HC Deb 23 March 1938 vol 333 cc1219-337

3.47 p.m.

Mr. Arthur Greenwood

I desire to raise a question of great importance to the people of this country. While heavy clouds gather over the international situation, heavy clouds are hanging over the people of this country because of the state of unemployment. I want to ask what preparations, if any His Majesty's Government are making to deal with what is bound to be a tragedy for the people of this country unless some steps are taken to meet it. In the King's Speech for the present Session this statement appeared: I rejoice to know that the outlook for trade and industry remains favourable, and that there is every indication that the progress made in the last year will be maintained. My Government will continue to take all possible measures to ensure industrial activity at home and to develop our overseas trade."—[OFFICIAL REPORT, 26th October, 1937; col. 8, Vol. 328.] That statement was made to the House on 26th October last, but before then the Prime Minister, speaking at the annual conference of the National Union of Conservative and Unionist Associations at Scarborough, said: There is still no visible signs of that slump which our political opponents continue to prophesy with such obviously pleasurable anticipation. The right hon. Gentleman the Prime Minister has made several references to this problem, but I will quote only one. In his New Year message to that great organ of public opinion called "Home and Empire," he wrote: Our Socialist opponents have recently talked a great deal about what they term 'the coming slump.' They put so much zest into the gloomy prophecies of a bad time just round the corner that one is almost forced to the conclusion that the wish is father to the thought. I resent that statement, and I quote it only to indicate the attitude of mind in which the Government approach a problem which is exercising the minds of business men all over the country and the minds of economists who have been spending a good deal of time in studying it. In the Debate on the King's Speech on 27th October, 1937, hon. Members opposite were, as usual, a little light in their manner of dealing with these things, as though they were matters for levity. In my speech in that Debate, I said: The fundamentals of our economic life remain what they were [Laughter]— The laughter was by hon. Members opposite. I went on to say: Hon. Members think this amusing, but it happens to be true, and unless you begin to think about taking steps now, and get your steps ready, nothing can prevent a trade slump in the next three years."—[OFFICIAL REPORT, 27th October, 1937; col. 90; Vol. 328.] I said that a few months ago, and both the Prime Minister and the Chancellor of the Exchequer have commented on it in speeches in the country. What is the position to-day? Statements have been made by the Prime Minister and by other Members of the Cabinet that everything, economically, is favourable. The Government have invented a new word. I watched with interest the change in their method of describing the distressed areas. They were called distressed areas, they were called depressed areas, and they were called worse things; but His Majesty's Government, in order to get out of the difficulty, called them Special Areas, and tried to remove all the horrible implications of calling them either distressed or depressed areas. Now the Government have invented a new word. Instead of talking of a slump, they call it a recession; but the fact still remains the same.

What is the position? Since last September, unemployment has been increasing. From September to October, the figures of unemployment increased by 51,000; from October to November, during the time in which the Prime Minister put into the King's Speech a statement that the outlook was good, unemployment increased by 109,000; from December to January, there was an increase of 162,000. The figures increased from 1,339,000 to 1,827,000 between September and January. In February of this year, the figures, from which no doubt the right hon. Gentleman will draw comfort, did not increase, but went down by 17,000. But the last figures show that we have in this country as registered unemployed persons 1,810,000 people. It may be that there are explanations. Indeed, in December, faced with that enormous increase in unemployment, the right hon. Gentleman made a most elaborate explanation which was published in all the newspapers. He said it was due to bad weather—bad weather from the Government's point of view, no doubt—but when one looks at the Bulletins of the London and Cambridge Economic Service, which are regarded as authoritative statements, one finds that their view in January on the December unemployment figures was as follows: The increase in unemployment was accentuated in December. After all allowance is made for possible interruption of outdoor work by the severe weather in the week of the count, it was found that there was an increase both in temporary and in complete unemployment in a great number of industries. It may be that to-day the situation is rather brighter than it was. It is true that the February figures were somewhat down, as one would have expected normally. It may be that the economic situation in America is not quite as ominous as it was a few months ago, but there are still many disturbing factors in the situation which show that the economic position is not as stable as the Government apparently would wish the country to believe. I would like the right hon. Gentleman the Minister of Labour to consider the position of wholesale prices, the adverse balance of trade, industrial securities, and the accumulating stocks in the industrial field. The Prime Minister and other Members of the Government have tried to allay public fears in this matter, and most of the chairmen of the banks have tried to pour oil on troubled waters; but as I said before, fundamentally the situation still remains the same. This matter is not one which affects this country alone. The Prime Minister may wish to live in political isolation, but at least he cannot pretend that he can live in economic isolation. It is clear that we are very much under the influence of wide and general economic circumstances. I will again quote from the Bulletin of the London and Cambridge Economic Service, which no doubt the right hon. Gentleman has himself perused. As late as 7th February of this year, they stated: To the British trader, producer and investor events abroad now have peculiar significance, for the course of trade in Britian is at this moment more than ever sensitive to the course of trade in the world. The trend of world prices and the purchasing power of foreign primary producers; the internal policies of the French and American Governments and the external policy of its own Government, these are the order of things to which this country must now look in order to read the outlook fo its own prosperity. The outlook for Britain coincides with the outlook of the world. Who can foresee now, in these difficult circumstances, what is going to be the outlook of the world in the coming months? Even if there were no other indications economically of the prospect of trade recession, the fact that the international situation is so uncertain ought to convince the Government of the need for early steps to deal with any possible adverse direction of trade and unemployment. So far as I have been able to follow the speeches of the Prime Minister, he does not appear to believe that the trade cycle is a reality. There are people, not very many, who believe that there are irregular ups and downs of trade which cannot be forecast. But there are economists—I shall quote an old colleague of mine, Professor MacGregor, who is now Professor of Economics at Oxford—who have shown quite clearly that these ups and downs of trade are not accidental. With that pawky Scottish humour that he possesses he worked out the ups and downs of shipwrecks in this country between 1870 and 1910. He worked out the number of British emigrants from this country between those years. They went up and down and there was no cause or relation between the ups and downs. But that is not so as regards trade. It is perfectly plain that there is an ebb and flow of trade. I have not time to analyse the reasons, but that the ebb and flow are caused by economic forces is undoubted.

The "Financial News" is not a paper which I normally read for my political views, but, after all, it is interested in all these financial and commercial questions. On 10th June of last year, in a leading article, the "Financial News" said: Despite the 'new economics' it seems abundantly clear that the fundamental causes which induce cyclical fluctuations in industry and trade are as strong as ever. Their effects may be mitigated, of course, by wise public policy or by more fortuitous events like rearmament programmes. But it seems certain that in the absence of positive action by the Government, trade activity will begin to decline when the level of direct and indirect rearmament expenditure begins to decline. There may be factors to prolong a trade cycle; there may be factors reducing or increasing the severity of the trade cycle; it may well be that the rearmament programme of the Government will prolong the trade cycle; but that when that programme ends there may be a situation of great gravity, cannot be doubted. In the report of the Unemployment Insurance Statutory Committee that note is struck. I do not propose to deal with the proposals of the Committee, or the Orders, but I am bound to draw the attention of the House to the conclusions of the Committee with regard to the future prospect of trade in this country. The committee say: Till recently there was reason to hope that the balance (in the Fund) at the end of 1937 would be materially greater than it has proved to be. The report goes on to deal with the very substantial increase in unemployment in the last quarter of last year, and the committee are naturally alarmed about it. They say: The sudden change in the course of unemployment has reduced materially the surplus above original expectations which till recently we hoped to be able to declare at the end of 1937. The committee go on to say that they had had the benefit of a discussion with Mr. H. D. Henderson, a Cambridge economist of some repute, who came before them representing the Committee on Economic Information of the Government's Economic Advisory Council, and this was Mr. Henderson's conclusion, in November, 1936: That in view of the Defence programme, there is practically no prospect of an appreciable recession of employment from the present level for 1937 and for some time thereafter. That on the completion of the intensive phase of the Defence programme, and in the normal course of the trade cycle we should be prepared for a relatively severe recession. The committee go on to say later: Looking beyond the present time, the view is changed. Unemployment at the end of 1937 was already above the level of unemployment in November, 1936. It is anything but certain to-day that there will be no appreciable recession of employment from that level 'for some time' after the end of 1937. The only question now is how great the immediate recession will be. Are we to suppose that 'the normal course of the trade cycle' is already operating to bring 'a relatively severe recession' into early prospect? Are we to expect, on the other hand, that the decline of employment now in progress will be arrested before anything that can fairly be called depression is reached? If 'the normal course of the trade cycle' is to be judged from experience in the past, there are some reasons for expecting that the movement of employment for several years will now be steadily downward. I do not want to read all the relevant passages of the report, but it is perfectly clear that this committee, presided over by Sir William Beveridge, who is an authority on these matters—he was the first man who made a scientific study of unemployment—came to the conclusion that the outlook is not as bright as the Government would have had us believe when the King's Speech was brought before the House last October. Because of their views this very large balance which they have in the fund is now to be diverted, because they feel that they must keep it in hand instead of it being given in additional benefits to the unemployed. If the Government do not take that committee's point of view, why have they accepted the committee's recommendation? Why have the Government not said, "This is nonsense; the trade situation is good. This large and increasing balance ought to be used for increased benefits." The fact that the Minister of Labour has accepted the committee's report means one of two things, and he can have it either way, so far as I am concerned. It means that he is unwilling to give anything more to the unemployed, or it means that the Government know that the conclusion in the report is a right conclusion. I know that the Government are banking on their rearmament policy. I am certain now that they are banking on an intensification of their rearmament policy. But only this month the "Financial News," which I look upon as a great authority in these matters, said: The acceleration of rearmament is so far producing very little industrial effect. Increased employment in the aircraft industry evidently cannot offset increased unemployment in the motor and cycle trades. The article goes on to say: From the point of view of employment itself, there is not much doubt that fewer workers are required for the production of armaments than were needed for the job of preparation. If there be an increase in our rearmament programme it may mean postponing the economic tendencies of our time. But what will happen when the world rearmament programme is completed? We are not the only nation that is rearming; nearly all great nations are feverishly rearming. When that comes to an end what will happen? The world will have been immeasurably impoverished by having to pour out its resources to build up these enormous armaments. The world is now pouring out its resources on a scale hitherto unknown, on a scale larger than that of the years from 1914 to 1918, and when that programme has been completed, if there is no war, what will happen? The world, crushed by the weight of the armaments it has created, will sink into the slough of despond, and we are bound to have the greatest depression within living memory unless active and constructive steps are taken now—now. The policy of preparedness to meet what is bound to come is the only way to prevent the worst effects of a very great recession in trade. The views which I have so far expressed are not confined to the members of my party. They are shared by all kinds of people. The "Economist" on 23rd October last year, just before the Debate on the King's Speech—which told us that everything was all right—said: It would be foolhardy in the extreme to deny the probability of a setback of some degree occurring at some time in the next three years. Before the General Election "— The "Economist" had no knowledge then of the situation that is in existence now— the Government will almost certainly be faced with the necessity of explaining away a mounting total of unemployment. It will be within the knowledge of hon. Members that Professor Keynes at the beginning of last year wrote a series of three articles which were headed" How to Avoid a Slump: Looking Ahead." It will also be within the recollection of the House that in June of last year a body of very distinguished economists, including the junior Member for Oxford University (Sir A. Salter), in a letter to the "Times," said: We, the undersigned economists in Oxford, are agreed upon the danger of a recession in trade activity leading to a severe depression within the next few years, and consider that it will be impossible to prevent this slump, or even effectively to mitigate it, unless preparations are made for this purpose before the depression starts. The "Times" at the beginning of January of this year had a leading article headed "Planning for Prosperity" in which it referred to a report published in Sweden on this very problem of preparing in advance for what are now called recessions of trade. It said of that report: It is emphasised again and again throughout the report that the best effects of national' or local works cannot be attained unless they are planned well in advance. I do not read any more of the argument, but it was perfectly clear from that article that the writer realised that it would be injudicious for this country to wait until the evil day had arrived before any steps were taken. A very distinguished indusltrialist, Lord Austin, took the same view in the autumn of last year when he said: I think that the present is the time to formulate plans for preventing a slump, before the rearmament spurt is on the wane. My last quotation—because I wish to fortify myself with the views of people who do not share my political outlook—is from the chairman of Barclays Bank, Mr. Fisher, who, early this year, at the annual meeting of the bank, said: Our aim must be to ensure that as the work is completed "— he was speaking of war work and rearmament— other work will be ready to take its place and that pre-occupation with production for defence purposes does not cause us to neglect our overseas markets. I wish to know whether the Government accept this view that, sooner or later when the rearmament drive has been completed, unless active steps are taken meantime, we shall be faced with very substantial unemployment? If the Government hides its head in the sand and says, "This thing is not going to happen," then the Government is hopeless. I believe it is hopeless anyhow, but if it is still living in this wonder-world of good trade, and if it believes that that will continue, then clearly it is wrong. But if it is believed by the Government—and I could quote speeches by the Prime Minister to this effect—that trade will not remain good for ever, then we are entitled to ask what steps have been taken already by the Government to deal with this eventuality. I am sorry that the junior Member for Oxford University is not here, because he has pointed out that it takes two years to get these schemes going.

Mr. Dingle Foot

Two or three years.

Mr. Greenwood

Therefore, unless the schemes are ready now, it is perfectly clear that we shall not be in a proper position to deal with them when the time comes. The Prime Minister and the Chancellor of the Exchequer have said about me and my friends that if we talk about a slump we shall bring it about. That is giving us credit for greater economic power than we have ever claimed to possess. I cannot imagine hard-boiled business men taking any notice of any threats from anybody, least of all anything that looks like a threat from a very humble person like myself. If the grave situation which we fear should arise—and I hope the Government will take steps to prevent it—then it is going to be far worse than the situation which existed between 1929 and 1931. Then we had a peak figure of over 3,000,000 unemployed. In the last six years the processes of rationalisation and mechanisation have been carried on, and I can foresee the possibility unless we are active now, when the big break comes, after the world's biggest expenditure on destructive armaments, of a volume of unemployment in this country which will not be 3,000,000 but will be 5,000,000 or 6,000,000 or 7,000,000 or even 8,000,000. I am not a scaremonger. It is no pleasure to me to stand here and warn the people whom I represent that that may be their fate, but I should not be honest to the House and the country if I did not point out the dreadful possibilities of delay in preparing for what is bound to come.

If there is any case for planning our national life, that case has been proved by the prospects of a recession in trade, within what period it is difficult to say, but within the next few years. There is obviously a need for planning now on broad and wise lines. If we do not plan we shall be driven, in a state of panic to begin all kinds of schemes of public works un-co-ordinated and unregulated. Now is the time for this nation, through its Government, to plan for the development of our national resources and our national assets, schemes which can be put into operation when trade begins to break. They cannot be hastily devised. The Government is now beginning to coordinate its rearmament programme, and it has not been too successful in that. But, at least, it is realising that the rearmament problem which is before it, must be dealt with on broad lines. If it be possible for our nation to spend its treasure on the scale it is now spending for rearmament, it is right that it should have regard to the use of its resources to deal with the problem of national development when trade becomes bad.

There was an interesting reference in the leading artice in the "Times" which I have already quoted, to Birmingham's policy in this matter. Whenever I see anything about Birmingham, I always read it with very great interest. Birmingham pioneered the way to municipal banks, and I am all in favour of watching the actions of that very important city. Birmingham, we are told, is now taking power to borrow money in order that when bad times come it will be able to put its plans into operation. I should have thought that what is right for Birmingham would be right for Britain. Birmingham thinks it is good, and so do I, to take time by the forelock. What I wish to ask the Minister—and I hope he will address his mind to the matter—is whether steps are being taken now to prepare plans? I do not mean plans for digging holes and filling them up again, but plans for the enrichment of our national life. Are plans being prepared and have the Government any organisation? The have the Committee of Imperial Defence. They ought to have their Committee of National Defence against unemployment and poverty. Have they any framework of organisation for dealing with this problem? Are they taking any steps in conjunction with local authorities and others? Are they making financial provision to deal with this problem? Are they taking this problem as seriously as other people outside this House are taking it?

I think we are entitled to a reasoned statement from the right hon. Gentleman on those points. It is no use trying to fob us off by saying that things are not as bad as they look. It is no use saying, as the right hon. Gentleman said about the February figures, that the figures for this month will be a pleasant surprise for everybody. It cannot be pleasant for anybody to know that, in this period of so-called "boom," we have 1,800,000 people out of work. That will not meet what we require from this side of the House. We raise this question in all seriousness, not because we want to stampede people, but because we feel the gravity of the economic situation, the urgency of the need for constructive plans, and to allay, I am bound to say, our fears that the Government are not taking the necessary measures. I hope we shall have from the right hon. Gentleman specific answers to my questions.

4.31 p.m.

Mr. Boothby

The right hon. Member for Wakefield (Mr. Greenwood), who has just sat down, made, if I may say so, a very interesting and constructive speech, and I hope that my right hon. Friend the Minister of Labour will, when he comes to reply, deal with some of the points that he has raised. I do not agree with all of them, but I think the House as a whole would agree that the right hon. Gentleman was seeking to find some constructive solution, not on purely party lines, for the unemployment problem which confronts us. It is rather a relief for the House to turn from the highly emotional subjects with which we have been dealing of late to the comparative calm of economics, in which our passions need not be severely engaged. In one of his concluding sentences the right hon. Gentleman who has just sat down referred to "this so-called boom." I would rather like him to accompany me one day to the City of London and talk to the gentlemen there about a boom at the present time. I am sure they would not agree with him. In fact, it is true to say that we are at the moment passing through a rather severe, although we hope a purely temporary, economic crisis. It is a crisis of confidence; and I think, from a purely economic point of view, it is a quite unnecessary crisis, because there is no evidence to show that we are in what is called a cyclical depression. It might have been expected, I think, that there would be some kind of crisis of confidence arising out of the international situation, but I think this crisis has been aggravated, both here and in the United States, by some other factors in addition to the international situation, factors which I want to deal with for a moment or two.

It is a very dangerous thing for this country and for the democracies of the world that this confidence crisis should have come upon us at this particular moment, because, whatever anybody may say, the fundamental strength of the democratic countries of the world is their economic strength. It is their most valuable asset, and we ought never to forget it, either on this side of the Atlantic Ocean or on the other. If we undermine our economic system, we shall really be up against it. There are signs of a definite industrial recession in this country at the moment as well as a purely financial crisis. The available figures all go to prove it, and the Minister of Labour will not, I think, be able to gainsay the fact that some of the news from the industrial areas in this country, even from the iron and steel areas, is disquieting. There has been a definite falling-off of orders during the last few weeks in a very large number of industries in this country, even in the heavy industries, which one had thought were going to be immune for some considerable time to come. I do not think it does any good to say there is no recession. There is, and we must face it.

We have to do something about it, and without being unduly critical, I would like to say that I think the Government as a whole, and in particular the Chancellor of the Exchequer, have not shown any very great imagination during the last six or seven months. They have adopted a completely passive attitude in the face of this economic crisis. First of all, for a long time they said it did not exist at all. Now that it is patent to them and to everybody else that it does exist, they still produce no constructive action of any kind to deal with it; and I cannot understand such an attitude on the part of the Chancellor of the Exchequer, who is faced with steadily mounting expenditure and steadily decreasing revenue. We are all right this year. We are obviously going to have a satisfactory surplus. But it is next year and the year after, that cause very great anxiety. I am sure the right hon. Gentleman will not in future get the revenue from Stamp Duties, for example, that he has estimated. It is not the Budget of 1938–39 that gives cause for anxiety, but the Budget of 1940–41, unless there is a very considerable revival of trade and industrial activity in this country.

I would like to say again what I have said in this House before, that I think his attitude of complete passivity in the face of the wholly unnecessary gold scare which lasted for several months last year was quite inexcusable. If you undermine confidence in your currency, you undermine confidence in everything. There was a gold scare which events proved was completely unjustified, and that was the beginning of something like a panic, which has steadily increased, until now we find ourselves faced with a very unpleasant, and, as I believe, largely unnecessary economic recession. We have suffered for the last six months from steadily increasing deflation; and it has been absolutely disastrous, as deflation always is. No constructive action has so far been taken by the Chancellor of the Exchequer, except to say that there has been no deflation. The flow of investment into industry, both here and in the United States, has for the time being completely dried up, and we have to face that fact. Yet the economic system under which we live depends for its success and prosperity upon a steady flow of investment into the capital industries, stimulated by confidence and anticipated profits; and when that dries up, you are bound to get into very serious trouble. The deflation continues at the present moment, accompanied by a fall in prices, and a catastrophic fall in values. I know that hon. and right hon. Members opposite have no great sympathy for the capitalists, but no hon. Member in this House will say that it is a good thing to have the capital value of wealth in the democratic countries of the world written down by some thousands of millions of pounds over a period of about nine months. That is bound to have an effect upon trade and industry, and a most serious effect upon purchasing power all over the world.

I would like to remind hon. Members, and particularly my right hon. Friend the Minister of Labour, that the fall in security values and in commodity prices over the period of about three months between September and December last year was much steeper than the comparable fall in 1929–30. I think it is the sharpest fall ever recorded in the economic history of the world; and it is a matter now of vital urgency to check it, because if we do not succeed in doing so, and in doing so in the fairly near future, I, for one, am convinced that we shall have to face the possibility of a slump which, as the right hon. Gentleman who has just spoken has said, will far exceed in magnitude and extent the slump of 1929–31. I think that would be absolutely disastrous for the nation at the present time. I think it would do more to bring about war than all the foreign policies or absence of foreign policies that you can imagine; and I hope the Government are taking serious thought with regard to what constructive action can be taken to restore confidence and stop the deflationary spiral, as the economists call it, in which we are gripped.

It is obvious that one method which we ought to pursue and must pursue, is a measure of reflation to counteract the deflation which has taken place. And I hope the Government will not be led away into any exaggerated ideas of what this country can now bear in the way of increased taxation. I think that a year ago the country could have sustained a considerable measure of increased taxation, but now I am quite certain that we cannot bear any large measure of increased taxation, and that if it is imposed, the law of diminishing returns will apply. It is necessary—and we can afford to do it—that any further measures of rearmament, and any further capital construction, should be financed by means of loans. The Government's credit is high, the supply of gold is ample for the purpose, and we can certainly borrow at very reasonable rates for capital expenditure which will stand us in good stead for some considerable period of years to come.

I would only like to say one thing with regard to what the right hon. Member for Wakefield said about planning for schemes. It is, of course, a very important subject, and I think we in this country do lack adequate statistical information with regard to what public works schemes are being carried on. I do not think there is any proper central bureau or authority which can co-ordinate these things. No hon. Member of this House can find out what schemes are being undertaken by what local authorities in the country at any given period, or what schemes are being held up, and why. The first thing that we require, if we are to have any constructive planning with regard to public works schemes, is adequate information with regard to them, which we have not got at the present time; and I beg my right hon. Friend to look into that aspect of the situation. Apart from desirability of information, it is clearly undesirable to embark upon unnecessary schemes of capital works for the cure of unemployment so long as we have a great rearmament programme in progress. I agree with the right hon. Gentleman who has just sat down that we ought to be planning those schemes at the present time. We ought to be providing ourselves with adequate information, we ought to be requiring local authorities to furnish the central Government with information about what they can do, about what is urgent and what is less urgent, and about the money that would be required; but now, when we are still in the midst of a vast rearmament programme, is not the moment to embark upon large schemes of public works.

What we most want at present is adequate information, and I hope the right hon. Gentleman will consider this matter. I am not one of those who have ever believed that you can spend your way out of a real depression by more public works. They are only palliatives, in the end. They may help, and it is obviously silly to embark upon public works at a period of boom and to restrict those public works at a period of depression.

Mr. Shinwell

I understood the hon. Gentleman to say there was no boom.

Mr. Boothby

At the moment we are going through a financial rather than an industrial crisis, and I am apprehensive that, unless steps are taken to stop the deflationary movement in the financial world, we may find ourselves in a very severe industrial depression; but with the present rearmament programme, it is obvious that we cannot say that we are now in a severe industrial depression. There is a very severe danger of it, but the industrial depression which may come, unless deflation is checked will not be an industrial depression involving 1,800,000 unemployed, but one of the order of 4,000,000 or 5,000,000 unemployed. That is what we have to try and avoid at all costs. These public works schemes are in any case palliatives, and while it is undesirable to proceed with great construction programmes in times when there are other forms of capital development like rearmament proceeding, and while it is equally silly to hold them up in times of depression, it is a fatal attitude of mind to get into to think you can alter a major economic trend simply by holding up or expanding the construction of public works.

In the end we in this country depend, and will always depend, for our prosperity upon international trade. We can never get away from that fact, and it is that fact to which the Government, I think, should chiefly direct their attention. They asked M. Van Zeeland to conduct an inquiry into the possibility of reviving international trade a few months ago, and he presented a most interesting report. One of the most interesting and constructive suggestions in that report was that we should try to call the nations together, with a view to ascertaining whether we could not have a pact of economic collaboration. I would like to ask the right hon. Gentleman whether the Government propose to take any action along this line in the near future, because I think it would do very much to appease the situation in Europe at the present moment, even if to begin with you could get only half-a-dozen of the smaller nations to join with you in such a plan.

But, of course, it is hopeless to expect a revival of trade, it is hopeless to expect any form of economic co-operation between the nations of the world, until you have settled the fundamental problem—that of Anglo-American economic relations. This, I think, really goes to the root of the problem. There is to-day no form of effective economic co-operation between this country and the United States. Nothing will now prevent a serious depression in the world except such co-operation. A trade agreement alone, the reduction of a few tariffs on both sides, will be useless without some fundamental agreement upon the deeper economic issues. As a matter of fact, I think it might be dangerous, because either the United States or ourselves, by pursuing a different line of economic policy with regard to currency or prices, could cut through any tariff arrangements that were made. A mere tariff agreement, with nothing more serious underlying it would be in some respects dangerous, and many of us would oppose it.

What I would like to see—and I think it is extraordinary that it has not happened—is a visit to Washington by a responsible Minister of the Government. There has not been such a visit since Lord Runciman went, and not very much transpired from that visit. It should be a visit to find out what the real economic intentions of the Federal Government of the United States are; and whether it would not be possible for us to come to an agreement as to the methods which we should together employ to restore confidence, to raise prices, and to make constructive use of the vast amount of gold that we both possess, and that is at present lying useless in the vaults of the Federal Reserve Bank and the Bank of England. Why should that great wealth be there unused while men are being turned out of employment by the hundred of thousands in the United States and by the thousand in this country? Why should there be poverty and distress, in these circumstances? If there is effective co-operation between the two countries and if we use that gold as a basis of credit in an effort to restore confidence and to stop deflation, we can do much to restore the economic position. For the time being, the confidence of the investor in the democratic countries, particularly in the United States and this country, has been destroyed. It has to be restored before we can expect any revival of prosperity and before we can get out of the economic and financial crisis in which we find ourselves.

Fine sentiments on foreign affairs will not carry us very far in this connection. The greatest disservice to the cause of peace and liberty that can be done in the world to-day is to undermine, at this critical juncture, the economic system of the two great democracies, the United States and the British Empire. Whether we like it or not, we are very much linked together. The United States are the marginal consumers of commodities, and if they are out of the market prices fall all over the world, the purchasing power in our markets and throughout the Empire is reduced, and men are thrown out of employment both here and in the Dominions, the Colonies and the United States. Here is the greatest chance of saving the world from war and restoring prosperity to the democratic peoples. I beg the Government seriously to consider the possibility of establishing that effective economic co-operation between Washington and London which has been so tragically absent during the last five years.

4.50 p.m.

Mr. Dingle Foot

I do not invariably agree with all that is said by the right hon. Gentleman the Member for Wakefield (Mr. Greenwood), but we ought to be grateful to him for having initiated a most important and valuable discussion. In our view, it was high time that the House should once more turn its attention to the economic outlook of this country and the problems of employment and unemployment. It was exceedingly interesting to anyone on this side who has heard the Debates of the last 12 months or so to hear the speech of the hon. Member for East Aberdeen (Mr. Boothby). He admitted that there was a depression. I gather it was a depression which stopped short of Temple Bar, but, nevertheless, there was a depression. Only last summer the state of employment and trade was regarded by hon. Members opposite with almost undiluted satisfaction. If anyone ventured so much as to hint from this side that there might be a recession or a slump in future, he was almost regarded as if he had been guilty of a form of blasphemy. I took the trouble before coming to this Debate to look up what was said in the Debate on the Address in October last year. This is what was said by the Chancellor of the Exchequer: I think, therefore, the fair view is undoubtedly, as I had occasion to say in the City some time ago, and as the Prime Minister said in a speech in the country, that there is no ground whatever in the immediate situation for asserting that there are palpable indications that our trade is approaching a decline."—[OFFICIAL REPORT, 26th October, 1937; col. 26, Vol. 328.] That was his considered view stated more than once in October. Since September last year there has been an increase in unemployment figures of over 471,000. Comparing the figures for February with those of February, 1937, there is an increase of 238,000. The percentage now for the whole country is 12.8, which represents an increase of 1.5 since this time last year. The ominous thing is that this should be happening at the time when we are so greatly increasing our expenditure on armaments. One would naturally expect that with this rapidly increasing expenditure taking effect there would be some increase in employment and some further fall in the unemployment figures, and that, even if there were a recession, it would be to some extent masked by the rearmament programme. We have, in spite of that programme, this substantial increase in the figures during the last five months. The right hon. Gentleman the Member for Wakefield did what most of us do in Debates of this kind, and fortified himself with the opinions of eminent economists. I would like to give a quotation from a recent speech of one of the younger economists, Mr. R. F. Harrod, whose opinions will, I am sure, commend themselves to the Parliamentary Secretary to the Ministry of Labour perhaps more than to the Minister. Speaking in January, he said: What of the future? Most economists agree that a bad slump will recur, though it is by no means certain that the present slump will be severe or long-lived. But we should be prepared for one comparable to that of 1929–31 to recur, if not now, then later. The view that the last slump was caused by the Great War appears to be untenable. The slump attributable to the War was that which occurred in 1920–22. In the meanwhile, the production both of consumable goods and capital equipment had gone rapidly ahead throughout the world. The losses of the War were made good many times over. The world was in no sense living beyond its means, since ample capital provision was being made. Great Britain had certain special difficulties. But the slump was world-wide and world causes must be sought. The increasing severity of the slump may be accounted for by the economic structure of our society itself, the growing proportion of consumption that can readily be curtailed and the growing proportion of saving and investment, sources from which it is probable that the cycle emanates. Last year in the Debate on the Address my hon. Friends and I put down an Amendment in which we drew attention to the question which has been raised this afternoon. We called for an examination and preparation of definite plans for employing our people on the construction of works of national importance and the utilisation of national resources which are at present neglected. After speeches on that subject had been delivered by some of my hon. Friends, we had an interesting reply from the President of the Board of Trade. I would like to remind the House of what he said: As has been stated by the Prime Minister and by the Chanceller of the Exchequer, it is a matter which the Government naturally have in mind to which they are giving the closest and most continuous attention, because we too are aware of the difficulty of 'timing' the long preliminaries which have to precede the inception of any work of this kind, and, therefore, the loss of any really effective results at the time when those works are most wanted."—[OFFICIAL REPORT, 2nd November, 1937; col. 785, Vol. 328.] That is what the President of the Board of Trade had to say in November, and I hope that when the Minister of Labour speaks to-day he will tell us precisely what has been done in pursuance of that undertaking. What are the Government doing in order to prepare plans for a possible slump? The right hon. Gentleman the Member for Wakefield quoted the example of Sweden. We know that in Sweden the Government have drawn up a detailed programme of public works which can be put into effect if a slump threatens at any time during the next 10 years. Having worked out the maximum expenditure which is contemplated, they are prepared to spend, if necessary, £143,000,000. I represent a Scottish constituency, and in population Sweden is not much larger than Scotland. I wish I could believe that under our present regime, if there were a severe slump, we could get in Scotland national development on anything like a comparable scale. I hope the Minister will tell us what kind of plans the Government are preparing. There is one project which is of particular interest to those of us who sit for the east of Scotland. That is the project, which has frequently been mentioned in the House, for building road bridges over the Forth and the Tay. They are not matters of just local interest, but matters of national interest to Scotland. Are the Government considering any schemes of that kind in any plans they may be preparing?

The hon. Member for East Aberdeen spoke of the disquieting news which came from the industrial districts. It must be in the minds of a good many Members on this side of the House what, if there is to be a recession in trade, will be the effect in those areas which, even at the present time, have very high unemployment figures? Even last year, when we were at the height of the so-called boom, we know that the recovery was unequally spread over the country. That disparity remains. Last month the percentage of unemployment for England was 11.9. In Greater London it fell as low as 8.6, and in Birmingham as low as 7. In Scotland it was 17, and Wales 23.8. It has been clear for a long time that the normal movement of industry is calculated to increase rather than to mitigate that difference between different parts of the country. To give an example, in the four years 1932–35 in Scotland there were 74 new factories opened and 102 were closed. Even in 1936, the latest year for which I have figures, there were only 26 new factories open out of a total for Great Britain of 551, and there were 14 closed. It is true that since then a trading estate has been set up at North Hillington, about which I shall say a word later but it is clear that we cannot expect the normal movements of industry to redress the balance between the old industrial districts and the new.

The only legislative contribution by the Government to meet that situation is contained in the Special Areas Acts, and as the Minister of Labour is present I want to say a word about them. On the face of it, at any rate, those Acts represent only a temporary policy, because the Act of 1937 is due to expire on 31st March, 1939. I hope that the Government will soon make some announcement of their intentions with regard to those Acts. It may be too much to ask for an announcement this afternoon, but I hope it will be made soon. Is it the intention of the Minister of Labour to use his powers under Section 7 of the Act of 1934 simply to transfer certain functions of the Commissioners to the Unemployment Assistance Board and various Government Departments, or is it proposed to continue that Act when it expires in March of next year? If it is proposed to continue those Acts will they be continued as they stand, or continued with some extensions?

The uncertainty among people in places concerned is interfering a good deal with the smooth working of those Measures. For example, there is in Scotland a certain form of planning authority known as the Scottish Economic Advisory Committee, which has been doing a great deal of work—I think it could do more with larger resources—in endeavouring to plan the economic future of Scotland. That committee depends for its funds very largely, not wholly, upon a grant from the Commissioner for Special Areas in Scotland. If the Act expires on 31st March next year and the funds are not made up from some other source, it will mean that the work of that committee will at once come to a standstill, and it is an obvious handicap upon any organisation not to know what its future will be after 31st March next year. Then there are a number of areas which are considering making applications, or which have made applications, under Sections 5 and 6 of the Act of 1937. Those are the areas which are not in the Schedule of Special Areas, but in which certain conditions of depression apply and which are able to make applications for the assistance which is given by those Sections. It is rather a handicap upon areas which are considering making application not to know what the future of the Act is to be. There may, for instance, be a site company and they cannot know what assistance can be expected after 31st March next year. Therefore, I do hope an announcement on the subject will not be long delayed.

Regarding the operation of the Acts themselves, I recollect the Debates when the original Act was introduced in 1934, and the principal criticism made at the time by the hon. Member for West Middlesbrough (Mr. K. Griffith) and a number of us in this part of the House, was that the Special Areas had been selected on an entirely arbitrary principle. They were simply areas which happened to have been visited by the four Commissioners sent out in the Autumn of 1934, and there was no machinery in the Act for bringing in other areas, even though more depressed. In my own constituency the unemployment figure at the moment is now 23.2 per cent., an increase of 2.2 since this time last year. Looking at the level of unemployment in the Highland Counties, we find that in Argyllshire it is 26.1; Banff, 39; Buckie, 43.9; Caithness and Sutherland, 39; and in the town of Wick, 39.2. In Wales we find Anglesey with a figure of 35.8 and Cardigan with 31. Compare those figures with the figures in some of the Special Areas which do receive very great assistance, which we do not grudge, under these Acts. In Lanarkshire the percentage is 18.2, Motherwell, 18.9; Renfrewshire, 15.4; Dumbarton, 13.2; Ardrossan and Irvine, which are part of the Special Areas, 12.6 and 15.2; in West Lothian there is Bathgate, with 9.6. I am not seeking to minimise the seriousness of these figures, but it is clear that there are a number of areas which up to now have received no assistance under the Special Areas Acts although a good deal worse off from the point of view of unemployment than the scheduled Special Areas themselves.

Let me illustrate the sort of thing that happens as a result of this arbitrary selection of a few areas. As I have said, we have a trading estate in Scotland, and it has produced admirable results in its immediate neighbourhood, but we cannot overlook the fact that it does act as a sort of pool into which all the fresh enterprise in the region tends to flow. I have mentioned the unemployment figures in my own constituency, and shown that they are substantially higher than those in some of the scheduled Special Areas in Scotland, and I have in my hand a letter which was sent a short time ago on behalf of the Commissioner for the Special Areas in Scotland to the president of the Business Club in Dundee. It is a letter appealing to him to bring to the notice of the members of his club a booklet which had been prepared advertising the attractions for new industries to go to the scheduled Special Areas. The object was to get him to persuade his members, if they were contemplating setting up new factories or workshops, to do so in the Special Areas.

No one in my constituency grudges anything that is done for the Special Areas, because it is realised how great their needs have been and are, but the Minister can realise the feelings of the recipients of that communication in an area which is worse off than the Special Areas, which are receiving this particular form of assistance. I have laboured that point because I feel it is important to point out how absurd and illogical is the geographical demarcation of the Special Areas. When the times comes I hope the House will be asked not only to continue those Acts but to extend them considerably. I hope that either to-day or in the near future we shall have an announcement from the Government as to what is to be the future of their Special Areas legislation, and what they are doing now to prepare plans for a slump should it come.

5.10 p.m.

Mr. Hayday

There are one or two points which I desire to bring to the notice of the Minister but before going into details I should like to point out that it is the international view that economic and social conditions throughout the world can either make or mar the world situation, and that the problem of unemployment might not have been so severe in the world had the British Government played a more definite part in appeasing the social and economic conditions of the peoples of the world. When the desire was expressed for international agreement in social and industrial matters the British Government should have taken the lead rather than bring up the rear, should have been more constructive and less critical of other people's efforts, should have had more faith in their own strength and been less ready to express doubts of the honesty of other nations. The calamitous state of affairs in the world to-day, particularly in the Far East, would not have developed had the social and economic proposals put forward at Geneva received a larger measure of support from the British representatives there.

One proposal in connection with which the British Government could have done much to counter the possibilities of trade depression is the 40-hour week, but instead of taking the lead in this matter Great Britain once again played the part of the sceptic, and as a result of that scepticism other nations have ceased to place the same value upon the importance of an international reduction of the hours of labour. The British attitude up to the present has been, "How could we agree to an international convention to reduce the hours of labour when we know that other nations would decline to carry it out, because we should be laying our own industrialists open to unfair competition which would oust them from world markets?" We ought not to entertain that suspicion. It is well known that India, China and Japan were quite willing to go some way, although not making the approach so steeply, toward the 40-hour week. It was known that France was ready and willing, and indeed, France, after a practical application of the 40-hour week, now finds herself handicapped by reason of the fact that Great Britain stands aside. The subject is to come up again at the June Conference in Geneva, and I hope that the policy of our Government will then undergo a change. They might throw their weight whole-heartedly with such nations as the United States and France, and with any other country that desired to bring about social and economic appeasement in the lot of the workers of the world. If we could do that we should destroy much of the incentive to keen competition in world markets which brings about such a distrustful and doubting atmosphere and leads to much more serious troubles than those which confront the country, although they certainly give us cause for considerable anxiety.

I hope that the Minister will think over two or three points which I now desire to put. While we are accustomed to speak in terms of the general economic situation and of fear for the future, we ought to examine deeply the personnel of the 1,800,000 persons who are unfortunately denied the right of employment to-day. I feel very sore at heart when I am told by the managers of Employment Exchanges that their great problem is the middle-aged and elderly workmen who are signing on, and how difficult it is to place them. They tell me how eager is the desire of employers for young men and how the employers complain at times of a shortage of boy and girl labour in certain areas at a time when there is what I believe to be an ever-growing percentage unemployed of the best material that any nation ever produced. They are men who years ago bore the brunt of heavy manual labour and ran many risks during the War, but now they seem to be easily forgotten. They are men who as fathers have been responsible for bringing to the nation its present manhood and womanhood, but to-day they find themselves being driven more rapidly than ever before into a state of hopelessness. They have no hope and no outlook, except that of being the cheap butt for the cynical people who are so fond of talking about the idle, lazy unemployed men who think only of crawling round to the Exchange and of lazing on the street corner. They are the best workers that this country ever produced and are of greater value to the nation than a good many people who are making fortunes now as a result of the boom in munitions of war. They are men upon whom we have depended, but men whom we now discard.

Nobody desires to see that percentage increased or that state of depreciation made worse, but it is a fact that many men who have been unemployed for five or six years and are now about 55 years of age, may not be capable of being absorbed into their old employment. I well remember when I interviewed employers who had to close down for so long that their workers, who had remained out of employment, could not take up their former heavy responsibilities when their industry was ready to reabsorb them. They were unable to perform the heavy tasks, which had to be arranged on a graduated scale, a little extra each week, until they reached their maximum. Those employers also advanced money to the men in order that they might get food and to ease all their mental worries so that they might rehabilitate themselves. Some men on the employment market are never likely to be re-absorbed. Is that problem, in the Minister's opinion, becoming more serious as time goes on? I ask the Minister to inquire to what extent employers who can afford cheap labour might be encouraged to take these men in at the full rate of wages for the industry.

We need give but a few minutes to thinking on this subject to feel that anything that could be done would be welcome. Hardly a Member of this House has not been approached by men who looked nearer 70 than 55 or 60. They begged their Member to go to the Employment Exchange or to interview employers in order to get them a watchman's job, or any kind of work. They are fearful that they will drift and get beyond recovery. It is not a very nice thing to have such men in households where there are virile youngsters who find themselves called upon to sacrifice their future in order to help parents whom they love.

A further point I wish to raise concerns the supplementation of benefit under Part II, to men who are signing on at Employment Exchanges and drawing benefit under Part I of the Act. When this Measure was discussed in 1934 the answer was given from the Government Front Bench that men drawing benefits under Part I, could, in certain circumstances, receive supplementary benefit under Part II. Recently, there has been a number of cases in which men have made application for supplementary benefit and have been refused because the amount of the difference upon the ascertained basis had been regarded as too small for payment to be arranged. I have already called the attention of the Minister to one case. I propose to ask him whether he has facilities for obtaining information whether the cases are confined to Nottingham or are general throughout the country, and to what extent, he, as the head of the Ministry of Labour, has control over these ascertainments of payment. I would further ask whether he can say what amount has been denied in bulk to these applicants over the period of a year, and has therefore been conserved to the Ministry under the Unemployment Assistance Board.

I have particulars of a case in point. The man had made his application, which was quite in order, and the amount of the difference was 1s. 1d. He was told that the ascertainment meant that his supplementation would be 1s. 1d. per week, but that the amount was too small for arrangements to be made to pay it. He has a wife and two children, and would therefore draw 32s. a week. Counting his rent, and other things, the ascertainment, under the Unemployment Assistance Board's method, was 33s. 1d.; but the odd 1s. 1d. was too small for them to arrange to pay it. Does any hon. Member realise what it means to have only 32s. to spend upon four persons, under present conditions of high rental, and so on, and what it means to be told that 1s. 1d. is of no account? "This 1s. 1d. is too small; we cannot arrange to make that payment." Last week the same man made application for employment, and he required 1s. 10d. for his fare. He went to the Employment Exchange and asked for an advance. He was given an advance of 2s. When he got to the place he was told that he was not the type of man required. They wanted a charge hand and not an ordinary baker. He pointed out what his fare had been, and the man he saw gave him 1s. 6d. When he got back, the Employment Exchange people stopped from his money the full 2s. and the man was therefore at a loss of 4d. Instead of saying that he ought not to be 4d. short the Employment Exchange people added insult to injury by saying that the 1s. 1d. was too small an amount for them to arrange to pay. Even though he was seeking employment he had to be penalised to the extent of a further 4d. in respect of his fare. I believe that this is not an isolated case but that it is general and I would like the Minister to look into the matter. I am sure that the House has not heard the last of it.

Another point is the extent to which foreign labour coming into the country on permit displaces our own labour and adds to the difficulties of the Employment Exchanges. There was a case in Nottingham in which a firm was involved in a dispute last October. The firm had in its employment two foreigners, working on permit. The dispute was settled after three days, but the employer apparently broke his pledge, which I suppose he gave either to the trade union officials or to the Ministry of Labour, and a further dispute broke out again in November. It is still running. One of the permits expired on 28th February and the other expired in April. I am not raising this instance in any attitude of antagonism to the nationalities of the men. The fact remains that this employer, who was in dispute with his own workpeople, was supplied with two men from outside the country while there were members of the same trade union available to do the class of work in which the men on permit are supposed to be specialists. Non-union and cheap labour has been introduced in the place of the men who are in dispute and it is being taught by the men who are over here on permit.

The Minister of Labour knows about this case because I have asked him questions and have made representations to him, but I have not yet had a reply. I asked on 24th February whether the permits ought to be renewed until the Department had reviewed the situation. I am still short of the information. I do not know whether the permits have been renewed. If they have, I say that it is wrong that you should play into the hands of a particularly bad type of employer by giving him facilities wherewith to beat down workers who are trying to maintain established conditions of employment. Labour is available and is signing on at the employment exchanges, but workers of other nationalities are allowed to come into the country on permit. I have no prejudice on account of the nationality of these people, but, to put it mildly, it is not quite right for the Minister of Labour to enable British labour to be replaced by granting permits if the same type of labour is available here; and, further, I think there ought to be an undertaking, if foreigners have to be allowed to come to this country because the type of labour required is not available here, that they will not be used as an instrument to keep down the wages and conditions of the nationals of this country.

5.31 p.m.

Mr. Amery

I do not propose to follow the hon. Member for West Nottingham (Mr. Hayday) into the somewhat detailed issues he has raised in connection with public assistance, except on one point. He, and all of us, must be well aware that, under present conditions of Government payments, whether of unemployment benefit or public assistance, the unskilled low-paid worker with a large family is often worse off when he is in employment than when he is out of work. From a national point of view that must be a fundamentally unsatisfactory situation, and I would very earnestly ask my right hon. Friend the Minister of Labour—

Mr. Stephen

What is the right hon. Gentleman's authority for that statement? Is he not aware that no person can receive in unemployment assistance a greater amount than he would receive if he was in employment?

Mr. Amery

I am afraid I must say that I have come across more than one case in my own constituency where it was to the man's interest to be out of employment. A man receiving some 30s. odd a week would get a great deal more if he has seven or eight children—

Mr. Stephen

It is quite against the Act of Parliament. It is definitely laid down that the applicant cannot receive more in assistance, or as much, as he would get when he is in employment, and I think it is altogether wrong for the right hon. Gentleman to come here and make a definite statement which is quite contrary to the facts.

Mr. Amery

Whatever the law may be, my experience is that there are men whose normal claim under unemployment assistance is, in virtue of their families, substantially greater than they are getting as unskilled labourers, and I suggest that the country ought to face the problem of the man with a large family, and the need, through industry in one form or another—I cannot, of course, discuss the legislative possibilities to-day—to do what is already done in other countries, and what my right hon. Friend the Secretary of State for War has recently done with regard to the married soldier, that is to say, to make provision through industry for families, and to see to it that the children in a large family do not suffer from the point of view of nourishment and opportunities for a healthy life as they do to-day. The problem is one which has been very fully discussed in a recent book by Mr. Seebohm Rowntree, and the conclusion to which he has come is that the only way of ensuring an adequate standard of nutrition for the children in large families in this country is to provide something in the nature of a family allowance in industry. I am not quarrelling from any point of view with the law as it stands, or making any inaccurate statement.

Coming to the much bigger point raised by the hon. Member for West Nottingham, with regard to the competition with our own workers which arises from the entry of foreign labour under permit, that raises a very big issue, on a far larger scale than the two or three workers to whom the hon. Member referred. Let me remind the House that there are two forms of permit under which foreign labour enters this country. One is the permit given by the Ministry of Labour, and the other is the permit given by the Import Duties Advisory Committee; and undoubtedly one of the most serious problems with which we are confronted to-day, at a time when unemployment is not diminishing as it should, is the continuous increase in the importation of foreign labour into this country in the form of finished manufactured goods. Last year we imported a total of something like £175,000,000 worth of fully manufactured goods into this country, excluding our imports of base metals, oils and other articles which belong more truly to the category of raw or semi-raw materials. That import of £175,000,000 worth of fully finished manufactures represents in direct or indirect labour, something like the work of 600,000 persons. Naturally, under any conditions, we should wish to import a certain amount of foreign manufactures; but, judging our need for imports of special manufactures of one type or another by the parallel of other countries, I venture to suggest that a figure of £75,000,000 worth of fully manufactured imports is probably quite as large as is necessary or consistent with the maximum development of our production and the maximum of employment in this country. In other words, these imports could very well be cut down by £100,000,000, giving, directly or indirectly, employment to some 400,000 persons, and making a very substantial contribution to our whole employment problem, as well as to our whole revenue problem; and that could be done without any prejudice to the export trade of this country.

Mr. Shinwell

Does the right hon. Gentleman suggest the complete exclusion of £75,000,000 worth of manufactured goods, or does he suggest that it should be done by a tariff?

Mr. Amery

I am suggesting that our tariff should be so increased as to reduce this unnecessary importation by some £100,000,000, to about £75,000,000. I want to raise this matter from another point of view, apart from the point of view of employment, namely, its effect upon the general economic situation in this country. It may be the case that we are in for a general world slump. Personally I am not convinced that the situation is such as to be in any sense parallel either to the situation in 1920 or to the very peculiar situation which arose in 1930. But the point to which I desire to draw the attention of the House is that in 1931 we were brought into dire straits by the combination and conjuncture of certain factors domestic to ourselves with a situation of general world depression. Of those factors, the two most important were, first, the effect on public confidence of the failure of the Government as a government to pay its way; and, secondly, and far more important in my opinion, the fact that as a nation we were not paying our way.

On our total balance of payments, including not only the balance of visible trade, but allowing for our shipping and insurance earnings and interest on foreign investments, we were, in the year 1931, down to the extent of having an adverse balance of £104,000,000 on the year, as against a favourable balance of practically the same amount, namely, £103,000,000, in 1929. It was that failure of the country to pay its way that was responsible for the greater part of the crisis of 1931. It was remedied, in the first instance, by the application of measures which acted on the excess of our imports and reduced it, so that in the following year the adverse balance was reduced to £51,000,000, and in 1933 to a level balance. Since then we have not paid our way fully. In 1934 we had an adverse balance of £7,000,000; in 1935 we had a small favourable balance of £32,000,000, in 1936 an adverse balance of £18,000,000, and in 1937 an adverse balance of £52,000,000; and, judging by the figures for the opening months of 1938, the adverse balance of the year is likely to be as large as it was in 1931.

That is a very serious situation, due in a large measure to the fact that our industries are not protected as they were originally intended to be protected in 1932. Our imports are not reduced as they were reduced in the earlier years of the tariff, because in those years additional protection was afforded by the recent depreciation of sterling in relation to other world currencies. Since then, all these other currencies have settled down to the level of sterling, and in many cases far below it. The dollar, the Japanese yen and the franc have all depreciated, and in other ways that temporary advantage which we enjoyed through the fall of sterling from gold has disappeared. Therefore, our tariff is no longer adequate to give the protection, either to our industries or to our trade balance, that it gave when it was originally imposed. That is a very serious matter in times of peace, but it may be infinitely more serious if, which Heaven forbid, we have to face the contingency of war. In 1914 we entered upon the Great War with a favourable balance of payments of about £181,000,000, representing, at present prices, considerably over £250,000,000; we had something like £3,000,000,000 worth of good saleable securities abroad upon which we could draw; our shipping was very nearly 50 per cent. of the world's tonnage; and yet, in spite of all this, we were pretty hard put to it to get through before the end of the War.

To-day, if we were at war, our shipping, which is one of the chief sources of our invisible exports, would all be required from the very first for purposes of defence and communications, and would have very little opportunity of earning money for us by trade with foreign countries. On the contrary, we should have to draw very largely upon the help of foreign shipping. Our saleable securities are far less in total value than was the case then. Does anyone suggest that we shall be able to borrow again from the United States as we were able to borrow in the late War? Add to that the fact that our export trade will inevitably go down, and that the cost of our imports will rise very seriously, so that we might in a very few months be in a position in which we could not secure either raw materials for our munitions or food supplies, and we should be brought literally to a standstill and to national bankruptcy. Surely, in these conditions, it is worth while trying to restore a better balance of trade and have a better reserve in hand than we enjoy at this moment.

The question will naturally be asked, How are we to do that? If we could increase our export trade, that would be one very desirable method; but in the world to-day, with restrictions being increased in every direction, the desire of other countries for self-sufficiency, and the additional difficulty created by our higher standard of living and higher cost of production, it is really excessive optimism to think that there is much hope of a general increase in our exports to the world at large.

One direction in which we can hope for a really substantial increase of exports is in those markets where our exports enjoy preference against foreign competition. The Empire markets already take more than half of our manufactured exports, and they are bound to take an ever-increasing share, both because they are readier to buy from us and because other countries are less ready to buy from us. But we certainly cannot hope for an immediate increase. We have to build up their strength and population, in order to help them to build up our export trade. That must be a matter of years. There was a time when we were able to foster our export trade by lending money abroad. Our loans went out largely in the shape of British manufactures, and the interest on them came back, partly in the shape of imports, but also in the dividend returned which enabled us to pay for them. That has largely passed away. A British loan to-day does not necessarily mean British goods going out to build the railways for which the loan was made. Moreover, as we have sometimes experienced in recent years, a loan may not be repaid and such goods as have gone out may become a dead loss. In those circumstances, the obvious step is to reduce our adverse balance of imports, from the balance of trade point of view as well as from the point of view of national employment.

It seems to me that we have reached a critical situation, in which it is the duty of the Government to see that the balance of trade is corrected. This is not a matter which can be left to the unfettered discretion of the Import Duties Advisory Committee. The duty of that committee is to prevent lobbying in this House in favour of one industry or another, and to take a strictly impartial view of the claims of different industries. But the general nature of our tariff system, the general object it serves, including defence considerations, is a matter which only the Government can decide and on which the Government are surely entitled to make representations to the Import Duties Advisory Committee or suggest, in default of those representations, that it should take the initiative by legislation. The Government do not hesitate to override the views of the committee when, in the course of treaty negotiations, they alter the findings to which the committee has come and reduce a duty. In the same way, it should be the task of the Government to see that, whether from the point of view of national employment or from the point of view of the balance of trade, or of our general economic security in peace, and still more in war, our tariff position should be strengthened. At any rate, if the Government come to a conclusion that that position should be strengthened, their hands should be free to do so.

That brings me to a matter which may affect the future of employment and the balance of trade in this country: the question of a treaty of trade with the United States. Such a treaty is in itself a most desirable thing. It is desirable that our trade relations with a great country like the United States should be stable, and should be based on a situation known for some years beforehand. There is a very strong case for making a treaty, in order to rectify the present unsatisfactory balance of trade between us and the United States. On an average, during the last three years, we have bought from the United States £62,000,000 each year more than they have bought from us—making a total of £186,000,000 altogether. I may be told that they have bought a great deal more from other parts of the Empire. That may be so. I know that they buy a great deal of rubber and tin from Singapore, including a considerable amount from Dutch territories which figure in the list as British produce. But that is by no means comparable to the effect on the economic strength of this country of a corresponding export from this country; and, in any case, that is a form of trade which will be carried on by the United States in any case. They are not going to buy less rubber or tin from Malaya because we are not prepared to give greater concessions to them in our market in the United Kingdom.

There is room for negotiation if we are determined that the basis should be a reduction of the adverse balance. We are buying, for instance, 10 times as much machinery from the United States as they are from us. There is great room for rectification there. That is a policy that we pursued in negotiations with Denmark and other countries. We insisted on a reduction of our adverse balance both by reducing our imports from Denmark and stipulating that there should be a greater quantity of British exports to Denmark. What I am afraid of is, that these negotiations are being pursued, not with the idea of definitely reducing the adverse balance, but simply with the idea of increasing the volume of trade by increasing our exports to the United States and correspondingly increasing imports here from the United States, possibly at the expense of Empire products, which provide the most hopeful prospect of an expansion of British export trade.

If we reduce duties which are already too low in this country, or commit the mistake of pledging ourselves not to vary existing duties, we expose ourselves to very great risks—not so much from the United States themselves, but because of the effect of the Most-Favoured Nation Clause upon the whole situation. If the United States make reductions in their duties to us, it does not follow in the least that we shall be the beneficiaries. It may well be that cheaper Japanese or Belgian goods or the, in effect, subsidised goods from totalitarian countries will displace us, and that we shall receive little benefit. On the other hand, it may be that the reductions here will be shared, not merely by the United States, but in a great measure by a number of others, and that our adverse balance will be still further increased.

I feel that we are confronted with a situation of real gravity, and it would be disastrous if, just from a general desire to have some sort of agreement, a good- will agreement, we should tie our hands behind our backs at a time when we do not know what the developments in international trade may be. One of the difficulties of to-day is that when you get a country like Russia, Italy or Germany, where the whole of industry is increasingly state-controlled, where the whole monetary system is under state control, exports bear no relation to the cost of production and may be subsidised to whatever extent the Government concerned feel desirable for their own purposes. In view of a situation which is becoming increasingly formidable, it would be a great mistake to tie our hands for a number of years, instead of retaining the flexibility of our tariff system. I feel that in this matter a word of warning is not out of place. I would say to my hon. Friend who is representing the Board of Trade, that the attitude of his Department is not altogether encouraging in this matter.

We are faced with the fact that, whereas every concession we ask from American industry is laid before American industry itself, in order that they may have every opportunity to put in their objections and state their views, our manufacturers are given no opportunity of being consulted on the reductions which America has asked for. Our Dominion producers are in a position to know because, naturally, we consult the Dominion Governments, and they, naturally and properly, consult their producers. Our producers, whether agricultural or industrial, are refused the right to know what is asked, but they are told to open their mouths, shut their eyes and hope for the best. That is not treating British industry fairly, and I know that the feeling in many quarters of British industry is very strong indeed. It is felt that they are having their hands tied behind them. It is a little late in the day, but I most earnestly appeal to my hon. Friend not to forget the uncertainties and dangers of the trade situation in the years that lie ahead, and not to do anything either to cripple the productive energies of this country at the present time or to tie our hands from using our tariffs in a more flexible manner.

5.59 p.m.

Mr. Lansbury

I do not intend to follow the right hon. Gentleman all through his speech, but I propose to say something about it. I am glad that the representative of the Board of Trade is here. As I have continually tried to get the Government to say something on the international economic question—I suppose the subject has been squeezed out because of the interest of hon. Members in either preventing war or preparing for war—I thought it best to try to get it in tonight, and I hope the hon. Member when he comes to reply, will be able to tell us something satisfactory. I am sorry that his chief is not able to be present, but we cannot help that. I would like, in passing, to call attention to the state of the House this evening, compared with the sort of House we have when foreign affairs are discussed. We are discussing to-night only the condition of the people of Great Britain, in whom, apparently, the bulk of hon. Members are not interested. I should have thought that that would have been the overwhelming question for the consideration of the House of Commons at this time of day. It is the condition of people not only here, but abroad which creates the war mentality and brings about war.

I want to deal with the question of unemployment pay, which was raised by the right hon. Gentleman. We shall never settle the question of unemployment until we pay a man as much when he is out of work as when he is in work. I have always been heterodox in regard to the theory that people should live on less when they are sick or out of work. It is a most extraordinary doctrine that a man's wife and children should be maintained on perhaps a third or even more than a third of his ordinary earnings for long periods. Even a week of unemployment for many men means throwing their wives back into debt for a long time. How the thousands of people in my division are able to keep themselves afloat even under the better conditions that prevail to-day passes my comprehension. When I heard the right hon. Gentleman rather complaining about the amount that a man gets—

Mr. Amery

No, that was the very opposite of what I wanted to say. I was pointing out that a man in regular work ought to get something additional in respect of his wife and children, so that when he was in work the family was better off than when he was unemployed. I was not complaining of what they get when unemployed. That is the last thing I would wish to do.

Mr. Lansbury

The right hon. Gentleman was perhaps a little unfortunate in the manner in which he expressed himself. I would not for the world attempt to misrepresent anything that he said, but that was what I thought was the point of view he was taking, because there is a sort of theory abroad that the unemployed are getting too much. There are many people writing and talking in that way. I am not one of those who think that it is a good thing that people should be unemployed; I think it is rather a bad thing. I hope that whenever the question is taken properly in hand, we shall deal with those who live at his end of the town as well as those who live at my end of the town. The unemployed are of two classes—those who have money in their pockets and those who have no money. Both are just as demoralised through unemployment. Nothing that the right hon. Gentleman or anyone else can say will ever convince me that the right standard to set for people who are out of work, especially when they have been out of work for a long time, is that they should receive less than when they are at work. Even with conditions as they are to-day the unemployed, their children and their womenfolk are grossly underfed, and neither I nor anybody else who has had anything to do with the bringing up of a family could agree to that sort of thing.

It is nonsense to talk about this being a boom period when there are 1,800,000 out of employment and a very large number who are never accounted for. As my hon. Friend the Member for West Nottingham (Mr. Hayday) pointed out, there is no hope or chance for many of the people who are the victims of this social disease, the people over 45. The hopelessness of meeting such men and women is, for me anyhow, very painful indeed. We meet them in the street and at their homes, and apparently very few people care anything about them at all.

There is also the problem of the young people. I tried to say something about this matter when we were dealing with the Supplementary Estimate for the Home Office the other day, and I tried to show the effect of unemployment on young people. I know that everybody in this House feels strongly about it, but there is no effective notice taken of it. We train them for a little while and shove them into a job here or a job there, but that does not settle the problem at all. It is not only a question of boys who go in for manual labour, but of boys who receive a fairly good education and who, when they are through with their examinations, find no place where they are needed at all. I think the problem is insoluble under present conditions, with the system under which our industries are carried on, but I would like the Minister to tell us what is being done, not to deal with them after they have failed, but to prevent them from getting into the hopeless position which forces some organisation to recondition them. The word "recondition" is a horrible word to me. You first of all allow them to drift into a very bad condition, and then you talk about reconditioning them.

I also intend to say a few words about the older men, but I do not want hon. Members to think that what I am going to say is a remedy. It is a sort of palliative. I have heard of the work being done in Lancashire, but in Monmouthshire I have seen it at first hand. I refer to the scheme which is being carried on by the Eastern Valley Subsistence Production Society under Peter Scott and his Order of Friends. I could not help wondering, as I walked round, what would be the end of this rather fine scheme for palliating the evil conditions under which men are living. Would it go the way of the Hollesley Bay scheme, and by and by all the money and effort be wasted because of the hopelessness with which Government Departments look upon these kinds of schemes? We look at the face of the right hon. Gentleman the Minister and we know exactly what he is thinking. I am not talking so much about what will happen at this particular hour or in another year, but I have in mind the very painful experience of what happened at Hollesley Bay, and it will take a lot to get that out of my mind. When I saw these men I realised that we had given them insufficient to maintain them decently and that some, philanthropic people, with the aid of Government grants, had taken land and formed this society. The men work together and then share what they produce at a cost which is equal to all of them and under equal conditions.

No one who has seen what has been done would ever say that these men were either unskilled or lazy; no one would ever say that any of them were not really pulling their weight. As I watched them at their meals and at their work, I thought to myself what a fearful waste of human effort was taking place, because there was no organisation in this country so to organise their labour as to make them absolutely independent and self-supporting and make them free of the need of what is called the dole and of having to depend upon the good will and the charitable feelings of rich people. It is one of the most terrible indictments of present-day society that such a thing had to happen. I have nothing but admiration for the men who thought of it and who give their time in helping to carry it out, but why should a number of my fellow-countrymen have to submit to that way of getting a decent living? They cannot live on unemployment pay; everybody agrees that they cannot. These men and their children and their womenfolk are now obtaining a little higher standard of life.

When I say that there is no boom in trade I am thinking of the sort of trades that operate in East London, where there are large numbers of people on part-time work and large numbers out of work. I know perfectly well that it is due to the same kind of economic causes that have prevailed all my life, and I see no chance either with this Government or with almost any Government of tackling the root problem which faces society to-day. This brings me to the speech of the right hon. Gentleman the Member for Spark-brook (Mr. Amery). He knows that I always listen to him with respect, either privately or publicly, because many years ago he did his level best to convert me to Protection. He has perhaps forgotten the couple of interviews we had with each other. I was not very young—I was older than the right hon. Gentleman—but I was, relatively speaking, rather raw and did not know very much, though probably I knew less than I know now. The right hon. Gentleman has not moved, and I have not moved, but I think that I had a clearer conception of what was wrong with the world then than he had, and I think I have to-day.

The right hon. Gentleman does not seem to realise that we are living in an entirely different economic world from that which prevailed before the War. We are trying to adapt ourselves to present-day conditions by retaining the old ideas under which we lived, and under which trade and industry were organised. If he will only think of his own speech, in which he pointed out that at the outbreak of the War we were getting £250,000,000 income from what is called invisible exports, he will realise that the world is in such a position that that cannot operate again. Even the Dominions, on whom he is pinning his faith, want to be our competitors in their own markets. They want to manufacture boots, leather, iron and steel goods. They want to make the things which before the War we took it for granted they would get from us. That is a great change. In addition, the South American countries, where many millions of British money have been lent, money which represents millions of pounds worth of labour on the part of workers of this country, are to-day, in many cases, not able to pay interest or to repay capital, and they are not able to borrow from us any further. They are not in a position to say: "We want to build a railway there" or "We want to put a road here." That has all gone by, because of the conditions that are prevailing. If we attempt to take payment from them we shall have to stop taking payment from the Dominions or other countries which owe us money, because payment must come to us in goods.

A great snowball of debt has been piled up. I am not referring to War debt, but ordinary economic debt, a great snowball of it, and no one knows how to move it. I reminded the House one day that Sir Josiah Stamp once said that what was wanted was an international bankruptcy court, so that the nations could go there and get their debts wiped out in the same way as private firms do. That seems to me to be the only way out, so far as these debts are concerned. Frequently at Question Time in the House questions are asked about one State or another that is in default. They are not in default because they have a double dose of original sin, but because of the stupid system under which industry and exchange are carried on. It has been blind competition and blind investment, without any sort of plan or idea.

The right hon. Member for Sparkbrook complained about the competition that might come from Russia or from the totalitarian States. I do not know much about the economic condition of the totalitarian States, but one thing seems to be certain, and that is that there is tremendous control from the centre. I suppose it is control in what they consider to be the best interests of their countries. With regard to Russia, the reason why that country is able to produce her goods and to put them on the market if she chooses at a very low price is that she has not to keep a great crowd of people who have lent their money and who require interest to be paid on it. Russia started, as it were, quite fair, without having to put by anything to keep a large idle class, idle in the sense of not contributing anything to the common weal.

In Russia, Japan, India, or China we are confronted with the fact that British capital has been invested in those countries for the purpose of developing them as competitors with ourselves. I often sit in this House and am struck by the fact that hon. Members complain about competition from those Eastern countries. A few weeks ago there was a complaint about competition from India in regard to jute and other things. Who taught India to compete? The late Lord Brentford put the matter very plainly when he said that we are not in India for the good of the Indian people; we are there to make money; we are there for profit. In the pursuit of profit we appear to be strangling ourselves under this competitive system of living, and as far as I can see there is no way out but a complete revolution in our minds. We must face the situation not from the point of view of blind competition but from the point of view of real co-operation.

That brings me to a particular point that I wish to put. If I were to put it to-morrow night, in case Mr. Speaker called upon me, I should not get an answer, because the minds of hon. Members will be upon other things, which are not a tithe as important as the matters about which I have been speaking. What are the Government going to do about the Van Zeeland Report? They asked this gentleman nearly a year ago to undertake a mission. He and his colleagues were to go to Europe, and he was to go to America to study the very questions which in an imperfect way I am trying to put. He was asked to study the conditions of world trade and what it is that is preventing the countries of the world from utilising the enormous powers which they possess for the good of each other. M. Van Zeeland has brought forward his report and I am putting my name to a Motion, along with some of my colleagues, asking the Government to do something in relation to that report. Some weeks ago the Prime Minister promised me, and I have been very patient about it, that the subject was being considered by our Government and the French Government. Will anyone be able to tell us how far that consideration has gone and whether there is any likelihood of steps being taken among the various Governments, at any rate those that are not totalitarian, and whether we can start along the road to economic appeasement?

The right hon. Member for Sparkbrook wants heavier tariffs, and he wants agreement with America, but on his own terms. America wants agreement on her terms. We shall never adjust these conditions until Mr. Cordell Hull can get his mind down to the fact that neither America nor Great Britain can live under the old conditions. They have to come forward and help to build a new economic world. Unless they are prepared to do that, they will quietly fade back into a sort of nationalist life without real enjoyment of the blessings of science and invention, or they will smash themselves in a universal war. To me it is as plain as a pikestaff and I cannot understand why it is not equally plain to other hon. Members.

We may go to Germany, America, Poland, Czechoslovakia, or any other country, and we shall find that the problem there is mainly if not entirely economic. They are not able, because of the burdens placed upon them, to deal with the poverty problem, which is for them much keener than ours. In its effect and scope it is very similar to our distressed areas. We may also go to Hungary. There is a Motion on the Order Paper about Hungary. It has been on the Order Paper for a month, but nobody bothers about it and nobody will do so until something happens, such as happened in Vienna the other day. I am not saying that the Van Zeeland Report contains everything that is necessary for dealing with the economic conditions of the world, but at least it puts before the world the vital problems that have to be dealt with and it asks that some steps should be taken for dealing with them.

You are not going to get prosperity in any one country alone or in any two countries alone. Individually, nationally and internationally we are now interdependent one upon another. It is a new attitude of mind that is needed both at home and abroad. We need that even more than ever to-day. The policy of quotas, tariffs, shutting the door, has landed us where we are. When Ministers came back from Ottawa anyone would have thought not simply that we were just entering the promised land but that we were in the promised land. Hon. Members will recollect the scene that night when the present Prime Minister spoke of our being proud that at last we had realised the great policy of the late Mr. Joseph Chamberlain. I think the right hon. Member for Sparkbrook made a great speech that night, glorying in the fact that he had lived to see the day when this great thing had happened. We have heard him to-night. I am not saying this to chortle over him, because I have been in the same position from another point of view. I merely direct his attention to the fact that that policy has brought us nowhere. If anything, it has made confusion worse confounded. I remember saying when hon. Members were cheering that we should come back to where we are to-day.

The world cannot organise in that sort of way. What the world needs and what Great Britain needs is a higher consuming power. Anyone would think that it was a crime to buy goods abroad. The fact is, as Lord Baldwin said, that you must both buy and sell. It is a question of exchange. If we want to avert war and the danger of wholesale destruction we must tackle the question of how to restore the economic life of our own country and of other countries. We shall not restore it by keeping on unemployment pay; we shall not restore it even by such schemes as I have mentioned. We shall restore it only by developing in the freest possible manner the channels of trade in this country, the Dominions, and all the countries of the world. I do not believe that that is impossible. There are men in all countries who take the same view, but they want a lead. If there was a man on the Front Bench opposite or on these benches who could speak to the world authoritatively for our country I believe we could give the world the greatest lead towards economic freedom, which is the basis of all freedom that the world has ever known.

6.30 p.m.

Lord Apsley

The right hon. Gentleman who has just spoken has gained the respect of the whole House because he does not speak on any subject unless he knows the details of it from his own personal experience. His speech not long ago on foreign policy proved that, if any proof was needed, for, indeed, he had been to all the countries of which he spoke, and had seen not only kings and dictators but the humblest persons in the land. He was not taken round by any propagandist agency, and consequently he gave us a speech which was true, unbiased and also very human. When he speaks of the unemployed in his own constituency we can be equally certain that he gives us an unbiased and true account. I think every hon. Member will be in agreement with the last portion of his speech this evening. It is perfectly true that much misery does exist abroad and undoubtedly will continue to exist until the world comes to its senses and pulls down the fatal trade barriers to allow a free intercourse and trade between nations. But is it going to be one man who can persuade them to pull down these barriers, or is it to be one nation who will give the lead? The right hon. Gentleman spoke of Russia. There is no reason why Russia should not adopt a policy of free trade in the world. The reason why Russia is able to keep her people employed, though on a somewhat squalid basis, is not only because she has no national debt, but because Russia is now the second greatest gold exporting country in the world. She has credits at her hand, and need fear no trade competition in the world.

The only reason why the people in Russia are living such a miserable life is that they are unable to get any of the comforts and necessities which people living under Western civilisation, whether employed or unemployed, look upon as a matter of course. If Russia would make a trade agreement with America and with this country we should have more channels into which to introduce our own trade and she hers. The hon. Member for Dundee (Mr. Foot) the spokesman for the Liberal party, gave us the kind of speech to which we have been familiar for some time now. For three years the Liberal party have been telling us, with the backing of a certain school of economy which has, I am glad to say, so far been proved to be an inaccurate prophet, that a slump is coming. I would remind the hon. Member that not long ago the Floor of the House was full of papers of a great Liberal petition protesting against the rise in the cost of living. Now that it has fallen several points below 1935 we hear nothing more about that, but they hark back to the slump that is coming. The attitude of the Liberal party reminds me a little of the weather forecasts we sometimes see, "Mainly fair; some rain possible." The hon. Member said that the present trade recession is somewhat analogous to the recession of 1930, and would probably run the same course. He said that the 1930 recession was not due to the War.

With all respect that is not a fair conclusion to draw. The 1930 recession, as I understand it, was brought about almost entirely by a world shortage of gold following a great demand for commodities. It was bound to lead to a policy of deflation. It is true that the shortage of gold was complicated by the fact that the United States of America, the greatest creditor nation, had an enormous stock of gold which was the direct outcome of the War—great in comparison with anybody else. Even including this, there was a shortage of gold, and the price of gold appreciated considerably. There was a period of depression throughout the world. That brought about its own remedy. The price of gold being high, new sources of gold production were discovered, old sources were re-worked, and gold has been flowing into the coffers of the nations in ever increasing quantities, though still into those of creditor nations.

In addition to that there was Trotsky's dismissal from power in Russia. He had always acted in close co-operation with those interested in the production of gold, but when Trotsky was dismissed from office, Russia reversed her policy of keeping great goldmines out of production and in a few years became a great producer of gold. Now gold from that source is pouring into the world's coffers in ever increasing quantities. I say that this recession of trade is not due to a shortage of gold but is due to a fear of an abundance of gold, and the possible effects which may occur. It is not easy to try and get a corner in gold in order to keep the price high. You cannot do it any more than you can get a corner in pepper, if there happens to be a hole in the bag, and there happens to be a hole in this bag. Gold must drop in price sooner or later and it will have considerable repercussions on world prices and world trade, and upon employment, disturbing and harmful at first, but when prices have found their new level will probably be beneficial. In my belief it is to the fear that the price of gold will drop, affecting all prices and all trades, that this recession in trade is due.

I want to say one word to the Minister of Labour. A slogan often used by hon. Members opposite is "Poverty amidst plenty." That seems to apply to the labour situation at the moment. We can see in the Press, and indeed in our own constituencies, that there is a shortage of labour, particularly of skilled labour. We hear frequently of firms who say that they cannot get labour at any cost, yet at the same time there are 1,800,000 people who are out of employment. Perhaps the Minister will touch on this point, and with his expert knowledge will say whether we can or cannot be entirely bound by that figure, because there is undoubtedly an increasing number of men and women who are turned out on short time. No doubt more and more firms are finding it convenient during the slack season to turn off their labour for a short time until the busy season comes on again. That does affect the figure to a considerable extent, and particularly is it the case in winter, now that agricultural labourers are on benefit, for, undoubtedly, farmers are finding it a convenient way of disposing of their labour, instead of using it to clear out ditches and repair fences. There is no doubt that there is an acute demand for labour at the present moment and that skilled men are wanted in greater numbers owing to the armament programme and the ancillary businesses and trades.

I want to make a suggestion to the right hon. Gentleman, and it is that men who are of middle age and over, who were perhaps turned off during the last depression, or perhaps through illness lost their jobs, and when recovered, find they have been passed over in favour of younger men should not be forgotten now. There is always a tendency to take younger men and women. It is often thought that older men who have been unemployed for some time will take longer to get back into the saddle again and that it is better to train young men right from the start. I hope steps will be taken to prevent this happening, particularly in the case of ex-service men who frequently see young men and young women going into industry over their heads. They feel they have been left on the shelf, possibly for ever. Is it not possible to increase the excellent schools, the labour institutions—there is a good one in my own constituency—in order to get some of these elderly men, who are steady workmen, into employment again? There are many who say that an older man is a better workman than a young man because his mind is not so often wandering to other things—girls, motor bicycles and greyhounds—and that he concentrates more on his work, and that if he can be got back into industry he is the most reliable man of the lot. The British Legion can help in finding the right man for the right job if the Ministry will co-operate.

There is one other matter. In my own part of the country the farms are enclosed in stone walls. It is the cheapest form of enclosure, and it used to be the custom of farmers to employ elderly men, pensioners, to go round the walls in fine weather for a small sum picking up the shards and keeping the walls in good condition. For the last 20 or 30 years there has been the idea that it is necessary to pay a man a full agricultural wage if he was employed in work of any sort on a farm. This, I understand, is not the case, and that there are facilities for using old pensioners and old people who are not fit for hard work on the farm and who would prefer to be walking around the fields patching up the stone walls rather than sitting in their gardens smoking a pipe. I understand that there are facilities for employing such old persons, but I am not aware that farmers have realised that they can do so.

Is it possible for the Employment Exchanges to inform the old men themselves and the farmers that these services can be used in this way? Unless this labour is used I fear that the stone walls will crumble and then the farmer in the end will find that it will cost at least £300 to rebuild one stone wall. I hope that some assistance can be given to these old people and to farmers by the Ministry in the way of putting them into touch with each other.

6.45 p.m.

The Minister of Labour (Mr. Ernest Brown)

I will do my best to reply to those points which mainly affect the problem at home, leaving my right hon. and gallant Friend the Parliamentary Secretary to the Board of Trade to deal with the wider economic issues which affect not only this country but the whole world. A great many detailed points, and one or two major questions, have been raised by hon. Members who have spoken. My Noble Friend the Member for Central Bristol (Lord Apsley) has referred to the paradox that at a time when there are 1,810,000 unemployed, there is a shortage of labour. That illustrates the difficulty of using the figures produced by the Ministry of Labour as composite figures. They cannot be treated as though all the men and women represented in the number recorded as unemployed at the Employment Exchanges in a given month were interchangeable, as though it were a problem of this figure of 1,810,000 unemployed in February in mass, and as though a plan must cover all of them equally. That is a complete delusion. The apparent paradox that side by side with the large number of unemployed people registered in a given month at the various exchanges there is a considerable number of shortages for certain kinds of craftsmen with a particular kind of skill, does not really point to the necessity for a plan, about which a good deal has been said, but for a real survey of the problem from the angle of the Ministry of Labour in order to bring to light those factors which are passing in their nature and those which are not passing, so that, when consideration is being given to the question of what can be done at a given time, we may really know what is the problem with which we are dealing and whether any solution which may be suggested will meet it.

The fact is that the workpeople registered at the exchanges in this mass figure are not homogeneous, nor are their problems homogeneous. They are persons of different ages, sexes and capacities, and they are seeking work in different industries and occupations and in different districts. Each district has very different problems, although some districts, such as the coal areas, have similar problems. Some of the people have been unemployed for a very long time and others are passing from one job to another; the latter are registered on the day of the count, but they may be in a job two days, three days or four days, or a month or two months afterwards. In my opinion, when people talk about a plan, they must remember that the first element of successful planning is a breaking up of the problem for the purpose of seeing it in its true proportions. I would like to try to assist the House by making an analysis of the problem as I see it, analysing it not only with reference to the problems involved in the unemployment figures, but with reference to the problems of employment. In trying to estimate the present trend, in trying to see—to use the metaphor of the right hon. Gentleman the Member for Wakefield (Mr. Greenwood)—whether the clouds are dense or not, and if dense whether they are likely to become more dense, surely we must not concentrate on the unemployment figures, but must look at the employment figures in relation to particular trades, and then look at those trades against the world background.

First of all, there are two or three things which the House should note about our register. No comparison has been made in the Debate so far between our register and the registers in other countries, but in several speeches outside the House, such comparisons have been made. I would point out that the basis of our figures is administrative, and that they are more complete than the figures to be found in any other country. Again, the figures must be read by reference to the schemes of benefits and allowances, and the greater the improvements in the benefits and allowances, the more complete the register is likely to be. Therefore, the use of the figures in mass leads to errors both in understanding the problem and in considering action. I hope the House will bear with me if I give a few figures in order to break up the problem and to see for what it is that we are being asked to plan. On 14th February, 1938, there were estimated to be in work, excluding agricultural workers, insured persons, between the ages of 16 and 64, to the number of 11,324,000. There were estimated to be unemployed 1,810,000, and this number includes 1,062,000 adult males who were registered as wholly unemployed. The total number of persons registered as temporarily stopped was 335,000. [An HON. MEMBER: "Men?"] I am referring to the total number of people unemployed. Unless I specifically mention the sex, the figures apply to all those concerned within the section. There were 70,000 casual workers. Those temporarily stopped and normally in casual employment came to a total of 405,000, out of a total register of 1,810,000. There were 251,000 women registered as wholly unemployed. The total figure includes 111,000 juveniles under the age of 18.

Dealing first of all with those who are temporarily stopped, if anybody asks me, "What do you intend to do in the direction of public works for the 430,000 who have found their way on to the register during the last five months?" My answer is that I do not think a policy of capital works is any solution of the problem of more than 100,000 temporarily stopped workers in the textile industry in Yorkshire and Lancashire. If anybody proposes capital works as a general remedy, I maintain that they would not be a remedy in that particular part of the country. The remedy for that particular problem lies elsewhere. Indeed, those who are running a double campaign on the one hand, for planning for more prosperity, and on the other hand a demand for low prices, are making incompatible demands. Any such demands are frivolous demands, because things which are fundamentally incompatible must be fundamentally frivolous. [Interruption.] If hon. Members will think that remark over, they will see that there is a good deal more wisdom in it than they may realise now.

The fact is that the rise in prices about which complaint has been made began as a result of the return to prosperity, and the lowest cost of living index number in this country coincided with the largest number of unemployed. I do not want to encroach on the ground of my right hon. and gallant Friend the Parliamentary Secretary to the Board of Trade, but I would like to say that one of the elements which showed itself in August—it did not show itself in July—when I was planning my tours to the nine Ministry of Labour divisions, was a drop in the price of raw wool which, six weeks later, made itself felt in almost every exchange in parts of the West Riding in an increase in the number of workers temporarily stopped. That fall in the price of raw wool affected the textile industries in the West Riding. I give that instance to show that one cannot commend every general policy of planning as a universal remedy for the great human problems involved in the question of dealing with every one of the people registered at the exchanges. It is for this reason that to-night I call the attention of the House and the country to the analysis of these figures.

Moreover, in looking at the magnitude of the problem, both from the point of view of those who have a plan or desire a plan, and of the unemployed themselves, the question arises as to how long the unemployed have been out of work. The House will have noticed that in the recent returns of the Ministry of Labour, we have given the country some regular information about that. We have made special counts in order to discover how long the unemployed had been unemployed. The latest figures for February reveal the following position. Of the total figure, 46 per cent., or 764,000, of the claimants for benefits and allowances—those are the only ones for whom we can get accurate figures—had been unemployed for less than six weeks; 63 per cent., or 1,041,000, had been unemployed for less than three months; 75 per cent., or 1,252,000, had been unemployed for less than six months. We come then to the hard core, to the men and women about whom the right hon. Gentleman the Member for Bow and Bromley (Mr. Lansbury) has spoken with such eloquence this evening. In February, they amounted to 17 per cent., or 279,000, of the total. It is there that we have the real problem. It is an interesting comment on the last four years that that hard core is now smaller than it has been at any time during the last four years. I am sure that hon. Members, whatever may be their political views, will agree that that is a cause, not for complacency, but for satisfaction. When one considers the figures in this way, one sees the real problem.

In the first place, for those who are changing over from one job to another, or who have been out of work for a short time, it is a matter of placing in the most expert way. Hon. Members will have noticed that the exchange machinery of the Ministry of Labour, which is a plan in operation, is more successful each year in drawing a larger number of employers to consult with it as to where best they can find the labour they need, and ever increasing use is made of that machinery by the unemployed themselves, in facilitating the quick change over from one job to another. In reply to my Noble Friend the Member for Central Bristol, who raised a specific point in this respect, I would point out that the exchanges regularly do all they can not merely to help those who desire labour on the industrial side, but those who require it in agriculture. The placing work of the Ministry was more successful last year than it had ever been before. It is a day-to-day and year-to-year plan for assisting industry and labour to get together in the quickest possible time, so that the period of unemployment may be shortened.

Secondly, the prospects in one area and in another, as in one industry and another, are not the same. I would observe that, it is a remarkable thing that after four years of extraordinary recovery, years in which we have broken every previously recorded total of employment, and at a time when we have an estimated total of 11,324,000 in employment—20,000 more than were estimated to be in work in February of last year and 2,000,000 more than in February, 1932—less than half of the insured population, in 1937 was to be found in Scotland, Wales and the North of England, and that rather more than half was in the Midlands, South and West. Of the unemployed in those same areas the former group, Scotland, Wales and the North of England, contained nearly two-thirds of the workers now registered as unemployed, and the latter group contained 645,000, or rather more than a third of the total unemployed. That is to say, 1,165,000 were in the former group and 645,000 in the latter.

Let me give one more illustration to put the thing in focus. Let us look at the incidence with regard to percentages. I take the same areas, the South and Midlands first. The incidence varies between 8 and 10 per cent. In Scotland and the North it varies between 13 and 18 per cent., whereas in Wales the incidence is 24 per cent. So the problem is a very different one when you deal with a very prosperous area in the South or the Midlands, or any prosperous part of any of the other areas, for there are prosperous parts in every area of the country now—from the problem in an area where the recovery has not been as great and especially in those two areas whose fortunes have been so long mainly dependent upon contracting industries—the coal areas and the cotton areas.

I come to the point stressed by the right hon. Gentleman the Member for Bow and Bromley. We have at the Ministry made inquiries about this in order to find where the burden is greatest and where the problem is most urgent. These are the analyses. Of the men, two-fifths of the unemployed are below 35 and one-fifth betwee 35 and 45—the group between 25 and 40 is the largest group in the total population and also the largest group in regard to eligibility for employment, and one of the surprises I had in making the analysis was the comparatively large proportion in that age group—and two-fifths over 45. When we come to women, the situation is different. Of those registered as unemployed in November, three-fifths were below 35, one-fifth between 35 and 45 and one-fifth over 45. Coming to the older group still, the group above 55, 22 per cent. of the men were over 55–250,000—and 22,000, or just over 9 per cent., of the women were over 55.

That, of course, leads me at once to consider what the prospects are in the various industries and what the outlook is. The right hon. Gentleman challenged me to give my views as to the future. He quoted from the Unemployment Statutory Committee. That Committee's report is the result of a Government plan. It is the annual working out of a Government plan whereby we look ahead and try to forecast what ought to be done with the funds that we apply for the benefit of those who are out of work, and to look ahead for as long as a cycle of eight years. It has the advantage that it provides the country and Members of the House with such forecasts as can reasonably be made. The right hon. Gentleman quoted one passage from the report but not the other. The economic advice given by the Committee is so balanced that it is illusory to quote a part only. The right hon. Gentleman was in error in talking about the report being the first to advocate the putting aside of a large sum by way of reserve. [Interruption.] I understood him to say that. In the very first survey of the position they made a recommendation that it was a prudent thing to put aside out of the balance a large sum against a recession, as we now call it—the word is not ours. It came from America, from no less a person. I believe, than the President of the United States. It is a convenient term, because it more accurately defines the position than the word "slump," which is so often used.

Let us see what the record is in certain outstanding industries. Let us take a comparison between now and six years ago. In the coal mining industry it is not quite the same problem as two years ago. Unemployment has been reduced from 295,000 to 97,000, but this is very largely discounted by a fall of 177,000 in the insured population. That is to say, those who are insured in the industry now, as compared with six years ago, are 868,000 instead of 1,045,000 as was the case then. Here is the percentage. Today unemployment is 11 per cent., whereas then it was 28.

Mr. Dunn

Do we understand the right hon. Gentleman to say that there are 868,000 in the mining industry?

Mr. Brown

I am not talking of persons on the colliery books. I am talking of insured persons six years ago and the comparable figure to-day.

Mr. Dunn

Is not the real fact that there are 760,000 men on the books, and not 868,000?

Mr. Brown

The hon. Member is now attempting to put a gloss on it which cannot be sustained. Some of the 868,000 insured persons who were in work when we took the last count may be out of work next time, while some of those on the insured register who were then out of work may be in work next time. I am using precisely comparable figures, not ignoring the fact that the insured population is generally larger than those in work at any given time. [Interruption.] The hon. Member does not do me justice. I made it plain that I was not dealing with the persons on the colliery books. I never mentioned the colliery books. I quoted the figures of insured persons in the industry, and the moment the hon. Member rose I knew exactly what was the point in his mind, because when at the Ministry of Mines I had interdepartmental discussions with the Minister of Labour dealing with the difference between the two figures.

With regard to cotton, there has been a large reduction in unemployment, from 143,000 to 95,000. This has, unfortunately, resulted from persons leaving the industry for other kinds of work. Cotton has suffered considerable contraction, the insured population having fallen from 518,000 to 408,000. Unemployment has improved from 26 to 23 per cent. but the numbers in employment are smaller than they were six years ago. [Interruption.] The Government are being asked to plan and they have a right to point out where the people are and what industries are concerned. That is a fair proposition in answer to the demand that has been made. The first element of planning is to know for whom you are planning, where they are and whether they need a plan at all, whether they are men who will, in the ordinary way, find work in two or three days or a week, whether they are men who have been out so long that the country as a whole desires to take notice, as it has in the Special Areas, of their particular plight as long-term unemployed men.

Major Procter

Has the right hon. Gentleman come to any conlusion as to helping those weavers who are working on two looms?

Mr. Brown

That problem is complicated by one of the most difficult of all our industrial problems, namely, that side by side with the large number of unemployed and with contraction in the industry, you have the particularly acute and distressing feature of under employment while at work.

Mr. Burke

Is it not a fact that in the last 12 months the number of weavers unemployed has almost doubled—that it hase risen from 21,000 to 40,000?

Mr. Brown

I hope before the end of my speech to give some facts about the textile trades to show that the greatest single factor in the increase of 400,000 has been in those trades. Let me try to give a picture of the situation as it is in the main industries. General engineering has recovered from the depression and is now enjoying "boom" conditions. In an insured population of 608,000, unemployment has been reduced from 160,000 in February, 1932, to 39,000 at the present time, that is, from 28 per cent. to 6 per cent., and I draw the inference that employment has increased by between 180,000 and 190,000. In shipbuilding and ship-repairing the situation is much improved though still serious. Unemployment has been reduced by 75,000 but the number of persons engaged has fallen by about 8,000. The unemployment percentage is now 21 compared with 60, which was the figure six years ago. The present unemployment is 34,000 and, on the latest figures, the insured population is 163,000.

Miss Wilkinson

How much of that fall is due to the fact that shipbuilding yards have been closed down altogether, and therefore people have been put out of the industry permanently?

Mr. Brown

I think I have indicated that that is one of the elements of the situation. I pointed out that the number of persons engaged has fallen which shows that we have in mind the point mentioned by the hon. Lady. The building industry has made a considerable improvement. There is an increase in the insured population of 174,000, together with a reduction in unemployment of 102,000. In other words, the industry employs 250,000 more persons than it did six years ago. The present number of unemployed is 170,000 of an insured population which last July numbered over 1,000,000. The unemployment is mainly in the ranks of the unskilled workers. Coming to motor vehicle, cycle and aircraft manufacture, we find another illustration of greatly increased employment. The figures show how a general picture of conditions may not be accurate. Unemployment has been reduced here by 30,000. At the same time 100,000 extra persons have been engaged, or an increase of about 130,000 in the number employed. At the last count there were 25,000 unemployed out of an insured population of 348,000 in this industry. The distributive trades have shown a remarkable increase step by step with the expansion of trade. They now employ 150,000 more than they did six years ago, as the result of an increase of personnel of 104,000, and a reduction in unemployment of 46,000. The present unemployment totals 202,000 out of an insured population of a little more than 2,000,000.

I sum up in this way. The estimated number of insured persons in employment was, as I have said, 11,324,000 in February or 20,000 more than in February, 1937—there is no sign of a recession there—and 2,000,000 more than there were six years ago. All the main industries, except woollens and worsteds, show a considerable reduction in unemployment. Cotton shows a reduction in unemployment, but it is offset by the facts to which I have already referred. Every one of the nine divisions of the Ministry of Labour shows a considerable reduction in unemployment, but the fact remains that the incidence of unemployment is about twice as severe in the North and in Scotland, and nearly three times as severe in Wales, as it is in the Midlands and the South.

Mr. Shinwell

Why does the right hon. Gentleman stick to the year 1932 in these comparisons? Is there any special reason for taking that year? Could he not take 1929 or even 1930, or perhaps 1931, when he first became a member of the Government?

Mr. Brown

I take that year, because it gives a fair picture of the difference between things as they were at the worst, and things as they are now. The right hon. Gentleman opposite talked about slumps. I am trying to give the House a picture of the situation as it compares with the worst period of the slump. I have been asked to say what we would do, and reference has been made to a figure of 3,000,000 unemployed. I have first to show the difference between the state of affairs at that period and the existing state of affairs.

I was asked about the recent rise in unemployment. Between September, 1937, and February, 1938, there was a rise of 471,000 in the figures, but of those, 143,000 were temporarily stopped workers and 14,000 were casual workers. Over the six months period the total unemployment increased by 35.2 per cent.; but the increase in the numbers wholly unemployed was only 28.8 per cent. while those temporarily stopped have increased by 74.5 per cent. as compared with the earlier figures. The worker who is temporarily stopped has the expectation of returning to his usual employment in the near future. Many of these workers are actually changing over from one job to another. In many cases they are experiencing either systematic or intermittent short-time work and they happened to be out of employment on the date when the count was taken. I was asked my opinion about the rise in the last five months. I draw the conclusion that the higher proportionate increase in the number temporarily stopped suggests that the increased totals are the result of a temporary slackening in industry rather than any permanent set-back, and affords grounds for hoping that the improvement found in last month's figure will continue.

Mr. George Griffiths

Will the right hon. Gentleman tell us the difference between the figures for February of this year and those of February last year?

Mr. Brown

I have already pointed out that there are 20,000 more at work now than there were in February of last year. There are those who talk about the problem of capital works as though it had the same background now as it had six or seven years ago. The problem of public works to-day is not the same problem as it was then. The hon. Member for East Aberdeen (Mr. Boothby) asked me whether it was possible to give any picture of what is being done at the moment. I do not think it is possible to give a complete picture, but I shall try to indicate, under certain main headings, how much is being done at this moment by the central Government, the local authorities and certain public boards.

I take housing first. Houses are being built in England and Wales at the rate of 330,000 annually, and of these 70,000 are being provided by local authorities and 260,000 by private enterprise. That compares with 202,000 in 1932. If the hon. Member for Seaham (Mr. Shinwell) would like the figure for 1929 I can give it to him. It was 203,000, and the figure for 1930 was 162,000. The number of houses provided by local authorities in the year ended September, 1937, was 71,500 and the loans sanctioned by the Ministry of Health for housing for the 11 months from 1st April, 1937, to 28th February, 1938, amounted to £35,300,000, compared with £38,000,000 for the whole of the financial year 1936–37. Taking health and miscellaneous services, the loans sanctioned during the 11 months ended on 28th February, 1938, amounted to £30,200,000 compared with £26,000,000 for the whole of the previous financial year. Expenditure for educational purposes by local authorities approved by the Board of Education for the first 11 months of 1937–38 amounted to £11,700,000.

Mr. Kelly

Is that entirely for building?

Mr. Brown

For educational purposes. I would point out, since the question has been raised, that there is always a time-lag between approval being given to a scheme by the Board of Education and application to the Ministry of Health for sanction of the loan. In the case of transport, the public expenditure with which the Ministry of Transport is concerned on roads and bridges amounted in 1936–37 to £58,000,000. In the case of railways there are two programmes, subject to agreements under which the Treasury guarantee the capital expenditure. The first agreement provides for work in the London area amounting to £14,000,000, and the second for work in the provinces amounting to £29,500,000, and up to the end of June, 1937, an expenditure of over £11,700,000 had been incurred.

As regards electricity, loans sanctioned by the Electricity Commissioners for electricity purposes, excluding the Central Electricity Board, amounted to £24,000,000 during 1936–37 as compared with £17,000,000 in the previous year. The Central Electricity Board is empowered to borrow up to £60,000,000 for the construction and acquisition of main transmission lines and purposes connected therewith, and the standardisation of frequency. At present, I understand, borrowing has been sanctioned by the board up to £52,500,000 of which less than £2,000,000 remains unexercised. Apart from that, the board can, with the approval of the Electricity Commissioners, direct authorised undertakers to carry out extensions and alterations, and during 1936 the estimated amount of expenditure involved in such directions was £12,500,000 spread over the next two or three years. Loans sanctioned in 1936–37 in connection with the conversion of tramway services to trolley vehicles or omnibus services amounted to £1,750,000. Dock developments involved a capital expenditure of which I cannot at the moment give the House the figure.

In the case of the Post Office the total expenditure on the engineering programme was £21,500,000 in 1936–37, of which nearly £14,000,000 was in respect of new works of construction in connection with the telephone and telegraph services. It is anticipated that there will be a considerable increase in the capital expenditure on telephone equipment in the current year. The actual expenditure on the engineering programme is estimated at about £27,000,000. As regards miscellaneous works for Government Departments, under the heading of civil works the expenditure of the Office of Works in 1937 was £2,750,000 which, of course, is exclusive of all work done under the Defence programme. I have made inquiries from the Home Office and the Prison Commissioners in regard to their building programmes, and I am informed that, excluding expenditure on air-raid precautions, their expenditure on buildings such as section houses, police stations, and prisons, amounted in 1937 to nearly £2,000,000.

There is one other item to which I will refer, in which hon. Members below the Gangway opposite will be interested, and that is in regard to forestry work. In 1929 the expenditure was £900,000; in 1932, £700,000; and in 1937, £1,300,000. When I say that the problem is very different now from the one which we discussed 11 years ago hon. Members will agree, I am sure, and also that this is a very formidable programme that is now being carried out. Under loans sanctioned for expenditure estimated by Government Departments, local authorities, and public undertakings, it amounts to somewhere between £200,000,000 and £300,000,000.

Mr. Foot

Is it not a fact that in 1931 the work of the Forestry Commission was one of the first to be slowed down?

Mr. Brown

Perhaps the hon. Member would like to have it in another way. The plantations maintained in existence increased from 127,000 acres in 1929, to 200,000 acres in 1932, and 330,000 acres in 1937, and plantable land went up from 320,000 acres in 1929, to 400,000 acres in 1932, and 600,000 acres in 1937. May I now be allowed to complete the picture by giving the House the latest figures about the Defence programme? Government contracts from 1st April, 1936, to the end of January, 1938—direct contracts in connection with the Defence programme—have been placed by Service Departments to the value of £344,768,700, and in the scheduled areas the contracts amounted, of that sum, to £96,492,000, of which orders to the value of £57,000,000 were placed in the Special Areas.

Mr. Shinwell

Has the right hon. Gentleman any estimate of the numbers employed in consequence of this expenditure?

Mr. Brown

I have explained to the House on numerous occasions that it is impossible to give any estimate of that kind. As the House knows very well, the work covers a number of large contracts and many thousands of small contracts. Now let me say a word about the construction side, which is again part of the plan of the Ministry of Labour's work. Take training. It is a very interesting fact—there is a number of figures that I might give, but I will give only one, and the figures are very eloquent—that in the last year, out of 10,761 young men who came to our centres for training for semi-skilled work, we placed 10,424, and since the schemes were started the numbers placed have amounted to over 60,000—a very remarkable piece of work. I have made it quite clear that if there are any other trade union members in the engineering trades, who, by refresher courses of this kind, might find a chance, although they are above the normal age at which we take young men, we shall be very pleased to give them an opportunity of taking the course. The hon. Member for Dundee (Mr. Foot) referred to the Special Areas. I gathered that he did not expect an answer now, but he raised one point that I can answer. I will not argue the case whether or not the arbitrary areas should be altered, but I will give some light on one point which may concern Dundee. If the hon. Member will look at Section 9 of the Act, he will find that they need not be held up because of the fear that any undertakings not entered into before 1939 will not—

Mr. Foot

I am sorry if I did not make myself clear, but my point was that under Sections 5 and 6 there are two forms of approval that can be given. First, assistance can be given to site companies; secondly, assistance can be given to concerns which are set up on the sites let to them by site companies. I understood that a site company would get an advance from the Treasury if it was incorporated before March, 1939, but I was advised that concerns which were set up might not be able to get assistance if they actually took over the site after March, 1939. Therefore it is important, when you are setting out on an adventure of this kind, to know what will happen after March, 1939.

Mr. Brown

If the hon. Member will look at Section 9, he will find that there are three particular provisions there, which deal with the problem he raised. The hon. Member for West Nottingham (Mr. Hayday) raised a point about supplementation. I do not think the complaints to which he referred were correct, but I will look further into that matter. With regard to the cases of the alien technicians, the hon. Member raised that matter by letter, and I will say one general word and one particular word on that subject. I am sending him a letter in a day or so about the actual case concerned, but on the general issue the House, especially now, desires two things. It desires the Minister of Labour to do his duty under the Act and to safeguard the rights of British workers and their opportunities for employment, but I have gathered from the reception the House gave recently to a statement by the Home Secretary I am required to do that with a sympathetic feeling for the needs for some of these people.

I had intended to say something about rationalisation and mechanisation, but I do not wish to detain the House too long, and so I will content myself by saying that I am asked whether I can say anything about any plans that we may have with local authorities for the future. I cannot usefully add to what was said about a month ago by my right hon. Friend the Prime Minister, and perhaps I may be allowed to repeat what he then said. He was asked whether any steps had been taken to cope with the increased number of the unemployed, and he replied: In reply to the first part of the question, the increase in unemployment to which the hon. Member refers is largely due to causes of a seasonal character and is not of such a nature as to call for the institution of measures, other than those which the Government are continuously applying for the stimulation of employment. As regards the preparation of plans for the future, this matter has not been overlooked and the Government are now considering what further steps they can take in conjunction particularly with local authorities. At the same time, I think it right to say that too much reliance should not be placed upon the possibility of doing more by such plans than contributing in some degree to reduce fluctuations of trade and employment."—[OFFICIAL REPORT, 10th February, 1938; col. 1230, Vol. 331.] I do not think we need fear that the clouds are as black as hon. Members opposite think. There is a temporary slowing down, but we shall do everything that we can to lay our plans to enable us to go forward, and in the meantime the Ministry of Labour, through their various constructive services, will do all they can to find jobs where those jobs are available for men, whether elderly or young.

Mr. Leslie

I am sorry I did not catch the figures of the unemployed in the distributive trades. Could the right hon. Gentleman give them to me?

Mr. Brown

I will let the hon. Member have them.

7.41 p.m.

Mr. Daggar

I have listened to the right hon. Gentleman's speech with great care, and I must say that I have never heard a more incoherent, disconnected speech in my life. One observation that I want to make is that he has not endeavoured to explain the fact that we have 1,800,000 persons unemployed at a time when the Government are commencing upon an armament expenditure of £1,500,000,000. That fact he has deliberately burked with repeated references to some picture that he has not even now completed, whatever the picture might be. However, we are all, I am sure, pleased that for the moment the national situation has eased sufficiently to permit us once again to discuss matters that directly affect the lives of our people in this country.

I suppose that to-night, as upon previous occasions when the question of unemployment and the condition of our people has been raised in this House, we shall be told about the improvement that has taken place. We shall be told, as we were last year, that the measure of improvement is to be found in the increase of free meals supplied to the children attending elementary schools. We were told by the Parliamentary Secretary to the Board of Education, when our people were in office, that there were 479,000 children supplied with meals and that the number supplied had increased from 7,500,000 to 86,500,000. Another Parliamentary Secretary, the Parliamentary Secretary to the Ministry of Health, also told us that the number of meals supplied to our children at school had increased from 27,500,000 to 100,000,000. It is very strange that both hon. Members should express the same view. Perhaps the explanation is to be found in the fact that all great minds think alike, or that there may have been an exchange of briefs, or that little things to small minds appear great. In any event, I am surprised that an increase in the number of free meals to children in our elementary schools is evidence of prosperity. I have always considered it evidence of the poverty of their parents and that children were fed at school because their parents could not afford to feed them at home.

I desire to remind the House that nearly 10 years have passed since the existence of distressed areas, as they were then called, began to be recognised nationally, and to remind the right hon. Gentleman, with regard to his claim that there has been an improvement in the conditions of our people, that according to the "Times" statement made at the end of last year: The number of people wholly out of work in the South Wales Special Area three years ago was 135,000, about one-third of the normal working population; and until the summer of 1936 it hardly changed at all. It is no slur upon the Commissioner's activities that the shrinkage to 90,000 which has occurred in the last 12 or 15 months is due largely to a sudden and sustained demand for coal. Short-time working, that bane of so many households in the valleys these last 10 years, has vanished. The peak of employment in the mines has not necessarily been reached, though it may be near. It is with the problem in South Wales that I want particularly to deal, not ignoring the fact that we have 1,800,000 persons on the unemployment registers. I want to put before the House two facts which must be faced, in my opinion, if an attempt is to be made to solve this problem of unemployment, particularly as it affects those of us who live in various parts of South Wales and Monmouthshire. One of them is emphasised in the Second Industrial Survey of South Wales, by Professor Marquand, a person who was employed by the Government to undertake the first survey that had ever been made for that area. The first point he emphasises is that if the 1929 output of coal could be regained, there would remain a surplus of 44,000 wholly unemployed miners. If the 1934 output remains the maximum, the surplus will be no fewer than 74,000. That fact constitutes a part of the problem which must receive consideration. A second fact is stated by the same authority in an article contributed to the "Colliery Guardian" supplement on 22nd November last year. I do not apologise for quoting from this authority. He says: Even if the maximum number of new industries could be successfully introduced the surplus of unemployed labour could not be entirely absorbed. The most important fact in the whole South Wales situation to-day is that nearly half of the wholly unemployed male workers are over 45 years of age. In the Special Areas—that is, in the East Glamorgan and Monmouthshire section of the coalfield—there were in May, 1936, some 16,000 wholly unemployed men between 55 and 64 years of age. To-day the number is probably larger. In the western section of the coalfield there were only 2,240 of these older men wholly unemployed; but the proportion of unemployment among this age-group was, even there, higher than among the younger workers. For all but a handful, reIabsorption in industry on commercial terms of the unemployed over 55 years of age is obviously impossible. For the many thousands who are over 40 or 45 it is evidently very doubtful. This is the most appalling problem that we have to confront. It is one which calls for the most earnest thought and the well-applied effort of every person with sufficient public spirit and true patriotism to care for the welfare of his fellow citizens. For the older men continued idleness, till death affords release, seems to be all that the future holds unless we can devise ways of filling the remaining eight or ten years of their working lives with some form of useful and creative activity outside regular industry. Their plight is vividly pictured in the third annual report of the South Wales Council of Social Service. Surveying the work of his council in the present situation of the coalfield, the secretary writes: 'The technique of a life sentence is very properly different from that of nine months in the second division; and what has been for four or five years a social approach to the meanwhile needs of almost 200,000 men of varying ages, must now also adjust itself to the permanent needs of thousands of men who have 20 or 30 years to live and no prospect of industrial opportunity.' That statement makes it clear that in the opinion of Professor Marquand there is a limitation to results that can be obtained by the introduction of new industries in South Wales. The creation of an industrial Britain is not due to light industries, and, therefore, cannot be maintained by such undertakings. Although that fact must be recognised, it will not prevent me from asking for their establishment in South Wales and Monmouthshire.

If regard is had to the magnitude of the problem of unemployed in South Wales and Monmouthshire, the Government have done little towards its solution. It is true that there has been some improvement, but that is not due to the efforts of the Government. Our problem there has scarcely been touched. We have it on the authority of the "Western Mail," in a statement they made last year, that there was a record number at work in 1936, but that employment in Wales was 24.6 per cent. less than in 1923. When we had our last discussion the Minister of Health stated that he had been in South Wales and that there had been a considerable improvement. We are under no obligation to accept the Minister of Health as an authority on the improvement that has taken place in South Wales simply because he has had the opportunity of an occasional car ride to the Special Areas there. The facts are to be found in the Government's own publication, to which I want to refer. In the last issue of the report known as the "Survey of Industrial Development" we are able to ascertain to what extent the Government have assisted the Special Areas in South Wales and Monmouthshire during the four years I933–36. During that period the number of factories opened in Great Britain was 2,044 employing 178,750 persons. In South Wales and Monmouth 14 factories were opened employing 2,500 individuals.

In this connection I desire to direct the attention of Members to the Board of Trade annual publication entitled "Survey of Industrial Development, 1936," which contains the excuses or reasons given by owners of factories for their establishment in places other than the Special Areas. Seven reasons are given, and one of them is called "Proximity to employer's residence." The attitude of the owners of those factories would probably be defended by those who contend that industry exists to serve the interests of society. In 1935 there were eight cases in which this reason was given. Last year there were 13, so that, according to this survey, there have been 21 instances in which the owners have stated that factories have been erected round London simply because they are in proximity to their residences. We can get no information of the numbers of factories involved nor of the number of persons employed. It appears that these owners desire to have their factories near their golf links, fishing stream or favourite grouse shooting preserve. While the report contains observations with regard to each of the other six reasons, there is no comment with regard to the excuse about factories being erected near the residences of the owners.

Perhaps I may be permitted to make a reference to my own division, because it contains three areas which have been scheduled as Special Areas, because it serves to illustrate the attitude of the Government towards the whole of South Wales and Monmouthshire, and because of a statement made by the Commissioner in his last report. He says that at Abertillery, an area which constitutes part of my division, the unemployment percentage is at least 10 points lower than it was a year ago. Further on he states that there has been a fall of over 15 points at Abertillery and Blaina, both of which places used to be regarded as exceptionally 'black' spots. I am not interested in the difference between the 10 points and the 15 points reduction, but I am concerned with the cause of the alleged decrease in unemployment. It is due to migration, which involves the breaking up of homes and to the policy of the Government. Last year 320 persons left Abertillery to take up employment secured for them by the Employment Exchange. Another 377 migrated, having secured employment by their own efforts. That makes a total from that one place of over 690 persons in 12 months. From Blaina, to which reference is made by the Commissioner in his report, the number of persons who left and found work for themselves was 690. The number of those who were found employment by the exchange was 162. which gives a total of 852 who have been compelled to leave the area where they have suffered as a result of the industrial depression since 1921. Since 1931 Abertillery has lost 3,500 people and Blaina during the same period has lost 3,455. There is another Employment Exchange in my division situated at Crumlin, and I find that during the same period 3,069 persons left that place.

In seven years, therefore, I have lost from my division a number of persons in excess of 10,000, which is equal to a whole township. It is migration which is solving the problem for us in South Wales and not any assistance given by the Government. I had an opportunity of presiding at a meeting in connection with the distribution of prizes at a secondary school in Nantyglo last year, and I was informed by the headmaster that 70 students had passed through the school and that only three were able to secure employment in the neighbourhood. There has not been a single new industry established in any part of the division which I have the honour to represent, but people are forced to find employment round London. That movement towards London will necessitate the expenditure of millions of pounds to secure their safety in the event of another war. Yet we are told by Sir George Gillett in his last report: My efforts have, therefore, been especially directed towards the introduction of a variety of lighter industries which will give employment to women as well as to men and are not so liable to violent fluctuations in a time of slump. It may be necessary to observe here that the Government should take an interest in persuading Sir George Gillett not to use the word "slump" but to use the much politer term of "trade recession." Recently an effort has been made by the Natyglo and Blaina urban authority to prevail upon the appropriate department to accept the responsibility for the construction of a road through an adjoining area where employment may be found for some of its people. Such efforts proved as difficult and unprofitable as the introduction of new industries. Much is attempted but nothing achieved in an area where we have had unemployment since 1921. I should like to know when the Government intend doing something for what has been appropriately described as "the land of forgotten men," for it must be obvious even to the Government that a trading estate at Tre-forest is no solution of the problem to which I have referred.

While the Government are making up their mind, may I appeal for a measure of afforestation? We talk about stones being given for bread. I am asking whether it is possible for us to have a few trees, until the Government have made up their mind to introduce new industries into that distressed area. There is plenty of land available. Trees have been planted where they are not wanted. Members of this House have received books from authors who are opposed to the policy being carried out by the Forestry Commission. In my own and other divisions in South Wales there is plenty of land available and we should offer no opposition to a measure of afforestation. Neither I nor my colleagues on these Benches can understand why this country should permit the erection of factories in areas where the percentage of unemployment is almost negligible, and where the beauty of the countryside is being sacrificed for the sake of unplanned industrialisation, when there are mining districts where that has already been achieved. I make this appeal to the Government, because Sir George Gillett, in his report, has stated: It may be that many of those who read these pages know as little about the areas from a personal aspect as I did before I undertook this work. I well remember the depressing effect which the great slag heaps and the ruins of dismal factories "— He could have said dreary pits as well— had upon me on my first visit, and even some measure of familiarity has not removed that feeling. That is the view of an individual who occasionally goes to those areas. I ask the House to consider what must be the feeling of depression among those who have nothing to do but to gaze upon those unsightly evidences of unbridled commercialism, those who have to reside in valleys where the hills have been denuded of their trees and stripped of their national beauty. There are hills there which could be restored to their former spendour if the Government would only make the effort, and put into operation schemes of afforestation—if only they could be persuaded to discharge their obligations to areas which have contributed so much to the industrial and commercial prosperity of this country.

I am aware that the Commissioner has said that some progress has been made in this connection, but little has been done in comparison with what is needed. Every report issued, including the one by Lord Portal, makes reference to this matter. In the second report, of February, 1936, it was stated that the Forestry Commission favoured the planting of 200,000 acres outside the Special Areas. I am asking to-night for a measure of afforestation in the Special Areas, and what reason can there be for not acting upon the advice tendered by the Commissioner? In his last report the Commissioner stated that he was willing to exercise his powers to acquire land for planting. Will the Minister or the Parliamentary Secretary tell me why we in these areas are refused such a small advantage? I ask that question because of this reference in the Commissioner's second report: In my first report attention was drawn to the desirability of promoting further schemes of afforestation in or near the Special Areas. Since that report was rendered I have had further discussions with the Chairman of the Forestry Commission. He also said that a programme of this nature would provide employment for an average of 2,000 manual workers yearly. In every one of the reports reference is made to afforestation. In one of them it is remarked that: Works of afforestation have a high employment value for the money spent. In another it is said: It may be that schemes of afforestation cannot go very far in solving the unemployment problem, yet sound schemes of afforestation are an economic proposition. In conclusion, I suggest that something must be done in view of the fact that there are still 1,800,000 persons unemployed, and this at a time when we have embarked upon an expenditure of no less than £1,500,000,000. I submit that it is necessary to consider a limitation of the consideration given to new light industries, and that more consideration ought to be given to those industries which have created the industrial supremacy of this country. The methods adopted by the Government are inadequate to deal with the problem. Its policy of assisted and forced migration is no solution for the problem as we see it in South Wales.

8.6 p.m.

Major Procter

I wish, first, to congratulate the Minister on a period of very conscientious work and upon the very great sympathy with which he has handled a very difficult problem. I have been somewhat surprised at the tardy recognition not only of his work but of the work of the Government in endeavouring to solve a problem which proved to be beyond the powers of the Labour Government in 1931. It has been said that no blame could be attached to that Government for its remissness in dealing with the unemployment problem, for the cause of unemployment then was the world crisis. To-day there is a world crisis equal to that of 1931; conditions in Europe and in America are worse to-day than they were then; but the remedies which have been applied by the present Government to meet difficult conditions have produced great results, and to-day we do not see in our unemployment figures a mounting roll of unemployed and forgotten men. The Government have operated in a statesmanlike way. They have put into operation well-thought-out schemes, and the result can be seen in Lancashire, and in the constituency which I represent where our unemployment has fallen.

Before this Government embarked upon a tariff policy to help the unemployment problem we were paying the foreigner for doing our work and paying our unemployed for not doing it. As a result of the tariff policy and the restoration of confidence there has come to Lancashire more than 2,000 factories and extensions of existing factories. Many of them would not be in Lancashire to-day but for Government action. A great firm in Germany has opened a factory in Nelson which will give employment to some thousands of people. I am sorry that that constituency got that factory, because it did not deserve it seeing that it supports free imports and did nothing to encourage the only method which would compel foreign industries to come here. In Blackburn there is a new factory which will make lamps which would otherwise have been made in Holland. At its "peak" this factory will provide employment for 5,000 men and women. Those are accomplishments which ought to be recognised and admited by the Labour party. If hon. Members opposite and their party had ever done anything comparable to this during their period of office their criticisms now would have some value.

Now I should like to pass to one or two points which affect mainly my own division. One concerns the problem of the Special Areas. Under powers which have been given to them by this legislature, borough councils which are anxious to attract new industries to their areas can borrow money for the reconditioning of empty mills or for building new factories. There are in my division a number of urban district councils which have a number of unemployed persons in their areas. They are Oswaldtwistle, Rishton, Clayton-le-Moors and Church. Their councillors are desirous of getting hold of empty factories and making them into workshops in order to attract industries to their localities, but unfortunately the legislation prevents urban district councils from borrowing money for that purpose. I suggest that the Minister of Labour should consult with his Cabinet colleagues to see whether that impediment cannot be removed.

The Special Areas have the promise of the Ministry that they will receive special consideration in the placing of Government contracts; that other things being equal they will get the contracts rather than more prosperous districts in the South. I should like to point out that that undertaking has not been fulfilled in the letter as far as sub-contractors are concerned. Let me give an illustration of the position. There is in Accrington brick works which makes the finest bricks in the world. The Accrington brick is known throughout the world. I believe that in the building of factories or army encampments or barracks, if it rested with the Ministry itself, the orders for the bricks would go to the Special Areas, but the contracts are let out to sub-contractors and they are under no such limitations, have made no such promises.

Mr. Burke

Accrington is not a Special Area.

Major Procter

Parts of my division, as far as unemployment is concerned, were until recently entitled to be classed as Special Areas.

Mr. Burke

It never has been.

Major Procter

Perhaps I stand corrected in that respect, but, as the hon. Member well knows, when Labour was in office we had a large volume of unemployment, and it was a district which could claim special consideration in these matters. That consideration has been promised, and what I was pointing out was that sub-contractors do not place the orders in the places where work is needed but that the orders have gone to the Birmingham area and to other prosperous districts. I suggest that the Minister of Labour should consult his colleagues in order to secure that contractors and subcontractors working on Government contracts should get their materials from areas in which there is a large volume of unemployment.

Three special problems confront us in this country and are specially associated with Lancashire. The first of them is the problem of the man of 55 years of age or over. I have many times tried by means of questions to elicit from the Minister what he proposes to do with men of 55 years of age and over who cannot get jobs. This is a very human problem, and among the greatest offenders in this respect are the Government and municipalities. On account of pension schemes, men over 35 years of age have very little chance of geting employment in Government service, such as in the Post Office. In industry the problem is very acute for a man of 55, because a youngster is preferred to him. I know that the Minister of Labour is thinking about this problem with sympathy, and I hope that he will give us a pronouncement at a very early date in regard to it. It may involve a subsidy on wages, but the problem is in any case one which we cannot ignore.

The problem of any unemployed worker above 45 is a serious one. If affects women workers as well. I am certain that the Minister will give it his sympathy. Mention of it leads me to the question, often raised in this House, of the cotton worker who is only partially employed and who, because of Lancashire independence of spirit, would rather work though she received less money than she might get on the dole. What docs the Minister of Labour say on this subject? What cooperation can we have from the trade unions to deal with the position? If the trade unions and the Minister of Labour were to get together to think out a scheme I am certain it would result in concrete suggestions how best to deal with this important matter. I again appeal for the sympathy of the Minister, this time on behalf Of the limbless ex-service men who, when they fall out of work, have to go to Employment Exchanges to register. There are not many of them; can the Minister not allow them to register by post so that they need not queue up, either to seek for light employment or to receive their pay? I am glad that we have our present Minister. I hope that we shall realise very soon the great harvest of the fine work which he has put in on the problem of unemployment, not only in Lancashire but throughout the country.

8.19 p.m.

Mr. Burke

I am pleased to have the opportunity of following the hon. and gallant Member for Accrington (Major Procter). He is one of the representatives of Lancashire constituencies, and his speech amazed me. He began by congratulating the Government on their tariff policy, which he said had done much for employment in the country, and went on to bemoan that there were many empty factories in his constituency and that the Government would not allow even the local authorities to recondition them. He tells us that he wants the Government and the trade unions to deal with the question of the partially unemployed. May I remind him that we have done what we can for that problem of unemployment? We have not only raised it with the Minister, but have taken the trouble to form part of a deputation, as we did the other day. When the matter comes before the House again I hope that we shall have the active support of hon. Gentlemen on the other side of the House. It is not a question for the trade unions or for the Minister, but for the employer, who has between his own hands the power to open the door if he likes.

The hon. and gallant Member tells us also that the Government have instituted many statesmanlike schemes. I listened to the Minister of Labour telling us what the Government were doing. He gave us a mass of figures and told us what various Departments were doing in the ordinary course of things, but there was no special effort to find work for the unemployed. At the Post Office, so much was being spent upon electricity, and so on. If the Minister of Labour buys himself a new suit in the ordinary course of things he does not regard that as something done specifically to help the unemployment problem. It is a part of the ordinary course of his existence. The matters which he mentioned to-day were, similarly, not specifically designed to solve the problem of unemployment. The hon. and gallant Member for Accrington spoke about his constituency being a Special Area, but it is not, of course, a Special Area, and it never was. He said he had a brick factory in it, and he hoped that the Government would take some of the bricks and use them. He pleaded with the Government to do so in order to assist the problem of the partially employed and the problem of the old person. After having had to make all those pleas, he said he was satisfied with the policy of the Government.

The Minister gave us a great many figures. He attempted to do the usual kind of thing and to blind the House with mathematical science. A namesake of mine made speeches in the House of Commons which, I believe, were terrible to listen to but delightful to read afterwards. The speech of the right hon. Gentleman was terrible to listen to and I am afraid that it will be just as bad when it is read in the morning. His long list of figures disclosed nothing of the Government's intentions. He told us that there were more persons employed to-day than there were six years ago, but the population is bigger to-day than it was six or 16 years ago. The number of persons employed will gradually creep up year by year as the population creeps up in size. The number of people who are potentially employable goes up at the same time. The Minister did not tell us that the gap between the number of those who want work and of those who are at work remains as big to-day as it was 10 or 20 years ago, although both figures go up in the chain of things. Nearly 2,000,000 persons are still unemployed.

The Minister says that he does not like the word "slump" but prefers the word "recession." What is the good of going to one of the persons who are unemployed and saying: "My dear person, you have not been hit by a slump but by a recession." Many of them have been unemployed for a long time; are we to console them by telling them that they have run into an elongated recession? That suggestion does not help them at all. The Minister's next point was that these people were not of a homogeneous kind, but were of various trades, sexes and ages. It is news, real news to give to the House of Commons that the unemployed are not a homogeneous whole but consist of various classes. I would remind the right hon. Gentleman that the largest numbers of unemployed are in one or two industries, and, if he cannot deal with all the odds and ends of unemployment in the smaller industries, he could at least bring in some schemes which would move the unemployment in the largest and most important industries. Such schemes would naturally and automatically have their effect upon this fringe of smaller industries which exists around the main industries.

There has been some talk about Special Areas. I want to speak about an area which is not scheduled as a Special Area. I am afraid that, because of that fact, there is a tendency to believe that the unemployment problem there is not as acute as it is in South Wales, Scotland, or Durham or on the North-East coast. I want to deal particularly with unemployment in Lancashire, and specifically with unemployment in the cotton trade. The Minister of Labour, before he left the House, said he would give us some more figures about the cotton trade, in answer to a question that I put to him. He went off without giving us those figures, and perhaps I may be allowed now to give to the House some figures in lieu of those which he might have given.

There are in Lancashire, of course, quite a number of industries which are of great importance, but the vital industry is still the cotton trade, and in North-East Lancashire—in my own constituency, for example—half the insured population are connected with one branch of the cotton trade, that of weaving. The Unemployment Assistance Board told the Minister in their last report that, by reason of the fact that large numbers of the board's applicants are in the coal mining industry and one or two other important industries, they therefore present a special problem. Lancashire presents a special problem from this point of view, that within the last month, while throughout the country the unemployment figures have shown a decrease of 17,000, there is only one area in the country where the unemployment figures have gone worse, and that is the North-Western area. I may tell the hon. and gallant Member for Accrington that one-half of the improvement of 17,000 over the whole country is wiped out by a fall back of some 8,250 persons in the North-western area, a part of which he represents. In January, 1938, there were 40,000 persons unemployed in the weaving industry. Last year the number was only 21,000, so that during the past 12 months, in this period of prosperity, the number of persons unemployed in the weaving industry has incerased by nearly 20,000. In Burnley, the increase represents 9.6 per cent.; in Blackburn, 6 per cent.; in Bolton, 5 per cent.; and to-day in the town of Burnley 25 per cent. of our insured population are unemployed. In other words, one person out of every four who ought to be in employment in Burnley is unemployed.

Moreover, the cotton trade, like other trades, has been able of recent years to get a fair supply of juvenile labour. It is able to absorb all the juvenile labour it can get, and it wants more. It is, however, at the older end of the scale that people cannot get employment in Burnley, and the probability is that, as you walk about the town of Burnley today, one out of every three adult persons is unemployed. That, of course, is a very serious position. The Unemployment Assistance Board's own report tells us that 45 per cent. of the people who make application to the Board are over 45 years of age. That problem of an employable population of increased age and of young persons drifting away to other areas or going into blind-alley occupations for a couple of years and being thrown out at 16, is acute, not only in Burnley, but over the whole Lancashire cotton area.

In addition to the main problem of unemployment in Lancashire, we have an unemployment problem that is peculiar to Lancashire, and I hope the Minister will take some cognisance of this. We have there what is known as under-employment or unregistered employment, or unrecorded employment, that is to say, unemployment that does not appear on the register of any Employment Exchange, but means that people are working the full 48 hours per week looking after two looms and only receiving half wages. Where a man is looking after a loom for a full week, he may get 8s. or 10s., and people may therefore be working the full 48 hours and leaving their mill with a wage of only £1, or 19s., or 18s. 6d. That problem exists in Lancashire and nowhere else, and we have asked the Minister to give his attention to it and to do something.

Major Procter

Have not the trade unions evolved a scheme for solving that problem?

Mr. Burke

Yes; the trade unions have been trying to deal with that problem with the employers for the last 10 years, but—

Major Procter

Will the hon. Member tell us what their solution is?

Mr. Burke

The hon. and gallant Gentleman knows as well as I do what the solution is. He knows that at the present time we are asking the cotton trade employers to give us a minimum wage of only 30s. a week—a terribly low wage. That is the solution, and the hon. and gallant Member knows that we have not got it yet. The Minister says he does not like us to go over these trade figures with a microscope. Believe me, there is no need to use a microscope in looking at the problems of Lancashire; the facts stand out for everyone to see. In 1920 or thereabouts, there were 600,000 persons engaged in the cotton industry. Now there are 400,000. That means that the industry has lost, because it cannot maintain them, at least one-third of the people who were engaged in it a few years ago, and, unless people are going to be blind and deaf to all that that means in the way of human misery, the problems do not call for any microscope; they are there for anyone to see.

As the Parliamentary Secretary to the Board of Trade is present, I would like to say a word about another aspect of the cotton industry. As he knows, if the industry is to improve, it will have to improve by expanding its export trade. In a steady flow of exports lies the solution of its problems. Recently Lancashire has suffered a very severe blow as the result of economic conditions in another part of the world. Whatever else Lancashire can do, she can never afford to be isolationist; her problems are linked up with problems all over the world. Just recently, on the top of the fact that our trade has slumped tremendously from year to year, the economic crisis on the west coast of Africa has robbed us of what had become one of our best markets. A year ago we were sending 17,000,000 square yards of cloth per month to the Gold Coast. In one year, that 17,000,000 square yards has dropped to 3,000,000 square yards. Out of 160,000,000 square yards, 17,000,000 square yards was a fairly decent proportion. I believe, in fact, that this had become the next largest market after India. But 3,000,000 square yards out of 160,000,000 square yards is negligible. The world's attention has been drawn to the fact that cocoa is being burned on the west coast of Africa. As far as Lancashire is concerned, that means more and more idle looms. Burning cocoa on the west coast of Africa has left the natives there without money to buy the cloth that Lancashire men would be employed in making. I know the Government have sent a Commission out to inquire into the matter, but the Commission will not report until July. I urge the Government to take some immediate action if our second largest market is to be saved to us at all.

In the same 12 months that has seen this drop in our exports, the number of persons unemployed has risen in Burnley from 3,417 to 6,593—that is in the cotton weaving section alone. I wonder how the hon. and gallant Member for Accrington likes this. You say that this problem is only temporary. It is not a temporary problem in Burnley. There are in Burnley 1,652 cotton weavers who have not done any work for 12 months or more. It may be a long period beyond the 12 months for some of them; but, for at least 12 months, the whole of them have done no work. That hard core of unemployment in the cotton trade is something that the Minister ought to have told us about. Instead, he gave us a mass of figures and percentages and a lot of words, behind which, I suggest, he hid a lot of ignorance.

All over the world, there is grave concern about our overseas trade. Whatever the Government's policy you cannot have an isolationist policy for Lancashire. I suggest that what is necessary to restore the position of Lancashire, is a better deal for Lancashire goods in the markets of the world. We in this country are the world's best customers, and we ought to be able to use that as a lever to get better bargains in our negotiations. The risks of exporters are greater, perhaps, than ever before in the history of export trade in this country, and Government assistance and protection will, perhaps, be necessary to gain for Lancashire that standard of reciprocity to which we are entitled. I suggest that in any treaty negotiations, political or commercial, that the Government are entering into, the first principle should be that of mutual support, whether with Empire countries or others. Lancashire asks for help, because she has done something to help herself. We have done all we can in attracting other industries. The hon. and gallant Member for Accrington tells us that 2,000 factories have come to Lancashire. I do not know where they are or where he gets the figures. I have been at some pains to get the figures out of the Government's own statement.

Major Procter

If you read the report of the Lancashire Development Association you will find the figures all set out.

Mr. Burke

I have the Government's own report for 1936.

Major Procter

This is 1938.

Mr. Burke

This is their last report. There is a very great difference between the hon. and gallant Member's figures and those given in this official report. This report tells us that there have been only 551 new factories up to 1936 in the whole country; 430 of them were connected with the home trade, and 121 with the export trade. It is true that in the north-west region, out of that 551 new factories, we got 114, but 15 of those were transfers within the area. Let us look to the other side of the picture. We opened 114 new factories, but in the same 12 months we closed down 120, of which 68 were textile mills. The one area in the whole country where you have more mills closed than anywhere else is the northwestern area, and the one industry in which you have more mills closed than in any other is the textile industry, and the one branch of that industry in which there were more mills closed than in any other branch is the weaving branch. That is a problem which no glossing over by figures can get around.

I ask the Government to consider the position of Lancashire, with its derelict mills, long-term unemployment, and its high burden of rates. We have to maintain our social services and meet new burdens imposed on us by Government demands—and these have to be met by people whose wages are low and amongst whom unemployment is high. Those who need most have least with which to meet those needs. In Burnley our rates are 13s., in Blackpool they are 8s. 6d., and in Bournemouth 7s. The public assistance rate in Burnley is 2s. 9d., and in Blackpool it is only 7d. Those are the figures that I commend to the Government. I ask them to turn to the problem of Lancashire and do something to help an industry which did so much to build up the commercial life of this country.

8.43 p.m.

Mr. Porritt

I am pleased to follow the hon. Member for Burnley (Mr. Burke), because I am a Lancashire man and live in that county. In many ways I support what the hon. Member has said. Only two years ago, there was considerable partisan bitterness whenever questions of unemployment and economic stress were raised here. I think it is true that to-night most hon. Members have tried to make constructive suggestions to the Government, and I hope that they will get the response they deserve. I would like to question the hon. Member for Burnley on the point he made when he said that the employer in Lancashire has the key in his own hands if he will give better conditions to his employés. The hon. Member must realise that the Lancashire cotton trade depends entirely on exports.

Mr. Burke

I was replying to the hon. and gallant Member for Accrington (Major Procter) on one point only—that of under-employment, two looms instead of four. That was the point I meant.

Mr. Porritt

I think we are all desirous of seeing men given proper wages. I know many men in the cotton trade who have been working 20 or 30 years at their job, and who are getting juveniles' wages, for the simple reason that there are no juveniles and that adult workers who may be unemployed are offered their jobs at very low wages and, if they refuse, they get no unemployment benefit. I should be out of order if I went into the pros and cons of tariff policy in India. As the hon. Member said, when he talked about the West Indian trade, the trade in Lancashire to-day is in a very parlous plight, and I am not going to camouflage the fact. There are factories which have closed down for the first time in their history, and employers all round feel pretty desperate about it, and I hope that the right hon. and gallant Gentleman who replies will realise that fact. I am not, fortunately, in the ordinary cotton industry, but we are in an allied trade to that and we have felt the draught, as has everybody else, and as I live in the district, as an employer, I know very well what the feelings are in Lancashire to-day.

On top of this trade depression—they call it slump in Lancashire—comes this West Indian business. We in Lancashire look upon it with considerable suspicion. We feel that the cocoa consuming interests in this country are not giving the natives a square deal. They have forced down the prices, and the natives, who are no longer the illiterate men of half a century ago, are striking back at these cocoa interests. We in Lancashire hope that they will win. What makes us so bitter in Lancashire to-day is that the cocoa and chocolate industries in Birmingham and the Midlands and in York stand out as ideal employers of labour, yet it seems to those of us who have been hard put to it to find decent wages for our employés that all that they are doing in the cocoa trade is to force down the price of cocoa and so make the West African natives sell it at any price and thereby make profits for the cocoa industry in this country.

That is the general feeling of Lancashire to-day. It may be wrong; I hope it is. We are faced with the position that a section of the cotton industry, which has enjoyed considerable prosperity in spite of the dreadful depression of 1931–32, has been pretty badly hit. We feel, too, that to send out a commission which will take months to report is wrong, that the problem of cocoa prices in West Africa should never have arisen, and that the Board of Trade should have been alive to the fact of what was happening and should have saved all the trouble and distress which have been caused in Lancashire. I am making a very strong speech on the subject because I know that the feeling is strong in Lancashire.

I want to support what the hon. Member for Burnley (Mr. Burke) has said with regard to short employment. Men to-day are only getting, say, 15s. a week for two looms, and if any of these men, having worked two or three weeks, have an accident, the compensation they receive is based on the average wages they were paid for the last 12 months. The result is that they may be incapacitated for life and they receive a miserable pittance as compensation. I understand that the trade unions have taken up this principle with the Ministry of Labour, and I think it is foolish of hon. Members on this side of the House not to take cognisance of the fact and to do what they can to help people in such circumstances.

One other thing I would like to mention is the question of new industries. Hon. Members opposite, again, have tried to force the Government to compel industrialists to start industries in their Special Areas in the North. I do not think that compulsion is desirable, but the Government should make much greater efforts than they have in the past to get these industrialists to start industries in already industrialised areas. In Lancashire we have the problem of large numbers of empty mills. The Spindles Board have already closed down 48 mills, and there must be a couple of hundred mills besides which are standing derelict. These mills for the most part are not suitable for modern industry, the reason being that they are four, five or six storeys high; and, again, these mills, which were built 50 or 60 years ago, were built to the designs of that period, the pillars are too near together and in many cases they are inconvenient for modern machinery. The only solution is for the site companies to build modern ground-storey factories, and then, I think, they will get the industries which they want. But it depends, I believe, upon the Board of Trade and the Government to insist in some way in order to get these industries to come north. It is wearisome when you come south, as I do every week, to see new factories springing up in the outskirts of London. Obviously, the reason is that the managers and directors like to live in London. They like the enjoyments of the Metropolis. There is a larger population situated in a small area in London—8,000,000—but there are as many people within 100 miles of Manchester as there are within 100 miles of the centre of London. Lancashire is a very great industrial centre and should not be overlooked.

I would like to hark back to what was mentioned earlier in this Debate, before the Minister of Labour replied, with regard to the import of foreign labour. It is probably true to say that 75 per cent. of the people coming to this country are domestic servants. I know that it is almost impossible in this country to get a cook, or parlourmaid or housemaid. That is admitted on all sides. If you get girls to come to your house they know nothing, and after you have taught them something, they stay, say, for two years, and then leave you and get married or something like that. Undoubtedly, one reason is that the conditions to-day in domestic service do not tempt new recruits. I do not accuse the individual private employer. The conditions there are pretty good, but in the cheap lodging-houses of the country you find bad conditions of employment, and these should be improved. There should be a stricter regulation of hours and of wages.

I do not think that you could institute a minimum wage for domestic servants. How is it that when these foreign girls come into this country they know how to cook? They are excellent cooks. They know housework from end to end. Surely, it is that the girls in this country have not sufficient opportunity to be trained in domestic science. I would mention in this connection the training centre started by Lady Cuthbert Headlam. I do not know how many girls she has, but I gather that she has no difficulty whatever in placing them in service. In fact it is almost useless to apply for a girl from that training establishment because there is a long waiting list of employers. I appeal to the Minister of Labour to encourage training centres so as to get a greater percentage of skilled domestic servants in this country. It is a very real problem, and, no doubt, in 10 years' time there will be scarcely any domestic helpers available.

With regard to the older section of the unemployed, it is one of the most pathetic things to see men over 50 out of work, because they know perfectly well that they have no chance of another job anywhere in such areas as Lancashire and the depressed districts. The only way you can help them both bodily and mentally is to find them work on allotments, or, if there is not the land available, they should have somewhere to go, some institute or some form of recreation which they have not now in proper degree.

Perhaps to-night I have stressed too much the Lancashire side of the case. One thing that struck me very much was the statement of the Minister of Labour that the reduction in unemployment in the cotton industry from 143,000 to 95,000 was due to persons leaving the industry for other kinds of work, and that the insured population in the cotton industry had fallen from 518,000 to 408,000. That does not apply to only one industry. It is similar in the coal industry. The fall in the number employed in our basic industries of steel, cotton and coal is very serious. It means that more people are going into the distributive trades, which are not productive in the same sense as the basic trades. I hope the Government will do everything they can to expand the basic trades, because it was by the basic trades that this country in the past created its wealth.

8.56 p.m.

Mr. Graham White

We all feel that the right hon. Member for Wakefield (Mr. Greenwood) rendered a service in opening a discussion on this subject. Many of us have felt that the Debate was overdue, because there is growing concern in the country over the increasing numbers of the unemployed and a desire to know what the Government have in mind to counteract it. Many of us feel that in this subject of unemployment there is one of the tests of democracy. If democracy is to survive in this or in any other country it will have to give much greater security to the workers and greater equality of opportunity than is afforded by any other system. We feel very anxious about it. It may very well be the case that democracy cannot stand another experience such as that of 1931, unless there is more visible constructive effort made to avoid it, and to contend in advance with the difficulties that may arise.

I was in complete agreement with what was said by the hon. Member for East Aberdeen (Mr. Boothby), when he spoke of the possibility that may arise when the great armaments programme begins to be damped down and to become less active. That consideration is in the minds of a good many who have spoken to-day. We feel that the Government ought to be concentrating upon something that is to take the place of the armaments programme. Up to the present time in the Debate—unless it was the speech of the right hon. Member for Sparkbrook (Mr. Amery), who pins his faith to a further dose of Protection—there has not been a single suggestion made of anything which will take the place of the armaments programme when it disappears. The necessity of making some alternative plan is imperative, because when that programme begins to decline, as we hope it may, thre will be an irresistible demand from the country, which no Government will be able to withstand, to put in the place of the expenditure upon armaments constructive works of development for the good of the country.

No Government will be able to stand out against the plea that will be made: "You have spent so much money upon weapons of destruction; what is to be done in promoting measures for the welfare of the people?" When that time comes, the Government will not have the help that is available from the reduction of interest rates—they could hardly be reduced much below their present level, it will not be possible to devalue this poorer rating again and there will not be so readily available the devices which were available to the Government at the time of the last depression. Therefore, it is necessary that on a much wider and much more searching scale than we have seen, there should be a survey and an estimate of what the country can do to meet the position that will arise. There should be Government co-operation with the local authorities in seeing how capital expenditure by the country, by corporations and by individuals, can at the proper time be devoted in the appropriate way to the public good.

I should like to make a few observations in regard to the speech of the Minister of Labour. He approached his task with the velocity, the vigour and the mastery of his subject which we have learned to expect from him. He launched upon us facts and figures which our quivering intellects could hardly grasp. He gave us figures which were meant either to charm or to hypnotise us—I hope they were meant to enlighten us—but they came upon us with the rapidity of shots from a machine gun, and I must confess that, for my part, I found difficulty in finding the salient points and features which he wished to convey to the House. He proceeded, as he said, to break up the problem and to analyse it, and by the time the analysis was over I was almost wondering whether there were any unemployed on the register.

The right hon. Gentleman went on to say that we must dissect the problem before we could relate it to the means of solution. I thought that after the dissection and the analysis had taken place there would be some plan appropriate to all sections of unemployed, married and single, 45 and over. What it all came down to was that there were 1,043,000 individuals, according to the last return, who had been out of work for less than six months, and that 17 per cent., or 279,000 on the register, were the long-term unemployed. Putting his finger on that spot he said that that was where the problem lay. The 279,000 may be part of the problem, and they certainly are part of the problem where the greatest tragedy lies.

The right hon. Gentleman did throw one crumb of consolation to us when he said that the bar against training for these men was no longer to operate. I was glad to hear that. I immediately applied that statement to the 400 men in my own division who used to earn their living as hand riveters and who, although they are still classified as in the engineering trade, have no chance, even on the record of their past skill and performance, of ever doing anything in the engineering trade again. That is where the tragedy lies. Those men are well capable of doing some work, and if there is no other means of putting them back into employment, we ought to make it a rule that employers in that particular business should have a King's Roll arrangement in operation, whereby when they employ men they should take on a certain number of these older men as well as the others.

I fortify myself in that suggestion by the statement of Sir William Beveridge, in the last report of the Statutory Committee, in which he pointed out to employers as a whole that the employer who took on a younger man simply because he was a younger man was performing an act which was anti-social, and that it should be recognised as such. That passage in the report should be commended to employers throughout the country. A younger man is more mobile, has no family ties and has greater opportunities for finding a job somewhere else. The 279,000 unemployed were picked out by the Minister as being the problem. He indicated that it was not necessary to think about the 1,043,000 who are temporarily on short term unemployment. It might be a sound argument to say that there is no acute problem if you have a steadily rising level of employment, when there is a probability of getting them back into work, but I suggest that it is a complete fallacy to say that they are not the problem when you have a descending level of employment.

I find myself in great difficulty in considering the point raised by the Minister. He says that these people are temporarily employed, that at a time when employment is rising it is open to every one to regard himself as temporarily unemployed. Is that the case? I should like someone to explain to me how it is that a man can be described as temporarily unemployed until he has got back to a job. That is the difficulty I found myself in when I tried to follow the argument of the right hon. Gentleman. I was bitterly disappointed when he gave us the impressive catalogue of work which is in hand at the moment, the various schemes of the Post Office, the Electricity Commissioners and the Board of Education, to find that there was not one word about anything being thought of or developed to take the place of the rearmament programme as it reaches its completion.

Let us remember one fact, which I think is important, and that is that as we go on with our armament campaign the structure of our industry is being more distorted, it is being altered, with the result that the transition when it comes may be more awkward and difficult than is apparent at the present time. We must assume that the Government have not considered its programme further than was indicated by the Prime Minister in reply to a question—a reply quoted by the right hon. Gentleman—that the Government were giving consideration to plans to deal with increasing unemployment, and in that regard were in consultation with local authorities. I would urge the immediate necessity of getting into touch with local authorities; that they should be invited to co-operate with the Government in surveying plans, not of things which they are going to do but of things they would like to do in five or 10 years' time. I would appeal that they should be able to survey these plans, to establish an order of priority in the matter of urgency, the amount of work which they would provide, and, generally, how far they can be expedited.

I would go further. I would like the Government to reconsider such plans as they may have in contemplation, find out whether some of the plans might be postponed and brought into operation at the right moment. It is not only necessary to plan in advance if you are to soften the effects of the coming slump; you must be able to put work into operation before the slump reaches the country in its full severity. If we wait until that stage, local authorities and people generally will be under the grip of the old fallacy that you must spend money when times are prosperous but when times are bad you must keep what little you have in your pocket. I think it is the duty of economic statesmanship in this country to make steady and thoroughgoing plans to bring into the field of manoeuvre at the right moment all the economic resources of which the country is capable.

9.12 p.m.

Mr. Harold Macmillan

The Debate has covered a very wide field, and I am tempted by the opportunity to do what I have not done for more than two years that is, to present some observations to the House of Commons. The older one gets, and the longer one sits in this House as a back bench Member, the less tempted, I find, is one to present any observations to the House, and I am not hopeful that the Government will give more sympathetic attention to what I have to say than they have done in the past. There is, however, this encouraging fact, which all of us have experienced in different ways, that although the suggestions and considerations which are put before successive Governments may not immediately be taken up by the Government, time passes, and what was the epigram, the paradox, of one period becomes the truism of four or five years hence; and the Government, having first turned it down, then carry out the very policy which we ventured to put before them. We are, as it were, a kind of moving platform. We must remember that everything is relevant, that time passes, and that changes are, in fact, made.

The Minister of Labour, in his very comprehensive speech this afternoon, gave us a great number of details which, like the hon. Member for East Birkenhead (Mr. White), I found it difficult to grasp in the way they were presented. I am an old-fashioned person. I do not like non-stop revues. I like the old legitimate drama, with construction and a theme. You know what it is all about. It starts in Act I and ends in Act III. As far as I could ascertain the Minister's views, he did not really think there was any problem about which anything could be done; he thought that in the process of the analysis he gave to-day he had, as it were, destroyed the problem which was presented to him. That is a superficial view to take of these matters, and I am afraid I must say so.

The Debate has been carried on under the shadow of much more pressing problems. To-morrow there will be a Debate which to-day fills all our minds; yet, perhaps it is not inappropriate that these two Debates should follow one upon the other, for there is a close association between the economic problems from which the world is suffering and the political situation in which it now finds itself. Perhaps the only great contribution which the democracies can make today is to show that, at any rate, their system of government is capable of dealing with these problems and making some solution to them in their own internal affairs, and is as capable of any other form of government of grappling boldly with them.

The Minister of Labour has told us in effect, that there is no problem, and nothing to worry about; but the House is still uncertain. I have listened to most of the Debate and as far as I can gather only two main solutions have been put forward. My right hon. Friend the Member for Sparkbrook (Mr. Amery), consistent with his whole political philosophy, told us that what is wanted is more Protection. The right hon. Gentleman the Member for Bow and Bromley (Mr. Lansbury), with curious inconsistency, I think, told us that what is wanted is more Free Trade. I listen always with great interest to the speeches of the right hon. Gentleman and other Members of his party. They seem to hold such a curious combination of views; half of them put forward views which would commend themselves to Karl Marx, and the other half put forward views which would be equally commendable to Mr. Cobden. One cannot really say to-day that a return to the free, laissez faire economy of 1850 would be a solution to the problems of the world. We all know that tariffs, quotas and other restrictions on world trade are part of the problem; but how have they arisen? They have arisen because of the much deeper social problems which present themselves behind any form of economy, whether capitalist or collectivist. It is a very remarkable fact that the only collectivist society in the world is not a Free Trade society. There is no solution along the lines of the orthodox laissez faire system. If it is said that it is tariffs and quotas that interfere with the overworking of the system, what about the social services, what about the pinning of wages, what about trade union activities? If one is to go back, as a solution, to the old self-equalising economy which was the whole principle of Liberalism and laissez faire, then one has to remove not merely trade restrictions, quotas and tariffs, but everything which impinges upon the automatic, stabilising economy. Nobody, in point of fact, can do that. Therefore, we have to face a situation which we all know to be a novel one and we have to make it our main object to recognise that many of these controversies of the past are obsolete, that we are faced with entirely new problems, and that we can deal with them only if we are prepared to regard them de novo.

The problem of unemployment is only half the problem in this country to-day. If unemployment were the whole problem, I should feel much happier about it. But what about the problem of under-employment and the problem of poverty? Can anybody read the objective statements made by those who have studied these questions—Sir John Orr and all that he has done, Mr. Rowntree and all his work—and not realise that, in addition to the problem of unemployment, there is the problem of millions of people who are not living on the standard of life which ought to be provided by a modern society? That is a problem which is just as important as that of the men who are temporarily out of work and the men who are working short time. Unemployment is not in itself a harmful thing. When it is unemployment of the upper classes it is called leisure. The real problem is that of not having enough money. That is a great problem of which the Minister, in his review to-day, did not seem to have any conception. It is a problem which is intimately related with the monetary and political solution of our difficulties.

It would take too long for me to give any comprehensive statement of what seem to me to be the lines on which these questions might be approached, but I should like to put forward one or two considerations which I would like His Majesty's Government and the House to take into account. What is the object which we have in view? It is the bringing about of a stable economy at the highest possible level of production. One can get stability at a low level, and that indeed one has in a very primitive society; but in order to avoid successive slumps and booms, and all the pressure on the economic system which has always operated in the past, even in the heyday, as it were, one has to get stability at the highest possible level of production.

In connection with that, there are several factors. There is, first, the industrial factor. Can we organise our industries by the most efficient technical method in order to get, first, a high level of production, and then, an accurate forecasting of market probabilities, which means, after all, the prevention or avoidance of successive slumps and booms. The Government have done something in that direction during the last 10 years. There has been Protection and a certain amount of reorganisation in many industries. Are we going on with that process? What is going to happen in the cotton industry and the coal industry? Are we going to set about-making those industries as efficient instruments of production and distribution as we can, without regard for vested interests and other considerations? Are we always, in our discussions, to come up against as obsolete an argument as Free Trade and Protection, and the old argument between private enterprise and Socialism, as though the problem before this country were whether, suddenly, we should switch over to a complete collectivist system or whether we should maintain a complete system of private enterprise? While these Debates are going on in the House, what is, in fact, happening? We are moving into a society which is neither capitalist in the old sense nor collectivist. Has anybody taken the trouble to make a calculation of the total production of goods and services in this country to-day, and into what categories of control they fall—how much under national activity, how much under municipal activity, how much under public corporations operating under statutory monopoly rights, how much under what are called public utility control?

In point of fact, we are operating, and are likely to operate, a mixed system ranging from complete nationalised enterprise on the one hand, and activities where the old type of private competitive system operates, on the other hand. If we are wise, we shall operate those classes and categories of production and control purely with regard to technical considerations and what seems, in each particular class of activity, to be likely to give the best results. I believe there is an increasingly important contribution which private competitive enterprise can make in new industry and in all those enterprises where great risks are taken; but I believe equally that for the purpose? of obtaining stability, order and cooperation in the new society, we shall have to place the organisation of the great basic industries and great basic utility services under some form of public control. That is the first object at which we should aim—the organisation of the production of goods and services upon the most effective methods open to us.

What is the second? The operation of finance as the servant and not the master of industry. What progress have we made here? The Bank of England still unreformed, still under the control, if I may say so without offence, of individuals who have made almost every possible mistake in the last few years, and still, I think, without any conception of what is the real problem of a modern up-to-date society. Its real problem is not under-saving, it is over-saving. Its real problem to-day is the operation of the money system in such a way that money, in its function as a store of value, is not allowed to dominate and wreck the whole economy. Money as a medium of exchange, money as a medium of value—yes; but money as a store of value is the great danger which faces a modern, highly technical, organised society to-day. What do I mean by that? The first purpose of monetary policy should be the equation of savings and investment. There is distributed to-day, or made available in the course of production by way of raw materials, salaries, wages, interest and profit, sufficient purchasing power to buy back all the goods produced on the market. We know that. And yet there is a lag. There is a lag when that which is daily withheld, that part of wages or salaries or profits which is not spent every day, does not re-enter the market in the shape of capital investment at the same rate as that which is withheld. Capital investment by a government can do a great deal but it cannot do everything.

What is the solution of this apparent paradox to-day? You have got a great capital expenditure by the Government on armaments, far greater than any of us would have dared to suggest in times past on forms of social capital enterprise. And yet this is not effective in producing a great improvement in our conditions because the deflationary effect of the European conditions which justify the armaments is greater than the inflationary effect of the armaments themselves. More harm is done by the lack of peace in the state of Europe and by the withholding of investment by private people and public corporations than by the total amount of new investment pushed on the market by the armaments policy. That is only to recognise that there are psychological as well as technical considerations to be taken into account. But I would still say that the operation of the capital market, the operation of the finance system must be as the servant of industry for the purpose of equating savings and investments, for the purpose of so operating the system as to make it as nearly balanced as possible from the financial and monetary point of view.

Lastly, there is a consideration equally important from the humanitarian and technical point of view, and that is the raising of consuming power in this country. What is the real defence against undue slumps, and what is the real solution of over-saving? It is to spend more. Why in this country we have not been subjected to the pressure that the people in the United States were subjected to in the slumps is just because we have had this social system. To the extent that we have our health insurances and our social insurance, to that extent we have avoided the great depths of depression which have overpowered much richer countries, much better equipped countries technically, such as the United States. What is the lesson to learn from that? To continue that process, to raise this standard and to adopt towards it quite new conceptions of what might be done. I think I have used the illustration once before in this House. What a strange thing it would be to a visitor from another planet who came and looked at this country and said, "Yes, you have all these services. You have all these valuable things which are done for the people. You educate your children free, but you do not feed them. Why do you educate them? Well, because in Victorian times it was always regarded as respectable to give somebody free something which they did not particularly want. But to give a man food, to give him a house—oh no, that pauperises him"; though how you can pauperise people who are already poor I have never been able to understand.

There is, I say in all seriousness, one of the greatest lines of stabilisation open to us both from the humanitarian and from the technical point of view, and that is the increase in the general standard of living, the distribution of wealth, power to consume, among the great mass of people. And again you should have a policy which is not based on vested interests, which is prepared to take quite new standards of distribution and new methods. You charge for water not on the amount of water you consume but on the rateable value. Should you not distribute milk in the same way? Why are we to say that because a thing has once been done it is respectable, but to extend it is revolutionary? I would beg the Government to consider all these methods. I recognise the great advance we have made in what we think possible to-day, compared with what was thought possible eight or 10 years ago. We have made great advance in industrial organisation, we have made great advance in the conception of the use of financial policy as a means in Government hands, and I would plead for this further recognition of the possibilities of purchasing power.

I am afraid that considerations such as those I have tried to define and describe are difficult to present in a short time, and may seem sometimes remote from immediate political issues, but is not this House sometimes remote from what the people are thinking and wishing? What do they care, if I may say so with equal respect to both sets of hon. and right hon. Gentlemen, who sit on that bench and who on this? It matters very little to them. Their names have for a few years, hardly for more than a decade, passed rapidly in and out—they are far less well known than film stars; you will never get such fame from the Cabinet as you get from Hollywood today. They go after a few years to another Chamber where, disguised under some remote and unknown name, they finally disappear into a political limbo. Who cares? Not the democracy. Right hon. Gentlemen themselves do not care. We are here to serve the public, which is really rather bored with all our political conventions, but is interested in the presentation of any mechanism or method that may seem to them to give them what they want. They are bored with the old terms of Private Enterprise and Socialism, Protection and Free Trade, but they are interested in any movement that will give them what they believe can, by energy and enterprise and effort, and intellectual and mental power, be done with the vast resources, technical and scientific, that we have at our command. And sooner or later either this democracy will die, either it will pass away and seek, vainly enough perhaps, its instrument in some other method of government hostile to all our notions, and to most of us horrible to contemplate; or sooner or later, whether it is hon. Gentlemen on that side of the House or, as I hope and believe, the party to which I belong, we shall be able to lead this country steadily, not by revolutionary but still by progressive and ambitious means, into the realisation of the new society which is open there for us to take if we have the courage to seize the opportunities that are ready for us to-day.

9.35 p.m.

Mr. W. Joseph Stewart

I have listened with interest but with a great deal of apprehension to this Debate. Many of the speeches have suggested the inevitability of a trade slump. Living in a Special Area where there are already tens of thousands of working-people who have been out of work for periods varying from a year up to 10 years, I dare not visualise the condition of things which would ensue if, in the near future, still more men were thrown out of employment. Many suggestions have been made as to the methods which ought to be adopted to meet this slump if it comes. Trade agreements with other nations and the removal of trade barriers have been advocated. In the time at my disposal tonight I cannot go into those proposals but I would suggest, in passing, that had the Government of the day dealt with the distribution and location of industry at the proper time, many of the Special Areas would not be in their present condition.

I have gone into the returns made by the Board of Trade as the result of a survey covering the years 1932 to 1936. During those years there were established in this country 2,700 new factories providing employment at their inception for 200,000 people, and later for 250,000. Of the employment thus provided two-fifths is in Greater London, about one-fifth in North-West England, one-sixth in the Midlands and one-eighth in North-East England. Greater London got 1,190 new factories employing 95,250 people. North-East England got 218 new factories employing 31,350 people. In 1935 there were established in Greater London 213 new factories giving employment to 19,650 people. In 1936, in the same area, 261 new factories were established giving employment to 20,050. Thus in two years 474 new factories were established in Greater London giving employment to 39,700 people. In 1935, in Durham, Northumberland and the North Riding of Yorkshire five new factories were established giving employment to 2,450 persons. In 1936 in the same area 16 new factories were established employing 4,600 persons, or a total of 21 factories against 474 in Greater London, and a total employment found of 7,050 persons against 39,700 persons in the Greater London area. Unemployment in the Special Areas is a very serious problem. We in Durham have been vexed with this problem for a number of years, and little has been done by the Ministry of Labour in finding work for our vast army of unemployed people. In October, 1937, in the administrative county of Durham we had 47,933 persons unemployed or 18.6 per cent. of the in- sured population. On Tyneside, which was one of the largest industrial areas in the country, at the same period there were 54,664 unemployed, or 20.8 of the insured population compared with an average for England and Wales of 10.1.

The right hon. Gentleman gave us figures this afternoon. They were figures which, I acknowledge, I could not grasp. They were given out too quickly and one could not follow the right hon. Gentleman but in his peroration he did suggest that things were infinitely better all round now than they had been for a number of years. In the Bishop Auckland area of Durham, an area on which we have repeatedly asked the right hon. Gentleman to focus his attention, there are today 32.7 of the insured population unemployed. In the Shildon area there are 33.7 unemployed and in Jarrow and Hebburn 26 per cent. In South Shields, in October, 1937, we had 27.7 per cent. of the insured population unemployed and to-day there are 31.9 unemployed. If a degree of prosperity has reached the country will the right hon. Gentleman tell us what is happening as far as South Shields is concerned. In Sunderland in October last year there was a percentage of unemployment of 23.1. To-day it is 26.1. If this prosperity exists, why should there be a rising figure of unemployment in those centres? Much has been said about the trading estates established in the Special Areas.

The idea is in the mind of certain people that those trading estates will meet the problem of the Special Areas to an appreciable extent. I agree that these estates may find employment for a large number of young people—some of whom, it has been suggested in the Press in recent days, have been exploited by employers of labour in the case of a certain trading estate in Durham. But while young people may be employed in these trading estates and in the light industries that are being introduced, very little employment has been found for the adult unemployed men in the county. In the near future it will become necessary to deal with that special problem in Durham county. I have gone through some returns submitted by the Commissioner for the Special Areas dealing with the decrease of unemployment in 1937. His words were, that in Durham, on Tyneside, and in South Wales, of the decrease in unemployment, 55 per cent. took place in the 18–34 age group, while 8.7 per cent. in Durham and on Tyneside and 6.5 per cent. in South Wales took place among the men aged 55 years and over. I would ask whoever is to reply for the Government what policy they have to deal with the man who has reached the age of 50 or 55 and who is unemployable, as far as the employers are concerned. Surely that is a problem that must be faced up to by the Government of the day. In Durham we have over 36,000 men who have not been employed for over a year, 10,000 who have not been employed for over five years, and others who have not been employed for eight, nine, or 10 years. What do the Government intend to do to meet this situation, so as to help an industrial county which is distressed through no fault of its own?

Unemployment in Durham, as in other Special Areas, is a very serious problem, especially for those who are responsible for the social services and for Poor Law relief. We have in Durham to-day, in spite of all the prosperity that has come through this increase in trade and this enormous expenditure upon armaments, 51,956 persons in receipt of Poor Law relief, at a weekly cost of £17,940 and at a cost per year of £937,880. There is another question which I would like the right hon. Gentleman to answer. In Durham to-day we have of able-bodied cases and of persons chargeable 1,270, at a cost per week to the local ratepayers of £479 and at a cost per year of £24,908. Surely that ought to be a charge on the National Exchequer and not on the local ratepayers. We have this huge total of £962,788 per year spent on Poor Law purposes. Durham will have to spend in 1938 for Poor Law purposes to maintain ordinary cases and people who have been rejected by the Employment Exchanges in the county £1,619,728, equal to a rate in the pound for Poor Law purposes of 10s. 5d. I would ask the Government, in all that they do, to take into consideration the conditions prevailing in the Special Areas in this country, and especially to focus their attention upon the conditions which prevail to-day in Durham County.

9.50 p.m.

Mr. Shinwell

It is significant that during the whole of these Debates not a single attempt has been made to challenge the case presented by my right hon. Friend the Member for Wakefield (Mr. Greenwood). On the contrary, he has received a large measure of support from the opposite benches. We have heard during the proceedings statements of the most dolful character from several hon. Members. The air has been charged with lamentations, and it now appears that gloomy predictions are no longer confined to this side of the House. We had, for example, a speech delivered by the hon. Member for East Aberdeen (Mr. Boothby), who declared that we were living, not in a boom period, but in a period of crisis, and that a trade decline had definitely set in. He appealed to the Government not to deny it, and he predicted bad Budgets in the future. These were very grave statements to make, but if the hon. Member for East Aberdeen were in his place, I would remind him that when his right hon. Friend the Chancellor of the Exchequer stated, a few months ago, that there was no ground for asserting an approaching trade decline, he was one of those who applauded the right hon. Gentleman, and he was among those on the opposite benches who derided hon. Members on this side when they declared that what is now described as a trade recession had definitely appeared. It is valuable to reach common agreement, at least on that head.

The pity is that the right hon. Gentleman the Minister of Labour did not himself appreciate the possibilities that are latent in the trade outlook for the future. He made a speech that was both amazing and alarming. It was amazing because I think it was in a large measure irrelevant to the subject at issue; it was alarming because it appeared to betray no appreciation of the immensity of the problem. As a speech it was an excellent dissertation on arithmetic, but it was no contribution to a solution of the problem that we are reviewing to-day. The right hon. Gentleman said that he was concerned about an analysis of the nature of unemployment and that that was essential before he proceeded to undertake planning. It occurs to me to ask him whether this is the first attempt at an analysis of this kind. If it is, it is somewhat belated. On the other hand, if his Department have occupied themselves in recent months with the analysis to which he referred, then we are justified in asking him whether that analysis will lead to any plan, otherwise the analysis which he indulged in this afternoon is of no value at all.

The right hon. Gentleman declared that figures used en masse bred illusions. I do not know whether that was intended to be condemnatory of what was said by my right hon. Friend. Again I would remind him that while it is true that figures breed illusion, when the figures of unemployment are reduced by 50,000 or 100,000 he takes the credit. Then there is no illusion. The right hon. Gentleman went on to say that capital works, for which several hon. Members have asked in the course of the Debate, cannot be regarded as a solution for unemployment, particularly in the textile industry. No hon. Member on this side has asserted that capital works can provide a complete solution, but whether they can or not, if that is the opinion of the right hon. Gentleman, will he be good enough to tell the House whether he has any alternative solution? After all, we are concerned with solutions and not with any political doctrine or partisanship. If the right hon. Gentleman can furnish a solution other than that presented by this side of the House, we shall be only too glad to hear what he has to say. Apparanetly, however, he has no solution.

The right hon. Gentleman said that the fluctuations which have occurred in recent months were due to factors outside the Government's control. That was strange language. It reminded me of our old friend, "world economic causes." When a Labour Government are in office they are primarily responsible for unemployment and trade fluctuations, but, lo and behold, it comes to pass—the right hon. Gentleman will understand that language—that when a National Government comes to power with the right hon. Gentleman at the helm at the Ministry of Labour, world economic causes are brought in to soften the blow. The right hon. Gentleman went on to say that a vast amount of local work was on hand, and he furnished details into which I need not enter. We have no reason to doubt the accuracy of the figures he suggested. He added that there is also a vast expenditure on armaments. He made these statements presumably to indicate that conditions were not quite so bad as we had represented them to be, and that something was being done. Is it not Strange that, in spite of this vast expenditure on national and local production, there should be at this time 1,800,000 persons out of work?

Clearly the conclusion to which we are irresistibly driven is that, in spite of vast expenditure of this kind, there is no solution for either the unemployment or the trade problems confronting the country. The right hon. Gentleman said something about a boom in engineering and appeared to take credit for it, and yet there are 39,000 unemployed in that industry. It is a strange condition of things to speak of a boom when there are so many unemployed in that industry, when one might have expected complete absorption. The right hon. Gentleman made one valuable admission when he said that there had been a recession in employment in the last few months. I believe that that is the first time the right hon. Gentleman has been ready to concede that fluctuations in an upward direction had occurred. He went on to say that he regarded it as a temporary slackening, and that it was not to be regarded as permanent, but he gave no reasons. How does he know that it is a temporary slackening? Is it because of the proposed new armament programme of the Government? Is the right hon. Gentleman relying solely upon armament production in order to arrest the decline in employment? If that is so, we are entitled to ask him the question, which has already been addressed to him by several hon. Members—what is to happen when the armaments programme, both old and proposed, has come to its end? On that issue the right hon. Gentleman has not ventured to offer any observations.

The right hon. Gentleman fails to detect certain tendencies operating in our national industries. For example, he said little or nothing about the losses in our export trade. As the right hon. and gallant Gentleman who represents the Board of Trade is to follow me, I should like to present him with a set of figures which bear on this problem. In the coal industry, while our exports in 1929 were 64,000,000 tons, in 1936 they fell to 37,000,000. In 1937 there was an increase to 43,000,000, but the fact from which we cannot escape is that there are still 21,000,000 tons less exported than in 1929. In a time of abnormal world demand—that is the significant factor in the situation—our coal exports have shrunk by one-third since 1929. That gives us something to think about, and I should like to ask the right hon. and gallant Gentleman to indicate whether the Government have addressed themselves to this problem. There is much we can say about it, but I content myself with stating the unchallengeable facts and to ask whether the Government have appreciated what this problem denotes.

I come to textiles and will give the figures for the cotton industry. In 1929 textiles accounted for 31 per cent. of our total exports. In 1936 they fell to 27.6 per cent., and in 1937 to 26.2 per cent. That is the reason why there are so many unemployed in the textile industry. Have the Government addressed themselves to that problem? Will the right hon. and gallant Gentleman indicate what the Government intend to do? I come to the question of shipbuilding, one of the most important of our national industries. Here I shall not rely on any views of mine but will quote from a well known Conservative newspaper, the "Evening Standard." As recently as yesterday the City Editor, addressing himself to the subject of shipbuilding, used these words: In 1929 this country was building 460,000 tons of shipping for foreign owners out of a total construction of 1,560,000 tons. To-day the figure is less than 90,000 tons out of a total of 1,200,000. There is something more to be said. In Germany nearly half the total tonnage being built is for foreign owners. That is unlike the situation in this country. There was a time when we almost monopolised the building of merchant vessels, but that monopoly has disappeared. There is another factor in the situation. Because of frozen currencies we are building more ships abroad. I ask the right hon. and gallant Gentleman whether we can afford to allow this to go on much longer? Last, but not least, in relation to shipbuilding I would remind the House that more than one-third of the total tonnage produced is naval construction. I regard that as a most serious situation.

Now I pass to what we on these benches regard as the most alarming tendency of all, the ratio of employment to the volume of industrial production. During this Debate I have heard a great deal from hon. Members in all quarters of the House on the causes of the problem. Something has been said about the need for a new monetary policy. The right hon. Member for Sparkbrook (Mr. Amery) argued that in our negotiations with the United States of America we must take care to correct the adverse balance of trade between the two countries. He argued that we must raise our tariffs because in the future we could not rely upon an abundance of exports. He also urged that we ought to cut down imports. The hon. Member for East Aberdeen submitted that in our negotiations with the United States of America we should urge upon that country the joint utilisation of our gold resources, and advocated greater inflation.

All these may be useful steps towards the solution of the trading problem, but unless we are prepared to deal with the problem of industrial production there is no hope of reducing unemployment in this country to a reasonable level, much less of solving the problem altogether. For example, in the steel industry the proportion of tons produced to persons employed was 5.6 in 1929, but in 1937 had risen to 7. Surely that is a serious situation. In the pig-iron industry the output per person employed in 1929 was 32 tons and in 1936–37 was 47 tons. Put in another form, in 1929 618,970 tons were produced and in 1936–37 681,000 tons, but the numbers employed were reduced from 19,000 to 14,000. Those are significant facts. In the latest report of the Commissioner for the Special Areas there is this reference to shipbuilding: It is evident that the increase in employment is not nearly in proportion to the increase in tonnage. Anyone familiar with shipbuilding is only too well aware of that fact. Fewer men are being employed. The building of ships is being expedited. Whereas some years ago it took nine months to produce a vessel of 6,000 to 7,000 tons it can now be built in four months. The introduction of welding instead of riveting has displaced an enormous amount of labour in that industry, and, what is more significant, there is no hope of its absorption in the shipbuilding industry. The volume of industrial production has increased from a figure of 108.5 in 1929 to 133.1 in 1937, yet the numbers unemployed in 1929 were 1,344,000 as against 1,664,000 in 1937. In other words, unemployment has increased by 500,000 since 1929, while industrial production is up by 24 per cent.

In face of these facts, which are unanswerable, we have to consider this problem from somewhat different angles. I have indicated one or two tendencies in support of what my right hon. Friend said about the decline in trade. It has been understood for a long time that shipping freights are an excellent indication of the state of trade and trade prospects. The Liverpool Shipowners' Association reports that freights declined by 7 per cent. in the last three months of 1937, and they say that although the situation was not quite as bad in 1937 as in previous years, yet if the position is analysed from the point of view of the future the grounds for satisfaction are by no means apparent. Those are significant words for such an Association to use. In the banking supplement to the "Manchester Guardian" I observe the following language: Prices are falling, business is slackening and unemployment is rising, but bank lendings are still expanding, and this movement merely conforms to the views advanced in these columns last September that the trend of advances always lags behind the trend of business. What are we to deduce from those figures? Surely it is that in spite of all the efforts made by the banking fraternity and capitalist industry in general to bolster up the present system all the indications are that a definite trade recession has set in.

Now I come to the conclusions which this party have reached. I listened with some interest to the speech of the hon. Member for Stockton (Mr. H. Macmillan). It contained much to be found in the Labour party's policy. At the same time, he wanted the best of both worlds. While he was reluctant to free himself from the shackles of private enterprise he was seeking the creation of a new social order. I appeal to him not to be faint-hearted. The conclusions which he has reached will drive him irresistibly into the direction of accepting the full policy of the Labour party. He referred to the difficulties of the transitional period from unfettered private enterprise to the collective system. He did not mention those terms, but I will do so for him. A transitional period is always difficult. The situation will become more difficult, but the greater the difficulty the more we are impelled to the conclusion that nothing short of complete reorganisation on national lines will suffice. He urged a policy which seemed to fit in with the policy of this party when he said that we ought to assert a greater measure of control over monetary policy, and that we should seek to raise purchasing power. He referred to inequalities in the distribution of wealth; all very fine phrases, common to Labour party platforms. Surely, he will see that if the problem about which he is so anxious is to be solved he must be prepared—I give him credit for great sincerity—to accept a much larger measure of national control.

I wish to submit to the right hon. and gallant Gentleman who will reply on the Debate certain considerations to which I hope he will address himself. I hope that he will advise hon. Members as to the course now being taken by the Government in the Anglo-American trade negotiations. I ask that advisedly because I hope that, in the process of those negotiations, the Government will not confine themselves merely to trade matters. If the negotiations are to be simply for correcting the adverse balance of trade, raising or lowering tariffs, or manipulating the most-favoured-nation clause, and all the rest of it, they will be futile. If His Majesty's Government are anxious for collaboration with the United States Government in promoting economic appeasement and in taking the lead among the nations of the world, the negotiations will be valuable. The influence of both countries is as great today as ever it was. I dare say. I say that with great sincerity. I hope that they will use that influence and will take the initiative.

I thought the hon. Member for Stockton decried what he described as the laissez faire attitude of the Members of this party, but this party is not essentially a Free Trade party. On the other hand, we are not wedded to tariff reform. We stand for a scientific regulation of industry and for a modification of the existing tariff system where modification is found to be necessary. Where trade barriers cause restriction in trade, a possibility which will no doubt be admitted even by those who espouse the cause of tariff reform, and cause fluctuations in employment, modification must ensue. In short, if we are to engage in conversations with other countries, they must not be upon an orthodox basis. Orthodoxy in trade matters is as dead as mutton. In that respect I agree with the hon. Member that we must make a new approach and must look at these matters from a new angle.

I have very little hope that the Government will respond to our appeal, particularly in view of the mediaeval doctrines that were referred to by the right hon. Gentleman the Member for Spark-brook. Therefore, I appeal to the right hon. and gallant Gentleman to give the House an assurance that the negotiations will be expedited, and that the basis of those negotiations will be comprehensive in character and not confined to trifling questions affecting the lowering or raising of tariff barriers. I should like also to ask the right hon. and gallant Gentleman to address himself to the report recently issued by M. Van Zeeland. I am not prepared to say that hon. and right hon. Members on this side are wedded to every word of that report. There is a great deal in it to which we would take exception. But, on the other hand, there is much in it, and more particularly in the intentions underlying the report, to which we should be very ready to give our assent. The Government cannot afford to ignore the implications of M. Van Zeeland's Report. To set it aside as they appear to be doing is to render to this country, and, indeed, to the world, a grave disservice.

In conclusion I want to address myself to what I regard—perhaps I speak only for myself, though I hope I speak for hon. Members in all quarters of the House—as a fundamental question. Hon. Members will agree that sooner or later the armaments programme will come to its end—the sooner the better. It may be a year, two years, or three years. But that programme has got to be paid for; large sums have to be expended in the course of its operation. We must consider what the effect of that expenditure is going to be, not alone on our trade prospects, but on our social prospects and on the plans, if there be such plans, that the Government have in contemplation for dealing with the situation. In short, we have to consider the effect of taxation on our economic, social and general trade prospects.

How is that expenditure to be met' It can be met in one of two ways, or, perhaps, in both ways. It can be met by direct taxation on a higher level. I hope I am not indulging in heresy when I say that, to the extent to which you increase direct taxation, it may well be that you exhaust, I will not say the savings of wealthy persons, because it seems to me, from the figures I have seen, that their savings are rapidly reaching exhaustion, but you exhaust the reserves of industrial companies in this country; and, to the extent to which you exhaust those reserves, you make it impossible for them to be used for future industrial investment. That is a serious prospect, and it can only be met in one of two ways—either by indirect taxation, to which I will refer in a moment, or by Government investment and the use of Government funds. I imagine that, in the situation that we envisage, the Government will not be in a position to utilise Government finance for these purposes, and, therefore, we are left with the sole alternative of indirect taxation.

What is to be the effect of increasing indirect taxation? It is bad enough now How will you meet the claim of the hon. Member for Stockton for increased purchasing power—the claim that we have been making for several years now—if there is to be more indirect taxation? The social services will be arrested which means less work, not more—fewer public and capital works instead of more. We have, therefore, to consider how the Government are going to meet the situation that is bound to arise. I hope the right hon. and gallant Gentleman will indicate, not in detail, but broadly, whether the Government have any ideas on these matters. We are entitled to say that, in spite of all the facts and the obvious tendencies, the economic trends. the Government appear helpless, drifting along without a semblance of a plan. What are they waiting for? Is it war? Is that the way out for them? But perhaps there will be no war, for the Government's objective is peace—and let us hope they succeed. But if there is no war, and the armaments programme comes to its inevitable end, our economic troubles will become greater. So we ask the Government to indicate, in the plainest possible terms, their appreciation of this problem, and their readiness to seek a solution or to do—I hope they will forgive me for what I am about to say—what the majority of people in this country anxiously desire, that they shall have the decency to resign and make way for a Government ready to produce a plan and carry it out. I use these words deliberately.

In my final words, I put it to hon. Members opposite—I need not put it to my hon. Friends on this side—that those who heard the speech of the right hon. Gentleman the Minister of Labour must agree that the Government have not the faintest appreciation of what is required. The right hon. Gentleman bandies figures around, he talks at random, but, so far as an understanding of the problem was concerned, he completely failed to face up to the position. An hon. Member has said, "We remember 1929." You can say what you please about 1929. You can rake up the dying embers of the past as much as you like. But the country will not rely on the Government because of the past. They are concerned about the present, and, what is even more important, the future. It is upon the Government's appreciation of existing tendencies and what is calculated to happen in the future that they will be judged; and, therefore, I hope that the right hon. and gallant Gentleman, if he can, in the absence of a clear indication of a plan from the right hon. Gentleman the Minister of Labour, will indicate that the Government have something to present to this House and the country.

10.29 p.m.

The Parliamentary Secretary to the Board of Trade (Captain Euan Wallace)

The hon. Member for Seaham (Mr. Shinwell) began by saying that no one had so far attempted from these benches to answer the case put forward by the right hon. Gentleman the Member for Wakefield (Mr. Greenwood). It will be my endeavour, in the time available, to answer the right hon. Gentleman, but I feel that, before I begin on that, I ought perhaps to apologise to those hon. Members who may have thought that this was to be an entirely Ministry of Labour Debate, and that they would find somebody at this Box competent to reply to many of the detailed points raised. By arrangement through the usual channels, it was decided that the Debate should range over a wider field, and I have the authority of my right hon. Friend the Minister of Labour for saying to those hon. Gentlemen whose speeches he is not in a position to answer to-night, that everyone of them will be carefully noted, that they will be taken up, if necessary, direct with hon. Members, and that there will, of course, be other opportunities for tackling the Minister of Labour during the weeks which are to come.

I think that the best way to answer the case put forward by the right hon. Gentleman who opened this Debate is to examine our trade position and prospects as they stand at the present moment; and any discussion of that kind must, if it is to be of value to the House and to the country, be viewed against the proper background—which is, I think, that between the end of 1932 and the third quarter of last year the general state of trade and industry in this country changed from one of deep depression to one of considerable prosperity not by any violent fits or starts, but by a continuous and steady increase of industrial activity year by year. The cumulative effect of these changes was that in the year 1937 industrial production in this country was 48 per cent. more than in the year 1932, and 20 per cent. more than in the year 1929, which is, by common agreement, regarded as a sort of high-water mark of the post-war period. All the available statistics show the improved industrial position, and in view of the fact that my right hon. Friend has given the House some statistics this afternoon, I am only going to say that wages have been raised over a large field, dividends have been better, retail sales have improved—

Mr. Kelly

And wages have gone down.

Captain Wallace

No, wages have gone up, and postal and railway receipts indicate the general diffusion of better times. The effect of all this has been that we had an employment figure of 11,599,000 last September and that, although it is not actually a record, is within a few hundred of being one. But I am bound to admit—and at a time like this anybody speaking for the Board of Trade must be very frank with the House—that in the last quarter of 1937 an clement of uncertainty began to appear in some industries, where manufacturers found hesitation among buyers in placing orders. This hesitation was more manifest in those trades which produce consumers' goods than in those which produce capital goods, and it was especially observable in some luxury trades like high-powered cars and wireless sets. There was, as certain hon. Members have mentioned this afternoon, a slackening in the woollen and cotton trades. That was partly due to a fall in raw material prices and partly due to the disturbed international situation, of which I shall have something more to say later. But even on the capital goods side private housebuilding declined, and although there was a partial recovery about the end of the year, owing to increased activity in Scotland, I am afraid that housebuilding for private occupation has declined again.

There was also a slight falling off in the building of factories other than for Government orders, but it is quite probable that, in view of the Government activity in factory building, the people who wanted to build private factories were experiencing difficulty in getting firm dates of delivery of material at prearranged prices. The increase in shipbuilding costs and falling shipping freights have been a sufficient reason to cause some hesitation among shipowners in placing new construction orders.

I must, however, emphasise again to put the picture in proper perspective, that the falling off has been slight. I do not think it is in any way unfair to refer to it rather as a slowing up in the rate of trade recovery than as a decline or even a standstill. It remains perfectly true, if we take employment as the criterion, that employment in February, 1938, was 20,000 more than it was a year ago and employment in December, 1937, was 200,000 more than it was in December, 1936. It is not possible at the present time—and I think this is an encouraging sign—to point to any one particular cause for such slackening as there has been. The causes vary in different trades; and, speaking generally, the economic conditions in this and in other countries are very different from those which preceded the slump of 1929.

Let me look for a moment at present conditions in the home market. Most industries, particularly the heavy industries, show no signs of a check. Iron and steel and engineering are working to capacity, and have orders for many months to come. In housing there is a great deal of public work to be undertaken, as the House knows; and I hope and believe that the improved position of steel supply in this country may lead to an increase in the work on factory orders. It is true, of course, that the rearmament programme is making an appreciable contribution to trade and employment, especially in the metal industries and the metal-using industries. It is equally true, and this has some considerable bearing on future policy, that the effect of the rearmament programme will increase.

At the present moment the high level of production in this country is still, in the main, due to commercial demand for the normal products of industry. The value of our factory production in a normal year is £2,500 millions. If we assume that we are spending our five year programme of £1,500,000,000 on rearmament at a steady rate, and take £300,000,000 as the money spent on rearmament this year, the House will realise that it still represents only a small figure in comparison with the normal commercial output. It is also true that the industries producing consumption goods for the home market have been considerably stimulated by more work and better wages during the last few years.

If I now turn to the position in the export trade and shipping, it is plain that, as many hon. Members have said, it has to depend very much more on the world situation and upon factors other than economic; indeed, I think, upon the old friend of the hon. Member for Sea-ham, "world economic causes."

Mr. Shinwell

"World economic causes" is the old friend of the party opposite.

Captain Wallace

Now the hon. Member tries to pass it on to us but I think he might take his share. Perhaps "world economic causes" are always the prerogative of the people on the Government side of the House rather than the prerogative of those on the Opposition side. Among the interesting speeches made this afternoon I was particularly struck with that of the hon. Member for East Aberdeen (Mr. Boothby), when he said that confidence was the real basis of international trade. It is, of course, profoundly but unfortunately true that political shocks are the greatest enemies of our export trade.

It is not possible to exaggerate the effect which conditions in the United States have upon the conditions in this country. Although I do not wish for a moment to minimise the detrimental effect which the recent loss of business confidence in America has had in many directions on our own national economy, it does appear that the amount of goods going into consumption in America is being fairly well maintained, and that the present troubles in America are rather more political than economic. That, I think, we may take on the whole as being to the good.

The expansion of our export trade during 1937 was largely due to the increased purchasing power of the primary producing countries, and that itself was the result of the rise in commodity prices during the year 1936. There have been two subsequent falls in the level of commodity prices, one in non-ferrous metals and wheat in the spring of last year, which was only a healthy adjustment of a speculative position, and a later one in non-ferrous metals, cotton and wool, due to conditions in the United States and to international tension generally. But in spite of that, commodity prices still remain above the level of the depression years. After all that has been said for years in this House in economic Debates, there is nobody who will deny that that is a good thing. The United States is the largest consumer of raw materials in the world and any improvement in the general economic situation of the United States is of immense benefit to the primary producing countries, and will undoubtedly react favourably in a short period on our own export market. On the whole, it looks as if the primary producing countries, as things are, will be able to maintain their imports at recent levels.

When we get a little more optimistic and go a step further and consider the possibilities of an expansion of our export trade, that is of course limited by exchange restrictions and import quotas, but I think I can say that provided there is no worsening of the international political situation—at the moment that is a fairly big "if"—and provided also that there is no worsening of internal conditions in foreign countries, and especially in America, there is no reason to anticipate any serious reduction of our exports. On the other hand, any relaxation of the present tension—and it is to that end that the whole of the efforts of His Majesty's Government are devoted—will undoubtedly provide, and I think very quickly provide, some opportunities for expansion.

Taking all factors into account, it would be unwise to prophesy that 1938 will show the same upward progress as 1937. But let it be clearly understood that a reduction in the rate of progress is a very different thing indeed from an actual economic recession, to use Mr. Roosevelt's word, or to use the more popular and descriptive expression, a slump. While it may be that the curve of trade activity in this country is beginning to flatten out, there are no definite signs that it has taken a downward trend. If it does prove that the position we reached in 1937 cannot be fully maintained in 1938—I hope and believe that will not be so—we have at any rate sound reasons for believing that a decline, if there were one, would be slow and orderly. Let me remind the House that conditions to-day are very different in five respects from those which obtained in 1929: there is no over-speculative position in the Stock market, no over-accumulation of commodity stocks, no great disparity between agricultural and industrial prices, no tightening of credit, and a very much smaller burden of international debt.

But, although there is no reason to suppose that a depression is imminent, I entirely accept the view of the right hon. Gentleman the Member for Wakefield (Mr. Greenwood) and the hon. Gentleman the Member for East Birkenhead (Mr. White), and many other hon. Members, that it is the duty of the Government to take every precaution which they can against the imminence of a slump. I will turn now for a moment to the question of public works as a cure for a slump. There is a popular tendency to exaggerate the effectiveness of public works, and it may interest the House to know that if one takes the 15 years between 1920 and 1935, the average amount of expenditure on public works, either grant-aided or actually undertaken by the Government, was less than 4 per cent. of the annual output of our factories. Everyone will realise that between 1920 and 1935, we had several different sorts of Governments, which pursued the policy of public works with greater or less intensity or discretion. It is a significant fact that during the whole of that period, those public works amounted to only 4 per cent. of our total factory output. Another thing which emerges from the actual experience of public works policy is that we discovered that the expenditure of £1,000,000 per annum on these kinds of works gave employment to 4,000 men. So that to counteract a 5 per cent. increase in the rate of unemployment, say 600,000 persons, one would require schemes costing £150,000,000 a year. As hon. Members know, the United States have gone in for a public works policy on a grand scale. I very much doubt whether they will be inclined to say that the results have come up to their expectations.

The hon. Member for East Birkenhead, to whom the House always listens with great interest on this and kindred subjects, put forward the idea of closing down, so to speak, in a boom, and delaying the execution of all public works where it could possibly be done until a time when they would be of more value to relieve unemployment. That is absolutely unexceptionable in theory, but I think he would agree that it is extraordinarily difficult to carry out in practice. Public works, whether they are undertaken by the central Government or by local authorities, are presumably bound up with the ordinary development of their policy, and any postponement of public works with which an authority is ready to proceed must, I think, ex hypothesi, be detrimental to its scheme of social services. It is very difficult to say to a man who is going to get employment from some public works scheme of a local authority or the central Government, "No, we will not give you a job now because either you or somebody else may have more need for it at some future date." And, of course, the problem in dealing with this question is to forecast even approximately the date on which a recession will take place. We all hope that it will be never.

So far as the present Government and its public works policy are concerned the House will recognise that we are to-day in the middle of the most gigantic public works policy which has ever been undertaken by any British Government. It has this very great merit, that it provides skilled and highly paid work for skilled men, and hon. Gentlemen in all parts of the House who have sat through our Debates in the last 10 or 12 years on the question of unemployment relief works will know the difficulty of finding a reasonable proportion of skilled work for skilled people who are out of employment. I think one of the most potent bulwarks against a serious slump is industrial reorganisation, to which my hon. Friend the Member for Stockton referred and I must say I was extremely interested to see him being wooed by the hon. Gentleman who spoke last, with an invitation to become a Socialist. The Government policy is to encourage the voluntary reorganisation of industry in every way, and we are now very much better off in that respect than we were in 1929. I was glad that the hon. Member for Stockton (Mr. Macmillan) expressed his appreciation of the use we have made of our protection policy to assist reorganisation in the steel industry.

But, as both my hon. Friend the Member for East Aberdeen and the hon. Gentleman the Member for Seaham very rightly said, in the long run the maintenance of prosperity in This country depends on improved international trade. International trade has improved in the last few years, and to that improvement this Government by its policy has made a very substantial contribution. By guaranteeing free entry to a large volume of imports from the Empire and giving preference on much more, it has promoted Empire trade and indirectly stimulated the demands of other parts of the Empire for foreign products. Since this country and the rest of the British Commonwealth of Nations are responsible for 30 per cent. of the international trade of the world it is clear that any improvement which we get here is soon widely distributed over most of the globe. Our policy of making bi-lateral agreements and generalising the advantages by the most-favoured-nation clause, has been approved by M. van Zeeland and adopted by Mr. Roosevelt's administration. Trade agreements have lowered trade barriers for the general good and there is no question of shutting out the foreigner. Our imports last year were valued at over £1,000 millions and of that £624,000,000 came from foreign countries. I wish to say a few words about M. van Zeeland in reply to the right hon. Gentleman the Member for Bow and Bromley (Mr. Lansbury). I regret that I cannot amplify the answers which the Prime Minister gave on 2nd February in regard to his mission. We recognise with gratitude the great contribution which he has made, but we cannot proceed further by ourselves. We and the French Government have, undoubtedly, a particular responsibility and it is in conjunction with the French Government that we shall take such further steps as we can.

Mr. Lansbury

Will the right hon. Gentleman ask the Prime Minister to tell the House to-morrow what progress has been made in taking action? We were told that the French and British Governments were to consider it. How long do they reckon they will want to consider it?

Captain Wallace

I will, of course, convey the right hon. Gentleman's request to my right hon. Friend the Prime Minister. Finally, there is the question of the trade negotiations with the United States, which are the most important that have ever been undertaken by them or by us. We have to bear in mind not only the interests of this country but the interests of the Dominions and the rest of the Empire. Since the production of America is in many respects parallel with ours, our interests are also parallel, and the House will realise that there were consequently considerable difficulties in finding a basis of agreement. Those difficulties have been overcome and an agreement is in process of being hammered out. I hope that nobody in the House will have the slightest suspicion that trade interests are to be sacrificed to political considerations. As regards consultation with industry in this country, perhaps hon. Members will look at the answer which the President of the Board of Trade gave yesterday on that subject. We are going to make a trade agreement, and nothing more than a trade agreement is on the tapis at the present moment; but I am sure hon. Members will agree that it is impossible, in present circumstances, to exaggerate the value of anything which will tend to draw this country closer to the other great English-speaking nation across the Atlantic.

This has been a serious Debate on a serious subject. I have tried to give the House an objective account of our present economic situation. I have not looked for statistics to prove any preconceived theory. I have tried in any deduction I have drawn, to keep in mind the view of the President of the Board of Trade that unqualified pessimism is worse than complacency. My hon. Friend the Member for Stockton told us that foreign affairs to-day overshadowed all our deliberations. I agree. The ideals which we are pursuing in the foreign field are, I think, common to the whole House and the whole country. We may disagree about methods but it is certain that the vigour with which and the speed at which we can pursue those ideals, depend entirely upon the economic strength of this country. It is fitting, therefore, that on the day before the Prime Minister intends to lay before the House the views of His Majesty's Government on an international situation of great gravity, we should have tried to make a frank examination of the economic foundations on which any foreign policy must ultimately rest.

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

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

The remaining Orders were read, and postponed.