HC Deb 08 June 1939 vol 348 cc643-767

Order for Second Reading read.

4.13 p.m.

The Minister Without Portfolio (Mr. Burgin)

I beg to move, "That the Bill be now read a Second time."

I think I shall consult the convenience of the House if, before dealing with the Bill itself, I endeavour to give them some description of the problem of supply as I see it. It was on 7th June, 1915, 24 years ago almost to a day, that my right hon. Friend the Chancellor of the Exchequer, who was then Secretary of State for Home Affairs, introduced a Ministry of Munitions Bill, the prototype of the legislation now being submitted to the House. That Bill came before the House in 1915, when the country was at war, when immense powers had already been given to the Executive freely and willingly by the House in order to bring that War to a successful conclusion. The Bill was intended to deal with the greatest immediate problem which had presented itself in the early months of the War. That was a shortage of ammunition. In the words of a well-known French artillery officer, "During the battle of the Marne our 75's devoured in a few days stocks of projectiles which our staff had thought might have lasted, if not for months, certainly for weeks." The primary object of the Ministry of Munitions Bill was to deal first with a particular problem, the then shortage of ammunition.

The wheel of Fortune has turned full circle since that day in June, 1915. The Ministry of Munitions was enlarged to very great proportions during the War. The object for which it was formed was achieved. At the end of the War its stocks were disposed of and the organisation itself dissipated. In fact, it was dissipated so completely that in some parts of the country all traces of the former organisation were lost. The House will remember the subsequent history of events. After the Peace Treaties attempts at disarmament followed. Great armament factories became but shadows of their former selves and, literally, grass began to grow where munitions had formerly been made. Now the reverse process is again at work. For some years past fresh plant has been springing up, orders have been pouring in, and organisation for manufacture on a large scale has been undertaken. Thus it is that the House is once more being asked, after 24 years, to consider the problem of setting up a Ministry of Supply, the equivalent in these days of the former Ministry of Munitions. But there is one great difference. This time we are not at war.

The object of this Bill is to implement the policy announced by the Prime Minister on 20th April, 1939. I refer hon. Members to the OFFICIAL REPORT of that date, column 496. In the last three years there have been numerous references in Parliament to the possibility of a Ministry of Supply and naturally, in preparing myself for this occasion, I have looked through them all. There are some entertaining references, there are some instances of prophecy and there are some full-dress Debates. My right hon. Friend the Member for Epping (Mr. Churchill) will allow me to remind the House of an instance of his prophetic powers. In the House on 21st May, 1936, my right hon. Friend gave certain advice to His Majesty's Government. He advised the Government to choose a Minister of Supply from the Front Bench, to equip him with, say, 12 young business men of experience, and to buttress those young men of business with a senior civil servant, and no better could we find, my right hon. Friend suggested, than the admirable Sir Arthur Robinson of the Supply Board. I refer hon. Members to the Official Report of 21st May, 1936, col. 1443. The hon. Member who is now addressing the House was the Minister chosen from the Front Bench it is intended that I should be buttressed with 12 or so young business men, and it is also the intention to have as Permanent Secretary of the Department, Sir Arthur Robinson. Sometimes a single shot brings down a bird; sometimes a "right and left" will bring down two, but rarely does one come across an instance of three falling to the same fire.

The only other reference to previous discussions which I make is to the Debate on the Address of 17th November, 1938, when speeches were made by the Prime Minister, the Minister for the Co-ordination of Defence and again by my right hon. Friend the Member for Epping.

There have been different opinions and changes of opinions as to the suitable field of operation for a Ministry of Supply. But whatever those opinions have been, the Army and Army stores have always been a part of the agreed field. The Government has had one object throughout the whole of this time and that is to provide whatever form of central supply organisation seemed to them best to secure the rearmament of the country as quickly as possible, upon the basis of the plans made known to and approved by the House. The opinion of the Government was that until they were convinced of the advantage of a separate Ministry of Supply, the responsibility should be left with the Departments and the chain between user, designer and supplier kept unbroken in one Department.

There is clear evidence that in the case of the Navy and the Royal Air Force the system of Departmental supply had resulted, and is resulting, in supplies fully up to the needs of the Departments, and that the necessary measure of priority and co-ordination can effectively be supplied through the machinery of the Committee of Imperial Defence. As regards the Army, that was the position until within the last two months. It was on 8th March, just three months ago, that the Secretary of State for War announced the decision to have 19 divisions and to equip the Territorial Army on the Regular Army scale. I refer hon. Members to the Official Report of that date, col. 2173. It was on 29th March this year—Official Report, col. 2054—that the decision to double the Territorial Army was announced. That is less than three months ago, and I ask the particular attention of the House to the fact that that decision has transformed the problem of Army supplies out of all recognition.

The Government concluded that the time had arrived when other means should be adopted for providing for Army supplies and that there should be created a Ministry of Supply, charged in the first instance—with a few special exceptions —with meeting the needs of Army supply, design, research and inspection; secondly, charged with the duty of acquiring common Service stores by agreement with all the Service Departments, and, finally, charged with the duty of maintaining suitable reserves of raw materials. I do not imagine that to-day it will be necessary to spend time in satisfying the House of the necessity of a Ministry of Supply. Nor do I think that I need spend time in elaborating the principle. The House, with its experience of past Debates on the subject, will recognise at once that if you take the decision to appoint a Minister of Supply and set up a Department, you must give to it powers adequate for the purposes that you intend to be served by that Department. Those powers must be wide and drastic. It is of the very essence of a Supply Department for a Defence Service that wide and drastic powers should be obtained. Of course, those powers are only to be used compulsorily if your voluntary system fails to deliver what is required. Hitherto, the voluntary system has been sufficient to meet the demand. We are now, however, in an emergency condition. We seem destined to live in an emergency condition. Therefore, something of the magnitude of the task must be appreciated in order to justify the wide powers that are granted by this Bill.

If any of us in civilian life contemplates some new experience, some new undertaking, some journey to a foreign country, or some recreation or sport, we find that there are a great many things of which we are in urgent need, beyond our ordinary outfit. But, broadly speaking, the civilian is in the happy position of being able to supply his need by buying articles over the counter. There may be differences of opinion as to the most effective source of supply; it may be necessary to look round a little while to find the right shop, but, as I say, broadly speaking almost everything which the ordinary civilian requires can be brought over the counter. Of course the problem becomes a little more difficult if large numbers of the public want the same article at the same time, and that article is not normally kept in stock. When you come to deal with the Defence Services, however, you find that the requirements are of a very special nature. Indeed, I think that the requirements of Government Departments are always very special. When you want something specially made there is the possibility of delay and difficulty. The point I want the House to realise is that the civilian who is faced with an unexpected requirement for equipment, can, as a rule, thanks to the system of stores, buy what he wants over the counter.

I put it to the House that one of the matters that we have to organise in a Ministry of Supply is an adequate collection of stores, so that in time of emergency there can be issued from store over the counter, as it were, a large part of what is required. The Navy, the Army and the Air Force consist of large numbers of trained men, all of whom require, in addition to the special implements of their training, such semi-civilian equipment as clothing, bedding and various tools and implements, apart from the specialised requirements of their branch of the Service. The War Office, which has been the Cinderella of the Defence Services, now finds itself the subject of tremendous expansion so that it is beyond the capacity either of the store or of normal industrial productive capacity to supply its needs immediately.

There is one feature of the modern Army which will not have escaped the attention of the House. The proportion of unskilled labour in the modern Army is steadily becoming less. The Army is becoming increasingly composed of specially trained mechanics, skilled in the use of mechanised forms of transport or fighting, and the problems inherent in that organisation are very considerable. The War Office then, in terms of supply, must equip its Regulars, its Territorials, its Reserves, its Militiamen with everything that a man engaged in service is likely to require—his uniform, including his service dress, battle dress, great coat, underclothing and boots, besides beading, tentage and utensils, and in addition to all that, every kind of equipment for mobility, every type of conveyance, every type of arms for defence and offence, ammunition, apparatus for chemical warfare and a large range of appliances for defence against gas. All this is in addition to every type of specialised implement applicable to the branch of the Army in which he is engaged.

The average infantry soldier, equipped with rifle, bayonet and respirator requires 84 articles of clothing and equipment, the manufacturing cost of which is roughly £ per head. I mention these figures to give the House some idea of the scope of this problem. Over and above the requirements of the individual, there are the requirements of the organisation, whether it be an infantry regiment, an artillery battery, a tank unit or whatever form of specialisation may be in question, and the capacity to maintain all that mechanised equipment in working order. The House will understand something of the magnitude of the problem when I mention that, apart from mechanical transport spares of ordinary trade patterns, the vocabulary of Army stores contains approximately 60,000 different items. Apart from the problem of rapid expansion, a large amount of equipment must be ready for emergencies and I think the problem of supply in the future will lie partly in the question of storage.

There is also the question of the constant change and improvement of weapons, change in the nature of warfare, the tendency to increase mechanisation, and differences in tactics and strategy. There is always research, new design, modification, production of type, all before there can be any production in terms of multiples of the type ultimately selected. Each new invention means alterations all along the line. A new gun means a new calibre, and a new calibre means a new mounting, a new shell and a new fuse. So the problem is very large indeed, and apart from all this picture that I am attempting to draw, there is the necessity for every country prudently to build up a war potential capable of immense enlargement should the necessity arise. Here we find that the increase of the Regular Army, the doubling of the Territorial Army, the calling-up of the Reserves, and the embodying of the Militia have all taken place at one and the same time, within a very short period of weeks, and the problem confronting the Supply Department is, therefore, to equip all these men adequately in the conditions which I have described.

Continental countries have been accustomed, with their system of conscription, to have as a normal occurrence an intake of large numbers of men every year and at fixed dates, and to provide for substantial increases to their armed forces, and they have had a regular experience of preparing for a long-term programme. Our expansion has not meant that the Army has been doubled, or multiplied by three or by four, but has been multiplied by a figure which involves the ex- penditure of hundreds of millions' of pounds sterling in equipment, and the organisation of supplies for an Army of that kind means the finding of new sources of supply and of manufacture of a character and of a diversity not easy adequately to convey to this House in ordinary, simple language. The Army is not expanding at a time when all else is quiet. There has been a period of international tension, and concentration has taken place on the enlargement, the modernisation, the expansion, and the equipment of all the Services at the same time, and over and above the Defence Services, measures have been introduced for defending the civil population, every man, woman, and child, against the dangers of air attack.

So you have the Army expanding in a framework of National Defence preparation itself, where every unit expands at the same time and where demands on the productive capacity are prodigious, are cumulative, are unceasing, and are always urgent for delivery in some short time. I think the time factor is perhaps the most important of all, and I stress this point because I am not sure, when hon. Members urge so much the importance of everything being done at the cheapest possible cost, that they are taking into account that a highly accelerated delivery over an ever shortening period is not always compatible with the prices which are applicable to a long-term, quiet, easy expansion. Much of the material that is required by an Army, such as military equipment, small arms, guns, mountings, tanks, anti-tank weapons, and anti-aircraft weapons, is highly specialised and is not suitable for normal industrial production at all. It comes only from a limited number of plants, and it comes only, in the first instance, from plants controlled by a limited number of production engineers.

Confronted with the necessity of expansion on this scale, of an expansion beyond the possibility of ordinary industrial productive capacity, the authorities in this country have had in mind four principal objectives, namely, to revive, strengthen, sustain, and utilise to the full the Royal Ordnance Factories, in particular Woolwich Arsenal, the mother of all armament construction, and Enfield, the home of all small arms, and to create up and down the country in strategic spots increased Royal Ordnance Factory potential. That is objective No. 1. Objective No. 2 has been to revive, strengthen, sustain, and utilise to the full the professional armament firms. [HON. MEMBERS: "Hear, hear."] Yes, the constribution which these firms make to national defence is quite incapable of exaggeration, and let no Member of the House misunderstand that. Anybody with opportunities of going around and inspecting the factories must be amazed at the extent of the total national contribution which is made by the professional armament firms. The third objective has been to broaden the means of supply by sub-contracting on as wide a basis as possible a large number of component parts, with a view to one larger firm acting as the parent for purpose of assembly; and the fourth objective has been to plan, so far as has been possible with the limited orders available, by way of educational orders for the utilisation for armament work of the general engineering trade of the country.

I would like this House to know that it and the country generally owe their thanks to all those who have contributed to this task of resuscitation and revival. Many devoted Crown servants have given of their best, and I should like to place on record, as a result of my own inquiries and investigations since 20th April, my sense of the immense way in which these servants have contributed to this task. In thanking them for what they have done, I wish, by adding to their numbers, by increasing their staff, and by giving them greater encouragement and a larger organisation, to invite from them even greater labours in the days to come. I have mentioned four objectives which the authorities have had in mind in endeavouring to cope with this problem of supply. Very substantial progress has been made in each of these four directions, and I hope, immediately the Ministry is authorised and this Bill has become law and the organisation is in full working order, to be able to tell the House from time to time, within the limits of prudence, something of the immensity of the problem on which we are engaged, something of the way in which that problem is successively tackled, and some measure of the extent of the deliveries that come forward. It is with this indication of the framework that I want the House to turn from the problem of supply in general to the terms of the legislation now submitted for authorising the Department whose responsibility it will be to organise, to develop, and to sustain that supply.

May I make one point clear, and that is the relation of supply to demand. We have all been brought up to believe that one of the immutable laws of nature is the law of supply and demand. In munition manufacture it is the reverse; it is demand that has to come before there can be supply, because until it has been decided what force you desire to maintain and what equipment you require for the purpose, and the manufacturer can be told what it is that is wanted, no question of supply can begin to arise at all. There may be need, there may be crying need, there may be a lack of some essential article, but unless and until the design for what is wanted has made its appearance, unless and until the production engineer can take that design and convert it into drawings, and those drawings into tools, there cannot be any flow, there cannot be any production movement, there cannot be any delivery, there cannot be any supply. The topic is a rather fascinating one, and I should like to have given some examples, but I will content myself with giving one only. The standard antiaircraft gun and gun mounting, capable alike of being used at a fixed spot or of being taken rapidly over rough ground and mounted at some vantage point and fired almost at once, has in terms of production 2,000 different working drawings, and no production whatever can be made until those 2,000 working drawings have been built up and the material has become available and the process of machining begun. The House will understand, where you are introducing completely new ordnance, manufactured on new lines, what an advantage it is to have a continuous flow from the forge right through to the completed weapon, and, therefore, in some of the newer ordnance factories you find, as is natural, a greater progress of delivery than is possible in any establishment not specifically adapted to the purpose. Where there is a continuous flow from the forge to the weapon, the rate of delivery is much in advance of what you can get in an older establishment.

I have only one more word before actually dealing with the Bill itself, and that is with regard to the link between design and production. I am afraid the link has not been close enough. Very often the designer, thinking in terms of perfection from his own point of view, cannot have had his eye very much on the production engineer, and in a time of emergency, when delay in a manufacturing process might mean fewer weapons available for defence at the end of a period of time, this question of simplification of design becomes very important; and I am most anxious that in future there shall be a closer liaison between the designer and the production engineer. There are some industrial organisations which are at present not engaged on armament manufacture but on export business, and it may be much more in the national interest that they should continue to be so; I want to make it clear to industry that I do not intend to interfere with firms carrying on export business unless and until it is absolutely essential to do so for the purpose of securing immediately some article required for the public service. We must retain a sense of proportion, and I want to give industry that measure of assurance.

I would now ask the House, which has been very patient with me—[Hon. Members: "Hear, hear!"]— I think it an advantage to explain the problem in some degree—to allow me to pass to the actual Bill itself. The Bill is accompanied by an explanatory and financial memorandum, and it is explained by Command Paper 6034. It is a relatively short Measure—19 Clauses and two Schedules. It is divided into three Parts, and some Clauses are necessarily formal. Clause 1 of Part I and the whole of Part III are routine. The Schedules, I think, call for no comment. Clause 18, which deals with definition, gets away from the old definition of armaments and munitions and refers in wide terms to the articles that come under the Bill as articles required for the public service, a definition to which, I think, no hon. Member will take exception.

Sir William Davison

Are there any articles not required for the public service?

Mr. Burgin

Time and experience alone can show. That leaves me with Clauses 2 to 13 to explain. Clause 2 sets out the general powers of the new Department. These powers are wide and are intended to be exhaustive and adequate, and it is under this Clause that Government Departments are protected from any interference by the new Ministry without their consent. The legislation provides that while the new Minister is to have all these powers without limitation, they can only be exercised in relation to another Government Department if the functions of that Department in the matter of supply have been transferred to the new Ministry by Order in Council. That is a sensible piece of organisation. No doubt other Government Departments will from time to time require supplies to be acquired by the Ministry of Supply. To the extent to which they do so require, their functions of supply must first be transferred to the new Minister before the powers given to him under this Clause can be applied to that particular. Clause 3 is the operative power to transfer by Order in Council the supply powers of any Government Department, and there is a specific reference in Sub-section (3) to the Essential Commodities Reserves Act, 1938, dealing with the question of accounts relating to purchases which have hitherto been made by the Board of Trade.

Sir Arthur Salter

I think it would greatly clarify the discussion if the right hon. Gentleman would tell us whether what he has just said means that a particular Department will have an absolute veto on the transfer of any present function.

Mr. Burgin

No. No Department has any such veto. It is a matter of Government policy. But you must not by setting up a new organisation throw a spanner into the wheel of something that is going on perfectly well. What you want is, if a Department requests that supplies should be acquired at the same time that supplies of the same material are being bought from the same source, that one purchase shall be made for the whole. The way it is done is that the Department concerned says, "The Ministry of Supply are buying largely of this material. Our requirements are so much. Will you please buy that amount for us?" There is no power of veto at all, but it is provided that there must be an Order in Council put before the House and approved before there can be an exercise by the Minister of Supply of powers of purchase of the subject matter of another Government Department. We are not talking merely of the defence services in terms of the Navy, the Army and the Air Force. We are thinking, for instance, of the requirements of the Lord Privy Seal in connection with civil defence. Steel may be required, and the most appropriate purchasing authority may well be the Department which has most to do with it.

Clause 4 is rather important. It gives power to finance the accumulation of reserves by traders with a view to carrying out the defence programme and, what is much more, maintaining certain essential civil industries in time of emergency. It is much wider than defence. It gives the Minister of Supply power to ensure that there will be adequate reserves of substances difficult to procure, held if necessary in merchants' hands, if necessary in traders' hands and in manufacturers' hands. Wide use can be made of that power. Wherever it is used, proper Estimates will be presented to cover expenditure. I cannot tell the House even approximately the sort of expenditure that is envisaged under the powers of the Clause but probably the House will feel it a sufficient assurance if they are notified, as I notify them now, that there will be Estimates on the occasion of each block of expenditure.

Mr. Kirkwood

Does that mean that the Minister of Supply is to take control of the raw materials, and that it is from him that the manufacturers will be supplied with them?

Mr. Burgin

That is a possibility. What is also a possibility is that raw materials shall be bought forward by different manufacturers. For instance, shipyards may well accumulate large stocks of materials in the knowledge that there might perhaps be a difficulty in procuring some of them. To the extent to which there can be reserves of certain stocks here, there is obviously less work for convoy vessels in time of emergency. It is an enabling Clause which is absolutely essential, and to the extent to which merchants and traders accumulate stock, as well as special Government purchases, is the Government richer should there be any difficulty in renewing stock.

Mr. A. Edwards

Would this Clause enable the Minister to say to blast furnace owners, "Keep your furnaces going full time and the Government will be respon- sible for all unsold stocks?" If a furnace is put out it costs a great deal to start it up again.

Mr. Burgin

I do not want to be too precise in giving a particular assurance without having given consideration to the particular example. As far as I understand the matter, I think the hon. Member's proposals would come within the Clause. I have no doubt whatever that power of that kind exists. What I am not quite sure is whether the power is inherent or whether it is special and might be conferred under the Clause.

Clause 5 is one of a number of Clauses giving the Minister power to procure information. Broadly speaking, the only way in which a census of the industrial capacity of the country can be acquired is by the exercise of such powers as are contained in Clauses 5, 7, 8, 9 and 10. Under the latter part of Clause 5 any Government Department which has power to call for any information can ask the Minister of Supply to procure it for him. I attach very considerable importance to this power of ascertaining stocks, delivery possibilities, facilities for production, facilities for storage and I have great hopes that by a wise, common-sense, considerate use of the powers given by this Clause there will be a great addition to the sum total of the knowledge readily available of the nation's productive and storage capacity. I mention both production and storage because storage might become almost as difficult a problem as manufacture, and it is essential that some sort of census of storage possibilities should be ascertained. Clause 6 deals with the procedure side of Orders in Council made under Part I of the Act. The Orders are to be laid and there is to be an affirmative Resolution of both Houses within 28 days.

Part II of the Measure is temporary in character. By Clause 13 the period of time during which its provisions are to continue is three years. It was felt that, the House having just passed the Military Training Act and having limited it to three years unless the House voted its continuation, it would be right that these exceptional powers over industry should be for the same length of time and so, although the Ministry of Supply is intended to be a permanent organisation, it is felt that the exceptional power given in peace time under Part II should be limited in duration. Therefore by Clause 13 these exceptional powers are limited to three years. Additional powers might well be wanted should war break out, but should war break out a great deal of emergency legislation will be required and that matter could then be dealt with. No one can foresee exactly what powers will be wanted in the event of war, but experience in the matter of meeting Army requirements has made it clear that there are many powers required now and it is these powers which are granted by Part II. They are exceptional. I do not wish to discuss the exceptional character of the powers that are taken but I may refer to two of them, the power to compel a manufacturer engaged on civilian business to give a war contract priority, and, secondly, the power to compel a manufacturer engaged on civilian business to accept a Government order.

Those are very big powers. In peacetime normally a contract means a free offer and a free acceptance. It is felt that in time of emergency the executive ought to have power to go to a particular works and say," You are splendidly equipped and tooled for the manufacture of a particular substance which is urgently required for the public service, and you are required to carry out in these works the manufacture of articles needed by the State and to do it now. "That is the effect of Clause 7. It gives the Minister this wholly exceptional power of imposing upon a manufacturer the obligation to accept the order and the obligation to give it priority. In the event of failure to comply it is no use having a fine and prosecution. You do not want to punish. What you want is the physical delivery of something which has got to be manufactured. You want an assurance that productive capacity shall be available for the State. So you say," In these works there shall be made now such and such an article required for the public service." Clause 7 gives these wide powers. Subsection (7) gives a manufacturer protection should he, by obeying the Minister's request, find himself in difficulty under a contract previously entered into. It is clearly necessary, and it is clearly arbitrary, but I am not pretending that the protection is complete. It protects the manufacturer all down the line, but you may well find that innocent people suffer loss. You might find that a purchaser who had relied on procuring delivery of goods by a particular time might be deprived of his intermediate profit because he could not secure delivery. You might find a manufacturer in great difficulties if he has undertaken to sell goods abroad and if he has assets in the country of his purchaser. No protection that I can give him will avail him in a foreign court of justice if the purchaser sues him. In the circumstances most likely to arise someone in this country will complain that the manufacturer has not kept his contract and that there is a case of hardship.

Mr. Leonard

Can the right hon. Gentleman assure the House that he has power to spread State requirements in such a manner that establishments called upon to give service will not be placed at a disadvantage in the commercial market by the freedom left to firms not required to meet State demands?

Mr. Burgin

The hon. Member has, of course, made a very pertinent observation. I am hoping that, although these exceptional powers are taken, it will never be necessary to use them. I am in great hopes that I shall never have to use this power of appointing a controller. The sanction in the event of failure to comply is the power of appointing a controller to take possession of the business. I will do my best to see that these powers are kept entirely in reserve and are only used in exceptional cases. I believe that with good will it ought to be possible to avoid putting manufacturers in the difficulty which this Clause might land us in. But I will bear in mind the point that the hon. Member has mentioned. I shall want to operate the Clause with a minimum of inconvenience and it is my firm conviction that a great deal of priority can be secured for essential supplies without placing manufacturers in the difficulties contemplated. If there are instances already in industry where, owing to the needs of the National Defence programme a manufacturer finds himself confronted with claims under a penalty clause, I hope that commercial interests will not prove too exacting in the enforcement of penalties never intended to apply to the type of circumstances to which I have just referred.

In Clause 8 there is a somewhat similar power with regard to storage.

Clause 9 is an extremely important Clause and deals with costs. One of the most important factors in connection with armaments supply is the question of cost. Consistent with the overriding necessity of securing delivery of essential supplies of which the country may be in need, the greatest duty of the Minister in charge of supply is to take every possible precaution to ensure that no swollen profit is created out of the necessity for the placing of essential orders on a large scale. Cost is a difficult factor to estimate. It may vary within very wide limits, and it is of the first importance that every factor should be made known to those upon whom the task of assessing cost falls. Hence the duty of keeping records, keeping them correctly, seeing that they are adequate and open to inspection and that copies or extracts can be obtained. Clause 9 sets out in detail the system whereby the costing of supplies and the remuneration for storage is to be calculated. The Bill has been so drawn that the combined effect of the Clauses giving the Minister power to secure information should result in all the items which the Minister wants to know being available to him, and armed with that information covering all the facilities available and covering every item of cost, it ought to be within the capacity of the skilled advisers of the Minister to maintain that check and control over cost which is one of the most important features of supply.

The vast majority of Government contractors have allowed the Service Departments ready access on demand to cost records, and the practice of keeping these records as an ordinary matter of business routine is far more widespread now than at the time of the last War, but there have been one or two instances of refusal, and I am afraid that the Minister must have the powers of compulsion provided for in the Bill. It is a problem of cost and not merely a problem of profit. It is in the interests of the country that prices themselves should not be too great even though the profit on the cost may be reasonable. I am satisfied that these Clauses will enable a valuable and a drastic method of control and the checking of prices to be obtained. The Clauses will be used for that purpose. It will be my constant preoccupation to endeavour to ensure that the Contract Departments make every effort in all cases to fix a fair and reasonable price.

Mr. Gallacher

They will do you.

Mr. Burgin

Quite apart from anything you do with profits once they have been earned, the wiser course is in all contracts of supply to endeavour to control the price to a fair and reasonable one at the outset. These special powers have been taken to enable all the factors of cost to be known. Clause 10 sets out the powers of the controllers of businesses and Clause 11 enables the Government to override restrictions.

Mr. S. O. Davies

I am not quite satisfied about Clause 11, and I would like to put a specific question. Would this relieve the undertaker from obligations that he might have entered into with his workmen, because the last sentence suggests that that is possible?

Mr. Burgin

No. I can give the hon. Member and the House the assurance at once. These powers and the powers of the Bill generally are not intended to give to the Minister of Supply different powers with regard to workmen than other employers possess. This is not intended to refer to labour at all, and I do give an unqualified assurance, adding that if it is necessary to make any changes in the wording we will be happy to look at the matter. The Clause is intended for quite a different object altogether, and does not refer to relations with men at all.

Mr. Edwards

The Minister stated that there had been cases of refusal of records. It is known to be a practice in some sections of industry to keep two sets of books, giving accurate and inaccurate costs. I am wondering if the Minister is protected in the Bill against the manufacturer putting one over on him.

Mr. Burgin

I have no doubt that the powers given by the series of Clauses enable complete control over manufacturers' books and costing systems to be obtained and indeed to impose on a manufacturer a costing system of Government origin.

Mr. Kingsley Griffith

Do the powers in Clause ii enable a limited company to go beyond the scope of its own articles or memorandum?

Mr. Burgin

I should not think that is so, but they were not the circumstances which one had in mind in drafting the Clause. I am advised now that it would have power to do that. I did not myself envisage that particular possibility. I apologise to the House for taking time over this matter, but it is necessary to give a good deal of explanation. I will now deal with Clause 12, which may be called the A.R.P. Clause. It is entirely different from the remainder of the Bill and calls for a little more explanation.

Sir Robert Tasker

Would the right hon. Gentleman before he goes on to Clause 12 say a word about Subsection (2)? Orders made under this may be revoked by the orders of the Minister.

Mr. Burgin

This is a common form Clause. If you have to deal with matters by an Order you can make any number of Orders one after another and vary one in making a second. It is a common form provision.

Sir R. Tasker

It gives unlimited power to the Minister.

Mr. Burgin

It is a common form of power. If the power to make an Order exists at all, there must be power to put an end to it.

Mr. Kirkwood

Would you have the power if there should be a dispute between a certain employer of labour and his workpeople to order the employer of labour to meet the workmen and discuss any labour troubles?

Mr. Burgin

No power—only sweet persuasion. Nothing in the Clause relates to such a circumstance at all. I have no doubt that an employer of labour would observe a request from a Government Department to behave properly and such a request would be made in any appropriate case, but there is no power under Clause 11 to do what the hon. Member asks.

May I tell the House about Clause 12? This is complementary to certain provisions in the Civil Defence Bill. The Civil Defence Bill contains provisions for protecting the personnel in industrial and commercial establishments, for the continuity of service of public utility undertakings which serve the community as a whole and also for precautions affecting industry as a whole, like camouflage, the obscuration of lights, and the prevention of glare. What it does not do is to provide for the protection of essential plant and machinery. That is a matter of Supply rather than a matter of Defence, and therefore in this Bill it is necessary for me to take certain powers. Obviously, where what is aimed at is the delivery of essential Government stores it is as important to protect the plant and machinery capable alone of producing those stores as it is to protect railways, docks, or other public utility undertakings. Clause 12 enables payments to be made from public money for effective defence against air attack of essential plant used in connection with supplies required for the public service. The financial provisions are set out in the Explanatory Memorandum. The House will see that something of the order of £2,000,000 to £2,500,000 sterling is contemplated as possible expenditure under this Clause.

What will the new Ministry take over? How will the new Ministry function? The new Ministry will take over, as the Command Paper shows, War Office supplies, agency supplies, common user supplies and the Board of Trade powers under the Essential Commodities Reserves Act. What will this involve in the way of staff? A comparatively small number of staff will be required at the outset because the Ministry in taking over the duty of supplying War Office needs will take over certain War Office headquarters staff and certain other staff of Army departments dealing with Army supplies. Headquarters staff, planning, contracts, finance and secretariat, will number about 800. The provision in the Army Estimates is £280,000 a year for that 800. Research, design, and experiment need about 4,000 staff at a cost of £920,000. Inspection services have a staff of approximately 11,800 and the Army Estimates show a total annual cost of about 2,140,000. The Ministry of Supply will also take over the manufacturing establishments of the War Office including the Royal Ordnance Factories with a further staff of some 34,000. The total staff will be somewhere of the order of 50,000. The cost of the Royal Ordnance Factories is included in the provision made for munitions. There will be a Supplementary Estimate presented by the War Office making provision for additional requirements of munitions, and there will be Ministry of Supply Estimates dealing with additional staff. As a matter of money, the Ministry of Supply will become responsible for the expenditure of something like £100,000,000 a year including Army general stores, armament stores, machine tools, clothing, mechanical transport, essential commodities and various items for other services.

Perhaps I might say one word finally about priority. It may be asked, what will be the effect produced by the appointment of a new Minister and the setting up of a new organisation if at the end of the day he has to battle for priorities with other Service Departments in a Priority Committee of Ministers presided over by the Minister for Co-ordination? In the six or seven weeks in which I have been engaged in preliminaries in connection with this task I have found that there exists in practice very little risk of a clash of priority between the Defence Services themselves. The clash that has to be dealt with, if at all, is the clash between Service and civil work. With that side of the matter the Bill adequately deals. In the main, Naval requirements, except for guns, and Air Ministry requirements, except for scientific instruments, are of a different character from the nor mal requirements of the War Office. Should it become necessary to go right back to raw materials and to deal not with clothing, not with machine tools, not with scientific instruments, but rather with wool, steel and glass, questions of priority might arise. I am quite content as guardian of the interests of the War Office supplies to have power to determine priority over ordinary mercantile con tracts, and at the same time to be allowed to express my view in a committee of Ministers presided over by the Minister for the Co-ordination of Defence. I do not believe that in practice difficulty is likely to arise, and certainly over the greater part of War Office requirements we are dealing with different commodities, different producers, and different methods of manufacture. The Bill does not contain any provision for the setting up of a statutory advisory committee. I propose, wherever possible, to use organised industry and to set up for my own guidance and benefit an advisory committee, but such body will be entirely advisory, and will not have a statutory basis. Hon. Members opposite have put down a formal Amendment to reject the Bill —

Mr. Kirkwood

Before the right hon. Gentleman leaves the point, may I ask him whether he proposes to consult with industrialists?

Mr. Burgin

What I want to do is to give the House an assurance that I am not proposing to work without taking fully into consideration recognised industry. I want to use the experience of the last War and the industrial knowledge that is available by inviting a number of industrialists to serve on an advisory committee, and I was explaining to the House that I feel sure it is better to have flexibility in that respect, and not a rigid provision statutorily imposed by the Bill. I was rather seeking to justify the fact that it is not included in the Bill as drafted.

Mr. Gallacher

Will the committee include representatives of the workers?

Mr. Burgin

I do not want to give specific undertakings as to how the committee will be constituted, but I am very much alive to the practical wisdom of working in touch with the associations of workers as well as with the associations of employers, and I do not think I need say more on that subject.

The Amendment which has been tabled by hon. Members opposite is not so much, in substance, an objection to the provisions of the Bill itself, as to the policy which hon. Members imagine to lie behind the Bill. The Amendment suggests that the present Bill fails to establish an immediate and unified control of all the supplies necessary for the Defence Services under conditions which will ensure prompt assembly and delivery and stop profiteering. But no Bill can establish control of supplies, and no Bill can ensure assembly and delivery. These are matters of administration. They do not involve the granting of powers, but only the exercise of powers. They depend on the activity of the Minister and his officials in so dealing with the powers at present contained in the Bill as to make the Department an effective Ministry of Supply; and it is a little ironical that, whereas the critics of Government policy have said in the past that the setting up of a Ministry of Supply was intended only to be a half-hearted measure, many of those critics are now protesting that the powers granted by the Bill are too extensive and go too far.

Mr. George Griffiths

We have not said that.

Mr. Burgin

Not in the Amendment, but hon. Members have the same access to information as I have, and papers dealing with this matter have alleged that the powers are too great. The Bill as now drawn is wide enough to cover all three Defence Services, and it does contain powers dealing with costing and the fixing of cost prices. The Amendment, therefore, is not one which attempts to raise questions of wording or questions of drafting; it is not directed to the Bill at all, but deals with political matters of Government policy, and is merely tantamount to saying that the Opposition object to Government policy, even though hitherto Opposition speakers have expressed their desire that a Ministry of Supply should be set up. I apologise for having occupied so much time, but I was anxious to give to the House not so much an explanation of the Bill as of the intention in my mind as to the scope and operation of the Measure, which I now commend to the House for its acceptance.

5. 22 p.m.

Mr. Dalton

I beg to move, to leave out from the word "That," to the end of the Question, and to add instead thereof: this House, being convinced that an effective Ministry of Supply is long overdue, cannot assent to the Second Reading of a Bill which fails to establish an immediate and unified control of all the supplies necessary for the Defence Services under conditions which will ensure prompt assembly and delivery and stop further profiteering. The right hon. Gentleman took some time to come to the Bill, but, when he came to the Bill, he interested us a good deal. He led up to it by a long road, which I am not going to follow, because, if I may say so without offence, a good deal of what he said was platitudinous and a matter of common agreement throughout the House. So far as the Bill is concerned, our views are set out in a summarised form in our Amendment. Our feeling is, first of all, that the Bill is brought in very late in the day. The right hon. Gentleman spoke of the time factor. I will say a word about that, too, and about the powers which are now being given, which in our view are not adequate to the condition of affairs with which we are confronted. With regard to the time factor, reference was made by the right hon. Gentleman to speeches in this House in 1936 by the right hon. Gentleman the Member for Epping (Mr. Churchill), and in 1938 by another speaker—I do not know who it was. But demands for a Ministry of Supply were first made in this House in 1934 by Lord Addison, as he now is, who, as Dr. Christopher Addison, sat for Swindon in the 1931–35 Parliament. I think the principal speech was made by him in 1934 demanding, at that comparatively early period of armament expansion, that a Ministry of Supply should be created, not in a wartime emergency, but as a measure of reasonable efficiency and coordination even in time of peace and at the then much lower level of armament expenditure. He spoke from first-hand experience as Minister of Munitions during the War, knowing the kind of problems which even then on a small scale were exhibiting themselves with regard to priority, co-ordination and the like.

Therefore, our demand from these benches dates back, not a year or two, but some five years, for a Bill such as the Government are now putting before us, so far as the principle is concerned, but for a stronger Bill than that which is now being submitted to the House. My hon. Friends have given continuous study to these problems, and only last week, at an interesting conference at a watering place which is represented by a member of the Government, we passed almost without dissent a report which I think the right hon. Gentleman will admit is a careful and detailed report, whether its conclusions are accepted by him or not. That report makes various proposals relating to defence, and one section deals specifically with the question of a Ministry of Supply. I will not quote it at any length, but it lays down very definite proposals. It excludes naval shipbuilding, which we regard as falling into a special category and able to be handled effectively by the Admiralty without the intervention of a Ministry of Supply. But we consider that all other articles intended or adapted for use in war, that definition being taken from the Ministry of Munitions Act, should become subject to the immediate control of the Minister—and here I stress the word "immediate," which occurs also in our Amendment—and not after long drawn-out obstructive wrangles with his colleagues in the Cabinet. It is here that we foresee a further aggravation of the time factor. It is not good enough that the Minister and his colleagues from whom he desires to take what they are unwilling to surrender, will, after long Departmental disputes, argue it out together in the Cabinet and at the end come to some decision or semi-decision, or to some further delaying reference to another Committee. Meanwhile time will have been lost and it is for this reason that we have pressed in the past, and press now, for the giving of immediate power to the Minister to take over substantially all supply functions with respect to all articles which are intended or adapted for use in war, except naval shipbuilding and one or two other exceptional items.

One of the great defects of this Bill is the apparently harmless provision in Clause 2, and the similar provisions in other Clauses, whereby the consent of other Departments has to be obtained for the transfer of specific functions of control over specific articles at a period subsequent to the passing of the Bill by Parliament. The right hon. Gentleman was a little complacent about the past records of the Service Departments with respect to supply requirements. He seemed to have passed a sponge across the slate of his memory with regard to the anti-aircraft gun and other scandals. He said that it was only within the last two months that the need for this Bill had been demonstrated to him and his colleagues in the Cabinet, as a consequence of the great expansion of the Territorial Army and the introduction of the Military Training Bill; but for many months there have been complaints, not only from these benches but from ether parts of the House, about the gross failure of the supply functions of the Service Departments. In particular, the gross failure of the War Office with regard to anti-aircraft guns, with regard to the Bren gun, and with regard to the supply of medium tanks and of other instruments, has been demonstrated time and again, and the Secretary of State for War had to make an abject confession from that Box—I am not surprised that he has had to leave the House now—in which he admitted that last September only a very small number of the antiaircraft guns dragged from the Imperial War Museum and other places of storage were properly equipped with predictors and other necessary gear.

These things are remembered by us and by wide circles of opinion in this country, and I do not think it would be a very apt introduction to his new functions for the Minister to assume that there has been so little in recent months of which complaint could be made and in regard to which improvements might be effected. With regard to the Air Ministry, grave complaints have been made by many of my hon. Friends, the justice of which has been admitted in considerable measure by the Minister, with regard to shortages and delays in delivery, not only of the aircraft themselves, but of all sorts and kinds of equipment and apparatus. We do not for a moment accept, nor does instructed opinion in the country accept, that until a month or two ago all was well as regards the supply functions of the War Office and the Air Ministry. The Admiralty has been less subject to criticism, but the War Office and the Air Ministry have a rotten record, which cannot be got rid of by observations of the optimistic character made by the Minister this afternoon. The Bill at first sight contains very strong and comprehensive powers in Clause 2, and anyone reading it rapidly would suppose that the Socialist Commonwealth was on the point of arrival. In Clause 2, the right hon. Gentleman is to have powers—ssI leave out the limitations— to buy or otherwise acquire, manufacture or otherwise produce, store and transport any articles required for the public service. That looks like a paraphrase of declarations which have been made for many years at Labour and Socialist gatherings demanding the nationalisation of all the means of production, distribution and exchange. That, of course, is very encouraging and agreeable, at a first and rapid reading, to my hon. Friends and myself. We have, indeed, a Daniel come to judgment. But on a closer scrutiny this hopeful aspect disappears, and we come in particular to the limitation to which I have already referred whereby the consent of other Government Departments has to be obtained before any transfer of powers can be made to the right hon. Gentleman. I am not going to repeat the argument I have already adduced, but I will summarise it again in a sentence by saying that here again there opens a long vista of tedious delay and squabbling between Departments. Some official person will desire not to be stripped of his functions or to be transferred from his own Department to the Department of the right hon. Gentleman. Out of these long delays, we believe that small output will come, and that this will largely invalidate the powers given under the Bill.

Turning to the White Paper, we are disappointed at how little it is intended to do now. Clause 2 is to be read, I understand, subject to what we are told in the White Paper is to be done now. I wish to ask the right hon. Gentleman who represents Lord Chatfield in this House, and who, I understand, is to reply to-night, certain questions raised by the White Paper, to which many hon. Members would like a reply. What is the reason for the wide exclusions from the powers of the Minister of Supply? The exceptions made include petrol, lubricants and medical stores, followed by the further exclusion of works services. These are very large exclusions indeed, and it is not clear why, when the right hon. Gentleman is to be allowed to handle fertilisers, he is not to be allowed to handle petrol or cement. With regard to common user, I am not sure whether I understood the Minister aright. When I read the White Paper I saw at the bottom of the first page a paragraph in which it is stated that it is further proposed that where stores and equipment required by Government Departments are for common user they can only be transferred by agreement with the Government Departments concerned. Does that mean that the agreement had already been got, before the right hon. Gentleman rose this afternoon, to transfer all stores and equipment required which are of common user, or does it mean that after the Bill has been passed then will begin a search for agreement?

Mr. Burgin

With regard to a large number of items an agreement already exists. It is impossible with regard to a large number of other items to say what will be common user. It is intended that there shall be a common-sense policy of one Department acquiring the whole of the stocks instead of having the possibility of one or more Government Departments buying against one another in a common market. A number of instances have arisen. I myself have had experiences quite recently. It is intended where a substance is likely to be required by more than one Department to obtain it in this way.

Mr. Dalton

As I understand now, agreement has been got with regard to certain specific cases, and agreement is to be sought in a large number of other cases which are likely to arise?

Mr. Burgin

That is generally correct.

Mr. Dalton

Materials which are obviously of common user include, for instance, both ferrous and non-ferrous metals, iron and steel on the one hand, copper, nickel and tungsten on the other. Is there agreement about them already?

Mr. Burgin

indicated assent,

Mr. Dalton

That is obviously important.

Mr. Burgin

I do not want to be tied down too specifically, but, broadly, the class of articles to which the hon. Gentleman has referred are articles on which agreement has been reached.

Mr. Dalton

That is reassuring up to a point. Then there are machine tools. I will run over certain points which occurred to me on a reading of the White Paper, and I would be much obliged if the right hon. Gentleman would deal with them when he replies, because much depends on whether agreement is reached quickly.

Mr. Lewis Jones

Does the hon. Member think that the Ministry of Supply would acquire machine tools and distribute them to the factories?

Mr. Dalton

We are making inquiries. The Minister of Supply, no doubt, will tell us later on. What we do know is that during the seven years in which we have sunffered under National Government the shortage of machine tools has been such that munitions production has been greatly hampered. This is not a case where we stand in a white sheet. We want to know whether there is a chance of improvement in the shocking state of affairs which has necessitated this Bill. The hon. Member for Swansea (Mr. L. Jones) is an industrialist of great repute, and he will, no doubt, be called in for consultation on some of these matters. I only hope that the consultations will result in a speedy increase in the supply of machine tools.

Let me pass to weapons. There are various weapons which are used by two or more of the services: machine guns, which are used both by the Army and the Air Force, fuses for shells, scientific instruments and internal combustion engines, in respect of which we have to consider not only the requirements for transport, tanks and so on, but the fact that the Minister of Agriculture also enters on the scene with his requirements for tractors. Is there any agreement actually come to whereby the production of these weapons, munitions, explosives and so on which are needed can be co-ordinated for the three fighting Services, and in some cases for Civil Defence and agriculture? Has any agreement been reached for the co-ordination of production and of priorities? The illustrations I have taken—I will not multply them—are sufficient to show that in a very wide range of finished and semi-finished articles for the fighting services, we are entitled to further information on the plans that have been made, and some reassurance that the problem of fixing priorities has received consideration.

In regard to storage, which arises on Clause 8, I raise no objection to the powers that the Minister proposes to take, but we should like to know, as part of the justification for taking these powers, whether so far as existing storage facilities are concerned, there has been any resistance by British corporations or private individuals to the use of these facilities? Are these powers needed, not only in order to secure an increase in the facilities, but also in order to overcome resistance by those in control of existing facilities? There is evidently a very large volume of storage in the country, and we should like to know whether powers are required in order to see that that storage is effectively used, as distinct from the need for increasing storage. Some of my hon. Friends will raise matters primarily affecting their own constituencies and in relation to the Minister's control of ordnance factories and kindred undertakings, but perhaps I might mention one point which has been a matter of adverse comment in certain localities. There are certain contractors —I think Messrs. Lindsay, Parkinson are one of them—who have had gangs of Irish labourers moving about from Lancashire to South Wales, from Chorley to Bridgend, with the result that local labour has been prejudiced. Both at Euxton, near Chorley, and at Bridgend, a great deal of work has been done, not by local labour, although there is a great deal of local labour available, but by this itinerant gang of Irishmen, whom it is. apparently more profitable to the contractors to employ than it would be to employ the local unemployed.

Mr. Burgin

I do not want the hon. Member to be under any misapprehension. The erection of these factories will not come under this Department. It will be a matter for the Office of Works.

Mr. Dalton

Works services for Army purposes will remain under the War Office. Does that include these erections?

Mr. Burgin

The reference in the White paper is to works and fortifications, which is a section of the War Office that is not transferred. The hon. Member was referring, as I understand, to factories at Chorley and Bridgend. I was merely intervening for the purpose of information, in order to tell him that they are under the Office of Works, and do not come under this Bill. Where there is to "be a new ordinance factory that would come under the Bill. I do not want the hon. Member to direct himself to a matter which is not in fact germane.

Mr. Dalton

I am much obliged. It is a point which can be raised on another occasion. The grievance is deeply felt and an explanation is required. There is a further point with regard to textiles. That will come under the Minister's control. He is going to be responsible for clothing the Army. During the Great War there were more woollen millionaires in the West Riding of Yorkshire than there were profiteers on a great scale in any other industry or area, and there are still bitter memories in the West Riding about that profiteering out of the War, and of the enormous fortunes that were accumulated. Sir Charles Sykes did pretty well for himself in the last War, so no doubt he is a good man to give advice now. He is one of the men to whom I have referred. Some of my hon. Friends would like information about the class of men appointed for this purpose. Sir Frederick Marquis was appointed to this body one month and given a peerage the next, which is evidence, no doubt, of the Government's regard for his abilities. We asked for names the other day. I do not complain that they were not given—the Minister presumably had not got them—but this question of names is a question of public confidence and credit.

Therefore, I hope that we shall press upon the Government for more information on the question of clothing contracts. Who are advising the Government? What powers have they, and how far are the persons who are giving advice as to how this thing should be organised, also the persons who are, through business interests, going to profit by the transaction? I put that frankly because there is still a nasty smell left from the last War, and we want to be sure that it is not again repeated. The same feeling has been raised by hon. Members in some other areas. This leads me to the question of profiteering. I understand that it is not intended by the Bill to prevent profiteering. The Minister hopes that it may have the effect of reducing costs in some directions. I read in the "Times," which defends His Majesty's Government, that another Bill is in preparation to deal with profiteering, and that some difficulty has been found in drafting it. As I understand that another Bill is to come, I am anxious not to address complaints to the wrong department. It would not be right to complain that, if this 'is how the Government are going to stop profiteering, it would not amount to much. It would not be fair to say that as there is another Bill coming. Am I right?

Mr. Burgin

The hon. Gentleman will note that the Prime Minister answered questions yesterday with regard to arms profits by stating that an announcement would be made next week. It follows, of course, that this Bill was not the Bill to which the Prime Minister referred.

Mr. Dalton

I wanted to get that clear, as the "Times" tells us there is difficulty in drafting that Bill. As far as this Bill is concerned, Clause 7 (6) seems to be, on first reading, rather a curious form of words regarding additions to be made to prices by reason of the Minister giving certain orders, and so forth. I am wondering whether there is any great deliberation in inserting the words "in addition." I should have thought that the whole price to be paid would have been subjected to determination. I do not want to ask the Minister to get up again now, but perhaps we could have an explanation from the right hon. Gentleman who replies later whether there is any special significance in limiting the determination to the additions to price as distinct from the standup price? My hon. Friends, in the course of the later stages of this Bill, to-day on Second Reading and later in Committee, will have points of detail to raise.

The right hon. Gentleman finished by making some comments upon our Amendment, and I will follow his example. Every epithet in our Amendment has been carefully considered. We have long declared our faith—as long ago as 1934— that an effective Ministry of Supply was long overdue. We do not feel, in the light of this Bill and of the explanation we have received, that an effective Ministry of Supply is being set up by the Bill, particularly as the White Paper puts an end to any hope that we might have obtained from the Bill itself. We hold the view that there should be established an immediate and unified control of all the supplies necessary for the Defence Services. We do not see either immediate or unified control being set up by this Bill, and many supplies for the Defence Services seem to fall outside of it, and some which admittedly fall inside have to be subject to long inter-departmental argumentative consideration. As far as profiteering is concerned, although there is no Bill to deal with the matter, we do not regard the proposals made in this Bill as adequate. For that reason my right hon. Friends and I have set down this Amendment and we shall at the conclusion of this Debate take it to a Division.

5.51 p.m.

Mr. K. Griffith

It has been very interesting this afternoon to see the right hon. Gentleman the Member for Luton (Mr. Burgin), as it were, acting as the midwife at his own birth. This Bill, if it is passed, brings him into existence in a more glorious position than he has ever occupied before. I hope that he will prove to be a vigorous and lusty infant. We have had experience of him in other offices, where he has always shown very great industry and application in regard to the matters to which he has put his hand. He has also the power of lucid explanation which, although I think that at one time this afternoon it was getting a little near the level of the children's hour, at any rate enables even the least intelligent of us to understand what he is talking about. He will pardon me if I say that industry and lucidity will not be sufficient qualities to enable anyone to succeed in the office which he is now taking on. He is now part of the Defence Ministry of the country in consultation with the other Defence Ministers, and an enormous amount will depend upon his own personality and drive as to whether this Bill is really to be a success or not. I was a little disturbed by the speech which he made the other day at Cardiff. I do not know that one should take too seriously speeches which Ministers make in the course of propaganda in the country, but he used these words: As a member of the Cabinet of some years standing he could only tell them that he was amazed at the completeness of our defences. I cannot help thinking that it was rather unkind to his colleagues of the Cabinet that he should register such tremendous astonishment that their work had produced any results at all. But that is not the reason why I call attention to that speech this afternoon. That, after all, is only a matter of phraseology, but it appeared to reflect a certain amount of complacency in the belief that everything was really all right in the completeness of our defences and the readiness of our preparations which he found all round him. I hope, even though he was complacent on behalf of his colleagues, he is not going to be complacent on behalf of his own job now that he has taken it on. I would myself much rather that he came here from time to time and made our flesh creep on the facts of defence rather than that he should croon us and himself into a state of apathy and of feeling that everything was all right. There is still grave uneasiness in face of the enormous preparations which we know are being made in other countries. The country will not easily be reassured, without proof of vigorous action, even now the Ministry has been created, that the activities of the Government will be sufficient.

I cannot help feeling uneasy for this reason. It is quite unconnected with the Minister himself, but the Government themselves have taken such a long time to be converted to the principle of this Bill, and have been so reluctant to adopt it, even when they were advised by a man of experience like Dr. Addison, who has been mentioned above the Gangway this afternoon, and advised from these benches, and to put into force any of the suggestions. One feels a little uneasy that this Bill, which has powers wide enough to create very remarkable results, may not be worked with sufficient energy. I cannot help remembering—perhaps other hon. Members also remember— Debates in which one happens to take part, and I find that on 10th November, 1936, I moved an Amendment to the Address, asking the Government to implement the proposals of the Royal Commission on this matter. I find that I laid nearly all my emphasis on those parts of the report of the Royal Commission which demanded the setting up of a Committee of Supply. I see that I said: If we are going to have an expansion of armaments, let it be an expansion which will be efficient, which will give us value, for the enormous expenditure that it entails, and, above all, will win the confidence of the people." —[OFFICIAL REPORT, 10th November, 1936; col. 712, Vol. 317.] That was not done. The recommendation of the Royal Commission was the sixth recommendation that the Government should assume complete responsibility for the arms industry in the United Kingdom and should organise and regulate the necessary collaboration between the Government and private industry, and that this responsibility should be exercised through a Parliamentary body presided over by a Minister responsible to Parliament and having executive powers in peace-time and in war. I am not sure that even this Bill fulfils the whole of that, but at that time the Government were turning down anything of the kind. The then Minister for the Co-ordination of Defence, who now is the Secretary of State for Dominion Affairs, replied to me in that Debate, and although I certainly would not recommend hon. Members to read my speech made on that date, they would find it extraordinarily interesting to read his speech. The reasons that the Government then gave for turning down the proposals for a Ministry of Supply or a Ministry of Munitions are extremely interesting. The right hon. Gentleman had a great deal of ground to cover and did not come to the Ministry of Supply until towards the end of his speech. He said: I only desire to say this further on this question of the Ministry of Munitions." — [OFFICIAL REPORT, 10th November, 1939; col. 744, Vol. 317.] and he proceeded to give a list of the objections to the things that he thought would happen if a Ministry of Munitions were established. One of these things was the interruption and breaking down of the processes of the industry of peacetime, and another was running the risk of destroying the financial fabric of the nation, and turning the country into one vast munitions-producing camp and stopping that export trade upon which the financial position of this country depends. These were the shocking results—it re-minded one of the worst influences of the French Revolution—which were supposed to accrue as a result of taking my humble suggestion at that time. I conclude that the same results will follow the right hon. Gentleman, although there is nothing about it in the White Paper. As a matter of logic, one is driven to suppose that the results which were feared in 1936 will still have to be endured in 1939. I find that to be rather an alarming prospect. If all these destructive functions are to be exercised by the Minister, I hardly feel that he is the right man for the job. We perhaps ought to appoint some spectacular and magnetic figure, someone more like the hon. Member for West Fife (Mr. Gallacher), who, I think, would fill the Bill very well. It is rather surprising to find this change of view. I shall be told that the circumstances have changed. Of course, the circumstances have changed. That is what circumstances are for, but it is not that so much that has brought about this new method. It is the change in the apprehension of the Government as to what the circumstances are—in that apprehension of theirs That, like a wounded snake, drags its slow length along generally some two years after the event. I could produce from the speech which I have quoted a remarkable instance of that slowness of apprehension. The then Minister for the Co-ordination of Defence said: So many shells, so many guns, so many bombs, so many rifles would convey very little to the House. What I propose to say is that at this moment while some supplies are already adequate or are being produced in satisfactory quantities, there are others of which the production has not yet been begun, and others again in which the production, although it has begun, will not come into what I may call the full tide of construction until the early or middle months of next year."—[OFFICIAL REPORT, 10th November, 1936; col. 741, Vol. 317.] The dates are rather interesting. That was on 10th November, 1936, and, therefore, the "early or middle months of next year," would mean about April to June, 1937. At that time all these things were to be in the "full tide of construction." No one can pretend that they were. More than a year after June, 1937, in the fateful month of September, 1938, is it not generally recognised that at that time a great part of our equipment was far from being then in the full tide of construction? At that time we had not got a Ministry of Supply. Now the Ministry is being set up, and I suppose it is not being set up without a due appreciation of the advantages of having such a Ministry. Indeed, the Minister was rather eloquent about it. He told us of all the things it would do. I myself made a note of the advantages which are to be obtained— acceleration of production, the accumulation of stores, the determination of priorities, the checking of over-charging and profiteering. I hope that this Bill, or some supplementary Bill, will achieve all these objects, but, none the less, it will still be true that for two and a half years after my humble speech on the subject at the end of 1936, these advantages were deliberately foregone, production was not accelerated, stores have not been accumulated, priorities have been left to be determined as they could, and profiteering in only a very mediocre sense has been checked. In fact, I doubt whether in the minds of the general public there is any conviction that it has been checked at all.

These two years have gone to satisfy the satiated appetites of the standing army of locusts which is one of the few things the Government keep permanently in being. I hope that in the future the advantages which I have mentioned, and which the Minister has mentioned, will be obtained, but I cannot feel fully assured of that at the present. The White Paper is most disquieting, because it is the first thing the Minister does in pursuance of his powers, and it seems to me to show a rather timid spirit in taking up his new office. I agree with every word of criticism made by the hon. Member for Bishop Auckland (Mr. Dalton), but I do not, however, agree with him in his conclusion, because the Amendment which he has moved is really a criticism of the White Paper rather than a criticism of the Bill itself. My colleagues and I on these benches having demanded for so many years the creation of a Ministry of Supply, would find it inconsistent to vote against a Bill which does give wide and extensive powers, which, it is true, in the hands of an inefficient Minister might be of no value, but I hope that the present Minister will not prove a Minister of that kind. If you put the best genius on the Front Bench he would need powers of this kind. Therefore, we cannot vote against the Bill.

I am sorry that the right hon. Gentleman confined himself to the War Office side of the problem. He said that the War Office is the Cinderella of the Services. I was not quite sure whether he was casting himself for the part of the fairy godmother or possibly Cinderella's sister. He did not explain. It occurs to me that the whole matter of priority is left in an entirely unsatisfactory position. It is true that the Minister has power over those kinds of equipment which are ordered by the War Office or through the War Office to decide priority as against civil competition, but it seems to me that in the rapid development which we hope is now going to take place there will be a shortage of some kinds of skilled labour and, therefore, it is not by any means beyond the bounds of probability that the three Services, indeed, the four Services, because we have now to include Air-Raid Precautions, may find themselves competing for the same men and the same materials, and I see a danger of delay in arguing this out in the Committee of Imperial Defence and afterwards in the Cabinet. We would much rather there was a central power to decide these things at once. Therefore, I find the White Paper by no means reassuring when we regard it as the first instalment of the Minister's actual exercise of these powers under the Bill.

Everything depends on the amount of imagination and vision and drive which the Minister puts into the job. If he regards it as a matter of great responsibility he can make it great, and of the greatest advantage for the defence of the country. But if he merely sees it in a small and timid way then the Bill will remain a dead-letter, and may indeed be dangerous by lulling the public into a false sense of security on the ground that activities which they imagine are taking place are, in fact, not taking place. It is for the right hon. Gentleman to make the wheels of the machine run. I hope he will; and I wish him the greatest success in his task.

6.9 p.m.

Mr. Pickthorn

I wish to play, as shortly as I can, an ungracious and perhaps foolish, certainly a foolhardy, part. It is an ungracious part for two reasons. First, because this is the one day in the year on which I must be in my constituency for some part of it and, therefore, I shall be unable to listen to the remainder of the Debate: and ungracious for another reason: while we may not be in a time of war, neither are we wholly and fully in a time of peace, and, that being so, precautions have to be taken, and some of our liberties have to be suspended in a way we ordinarily should not be willing to permit save in time of war. It may seem ungracious for us in these circumstances to look too closely at the legal and constitutional forms which are involved in what may be proposed. It may be foolish, and certainly foolhardy on my part, because I am profoundly conscious that if I had devoted much more time to the Bill than I have, I should not have succeeded in fully understanding it. I do not blame the draftsmen for that; it is partly in the nature of the subject, and no doubt partly in the nature of my own capacity.

But there are some questions which I should like to ask. The first is about Clause 2. The hon. Member for Bishop Auckland (Mr. Dalton) said that at first sight Clause 2 seemed to promise the social commonwealth to-morrow. I have heard the same comment made by some who do not hold the political views of the hon. Member. But the hon. Member for Bishop Auckland did not explain why at second sight that has proved not to be true, and as he has not explained it I think it is not unreasonable to ask that some one on this side of the House should explain why it is not true. Historically, of course, war always has tended to Socialism, but as we are not at war it may be that we are tending towards Socialism perhaps rather less quickly than when we are at war. As far as I can understand the Bill, the only limitation on the general powers of the Minister in Clause 2 are in Clause 6, and that is really a quite formal limitation and where, in Clause 18, we find that the expression "articles required for the public service" mean: ''articles required by any Government Department for the purpose of the discharge of its functions. I am not quite clear what "the discharge of its functions" means. I should imagine that if a Secretary of State wanted a packet of Gold Flake or a string of polo ponies, they would not be "articles required by any Government Department," and the addition of these words does not seem to make the Clause clearer than it otherwise would be. I take it that the Ministry of Supply is a Government Department as far as it appears on the Bill, and that it is purely within the powers of the new Minister to define what is necessary for the purpose of the discharge of the functions of the Ministry. I think that the hon. Member for Bishop Auckland spoke even better than he knew, and therefore I think that it is not unreasonable to hope that we may have some explanation of what are the restrictions upon Clause 2 contained in the Bill.

Also in Clause 2 in Sub-sections (2) and (3) we have provisions for Orders in Council which may make modifications or adaptations even in Statutes. It is quite true that under Clause 6 they will require an affirmative Resolution of the House, but only after a delay of 28 Parliamentary days. It may easily happen that the eggs will have been so throughly scrambled that they cannot be unscrambled at the end of 28 days, especially if the period of the long vacation is added. I would ask whether it would be regarded as a weakening of the Measure if the affirmative Resolution were made a pre-requisite instead of there being this gap of 28 Parliamentary days. There are precedents for this. I suppose that the nearest—not that in present circumstances I would stand on any precedent—was when the old Local Government Boards disappeared and their powers were transferred to the Ministry of Health and the Scottish equivalent. On that occasion what I am now suggesting was done, and I should have thought that it had now almost become a constitutional convention, which should be encouraged, that an affirmative Resolution should be a prerequisite for an Order in Council which purports to amend the actual text of a Statute. I do not wish to weary the House with precedents, but I could adduce some other Statutes where that has been done.

Then, I wish to ask a question for which I apologise, because I am not at all sure that perhaps all the lawyers in the House do not know the answer already, but I have asked several lawyers outside the House without getting a clear answer. It is a question on Clause 3. I think I am right in saying that, not counting the splitting up of the Dominions and Colonies, which was really a formal affair, the last establishment of a new Ministry was that of the Ministry of Transport. On that occasion, the Minister of Transport was put in the rather unusual position of being able to sue and of being liable to be sued in tort or otherwise. I suppose that was done on that occasion because at that time it was thought that very likely the railways might be socialised, and it was felt that it would be more than the public would stand if the doctrine that the King can do no wrong were to apply to all the employés of the railway companies.

Now, on this occasion, the Minister is being given, if not actual and immediate powers, in posse, powers and chances of influencing the ordinary life of individuals, their property, comfort and so on, quite as wide as the Minister of Transport would have even if he were also the Minister of Railways. I do not think for a moment that I have sufficiently considered the matter for my opinion to be worth much even to myself. I do not suggest that the Minister ought to be placed in the same position as the Minister of Transport, but I wish to inquire whether that has been considered, and, if not, what exactly is the effect here? When the liabilities are transferred, in what way exactly are they transferred? Is the Minister merely to be in a position that you can proceed against him by petition of right after getting a fiat or if not, how can you proceed, and so forth? I think that sort of constitutional question about the relationship between the Minister and the private individual ought to be explained to us some time, and I hope that some of them may be explained even now, before we get to the Committee stage.

I would like to ask a question on Clause 4. I do not remember much about the Ministry of Munitions. Here the Minister can accumulate any sort of stock that is in any way useful, directly or indirectly, to National Defence. As far as I understand it, there is no sort of regulation of his disposal of that stock. It may be that it is considered quite im- possible, without fatally hampering the new Ministry, to make any such regulations, but I think the House ought to inquire whether there is to be any regulation at all about the dispersal of the stocks acquired in this way.

So far, everything I have said has referred to what, if this Bill passes, will, until it is repealed, be the permanent law of the land. People always do war some injustice. One should give even the Devil his due, and it is, I believe, a heresy fatal to salvation to suppose that even the Devil is all bad. Hon. Members and others are frequently less than just to war. One of the virtues of war is that when it is over you know it is over. [Interruption.] Sooner or later.

Mr. Wedgwood Benn

Not at all.

Mr. Pickthorn

It is true that for the convenience of Governments, it may be necessary to pretend that war is going on after it has stopped, but it is also true that for the purpose of legal effect a moment is mentioned at which war is legally held to be finished. The conditions in which we now find ourselves have not that virtue, and therefore, although I do not say we should not give all the powers for which we are here asked⁁both the hon. Members opposite who have spoken wanted to give more powers still ⁁I do say that powers of this sort ought not to be given in perpetuity without the House clearly understanding what it is that it is doing.

I pass now to Part II, the temporary part, of the Bill. There is a variety of cases in Clause 7 (5), Clause 8 (4) and (5) and Clause 9 (3, b), when various people do not do what the Minister tells them to do, the Minister imposes controls or sanctions of one sort or another on them. In all cases it is the Minister alone, without there being any sort of appeal. The question to be asked is this⁁is it quite certain that it would be intolerably clogging to administration that there should be some kind of appeal or some kind of co-operation with the Minister required before those Sub-sections are to have effect? Similarly in Clause 7 (6), which deals with the question of arbitration. I am not a commercial man, but I take it that in contracts there may be other matters mentioned besides the question of price; but here, as far as I can see, there is no provision for arbitration except on prices. Where arbitration is provided for, the arbitrator is to be chosen by the Minister from a panel appointed by the Minister. I inquire again whether it would be intolerably clogging to administration that a little more should be given to the subject as against the administration in this connection. For instance, would such a modest suggestion as that the panel should be appointed by, say, the Lord Chancellor, be hamstringing National Defence at a moment when that would be the wickedest thing any of us could do?

Under Clause 10 (I, e) when the Minister puts a controller in charge of a business because the business has not been managed as he desired, the controller becomes the agent of the undertaker. That seems to me to be odd. I am sorry to inflict so much negative autobiography on the House, but besides not being a commercial man, I am also not a lawyer; but I thought the essence of an agent was that he was a man who did something under the control and for the purposes of his principal. Here, the characteristic feature of an agent is to be that he does not, and it seems to me reasonable to inquire whether the controller should not become the agent of the Minister rather than the agent of the person displaced. On Clause II, we have already had two questions, one whether it might mean a sort of contracting out from ordinary relations with labour, to which the answer did not seem to be quite clear, and another whether it might mean a sort of contracting out of the ordinary rules of the Companies Acts. Cannot those questions be indefinitely extended? Might not Clause II, unless there be some safeguard, cut out the Workmen's Compensation Act, the Factory Acts, and the Minimum Wages Acts? These clearly are questions about which the House ought to know what exactly it is doing.

So far, everything I have been saying has been rather by way of questioning powers which are being given to the Minister. I wish to ask whether there is not one other power that has been omitted from the Bill. So far as I remember War legislation, there was a power of, so to speak, delegating priorities. Priorities were placed in A Class, B Class and C Class, and the contractor to whom a certificate had been given that he was working on A Class might himself delegate, so to speak, certificates to sub-contractors. Are not such powers necessary if a Bill of this kind is to be effective, and if they are necessary, is it quite clear that such powers are contained in the Bill? To a lay reader, on cursory inspection, that does not appear to be so.

6.25 p.m.

Mr. Stokes

The Minister, in his opening remarks, made some reference to a band of 12 young men who are going to assist him in his Department. I am not sure that I understood him rightly, but I took him to mean that these young men would be in addition to, or different from, the various advisory councils he is going to seek elsewhere.

Mr. Burgin

indicated dissent.

Mr. Stokes

Then I misunderstood the right hon. Gentleman, and the 12 young men are not going to accompany him on his path. The Minister then dealt with a point to which I should like to refer early, because it seemed to me that, when raising the point of quick deliveries which might be required under this supply, he was going to make this an excuse for extra high prices. I appreciate fully that if quick deliveries are asked for, special plant and so on may be required, but surely the experience of most manufacturers is that the one thing they want is that there should be quick deliveries required⁁the quicker the delivery the greater the profit. I hope the Minister will not allow himself to be influenced into giving high prices merely on account of the quick deliveries he is going to require of manufacturers. In the White Paper, it is stated that: It is also proposed to transfer from the War Office all their functions with regard to research, design and inspection of munitions of war. I was glad to read that, and more glad still to hear the Minister refer to the importance of co-ordinating design with production, for certainly it has been the opinion of many of us in industry that the War Office in recent years have suffered from what I would call a bleak period, when they have had nothing to spend and too many people to spend it, with the result that some of the designs which they produced were extremely excellent in every way, but were what I would term a watchmaker's job. I ask the Minister particularly to give his attention to the question of tanks, because the tolerances to which firms are asked to work are far too fine. They are all right as museum pieces, but far too fine and expensive as a production job, with the result—I have it on the authority of people doing the work— that those machines are costing four or five times more than they should do. I do not pretend that it is possible to redesign the tanks altogether in a short time, but undoubtedly a great deal of money could be saved if the tolerances were revised. Secondly, I ask the Minister to pay attention, particularly with regard to the War Office, to the question of the revision of contract prices. Most of the contracts let by the War Office are subject to revision every year or every two years. It is surely within the knowledge of everybody who knows anything about manufacture, as you progress costs come down considerably, and it ought to be possible to obtain goods at a much cheaper price. It is within my knowledge that contracts are being re-let on the old price basis, and no steps are being taken to take advantage of the experience of the manufacturers and of the workmen.

It must be obvious to the House that there are only two reasons why we want this Ministry of Supply, first to get efficiency and, secondly, effectively to control prices. I do not propose to attempt to deal with efficiency of supply, because there are many others who are capable of doing that, but I should like to give the House information of one or two things that are happening at the present time in other Departments in order to emphasise how important it is that the control of all supplies for all the Departments should be taken over now by the Ministry of Supply. If this is not done what is going to happen is that one Ministry will, in fact, be played off against the other, and there will be a constant excuse for price differentiations. The Secretary of State for Air, in replying to a question of mine the other day, expressed complete complacency with the method of sub contracting. He said he was satisfied that the method at present followed was in the best public interest. I want to tell the House of a case within by knowledge, which happened only a few weeks ago, where a manufacturer was asked by an armament firm to subcontract for certain equipment. He put in his tender and was surprised when next day he was rung up and told that his offer was no good. Disappointment was expressed by the manufacturer, especially as, he said, he had not overloaded the price, to which the astonishing answer was made, "The price is not over-loaded, it is far too low. If you put in another tender 50 per cent. above the one you have put in now we will send you an order for the goods."

It is absolutely essential that these subcontracts should be closely watched by the Ministry of Supply. I would also refer to the statement I made in the Budget Debate, which I dare say most hon. Members thought was somewhat vainglorious, that it was possible, if we set about it in the right way⁁and this, perhaps, may give the Minister a measure of what he may be able to do—to save some £300,000,000 on the rearmament programme. One friend of mine who is a doubting Thomas mentioned this to a senior official of one of the Ministries, because he did not believe that what I had said was true, and was astonished to receive the reply, "Manifestly it could easily be done if the Government only tackled it in the right way."

I should like to tell the House how important it is that supplies required by the Civil Defence Department should be tackled. I have put a series of questions lately on what I called the "tin shelters," and the Lord Privy Seal has said that he is satisfied that he is getting all he wants in the way of advice from the Import Duties Advisory Committee. I will not delay the House by discussing whether that is a suitable body to advise him, but I would remind the House and the Minister that it was due to their action that the price of steel was kept at an artificially high level during 1938. The particular example I wish to quote is this. Recently a manufacturer was asked to supply parts of these tin shelters—the angle irons for the fastening down arrangements—which I take it the Lord Privy Seal referred to as "fabricated material." A group were asked to supply 10,000 tons. All that was required was to chop angles up into four foot lengths and punch a couple of holes in each length. The price paid—I suppose by the Home Office▀×was £22 a ton. Everybody knows that that stuff can be made for £14 a ton. Some of the manufacturers themselves stated so. On that 10,000-ton order the Government paid £85,000 too much—on a total payment of £225,000.

I am not going into a lot of details, but I should like to quote one more example covering the Admiralty, who are usually allowed to get off on these occasions. I think that here, again, the Minister can exercise his influence if he sets about things in the right way. I have no first-hand examples of actual profiteering on Admiralty work, but a very important official of one of the big armament firms told me himself not many months ago that it had taken them an extra month to conceal their profits—as a result of extra contracts—so as to produce a balance sheet which was at least presentable to the public without giving the game away.

So much for the profiteering side, and what the Minister can do if he tackles it under a Ministry of Supply. Next I should like to put in a word for the manufacturers, of whom I am one, because we are not all thieves by any manner of means. I urge that the Minister should take manufacturers into his counsel, so as to get the best possible co-operation from them. The instances I have given to-day come, every one of them, from responsible people who would gladly come forward and agree to profit control and agree to put their ability at the disposal of the Government; but for some extraordinary reason which I cannot understand the Government are not interested. The very idea of no profit seems to upset them so badly that they will not take the slightest bit of interest, not even to the extent of saying, "What do you mean by this?"

I should like to ask the Minister whether he will not adopt a scheme which I have often advocated in this House with regard to the auditing of contracts. I am certain there is going to be no satisfactory result from this ridiculous cost-accounting inspection. I have said it before, and I say it again, it is the easiest thing to get round. What ought to be demanded, what any business man would insist on, is that when a contract has been completed there shall be a certified statement from the manufacturer, signed by his auditors or other responsible independent people, certifying exactly what the profit on that contract is. If the Government do not like to take the surplus back that is another matter, but we should know how we are getting on with regard to the cost of supplies. I think that I have quoted all that is really germane to this argument. My own impression of this Bill is that it is what I would call a miserable, half-hearted affair. It reduces the Minister to being a sort of bottle-washer for the Secretary of State for War, and while he may grow up to be something greater I say, without wishing to be in any way personal, that I can only think of it as a kind of Potash and Pearlmutter partnership, which is not really very satisfactory from the point of view of the public. We need much more than this Bill offers and the White Paper implies, and for that reason I shall have the greatest pleasure in voting against it.

6.38 p.m.

Sir Arnold Gridley

In following the hon. Member for Ipswich (Mr. Stokes) I confess that I find it a little difficult to give that credence which I would desire to give to some of the statements which he makes from time to time in this House. He solemnly asks us to believe that by making certain alterations in the design of tanks it is possible to cut the cost four or five time. I think that is an exaggeration, an over-exaggeration, which really spoils his case and would have been very much better left unsaid.

Mr. Stokes

If I said what the hon. Member says that I said—and I have no doubt that I did say it—it was not exactly what I meant. What I was referring to was the cost of putting the tanks together. Obviously the cost of the engine is not going to differ if you alter the design of the tank. The engine itself is a unit. The people to whom I was referring are those who carry out the assembly of the tank. It was the cost of assembly of the units that I had in mind and I am much obliged to the hon. Member for drawing attention to my statement, because obviously you cannot reduce the cost of the tank four or five times.

Sir A. Gridley

It is obvious that when two men with a single thought get together they very soon arrive at a correct understanding, and I am glad that the misapprehension is now removed. With regard to other observations he made, may I suggest to him that it does not carry us very far to hear general charges bandied about in the House. He quoted three or four cases. I am sure that if only he will give those specific charges in detail to the Ministry concerned, they will be investigated.

Mr. A. V. Alexander

We have before brought specific cases of profiteering in armaments, and usually the Minister gets up and defends them.

Mr. Stokes

I entirely agree with what the hon. Member says, that it sounds absolute humbug to come to this House and make what he calls generalisations without giving particulars. The difficulty is this, that if I gave the names of the people or firms concerned in effect those firms would go on the black list. I have done it myself—I do not mind in the least —but in effect my firm is out of it from the point of view of Government contracts. Everybody says that it is not so, but we get no orders, and so the effect is the same. I can only give the information to the House and hon. Members can take it or leave it. I cannot give names of people or firms, for the reason that if I did so the sources of my information would dry up immediately and it would prejudice the interest of the firms concerned.

Sir A. Gridley

I think I will leave that statement to answer itself, but I should hesitate myself to make statements which I was not prepared to see carried to ministerial action. I am sorry that the hon. Member for Bishop Auckland (Mr. Dalton) is no longer here, because one observation of his rather astonished me. He said that one reason why the Government are proposing to set up this Ministry of Supply is the shocking state of affairs which exists in the rearming of the Defence Services. It is six months almost to the day since we had the last full-dress Debate on the question of whether we should set up a Ministry of Supply. The right hon. Member for Epping (Mr. Churchill) expounded his views on that occasion in a speech which lasted what we should now, with our modified views, consider a long time, namely 62 minutes, but which as usual seemed to those of us who listened to it a very much shorter time. The result of our Debate that night was 326 votes against setting up a Ministry of Supply and 130 votes for, so that even on the opposite side of the House there must on that occasion have been some abstensions or disagreements.

On that occasion I spoke and submitted arguments, which seemed to have some force, against the proposal to set up a Ministry of Supply, and to-day I feel somewhat in the position of having, perhaps, to eat my words. The hon. Member for West Middlesbrough (Mr. K. Griffith) said that we should be taunted with the assertion that circumstances have changed. Have they not very radically changed since 8th November when we last discussed this particular subject? It is only a few weeks since one of the most solemn pledges was flagrantly broken, when Czecho-Slovakia was so brutally over-run. It is all very well for hon. Members opposite to say they knew that was coming. How they can be so wise as to determine exactly what events are bound to occur six months ahead I do not know. It is prescience which we do not claim to possess on this side of the House.

Then again, on Good Friday Albania was overrun by the Italian troops. The result of those two occurrences in Europe, which I think history will show to have been Herr Hitler's most fatal blunders in the course of his career up to now, has been to show the world unmistakably that the policy of the dictatorial Powers was one of force and was not the policy of reason. Those tragic events, which have taken place in Europe since we last discussed this problem, have led to the decision to double the Territorial Forces, to the introduction and the passing of an Act of compulsory training, and to the vital agreements into which we have entered to go to the aid of other countries. All those are grave, costly and inevitable commitments, involving an enormous expansion of production and equipment, on which we have had to enter since last we discussed this question. Therefore, it is only right that we should review our general organisation and consider afresh whether it is now the time to set up a Ministry of Supply. I, for one, make no apology for the changed views which I now express and which differ largely from those to which I gave utterance in November last.

May I remind the House of what was said by one or two other speakers on that occasion. The right hon. Gentleman the Member for Epping, in the speech to which I have referred, said: The Army is not a vital weapon. Upon it England would not be saved or cast away. That sounds an extraordinary statement to make when we look upon the difference there is to-day in our position as a nation and our commitments in Europe. The Leader of the Liberal opposition, in his speech advocating a Ministry of Supply, said, putting a question to himself: What power would I give to the new Ministry? Very little at first "— Probably that was quite right in the circumstances as they existed in November, but I think that all quarters of the House agree to-day that full, complete and drastic powers are necessary to the Minister if he is to carry out his work adequately and fully. Other speakers like myself have found it necessary to change the views which they held in November last and to review the situation as it is to-day. It is now absolutely essential that a Ministry of Supply should be created with the powers, wide and drastic though they be, which are contained in the present Bill. The Bill, as other speakers have said, merely creates a piece of machinery. It all depends how that machinery functions when it is set up. A leading article in the "Times" said some few days ago that it was on the calibre of the Minister and of the executive staff with which he surrounds himself that the success or the failure depends of the task entrusted to the right hon. Gentleman under the provisions of the Bill.

I want to say a word or two on the question of profits. The matter was introduced by the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) just now. He has over and over again given examples in this House of firms who have, actually or apparently, been making what he considers to be excessive profits. Just over a year ago he made a most comprehensive review of these charges, in which he listed a number of firms who were making, as he said, great profits. I do not propose to burden the House by going over the list which he gave, although I am quite willing to do so if challenged by the right hon. Gentleman. One thing which he omitted in that statement was the enormous writing-down of capital which most of the firms to which he referred had to face in the years immediately preceding the first year which he took for comparative purposes, 1934. In fairness to the companies concerned— he usually is fair—he might have indicated to the House what great losses the shareholders in those companies had been asked to face in the difficult period after the close of the War and down to 1934.

Mr. Quibell

The capital had been inflated during the War.

Mr. Alexander

rose —

Sir A. Gridley

Perhaps I might complete this point before the right hon. Gentleman intervenes. Let me look at the profits of the great undertaking with which the right hon. Gentleman himself is associated. I will take for comparison the same year as he did himself. I find that in 1934 the sales of the Co-operative Wholesale Society were £82,000,000. After providing for the depreciation, obsolescence, etc., the surplus profit shown was £1,473,000, or nearly 18 per cent. In 1938, the sales were increased from £82,000,000 to early £120,000,000, that is about 50 per cent., but the profit had increased to £2,799,000, or nearly 100 percent. [Interruption.] I am not complaining about this enormous increase in profits, and I congratulate the right hon. Gentleman —

Mr. Alexander

Would the hon. Member explain where he gets his 100 percent.?

Sir A. Gridley

The increase.

Mr. Alexander

He did not say "increase." We want to understand the hon. Gentleman's figures.

Mr. Lees-Smith

Was that a profit on capital or on turnover.

Sir A. Gridley

On turnover. I can give the profit on capital. I am sorry that the right hon. Gentleman the Member for Hillsborough thought I was talking about a profit of 100 per cent. on the gross turnover.

Mr. Edwards

The hon. Member said that on a turnover of £82,000,000 there was a profit of something less than £2,000,000. That complicates it.

Sir A. Gridley

I will check the figure. [HON. MEMBERS: "Withdraw it."] Certainly, I will withdraw it if necessary. The point still remains that an increase in turnover of 50 percent. between those two years produced an in- crease in gross profits of nearly 100 per cent., and it shows the effect of an increased turnover upon profit. The year 1938 was a good year for the Co-operative Wholesale Society's business, just as it was for many other businesses in the country.

Mr. Alexander

I invite the organisations of which we complain to adopt the practice which we follow. We make a profit on the increased turnover and give it back to the purchasers. Why do not the Government contractors give their profits back to the Government?

Sir A. Gridley

I presume that the capital in the Co-operative Wholesale Society is held by the consumers and that there are shareholders?

Mr. Alexander

No.

Sir A. Gridley

None at all?

Mr. Quibell

It is not a shareholding society.

Sir A. Gridley

The principle remains precisely the same, which is that you have done good business and you have increased your profit because of circumstances over which you had no control, just as a manufacturer of iron and steel does when his output has increased. It is not fair to condemn firms who have made better profits in good years than they have made in bad years as though they are doing something that is reprehensible.

Mr. Edwards

This is a very important matter. The hon. Member almost seems to suggest that because these people have had a series of bad years they have now the right to recoup all their losses at the Government's expense. Surely he would not justify that?

Sir A. Gridley

I made no such point or claim. The very fact that capital has been written down in many cases and in the case of one firm by £9,000,000—

Mr. Quibell

It was written up during the War.

Mr. Edwards

If we go into the previous history we see where the capital was written up.

Sir A. Gridley

That is not the point. The point is that the shareholders who had subscribed had to face a loss of £9,000,000 when the capital was written down. Obviously on a smaller capital you may return a larger percentage of profit. That is my reply to the hon. Gentleman's question.

The last thing I want to say is that the Minister will have powers that are completely coercive, if he likes to use them. I believe that it is his honest intention to endeavour to get industry to cooperate fully with him in meeting the requirements of the Services. He will find industry fully ready, and the workpeople too. Those who are engaged in the factories which we have in mind at the moment have been working unstintingly and unsparingly during the past two years in endeavouring to help the country to obtain that output of defensive equipment which we want. One final reason why I shall welcome to-day the decision, at which we shall undoubtedly arrive, to set up this Ministry of Supply is that it will be another clear and unmistakable indication to the dictator Powers that the British people have unitedly and determinedly emerged from a period of anxiety into one of strong determination.

Mr. Watkins

In arriving at the 18 percent. mentioned has not the hon. Member got his decimal point wrong? Should it not be 1.8 percent. instead of 18? It is something under £1,500,000 on £82,000,000 turnover. It seems it should be 1.8 per cent. instead of 18 and it is a considerable difference.

Sir A. Gridley

I quite agree. I put my figures rather badly. The hon. Member is right but my argument remains the same.

Mr. Watkins

The hon. Gentleman can take this satisfaction that he is not the first Member of Parliament who has scored off a decimal point.

7.2 p.m.

Mr. Ellis Smith

Many Members of the House have made an observation this afternoon, particularly while the Minister was introducing the Bill, which gave me the impression that they were of the opinion that it was the hon. Member for Acton (Mr. Duggan) who was responsible for the principle contained in the Bill. Had they followed the development of these principles they would long since have realised that many of my hon. Friends on these benches, and particularly the hon. Member for Dumbarton (Mr. Kirkwood) were responsible for advocating the principles of this Bill 20 years ago. As a matter of fact my hon. Friend the Member for Dumbarton was deported because in 1916 he was advocating the increased efficiency of industry of this country based upon the principle contained in this Bill. In view of the serious international situation anyone who has the interests of democracy at heart and anyone who has the interests of humanity at heart is bound to be in agreement with the road along which this Bill is going, but so far as we are concerned we are not satisfied with the Bill because it is not going far enough. It is not comprehensive enough, and in addition to that we think that in this serious international situation, with its effects internally upon this country, a time has arrived when the industries of this country should be run as efficiently as the Post Office is run and should bring the same results to the people of this country.

My view is that there is a great need for a British plan for the preparation of defence, and I want to make an examination of the circumstances, speaking critically but constructively, having in mind the needs of the defence of the people of this country. I hope that the Minister will make a note of this because I intend to emphasise it time after time, and because I believe that hon. Members on both sides have not yet seen or accepted this statement. I believe that war will be largely won or lost before the war breaks out, and it is because of a realisation of that, and having in mind the development of armaments throughout the world, that I at least as an individual am concerned about the inadequacy of the Bill we are now considering. Therefore, if we accept the statement I have just made, I think we must logically accept the position that we need to be adequately prepared in order that we can be ready to face an emergency of the kind we may have to face. Therefore, if we accept those statements surely we require a plan, and if we require a plan surely we require the power to carry it out.

We have heard a great deal during the past year or two, particularly from enemies of our people, from people in high places who have proved themselves to be enemies of our people, people who have dined and wined with people like Ribbentrop, people who sat beside Hitler when he made his speech at Nuremberg— these people a few months ago were talking about totalitarian efficiency. Some of us know that it was a fallacy, some of us know that if industry in this country could only be given a plan, given instructions, given a definite "yes" or "no," it would prove as efficient as industry in any part of the world. To give a concrete example may I remind the House of what has taken place at Chorley? It is necessary to emphasise this on every conceivable occasion so as to deal with the enemies of the people. At Chorley there has been built the largest building of its kind in the world. It was estimated that that building would take a certain period to complete, but as the result of co-operation and of guarantees given to the men and the men's representatives such a spirit was created that the building has been finished within a third of the time it was to have taken. That was because the men had a plan to work to, because those in authority had power to give instructions. What was done at Chorley can equally be done throughout the country.

I am familiar with people holding certain positions of importance in the country, and they tell me that one of their greatest difficulties has been to get a "yes" or "no" from Government representatives. If as the result of the passing of this Bill we are going to get more decisions, that in itself will help increased efficiency. What we want to secure is a maximum result in a minimum time, because we realise the position we are in. Those of us who are familiar with the people know that the spirit of the people in the country now is wonderful. If only we had a people's Government that would harness that wonderful spirit this great country would be ready to face any potential aggressor in the world; we should be able to create in the world a confidence that would rally round Britain and enable us to preserve peace, or in the eventuality of a serious international emergency ready to face any potential aggressors and deal with them in the way they should be treated.

The Minister has a great responsibility, and a good deal will depend upon the spirit in which this scheme is to be administered. The right hon. Gentleman has a great responsibility, and at the same time he has a great opportunity. I want to ask two questions in particular, and I would like an answer to them this evening. Why are three shifts not being worked to meet our most urgent needs? I find many of our most urgent needs still going on in the old sweet way. A second question. Several huge aircraft are now being built. We have got ideal weapons, but why are there not at least two shifts on the construction of aircraft while the weather is as it is? The next point is that we in this country are dependant on supplies from overseas and I want to remind the House and get one or two things on record. I have it from a civil servant who was responsible for the food supply that at one stage in 1917 we had only three weeks supply of food and at the same time our people were on rations. Surely it was a serious problem. The problem, I understand, will be more serious in any future war unless we take adequate steps now to deal with it. I understand that approximately 60 per cent. of the flour mills of this country are in and around Greater London, and that the concentration of our food storage is chiefly in the ports of London and Liverpool. If these are facts, surely we require a great increase in the Mercantile Marine; secondly, huge stocks and huge storage of food; thirdly, alternative inland supplies; and, fourthly, improved relationships with Eire in order that we should not be stabbed in the back as the result of not having the best possible relationships with that country. We require in this country more than in any other part of the world a huge store of food not only for human consumption, but also for cattle and farmers' requirements. My proposal would relieve transport in the event of war, and I therefore suggest that the purchase of food and raw materials should be made at the source.

If there is time later I intend to quote from the Report of the Royal Commission which investigated the private manufacture of armaments. That Royal Commission made a number of suggestions on the lines I am now advocating. I hope the Minister will be good enough to make a note of those suggestions. I believe that the Ministry of Supply, as soon as it is set up, should take into consultation the Secretary for Mines and say to him that we can no longer afford to leave alternative supplies to private enterprise. In view of what has taken place in France, Germany, the Union of Soviet Socialist Republics and one or two other countries, the time has arrived for a re-examination of the possibility of alternative supplies by methods of obtaining oil from coal, and secondly by developing producer gas in the way it has been developed in France, America and some other countries. If this was done it would provide us with alternative supplies. We could use the petrol for the armed forces, and save transport in war time. Therefore, I hope an examination will be made of this point.

As to the report of the Royal Commission on the private manufacture of armaments, I would mention that I spent the whole of last Sunday evening reading the evidence, and I hope the Minister and the Chancellor of the Duchy of Lancaster and others responsible will examine that evidence. There are lessons to be learned from it. It proves a theory I have held for some time. Many hon. Friends may not be prepared to accept my theoretical ideas, but they may take notice of the evidence that was put before a Royal Commission. One of the witnesses examined before that Commission was Major-General Sir Stanley von Donop who, in reply to the Chairman, said he had held several appointments including those of Professor of Artillery to the Royal Military Academy, Woolwich; Superintendent of Experiments; Secretary of the Ordnance Committee; Master-General of the Ordnance and others. He had attended in 1916 several meetings of Cabinet Ministers on this question. I should say that at that time the Secretary of State for War and those responsible were not satisfied with the supplies which they were getting from the armament manufacturers and giving evidence upon this point Major-General Sir Stanley von Donop said: The only reason they could not do it"— that was keep up the necessary supplies— was that they found almost every other country in the world demanding machinery from America. They could not get the machinery to do it and that was why they failed. He went on to say: The inability of the armament firms to fulfil their promises may be attributed to … delays in the delivery of machinery, due, firstly, to the fact that the whole world was calling for machinery especially from America and, secondly, to delays in land and sea transport. Often it took 60 instead of 20 days for goods to come from America while railways and docks were so congested that even transit from Liverpool to London sometimes occupied five weeks. Surely we ought to give attention to evidence of that kind. The lesson to be drawn from it is the importance of having a plan. If we are to hold our own in an emergency of the character which we can all visualise, it is most important that we should have a plan. That is why I recommend the consideration of that evidence to the Minister. This brings me to a point with which I can claim to have some familiarity, namely the need for increasing our output of machine tools. I have been very much concerned about this question for a long time. That concern is due, in the first place, to my own knowledge of the engineering industry. When I hear hon. Members opposite talking about business men, I often think of the men whom I have left behind in the workshops and how competent and efficient they are. When I regard some of the people whom I have met since coming here, I feel rather concerned about whether the efforts of my former fellow workers in the shops are receiving that consideration which they deserve, and whether their work is not worthy of more efficiency on the part of those who are in authority, and who decide questions of policy.

I do not wish to dwell upon the subject of machine tools. It would take a long time to deal with it adequately. But there are one or two points which I should like to place on record for the consideration of the Minister. I find that, as regards the main types of machine tools, such as milling machines, lathes, grinding machines, drilling machines, presses and punches, planers and shapers, we imported into this country, between July, 1935, and December, 1938, no less than £15,500,000 worth while we exported nearly £10,000,000 worth. Anyone familiar with the industry knows that there must be something wrong when we have imported to that extent. Of the total imports, approximately 50 per cent. have come from America. About that I make no complaint, because I regard the American people as our own flesh and blood. What I do complain of, especially in view of the statements which one hears nowadays, is that 30 per cent. of this importation came from Germany. I say unhesitatingly that there is something radically wrong somewhere in this country, when 30 per cent. of the importation of machine tools has been brought here from Germany.

The position is even more serious than these facts would indicate. Anyone acquainted with the industry knows that the demand for grinding machines in engineering has been increased as a result of the high standard of inspection of the products required by the Air Ministry. I agree with having a high standard of inspection. Only the best is good enough for the men who are going up and risking their lives in these machines. It is essential to maintain a very high standard of inspection. It may not suit certain people but I for one would have the highest standard of inspection possible. We have imported over £2,000,000 worth of grinding machinery. The Union of Soviet Socialist Republics people say that the finest machine-tool manufacturers in the world are the British. In Stockport and in the Manchester area huge orders are now being carried out for presses and other machine tools keeping thousands of men in employment. How is it then £15,500,000 worth of machine tools has been imported during the past five years? I hope the Minister will make a note of that point and deal with it.

I had intended dealing with the reports of the Committee of Public Accounts in connection with these matters, but there is not time to go into that part of the question fully, and I content myself with putting this fact upon record. The Select Committee on Estimates, in their report of July, 1938, say: The case of a small number of firms constituting one industry of importance who are not wholly in effective competition with one another and who have refused facilities for checking their prices is still under consideration. The Committee of Public Accounts reported also in July, 1938: Your Committee suggest that consideration should be given to the possibility of making arrangements under which the reasonableness of prices could be more definitely checked. Those reports were made nearly 12 months ago, but from that day to this no steps have been taken to deal with the position then indicated. I have noticed statements in the Press during the past day or two, suggesting that the Opposition have not interested themselves sufficiently in the question of profiteering. Does any hon. Member present associate himself with that suggestion? Hon. Members here know that since early in 1936 my hon. and right hon. Friends on these benches have repeatedly put down questions on this subject. We have followed up that action by pointing out our dissatisfaction with the method of giving out Government contracts. An hon. Member below the Gangway expressed the hope this afternoon that a new system of costing would be introduced, but the suggestion which he made to that end would not improve the position very much. It is impossible for accountants alone to check figures in the engineering industry, as anyone familiar with that industry knows. The average chairman of a shop stewards committee, the average shop steward, can evade any investigation by accountants or auditors.

It is because we on this side are concerned about this question that we want to make constructive proposals to deal with profiteering. First, we suggest that the auditors and accountants when they come to "check up" on a firm should have with them technical experts who have been trained as engineers, who have gone through the shops themselves, who know the ropes and know all the manipulations that can take place. Even then it would hardly be possible to check costs thoroughly, and, therefore, I suggest, further, that the Minister of Supply should be empowered to examine the workers' piece-work prices. With an examination of these piece-work rate tickets, and allowing a reasonable amount for overhead charges and cost of raw material, while seeing that there was no over-valuation of capital charges and leaving the valuation of depreciation to be decided by the Government, the auditors, accountants and technical experts jointly should be able to arrive at a basis upon which it would be possible to make an effective check.

I would also ask the Ministry and the Government whether the time has not arrived for carrying out the Report of the Royal Commission on the private manufacture of armaments. We have been very disappointed about this matter. My hon. Friends representing the trade union movement, the co-operative movement, the Union of Democratic Control and various research departments with which we are associated, spent weeks in preparing evidence to put before the Royal Commission. The report was very disappointing to us but I submit that a number of the suggestions that were made, even from an orthodox point of view, ought to be carried out.

First has not the time arrived when national factories should be established? I have documentary evidence here to show what happened in 1916. I find that the Government at that time were being charged by firms 2½d. each for tin cups but when the Ministry of Munitions got going and a number of national factories were set up, those cups were produced at ½d. each. Discs for which 10d. each were being charged were made in the national factories at 4½d. and tubes—for shells in tanks—for which IS. 6d. each was being charged, were made for4½d. under the Ministry of Munitions, while grub screws which were required in millions were manufactured in the national factories at 1½d. each instead of 2d., the charge which had been made by the firms. As regards shells, 18-pound shells which had formerly cost 20s. each were manufactured in the national factories at 11s. 6d.; 4.5 shells which had cost 50s. were manufactured in the natiional factories at 36s. and 6.0 shells for which 80s. each had been charged were manufactured in the national factories at 68s. each.

Here is concrete evidence of the necessity not only for having a Ministry of Supply, but for giving it power to set up national factories, so that the taxpayer shall get value for money and the prices charged by private enterprise can be checked against the cost of production in those national factories. Does any hon. Member doubt the possibility of that being done or think that that would not be a good business proposition? If they do, I have here a statement issued by the War Office itself. Some of us visited, a few weeks ago, a demonstration by the mechanised Army, and we came away thoroughly satisfied with the efficiency of that Force. We were presented with a document known as "Machinery," and I have taken a few extracts from the issues of 12th, 19th, and 26th January, 1939. It is circulated "with the compliments of the Director of Public Relations, War Office," and it states: In the case of the Royal Ordnance Factory at Nottingham …the difficulties encountered in connection with supplies of machine tools and labour have been peculiarly great. Much of the plant required for gun production is of a highly specialised nature.… Under the circumstances the results which have been achieved at Nottingham have been remarkable, and ,… every member of the organisation is to be congratulated on the high standard of efficiency which has been attained in so short a period. … The development of the organisation to its present state of efficiency and high output is truly a remarkable achievement, which reflects considerable credit on all concerned. Therefore, our theory is confirmed by the Director of Public Relations at the War Office, and if the Government have set up a factory in Nottingham to manufacture anti-aircraft guns, surely it is right to do it throughout the country in order that the taxpayers' money may be saved. The high standard of efficiency that has been achieved is remarkable, and, therefore, our case is proved. The issue that this House has to face—and hon. Members opposite who claim to have regard to the taxpayers' interest may have to decide this question for themselves during the Committee stage on this Bill—is, Is this country to be adequately equipped at 10 per cent., 20 per cent., 40 per cent., or is it to be adequately equipped on the basis of the efficiency of the antiaircraft gun factory at Nottingham? The evidence which I have placed upon record is incontrovertible and can be checked in Government publications by any hon. Member who is prepared to read the evidence placed before the Royal Commission, and I hope that that Commission will not have wasted its time and that even from an orthodox point of view, while it does not satisfy us, their recommendations will now be carried out. I hope that on the Committee stage, now that the House is going to accept the principle of the need of a Ministry of Supply, we shall do what we can to improve the Bill, in order that the people of this country may be adequately safeguarded by bringing the state of efficiency of our armed forces up to the maximum standard possible.

7.34 p.m.

Sir A. Salter

I find myself to be in agreement with the arguments of about half the speakers while disagreeing with their conclusions and to be in agreement with the conclusions of the other half, while disagreeing with their arguments. We seem to be getting into the ridiculous position in which all who have for years past consistently advocated a Ministry of Supply are now going into the Lobby to vote against this Bill, and that those who, like the hon. Member who spoke last but one, have for years opposed a Ministry of Supply will be going into the Lobby to support it. I do not think we can say fairly, in explanation of this, that it is because the present Bill is narrowly drawn or is inadequate for its purpose. I think that if the Bill is fairly examined, it must be agreed that the powers given in it are wide and sufficient to enable a real Ministry of Supply to be set up. Certainly I desire to congratulate the Government most sincerely, not only on producing a Bill, but on introducing a Bill, with powers as wide as those included in this one.

But I did not rise to pay compliments to the Government. I think we ought to have and shall have what is, on the whole, a good Ministry of Supply Act, but as far as I can gather, while we shall have a Ministry of Supply Act, we shall not have a Ministry of Supply but only a Ministry of Army Supply. I have read very carefully the statement of the Prime Minister on 20th April and the various statements made by the prospective Minister, both inside and outside this House, including his speech this afternoon, and I see very little prospect that we can expect in any near future to have what in substance will be much more than a rather differently directed Army Contracts Department. I agree that the Ministry of Supply Bill enables much more to be done, and I hope that much more will be done, but I do not gather any hope from the attitude of mind that has so far been indicated that much more will be done. The hon. Member who spoke for the Liberal party referred to the speech of the prospective Minister at Cardiff. That speech may have given comfort to most of those who listened to it, but there is nothing that gives me so much distrust as the kind of optimism it expressed. It is an indication of the attitude of mind from which one must judge to what extent the permissive powers in this Bill will in fact be exercised. I remember that when this country with many others signed the Kellogg Pact, under which we undertook never to use war as an instrument of national policy, someone expressed a doubt whether that pledge would be fully observed. The reply given was that most certainly Great Britain would fully observe that pledge and would never use war as an instrument of national policy, and to enforce his argument the British Minister in question added, "Great Britain never has used war as an instrument of national policy." The reply did not remove the doubts. When the right hon. Gentleman entrusted with these great and, on the whole, I think, adequate powers is considering to what extent he will put them into effect, I hope he will not be in the mood in which he was when he made the speech, in which he indicated that everything was already so satisfactory.

The essence of this Bill is that it is a permissive Bill. I have very little to criticise in the Bill itself, and what little I might say in criticism of it I shall not say, because I think it is so unimportant as compared with the wide margin of uncertainty as to how far and how soon the powers in the Bill will be utilised. To illustrate that, I will in a moment summarise the kind of thing that I think a real Ministry of Supply, not a Ministry of Army Supply, could and should do. But let me first remark that the Government by introducing this Bill and at least applying the principle of a Ministry of Supply to one sphere where they recognise that the importance of supply is great and urgent, namely, the Army, have cancelled and made nonsense of every argument they have presented against those of us who have for years been asking for a Ministry of Supply. We were told that it would take such a long time to introduce a new system, and that in the meantime it would disrupt the whole of the existing organisation. By taking this step the Government have proclaimed that that is not the case. We were told that it would be a fatal thing to change the responsibility in regard to design⁁that was an argument that was perhaps stressed more strongly than any other▀╣but now the prospective Minister tells us, the critics of the Government on this matter, as if it was something we had to learn from the Government, that it is necessary to establish a closer relation between design and production.

Really, I think the right hon. Gentleman was unduly anxious not to put a strain upon our intelligence. He emphasised, and emphasised very strongly, how important the element of time was, and how you could accelerate production by the methods and principles that are being introduced in this Bill. I think that a larger proportion of those who are not on the Treasury Bench had realised the truth of those arguments than those who are on the Treasury Bench. The right hon. Gentleman turned to the right hon. Member for Epping (Mr. Churchill) and said what a wonderful thing it was that he had practically anticipated by a very long time the appointment of a Minister of Supply. But surely the right hon. Member for Epping has been not merely showing himself a prophet, but a very persuasive critic, and he has been very powerfully aided by the pressure of events, which have slowly compelled the Government to admit that their critics were right throughout all this period and at last, too late, they are beginning to do what they have been urged for so long to do. The right hon. Gentleman may answer that it was not necessary before, but it is there, I think that the Treasury Bench is really separated most widely from its critics. The right hon. Gentleman said there was no real necessity to do something that would greatly accelerate and extend the production of things that were wanted for national defence until the emergency of this year. There is the difference. If indeed our supplies, and the rate of supplies over the whole range of the articles required, were sufficient up till March, then I should have no criticism to make of the Government. I would point out that if the Government have now admitted that when there is some need which they recognise to be urgent this is the method of meeting it, they have destroyed altogether the validity of their arguments for years past as applicable not only to this sphere of supplies, but also to the other spheres of supplies that are needed by the other fighting Forces and by the civil Departments of the State.

It is here that I am especially anxious. I see no reason to think that there will be any early extension of the Minister's powers to cover the supplies of articles needed by the other Departments, and that is why I intervened to ask whether the Departments would have a veto against a transfer of their functions to the said Ministry. The right hon. Gentleman said, "Not a veto," but it was clear from the way in which he answered the question that he contemplated that normally the initiative for the transfer of the supply arrangements for the other fighting Forces would have to come from the Department now purchasing the supplies. I would ask the prospective Minister to study the history of the last War, and the time that preceded the establishment of the Ministry of Munitions, and the way in which the contracts Departments resisted a change. I would ask him whether he thinks if there is not a strong initiative from outside the contracts Departments, the transfer will be on a sufficient scale or early enough. I am sure it will not.

To summarise what I suggest the Ministry of Supply could and should now do. In the first place, it could secure the ecomomies of mass orders and standardisation not only in regard to Army supplies, but in regard to the vast amount of other supplies which could most conveniently be arranged for under a single Department properly staffed and by similar methods. But that requires a very strong impulse which is not likely to come from an existing contracts department. In the second place, such a real Ministry of Supply could and should do a great deal in adapting certain industries to the supply of articles now needed for National Defence which they are not making now. Here, again, the powers are there. But will they really be used on an adequate scale, not only within the sphere now contemplated, but as regards, for example, the implements of warfare of the Air Service and of some other Departments⁁I do not say all? In the third place, as to priority, I am not at all clear that any arrangements securing proper priority will be adequate, not only as between civilian and Government needs, but as between one Department and another, and as between certain activities outside the sphere of Government which will impinge upon each other and upon Government requirements as shortages develop not only of raw materials, but of skilled labour here and there. While there was a Priority Committee in the last War, and certain powers to compel priority on somewhat the same lines as are now proposed, it was the control of raw materials, with conditional allocation, that really gave effective power; and so long as that control of raw materials does not exist it cannot be assumed that powers of priority will work at all in the same way that they did during the War when there was in addition control and power to allocate; raw materials.

Now I come to one part of what the new Ministry could do very quickly, and on a very large scale. I am very glad now that by the arrangements recently announced as regards food and by the arrangements now proposed as regards essential commodities, fertilisers and petroleum, the task of obtaining and storing those essential commodities, for which we depend in large measure on imports from overseas, has been transferred from the Board of Trade to Ministers specially concerned with war requirements, and we hope with more of a war perspective. I am not criticising individuals, but a peace-time Department like the Board of Trade has a perspective which disinclines it to do things which interfere with the normal customs and habits of trade. Undoubtedly it is the case that, as regards food and raw materials, the powers that have existed have been very inadequately used. I wish to say with the utmost emphasis that I can command⁁and I say so the more seriously and confidently because I know the weight of unanimous authority outside on this matter⁁that the Government have not faced at all sufficiently the gravity of the situation which, in all human probability will arise, when war comes, not through loss of our command of the seas, but through the very grave reduction of our importing capacity even while we command the sea. This is one of our greatest dangers. It is one that can be relieved, with no excessive and impossible expense, in only a few months in peace time if we act quickly. I urge the new Minister to give his attention at once to this matter and see whether it is not possible to increase largely and very quickly the stocks of imported raw materials for which he will have responsibility.

There is one further thing that the Minister of Supply could do, and will have to do as the situation gets more and more serious. That is to try to see that the extra demands on the resources of the country are not made in such a way as to cause inflated prices throughout a wide sphere of activity outside the Government's own direct requirements. While I fully realise that there cannot be in peace time the same intensity of control over the whole economic system of the country as there would be in war, I think the Minister will find it necessary to have very definite control over certain key industries, for example steel, otherwise very serious distortion of prices will develop in peace time, after which it will be almost incurable because, if war came, with distorted prices you would be stereotyping a position which had already gone wrong. By doing this quickly and on a large scale the new Minister would not only be doing something of the utmost importance at the moment but he would be incidentally getting his Ministry into a condition and a position which would enable him without delay on the outbreak of war to carry out his more extended tasks.

7.53 P.m.

Mr. L. Jones

When the suggestion was made a few months ago as to the powers that it was intended to give to this new Department, some critics suggested that it was merely going to be a shadow of the Department that they hoped for. Since the publication of the Bill some of those very critics have turned to the other extreme and complained of the dictatorial powers that the Minister is to receive. I was perfectly satisfied, from the very wide experience that I had in the last War in the service of the Ministry of Munitions, that when a department of this kind was instituted, if it were to be successful and effective, the Minister in charge would have to get very extensive powers which were bound to interfere with all kinds of commercial interests, and anyone who examines the Bill and compares these powers with those given to the Minister of Munitions in 1915 will realise that no Minister of the Crown was ever given such extravagant, and, indeed, dictatorial powers as are given under this Bill. I agree with the hon. Member for West Middlesbrough (Mr. K. Griffith). I am very concerned that, by the publication of the White Paper last week, the powers of the Minister have been so seriously curtailed. It is now clear, especially after the Minister's speech, that his immediate concern will be to deal with War Office requirements. One can only gather that those responsible for the control of the Admiralty and the Air Ministry have very courteously but firmly told the Minister that, as far as the supplies of those Departments are concerned, he must keep off the grass, and indeed his work, his duty, and his responsibility under the Bill are to be limited almost entirely to War Office requirements and to a very limited degree, as far as raw materials are concerned, to the other Departments.

How will this affect the powers of the Ministry? The right hon. Gentleman referred to the important question of priority. Those who had any considerable experience of priority during the last War will know that this problem will provide the Minister with one of his most important and responsible functions and will also provide him with almost insuperable difficulties because of the competition which is bound to arise as it did in the last War, between the three supply Departments of the State. I think it is essential that we should differentiate between the two kinds of priority authorities referred to in the Bill and in the Explanatory Memorandum. Clause 7 gives the Minister the power to give directions as to priority. But the Explanatory Memorandum in which alone there is any reference to the Ministerial Priority Committee, definitely states that the exercise of the Minister's powers as to priority will in general be subject to the control of the Ministerial Priority Committee. That is the only place in the document where this Ministerial Committee is referred to. That means that the Minister's powers of priority are to be subject to another priority authority. That is a very important qualification of his powers. That statement in the Explanatory Memorandum makes me wonder whether those responsible for the drafting of the Bill realise what a tremendous task the Minister will have placed on his shoulders in the exercise of priority.

The Minister is going to have great difficulty over this question of priority. I remember that during the last War there was brought into being a Cabinet Priority Committee under the chairmanship of General Smuts. That committee was appointed in 1916 or 1917 to decide the relative priorities as between the Admiralty, the Air Force and the War Office. It was only concerned with general policy questions. I well remember the difficulty, for instance, on the question of mechanical transport on which the Cabinet Priority Committee had to decide. Very definitely, in my mind, there stands out the recollection that if at any time their Lordships at the Admiralty cared to be firm and definite, and cared to fight against a decision by the Cabinet Priority Committee, the Admiralty always won. I think that was the experience of everybody who had anything to do with priority at that time.

Serious efforts were made by colleagues of mine, even up to the end of the War, to get set up a real central authority by the Cabinet to deal with questions of priority, and not only to deal with questions of priority but to act as a court of appeal as between the various Supply Departments, but we failed. I suggest to the Minister that unless this Ministerial Priority Committee does its work much more effectively than the Cabinet Priority Committee did during the last War, then I shall be very dubious as to its effectiveness. Some reference was made by the Minister, in moving the Second Reading of this Bill, to a C.I.D. Committee of which the Minister for the Coordination of Defence would be the chairman. That makes me wonder what exactly is to be the relationship of the Minister for Co-ordination of Defence to this Ministerial Priority Committee, to which reference is made in the Explanatory Memorandum. In the White Paper issued in 1936, Cmd. Paper 1507, a statement referring to defence, there appears paragraph 60: Co-ordination of Service requirements will be effected through the existing Transport Supply Officers Co-ordination Committee of the C.I.D. and the new deputy chairman of the Committee of Imperial Defence, will, as chairman of this Committee, be able to supervise the whole system of supply and correct any deficiencies which may be found to arise. I am sure that hon. Members would like to know what is to be the relationship of this Committee to the Ministerial Priority Committee to which I have referred. I hope the Minister will try to deal with this point and tell us what is to be the relationship between the two committees, because it is of vital importance. It is only if and when this Ministerial Priority Committee does its work correctly and thoroughly that the work of the Minister himself in dealing with actual priority for actual contracts in the factories begins. I want to suggest that the Minister, even when that Ministerial Priority Committee has accomplished its task or comes to its decision, will be prejudiced from the start in putting his priority system into opera- tion because he has only power under the White Paper to deal with priority of War Office contracts, or, as the hon. Member for Oxford University (Sir A. Salter) said, War Office contracts in relation to commercial orders. How can the Minister operate his priority scheme in a factory where each of the Defence Supply Departments has contracts if his authority as regards priority is only to affect the War Office contracts? He will, obviously, be powerless so far as Admiralty and Air Ministry contracts are concerned.

I want to emphasise that the Ministerial Priority Committee can deal only with generalities, while the Minister himself will be responsible for priority in individual contracts. Times will arise when the supply of any parts or material may be less than the Government's demand. The Government will only know of the extent of that demand by the effect of cumulative priority certificates which are in operation at a particular time. It is only by the operation of the priority system affecting each of the Supply Departments which use the common material or the knowledge gained that the Ministry of Supply will know exactly the facts of the situation. Therefore, the only effective method of putting such an adequate supply in practice into proper priority production will be to get some general agreement as between the three Service Departments. I hope that, although the Minister's duties are curtailed by this White Paper, he will be able as soon as possible to arrange for a regular consultation between the Supply Departments of the three Services. Without such an agreement it is obvious from our experience in the last War that the law of the jungle will prevail when there is real competition between the three Services for a restricted supply of the material. The Admiralty will make it impossible by insisting on the highest rate of priority for themselves, even when their orders are not of high priority type. Whatever may be the reason for limiting the operations of the Minister, I hope that that limitation is only to be in peace time, because I am certain that his work will become very difficult in war time unless he is able to control all the three Services.

The Minister has partly answered one of the few remaining questions that I want to put to him. The exercise of his priority powers may have a very serious effect on export trade, and I hope that the President of the Board of Trade will keep his eye on this matter. It is important that the Minister should exercise powers of priority, but it is also important that he should restrict the use of those powers as little as possible to the detriment of the export trade. It is unnecessary for me to emphasise how important it is that firms which have entered into contracts for export orders should not fail to carry out those contracts, because by so doing they would not only lose the contracts but they would face the loss of goodwill which may have cost them considerable expenditure to develop. The Minister dealt with the question of protective measures. Hon. Members will be aware that Clause 12 gives the Minister power to compel or to order Government contractors to adopt certain measures for the protection of their plant. This may be very desirable, but the provisions of the Clause appear to be unjust. The Civil Defence Bill already makes it obligatory on all occupiers of factories employing more than 50 people to adopt certain measures for A.R.P. One only assumes that this particular Clause adds further responsibility for occupiers of factories to protect the plant which is being engaged on production of War Office contracts. The proposal in this Clause is that for the capital expenditure incurred in installing these protective measures a grant will be made to the extent of 5s. 6d. in the £—that is to say 27 ½per cent. of the capital cost. But it also adds that they will receive an allowance and in addition contracting departments are to be authorised, to give as part of the cost of their orders a further part of the remaining 72½ percent. of capital expenditure proportionate to the amount of work for the Government in the contractor's hands as compared with the total of work in hand. That is a very unfair proposition, because it is quite possible that the proportion of work which the manufacturer is carrying on as a Government contract may be very small indeed, and if he is compelled to adopt some protective measure it is possible that the proportion of Government contracts may be so small that his ordinary highly competitive business may be forced to undertake the cost of those measures which the Ministry of Supply has made obligatory on him. I think that the Minister should further consider that matter and see if it is not possible for him to pay the whole cost of certain measures.

May I also ask him this question? It is the general belief that the Air Ministry, in its contracts with its own contractors, has allowed those contractors to put in in their costing system the whole cost of A.R.P. and such protective measures as the Minister is suggesting in Clause 12. If that is true, and the Air Minister allows the whole of those costs, why should not every other Government contractor, whether for the Admiralty or the War Office, be treated on the same footing as the Air Ministry treats its own contractors? I shall be glad if the Minister will be good enough to let me know what he thinks of that suggestion.

I realise that the Minister of Supply will be shouldering a tremendous responsibility. The very fact that his Department is new, and, indeed, the very nature of his task, will bring to him and his Department new problems every day. He will need the willing co-operation of employers and employed, and I am confident that he will receive the sincere cooperation both of the trade union leaders and of those who represent employers of labour. But the Minister starts under much more favourable conditions than did the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) when he instituted the Department afterwards presided over by Dr. Addison. The right hon. Gentleman was the first Minister of Munitions, and he organised that Department early in 1915. The present Minister will start with considerable advantages over the Minister of Munitions of those days, because great developments have taken place in the reorganisation and modernisation of industry in this country in the post-war years, and the Minister will have all the advantages of negotiating with and meeting representatives of the collective organisations of these various industries, whereas the Minister of Munitions in those days, in his survey of the potentialities of British industry, had to investigate, as it were, the individual practice in each case.

I should like to make some reference— I think it has been referred to already⁁ to the question of utilising the practical experience of manufacturers in the design of certain defence plant. I agree with the hon. Member who spoke last that the Minister should make very special efforts to utilise the practical experience of manufacturers generally in the design of certain defence supplies, so that modifications of detail could be considered, especially where they would appear to result in greater acceleration of production without in any way affecting the utility of the product itself. This matter is, of course, of special interest at the present time, when the Minister is taking steps to compel, if you like, industries to take on Government contracts where the products of a number of firms will differ only slightly from their normal production, but for which their equipment is not complete. It may frequently happen that a minor change in specification will greatly facilitate production by permitting the use of materials or tools that are available without detriment to the product itself or to its interchangeability with similar units of manufacture.

I am sure that manufacturers throughout the country earnestly hope that the liaison between some of the supply departments and industry will be very much improved. It cannot be too strongly urged that, if acceleration of rearmament is desired and is to be achieved, an organisation by which quick decisions can be made is essential. A letter from a Member of this House appeared in one of the national journals a few days ago emphasising that very point. Under the present system considerable delay and irritation is frequently caused by the complete lack of liaison. I have put forward these points for the consideration of the House and, I hope, of the Minister, not in any carping spirit. I hope the Minister will allow me to assure him, as one who had considerable experience in the Ministry of Munitions during the last War, particularly as Secretary of the Priority Department, to which I have made so much reference to-night, that if in a small way the experience I had in the last War can be of any use to him or to his Department, I shall be very glad to place it at his disposal.

8.21 p.m.

Sir Stafford Cripps

Speakers so far seem to have divided themselves into two species—those who consider the Bill to be insufficient, and those who are quite certain that the Minister will be. I think that probably both are right. For the moment I want to deal with the insufficiencies of the Bill itself. I only venture to intervene because I had some experience during the last War, also in the Ministry of Munitions, and was one of those who on some occasions roundly cursed the last speaker as regards priority, though probably he did not know it. It is important to observe that this Bill falls into two parts. The first part is a permanent organisation, quite irrespective of any emergency. It is impossible, therefore, for the Minister or the Government to say that the origin of this Bill is an emergency of two months ago. If that had been so, we should have had Part II only, and not Part I. What is being done here is that, as a permanent part of the organisation of the defence of this country, a Ministry of Supply is being set up.

The necessity for a Ministry of Supply is due to the fact that it is necessary to have some means of co-ordinating the very dispersed manufactures which are now essential in the defence services of any country. It has been found by experience, which was very realistic and very tragic in the last War, that unless there is some such co-ordination it will not be possible to obtain either the volume or the flexibility of production which is so essential in times of emergency and in times of war. That co-ordination must be both vertical and horizontal. You have to co-ordinate every stage of production in a particular department, starting with research and ending with the finished product which is sent out to be utilised in the field or wherever it may be. There must also be co-ordination between the different departments in order that you may be able somehow or other to assess the degree of emergency with which articles are required in these different departments, and that degree of emergency has to be assessed, not only as a matter of policy, but as a matter of day-to-day administration. There are often times, as I remember from my own experience, when something goes wrong in a particularly important factory. Let us say that an electric motor burns out and there is no other motor available— and this is an illustration drawn from actual experience—except one which has been made for the Admiralty, which is not wanted for another two months and which, if it could be put into the other factory, working say for the War Office, would enable that factory to go back to full production within 24 hours. Unless there is somebody that can decide that the priority existing on that electric motor of the Admiralty can be immediately changed over to the War Office, you are going to hold up the production of some vitally important article for, it may be, a fortnight or three weeks.

That necessity for an immediate power of co-ordination was lacking at the beginning of the last War, and those who were then concerned in the early struggles with regard to the setting up of a Ministry of Munitions will remember that the very difficulty that occurred was due to the War Office insisting, even though there was to be a new Supply Department, that it should be a War Office Supply Department. They would not let it go out of the War Office building. It was only by a clandestine adventure that it got across the road into the Department of Agriculture and Fisheries, which was then being built, and, by the bribing of a stonemason, the title "Armament Buildings" came over the door, and thereby the title of the Ministry of Munitions was established. That struggle to keep the Supply Department within the War Office is exactly what is happening over the framing of this Bill. Because of that, this Bill is, in my view, wholly insufficient to deal with an emergency. Whether it might do, in times of peace, as the basis of a long-term policy is another thing, but to deal with an emergency it is quite insufficient. The Minister when he was speaking referred to his "inherent powers." He has not any; and he never will have any. The powers he has are the powers in the Act. This is a statutory Ministry set up by this Measure, and the first Clause says that he shall have such functions as are or may be conferred on him by or under this Act. If the powers are not found here, they will not exist. Therefore, it is of vital importance that the powers should be in the Act. One cannot just slur over words, and say, "Never mind, it will be an inherent power." In Clause 2, one observes that, although the words are quite wide— to buy or otherwise acquire any articles for the purpose of exchanging them for articles required for the public service.… there is this essential limitation: that the Minister cannot by himself determine what area his activities shall cover. That can be determined only by the wrangles of the Cabinet. Anybody who knows what happened in 1914 and 1915 knows how long those wrangles can go on, and knows the jealousies of the Departments to preserve their own powers for certain manufactures and certain areas of industry, and their unwillingness to pool. The whole essence of Supply is to compel that pooling by the Departments; and it is the weakness of the Bill that it fails in that respect. I am disturbed at the fact that in Clause 3 concurrent powers will be given to the Minister and one of the Departments. That seems to me something that could come only out of "Alice through the Looking-Glass" or some similar work, because the whole object of this is to stop concurrent powers. Surely, that provision at least should be wiped out, and it should be made impossible to put that compromise on the Minister—because that is what it will mean. He will be saying that it is essential to get these Supply powers, the Air Force or somebody else will not give up those powers, and it will then be said, "Very well, we will both do it."

If I may turn to Clause 5, which deals with the question of stocks, it seems to me that this has completely omitted to consider the case of what I might call free general storage. It has considered storage for a particular article, and if there is an excess of that available means can be taken to utilise it. But take things like railway warehouses, which would not come under the Clause at all, because the railway would not be a person storing or having control of any article required for the public service. [Interruption.]Are you suggesting that they are producing transport as an article? Are you suggesting that they are producing engineering goods? You are not suggesting that they are producing wheat, are you? There is no power to deal with them under Clause 5. There are railway warehouses which are not used at all: there are whole floors which are empty; and for them there is no provision made. The Clause is far too narrow.

Clause 7 seems to me not to fit in the least with Clause 2. Under Clause 7, power is given to the Minister to give directions to deliver any article. To whom is it to be delivered? Is he to give power to deliver it to himself, or to the person who ordered it? That is absolutely vital. because on that depends his power of priority. Let us take electric motors as an example again. Suppose he is acquainted with a business that has orders for 50 electric motors; 10 for the Admiralty, 10 for the Air Force, 10 for the War Office, and 20 for the Supply Department. He has power to take the orders as they are delivered. Can he say, "You must deliver the Air Force order, then the Admiralty order, then the War Office order, and then mine"? If he can, then he has priority powers. But that is exactly what he has not power to do. Under Clause 7 (1), he has power to give directions to any person who by virtue of any contract, whether made with the Minister or another Government Department or any other person, and whether made before or after the commencement of this Act, is under an obligation— (a) to deliver any articles required for the public service … He can say, "Deliver your 50 motors," but he has no power to say, "Deliver 10 motors first to the Admiralty"— absolutely none. If you read the words that follow, he has power to see that any work in connection with those articles or works shall be given priority over all other work,… He can say, "You have to deliver the 50 motors first," but he cannot say, "You have to deliver 10 first." He cannot put the Admiralty before the Air Force or the War Offie. [Interruption.] If he has that power, it must be clearly stated. It alters the whole tenour of the Bill. I am sure the right hon. Gentleman does not want to start with a complicated legal action as to whether this does or does not mean what he is rather suggesting that it does by his nodding of the head. If this means the right of the Minister of Supply to arrange, as between orders given by different Government Departments, the priority in which they shall go to those Government Departments, clearly it must be stated here, and it will make a profound difference to the whole of the Bill. It is a most extraordinary situation really when you come to think that, if that is the power which the Minister is to have, he is not to have the power to give orders in respect of these goods, but only to give instructions of delivery with regard to the goods. That is really making nonsense of any kind of business. In Clause 2 he has no powers to give orders for the Air Force, but power to order delivery to the Air Force, and if he has the power to do that he must have powers also to give orders for the Air Force. You cannot chip in right in the middle of a business when a thing is half manufactured and say, "I have nothing to do with orders, but I am given specific authority to tell you what to do with regard to deliveries." That shows that Clause 2 and Clause 7 do not go together. If you are given powers to arrange priority as between Government Departments, you must have that overriding power in Clause 2 as well.

I would like to ask the right hon. Gentleman another question about Clause 7 (1). Is this intended to cover preference to transport, which may be a very vital matter? Is it intended to give the railways orders that they are to transport certain goods in preference to certain other goods? I hear the right hon. Gentleman say, "I do not think it is." Clearly he ought to have that power. If you are dealing with the storage of large quantities of material, it may become vital that you should order certain goods to take preference of certain big, heavy traffic which otherwise may hang up ships and other things for a long time. One of the most important features very often in co-ordination of production on this sort of scale is transport, both of raw materials and of the finished product, very often transport of raw materials being the more important of the two.

I will deal with one other matter, and it relates to Clause 9. Why does not the Minister include in "any person," the sub-contractor? It is a simple and an easy thing to include, among the people whose books he can inspect, the subcontractor. It would have been absolutely reasonable to do it in the circumstances, and not only that, but also to include the books of controlling companies as regards subsidiaries, and subsidiary companies as regards controlling companies. Otherwise, he may find that he will get very little information from the person who is actually supposed to be having the control of the articles that are required. This method of checking cost accounts really is not going to take him anywhere. I have had a great deal of experience of cost accounts. During the late War I organised the whole of the costs accounts of the department of the Ministry to which I was attached. I know from my experience of that work that reliability, even when one tries to compare them with other people, is something upon which one can place absolutely no faith at all. I saw the cost accounts of every factory in this country, in France, in Canada, and in the United States of America, that was producing sulphuric acid. One really could not get anything at all from these comparisons, and yet they were the only basis for showing whether a manufacturer was producing economically and what it was in fact actually costing him, but they were not of any use as regards checking the amount of profit that could be made. With all the elaborate costs accounts and all the checking that was done during the late War, the profiteers were there just the same at the end as they were at the beginning.

There is only one real way of getting rid of them, and that is by nationalising the manufacture. From the point of view of efficiency, the late War proved beyond all possibility of doubt that the national factories were infinitely more efficient than any privately-owned factory in the production of every kind of material, chemicals, engineering material, shells and other things. The only cure, if the Minister is not going to adopt that course, is to have a real C.I.D. committee—a Criminal Investigation Department committee rather than the Committee of Imperial Defence. The alternative suggested by the hon. Member for Ipswich (Mr. Stokes), which would at least give some information, is the audited certificate of profits on each contract. If you really appoint an outside auditor you have something that you can rely upon as giving a fairly true picture of the profits that have been earned on the particular contract. These are the reasons why I believe that this Bill is wholly insufficient to give the powers that are essential, the powers of co-ordination, of action in emergency, and of controlling profiteering in the armaments industry. I am quite sure, however much the Minister tries with this Bill, that we shall find in a year's time, if we are still in a state of peace, as we all hope we shall be, that he has not really got any further than being a rather glorified department of the War Office, perhaps having been able to put that department as a War Office department right, but still leaving the whole great problem of priorities and of co-ordination untouched.

8.42 p.m.

Mr. Harold Macmillan

The hon. and learned Gentleman the Member for East Bristol (Sir S. Cripps), who has addressed the House, as usual, with great perspicacity and skill, put his finger upon one or two important weaknesses of the Bill as it is drawn. Nevertheless, I think that the House as a whole welcomes the introduction of this Bill, and, with all the various criticisms which have been made of it, we feel that on the whole it marks a great departure and a great forward movement in the organisation of our defences. I sympathise a little with the difficulty of the Minister whose task it was to introduce this Bill. In the preliminary part of his speech he naturally laboured under the difficulty of the past history of this controversy, and when he delighted us with an agreeable lecture upon elementary economics in the first part of his speech he had to keep fairly far away from the actual subject of the history of the Ministry of Supply controversy.

It is only a few months ago that I was very nearly converted by the Prime Minister to the view that a Ministry of Supply was a very bad thing. I refer to the Debate in November, when the most powerful arguments were brought before us that this Ministry would mean delay, would do nothing but harm, could, do not good, and would destroy the export trade, and, in fact, it was only by the greatest effort that I was so able to restrain myself from being converted by the arguments of the Prime Minister and his colleagues as to go into the Lobby to vote for the Ministry of Supply with two or three other Members of my party. However, he also was in that difficulty in making reference to my right hon. Friend the Member for Epping (Mr. Churchill). I do not think it was altogether wise of him to have made that reference. He congratulated himself upon the fact that three desiderata which my right hon. Friend had put before the House in the year 1936 had been achieved with one blow to-day. To use the phrase, he killed three birds with one shot. But there has been a delay of about three years between the firing of the gun and getting the game into the game bag, three frightful years when all the arguments which are so powerful against a change of method would not have been effective if the necessary steps had been taken at the proper time. If the right hon. Gentleman thought fit to make any reference to the right hon. Member for Epping it would not have been altogether improper for him to have made some reference to the indomitable efforts, the skill, and the public service, which the right hon. Member for Epping has given to the House and to the country through all these years in bringing these matters to the attention of the House.

This is just one further conversion of the Government—I am glad that they have been converted—and now there must be a traffic problem on the road to Damascus. On one subject after another we have had these repeated conversions of the Government. In the last four years we have gone through the whole circle. In foreign affairs we started with collective security, then went into isolation, and then back again to collective security. In the case of the defence forces, conscription was absolutely impossible; the voluntary system must be held to the end. But in a few weeks the voluntary system has been abandoned and conscription has been brought in. On the question of supply we have at last one further conversion on the part of the Government, which I am glad to welcome. But these repeated retreats have sometimes a very disconcerting effect on loyal supporters of the Government; they are made so repeatedly that they leave some of them in a position of some difficulty. The hon. Member for Stockport (Sir A. Gridley) explained with a great deal of grace the reasons which made him entirely change his mind on this matter, and then finding himself a few weeks ago holding on to a position which his leaders had abandoned; leaving his banner planted in the field and leaving on the Order Paper a Motion congratulating the Government for not having adopted a policy which two weeks later they did adopt.

This is a matter, I believe, of national importance. These great changes, these reversals of policy, are carried out by the men who have long denied them to be necessary, who have been proved to be consistently wrong in their prophecies and their methods, who consistently demand alone the power to carry us through the grave difficulties which still confront us. I do not believe in the long history of this House there has been any occasion comparable with the present except the period of the complete domination of the Liberal party at the end of his life by Mr. Gladstone. It was not better described than by the father of the present Prime Minister, and it exactly describes the situation to-day and the way in which this House follows the successive turns of the present Government. He said in 1893: They think every scheme as it successively proceeds from the fertile brain of the Prime Minister is perfect and cannot be improved. The Prime Minister calls 'black,' and they say, 'it is good.' The Prime Minister calls 'white,' and they say 'it is better.' It is always the voice of God. Never since the time of Herod has there been such slavish admiration. The effect of those words on a part of the House was such that there arose a free fight, during which over 60 Members had to be carried out. But those words exactly describe the history of the last three years. Do not let us flatter ourselves that these successive conversions are due to argument, to fear or to discussion. Even the rhetoric of the right hon. Member for Epping has changed no vote, has made no difference. These changes have been made by the hard pressure of actual facts, and I believe that the changes which will have to be made in this Bill, the increased powers which will have to be given over the national economy, if we are to face these national problems, will also be brought about by the difficulty of actually working the system in the years and months to come. The duties in the White Paper and still more in the Bill when it is operated in full, will require all the powers which are envisaged as necessary to the authority and power of a Minister of Supply if he is really to carry out these immense duties.

He will have huge problems to solve. He will have to co-ordinate orders, which, in effect, means a division of functions in the economic and industrial life. He will have to effect standardisation of design, increased mass production, and increased factory capacity, and he will have to remember all the time that where he increases production in one field he will decrease it in another. He will have to choose what are the essential things for the nation to produce, and what are the non-essential things. These are huge problems. He will have to deal with the question of skilled labour and profits which are inevitably bound up with the problem. We all know that the basis of what is a fair profit is the basis of what is the cost; and costs largely depend on labour costs. Are we to allow labour costs to rise as well as other costs merely by the competition bidding in armament production in order to obtain workers who are engaged in other walks of life? If we do that we shall plunge into a great inflationary spiral which will have the same bad effects as the last War, and when it is over it will leave behind the same difficulties of readjustment as between trade and trade and man and man as we suffered in 1920. If one man goes from one industry to another merely because of a rise in wages it automatically makes a shortage in the industry, prices will rise and profits will rise, and there will be the same effects which we have deplored before.

The only course will be to take a still wider measure of control and declare that certain commodities which are non-essential may not be manufactured at all, or must be reduced in volume, and I am certain that if he is to avoid these difficulties the right hon. Gentleman will have to increase his general control over our economic system. In other words economics are indivisible. You cannot allow a whole series of withdrawals from one part of the economic fabric to another without also taking more control over the rest, and if you do you will be subject to all the same difficulties and mistakes. We have enormously increased our efforts in recent months. We have raised great armies, doubled the Territorial Army, and there are 200,000 men in the Militia. Nearly 1,000,000 men in one way and another are in arms. We have a vast armament programme. We have to accumulate stocks of food and material. We have the air-raid precautions programme. We should be reclaiming derelict land to increase our capacity to produce food in time of war. At the same time, we have to maintain our power to export in order to pay for all these necessary imports to increase our power. What shall we find? Shall we not find that, as part of the Ministry of Supply, intimately bound up with its problems, we shall have to consider whether we can carry all these burdens and still leave a great part of our export industries unemployed or under-employed? Shall we not have to consider whether it will not be to our benefit to put men to work in the cotton and coal industries, and to export those commodities even at a nominal loss in order to give us the necessary foreign exchange with which to carry on our great enterprises?

All these will ultimately and inevitably become part of the problems with which the Minister of Supply, moving from what he now is under the White Paper, a sort of higher Army ordnance, moving under the full powers of his own Bill, into a real Minister of Supply, will have to deal. He will have to move into even greater powers and to take a complete survey and a large control over the whole field of the economic endeavour of this country. I do not think we yet recognise —and I am sure great numbers of people outside do not recognize—how vast are the difficulties that confront us, vaster still because we are not able, and I am glad to say not willing, to take the simple solution of the totalitarian State by taking all powers into our hands. We are in the difficulty of trying to preserve the freedom of life to which we have been accustomed and at the same time getting the discipline and control which is necessary for us in order to carry out these enormous and overwhelming tasks.

I am sure the Minister will believe that I am sincere when I say that I believe and hope he will have good fortune in carrying out this work. I have given myself the pleasure of looking through a number of his speeches that have been made during the last few months, and I find that at least they all show optimism, loyalty and hope, even when sometimes I have thought their prophecies have been unwise and ill-founded; but I say frankly, as I believe the country will say, that he has taken on a great task in which we wish him well. He owes his responsibility to the House and the nation. I believe that the tasks that lie before the country as a whole will require the mobilisation of all its powers and resources.

I do not wish to emphasise unduly what I said at the beginning of my speech, but I believe there are great classes of our people who feel that it is incredible that men of the highest knowledge and greatest capacity, men who have been proved right in these controversies, are consistently left out of the Government. The Government insist upon getting on a narrower and narrower basis instead of a wider and wider one. The great national unity of which we all speak the Government do nothing to promote. I feel that if we are effectively to face these difficulties, we have got to have a Bill in which these powers will be not merely permissive but will be used. I believe we shall have to follow this Bill by a Bill taking greater powers. We are in one of those lulls in which people say that everything is all right because on every day of every week there is not some fresh monstrous horror pushed into the world; but do not let people be lulled into this false security. We have immense tasks before us and they can be carried out only by the greater authority of each individual Minister and particularly the Minister under this Bill, and by the wider authority of the Government taken as a whole, more broadly based upon the general consent of the people.

9.0 p.m.

Mr. Edwards

One can conceive that there was in the minds of those who drafted the Bill a desire to avoid the new Ministry becoming a bottleneck for all the Departments. One can see the wisdom of that, for nothing is more calculated to hold up production and progress than a bottleneck through which everything has to pass. At the same time, I am sure that the Minister, after having listened to the remarks that have been made to-day, will be determined that, if he is not to be a bottleneck, at any rate he will not be a mere bottle-washer, as one hon. Member put it. From what has been said, it is obvious that there is a danger that that will be the case and that there will come to the Minister only those things which other people wish to send to him in order to save themselves some difficulty or perhaps, sometimes, for other reasons.

I should like to refer to some remarks that were made by the hon. Member for Stockport (Sir A. Gridley). He spoke as a big business man, and told us that he refused to give credence to the statements that had been made by my hon. Friend the Member for Ipswich (Mr. Stokes). The hon. Member for Stockport was determined that the hon. Member for Ipswich had been telling the House a good many things which were not only not true, but for which there was no foundation. I think the Minister will lay himself open to grave charges of neglect if he does not do something about what has been said by my hon. Friend. What my hon. Friend said is either true or it should be withdrawn, and any Minister who allowed it to pass without taking very serious action with regard to it would lay himself open to very grave charges of neglect. The right hon. Gentleman will have power under this Bill to make the fullest investigation. The hon. Member for Stockport said that my hon. Friend should give names. My hon. Friend told us that he is already on a black list. That is a very serious statement to make in the House. Because he has refused to sell his goods to the Ministries at a higher price, he has been put on a black list, and gets no orders.

Colonel Burton

I know that the hon. Member would not wish to misrepresent what was said by the hon. Member for Ipswich (Mr. Stokes), and as the hon. Member for Ipswich is in an adjoining constituency to my own, I would like to protect him against the hon. Member's statement. He said that he was not put on a black list, but for some reason or other he did not get orders. He said that he was not on a black list.

Mr. Edwards

If the hon. Member can tell the difference between that and being on a black list, I hope he will tell us. It means exactly what a black list means, and my hon. Friend the Member for Ipswich made clear that that was exactly what he meant. He has been put on a black list, in effect; he can afford to be on it, and does not care what happens. There are other manufacturers who do care, and they have to be very careful. It is not for the Minister or any other hon. Member to ask my hon. Friend to give names. As I have said, it is easy for the Minister, if he wants to do so, to find out who those people are. The hon. Member for Stockport, as a big business man, attacked the Co-operative Wholesale Society and told us that it had made some rather fabulous profits. It was only at the end of his speech that he discovered that he had made a mistake of one decimal point. If a business man, criticising another big organisation, can make a mistake of a decimal point, it is possible that he can also make a mis- take when he is costing. From some of the figures that have been put before us, it seems that such mistakes may have been made in regard to decimal points, and the Minister in his investigations will have to watch those decimal points. The misplacing of a decimal point makes all the difference.

I know a little of what happens in these times of emergency. I was connected with a business which did a lot of work for the Ministries during the last War, and because of certain technical knowledge which I possess I was able to take some waste material which the manufacturers were just throwing away on the dump, and to make use of it. I knew there was something in that waste material of which the country was short. My company bought up the lot at from £3 to £5 a ton. We spent about 25s. a ton on it and sold it for £28 a ton. That was not an isolated instance. Many people were doing similar things. The Ministry of Munitions ought to have had the power in those days to take that raw material, pay us a few pounds a ton for treating it and sell it at a proper price; but the people with whom I was associated at that time knew that 80 per cent. of excess profits were being taken from businesses and we thought we were entitled to a fairly substantial margin of profit. I do not say that that was right, but it was just a case, as capitalists always argue, of supply and demand. If that law of supply and demand is to operate on this occasion I think the hon. Member for Bristol, East (Sir S. Cripps) is right in saying that there should be a criminal investigation department.

Then let me mention another thing. A Department which I used to visit a great deal at that time had in charge of it a gentleman who knew not the first thing about the goods with which he was dealing—not a thing. I never knew a bigger "dud" in any Department, and that is saying something. We had to teach that man the very rudiments of the business which he was professing to control. It may have been a coincidence, though I do not believe it was, but after the War I was amazed to find that gentleman a director of the same type of business as he had been dealing with during the War. It may be very unfair to suggest that he was receiving some reward for services rendered but there are many people in the country who believe that such things did happen. It has happened very frequently with armament manufacturers, and I do not think anybody dare get up in the House and deny that statement.

There was another strange argument put forward by the hon. Member for Stockport. It was also put forward by the Secretary of State for Air when I raised the question with him on one occasion. Instead of getting up in the House and saying, "It is disgraceful that the country should be robbed by these people taking these exorbitant profits," the Member for Stockport said, as the Secretary of State for Air had said not so very long ago, "You must remember that for years they have lost money." What a strange doctrine it would be if we say that the Ministry of Supply is to go to a manufacturer and say, "Before I fix prices with you let me see your balance sheets for the last 10 years, and if you have lost a lot of money I do not mind of you recoup yourselves." What a strange doctrine, what a thoroughly dishonest doctrine; but that was the argument put forward in the House to-day and put forward by the Secretary of State for Air not long ago. I have said it before, and I say again, that, in the case of manufacturers of aeroplanes, at a time when this country was in grave danger, the question of production was secondary with them and the question of profit was primary. I have said before that over a period of six months after the Prime Minister had told us that this national necessity was not to be exploited for private gain, out of £7,000,000 attracted to aeroplane manufacture for the production of aeroplanes more than £6,000,000 went directly into the pockets of the profiteers.

After I had made that statement, the late Minister for the Co-ordination of Defence wrote to me personally about it. He was astounded that I should make the statement and asked for evidence. I gave him the evidence and presumed there was to be a statement made in the House, that there would be a correction when he had investigated it; but there never was any statement and there never was any correction, because he found it was true. Therefore, Members opposite must not get impatient when hon. Members on this side emphasise that profiteering is going on and warn the Minister that he will have to use all the powers at his disposal, and perhaps seek more powers, if he is going to cope with these people, because there is nothing they will stop at.

Mr. Simmonds

When the hon. Member referred just now to the profits made by the aircraft industry, was he not referring to the profits made on the Stock Exchange by flotations?

Mr. Edwards

Very largely.

Mr. Simmonds

I think the hon. Member would wish to explain that that was not profit made by the aircraft industry itself.

Mr. Edwards

No, it could not be. I admit that. I tried to point out that it is not the people who are really producing the aeroplanes but the gamblers and speculators who get the money. I said the money went into the pockets of the profiteers instead of going into the production of aeroplanes. With that example before us we should speak very plainly in this House, and warn the Minister that we shall get on his track if he does not do something. If the money which companies have lost in previous years is to be taken into consideration would it not be possible to take into consideration the position of the workers who have been out of work for some years and recoup them a little for what they have lost? I am glad the hon. Member for Stockport has come back, because I was referring to something he said about manufacturers who had lost money over a period of years being entitled to recoup themselves. I would point out that he did not say anything about the workpeople also having a right to recoup themselves for the losses of past years.

It may be said that the military strength of this country is equal to the industrial strength. It can be no more. I have watched the ups and downs of the iron and steel industry for many years, and would like to emphasise that steel manufacturers are not the people to advise the Government as to the price at which steel should be sold. I think the Minister ought to determine that for himself through some less biased channel. I believe that what the hon. Member for Ipswich said to-day is correct. I know the Minister disagrees with what the hon. Member said, and if the hon. Member is wrong the House ought to know that he is wrong, and I hope the Minister will made a note of those points. To go back to the ups and downs of the iron and steel industry. There was a time not so long ago when this country was in great danger, yet at that time we had ships coming to this country loaded with scrap iron brought from foreign countries, and those ships were passing on the high seas other ships which were leaving our ports loaded with scrap iron which we were selling to foreign countries. What an amazing state of affairs.

Are the people who are engaged in that industry the best people to advise the Government as to the economic price at which steel should be sold? There was a time in 1937 when one could not get iron or steel for love or money. The man who wanted 50 tons was ordering 100 tons, and sometimes 500 tons, in order to make sure of getting some proportion of his requirements met. Before I went to America in August, 1937, I had to order sufficient pig iron to last my factory until I got back, and I had to pay a premium of 25s. a ton for that pig iron— indeed, it was mostly scrap iron, because it was difficult to get pig iron. In the December of that year the Government allowed blast furnaces to go out until there were some 30 that were not producing a single iron bar. The Government let us get into the position where, if war had been declared, there would have been ships bringing iron ore to the country when they might have been bringing food. What a terrible business. I approached Government Departments and spoke with them. I approached the then Minister for the Co-ordination of Defence. He was awfully charming, but we did not get anywhere with him. During the crises, unemployment in my constituency increased by more than 20 percent.

Iron and steel are the beginning of any industry. You can talk about any industry you like; I know the importance of them all, and if you do not have iron and steel you do not get anything else. If you did not get iron and steel you would not get any more coal. During the last War the Germans were attacking the blast furnaces of this country, knowing full well the effect that would be produced if they could put them out. They missed. I do not think that a single blast furnace was hit. No sane man now thinks that they will be missed next time.

Knowing that, and while they were taking precautions in this country, the Government deliberately allowed one blast furnace after another to go out of production. To-day they cannot get them in again fast enough. We are buying scrap iron and pig iron from foreign countries. There is no sense in that. What the Minister can do is to say to the manufacturers: "Never again allow blast furnaces in this country to go out without my consent." He has the power to do that.

The only problem would be that the manufacturers could not afford to carry on because of their production costs. We could say to the manufacturers: "If you have any unsold stock the Government will be responsible for it." You have only to give a guarantee to the bank and the bank would then advance to the manufacturers all the money they wanted. That used to be done privately. Before the War there were stocks of pig iron. We used to call it the "pawnshop for pig iron." The manufacturers did not stop production. Instead of putting their blast furnaces out and their men out of work they put into storage the surplus product which they could not afford to carry themselves. They paid something for storage and something for discount and they were able to get warrants. They sold the warrants in the open market. It was a kind of currency, but unfortunately it turned into a kind of gambling in the warrants, which was a bad thing. In a time of grave emergency, the Government should say: "Do not put out any more blast furnaces. Store the pig iron if you like. We will provide the storage for you but never stop the blast furnaces." That is the least we can ask of the new Minister of Supply. If he wants to discuss the matter with me I shall be very glad to give him all the information at my command. I have already discussed it with several Ministers. It does not seem to be a very serious problem. I presented an Estimate to the Minister for the Co-ordination of Defence showing that at the very worst my suggestion could not cost the country more than £5,000,000, and at its very best it would probably make a very considerable profit.

There is only one other point and that is about raw materials. I cannot for the life of me see that any Minister in this country is doing his duty to the Government if he allows raw materials to be taken away. We have established beyond all question that Germany and Italy would not be a menace to anybody but for the materials which they get from the British Empire. The British Empire can stop those materials from going there. Germany could not fight a war for longer than six months duration at the very outside if we were to stop that trade. The Government may say, "We cannot afford to stop the trade because we must have this export in order to get currency." If the Dominions agree, let us raise a loan. Let us buy the raw materials from them and store them in the Dominions. We can sell them in the open market when the crisis has passed. We can sell them to the other people when there is to be some disarmament. It is a terrible indictment of the Government that Germany, Japan and Italy would not be a menace to anybody in the world if we refused to supply them with essential raw materials. From what I know of America they would follow our lead. If America and this country controlled the raw materials—about 75 per cent. of them are under our control—we could then declare peace on earth and good will to man instead of living under this constant threat of someone declaring war on us. I hope that the Minister will use the powers he has and that the result of this Debate will be that he gets them very much stronger.

9.22 p.m.

Mr. Simmonds

As I listened to the speeches of hon. Gentlemen this afternoon it seemed to me that the House has scarcely been gracious to the Government for bringing forward this Measure. All sides of the House have been pressing the Government to bring in a Bill of this; nature and yet there has been scant appreciation of the fact that the Government have now taken that course. It is unquestionable, if we look even at the circumscription of some of the wider powers which hon. Members would like to see, that this is a very bold Measure indeed. The Government are entitled to some meed of congratulation for their action in this respect.

Mr. Alexander

Better late than never.

Mr. Simmonds

That is a very good principle but, better never late. As I say, the basic principle that concerns us in this Bill is the power that it affords to the Government to force trade and industry to obey their wishes, even though in doing so trade and industry might be operating in opposition to the wishes and the financial interest of the shareholders of the companies. Before we follow along this line which is, to say the very least, revolutionary for this country, it is fair that we should remember that very large numbers of the shareholders of these companies are drawn from every grade and class of the population. We need not think that the companies which will, or might be, affected by the proposals of the Bill are only armament companies, but they are all manner of companies. Large numbers of people are relying upon the dividends they receive from the companies to meet the very necessities of life. Let us not forget that fact when we are dealing with this proposition.

I understand that Clause 2, Sub-section (I, c) gives the Minister permanent powers to manufacture any articles required for the public service. Clause 18 defines articles required for the public service as not merely: (a) articles required by any Government Department for the purpose of the discharge of its functions, but also: (b) articles which, in the opinion of the Minister, would be essential for the needs of the community in the event of war, and, further again, anything which in the opinion of the Minister is likely to be necessary for or in connection with the production of any such article.

It is quite clear that here we are arming the Executive with the widest powers and that any Minister by a Departmental ruling could develop State manufacture over a very wide area, wholly outside what can be regarded as armaments. That this should become a permanent part of the national organisation is, I think, seriously open to question, and it would seem therefore that it is a questionable part of this Bill that the Government intend to take these powers permanently. They have taken certain powers for a temporary period of three years, and I do not feel that the Government would wish to bring in a Measure of this revolutionary nature on the wave of national desire to prevent unfair profits, and to allow it to remain on the Statute Book so that it could be used in other times for purposes wholly different from that which Parliament and the country at present have in mind.

I trust that my right hon. Friend the Minister elect will consider whether in fact the Government have not gone too far in regard to making these powers permanent, and I would particularly like him to bear in mind some of the effects of some of the powers that he proposes to take. He has said that the powers of compulsion which, if the Measure passes as it is, he will be able to utilise against any company that declines to accept the orders that some Department wishes to place with it, will never be used at all. He hopes that peaceful persuasion will be adequate, and indeed we all do. But these powers are there, and is it not the responsibility and duty of this House to see that the powers are framed in a manner which —now in cold blood without the heat of an issue being raised—will be equitable to all parties? A company may decline for a reason which it thinks very good to accept an order. Possibly it would involve a substantial expenditure of money which it would not see forthcoming within a number of years, whilst on the other hand possibly the Minister might say, "No, that ought to be amortised over a large number of years." The company may say, "This seems to be heading for disaster." The manufactures might possibly say to the Minister, "You cannot ask us to accept the order." Notwithstanding that the Minister says, "You are to accept this order. "If the Board declines to accept it what is the provision of the Act? It is that they will take the order and at some time or other an arbitrator appointed by the Minister, not by both the parties but by the Minister, will decide upon what financial basis and what conditions in other respects that contract should be accepted?

I feel that there is a grave danger to the financial stability of many companies that are essential for the national welfare. I believe that when you are proposing to force a company to undertake certain obligations, particularly of a manufacturing nature, you need to proceed with the utmost care, and I believe we have sufficient evidence before us now to show that this danger is real and not fictitious. Hon. Members will have read only in the last few days of two well known firms, one in the building industry and one in the motor industry, both of which are in dire financial difficulties because of the fact that they have accepted Government contracts and have not been able to get payment for them sufficiently quickly, or in some way or another their normal financial machine has been upset. What is the answer I have heard from time to time? That the banks will help. But in one of these cases I see that the bank itself has put in a receiver, and it is quite clear that we have to be very certain when we are placing these powers in the hands of an impersonal Minister whom we may not know. Although I believe my right hon. Friend will use them with the justice to which he referred in his speech, yet we have got to look on them in their worst aspect, and when we take those examples, which my hon. Friend opposite knows as well as I do, of companies to-day in financial difficulties because they are attempting to fulfil their contracts with the Service Departments, it shows that we have to go a little further into the matter.

It is not a matter of very great difficulty, because I noticed only a little while ago that in France they have a new law which fixes a large number of details in connection with these contracts. Let me mention one without taking too much of the time of the House. If an industrialist has to put up new buildings in order to fulfil his contracts it is definitely laid down by French law that he may charge the cost of those buildings as an annual charge on the year that he makes the expenditure, and that charge is acceptable to the Government before any question of profit is calculated. You may say that we cannot go so far as that, but I think we should, if we force companies to undertake capital expenditure which may not be subsequently remunerative. We should not leave it to an arbitrator who may have all sorts of interesting personal views as to what is to happen in these cases where millions of pounds may be involved. I feel that the House cannot properly show its responsibility by refusing to say in what way this expenditure ought to be dealt with if the compulsory powers of the Minister have in fact to be utilised.

I should be grateful if my right hon. Friend would give some thought to this particular point, and say whether it would not be acceptable to the Government to incorporate at one of the later stages of the Bill some provision which would take out of the hands of the arbitrator important decisions, and put them where they properly lie, namely, with Parliament. A question which is constantly coming up is the question of deferred payment. Many of the contracts placed by the Defence Departments are based on payment of, say, 70 per cent. on a delivery of goods. The other 30 per cent. is argued for year after year until at length a settlement is reached. I was given by a contractor only yesterday a very interesting sidelight on the attitude of mind behind these deferred payments. It has become so much a part of some of these orders that when legally a contract, which was completed in 1937, was agreed by the Minister concerned to have been quoted at a fair and reasonable price, and the other 30 per cent. was offered in payment, there was, as I thought and so my friends thought, the impudent suggestion that there should be 2½per cent. cash discount on the 30 per cent. which was being paid out because it was being paid within seven days of the decision. I think everybody in commerce and industry will say straightaway that that was an infamous suggestion. But let it go by.

The point is that that is the attitude of mind which is behind these contracts, and it is going to raise the gravest difficulties financially for many of these companies. I notice that some companies in the aircraft industry on account of this percentage have had to borrow more than £1,000,000 from the banks while these questions were being settled. I feel that all these points should be more closely defined, if we are to give these compulsory powers to the Government.

Mr. Garro Jones

What is the degree of hardship in having to borrow from the banks at 4 ½or 5 per cent., when they are making 20 or 30 percent. on the turnover of the money, by their profits from the Government?

Mr. Simmonds

It will be obvious to the hon. Member that if you are paying 4 or 5 percent. for several years on this 30 percent. you are incurring an obligation which, as far as I know, Government Departments have never accepted as a charge in connection with contracts. That is, they have to pay something unfairly, as a cost in connection with the contract.

Mr. Garro Jones

Surely if they did not borrow the money from the banks, they would have to pay interest on it to the shareholders by way of increase in capital? There is no hardship whatever if they are able to finance their operations by bank borrowings.

Mr. Simmonds

The hon. Member does not understand the position at all. A certain price is quoted for an article, and one normally expects that the money will be paid within six months or so of the delivery of the article. In these cases 30 percent is being withheld for several years and interest is being paid upon that.

Mr. Garro Jones

But surely in the price which they are charging —

Mr. Simmonds

I am anxious not to take up any more time and I trust that the hon. Member will not insist on proceeding futher with that argument. I would like to add to the appeal which has been made, that the question of the cost of Civil Defence should be reconsidered by the Government. They cannot have fully considered this matter, or they would realise immediately the inequity of forcing upon a company which they desire to make special preparations against air attack, an additional responsibility which will not fall upon competitors of that company who are not called upon to make such preparation. I feel sure that if the matter is considered, the Government will see the equity of the appeal which has been made to-day. I should also be grateful if my right hon. Friend, or whoever replies on his behalf, could indicate that the Government were prepared to be more definitive as to the nature of the compulsory powers, particularly as regards the capital expenditure which manufacturers may be required to undertake.

9.39 p.m.

Lieut.-Commander Fletcher

The hon. Member for Oxford University (Sir A. Salter) complained that the Government in bringing forward this Bill had used arguments in support of it which involved the destruction of all the arguments previously brought forward by them against the establishment of such a Ministry. Where this Government is concerned, that is what the Minister himself this afternoon described as common form. The main point in my mind is that, at any rate, the Government have now set up a Ministry of Supply. There is a poem about a lady who vowing she would ne'er consent, consented. I should think that the man involved in that affair was mainly preoccupied with the fact that she had consented find was not worrying very much about the weak mindedness which her action indicated. I am content that we have this Ministry of Supply in spite of the fact that the Prime Minister over and over again declined to set up such a Ministry. If I may, I should like on the personal side to congratulate the Minister on becoming manager of the Army and Navy "Stores," although it is true that at the moment he is not allowed to go into the Navy Department. If he ever does try to make his way in there I shall be interested to watch his struggles with the Admirals. The Minister is launching out on a new commission, fraught with great possibilities for our country, and I wish him a very prosperous voyage.

The Minister referred to the fact that he is fulfilling a forecast made by the right hon. Gentleman the Member for Epping (Mr. Churchill). This is the fulfilment of but one of many warnings which have been uttered by that right hon. Member. In fact his speeches remind me of the old story of the Sibylline Books. The right hon. Gentleman keeps on coming to this House and issuing warnings to the Government. The Government invariably reject his warnings, but over and over again we find them having to adopt his proposals at a far higher price than they need have paid had they heeded him in the first instance. This Ministry of Supply is a case in point.

Of course the Ministry had to come. It was obviously impossible from the first for the Minister for the Co-ordination of Defence to co-ordinate the supply side of a £1,500,000,000 rearmament programme, and at the same time relate those supplies to our strategic plans and to do all that with only vague authority and a very exiguous staff. It was always a completely impossible task. I think the last Minister for the Co-ordination of Defence will be remembered chiefly for his complacency. I hope that is something which the Minister of Supply will avoid. As an instance of complacency, I remember the late Minister for the Co-ordination of Defence saying in January, 1938, that "he saw nothing to regret or to deplore in what had been done or left undone in the last few years." That is what doctors would describe as an almost morbid degree of self-complacency, and as the Minister of Supply in the months to come finds himself putting right what was left undone during those "few years" I am not at all sure he will be as complacent about it as was the late Minister for the Co-ordination of Defence.

In considering this Bill for the establishment of a Ministry of Supply, there are three essentials to be remembered like the three axioms of Euclid. First, supply for defence purposes should be organised in such a manner that it will give permanent advantage to British industry in times of peace. Second, it must work so as to create confidence in the fighting forces that no shortage of the best possible material exists. Finally, and perhaps most important, the Ministry of Supply must so do its work that it always has at its disposal a satisfied and contented labour force. One might sum up those three axioms by reminding the House that in the last War it took nine men in industry to maintain two men in the fighting line. It follows from that, that the strength at which the nation can maintain its fighting forces must depend on the industrial, financial and commercial strength of the country and the main task of the Ministry surely must be to maintain the essential harmony between those two factors.

The magnitude of the task is, of course, colossal. I notice that at the War Office there are 40 separate bodies and 12,000 personnel engaged in the business of supply. At the Admiralty there are 20 separate bodies and 7,000 personnel, and at the Air Ministry 30 separate bodies and 8,000 personnel. Those figures give some idea of the magnitude of the task before the Minister, and in view of that I cannot help wondering if it will not be found that some form of local decentralisation becomes necessary. It is going to be a vast task to handle from Whitehall alone.

If I may give the House one or two brief instances of the cumbrousness of the existing system of supplies, I would mention that each Service Department at present has its own Director of Research, with committees and experimental departments under him, each has its own design department, with more committees and officials, each has its own machinery for industrial planning, each has its own department for placing contracts, and each has its own staff for production and inspection. Each Service tends to be jealous of its independence, as do even the departments of each Service. It will be a very difficult thing indeed for the Minister to break that watertight system down, and I shall watch, as I am sure we all shall, his efforts in that direction with great interest. As a result of all this cumbrousness and overlapping, the plain fact is that the country has been getting poor value for the money which it has been spending upon its rearmament programme.

The report of the Select Committee on Estimates for 1938 has been referred to. The War Office evidence before that Committee stated that all Service Departments had to accept standard prices of steel and that British steel prices were abnormally high. The evidence showed that War Office contractors refused access to books and admitted collusion between contractors and sub-contractors, but said that it was impossible to prevent it. Take the evidence given by a Treasury representative: No two people agree as to what reasonable profits are. I should have thought that by now, after all these years, and after the experience of the War, Treasury officials might have acquired sufficient experience to know what a reasonable profit is, or at any rate to express some opinion about it. Then the evidence given by the representatives of the Air Ministry before the same Select Committee stated that there was little or no check on material prices and that it is impossible to get the most rapid deliveries at the lowest prices, since, if the profit motive is impaired, there remains little incentive to the companies to give rapid delivery. Then there was the evidence of the Admiralty representatives, who agreed that there is a ring in the British machine tool trade, and the comment which was given to me upon that Admiralty evidence was that the whole of the Admiralty documents and evidence is well drawn up in order to mystify any but the most expert inquirer, and they evidently do not take kindly to any investigation at all. It can hardly be denied, in the face of such evidence, that the country has been getting poor value in many instances for the money which it has expended upon the rearmament programme. The efficiency of the machinery of supply has been deservedly criticised because there has been no planning. Think of the delays that occurred in the case especially of aircraft, of the delays about the Brengun, the delays about the anti-aircraft guns, and so on. All these things are evidence of the poor value which the country has been getting. Then the Government have given pledges about profiteering. We have had them over and over again in this House, but, nevertheless, profits have been made on an unjustifiable scale. Few firms have not doubled their profits, and many have trebled and even quadrupled them. Between 1934 and 1939, by way of loan and taxation, there has been an expenditure of £1,618,000,000 on armaments. If we take only 10 per cent., which the Government have said they consider to be a reasonable profit, the profit would amount to £162,000,000upon those five years' expenditure on armaments alone. The question has already been referred to in this Debate, but I do so again because during the War nothing caused more unrest among labour than the suspicion that a favoured few were making excessive profits. I know the Minister agrees that a contented labour force is essential to the work of his Ministry, and so I am sure he will see and appreciate the necessity for really giving effect to the many pledges and promises of the Government in regard to profiteering.

An efficient Supply machinery established years ago would have prevented this profiteering which has cost the country millions. The lack of planning also has cost the country millions. There were no fewer than five expansions of the Air Force in four years. No wonder money flowed like water when one thinks of the lack of planning that that fact alone represents. I have spoken about the overlapping of the Service Departments and of how each Service Department maintains its own special depart- ment for particular needs. I want now to refer to invention, research, design, specification, inspection and testing. Again, all that is split up between the three Services instead of being handled as a whole, as it obviously should be. Also it is very largely handled by Service personnel, with, in some cases, very little or perhaps inadequate technical "knowledge. I think it will be very satisfactory indeed if the Minister is, as I understood him to say this afternoon, to supervise and co-ordinate invention, research and design. I hope that will all be done with a view to leading up to specification, so that the Ministry finally hands over the completed article to the Department concerned. After ail, the job of the Defence Services is to make known their requirements, and to hand those requirements over to the Minister and the industrialists to fulfil. Co-ordination and centralisation in regard to specifications will lead to great savings of time and money.

I would like to say a word or two on the subject of sub-contracting, and I hope the Minister will be able to prevent overlapping of orders, especially to sub-contractors. Incidentally, I believe there are many firms at the present time capable of doing far more important work than the sub-contracting work upon which they are employed and which is all that they can get. I think this sub-contracting should be centrally controlled. I am not suggesting that the Minister should allot sub-contracts—I realise that that would be out of the question—but I think there is good reason to argue that a head firm when placing a sub-contract should notify the Minister of the fact, because that would enable the Minister to know that all firms capable of doing sub-contracting work were not only fully employed but also suitably employed doing the highest grade of work which their plant and their staff enabled them to do.

The last matter that I would mention has already been referred to by my hon. Friend the Member for Stoke (Mr. E. Smith), but I would like also to refer to the question of machine tools and to emphasise one or two points that he made. I feel that in all that has been said about machine tools the war wastage of machine tools has not yet been envisaged and I confess that I was startled to discover what a long list there is of machines which are essential for war-time production but are not manufactured in this country.

Again I have been astonished to find how few firms there are which manufacture certain of these tools. I am told that for capstan lathes we are almost entirely dependent on two firms while for essential presses we are exceptionally dependent upon Germany. There seems to be no really effective competition inside the British machine tool trade. The trade refuses to justify its prices or to allow inspection of its books. The War Office representative, whom I have quoted already, in his evidence before the Select Committee said that in one instance they did see the books of a machine tool firm and "the profit was a shock to us." Has the Government any advisers of its own in this matter of machine tools or does it rely upon outside advisers and if so who are they? Are any of our machine tool manufacturers also agents for foreign machine tools and if so is it possible that they find they can make the same profit out of commission that they can make out of manufacture and make it rather more easily? I am sure that the whole question of machine tools and of a national machine tools factory deserves close re-examination. In particular an essential matter is to institute at once a survey of machine tools in the country with a view to finding out exactly what we have got, which of them require reconditioning and which are really too old to be giving the efficiency that is necessary. I should also like to ask who it is that advises the Government on the subject of optical instruments. I have had some correspondence with the Secretary of State for Air and the late Minister for Co-ordination of Defence on this subject. It seems to me that the position is very unsatisfactory. I have been given to understand, and it has not been contradicted, that certain factories are dependent upon Germany and the United States for certain essential optical instruments and that is a matter which calls for early investigation.

Much as I welcome the institution of a Ministry of Supply I certainly cannot say that the Bill is satisfactory in every respect. With great regret I am compelled to look this gift horse in the mouth and the Amendment seems to me to be in many ways justified. But at any rate with all its defects and deficiencies the Ministry of Supply as set up in the Bill is a start. I remember after all that the Ministry for the Co-ordination of Defence was similarly regarded as unsatisfactory in its scope but at any rate its very defects have led on to a Ministry of Supply. Similarly I hope this Ministry of Supply with all its defects will lead on to something better. I want to take a practical view of the Bill. I wish, as I am sure the whole House wishes, to do everything possible by way of Amendment on the Committee stage to improve and make the very best possible out of this long awaited and, with all its defects, welcome Bill.

9.59 p.m.

Mr. Alexander

I agree with my hon. and gallant Friend that we are very glad that there is to be a Ministry of Supply. It is a pity that we have to say about the effort of the Government that it comes within the category of "better late than never." The Minister himself tried to persuade the House that the Government has been right all the time and that there was no need really for a Ministry of Supply until about two months ago when the great expansion, first of the Territorial Forces and then the second effort of the Government to expand man-power made it necessary. I hope the Minister will not try to get support for his efforts from any such argument as that, because it will make us feel with the hon. Member for Oxford University (Sir A. Salter) that he is going to be far too complacent about the magnitude of the problem that he has to face. He has only been there a few weeks and we all wish him well, because there is no party in the House which does not want to see the ordinary operations for the country's defence made as efficient as they can possibly be made, and it depends to a great extent on the Minister's attitude towards that problem how far he is going to get the complete good will of all parties behind his effort. The opposition from this side, as well as the Tory opposition of the right hon. Gentleman the Member for Epping (Mr. Churchill), in the last three or four years has urged in and out of season the necessity of having a really co-ordinated system of defence supervision, both from the point of view of Defence and of a Ministry of Supply.

The real case for a Ministry of Supply is perhaps to be found best set out in the speech of the Secretary of State for War on the Motion of Censure on 3rd November last. Perhaps the Minister will not mind if I ask him to reconsider the magni- tude of his problem and the lack of preparedness by refreshing his memory with some of the things which the Secretary of State for War then had to acknowledge were the result of not being properly prepared up to that date. He said: I have seen representative employers of industry and I have asked them whether there is any means of accelerating our production. I did this not after the crisis but well before the crisis. I asked them to criticise anything which it might occur to them to criticise in our organisation and to be quite relentless in doing so, sparing neither persons nor the organisation itself. They expressed the highest opinion of the organisation existing at the War Office and said that virtually nothing could be done to improve it. I hope that is not going to be the attitude of the Minister of Supply now, because here we are in June setting up the Ministry because production cannot be arranged through this Department of the War Office which the Secretary of State was being assured could not possibly be improved upon. The Minister has argued to-day that the voluntary system has not broken down. If it had not broken down there would not be the need for this Bill with the drastic powers contained in it. Of course it did break down. To come again to the evidence of the Secretary of State for War himself last year, he said: Nothing, of course, could atone, or will atone until our programme is complete, for the shortage of war equipment. All the defects in our deployment relate in one way or another to the shortage of equipment and the incomplete state of our organisation."— [OFFICIAL REPORT, 3rd November, 1938; col. 527, Vol. 340.] It was all a complete condemnation of the failure of the voluntary system, at the end of nearly four years' intensive armament effort, to be able to meet the situation efficiently. I hope, therefore, that the Minister of Supply will look at his job from the point of view that at last the Government has yielded to the views of Members in all parts of the House, and will tackle this with the object of getting supply and delivery really efficient to meet the needs of the situation as we see it abroad, and as it will develop with the expansion of the personnel of the forces.

I may, perhaps, be permitted to make a short reference to the fact that in this matter, as in so many others, the Government have changed their minds. It would be a great comfort and inspiration to the country if at last we could have a Government able to make up their minds, because we are paying a very heavy price for the fact that they have wobbled on foreign policy, and we still wonder whether we shall have to pay a heavy price for what we have so much urged them to do in the matter of an alliance with the Union of Soviet Socialist Republics. They would not do that last September. After years of opposition they have now adopted a Ministry of Supply. I wish we could say that the manner in which the Bill has been presented to the House has been satisfactory. The Minister of Supply said that the Amendment is a reply not to the Bill but to the White Paper. I hope he does not think so after listening to the Debate. The Amendment is completely apposite to what is, in our view, defective in the Bill for achieving the purpose of the Bill. It says that the Ministry of Supply is long overdue. I hope the Minister will not deny that. It says that the Bill fails to establish an immediate and unified control of all supplies necessary. I hope the Minister, or the Chancellor of the Duchy, will not deny that. From all parts of the House the argument has been put again and again that while the wide and drastic powers in Part I of the Bill could be used if you got an Order in Council, you have put so much limitation on the Minister before he can get his Order in Council that the unified control is likely to be conspicuous by its absence.

I will remind the right hon. Gentleman of the speech of the hon. Member for Swansea (Mr. L. Jones), who said he was speaking with some knowledge of priorities and their management in the last War, and he looked with considerable concern at the failure to put in this Bill new provisions for a proper unification of control. Having been at the Admiralty myself I have a natural sympathy with many of the arguments that have been used by the Admiralty in the past concerning their right to do certain things for themselves. I know something about it, but I think we can say that as regards shipbuilding it could not be very much improved under general arrangements that can be made through a separate naval department. I would also say that, with the successful prosecution of the claim of the Admiralty to have its own Fleet Air Arm, and so compete for supplies of aeroplanes, if you take the admitted bottle-necks that occur in the orders of the Admiralty for material such as instruments and gun mountings, both these two requirements come into constant conflict with certain necessary supplies for the Army; and if you take the case of the Air Ministry, the pressure for such things as instruments also comes into conflict with the Admiralty and the Army.

Unless the Minister is to have really effective control in the management of priorities I do not believe you are going to get the maximum of efficiency in the equipment of three main Services. I hope the Minister and the Cabinet will take the criticism in our Amendment in the spirit in which it is intended, and will reconsider this matter of unification of control before the Committee and Report stages of the Bill, and wipe out these limitations which at present make it incumbent on the Minister to go through all the paraphernalia of a number of consultations and then of a committee of Ministers before he can get an Order in Council to bring about this unification. I do not want to argue that purely for the purposes of party ends, I want it to be done for speeding-up and making more efficient the Defence Services. The hon. Member for Cambridge University (Mr. Pickthorn) said that our experience was that war always brought us nearer to Socialism. I do not think my hon. Friends would quarrel with that. What we so much deplore is that it should need the calamity of war to prove that the nation can be more efficient when it is organised in the public interest, and it is a great pity that when so many people suffer to-day from the maldistribution of the resources of the country you cannot apply the same principles in peace time.

When I listened to the speech of the hon. Member for Stockport (Sir A. Gridley) I was more than ever convinced. I recognise that the Minister has said that there is to be another Bill to deal with profiteering. The hon. Member rather took me up on statements I have made in the past as to the profits of certain armament and aeroplane companies, and said that I might have been frank enough to say that these profits were in relation to capital which had to be severely written down because of losses in the post-war period. I do not know one of the companies I have quoted in previous Debates which has written down its capital in the post-war period which had not also issued extremely large new issues of capital because of the great profits they had made during the War. In the case of one of the companies which no doubt he had in mind, with which I have had some correspondence, and which is very well run, there is no doubt that increased capital was issued in 1919 based on the experience it had had in the last two or three years of the War.

So far from the profits of aeroplane companies being merely stock exchange profits gained by speculators, I think that in nearly every case the capital of aeroplane companies, which had to be written down during the War, has been restored to its original value, and, on the top of that, very heavy profits are now being made. One such company is quoted in the "Sunday Express," a paper which is not usually taken by Members on this side of the House, but which no doubt is read very widely on the other side. It gives some of these examples. It states that in the past three years the Hawker Siddeley Aircraft Company has paid dividends to its shareholders amounting to 13 per cent. with a cash bonus of 10 per cent. in 1936, 32½ per cent. and a cash bonus of 10 per cent, in 1937, and 32½J per cent. and a cash bonus of 10 per cent. last year; while as regards the very well run Handley Page Company, whose capital has been restored practically to its original value before it was written down, the "Sunday Express" states that last year it made a profit of £211,000 on a capital of £572,000—a pretty heavy return in one year on capital which was no longer depreciated, but which had been written up practically to its former value.

It is not good enough, in view of the great sacrifices which the Government are necessarily calling upon all classes of taxpayers to make, that profits of this kind should go on without real efforts being made to stop them. We have had some discussion to-day as to how far the Minister of Supply will have power to deal with this question, and no doubt there will be separate fiscal measures for dealing with profits as profits. Clearly it will be the duty of the Minister of Supply to prevent unnecessary profits from arising, and that is the direction in which we ask him for immediate attention and for a proper lead. I have never failed to recognise that there are very great difficulties in the case of Government control of that particular matter. You have an involved engineering production and assembly process, and, if you want to make quite sure that there is not going to be a loss on the turnover of a particular block of capital in these circumstances, you have to have pretty careful margins on the various processes.

I feel sure that the Minister of Supply, when he looks into this matter, will be entitled to approve of separate costings which, however fine the margin might be, would at least show that there was not going to be a loss on the complete production of the article, but I do not think that that is going far enough. I think that, when the contract is complete, the particular Department dealing with it should, as I suggested here many months ago, have an audit of the accounts, and that there ought not to be taken out of a Government contract at a time of national need and, indeed, almost of national financial extremity, because the charges on the nation are very heavy, more than a certain fixed rate upon the capital employed on that Government contract work. I hope that the Minister will be able to see, from the arguments we have put up on many occasions, that, taking those two processes together, having a decent sound basis of costing and an overriding audit as to what profits should be allowed, he would be able to prevent to a large extent the very high profits which have been made during the past three or four years, and which are so very disturbing to the citizens in general.

There is another point to which I would ask him to direct his mind before the later stages of the Bill. The hon. and learned Member for East Bristol (Sir S. Cripps) referred to the legal differences between Part I and Part II of the Bill. I am not quite sure whether that criticism was right in every respect, although it certainly sounded pretty good to me. It seemed to me to depend very much on whether or not the Minister is really going to get the ultimate powers he could get by Order in Council. If he does not, I think that the hon. and learned Member's criticism of Part II, and especially Clause 7, stands. In going over those arguments, the hon. and learned Member referred at one point to railway companies and storage. That reminded me of something that my hon. Friends certainly intend to raise on the Committee stage. If you look at the italicised parts of Clause 4, you will see that there are references to the way in which the Government may, through the Minister, finance, either by way of grant or loan, certain processes. I am quite sure that my hon. Friends would very strongly object to the Government proceeding to provide extra storage accommodation in the country by way of grants, or, in certain circumstances, even by way of loan, to private interests. They have already done far too much of that during this armaments campaign. I do not know whether the Minister, by reason of his connection with the Ministry of Transport before going to the new Department will have present in his mind all that has been going on in the past few months in regard to storage. When I heard what was said about storage by the hon. and learned Member for East Bristol I, at any rate, recollected my own small connections with the matter and the fact that the railway companies have been searching for additional warehouse accommodation which might be used in an emergency as well as the accommodation which they themselves and other transport concerns control.

But one of the great problems that we may have to face is not merely that of storage for engineering and raw materials, but also of storage for foodstuffs. You want a diversion of the plants of storage and of electrical provision for cold storage. The Minister of Supply, while he may not be concerned in the actual purchase of foodstuffs—that will be the concern of the Food (Defence Plans) section—may be called in to provide additional storage and electrical facilities for cold storage, and I think the House ought to say that if we provide that out of public funds it ought not to be by Government grants to a private concern but by way of loan to a municipality. I would like to see a wide increase of cold storage made available in places like Plymouth, Falmouth, Penzance, the Welsh ports and the North-West coast generally. But for these things to be done by means of grants to private interests would be quite wrong, and I hope hon. Members will back us up when we come to move Amendments to that part of the Bill.

I was unable to listen to the speech of my hon. Friend the Member for Stoke-on-Trent (Mr. E. Smith) to-night, but I was very glad to learn later of the case which he had made to the House with regard to machine tools. I was glad that he had done so because I know a great deal about it in my own constituency. I have already had to take up the question with one of the Departments—I am still waiting for an answer—with regard to the percentage of machine tools, which, during the last two or three years, have been imported from abroad. I know that we have at the same time been exporting a considerable quantity of machine tools, but, unfortunately, the balance of trade in regard to this commodity has been severely against us. When I consider the extent of the proportion of the commodity which has come from a country which would be an enemy country probably if belligerency broke out, that is a very serious position. My inquiries are not confined to the actual finished product—the manufactured machine tool—but apply also to the special types of steel used in the preparation of these machine tools. I find also on inquiry that we have been importing very considerable quantities from Germany, as well as from the United States of America, of these special types of steel, hard and semi-hard, used in the manufacture of these machine tools. It is a very difficult position for us to face unless we are prepared to organise the supply of these articles upon a really sound basis.

We welcome the fact that, very late though it may be, the Government have at last adopted the principle of a Ministry of Supply. We regret very much indeed that they have not seen fit to go the whole distance and seen that the Minister, who is to start a very big job, is equipped with the powers for giving unified control of the products required for all three of the fighting service departments. We trust that the great mistakes which have been made in the past with regard to the profits made out of these requirements for our Defence will not be repeated under his direction. We shall await with interest the separate fiscal Measure which is to deal with armament profits, but we are not encouraged by the opening of the Debate on that point to-day, and certainly we were not encouraged by the statements made by the Prime Minister on two successive days, on 26th and 27th April. It seemed to us then that there was not going to be any real and effective effort made to check profits or to prevent individual fortunes from being made, unless and until, to quote the words of the Prime Minister, "war actually breaks out." Here we are in the midst of a spending period, when, in the course of only five or six years, we shall spend about £2,000,000,000 on the armament programme. If you make a mistake of allowing, say, 5 or 6 per cent. only of extra profit on that, you will perhaps be doing just the one thing that will prevent us from making a decent consolidation and improvement of the social status of the workers of this country.

10.30 p.m.

The Chancellor of the Duchy of Lancaster (Mr. W. S. Morrison)

The right hon. Gentleman the Member for Hills-borough (Mr. Alexander) expressed the hope that my right hon. Friend and myself and the Government will accept the criticism which has fallen from hon. Members to-day in the spirit in which it is meant. I can assure him at once that we do so. Indeed so constructive has been the criticism in the main, and so genuine has been the spirit of trying to improve the Bill, that it is a complete mystery to us why hon. Members opposite should announce their intention of dividing against the Bill. The right hon. Gentleman said that there were two points on which they felt compelled to table their Amendment. One was that the Bill was long overdue. This is the first time I have heard something described in the same breath as being long overdue and calling for rejection when it comes. Hon. Members have claimed that the Bill is long overdue for reasons which they say are vital, and yet when at last the Bill comes they proceed to reject it on the ground that it is long overdue. I should have thought that appetite would have grown with abstinence and that so far from rejecting it on that ground they would have welcomed it with the greatest eagerness.

The second point on which the right hon. Gentleman said the Bill must be rejected is one which, if it is true, has greater substance—namely, that it does not provide for that unified control of the requirements of the Services, which is a cardinal point in the arguments of hon. Members opposite. The answer is that the Bill whose fate we are about to decide does in fact in terms provide for the widest possible measure of control of supply, covering every branch of the Services. But, says the right hon. Gentleman, the procedure by Order in Council is dilatory and will prevent this laudable ambition being realised with expedition. I am sorry that the hon. Gentleman the junior Member for Dundee (Mr. Foot) is not in his place. He very often tells us how wickedly expeditious is this method of Order in Council. He is continually asking us to delete the procedure from this and that Measure, on the ground that it is too speedy and does not permit of lengthy criticism which a Bill itself involves, and that it weakens Parliamentary control in that way. Can the right hon. Gentleman really doubt that, should circumstances be such that it became necessary in the national interest to unify all these things under the Ministry of Supply, the Government of the day could not easily secure the necessary amendments by the Order in Council procedure?

As to the merits of the proposal in the White Paper I will say a word or two later, but let me say in opening that the Debate so far has been concerned not so much in attacking the Bill and the powers which it confers upon the Minister as upon the intentions of the Government as notified in the White Paper. There are strong and to my mind valid reasons for the attitude expressed in the White Paper, but in any case I most earnestly say that if the defect is not in the Bill but in the way it is proposed to administer the Bill, that is no reason for voting against the Bill. It is a reason on every conceivable opportunity which presents itself in our Parliamentary system for criticising the administration of the Bill, if it is really a subject of criticism. I cannot see, in logic or fairness, why there should be a case for voting against a Measure which hon. Members opposite have declared to be long overdue and which contains powers which, if properly administered, as I say they will be, are the very things hon. Members have been desiring. I think that any criticism of the Government's intentions, as expressed in the White Paper—and I think there are valid grounds for the decision that has been come to—should be expressed by way of criticism of the administration and not of the legislation now before the House.

On the question whether or not the Bill is overdue, my hon. Friend the Member for Stockton (Mr. H. Macmillan), the hon. Member for Ipswich (Mr. Stokes), the hon. Member for Bishop Auckland (Mr. Dalton), and various other hon. and right hon. Members, have amused themselves by remarks of a facetious character about His Majesty's Government with regard to the various changes in respect of the Army, foreign policy and so on. What they have failed to appreciate is that all these things are part of one decision. If in the foreign situation recent events have occurred such as to require an Army on the scale that is now proposed, and which has been announced within the last two months, then it follows logically that a Bill of this sort is necessary. All these things are part of one piece, and if the decision that has been come to, and the changes that have been announced since March, are necessary, this is a logical consequence of that decision. Far from there having been a series of changes of policy, in so far as there has been a change, it has been one decision only, of which this is a part.

Mr. Alexander

If that really be the position, and as expansion is taking place just as heavily in the case of the Air Force and the Navy, why do not the Government take powers as a whole for the three Services now, instead of causing this opposition and difficulty with regard to unification?

Mr. Morrison

I was about to come to that. This Bill depends upon a recent decision to increase, not the Navy or the Air Force, but the Army. The Army is being increased by bringing the Territorial Army up to war strength and then doubling that, and by introducing and passing, as we did not more than a week ago, the Military Training Act. The decision to increase the Land Forces is the new factor that renders this Bill necessary. In recent months, there have been no such decisions with regard to the Navy and the Air Force. Those decisions were taken before this new factor, the increase in the Land Forces which is contemplated. During the War, the necessity for creating a Ministry of Munitions was not the problem of the Admiralty. Throughout the War, the Admiralty continued to look after their own supply. It was not the problem of the Air Force. It was the immense Land Army which this country unexpectedly put into the field that created the necessity for the Ministry of Munitions.

Sir A. Salter

Does the right hon. Gentleman suggest that the Ministry of Munitions did not deal with the requirements of the Air Force during the War? Surely, aeroplanes were made by the Ministry of Munitions.

Mr. Morrison

Surely, nobody denies that the great problem of supply in the War was that of shells and munitions of war for the Army. It was this which brought the Ministry of Munitions into being. I only mention the fact that this Ministry of Supply Bill is a logical consequence of this decision about the Land Forces in order to mitigate some of the criticism that has been made. There has been criticism of the progress of the War Office in dealing with its supply problem, but the War Office supply problem was limited by the size of the Land Forces for which it was called upon to make provision. As long as we were working on the hypothesis that it was a small force the supply problem was correspondingly scaled down, and the War Office did perform its task successfully, but now we have a vastly changed hypothesis, new demands are suddenly made upon them, and that has added to the burden of the War Office supply problem. I ask the House to take note of that as part of the picture which we have to consider.

Hon. Members have poked some harmless fun at us over this matter, mostly on the triumphant note of "I told you so. I always told you that a Ministry of Supply was necessary, and now you are setting it up." I repeat that the institution of a Ministry of Supply is necessary because of the recent decision to increase the size of the Army. Hon. Members opposite say they told us in 1934 that a Ministry of Supply was necessary, but at that date they did not tell us that we ought to double the Territorial Army or to bring in the Military Training Act. In fact, at that time some of them were voting against those things. On the old hypothesis the Ministry of Supply was not necessary; on the new one it is.

Let me deal next with the point to which the right hon. Gentleman and other hon. Members attach a great deal of importance, namely, the reason why this Bill, though wide and general in its legislative form in the first instance, is to be applied only to the problems of Army supply and common user. Surely that is, in the first instance, merely common sense. Take the position of the Admiralty. As the right hon. Gentleman knows, there are very great problems connected with Admiralty supply which render the Admiralty very largely concerned with the goods which are manufactured for the Services generally. But, quite apart from that, in the case of the Admiralty there is not anything like the expansion programme that we have in the case of the Army. In the case of the Air Force we have a programme with which very great strides have been made; the immense difficulties connected with the supply of aircraft have been very successfully overcome and production is very satisfactory. And there is no recent decision, dating from March, which has increased the problems of the Air Ministry. It is only in the War Office that that has happened.

From the benches opposite we have frequently heard charges that the Government have adopted too complacent an attitude. I am sure that any one who heard my right hon. Friend introduce this Bill would acquit him of any feeling that this is a job to be taken lightly. I think the care with which he expounded the problem is evidence of his grasp of its size and importance. It is a great task which confronts him, and I ask the House, as a matter of common sense and practical wisdom, whether it is necessary to complicate what must be a great task in any case, at least in the first instance, by adding on to it the supply problems of the Admiralty, when the Admiralty is dealing with them so efficiently, and the supply problems of the Air Ministry, which also are being so well handled. Surely the course advocated by the White Paper is the best, namely, to proceed in the first place with Army supplies.

I was asked a few questions by the hon. Member for Bishop Auckland with regard to common user. He asked why certain War Office supplies were not being taken over by the new Ministry. He instanced food, forage, fuel and light. The reason is that those are local problems and that they occur in localities where the regiment is stationed. There is no shortage of supplies in those articles, and there are no special difficulties connected with them. It is thought that they can be dealt with as matters of administration in a much better way than by centralising them in the Ministry. We can permit them to be acquired from local authorities or local suppliers as the case may be. The hon. Gentleman asked also about petrol and why it was not included. The reason is that petrol is already bought for all services under an arrangement which has been drawn up by the Treasury with the oil suppliers. It is an arrangement which is working very well and which makes provision for the differences between the petrol required by different services for different purposes, and there seems no reason to alter it.

With regard to articles of common user the right hon. Gentleman wanted to know whether or not we were including in that category machine tools. It is clear that in view of the great expansion of Army demands there is an increase in the need for machine tools which is so great that it must be dealt with as a single problem. It will fall to the Ministry of Supply to deal with that problem. In regard to machine guns the machine guns in general user, such as the Bren and the Vickers, will be a matter for the new Minister. There are certain specialist types into which I need not go in detail, which will not be so transferred.

There are other questions which I was asked dealing with textiles. In the case of textiles I can inform the House that the War Office has been able to buy to meet its requirements on very favourable terms and that there is no shortage of supply. We have not by any means exhausted the trade capacity of the country. There is no difficulty about that.

The hon. Member for Oxford University (Sir A. Salter) wanted to know whether the arrangements for priorities were satisfactory. They are admirably designed to prevent any difficulty over that matter. As in the last War there is a ministerial committee with ultimate authority, but we are not at war, and the demands, great as they are for the rearmament programme, are not the demands for war-time. The truth of the matter is that though this priority committee exists and is able to function, all its problems have been settled on a lower level, and it has not been necessary to invoke ministerial priority, but the machinery is there and it can be used if required. The hon. Member for Cambridge University (Mr. Pickthorn) raised a number of interesting points. His chief fear was that the Bill might be operated harshly against the supplier of goods by the new Minister. I would answer him shortly by saying that that is not the intention at all. We seek to achieve our end by a maintenance of the co-operation, which has been such a definite factor, and a distinguishing factor so far in many cases, of the rearmament programme. Although we feel that it is necessary to have those powers in reserve, it will not be necessary, we hope, to use them.

The hon. Member asked one point in regard to Clause 10. He wondered why, when a controller is put into a factory which fails to do what the Government want it to do, he should be made the agent of the undertaker. That is merely a legal way of putting the controller into the shoes of the undertaker and making him able to carry on the business as if he were the undertaker himself. The question was also raised whether Clause 11 would be used to modify agreements with workmen. There is no such intention. Throughout the Bill the intention is to leave that matter as it is at the moment.

On the question of profiteering, which always raises great interest in the House, and very properly so, the right hon. Gentleman the Member for Hillsborough was quite right when he said there were two ways of dealing with that matter. One is that of trying to prevent undue profit being made, and the second is, if you fail in that, you get it back by some fiscal arrangement. So far as this Bill is concerned it deals solely with the first part, the fiscal arrangement being another matter altogether. Various hon. and right hon. Members have spoken on the subject, and have expressed the view that such is the ingenuity of manufacturers that nothing we can do in the costing line is of any use at all. But that is putting it too widely, and in many cases we are able to point to results achieved by this method where profits and prices have been limited. The hon. Member for Stoke (Mr. Ellis Smith) made an interesting suggestion that we should not put our trust entirely in accountants. They are gentleman who are accustomed to cast up figures with great accuracy, but he thought we should reinforce their investigations with the services of men trained in the business who know what a process is and what devices may be adopted to make the accountant's examination nugatory. That is precisely the general practice of costing in a Government Department. We have people who have a skilled knowledge of the process and have been through the trade in many instances. I am entirely in agreement with him on this matter.

But, however we may regard the matter, one thing is true, that the basis of any successful and efficient costing system lies in the power to obtain information. That is the basis of any proper cost accounting, and I put forward as a reason for asking hon. Members to reconsider the attitude defined by the hon. Member for Bishop Auckland, the fact that this Bill gives very wide powers indeed for obtaining all the information which the Minister desires, and I should think the House will agree that it lays the foundation for a satisfactory investigation into this difficult and troublesome question. The hon. Member for Ipswich also referred to this matter, and he gave us a number of instances where he said that undue profits were being made, and he told how some officials said that this or that was being done. I was reminded of the story of Tomlinson, described in a poem by Kipling. This man's mind was made up entirely from hearsay reports which he had received or read from other sources and not by anything he had thought out or experienced by himself. I remember it says there when he is asked for his answer about something: But this I have thought and this I have read, And this I heard men say, And that I have read that another man said, Of a Carle in Norroway. It seemed to me, as I heard the hon. Member for Ipswich, that he was very much in the position of the lamented Tomlinson, and although I do not think his description applied to the abode which Tomlinson described, I equally rejoice to think that neither will it apply to the other place.

Mr. Stokes

May I interrupt? I can sympathise with the right hon. Member's point of view perfectly, but he evidently did not listen to the explanation which I gave to the hon. Member who spoke after me, when I explained that I was referring to facts on which I was perfectly satisfied, but that it was absolutely impossible for me to mention names of firms or indi- viduals because these would go on what I described as the Government's black list.

Mr. Morrison

I must leave it to the hon. Member's own judgment to decide what is his duty in the matter. I am bound to say that the suggestion underlying the hon. Member's allegation is a very serious one and I think it places Ministers in a very difficult position if allegations are made and at the same time they are given no material by means of which they can probe those allegations.

Mr. Stokes

If I were a Minister sitting on that Front Bench, I could with the greatest ease, on the information given, trace the firms referred to.

Hon. Members

Why do you not give them?

Mr. Morrison

I must leave the House to be the judges of the matter. The hon. Member for Stoke and other hon. Members referred to the position of the machine tool industry. That is a long story and I do not wish to go into it now. I hope to be able to make a statement as to one aspect of the matter shortly, but I would say this on the general question of exports and imports. Hon. Members have felt it to be anomalous that this industry should have a considerable export trade and at the same time that the nation should be importing machine tools from abroad for the purposes of the programme. In the first place, the House will appreciate the enormous extent to which the demand for machine tools has increased suddenly in recent years. As regards the export trade, the hon. Member for Stoke said that in his part of the world large numbers of men were being given employment in the export trade. The export trade in these articles is almost exclusively with Russia, the Dominions and France. It has been the policy that, as far as is consistent with the national interest, the export trade should be maintained, because it is a source of livelihood to a great many men in this highly skilled industry. Should requirements for the armament programme at any time decline, it is something to have kept that trade together. It is the fact that a large number of machine tools can be imported and used for the armament programme. I think on the whole it is best in the long-range interests of the trade and the men employed in it that the export trade should be maintained and the gap filled up by imports. I would only say that in regard to the export side. I listened to the hon. Member for Stoke with great interest and with a great deal of sympathy. He said one thing which I thought was very true though I do not go the whole way with him. He said wars were lost or won before they were begun.

Mr. E. Smith

Modern wars.

Mr. Morrison

I do not know that I accept that, but I understand what is in the hon. Member's mind and it is an idea that he shares, I think, with all the House.

Mr. Smith

No, many of them are still living in mid-Victorian times.

Mr. Morrison

Not so many. I ask the hon. Member not to take too gloomy a view. There are perhaps a few left —on all sides of the House. But as he knows we all want to increase the strength and organisation of the country so that, should the worst come to the worst, the country will be prepared. That is our common ambition. I submit to the House that this Measure which is now before us is a very important contributory factor to that end. The powers which it contains are rendered necessary by the increase in our military forces. That is a plain statement of fact on which I

ask the House to accept the Second Reading of the Bill.

Mr. Edwards

Before the Minister resumes his seat, may I ask him one question? He has referred to the statement made by the hon. Member for Ipswich (Mr. Stokes), but has not, I think, done justice to those statements. He asked for information, but the Minister must know that if he wants to follow this thing up, he can easily do it, and if he has any difficulty, will he accept assistance from one or two hon. Members on this side? Is he aware that the Minister whom he now represents in this House wrote to me, as I mentioned in my speech, about certain statements in regard to gross profiteering and asked for the evidence. I gave him the evidence, and he has made no further statement. Will the Minister follow this matter up and accept assistance from this side of the House in order to do so?

Mr. Morrison

I can only say at once that I am very anxious to accept all the assistance that I can in dealing with any matters of this character. I do not care where it comes from; I shall be very grateful for it.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 235; Noes, 114.

Division No. 163.] AYES. [11.3 p.m.
Acland-Troyte, Lt.-Col. G. J. Bullock, Capt. M. Despencer-Robertson. Major J. A. F
Adams, S. V. T. (Leeds, W.) Burgin, Rt. Hon. E. L. Doland, G. F.
Agnew, Lieut.-Comdr. P. G. Burton, Cot. H. W. Conner, P. W.
Albery, Sir Irving Butcher, H. W. Duckworth, Arthur (Shrewsbury)
Allen, Col. J. Sandeman (B'knhead) Caine, G. R. Hall- Dugdale, Captain T. L.
Anstruther-Gray, W. J. Campbell, Sir E. T. Duggan, H. J.
Apsley, Lord Cartland, J. R. H. Duncan, J. A. L.
Aske, Sir R. W. Cary, R. A. Dunglass, Lord
Assheton, R. Cayzer, Sir C. W. (City of Chester) Eastwood, J. F.
Astor, Viscountess (Plymouth, Sutton) Cazalet, Thelma (Islington, E.) Eden, Rt. Hon. A.
Baillie, Sir A. W. M. Cazalet, Capt. V. A. (Chippenhanm) Edmondson, Major Sir J.
Balfour, G. (Hampstead) Channon, H. Ellis, Sir G.
Balfour, Capt. H. H. (Isle of Thanet) Chapman, A. (Rutherglen) Elliston, Capt. G. S.
Beauchamp, Sir B. C. Clarke, Colonel R. S. (E. Grinstead) Emmott, C. E. G. C.
Beechman, N. A. Cobb, Captain E. C. (Preston) Emrys-Evans, P. V.
Bird, Sir R. B. Colman, N. C. D. Entwistle, Sir C. F.
Blair, Sir R. Conant, Captain R. J. E. Erskine-Hill, A. G.
Bossom, A. C. Cooke, J. D. (Hammersmith, S.) Evans, Capt. A. (Cardiff, S.)
Boulton, W. W. Courthope, Col. Rt. Hon. Sir G. L. Everard, Sir William Lindsay
Bower, Comdr. R. T. Cox, H. B. Trevor Fildes, Sir H.
Boyce, H. Leslie Craven-Ellis, W Findlay, Sir E.
Braithwaite, Major A. N. (Buckrose) Croft, Brig.-Gen. Sir H. Page Fleming, E. L.
Braithwaite, J. Gurney (Holderness) Crooke, Sir J. Smedley Foot, D. M.
Brass, Sir W. Crookshank, Capt. Rt. Hon. H. F. C. Fremantle, Sir F. E.
Briscoe, Capt. R. G. Cross, R. H. Furness, S. N.
Broadbridge, Sir G. T. Cruddas, Col. B. Fyfe, D. P. M.
Brooklebank, Sir Edmund Culverwell, C. T. George, Megan Lloyd (Anglesey)
Brooke, H. (Lewisham, W.) Davies, C. (Montgomery) Gilmour, Lt.-Col. Rt. Hon. Sir J.
Brown, Brig.-Gen. H. C. (Newbury) De la Bère, R. Gluckstein, L. H.
Browne, A. C. (Belfast, W.) Denman, Hon. R. D. Goldie, N. B.
Bull, B. B. Denville, Alfred Gower, Sir R. V.
Graham, Captain A. C. (Wirral) Lloyd, G. W. Samuel, M. R. A.
Grant-Ferris, Flight-Lieutenant R. Locker-Lampson, Comdr. O. S. Sandeman, Sir N. S.
Granville, E. L. Loftus, P. C. Sandys, E. D.
Greene, W. P. C. (Worcester) Lyons, A. M. Schuster, Sir G. E.
Gretton, Col. Rt. Hon. J. Mabane, W. (Huddersfield) Selley, H. R.
Gridley, Sir A. B. MacAndrew, Colonel Sir C. G. Shakespeare, G. H.
Griffith, F. Kingsley (M'ddl'sbro, W.) McCorquodale, M. S. Shaw, Captain W. T. (Forfar)
Grimston, R. V. MacDonald, Rt. Hon. M. (Ross) Simmonds, O. E.
Gritten, W. G. Howard MacDonald, Sir Murdoch (Inverness) Sinclair, Rt. Hon. Sir A. (C'thn's)
Guest, Lieut.-Colonel H. (Drake) McEwen, Capt. J. H. F. Smith, Bracewell (Dulwich)
Guest, Maj. Hon. O. (C'mb'rw'll, N.W.) Macmillan, H. (Stockton-on-Tees) Snadden, W. McN.
Gunston, Capt. Sir D. W. Maitland, Sir Adam Somervell, Rt. Hon. Sir Donald
Hambr[...], A. V. Makins, Brigadier-General Sir Ernest Spears, Brigadier-General E. L.
Hammersley, S. S. Manningham-Buller, Sir M. Spens, W. P.
Hannah, I. C. Margesson, Capt. Rt. Hon. H. D. R. Stanley, Rt. Hon. Oliver (W'm'I'd)
Hannon, Sir P. J. H. Markham, S. F. Stewart, J. Henderson (Fife, E.)
Harris, Sir P. A. Medlicott, F. Storey, S.
Haslam, H. C. (Horncastle) Mills, Major J. D. (New Forest) Strauss, H. G. (Norwich)
Haslam, Sir J. (Bolton) Moreing, A. C. Stuart, Rt. Hon. J. (Moray and Nairn)
Heilgers, Captain F. F. A. Morris-Jones, Sir Henry Tasker, Sir R. t.
Hely-Hutchinson, M. R. Morrison, Rt. Hon. W. S. (Cirencester) Taylor, C. S. (Eastbourne)
Heneage, Lieut.-Colonel A. P. Munro, P. Taylor, Vice-Adm. E. A. (Padd., S.)
Herbert, A. P. (Oxford U.) Nall, Sir J. Thomas, J. P. L.
Herbert, Lt.-Col. J. A. (Monmouth) Neven-Spence, Major B. H. H. Touche, G. C.
Higgs, W. F. Nicholson, G. (Farnham) Tree, A. R. L. F.
Hoare, Rt. Hon. Sir S. Nicolson, Hon. H. G. Wakefield, W. W.
Hogg, Hon. Q. McG. O'Neill, Rt. Hon. Sir Hugh Walker-Smith, Sir J.
Holmes, J. S. Orr-Ewing, I. L. Wallace, Capt. Rt. Hon. Euan
Hore-Belisha, Rt. Hon. L. Patrick, C. M. Ward, Lieut.-Col. Sir A. L. (Hull)
Howitt, Dr. A. B. Peake, O. Ward, Irene M. B. (Wallsend)
Hudson, Capt. A. U. M. (Hack., N.) Petherick, M. Wardlaw-Milne, Sir J. S.
Hunloke, H. P. Raikes, H. V. A. M. Wayland, Sir W. A.
Hurd, Sir P. A. Ramsden, Sir E. Webbe, Sir W. Harold
Inskip, Rt. Hon. Sir T. W. H. Rankin, sir R. White, H. Graham
James, Wins-Commander A. W. H. Rathbone, J. R. (Bodmin) Whiteley, Major J. P. (Buckingham)
Jarvis, Sir J. J. Reed, A. C. (Exeter) Williams, C. (Torquay)
Jennings, R. Reid, W. Allan (Derby) Williams, Sir H. G. (Croydon, S.)
Jones, L. (Swansea W.) Remer, J. R. Windsor-Clive, Lieut.-Colonel G.
Kellett, Major E. O. Rickards, G. W. (Skipton) Winterton, Rt. Hon. Earl
Kerr, H. W. (Oldham) Roberts, W. (Cumberland, N.) Womersley, Sir W. J.
Knox, Major-General Sir A. W. F. Ropner, Colonel L. Wood, Hon. C. I. C.
Lamb, Sir J. Q. Ross, Major Sir R. D. (Londonderry) Wright, Wing-Commander J. A. C.
Lancaster, Captain C. G. Ross Taylor, W. (Woodbridge) York, C.
Latham, Sir P. Rowlands, G. Young, A. S. L. (Partick)
Law, R. K. (Hull, S.W.) Royds, Admiral Sir P. M. R.
Leighton, Major B. E. P. Russell, Sir Alexander TELLERS FOR THE AYES.—
Levy, T. Salmon, Sir I. Captain Waterhouse and Lieut.-
Lewis, O. Salt, E. W Colonel Kerr.
Lipson, D. L. Salter, Sir J. Arthur (Oxford U.)
NOES.
Adams, D. (Consett) Green, W. H. (Deptford) Marshall, F.
Adams, D. M. (Poplar, S.) Greenwood, Rt. Hon. A. Mathers, G.
Adamson, Jennie L. (Dartford) Grenfell, D. R. Maxton, J.
Alexander, Rt. Hon. A. V. (H'lsbr.) Griffiths, G. A. (Hemsworth) Milner, Major J.
Ammon, C. G Griffiths, J. (Llanelly) Montague, F.
Banfield, J. W. Groves, T. E. Naylor, T. E.
Barnes, A. J. Guest, Dr. L. H. (Islington, N.) Noel-Baker, P. J.
Batey, J. Hall, G. H. (Aberdare) Oliver, G. H.
Beaumont, H. (Batley) Hall, J. H. (Whitechapel) Paling, W.
Bellenger, F. J. Hayday, A. Parker, J.
Benn, Rt. Hon. W. W. Henderson, A. (Kingswinford) Pearson, A.
Benson G. Henderson, J. (Ardwick) Pethick-Lawrence, Rt. Hon. F. W.
Bevan, A. Henderson, T. (Tradeston) Poole, C C.
Broad, F. A. Hills, A. (Pontefract) Price, M. P.
Buchanan, G. Hopkin, D. Quibell, D. J. K.
Charleton, H. C. Isaacs, G. A. Richards, R. (Wrexham)
Chater, D. Jagger, J. Ridley, G.
Cluse, W. S. Jonkins, Sir W. (Neath) Riley, B.
Collindridge, F. John, W. Ritson, J.
Cove, W. G. Jones, A. C. (Shipley) Robinson, W. A. (St. Helens)
Cripps, Hon. Sir Stafford Kennedy, Rt. Hon. T. Sexton, T. M.
Daggar, G. Kirby, B. V. Shinwell, E.
Dalton, H. Kirkwood. D. Silkin, L.
Davidson, J. J. (Maryhill) Lathan, G. Silverman, S. S.
Davies, S. O. (Merthyr) Lawson, J. J. Simpson, F. B.
Day, H. Leach, W. Sloan, A.
Ede, J. C. Lee, F. Smith, Ben (Rotherhithe)
Edwards, A. (Middlesbrough E.) Leslie, J. R. Smith, E. (Stoke)
Edwards, Sir C. (Bedwellty) Macdonald, G. (Ince) Smith, T. (Normanton)
Fletcher, Lt.-Comdr. R. T. H. McEntee, V. La T. Sorensen, R. W.
Frankel, D. McGhee, H. G. Stephen, C.
Gardner, B. W. MacLaren, A. Stewart, W. J (H'ght'n-le-Sp'ng)
Garro Jones, G. M. Maclean, N. Stokes, R, R.
Strauss, G. R. (Lambeth, N.) Viant, S. P. Wilmot, J.
Summerskill, Dr. Edith Walkden, A. G. Windsor, W. (Hall, C.)
Taylor, R. J. (Morpeth) Watkins, F. C. Young, Sir R. (Newton)
Thurtle, E. Westwood, J.
Tinker, J. J. Whiteley, W. (Blaydon) TELLERS FOR THE NOES.—
Tomlinson, G. Williams, T. (Don Valley) Mr. Adamson and Mr. Anderson.

Resolution agreed to.

Bill committed to a Committee of the whole House for Monday next.—[Captain Margesson.]