ECONOMIC POLICY.

HC Deb 07 August 1940 vol 364 cc217-357

3.53 p.m.

The Minister without Portfolio (Mr. Arthur Greenwood)

As I have not spoken for a relatively long period, perhaps I had better ask for the indulgence of the House as one who is making, as it were, a maiden speech. I never expected to get away for very long in this new Government without having to be paraded and to answer for myself and some of my colleagues. While the present Government was in process of formation, the war took a new and graver turn. Norway and Denmark were swallowed up, and then, one after another, Holland and Belgium were overrun, and a large portion of France fell into the hands of Hitler. France soon ceased to take part in the struggle, and large territories have fallen into the hands of the German dictator. At that time, the prospect of the danger of invasion was imminent, and, as we know, that danger is not yet past.

It was clear in the very early days of the present Government that a tremendous and growing burden rested on Britain. I do not think that the outlook to-day should daunt us. It is not for me to dwell upon the undoubted moral ascendancy of the Royal Air Force and of the Navy, and of the Army, when it was tried in very difficult circumstances, but, to achieve victory as swiftly as may be, these Forces must be adequately provided with the sinews of war and the people as a whole kept in good heart and in good condition. The Government have directed their energies to, among other things, strengthening the sinews of war. Britain will never be defeated because our fighting men falter, or because our people lose faith in our great purpose, but the struggle may be prolonged, and prodigious suffering be indicted before victory is achieved, unless all the economic resources of the Commonwealth and of our Allies and friends are mobilised to the fullest possible extent.

From the earliest days it has been known that an army marches on its stomach. In modern warfare, mechanised units pound their way, fed by oil and petrol, and planes roar through the sky, fed by oil and petrol. Planes, tanks, guns and the munitions of war are very complex mechanism, calling for varied skill and for a large variety of materials drawn from the four quarters of the earth. The arena of war is widened by the increased range of both air and sea craft. War now has become total war, in which the term "non-combatant" ceases to have any meaning. War of this kind and of this complexity, involving whole populations, calls for economic organisation on a scale unknown in the past and, I am prepared to admit, not yet fully achieved in the present.

Before pursuing this problem, let us, in order to put ourselves in good heart, consider the economic position of the enemy. Hitler, in his latest speech, painted a rosy picture of his economic strength. He declared that Germany and Italy had at their disposal 200,000,000 people, from whom they could draw 130,000,000 for military man-power and about 70,000,000 to be engaged in productive work. He also told us that his total amount of supplies to the army and the air force, and for all services, was considerably greater than before his attack in the West. That, no doubt, is true, as, of course, it is true of this country; but we must look at the picture a little more closely. It is true that Hitler commands the West of Europe from the Arctic Circle to the Pyrenees, a vast coastline 2,000 miles in length. It is true that he has brought many millions of people under his sway, but we must not assume that this great stretch of coast is necessarily an overwhelming asset to Hitler. Nor must we assume that he has made millions of friends. Hitler rules over sullen people who may prove to be liabilities rather than assets. He may make serfs of them, and his Gestapo may browbeat and imprison them, but he will not get out of them the willing service which the people of this country are so fully giving to the national cause. He may rob them in order to feed his own people, but he cannot add starvation to slavery without running the grave risk of revolution within his own territory.

Hitler is, in fact, beset by serious problems within his swollen boundaries, problems which will intensify and not diminish as the days go by. Hitler boasts that his food supplies are—I will use his own words—guaranteed for so long as the war lasts. Mr. Speaker, I wonder. I fancy that, as winter draws on, Hitler will not be happy at the conditions of famine to which his aggression and conquest have doomed considerable areas of his newly-seized territories. Multitudes of fleeing refugees have trampled down the growing corn of Western Europe. His tanks and planes have devastated much of the countryside in Western Europe. It is said, as I believe with truth, that his crops will not be very good this year. When this winter gives way to next spring he will, in my view, begin to feel the pinch of the food problem more seriously than in the situation which confronts him now. He will, of course, continue the making of war materials, but some of his chief industrial areas, as well as his aerodromes, have suffered very heavy punishment. Factories and works of all kinds, oil refineries and stores, railway junctions and marshalling yards, and docks and ships have been, are still being, and will continue to be, the targets for our deadly bombing planes, night by night and week by week, and more and more heavily, as our bombing strength increases.

Output vital to the enemy has, undoubtedly, been interfered with very seriously and it will be difficult, if not impossible, to repair the damage which has been done to productive enterprises, transport, lines of communication and valuable stores, for a considerable time to come. He will need to draw more and more on his resources. The more vigorously he prosecutes the war, the more rapidly his stores will disappear, and he will find it increasingly difficult to maintain his production to meet wastage and losses, notwithstanding his very highly-organised industrial system. It may be thought that with the Western ports of Europe at his full disposal, the enemy will be able to satisfy his present need for imports, but the British Navy, the Minisistry of Economic Warfare and the Ministry of Shipping, do not stand idly by. The Navy is ever vigilant, and my right hon. Friends the Minister of Economic Warfare and the Minister of Shipping described in the House a few days ago, with what I thought was the full approval of the House, the measures which are being taken now to ensure that Hitler shall not draw sustenance from foreign sources. Not only Germany, but the territories which he now controls, will be unable to carry on trade on any scale with the outside world. The blockade operates over a wide area, which must become more and more impoverished, as its arteries are cut.

I have no doubt that Hitler has seized and will continue to seize all the food and materials he can from the territories he has overrun. He will ransack every cupboard, but once he has despoiled his victims, supplies will either cease or become, in future, much less plentiful. Hitler boasted in his speech that he possessed unlimited quantities of what he called the two most vital raw materials, coal and iron. I do not wish to pursue this problem in any detail. Iron, he possesses in great quantities, and he probably has no need to fear a shortage of aluminium, but his coal situation is different and his supplies henceforth will be seriously short. He may sit upon mountains of iron ore, but if he has not the coal whereby the iron ore can be smelted, it will not be of first-class military value to him. On balance, in a normal year, this country exports some 30,000,000 tons of coal to the Continent of Europe. None of that, henceforth, will fall into the hands of Germany. As regards oil, of the 20,000,000 tons of oil which are normally consumed throughout his territory per year, the enemy cannot hope either to produce or procure more than half. I give those two illustrations merely as pointers to the situation in which Hitler now finds himself economically. If and when the real pinch comes, as it will sooner or later, in a hundred different directions, it is more than doubtful whether the subdued peoples of Germany and other lands will be prepared or able to stand the strain.

Yet we must not for one single moment under-estimate the power arrayed against us, a power which has been built up, systematically, as a result of stupendous organised effort over the last six years and more. During the whole of that time Germany's mind and strength have been devoted to one purpose, the preparation of the strongest and most terrible fighting force the world has ever seen. The enemy's economic system has been for some years on a war footing—a mighty engine, turning out planes, tanks, guns and all the paraphernalia of war on a gigantic scale. In spite of heavy losses, heavier perhaps than many people think, he still possesses great strength and we must remember that we have not yet felt the full brunt of his blow. We on our side, and I think this is agreed now in all quarters of the House, were not fully mobilised for war when it was forced upon us. It is no simple thing, except perhaps in a totalitarian State, to switch over from peace production to war work and we were at a disadvantage, in that it is only after nearly a year of war that we are capable of becoming as efficient for war purposes as the dictators. We are still—and this must be admitted—in process of changing over from a peace to a war economy. We have got now to make the best of our resources. All our resources must be directed to the national life and effort at those points necessary for the victorious conduct of the war and the maintenance of the national spirit. We intend to win and the Government do not intend to allow the limit of its prosecution of the war to be anything less than the whole of the resources of man-power, industrial capacity, finance and foreign assets at our disposal.

To achieve the maximum of effort we must plan our economic strategy with a view to the best co-ordination and co-operation of all the agencies concerned, and I would like to give the House an example showing how many sides of Government activity are touched by a single war problem. To-day the Government are the main importers of goods from overseas. To carry through this vast business we must have a definite programme and to make this programme we must strike a balance between a host of conflicting considerations. Suppose, for example, it is suggested that our imports of a certain commodity should be increased. Clearly, as the House will see, this is not a matter for the Department which happens to need the increased supplies. We have to ask whether shipping supplies are available, and that is a matter for the Ministry of Shipping. We have to ask whether foreign exchange is available, and that is a matter for the Treasury. We have to ask whether our supply of foreign exchange can be maintained. That is a matter which may eventually depend on the amount we can export, which is the business of the Board of Trade. Moreover, the amount we can export depends partly on the amount of labour which we can spare from other purposes for the manufacture of exports.

Even then, the survey is not complete. We have also to take into account the possible effect of our purchases, which we are bringing into this country, upon the economic life of the exporting country. We have to ask whether by buying a little dearer somewhere else we could make things a little more difficult for the enemy and whether there are other political reasons why purchase in one country is more desirable than purchase in another. These are matters in which we must look to the Foreign Office and the Ministry of Economic Warfare for advice. To take account of all these considerations and see that they are properly weighed, one against the other, needs central organisation on the part of the State. We need an organisation which ensures that the different claims of the different Departments can be considered in an orderly way. We need an organisation whose business it is also to look ahead, to see how things are likely to develop in the future, an organisation which makes provision not merely against day-to-day contingencies as they continually arise, but against remoter problems which may develop as the war continues and as this new situation unfolds.

I have given an illustration of the need for the kind of organisation which we are now trying to build, and I should like now to say something about the way in which we are working. The Lord Privy Seal informed the House on 4th June of the new arrangements we had made for the consideration of particular economic problems and for the co-ordination of our economic effort. Each of the main groups of problems—the wider and more general economic problem, the production problem, the food question—is dealt with by a special committee, composed of members of the War Cabinet and the Ministers in charge of the Departments concerned. But we have introduced new and important changes in the previous organisation of the State. First, the Government appointed a small Committee consisting of the Lord President of the Council, the chairmen of the Economic Committees, the Lord Privy Seal, the Chancellor of the Exchequer and myself. This Committee is expressly charged with the duty of concerting and directing the work of all Ministerial Committees dealing with economic problems.

This small central Committee represents, I think, a new experiment in the war-time system of government. It is in a position to survey the field as a whole. It regularly looks at the whole picture, measuring the progress made in various directions, taking account of the difficulties which have arisen or which we can see arising, and also having regard to our future needs. It is free to take up any economic problem where, in its judgment, there is particular need for the co-ordination of the activities of a number of Departments concerned in that problem. Secondly, there is the Economic Policy Committee, over which I preside and which concerns itself with the broader problem of economic war policy. [HON. MEMBERS: "Who are they?"] The Economic Policy Committee consists of members from all those Departments which are directly, and in some cases indirectly, interested in economic problems.

Mr. Buchanan (Glasgow, Gorbals)

Everybody in the Government?

Mr. Greenwood

Not necessarily. If the House wished, I could give the names of the members of the Committee, but not out of my head. Since the end of May the Committee has had to face the changed military situation and the need for the intensification of our war effort. It was that Committee which decided on the limitation of sales in the home market, both of unessential consumption goods and of machinery, with the object of releasing productive capacity for munitions work and for the export trade. It was that Committee which laid down the principles which should govern the maintenance of our export trade in those cases where there might be some clash with the needs of the munitions industry. More important, perhaps, the Committee has reviewed and revised our import programme for the next 12 months, having regard to these three considerations: the increased claims on our importing capacity which an intensification of arms output inevitably implies, the need for building up greater reserves of essential imports against the unknown, but per- haps substantial, effect of intensified air attack on this country, and, thirdly, the closing to us of certain sources of supply in countries now occupied by the enemy. It has had to weigh the rival claims of our food import programmes with those of our raw material import programmes, and it is now considering the possible repercussion on the level of prices and on the cost of living of a diminished supply of goods for the home market at a time when incomes are being increased by the intensification of production. The Committee, in addition, has before it a number of problems, of which I would mention only one: the importance of maintaining our coal export trade and exploiting all the available overseas markets.

But then, as the war wore on, we were faced with another problem of far-reaching importance, and the Economic Policy Committee, on the suggestion of the Minister of Economic Warfare, set up a sub-committee, of which I am chairman, to study the problem of surpluses of production of all kinds created by the enlargement of the physical area of the economic blockade owing to German successes in the West of Europe and the entry of Italy into the war. To the producers overseas, whether in the British or Allied Empires or elsewhere, this closing of markets to them presented a very serious problem. If we cannot evolve a policy for dealing with their surpluses, those people may try, by backdoor methods such as are open to them, to bring those goods still to the assistance of Germany and German territory. We have already taken certain steps, as the House knows, to deal with this problem, but it is perfectly clear that one very important factor in the effectiveness of our economic war effort is to deal with this very serious problem of surplus overseas commodities in such a way as that they may be an advantage to us and of definite disadvantage to the enemy.

Questions have been asked on more than one occasion about the Production Council. The Production Council deals with the whole range of production problems, many of which are dealt with in the first instance by three interdepartmental committees to which I will refer in a moment. Outside these, labour questions necessarily loom important on the Production Council. The initiative in these labour problems rests with the Minister of Labour, but the Production Council provides the opportunity for him to secure the co-operation of the Supply Departments. It is among the functions of the Minister of Labour to secure the most effective distribution of skilled labour and the training of additional workers to perform skilled or semiskilled services, and the question obviously is one which can only be satisfactorily settled when the needs of the various production Departments are known and when there is agreement as to the way in which this problem is to he tackled.

The Production Council has attached to it three inter-departmental committees. One deals with priorities and is under the chairmanship of my hon. and gallant Friend the Parliamentary Secretary to the Ministry of Aircraft Production. It will, I think, be agreed in all quarters of the House that it must be for the War Cabinet to take the fundamental decisions as to our defence needs. That in a sense determines the major priorities, and it must consequently decide in broad principle to what extent these major war requirements must have prior claims over the requirements of the home and foreign trade. It is the duty of my Production Council to implement those major decisions. During the past weeks defence requirements have stood paramount over all others, and I have a great measure of sympathy for the difficulties which my hon. and gallant Friend the Chairman of the Priority Committee has had to face in these recent weeks. The collapse of France greatly increased our difficulties. We had to give immediately clear priority to those essential weapons of war which would provide the maximum resistance to the enemy in the shortest space of time. There can be no doubt that this policy of rushing things through in the last three months—a policy which, perhaps, is not to he regarded as scientific—has resulted in a very substantial increase in vital supplies and the diversion of production into more important channels. The Production Council realises, however, with the vastly increased war programme, with the need for keeping in our minds the possibility of a long war and with the re-organisation of the area boards, to which I will refer, that these matters call for a re-examination of the priority system. I do not pretend that the priority system has worked as well as it should have done, but having had in the national interest to make this great spurt for immediate war purposes, we are now considering further measures so as to ensure, as far as it is humanly possible, that material, plant and labour are effectively used to carry out the Government's production programme.

There is a second committee in the Works and Buildings Priority Committee under the chairmanship of the Parliamentary Secretary to the Ministry of Labour. During recent weeks the activities of this Committee have very substantially increased. At first it mainly dealt with problems concerning the demand for and the supply of building materials and labour, but the Production Council laid it down very clearly that all Government building contracts must be submitted for approval before they are let, and the whole of the Government's building programme should be reviewed in order that work might be concentrated on those jobs which could make a contribution to our war effort within the next few months. The more urgent work is still being pressed forward at the expense of work required at some later stage, but work which, if the war be prolonged, we shall have to complete at sonic time or another.

It became clear to us also that certain private enterprise building was interfering with the war effort, and the Production Council therefore decided, on the recommendation of the Chairman of the Works and Buildings Committee—[An HON. MEMBER: "Who is that?"] I have already said, my hon. Friend the Parliamentary Secretary to the Ministry of Labour. The Production Council therefore decided to establish a licensing system for all private buildings, and regulations regarding the establishment of this licensing system will be brought into operation very shortly. In recent weeks that Committee has had a new and complicating factor to face because of the vastly increased demand for materials for the War Office Emergency Defence Forces, while the extension of the Government's building programme and the demand for air-raid shelters created a new problem because of the reduction of brick stocks. Now, as a result of the work of this Committee, steps are being taken to ensure that brickmakers can increase their production at once through the release of the necessary labour from the Armed Forces, and steps are being taken to ensure the utmost economy in the use of materials in defence works.

A more recently established interdepartmental committee is that dealing with area boards and industrial capacity, over which I invited the Parliamentary Secretary to the Ministry of Supply to preside. This committee is dealing with what I have always regarded as a vital problem, that of matching industrial capacity with our war requirements? It is a problem which I have stressed in this House both before and during the war when I sat on the benches opposite. I have always held that we must decentralise the search for plant, machinery and buildings to the areas where there could be people who knew. The area boards originally established—which met with very stern criticism from me when I spoke from the Box opposite—were not, in the view of the present Government, as active and as useful as they might have been. It was clear that insufficient use was being made of what was vital, of the local knowledge of industrialists and trade unionists in the various areas. It was decided, therefore, to set up this Industrial Capacity Committee to deal with the problem of marrying capacity to Supply needs, the pooling of machine tools, and the utilisation for war ends of declining trade.

The scope and authority of the area boards have been extended, and each of them reproduces the inter-departmental character of the main central committee. The previous boards, as the House will remember, consisted entirely of officials. The reconstituted boards consist each of 11 members, five being officials, representing the Departments concerned with with production, and six being representatives of industry. The 11 members form a joint committee, at least three of whom are trade unionists. The chairman and deputy-chairman of each of those committees are representative of industry, one of management and one of the organised workers. That brings to bear local knowledge and experience, which hitherto had not been mobilised, behind the search for capacity in this country, in order to promote the development of our war production. The boards will now assist the main contractors who are looking for subcontractors, using their special knowledge of the industrial capacity of the areas; they will warn the Ministers concerned—this is a point of some importance—against overburdening the true capacity of any firm or plant by giving firms orders which they cannot fulfil in a reasonable time; and they will seek out latent capacity in other areas. In order to avoid as much correspondence as I can, might I say that manufacturers who have unused capacity should not write to me? I am merely delivering a message to the House; they should apply to their own area boards. People in the House with industrial experience know the difficulties we have had with the machine tool problem.

Mr. Stokes (Ipswich)

Will the right hon. Gentleman tell us when these area boards meet? Is it not the case that they have never met?

Mr. Greenwood

I am in some doubt whether that is correct. It may be so in the hon. Member's own area, but if he will put a question to the chairman of the committee, it will be answered. The machine-tool problem has been one of great concern. We have in recent weeks taken a census of our machine tools, and the area boards are now undertaking an inspection of all those tools with a view to getting them into appropriate use. They are now organising what plants are ready for them to organise in their areas, in order to deal rapidly with the situation which might arise out of the destruction of factories by air raids. Finally, the area boards will be called upon, in the unfortunate event of a breakdown of communications, to act as the body in charge of war production in their areas, working immediately under the regional commissioners and the regional defence organisations.

Mr. Buchanan

The right hon. Gentleman mentioned at the beginning of his speech the question of consultation with trade union opinion. Has any attempt ever been made to consult with trade union opinion locally?

Mr. Greenwood

I understand that the matter was discussed with the Trades Union Congress and the trade unions primarily concerned.

Mr. Buchanan

I come from a district which is by no means the least affected by these schemes, and our trade union people know nothing about them. These area boards have never met.

Mr. Greenwood

I am not so sure. In some areas they may not have met, but I have myself seen the chairmen and deputy-chairmen of some of them, and the personnel of some of them. I am quite sure that my hon. Friend has conducted his, negotiations for the setting up of these committees in the most orderly and proper way, and that the trade unions concerned have been consulted. It happens at times that the problem of unused capacity, factories, plant, machinery and so on, affects not merely an individual firm in a particular area but a whole trade, either because of shortage of raw materials or because of a reduction in the demand for the products of the industry. This problem is one for the Industrial Capacity Committee itself, which will, where any trade is hard hit, consult the representatives of the industry or industries concerned. The committee will do everything it can from now onwards to adapt the resources of the trades to direct war effort. Where that is impracticable, it will try to divert capacity to export purposes. In any event, we shall do everything possible to ensure that there is no idle plant and machinery in the country which can be used to the national advantage.

I should like to refer to another activity. Although it is not the responsibility of the Production Council, it is very closely and very importantly associated with our economic effort. I deal with it as the member of the War Cabinet charged with the oversight of our war purchases from North America. On 11th July I made a short statement in this House regarding the new organisation that we were setting up to deal with our purchases of arms and munitions from North America, following upon the dissolution of the Anglo-French organisation which had previously existed. I told the House that the Canadian Department of Munitions and Supply, under Mr. Howe, had undertaken to receive notice of our requirements direct from the Supply Departments concerned, and to arrange for the placing of these orders and the development of the productive capacity required, and that in New York the British Purchasing Commission, under Mr. Purvis, would remain to deal with the increased and increasing British purchases in the United States of America. Further, I told the House that in London a North America Supply Committee, served by a central organisation known as the Central Office for North American Supplies, would consider general questions of policy and co-ordination arising from our enormous purchasing programme in the United States and Canada. I invited the Parliamentary Secretary to the Ministry of Shipping to become chairman of that committee. This new organisation has now been actively at work for some weeks, and I hope that I shall be able in the very near future to give a more complete account of its tangible achievements than is possible to-day.

Sir Adam Maitland (Faversham)

Has this Committee to deal also with purchases of aircraft?

Mr. Greenwood

It deals with the purchase of all kinds of war material. It was through the old Anglo-French Commission that the original orders for aircraft were placed.

Sir A. Maitland

I understood that it was to deal with purchases from America. Is the right hon. Gentleman responsible also, as a member of the War Cabinet, for purchases of aircraft, or is that still left with the Minister of Aircraft Production?

Mr. Greenwood

I explained that the Departments give their own orders direct, and the whole thing is co-ordinated by the central committee. The Ministry of Supply place their orders direct, the Ministry of Aircraft Production place their orders direct; but there is a co-ordinating body to see that we get the maximum of things that we want. I should like to say a few words about this organisation's work and its responsibility. It is obvious that since the occupation of the Low Countries and France has transferred resources to the enemy, and brought enemy aircraft nearer to our own factories, the need to supplement our own production by drawing on the vast and invulnerable capacity of North America has immensely increased. This task has not only become more important, but it has changed its character. The United States Government are now themselves engaged in a vast effort of national rearmament, and are organising American industry to that purpose. Therefore, while but a few months ago we were placing orders with American industry to supply the deficiencies in a combined Allied production, we now need to em- bark on a much more extensive programme, which must be related to the American national defence preparations.

The House will readily understand the complexity of the questions involved. The task of the British Purchasing Commission in New York and of its director-general, Mr. Purvis, is, therefore, far greater than that of acting as a simple purchasing agent for this country and the Empire. It involves all sorts of economic and technical questions and constant communication with the United States Administration, not only on matters of detail but on general questions of requirements. At the same time, we need, both in New York and in London, to co-ordinate our requirements with those of the Dominions and India and our Allies. We are taking steps now to ensure that Mr. Purvis is given the additional technical personnel and the requisite authority which he will need for his increased and vitally important task.

Mr. Kenneth Lindsay (Kilmarnock)

Is this Committee responsible also for purchases from, say, Australia, or only for purchases from the United States?

Mr. Greenwood

Its title explains its scope; it is responsible only for purchases from the North American countries, they being our two most important potential providers of war material. The director-general is to be further aided now by a series of technical commissions of experts who have had practical experience, such as the United States have not yet had, of the production and operation of different types of armaments. We are at the same time, of course, co-operating with the Canadian Government in securing the fullest possible use and development of productive capacity in Canada. In the vast economic effort which underlies all modern military action, we happily do not need to think of this island as matched alone against the Continent of Europe, for behind our own resources are the resources of another Continent, and the resources of this great Continent of North America are both beyond the reach of enemy assault and, thanks to our Navy, accessible to ourselves.

Now I come to a very short review of the main principles of the policy that we are pursuing. Parliament in the early days of this Administration gave the Government wide and far-reaching powers over lives and property in this country, and they will not shrink from using those powers as circumstances require. A vast number of factories and other industrial establishments have already come under direct State control. Land badly cultivated has been taken out of the hands of farmers, labour has been called upon for great sacrifices, and the whole economic system of the country, with its many ramifications, is being adapted, perhaps not to the complete satisfaction of everybody or of myself, to the fulfilment of the nation's needs, and nothing will be allowed to stand in the way of our achievement of the war purpose. Our object now is one not easy to achieve. Our object is a Britain completely mobilised economically in the public service devoted to national needs and regardless of selfish interests.

How have we been trying to carry out our policy? Let me take the question of consumption first. It is necessary, if the war is to be conducted efficiently and properly, that the consumption of the people shall be safeguarded and that every endeavour shall be made to avoid unnecessary hardship. We all know that since the outbreak of war there has been a rise in retail prices. That was inevitable because of factors quite outside our control, such as the curtailment of supplies from overseas, increased difficulties and risks of transport, fall in the value of sterling abroad and so on. But an effort has been made to reduce the burden, which would otherwise have been considerably greater, and it is interesting that, although the cost of living has risen, the cost of living has risen less than prices in general. It is our object that the prices of the necessities of the people shall, as far as possible, be kept down, and we are spending, as the House knows, very considerable sums of money in order to do this, and those efforts to anchor down the prices of essential commodities will be continued. It is the policy of the Government, by the maintenance of supplies, and, if necessary, by rationing, to restrict the movements of prices to a minimum. It is our purpose, too, to make special provision for those members of the community who are most hit by the rise in prices of essential commodities, and, as the House knows—to give one very important example—we have recently set up a scheme whereby free and cheap milk is available for mothers and children in poorer districts—a scheme which, I understand, is being made of increasing use as it becomes more widely known. Community feeding is being extended as widely as possible at canteens for industrial workers, and we feel that in these ways, whatever restrictions may become necessary in the future, we shall ensure and maintain unimpaired the health of the nation.

While we have tried, and so far with success, to ensure the adequate supply of the necessaries of life, at the same time we have deliberately taken steps to secure that non-essential consumption is restricted. Resources which were available for maintaining and increasing the war output ought not to be diverted to unnecessary consumption. There are two ways in which we may restrict unnecessary consumption. On the one hand, we can do it by financial measures, by increasing taxation and encouraging savings, and, on the other hand, we can do it by direct limitation of consumption and prohibition of unnecessary imports. Both these methods have their uses, and both of them, as the House knows, are being employed. The President of the Board of Trade has taken steps by Orders restricting consumption so as to release labour and productive resources for the ma king of munitions and for export. The transference has taken place, and I hope it will take place, quickly and smoothly, though there may be dislocations in the process. The recent Budget has relieved us of some of our non-essential purchasing power—I gather, in the view of the House, not sufficient—and the Chancellor of the Exchequer has made it clear in the most cheerful terms, and, I gather, with the general approval of the House, that those who can be further impoverished will be further impoverished in the future, so that their unnecessary expenditure may be diverted to making resources vital for the war effort.

I have referred to the import policy, and I do not want to elaborate this point, but the general strategic position now has made the import problem a good deal more complex. There are two limiting factors which govern the policy of imports. On the one hand, the capacity of the ships and the ports, and, on the other hand, the supplies of foreign ex- change and foreign assets. We have to take account of the kind of imports it is physically possible for us to bring into this country, and we have to take account of the resources out of which we can pay for what we buy. As regards our foreign resources, it is clear that we need to proceed with a little care. I am myself not for hoarding them like a miser, but, after all, our supply of foreign assets is not unlimited. We have taken steps to increase exports, and we shall do everything we can properly do in this direction, but, in present circumstances, it is clear that the possibilities of increased exports from this country are not too glowing. It is important that we should use our foreign exchange as far as we can for the purchase of aeroplanes, munitions and so on from abroad. Although our need for skilled labour in the war industries is very great, it is necessary for us to retain some of this labour in the production of commodities for export, in order that our supplies of foreign exchange may be maintained. Therefore, people who are employed in the export services are playing their part in the productive system just as fully and helpfully as if they were engaged on direct war production. But, of course, we need, as the House will see, to reduce to a minimum the amount that we buy from abroad, to reduce it just to the limits of the things that we need for essential consumption over here and for productive services.

It is true that at the moment our shipping position is not too bad. Port capacity has not been very seriously impaired, but we are hound to recognise that our ports and our shipping are bound to be among the main objects of the attack of the enemy. It follows, therefore, that, in the short run, while the position is good for us, it is prudent for the country to import as much as we can of those foodstuffs and materials as can readily he stored, not in order to increase consumption, but in order to build up stocks against the day when our capacity to import may not be as great. Our policy, therefore, has a double aspect. In the short run, we are trying to increase our stocks, and very considerable progress has been made in this direction. If the enemy hopes that he can starve us out, he is very greatly mistaken. The starvation of the people of this country is impossible. Nothing can be more emphatic than that. Looking ahead, however, it may he necessary to reduce the rate of intake of things into this country. Even if we were sure of unlimited help from sympathetic peoples abroad, it would be perilous for us, and for our long-term import programme, to include commodities which are not indispensable to national efficiency. I hope that when people reflect on the limitations with which they have to put up, and the further limitations which may come to them before very long as the result of this policy, they will remember that these limitations have been imposed on our imports in order that we may conserve the wherewithal to buy aeroplanes and tanks with which to defend our homes. We control the ships, the ports and the imports that reach us, and these controls are exercised with one aim in view—the use of our sea-borne trade for the national cause and the public good.

Mr. Stokes

Why do you not control the money, and then you would be all right?

Mr. Greenwood

I am dealing with things and not with counters. Therefore, let me just briefly turn to the problem of production. No one in the House will expect me to give exact details of the great increases in military production which have taken place in recent weeks, but I can assure the House that very great strides have been made in speeding up the production of aircraft. Only a few weeks ago the Minister of Supply was able to give the House some striking indications of the progress which is being made in the production of Army equipment—progress, I may say, which is much more marked to-day. The actual deliveries of aircraft and aero engines has very rapidly increased. The output of some of the most vital things like antiaircraft guns, anti-tank guns, Bren guns and tanks, and so on, is mounting, and as the days go by this upward movement is not merely increasing, but is actually gaining momentum. And we intend to continue. We have every reason to hope that from week to week in the months that lie ahead the volume of output of our factories and foundries will attain greater and greater proportions, and, indeed, proportions larger than the output ever obtained before.

Two things are necessary in order to increase our war output. On the one hand, as I have already tried to indicate, we must reintroduce for war purposes more and more of the productive capacity of the factories and workshops of the country. On the other hand, we must see that labour is available to use it, and to increase the volume of productive capacity available it is necessary that we should eliminate unnecessary production. The Board of Trade, with its orders restricting consumption and the use of machinery, is following out this policy. We are also taking steps to see that the necessary capital construction is damped down in order that resources may be available for war purposes. Systematic steps are now being taken to compile a complete census of works and machinery which will enable us to put our finger on any factory available for war purposes and to direct that appropriate work shall be given to it. Complaints have been made in the past concerning the working of the contract system and the failure to use the capacity of small firms and we hope, through the machinery I have already described, to remedy any shortcomings in this direction.

As to the supply of labour, in the past few months there has been a great increase in the number of workers employed on Government work. There has been an enormous increase in output, and this increase has been brought about partly by bringing more people in, partly by the transfer of labour from one purpose to another, and partly by increased hours. But this process obviously has its limitations; the numbers of unemployed who are readily available will, one assumes, very shortly diminish, and the numbers which can be transferred from production for civilian purposes will grow smaller as time goes on. The recent increases in hours of labour show the great response of the workers to the special emergency which existed after the loss of equipment by the British Expeditionary Force in the Battle of France. Clearly, however, that process cannot continue indefinitely, and already it is becoming necessary to take steps to guard against the undue exhaustion of very willing workers. In the future, if we have to carry out the plans made, we shall need more and more to recruit the armaments industry by training and by dilution, and steps are being taken to bring this about. The training schemes of the Ministry of Labour are being extended, and arrangements are being made for a large increase in training facilities within the actual works themselves. Without prejudice to the resumption of normal arrangements in peace-time, trade unions have agreed, with great willingness, to waive certain claims of rights which might have been made an obstacle to the training of people for tasks of various skill.

I am afraid I have detained the House much too long, but this vast and very complex effort in the economic field on which we are engaged is merely one facet of the problem, and no man can possibly know them all. What is essential is that we should have an economic policy commensurate with the task facing us and a policy which, with the co-operation of the various Departments, can be effectively carried out. I have only one concern, and that is to use such powers of sweet reasonableness as I possess—and these powers are more obvious in office than in opposition—to secure the maximum cooperation and see that the Government's policy is implemented and fully carried out.

I would like to take this opportunity, the first, to thank the many Ministers who have co-operated with me in my various activities and who, in the interests of the larger national policy, have very willingly made adjustments in their own programmes in order to conform to the general plan. If the House asks me whether I am satisfied with our economic progress, I will give a perfectly straight answer. When I was a member of the Opposition, with other Members far more distinguished than I, our capacity for satisfaction was not very marked. I never knew myself to be satisfied with any Government when I was in opposition, and having been bred in dissatisfaction, so to speak, I will not pretend that I am satisfied to-day, nor shall I be satisfied so long as I hold my present office. Satisfaction can come only with perfection, and, alas, we are not a perfect people. But great strides have been made and greater strides will be made. We have stubborn but not insurmountable difficulties to meet. There are shortages of materials, bottlenecks in the matter of machine tools, labour shortages, and in the direction of output of supplies I am prepared to admit that they are far from what we would like. We must recognise the possible difficulties arising from the bombing of factories, foundries, docks and shipyards, the mining of ports, and the sinking of ships, but even then there is no real cause for dismay. I feel certain that economically we shall go on from strength to strength.

The monstrous German Reich is already largely beleaguered. It has only limited external supplies on which it can draw, but we can stretch across the seas, where the treasures of the world lie, and bring them to our shores. We can be sure of the active help of the free peoples, and we can look forward to ever-increasing supplies from the New World to reinforce our own ever-growing efforts. The desire of all those who with me are engaged on the economic front is to bring the greatest possible power to the aid of the Fighting Services, not for the destruction of the conquered and suppressed peoples, but for the final liberty which will assure to them the victory that we are determined shall be for ever ours.

5.10 p.m.

Mr. Shinwell (Seaham)

My right hon. Friend has left me with a very difficult task. The atmosphere is far from inspiring, and I doubt whether I can grip the House into a state of high excitement. But I observed that my right hon. Friend did inform us of his own dissatisfaction with the existing position. If that is so, he would hardly expect me to express satisfaction with the statement to which we have just listened. With the best will in the world, and despite my considerable affection for my right hon. Friend, I am unable to offer congratulations to the Government on the presentation of what they are pleased to describe as their economic policy. Indeed, the statement we have just heard hardly does justice to the Government's own achievements. Of course, there have been improvements since this Government was formed, in production and in organisation and the like, but we would have wished to have heard rather more in detail what the Government have accomplished. My initial criticism of the speech of my right hon. Friend is that it contained no conception whatever of a coherent plan. At any rate, I failed to detect evidence which would justify me in making an observation of a contrary character. We heard a great deal about co-ordination, programmes and committees, and we heard the right hon. Gentleman say that we must plan our economic strategy, that we must have programmes and the right balance as between this essential and that. It is all very well, but it is hardly adequate for the purpose of winning the war against a ruthless and well organised enemy, and that is the consideration which must present itself to the mind of every hon. Member.

Let me, first of all, dispose of one element in the case just presented to the House. My right hon. Friend devoted considerable time, as I understood him, to minimising the resources and potentialities of the enemy. It is true that in a few words he said we must not under-estimate the powers of the enemy, but preceding this observation he tried to demonstrate that we need not be in any way dismayed by the resources or potentialities of the enemy confronting us. He indulged in much speculation on that head, and I only want to say to my right hon. Friend and to hon. Members that we have heard all that before. We have heard it not only for several months, but for several years. We were told over and over again in this House that the resources of the enemy were by no means as vast as some hon. Members suggested. The resources of the enemy may have been exaggerated, but I am not concerned with speculation, but with results, and the results since the beginning of this war hardly justify us in minimising the advantages the enemy possesses or in underestimating his resource or capabilities. I prefer to proceed on the assumption that the enemy is strongly organised. It is disastrous, speaking from a personal standpoint, to regard an opponent as being of no importance. Never underestimate an opponent. I regret that my right hon. Friend should have indulged in those roving speculations, which, in my judgment, are completely irrelevant to the issues and the situation which now confront us.

I invite attention to the facts of the situation, and I do so by propounding a few questions. First of all, what is the aim of the Government in the sphere of economic policy? I suppose they have a definite objective in the military sphere, but it is equally important in the field of economic policy to know what the goal is. I wonder whether the Government have attempted a survey of our econo- mic potential. There have been committees and inquiries and a perambulation by experts, but has there been an exhaustive survey of our economic possibilities, and is that not vital in the present situation? Let us assume a war of two or three years' duration. I think my right hon. Friend will agree in that estimate. Have the Government estimated our needs in aircraft production, in guns and other munitions, in labour, in raw material and in exports? Moreover, is there a definite allocation as between actual war essentials and exports and the needs of the civilian population? These are all essential ingredients of the survey which appears to me to be so essential. Furthermore, have the Government estimated how many factories are required for the production of war essentials and, in particular, what surplus of factories is available in the event of heavy air bombardment and destruction? We must budget for all the dreadful possibilities which are inherent in air warfare. We have heard nothing of that.

I am glad to see the Minister of Labour. This is the first opportunity I have had of publicly congratulating him on his high appointment and on his many achievements. I should like to ask what actual provision has been made for training. My right hon. Friend told us the other day that we had now 28,000 trainees, and I think he said, either in the House or elsewhere, that he envisaged the possibility of 40,000 persons being trained in the course of this year. It is estimated on the most reliable authority that 780,000 men and women are undergoing training in Germany. The Minister of Labour agrees. Then what nonsense is this, how futile, how childish in comparison.

I leave the Minister of Labour for the moment, and I return to the Minister without Portfolio. I should like to know about priorities—I mean in home material, in labour and in tools. Of course, there are priority committees, but their operations are not based on any definite plans or related to the division between production for war essentials and exports.

Mr. Greenwood

Of course they are.

Mr. Shinwell

If so, we might have heard something about it in that long speech. The discussion so far has been conducted on friendly lines. The Minister without Portfolio still remains my right hon. Friend. I do not want to covert him into a right hon. Gentleman. All these points that I have mentioned are vital elements in the plan. Let us appreciate the facts. Our resources are not fully employed. That much is clear. Labour is idle, factories are not adequately utilised, men are being dismissed, many workers are under-employed, miners are working three and four shifts a week, and no effort is made to divert this labour to other industries. Large numbers of people are being evacuated from Defence areas and have nothing to do. Sundry undertakings are closed down as a result of Government action, but no compensation is paid to those affected. I want to underline those points. Let us consider the position of under-employed factories and labour. I do not vouch for the authenticity of the statement to which I am about to refer, but I have received a communication which was sent to the Prime Minister, in which we are informed that 350 men, most of them with long experience in the engineering and aircraft industries, were sacked without notice last week-end from Castle Bromwich aircraft factory. The writer adds: Imagine the thoughts of those 350 men, with wives and families, as they listened to the drivel over the radio appealing for more men for the aircraft industry. I understand that that is not the only factory in that situation. I have heard the same of Morris's works at Oxford. I have heard the same about Ford's works at Dagenham. I could furnish many details, but it is not my purpose to deal with details. May I ask what is the position as regards the output of steel and the organisation of our resources in that regard? May I invite attention to the peculiar position of certain steel firms, as the result of which I am informed—others can speak with greater authority on the subject than I can—that Ebbw Vale is far from fully employed? I do not want to introduce that controversial topic in which Sir William Firth has been involved, but it calls for some inquiry. There I leave it.

Let me underline another point to which I have made reference. Miners are on slack time in my own division and in many others. It is not so long since we talked about miners producing 20,000,000 tons more coal, and there was talk about utilising the services of Belgian and other miners. Now our own men cannot obtain work. I have had pathetic appeals from men asking that they might be allowed to join the Army or be diverted into other industries.

The Minister of Labour (Mr. Ernest Bevin)

I offered the Mines Department to withdraw the Order entirely and to raise the age of reservation, but the Mines Department pressed me to give them another month before I took that step, and I acceded to their request, thinking that they knew their business.

Mr. Shinwell

That is an explanation, but it is no justification for the present situation.

Mr. Bevin

I do not think the Minister of Labour or the Minister of Mines can be held responsible for the loss of markets on the Continent.

Mr. Shinwell

I appreciate that as fully as my right hon. Friend. It is a subject with which I am slightly acquainted. I was about to make certain suggestions in that connection.

The Secretary for Mines (Mr. David Grenfell)

Does my hon. Friend propose to raise the age of reservation in the mining industry?

Mr. Shinwell

Surely I am not being called upon as a member of the Labour party on this side—I cannot say the Opposition side—to deal in detail with all the matters which ought to be the concern of the Government themselves. I am going to deal with something much more important. After all, surely it is better, instead of allowing miners to remain unemployed, for the Government to build up huge stocks of coal. [Interruption.] There has been talk about the building-up of stocks of coal, but these huge stocks, as far as we can see, have not been built up, and in my view it is impossible to build them up unless the Government are prepared adequately to finance those responsible for their building up; and it is not even sufficient to build them up and dump them in this country. In my view, we ought to build up stocks and dump them in Northern Ireland and in our Colonies, and utilise ships which otherwise go out in ballast, but the whole thing has to be organised. If you cannot build up stocks of coal and employ idle miners in some way, you have to divert these able artisans—for such they are—into useful war essential industries.

There has been an increase in unemployment. I do not know whether that is attributable to what has happened on the Continent, and I do not really care what the excuse may be. I am not blaming the Minister of Labour—far from it—but before that increase in unemployment we had 700,000 unemployed, although many were unemployable. A remarkable thing is that a large number of girls are being rendered unemployed simply because of the change in Government policy. That was inevitable. If, as the result of direct Government policy, people are thrown out of work, the question of unemployment pay does not arise at all. These people ought to be paid approximately their full wages. I am not so sure that in war-time we ought not to abolish unemployment benefit altogether. The Government should be charged with the responsibility of finding people work, as they could if we had a plan, and, if we cannot, then pay them approximately full wages.

I want to direct the attention of the House to a consideration which I think is of some consequence. The President of the Board of Trade has developed the policy of curtailment of consumption, and, as an inevitable corollary, curtailment of production. As a result people are thrown out of work. To throw somebody out of work does not of itself contribute to the war effort. Indeed, as far as I am concerned, I would allow cinemas to go on and the luxury trades to continue, unless it could be demonstrated to me that their existence militated against the war effort; for they might as well be working as doing nothing. Large numbers of small business undertakings have been thrown out of gear in precisely the same way. It would be far better to allow them to continue than to do nothing. On the other hand, if, as a result of throwing people out of work, it were possible to transfer them to the production of more essential articles, that would be a contribution to the war effort. To do that needs a plan; it needs a clear picture of what is wanted from the point of view of objective and organisation.

There are further considerations to which I invite the attention of hon. Members. There may be a curtailment of the operation of the distributive trades as a result of a change in Government policy. If so, it would be much easier to recruit their machinery and labour for the war effort if financial aid was promised to recreate those trades after the war. They must have some kind of assurance. It would be easier to evacuate the Defence Areas without misunderstanding, confusion, and resentment, if they were financed. The Government are simply taking people out of the Defence Areas and putting them anywhere; their businesses are going down and down, and their incomes diminishing almost to nothing. What do the Government offer them? A local moratorium—which means little or nothing in the circumstances. Therefore, if it is in the national interest to bring certain trades to an end, do so, but do not allow the people concerned to suffer. Our resources must be pooled. My hon. Friend below the Gangway, in speaking on the Budget the other day, made a very interesting proposition with which I am wholeheartedly in agreement. He gave as an illustration a firm with which he was associated where a variety of interests were brought together and co-ordinated, and no doubt there was some measure of compensation provided and a measure of absorption of people who might otherwise have been redundant and have been thrown on to the streets. Similar action is required in the aircraft industry, the munitions industry and the textile industry; and all that would make a contribution to the war effort. There should be a complete pooling of our resources; our production should be concentrated in the most efficient units, and those discarded must either be absorbed or compensated.

I turn now to another aspect of the problem. Little change has occurred in our living conditions. There is plenty to eat and drink. That is very satisfactory. No doubt, in comparison with what is happening in other countries—it may be in enemy countries—our position can be regarded as highly satisfactory. But we must look ahead. It may be that the present adequacy of our supplies can be regarded as evidence of huge stocks, but how long will they continue? I put it to my right hon. Friend the Minister without Portfolio that it is wise to plan on the worst and not on the most optimistic assumptions. I will fortify what I am now saying by dealing with a matter on which I have frequently spoken in the House—namely, the shipping position. I agree that the German claims about our shipping losses are grossly exaggerated. Nevertheless, we must not minimise the effect of air and submarine attack on shipping. Our losses have been huge, and it is idle to minimise them. I will not furnish any details, but they are known to me, as they are known to the Government. They are sometimes alarming and depressing. It is true that much tonnage has accrued to us—neutral tonnage, Norwegian, Dutch, Danish and French vessels—but, on the other hand, the replacement of lost shipping is very slow. I do not see a representative of the Admiralty present, and I do not complain of that. We have not been able this year to replace lost tonnage, and we are a long way from fulfilling our programme. That I know and deplore. There are other reasons why we cannot rely entirely upon the neutrals. There are difficulties about the seamen.

Our shipping position makes it essential that we should invite the attention of the Government and the country to the need for a drastic conservation of our supplies. In my judgment, the need is extended rationing. In saying that, I am in excellent company. I took a refresher course last week by reading the speeches of Members of the Government. I do not want to indulge in the debating tactics that are customary in the House in peace time. I read speeches by Members of the Government in which they asked, and persisted in asking for an iron ration. I noted, in particular, that the hon. Member who is now Parliamentary Secretary to the Ministry of Food was as keen as mustard on an iron ration. But the other day he spoke about there being no need for extending rationing this year. There seems to be a change of mind on the part of hon. Members when they cross the Floor of the House. [interruption.] All that I can say is that if, when they cross the Floor, they gain more knowledge, they ought not to conceal it; and perhaps we might be given a little more knowledge on these matters this afternoon. Extended rationing would cut out needless imports and conserve shipping. Something more is wanted. I will deal now with a point that was raised by my right hon. Friend the Minister without Portfolio. Something must be done about improving docks and harbours. I do not mean the larger ones; I mean particularly those on the West Coast, and we ought to employ as fully as we can the Western Highlands for this purpose. More important still is the need for prohibiting entirely the production of certain classes Of goods.

Is our export position satisfactory? We should not compare our export position now with the position last year—a favourite device of certain people—but should consider what our needs may be in the future. The position is a little better than it was last year, but that does not matter, for comparisons are fruitless. Let hon. Members consider what our needs may be in the future, and note what we are doing. We forbid consumption by various devices. We curtail the production of some goods—for example, textiles—but we do not assist exports. I am satisfied that my hon. Friends who are associated with the textile industry will bear me out in that contention. The textile industry has not benefited to any degree, and certainly not in any large measure, as a result of the curtailment of production for home consumption. The only purpose of curtailing production and consumption is either to assist the production of essentials or to make goods available for export. I put it to the President of the Board of Trade that we cannot expect a large export trade unless we finance manufacturers and create export companies, but first, we must estimate what goods can be made available for export, and allocate raw materials and labour for that purpose.

The export trade is suffering from the absence of clear decisions. That is due to the absence of a plan. My right hon. Friend the Minister without Portfolio, in speaking about committees, forgot to mention the Stamp Committee. We were told that the function of the Stamp Committee was to plan, to map out, to present a clear picture of what was required. If that is not the function of the Stamp Committee, who is responsible for the preparation of plans and policy? My right hon. Friend spoke about committees, and explained the four-decker structure of the committees. First of all, there are several committees dealing with problems or groups of problems.

Secondly, there is a committee, for which my right hon. Friend is responsible, charged with the direction of the other committees. Thirdly, there is the Economic Policy Committee, over which my right hon. Friend presides; and fourthly, there is the Production Council, which, according to my right hon. Friend, deals with a whole range of problems, and the duty of that council is to implement the plans and decisions. I understood that my right hon. Friend's chief function was to smooth out difficulties. If there is a difficulty at the Ministry of Supply, the Ministry of Labour, or the Board of Trade, they go to my right hon. Friend, as chairman of the Production Council, and he smoothes out the difficulties, acting as a kind of arbitrator. There was a well-known comedian on the wireless who talked about bungers-up of ratholes. My right hon. Friend is a smoother-out of Departmental difficulties. What I want to see is a planner-out of Government economic policy.

Are the Government exercising the powers which they have? We have heard a great deal about the Government's extraordinary powers, and the Lord Privy Seal said that they had taken power to assume possession of all property. Where have they taken possession of property? They have taken over some factories, but those factories would have been taken over in any event. They have to be taken over. There was recently a case in the courts, with which I cannot deal now because it is sub judice, but clearly something is wrong with the Regulations of the Ministry of Supply, and the learned judge would not allow the Ministry to proceed, at any rate for the time being. That seems to show that the powers of the Government are far from being ample. Where land has been taken, as my hon. Friend the Member for Ipswich (Mr. Stokes) has said over and over again, excessive prices have been paid. Arms manufacturers are still in possession of factories and earning high profits, but the most important thing is that they are financed by Government capital. They retain their factories and still earn profits, but they are financed by Government capital; whereas small traders who have lost all have no compensation, and manufacturers who have been displaced are left to look after themselves.

The Government do not seem to realise the magnitude of the problem. Consider what the enemy have accomplished. We must make an effort to exceed their production, but we cannot do it—and here I come to what is regarded as being fundamental by hon. Members on this side, for I speak not only for myself in this respect, but for all hon. Members on this side who belong to the Labour party, and I hope hon. Members of the Labour party in all parts of the House—unless we organise on a collective scale, pooling our resources and utilising them without regard for private interests, but being willing to take measures to absorb everybody and everything into the common effort. Individualist competition must be replaced either as a result of undergoing considerable modifications or as a result of a full-blooded system of collectivist production. We cannot rely too much upon the United States of America, as I was glad to hear my right hon. Friend observe. She may be embroiled in war with Japan, and, if so, she will be bound to produce for herself. We have heard of difficulties which do not make us feel too optimistic. It is better that we should assume that we must rely on ourselves, and organise accordingly.

I have attempted to go no further than to state the principles. We must win this war, and win it in the shortest possible time. This calls for the utmost efficiency, not so much in the form of slogans, although they have their place, but in organisation and planning, and above all—and to this I attach considerable importance—the people of this country must be told what we are up against, and asked to steel themselves for the struggle. It is better to do this and endure hardships now, than to experience greater suffering in the future.

5.46 p.m.

Sir George Schuster (Walsall)

As I listened to the right hon. Gentleman the Minister without Portfolio I felt that to a certain extent he disarmed criticism at the end of his speech by giving us a very satisfactory account of what his aims were, and by telling us quite definitely that he was not himself yet satisfied with the progress that had been made. But, though he did disarm criticism to that extent, I feel that his account of the machinery of government by which he was proposing to fulfil his aims was far from convincing. In fairness, it must be said that it is too early yet to judge whether that machinery will be successful or not, because it must be tested by results, and I do not think the present Government have been in power long enough for us to know what the results of their policy will be. But the question which I asked myself as I listened to the right hon. Gentleman was, Where is the vital spark in this whole organisation which is to give us the production that we need? Production is the one word we must concentrate upon, and to it we must give all our thoughts. It was only in the last passage of the right hon. Gentleman's speech that he mentioned the word "production." He told us about all sorts of organisations for getting over difficulties, but when he came to the question of production, he had only a very few words to say about it.

I am very seriously perturbed in my own mind whether, in this whole complex machinery which has been set up and in the course which the Government are now following—and I must apologise to the House, because I have stated this before—we are not in a great danger of half measures and falling between two stools. In the last war we did, after many mistakes, achieve an immense productive effort. It was seriously criticised afterwards, because, no doubt, one of the main driving forces of that effort was the search for private profit. Everyone says now that we cannot have that again, and we set about making all sorts of regulations and controls. But, if you remove the incentive of private profit, which is and has been in the industrial system of this country, however much some of us may regret it, the motive force which has made the wheels go round, you run the risk of not maintaining the vitality of your productive forces, and then you have to replace it with something else. If the Government—perhaps quite rightly—decide that that essential motive power shall no longer be the profit motive, then they take upon themselves a very heavy responsibility to replace it with something else. I feel grave doubts as to whether they are yet in a position to fulfil that responsibility.

Mr. MacLaren (Burslem)

What has Hitler done?

Sir G. Schuster

Hitler, in his own way, has succeeded.

Mr. MacLaren

What did he do?

Sir G. Schuster

The hon. Member for Burslem (Mr. MacLaren) knows quite well what he did, and I am not to be led into a discussion on what Hitler has done, because I want to concentrate upon our own problems and our own affairs. The present Government have made the position even more difficult than it was before, because they have imposed an Excess Profits Tax at the rate of 100 per cent. That again may be perfectly right, but it still further increases the Government's responsibility to provide the organisation and plans and driving force for getting our productive effort going. I could give the House many examples of small businesses where expansion of productive capacity, which ought to be of great value to the country, is not undertaken, simply because it cannot be financed, and because the present Excess Profits Tax provisions make it impossible to raise the money. It is not a question of bad faith or lack of patriotism or undue greed. It is simply that according to our present system you cannot work and carry on business unless there is a reasonable chance of making profits. If you have an Excess Profits Tax at the rate of 100 per cent., and there is a question of increasing your business, the position is really one of "Heads I lose, tails you win," and on that basis all natural expansion of business must collapse.

I am not necessarily quarrelling with the whole basis on which this policy rests, but I do say that it puts on the Government a heavy responsibility to prepare some alternative system which will give motive power to our productive machine. How can that be done? I am not speaking now so much about very large undertakings, because they have always been in close contact with the Government and with their own immense resources, combined with Government capital aid they have no doubt been expanding fairly satisfactorily. But a very large proportion of our industrial output in this country depends upon our small concerns, and it is there that I see the danger of a lack of vitality owing to the present half measures. If we are to continue on this basis, I am inclined to agree with the hon. Member for Seaham (Mr. Shinwell), that we must go much further and allow the Government to direct the whole of our industrial effort and reach a stage, which I have indeed, myself, advocated, where over every door of every business there shall be posted a label, saying in clear language, "This business for the duration of the war is being conducted on Government account." At any rate, if we continue on the present basis of half measures, we run the grave risk of not mobilising our full productive forces.

Now the question arises, if the Government have to undertake an ambitious programme of that kind, carrying on their shoulders the whole responsibility of the industrial effort of this country, how are they to become effective for that purpose? I have already stated that what we have heard this afternoon about a long series of committees is a very unconvincing answer to that question. I could not help thinking, as the right hon. Gentleman was speaking, what he would have said from the Opposition Bench in answer to a similar speech. It may be that behind all this unconvincing exterior there is some driving force which is ensuring the right result in spite of what appear to be discouraging impediments; but we have yet to see the results to convince us that that is the case. I have a strong feeling that committees are very unsuitable bodies for framing operation orders, and it is operation orders that we want.

I venture to put to the House three steps which could usefully be taken. The first necessity is a central directing authority. That, of course, is a problem over which we have all been racking our brains during the past 11 months of war, and there have been many Debates on the subject. If that directing authority is to work effectively, it must be something which in some way fits in with our existing system of departmental responsibility, and one of my chief apprehensions about these various committees is that they may sap the strength of departmental responsibility. One wonders who advises the chairmen of the committees. Do they receive advice from the recognised departmental advisers, or have they some private advisers of their own? Is there not a great danger that decisions will be taken without full consultation with all the Departments? Have there not been cases where decisions have been taken in the last few months which have been subsequently rapidly reversed? I believe that we should have done better if we had attempted to build more on our existing machine. I venture to put an idea before the House which I have mentioned before. If we examine our existing governmental machine, we find that there are one Department and one Minister who have had a right to keep a check on the business of every Department, and they are the Treasury and the Chancellor of the Exchequer. I believe it would have been much better to build up the organ of co-ordination on the existing structure of the Treasury and the Chancellor of the Exchequer, and to en-large the scope of Treasury responsibility to cover economic considerations as well as purely financial considerations. I know I shall be told that the Treasury is tarred with the brush of public suspicion, and that its officials are mainly trained for the purpose of finding good reasons for not spending money. But I think that suspicion is unfair to the Treasury and that it is most dangerous to allow it to become a reality.

Mr. Quibell (Brigg)

It is a reality.

Sir G. Schuster

The idea that the function of the Treasury is merely to protect the till is, I suggest, out of date. It may have been a proper and adequate conception of its peace-time role, when the economic machine was driven by the ordinary forces of competitive industry and all that the Government had to do was to regulate in a minor way. But, in war-time, one passes into quite a different necessity, and I further believe that that necessity will survive this period of war and will always be with us. I think, therefore, that the Treasury should be built up to a higher level and a broader conception of what is required for financial and economic policy. In almost every country now Governments are moving towards the necessity of having a Minister of Economic Policy. I do not see how one can have a Minister of Economic Policy who has not as part of his responsibility the Budget of the country. Therefore, it would be much safer to build up the Treasury on a higher and wider conception of what financial policy should be than to say that the Treasury is merely concerned with seeing that the money bags are kept full and that we are going to keep it under. That is a dan- gerous line to take, because the Treasury, as a result of its history, has an enormous power and prestige in this country. It should not be kept under and condemned to use its power and prestige merely for that narrow purpose. I am for that reason somewhat concerned that the Chancellor of the Exchequer is no longer a member of the War Cabinet. I am not talking in terms of personalities. I should be very glad to see the right hon. Gentleman himself as Chancellor of the Exchequer if he is to exercise the responsibilities which he now has to exercise.

I want to pass from the question of centrally directed authority to the second thing which seems to me to be the great need. That is, that there should be in every Department a greater provision for leisure, for forethought and the exercise of thought among the higher officials. At present hardly one of the higher officials has time to do anything but get through the daily routine. The sub-committee of the Committee on National Expenditure of which I was chairman which examined the Ministry of Food and reported on it two months ago dealt at some length with the necessity of having a department of forethought in the Ministry of Food. I feel strongly that measures on those lines are required. If in each Department there were set aside officials of high standing who had time to detach themselves from the daily routine and think of the secondary reactions and the more distant consequences of their policy, and if the officials in each Department who were charged with that function had an opportunity to get together, we should out of their conferences have a chance of getting a co-ordinated policy which would be formulated in a safer way because it would be formulated by people who were in direct contact with their own departmental work. The third practical direction, though in a humbler sphere, where there is room for improvement is in some better central organisation for the collection of statistics, intelligence and information, to which the Government could turn for digested factual reports on matters of current interest, not merely in home affairs, but also such matters, for example, as an exact account of how in Germany they have dealt with certain problems up to date. A Department of that kind would be of great value.

But we are, of course, concerned not merely with organisation in the abstract, but with the actual problems with which the country is faced. Of these, I want to mention four. First, our supreme object now must be the maximum production for war purposes, and I would ask the right hon. Gentleman whether he can say that the existing industrial capacity has been fully tapped for war work. Can he say not only that nonessential production has been cut out, but that the energy released has been turned into war work? I think that he would find it very difficult to give a satisfactory answer to that question yet. A second question of vital importance is whether, subject to the needs of war production, we are keeping our place in the economy of the world.

We have recently had interesting reports of the Pan-American Congress. The discussion, the background to it, and the conclusions which it reached show in rather a vivid way that we, with our Commonwealth and the overseas possessions of our Allies linked with us, stand between two clearly distinguished groups—the American countries on the one side, and the Totalitarian States on the other. I would like to know whether we are doing all that we can to see that we ourselves are linked up with those American countries. I fully appreciate the immense difficulties of the problem, but it seems to me that the objective at which we should aim is that we, together with them, should endeavour to build up a satisfactory economic régime which could continue for the period of the war, three, four or five years if necessary. which could give the inhabitants of those countries a satisfactory basis for life, and which could deny all that is needed to our enemies. Are we facing that immensely important problem? That is a question to which I would like an answer. The third problem that needs tackling is the relation between wages and service pay. The right hon. Gentleman said nothing about that. Lastly, there is the problem of the transfer of labour, for example, from the distributive trades to the productive trades.

I have mentioned four problems, all of which require proper handling if we are to produce that war effort which is needed. The problems are different; some require constructive thinking, some political courage and some good diplomacy, but none of them are possible unless the team which is responsible for governmental work is working together with the courage which comes from successful achievement. Apart from that, however good the Government organisation is, we must rely on the driving force of outside energies as well. The task is to harness all that energy into the service of the State. I have an open mind about how that is to be done. I was glad to hear what the right hon. Gentleman said about his appreciation of the value of taking advantage of local experience and ideas and of decentralisation. I had indeed listened with great appreciation to the speech which he made in the early days of the war on that subject. But I am now asking myself what has been done, and I was sorry that he gave us so unconvincing an answer to the simple question whether the area committees have actually started to function.

Above all, if we are giving up private profit as the dominating motive we must have a system which harnesses all our energies in the service of the State, which treats everybody fairly and gives everybody a fair chance. I am waiting for a sign that the Government are ready to face that problem. My memory goes back to two days soon after this Government was formed. We heard on one day a statement from the Lord Privy Seal couched in very brave words, which led us to suppose that the Government really were going to face this problem and harness all property, all resources, everything in the service of the State. On the next day I came into the House and found a Debate proceeding on the Bill for the limitation of dividends. It is true that that Bill was given up and that, so far as it went, it was a harmless Measure. It was difficult, however, to reconcile the atmosphere of the first day and the atmosphere of the second. I want to see the Government carrying on in the atmosphere of the first day. I have been pleading for good organisation and for union of thought and action. But, above all, I plead for the courage to say that half measures are past.

6.11 p.m.

Mr. Horabin (Cornwall, Northern)

Like the hon. Member for Walsall (Sir G. Schuster), I was rather discouraged by the Minister's speech, because it seemed to me that no coherent economic policy came out of it. The organisation which it took him so long to describe seemed to me so intricate that I am not surprised that there is no coherent policy behind it at all. The Minister told us that one of the main objects of economic policy, apart from supplying our Armed Forces with the munitions they require, is to keep the people of this country in good heart. I suggest that the Government have failed badly in that respect. When war broke out and ever since, every Member of the House has desired to see one thing—equality of sacrifice. It is true, of course, that everyone is bearing heavier taxation and that all classes of the community are paying their contributions towards the war. It is also true that the black-coated workers, the professional classes, the boarding-house keepers and people who are primarily engaged in peace-time industries are being very nearly ruined. These people are, in fact, paying for the war. I must apologise to the House, but I am afraid I cannot go on. I have been in bed for two days, and my nerves are shattered.

6.13 p.m.

Mr. Tomlinson (Farnworth)

I am sorry that the hon. Member, in developing his argument, found himself unable to continue, and I shall be quite willing, when he is able to resume, to give way to him if the House desires. When the hon. Member for Walsall (Sir G. Schuster) was speaking, I found myself in profound agreement with one thing he said. That is, that we are in danger of falling between two stools. When the Lord Privy Seal brought forward the Measure which gave the right to the Government to conscript all we had in order to win the war, the spirit in the House was the spirit in the country, and it is the spirit that we desire to see behind the Government in order to achieve the object we have in view. The hon. Member suggested that when by taxing excess profits 100 per cent. the Government had taken away the profit motive in industry, they did not substitute something in its place. I think he is right, but I would point out that the powers of the Government have been used in one direction and that the people upon whom they have been used have responded in the spirit in which everybody expected they would. I had a letter the other day from a young man engaged in the retail side of the wireless industry. For a worker, he was occupying an exceptionally good post, in which he was earning £4 10s. a week. That sum may not be much to Members of this House, but it is a good wage for a working man. In addition, he was leaving home at seven in the morning and returning home by half-past four or live o'clock in the afternoon. He was needed, and by an order of the Government he was transferred from that job to another one at £3 10s. a week, and in addition had to leave home an hour earlier and did not get back until three hours later in the evening, and travelling expenses cost him 1s. 8d. a day. He wrote to me saying that if it was in the interests of the nation, he was quite willing to do it, but he pointed to what was taking place all around him and was in direct contradistinction to the effort he was called upon to make. That is a simple illustration of how we may be giving a fillip to one part of our effort at the expense of another.

I am interested in the cotton industry—from the workers' side, not from the standpoint of people who are not, perhaps, desirous of giving of their best because profit-making is no longer so good—and during the last six weeks I have had some unpleasant jobs. I have had to attempt to explain anomaly after anomaly which has arisen in the industry. In some cases workers have been called upon to work double time, or to work overtime, while the next mill has been short of work. I have attempted to explain this anomaly and to keep the people satisfied with working too long hours, and I have done it because I felt it was in the interest of the national effort, and because I thought that we were developing an economic plan, but what has taken place to-day convinces me that no definite economic plan has been thought out.

I do not claim to be an economist, and I do not want to speak in high falutin' language about these economic problems. They are simple so far as this industry is concerned, and the economics of the situation are simple. If I am told that the home trade must be restricted in order that industrial effort can be transferred to another section I understand the position, and if we were taking people out of one section of the cotton industry and placing them elsewhere I should have no complaint to make; but if we take people out of the cotton industry by restricting home consumption and then put them on the unemployment register, I say that is not following out a policy but is only fooling about. That is not control, but what we in Lancashire call "mucking about." Our people do not understand it, and I cannot explain it to them. I came here this afternoon thinking to get an explanation from the Government, but we have not had one, and the reason is, as the hon. Member for Walsall said, that we are attempting to reconcile irreconcilables and are falling between two stools. In my judgment we cannot have private interests and the national interests taking first place at one and the same time; where the two interests do not coincide somebody has got to back down. We are attempting to reconcile the individual interests of private owners with the national interest, and where they do not run tandem, do not coincide, we let things get into a muddle before deciding what to do.

I believe that the cotton industry has some contribution to make to our export trade. If it has not, I fail to see what industry can make a contribution. We began on that assumption some months ago, and I was not only interested, but enthusiastic. I spoke of it all over Lancashire, and thought there was an opportunity for the industry to "get a move on." What has happened? First, a Cotton Controller was appointed, but his duties would seem to clash, because he could not do all that he ought to do for the export trade while at the same time giving the necessary attention to the interests of the Ministry of Supply, to whom he is partly responsible. So there has been a division of effort. Even after all these months we do not know what the position is. Frankly, I see no plan which will carry us from one stage to the other.

I know that there has been some control and that under the Ministry of Supply wonderful work is being done for war purposes. In the making of cloth for the barrage balloons and other purposes people are working overtime and under very bad conditions, working longer hours than anyone ought to be called upon to work in a summer like this. Anyone who has worked in a mill knows what sacrifices these people are making. One section of our workers are doing that and realise that they are doing a job that is of vital importance to the country. Another section were told two or three months ago that all their labour would be required in order that the export trade might receive the fillip it needs. Some of them were engaged on home production. Just as they had got nicely working we received information that because of economic policy the home trade was to be cut down to 25 per cent. The effect upon the industry was disastrous. Orders for scores of millions of yards of cloth which had been woven were cancelled, and many manufacturers were left in an impossible position.

The point I am trying to make is that if there had been some co-ordinated policy, that cloth could have been taken over for stock. If, as the hon. Member for Seaham (Mr. Shinwell) said, it is reasonable to stock coal because coal is needed and miners would otherwise be unemployed, it is equally reasonable that we should stock cloth. The Government should purchase for stock textiles manufactured at this time rather than allow a situation to develop in which people have no work to do and no money to spend. Let us have the industry so run that the people in it can realise that they are not only giving of their best but are contributing to, the national effort in so doing. The situation in my own village is tragic. How can one appeal to those people to "Go to it" when there is a notice on the shed door that owing to shortage of supplies they will be laid off work this week? They do not understand all the finesse of this economic policy; they do not understand that it is necessary that one particular item should be cut down in order that the effort of the country can be concentrated in another direction. All they know is that they are wanting to work in the interests of the country and that there is no work for them to do.

Before we come to decisions in one direction we must take decisions in another direction. If we decide that goods are not to be consumed at home because that would not be in the national interest, we should first prepare to utilise in other ways the labour which has been producing those goods. If that labour cannot be turned over to the national effort, then I submit that by restricting consumption at home we are doing a disservice to the community rather than a service. I shall be glad if anyone can convince me to the contrary, because then I shall be able to tell my people how this position can be squared. It "does not square" to me. If you can convince me that by throwing a person out of work we are helping that person to help to win the war, then I can convince my people that they can go to the Employment Exchange and draw their 19s. a week with a good heart. But it does not fit in with what we are told in this House, does not fit in with the economics which we are told are necessary to win the war.

Let me, in two sentences, tell the House what I think is needed. Possibly hon. Members will not agree with it, but it is in line with what the hon. Member for Walsall said. I believe that it is the duty of the Government to take over all businesses, all production, and all the workers at the same time. Take over the workers now; concentrate all effort upon the production that is needed; guarantee to every man and woman a fair and reasonable standard of life; and at the end of the war we will settle the question of to whom the things belong. If we are in earnest about it, we cannot let a man say, "This is my factory, and I am prepared to work if you will give me 20 per cent, profit." If the factory is to be worth anything at all after the war, the war has to be won, and we should say that we are taking the nation's services for both the nation and the war. Everyone should be put to the task for which he is best suited. If necessary, a man should go to the making of armaments, or should continue with weaving, but he should know that he is doing his job at the bidding of the Government. The Government should be in a position to say, "No longer are you, as owner of this place, entitled to do what you please, and you must fit in with the nation's requirements. We need you, your business experience and managerial qualities. We will he responsible for finance and responsible for the product when it is finished, but we are going to determine what shall be produced."

Unless something is done along those lines we shall fall between two stools. We shall not get maximum output, we shall have lost the very things which we are seeking to retain—all because we wanted to have both the halfpenny and the cake at the same time. I appeal to the Minister to take another look at this problem, and I also appeal to the War Cabinet to realise that nothing less than the control of the nation's life will suffice as an economic policy at a time when we are all in danger of going under. With proper organisation we can come out on top.

6.29 p.m.

Mr. Higgs (Birmingham, West)

I should like to congratulate the Minister upon his speech this afternoon. I find myself more in accord with him than I have ever done before, though there are parts of his speech with which I do not agree. When the hon. Member for Sea-ham (Mr. Shinwell) is in the Cabinet or on this side of the House, doubtless I shall then find myself in agreement with him. I appreciate many of the remarks made by the hon. Member for Walsall (Sir G. Schuster), and I shall say a few words on taxation in a moment. The Government have changed their policy on many occasions. First thoughts have had to be abandoned. The original evacuation scheme had to he altered drastically, the Fuel and Lighting Order is now in suspense, and the "Don't chatter" crusade is also overboard. It is now time that the Government considered revising the 100 per cent. Excess Profits Tax. The last two Budgets have imposed burdens on industry that will undoubtedly produce stagnation if they are allowed to continue. Enterprise is being stifled. It is individual enterprise that we require. I disagree with the speech of the hon. Member who has just spoken. There must be some incentive to production. [Laughter.] I hear hon. Members opposite laughing, but I repeat that the individual is the fellow who counts. Look at the industries of all nations, and you will see that they are built around individuals. It is therefore individuals whom we have to encourage. Apathy will spread at an alarming rate if matters are allowed to continue as they now are. Individual incentive is necessary.

A firm may have an opportunity of lowering its costs of production but may not have the capital to do so. I know of a firm which, if it could spend £2,000, could reduce the cost of production of one part by 50 per cent., but with Excess Profits Tax at 100 per cent., it will not be in a position to spend that additional money. Rising prices demand in them- selves extra capital. If a firm with £100,000 capital had £100,000 turnover last year, and this year wishes to turn our the same number of articles—you may say, for the sake of argument 10,000 articles—the price for the 10,000 articles will have risen, and the same turnover this year will necessitate a capital of £120,000 or £130,000, an increase of 20 or 30 per cent. The rising prices aid the extra capital have to come out of the profits, and help to absorb profits. Expansion is, therefore, to that extent, impossible unless the Government contribute the extra capital. Some return on money is essential, if it is to be spent. The solution to the problem is, of course, reduction in the Excess Profits Tax. It would be reasonable, and for the benefit of the nation, if it were reduced to a moderate figure, say, 75 per cent. or 85 per cent. There is some incentive then. Every hon. Member knows that if he is to get personal gain, he puts more effort into his occupation. That applies to all ranks of society, and manufacturers are human, like any other section. If the tax remains at its present level, I believe it will ultimately destroy industry. British industry has been built up upon individuality, and we have to retain that individuality, even in war time. We all need some incentive to work.

I now come to the point about the remuneration of labour. I have great admiration for the efforts that labour has put into industry during the war period. I have never had any trouble, argument or differences with trade unions. I respect their organisation and the good work that they have clone for the community. On the other hand, I do not respect the wages ramp which is taking place to-day. [Interruption.] I am not referring to the ordinary remuneration of the worker but to the ramp that is taking place, and the wages that are received by a minority of the workers. I go so far as to say that that minority has never asked for the wages that its members are now receiving. Ministers know very well about the excessive wages that are being paid. The Minister of Labour has had heaps of correspondence and he knows what remuneration is being received, but he is taking no action. It is not only manufacturers who complain; complaints are made because of the inequality of sacrifice. The fellow in the Forces is dissatisfied and is becoming more dissatisfied. I am not complaining because I happen to be a manufacturer and have to pay these high wages. I receive correspondence daily, in common with other Members of the House, and I could extract one or two facts from these letters for the benefit of hon. Members who do not believe me. I saw in the paper to-day about a young fellow of 16 who is earning £12 a week. [Interruption.]

Mr. Gailacher (Fife, West)

It is no more than you get.

Mr. Higgs

I am speaking about the unreasonable wage for that individual. The hon. Member mentally agrees with me. He may interject for political reasons, but that is no concrete reply to me.

Mr. Gallacher

Excuse me, but I would rather pay a lad of 16 £12 a week for doing useful productive work than pay some hon. Members of this House £12 a week for doing nothing or less than nothing.

Mr. Higgs

That is unreasonable. If a lad can earn £12 a week, the hon. Member, in his position, is worth ten or a hundred times that sum. If that situation is to continue, we shall have inflation at a more rapid rate than we have had it at present. There is no disputing the fact that we have had inflation for 12 or 18 months and that these wages will contribute to it.

Mr. David Adams (Durham, Consett)

May we hear for what the £12 a week was paid?

Mr. Higgs

I cannot say that at the moment, because I have not the particulars here.

Mr. George Griffiths (Hemsworth)

The lad is not a collier, is he?

Mr. Higgs

I shall be only too pleased to give hon. Members the information if they will come to me after I have sat down. Then there are agricultural workers. I do not wish to be accused of making a speech against rising wages, because I am all in favour of a fair union rate of pay and conditions, but I am not in favour of conditions of this description. I have letters here which I can show any hon. Member if he wants to see them. I have a batch of this correspondence. One of the letters refers to a man who is getting three times as much as his pre-war rate.

Mr. MacLaren

It is not the Duke of Westminster, is it?

Mr. Higgs

There is also a reference to somebody whose pre-war pay was £4 or £5 a week and who, for three consecutive weeks, has picked up £13, £14 and £15 a week respectively. Those are not statements which I make from my own knowledge but are what I have in writing from various individuals, and I am prepared to show the letters to any hon. Member who wishes to see them.

Mr. Naylor (Southwark, South-East)

I would like to know whether the so-called high rates of wages to which the hon. Member refers are not the subject of agreement between the employers' organisations and the trades unions?

Mr. Higgs

No, they are not. The reason they are high is that there are bonus additions to the standard rates. Whatever may be the standard rate in the district, 1s. 4d. or 1s. 6d. or 1s. 8d., I do not know just what it is, or the particular district in which the hon. Member is interested, but I know that most of the aircraft firms—and it is the aircraft industry which is the culprit—are paying 2d. an hour war bonus rate, and another rate for good time-keeping. They are also fixing piece-work prices in a very inefficient manner.

Mr. Naylor

In view of what the hon. Member has said, may I ask whether the workman is not entitled to receive the higher market rate, independent of any trade agreement, if he can secure it because labour in that department is scarce? That is to say, is he not entitled to reap the advantage of scarcity of labour in the market? Would the hon. Member agree that, if the workman is prevented from earning high wages when labour is plentiful, he has the right to the higher rate when labour is scarce?

Mr. Higgs

I do not agree that he is getting trade union rates; he is getting a bonus to which he is not entitled and which is above the trade union rates. I agree that supply and demand of labour and its remuneration are the same as supply and demand of commodities, but a small section of the labouring community is taking advantage of the present exceptional conditions. [Interruption.] Mr. Speaker, I am trying to make a speech.

Mr. Speaker

Hon. Members had better allow the hon. Member to make his speech without further interruption.

Mr. Higgs

I will repeat again that I am not complaining about the remuneration of labour, but I am definitely complaining about the wages ramp. Unless something is done about it, we shall see very serious economic conditions arising in this country. The remuneration of labour is a fundamental cost of production. When coal is in the ground it may be worth about 6d. a ton, but after it has been got and hauled to the surface it is worth perhaps £2 a ton. Practically the whole of the expenditure which makes that difference of price has gone upon the two things, profit and remuneration of labour. Unless something is done and the problem which I have outlined is faced, we are in for economic collapse. The war may be won or lost on the economic front, and we have to take into consideration factors of that description. Six months hence may be too late. It is too late as it is, but I hope that the Minister will give some attention to this very important factor.

I will not worry the House with another half-dozen of these letters. [HON. MEMBERS: "Hear, hear!"] Hon. Members opposite cheer, but I should just like them to go through these letters in private. I wish I could make them public. Take a case in which the turnover was making £500 or £700 profit per annum, necessitating a capital of £10,000, £15,000 or £20,000 and the employment of 20, 30, 50 or 60 people, the number depending upon their industry. There is a capitalist in every sense, making £500 or £700 a year. The workers are getting the wages to which I have referred, and which go up to £700 or £1,000 a year, and yet one class of individual is despised, and hon. Members opposite say that the other fellow is entitled to the money. There is no sense or reason in that argument. This is one of the factors that must be tackled seriously at an early date.

When an hon. Member opposite interrupted me a few moments ago, I referred to rate fixing. Here I have had a lot of trouble. We manufacture aircraft of which we have not had considerable experience. I agree that production is necessary; unless we get production or output, we shall lose the war. Also, if we get trouble with our economic conditions at home, we shall lose the war. We have to get a balance between the two. In order to get this new craft going, which has never been manufactured before, it is necessary to fix piece-work rates, and this is where I differ to some extent from the trade unions. With every good intention, there are rate fixers, who are specialists. They have been working with their hands for 10, 20 or 30 years, and they endeavour to discharge their duties to the best of their ability. When first the machine is worked you have to find out how long it takes to do the job. It may be 10,000 minutes or 10,000 minutes; it is a unit of time. That unit of time is given to the operator plus 25 per cent. bonus. The men erect one machine, then they erect 10, then 100, and so on. The more they erect, the more skilled they become, not necessarily by greater effort on their part but because they become more used to the assembly. When you fix a price on a new job like that and increase the quantities, it is a well known fact that the bonus goes up. There has been no great guard in fixing those piece-work prices by the management. Those prices have risen, and therefore we get these high wage rates which unfortunately percolate all through industry. The matter does not end there. We get these high wage rates in the aircraft industry—and that is the industry in which the wage ramp exists—but unfortunately it is the kindred industries which are responsible for export trade, and, therefore, the wage rate of the export article is increased and with it the cost.

There is one point on which I did not agree with the Minister when he said it was a question of excess capacity for export. It is also a question of price. Even to-day we have competition overseas. I agree that we have lost a lot of our competitors, but we still have Japan, the United States, and other nations manufacturing. We must keep our prices down if we are to export, and it is necessary to watch these wage prices if we are to maintain our overseas trade. If we are to limit profit as it has been limited, it is only fair and reasonable to limit wages, not to the extent that difficulty and chaos will be caused in industry, but to a reasonable amount. We have overdone it in one direction, and we have overdone it in another. It may be said that any profit which is made in industry all goes on E.P.T. It is not so. It goes in deplorable inefficiency. Unless a limit is put on wages, I can see a state of chaos occurring in this country within a short time. To win the war is the first consideration. We do not want a Russia, and we do not want a France, but we do want to keep the balance, and now, before it is too late, is the time to consider it.

6.49 p.m.

Lieut.-Colonel Sir Cuthbert Headlam (Newcastle-upon-Tyne, North)

I do not want to detain the House many minutes, but there are one or two points which I wish to bring to the attention of whomsoever is going to reply. I listened to the right hon. Gentleman who opened the discussion this afternoon for over an hour, and then unfortunately I had to go out of the House, as somebody came to see me, but I must confess that during that hour I was not particularly impressed by the case he made out for the economic policy of the Government. Since the beginning of the war there has been a tremendous muddle in the whole of the economic management of the war. There have been far too many Departments concerned with this matter, and from what the Minister said in his opening remarks it seems to me that the tendency to-day is to increase the number of those in authority who have to be consulted by the unfortunate business men. There is no real co-ordination, despite assertions to the contrary.

There was only one point which came out of the Minister's speech which gave me any kind of satisfaction at all, and that was the formation of these area committees. He could not or did not explain anything about them, and he was not quite certain whether they were really in existence. However, I did notice in my paper in the North of England that a committee of this kind had been established and the names of the members of the committee were set forth. They were all names that commanded respect, but at the same time they were names of men who were already overpowered with work, and who, I should imagine, would not be able to give sufficient time to the work in question. I hope that this may not be the case and that I am wrong. Of one thing I am certain, that the greater decentralisation there is in these matters, the better, and therefore the formation of these area committees, if they are really to function, is a real step in the right direction. In my own part of the world there are a good many small firms which have been engaged in work which is no longer available. They are comparatively small affairs, but they employ a certain amount of labour, and various gentlemen who have been connected with these businesses have come to me and have said: "We are perfectly capable in our works of doing Government work for the Ministry of Supply or other Ministries, but we can get no kind of attention when we ask for orders." I can understand that the Ministry of Supply is overpowered with people coming to it and asking for contracts, but the real difficulty which I find that these people experience is that they have to turn down their workers, and they have to face the prospect of closing down altogether because they cannot get attention speedily enough.

At the moment I have various cases in mind. With these area committees it seems to me that we can at last get someone on the spot to whom we can go. I have always received the greatest courtesy from the Ministry of Supply and other Ministries to which I have gone, but I have not always obtained results; indeed, I do not think I have obtained a result of any kind from any Ministry to which I have gone since the beginning of the war in the way of finding employment for people or expediting foreign trade. However, I hope that we have now solved one of these problems by the creation of these area committees. Members of Parliament will be able to go to these committees and get in touch with them right away, and there will be less need for this pestering of Ministers who have other matters to attend to. It should be possible for these committees to arrange sub-contracting work for the smaller firms. The point is that to-day no one knows to whom to go for the work which he requires. Therefore, I welcome the formation of these area committees, and I hope that whoever is to reply to this Debate will be able to inform the House that they are actually functioning and that it will be possible for Mem- bers of Parliament, traders and commercial people in the country generally to get in touch with them as speedily as possible.

I would suggest that it might not be altogether inadvisable to see that the members of these committees really have time in which to do the work which they are expected to do, because I have found in other Government concerns of this kind that very often the gentlemen who are supposed to be functioning are not actually taking much part in the work in question. I also hope that a real drive will be made by the Government to promote foreign trade. I know that there are new methods by which it is hoped to promote trade, for instance, in the Balkans. I know there is a special department; I do not know how to describe it—I cannot even remember its name—but it is a Government body, and it is presumed to be making tremendous efforts to promote our trade in the Balkans. My right hon. Friend the Minister of Economic Warfare was enlarging upon its merits in a speech which he made the other night. All that I can say is that from the beginning of the war to the present time we have lost opportunity after opportunity of promoting our trade in the Balkans and other parts of the world, and I am not one of those who has that fervid confidence, which was shown by the hon. Member for Earn-worth (Mr. Tomlinson) in the policy of everything being run by the Government. I think that the few remarks which I have made this afternoon will show that I believe that the war, instead of proving the vast benefit to the country of Government control of industry, is proving rather the contrary, and I am perfectly, certain that whatever may be said about industry at home, if we want it to develop trade abroad it must be done by private enterprise.

Mr. Shinwell

May I interrupt the hon. and gallant Gentleman? He referred to a corporation whose name he could not remember. I presume that he means the English Commercial Corporation. Is he aware that the Government have now had to finance that corporation with Government money?

Sir C. Headlam

I am not aware of the correct details of that corporation's financial position, but I am certain that the corporation is not effecting the purpose for which it was created. I may be wrong, and, if so, I should like to be corrected. However, putting that aside, I am certain that in order to develop foreign trade you must have Government support for any private enterprise. That is clear, because otherwise you cannot do anything at all. You cannot go abroad without Government consent, but the actual business must be left to private enterprise. If the Government are wise, they will do their utmost to promote private enterprise, not only in Europe, but, much more important, in the Americas, both North and South. That is a subject which the speech of the right hon. Gentleman the Minister without Portfolio seemed so very cursorily to touch. He hardly alluded to that part of the business at all, and I feel that the House would like to know what the Government are doing to promote our foreign export trade, because, after all, the Government largely depends upon it and without it we shall not he economically successful throughout this war. The House would like to know more about that side of the question than has been told us by the Minister who opened this Debate. To return now to our home front, I would emphasise once again the real importance of assisting local business people in the way in which I suggest these local area committees can. I welcome their formation by the Government and look forward to some results. I hope that the right men are in charge and that local industries will be given the opportunity which they have been seeking all through the war.

7.0 p.m.

Mr. Wedgwood (Newcastle-under-Lyme)

I agree with the hon. and gallant Member for North Newcastle-upon-Tyne (Sir C. Headlam) in his disappointment at the speech by the Minister without Portolio. We cannot discuss the economics of this country at war without coming back to the principal question, and that is: How much wealth can be produced in this country at war? Everybody must realise that we cannot spend more than we produce. If we take every penny of everybody's income, we still have somehow to produce what we are spending, and therefore I get tired of all these questions of how much we are raising by taxation, by loan and in other ways. The real question is: How far are we able to meet the total cost of all our war expenditure, including keeping the people alive in this country? The feeding of the people, the cost of raw materials and the cost of the war have to be met out of wealth produced in this country. I rule out the trifling amount of wealth produced in the Empire which comes into this country in the shape of dividends or anything of that sort, but, generally speaking, the total wealth produced is the criterion by which we can measure the amount which we must spend and how we are to live in this country.

The Government must in some way secure the maximum production of the most economic articles. Hon. Members have pointed out that the only way to secure maximum production is to have everybody steadily at work, doing work that is useful, that there should be no question of turning people off because orders are slack, or hanging around Government offices in order to get contracts to keep one's people going. There must be some means of absorbing surplus production; that is to say, you must get full work for your manufacturers and they must be quite independent of the question of the number of orders that are coming in. In every case every manufacturer is faced with the question of keeping his factory steadily employed. If he can keep it employed working night and day on two or three shifts, his overheads go down and the cost of production goes down. Otherwise prices are bound to go up, the cost of the article goes up, and that leads to the losing of the foreign market.

We have seen this particularly in connection with Colonial produce. If we apply the doctrine of maximum production to the Colonies, we get on a small scale exactly what I am trying to point out. In the Gold Coast they produce, very cheaply and economically, cocoa beans, and the Colonial Office has had to consider lately the question of whether they ought not to burn the surplus cocoa beans. It is a surplus product which private individuals cannot market. In the Straits Settlements they are producing more tin than the whole world wants at its present price. They are producing rubber on a restrictive arrangement. In all those questions, whether it be cocoa beans from the Gold Coast, tin or rubber from the Straits Settlements, if we want maximum production, we must find some way of marketing the surplus. I do not believe that private ownership can market the surplus.

Let me take the potting trade as another instance. Unfortunately, with this new Purchase Tax the Government are proposing to apply a tax of 33 per cent. on the people who make cheap china, and only 16 per cent. on the people who make cheap earthenware, with the result that the manufacturer of cheap bone china will either be suppressed or have to go entirely into the export trade. The difference of 16 per cent. is quite enough to throw him out of the home market altogether, so that they have to go into the export trade if the factory is to keep open at all. They may be able to get a little of that 75 per cent. of their production which now goes into the home market into the export trade, but unless they get the whole of that 75 per cent. into the foreign market and sell it abroad the factories will either have to close down or have to run uneconomically, the workers being employed three days a week, instead of six clays a week. Similar injury is continually happening all over the country. Sometimes it is through the mistake of the Government in imposing their taxation on such stupid lines; sometimes it is because the orders are not available, because of the foreign market having died; but always it is because there is a surplus unmarketable.

If we are to get enough production in this country to pay our way, that question of how to deal with the surplus products must be considered. The Government told us the other day that they had appointed a committee to consider how to deal with the surplus production of tin and cocoa in the Colonies. If we are discussing the economics of war to-day, we must pay a little attention to this question.

I will put to the House what I believe to be the only way out. My hon. Friend the Member for Farnworth (Mr. Tomlinson), in an admirable speech, said that he thought the way out was to take over the factories and carry on exactly as though the whole production of this country was State production. I think we can achieve the same end much more satisfactorily in a different way. Already nearly the whole of our profits are being absorbed by high taxation. We are all faced with financial ruin. Nobody minds that very much, provided that everybody is faced with the same ruin. What hurts is the sense of injustice, when somebody is doing well and somebody else is not. The one thing that might ruin our chances of beating Hitler would be a sense of injustice which would wipe out for the injured person the great cause for which we are fighting. The time has come, or it will come very soon, when the Government will have to feed and clothe us all.

Mr. Denville (Newcastle-upon-Tyne, Central)

And bury us all.

Mr. Wedgwood

Then we should have to have a moratorium! If we are spending £10,000,000 a day, it is obvious that there is not going to be a surplus for anybody. The State will have to take everything except food, clothing, and other real necessities.

The Government tried to meet over-consumption by their Purchase Tax and by trying to persuade people to reinvest their pay in Government loans—a fleabite. I do not think that it will have sufficient effect. The only thing that will really keep consumption down is to put us all on to rations like the Army. After all, there is not very much difference now between the Army in the front line trench, the army in the factories or the army in this House. We are all like people on a desert island, under an Admirable Crichton like the Prime Minister. If we were treated alike, it would be found that people, far from being discouraged, would feel that this was just one more adventure in the war in which we were all ready to join.

How would that affect the manufacturer? I would say to the manufacturer, "Henceforth we will take your entire product. We will pay no wages. We will pay you no salaries, but we will keep you all. It is just as if you were soldiers in a regiment. You are part of the Army. We will keep you and pay you 2s. a day, or whatever it is." We have got to a position in which we have all to be in the same hole, not an uncomfortable hole if we are all in it together, but a very unpleasant hole if somebody is making a fortune and other people are grousing about not being able to do so. The morale of this country is not injured by all faring alike; it is injured if there is any sense of injustice in it. I may speak as a manufacturer. I do not think that the manufacturers would feel the injustice, if, for the duration of the war, they were told, "Carry on to the best of your ability. We cannot give you any profits. There will be a moratorium on your debts till the end of the war." I dare say that at the end of the war the £ will not be as valuable as it is now. Debts will be more easily paid. They should be told, "We will take all your products."

Mr. Quibell

Do not be so cheerful.

Mr. Wedgwood

It is a very cheerful position, I can assure you, if you owe money.

Then, we must deal with the surplus profits. In the first place, you will not have to keep perhaps as many factories open as at the present time. You may have to do the work in the best factories, and keep these best factories working day and night.

Mr. Marcus Samuel (Putney)

Supposing it was all loss instead of profit?

Mr. Wedgwood

The Government will fix the prices at which they sell things. All the cost will be the raw material and the feeding of the people. If there is a loss on the year, they will have to drop the manufacture and change over to something else. Obviously, making goods at a loss is not the most economical form of production.

Cannot we combine this with some sort of vision of the future after the war is over? I will take the case of cocoa, because it does not affect anybody in this country, but is a very good illustration. Cocoa is at present being burnt because it cannot be sold. That is wasteful. If necessary, I would have the Government buy up the cocoa crop, at cost, of course, and I mean by cost, what it costs to pick the beans and feed the natives, and nothing more. I would have them sell that cocoa at slaughter prices in any market in the world. At the present time I would send it to Japan. I would even give it away.

Mr. Quibell

What, give it away to Japan?

Mr. Wedgwood

Yes, give it to Japan to create a market. Better take India. For instance, I would actually give it away to the people of India rather than burn it. I think that by so doing you would begin to create a market which might be useful after the war. You would teach people to use cocoa who had never previously touched cocoa in their lives. You would develop in that way a taste for an article manufactured in Birmingham and in York, and, at the same time, a market for the raw material of the Gold Coast which would add to the value of the products of the Empire, now and after this war. The same thing applies, of course, to earthenware. It has been suggested to the Government before now that they might take the product as supplied by the factories, send it abroad and sell it at Buenos Aires or Rio de Janeiro on the quayside for whatever it would fetch. It might just cover the cost of production. It would easily cover the cost of production if that was only what it would cost this country to feed and clothe the people engaged in making the article. But in any case, if you are looking to the future, and if you realise that you cannot spend £10,000,000 a day without producing £10,000,000 a day, if you keep that in mind, you must see that we shall have to come to the position of taking everybody's income and everything that is produced.

No taxation, if we are to pay our way, will fail to take everything in the nature of income. Therefore, we can look forward to a system of rough justice whereby we keep the people in this country as in a fortress, or as in a desert island, where the State keeps us alive by feeding and clothing us, perhaps with a little extra for the soldier's necessaries; where we are no longer a State with all our own silly little ideas of how we can safeguard our financial position after the war; where we shall no longer be filled with anxiety as to the future of our children, where we can be free from all jealousies and the sense of injustice which disturb life at the present time, and where we shall have a common faith and a common cause, for the duration of the war. After the duration, why, we can go back to our present system, if we find that State action is not the most efficient method of producing wealth. Naturally, as an individualist, I consider that the State, in interfering with the individual in normal times, always makes mistakes and is more foolish than the average individual. I think that probably most Members of the House, even on this side, agree with me on that.

Hon. Members

No.

Mr. MacLaren

There ought to be State control.

Mr. Wedgwood

Individual initiative has made the country what it is. I still have faith in individualism, but whatever our views may be, we must all submit our individual action in war to the national necessity. This House is to-day really happier than it has ever been before. All those personal aspirations and jealousies about who is getting on and who has not got a job are very small to-day and rather contemptible. Just as we must sacrifice our private ambitions in time of war, so we must sacrifice our individual liberties in time of war. We must see that this Government looks forward and realises that during war more goods must be produced and that everybody must sacrifice everything to the State for the State, in order that the State may survive.

7.21 p.m.

The Minister of Labour (Mr. Ernest Bevin)

rose—

Mr. Shinwell

I am sorry to interrupt my right hon. Friend, but I think we want to be quite clear about what is intended by the Government. Perhaps he can say whether it is the intention of the Government to appoint some right hon. Gentleman to wind up the Debate?

Mr. Bevin

I was going to say that I proposed to make only a short intervention in the Debate and did not intend to wind up the discussion. I wish to deal with some of the points which have been referred to in some of the speeches and which, I think, if they go unanswered, might mislead the workpeople upon whom we are now so much depending to win this war. It was suggested that so far as labour was concerned, there was no plan and that there has been no planning. I think it is rather unfortunate that since I have been a Member of this House I have been able to explain outside a good deal of what has been done, but have not had the opportunity to indicate clearly here that there is planning and that that planning is working. I feel satisfied that the working out and planning of the use of labour at this stage of our history are bound to have a bearing on the future economic life of the country after the war. My right hon. Friend the Minister without Portfolio indicated that there has been established a Production Council. That was one of my suggestions, because I wanted labour to be in on the planning and to be regarded by the State as an equal factor with every other form of production, whether management, finance or whatever it might be. But this House in the middle of that plan imposed very onerous powers, the like of which, I think, even in the last war, had not to be exercised by any Minister of the Crown to the same extent at any period of that war. It is true that we had a Munitions Act and certain restrictions on strikes, but the powers were not imposed upon a Minister but upon tribunals, which, in the main, had a judicial head.

In this case, however, Parliament imposed powers directly upon the Minister, and there were two courses open for us to take. One was to exercise those powers in planning the ordering about of the people, and I came to the conclusion—and the Government as a whole supported me—that although the sanction was there, and in the last resort might probably have to he used, the great democratic machinery which has grown up in industry during the last 30 years must be exercised to the fullest possible extent. During the few weeks in which I have held office events of a momentous character in history have taken place. There were trade unions in this country which, if they had exercised the law of supply and demand, or their economic power, at this stage could have extracted what they liked. Here I would say to the hon. Member for Walsall (Sir G. Schuster) that if managements want an example of motive other than the profit motive, let them look at the voluntary abnegation of strength and power which the trade unions have exercised since the introduction of these powers. It has not been a question of 100 per cent. Excess Profits Tax or any other excess duties, but the rate for the job. In facing the problem, the Government came to the conclusion that it was preferable not to try to build up something new as we did in the last war, based on the old Treasury agreement, or something new built up on the basis of the old Munitions Tribunal, with its imprisonment, penal sanction and heavy fines, but to take the great joint bodies that exist and merely graft on to them a final court to supersede the power of the strike. Do hon. Members suggest, simple as it may appear on paper, that that is not planning for the handling of nearly 50,000,000 people? I say that is planning.

In carrying out the powers, one of the dudes was to move labour from one place to another. The miners at that time were urged to make a tremendous increase in output—I believe, to the extent of 40,000,000 or 50,000,000 tons per annum extra. What was the Minister of Labour to do? I agreed with the Minister for Mines to stop the men leaving the mines. I agreed to send men back to the mines who had left—not an easy job. They had to be sent back at a loss of £2 a week between the job they were on and the job they were off. But it was part of a plan to save the country and to save France at that time, and they went. Immediately the Continental market went I consulted the Minister for Mines and said, "What are we to do now? You will be working out a new policy." Within a day we stopped the sending back of the men. Could any Ministry move faster? We said, "Shall we alter the reservation?" Men from the hon. Member's own district were sent to defence work.

Mr. Shinwell

How many?

Mr. Bevin

Thousands, all over the country.

Mr. Shinwell

The right hon. Gentleman has made a very challenging statement. Will he furnish details and say how many men were sent?

Mr. Bevin

In South Wales and in various parts of the country, and from the East Coast strip, thousands of men have been sent on to that work. Hon. Members who represent Hull will tell you that I stipulated that, immediately the Admiralty had to take the trawlers and use them for our defence and the fishing stopped, the contractors who took the job for coastal defence must take the people from Hull, though they had never been in that area before, and Grimsby and other places. Speaking from memory—I did not know that I was going to take part in this Debate—I believe that from Hull alone I transferred in a few days nearly 4,400 people from the fishing industry and ancillary trades to defence work. There is a constant change in the situation. Your enemy is determining your action every day. You cannot put down a plan and say, "I am going to work that out with labour in this week, that week, or subsequent weeks." You have to sit in the office every morning. I had some problems before I was a Minister, but I think I have all the problems of all the unions now that I am a Minister. I was limited to one union at that time.

Now take another case. The changing conditions have affected one port, which I will not mention. Only to-day, before I came down to the House at four o'clock, I had to arrange for the Employment Exchanges to take nearly 6,000 dockers and move them right out of the port altogether, because, even if the danger of invasion has gone, the import and export trade of the country will not be of a character to take up the peace-time full employment. Reference has been made to men being stood off at aircraft factories. That may be. We cannot afford for any skilled man to be idle, and one of the pressures that I am daily putting on managements is not to keep a skilled man idle—[An HON. MEMBER: "Or unskilled"]—or unskilled. You can have them, and you may put them where the machinery is, and where production can go on, and immediately the labour supply boards report slackness it is their duty to move them where the demand is.

I do not suggest that it is working perfectly. I have had a good deal of opposition. I have prejudices from managements. I have a type of person who says, "I know my own business," but unfortunately he does not know the State's business. He does not know the business of the country. He has only lived and had his being in his own factory. I do not criticise that, but it is not easy to walk into a country which has had its individual freedom, as we have had, and apply these Orders in the way it has had to be done. I had to establish labour supply boards in 26 centres, and it was done within a month. I had to get independent chairmen. I had to get trade union representatives and employers. Remember that people at this time are busy with production, and it is extremely difficult to get the people you want to serve in these capacities. We are establishing a labour inspectorate for the first time which goes into the works—new and untried. Some say they are not all as competent as they might be, and the inspectorate think that some of the managements are not as competent as they might be. It appears to be mutual. The bulk of this inspectorate the day before they were appointed by the Ministry were working men in the shops, and they have had to go in and to suggest to the management the use of less skilled labour, and to perform the unpleasant task of dilution. When a skilled man who has served his time at his trade is asked to train another, he is asked to destroy his own capital, for which no computation can compensate him. He has to face at the end of the war a competitive factor which may mean, not waiting for the Treasury to tell him how much money he is to get, but whether his whole employment is going. That is the nightmare that dilution represents, yet that inspector has to carry it out. Please do not say there is no planning, and that the danger is being dealt with in a half-hearted way. [Interruption.] I have quoted my hon. Friend's actual words.

Mr. Shinwell

My right hon. Friend misunderstands the position. He seems to think you can deal with labour in a watertight compartment. My whole case was designed to show that there must be a Government economic policy, and it deals with factories, production and exports. I do not complain of what he has done. I went so far as to congratulate him upon his great achievements since he came to office. But to suggest that this is a plan, that you can deal with labour in a hand-to-mouth fashion from day to day according to circumstances, is completely to misunderstand what is meant by an economic policy.

Mr. Bevin

The suggestion was made that miners were being thrown out of work and nothing was being done. It is a cynicism which goes deep into the hearts of men when it is implied that one of his own colleagues is letting this happen and that nothing is being done. [Interruption.] The hon. Gentleman may get annoyed with me. I am not used to this House, but I am used to appreciating facts. If there is talk about the morale of this country and the morale for winning the war, then I say, let cynical bitterness and discontent get into the hearts of my army, and we have lost the war. Therefore, if the suggestion is made to my hon. Friend's division, which is a mining division, that the men are being allowed to go out of work and nothing is being done, I must correct that statement with emphasis; and indeed, if I am not guilty of that neglect, I will not allow the miners of this country to feel for one moment that I am neglecting their welfare. In this war I have been as strong as most men on the platform and as bitter in debate as any man could be, but the time for that is past, and I suggest that others might use caution in their language.

With regard to the general position of the Board of Trade and planning, what did my hon Friend say? He said, first of all, that he could not see the need for holding up production in the luxury trades, but later on he said that no luxury articles should be produced. I was in a little difficulty in knowing on which side he came down. The facts are these. The imports, the raw materials, the loss of sources of raw materials, the risks the men on the sea are running, all had to enter into the calculation. It was decided to give munitions and exports first place. I think that was a wise economic decision. When I introduced the Unemployment Bill in the House, I said that owing to the arrangement arrived at with the President of the Board of Trade for the restriction of luxuries, in the next three months, while the adjustment between those trades and the transference to munitions took place, pockets of unemployment would arise. These were the steps which we took. There was immediately a liaison between the Board of Trade and my Ministry. Before each Order begins to operate, the officers of the Departments consult and find out where the Order is likely to hit people. If it is a case of big multiple factories—that is, employers having factories in different parts of the country—and if they have, say, two, three or four factories. we find out whether, in the restriction of their trade, they can close down in a munitions area in order that the labour may be transferred easily and not leave islands of unemployment. I suggest that is planning. It is the only planning that can be done with a problem of this character.

In regard to exports, we have issued notices to try to appease the men, because they felt that in working on exports they were not giving their weight towards winning the war. We have had to assure them that in working on vital exports they are making as big a contribution towards winning the war as they would be if they were working directly on munitions. That is planning. What else can be done? It is true that we have planned to increase dilution on the munitions side, and on the export side, too, there must be some. I think my hon. Friends from the craft trades will bear me out when I say that that is a wisely planned system, because in the munitions industry there can be much mass production, a great deal of which will disappear at the end of the war, whereas in the export trades, where every order that is obtained may represent a different technique or a different form of production, the maintenance of high craftsmanship is vital for our economic policy at the end of the war. I suggest that is planning. It is working out the two things in a correlated way in as perfect a form as anyone can attempt.

In the case of bricks, for a variety of reasons brick production went down. At the present time, for buildings for Air-Raid Precautions and for a variety of purposes, we want every brick we can get. What did we do? The men had left the industry. We called together the Departments responsible for ordering bricks and we got a firm order until next December for every brick that could be produced. Every brickyard can work now with the assurance that its bricks can be taken. To save transport, in every district the bricks will be impressed from the nearest brick-maker. With these assurances, we were able to bring back from other industries to the brick trade as many men as we could in order to keep the orders going, and, I hope, overtake the delay in buildings for Air-Raid Precautions purposes. We followed that up, as my hon. Friend the Member for East Woolwich (Mr. Hicks) knows, by taking up the matter with the building industry. It was no good meeting the representatives of the building industry until we had settled the question of the production of the materials. In a day or two, we shall meet those responsible for the building operations, and we shall ask them to make concessions to us on questions of demarcation, and I think they Sill do so in order to complete this task for the safety of their own fellow men. Is not that planning? We arranged for the brick-making, we brought back the workers, and we are about to deal with the builders, and in those three ways we endeavour to get complete production from end to end.

Let me refer to shipbuilding, although it affects me only indirectly. The German figures are wrong. But it was not carelessness that caused us to go off merchant shipbuilding; it was not a question of somebody's willingness or neglect. It was a question of deliveries. We did so to increase the protective power of the British Navy. We diverted everything to achieve a given objective. It was not unplanned. Everything that was done at the Admiralty and at the Ministry of Shipping in regard to shipbuilding was worked out with meticulous care. I cannot turn out riveters, platers, engineers, and marine engineers as chickens are turned out of an incubator. It takes a long time to produce these skilled men. In order to meet the requirements of our plan, we had to get the men. My hon. Friends from the Clyde asked, "Why do you not stop building this big ship?" My hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood) came to me and made a suggestion, for which I thank him. We welcomed that suggestion. We speeded up gun mountings and various other things, and I am happy to say that as a result of that plan Hitler will get a far warmer welcome than he otherwise would have done.

This is the first time I have been in a Government, but I have been telling them what they ought to do for a long time—I hope constructively at times—when I have not been a Member. But no one can expect a Government to have the necessary time in three months with the loss of Dunkirk and all the equipment in France, with the necessity of re-equipping all those divisions, with the problem of obtaining raw material, and with the loss of sources of materials near to our shores for which we now have to go further afield. Even in that time we took a very wise decision. We took every commodity which was available in the country and all available labour and supplies. If we had so many weeks' supplies of food, and too little alloyed steel supplies, steps were taken to carry out priority arrangements right down to sources of supply, on the other side of the world, in order to make sure that commodities needed to finish and complete an article were sure to be shipped. That was the plan. I admit that, with enemy action and with internal difficulties, we may have been delayed, but the result to which I refer has been achieved despite a tax upon our production by Nazi raids. In this connection I should like to say that the way the men have stuck to their work after the sirens have been sounded, merits the approval of every citizen and is the pride of everyone.

I confess that there has been no time to make an economic survey. One statesman in Australia said that economists were wonderfully able in telling you the way you had come, but were not sure of the way you should go. It is a little difficult to forecast economic policy in these days. Can anyone tell me what will be the geography of the world at the end of this war, and can anyone tell me what will be the world's financial position? Can anyone foresee the exact picture of events, and what we shall have to cope with when the war is over? For myself, I stick to my fundamental principles, and try to apply them to every problem which arises. I believe that a great deal can be contributed, not so much in the form of debate, but in constructive thinking by very wide circles in this country, by those who do not carry the burden of office at this moment. If ever there was a time when constructive thinking and wise policies for the future of the world have to be ready such a time will be at the moment when the guns cease fire. At that moment any contribution that can be made I am sure will be welcomed by anyone who has the onerous task of dealing with the situation.

I have intervened in the hope of showing that while we are not satisfied—and who can be satisfied in a war while the scientific brains of the world are operating against you?—we have been following this plan. Employers in this country must cease to be lazy-minded. It is as vital to train men in the workshops to see this war through, as it is to train men for the Army. While we are doing as much as we can in the training centres, we are not getting all the help we might from industry. I close on this note of appeal, in the hope that, while we may make mistakes in our judgments, our planning will lead towards the objective of final victory.

7.55 p.m

Sir Walter Smiles (Blackburn)

The right hon. Gentleman who has just spoken has introduced a breath of fresh air into this Debate. It is a pleasure to listen to him, and to hear a man who really does go into details and does not give us a lot of platitudes about economics, which are not in time to-day. I am not one of those Members who helped in any way to bring down the last Government, but, speaking as a Conservative back bencher, I know that we welcome the four right hon. Gentlemen who have been brought into office. Whatever happens in the future, we Conservative back benchers will not spring on their backs and stab them, for any little oversight, in order to bring them down. We do not intend to put a monkey wrench in the machinery, but we shall do our best to support them. I believe that if these right hon. Gentlemen carry on as they have been doing, they will contribute a great deal to the winning of this war.

There are three subjects with which wish to deal—gold, textiles and coal. I should like to know what is the Government's policy with regard to gold. In this respect, I am speaking about one British colony only because the South African Dominion and Australia can look after themselves. What is the position in regard to our colony of West Africa? We all know that people have sunk millions of pounds in these mines and some of them are just coming into production. From the way in which taxation is arranged at the present moment, one would imagine that this Government did not wish West African mines to produce 100 per cent. of their capacity. The Minister without Portfolio was speaking about the necessity of obtaining supplies from America, and how we were to pay for them. At the present moment the United States is one of the few countries prepared to take gold, and I suggest that, instead of the West African mines being discouraged to produce their 100 per cent. of gold at the present moment they should be encouraged to do so, because every 100 ounces of gold will do something to buy more aeroplanes from America. Some people's description of a gold mine is "a hole in the ground for people to put their money into." And usually, only one mine in two is successful. Some of these mines have a life of only about 20 years. Millions of pounds have been sunk in them, years of work have been done and no dividends paid and just now as they are coming into production, the Government's system of taxation puts on the brake. A system of taxation should be introduced which would encourage these mines to produce the greatest quantity of gold in the shortest possible time. We want this gold now and not in five or six years' time.

After the production of gold we have to think about our export markets. The only exports about which I propose to talk are textiles, the principal of which are linen and cotton. Owing to various causes over which we have no control, Belgium being occupied and there being difficulty in getting ships to Russia, it is hard to get flax. I think there is only sufficient flax in this country for a few months' supply. I suggest that the policy of the Government should be to conserve this flax for the export of linen to the United States of America and that, where possible, other materials should be used for the home market. In the case of tarpaulins, for instance, I understand that in peace-time the Admiralty stipulated for the best quality flax, and they made sail-cloths and things of that kind that would last for years. It is not so necessary to do that to-day, and I suggest that cotton or jute might be used for the tarpaulins, in order that the flax might he sold to the United States to produce dollars.

I understand that only four countries remain on what they call "hard" currency, among them being the Argentine and the United States. We must have dollars if we are to buy aeroplanes and munitions. Excluding the British Empire, the United States is the only country which can supply us with aeroplanes, so that our exports to that country must he carefully nursed. There are lots of substitutes which the Minister of Supply and the three Service Departments could use in place of the high-class materials which they are using. I have had letters from a manufacturer in my constituency who produces cotton felt, and he says he is not able to get any orders for it, although for the lining of such things as munition boxes, for which woollen felt is used, cotton felt would be good enough, and he is prepared to guarantee it. Wool, in the shape of tweeds or worsteds or high quality things of that kind, is another material that should be exported to the United States to bring in the valuable dollars that we require to buy aeroplanes.

The other subject which I want to mention is coal, to which the hon. Member for Seaham (Mr. Shinwell) referred. My memory carries me back to last January, February and possibly March, when we were all getting letters and telegrams from our constituents complaining that they had no coal in their houses. I got into trouble with some of the coal traders in Blackburn, because I suggested that for next winter the local corporations should lay in stocks of coal in order to avoid the shortage that we experienced last winter. During that period our locomotive drivers were driving through the snow and the terrible fogs during the night in order to bring coal for domestic consumption. It is all very well for the Minister of Mines to tell people to lay in stocks of coal now. Like many other Members, I have laid in a stock, and many middle-class people have done so too, but it is not so easy for the working man. His house is not designed to accommodate a stock, even if he had the money with which to buy it. I suggest that the Minister of Health should be allowed to make an advance to local corporations to buy coal now. I do not want to take trade from the coal traders, but many of them have not the capital or the space to carry large stocks. I want the municipalities to help the coal traders. Like the Minister of Supply, I say, "Do it now" before the winter comes, so that our locomotive drivers shall not be put to the terrible discomfort of having to drive at night through snow and fog. If the Government can do anything to make it easier to provide finance so that people will have stocks of coal in their own localities, this winter, they will be doing something towards the economic planning necessary in time of war.

8.6 p.m.

Mr. Stokes (Ipswich)

I should like to join with the hon. Member for Blackburn (Sir W. Smiles) in thanking the Minister of Labour for his speech. I am bound to say that I felt a great deal better when he finished than I did when he started. As an employer, I should like to join with him in saying how thoroughly cooperative the trade unions and the men in the shops have been in helping in the difficult business of trainees. What it means to the skilled operative is not appreciated by all hon. Members for, apart from selling his capital, he sells his wages to a certain extent as well. There are great difficulties, especially-when you are double-shifted, in duplicating and handing over, and it means a considerable individual sacrifice on the part of men in the shops, So far as I have experienced it, there has been little or no grousing, but admirable co-operation all round. I think that my right hon. Friend the Minister of Labour was a little hard on my hon. Friend the Member for Seaham (Mr. Shinwell) in flaying him alive for saying there was no plan, because, honestly, in listening to the opening speech of my right hon. Friend the Minister without Portfolio, one did not get the impression that things were as they should be. My right hon. Friend told us that there was an Economic Policy Committee, and when we asked him who the members of the committee were, he could not tell us their names. Either the committee is so large that there are too many for him to remember, like some of the other committees, it never meets. That is the suspicion in one's mind.

Then he told us that there was a Production Council, and he alarmed me by saying that the council was all ready when the production departments would let them know what they wanted. My right hon. Friend gave me the impression that they had not a proper plan of what was needed for the next 12 or 18 months. When my right hon. Friend got on to one of my favourite subjects, the area boards, he was not able to tell us whether the boards have been appointed or whether they have met.

Mr. Greenwood

I said that they had been appointed, but that I was not sure how many of them had met.

Mr. Stokes

I do not want to misquote my right hon. Friend, but I have tried to discover who is chairman of my area board, and I cannot find out. I saw in the Press the other day that what was called the "retired rear-admiral" scheme, which we criticised so much last year, has been abolished, but there has been no further announcement, and I have not found an employer in my constituency who knows who the chairman of our area board is or when the board is likely to meet. My hon. Friend the Member for Seaham was entitled to express considerable doubt as to whether they were going along the right lines. I am delighted to hear that these new area boards have been appointed, because when the "rear-admiral" scheme was first suggested more than a year ago, we criticised it violently and said it could not possibly work. Now the Government have come round and done what we suggested should be done.

The right hon. Gentleman who opened the Debate spoke about the priority system. I did not follow him entirely, but in my experience the priority system does not work very well, particularly when you are dealing with sub-contractors, simply because there does not seem to be a single head for sub-contracting supplies. The Admiralty, the Air Ministry and the Ministry of Supply all battle the sub-contractors, and the wretched manufacturer who has sub-contracted with one of those firms has a frightfully difficult job to get his materials at the right time. He may have made an arrangement for what he wants and been promised a delivery date, but everything is upset by some official from another Ministry dashing in to claim priority. I have had cases in which work has been taken off the machines which I required in my own factory. I wish there could be, and perhaps the right hon. Gentleman proposes that there should be, some better co-ordination in the sub-contracting work, so that main contractors may have a chance of delivering their goods to time.

Two things which the hon. Member for West Birmingham (Mr. Higgs) said from the benches opposite should not go unchallenged from this side. He said it was a pity the Excess Profits Tax had been put up to 100 per cent. because it destroyed all incentive, and that he felt we should never get the job done unless there was incentive. I agree that we mist have a carrot for the donkey in some form or other, but there ought to be what I call the incentive of a common aim, and surely we have that now. It is outrageous to suggest that managements will not be efficient simply because "it does not matter a hang" whether goods cost more or less, as the profits will be taken away. I have not heard that statement made from this side of the House, and it astonishes me to hear a manufacturer make that sort of claim. I am sure it is not the contention of the men that there should be waste in the factories or excessive wages provided that the work is properly organised. I think it is a great mistake that the Limitation of Dividends Bill was not proceeded with, because I can foresee that dividends will increase, and the money will not be paid over to the Government in the form of subscribing to loans—with which, incidentally, I do not agree—nor will it be ploughed back into the business as it ought to be in the interests of sound business.

The second thing said by the Member which I want to refute is that there is what he calls a "wages ramp." I have heard stories of people who are earning £10 or £12 a week, but I have not any evidence of it myself in my own factory, and when we find that the Government have not yet dealt with some of the major inqualities which exist I have no intention of attacking men for making a bit more at the present time. I should like to correct a wrong impression which I think will be created by what the hon. Member said about the method of fixing piece rates. I have never heard such a story before. If we conducted affairs in our factory in the same way there would not be peace for five minutes. It is wrong to suggest that in the case of a new job the price is fixed immediately and becomes fixed for all time. The arrangements with the unions are much more sensible. The thing is done on a reasonable basis; people are given a reasonable time to ascertain what will be the right wages for the job having regard to all the considerations, quantity, method, etc., after trial.

I wish to ask whoever winds up the Debate whether he can assure us that in future there shall be no delay in making payments to contractors. The Govern-merit announced not many weeks ago that they had given instructions that the banks were not on any account to hold up production in works on account of lack of finance, that they were to advance the money and the Government would pay it back through the contractors, of course. That is all very fine, but the banks do not do that for "nowt." Contracts are undertaken at fixed prices, and if contractors are charged 4 or 5 per cent. on money borrowed from the banks they will have no chance of putting that into the price—at laest not until the next occasion. It seems wrong that the Government should be so long in making their payments. I have had experience of the delay, and have had complaints from a very large number of other manufacturers, some of whom are owed hundreds of thousands of pounds. If the Departments were properly organised there would be no reason for delays in payments; and if, indeed, contracts must be financed by the banks, the Government should lay down the rule that they are not to he charged any interest at all.

The right hon. Gentleman spoke about American purchases. Again, I did not follow all that he said, but I will call his attention to the fact that since the beginning of the war the prices of American machine tools have gone up by 300 per cent., and it looks as though someone on the other side were making a good thing out of the business. I am glad that the Minister of Labour is back in his seat, because I should like to feel assured that when we get all these tools we shall have the people to work them. I have met with difficulties in my own factory, though I have done my best to train workers. Ac the Minister of Labour said, we cannot turn engineers out of a hat after a week's training. I doubt very much whether when we get all these tools, we shall be able to use them. I hope the Government are co-ordinating their purchases of tools with the provision of the requisite supply of labour to work them, especially having regard to the high increase in the cost of tools since the war started.

Mr. Austin Hopkinson (Mossley)

Can the hon. Member tell us the average rise in the cost of English machine tools?

Mr. Stokes

My impression is that it is about 50 per cent., but it does vary enormously with the type of tool. I have not found that machine tools produced in this country have gone up in price nearly as much as I expected they would, having regard to all that has happened since the war started, but they are difficult to get and one has not been able to make many purchases. Another point that I wish to put forward concerns the sad economic plight of many small businesses of £500 or £600 a year. It seems to merit the attention of the Economic Policy Committee. All up and down the East Coast there are small business men, retailers of one sort and another, who are really all "broke." They have plenty of stocks, plenty to sell, but everybody who comes into the shop says, "No, I must not buy, because I have been told not to." I question very much whether the policy of restricting purchases is as right as people like to believe it is. My question is answered by the hare fact that there are over 800,000 people unemployed. It seems to be thoroughly bad economics to suggest that people must not make purchases if there are both goods and materials available and idle men who could produce more wealth to keep the whole economic system in action. The whole thing is based on a profound misconception of the meaning of money, but I do not want to go into a long dissertation upon what money is. I do not want to start that hare.

There are two things I urge that the Government should do. First of all, there is land purchase. [Laughter.] I am not suggesting any new legislation, so my hon. Friends need not laugh at me in anticipation. The Government have all the powers they need. It is an absolute scandal that certain things should be allowed to happen. Here is the case of 26 acres of land purchased at Harrow. The rateable value of the land prior to purchase was £48. The local authority who wanted to use the land paid £15,000 for those 26 acres, that is, £600 an acre, or 300 times its rateable value. Is that a policy of sacrifice? It is preposterous that that sort of thing should be allowed to go on. I have pressed the Chancellor of the Exchequer again and again to make the statement that land sales are to be subject to the 100 per cent. Excess Profits Tax, but he gets out of it by telling me that some land sales are capital sales and some are revenue sales. When I ask him which is which, he either says he does not know or is not prepared to tell me, on the precedent that it is not in the public interest. I do not know why hon. Members opposite complain that a man earns £12 a week on munitions when a man who has 26 acres of land walks off with £15,000. I urge the Government to deal with this vitally important point.

Secondly, I urge that the Government should pay serious attention to the whole question of financing the war. I would like to recall to hon. Members what happened during the last war, because perhaps by so doing one might avoid falling into the same trap this time. When we started the last war the National Debt was about £700,000,000. When we finished that war it was £7,000,000,000. When we started this war it was about £8,000,000,000. The point is that between 1918 and the beginning of this war, on a National Debt of about £7,000,000,000, varying up and down to £8,000,000,000, we paid £5,600,000,000 in interest. Having paid that interest, we are still left with a National Debt of £8,000,000,000. So far as I can judge, we shall spend twice as much on this war. I know that hon. and right hon. Members who speak from our Front Bench are now rather content that this is going to be a nice 3 per cent. war, but, as far as I can see, when the war is over, if spending goes on at its present rate and the war ends at the end of 1942, the National Debt will he of the order of £15,000,000,000 or £16,000,000,000, and the annual interest service of the Debt will be about £450,000,000, or practically equal to the total genuine savings of the people.

Really and truly, if the war is to be financed by borrowing—I could argue that subject, and it would take a long time—and by creating false money, surely it is right that the Government should use the powers they have and should take over at least the issue department of the Bank of England in order to control the issue of credit for the financing of the war. We might, in that way, be able to get out of this mess in no greater debt than when we entered into it. You will never be able to pay off the capital, and it is nonsense to suggest that you will. We have not yet paid for the Battle of Waterloo. I would remind hon. Members that there is very little difference between a banker and a forger. The forger forges money, passes it over, and then goes off with the swag, but the banker creates money out of nothing, lends it out to somebody, lives on interest, and keeps quite within the law.

Mr. Buchanan

One goes to gaol, and the other gets made into a peer.

Mr. Stokes

That is in the nature of things, and is possible within the existing system.

Mr. Kirkwood (Dumbarton Burghs)

We want to change them over.

Mr. Stokes

We do indeed. Finally, I urge that the Government should pay serious attention now to what is going to happen when the war is over. I quite agree with the right hon. Gentleman the Minister of Labour that the Cabinet, Ministers, secretaries and so on, are doing far too much to be able to sit down and think out what is to happen under an enormous variety of possible circumstances, but I suggest that it will be quite possible to find some fairly level-headed, intelligent and progressive people who are not in the Government—[Laughter]—and not necessarily in this House—and to put them together to try to work out what is to happen the moment the guns stop going off. It will be tragic if we have the same sort of thing that we had after the last war. I remember assembling all my men in France and reading to them the document which was sent out by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) about a land fit for heroes, etc. We all felt like crying with emotion, but nothing came of it. The whole lot of the men went on to the scrap heap when they got home.

I was horrified yesterday when the Lord Privy Seal answered a Question put by a Government back bench Member, whether there was any committee sitting to investigate the economic situation after the war, and said, "No." He said there was no time for it. I asked whether anybody was studying this problem, and he merely smiled at me. I do not think it is a question of smiles at all. I am in dead earnest about it. There are plenty of people about who could examine the subject if the Government would give a lead and get a few progressive people together, but for heaven's sake let us avoid the reactionaries and the mumbo jumbo economists. Finally, it is not the side with the greatest assets which will win the war but the side which makes the best use of the assets it has. We shall fail badly unless we make the best use of every single asset and organise the whole of our man power.

8.28 p.m.

Mr. Clement Davies (Montgomery)

I agree with the hon. Member for Ipswich (Mr. Stokes) that it is very necessary for us to try to work out the economic plans which we might put into effect when the war is over, but, for the moment, what is of much more concern to us, is the immediate plan for winning the war. May I, on behalf of all who had the pleasure of listening to him, thank the Minister of Labour for intervening in the Debate? It was a virile and courageous speech, such as one has learned to expect from him. It was a real pleasure to see him standing four-square at that Box and dealing with the situation. He dealt, very rightly, with only one part, that which immediately concerns him, but there are much broader issues with which we are deeply concerned.

I confess I was disappointed with the speech of the Minister without Portfolio. We are all very fond of him. We have great hopes of him, because he is a man of wide experience and great vision, but somehow we all feel that things are not happening as they should, and that something is holding them up somewhere. We still feel, in spite of changed personnel and the new energy that has been put into the Government, that all is not being done and planned that ought to be done and planned. When we criticise, the criticism is not directed at anything other than that point. Let us get that matter right, and get that energy and that plan now. We shall not do away with criticism merely by saying: "It is not as good as we should like it to be." Both the Minister of Labour and the Minister without Portfolio said: "Of course, we are not satisfied." But that is not good enough. Is anything happening which is preventing them from putting their plans into effect?

This is the kind of thing which is worrying us at the moment. We know that certain expenditures have to be kept down. We are told by everybody, very rightly, that we must do without luxuries. As the right hon. Gentleman also quite rightly pointed out, that will lead to immediate unemployment. We are told also that the increased taxation will stop consumption and will probably stop a certain amount of production. That, again, is leading to unemployment. Then there is the fact that we cannot import the supplies which we imported in the past. Therefore we shall not get the raw materials with which to put people into work. We know that the Board of Trade have issued a restriction order that raw materials are to be given to the manufacturers who are manufacturing for sale in this country, only to the extent of two-thirds of what they had in the past. That, again, will lead to unemployment and to less production. I say to the Government: Granted all those points what is your plan? What are you going to do about it? So far, all that has happened is on the negative and not on the positive side.

Let me take the instance which I gave first, namely, doing away with luxuries. You say to the manufacturers: "You shall not manufacture." You also say that they are to be taxed under this new Purchase Tax. You will cut down all that. You will put men engaged in production and the distributive trades out of work. What will you do? Well you let them wait for something to happen? Will you compensate them in some way? Let me take, as an instance, something which is happening to-day. Men and women have been taken away from the danger areas. They have left their homes, their shops, their goods, their all. What do you propose to goods with regard to them? Is that to go on, as each area becomes a danger area? Are they to be put back when an area ceases to be a danger area? Very rightly, the right hon. Gentleman the Minister of Labour said: "Who can foresee what will he the position after this war?" Who can foresee what will be the conditions under which we shall live? I agree that nobody can, but it is the duty of the Government to foresee as much as they possibly can for the next few months, or possibly for the next two or three years. It may be a matter which is giving the Government deep concern at the moment, but if it is not, the sooner we know the better. The sooner we know what we have to do in order to meet the situation the better.

Let me take the Board of Trade as an instance. The Board of Trade has issued its Regulations. The object was twofold: to limit the amount of raw materials which could be used for home production, and to increase and encourage the production of goods for export. But what has been the effect? By merely leaving the matter in that way certain mills to-day are running at half-time. That does not add to the national wealth or to our production. It does not increase our strength at present. I was told the other day of the position in one industry. I know the efforts which have been made by the Board of Trade to get these people to work together, to put forward a plan by which they can tide over this present position and increase their production. The representatives of the hosiery trade were called together and were told: "You are to have your raw materials cut down. What do you propose to do about it?" Their answer, I understand, was: "We must all be treated on the same basis. We must all be treated fairly." Quite right, but what was their idea of being treated fairly and on the same basis? It was that all should work on half-time. How will that help the nation at a time like this, when all are agreed that every man should be on his toes?

The right hon. Gentleman was right in paying a tribute to our freedom in the past and to our old traditions, but when are the Government going to use those powers which they have to deal with this situation? The House rightly passed, in less than an hour, the Bill giving the Government full power over men and materials. When will they use those powers? It is said that the Government have been in office only three months, but these matters have been in front of the representatives of this country for at least 12 months. Before the right hon. Gentleman came into this House, when he was playing his great part outside, some of us were calling attention, whenever we could, to the fact that there were well over 1,000,000 unemployed. Are we to understand that when we were calling attention to that, the Ministry of which he is now the head was doing practically nothing to deal with that situation; that it was allowed to go on, men being picked up, here and there, by a new industry when one happened to arise? Was there some planning, or has everything had to be devised since? If that is the state of affairs, it is an appalling one.

But whether they have planned, or whether they are merely devising a policy now, I would ask the right hon. Gentleman and the President of the Board of Trade, who, I understand, is to wind up the Debate, to take the public into their confidence as early as they can. The right hon. Gentleman has told us about the number of people that he is putting into trade. What a vast difference there is between the figure he has mentioned and the figure mentioned by his predecessor, which appalled a few of us who ventured to offer criticism at that time. Let the President of the Board of Trade tell us what he intends to do with regard to these trades which he is now cutting down. Is he going to exercise the powers that he has? It is obvious that the time has come to deal with the country as a whole, and to see that the sacrifices, which we are all prepared to make, are on an equal footing. The hon. Member for Seaham (Mr. Shinwell) was quite right. There must now be a collective plan to fight this totalitarian system. If you have to pool industry, industry will be pooled. If there are certain vested interests in industry which grumble or try to stop you, you can be sure that the House and the country will be behind you if you exercise your powers.

Our financial system is completely broken up. I think every hon. Member who spoke in the Debate yesterday pointed out to the Chancellor of the Exchequer that taxation and borrowing would never fill up the enormous and increasing gap. That gap amounts to at least £800,000,000, and it will grow. What is the use of trying to go on with the old situation? The only way is to have a plan for the whole country, and to tell it to the people; and they will all be prepared to help in carrying it out. If the Government have not their plan complete at the moment, let them tell us the broad lines on which they are working, and we will give them every encouragement. But do not let the Government keep these things to themselves. Let them show us that they mean business. It is rather significant at this time that we still continue with the old tags. It shows me that there has been no real change even yet. There is happening about us to-day, whether we will it or not, the greatest revolution in the history of man. We shall never see again what we saw on 2nd September. To-day, the man responsible for production, for the economics of this country, is called "the Minister without Portfolio." Why call him that; it is a silly phrase in any event. Give him a name. Call him the Minister of Production, or the Minister of Economics. Give him an office, instead of a back room in the Treasury. Give him a staff. And why do we use the title "Lord Privy Seal" at a time like this? These may be only phrases, but if they were changed it would, at any rate, show that the Government are facing the fact that great changes are taking place, and are determined to see that the country is put on a proper footing to meet them.

8.42 p.m.

Lieut.-Colonel Sir William Allen (Armagh)

The more I listen to Debates on the economic state of the country and the various duties that have to be performed by the various Ministers, and to the insistence of those hon. Members who have no responsibility, the more it seems to me that they are looking for miracles in this twentieth century. I do not know whether my colleague the hon. Member for Down (Dr. Little) would agree with me if I said that the time of miracles is past, but of one thing I am certain, that we have Ministers on the Front Bench now who are pulling their weight. I know that in Northern Ireland it is realised that the Government have really got down to business in carrying on this war.

A couple of subjects have been referred to by hon. Members opposite with which I would like to deal. The first is the Excess Profits Tax. From the point of view of economics, I think that tax may be called a full cousin of the former Excess Profits Duty. When the Excess Profits Duty was introduced, we thought we were going to have huge quantities of money as a result, but it did not work out that way, particularly when the late Sir Austen Chamberlain raised the duty to 80 per cent. It was pointed out that there would be a very unfair incidence, more particularly as the three years' prewar average was taken as a basis for computation of the tax. Some concerns had had a very bad three years prior to the war, but they started to make a little money during the war. Concerns that had had no profits during that three-year period might then make a profit of £1,000, and they had to hand over £800 of that to the Chancellor of the Exchequer. We looked upon that as being immoral finance. There were other concerns which could bear the tax well, as they had been paying 10 per cent. or 15 per cent. before the war. To take away money from a concern which is struggling is bad. In 1920, it will be remembered, the bottom dropped out of the market. Millions of yards of material were thrown on the market, and scores of millions of pounds had to be returned out of Excess Profits Duty by the Treasury.

That is what happened with the Excess Profits Duty. There is rather a different state of affairs with regard to the Excess Profits Tax. I was very glad to hear the Chancellor explain what he proposed to do with regard to it. From an economic standpoint, he deserves every credit. Although 100 per cent. of the excess profits may be taken, and although certain concerns may have had no prewar profits and may at present be making a profit, I would like to remind hon. Members of what the Chancellor of the Exchequer said. He is making arrangements for a committee to which these concerns may appeal, and before which they may put their financial position. In that way those concerns which had very small profits before the war, will be partly relieved of that 100 per cent. tax.

Mr. Deputy-Speaker (Colonel Clifton Brown)

We are not discussing the Finance Bill now. The hon. and gallant Member cannot go into the Excess Profits Tax in this Debate, and anticipate debate on the further stages of the Bill.

Sir W. Allen

Several Members have dealt with the Excess Profits Tax from an economic point of view. I agree that we have no right to discuss it as a matter for the Finance Bill; I am touching upon it only from the economic point of view. But I will leave the matter there. Another question which was referred to was the suggestion of land purchase for England. I would not advise that in all things England should follow policies which have been adopted in Ireland, but I would suggest that the Government or some other responsible authority should take up the question of land purchase in England, so that the farmers might own land here, as they do in Ireland. I do not think that that is impossible. If it were done, a great deal of hardships of which farmers complain would be done away with.

Mr. Mathers (Linlithgow)

Why leave out Scotland?

Sir W. Allen

I do not see why it should not be done in Scotland, too.

Mr. Mathers

You limited your proposal to England.

Sir W. Allen

Shall I call it Great Britain? That includes Scotland, England and Wales. There is another question in which we are all interested—the inequality of sacrifice at the present time. The soldier gets a couple of shillings a day. I should like some Member of the Cabinet or the Secretary of State for War to inquire into the salaries that are being paid in the War Office. It might surprise the House to learn that there are some individuals there drawing double salaries. That is absolutely contrary to the pay warrant, and I do not believe that that has the sanction of the Treasury. When we talk about equality of sacrifice and equality of payment, the Departments should begin at home. I would be glad if the Secretary of State for War would take up that matter of the men who are drawing double salaries at the War Office. It may be that the same thing is happening in the Royal Air Force or the Royal Navy. I do not know, but I have been informed that such is the case in the War Office, and the sooner that ends the better.

I would like to follow what was said by my hon. Friend the Member for Blackburn (Sir W. Smiles) in regard to the textile industry. I do not think that we are getting a fair deal in Northern Ireland. The late Minister of Supply visited us not long ago and made delightful promises. A lot was to be done, but nothing has happened yet. Unemployment is appalling. In the little town in which I was born, a town of 14,000 inhabitants, between 2,000 and 3,000 people are unemployed. These are men and women with magnificent skill, and yet we cannot get anything for them to do. It is not to the credit of the Minister of Supply that something is not done. My hon. Friend the Member for Blackburn spoke of flax. I do not think that we are getting a fair deal in the distribution of flax. What is happening at the present moment? Nearly every Member who speaks in this House refers to the necessity for increasing our exports. The making of linen in Northern Ireland is almost entirely a matter of the increase of exports, and its development is for the economic welfare of this country. I do not believe that there is any other Navy in the world but ours which insists on utilising flax in the materials which they require. There seems to be a kind of prejudice in favour of the use of flax. I have put down a Question with regard to that matter, and I hope that I shall receive a satisfactory answer, and that more flax will be released to the spinners of Northern Ireland in order that the spinners may be employed, and that the country may benefit by increased exports. I was told, when coming across on Monday night from Northern Ireland, that unless more flax is sent over there, at least three of the largest spinning mills will be closed down next week and 1,600 hands turned off. That is all wrong. I am firmly convinced that, if we can only get a fair distribution of flax in Northern Ireland, unemployment will decrease to an extraordinary extent and the finances of the country will benefit.

My hon. Friend the Member for Blackburn also touched on the question of fuel. I wonder if hon. Members opposite would tell me what they are paying at the present time for household coal? I would like to know. We cannot get any coal in Northern Ireland. I have had some communication with my hon. Friend the Secretary for Mines, and, as far as he can, I believe he will help us, but he cannot work miracles. We want household coal particularly. He tells us that we can get plenty of other coal, but we cannot burn that coal in our grates. It is only fair that we should get part of the distribution of household coal. Surely, the miners are digging up household coal to a far greater extent than they were before the war. We have been told to lay in more coal. My hon. Friend was right when he asked how can a poor man lay in coal. All he can lay in is a bag at a time, but he ought to be able to get that bag at a reasonable price. I doubt very much whether any hon. Member opposite pays as much as 65s. a ton for household coal, but that is the price that we are being charged at the present time. It is for the Secretary for Mines to see what can be done with regard to the reduction of the price of coal. I know that the costs of production have gone up owing to railway charges, and shipping freights have to be added to the price that we pay, but we ought to be able to get coal at a very much lower price than that. I would ask the Secretary for Mines to look into the question seriously, and, above all, to see that we in Northern Ireland get a fair distribution of the household coal that is produced.

We are all, of course, in for the winning of the war. We are doing our best in Ulster. We have contributed men, and, to some extent munitions. We are heart and soul with you in the winning of the war, but do let us have fair treatment in order that some heart may be put into the people of Northern Ireland. You have sent soldiers over there and I believe they are very happy indeed, and that as a result of their training you will find some of the best regiments upon which you can count for the winning of the war. But there is the economic side of our position which I plead with the Government to rectify.

I have mentioned some of the subjects in regard to which they could help, more particularly the fair distribution of flax. I do not see why the Navy should insist on their covers being made of calico. An hon. Member opposite told us of the orders for millions of yards of cotton goods that have been cancelled. They should use some of those, instead of insisting on materials produced from flax, which is used in our staple industry. Hundreds of thousands of people are dependent upon the amount of flax that we receive. I know that Russia and Belgium are struck out as producers of large quantities of flax, and that we cannot get any from Northern France. The farmers in Northern Ireland have done magnificently in regard to the land that has been turned up by the plough, and a greater acreage has been put down to flax in Northern Ireland than in any other part of the country. It is an economic problem as far as we are concerned, but even more than that, it is a question that this Government must tackle very seriously, because Northern Ireland depends on exports to foreign countries, and particularly to the United States of America, which take a large quantity of our goods. All that you have to do is to send us the flax and so keep the mills going, increase employment, send out the goods and there you have an opportunity of really contributing to the really successful prosecution of the war.

9.0 p.m.

Mr. Ellis Smith (Stoke)

As one who has sat in the House since four o'clock, the first thing I want to do—and I believe most hon. Members will associate themselves with me—is to express my sympathy with the hon. Member for North Cornwall (Mr. Horabin) at the experience which befell him when he spoke from the Liberal benches. I hope that that experience will not affect his confidence and that when he comes to read the OFFICIAL REPORT to-morrow he will see that our thoughts were with him and that we hope he will soon be able to make further constructive contributions to our Debates.

I want to say to my right hon. Friend the Minister of Labour, who, metaphorically speaking, produced a blue print this evening, that so far as his responsibility is concerned he has a plan for dealing with labour. But what we are hoping and appealing for in this Debate is that a similar plan should be drafted in order that the whole economic life of this country can be planned in the same way. I am only relatively young, but I have followed the activities of my right hon. Friend for about 20 years, and I know that during his career he has shown great courage in standing up to huge mass meeting of men, and that as a result of his experiences he is well qualified and provided with the capacity to deal with the very difficult situation in which we find ourselves to-day. To hon. Members on that side, most of whom come from the class to which we belong, I will say that we believe they can make a great constructive contribution towards enabling the nation to win through, provided they see that the same energy, courage and outlook are harnessed to our war effort.

I wish that the hon. Member for West Birmingham (Mr. Higgs) was in his place, because he and those associated with him are doing an ill service to the nation in making speeches like that which he made this evening. He knows, or he should know, that there is in existence, between trade unions catering for workpeople in supply industries and organised employers, negotiation machinery that takes care of conditions, piece-work prices and rates of wages. No hon. Member who understands industry and the collective machinery which is in existence ought to make an irresponsible speech such as he made. It is easy to speak of our principles and maintain them here, but where we are put to the test is in the part that we play when we are earning our livelihood in factory or workshop, and in fighting for our principles when we are running the risk of victimisation and all that it means. I have no hesitation in saying, having had that experience, that our men are getting greater results now than ever they did in their lives before, and that the spirit of our people is such that it is inspiring to anyone who knows anything about it, and, were I acting in a representative capacity in a workshop tomorrow, I know what an irritating effect it would have in the workshop when it was known that speeches of that kind were being made. I hope we have heard the last of that kind of pin pricking.

My right hon. Friend who opened the Debate to-day made use of a number of phrases and outlined a number of principles which I want to use as a basis for my constructive contribution. He said the war now had become a total war and called for the complete organisation of our resources. That is true, and that is why we on this side in particular are asking for a plan in order that that economic organisation can be carried out. He made use of a significant phrase when he said that certain private enterprise building was interfering with our war effort. It is certain vested interests which are standing in the way and preventing the complete mobilisation of our economic resources. It is certain vested interests which are standing in the way of a scientific plan being formulated by the Minister without Portfolio. A few days ago I asked when compulsory powers would be used to direct material and production in order that the peak could be obtained and the people be assured that the maximum effort was being made. Most people who take an intelligent interest in industry, the managerial, administrative and manual workers, are very disturbed at the slow motion machine which is organising the economic life of the country. It is now two months since the Production Council was set up. I spent last Sun-clay afternoon taking it easy for a change. I sat in my garden reading the War Memoirs of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). If Members of the Government will take that book down from their shelves, they will see that we are now in a similar position to that in which the right hon. Gentleman was in 1917 when he made the speech that he did make in Manchester.

I have found myself on numerous occasions during the past few years ahead of Members of this House. I have advocated proposals which were not acceptable at the time and have lived to see the day when nearly all of them have been accepted. For example, prohibition of certain imports, export councils or groups, export levies, essential commodity schemes, extension of export credit facilities—all these have been advocated by a small group of Members and they have all been ridiculed at one time. All of them have been treated as being before their day. Slowly but surely, however, as a result of changed circumstances, the House and the Government have had to accept those proposals. At the present time, the Government's policy is to allow industrial self-government, which in many cases means monopoly self-government. I have discussed this matter with scores of people who are engaged in industry. I ask hon. Members to be good enough to read the "Economist" of about a week ago, when that journal dealt with this question. I have no hesitation in saying that the Government's economic policy is out-of-date. It will not serve the needs of our war effort. There is too much marking time, too much trying to conciliate vested interests, instead of dealing with them ruthlessly as the situation demands, and there is too much safeguarding of vested interests in this policy of industrial self-government.

Very largely that policy is a legacy of the last Government, and just as the guilty men were responsible very largely for bringing us into this situation as a result of their foreign policy over the last five years, so the present Government, sooner or later—next year may be too late, but there is still time—will have to throw overboard this legacy of the economic policy which they have inherited from the last Government. That Government opposed the formation of a low tariff group; they refused to take action on the Belgian Prime Minister's report, they refused to resume normal trading relationships with the Soviet Union, they were responsible for creating difficulties with Mexico, they were responsible for the treatment of the New Zealand Government, and for more of what went on behind the scenes, which it is not necessary to relate. All that belongs to the past, and I mention it only in order that the House may profit from past experience and make amends for the past. Next year may be too late.

Those who care most dare most. That is why hon. Members on this side, who are not here because of their social positions or because their parents have been able to give them a University education, but because they represent the very life and aspirations of our people, speak about the situation as they do. We need to lay down now—not next month or next year—the basis of an economic policy for Britain, and to offer economic co-operation to all those who are prepared to co-operate with us. I was delighted with the offer which the Government made to France a few weeks ago, an offer which I think will be to the everlasting credit of this Government. It was one of the best things that have been done by a Government of our land for many years. But the offer was not made until it was nearly too late. France had nearly collapsed before the offer was made.

Therefore, I am hoping that we shall profit from that experience, and that now we shall reorganise our economic life upon a scientific basis and make an offer to America, and that such an offer from this House will go out to all the English-speaking peoples throughout the world, to America, to the Dominions and the Colonies, and to the Soviet Union, to the Mexican people, and to all people of a progressive nature who are prepared to cooperate with Great Britain. Such an offer would electrify the world, and enable us to rally round ourselves all the progressive peoples and Governments who are opposed to the totalitarian States, which are leading the world into bank-ruptcy. Therefore, I make an appeal that the Government should take the initiative in the same way that they did prior to the collapse of France. They should examine this Debate in the morning, or the day after, because next month or next year it may be too late, so that we can rally around us America, Turkey and many other countries which will cooperate with us if we take the initiative.

The internal situation demands mobilisation of all our economic forces. This can be done only by the same drive, energy, courage and determination as were exhibited by the Minister of Labour in his speech to-night. In those other countries there are men at the helm, no matter how critical we are of them, who have courage, drive, vitality and determination, and these are the qualifications and assets which are demanded of statesmen at the present time. From the Government Front Bench we want more of that kind of drive and energy. I am convinced that civil servants will rally behind a drive of that kind, as a result of consultations I have had with a number of them. They are living for this day to come, because in the past Great Britain has been the centre and the admiration of the peoples of the world. We led the world in industrial development, in the development of constitutional government, and in the development of economic resources. Why cannot we take the initiative now in order that we can lead the world with a new economic policy, and begin to trade together and work together, harnessing the whole economic resources of the world against the totalitarian States which have taken the initiative up to the present.

If anyone doubts my proposals, I invite them to go to the Library and ask the Librarian to obtain for them a book by Mr. E. M. Lloyd, a distinguished civil servant, and not a Horace Wilson, in the last war—"Experience in State Control at the War Office and Ministry of Food." That book states: I believe that to wage war effectively involves replacing private enterprise by collective organisations. I would go further and say that we have arrived at a period of development in mankind when, if we are to live decently in the future, it can be done only on the basis of the policy for which I have been pleading. This book also states: The development of war-time control was thus due almost entirely to overwhelming forces of circumstances and hardly at all to a deliberate policy of State Government constantly thought out and consistently applied. I am asking the Government to profit by our experience in the last war, because only by doing that will they be able to work out a deliberate economic policy, thought out and consistently applied in the way we have been asking during this Debate. Again the book states: Each measure of drastic State interference had to be preceded by some disaster and the disasters were those of Passchendaele, Cambrai, Arras, Gallipoli, and others. I am pleading that rather than risk the lives of our lads in the way in which they were risked in the last war, we should have a planned economy so that we can organise the maximum resources of our country to enable them to have the best possible equipment with which to hold their own and defeat the enemy. It is imperative that we should plan at once upon a basis of this kind. The efficient prosecution of the war demands it. The policy of the Government is to leave individual industries to organise industry. I repeat that is out-of-date and we cannot afford it. No industry to-day lives unto itself. All industries are interdependent and in turn depend upon the State in some form.

The time has arrived, therefore, when the Government should plan their economic policy in the way in which we on this side advocate. We are living in a relatively small island, and from that fact we derive great advantages. At the same time, we suffer certain disadvantages, one of which is that we have a huge population to maintain. The time has arrived when we cannot afford to leave the land in the hands of private landowners, and steps should be taken at once to secure the maximum productivity from the land. Hon. Members who have followed the danger of inflation and have had contact with a large number of people who have suffered as the result of it remember what happened in the last war. One constructive way of avoiding inflation is to produce the maximum amount of food in this country and to stabilise prices. If any Member of the Government or of the House doubts this, let him read the Debates in another place which took place in the last war. In 1917 Lord Rhondda said that one of the best steps that had been taken to avoid inflation was the stabilisation of prices. In a planned economy we need the maximum amount of food production. This will enable us to stabilise prices and reduce imports.

By planning our life in this way we shall be able to mobilise the economic resources of the country and give a lead to all those throughout the world who are prepared to co-operate with us. In that way we shall be able to make a constructive contribution which will safeguard the future of humanity. In democracy all things are possible. In a democracy we can stand here and plead for our point of view to be accepted. In a democracy little drops of water gently wear the stone away. As a result of years of agitation we have been able to bring about National Health Insurance, Unemployment Insurance, old age pensions and the acceptance of the principle of collective bargaining. In this way we are slowly but surely capturing the confidence of our people. Slowly but surely, too, our principles will have to be accepted. For this reason we want to safeguard democracy in order that the future of humanity can be much brighter.

9.25 p.m.

Mr. Austin Hopkinson (Mossley)

Many of us who have listened to the speech of the hon. Member for Stoke (Mr. Ellis Smith) will agree very largely with what he has said, particularly that during a period of war such as we are passing through now the economic and industrial organisation of the country should be to a large extent upon a basis of State Socialism. But at that point I beg leave to differ from him, and for this reason, that on the other side a period of peace should never under any circumstances be a period of State Socialism. I will endeavour to explain why. During war time it is necessary for a nation to be able to realise its capital resources, that is to say, to make available for immediate expenditure all those means of wealth which it has been building up during the years preceding the period of emergency. It is known as a fact that the best way of getting at the capital resources of the nation and turning them into a form in which they can be spent immediately, as if they were revenue, is the system known as State Socialism. In fact, the advocates of State Socialism throughout the world have always put forward their advocacy of it for that particular reason. They say, "Let us adopt a system of State Socialism in order that wages may be a first charge upon industry—not capital." In other words, instead of providing for the future, use the whole proceeds for our present necessities and let the future take care of itself.

During the war that is the right attitude of mind, because whatever happens to our capital resources it is justifiable to meet the danger which threatens to overwhelm the welfare and the existence of the whole nation, but, mark this, if we are to continue a system of State Social- ism when peace is re-established we are not making provision for meeting the next emergency that may occur in our history. If we continue our system of making capital resources available for immediate expenditure, which constitutes State Socialism, by the time we reach the next period of emergency we shall find it practically impossible to finance our needs, just as we are doing, mark you, at the present time. If the period since the last war had been a period during which we had carefully built up capital resources instead of dissipating them, we should not have found ourselves in the financial difficulty that we are in to-day.

After all, this is the one country which took part in the last war which came out of it in a fairly stable financial position. Why was that? It was due to half a century of what is termed "Gladstonian finance," that is, half a century of careful building up of the capital resources of the country and making them available for expenditure in emergency. That leads us, surely, to this conclusion, that admitting that a system of State Socialism is the appropriate industrial and financial system for a country during war, and admitting also that if those immediate resources of capital are to be built up again rapidly some sort of individualistic basis of industry is essential when peace is restored, then logically it follows that the system of State Socialism that is adopted deliberately during war must be such that it can easily and smoothly pass back into some form of individualistic organisation when peace is re-established. That is the problem to which I have devoted my own attention and my facilities for making industrial experiments during the period which elapsed since the last war.

For the benefit of the hon. Member for Stoke and his colleagues, I am putting forward, not as a panacea, not as an introduction to Utopia, but merely as the results of practical experience over a long number of years, certain conclusions on this subject which I have reached, rightly or wrongly. What is the proper basis of our industries, and particularly our munitions industries, in this country at the present time? When I say "munitions industries" I mean munitions in the widest sense of the term, so wide a sense that, in the course of time and when war comes, all industries will be what may be rightly termed munitions industries.

I have maintained all along that the proper basis during war-time is a system which I worked out experimentally to see how it would run. It is a system by which all the profits of the individual concern are distributed equally among those who take part in the running of the concern. The ordinary shareholder, who takes no active part, is allowed only a fixed rate of interest during the period of the war. He has to exchange his ordinary shares, during the war period, or his preference shares, for a fixed rate of interest, and the ordinary shares are then held in trust by a Government trustee for the whole of the people employed in that individual concern. The object of that arrangement is to maintain the individuality of the separate concerns, so that, at the end of the emergency, we can return to a system of individual enterprise, with its instigation and its spur to the building up of the depleted capital resources.

Let hon. Members opposite not get the impression that I advocate going back after this period of emergency to exactly where we started before the war. I advocate no such thing. I feel, and I have said it in public more than once, both before and after the war started, that unless the war is succeeded by a revolution it will have been hardly worth while. I do not mean turning everything upside down and shooting people—although, to tell the honest truth, the unregenerate sinner in me would like to see quite a large number of people dealt with in that way—but what I like to think of as an English revolution, a respectable revolution, the sort of revolution that our people have carried through in the past and by which they have got everything that foreign nations have got only after fighting in the streets, bloodshed, executions, and murders up and down the land. Our people are quite capable of making that sort of respectable revolution, but they will want some guidance from above before they can do it. I do not think that the preparation for this English revolution—

Mr. Kirkwood

Perhaps the hon. Member would call it a British revolution.

M. Hopkinson

Yes, of course, a British revolution. I do not think it is likely to take the best form for the future welfare of the country if attempts are made by existing Governments to take advantage of the critical situation of the country to limit our liberties in every way, legitimate and illegitimate. The gravest danger that confronts us is the tendency of the Government to be entirely autocratic, to set themselves up as infallible and all their Ministers as infallible, people whose authority and wisdom are not to be challenged. It does not matter what their previous history may have been. They may have been people whom nobody could possibly trust in any private matter whatsoever. Having now reached the Treasury Bench, they are above suspicion and everybody must bow down to them and worship their wisdom.

If that sort of thing is allowed to go on—and it is the responsibility of the House of Commons if it does go on—and if people who are utterly unworthy to have any sort of authority are given unlimited authority over our lives and liberties, that revolution, when it comes, will not be what I have called English, but will be of the very worst type, with fighting in the streets like the fighting in the streets in Continental countries in times past; and, what is more, people like myself will be in the forefront of the battle.

9.35 P.m.

Mr. Charles Brown (Mansfield)

It was interesting to hear the hon. and gallant Member for Mossley (Mr. Hopkinson) express the view that a form of State Socialism is necessary in waging the war, because those of us who have been in the House for some time know what a staunch individualist he is. On every available occasion he has propounded his views to the House with eloquence and determination, but I cannot understand why, when he argues that successfully to wage the war we must have State Socialism, he should object to having something equivalent to it in peace-time so that the majority of the people may have the maximum benefit from the exploitation of the resources of the country.

I was also interested by the speech of the Minister of Labour. I am sorry that he is not here at the moment. Other hon. Members have said that it was one of the most interesting speeches made today, and I agree, but I want to pass one or two comments on it. The Minister of Labour began by telling the House of the enormous powers which recent legislation had placed in his hands. He assured us that he did not want to use those powers in an autocratic fashion, but had chosen to use them in a democratic fashion. He said that he was utilising the democratic machinery which had grown up in this country during the last 30 years and of which he was proud. I am sure that my colleagues on these benches are as proud of that democratic machinery as the Minister of Labour. I cannot understand why the remarks of my hon. Friend the Member for Seaham (Mr. Shinwell) somehow got beneath the skin of the Minister and irritated him. I have heard the Minister take part in Debates on various occasions and I know what a skilful debater he is. I am surprised to find that the speech of my hon. Friend affected him in the way that it did.

Mr. Kirkwood

The other side have not been used to getting the truth.

Mr. Brown

The Minister of Labour is a very skilful debater, and yet all he did throughout the whole of his speech this evening was to beg the question as far as my hon. Friend the Member for Sea-ham was concerned. The Minister was very much concerned to show that he had, what he called a "plan" for labour. But it was not a plan at all. It was only a method of moving labour about when difficulties arise in particular places. It had nothing to do with the economic planning of labour resources, which was in the mind of my hon. Friend the Member for Seaham. By using the word "plan" in an entirely different sense, he misconstrued the speech of my hon. Friend, and by telling us of the manner in which he moved labour about as difficulties arose, he sought to create an impression that there was a real economic plan for utilising labour in the country to-day. Of course, when the Minister of Labour speaks, one feels that things cannot go wrong. He is very confident, and he has every right to be confident. Few people know labour conditions in this country better than he does. When he sits down one feels that the last word has been said on the problem, and that things cannot go wrong while they are in his hands. But, unfortunately, they do. He asked, who could tell what the geography of the world would be when the war ended? Of course, no one can tell. He went on to tell us that we had to do some thinking for the time when the guns ceased firing. I agree, but we have also to do some thinking before the guns cease firing. That is the point which my hon. Friend the Member for Seaham and other hon. Members have tried to raise to-day. The thinking that we have to do now, is very important.

In relation to the large general problem which has been raised by this Debate, one or two points which I want to make may seem small and insignificant, but they are, in their way, quite important. We can all agree with the right hon. Gentleman the Minister without Portfolio that it is one of the main jobs of the Government to keep the people in good heart. Are some of the present policies of the Government calculated to do this? If morale declines and discontent grows, we must hold the Government responsible. At this moment morale is very high. The purpose and resolve of the people are firm in regard to what is at issue between ourselves and the totalitarian States. But you can do things which will irritate and annoy the people, and slowly undermine the splendid morale now existing. If you are not very careful, you may have to face discontent, which will be difficult to deal with.

I should like to make some observations on other speeches to which I have listened since four o'clock. I will deal with a section of the textile industry to which the hon. and gallant Member for Armagh (Sir W. Allen) referred; but, first, I would like to make some points in regard to which I think we are all agreed. We all agree on the utilisation at all costs of all available labour for this tremendous effort. We must adapt labour resources to the specific tasks that various units are best able to discharge. That, I am sure, is largely what was in the mind of my hon. Friend the Member for Seaham. The Minister without Portfolio talked about switching over from peace-time economics to war-time economics. He did not express complete satisfaction with what had been done, and I am sure that there are not many of us who feel completely satisfied. But there has been a year in which to switch over, and I am sure a lot of switching over which could have been done, has not been done. I am sure that the proper adjustment between necessary home trade and export trade has not yet been made. Ministers would probably agree with me on that. It is difficult to believe that these main points are not always in the minds of Ministers; hut, within the administrative machinery of the State, although we have, perhaps, a fairly clear understanding of what we want to-day, there seems to be so much delay, confusion and contradiction that things are always going wrong.

Let me illustrate that point in connection with the utilisation of the labour resources of the State. We have only to remember that we have still—I wish the Minister of Labour had been here, because it is not fair to say some of these things in his absence—a considerable number of unemployed. I am reminded that the number is 800,000. It is unfortunate that, at a time like this, we should be, in some ways, adding to the number. The Minister of Labour reminded us that on one occasion he had said that his policies were bound to create pockets of unemployment in various parts of the country. What I want to say to Members of the Government who are listening to me is that, if the Government decide on certain policies, which when they are initiated are bound to cause unemployment, they should at the same time have plans arranged, so that those who are, or become, unemployed could at once be reabsorbed into essential industry. Probably there are some such plans. I do not know; they are not obvious. I complain of the time-lag that occurs in these processes. This time-lag weakens public morale, because it undermines faith in the capacity of the Government to deal effectively with the necessary economic readjustments required by war conditions. Consequently, it is a sheer waste of labour power which is available for the terrific economic effort that we must make. I would urge Ministers not to put people out of work before they are ready to take them into some other form of occupation in some of the multifarious ways in which they have to provide munitions of all kinds in these days.

There is one other point that I want to make. It relates to the curious way in which the Schedule of Reserved Occupations works. I had a case brought to my notice this week-end of a tailor who is unemployed. He got himself a job. Tailors are reserved over 30. He went to the Employment Exchange, wanting to take the new job that he had got, and, because he was over 30 and in a reserved occupation, he could not take the job. He now has no work. That also applies to printers, who are reserved over 30. Many are out of work. They get other jobs, but the Employment Exchange will not let them take them because they are in a reserved occupation. I said a little while ago that these may appear to be minor matters in relation to the large economic question that we are discussing, but I want to point out that the Government must take steps to see to it that, when they displace labour through their policies, that labour is reabsorbed in other directions as quickly as possible.

The hon. and gallant Member for Armagh referred to the textile trade. There is a section of the textile trade in my constituency. They make stockings. It is one of the branches of the textile industry that has to cut its production by one-third. Our factories are closing. They are on short time. I do not know what is to become of the female labour, but the male labour, which consists of highly-skilled machine-minders, is working only two or three days a week, or perhaps not working at all. Surely there ought to be some method, plan or general idea in the existing economic circumstances of forming an economic organisation. It is terrible to think or to say this, but we have to do it in the world in which we are living; we have to harness our economic organisation at every point to the war machine, which we have to run to the fullest possible extent, if we are to be successful in the struggle that faces us. I hope that Ministers who are on the Front Bench will take note of what, in some ways, appear to be minor points, but I am sure that, if they are not attended to, they will undermine the morale of large sections of the working-class population and create discontent and disaffection which will be difficult to deal with in the days that are ahead.

9.49 P.m.

Mr. Kenneth Lindsay (Kilmarnock)

I have listened to almost every speech during this Debate, and I rise at this time wishing that I could have been able to congratulate my right hon. Friend the Minister without Portfolio. I have known him too many years not to be able to stand here and congratulate him on his speech, but I came here this afternoon in great expectation. We have been listening to Budget debates for three or four days. We have listened to speeches tonight like those of my hon. Friend the Member for Mansfield (Mr. C. Brown) and my hon. Friend the Member for Stoke (Mr. E. Smith), and they expressed views with great force and spoke for people who are, in some cases, in distress. From the Treasury Bench this afternoon, apart from an intervention by the Minister of Labour, which was very timely from the point of view of the Government, we have not had an answer. He did not answer the speech of my hon. Friend the Member for Scaham (Mr. Shinwell) at all, but what he did say was that so far as he was concerned things were moving pretty well. He did not say he had a plan, but I appreciate the fact that since he has been in office he has had to adjust himself to so many new situations that it is not altogether easy to have the kind of plan which my hon. Friend had in mind for the labour of the country.

The Minister of Labour did, however, say that the Production Council was his idea, but I have been wondering what was the job of the Minister without Portfolio. This afternoon I asked him a Question about the number of economists who were advising the Cabinet, and he referred me to an answer, given some time ago, in which he said that the staff consisted of 16 persons, of whom two were civil servants, the remainder being economists and statisticians who were temporarily employed in the public service. He said that this staff was not only available for assisting Lord Stamp's survey, but was also at the disposal of five Ministerial committees, dealing with economic subjects, presided over by the Lord President of the Council. I can understand that it is a wise thing to have some economists capable of looking at a Department as a whole—I wish every Department had such a committee—but to have 16 economists in an advisory capacity, in a vacuum, advising the Prime Minister, the Minister without Portfolio and Lord Stamp, and then to have a speech of the kind we had this after- noon from the Government Front Bench does not seem to make sense. I am not quite sure whether we ought not to have had some answer to the points put on the Budget. Is the Minister without Portfolio, whose main job is to deal with economic policy, quite divorced from the Budget? It is just as well that there are a few independent Members here with independent views.

I listened to the hon. Member for Ipswich (Mr. Stokes) this afternoon, and I must say I agree with almost 100 per cent. of what he said, apart from some of his particular notions which one cannot always follow. All I can say is that I am glad there are a few people left in the House of Commons who can speak with the force with which he spoke on this subject this afternoon. He was asking about area boards, and I am glad that my hon. Friend the Parliamentary Secretary to the Ministry of Supply is to reply, because he was responsible for these boards. The Minister without Portfolio did not know whether they were set up or not. What is the new thing about economic policy that has been happening since this Government came in? We have this new list of councils and economic committees, but I understand that the man who has got a move on is the man who has done away with committees—Lord Beaverbrook. I may be wrong, and I may be corrected, but I understand he has actually got more aeroplanes produced. He may have gone about it in his own way. I thought the Minister without Portfolio would have answered that question.

The right hon. Gentleman the Minister without Portfolio talked about consumption and said, "You see what we have done. We have a cheap milk scheme and communal feeding centres." Did it take the Minister without Portfolio to introduce the cheap milk scheme? It is a very sensible scheme, which was introduced, I think, by the Ministry of Food. As for the communal feeding schemes, they are only just beginning. That, I understand, was a common sense proposal put forward by the Minister for Labour which met with general approval. We haye listened for two weeks to the Chancellor of the Exchequer trying to explain away the Budget. There is not a single newspaper, from the "Times" to the "Economist," which has not said that it does not answer the problems of the day. I thought we were going to hear a bit more to-night. I am interested in a particular aspect of the Purchase Tax, and I have talked with all kinds of people. As far as I can see, the Purchase Tax is bound to put a number of people out of work. The reply of the Minister of Labour to that, that he has moved people about and set up 26 labour supply boards and that he has moved some fishermen to help on defence work—

The Secretary for Mines (Mr. David Grenfell)

The fishermen were already unemployed.

Mr. Lindsay

What we are talking about is the fresh unemployment caused by the peculiar legislation being passed by the Government. [Interruption.] The times are too serious to make debating points. Some unemployment is caused by the military situation and some by legislation, quite rightly so, because hon. Members have been saying day after day that they wish to restrict luxury trades. We have heard a great deal to-night about planned economy, and the well-known book on scientific control of industry in the last war has been quoted. I agree very much more with the spirit expressed by the hon. Member for Mossley (Mr. Hopkinson), and also by the hon. Member for Stoke in his own way. If we are going back to a barren Debate on State Socialism and individualism in these days, we have missed the whole point. I do not care what anyone calls anything. We have heard of a planned economy. We have heard that we have to get much nearer to equality of sacrifice. We have heard of an iron ration in a variety of forms. The hon. Member for Walsall (Sir G. Schuster) said we must either have a wholly planned economy or else go back and do away with the 100 per cent. Excess Profits Tax. I think that has been answered pretty fully on this side. A good many Members have spoken, and they have not asked for any other motive in industry. It is only persons who are concerned with the higher wages that have been given to one or two people, who are working very long hours, who have been concerned with this new motive in industry. I think that is all nonsense. Will the hon. Member go the whole way on an iron ration, if we mean anything definite by an iron ration?

I think it is time the House gave an answer on the Budget. It is time the House expressed itself in much clearer language than has been the case during the last three weeks as to what it means when it says that we will have a survey of all non-essential industries and that we will have a system of taxation universal in its application to all incomes above a certain minimum. We have not yet got anywhere near to equality of sacrifice. I am prepared to say—because I am prepared to go on to an iron ration to-morrow—that we cannot go on very much longer with the inequality between soldiers and civilians. I am not now talking about high wages, because that does not come into it, but unless the Government are prepared to answer this question and kindred questions, it seems to me that we shall not get very much further with the next Budget, let alone with an economic policy.

The hon. Gentleman who is to reply to the Debate heard the speech of the hon. Member for Seaham. We will agree that on the labour side there is planning, not that the plan has been put fully into execution, but that the Minister of Labour knows what he is at. He is in close touch with the Secretary for Mines, and he has a very considerable scheme for retraining—not simply a few thousands, but tens and scores of thousands—and that scheme is proceeding. From the vigour of his speech to-night, one felt that he was fully in control of the situation. If I may say so almost in defence of the Minister without Portfolio, he was given an impossible job this afternoon. He had to talk about committees. On policy, is there complete agreement in the Cabinet? Do they see eye to eye on this, or is it difficult for them at this time to make up their minds? There are strong opponents to what has been called on this side of the House, I will not say a planned economy, but a complete survey of the resources of the country, a decision as to what are and what are not luxury industries, a much more comprehensive system of rationing, because the present rationing system if we really mean business—and I do not want to see irritation caused for the sake of irritation—is completely unfair even with regard to food. It is possible to have three meat meals a day if one wants them, by going to restaurants. It is because these gross inequalities exist, it is because those of us who are not in khaki feel that we want to be on exactly the same terms as any fighting men, it is because there is still a division of opinion as to whether 75 per cent., 90 per cent., or Zoo per cent. Excess Profits Tax is needed—and this is a pretty serious fundamental difference of opinion on policy which has been put forward time after time—it is because of these things, that I find it very difficult to be satisfied with this Debate.

We might have had an opening speech from the President of the Board of Trade, or from the Minister of Economic Warfare, but I think the Minister without Portfolio was presented with an impossible task. He gave us a story of the various Government Committees engaged in deciding policy, he told us something about imports of raw materials and food, which had to be balanced, and he gave us a list of the various Committees dealing with priorities, and labour, and so forth. The right hon. Gentleman has not been present for part of the time, but I can assure him that even on those questions men with practical experience have found difficulty in following what precisely is being done, and have made very pertinent criticisms. Therefore, I suggest that, as a result of the Debates on the Budget so far and the Debate tonight, in which we have heard a series of most interesting speeches, mostly from this side of the House and from the cross benches, it is not clear either what is the Government's economic policy, or how the new additions to the Government, particularly the economists, are to help. Sir William Beveridge has been brought in by the Minister of Labour to make a survey, and there are other economists who are also to help the Cabinet. It is because there is dissatisfaction—and it is genuine dissatisfaction—that we have had these speeches to-night. I am sure that I speak for my hon. Friend who opened the Debate from this side when I say that we should like to have a reply to some of these questions.

10.6 p.m.

Mr. Quibell (Brigg)

There are one or two points that I should like to raise, but before doing so I should like to refer to a suggestion made by the hon. Member for Kilmarnock (Mr. Lindsay). He has no objection to what he described as an iron ration. I do not quite know what that is, but it strikes me that most men I know would prefer a rasher of bacon. I have not the slightest doubt that it would be sufficient for the hon. Member, but it would not satisfy men engaged in industry, and those who have to stand in front of a furnace. In so far as there may be a strict scheme of rationing, there must be an allowance of extra food for men engaged in heavy industry.

I was interested to hear what the Minister of Labour had to say in regard to the planning and organisation which had taken place in his Department, and dealing with the employment of labour, following on, as it does, the announcement made some little time ago that a building directorate had been formed for the purpose of advising the Minister. It made me wonder whether the Minister really understood the problem which exists in the building trade to-day. It seems to me that so far as Ministers are concerned they merely rely on what I call trade union leaders, and some of the federated employers of the trade, without having regard to the thousands of small men who are not in federated employers' organisations. His announcement amazes me. First of all the brickyards have now to work again in order that bricks may be produced, but it is not long since I interviewed one of the Ministers in respect of this very matter, and advised him to use bricks instead of timber in the building of the camps. If that had been done, and if there had been consultations with some practical men engaged in this industry in this House, we should not have been in the present position. These practical men are never consulted, and consequently we get decisions which are totally wrong, and we are not able to contribute one bit to the winning of this war.

Up to about three weeks ago, in my own town, numbers of bricklayers and labourers, who, I gather from the speeches to-day, are now required, were doing navvying work. I have three bricklayers labouring for me. Little builders whose businesses have been closed do not complain very much about it, but between 20,000 and 30,000 small builders have been put out of business. They are signing on at the Employment Exchanges. Some are labouring in the steel works, and other are doing bits of work here and there because their little businesses have gone. What steps does the Minister propose to take in order that that kind of labour may be harnessed to the national effort? The policy of stopping the supply of material to private building is wrong until the Government can absorb the labour that is waiting to be absorbed.

Not long ago in my town I could have put on 20 or 30 skilled men, and yet within a mile or two the Government brought in men from all parts of the country. The organisation of the Ministry of Labour has been used to send men to do skilled work in districts where skilled men already exist and are having to do labouring work. There is no sense in it. There ought to be created in the localities organisations of men who know the industry to advise the Employment Exchanges how to get hold of the labour that is available. Building material has now become so exorbitant in price and difficult to obtain that it does not need legislation to put builders out of business. Were it not for the order of the Minister for Home Security to local authorities to provide brick shelters where there are not sufficient steel shelters, there would in my town, for instance, be anything up to 40 bricklayers unemployed or doing labouring work. I feel it my duty to draw the attention of the Minister to the great reservoir of skilled labour that could be used, because of the number of small business men who are out of work. Some of them will be out of work next week. A firm I know very well is building air-raid shelters for our local authority, but there is not a bag of cement to be got, and the men will have to lay oft next week. I can understand the competent military authorities coming first and getting the cement, but there is no sense in bringing that work to a standstill and putting men on the dole. I can mention stores where there are between 2,000 and 3,000 tons of cement, and it is lack of organisation that leads to the work on air-raid shelters being stopped and men put out of work.

I do not know anything about machine tools except to say that in garages and certain other places there is a large number that are not being used. I can give the address of a place where there are two lathes which have not been doing anything for a long time. There is a large number of others in garages all over the country. A census of these tools could easily be taken, and they ought to be used in the national effort while we are so short of them. In the garage which I mentioned there were not only the two lathes but other machine tools, all absolutely idle, with not a single man at work. Most of the garages in the smaller towns in the country have a lathe, but very few are doing any work owing to the reduction in the number of cars on the roads. If there is, as I believe there is, such a shortage of machine tools the Minister ought to draw upon that reservoir of tools to be found in the remoter parts of the country.

I cannot conclude without referring to the speech of my hon. Friend the Member for Ipswich (Mr. Stokes), who, I regret, is not in his place. It is not often that I have anything to say in support of the Government, but one of the hon. Memhoes great charges against the Government was that they paid a big price for land. If he had been in my place, he would probably have done what I did on one occasion. I paid a large sum of money for 10 acres of land, and I had a good reason for doing it. It was worth it; that is all. Experience has proved to me during the last four years that it was worth not only what I gave for it, but worth a good deal more. I gave the seller all he asked, and I did not come to the House to complain about it. I consider the value of a piece of land to he the price that a man will give for it in the open market. You cannot value land by the amount it is contributing to the rates or what a man thinks it is worth for agricultural purposes only. I am in the building trade, and what I paid for that piece of land was worth it to me. Perhaps the hon. Member for Ipswich would only have looked at it as agricultural land, but I knew differently, and it came into my possession, and I am very pleased. It has proved to be cheaper than some land for which I have paid £50 an acre. You cannot determine the value of land by what you give for it but by the use to which you put it and the position in which it is.

10.18 p.m.

The Parliamentary Secretary to the Ministry of Supply (Mr. Harold Macmillan)

I do not think that the Government can complain of the tone and character of the Debate, which has covered very wide grounds. It is one of the most agreeable features of a Parlia- mentary situation in which there is no Opposition that all Members of all parties can equally attack or support the Government and can agree or disagree with one another. The hon. Member for Seaham (Mr. Shinwell), who opened the Debate from the other side, covered in his speech a large number of subjects, and I am afraid that I must disappoint him from the start, because I do not feel able to cover them all in my reply. He has been replied to, I think very satisfactorily to a large part of the House, by the speech of my right hon. Friend the Minister of Labour. There has developed some question of whether this plan which my right hon. Friend had was a plan or only a method That seems to be only a Pickwickian distinction, since if the method was satisfactorily applied over a sufficiently wide field, it might in time prove to be a plan. The other subjects dealt with have ranged over monetary policy, inflation, the system of land tenure—upon which we have had the advantage of the rival views of the hon. Member for Ipswich (Mr. Stokes) and my hon. Friend the Member for Brigg (Mr. Quibell)—property in general, State capitalism, State socialism, and syndicalism, and we have even seem the delightful spectacle of an agreement between my hon. Friend the Member for Mossley (Mr. A. Hopkinson) and other Members of the House that for the purpose of conducting a war some system of State socialism must be regarded as necessary. It is still left uncertain whether that is to be regarded as an argument against State socialism or in favour of the war.

The hon. Member for Stoke (Mr. E. Smith) gave a very interesting speech, as he always does, well thought out and constructive, and he went into wider territory. I must disappoint him as to the Government's exact plan for announcing to the world our intention of making a federal union between the British Commonwealth of Nations, the United States, Mexico and the Union of Soviet Socialist Republics. Although the persuasive eloquence of the Prime Minister might possibly carry that rather ambitious scheme, I am sure the hon. Member will regard it as beyond the function of a Parliamentary Secretary to plunge into such dangerous waters.

The hon. Member for Mansfield (Mr. C. Brown) said that we were engaged in turning from a peace to a war rearmament; that, of course, we all know, but it is more complicated than that, because our war economy has to be adjusted rapidly, in accordance with tactical and strategical considerations. When I am asked whether I can announce for the Government an ambitious and large-scale economy plan, I am afraid I cannot do so. The hon. Member paid a tribute, and I was glad to hear it, to the value of the independent Member of the House.

The House as a whole must bear in mind the circumstances in which the Government took office. Incredible events have taken place on a vast scale, and the first definite and most determined plan we have is to deal, as rapidly as we can, by every means in our power, with the great strategical threat which is made upon us to-day. We have to prepare and to bring every weapon into being that can be manufactured, or made, in time, and to give every sinew of our strength to the preparation of the immediate needs of the next few weeks and months. Then it may be possible for Ministers to give, in a more completely worked out form, the general scheme which they are gradually bringing into being over a wide sphere of our national economy.

I thought it would be for the convenience of the House if, for a few minutes, I said, on a narrower issue, a few words about the area organisations. I know that nothing bores the House of Commons more than a description of the machinery of government, because it always wants to know what the machinery is going to do, and how it will do it. But I must perhaps say just a word, because I think hon. Members are interested in that matter from a personal aspect. The area organisation that we are now trying to set up is what I might call a fusion between the system which we found when we came into office—that is, the area board system comprising the officials of the various Government Departments—and the area committees which were advisory to them. We are trying to fuse them into a single committee which will be executive and of which the unofficial representation will be equal to the official representation. I have been asked whether those boards have yet come into being. The hon. Member for Ipswich, who I am glad to see is now here, asked me whether in his particular area the chairman had been appointed. I can say that the chairman is Mr. Leslie Walton. It will take some time to get the boards fully and practically constituted. Out of 12 boards, nine are in course of constitution, and within a day or two I hope that all will have had their official being.

It is important to get the right people. As I see it, these boards will have not only to carry on the work which has been performed by the officials, but they must be ready to take on greater responsibilities, and therefore I thought it wise to consult with the best authorities that I could. The trade union representatives have been appointed in consultation with the Trades Union Congress, and I would like to thank Sir Walter Citrine for the great assistance that he has given. I have tried to pick the representatives of the employers and employing interests from men of broad mind and of local character. I think we shall have a body of men who can take the responsibilities, which will be greater as the pressure increases. They will have to take steps which will lead to the closing down of some people's businesses, taking away their labour and plant, putting out of business decent people who have helped to build up the goodwill of those businesses and who naturally cling to their work, not only from the financial point of view, but because of the pride which they have in the business. When it comes to making very big changes which affect large numbers of persons, the officials should be supported by a wider body of men who represent the localities in general. I would observe, in passing, that it is one of the paradoxes of the situation that whereas it is clear that in many trades by far the most efficient method of increasing production is to draft labour into the large enterprises, by far the quickest way to increase production is to make sure that all the machine tools that we possess are worked 100 per cent. capacity and to set up this temporary measure of large-scale Socialism, if you like to call it that, or State capitalism.

I have found in every part of the House that there is the greatest support in favour of the small man. I said the other day by way of a joke that I would try to introduce State Socialism into this country if I did not have to put up with the tremendous resistance of the Labour movement. While not shrinking, either through our local organisation or our national organisation, from the decision to put production above all other considerations, it is our endeavour to try to exhaust all other possible means to see how far we can bring to the existing enterprises some part of the manufacture of munitions, in order to keep them in being. Only when we have found that, owing to the nature of the enterprise, it cannot be hitched on to modern munitions production, shall we feel bound to take this more extreme measure of taking away its machinery and transferring its labour somewhere else. I want to follow that policy for two reasons: first, because it conforms to the principles for which, largely, we are fighting this war, and, secondly, out of regard for our economy after the war. We do not want to destroy some of the trades upon which we shall rely for our exports and for some of our internal economy after the war. Apart from the area organisations, which are to carry out the duties which have been performed up to now by the appropriate officers of the Ministries concerned—the choosing of contracts, organising subcontracts, finding out whether firms are overloaded with sub-contracts and so on, all of which we hope to do with greater knowledge by the creation of the new organisations—we are trying to deal with these matters at the centre.

Mr. Granville (Eye)

To whom will these area organisations be responsible?

Mr. Macmillan

To a committee, of which I am chairman, called the Industrial Capacity Committee; and that committee is responsible to the Central Committee over which my right hon. Friend presides. My committee includes leading officials of the various production Ministries. We are trying to deal with this question, not only locally, but centrally. I was impressed by what the hon. Member for Brigg said, that we must harness as much local knowledge as possible. We are trying to keep in being the existing engineering panels, and we propose to set up panels of the other industries, and to ask for their help in making inquiries in their industries. But, apart from that, we are preparing to deal centrally with these matters. Sir James Lithgow, who has agreed to act as deputy-chairman of the Industrial Capacity Committee, and I have done a great deal of work in seeing. employers and workers who are organised on a national basis, in order to work out plans for dealing with those industries which are shrinking, and for finding them contracts or sub-contracts where possible. I take, for example, the printing industry. Careful arrangements have been made about printing machinery which cannot be used for other purposes, and we are arranging that the men should not be stood off, but that their names should be given to the controller of labour in the division, so that they can be taken into the kind of work for which their records make them best suited. These questions necessarily involve rather difficult problems.

Mr. E. Smith

I believe that the machinery which is now being set up will be a big improvement on the old machinery, but I and others with whom I am associated are concerned as to when it will begin to function.

Mr. Macmillan

I said before the hon. Member came in that of the 12 area boards, nine are fully constituted, and I think all of them either have had their first meeting or will have held it by the end of this week. All the instructions which have been agreed upon by the central committee over which I preside have been sent out to the chairmen and secretaries.

Mr. Smith

This is very important. Let me give a concrete illustration. I know highly-skilled fitters employed in the engineering industry who are only working ordinary time. There is something wrong with the machinery when a state of affairs like that is still in existence.

Mr. Macmillan

The hon. Member is coming to another point with which I was just going to deal. I thought he was dealing with organisation. Instructions have been sent out by the Industrial Capacity Committee to all the area boards, and they include instructions to deal with the normal work such as were previously followed by the officers of the Ministry in carrying out their powers and duties. They have, in addition, undertaken the inspection, and the decisions that follow from the taking of the first machine-tool census. The taking of the first machine-tool census, which was one of the first steps taken by my right hon. Friend the Minister of Supply on taking office, has provided us with a very valuable amount of information. It has given us information as to the character, age, position and average hours of work per week of every machine tool in the engineering trade of the country during a certain week. The results of that census are extremely interesting. They show, broadly speaking, that the organisation of the complete use of the machine tool is the most advanced in the largest firms, that the smaller firms find it extremely difficult to organise around-the-clock working, and that you get a reasonably satisfactory result in the middle firms. What we have had to do is first to build up the middle firms to the position of the large firms, and to try either to join up the small firms with the middle firms or to build them up +o a more satisfactory basis.

It is absolutely certain, as I see it, that the most efficient way to increase production is to make the best use of the production tools that are now in being, and if it has revealed nothing else, it has shown that it might in certain circumstances be advantageous to take highly-skilled men off machine-tools in order to use them for training other men for a short period on tools which now exist.

Following that census, each area has organised an inspecting system, and 40 or 50 men have been lent to us by the machine-tool trade, men who are sufficiently expert to be able to inspect. They have followed the census by an inspection, and out of the 12 areas, 11 areas—all except that of Northern Ireland—have had that inspection, and we have the complete results of the inspection which followed the census. As to how far they are able to take remedial action by letting sub-contracts or getting other labour and so on, we have got now the results as to how far they will be allowed to do that. Therefore the onus is thrown upon us in the central committee to take some further action in the matter. At the same time, the next stage of the machine-tool census has just been finished. After the census in the engineering trade, we have just finished a census in the non-engineering trades, and we shall find in the maintenance class of the non-engineering trades a very large reservoir of tools and labour that can be used. The actual returns were made during this week, and I am looking to the result of that second census, which, I think, will be of the greatest value.

Of course, to be efficient the census will have to be brought up to date. These are the kind of practical measures which one tries to take, and I am bound to say that I think they are the wisest ones, for a Government in the circumstances in which this Government took office, to begin to take. We have tried to get production increases and would have liked to have planned a long way ahead. But let us have first things first; let us have short-term planning first and get increased production of the weapons we need, always having regard to, and remembering, the one weapon—export trade—which we must have so that we can buy further machinery for war. I regard it as one of the important functions of the Central Committee, of which I am chairman, and of the areas, that the Board of Trade representatives should keep us reminded that we must not, by foolish action, deprive ourselves of vital export trade and take away the men who ought properly to be working on exports.

All this has to be carried out as a reasonable, common-sense decision. These problems are those on which we have tried to concentrate—on a short-term policy at any rate. The trouble is that modern munitions production is a very complicated thing; it is not like it was when the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) took this matter in hand during 1915. At that time, when he formed his first Ministry of Munitions, he was dependent almost entirely on ordnance factories and one or two great armaments firms. Here we have organised production over a much wider field and that had already been done in this war by the time this Government took office. The great need was for the production of shell ammunition. In those days shell production was simpler of manufacture than it is now. Almost every form of ammunition production has become more complicated. Everybody who knows anything about the small arms ammunition of to-day, and can compare it with the ammunition of 20 years ago, knows that. It is more difficult to get organised on a small scale basis, and we have to face that reality. Moreover, the limiting factor is not the production of ammunition but the production of weapons, and weapons, especially those of the more scientific development, are very complicated things to make. So we have, obviously, a rather different problem from that of 20 years ago. [An HON. MEMBER: "But better machinery."] Yes, better machinery, but it is not concentrated in large stocks. We have, also, a continually changing problem in the technique of production such as we had to face through the loss of equipment at Dunkirk by the B.E.F., and the bringing of different weapons into use, and so on. It may be that it is not by the vast increase in munitions but by the development of some of the new methods, and weapons not now in production, by scientists and experts, that we shall make the biggest contribution to the final strategy which will defeat the enemy. Meanwhile, I think the Government's duty—many contributions have been made to our Debate, and it emerges from it that the Government have not been neglectful of that duty—taking office at the time they did, faced with the events they had to face in these two months, was to make the most practical contribution they could towards the immediate need for putting this country into a state to repel any attack made upon it, and by that successful standing fast against threatened invasion build up power to make a counter-attack in the months that are to come.

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

Bill read the Third time, and passed.