Commons Sitting of 15 March 1940

Preamble
The House met at Eleven of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.
Newcastle and Gateshead Waterworks Bill.
Staffordshire and Worcestershire Canal Bill.
Read the Third time, and passed.

ORDERS OF THE DAY.

  SUPPLY.
  REPORT (13TH MARCH.)
  VOTE OF CREDIT, 1940.

  SUPPLY.

    EXPENDITURE ARISING OUT OF THE WAR.
    Resolution reported:
    "That a sum, not exceeding £700,000,000, be granted to His Majesty, towards defraying the expenses which may be incurred during the year ending on the 31st day of March, 1941, for general Navy, Army and Air Services and for the Ministry of Supply in so far as specific provision is not made there for by Parliament, for securing the public safety, the defence of the realm, the maintenance of public order and the efficient prosecution of the war, for maintaining supplies and services essential to the life of the community and generally for all expenses, beyond those provided for in the ordinary Grants of Parliament, arising out of the existence of a state of war."
    Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

    MINISTRY OF SUPPLY.
    11.6 a.m
    Mr. Herbert Morrison: I would first express to the Minister and to the House my apologies for the absence of my right hon. and learned Friend the Member for Ashton-under-Lyne (Sir W. Jowitt), who is intending to wind up the debate. Unfortunately the Privy Council have a law case in which he is engaged, and they are sitting to-day instead of yesterday, but we shall keep him fully informed about the Minister's statement. The Opposition have asked for this subject to be taken to-day for two reasons. One is in order that we may put to the Minister of Supply a number of questions on the progress of the work of his Department, with particular reference to certain aspects of that work; and the second is in order to deal with certain matters which I raised in Questions some little time ago with regard to a practice which has grown up of persons seeking to do business with manufacturers on the basis of a commission arrangement provided they get orders from the Ministry of Supply.
    First of all, I wish to deal with the general work of the Ministry, and to put to the Minister certain questions seeking information that we think the House and
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    the country ought to have. It will be remembered that prior to the establishment of the Ministry of Supply shortly before the war the Opposition urged that the Ministry should do practically all the purchasing for the three Service Departments, and, indeed, we should have been pleased if it could have done the purchasing for the civilian Departments as well. When the Ministry was established it was confined to purchasing on behalf of the War Office and was little more than the purchasing branch of the War Office. I should like to know whether there is any intention of extending its activities to cover the requirements of the Admiralty and the Air Ministry either in whole or in part.
    The House will remember that when the Prime Minister announced the intention to bring forward a Bill for the establishment of the Ministry of Supply he did say that while at first the Admiralty and the Air Ministry would not be catered for, it might be possible that such an extension would take place later, and it appears to us that the Ministry has now been established sufficiently long for the Government to have given favourable consideration to its taking over part, at any rate, of the purchasing for the Admiralty and the Air Ministry. One appreciates that this must be a delicate process in time of war, and that the Government would have to move with some caution, but it seems a fair point to raise whether, stage by stage, part of the work at any rate of those Departments in the realm of purchases should not be taken over. It is the position that the Ministry of Supply, the Admiralty and the Air Ministry are to some extent falling over each other and competing for the purchase of similar goods in the market, and that, it seems to me, is contrary to good public policy and to good administration, and may well lead to difficulties between the Departments and to an unnecessary increase in prices. Moreover, there should be a good deal of standardisation of products, which will tend to decrease the cost of production and consequently prices. I should be glad if the Minister would inform the House what the position is.
    The Minister of Supply (Mr. Burgin): Could the right hon. Gentleman, without breaking his argument, give any instances in which, as he suggests, the Departments are tumbling over one another for the same articles?
    Mr. Morrison: I was not proposing to give specific instances, but it seems to me that, on the face of it, the Departments must be purchasing rather similar commodities, and must be entering the market separately for them and, therefore, be liable to compete with one another. In previous discussions apprehensions were expressed, and some of those apprehensions were admitted to be well founded, of shortages of certain essential supplies. It would not be appropriate that I should mention specific things, but if the Minister could give us some information on the progress of production, saying how far any arrears that existed have been overtaken and how far supplies, both for active military operations and for the equipment of the Army, are coming forward satisfactorily, we should be glad.
    In particular we should like to know the position as to machine tools, jigs and gauges. Before the war it was admittedly very unsatisfactory. I am informed that as regards the main types of machine tools the position as to imports and exports between July, 1935, and December, 1938, a period of somewhat over three years, was that we exported just under£10,000,000 worth of the main types of machine tools, but, on the other hand, that we imported over £15,500,000 worth, and that a large proportion of the imports came from America and Germany. Indeed, of the total imports, about 50 per cent., namely, over £8,500,000 worth, came from America and £4,250,000 worth from Germany.
    That was a very unsatisfactory position, because machine tools are vital to large-scale engineering production, and it seems to me that it was a somewhat disgraceful thing for this great country, perhaps as highly skilled in engineering production as any country in the world, to be dependent to such an enormous extent upon foreign importations. Undoubtedly the shortage of machine tools has been one of the major difficulties of the Minister in securing from the engineering industry the output he requires, and it is also a difficulty for the Air Ministry. We are very anxious to hear that the position is being retrieved, and should like to be assured that in retrieving the position for current production the Minister is keeping his mind on the post-war position and trying to lay such a foundation in machine-tool production that after
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    the war the position here will be very much more satisfactory than it was before the war.
    I am informed that there is some shortage in imports of wool, with the result that unemployment has tended to grow in the manufacturing industries using wool, and that consequently our exports have been hampered. If that be so, it is bad for employment here and bad for our export trade, which was to a considerable extent done with America, and therefore it is bad from the point of view of the exchange position. I should be glad if the Minister could tell us anything about that. Then there is asbestos. Is it the case that we are importing considerable quantities of asbestos, although we could manufacture it at home? If that be so, it seems to be regrettable, because the shipping space occupied by asbestos could be used for other essential commodities and further employment in its manufacture could be given to our people here.
    There is one other point of major policy I would like to mention. A recent report of the Royal Commission on the Geographical Location of Industry has been published. The question has been raised by a number of my hon. Friends who represent areas that have gone through terrible depression in recent years, as to whether the Government are taking account of those depressed areas in the placing of factories for the manufacture of essential requirements for the prosecution of the War. This is an opportunity to rectify, to some extent, the geographical distribution of industry, because, in the case of war manufacture, the Government have an opportunity of influencing directly the distribution of industry. I should like the Minister to inform the House whether his Department have in mind steadily the desirability, as far as economic factors and circumstances permit, of new factories being put up with the encouragement, the assistance or even the direct action of the State, and being preferentially placed in areas which have suffered, may still suffer, and are likely to suffer from unemployment in the very near future. It would be a great pity if the opportunity were not taken to secure a proper and reasonable distribution of industry, so far as that falls within the influence of the right hon. Gentleman's Department.
    Then we should like the Minister to say whether there is in existence an active

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    process of standardisation of the items which are required. I have heard of an instance in which some doubt exists whether that is the case, namely, the case of baths. The general standard length of these baths is, I am informed, five feet, but I have been told that a fair number of six-feet baths has been ordered, with the consequence that the plant which exists mainly for five-feet baths could not be used, and that special plant had to be created. I mention this as an illustration. I am sure that the House and the Minister will agree that standardisation of products is extremely desirable, because it reduces overheads and stimulates greater output on a more economical basis. I hope very much that the Minister of Supply will be able to give the House adequate and full information on the points that I have raised. They are all essential to the successful prosecution of the War and to the successful conduct of the work of the Ministry of Supply. I shall be very glad if the Minister will be so good as to give the House the fullest possible information on these points, in order that they may be considered by the House.
    Now I pass to certain other matters. I wish to make a passing reference to the recent dismissals, or removals from office, of certain people in the Ministry of Supply, namely, the brothers Behar and Captain Davis. I do so, seeking from the Minister any statement that he feels he can make, althought I appreciate the difficulties of the matter. The Minister has said that these appointments were temporary and were within his own control. He made the appointments and decided upon the removals. The reasons were satisfactory to him, and that is all there is to do; but questions have been put in this House and answers have been given. The consequence is that the country apprehends that there must have been some offence on the part of these persons. It is a matter for consideration whether the nature of those offences should not be given to the House in justice to the Minister and, may I add, in justice to the accused persons themselves. Moreover, if, as the Minister says, there was no complaint as to their work in the Ministry of Supply, as I understand he did inform the House the other day, we may ask whether there was some trouble prior to their appointment, and whether proper
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    investigations were made before they were appointed to function as officers of the Department. Obviously it is desirable that nobody should be appointed in the Department unless proper inquiries are made. Two of those gentlemen were persons of some sort of public standing. I understand that two of them were, or are, prospective Conservative candidates for Parliament. One of them has been the Mayor of Deal and member for Deal on the Kent county council. There is one general consideration which arises out of these matters. I forget whether the brothers Behar held military rank. I rather believe they did.
    Mr. Burgin Mr. Burgin indicated assent.
    Mr. Morrison:The point I wish to raise with the Minister is whether it is really desirable that an essentially civilian Department such as the Ministry of Supply should have functioning m it commissioned Army officers, doing work as military officers and in military uniform. I need not assure the House that I have no prejudice against military uniform as such, and I am not suggesting any such prejudice, especially when the country is facing its present difficulties; but it seems to me administratively wrong that, in a civilian Department, there should be functioning a military hierarchy. It does not easily fit in with civilian administration or with commercial administration. The Ministry of Supply is not merely a civilian Department; it is essentially a Department of business and commerce—of active business and commerce.
    A principal assistant may have an argument or a difference of opinion with an assistant secretary of his Department. While it is the case that assistant secretaries make comments on the Minister's principal assistant, it is sometimes the case that the Minister's principal assistant makes comments on the minutes of assistant secretaries, and It is right that that should be so. It is profoundly important that principal assistants should never be afraid of expressing an opinion to the assistant secretary higher up and giving him advice, or of telling him quite frankly that, in the opinion of the principal assistant, the course which the assistant secretary is taking is wrong. All that can be done within the proper discipline of the Civil Service, and, in-

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    deed, is done every day of the week; but while a principal assistant can have, in a respectful and polite way, such a difference of opinion, and can give frank advice to the assistant secretary higher up, it is a little difficult for a second lieutenant to have an argument with a major and to comment freely on documents and proposals for which the major, in his capacity as officer of the Minister of Supply, may be responsible. I suggest that it is not conducive to that freedom of consultation and of discussion that the military system should obtain in this Department, however right it may be in the War Office, the Admiralty or the Air Ministry. I would ask the Minister, as a result, to consider, in relation to these gentlemen walking around in military uniform, although they may be good officers of the Department, whether, if they are to remain in the Ministry, it is not, on the whole, desirable that the uniforms should come off and the military rank should come off too and that they should function in the ordinary way of the Civil Service, subject to the fact that many of their appointments are temporary and are commercial rather than Civil Service in character.
    I wish now to refer to the plight of the small manufacturer. It is a difficult problem from the point of view both of the small manufacturer and of the Minister. I should imagine that the Minister wishes to capitalise every productive agency that he can, whether that productive agency is on a large or a small scale. I agree that the problem of dealing with a very large number of small or moderate-sized manufacturers may be a problem of some difficulty from the point of view of practical administration. On the other hand, in these times the small manufacturer has his financial problems in rendering the assistance to the State that he wishes to render, and at this time the condition of many manufacturing concerns of small or medium status with limited capital is undoubtedly very difficult with regard to capital. In most cases the capital has been completely absorbed in the business for peace-time production, and there is not the fluid margin available to allow of great change-overs without some definite financial stress being felt by the concern.
    The obvious difficulties which face the medium manufacturer include the fol-
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    lowing: the length of time from the receipt of contracts to the actual commencement of manufacture, which is entirely due to the arrangements for additional plant, planning and generally getting the processes into commission; secondly, the manufacturer must purchase the necessary raw materials, and these are often bought from large public companies or combines who to a great extent are demanding cash payment against pro forma invoices before proceeding with the manufacture of the necessary material; thirdly, there is the financing of special equipment which may or may not be required for a long period, because if the war is over shortly, much of the machinery for these special purposes will be redundant and the capital involved will be completely lost. These are the problems which face the small or medium manufacturer. He is in this position, that although he may have a contract for many thousand of pounds, unless there are special arrangements—and if there are, I hope the Minister will tell us—he has to spend considerable sums on capital and raw material which undoubtedly gives him considerable financial embarrassment. I understand that in the last war special arrangements were made by the Ministry of Munitions for financing these small firms. It is far better, and I suggest it is right, that the Government should handle this financial problem and that it should not be left to the small firms to get money from one quarter or from another if they can.
    There were revelations some little time ago about what has become known as the Scott case, which, it seems to me, arose from the absence of Government supervision. The best plan is for the Department itself to have its own financial arrangements for helping these smaller manufacturers, subject to a proper safeguarding of the public interest, rather than that the small man should be left to find money, sometimes from undesirable quarters and sometimes to use people who turn out to be undesirable in securing finance. I shall be glad if the Minister will inform the House what arrangements are being made in that respect, and whether it is the fact that the Scott system of financing still obtains or whether that has been entirely eradicated.
    I come to the last subject with which I desire to deal, but I am afraid I must deal with it at some length; namely, the

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    commission system which has developed in securing orders from the Ministry of Supply and apparently placing orders by the Ministry of Supply. There may be two explanations. Either these people are being recognised in some way by the Ministry or it is the case that they are bluffing and that they are not securing business from the Ministry. If they are functioning as commission agents and are getting Ministry business on a commission basis, then I think the Minister must give to the House some explanation as to why that system is in any way recognised by the Ministry. The Minister has given certain categorical statements to the House about this matter. As I understand it, the system is this: a certain gentleman visits a firm or manufacturer and says, "Do you want orders from the Ministry of Supply?" They say, "Yes." "Have you got any?" The reply is, "No." So they ask, "Have you got any inquiries?" "No." "Well, but the Government cannot deal with all the thousands of people. I have connections with the Ministry, and I can get business, providing you pay me commission on the business I secure."
    That is, broadly, the line of country upon which these gentlemen proceed. To me, the system seems to be quite wrong and irregular. Any basis of commission on the value of orders received is, in the first place, a positive incitement to get the price as high as possible. The Ministry doubtless have their own methods of price checking and so on, and I should like the Minister to assure us that people who have formerly been in the industry concerned and who will revert to it will have no voice in fixing the prices in matters of that kind. When you have cases of commissions paid on the value of business done, there is every encouragement and incitement to get prices up to the highest possible level. Moreover, any commission, however modest, will cost somebody very large sums of money in view of the enormous values of contracts which are being placed by the Ministry of Supply. That is one objection to it. The second objection is that it is an incitement for these people to place orders, if they can, with unsuitable firms.
    I have been told that most amazing inquiries through these intermediaries have been received from firms—inquiries
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    for articles which it is perfectly obvious those firms did not, do not, and are not likely to manufacture. The firm is told, "Do not worry. You take the order; we can arrange for a sub-contractor who can do the job, and you will get your profit." If that is so, it means that there must be a rake-off by the firm which does not do the work and by the firm which does the work. Moreover, any system of this kind produces a wrong relationship between contractors and State Departments. It is a system in which there is a great temptation for commission men to become friendly with officers of the Ministry. Quite apart from whether that is taking place or not—there are allegations to that effect, but I do not wish to make any charges, because I have no clear evidence—it is the duty of the Minister to examine any system of doing business from the point of view, among others, of whether it is likely to have that effect. It is important, not only that State Departments shall be straight, but that they shall appear to be straight, and that there shall be no apprehension in the public mind as to their activities on matters of this kind. The Minister, in answering my Question on 26th February, was very explicit as to the undesirability of this practice. He said:
    "My hon. Friend the Parliamentary Secretary and I have taken such opportunities as have been open to us to state publicly that no firm desiring contracts with the Ministry need employ the services of intermediaries; and that direct access to the Ministry officials is readily obtainable if an appointment is made."—[OFFICIAL REPORT, 26th February, 1940; col. 1731, Vol. 357.]
    What I am doubtful about in that reply is the statement that firms "need" not employ intermediaries. I should like to know, Are the intermediaries recognised by the Ministry, and, if so, on what basis? If they are recognised, the condemnation of the Minister does not count for much, unless he can show that the recognition is upon such a basis, and upon such terms that the public interest and the cleanliness of administration are amply safeguarded.
    The Minister has said—and I cannot argue about this—that it was very doubtful whether there was proper legal provision for the prevention of this kind of thing. He made a distinction—which I do not dispute—between an offence against the law and an offence which was not against the law. On the other

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    hand, I put it to him that legality is not the fundamental point about this, but that it is a question of what is right or wrong from the point of view of good public policy. If this is legal, but contrary to good public policy, we must change the law or bring in whatever regulations are necessary. We are at war, and the Minister must be provided with proper powers to stamp this out. The Minister said on 26th February that he knew that this had been going on for a long time; and, indeed, it was because he knew that, that a public statement was made deprecating and discouraging it. If that is so, and if the Minister knew that he had not sufficient legal powers to deal with it, I wonder why he did not take such powers, promptly. I am certain that all parties would be prepared to give the Minister, with speed, all necessary powers to stop the practices of this kind.
    I should like to ask the Minister what steps are taken to ensure that would-be suppliers applying for contracts, and suppliers obtaining contracts, are themselves, firstly, reputable concerns, suitably equipped for the work involved, and financially, subject to such arrangements as may be made between them and the Ministry, able to obtain the necessary materials and labour. I should like the Minister to say whether experience gained since the foundation of the Ministry has caused the introduction of a black list covering firms and individuals who have not complied with the first, if not all, of the requirements, whether the Ministry has a black list of undesirable contractors or undesirable intermediaries, against whom the Ministry should be on its guard.
    I will mention one or two examples of this commission system, and a few of the persons who are involved in the business. I first mention a gentleman named Captain V. R. Ullman, M.C., who, I am advised, lives at The Island, Thames Ditton. I gather that this gentleman has been very active in getting or placing business in the Midlands area, and that he stales that he has contacts and considerable influence with the Ministry of Supply and can get inquiries where other people cannot. In fact, I am told that he has produced inquiries, and, indeed, more than inquiries, which formerly firms were unable to place. The story he tells is much the same as that which I summarised to the House as to the general
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    case which is put up by these gentlemen for getting contracts with firms and persuading them to enter into business with them on a commission basis. There is something more serious about this gentleman. I am informed by more than one person that he has in his possession a visiting card of the Minister of Supply himself, and that on that card is written that he is to have access to the Minister at any time he may desire. That is the statement that comes to me. It is a statement by persons who say that they have seen this visiting card.
    I am sure the Minister will wish to deal, very completely and frankly, with that. It is clearly undesirable that any commission agent should possess such a visiting card of a Minister of the Crown in this connection. I hope, as I am sure will be the case, that the Minister will be able to clear up this point completely. I should like to ask whether Captain Ullman is known to him personally, as he claims to be; whether he is still doing business as an intermediary between the Ministry and manufacturers; and whether he recently went into the Midlands area and saw an Admiral somebody, one of the Ministry's officials, with an introduction from a high officer of the Ministry. I should like to know how far this gentleman is recognised by the Department, and how far he is still acting in these matters. I think it is only right that the Minister should have the fullest opportunity to deal with the matter frankly, in due course. He will know, from our own personal relations, that I am not raising this in order to get in any personal digs at him. His own relations with me have been good, and when he was Minister of Transport he came, not to a full, but, in the circumstances, a handsome, settlement with the London County Council about Waterloo Bridge.
    Lieut.-Colonel Sir A. Lambert Ward: Was there any intermediary?
    Mr. Morrison: No, Sir, there was no intermediary there; it was a case of direct action. There is another gentleman in the firm of F. H. Davies and Company. He has no connection with Captain Davis—in fact he spells his name with an "e"—although this gentleman also is a captain. The address of this firm is at 5, London Wall Buildings, London Wall;

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    and I am told that the principal is Captain F. H. Davies. I am informed that this man has quite a small office and that he carries on business by the same kind of procedure that I have described, that his office is over the Colonial Club, and that he frequently uses a box number advertisement in the "Times" and the "Daily Telegraph." I make no reflection on those newspapers for accepting the advertisement. There was no reason why they should know, from the wording of the advertisement, that there is anything objectionable about it. When approached, he says that he is able to influence Ministry of Supply orders, for which he requires a nominal retaining fee and a commission. The retaining fee system may be designed to make the man not a commission agent, but nominally an employed person of the firm. Nevertheless, it is a method of evasion. I am told that he is acting in this capacity as agent for Benford, Limited, Monk Metal Windows, Darwen's, Limited, Railway Accessories, Limited, Poles, Limited, and Brindley Valve Company, Limited. The information about Captain Davies, and about the next case I will mention, comes to me from Mr. Rankin, of Bylock Electric, Limited.
    Mr. Rankin was good enough to see me, and, indeed, the Minister was good enough to arrange that he should see the deputy secretary of the Department. I am sure that Mr. Rankin is animated by nothing but the public interest, and I am also sure that the Minister will see to it that, as a result of his approaching a Member of Parliament, no injury will be suffered by the firm of which Mr. Rankin is a director. With this firm of F. H. Davies and Co. Mr. Rankin and one of his partners, Mr.Latham, conducted correspondence on behalf of Bylock Electric Ltd. Mr. Rankin was thoroughly against the system all the time, but he conducted this correspondence with legal advice with a view to getting documentary evidence as to what was happening. There was, therefore, an agreement between the firm and F. H. Davies & Co. for 2½ per cent. commission on any Government orders introduced. I will give to the House some of the letters that passed, so that hon. Members can seethe nature of the approach which was made. In a letter dated 7th November, Mr. Davies wrote to the Bylock Electric Co.:
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    "I am to-day in receipt of a communication from the Assistant Director of Munitions Production to the effect that the details with which I have furnished him in connection with your plant and potential production have been recorded by them, and at the first opportunity an inquiry will be sent to you. We must now possess ourselves in patience, as Government departments do not work particularly fast. As soon as you receive an inquiry from them, I shall be glad if you could communicate with me so that I can advise you as to the best method of preparing your tender and of handling the subsequent negotiations."
    A reply was sent by the firm acknowledging that letter and advising them of certain facts. A plant list and so on was supplied to F. H. Davies & Co. Another letter came from F. H. Davies on 17th November as follows:
    "We confirm our conversation over the telephone this morning, when we informed you that the Ministry of Supply were to-day forwarding to you a specification and form of tender covering a supply of upwards of 15,000 mincing machines. We hope that you will find it possible to submit a favourable offer. Tenders have officially closed, but they will hold the matter open for you until Tuesday morning."
    That was acknowledged also by the firm. Other letters of this kind followed, including one dated 6th December, which said:
    "We have had an interview with one of the officials of the Directorate of Munition Production and have shown him samples which Mr. Rankin left with us yesterday. He was very interested, and promised to send us an inquiry. We shall be glad if you will advise us when this is received, as we should like an opportunity of discussing the subject with you before the tender is lodged. Owing to the length of time that it takes for any government department to act, it will probably be a week or two before you hear, and if there is anything which we can do to expedite the matters you can rely upon us."
    That was the kind of letter which this firm was sending, and it is only fair to the Ministry to add that apparently no business eventuated, and the arrangement was cancelled. But the approaches were made. There is a parasitic growth on industrial production of this kind of thing. It is a waste of time, it is thoroughly undesirable, and I earnestly trust that the Minister will be able to inform the House that he is taking steps to arm himself with the necessary powers to bring this kind of thing to an end, excepting in so far—and this is the debatable part of it—as it is recognised by the Ministry, and in that case, if it is recognised by the Ministry, then the Minister will be respon-

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    sible for everything that happens in that respect. And in so far as it is a breach of the law, in that case it will be his duty to prosecute.
    Mr. Rankin has given me particulars of another body which is also active in this matter. It does not appear to be a firm, as far as I can see, so much as two gentlemen who are partners in this matter. One is Sir Charles Allom, F.S.A., V.P.I.A.A.S.—I do not know what those initials mean—and his partner is apparently Mr. Gordon Kyle, both of 43, North Audley Street, and they are hereinafter, in the agreement, called "the firm". This was the agreement which was in fact made or in process of negotiation with the Bylock Electric people under the same conditions as I have indicated after they got legal advice, because they wanted this matter completed in order that documentary evidence could be produced. This is the memorandum of agreement which was finally supplied.
    "Memorandum of Agreement made this day of, 1940 between Sir Charles Allom, F.S.A., V.P.I.A.A.S., and Gordon Kyle of 43, North Audley Street, hereinafter called the firm, of the one part and hereinafter called the manufacturers, of the other part."
    Presumably this was an agreement being sought to be made with a wide variety of firms:—
    "(1) In consideration of services rendered or to be rendered by the firm to the manufacturers in giving to the manufacturers an introduction or introductions to the persons, firms and companies or to any government department with a view to such persons, firms and companies and government departments giving orders to the manufacturers, the manufacturers will pay to the firm a commission which would not at any time be less than 2½ per cent. on the gross value of all orders received by the manufacturers through or arising directly or indirectly from any introduction of business given to the manufacturers by the firm, but may be increased by agreement upon certain contracts to a figure not to exceed 10 per cent. under any circumstances."
    I should think so too!

    "(2) The said commission shall be payable immediately the manufacturers shall receive payment or payments on account in respect of any order or orders received by them as aforesaid.

    "(3) The said commission shall be payable in respect of all orders so given as aforesaid during the continuance of the hostilities which commenced on 3rd September, 1939. In witness whereof, etc."

    There it is in thoroughly businesslike form and proceeding in that way. In order to
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    instance the unsatisfactory manner in which apparently orders are being placed by the Ministry, if my information is correct, I wish to make special mention of the following:—Kitchendom Ltd., Stadium Works, Wembley, are a cabinet-making concern, and they received orders from the Ministry of Supply for 100,000 metal bomb-tails, an engineering proposition. They in turn, not being able to manufacture this kind of thing, subcontracted to Bylock Electric Ltd. The result was that Kitchendom Ltd., I am informed, took a substantial profit for merely passing on the order to Bylock Electric Ltd. This uneconomic procedure means that two profits are made instead of one, and it seems to me to be all wrong. I am informed that there was a meeting of the Federation of British Manufacturers recently, and that there the proposal was made, which, if my information is right, had official approval, and this document which I now hold was handed to the people present by a gentleman who was supposed to be a liaison officer of the Ministry of Supply. This is a scheme for organising the small manufacturers of South East England. It says in this document that Messrs. J. Rawson and Sons, Ltd., of Tunbridge Wells, will be the prime contractors responsible to the Ministry of Supply for the satisfactory operation of all contracts in respect of—
    "1, price; 2, quality; 3, delivery requirements and conditions of employment; 4, accounting; 5, payment; 6, general organisation."
    This is another commission (5 per cent. minimum) case. I fully understand that the Ministry may wish to have some collective arrangement for the mobilisation of the resources of the small manufacturers. I am informed that Messrs. Rawson are merely garage proprietors, and, if that is so, I cannot see why they were put into the position of giving a primary contract in such an area, where there is a considerable field of production. It would be more satisfactory if the mobilisation of the small manufacturer, if it is to take place, should be done directly by the Ministry itself, through their own officers, and not through private firms. If they are private firms, they ought to be firms of considerable substance.
    Mr. R. Morgan: Can the right hon. Gentleman give the name of that association?
    Mr. Morrison: I understand that the meeting was held under the auspices of the South-East England branch of the Federation of British Manufacturers, the head of which, I believe, is a gentleman named Mr. McDonald. It is said that officers of the Ministry were there. I will give another instance of another class—the trade associations coming into the processes of purchase. These are more respectable than these individual gentlemen. Again a percentage is charged, again there is a rake-off, which seems to me a doubtful practice. I am informed that a firm of sub-contractors in the joinery trade applied to the Timber Control at Bristol for the release of the necessary timber with which to execute their contract. They received a reply from a timber association informing them that they would be required to pay a 1 per cent. commission to the Association on the gross value of the contract in question or any future contracts that they might obtain. The sub-contractors in question handed the correspondence to Messrs. Nissen Buildings, Ltd., of Hoddesdon, who wrote to the Director of Contracts at Portland House, receiving a reply that the matter had been satisfactorily dealt with. I understand that all the documents relating to this matter are in the hands of Messrs. Nissen Buildings, Ltd. All I wish to say about that is that 1 per cent. may sound a small item, but with the vast sums that are involved in timber transactions in this country it will amount to a big sum, and I cannot see why these trade associations should be brought into the picture to that extent.
    Incidentally, I have had a letter of grievous complaint from a commission gentleman who says that the commission promised him by certain firms has not been paid. He asks me to help him out and urges me not to go too far in this agitation lest it should put honest men out of a job.
    There was a letter in the "Manchester Guardian" yesterday by a person whose name was not published. It is significant about this business that there were many manufacturers who have told me things but have been very unwilling that their names should be used, and, of course, I must respect their request. Mr. Rankin, of Bylock Electric, Limited, told me that I could use his name as much as I liked
    1540
    and said, "If am ruined, I do not mind. This must be stopped. This country is at war." I am sure that the Minister, with proper public spirit, will see that he is amply protected. The letter in the "Manchester Guardian" was signed "Maker-up" and says:
    "Much has been said recently, both inside and outside the House of Commons, about the position of agents in connection with contracts for Government supplies and we have had repeated assertions by the Ministry of Supply that there was no need whatever for Government contractors to employ any intermediary between the Ministry and themselves in order to secure Government contracts. In spite of these official assurances, however, it is clear that a large number of Government contractors continue to employ such agents. For a number of months in the early part of 1939 the writer's firm made repeated endeavours to obtain a contract for Army clothing. We had the usual acknowledgment of our letters, and even visits to inspect the factory by officials of the Ministry of Supply but a contract was never forthcoming. Mr. Burgin stated recently that his strictures regarding agents did not apply to bona-fide agents employed by firms in the normal manner. The London representative of the writer's firm called on more than one occasion on the Contracts Department of the Ministry of Supply but instead of being welcomed by a Department which was understood to be desperately in need of supplies of clothing, he was given a very unpleasant reception and still no orders of any kind were to be had. This was about the middle of 1939. Soon afterwards we had a call from one of the agents who are officially regarded as unnecessary and who offered us a contract for as much as we could take. Two or three days later, without any further inquiry being made, a telegram was received by us confirming the placing of a large contract.
    "As far as the legitimacy of this contract was concerned neither the writers firm, nor, it is certain, other firms similarly placed, have any qualms whatsoever as the agent in question and his transactions were obviously known to the officials of the Ministry of Supply. Mr. Herbert Morrison referring to this question in Parliament recently, mentioned bribery and corruption. As to this the writer cannot say but one thing is clear and that is that large sums are being paid out in the form of commission to these agents. As it is obvious that manufacturers must cover such expenses when quoting their prices we are faced with the fact that in the last resort the taxpayers are paying a considerable amount of money for services which, according to official information, are superfluous."
    This is a thoroughly undesirable state of affairs. I represent a constituency of poor people in the East and North East of London, and I do not feel happy when they are buying their sugar, tea, and other requirements, that they should

    1541
    be paying taxes merely to prop up parasites. They cannot afford it, and neither can the taxpayers of the middle classes or even the upper classes. The taxpayer has a right to be protected against this kind of thing. It is unwholesome and should be stamped out with all the vigour we can command. It is not only sound economic policy to do so, but it should be the settled principle of the Minister that he should aim at placing a contract at the point of production wherever he can and not through intermediaries or even sub-contractors, except where it can be proved to be proper, as it often is, in the public interest. It is also desirable that the Ministry itself should take the responsibility for the organisation of the small men instead of leaving them to the mercy of the private associations, middlemen, "funny-business" men, or commission agents of this kind. I am sorry that it has been necessary to keep the House for so long in dealing with these matters, but I believe it was, and is, in the public interest that they should be ventilated. I hope that, in dealing with matters of wider policy, the Minister may be able to give us satisfactory assurances and explanations with regard to the things to which I have referred. I am grateful to the House for the patience with which it has listened to me.
    12.5 p.m.
    The Minister of Supply (Mr. Burgin): I feel that the House would like me to deal at once, before the Debate proceeds, with the matters which have been covered in the comprehensive speech of the right hon. Member for South Hackney (Mr. H. Morrison). There is a good deal which I wish to tell the House, and I too must ask for their patience, because the question of commissions, to which the whole of the latter part of the speech of the right hon. Member was directed, is by no means a simple one. It may be easy to point to what is reprehensible and objectionable in the work of a production Department called upon to fulfil the task of endeavouring to equip the Army and to some extent the nation for resisting an attack, but we must be quite clear that in pillorying objectionable practices we do not go too far in the other extreme and cut off from the Ministry many sources of supply which would otherwise be open to them. It will take me a little time to make the position clear, and perhaps the right hon. Gentleman will allow me
    1542
    to take his speech in the reverse order to that in which he put his questions, but, with the single exception of the remarks he made about trade associations, of which I must have notice because it is completely new to me, I propose to answer each of his questions in detail.
    I hope it will be convenient if I deal with the whole of the commissions state of affairs first and then with the wider question of the policy of the Department. In order that the question of commissions can be understood at all, I would ask the House to allow me to state something of the size of what we are doing. Everybody who has had any experience in the open air knows that a very little jam will attract a good many wasps, and it is necessary for me to reveal something of the extent of the jam. It was on 13th July, 1939, that the Royal Assent was given to the Act establishing the Ministry of Supply, and it was on 1st August, five weeks before the war, that the Ministry effectively commenced operation. We took over from the War Office and the Board of Trade approximately 1,000 Civil Servants as the nucleus of the headquarters staff. The business of the Ministry, as the House knows, was to equip the Army, to supply articles of common user required by the other Fighting Services, to deal with the problem of raw materials, whether required for Government purposes, export, or home trade, to deal with the problem of machine tools, again for the Fighting Services and home trade, to deal with inventions, and to organise salvage, both in France behind the theatre of military operations and in the home country, and, in addition, to take part in organising and controlling the Purchasing Commissions in Canada and the United States. In addition to that chapter of activities the Ministry is also the home of the central administration for the important work of priority.
    Some idea of the immensity of that task can be conveyed by two different lines of inquiry—the extent of commitments, on the one hand, and the size of the staff, on the other. Commitments made since the outbreak of war, that is from 3rd September, 1939, roughly six months, already exceed £500,000,000, and at the present time commitments are being entered into and contracts are being placed for munitions and stores alone of something like £16,000,000 a week.

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    Orders for an immensely miscellaneous collection of services and articles have been placed in this country and throughout the world, factory constructions planned and the whole co-ordinated as wished by the general staff. An immense amount of production and an immense acceleration of delivery has involved trading on a very large scale. Every industrialist and every hon. Member with business experience will realise the heavy calls that are made upon a staff by a multiplication of the turnover by tens of thousands, as has occurred in connection with the Ministry of Supply. The nucleus staff of 1,000 people taken over in August has increased until the headquarters staff of the Ministry at the present time is 4,000, and is being added to at the rate of 50 a week. As the scale of supply increases, the personnel also must increase.
    The expansion has involved a heavy burden on the officials, and there is no sign of that burden being lifted; indeed, in some spheres, of which that of the Director-General of Finance is a notable instance, the burden must necessarily grow greater. That staff must constantly increase. Of the 4,000 headquarters staff rather less than one-half are Civil servants and the other half are temporary. Some of them are leading industrialists, scientists and others serving without charge to the State while others, in the national interest, have consented to take remuneration out of all proportion to what they would be able to earn outside. There is also a cadre of military officers who, among other things, maintain in regard to Army supply a close liaison between the supplier and the user. I will deal with the point of the right hon. Member as to how far military officers are necessary and should be in uniform, but I want to state that in the headquarters staff of the Ministry of Supply you will find some 90 military officers connected with parts of the task imposed on the Minister by the Act of Parliament. I am sure that this staff is second to none in loyalty, enthusiasm and devotion to duty, and I think it right and proper in the interests of the Civil servants, both established and temporary, and of the very distinguished serving officers of the Forces, to make this abundantly clear. Some of the leading industrialists of the country who are working with the Depart-
    1544
    ment would, I am sure, also give a tribute to the high standard of integrity of all ranks in the Service.
    It is against that background, and in that sense of proportion of world happenings, that I now would like to turn to the specific matters which have been raised by the right hon. Gentleman. May I express the hope that when we have devoted time to debate these matters, as, of course, it is right and proper that we should, we may be allowed to get back to the main essentials of production? I am not sure that it is always realised that the pursuit of one perfectly legitimate object, namely, an inquiry into some objectionable practice, may inadvertently do real damage to the efforts of the staff to attain the essential object, which is the maintenance of the maximum pressure of production over a wide range.
    Miss Wilkinson: There is no harm in having a clean up.
    Mr. Burgin: I am not raising any objection. The senior Civil servants and the most expert officers, the most knowledgeable people on the staff, have had their attention diverted by the necessity of making inquiries into a great number of matters. They are all necessary, and I do not in the least complain, but I ask the House to realise the immense problem of production, the terrific scale and the extremely short time to produce the ever-growing quantities of requirements asked for by the Services. The Ministry of Supply is perhaps the greatest individual business organisation at the present time. I hope the House will not misunderstand and think that I am burking any inquiry. On the contrary, the right hon. Gentleman will be the first to admit that I have personally looked into each of the cases he has brought to my notice and that in some of them I have preceded his inquiry by a month or so.
    Let us look at the matters which the right hon. Gentleman has raised to-day. I will not deal at the moment with the dismissal of three officers; I want to deal with the question of commissions. There is a great deal of misunderstanding, within and without the House, about the question of commissions and Government contracts. There is a great deal of confusion of thought on the part of the public, a great many loose expressions in the

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    Press and a tendency to confuse the perfectly legitimate, established business practice of remunerating an agent by commission, and the very criminal practice of offering or attempting to bribe a Government servant. This Debate will serve a very useful purpose if, as a result of what we are doing to-day, all sections of the public become better informed.
    Speaking as a responsible Minister of the Crown, and as the head of this great spending Department, I can tell the House with absolute sincerity, that I have not seen a single case in which a specific allegation has been made that a servant of the Crown has been bribed or offered an improper advantage in connection with a Government contract. If such a case is brought to my notice and the charge, after proper inquiry, is proved, justice will be done with the utmost rigour and at the utmost speed. It would be wrong, however, to allow disquiet to spread, or public indignation, which is easily kindled in time of war, to be raised against an established business practice, in itself legal and in itself, in a wide variety of instances, one of service to manufacturer and Government alike. What is absolutely unnecessary, certainly in the case of the Ministry of Supply, is for any manufacturer to seek an intermediary's help for purposes of introduction.
    The matter was raised in the Ministry in November and December last year, when some cases came to light of persons representing that they could secure contracts by the exertion of influence over members of the Ministry's staff. These matters were investigated to see whether there was any ground whatever for such a charge, and in no case were we able to find a single instance in which there was ground for a prosecution, with the slightest hope of success. It was decided that the best course was to bring all these practices into the light of day by means of Press notices and by public speeches. The first Press notice was issued on 12th December, and perhaps the House will allow me to read it:
    "It has recently come to light that certain persons, purporting to have special facilities for approaching the Ministry of Supply, have offered their services to contracting firms as intermediaries on a commission basis. The Ministry of Supply desires to make it clear that if a firm wishes to be considered for Ministry contracts, it is free to apply direct to the Ministry and that all such applications are dealt with on their merits. There should,
    1546
    therefore, be no necessity to employ intermediaries."
    On 15th January, a month later, another notice was inserted in the Press. It read:
    "Certain persons purporting to have special facilities for approaching the Ministry of Supply and obtaining contracts, are offering their services to smaller firms, particularly as intermediaries on a commission or subscription basis. The Ministry of Supply again desires, in the public interest and in the interest of these firms, to state that anyone wishing to be considered for Ministry contracts is free to apply direct to the Ministry, or to the Area Officers of the Ministry, and that all such applications are dealt with on their merits. There should, therefore, be no necessity to employ intermediaries who, in return for a financial consideration, represent themselves as being able to influence contracts."
    That notice went on to say that the Ministry's aim was to make as full use as possible of the small firms and to suggest methods by which this could be done, without recourse to commission agents. On 23rd January, my hon. and gallant Friend the Parliamentary Secretary met the St. Pancras Chamber of Commerce and an account of the proceedings was issued to the Press. My hon. and gallant Friend said:
    "The wrong people for manufacturers to go to are those who represent that they have some means, usually not specified, of influencing the placing of orders. These agents demand either a percentage of the value of any order received, or a subscription to a mushroom organisation, much in excess of the subscriptions asked by legitimate trade associations. Manufacturers would be most unwise to have any dealings with persons of this sort."
    In a speech which I made at Birmingham on 20th January, I pointed out how any joint body, federation or chamber, could approach the Area Boards, if it was a non-profit organisation. I expressed my intention of eliminating the individual who might be tempted to go round for his own pecuniary benefit, pretending to have a non-existent power to influence orders from all or any of the Supply Departments. I think the House will agree that we took steps in the Ministry to warn manufacturers against these undesirable intermediaries. Short of taking legislative action to make it an offence to obtain a commission, there was nothing more that I could do. Early last month, however, I decided that this step was necessary. Owing to war conditions, a very large proportion of the trade of this country is now carried on by and with Government Departments and that has

    1547
    attracted to Government business an equally large proportion of the people who live by their wits. The Government have decided that the time has come when the position of agents must be regularised and an end put to the atmosphere of suspicion engendered by the activities of unscrupulous individuals. Regulations under the Emergency Powers (Defence) Acts are now in draft, and will, I hope, be approved before Easter. I cannot obviously go into the details of the Regulations now. They will be presented to the House in the ordinary way, and they have been drafted with a view to making it an offence, without any question, to attempt to obtain commissions by representing that influence can be brought to bear upon any Government servant, while at the same time they safeguard, as far as possible, the legitimate and proper relationship between a principal and his accredited agent, so long as everything is done openly and with the knowledge of the contracting department. I believe that that action will put a stop to the very undesirable activities of some of these people.
    So much for the general position of agents. I would now like to deal in detail with the specific cases about which the right hon. Gentleman the Member for South Hackney has put questions to me. He mentioned Captain V. R. Ullman,M.C. The House will recollect that this is the gentleman who got a visiting card of mine. I believe Captain Ullman, who is known to me personally and has been over a long period of years, to be a man of undoubted integrity, and I am amazed to hear some of the things that are debited to his account by the right hon. Gentleman. I believe him to be a holder of the Military Cross who served with distinction in the last war, and I will tell the House frankly of his dealings with the Ministry of Supply since that Department was created. He performed some service by bringing some information to our attention with regard to a certain matter not remotely connected with what we are discussing to-day—a question of other activities in another country. He has seen me at the Ministry of Supply—speaking from memory, but a fairly accurate one—two or three times since the outbreak of the war, but never as an intermediary. He has called on behalf of
    1548
    his employers, a well known firm, who were in negotiation with us for a contract for the supply of trench mortar ammunition.
    Trench mortar ammunition was wanted in considerable quantities, and we were endeavouring to extend our realm of suppliers to a much wider range. Captain Ullman, whom I believed and still believe to be in the employ of a very reputable company, called as the representative of that company to make inquiries about the design of a particular trench mortar weapon. I telephoned myself to Woolwich that he should have access to the samples room. On another occasion, he desired to see an actual trench mortar bomb. It turned out that there was an exhibition at Savoy Hill House, within a few hundred yards of where I was seated having the interview, but that admission to that exhibition could only be obtained by a card giving authority of access. I handed to him a visiting card with an authorisation of access for the express purpose of enabling him to go to that exhibition, and I telephoned to the officer in charge of the exhibition. As far as I knew, that was a proper proceeding. I have not seen Captain Ullman from that day. As far as I know, the contract for the trench mortar ammunition did not go through with the firm because they found it was more difficult to manufacture than the class of goods which they had been making. I have told hon. Members the story as far as I know it. I have never known of Captain Ullman as a representative except of his own employers, and if, as the right hon. Member for South Hackney said, Captain Ullman has been engaged as an intermediary in the Midlands, claiming to have influence with the Ministry, he has been doing something improper and something not recognised by the Ministry. He has no influence whatever with the Ministry and no authority to do what the right hon. Member has alleged against him.
    Miss Wilkinson: I apologise for interrupting the Minister, but may I ask why, if the visiting card was given to this man so that he could have access to the exhibition, it should have said that he was to have access to the Minister?
    Mr. Burgin: I cannot tell. I do not recollect the actual words, but what I

    1549
    wrote in blue pencil on the back of the visiting card was written for the express purpose of securing what was a very desirable thing, an entry into an exhibition to see an article of which we were in need, and of which the manufacture was required. The House will see how warily the Minister has to walk. I do not want to have anything to do with anybody undesirable, but I want to extend production in every possible way at the most rapid rate.
    Mr. H. Morrison: With regard to what I said about the activities of this gentle man in the Midlands, my information is that the message on the back of the visiting card says that he is to have access to the Minister. The Minister is not quite clear in his memory as to what he wrote on the back of the visiting card. That is a matter which needs to be cleared up. May I put this to the Minister? Ministers have a certain sphere of action and officers of the Department have another. It is for the officers of the Department to carry out executive orders. Does not the Minister think that it would be better, if a gentleman is to have authority to visit a certain place, that he should have it on an official document of the Department, and not on the visiting card of the Minister at the head of the Department? Does not the Minister think that it is exceedingly dangerous for people engaged in business in connection with the Ministry and outside firms to be able to carry about with them the personal visiting card of the Minister?
    Mr. Burgin: Yes, I think I do; I think it is a great pity. But I was dealing with a man whom I have known for a long time, whom I believed in every way to be reputable; and I thought I was dealing with him as the representative of his own employers, with whom we were in contact. Perhaps it was careless to have given him a visiting card. My idea was that the card would be handed to Major Scrutton, who was in charge of the exhibition. As I say, the right hon. Member for South Hackney has attributed to this man activities quite unknown to me, quite foreign to anything that I know of him. With regard to this case, all I can tell the House, as I have done frankly, is that I have known this man over a long period of years, and I believe him to be of absolute and undoubted integrity.
    Mr. Austin Hopkinson: My right hon. Friend referred to some previous services rendered by this man in some foreign country. Can he tell us what foreign country it was?
    Mr. Burgin: I did not refer to services rendered by this gentleman in a foreign country. It was information about something that was happening in a foreign country which was wanted by the General Staff.
    Mr. Hopkinson: What country was it?
    Mr. Burgin: I would like to look at the details. What I am telling the House is that information was wanted by the General Staff, and it so happened that some information bearing on the matter was brought to me by this man. I have not got all the papers with me, as I did not know that this was one of the cases that would be raised.
    Miss Wilkinson: In view of the name, is this man of German extraction?
    Mr. Burgin: As he was an officer in the British Army, I think he must be a British subject. Frankly, I do not know. I have dealt with this case in some detail because of the incident of the visiting card, about which there has been a good deal in the Press. I am sorry I cannot pledge my memory as to the wording which I put on it authorising entry to the exhibition.
    I pass now to the other cases raised by the right hon. Member for South Hackney. In the case of Messrs. F. H. Davies and Company, an allegation was made that that company advertise offering war work and that when they are approached they say they are in a position to influence Ministry of Supply orders for a retaining fee and a commission. I have not quite completed my investigations into this case, but it appears that they are regularly accredited agents of several firms, and in that capacity they are in touch with the Ministry. It appears prima facie to be a case of an agency firm, holding proper agreements with a number of firms, endeavouring to extend their business. It does not appear prima facie to be a matter to which I could take exception. I think the right hon. Member for South Hackney will agree with me that in the correspondence it was shown that the matter was not by any means limited to the Ministry of

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    Supply, and that the letters related to other Government Departments.
    Mr. H. Morrison: One of them did.
    Mr. Burgin: The third case mentioned by the right hon. Member was that of Sir Charles Allom and a man called Gordon Kyle. The draft form of contract which the right hon. Member read did not refer to the Ministry of Supply only, but generally to Government Departments. The right hon. Member had shown me that form of contract, and broadly, in consideration of services rendered by the two gentlemen to manufacturers in giving introductions to persons, firms, companies and Government Departments, the manufacturers undertake to pay a commission. That particular enterprise had already been brought to the notice of my Department and legal advice had been taken as to whether any offence was disclosed. We were advised that no offence under the existing law was disclosed. I think the House would like to know that Sir Charles Allom, the gentleman referred to in the agreement, is a member of the executive of Mr. McDonald's organisation, a grouping of small firms; that in his capacity as a member of the executive he attended a meeting at the Ministry of Supply; that he was told that the Ministry frowned upon intermediaries who claimed commissions; that the Press notice was read to him telling him that firms had a direct right of approach; and that we in the Ministry understood him to assent to the Ministry's attitude. That was on 17th January of this year, on the occasion of the big deputation, which was attended by Mr. McDonald and his various officials, among whom was Sir Charles Allom. The House will understand how surprised the Ministry and its officials were to find that a gentleman who was a member of the executive, who attended the deputation and who was told that this practice was not countenanced by the Ministry, should be apparently engaged in it. When the right hon. Member for South Hackney brought this to my notice, correspondence ensued between the Ministry and Sir Charles Allom, and as a result of that correspondence, Sir Charles Allom wrote that it was indeed by error that Government Departments had been included in the draft agreement, and that he would take steps to have them deleted. The House can draw its own deductions.
    Mr. R. Morgan: My right hon. Friend has referred to the association organised by Mr. McDonald, which, I take it, is run by subscriptions. Do I understand him to say that he is dealing direct with that small manufacturers' association? If so, is he satisfied with the credentials of its original organisers?
    Mr. Burgin: I was dealing with Sir Charles Allom, and my reference to that Association was in passing. I said that the House must draw its own deductions. The right hon. Gentleman mentioned Kitchendom, a firm of cabinet makers which had been given an order for bomb tails. The matter has been dealt with. Kitchendom had no right under their contract to sub-contract, and the fact that they have sub-contracted enabled the Ministry to cancel the original contract. I would not like the House to think that it was wrong to give the order. The bomb tail is a very small piece of light metal which has to be soldered, and we are most anxious to try and find something that the woodworking firms can do. There is a shortage of wood and a great deal of difficulty in keeping them employed. We were advised by our inspection officers—I have forgotten the price, but it was a question of pennies for each one—that the idea of soldering two small pieces of very light metal work was the sort of thing which the employés of these woodworking firms could quite easily do, especially when it became repetition work. There is no apology whatever for having given the order to Kitchendoms, but it happened that not having the right to sub-contract, by doing so, their main contract has been cancelled.
    Miss Wilkinson: Does it not mean that the Minister gave the work to a firm which had not the facilities to do it? Does that not add to the cost of production?
    Mr. Burgin: The hon. Lady must realise that we have to give contracts to almost everybody because there is an immensity of work to be done. The whole task is finding firms which did not do it before and which will make a shot at it now. The task of equipping the nation for war exceeds everything to do with the engineering industry, or those who have done the work before. We have to bring in, every day, new people

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    who, in the national interest, are willing to swing over their production to something different.
    Miss Wilkinson: From what the Minister has said, is it not obvious that they they could have done it.
    Mr. Burgin: In that particular instance they chose to sub-contract for what reasons I do not know, but I do not want the House to get hold of the wrong idea. We are not in the least repentant for having given the order, and we think they could have done it.
    The right hon. Gentleman next passed to the grouping schemes being organised by the Ministry and said that he thought it was rather a pity that the idea was being adopted and that he would rather the Ministry in some way asked the small firms to do it themselves. I am sorry to hear him say that, and I invite him to examine, in much greater detail, what we know as the grouping systems bringing small firms into productive capacity on the type of things wanted. It is very difficult indeed, and usually demands something beyond their competence, beyond their plant and financial resources while at the same time they see their ordinary work dwindling, their labour forces dissipating and their capital disappearing. So there is a request for work on the one hand and inability to perform it on the other. This idea of grouping has been worked out completely in agreement with the smaller firms themselves and I will give the House two illustrations. The first is the scheme for the allocation among local garages of repair work on vehicles coming back from the British Expeditionary Force. There was a cry of incredulity when the right hon. Gentleman the Member for South Hackney mentioned a garage firm, but garages often have some sort of machinery and plant, and it would be a great waste if they were not used at a time when there is shortage of petrol and the falling into disrepair of ordinary private cars. The garages are left high and dry—
    Mr.H.Morrison: That was not my point. I was surprised that a garage proprietor should be appointed as prime contractor to a very large area.
    Mr. Burgin: I do not want to make a false point. However, I want the House to realise that we have to get the small garages somewhere into the picture, and
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    one of the ways to do it has been by grouping, so that when vehicles come back from the British Expeditionary Force they are to some extent repaired in garages near to the port of arrival. It is a very happy scheme, which has been worked out with complete approval of the different motor associations, and they have nominated the garages. But this is not the scheme to which the right hon. Gentleman referred. I give it to the House as an example of our endeavours to use small firms which in some way approximate to engineering, although the House will understand that a garage repairs, whereas what we want is someone to produce and who has a very different type of machinery. We have brought together a large number of firms in the South-Eastern area with a view to taking shell contracts, and the prime movers in this scheme happen to be a firm of garage proprietors: it is the firms who select who is to be the prime contractor. The Ministry set out a list of terms on which they will be prepared to recognise the groups, but it is the groups themselves who select who is to be the nominal contractor. That scheme, I think, works very satisfactorily, and certainly the small firms themselves up and down the country are doing their best to organise groups of this kind. I shall be happy to give the right hon. Gentleman information if he cares to look into this question, because I think he will find that he is going too far with his complaints, and that these groups of small manufacturers, allocating their own nominal general contractor in this sharing method, make for a system of increasing production which may have the general approval of this House.
    I mentioned in passing Mr. McDonald's organisation. A great deal of nonsense is talked by people on behalf of that organisation. There is hardly a day which passes without some ridiculous assertion being made in the Press such as attributing to me the idea of giving a contract to some firm to plough-up an air field in Scotland, it not being any business of the Ministry to plough or prepare aerodromes either in Scotland or anywhere else. They are all given with a great redundancy of chapter and verse—the wrong chapter and the wrong verse. I am not at all satisfied with the credentials and antecedents of some of the people whose names are prominently associated with that organisation. A great deal of

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    inquiry could be made with profit into the antecedents of some of them. I am, however, concerned with receiving the greatest quantity of goods, and I am consistently doing that by spreading orders as far as is possible. I do not want the small manufacturers to suffer from that organisation. I would like the right hon. Gentleman to know that, contrary to all he thought, the organisation of the garages in South-East London has nothing to do with Macdonald. They started long before he came into the picture. My officials are rather proud of that South-Eastern England Association, and I should not like it to be associated with the other. As to the trade association point, I asked the right hon. Gentleman to give me notice as it was completely new ground to me, and I had not heard the details.
    I hope I have dealt with the commissions issue, and, subject to saying a few words about the dismissal of the three officers mentioned, I will get down to the main issues governing the policy of the Department. A great deal of publicity was given, necessarily, I suppose, in time of war, to the dismissal by the Ministry of three officers. It was made clear by me, as the right hon. Gentleman the Member for South Hackney said, that no allegation was made against these three gentlemen in respect of anything done by them during their period of service in the Ministry of Supply. One of the three, Captain Davis, was the effective introducer and the recommender of the other two. I formed the opinion that none of the three was suitable for the post which he held in the Ministry, and in that belief, conscientiously held, I determined their appointments. That is the whole story. The right hon. Gentleman asked whether that meant that they ought not to have been appointed—that is the effect of his question. I tell him frankly that I think it was a mistake to have appointed any of the three to the Ministry. Captain Davis had a distinguished record in the Ministry of Munitions in the last war, and on that experience he was appointed. I think in view of the events that have happened that it was a mistake to have appointed any of the three. In war, if you discover a mistake, the proper thing to do is to admit it and act upon it. I
    1556
    have not the slightest doubt that it was right that these three appointments should be determined. I terminated them as soon as I formed that view and I notified them that no allegations were made against them. If in answer to the first question in the House I stated the facts too bluntly, that is my responsibility, but I told the House exactly the position.
    Mr. McEntee: Will the right hon. Gentleman now say clearly that the only reason for these gentlemen ceasing to hold the appointments they held was that they were not suitable for the particular jobs they were in? I would like the right hon. Gentleman to be emphatic, because I know the feeling in Civil Service circles about the method of the discharges, which is contrary to the usual practice of discharging Civil servants, either temporary or permanent. That fact and the fact that they are men of position led to the belief outside that there must have been some reason, apart from character, why they were discharged.
    Mr. Burgin: I state emphatically that I discharged these men because, in my judgment, no one of them was suitable for the post he held and that no one of the three was a Civil servant. The fact that there had been the Scott case, the fact that the right hon. Gentleman the Member for South Hackney had raised a question about commissions, and the fact that there was the dismissal of these three officers made the Press in some way connect the three instances. I would like to be equally emphatic in saying that there was no connection between any of them. The Scott case is the subject of inquiry, and the right hon. and learned Member for Ashton-under-Lyne (Sir W. Jowitt) was good enough to say that, so far as my Ministry is concerned, it had been done satisfactorily. That inquiry is proceeding in the War Office. The commission matter is under an entirely separate heading, and I have, I hope, dealt with it to-day. The three dismissals are entirely separate and unconnected with one or other of the other matters, and the reason for them was the unsuitability for the positions to which the persons concerned had been appointed.
    May I, having cleared the deck a little in that way, get back to the specific questions which the right hon. Gentleman the

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    Member for South Hackney asked me with regard to the Ministry generally? Then I will say a word about officers in uniform. Is it intended, he asked, that the activities of the Ministry of Supply should be extended to cover purchases for other Departments? It has an immense amount to do already on behalf of the other Departments. There is an immense amount bought on behalf of other Departments, perhaps far more than the House realises; and there is far more co-operation between the Fighting Services than the country or the House realises They are not in competition in the market for the same thing. I do not see it; I do not come across it. The requirements of the Fighting Services in respect of every commodity of which there is control—and there is control if a commodity is in short supply—come to the central priority organisation of the Ministry. They are made known to us by the different Fighting Services, and consequently competition in buying against one another in the market does not take place. I do not know what is at the back of the right hon. Gentleman's mind in making that point. I do not think it happens; certainly it is not the cause of embarrassment.
    The right hon. Gentleman asked me to make a general statement on the question of progress in the making-up of defence and shortages and on the rapidity of production. He particularly mentioned machine tools. The House will realise that there has not been sufficient time since the outbreak of war for a new factory completely planned to have come into effective production. Nobody will expect factories to be erected and in full production in six months. From all the orders placed in existing plants, of course, continuous deliveries are coming forward with reasonable satisfaction, although there may be certain gaps here and there. No production officer in time of war avoids disappointments. The Siberian winter, the difficulties with coal, the holding back of raw material to allow transport of coal trains, the difficulties of employés in some districts to get to their plants, and influenza have all had some effect, but the general progress of production, with one or two exceptions, is going forward satisfactorily. The right hon. Gentleman mentioned that before the war we imported foreign machine tools and in turn exported others. He is right
    1558
    in thinking that we are projecting our minds forward to the position of this country after the war.
    There has been an immense expansion of the machine-tool industry since the outbreak of war, and a large number of schemes for machine-tool making have been assisted by the withdrawal of men from the Army and by the provision of funds. We are buyers of machine tools from any country that has them to sell. We are buying and paying for large numbers of American machine tools of which we are getting effective delivery. We are simplifying a type of machine too for a specific war purpose, and we are getting an increase in the number of machine tools on night shifts as well as on day shifts. We have progress officers in the tool-making industry, and I do not think that machine-tool makers are lacking in response to the effort which the country is asking them to make. There is room, however, for tremendous improvement. We have a number of progress officers visiting 18 machine-tool firms a. week, each with a view to ironing out difficulties within their own production schedules. Factories for the making of gauges are going up. Gauges are a difficulty, and they necessarily must be. The House must know that gauges are one of the things which stand in the way of employing small firms too rapidly. It takes a complete set of gauges to make a complete set of shell, whether the firm is making millions in a year or thousands in a week, and it may be that economy in the use of gauges is necessary for aggregate production.
    I was surprised to hear the right hon. Gentleman say there was a shortage of wool imports. It is not known to me. I do not believe it to be a fact, and I do not think it right to say that exports of wool have suffered through lack of wool imports. There is, of course, the general difficulty in regard to shipping. That, one understands. There is far more wool purchased in Australia and New Zealand than is actually getting to these shores. But, while it will be necessary to ration wool for civilian consumption in the home trade, there is no lack of wool for export, and there is no lack of wool being imported. I should be happy to give any more information should the right hon. Gentleman so wish.
    Miss Wilkinson: Will the right hon. Gentleman consult his own Director of

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    Wool Supplies, who this week, in a trade publication, is reported as having said that there was a considerable shortage and that rationing would take place.
    Mr. Burgin: The hon. Lady has not followed. There will be rationing for home use. The dissipation of wool in the home trade for luxury purposes will be cut down to about a half of what it normally is. That does not mean that wool is in short supply for the essential needs of the country or of export.
    Sir Percy Harris: The right hon. Gentleman is quite wrong, and he ought to look into it. His general statement is not confirmed by manufacturers all over the country.
    Mr. Burgin: If wool is improperly going into the home trade which ought to be used for export, that is a matter for the trade to organise. The hon. Baronet is putting to me matters which relate to the President of the Board of Trade. I am the controller of the raw wool. The raw wool is increased for export in this rationing period. Anyone who exported 100 in the last rationing period can get 125 in this. I am surprised to hear what the hon. Baronet says, and I will certainly make inquiries. I am surprised to hear that there is a shortage. I will look into it. There need not be, because we are giving a 50 per cent. share of an immense expenditure to the home trade. I will cut into it without any compunction if it is necessary to help the export trade, but it ought not to be at present.
    Miss Wilkinson: May I call the right hon. Gentleman's attention to the speech of Lord Woolton, which I do not think bears out the statement which he has made? I will provide him with it during the afternoon.
    Mr. Burgin: I know Lord Woolton's mind on the matter and am working in daily touch with him, but he is not connected with the export trade. He is looking after the needs of the Services.
    Miss Wilkinson: He is the Director of Wool Supplies.
    Mr. Burgin: No, he is the Director General of Equipment and Stores on the Council of the Ministry of Supply and is not in the least associated with wool con-
    1560
    trol. It is no good for the hon. Lady to look at me with incredulity. He is one of the most valued high-calibre industrialists associated with the Ministry of Supply, giving whole-time work to my Department.
    With regard to asbestos, I know nothing of what the right hon. Gentleman is suggesting. As far as I know, all the production capacity is fully employed. The raw material, of course, has to be imported. If there is anything to look into, I will look into it with pleasure. With regard to the location of industry, my first requirement is to secure production. If, consistently with doing that, I can also secure production from a distressed area, by all means let it have preference provided there is no overriding strategic reason of vulnerability for preventing it going there. The main task is to secure production wherever the labour force and the raw material requirement can best be served. Subject to that, I am bearing in mind the report on the location of industry. The right hon. Gentleman and the House will know that, when a new factory is planned, its site is a matter of agreement between Government Departments, the Ministry of Labour having a very large voice in determining where it ought to be placed from the labour point of view. The right hon. Gentleman asked me about baths. I was not aware that the Department had bought any, but I will have inquiries made. It does not sound as if it comes down my street. I think it is, perhaps, another Department.
    As to military officers employed in the Ministry, there is a great deal of public feeling about officers in uniform in Government Departments. Whilst I sympathise with that general point of view, it must be borne in mind that there has been attributed to the Ministry of Supply the responsibility for research, design, experiment and inspection, and that the senior military officers, who are experts in ballistic and similar sciences, must, of course, be associated with these forms of activity. It is not the Ministry of Supply which determines whether a man is to be in uniform but the consumer—the Army. If the Army say that certain forms of work and to be supervised by men under military control, in military uniform, it is not a matter in which I have an effective voice, but, in keeping with

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    the general wish of the House, I have, right from the outset of the Ministry, made it clear that in my view we should civilianise every Department to the fullest extent it is possible to do so, and I am entirely in sympathy with that general view. We have the Director of Artillery, the Director of Mechanisation, the Director of Engineering and Signal Equipment, with their officers serving under them. General Sir Maurice Taylor, senior military adviser, is a member of the Supply Council. On our headquarters military staff there are some 90 officers, excluding retired officers, holding appointments. I have arranged that, in any future case where it is suggested that an officer should be appointed to carry out a specific duty in the Ministry of Supply, it should always be specially considered whether the newly appointed officer should be military. It depends very much on the nature of the work and how far it is necessary for the officers to serve from time to time with the troops themselves as users of the material.
    I apologise for taking up a good deal of time, but I thought it right to reply at once to the very helpful review which the right hon. Gentleman made. I hope he will feel that I have tried to deal faithfully with the matters which he has called to my attention.
    1.5 p.m.
    Mr. Horabin: I am not going to follow the right hon. Member for South Hackney (Mr. H. Morrison) and the Minister of Supply on the subject of commissions and contracts and men in uniform. I wish to touch for a few moments upon a broader and more vital issue. The Minister of Supply always argues his case ably and has done so to-day, and I think many of the points he has made have been convincing, but he still leaves me deeply concerned about the adequacy of our preparations to meet the trials that I believe lie immediately ahead of us. So many comparisons have been made with our effort in the last war. I was glad they were not made to-day. There have been so many comparisons about the rate of output then and the rate of output now. Those comparisons always leave me cold because I feel they are not really relevant. Surely the only relevant comparison is between our effort and the effort that Germany is making to-day, and that, of course, the Minister
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    has failed to give us at any time. I am not suggesting that he should follow in the footsteps of another Minister and give us comparisons which must be largely based upon wishful thinking. Such comparisons deceive neither this House nor the enemy and only succeed, as they did in the last war, in deceiving Ministers themselves. In war it is vital to take a realistic view of the enemy's efforts; otherwise, disaster may stare us in the face.
    So to-day I should like to make what I consider to be some realistic comparisons between our effort and Germany's in the matter of supplies, and in doing that I am concerned more with the next nine months than with the future, because if we cannot hold the enemy at bay for the next nine months, it is no good talking about what we shall be doing in 1941 or 1942. The essential comparison upon which the work and plans of the Ministry of Supply must be judged, like those of all the Service Departments, is the comparison between our striking power and that of the enemy. In the six and a half years before the outbreak of war Germany spent between £4,000,000,000 and £5,000,000,000 upon war preparations. In the same period France and England between them spent £1,700,000,000, and in spite of technical obsolescence, which, after all, affects both sides, and not alone Germany; and in spite of the wastage of ammunition and equipment in the conquest of Poland, against which, of course, must be set the stocks which were captured both in Poland and Czechoslovakia, Germany before the war must have accumulated vast stocks of completed war material far in excess of those accumulated by France and ourselves.
    What has happened since the outbreak of war? Have England and France caught up with those enormous preparations made by Nazi Germany? We have not. We have not even maintained our position. We have fallen further behind. Since the outbreak of war Germany has been increasing her striking power at the rate of more than £3,000,000,000 a year. This figure is arrived at after weighting the calculations for the difference in the cost of raw materials to Germany and ourselves, and so on. We have been increasing our striking power at the rate of rather less than £1,600,000,000 a year—that figure was admitted by the Chancellor of the Exchequer last Wednesday

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    —and the French have certainly not been increasing their striking power at the rate of more than £1,000,000,000. During the last six months, therefore, Germany has forged still further ahead. It is probably true that Germany has been eating into her stocks of raw materials, but she has been converting them into far more valuable stocks of shells, guns, aircraft and tanks, and it will be many months, at least nine months, I should say, before the shortage of raw materials will compel her to reduce her war production.
    On these comparisons I feel justified in saying that the present effort of the Ministry of Supply is wholly inadequate. It is wrong in scale, because the comparisons have been made between what we have been doing in past years, and have not consistently kept in mind the gigantic effort made by Nazi Germany. We have heard about the new machines which we have in industry, but I do not think it is much use talking about those, because Germany has those modern machines as well. We must not forget that Germany has almost completely re-equipped her industry twice since the last war. The first occasion was during the inflationary period, and she has done it again since the Nazis came into power. One of the first things Hitler did was to allow German industrialists to set the whole cost of new industrial equipment against income tax in the year in which it was installed. The re-equipment of German industry has thus been carried out fairly completely within the last six and a half years, and as a result of that the output per head in Germany is substantially higher than in this country. So I feel there is no rule for complacency there.
    Of course, there is the question of unemployment. Germany, on the outbreak of war, had exactly the same problem as we had. Unemployment rose in Germany to between 600,000 and 1,000,000 as a result of the organisational breakdown which occurred on the outbreak of war, but in the middle of November Germany rectified this by the formation of a Supreme Economic Council, and the unemployed then very quickly dropped, it is said, to rather less than 200,000, with fewer than 250,000 workers on short time. In January our unemployed still numbered 1,500,000, although our population is very little more than half that of Ger-
    1564
    many, and the "Economist" admitted that last December our industrial activity had fallen from 4½ to 6½ per cent. below what it was before the outbreak of war. The breakdown in the organisation of our supply effort is proved, I think, by the fact that the production of war material is being hampered already by a shortage of skilled labour, although we have this huge army of unemployed. If Germany can get her unemployables down to under 200,000, surely it is nonsense to talk about 600,000 unemployables in this country. We should be able to get very much below the 200,000 of Germany. Since the outbreak of war Germany has already trained more than 500,000 people for war work, and she is setting out to train another200,000. What are we doing in this respect? The House knows the answer. The "Economist" sums up the situation very fairly, I think, when it says:
    "The great takers of labour in the last five months have been the textile trades which, though they work for the Government, are not those in which the first and largest spurt would have been expected to appear if the Government were executing a vigorous and coherent thrust for higher production where it is most badly needed. The labour market is still waiting for the armaments drive."
    I am aware, of course, that the organisation required to speed up our armament output to the vitally necessary scale to enable us to meet effectively the onslaught which is likely to be made upon us lies beyond the purview of the Minister of Supplies. It goes far deeper. It requires a Minister to control all our economic activities. Nevertheless, there is much that the Minister of Supply can do to close the gap that yawns between our potential effort and actual performance. The acute shortage of machine tools, which was referred to by the right hon. Gentleman and also by the Minister, is common knowledge. I think the Minister is taking far too light a view of the problem. I believe that the situation is being hidden even for the Minister of Supply himself by the system of robbing Peter to pay Paul. That seems to me to strike right at the root of the problem. The moment the war begins in real earnest those deficiencies are bound to reveal themselves. I say, without fear of contradiction, that the machine-tool situation is extremely serious at the present moment, and that if we go on as we are—I say this in all seriousness—we shall be faced with a far more serious main-

    1565
    tins crisis than we were faced with during the last war.
    I suggest to the Minister that it would be far sounder to face this situation now as I believe it should have been faced last November. After all, the Minister of Supply is not responsible for the present lamentable situation. That grave responsibility rests on other shoulders and on those who, among other omissions, did not plan for a machine-tool controller round about February, 1939, when the other controls were being planned. I suggest that the Minister will be responsible if he does not face the machine-tool situation at once. If it is not faced, we shall be gambling with the future of the British people. It is that which is at stake. The situation is such that the Minister will be forced to adopt the expedients of the last War in order to get adequate production. Before many weeks are out he will be forced to use the existing productive capacity of this country. New machine tools which are so necessary will not be obtained in time, and it would be wise of him to adopt now some of those expedients of the last War. There is an enormous productive capacity for armaments in the smaller engineering firms scattered all over the country. I know that the Minister has shown some appreciation of that fact, but after six months of war suitable machine tools are lying in the smaller engineering shops today and running to waste, from the point of view of our war effort. There is skilled labour in those factories also running to waste at the present moment, from the point of view of our essential war effort. I suggest also—
    Mr. Burgin: I did not want to interrupt the hon. Gentleman, and I am sure that he is giving an impression which he believes to be accurate. Does he really know of a single machine tool that would be of value to arms production and that is not being so used?
    Mr. Horabin: Yes, certainly. I will give information to the Minister afterwards.
    Mr. Burgin: I hope he will be good enough to give me the information. Perhaps I can tell him this: I know of none. Representatives of the Ministry are scouring the country every day for suitable machine tools that may be turned to armament production—but let me not be
    1566
    misled by a false confidence. If there is a machine tool anywhere, I am very amazed if it has escaped the net of my searchers.
    Mr. Horabin: I would remind the Minister also that at the present moment plants suitable for the production of munitions and armaments are not being used for that purpose. Some of them are lying idle. They have the machine tools. I can give the right hon. Gentleman an example from a rural area with which I am acquainted, and I know certainly that there are others. Machine tools and skilled men are waiting to be organised at the present moment. As in the last war, their output may be less than the estimated output of the new factories and the new machines, but it can be obtained in time, whereas the output of the new factories and the new machines may not be available until 1941 or 1942. What use are shells in 1941 or 1942 when we may need them for our defence in 1940? I cannot understand why the whole of our engineering industry has not been controlled as it was in the last war. Surely our immediate need is greater now than it was then.
    In this war the enemy starts off with his stocks, his output and his fighting power at a maximum which goes far beyond anything which existed in the last War. The publications of the German General Staff shows clearly that Blitzkrieg is neither a surprise attack nor an attack on the outbreak of war; it means the use of all the available resources and of all stocks, almost irrespective of losses, in one tremendous, sustained attack on the decisive objective. That is what we may have to face within a very few weeks. We could meet it if we organised our resources now. Are not we capable of doing what Germany did last November, that is, admitting our organisational mistakes and putting them right? Surely we are as capable as Germany in that respect. The Minister has a great opportunity, and if he takes it, I have no fear whatever for the future. If our actual performance is brought as near as possible to our potential performance, the issue cannot be in doubt. We can extend, in terms of present prices, our war effort from its present £1,600,000 a year to something like £2,500,000, with a proper amount of substitution in the

    1567
    trenches of British unskilled for French skilled labour, and the French can increase their war effort to something like £1,500,000 a year. If all that is done, the issue will not be in doubt. Surely the people of this country are eager to make this effort. The Government must organise it, if it is to come about.
    1.22 p.m.
    Mr. Butcher: We have listened with considerable interest to the speech of the hon. Member for North Cornwall (Mr. Horabin), but I find myself unable to follow him into some of the gloomy avenues down which he endeavoured to lead us. I am afraid that he is the victim of German propaganda. The figures of German production are no more likely to be accurate as records of the past than Herr Hitler's pronouncements are as a forecast of things to come. By accepting German unemployment having been reduced to 200,000, as opposed to our own figure, he is comparing two sets of figures which have no direct correspondence with each other.
    Mr. Horabin: These figures were calculated in this country by our economists, from the available official statistics of all countries. They have been properly weighted by those economists. I am prepared to show them to the hon. Gentleman after this Debate, if he would like to see them. I can assume him that they are accepted by the economic experts of this country; they have been worked out by them.
    Mr. Butcher: I feel that the hon. Gentleman gave his case away when he said that the figures had been calculated from available official statistics of the countries concerned. He referred to the question of Germany training men to take part in the war effort, and he contrasted it with what is being done in this country. The number being trained by the Ministry of Labour is substantial, although some would wish to see it far greater. In practice, the task of training men for a place in war industry must be done by the industry itself in co-operation with the trade unions concerned. The position with regard to machine tools is important, of course. I agree with him entirely. The Minister himself has said that no one charged with the production of engineering commodities on a vast scale can have
    1568
    too many machine tools, but we still have in this country this position, that some of the machine tools that we have in the production line are standing still at night partly because we have not got the skilled men. I thought that the Minister's review was quite encouraging, and when he referred to the case of Kitchendom Ltd., to which the hon. Lady the Member for Jarrow (Miss Wilkinson) took some exception, I must say that I did not think the Ministry of Supply would have such enterprise as to go to a woodworking firm and say to them, "Here is something out of your line, but you have premises, an office organisation, an organisation for controlling output, and perhaps costing, and you have a labour force." I am delighted to know that there is this widespread opportunity for factory employers and employés to swing over from wood to metal working. To-night I am going to write to a building firm in Boston who are hunting round for employment in regard to. woodwork, and I shall tell them that the Ministry will give anybody a chance if they will set up a really good scheme and make a real attempt to change over their production and so keep their men employed.
    There are one or two points which I would like to put to the Minister, and I would be grateful if he would deal with them. First, there is the question of co-operation and co-ordination with our French Ally. I do not doubt that at this period of the war it is so accepted as a real and genuine fact that perhaps he thought it superfluous to mention it, but we would welcome some assurance on that point. I was glad that he expressed his willingness to cut into the quantity of wood and other materials available for civilian consumption. If there is one complaint which I have to make of the Ministry of Supply it is that they are a little too tender towards the civilian consumption and the home consumer of non-essential commodities. I refer in particular to paper. I imagine that it is a commodity which requires substantial shipping space, and methods of saving paper have only to be explored in order for new ones to be discovered. We have heard of a committee at the Ministry of Supply starting to save wood by knocking inches off the plans of various articles here and there. If we started saving paper on those lines I am sure that we

    1569
    should have a very substantial saving indeed.
    I do not want, at this time, to raise on the Floor of the House the question of the cost of fertilisers to farmers, but I ask the Minister to examine the increase in the prices and to make sure that they are based on a fair basis and adequately costed. We have heard from the Minister an encouraging report on the orders that have been placed. Some of us would like to know the value of the deliveries that are being made, although I appreciate that there are strategic reasons perhaps why this cannot be done. Indeed if the figures would be of value to us, they would be of value to other people as well. Nevertheless I believe the Ministry is well in its stride. One or two incidents have cropped up, but they have been dealt with very frankly by my right hon. Friend in his speech to-day. I look forward in the days that are ahead, not to the fulfilment of the gloomy prophecies of the hon. Gentleman the Member for North Cornwall, but to full co-operation between the Ministry, employers and organised workers, so that we can make our war effort not only equal that of our Allies but superior to that of our enemies.
    1.31 p.m.
    Mr. McEntee: I would like to put to the Minister a point which has been touched on to some extent but which I think needs emphasising. It has been dealt with by every speaker up to now, including the Minister himself. That is the question of machine tools and their operation. I think it is agreed that there is, and possibly will be right up to the end of the war, a shortage of machine tools. We want, and we shall continue to want, all we can get. I am concerned not so much with the shortage, whatever there may be, but with the use that is being made of these machine tools that are available. To a large extent the Minister's Department is responsible for employment and unemployment. It depends very largely on the amount of the necessary materials that can be supplied to industry as to whether employment is reduced or increased, and it depends to a large extent on the Ministry what amount of raw materials necessary for that employment is available.
    Machine tools are a good example. I went to two firms in my area—I can give
    1570
    the names of both of them if necessary—and they are doing a considerable amount of work in connection with the war, one by direct contract and the other by sub-contract. The firm working by direct contract are making at least some of their own machine tools, but there is a definite shortage of the material with which to make them. The other point is that the tools which are already being made are not operating to the full extent, and that is the point which I desire to stress to the Minister. If he can get in touch with the Service Departments, if he can put what I call more common sense into them in regard to the men who are taken into the Army and are kept there for all kinds of reasons, and if he can induce the Army to return some of the essential men to the industries that are making the war materials, then he will be able to get a very greatly increased production of the articles which are essential for the prosecution of the war.
    Some weeks ago I had occasion to write in regard to six men, all of whom were considered by the firm concerned—an engineering firm—to be essential for production, particularly one of them. They told me that they especially wanted this one young man; he had been trained all his working life by that firm for a specific piece of work in connection with the machine that he was operating. He knows no other job. He was taken into the Army in the ordinary way, although he was in a reserved occupation, and an effort is now being made to get him out. If he was doing work in the Army for which he has been trained one could at least say that it is necessary to keep him there, but since he has been in the Army he has been learning an entirely new trade with which he has no connection and of which he has no experience. There are five others, all of whom are essential, and three of them are doing what is ordinarily called foot slogging, marching up and down in a field, guarding nothing in particular but just being kept in an occupation of some kind in the Army. Yet they are essential to the industry in which the war material is being turned out.
    In other instances—I have done this with regard to more than one firm, and I am not an agent of any firm—I have asked firms to send full particulars of their capacities to all the Ministries, including the Ministry of Supply. There was one

    1571
    firm where men were on the point of being discharged, and the machinery was all ready for operation. I was told by one of the Service Departments that they hoped to send contracts to this firm soon; but that was months ago, and the firm have no contracts yet. I was able myself, through the sheer accident of meeting a gentleman connected with a very large engineering firm in this country, who told me that his firm wished to get into contact with small firms who had toolmakers available, to put that firm in touch with another concern who had toolmakers available and were thinking of discharging them. But that is not work that I should have to do; it is the duty of the Ministry. The firm concerned is one which, it would be imagined, would have been known at the Ministry. It is fully competent for the work. I hope that firms having machine tools will be organised, and that men whom they want, and who are now spending their time uselessly marching up and down, will be brought back from military service.
    I differ entirely from my hon. Friend the Member for Jarrow (Miss Wilkinson), who appears to think that wood-workers are not qualified for work in the metal industries. I have been a wood-worker myself, and consequently I am better able to judge than she is. I have written to all the Ministries urging them to use wood-workers as metal-workers. In the ordinary way wood-workers employed by shop-fitting firms are doing metal work every day, and in many other branches of industry wood-workers are so closely connected with metal work that they could easily take it up. I hope that, in consequence of the severe unemployment existing among wood-workers, they will be given an opportunity of taking up metal work. I think that the light metal and sheet metal industries would welcome them. I am sure the trade unions would. If they must have dilution, I am sure they would rather receive trade union carpenters and joiners than people outside, who know nothing about the industry and will want to stay in it after the war, when it will be over-staffed.
    Unemployment in the building trade is very largely due to shortage of timber. In the last war timber was imported by other methods than by ships—I will not say more than that. It is absurd to say that if we make use of these other
    1572
    methods, the enemy will get to know about it. If a ship leaves another country with timber for us, the enemy, of course, know about it; and if timber comes to us in any other form they will, no doubt, know about it. In any case, it is liable to be attacked, but the attack would be very much less effective if the timber were not carried on a ship; and we should not lose a ship as well as the timber. The Minister said the other day that we had bought considerable quantities of timber. "Considerable" is a very vague word, but I think it would be true to say that large quantities have been purchased overseas, in various countries. That timber is still lying in those countries, and that fact is responsible for very serious unemployment here. I urge the Minister, in the interests of many industries, and particularly the shipbuilding industry, to see that this timber is brought over to this country as quickly as possible.
    I have had a letter from Belfast, which possesses one of the finest shipyards in the world, informing me that unemployment there is so serious that men are almost starving. I have been in touch with the Ministry to see whether something could not be done for the shipbuilders employed in such a fine shipyard as Harland and Wolff's at Belfast. I learn that in other parts of the country the same sort of thing is happening. I know Belfast very well, as I worked in the shipyards there many years ago myself. It seems to me extraordinary, in view of the amount of shipping that we are losing, that there should be so much unemployment in the shipbuilding industry. I will give one reason—I could give others, but they would be irrelevant today. One reason is the definite shortage of timber and steel and other things that go to the building of a ship, and the right hon. Gentleman's Department is responsible for looking after the supply of those things. I hope that the right hon. Gentleman will make every possible effort, in the interests of the large number of unemployed men in the building and shipbuilding industries, to speed up the supply of the necessary raw materials.
    I will say a word about touting. A gentleman named Leaver and another named Kramer came to a firm in the constituency which I represent, and claimed to have large contracts for the firm of Kramer, which is a little, petty, undersized furniture shop in Shoreditch. This

    1573
    firm is so small as to be almost unable to do any kind of reasonable contracting at all, but it is sending out these touts. I believe one of the touts is a brother-in-law of the lady who is the proprietor of the firm. It is a reputable firm, I say nothing against it; but it is utterly incompetent to do large contracts. The other man, I believe, is employed by a firm of house and estate agents as a clerk. He has formed, or is in process of forming, a firm under the name of B. Kramer Limited. This firm claims to have large supplies of contracts from the Ministry, and to have access to the large firm of Lazarus and Company, of Edmonton, and is offering all kinds of concessions to firms, including one in my constituency, if they will allow it to use their premises, at a rent, and to use their credit—which is more important—so that it will be able to get timber and other necessities for carrying out the Government contracts that it claims to have. I can give the Minister the names of the contractors and all particulars, and I promise to send him particulars of one or two cases. I hope that he will make some inquiry into the facts of the cases that I send to him.
    My right hon. Friend the Member for South Hackney (Mr. H. Morrison) mentioned a number of cases, in one of which a gentleman's name was given followed by the initials B.T.I.A.A.S., and he was wondering, and I also, what they meant. May I suggest—British Touts in Association Against the State? That is the only definition of the letters that occurred to me at the time, and one that is appropriate. I urge the Minister to speed up the efforts to produce the supply of material which will give an opportunity for men to be employed in the trades, that I have mentioned.
    1.46 p.m.
    Miss Wilkinson: I realise, though apparently few people in this House do—there is a very small attendance in view of the extraordinary importance of this Debate—how vast is the whole organisation with which the Minister of Supply has to deal. It is recognised on this side of the House that the right hon. Gentleman is putting an immense amount of energy into his job, and the criticisms that we are making are not of him personally. Those of us who have had experience in dealing with him at other Ministries, such, as the Ministry of Transport, realise that he is a man
    1574
    whose mind is certainly not bounded by convention. I should like the Parliamentary Secretary, when he replies, to deal with the question of area organisation, which is one of the matters upon which the Minister of Supply does not appear to have given sufficient attention. I have been reading through a considerable number of reports during the last war, all of which emphasise the enormous difference that was made, both in speed and efficiency, when there was an adequate area organisation. I would refer, for example, to the memoirs published by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), in which he said that so immense was the difference when a really good area organisation was set going, that he assumed that in any future war area organisation would be put into operation at once.
    I would remind the Minister that his organisation has been in operation for seven or eight months and that the war has been going on for just over six months, and yet up to date, according to a report issued by the Ministry of Supply itself, only four area committees have been completed. It is hoped to have 11 such committees before Easter, and 23 committees altogether. It is something to know that the Ministry expects to get half of that number before Easter, but that is rather slow progress for an organisation which is vital to really effective organisation and direction. With the best will in the world, a central organisation in London cannot know the conditions of the districts and the whole production of the factories, except in the form of statistics. If it is to bring about the effective organisation of men and material, the Ministry must have people in the districts continually in touch with the factories, the owners and the men, so as to bring about a real drive in the districts as well as at the centre. I was very interested in a speech by Lord Woolton as to the difference that was made with regard to cotton when a cotton office was established in the Manchester area, as compared with the period when an attempt was made to obtain a certain kind of cotton cloth from London. It was said that Lancashire could not do it, but when they went into the district, Lancashire turned out three or four times the amount that they previously said they

    1575
    could not supply. I do not want to do the Minister an injustice, and I think we were at cross-purposes when I interrupted him in the course of his speech. I was dealing with woollen goods, and he was dealing with raw wool. Although, owing to shipping difficulties we are not getting the raw wool that we ought to get, the really important thing is whether we are making the best use of the wool that is available.
    Obviously, while every war Department must be concerned with the dollar position, the Ministry of Supply must be supremely concerned with it. You cannot deal with these matters by arithmetic alone, but it is the fact that, if we sold all the dollar securities that are at all realisable, we would only have enough to pay for 100 days of war, at the rate of £6,000,000 a day. These are not calculations that have been made by me, but they have been made by experts. It is no secret, and we are not making Germany a present of any confidential information when we say that we are absolutely desperate for dollar exchange. When we have paid for what we have already ordered in America, the prospect of getting further dollars, unless we have loans, is distinctly slight unless we export. One of the things in which Britain is supreme in the markets of the world is fine woollens, and whatever the tariff, the Americans will buy them. The Minister of Supply should not merely make an appeal, but should take steps to see that we cut down the consumption in this country of things that are desperately needed for export and which are not needed in this country in time of war. I will give an example. I was lunching with a friend of mine from the North who is one of the biggest retailers in Newcastle-on-Tyne, who told me that, in another business with which he is connected, the retailers of Bond Street, the leading fashion experts of the country, I suppose, are arranging to have a woollen week to poularise woollen fashions among women. What is popularised in London, becomes the standard for the country. This is not a matter for facetious jokes. If the women of this country are told that they ought not to wearwoollens—I wish to say here that everything that I am wearing was bought previous to the declaration of war—I am sure that they would not do so. The warmer weather
    1576
    is coming on, and it will be possible to wear other fabrics. Because the lead is being given, with strange perversity at this time, things that ought to be used for export are being used in this country. It is no use merely making an appeal on these matters, because what the sensible and responsible person starts to do the selfish person neutralises. Therefore, the Minister himself ought to stop any wool of this kind being used for civilian use.
    I would also like to ask what is being done with regard to scrap steel? As it happens, the British steel industry is very much more dependent upon scrap than are the Germans. The Germans are using the lower grade ore. It is tragic to remember that some of us fought desperately three years ago for the use of the Brassert process in the making of steel, which would have enabled low grade ores to be used in this country, and to think what the erection of steel works in Jarrow, in 1933 or 1934, would have meant to this country to-day. We could have used the stuff that was there in our own soil instead of now having to look round for our own scrap. Private organisations are asking for scrap where-ever they can get it, with the result that there is a scarcity and prices are being forced up to a phenomenal point. Where is the national lead for the collection and use of scrap? There ought not to be a single iron lamp standard erected in this country while the war lasts. The Germans can use concrete and have produced something more artistic than our standards and there ought to be a movement for taking down all our lampposts, except those being used in the black-out. We might even pull up the railings in our parks if it meant we would not be faced with the trouble of getting machinery, factories and ship-building going with such a shortage of material. When will the Government take some national lead in this matter and not allow private firms to collect scrap and force up prices?
    As regards the handing out of contracts, I want to say that my colleague the Member for West Walthamstow (Mr. McEntee) misunderstood me. It is far from me to suggest that wood-workers are not capable of working on steel. In fact, I have been pressing for the training of skilled men in the use of tools so that they can be turned to steel work if it is necessary. What I do urge is the

    1577
    organisation of labour. The Minister himself has said that to actually get things made is an immense problem. If we are to keep our Army and Air Force in the field, and supply our allies, everything depends upon mass production, keeping up the flow of production and making the fullest use of every gauge, jig and machine tool we have. Employment ought to be there for the unemployed and the men organised for it.
    The thing I am concerned about, although I am not immediately connected with the question of supply on the War Expenditure Committee, is the prejudice of the Government which is being elevated to a policy of assuming that we must keep going the smallest unit of capitalist organisation. The Minister said we must find orders for the small firms. Why? The important thing is to use material, labour and machinery to the full, but the best way of doing it is not to keep the small firms in being. The Government think it would be a great pity if they went bankrupt and were not there after the war. I do not want to see anybody bankrupted, but it is thoroughly bad organisation from the national point of view to let precious machinery go to these small units. A great deal of sentimental nonsense is being talked about the small firms, and, although I know I shall have heaps of letters protesting about what I am saying, it is time somebody had the courage to say something. The trouble with our Ministers is not that they refuse to listen to those who talk to them, but that they listen to everybody at once, with the result that they are spinning round like weather cocks, instead of deciding on one policy, ruthless or not, and sticking to it.
    Sir Patrick Hannon: Does the hon. Lady realise that thousands of small firms in this country are at present employed in various capacities on the production of munition work for the war, and for various defence organisations, and does she realise that if they were detached from their present operations, thousands of people would be out of work? Does she seriously tell us that these small firms should have no more consideration or organisation?
    Miss Wilkinson: What I am trying to say is that this war is not a scheme of public works for providing employment
    1578
    for the unemployed, but that this war has to be won. If it is to be a pleasant little occupation by which we are to provide work for the unemployed, which they cannot get in peace-time, then, so long as you can get Hitler to agree to that, we can get on with it. But if this war is to be won we have to consider how to use our effective labour to the best advantage. It is not the best way to keep thousands of inefficient little businesses in being, in order to provide employment in war time, when we ought to be using every available man. Statisticians of the Ministry of Labour warn us that we will have to use every available woman before this war is finished. I am not saying anything about small firms in peace time but what is the use of keeping inefficient firms going now in the light of the immense war effort which is required, and which means turning out stuff at the greatest possible speed?
    Sir P. Hannon: We ought to get this matter right. Does the hon. Lady realise that hundreds of firms in this country, with certain assistance from larger firms, are engaged in the production of munitions, have been brought into an efficient constructive position, and are playing a great part?
    Miss Wilkinson: To the extent to which a small firm can fit into a large organisation, that is true, but perhaps the hon. Gentleman was not present at the time we debated this point. The point is that the Ministry of Supply has given certain contracts to certain firms which have been utterly unable to carry them out because of the lack of machinery or organisation. Firms then sub-let the contracts, and extra profits had to be earned, with the result that there was general inefficiency all round. What I am objecting to is the Minister's assumption that any small firm, however inefficient, should get some kind of contract in order to keep it in being.
    The third point I want to make is in regard to how this immense amount of labour and organisation is to be secured for production. I was horrified about a fortnight ago to learn that the Minister of Labour expected to receive the congratulations of the House because he had made arrangements through training schemes for 40,000 skilled and semi-skilled men to be trained in the course

    1579
    of one year. On that basis how are we going to get the key men who are not in sufficient numbers at the present time? It seems to me that we are not thinking seriously enough on this question of the training and organisation of our people for the big job which this war is. It seems to me that on this little island we have not been able to think in terms of the really terrific job in front of us, and that we are paying too much attention to these people who are pleading that if we do not let them keep on they will not be able to keep their workers employed and will not be able to continue after the war. These people, I think, ought to be gathered together inside much bigger organisations. I am wondering whether we are not thinking too much in terms of keeping everybody as near pre-war conditions as possible, and also in terms of leaving our whole organisation at the end of the war as nearly as possible what it was in the beginning. That is an entirely wrong conception. We have to think much more in national terms, even if it does upset the hon. Member for Moseley (Sir P. Hannon), who is clothed in the invincible prejudices of his own generation.
    Sir P. Hannon: I can assure the hon. Lady that I am the most unprejudiced person in the House.
    Miss Wilkinson: I have heard some statements which have taken my breath away, but that statement almost renders me speechless. I wanted to make these points, because I feel that we are entering upon a different world than ever we have known, and we cannot pass into this new world with the thoughts and prejudices of the last century. It is horrible that we should have to get this national drive to make things and to do things only under the stimulus of war. If it was done for peace how much happier we should be. But here we are in this war, and we shall only get out of our present difficulties by looking at things on a national basis.
    2.9 p.m.
    Sir P. Hannon: I am sure that the House has listened with the greatest possible attention to the charming speech, the comprehensive speech and in some respects the interesting speech of the hon. Member for Jarrow (Miss Wilkinson). Every time she contributes to our Debates
    1580
    we are impressed by her sincerity and her keen political mind in examining the tendency of public questions. But I think she is a little unfair to the small manufacturer, who has made in the past, is now making, and we hope will continue to make in the future, a very substantial contribution to our economic stability. The hon. Lady has in mind the complete elimination of small industries throughout the country in order to concentrate on the greater and more highly organised industries, the big corporations which are doing the work in Birmingham, Sheffield, Newcastle, Manchester, of providing munitions.
    Does she seriously contemplate a situation like that in this country? Small manufacturers scattered all over the Midlands are doing most valuable work. In one of the corporations with which I am associated there are no fewer than 180 small manufacturers who are doing valuable work in this grave and serious time. Does the hon. Lady say to me as a director of this corporation that we should not take into the ambit of our activities the work of these small manufacturers? If she would only reflect for a moment and seriously consider the result of an action of that kind she would find that it would disturb the employment of many thousands of people who are engaged in these small factories in their own localities and districts, and who are prepared to do their best in rendering their contribution to our war activities. It would not be the same if they were removed to other districts.
    I think the House should appreciate the wonderful achievement of the Ministry of Supply. I have been in public life for a long time and I have seen a good deal of the progress of organisation in various branches of national life, and in municipal and civic life. I think the verdict of history from the economic standpoint will be that the achievement of the Ministry of Supply, since it undertook its present responsibilities, will be that it is an economic record. We had the other day a conference in Birmingham at which the Minister of Supply was present. It was the first conference in which were brought together those responsible for the direction of industry and the heads of the trade unions. A council was established, the object of which was to bring into closer contact all the elements concerned

    1581
    with the great constructive and progressive work of dealing with war supplies. The same process was followed in other great centres, and the organisation thus established by the Minister of Supply is one of the most outstanding achievements in industrial organisation in modern times. I am not sure whether the hon. Member for Bridgeton (Mr. Maxton) would pay the same tribute to the Minister of Supply, but I think that, as a young student of the old science of political economy, he will see in it a first step in advance in national administration.
    From my own experience the work of the Minister has put new ginger into the production of this country. May I make one short observation about the Parliamentary Secretary? In supporting the work of the Minister all over the country, the activities of the Parliamentary Secretary, his constructive suggestions and his kindly sympathy and accessibility to everybody who wishes to consult the Ministry, are something of which this House ought to be proud. Nobody engaged in industry in this country to-day can have any sympathy with the intervention of people seeking commissions and professing to exercise any kind of improper or abnormal influence on Ministers or officials. Against that sort of thing the country has, thank God, set its face sternly to-day. In the last war there was an orgy of graft and grab, unworthy of the traditions of this country. That will not be repeated in this our time, when these matters are under the direction of my right hon. Friend the Minister of Supply. I am confident that he, with his broad grasp of his responsibilities, and insight into human character which he exercises in the selection of those who carry out the policy of his Department, is doing a great work. I am sure that he and my hon. and gallant Friend the Parliamentary Secretary will, in the future, when the pressure of these exacting days has passed from us receive the thanks of the country for what they have accomplished.
    I can say on behalf of the various organisations in industry with which I am associated, that we shall do whatever we can do in response to the appeals made to us. I can say this also for our workpeople. During these terrible times, when every element of energy in the nation must be strained to its limits in the struggle in which we are engaged the Ministry will
    1582
    have the complete support of employers and employed alike in the discharge of their great task. Everyone in this House has the greatest respect for the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison). His contributions to our Debates are always packed with thought and suggestive of careful consideration of the problems with which he is concerned. Nevertheless, having examined the criticisms which he made this morning, I think the House will agree that the reply of the Minister has made it perfectly clear that as regards efficiency, progressive, productive effort and administration the affairs of this Department are being conducted on an honest and honourable basis, and with regard for the interests of the taxpayers of this country, and that, as a result of to-day's Debate, the Ministry of Supply has vindicated its position.
    2.19 p.m.
    Mr. Ellis Smith: I agree with my hon. Friend the Member for Jarrow (Miss Wilkinson) that we are here dealing with a serious problem arising out of a serious situation. I welcome the opportunity of making a few observations on this subject and I shall endeavour to make my contribution to the Debate as objective as possible. The Minister has a great responsibility. Knowing something about the subject with which we are dealing, I would say that his responsibility is as great as that of any other Minister of State at the present time. I detect in this House and outside a tendency to under-rate the problem which we are up against in this country at the present time. I know something of Germany and the German people. I have lived among them; I have followed their development since the last War, and I have no hesitation in saying that in this struggle we are opposed to a very formidable Power and one which ought not to be under-rated.
    The Germans have harnessed science as no other people have done up to the present, and used it for aggressive national purposes. Their military machine is super-tuned. All that ever stood in its way has been ruthlessly swept aside. The German Government, whether dealing with a group of people within their own country, such as the class of people to whom I belong or dealing with some outside Power, never attack that group, or that Power, unless they are convinced

    1583
    of an overwhelming superiority. Therefore, the first question which I ask is: Are we sure that the Germans have not used the last six months in order to obtain an overwhelming superiority over Britain and France? Are Britain and France relatively more powerful than they were in September, 1939?
    I have sat through this Debate and I followed every detail of the Minister's statement with great care. I should like to deal with some of the questions raised by my right hon. Friend the Member for South Hackney (Mr. H. Morrison) although, perhaps, we in the North are not as familiar with that aspect of life as people in London, but I propose to content myself on this occasion with some observations on the industrial side of the problem. The Minister indicated that he realised the immensity of his task. He said the Ministry had power to deal with all raw materials, and in saying that he included coal.
    The Parliamentary Secretary to the Ministry of Supply (Colonel Llewellin): No, we do not deal with coal. That is a matter for the Mines Department.
    Mr. Smith: The Minister said that the coal problem was one of the very serious problems with which he had to deal.
    Colonel Llewellin: I think the hon. Member has misunderstood my right hon. Friend's reference. He referred to the shortage of coal supplies to the various works but it is not a question of the Ministry supplying coal.
    Mr. Smith: I recognise that, but the reference was to the fact that coal supplies had been a problem. The Minister also said that vehicles which broke down in France were to be brought to this country for repair. I had some experience in this branch of work during the last War. I was employed at a repair depot in France dealing with broken-down tanks and I cannot understand the Ministry's decision to adopt a policy of that kind. It means that vehicles will have to be brought from various parts of France to French ports; then transported across the Channel, and, finally, sent on from the British port to the repair depot. When the repairs have been done, the vehicles will have to be sent back again to the coast, then across
    1584
    the Channel, and then from the French port to their destination. This involves the use of an immense amount of transport and is to my mind a most unscientific method of dealing with repairs. It indicates that the Ministry has not given that consideration to our experience in the last War which ought to be given to it. We all know the difficulties of transport and it should be the duty of the Minister to economise, wherever possible, in the use of transport.
    Sir P. Hannon: I am sure the House would be interested to know what was done in this respect in the last War. Had we repair depots in France? [HON. MEMBERS: "Yes."] Is not the same thing being done now?
    Mr. Smith: I am glad that the hon. Member has put that question. It is important that this matter should be made clear. One of the great difficulties in modern war is the transport difficulty and my point is that it is necessary to economise transport as much as possible. In the last War, we had a number of repair depots in France. At the place at which I worked, there were 2,000 skilled engineers employed in repairing tanks alone. There were, in addition, several places, such as Etaples, Abbeville, and Boulogne, where vehicles of the Army transport were repaired and then returned to use immediately. By that means, there was economy in transport and time. I hope that the Minister will re-examine this aspect of his policy. The Minister did not say a word about national factories. I do not criticise him because of that, for I realise that he had very much to deal with; but the country is becoming more and more concerned on the question of national factories. I should like the Parliamentary Secretary to inform us what the Government are doing with regard to the establish of more national factories. I raise this matter because of our experiences in the last War. I have a copy of a note that was written by Sir Hardman Lever to the Minister of Munitions in 1916, which reads:
    "This great group of factories offers unique opportunities for centralising buying, standardising production, collating and exchanging information, and for introducing improvements so that each may profit by the experience of all."
    In that memorandum, Sir Hardman Lever stated for the benefit of the Minister of Munitions his experiences in connection

    1585
    with the erection of national factories, and suggested that more should be done in that direction. I come now to the next question that I want to put to the Minister. My speech will consist of a number of questions, and in putting them I am speaking, not on my own behalf, but on behalf of organised people outside this House who are concerned about these matters. Is the Minister satisfied that our supplies are assured in respect of alloys, base materials, non-ferrous metals, and important materials of that sort? Modern war is largely mechanised, and mechanisation makes machine tools more vital than they have ever been in the past. The other day, in reading a trade publication, I came across the following passage:
    "At the annual dinner held recently of the Machine Tools Trades Association, the Minister said—"
    The Minister gave a figure, but I think it is a mistake to give figures, because to a certain extent the Germans may be able to deduce from them what is our production. It was a mistake, in my opinion, to give that figure, although I agree that the Germans cannot check up the amount of machine tools that have been imported into the country. I will not repeat the figure. The Minister said that so many thousands of people are engaged in machine tools production, and he went on to say:
    "Would that it could be multiplied several times."
    The question I want to ask is why the number is not more than it is at the present time. I do not place the responsibility at the door of the present Minister and Parliamentary Secretary, but hon. Members on this side are entitled to some reply to that question. The Government have no excuse in this matter. We on this side have been flogging the question for the last three years. We raised the question in the first place as a result of the Royal Commission on the private manufacture of armaments, and the documentary evidence which specialists placed before the Commission in order that we might profit from our past experiences. Moreover, some of my right hon. and hon. Friends who are familiar with the industry, and have friends in it, realised what was taking place. Therefore, as we have been involved in war for six months, we are entitled to receive more satisfaction on this question than we have so far re-
    1586
    ceived. Are the Minister and the Parliamentary Secretary satisfied that adequate steps have been taken to increase output? I know that since they took office, a great improvement has taken place in this respect, but we were lagging so far behind, and, therefore, it is not good enough to be satisfied with what has been done up to the present. Are they satisfied that, having regard to what will be our needs in the future, the supply of machine tools will be adequate?
    Sir P. Hannon:I apologise for interrupting the hon. Member again, but this is a very important matter. I want to ask the hon. Member—and I am glad to see that the Leader of the Opposition is present—whether any suggestion came from that side of the House during the years preceding September, 1938, when the crisis came upon us, that intensified production of machine tools was essential for the conduct of war?
    Mr. Attlee: I ask the hon. Gentleman to read the Debates that have taken place.
    Mr. Smith:If the hon. Gentleman will read the OFFICIAL REPORT, he will find evidence that will satisfy him in this matter. Ever since 1936, we have been putting one question after another about this subject, and, as a matter of fact, I became tired of talking about it because so many hon. Members opposite began to joke about it and say, "When are you going to raise the question of machine tools again?". If the hon. Member is not satisfied with my reply, perhaps he will look up the OFFICIAL REPORT and he will find the answer there. When the Minister said, in the course of his speech, that we were obtaining new supplies from America, the thought which passed through my mind was, "Yes, and we are paying for them." I do not want to be misunderstood in the remarks that I am now about to make. I am not speaking critically about the buying of war material from America, because I believe we shall need it from all over the world before we are through the war; but I have in my possession the following report from Washington sources:
    "The terms under which the Allies are buying war material, including planes, are abnormally stiff. These terms represent practically the provision of funds for the extension of factories necessary."
    Are those the facts? Is it a fact that the American machine tools are costing

    1587
    twice as much as those produced in Britain, and if so, does not that justify us in demanding that national factories should be set up in order to meet our growing requirements? My next question has reference to railway wagons, coal trucks, and locomotives. Hon. Members will remember that on several occasions, long before the war, a number of hon. Members on this side raised the question of the need for building coal trucks with a greater carrying capacity than the present ones have. In America and Germany they have coal trucks with a greater carrying capacity than those in this country, and the result is that the amount of coal carried per locomotive is much greater than it is in this country. Why are we not adopting a policy of that kind in view of our series transport difficulties? Moreover, why do we confine ourselves to making coal trucks of wood? Why are not new methods introduced, as in America and Germany? It is well known that wagons of thin sheet steel welded together by the latest methods of arc-electric welding can be produced in a shorter time than wooden coal trucks can be. Will the Minister give consideration to that?
    In modern war there is bound to be great wastage and that raises an important matter on which the right hon. Gentleman who is now First Lord of the Admiralty hammered away year after year from his place below the Gangway opposite. To manufacture munitions efficiently it is necessary to have ample stocks of jigs, tools and machine tools. That brings me to the question of wastage. Wastage produces a great demand for spare parts, and if we are to utilise our instruments of war to the best advantage, it is necessary that repairs should be done in the minimum of time. That can only be done if the spare parts are produced in thousands, and millions in some cases. It can only be done if there are adequate stocks available which can be fitted without difficulty when the Army needs them. Has attention been given to that matter?
    I am not speaking for myself but for many influential people outside this House. How is it that the Area Boards and the Area Advisory Committees have not functioned to the extent that they should? I should like a definite answer as to why the National Advisory Committee has not yet functioned and why it
    1588
    is that only the inaugural meeting has been held. Here we have capable, competent men with great experience behind them, and yet all they have been called upon to do is to attend an inaugural meeting. No further meeting has taken place, and great disappointment exists. Therefore I ask, Who is responsible for the position? There are bound to be conflicts of interest between various Government Departments. We have the Ministry of Supply, the Ministry of Shipping and the Ministry of Mines. The Ministry of Mines is responsible for producing coal, oil and petrol, and this is bound to be a serious matter to the Ministry of Supply. Is there the maximum amount of co-ordination and co-operation between these Ministries, and are regular consultations held, and are the liaison officers or representatives constantly in consultation? I raise that because I have been reading the report of the Military Board of Allied Supply published by the United States Government. They place their experience on record in a report to be found in the Library. I find on page 58 the following statement:
    "Another shortage affecting the output of munitions was that of coal, due to the loss of coal-fields in France and the reduced output in Britain."
    This is a very serious matter, and all in touch with industry realise the seriousness of it. It is true that in this House the household consumers' interest have been raised in the past few weeks, but there is another serious aspect in regard to the shortage of coal and lack of policy on the part of the Ministry of Mines. My hon. Friend the Member for Ince (Mr. G. Macdonald) last night pointed out the serious effect of taking key men out of the mining industry. I know this is not the direct responsibility of the Minister, but it shows the essential need for the maximum co-operation and co-ordination between the various Ministries. We on this side of the House are convinced—we know—that we are not geting the best results because there is a lack of co-operation and co-ordination. Despite what the Prime Minister may say, and what was said in the interview, and what the Secretary of State for Mines says, there is no excuse for the shortage of coal during the past few weeks. I am the first to admit that we have had very serious weather difficulties, but if we had been living in

    1589
    peace-time, and the Government knew that a strike was to take place in six months' time, they would have seen that there were adequate stocks of coal throughout the country.
    Mr. Speaker: That has nothing to do with the Ministry of Supply Vote.
    Mr. Smith: As a matter of fact I have been leading up to this, and I was going to show what a great deal it has to do with the Ministry of Supply. The Ministry is responsible for the production of steel, and I know—I am very loathe to say it but it is I think my public duty to do so—that certain steel works have been closed down and others are on short time because of the lack of coal. If these are the facts—we know that they are—the question of the supply of coal is a very vital matter to the Minister and there should be co-operation and co-ordination to ensure adequate supplies in the future. However, seeing that the Speaker has given his Ruling I will not follow the matter further. I shall be satisfied that I have raised it and called the attention of the Minister and the House to it.
    Speaking on behalf of the people I represent, there is no exhilaration amongst them for this war, but at the same time they realise the seriousness of it, and there is a quiet determination that they are going to do all they possibly can in order that the nation to which they belong shall come out on the right side. At the same time they are concerned with the questions I have been raising, but due to the Ruling of the Speaker, I shall not have an opportunity of putting forward a few constructive ways of dealing with the shortage of coal. Anyone familiar with the possibilities of transport in the North knows that there need not be a shortage of coal for the South. It is not necessary to bring coal from the North Sea; it could have been brought by other ways and the strain on the railway system could have been saved. I hope that an opportunity will be given for me to put forward constructive ideas privately in order that they can be taken into consideration.
    I want to conclude by saying that we have the good will of the people of this country at the present. The Minister has a serious responsibility—I believe he recognises that if we are to retain the good will, it is necessary that right hon.
    1590
    and hon. Members of this House should realise that they ought to conduct themselves in such a way as to maintain it. I want to make a public protest against the mischievous irresponsible article appearing in a Sunday newspaper. We are in a serious situation, and we are up against a formidable Power. Therefore every right hon. Member and hon Member in this House ought to realise that he, as an individual, has a serious responsibility, and that he ought not to be writing irresponsible articles which are conducive to mischievousness throughout the world. In my view these articles have been responsible for that and are to be deprecated. Having said that I am satisfied that, as a result of the way in which the Minister has listened to my right hon. Friend the Member for South Hackney (Mr. H. Morrison) and to hon. Members who have spoken on both sides of the House, the complaints raised in the Press and in this House in regard to commissions are to be dealt with. Under Defence Regulations there is power to deal with the complaints before Easter and this will be conducive to bringing greater confidence in industry, which is greatly needed at the present time.
    2.45 p.m.
    Dr. Little: I rise, in view of the contemplated visit of my right hon. Friend the Minister to Northern Ireland the week after next, to assure him of the great pleasure that his visit will give to the people of Ulster. Coupled with that great pleasure there are large expectations of good things to come through the Ministry of Supply. The House is deeply indebted to the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) for raising the matter she did to-day. They are matters that should be brought unto the floor of the House since they are not such as we in a Christian assembly can wink at, and he has performed a public service to the nation by bringing them up. I question whether we have for a long time spent more profitable hours in spite of the smallness of the attendance that we have to-day.
    I was pleased with the straightforward and honest way in which the Minister met the case presented by the right hon. Gentleman. I have a feeling that not only the Ministry, but the Government, are wide awake to the danger, and I trust that they will sweep out all these

    1591
    adventurers with the besom of destruction. I have no sympathy with them at a time when the very life of the nation hangs in the balance. It is a life and death fight, but in spite of what the hon. Member for Stoke (Mr. Ellis Smith) said about the super-human force against us, that force has feet of clay and we shall triumph in the issue. These obstacles, however, must be put out of the way, and I am glad of the answer that the Minister has given. At any time, but especially in war-time, all these parasitic growths must be resolutely removed for the health and well-being of the body politic of the nation. Every element that creates the slightest suspicion—and the country is full of suspicious people—must be removed. There are always people who will whisper and wonder and suspect, and we must give them no more grounds for suspicion.
    I have found my right hon. Friend the Minister very kindly disposed towards Ulster. Whenever I have approached him on Ulster questions he has received me in the kindest possible way. He already knows something of the position in Northern Ireland to-day. He will meet there the Prime Minister and Members of the Government, and the men who stand in the forefront of the war effort. I hope he will also meet representatives of the men who are shouldering the heavy work and doing it bravely. I trust that before he leaves Northern Ireland he will have a feeling that they are doing their part and that the Government here cannot stand behind them too well in giving them more work than they have received. In no part of the kingdom can you find better workmen or better work than are to be found in Northern Ireland. The men are true as steel and they are heart and soul with you here in the war. Anything that we can do in whatever position in life we are placed to assist Britain at the moment we are prepared to do. We are prepared to make every sacrifice for victory, for the triumph of right over might, and I am convinced that God will grant us that.
    I hope the Minister will keep before him the development and extension of firms already on Government work. We have Harland and Wolffs making ships and Short and Harland on aeroplane work. My hon. Friend the Member for
    1592
    East Belfast (Mr. Harland) assures me that large developments are going on there. We are favoured with having the hon. Member as a Member of this House. He is highly honoured in Belfast and I am sure he will be equally honoured here. I hope the Minister will not be satisfied with these developments but that he will strike out in new directions. We have many fountains there on tap and many ways of work that could be adopted. I hope that he will make arrangements to expand production, thus enabling us in Ulster to provide the things that are urgently required and give work for the unemployed. We have a large list of unemployed and I want to see it lessened. I would not like the House to accept the somber picture of the hon. Member for West Walthamstow (Mr. McEntee). Every cloud has its silver lining. Some people receive this pen and ink work and take it all in, but I never did. If the hon. Member went to Belfast for a little while, he would find that we have a Ministry of Labour there. The head of it is a most kindly disposed man, and it is well staffed. I can assure the hon. Member that there is no one in Belfast who is near starvation or anything of the kind, but what we want to see is that every one who desires work obtains it.
    We have hosts of the best workmen in the kingdom. They are anxious for work and I trust that now that free sites have been offered by my hon. Friend the Member for South Belfast (Mr. W. John Stewart) the Government will accept them and take advantage of the opportunity they offer. We do not get many free gifts and we should gladly accept anything that is offered which at all falls into our plans. I hope, therefore, that there will not only be an extension of the shipyard and aircraft works, but large extensions of old works and new industries set up. I would make a plea for the small manufacturer. I was glad to hear the Minister state that he is to utilise the small manufacturers. He will find such firms in Ulster very ready and waiting for orders. I hope that there will be no financial embarrassment such as has been mentioned to-day, but that the Government will not only encourage the large manufacturer to go on but assist the small manufacturers with finance to do their part to hasten the end of the war and a glorious victory for righteousness and justice. Any work that is done in Ulster is

    1593
    always A.1 work. We cannot be beaten in any place on the face of the earth. I want to see more work for Ulster. I want to see those workless men engaged in industry. They would love to be engaged. They are waiting for the order, and we are looking forward to my right hon. Friend's coming to Northern Ireland to say to one man, "Go" and he will go and, to another, "Come" and he will come. I do not see any better way of hastening the winning of the war than to get our unemployed into work and toward that much desired end we should all give a long pull, a strong pull, and a pull all together.
    2.56 p.m.
    Sir William Jowitt: We have listened to an interesting speech in which the claims of Northern Ireland have been put into their proper perspective, and we have heard about the advantage of the long pull, which is not confined to Northern Ireland. I hope the Minister, when he visits Northern Ireland, will neither postpone nor prefer their claims to those of any other part of the United Kingdom. It seems to me an entirely wrong point of view from which to approach our problems to-day to consider that they should be used for providing work for this, that or the other constituency. The Minister should place his contracts where he can get the work done in the quickest time at the lowest rate. If that happens to be Northern Ireland, then good luck to Northern Ireland. If it happens to be somewhere else, I hope somewhere else will be preferred to Northern Ireland.
    This Debate has been as little of a party nature as any debate that I remember. We on this side most sincerely wish good fortune and success to the Minister and to my hon. Friend who is going to reply. The hon. Member for Moseley (Sir P. Hannon) referred to the wonderful achievement of the Ministry of Supply. History may adjudge that the performance of the Ministry has been very remarkable or it may say that they have failed in their task. I am in no position to judge at present, and I strongly suspect that the hon. Member is in the same position that I am.
    Sir P. Hannon: I can judge from past experience. Prophecies are made in practical affairs because something has
    1594
    already been accomplished from which you can predict what is likely to happen in the future.
    Sir W. Jowitt: The hon. Member says something has been accomplished. What? We heard from him that a conference had been held the week before last, but the war has been on for six months, and it is idle to deny that the Minister of Supply, through no fault of his, is up against a stupendous problem. I am one of those who firmly believe that we shall achieve complete victory, but I believe the very worst way to look at the thing is to try to console yourselves by these aphorisms about every cloud having a silver lining. We have to face up to all the difficulties. We have not to blame the Minister for the situation. We have to remember the exceedingly difficult circumstances in which he assumed office. The hon Member said he was surprised to hear that we on this side had raised these matters in the old days. I do not think it is much good going back to the past. I have read the debates, and I have seen, for certainly three years past, this side of the House raising requests for the appointment of a Minister of Munitions, a Minister of Supply, and a Minister of Defence. I myself took the trouble to go before the Bankes Commission—it must have been in 1935—and I raised the desirability then and there of appointing a Minister of Munitions, pointing out the obvious fact that he ought to be appointed before the war came and not when the war was upon us. That did not need any second sight or gift of prophecy. It merely needed a small rudiment of common sense.
    Sir P. Hannon: While the right hon. and learned Gentleman was pleading with the Bankes Commission to have a Minister of Munitions appointed, his party was voting against it—[HON. MEMBERS: "No"].
    Sir W. Jowitt: I think, if the hon. Member follows Dr. Johnson's advice and verifies his references, he will find he is wrong. I will leave him to look up the matter, and I know he will be a stern judge of his interruptions.
    I want to bring the House back to the matter which my right hon. Friend raised at the beginning of the debate. It is a fallacy to think that these are small points which may divert the attention of

    1595
    the Minister and his officials from a much larger issue. I have the opportunity of seeing, in the course of my professional business, a large number of people about a variety of circumstances. I hear a great deal which, naturally, I cannot reveal. I am only saying what every other Member is conscious of, that there is about the country to-day an undercurrent of talk. I have no doubt that Members on all sides have heard this sort of thing, that, if you want to get your stuff passed, you have to be on good terms with the Ministry. I do not say that it is true. If I had any evidence, I should at once give it to the Minister.
    When the Scott case came to me I at once wrote the full information to him. But it is very important that that sort of talk, if it exists, should be knocked on the head, and that is why, when my right hon. Friend came across these instances which he has mentioned, he asked me to go with him to interview these people in order that we might form an independent impression as to whether they seemed to be responsible people who were trying to assist and telling the truth so that we might, if we thought proper, bring it to the attention of the Minister and, through him, of the House. I did so. I have no evidence which entitles me to suggest that in any of these cases there was corruption in the sense of the bribing of Ministry officials. I have no evidence of it at all, and I do not make that suggestion in the slightest degree.
    On the other hand, I do feel, and feel very strongly that the system which was revealed is a vicious system. Somebody comes along and says, "I have special facilities with the Ministry of Supply." Either that is true or false. If it is false, the man who tries to get an order on the strength of that statement is a "wrong-'un." If, on the other hand, it is true, and he has special facilities, then one at once becomes suspicious, because he ought not to have any facilities other than those which every one of His Majesty's lieges has to go straight to the Ministry of Supply. Further, if it be the fact that people are getting commissions by pretending that they have special facilities with the Ministry of Supply, the system is a vicious system, because it has a tendency to make them try to corrupt somebody in the Ministry of Supply so as to get those facilities. Therefore we all
    1596
    agree, that side of the House just as much as this side, that this is a thoroughly bad system.
    I should like to ask a few more questions. The Minister said to-day, and I was glad to hear it, that he is going to propound before Easter a new Defence of the Realm Regulation making this thing illegal. I hope when he is doing so that he will bear in mind two things. I am no great admirer of retrospective legislation—we sometimes have it in the Budget to deal with tax-dodging, and there I think it is quite justified—but personally I should like to see it applied to these cases. I should like to see those who have made profits by getting these commissions since the war—I am not going to make it a criminal offence retrospectively—hand over those profits as a contribution to our war effort. Next I should like to see it made essential that everybody who has indulged in this sort of transaction should reveal it now by sending in a return to the Minister. It may be useful to the Minister to have the information to check up. With a great deal of experience, I say that it is extraordinarily difficult in this country to find evidence of corruption. Anyone who has been Attorney-General knows that in a great country like ours there must be a good deal of corruption, but I can hardly recall one case, although I was always on the look out for cases, in which I managed to get definite evidence. Do not let us assume too readily that the mere fact that we have not got any evidence of it proves positively that there is no such thing. I hope the Minister will have sent to him all the particulars of these people who have been trying to make a good thing out of their country's necessity. It may be useful to him to have that information, in order that he may be able to look into the matter rather more closely than has been possible heretofore.
    I come now to the three cases which have been referred to, and I am sorry the Minister himself is not here, because I understood he was coming back. With regard, first, to Captain Ullman, I have myself seen people who have seen the calling card which the Minister gave to Captain Ullman. I have not, however, seen the card itself, and therefore have only got their recollection of what was on it. Their recollection undoubtedly was that the card was a card admitting

    1597
    Captain Ullman, not to a trade exhibition or something of the kind at Savoy Hill, but to the Minister himself. After my right hon. Friend and I had interviewed these people, this matter was mentioned to the Minister on 26th February, about a fortnight ago, by my right hon. Friend. He then knew that somebody whom he believed to be a man of undoubted integrity, who had got a card for, according to the Minister's theory, some precise and particular purpose, was, if our information was true, going round using that card for another and wholly different purpose. He was going round to manufacturers, saying, "I can get you orders from the Ministry of Supply. You employ me. I will show you what I can do. Why, just look at this card." Then he produces the card as evidence of—what shall I say?—his credentials, with the Ministry of Supply.
    If that is true—and that was the allegation that my right hon. Friend and I, having heard the witnesses, passed on to the Minister on 26th February—it seems odd that the Minister apparently has not communicated with Captain Ullman since that day. Frankly, I am at a loss to understand it. He tells us that he does not know what was on the card; but he can find out. He could ask Captain Ullman, that friend of his of long standing, "What is the explanation of this?" I am bound to say I should have thought that, in fairness to Captain Ullman, he would have said to him, "Look here, a very unpleasant allegation is being made about you. What is being said about you is this: That you are using a card which I gave you for one precise and particular purpose for a wholly different purpose. I would like you to give me an explanation of this." Nothing of the sort. In regard to Captain Ullman we stand very much where we did on 26th February.
    Has no communication been made? Has nothing been done to find out from Captain Ullman his side of the story? Are we to rely simply on the recollection of the Minister? Obviously, it is very imperfect. He does not himself remember what was on the card. I feel, if my right hon. Friend and I take the trouble to see these witnesses, to go into the matter and to make as certain as we can about the facts and then give them to the Minister, that it is incumbent upon the Minister to take the trouble to make some
    1598
    inquiries as to whether our information is true or not.
    That is the position with regard to Captain Ullman. I pass to Captain Davies. Here, again, is a gentleman who is earning a living by going round to various firms and saying that he will get them orders with the Ministry of Supply in return for a commission. The Minister said to-day that he cannot take any exception to that activity. Now, may I say this quite frankly? I do understand something about the structure of business in this country and how it is done. I entirely understand that, in times of peace, it may be a perfectly legitimate effort and a necessary effort to have people on a commission basis whose task it is to bring together the man who has some plant which could do work and a manufacturer who wants work done; but the war situation is wholly different. It has revolutionised the whole thing. There is no necessity and no room for these commission agent people now. They are wholly unnecessary. What matters today is that the taxpayer should not pay a penny more than is necessary for the goods which he buys. I ask the Minister to reconsider this matter in the light of what I have been saying, namely, that the war has created an entirely new situation. Let him ask himself whether the activities of gentlemen like Captain Davies are really in any way necessary in the altered circumstances of to-day when, as we all know, the Minister of Supply wants all he can get and, I may add, wants it as cheaply as he can get it, in these vital respects.
    Now I come to the third case. I entirely sympathise with what the Minister said about it. Under this rather high-sounding name—I have forgotten what it was, but the Minister explained it very happily as "a rotundity of phrase" or something of that sort—this institution or organisation has been set up, and it looks to me, speaking as an old and experienced hand, rather like a high-sounding title to enable some gentleman to get a rake-off. I am now dealing with the case of Sir Charles Allom. This matter having been brought to his attention in December and having published notices in the Press saying that it was quite unnecessary for these manufacturers or people willing to do the work to avail themselves of the services of these people, the Minister seemed to

    1599
    think that that was all he need do other than passing a Regulation.
    I will tell the House what I suggest he should have done. Directly he found that Sir Charles Allom was doing this business, he could have given the strictest instruction at his Ministry—perhaps he did—that Sir Charles Allom and his associates or agents, if they were known, were not to be allowed inside the door. I would like to ask this question of the hon. and gallant Gentleman who is going to reply: Is he aware of any orders which were in fact given through the instrumentality of Sir Charles Allom? Has he checked that up? I cannot give dates, and I cannot be precise, but I would suggest that the hon. and gallant Gentleman should make inquiries, and I would suggest that it might be interesting to find out how long those orders given to or through his instrumentality continued, whether they continued after these notices in the Press and whether they continued even after the very much more precise warning which the right hon. Gentleman the Minister himself gave. I think it would be a useful line of inquiry, because, as I said, in the absence of the right hon. Gentleman, I want to remove not only the actual fact of any corruption, but any suspicion and any smoke that there may be, about a matter which, I am afraid, is being talked about to-day, perhaps quite wrongly and unnecessarily.
    There are one or two other small matters with which I wish to deal, and then I shall finish. Again I think I am voicing the view of both sides of the House when I say with regard to men in uniform that we have no objection whatever to the Minister using the services of soldiers in His Majesty's Army. There are many tasks, I understand, for which soldiers are more fitted than other people. What I do object to is what I may term "chocolate soldiers." After all, to wear His Majesty's uniform is a great honour, and we do not want a civilian brought into the Ministry and masquerading as a soldier because he is doing a particular job of work. If you want to employ real soldiers, by all means do so. I suggest that this system of making ad hoc soldiers in that way must definitely stop.
    I shall not talk about machine tools, for this reason: I happen to be a member of the Committee appointed by this House to examine into expenditure, and
    1600
    although I have not considered the case of the Ministry of Supply, which is nothing to do with my sub-committee at all, to some extent I have become acquainted with the machine-tool problem, and, that being so, I think it is much better that as a member of that Committee I should not say anything about it at this stage.
    I should, however, like to say this about steel, because it illustrates, I think, what is so important. I want the Minister to get the whole country behind him, to arouse the country to a sense of the greatness of its task, in order that he may have the enthusiastic support of everybody helping him. It seems to me sometimes that a good many people hardly realise that we are at war. The other day I went with a very distinguished person in the way of Supply to inspect a Government factory. As we proceeded down a by-pass road, we saw workmen putting up steel rails at the side of the road. My companion said, "You see that? I Was in Germany six months before the war, and they were then pulling down all the steel rails beside the roads." That is a trivial instance, but it shows a truth. I do not believe the country need be alarmed, but it should be told the truth, that we have an immense task before us, which needs the utmost good will and help of every section of the community; that if we all help, we shall win the war, but that we are up against an exceedingly stiff task.
    With regard to the grouping of small industries, although I should have organised this thing very differently if I had had my way—and I gave evidence before the Bankes Commission—we must be realists, and face things as they are to-day: we must do the best with the system that we have; and I and my hon. Friends do not dissent from the idea of bringing into the scheme all the small firms. I think it is right to insist on that. It may cost more, and even take more time, but you are spreading your net wider by that means, and making it possible to do more work. But I cannot say that I regard the case of the garage proprietor which has been mentioned as a happy illustration of this. So far as I know, the contract which is there contemplated is not a contract for the repair of vehicles at all. So far as I know, that garage proprietor will not himself do any part of the work; he is merely to be a

    1601
    person with whom the contract is made. He is the prime contractor. Having signed the contract, the first and perhaps the most onerous part of his task is over. He then parcels out various parts of the contract among various people, who really are sub-contractors, gets the goods sent to his place, and takes as his remuneration what is oddly described as a minimum charge of 5 per cent. How much it may be, heaven only knows. At any rate, all these sub-contractors are told, "You are to have something taken off you. It will not be less than 5 per cent." How much more it will be I do not know. That seems to be nothing to do with the principle of sub-contracting and getting in a lot of small firms. I cannot regard this illustration, if it is typical of what I say, as at all on the lines of the sort of proceeding which I personally think inevitable to-day and would like to see further extended.
    We make no apology for going into these matters, because we think that it is vitally important, if the Minister is to get on with what I agree are the larger and far more important parts of his work, that there should be established between the Minister and the country a relationship of trust and confidence. If some people in this country begin to think that other people are making a good thing out of the war, then their own war effort will almost certainly fail in effect. Therefore, I myself would like to see a simple, short principle enacted that no one in this country is to be any better off after the war that he was before it, and I think that that also would meet with almost unanimous support in this House. We have tried to clear up these matters in order that the Minister may overcome what I have frankly described as doubts and suspicions, which, perhaps wrongly, exist to my certain knowledge to-day, and so enable us to get on with the job, to get the goods, and to win the war in the shortest possible time.
    3.27 p.m.
    The Parliamentary Secretary to the Ministry of Supply (Colonel Llewellin): Perhaps the right hon. and learned Gentleman and hon. Members will allow me at the outset of my remarks to say that I am certain that my right hon. Friend—and certainly I do—appreciates the tone in which the debate has been conducted to-day. Perhaps I can deal
    1602
    with the major point—the commission point—before taking up others although, haps some of them are more important. At any rate, the main part of two speeches to-day was made on the commission point, and perhaps I may deal with one or two matters, although I shall not if the right hon. and learned Gentleman will excuse me deal again with the specific cases which were dealt with by right hon. Friend. I have no doubt that he will go into the matter, especially the cases that the right hon. Gentleman mentioned and will communicate with the right hon. and learned Gentleman about them.
    Mr. H. Morrison: That is not satisfactory. Is nothing to be said about what has taken place with relation to Captain Ullman and this card between 26th February, when I informed the Minister and gave him particulars, and the present time?
    Mr. Burgin: It was not until to-day that I have heard fully that the right hon. Gentleman suggests that improper use has been made of this card. I gave frankly across the Table of the House the circumstances, entirely innocent, as I thought, in which the card came into existence. I certainly have not communicated with Captain Ullman in any way since the issue of that card.
    Mr. Morrison: I am exceedingly sorry, but I must differ from the right hon. Gentleman. I am afraid that just as his recollection was doubtful of what he wrote on the card, his recollection is doubtful about what took place between us on 26th February, I put these questions, and afterwards I saw the right hon. Gentleman in the Lobby, and I put it before him definitely that the card existed and was being used for the purpose of enabling Captain Ullman to get introductions to manufacturers, and the Minister subsequently spoke to my right hon. and learned Friend.
    Mr. Burgin: The right hon. Gentleman told me that the card existed as I, at once, agree, but I am only telling the House that I have not, in fact, communicated with Captain Ullman in any way since the right hon. Gentleman spoke to me.
    Colonel Llewellin: Perhaps the House will understand, as this was a personal matter with my right hon. Friend, why I preferred to give way and let him deal

    1603
    with it. With regard to the general point about commissions, of course, none of us at the Ministry want to hear this undercurrent of talk about somebody being entertained, or having some influence with the Ministry which can procure them a particular commission. We hope, as my right hon. Friend said, to get through before Easter a new draft Regulation to deal with that point. Whether, in the draft Order in Council under the Defence of the Realm Regulations, we could make people who had done this kind of thing before the war disgorge what they had previously got is a matter more for the Chancellor of the Exchequer than myself. I will, however, certainly go into it—
    Mr. MacLaren: Deport them.
    Colonel Llewellin: Although we may hope that all these people are foreigners, I am afraid some of them are British nationals, and we could not, therefore, do as the hon. Gentleman wishes. The right hon. and learned Gentleman opposite asked whether the transactions could be revealed. There will be—at least, I hope there will—under the new Regulation, a clause to say that in those cases which may be legitimate, for instance, where there is a recognised agent in London dealing for a firm in the North of England or in Scotland, on commission as in the past, the interest will have to be revealed to the Ministry through a prescribed officer. This is not the only Ministry concerned in this matter. The draft Regulation will apply to any contracts with any Government Department. I hope Members will look carefully into the Regulation when it is introduced and that the House will be satisfied that we are doing our best to stop a practice which everybody wishes to see stopped. The right hon. and learned Gentleman opposite said that he did not like ad hoc soldiers. Nor do I. I happened, myself, to serve in the last war and was a Territorial until a year ago. I do not look upon a Territorial as an ad hoc soldier. I would say an ad hoc soldier is a man, who up to the time war breaks out has done nothing in any military capacity and thereafter wishes only to serve in uniform as a non-combatant. I think that description applies in all cases apart from exceptional circumstances such as, where a man is serving in connection with salvage overseas.
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    There are some 90 officers in the Ministry, highly respected soldiers. There is Sir Maurice Taylor, our chief military adviser, and then we have the Director of Artillery looking after the whole of the development and design of the gunnery side of the Army and who, of course, must be a gunner to give satisfaction to users who are gunners. There is a distinguished officer, Brigadier-General Fuller, who is looking after the supply side of engineering and signal stores, and another distinguished officer looking after the tanks and transport side.
    Sir W. Jowitt: The hon. and gallant Member need not apologise to us for having soldiers. We are glad the Ministry has them, and, obviously, these distinguished soldiers are doing useful work.
    Colonel Llewellin: I am much obliged to the right hon. and learned Member, but it is only fair that these officers should be publicly defended. As a matter of fact, the one thing which a Regular officer wants to do in time of war is to get out of a concern like the Ministry of Supply. He wants to go out and serve in the field, and if people make aspersions, it only makes it more difficult for us to get distinguished officers in these jobs. The only other point raised by the right hon. and learned Member was in respect of steel, a matter also mentioned by the hon. Member for Jarrow (Miss Wilkinson). She said that we ought to take up the steel lamp standards.
    Mr. MacLaren: And the Belisha beacons.
    Colonel Llewellin: We are taking up old tram lines, I am not quite certain as to the districts, but I know that we have certain contracts to take up old tram lines.
    Earl Winterton: Has the Department power to compel local authorities to take up old tram lines, or power to prevent their using steel in the construction of roads at the present time?
    Colonel Llewellin: When I bumped into a Belisha beacon the other night I was inclined to agree with the hon. Member that we might take them off the roads. After all, it is the studs which really mark the crossings for motorists and pedestrians. However, we have them to

    1605
    fall back upon if necessary. With regard to the Noble Lord's question, I am not at all sure that we have power to compel local authorities to take up old tram lines, but we certainly have power to prevent them from getting steel. To a certain extent steel has been used in the recent past for purposes such as those which the right hon. and learned Gentleman mentioned, but as this is a matter which comes directly under the committee of which I am chairman, I may say that we have now got the full requirements, not only for the Service Departments and for the Board of Trade for export purposes, but for the Ministry of Transport for the transport industries and for the Mines Department to meet the needs of the coal mining industry and in a similar way we have the requirements for all other industrial purposes. We have got the full picture, and it is just as well that the country should realize that there will be less steel for home industry and for the manufacture of ordinary articles of use than the public are accustomed to, normally, in times of peace. That is inevitable when you are trying, at one and the same time, to carry out the biggest shipbuilding programme that has ever been undertaken in this country, to equip a vast Army and to build a very large Air Force. It is inevitable, therefore, especially at this time when we cannot afford to buy as much finished steel from the United States of America as we did in the last war, that people here should have to go short of steel for the less essential purposes. When the instructions which have just been passed through my committee are put into effect by the iron and steel control I do not think the right hon. Gentleman will see any more of those fences to which he referred being erected as he passes through the country.
    I pass to the speech of the hon. Member for North Cornwall (Mr. Horabin). I must say that the impression which his speech gave to me—and I understand that it gave much the same impression to my hon. Friend the Member for Holland-with-Boston (Mr. Butcher) who followed him—was that it was—unfortunately I think—the greatest tribute paid in this House since this War started to the Nazi system. I was rather depressed to hear the hon. Member make that speech. But I do not think the Nazis need be overjoyed, because I think the speech of the hon. Member was not
    1606
    really founded upon fact. The hon. Member referred to the position of small firms in North Cornwall, and perhaps before dealing with those particular cases I might refer to the small firms generally. The hon. Lady the Member for Jarrow (Miss Wilkinson) made a very courageous speech, if I may say so, with regard to these small firms. What she said in effect was, "Why keep the small firms going at all"?
    Miss Wilkinson: I do not wish to be misrepresented. What I asked was, "Why keep small firms going just for the sake of keeping them going?"I definitely excluded those firms which fitted into such an organisation as that suggested by the hon. Member for Moseley (Sir P. Hannon).
    Colonel Llewellin: I am very glad to hear that, and I am sorry if I misunderstood the hon. Lady's remark. The policy of the Ministry, and I think it is the right one, is to use such of the small firms as can be fitted into the picture. Some of these small firms can be fitted into the picture as sub-contracting units, and as my hon. Friend the Member for Moseley (Sir P. Hannon) said, a number of them are doing very good sub-contracting work at the present time. Others may be grouped together, as has been done in certain instances. Obviously it is not worth while to waste a lot of munition tools in "tooling up" small firms when you could use them to far better advantage in "tooling up" larger units from which you will get a much greater stream of production. Where a small firm has tools of its own which it can use, there is a good deal to be said for using that firm. To begin with, the workpeople are then kept working near their own homes, which is of some importance. Where they can be kept working in these small places, it is far better than to put up a new unit which perhaps has to be outside the town, so that the people have to come long railway journeys, as unfortunately they have to do at some of our factories to-day. Where we can use existing buildings, existing tools, and employ the people near their own homes, we shall certainly employ the small firms. But to employ small firms for the sake of employing small firms would be wrong. We must buy goods where they can be efficiently made, quickly made, and made at the least possible cost to the State. That cannot be done if one uses an in-

    1607
    efficient small firm simply for the sake of using it. The hon. Member for North Cornwall quoted the case of some firms in his constituency—
    Mr. Horabin: Not in my constituency.
    Colonel Llewellin: I have a note that they are in North Cornwall.
    Mr. Horabin: One of them.
    Colonel Llewellin:I was under the impression that the hon. Member represented North Cornwall. At any rate, he spoke about Cornish firms. If those firms come within the category I have described, then what they should do is get into touch with the area organisation at Bristol, which is already in being, and looks after Cornwall. They can then go to see an exhibition there and offer to make what they think they are capable of making. Perhaps the hon. Member will take that message to those whom he has in mind. The hon. Lady the Member for Jarrow asked how the area organisation is progressing. We have got the area committees working in Birmingham, Leeds, Glasgow, Manchester, Newcastle, Lincoln, Nottingham, Leicester, Bristol, Sheffield, and Stockton. As my hon. Friend the Member for Down (Dr. Little) intimated, the next area committee will be in Belfast, and will be opened by my right hon. Friend just after Easter.
    Mr. McEntee: What about London?
    Colonel Llewellin: The London area was not on such an urgent list as some of the others. Of course, we have the area exhibitions in London, as the hon. Member knows. There are the munitions exhibition at Savoy Hill, and the general stores exhibition at Paddington. People can go to Savoy Hill and deal with the area officer, although the area committee has not yet been formed. The hon. Lady the Member for Jarrow asked why these area committees were not functioning before, and she made some criticism in that respect. During the last war, these things grew up very quickly. Not a great deal of trouble was taken in their formation, and the result was that some happened to be excellent and some did very little good. What we wanted to make fully certain of this time was that they would be set up carefully with the full agreement of the trade unions and the employers that we would get the best
    1608
    people we could on both sides and get really good secretaries, and that we would not, having done a thing in haste, have to repent at leisure, and then be told, in the Press and in the House, because we had appointed somebody too quickly and then got rid of him, that there was some scandal about the whole matter. It is far better to go rather more slowly, because we want these boards and the committees advising them to make a real contribution to our munitions programme.
    The hon. Lady the Member for Jarrow talked about fine wool and said that it was one of the things most supreme in the export trade. I should say "Yes" to that, coupled with the linen of Northern Ireland. We have given the paramount amount of flax to the linen industry of Northern Ireland to keep the export trade going. It is a very valuable contribution to the dollar position. We are also seeing that extra wool is given to those who are prepared to use it for the export of goods and gradually we are cutting down the amount of wool for home civilian consumption. I am glad to see that the hon. Lady's dress, which she mentioned, is made of wool. It looks as though it would last, if I may say so, through the war or perhaps a year or two longer.
    My hon. friend the Member for Moseley made a very charming speech about the Ministry, but his references to myself, I think, were rather too fulsome. He was absolutely correct in an interjection to the right hon. and learned Member who said that the Labour Party was clamouring for more machine tools for armaments in 1935. My hon. Friend said that at that time they voted against the Service Estimates. Actually they voted against the Service Estimates also in the spring of 1936.
    Mr. H. Morrison: May I remind the hon. and gallant gentleman that it was on the grounds of policy, and, secondly, surely he knows these Estimates did not cover machine tools. Therefore, his point seems to be missed.
    Mr. Mathers: Did the Tory party realise that in voting against the Education Estimate they would do away with education?
    Colonel Llewellin: I understand that the reason why the lack of machine tools was put at our door was because somebody thought we should have existed and

    1609
    asked for them then. Of course, if you are to have no Army, no Navy, and no Air Force, there is really not much point in having a Ministry of Supply.
    Mr. Cocks: We did not suggest we did not want an Army, Navy, or Air Force. We wanted better ones.
    Colonel Llewellin: I believe the hon. Member knew perfectly well that he was going to be beaten on that occasion and did not mind going into the Lobby. He ought to have realised what he was doing as he has been a long time in this House and knew what the effect of his vote would have been. I am afraid I was away when the hon. Member for West Walthamstow (Mr. McEntee) made his speech, but we will look into the new case he has brought forward—the case of touting—if he will give all particulars. It will certainly be fully investigated.
    Mr. McEntee: Would the hon. and gallant Member look into the other point I raised in regard to the greater facility of releasing engineers from the Army?
    Colonel Llewellin: I think the equivalent of about two divisions of men have been released by the Army for various purposes and for different trades. The cases which come to hon. Members are just on the fringe, some of which we put right and in others we fail. The Army have co-operated very willingly on this matter. With regard to machine tool-makers, we are to get even more released. That matter is obviously one which any Supply Department must be constantly pressing. The hon. Member for Holland-with-Boston asked whether there was co-operation with our Allies, and the answer is, "Yes." The closest connection is kept between the two Ministries of Supply, and there is the closest liaison between the two Governments in the higher spheres as well. The hon. Member for Stoke (Mr. E. Smith) asked about the national factories. We are planning at present for a total of 42 Royal Ordnance factories, which are all being run as national factories. In a certain number of cases we are adding to existing factories and they will be run by the managers of the firms concerned. I should have liked to deal with all the points that were mentioned by the hon. Member, but my time is short. I apologise to him and perhaps I may write to him.
    Mr. E. Smith: Will the Parliamentary Secretary deal with the point about which I am concerned, as to why only the inaugural meeting of the National Advisory Council has been held?
    Colonel Llewellin: We had that meeting, and we were all very glad to meet. We left it that when there was anything important to consult about, we should have a full meeting. Every member of the Advisory Council will always have the right to come and see anybody at the Ministry on request. If there is any wish for an immediate meeting, we shall be delighted to have our colleagues on that Council meet us.
    Miss Wilkinson: Is membership of this Council only a decoration?
    Colonel Llewellin: No, Sir, the Council is of great use and will be the means of bringing many important points to our notice. Any member of it can have free access to the Ministry by virtue of his position. I am sorry that I have not been able to answer all the questions. I would ask hon. Members to put things in their proper perspective and realise that the few cases that we see in the papers are a very small fringe of the contracts with which we have to deal. There are 750 contracts going through the Department every week and a large number of Civil servants are working on them extremely long hours. They are doing hard and good work, and the gratitude of the country should be given to them.
    Question,
    "That a sum, not exceeding £700,000,000, be granted to His Majesty, towards defraying the expenses which may be incurred during the year ending on the 31st day of March, 1941, for general Navy, Army and Air Services and for the Ministry of Supply in so far as specific provision is not made therefore by Parliament, for securing the public safety, the defence of the realm, the maintenance of public order and the efficient prosecution of the war, for maintaining supplies and services essential to the life of the community and generally for all expenses, beyond those provided for in the ordinary Grants of Parliament, arising out of the existence of a state of war,"
    put, and agreed to.

  WAYS AND MEANS.
  REPORT [13TH MARCH.]
  Resolutions reported:

  1. "That, towards making good the Supply granted to His Majesty for the service of the year ended the 31st day of March, 1939, the

  1611
  sum of £38,470 2s. 5d. be granted put of the Consolidated Fund of the United Kingdom."

  2. "That, towards making good the Supply granted to His Majesty for the service of the year ending on the 31st day of March, 1940, the sum of £2,018,930 be granted out of the Consolidated Fund of the United Kingdom."

  3. "That, towards making good the Supply granted to His Majesty for the service of the year ending on the 31st. day of March, 1941, the sum of £881,165,400 be granted out of the Consolidated Fund of the United Kingdom."

  Resolutions agreed to.
  Bill ordered to be brought in upon the said Resolutions by the Chairman of Ways and Means, the Chancellor of the Exchequer and Captain Crookshank.

  WAYS AND MEANS.

    CONSOLIDATED FUND (NO. 1) BILL,
    "to apply certain sums out of the Consolidated Fund to the service of the years
    1612
    ending on the thirty-first day of March, one thousand nine hundred and thirty-nine, one thousand nine hundred and forty and one thousand nine hundred and forty-one," presented accordingly, and read the First time; to be read a Second time upon Monday next, and to be printed. [Bill 30.]
    The remaining Orders were read and postponed.
    Whereupon Mr. SPEAKER adjourned the House, without Question put, pursuant to Standing Order No. 2.
    Adjourned at One Minute after Four o'Clock, until Monday next, 18th March