason.

There is one thing more that I should like to say, and I only say it, not to attack any hon. or right hon. Gentleman on this side, but because it is rather important for the sake of county Durham itself. It is absolutely false, and ludicrous really, to anybody who knows the county, to speak as if the people up there were most disagreeable, almost uncivilised, and certainly people who were on the alert all the time looking for chances of great industrial unrest. The true facts are absolutely contrary. I should think that people in county Durham are more loyal to their employers and to the job in which they work than any other people in this country. They are almost sentimental in their local loyalty and in their devotion to their own particular firm. Anybody who knows any of the shipbuilding yards will know that the men have an almost sentimental attachment to them and would sooner work in the yard in which they first started as boys than go round to the next yard for a, job with perhaps more prospects.

The history of industry in that county will show that, except for one particular instance, about which I am not really competent to speak, there have been very few industrial disputes indeed. I personally cannot remember in my lifetime a stoppage in the steel trade. There may have been one, but I personally do not remember it, and I do not think that there has been more than one stoppage of any moment in the shipbuilding industry since the War. That is not a bad record, and industrial trouble is no reason at all for people refusing to start industries in that area. The real trouble is that we have for so long been dependent upon a few industries. Through no fault of our own those industries are depressed, and it is because we are depressed that we are likely to get more depressed. It is just the same as the man who is in financial difficulties—his condition is likely to get worse rather than better unless outside help is given. I welcome this not because it is a big thing in itself, but because it is a step forward, and I think that it will do some good.

9.42 p.m.


I was interested in the speech delivered by the hon. Lady the Member for Wallsend (Miss Ward), and I am sorry that she is not here at the moment. It seemed to me that if she had been a Methodist preacher she would have divided her address into two parts. The first would have expressed gratitude and thanks to the Government, and, secondly, it would have been a criticism of the amount of money the Government have given. She asked the Government for details of what they mean to do I am glad that at last the Government have come to recognise that if something is to be done for the distressed areas they will have to do it. I regard this as a step in the right direction, only it is too short and too feeble a step. Instead of £1,000,000, the Government ought to have come forward with £20,000,000, and that would not have been too much for the distressed areas. I want to emphasise the point made by the hon. Lady the Member for Wallsend as to what the Government really mean by this proposal. I do not ask for details, but I would ask the Chancellor of the Exchequer or the Financial Secretary, whoever replies to-night, to say what they really mean. The Chancellor of the Exchequer last Thursday night, in endeavouring to explain the matter, left it far from clear. He said: In the first place, I do not think it is proposed that the assistance should be confined to any particular form of industry, whether productive or distributive. I anticipate that the general desire will be that this financial assistance should be directed, as far as possible, to those kinds of industries which are likely to give the greatest amount of employment, and that covers also the question of small industries. As regard the much larger industries, I do not think those are industries which could be brought into this category at all."— [OFFICIA L REPORT, 23rd April, 1936; col. 430, Vol. 311.] The Chancellor of the Exchequer ought to explain what he means by the smaller industries that will give the greatest amount of employment. If there is to be no money to assist large industries and only small industries are to be assisted, one fails to see that they will give a great amount of employment. This matter must have been thought out before the sum of £1,000,000 was suggested, and I should like the Chancellor of the Exchequer to tell us what those small industries are that will give the greatest amount of employment. I should also like him to explain where it is proposed to set up these industries. This sum of £1,000,000 is for all the distressed areas under the Fourth Schedule of the Act of 1934. That means Durham, part of Northumberland, Cumberland, South Wales and Scotland. According to the Fourth Schedule, the £1,000,000 would apply to 77 boroughs, eight non-county boroughs, 79 villages, large and small, in the North East of England, in Cumberland, Wales and Scotland. That is a large number of places to which the £1,000,000 would have to apply.

If the Chancellor of the Exchequer can tell us where he means to start these industries, I am afraid that we shall find that there will not be many industries started in every part of the distressed areas. If the sum is to be only £1,000,000, it will only be one of the distressed areas that will be affected, and a very small part. The hon. Member for Wallsend reminded us that the Chancellor of the Exchequer in his Budget speech referred to this matter as experimental. Some of us have been pleading the case of the distressed areas so long that we do not like the word "experiment." After all these years we should no longer be experimenting with the distressed areas. If it is to be merely a matter of experimenting, it does not hold out much hope. One hon. Member referred to a speech made by the Chancellor of the Exchequer in 1934, when he referred to the experiments that were to be tried by the Commissioners, then being appointed for the distressed areas. He said on that occasion: We are going to give the Commissioners a very wide discretion. They must not be afraid of trying experiments, even if those experiments fail. The Minister of Labour, in December, 1934, referring to the same matter, said that the Commissioner should start off with enough money to make it quite certain that they will be enabled to under- take any experiments in work which they think are necessary. The House then voted £2,000,000 for the purpose of making experiments, and nearly two years afterwards we see the result. We see that the experiments that have been tried have been an absolute failure in the distressed areas. They have proved valueless. Of the £2,000,000 which the House voted on that occasion the Commissioner for the distressed areas has only spent £330,000 to help the distressed areas. If we are going to vote £1,000,000 to-night and wait another two years to find that only a few thousand pounds of that £1,000,000 have been spent, this additional experiment will also be a failure.

The Chancellor of the Exchequer must be prepared to drop the idea that the £1,000,000 will help the distressed areas. The Commissioner for the distressed areas has given his attention to a trading estate in County Durham and he is proposing to help a deep-water scheme on the Tyne. That deep-water scheme on the Tyne will not help us in the distressed areas in the south-west part of the County of Durham. What some of us are anxious about is that something should be done in order to revive our colliery villages, because it is in the colliery villages in the south-west where there is no hope at all. The National Council of Social Service issued a report recently, in which they referred to one of the villages in my division, the village of Tow Law. They say: As an example of the many-sided schemes in which co-operative effort is being made by the local efforts of the National Council, Tow Law, in County Durham, may be instanced. This village of 4,000 souls grew up around cool pits and an iron foundry. The iron foundry has long been abandoned. The pits ceased work seven years ago. What is this proposal for £1,000,000 going to do for a village like that? Is it proposed to set up an industry in that village, which is only typical of scores of villages in the County of Durham where pits have been dismantled, where there is no other industry and where men cannot get employment? What is the Chancellor of the Exchequer going to do for those villages? Does he propose to set up a new industry in each one of those villages? If so, £1,000,000 will not help us very far. The Commissioner in his last report on the Special Areas said that whereas in the Special Areas there were 401,920 miners insured in 1934, the figure had dropped in 1935 to 384,470. In a year there had been a reduction in the number of insured miners of 17,450. When the Chancellor of the Exchequer is making this proposal, we have a right to ask him what he is going to do for the miners in those distressed areas. At present there is no hope for theta. Nothing that the Commissioner has done has touched the fringe of the question. Is this sum of £1,000,000 going to help them out of their poverty? I submit that £1,000,000 is far too small.

There is only one thing for the Government to do, as I have said again and again in this House, if they are to help us in the County of Durham, and that is for them to find £10,000,000 to set up plant for the extraction of oil from coal. Nothing else will help us as far as I can see. At the same time I am glad that the Government are recognising that it is their duty to find money. What we want in Durham is money, and the only place from which we can get it is the Government. If the Chancellor of the Exchequer, instead of giving his attention to a loan for armaments, would do what he can to re-establish the coal industry in the distressed area of Durham, there would be some hope for us, but until he does that there is no hope. I hope the right hon. Gentleman will not be satisfied with voting £1,000,000 for the distressed areas. It is not sufficient. It may be a step in the right direction, but I hope the right hon. Gentleman will face the question of raising a far bigger sum in order to help us out of our poverty.

9.57 p.m.


The House will agree that the problem with which we are dealing is an immense one and no one would desire to minimise its importance. The hon. Member for Sunderland (Mr. Furness) said quite rightly that the problem of the Special Areas has been largely created by the decline or collapse of two great industries, coal mining and shipbuilding and, particularly, the collapse of the coal exporting section of the industry. There is another feature of these Special Areas. In the last century when they became crowded and busy centres of life they are an example of that complete lack of planning which is characteristic of this country. Take South Wales. From 1875 to 1913 South Wales grew like a hothouse plant. In that period the average output of coal in South Wales increased at the rate of 1,000,000 tons per year and the number of persons finding employment in the industry increased at the rate of 4,000 a year. They were the days of the black diamonds, when fortunes were to be made in South Wales, when capitalists were not afraid of South Wales, because it was a profitable part of the country. They were the days when the best of our youth in our mining villages were attracted to the industry by the high wages. It was easy to get capital to be sunk in the pits without any guarantee from the Exchequer because of the handsome profits which were made. Then came the War, and at the end of the War came the decline which has gone on ever since and reduced the area to its present plight.

During those 25 years there was no effort by anyone or by any local authority to try and produce some balance in the economic life of the area. It became completely dependent on coal. We put all our eggs into one basket, and when the industry failed the community began to decay. That is characteristic of this country. There is no planning of industry, no balancing of industry, no attempt to bring a diversity of industries into an area so that if one fails the others will maintain the area. We are now beginning to realise that these areas will never recover if left to themselves. They must be reconstructed; there must be a real effort to renew their lives and that effort must be co-ordinated and assisted by the Government. Private enterprise will not do it by itself; there is no hope of capitalism doing it unless it is directed by the Government of the day. I hope, therefore, that now we have made a beginning. If we speak of this proposal sometimes with contempt we do not do so because we refuse this small measure of assistance but because we know how urgent the problem is, how time is going on, the sands are running down, and how our men and women are decaying. That is why we speak of it as a very small measure. But now that the problem has been approached from the standpoint of public money and the Government themselves are taking a hand, I hope that if these areas are to be reconstructed the mistakes of the past will not be repeated. I hope there will be an attempt to intro- duce into these areas a diversity of industries which will not make them in the next half century as dependent on one industry as they have been in the past.

May I follow up one point put by the hon. Member for West Middlesbrough (Mr. K. Griffith). As the Resolution stands, every village outside a Special Area as defined will be precluded from getting help. I represent a division in South Wales which is outside a Special Area as defined, but which still contains villages and towns which are as depressed as any in the Special Area. Indeed, in the Special Area there may be towns and villages which are not as depressed as those which are outside the area. I want to ask the Chancellor of the Exchequer whether he is going to be definite that no application except from what are defined as Special Areas will be considered? May I ask also whether there is going to be any attempt by the Government to determine, even within a Special Area, the location of these industries? Who is to determine this matter Suppose that from South Wales during the first six months there are applications by six companies to establish six new industries and they all want to be established in Cardiff. One of the things which affects us is the trend of industries to the towns. The Chancellor of the Exchequer took some pride that because of tariffs huge great works are being built outside Cardiff at a cost of £3,000,000. They are not new works. They are works transferred from Dowlais to the city of Cardiff. It is not a new works at all. As a matter of fact, the firm has been known as the Dowlais works, only now it will be in the city of Cardiff instead of in Dowlais, a village which is now derelict.

All that we may get in South Wales from this fund is the setting up of new factories and industries in Cardiff and Newport, and perhaps in Swansea, whereas what we want to do is to recover the vitality and life of our valleys and to rebuild our villages. Will the Government try to channel these industries away from the towns, which are continuously growing, while the villages are decaying, away from the towns and cities to the villages and valleys where those industries, however small, may be a very useful contribution?

The hon. Member for Farnham (Sir A. M. Samuel) referred to the fact that in certain of the special areas we have what he described as a bad atmosphere. One would not like the statement to go out unchallenged that the people in these special areas are in some way wild or irresponsible and always making trouble. I have been associated all my life, and I am still, as President, with the largest trade union in South Wales, the South Wales Miners Federation. I know that that federation may have a reputation for creating trouble, but I want to deny the assertion that that trouble is always of our snaking. That trouble is far more often of the making of the other people, the coal owners in South Wales. I want the House to remember, while on this subject of industrial strife, that we have had for 10 years an industrial depression in that area, 10 years during which there have been two men for every single job available, 10 years during which the fact that there are two men for every job has been very often ruthlessly used by employers. Do not forget the fact that men who are in work go back to homes where there are one or two or perhaps three who are unemployed, and that the fact that South Wales is a depressed area has spread the feeling not only of depression, but of sourness and bitterness, all over that area. The fact that they are depressed is because there is so much unemployment, and that is why there is so much strife.

I want to speak for my own people, my own country, my own workpeople in South Wales. During the last 10 years a good deal of the strife that has taken place in South Wales has been due to the fact that in that area men have seen what has taken place, that royalty owners have taken out of Soul Is Wales 3d. per ton more on every ton of coal than the average royalty owner has taken in the whole of the country, and they have never seen a single royalty owner making any contribution to relieve the distress in South Wales. During the last 10 or 20 years there has been an enormous amount of gambling by financiers in the coal trade, and all this has created this spirit and is in no small measure responsible for it. I say that the people from whom I sprang, of whom I am proud, are as capable, as hard working, as thrifty, and as good as any other section of people in this country, and if an appeal is made to them, they will make a response equal to that of any other section of people in this country. I want therefore to make my protest against any conclusion that the ills from which South Wales is suffering now are in any way attributable to those men and women. They are not. They are attributable to causes over which they have no control, and I urge the Chancellor of the Exchequer to give us for this Government, for this rich and prosperous nation, a message to take back to these men and women that this paltry, trivial £1,000,000 is not the last word, but the beginning of words that will not end until these special areas are rebuilt and reconstructed.

10.10 p.m.


I recall that when the Labour Government were in office and my right hon. Friend the Member for Wakefield (Mr. Greenwood) was Minister of Health, the right hon. Gentleman who is now Chancellor of the Exchequer attacked him because in one of his Housing Bills he had not done sufficient to deal with the garden city idea, and arising very largely from the speech of the right hon. Gentleman, a Departmental Committee was set up by my right hon. Friend, called the Departmental Committee on Garden Cities and Satellite Towns. I had the honour of serving on that committee. We produced a report which I think had a notice of about 10 lines in the "Times," and that apparently was regarded as a sufficient obituary notice to efforts that had lasted over several years.

I want to reinforce the plea that has been so eloquently made by my hon. Friend the Member for Llanelly (Mr. J. Griffiths), that the opportunity thus presented to the Chancellor should be used for securing some real planning of the economic life of these areas. I speak as one who went to County Durham 10 years ago, having never previously seen a mining village or town, and I cannot help thinking that the hon. Baronet the Member for Farnham (Sir A. M. Samuel) has had somewhat the same experience, only he has not gone back again to a mining area to realise the spirit which imbues the people there. My fear about the Chancellor's present proposals is that in limiting the amount of help in any one scheme to £10,000 he is not really giving these areas the chance of getting the industries which we all feel they should have. When one takes account of the villages mentioned by my hon. Friend the Member for Spennymoor (Mr. Batey), I think it is going to take far more than £10,000 to get going there the industry that is going to be any real contribution to economic reconstruction.

If you take my own county borough of South Shields, there we are faced with the fact that, as the senior Member for Sunderland (Mr. Furness) said, we are dependent upon two industries, coal and shipbuilding, and both of them are in the plight described by the hon. Member for exactly the same reasons that they are in that plight on the Wear; and if we are to do anything to start alternative industries in these great towns like South Shields and Sunderland, a mere scheme that can be financed for £10,000 is not going very far. I am sure that it will be necessary very largely to have new buildings. I can think of no buildings that there are in those two towns that are likely to attract people who want to start a new industry, nor are they likely to attract workers. I think the House has to realise that unless we make a determined effort in this matter, we shall be faced, as the years follow one another, with an increasing amount of hopelessness in these districts that have suffered so long.

It is not so many months ago that I was in a classroom in Surbiton questioning the children, and one of the boys answered with an accent that betrayed the fact that until a very few weeks before he had lived north of the Tweed. When I commented on it to the assistant teacher in charge of the class, at the end of my visit, he told me that not a single boy in that class had been born in Surbiton, but that all of them had been born outside; and in one of those new estates that one sees springing up round London their parents had come bringing these children, as it were, in flight from these areas where the depression has been so acute. I think it is a very serious thing for this country to be faced with the fact that practically everybody who can move from these districts is doing so, and that people such as accountants, and what are generally called, for some reason I cannot quite understand, the lower middle-class element, if they see a chance of getting a job near London take it, even if it represents an immediate sacrifice. They do this because they feel that any job they may now have in the distressed areas is one that is not likely to be of very long duration and a job in the south, near London, even if it brings in less money at the moment, probably represents a greater chance of permanent employment than does the job which they hold in a distressed area.

I am quite sure that in order to attract industries to these areas the Government must be prepared to adopt the motto of the right hon. Gentleman the Chancellor of the Exchequer and not be afraid of losing some of this money if they lend it. I am sure that in the great majority of cases they will manage to put their money on the right horse, but if they are going in for experiments they must be prepared to see some of them fail and to believe that possibly the lessons they learn from the failures may be worth the expense incurred. I do urge the Chancellor of the Exchequer—who was not too definite on the matter in his Budget speech—not to be too strict concerning the upper limit of £10,000 when it is clear that the experiment for which the advance is asked is one that really represents a definite effort to start an industry on a large and attractive scale in one of these areas where the industries on which they have depended in the past have apparently gone for good. It would be out of place to-night to deal with the points made in the speech of the hon. Member for Sunderland (Mr. Furness), who pointed to the causes for the distress, but I hope the Chancellor will not be too niggardly in the advances which he makes, and I hope we may feel that this £1,000,000 is not the end of the Government's efforts in this direction.

10.18 p.m.


I have a great deal of sympathy with the moderate speeches made by the hon. Member for Llanelly (Mr. J. Griffiths) and the hon. Member for South Shields (Mr. Ede). With a great number of the things they said I am in complete agreement. The hon. Member for South Shields spoke of the movement of people to the South of England, and in that connection I would refer to the position 30 years ago, when people emigrated from this country to Canada and to Australia, in order to better themselves. Now people stay in this country because it is not possible for them to better themselves abroad.

My only complaint about this grant of £1,000,000 is the narrow geographical boundaries within which the money is to be given. There are a great many areas which, although I do not pretend they have suffered as much as Durham or South Wales, have nevertheless suffered very much. I refer, for instance, to Lancashire. In Durham and in South Wales some of the coal trade has gone, partly I understand because of the operation of sanctions and partly because of the competition of oil, and in Lancashire some of the trade has gone because of the competition of cotton manufacturers in Asia, in India and in Japan. There are a great number of cotton mills in Lancashire which can never work again. They were fine mills some 50 or 60 years ago. They gave a great deal of employment to a large number of workpeople and no doubt made handsome profits for the people who owned them. At the present time they are an eyesore.

The old mills in many of the towns there offer no attraction to people who are likely to establish new industries, and I suggest that part of this sum might be granted, in any way which the Chancellor chose to arrange, to local authorities for the purpose of pulling down those old mills. People who intend to establish new industries are more likely to establish those industries on vacant sites than to take over mills which are perhaps 60 or 70 years old and are not very pleasing or artistic structures. I heard the hon. Member for South Shields recently refer to the wonderful factories which have been set up along the Great West Road. These buildings of reinforced concrete, in the middle of green lawns and illuminated by flood lighting, are a pleasure and a delight to see, and I am sure are pleasant places in which to work. If we had factories of that type in the North, it would help to keep the people there and prevent them coming South in search of work. I think that, broadly speaking, it is fair to say that most of the modern factories are being built in the vicinity of London.

Some hon. Members have sneered at the figure of £1,000,000. but, after all, it is a large sum and any bank or any creditors of a company if they know that the firm is a live one and that it has £10,000 of additional capital available, will be ready to extend ample credit to it, so long as they know that the order-book is full and that the company is being run on sound lines. Nor do I think that we ought to sneer at firms starting from small beginnings. The plaster-board industry started in a very small way and, as a result of the building boom, it has advanced by leaps and bounds and now employs large numbers. Then there is the tarmac industry, the products of which, I understand, are made from disused slag heaps. It started in a small way and now employs many people. There is also the elastic yarn industry which is starting in Lancashire next month and which, it is hoped, will also give considerable employment. Every new industry is in the nature of an experiment, and a sum of £10,000 may mean the difference between failure and success. The only criticism which I have to offer as regards the £1,000,000—a sum which may be increased later on—is that it is confined to certain areas and is not being extended to other places which are perhaps as much distressed as those areas but are, unfortunately, outside the geographical boundaries which have been fixed.

10.24 p.m.


I am pleased to have an opportunity of participating in this Debate. I had the pleasure of witnessing a "talkie" film recently, in which the Chancellor of the Exchequer took the chief part, and his concluding words were "Well, after all, it is not such a bad Budget." He seemed to be speaking with tears in his eyes. Whether they were tears of regret or tears of happiness at having made so successful an escape, I do not know. Although I do not agree with the right hon. Gentleman as Chancellor of the Exchequer I can assure him of one thing—that he has great potentialities as a cinema star. With regard to the issues with which we are concerned, the hon. Member for Seaham (Mr. Shinwell) raised certain important questions with which he asked the right hon. Gentleman to deal. The opening sentence of the Financial Resolution reads: To authorise the Treasury to make, with a company to be established with the object (among other objects)…. What is the meaning of "among other objects"? If, as we are told, the ostensible purpose of this proposal is to deal with unemployment and distress in the Special Areas, the House is entitled to know precisely the interpretation placed by the Chancellor upon those words. I would invite the attention of the House to the Chancellor's speech on the Budget, in which he said: On the other hand, it has been argued on good authority that if there is any difficulty about financing small businesses, it is not due to any backwardness on the part of financial interests, but rather to the difficulties that are inherent in the situation. It is said that there would be ample financial backing for any promising industrial enterprise even if it were situated in the most severely depressed area, and that if that financial assistance had not been forthcoming it was not because people were exaggerating the financial risks but because in fact the risk was greater than would be accepted in the ordinary course of business by financial concerns."—[OFFICIAL REPORT, 21st April, 1936; col. 51, Vol. 311.] If ever there were a definite condemnation from the ranks of the National Government proving conclusively the complete failure of private enterprise, it is in that paragraph. What are these proposals of the Chancellor? The proposals are, as I understand, that business in the Special Areas requires impetus or stimulus, and the argument which is put forward is that the risk is too hazardous and that the Government should accept responsibility to a limited extent. An hon. Lady who spoke earlier used the word "criticism." I never at any time criticise unless with complete justification, and I say that if this is to be the only policy, the only tangible proposal which is to be placed before the House to deal with the distress in the Special Areas, it is completely intolerable. It is shilly-shallying with the position; it is toying with the problem; and again it is proof positive of the bankrupt policy of the National Government when national problems are concerned.

The National Government have been in office for five years, and what have they done to deal with the problem of the distressed areas? They have done practically nothing, so far as I can see. The people of this country are looking to the Government for a lead, and when I think of the conduct of the National Government during their tenure of office, I think of the words of Omar Khayyam. I will repeat those wards for the benefit of the National Government: The Moving Finger writes; and, having writ, Moves on: nor all thy Piety, nor Wit Shall lure it back to cancel half a line, Nor all your Tears wash out a Word of it. We are told that this is a National Government. I ask the Chancellor, What is the meaning of the word "National"? If it means anything, surely it means a Government representative of all sections and every section of the community, working class, middle class and rich alike. I say this Government is not national. It may be national in name, but it is not national in deed. I ask the Chancellor, Are we to go ahead, as we have in the past five years, neglecting the protection of the rights of our citizens? Are we still prepared to permit this nation to go forward, as is admited on all hands, as a C3 nation?


The hon. Member is going far outside the terms of this Resolution.


I abide by your ruling, Mr. Speaker. I just wish to say that we have a war to wage and that, so far as Members on these benches are concerned, that war is in Great Britain. It is a war against disease, against poverty and against unemployment. With regard to the question of the Special Areas, in the Second Schedule of the 1934 Act the two Special Areas which had first consideration, so far as I can see, are the County of Dumbarton and the County of Larnark. In the County of Dumbarton, which I have the honour to represent, we find that in the past three years the public assistance figures have risen from £35,000 per annum to no less than £72,000. Those figures speak for themselves. In the case of the town of Hamilton, in the county of Lanark, which is represented by the hon. Member for Hamilton (Mr. D. Graham), we find these astonishing figures. In December, 1930, the total expenditure in that one month on the ordinary poor was £1,579, and in December, 1935, it had risen to £4,051, an increase of no less than £3,000. As regards the able-bodied poor, for the like periods, the increase was from £622 to £2,400, a total increase per month of no less than £2,000. Taking Scotland as a whole, and dealing with the mining industry, which in my submission has quite properly been described as a Jekyll and Hyde industry, we find that from 1911 there has been a drop in coal of 25 per cent., in oil shale of 55 per cent., and of all minerals of 28 per cent. We have a definite proposal before us, and I appeal to the Chancellor to reconsider the matter in the light of the facts and circumstances which have been placed before him, and to give to the people justice and no less than justice.

10.34 p.m.


The Debate which we have had upon this Resolution has been characterised by one feature which seems to me to be common to every discussion about the Special Areas. No matter what aspect of the problem the Government may be approaching, no matter what request they are responding to by any new proposal they may bring before this House, with a few honourable exceptions hon. Members opposite receive our proposals with every attempt to belittle, to decry them, and to explain that they are the wrong thing; in short, they do their best to make them inoperative. Hon. Members cannot resist that kind of speech, and they find ground for suspicion and complaint in every phrase of the Resolution. An hon Member opposite inquired what was the sinister meaning of providing that this company should be instituted for a certain purpose, "among other objects."


In all fairness I do not think the Chancellor should say that I used the expression "sinister."


I did not say that the hon. Member used the expression "sinister" but the indication he made by his remark was that there was some sinister purpose behind those words. Perhaps the hon. Member is not aware of the common practice that in the drawing up of a memorandum of association of a company it is necessary not to restrict too closely the purpose for which the company is formed. If you put one object only, you are quite likely to be caught out hereafter and challenged as to whether a particular piece of work which the company may be carrying out is within the terms of the memorandum. It is, therefore, customary to insert words like "among other objects," in order to guard against a possibility of that sort.

The Resolution, though somewhat lengthy, is to cover a Bill which will be introduced, and which will deal only with a comparatively small matter. We have, nevertheless, had a discussion which has ranged over a considerably wider field; which has, in fact, ranged over the whole question of the condition of the Special Areas and of the causes which have brought about that condition. The hon. Member for Pontypool (Mr. Jenkins), in the course of a moderate and reasonable speech, ascribed the condition of the Special Areas entirely to the policy of successive Governments. I do not propose to enter into any detailed argument with him on that point, but I think my hon. Friend the Member for Sunderland (Mr. Furness) was very much nearer the heart of this matter when he said, with great knowledge of his subject, that the real cause of the condition of the Special Areas was that in the past they had been associated with only one or two large industries, commonly known as heavy industries, and that when those industries became depressed there was nothing else for the people to turn to. An hon. Member opposite said that in his area it was the coal industry which had brought about the special conditions, and that those conditions had existed for 10 years in the area which he represents. That rather conflicts with the argument the other day that the conditions were brought about entirely by the Tariff, which was introduced only four years ago.

Without entering into further discussions on that question, I would try to answer a question by the hon. Member for Llanelly (Mr. J. Griffiths) as to why industry had not been better planned in that area in the past. In so far as that may be said to be the function of government, that accusation cannot be confined to the Government of one party. It is clear that as long as industry was increasing in the manner in which he described, at the rate of 1,000,000 tons a year, people were much too busy carrying on the industry to think about planning the neighbourhood. It is only when things begin to go wrong, when the industry upon which one of these areas has been dependent begins to fade, that it becomes obvious that it is necessary to turn round and see whether other industries cannot be found to take the place of the work which has begun to decline. I do not think there would be very much support for a Government which attempted to plan in an area where industry was flourishing in the way that the hon. Member described a little while ago. What we are proposing to do, in the Bill which will be authorised if the Resolution is passed, includes a certain amount of planning. It may be on a small scale, but it is a definite effort to try to make up in some degree, by the establishment of small industries, for the decline of the larger industries upon which these areas in the past have been almost entirely dependent. Let me read to the House a sentence or two from the second report of the Commissioner for the Special Areas. He says: In my first report reference is made to the difficulty of getting capital for the establishment of new or the expansion of existing industries in the Special Areas. The difficulty relates in the main to the smaller industries, but these are precisely the industries for which, in my view, there is the greatest need in the Special Areas at the present time. Here we have the Commissioner, who, for a long period has been directing almost the whole of his time and thought to the problems connected with the Special Areas, coming definitely to the conclusion that it is the smaller industries for which there is the greatest need in the Special Areas at the present time. That is not the view of some hon. Members opposite. They have deprecated the idea that we should bring in what the hon. Member for Seaham (Mr. Shinwell) described as niggling, or piffling, or miserable proposals for the establishment of small industries. He did not make any constructive suggestion himself as to what should be done in those areas, and I could not help thinking that, although his constituents, for whose benefit, no doubt, he made the sort of speech that he did, while they may enjoy very much his terms of abuse of the Government and the proposals of the Government, will perhaps not forget that it would have been still more helpful if he had not attempted to denigrate the proposals of the Government, and so render it more difficult to raise the capital which is necessary to start these small industries, and less possible for the Government's proposals to succeed, but had at least made some proposals of his own.


If a suitable opportunity is provided in the House, I shall be only too willing to produce constructive proposals.


I should have thought that this was just the opportunity for the hon. Member—


This is your scheme.


I have no doubt that it would have been very easy for the hon. Member, with his fertile mind, to find an opportunity of putting forward the ideas which are teeming in his brain.

Some hon. Members, for example the hon. Member for Spennymoor (Mr. Batey), have said that they do not like experiments. The hon. Member says he is tired of experiments. But has he reflected upon what is the consequence of that proposal? If we are not to try experiments, we must only try certainties. Surely the whole object of the special treatment that we have been endeavouring to apply to the Special Areas is that we should not rely upon certainties. Indeed, we have been urged by many to abandon the idea that we must confine ourselves to certainties and be more enterprising than we are being in this proposition. I suggest to the hon. Member that he is wrong to suggest that we have not to try experiments, that it is just experiments that we have got to try and that the only hope for these areas is that we should not be afraid to try anything which, on the face of it, appears to have even a small chance of turning out successfully because, if we fail in these experiments, no great harm is done. On the other hand, if we can show that a scheme of this kind is sufficiently well-founded to attract capital and will actually establish even a few new industries in these districts we shall have made a start. We shall have more solid ground on which to build further experiments, and that will be the time when we may well consider whether an experiment which has been proved successful in the Special Areas may not subsequently be extended to other areas which are not perhaps as badly off as the Special Areas but which are, nevertheless, very much in need of assistance.


Is the right hon. Gentleman aware that while the Government are experimenting the people are starving?


No, I am not aware of that, and it is not true. They are not starving, though they are suffering hardship and they are suffering from the hopelessness of long waiting without seeing that something satisfactory is coming. The hon. Member might be fair enough to recognise that we have here a problem of extraordinary difficulty. A great deal of patience is required and we ought to try to help one another to find out something which will give us a chance of ameliorating the position and not put difficulties in the way.

The hon. Member for Pontypool asked what the Government were going to do to prevent new industries going to the Midlands instead of to the Special Areas. He was immediately followed by the hon. Member for East Wolverhampton (Mr. Mander), who told us a story of a promising industry that was going to Wolverhampton when the Government stepped in and sent it up to the Special Areas. He said he was not selfish in these matters, but I rather gathered that there was one exception to the general rule, when his own constituency was affected. We are trying a great number of different methods of helping the people in these Special Areas. This one that we are trying now has never pretended to be a universal solution, or even a contribution on a very large scale to the solution of the problem, but it is a definite response to a definite recommendation on the part of the Special Commissioner the terms of which I partly read to the Committee. I might, perhaps, finish the quotation. He said: If the areas are to share in the general economic revival of the country, they must no longer depend solely on a comparatively few heavy industries. While this is an experiment which it is well worth while to try, it is not our idea of a complete solution, nor is it the only contribution that we are making to the problem of the Special Areas. Everybody knows that great efforts have been made by the Government to restore or to re-develop some of the heavy industries which were the foundation of the prosperity that once existed in those areas. Much work has been done by the Government, and it has resulted, for instance, in a considerable revival of shipbuilding on the Tyne. The plans for the reopening of the steel works at Ebbw Vale and for the starting of steel works at Jarrow are other cases in point.


This really is marvelous! I have never had any information from anybody about these steel works at Jarrow. Is the Chancellor taking credit for having started them or are they about to be started?


I have no reason to suppose that the plans which have been made public in the Press are not proceeding in the ordinary course; and though I am not taking any credit for the Government in that respect, I certainly take a great deal of credit for the Special Commissioner appointed by the Government, who has made great efforts to get steel works started at Jarrow. It seems as if nothing can be done in the Special Areas which will please hon. Members opposite.


You are not doing anything!


A number of questions of detail have been asked. I do not propose to answer all of them now, because there will be a much better opportunity of discussing details when the Bill is before the House. But I might perhaps say a word or two on one or two special points which have been put to me. In particular I think a good deal of misunderstanding exists about the way in which this scheme is expected to work. The amount of £1,000,000 has been, of course, the subject of a great deal of scornful comment by hon. Members opposite, who are always tempted to think in terms of tens or hundreds of millions, and who always think that a, question of a million is trifling and not worth thinking about. When you consider that this is a proposal for assisting small industries, purely and specifically small industries and not large industries, and when you consider that according to the plan the £1,000,000 is to be a continuing credit to be used over and over again during the whole life of the company, it will be seen that there is no reason to complain of the smallness of the nominal capital of the company. What is the use of starting a company with a capital of £20,000,000, as the hon. Member for Spennymoor (Mr. Batey) suggested, when you do not even know whether you will be able to get sufficient applications to make use of the £1,000,000?

The hon. Member for Seaham (Mr. Shinwell) in opening the discussion said he thought it unlikely that even the £1,000,000 would be wanted. If that is so at any rate there will not be quite so much waste of time and money as if we were starting a company with a capital of £20,000,000. But if the company started with £1,000,000 capital proves to be a success there is no reason why its operations should not be extended in the future. The idea of an experiment is that you start in a comparatively small way and expand as you find out the extent to which your experiment can be profitably expanded.

Another question asked me by my hon. Friend the Member for Wallsend (Miss Ward) was as to what I meant when I said that as a general rule the amount of any individual loan would be limited to £10,000. When I referred to that as a general rule I meant to infer that as the industries to be assisted were small I did not expect that in the great majority of cases there was any question that a larger sum than that would be required. I do not wish to exclude the possibility that in exceptional circumstances there might be some case which required a larger sum than £10,000 to enable it to start but which nevertheless it would not be able to obtain through the ordinary sources.

The House will recollect what I said before, that the purpose of this proposed company is not to do the same business as is now being done by ordinary financial institutions, but it is to go beyond that. It is to take risks which the ordinary financial institution would not care to take in the course of ordinary business. That is, in fact, the nature of the experiment. It is possible—I think that it is very likely—that we shall lose a certain amount of money. The hon. Member for South Shields (Mr. Ede) begged us not to be afraid of losing money. That is why we are doing the very thing we are proposing to do in this Bill. We are here guaranteeing losses which I personally think may be sustained, and we are guaranteeing those losses in order to see whether, despite those losses, the company can be made a success. But as the company continues to function, the losses will accumulate, but they cannot exceed the total amount of the capital, namely, £1,000,000. Therefore, that is the limita- tion of the amount of loss which the Exchequer can sustain on the whole process.

The hon. Member for Seaham professed to be unable to understand the financial arrangements of the Bill, although I have my doubts whether his difficulty was quite as great as he made out. It seems fairly clear that the Government are prepared to subscribe £20,000 a year for management expenses, and they are going to subscribe the sum of £100,000 to the reserve fund of the company.


I am extremely anxious to ascertain where the initial capital outlay comes from, and whether it will not be necessary for the company to raise a loan through the medium of financial institutions on the guarantee provided by the Treasury.


I stated in my Budget speech that no part of the capital would be found by the State, and therefore, the hon. Member is quite correct in supposing that the capital is to be raised from private sources.


Then, will the right hon. Gentleman deal with my main point, which is, where is the £1,000,000 coming from? Is it to come as a direct contribution from the State to be placed at the disposal of the company, or is the £1,000,000 as such to be raised through the medium of the financial institutions on the guarantee of the Government, and the guarantee itself, and any losses sustained to be eventually met on the winding up of the company? That is in the Resolution.


The hon. Member is repeating his question. He asks, is the £1,000,000 capital of the company to be provided by the State. I said in my Budget speech that no part of the capital is to be provided by the State, and I say, therefore, that the £1,000,000 is to be raised from private sources. It is not to be raised on the guarantee of the Government. It will be raised—I hope that it will be raised, if people are not too frightened by the gloomy prophecies of the hon. Member—I should think, probably largely from public-spirited motives. I cannot imagine any very great attraction about this scheme, but it is raised on the consideration that the Government are guaranteeing the losses up to 25 per cent, of the loans granted.


May I put my last question to the right hon. Gentleman now that he has, in point of fact, substantiated my contention. Will he now agree that the total amount of capital which at any time during the operation of his scheme can be met out of Treasury funds will be £250,000?


No, it is not. The Treasury guarantees losses up to 25 per cent. of the amount of the loans granted. The capital will be used as a revolving credit again and again, and losses may take place, until in the end the whole of the million pounds originally subscribed may have been lost. In that case the Government will have to foot the bill up to the amount of that loss. The Government are going shares, as it were, in the possible losses of this company in order to induce private enterprise to find the rest of the money. The profits of the company are to be strictly limited. The rate of interest will not be prescribed, but it will be considering the nature of the company, as near as possible, but not quite the same, as the rate charged if a bank were to lend.

The hon. Member for Llanelly asked me a question about the allocation of the industries in the Special Areas. He said that it might well be that it would be much easier to plant the industries in the large towns than in the villages, whereas the need for employment would probably be greater in the villages than in the towns. That is not a matter on which one can lay down strict conditions. It is better to have a new industry started in a town than not at all, although I agree with the hon. Member that we would prefer to see them in the villages. My answer is contained in what I said in my Budget speech, that the company will work in the closest co-operation with the local authorities, the development councils and other local bodies that are willing to co-operate, give advice and exercise influence in the locating of the particular industries. We cannot force industries to go where they do not want to go, but in so far as we can employ local knowledge and local influence to induce them to go where we want them to go, that influence will be used. In conclusion, I commend the Resolution to the House as a preliminary step in a measure which does not pretend to deal with the problem as a whole, but which, I hope, will be a useful contribution towards a solution of the problem.


On a point of Order. The right hon. Gentleman twitted my hon. Friend the Member for Seaham (Mr. Shinwell) on not having put forward alternative suggestions. As many of my hon. Friends have alternative suggestions to make, I should like to ask whether it would be in order to advance alternative suggestions on the Resolution now before the House.


I should like to hear the suggestions before I give any Ruling.


I cannot hope that any suggestion that I can put forward will meet with the approval of hon. Members opposite, but we have a number of preliminary suggestions we can make, which have been made in various ways in the House before but the Chancellor of the Exchequer has taken no notice of them. Before I mention one or two I should like to point out that the reference made by the right hon. Gentleman to the restarting of the works at Ebbw Vale may easily be misunderstood. I naturally am exceedingly pleased that the steel works are being restarted and the pleasure will be shared by everybody in every part of the House. It is a very large steel works and once it is under way it ought to have a great influence in lifting the atmosphere of that district. I should like to point out to the right hon. Gentleman that I can provide him with the literature of the Conservative candidate and his supporters at the last Election, in which the managing director of the steel works denies any Government participation whatsoever in the resumption of the works. A pretty quarrel is going on between the managing director and the Special Commissioner in which the managing director denies that the Special Commissioner has had anything to do with the restarting of the works.

I am the last person to try and take from the Special Commissioner any credit for the Herculean efforts he has made in spite of great difficulties to establish industries in the depressed areas. We suggest that light industries should be established in depressed areas in substitution of the heavy industries which have been declining for over 10 years. They have left a volume of unemployment and the only way to provide employment for these men is to establish light industries in substitution of the heavy industries which have been stopped. We have been putting forward this suggestion for the last 10 years—[An HON. MEMBER: "Even when you were in office"] —but our pleas have not been listened to very sympathetically. In considering this problem it is necessary to answer the question why light industries establish themselves outside depressed areas, and are reluctant to go into them. Obviously it is because there is a greater consuming power outside than there is inside the distressed areas. If light industries are to be maintained inside distressed areas it can only be done by building up the purchasing power of the people in the areas.

The reason why light industries are establishing themselves around London is obviously because London provides a market for the products of those industries. If light industries are to be maintained in the distressed areas you must build up a market for their products there. The reason why there are depressed areas is because of the large number of unemployed, and therefore they have a very low purchasing power. If you are sincere in your intention to try and establish, and also maintain, light industries in depressed areas, you ought not to depress the purchasing power of the unemployed population in those areas by submitting them to disadvantages which the rest of the country does not share.

The right hon. Gentleman the Chancellor of the Exchequer is taking away from South Wales, from Durham, and from Lanarkshire millions of pounds every year by the imposition of the means test. I do not ask that you should give more to the men who are unemployed in the distressed areas than you give to men outside, but at least give them as much. We have not got the figures before us, because they are concealed in the Chancellor's own accounts, but some time ago we had a figure put in this House that as much as £15,000,000 to £16,000,000 a year are being saved to the national finances out of the means test, or £50,000,000 since the imposition of the means test in 1931. This is the purchasing power that you need to consume the products of the light industries. Is it not therefore a concrete suggestion of value, although it may be disagreeable, although it may be indigestible to hon. Members opposite, that you should leave that £15,000,000 in the distressed areas?

A week or two ago the House considered another proposition. There was a surplus of £6,000,000 in the Unemployment Insurance Fund, and in order to make a present of £2,000,000 to the workers and contributors to insurance, this House dissipated £4,500,000 that might easily have been used to increase the rates of benefit in the distressed areas. If unemployment figures fall, as it is expected that they will fall in the next six months of the year—[HON. MEMBERS: "Hear, hear"]—Yes, it, is true, because large numbers of unemployed men are being engaged in building floating tombstones on the Atlantic. At any rate, the facts are that the unemployment figures will fall, and there will be a further surplus on that fund. Is that going to be disssipated in the same way? Where the distressed areas are in Great Britain is where the exporting coal districts are. Is that denied by the Chancellor? Is there any hon. Member here who denies that? A little while ago the miners attempted to get an increased wage, and a very large portion of the increased wage that they obtained is passed back to the Chancellor by the deduction of unemployment allowances. These are the wages that would have to be used to buy the products of the light industries.

This House also passed a Resolution on a free vote saying that the miners' demand for an increased wage ought to be conceded. In South Wales they got an average of 3½d. per day. The largest increase has been given in those portions of the coal trade where distress does not exist in the same degree. For many years now students of the coal industry —and again I emphasise that it is the decline of the coal industry that is mainly responsible for the distress, and the decline is most marked in those districts employing the export market—have implored the Government to reorganise the coal trade so as to enable those exporting districts to sustain the burden of exports by using some of the revenue of the home market. Instead of that, South Wales, Durham, Northumberland and some parts of Scotland have had to sustain the whole burden of meeting the export trade of Great Britain. Is it not, therefore, a concrete suggestion of first-class importance to say that if the purchasing power of the export trades, and the distressed areas in which they exist, is to be increased, the coal industry must be unified so that the burden of sustaining the export trade falls on industry as a whole? But that requires a wide and comprehensive policy and not the pettifogging and niggling approach which the Government are making.

It is no use the Chancellor of the Exchequer saying that we decry every effort he is making. I welcome every experiment that can be made with a view to preventing the drift of industry and population from the distressed areas, but I submit to the Chancellor and the House in all seriousness that a wider and more comprehensive view than that which the Government have is necessary if the problem is to be properly tackled. The carrying out of all the suggestions I have made is within the powers of the Government and this House, and I maintain that the Chancellor is not being fair to the House or to the Opposition, which have implored him over and over again to tackle the problem on the lines I have suggested. He exposes himself quite legitimately to the charge of bringing to bear on this problem a pettifogging intelligence, unless he reorganises the heavy industries which exist in the distressed areas, and unless he sends funds into those areas in order to build up their purchasing power, and thereby provide a market for the light industries. This £1,000,000 will not be spent, and it will not be spent because private enterprise, as the Chancellor has already said in his Budget statement, will not invest money philanthropically in those areas. The Chancellor himself will have to foster the proper economic conditions in those areas if the light industries are to survive. If the Chancellor wants other concrete suggestions, our minds are teeming with them, if he would afford us an opportunity of bringing them before him.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Bill ordered to be brought in upon the said Resolution by the Chancellor of the Exchequer, Sir Godfrey Collins, Mr. Ernest Brown and Mr. W. S. Morrison.