CONCENTRATION OF PRODUCTION.

HC Deb 27 March 1941 vol 370 cc729-826

Motion made, and Question proposed, "That this House do now adjourn." — [Mr. James Stuart.]

The President of the Board of Trade (Mr. Lyttelton)

I will now deal as clearly and explicitly as possible with the subject of concentration of production, and if in doing so I am obliged to enter into matters of technical detail, I hope the House will bear with me. The principles which underlie this policy are very simple. We have now reached a stage in our production at which we can afford to waste nothing. All the ingredients of production are precious. A demand for labour on a very big scale is beginning to be felt. There is a strain on our raw material supplies and on our shipping space, and there is a strain on our capacity to produce munitions of war. In these stringent circumstances, I suggest that it is unthinkable that even one man or woman, skilled or unskilled, should work part-time or that a single ton of raw material should be directed towards unessential manufacture. We have already cut down greatly the production available for home civilian consumption. We have already had to make serious cuts in the supply of raw materials for the consumer goods industries. We have already had to adopt a discriminatory policy with regard to our exports, a policy which is designed, first, to meet the essential requirements of our customers, and, secondly, to provide us with the maximum possible resources in purchasing-power abroad.

I think there are few in this House or indeed in the country who do not recognise that the measures already taken were inevitable and inescapable. They have inflicted much inconvenience and some hardship, but the sacrifices have already taken place. The policy to which I am addressing myself to-day is intended to secure that those sacrifices are not dissipated in waste and inefficiency. These measures are complementary to what has already been done and they do not, by themselves, reduce the volume of production. They are, in fact, dictated by necessity and not by policy. They are not seeking, in the industries affected, to found a new order of industrial organisation in a doctrinaire framework. Here is no plan to reduce permanently the number of small firms in an industry, and least of all to force small firms into the arms of the combines. These are war measures: "What's to come is still unsure." I feel that, at all costs, we must keep an open mind as to the appropriate structure of industry after the war to deal with problems of which, so far, we have little knowledge.

There are other matters of principle which I shall have to outline. Just as in ordinary industrial production we must aim at all the components of a finished machine, say a motor-car, coming off the production line at the same moment, so in these broader matters of policy we are trying to release labour from its peacetime occupations in exactly the place and at exactly the time when it can be most readily absorbed into war production. In other words, we must ask, are we putting these plans into force at the right moment? My hon. Friend the Member for South Croydon (Sir H. Williams) has more than once criticised the Government on the grounds that the release of labour is taking place too soon and that the Limitation of Supplies Order has released men from their occupations before they could be absorbed. All his criticism has been directed to show that our policy was too early. On the other hand, my hon. Friend the Member for Seaham (Mr. Shinwell), since I made the original statement on this policy in this House, has intervened two or three times to describe the policy as belated. I think it must be clear that both these distinguished critics cannot be right. It may be, though I hesitate to suggest it, that both of them are wrong. At any rate the omelette they have prepared would, I think, be more digestible if due regard had been paid to its consistency. There is another alternative, in addition to those I have mentioned, which is that the Government may be right.

However this may be, I should think it lacking in candour to say that I expected the timing of this concentration of production to be perfect or even very good. In fact, that is impossible. It is only gradually that the country works up to its peak of production. It is only now, as the Prime Minister has said, in the nineteenth month of the war, that we are beginning to feel the demands caused by our new factories. From now onwards, we shall begin to see an even more insistent demand for labour, skilled and unskilled, men and women. It must be clear that to synchronise the release of these vast forces in all parts of the country so that there is not a day's delay in finding them work in the munitions factories, and, on the other hand, to arrange that no factories engaged on the production of munitions shall wait for a single hour on a single worker, is quite impossible. The interruption of transport at an unlucky moment, delay in the supply of one piece of machinery, a snowstorm, any of the thousand-and-one contingencies of war or peace, may delay the completion of a factory, and so throw out the synchronisation. These factors are incalculable. I think, however, we can aim at and attain a general synchronisation. If I may use a sporting analogy, our actions here must be compared to golf and not rifle shooting. If our timing is good, we may reach the green, but we should not be criticised because we do not hole out with every shot.

I feel that the Limitation of Supplies Order has, in fact, released about the right number of men and women at about the right time. The statistics show that something like nine out of every 10 who have been so displaced have already been absorbed. When we take into consideration that a certain number of workers must always be in transit from one occupation to another, I think we may say that the timing in this matter has been satisfactory. To-day, however, the demand is on quite a different scale. My right hon. Friend the Minister of Labour has still in front of him a vast problem, the biggest as regards demands for labour, that, I think, has ever confronted an industrial country with a population comparable to ours. Faced by this problem, I think it is mandatory that we must economise in our use of labour and see to it that no man or woman works part-time. Imagine a small industry of, say, 100 plants of about equal size. If the supply of raw material or the demand for labour exacts that that industry should work at 50 per cent, of its capacity it is impossible to imagine that the whole industry should work half time or lay off its labour for a portion of every week. That is only playing at war. If that is once admitted as an axiom, and I suggest that it is an axiom, then concentration of production is the only solution.

There are one or two more details which it is necessary to give about the general principle. There are, to-day, four factors operating. There is, first, the supply of raw material controlled by the Ministry of Supply; second, the direction of labour under the Ministry of Labour; third, the Limitation of Supplies Order under the Board of Trade; and fourth, the requisitioning powers of the Supply Departments and the Ministry of Works and Buildings. These requisitioning powers are designed to secure stand-by plant in case of damage and to avoid the necessity of building new plants where old ones would serve. If we concentrate production in the ordinary way the total revenue surplus of any industry should be increased by saving in overhead expenses, saving of waste due to the under-employment of labour or machines, saving in part—I say "part" advisedly—of selling costs, saving by some standardisation of products and in fuel, power and transport. Further, the present position of industry will be improved to the extent that the Government have to use requisitioning powers. Under the Act, the Government pay compensation when they requisition a factory.

There is nothing in this plan to make the position of industry worse than it is to-day and much to make it better. I will give a concrete example, but as the particular scheme of concentration is not finally approved, I will not give names or the industry in which the people are engaged. There are three firms and four factories. The firms are concentrating production in one of the factories. Their total turnover is £274,000 a year. The saving in overhead expenses as a result of this concentration is no less than £28,000, or between 10 per cent, and 11 per cent. on the total value of the turnover. They release by this scheme 65,000 square feet of factory space out of a total of 140,000. If part of that factory space is required for storage the Government will pay compensation upon it, and a further sum must therefore be added to the £28,000 which has already been saved. In this instance, the industry will be much better off.

Mr. Silverman (Nelson and Colne)

What labour will be saved?

Mr. Lyttelton

I cannot give an estimate at the moment. The total production of the one firm will be approximately equal to that reached by the four factories. Before leaving the matter of principle let me say that it would be impossible for us to wait until the demand for labour was so urgent that the Ministry of Labour would be obliged to draw labour from where it could and not from where it should. All the powers over labour, raw materials, plant and civilian consumption must be exercised at some time, over some plants generally and over most plants in some industries. I do suggest that it is beyond controversy that the powers should be exercised as part of a co-ordinated plan and not indiscriminately, just to meet needs when they occur. In short, the policy of concentration is designed to create conditions in which the powers already granted by Parliament to the Executive can be exercised with the minimum dislocation of the industrial structure. It is a policy dictated by necessity, and in no circumstances must be regarded as part of a permanent system for the post-war period.

So much for the principle. I must now turn to the more difficult and detailed subject of its application, and I ask the indulgence of the House when I do so because I must, of necessity, plunge into many matters of detail, technical matters. I will try to deal with them in sequence, and first with the Industrial and Export Council which has already been set up. Secondly, I will deal with the methods of concentration, with which of course is bound up the remuneration enjoyed by the closed-down firms; thirdly with the protection enjoyed by the nucleus firms when concentration has been effected, and fourthly with the retail trade, to which I promised to refer. I will finally say something about monopolies and trusts with which is bound up the question of the small man and about post-war problems. First, therefore, let me consider the Industrial and Export Council.

The Board of Trade have been engaged for many months in the study of those industries affected by the Limitation of Supplies Order, and they have a complete census of them. The Ministry of Supply, through the raw materials control, has close touch with and knowledge of other industries. The Minister of Labour knows the number of men and women and the areas in which they are likely to be required. The Industrial and Export Council, of which I am Chairman, includes the Noble Lord who is the Parliamentary Secretary of the raw materials Department of the Ministry of Supply, my hon. Friend the Member for Farnworth (Mr. Tomlinson), who is Parliamentary Secretary to the Ministry of Labour, the Controller-General of Factory and Storage Space, Sir Cecil Weir, who has just been appointed. His task is to compile—and he has only just begun it—a register of all the plants available for requisitioning, whether for actual production or for storage. When he has proceeded a little further with his labours, no supply Department or Service Department will be able to requisition premises without passing their request through this control.

Also on the Council are Mr. Charles Dukes of the National Union of General and Municipal Workers and Mr. Hutchinson of the Boiler Makers, and Iron and Steel Shipbuilders' Society. The Council also includes a number of very eminent business men of great experience and impartiality. It has been suggested that they are drawn from what is vulgarly called big business, and that is quite true. They include, for instance, Mr. D'Arcy Cooper, Chairman of Unilever Limited, the largest industrial company in the country, and Mr. Beale, the Chairman of Guest, Keen and Nettlefolds. Those gentlemen are all men of known impartiality. Nevertheless, their impartiality in this work will not be tested, because they are mainly engaged on work with industries in which they have no interests and no connections. Next I come to the methods of concentration. The Board of Trade will indicate, from knowledge acquired of course from the Ministry of Supply—

Mr. Garro Jones (Aberdeen, North)

I am sorry to interrupt the right hon. Gentleman in his intricate exposition, but the names which he has given of the members of the Council are the additional members added for the purpose of this concentration of industry. I take it that the other members are the original member of the Export Council.

Mr. Lyttelton

There are really three bodies. There is the main Council, which meets once a month, and which contains all those who were originally on the Export Council. Then there is the Indus- trial and Export Committee which meets once a week. This Committee has a subcommittee of business men, which is in continuous session.

Sir Patrick Hannon (Birmingham, Moseley)

Will my right hon. Friend make this point quite clear? Does the new Industrial Export Council, on which he proposes to put the gentlemen whose names he has given, operate separately from the old council? Are they two bodies, one meeting monthly and one meeting weekly, or is there only one council?

Mr. Lyttelton

It is one body and there are committees which are emanations from the main body. I will now turn to the methods of concentration. The Board of Trade will indicate what the degree of concentration to be achieved is or, in other words, what the degree of redundancy in any industry is, and where the concentration should take place geographically. That is in order to secure that concentration should be in those areas where the demand for labour is likely to be light and that the plants to be closed down should be in those areas where the demand for labour for munition purposes is likely to be heavy. Maps showing how this is to be done are being prepared and are available for the industry. At this point the actual industry is called together, and a body representing both the employers and the employed is invited to the Board of Trade.

There are two main methods by which concentration is secured, either the commercial or the financial method. I will give two instances of the commercial method. First of all, a group of firms may arrange that one of them manufactures the actual product which was being made by the other and for the account of the other, and by "manufacturing for the account" I mean that the nucleus firm manufactures at cost and sells the product to the closed-down firm at cost. The closed-down firm, with admittedly a reduced number of salesmen, will then sell its own product. This is a very simple method, and I think it would surprise hon. Members to know how often it is employed in peace-time. These arrangements are very common in peace-time, and in war-time the application of these methods has already been greatly ex- tended. It is not uncommon for two or three firms to make provision against enemy action by arranging that one of them should manufacture the other's products if the factory is knocked out by enemy action. This will ease the problem of concentration by commercial arrangement. There is another type of commercial arrangement which might be mentioned. A certain manufacturer has been allotted a supply of raw materials by the Ministry of Supply and may sell the rights to use that raw material to another firm for a cash payment.

These are the main lines on which commercial arrangements will go, but they are not a universal application. It may be that the nucleus firm is actually unable to make the product of the closed down firm. It may be that the closed down firm has a trade mark or a secret process which it is unwilling to disclose to its competitor; very often that is so, but that is no reason why a commercial arrangement should not be made. In that event the closed down firm might suggest the manufacture of a more standardised product under a special trade mark which would be current only during the war. Very often these standardised products are more suitable in times of war than the specialised article, which is very often a matter of fashion rather than of necessity in times of peace.

It is important to emphasise at this point that the certificates which the Board of Trade give in the first instance to nucleus firms are usually provisional, and consequently only entitle the nucleus firm to provisional protection. The reason for this is obvious. First of all, we want to produce concentration very speedily, and, secondly, we do not want firms which are in a particularly favourable position to contract out of the scheme and afterwards refuse to enter into any negotiations for the help of their fellows. There are now some firms which are working 100 per cent, largely on Government orders. They must at once be given provisional certificates protecting them from drafts from their labour force or requisitioning by a Supply department. But because of those circumstances there is no reason why they should not be asked to help industry as a whole and to take part in a scheme whereby the closed down firms are compensated, and this is the reason why the provisional certificate is issued. I spoke just now of standard lines. I must say one word about brands and trade marks. Most people desire to keep their brands and trade marks in front of the public, and I think it is interesting to see that in many instances where manufacturers are engaged in Government work they are keeping their brands in front of the public by means of advertisement. We shall give all the help we can to keeping alive these trade marks.

There is a third system which I do not think is generally workable or desirable. It consists of a levy upon the nucleus firms, the proceeds being paid into a central pool for the benefit of those closed down. The other commercial arrangements are more desirable, but in certain highly organised industries this levy method has been applied. In fact, in the cotton trade they are working on these lines, although at the present moment it applies only to the spinning section of the industry.

Before leaving this question, I must touch shortly on matters of taxation. I have asked my right hon. Friend the Chancellor of the Exchequer to permit payments of a revenue character, made by firms under voluntary financial arrangements, with the usual safeguards and with Board of Trade approval, to be a deduction from profits of the nucleus concern for taxation purposes. It would follow, of course, that the payments will be regarded as trading receipts of the closed-down firms. There are other more complicated matters of taxation involved, and I do not think I need go into them at this moment, but my right hon. Friend has authorised me to state that he concedes in principle the point I have just mentioned, that he will give sympathetic consideration to the other matters which I have placed before him.

In all these matters we are aiming at flexibility. There are different methods of achieving these results in different industries, and even different methods inside those industries and in different sections of them. I notice that there is some criticism that the Board of Trade is not giving industry enough instruction and is leaving them in a state of uncertainty. I think that this flexibility at which we are aiming probably gives colour to these criticisms, but they are unfounded. In fact, we are giving very close direction as to the lines on which industry should proceed, and from the beginning the business members of the Industrial and Export Council are giving advice and guidance on how exactly the schemes should be framed. If there is any difficulty the Council itself will be referred to.

I must now give an account of what are the advantages enjoyed by the nucleus firms. First, the Minister of Labour will not make drafts from their labour forces for filling other industrial vacancies except where substitutes can be provided. For men due for service in the Forces a liberal policy of deferment will be followed to allow time for substitution of other workers. The next protection is that the available raw material and, what is even more important, the available Government orders will be directed to the factories and on to the books of the nucleus firms. Thirdly, the factories of the nucleus firms will not be subject to requisitioning by the Service Departments. Requisitioning which I think will be on a much larger scale than hon. Members anticipate, will, of course, take place over the large number of factories closed down as a result of concentration.

I promised recently to say something about the retail trade. As I have already shown, the effect of concentration is not further to reduce the volume of production, but merely to alter its location. The volume of production is dictated by quite other necessities, by the raw materials available, the needs of the armament industry, and so forth, but for these very reasons the volume of commodities available for distribution has already been seriously diminished. The concentration of production affects primarily the supply of factory-trained labour and factory space and consequently the subject of concentration in the retail trade is not a facet of the problem we are discussing; it is quite a different question. I must be careful to say that it is not chiefly the concern of the Ministry of Labour, although in many aspects it is so, but, of course, the structure and wellbeing of the retail trade, with a turnover in peacetime of over £2,000,000,000 a year, is a great preoccupation of the Board of Trade.

I cannot say that I am ready with plans, because my task is first to secure the release of factory-trained labour and factory space. I would, however, propose to address myself very shortly to this problem, and I am encouraged by seeing in the "Drapers' Record"—a powerful trade journal which, I may say, has not always been very vociferous in its praise either of me or of my Department—a very constructive suggestion which I quote: We suggest that local traders mutually arrange for a contraction of their number, those continuing to make an allowance to colleagues who drop out. Here is another suggestion: The suggestion is repeated and re-emphasised that steps be taken right now, in each district, for the war-time marriage of shops on terms mutually agreed. And so forth. I think that those are the broad lines upon which to proceed, and I will give every encouragement to the working out of schemes aiming at the grouping of shops.

The relative balance between the share of trade which is now enjoyed by the multiple stores or Co-operative societies, and that which is enjoyed by the small retailer, should not, I think, be disturbed. It must be remembered that the chain stores employ a very much higher proportion of mobile labour—of easily transferable labour—than the small retailer; they employ a far larger number of unmarried women and youths, and when these persons are called to the munition industries or the Forces, the multiple stores will either have to face some reduction in the proportion of trade which they enjoy or will have to replace that labour force with more elderly people, which will to some extent give relief to the unemployment question. It has been suggested that I should take the course of actually diverting trade from the big chain stores into the hands of the small retailer. I must not do that; I must be impartial in this matter, and I think the chain stores already suffer from some disabilities from which the small trader does not. [Several HON. MEMBERS: "What are they?"] I have just described them. I do not wish to go over the ground again. They have labour which is very much more readily subject to drafts for the munition industries and the Services.

There are one or two other matters concerning the difference between the problem of retail concentration and that of factory concentration which I must not omit. It is impossible, it would be a fruitless task, to study the turnover of a million retailers. In the manufacturing industries the Board of Trade has amassed a great deal of information. We know the type of labour which the manufacturers employ, the nature of their production and markets, the amount of space they have, their turnover, and their financial resources. Such a research into the retail trade would be entirely fruitless, and therefore the Government cannot, in the nature of things, seek to exercise the same control over the retail trade as they are proposing to apply to the manufacturing trades. Moreover, the problem is a much more regional one than it is in the case of the manufacturing industries.

I have only two more subjects to deal with. Firstly, monopolies, with which, of course, is bound up the position of the small man, and secondly, something about post-war problems. Concentration has been criticised on the ground that it will lead to the creation of monopolies. If that were true I should regard it as a very serious criticism, for the light and new industries with which we are mainly concerned would suffer much more seriously than others from the loss of initiative and flexibility which such a result would give. But that criticism is based in a misapprehension of the structure of the industries with which we are mainly concerned. The large trust is of most use in those industries where large quantities of homogeneous products are produced. It is in the field of consumer goods industries where you find multitudinous types and a great variety of designs; in the hosiery industry alone there are 1,500 firms. That structure is dictated by the nature of the problem. Here is the least favourable field in which monopolies could arise. It is utterly impossible. Concentration must inevitably reduce the number of small firms in production during the war period, but when peace-time conditions are restored there will be a tendency for them to increase again.

Mr. Shinwell (Seaham)

Does the right hon. Gentleman believe, if concentration cuts down overhead costs, eliminates waste and promotes efficiency, that in spite of that we are going to return to the old method?

Mr. Lyttelton

I am sorry the hon. Gentleman has not followed the argument. It is my fault. The saving of overhead expenses of which I was speaking results because the total volume of production is reduced. The £28,000 I mentioned in a particular case was saved because the industry was concentrated. If all the firms were producing 100 per cent, there would be no saving.

Mr. Silverman

Did not the right hon. Gentleman say that the volume of production would not be reduced?

Mr. Lyttelton

Not all firms are working 100 per cent., and it is for that reason that there would be a saving of expenses in production. The Government have declared that they would prefer the arrangements to be terminable and commercial rather than permanent and financial, and it is most desirable that we should not get into permanent financial amalgamations, because, as I have said, the structure of these industries does not lend itself to trustification. The Government's policy is the inevitable outcome of war conditions. Once the war is over, those conditions will disappear.

Another form of the same criticism is that these schemes are directed against the small man. Nothing could be less true. For instance, under the Limitation of Supplies Order, very small firms are left entirely outside the net, and are not subject to any limitation of supply. I am ready to give an absolute pledge that where the firm is so small that the dislocation caused would be out of proportion to the advantages gained by concentration, we shall not touch it. The moment it becomes big enough to make concentration materially worth while, the position is different. Then there is no reason whatever why any group, however small, that complies with the Board of Trade requirements as to the degree of concentration, the geographical release of labour, and so forth, should not get the certificate which entitles it to the protection that I have described.

I must say something about the post-war problem. An eye must be kept upon the change-over from war to peace. The revival of these industries will be greatly helped by the enormous demand which will certainly come after the war for consumer goods. I would think that the demand will be so large that we shall have to continue control for some time after the war. It will be impossible to cut off these controls in a day. Not only would you see an enormous boom, but you would see the appearance of mushroom concerns, with mushroom prospectuses, and, of course, mushroom bankruptcies afterwards. It will be necessary for firms which have closed down for war reasons to regain touch with their customers and to get into production before newcomers get into the industry. This will have to be dealt with discretion, because there are newcomers and new processes coming forward, and we should not stifle genuine enterprise with sound financial backing.

Mr. Butcher (Holland-with-Boston)

What has substantial financial backing to do with the question of the desirability of starting a business? Surely it is a matter of satisfactory production, and not of the weight of money behind it.

Mr. Lyttelton

I have yet to see satisfactory production achieved by a business which was approaching bankruptcy-Mushroom concerns, in fact, rob the investor, spoil the industry for the other people in it, and then go out of the business when the damage has been done. We must turn over from war to peace very gradually, so that the minimum of dislocation is caused, and so that the firms which have been closed down are given every opportunity to regain their trade. I cannot do better than quote from a leading article in the "Times" of last Tuesday, which, if I may say so, was a most admirable survey of the whole question. The last part of that article reads: There is need to beware, lest war-time measures should impose on indutry a rigidity not suited to conditions after the war. It is reasonable that firms closed down for national reasons during the war should be revived after the war. Nevertheless, new times demand new enterprise, against which the door should not be closed. In conclusion, let me say that the experience I have had in these negotiations with industry has done nothing whatever to alter the confidence that I have always had in my fellow-countrymen. They are extremely co-operative, and, once the need is shown to be insistent, there are no sacrifices that they are unwilling to undergo.

Their private interests do not count at all. There is no single industry which I have approached—and I have approached many: hosiery, pottery, toilet preparations, toys, sports goods, musical instruments, plastic goods, linoleum, photography, gloves, cutlery, lace, umbrellas, carpets, fountain pens, glass and jewellery. Not one of these industries has expressed any dissent from the general proposition, and I really believe that these schemes will shortly become operative. I would ask hon. Members to help on these schemes in their constituencies, and to believe me when I say that they are absolutely necessary in war-time, that they will be administered sensibly and flexibly, and that they will make a contribution— and a not inconsiderable one—to victory.

Sir Herbert Williams (Croydon, South)

We have all listened with interest to the statement made by the President of the Board of Trade in defence of his policy. Yesterday, when I got to my office, I found on my desk the "Ministry of Labour Gazette" for February, 1941. It was once known as the '' Board of Trade Labour Gazette."I have been a subscriber to, and a reader of, this publication for the last 30 years. I was glad that it arrived last night, because I thought that there would be some information in it which would be useful for to-day's Debate. But it is now the desire of Government Departments to deprive Members as far as possible of information essential to the conduct of debate in this House. This publication reached me yesterday, 25th March. In pre-war days it was published on 18th February. Although it is now only half the usual size, and although it contains only one-third of its usual information, the Ministry of Labour now take five or six weeks longer to produce it. We have at our disposal no more recent man-power figures, as far as unemployment is concerned, than those for January. It is an absolute scandal that we cannot have more complete information. The reason given, that it would disclose information to the enemy, is, I am certain, utter nonsense. The real reason is that they do not want us to have information.

The whole case behind this proposal is that there is a great shortage of manpower. I do not believe it. During the four weeks ended 25th January the Min- istry of Labour paid out £2,500,000 to unemployed persons. That was for the period of four weeks. It consisted of £1,750,000 in unemployment benefit, and £750,000 in unemployment assistance. It is no good saying, as the "Daily Telegraph," in its desperate efforts to support the Minister is saying, and as successive Ministers have said, that there is nobody unemployed. People are not paid unemployment benefit unless they are fit and available for work. Why has not the Minister got hold of these people before he upsets industry? After the Minister made his last statement and said that the reserve of labour was exhausted, I wrote to him, and protested. I have sent him particulars of a number of people—the trouble is that they are not very young. Employers are too fussy. They will not have people who are over 45; except for that Front Bench—though I am glad to say that there is a rather young team there, in the actual physical sense at this moment. I had a letter this week from a lady complaining of the great mass of people at the Croydon Employment Exchange.

We really ought to begin to think of recruiting into industry the women who are not normally wage-earning. Of course, they are not lining up. A year ago the Prime Minister, then First Lord of the Admiralty, made a speech in Manchester, in which he said, "We want a million women in industry." They lined up in their thousands, to the great despair of the Employment Exchanges. There were no jobs for them. The present Minister of Labour, on two or three occasions, has done the same thing. They line up. When they get there, there is nothing for them. The women are fed up with it, and I agree with them. It is sheer incompetence on the part of Ministers in dealing with this man-power problem. In the last war at this stage we had 750,000 extra women employed in Government and munition factories and the rest. I do not believe that there are 100,000 up to now. At any rate, they have not the courage to publish what they have done, yet during the last war the Government did not hesitate to tell the truth. They dare not publish the figures because they would reveal their incompetence and failure in dealing with the man-power problem. That is a perfectly frank and blunt statement. I speak as bluntly as I can, because I am constantly receiving communications from people who cannot get a job. I pass them on to the Minister, and still they do not get a job.

The truth is that, some years ago, the Board of Trade was badly bitten by the bug of economic Fascism. It goes back a long time; it is not a war-time policy. I have seen it growing up steadily for 10 or 15 years. There were some signs of this when I was there, though I did something to obstruct it, but it has been much worse since. The Coal Mines Act, the Cotton Spindles Act, the Cotton Industry Act, the London Passenger Transport Act and the Cables and Wireless Act have all been flops and failures. All the concentration of industry and all the reorganisation that was produced were soon out of date. We have had the greatest concentration of failures that the world has ever seen. The Export Council has been such an incredible flop that it now by spiritualistic processes has emerged as the Reconstruction Council. I am on one of these export groups. I went to a meeting eight months ago, and I told colleagues that it would be a flop, and they were rather horrified. They were very much impressed by my right hon. Friend's predecessor. How polite these commercial men are when they meet Ministers. Ministers think that they have converted them, but I hear them when they have come away. The ordinary business man is a very timorous creature when he meets the ingenious politician. That is the trouble. You even do not get the real truth from them, believe me. When I went to one of the meetings of the Export Council I said that it would be a flop. They appointed me on the executive committee. I said that I was rather busy and could not very well go on to the committee. They said that they would let me have periodical reports. They have not let me have the first report yet.

This is rather a wide Debate. The Board of Trade exists to help the export trade and all the rest of it. I received a letter a few days ago from a gentleman trying to do export trade. He was virulent on the incompetence which he himself had experienced, and he quotes a typical example: — Export trade—to give a typical illustration of the wastage of national effort and export currency. We export mainly building supplies, which include sanitaryware. Then he goes into some detail, with regard to a closet suite for export, sold at 55s. 6d. complete. It comprises eight items, which come under seven different controls. They had an order for these for the United States of America. They were already for shipment, and of the total value, 7 per cent, was represented by the flush-pipe. They were refused a licence for materials for the flush-pipe, and not even with all the enthusiasm of the United States for the British Empire were they prepared to have a closet without a flush pipe. The President of the Board of Trade talks as though firm "B" can make the goods of firm "A." There is nobody in the Board of Trade who has ever sold anything for export, except possibly the President of the Board when he was in business, and traded in international commodities such as zinc and tin, which are not the kind of things dealt with in serious export trade.

There is a firm in my constituency which makes scented soap and such like things. In the day-time air-raid last August their factory was wrecked, and they obtained another factory in a different district, but a bomb hit that and it was wrecked. They have now secured another factory. They have a lot of export trade; they sell luxury soap. The ladies who go to night clubs in New York City, where they are still open, are the kind of people who buy luxury soap. If they buy Bourjois soap, it is no good sending out Pears soap, which is something that they have not ordered. That is not the way that export trade is done. You can do that sort of thing with bars of lead, because they are all more or less the same. The right hon. Gentleman was absent from the Chamber when I made the remark that nobody in the Board of Trade had sold anything in the export trade except the right hon. Gentleman when he was in business. I pointed out that he was a trader in what I call international commodities, which are not the same as the commodities which enter the export trade.

I made a protest against the suppression of information with regard to unemployment. We are not in a position to find out the real facts. There is the further suppression of trade statistics. The Monthly Trade Returns now are a complete farce. It was not found necessary during the last war to have the same de- gree of repression. The Germans can in the main find out our trade quite easily from the statistics that are published by the neutral countries; the bulk of the information is in fact available.

Sir P. Hannon

Is that really true? Are neutral countries now publishing statistics of imports and exports as they were before war broke out?

Sir H. Williams

Certainly; the United States publish all the armaments that they send us. They sometimes publish them twice over, and make a double entry. I do not believe that if information were published, it would be of particular value to the enemy to judge the economic value of the policy of His Majesty's Government. It is not only in respect of unemployment statistics, but also in trade statistics that there is a complete closure of a kind that did not happen in the last war. The right hon. Gentleman shakes his head and therefore contradicts me.

Mr. Lyttelton

If my hon. Friend wishes for these statistics, they are available, but they are not published, which is quite a different thing. As far as the export trade is concerned, if he will come to the Board of Trade, I will show him the whole of the figures.

Sir H. Williams

I cannot run round to the Board of Trade. I have every month for years, on the appropriate day, gone to the Vote Office and obtained the Board of Trade returns. I have taken them home and spent time upon them on convenient occasions. Why should not they be published as in the last war?

Mr. Lyttelton

The capitulation of France.

Sir H. Williams

It made no difference. It took place before France was knocked out. It is not long ago that I sent a letter to the President of the Board in which I said that an illegitimate baby was on his doorstep when he arrived. I am not blaming him. This policy is urged on the ground of the shortage of materials. If there was any kind of intelligence and competence looking after shipping and docks there would be nothing like the shortage of materials which now prevail. That was dealt with in detail in secret debate. It is common knowledge that the administration of our shipping and docks is a first-class joke.

That is why we are short of a great many things for the civil and war purposes. There is the proposal for concentration of the manufacture of goods which are essential for civil consumption. I hope that we are going to drop this terrible phrase of "non-essential goods." What it means, I do not know. They are going to be concentrated.

Why is the President of the Board at this moment doing for civil purposes the exact opposite of what other Ministries are doing for war purposes? As a result of bombing—and there is no secret about it—we are dispersing production to the greatest possible extent. The Ministry of Supply, the Ministry of Aircraft Production and the Admiralty are doing it, and Hitler is doing it. Every country at war is dispersing production Why? So that if one bomb scores a hit, it does not knock out all the industry. The President of the Board of Trade says that we must not do that, that different circumstances apply. The Limitation of Supplies Order concentrated supplies in London so much that Hitler was able to burn more in one night than he would have been able to do if the supplies had been distributed throughout the country. The area most severely attacked was the textile-storage area in the City of London. It was in the newspapers. We all know about it, and I am not doing anything improper in talking about it now.

I am not at all clear as to what is the policy. If there are four factories making the same thing on a 25 per cent, basis, that, obviously, is uneconomical. The President of the Board of Trade says, "Put one factory on to making the same thing on a 100 per cent, basis," but I am not clear about what is to happen to the three empty factories. Are they to be used for the production of war materials? That was not stated in plain terms. If they are, why not give them orders now, before you destroy them? A firm is not a collection of 400 people; if has a soul, an entity and is a real and living thing. It is a place with traditions. Ever since the war started some of us have been begging and beseeching Government Departments to spread contracts more freely so that small firms could have a share. What has been the attitude? Resistance all the time. Orders have been given only to the big firms. That has been the policy throughout. Many firms are engaged on mixed work, partly on the production of war material and partly on the production of civilian goods. I know one of the troubles, which is not the fault of the President of the Board of Trade. It is due to the bad advice given by the Air Staff, who drew a line on a map and said that factories on one side of the line were in a dangerous area and that those on the other were in a not so dangerous area. Coventry was one of the safe places —

Mr. J. J. Davidson (Maryhill)

So was Clydeside.

Sir H. Williams

Liverpool was safer still. That was the theory, arid great factories were built without any consideration as to the amount of labour available, or houses for the people. No arrangements were made for transport, and in many cases factories were built where there was no electric supply available.

Mr. MacLaren (Burslem)

And no water.

Sir H. Williams

Now, as a result of the follies which have been committed, people are taken from one district and shifted to another and are sometimes called unpatriotic because they do not want to move to places where conditions are deplorable. In some towns where there is undue concentration of war industries, conditions from every social point of view are deplorable. When I was visiting towns in connection with the work of the Select Committee on National Expenditure I came across a number of volunteer ladies who were going round a town trying to squeeze people coming in from other districts into odd corners of houses. The place was completely jammed. By his scheme the President of the Board of Trade is to take people away from where they now live instead of taking the work to where there are proper amenities and productive capacity. I think this policy is almost in the category of lunacy.

It is not as though we have any reason to believe the wisdom which has come from the Treasury Bench. Last week a Select Committee published three reports. Were they a description of success or brilliant organising ability? No. They were much the reverse, and I expect there will be a few more reports like those coming out from time to time. The sub-committee of which I am chairman drew attention in a report published last Wednesday to the fact that there would be inadequate accommodation for the housing of people when a certain factory went into production. If that is the source that asks me to believe that everything it says is the height of wisdom, I am not prepared to accept that view without a little more conviction that it is right.

Sir P. Hannon

My hon. Friend is criticising the statement made by the President of the Board of Trade, but is it fair to introduce an example of that kind? All these things happened in the first flush of war, when the country was in a crisis, and they ought not to be quoted against my right hon. Friend.

Sir H. Williams

It is not often that my hon. Friend and I differ. If this happened only during the first flush of war, I would not mind. Only a few weeks ago I asked a Question in the House about a ship which normally carried bananas from Jamaica to Liverpool. Having been taken over from the banana company, the ship, full of oranges and grapefruit, left Jamaica and arrived at the Clyde on 17th December. It stayed at the Clyde for five days, for no reason which I could find out, and then was sent on a long and perilous voyage, round the North of Scotland, I presume, to London, where it arrived on 29th December. It was 12 days after it came to this country before a single orange or grapefruit was taken from the ship. If the vessel had been still in the hands of the company, there would have been time for it to have been unloaded and have been back in Jamaica before it was in fact unloaded in London.

Sir P. Hannon

That has nothing to do with the question of man-power.

Sir H. Williams

But it deals entirely with my hon. Friend's interruption. He said that these blunders I am talking about were mainly in the early days of the war, so I thought I would give him one example to show that things are not so lovely and that there are stupidity and incompetence in the administration of every Department of State with which you can get in touch.

Mr. Hammersley (Willesden, East)

In the earlier part of his speech my hon. Friend suggested that the smaller miscellaneous companies ought to get on to full production by taking in war work. Is it not a fact that if they do that, they are not affected at all by this proposal, according to the statement of the President of the Board of Trade?

Sir H. Williams

If the Service Departments would only give them contracts, the problem would not arise. It has been the reluctance of my right hon. Friend's colleagues to pursue a sensible and economic policy which has led to the creation of this problem. This is my case. In the first place, there is a vast amount of unemployment in this country. That is proved by the fact that in four weeks we have paid £2,500,000 to people who were unemployed, and a condition of that payment was that they were not entitled to the money unless they were available for work, willing to work, and fit for work. That is the proof that there is a reserve of unemployed people. In the second place, it is true that we have not up to now recruited into industry more than a tiny fraction of those women who normally do not seek wage-earning occupations, but are willing to take them, as was clearly shown by the experience of the last war. In these circumstances, the adoption of a scheme that is bound to have a serious post-war reaction seems to me to be undesirable.

After all, if man-power is wanted, might it not be worth while to look around the Government Departments? Will anybody seriously tell me that every Government Department is not grossly overstaffed as a result of the administrative methods adopted? Let me give an illustration which does not bear on the right hon. Gentleman's Department. Yesterday I asked a Question, and in that Question I gave the dates of letters I had written, one of them on 2nd December and the other on 31st December. The letters related to two matters not of big importance, but of importance in relation to the issue. I also wrote at least three supplementary letters. I did not get any answer, so I asked a Question in the House. In an ordinary business the thing would have been dealt with, and two-thirds of that correspondence would not have been necessary. Every Government Department send an acknowledg- ment in respect of things which they ought to answer by return of post. Ministers write letters beginning "In reply to yours of 27th January," and one gets the letter on 27th March. What horrifies me is that they are not even ashamed of writing letters like that.

Mr. MacLaren

It is in the same year.

Sir H. Williams

Therefore, I maintain that within the Government Departments, given good administration, there is room for a comb-out for a great many jobs, industrial and munitions. Before the Government do the things which they now propose, many of which I think are very undesirable, they ought to exhaust all other resources, which would cause less disturbance. This is a Debate in which many hon. Members want to take part, and it is always wrong for those who have the privilege of speaking from this Box to take up too much time. I have been a little vigorous in my remarks. I have been vigorous because I am indignant. I am always indignant when I see incompetence of this sort, and there is a great deal of incompetence involved here. One sees it daily; every Member of Parliament, in his correspondence with Government Departments, is aware of the fact that ordinary business routine is never adopted. This makes one angry—all the more angry when those who are responsible for this incompetence inspire Ministers to come to the House and demand revolutionary changes the merits of which seem to me to be doubtful.

It is customary when one has spoken from this Box to be present during the greater part of the ensuing Debate. I want to make an apology in advance. Shortly I have to be present in the Select Committee which is considering a report from my Sub-Committee, and naturally I must be there to defend my baby, just as the President of the Board of Trade has to be present here to defend somebody else's illegitimate baby. I ask the right hon. Gentleman to accept my apology in advance. I hope that this project, whether it be good or bad, will receive from the House a serious and critical examination.

Mr. Horabin (Cornwall, North)

I gather from the speech of the hon. Member for South Croydon (Sir H. Williams) that he thinks the President of the Board of Trade has gone too far in his scheme for the concentration of industry. In my view, the right hon. Gentleman has not gone far enough, although I think, as does the hon. Member for South Croydon, that in some respects he has gone the wrong way. Why I think that will emerge, I hope, as I proceed with my speech. The right hon. Gentleman introduced the third Limitation of Supplies Order very shortly after he took office. That was a speedy action on his part to build up our war strength, but I do not think he went nearly far enough at that time. The Order should have been accompanied by a system of complete rationing of the so-called non-essential consumers' goods. I believe we ought to have had rationing of everything that we consume.

While I can congratulate the President of the Board of Trade on the relative speed with which he got to work, I cannot congratulate the Government of which he is a member. As long ago as last April, I and many other hon. Members were pressing in the House for two things —first, that civilian consumption, even then, should be cut to the bone, and secondly, that the so-called non-essential industries should be closed down to a minimum. And I would have done another thing. I would have reduced output in the non-essential industries, by one cut, to the minimum at the outset. At that time, of course, the raw materials, the factories and the labour that would have been released could not have been absorbed into war industries, but at that time they could have been used for a far more important purpose even than being used for war industries. They could have been used to build up stocks of the so-called non-essential commodities, stocks for civilian consumption, and, what was even more important, stocks for export, which stocks could have been shipped overseas and held abroad until they were required for distribution. What a difference that would have made to our shipping position at the present time. But I suppose, once again, we have to say, as we have said in the House so many times during the last 18 months, that we must let the past bury its dissipated opportunities. Shall we have to say exactly the same thing in six months' time when we come again to consider the question of the concentration of industry? Are we again to miss the opportunity that faces us?

As I see it, the concentration of industry merely implements a wholly negative policy—that is, the wholly negative policy of strangling the home market by limitation of supplies. I agree with that policy; it is a vitally necessary policy; but what I want to impress upon the President of the Board of Trade and his colleagues is that, side by side with this negative policy, there should be positive, creative policies. Creative policies are absolutely necessary; in my view, they are essential to further our war effort and essential also to ensure that the standard of living of the people of this country shall be maintained after the war. We can defeat Hitler only if we use our resources—and let me say our very limited resources today—with the utmost intelligence. From that point of view, I think that the concentration of industry must conform to three fundamental requirements.

In considering the concentration of industry, we have to take account of the interests of the community as a whole. That is something to which the President of the Board of Trade has referred. It must also be fair and lead to the maximum efficiency in industry. In the rationalisation of industry that was taking place before the war, the interests of the community as a whole were sacrificed to the interests of the industry that was being rationalised. I think those who were concerned with that rationalisation were genuinely unaware that there were larger interests that ought to have been taken into account. They thought they were doing their best for the country when they were doing their best for their industry. But surely, with the examples we have before us to-day, we know that that is a wholly mistaken idea? We have only to take one example, that of National Shipbuilders' Security. It was formed for what purpose? —to close down our surplus shipbuilding. But what could we not do with that surplus shipbuilding today which was so wantonly destroyed? Then there have been the antics of the Bank of England in steel. Electricity has been mishandled, and we see, at the present, big business digging in Whitehall in the Raw Materials Controls to carry out the same purposes after the war.

I ask the President of the Board of Trade to ponder these problems very deeply. The interests of the community must be paramount, and must come before the interests of any individual industry. We do not want to see the corporative State creeping in by the back-door. We do not want to see the corporative State by which capital, labour and management in an industry set out to hold the community as a whole up for ransom. We do not want that introduced. I deplore the way this concentration of industry has been introduced. The President of the Board of Trade describes it as a concentration by firms and not by industries. But surely the position is that the number of factories will be reduced in each industry. It will be just as easy for the people in industry, as it is for the State, to carry it further, and amalgamate all those nucleus firms, with the result that we shall have the corporative State coming in by the back-door. Surely this is a thing to be avoided at all costs. The President of the Board of Trade needs to use courage and imagination to face up to this problem. I am sure he will have to fight his own permanent officials and the Treasury, and, even more, capital, management and labour in every industry which he attempts to concentrate.

Then there is the second consideration —the question of fairness. Those who suffer as the result of the limitation of supplies must be treated fairly, and that means compensation. I will deal with compensation very briefly, not from the point of view of elementary justice, but from the point of view of morale, because it is morale which affects our war strength. I yield to no hon. Member in this House in admiration for, and in an absolute belief in, the soundness of the British people. I know that whatever is coming to us we shall stick it out. If you add to the suffering caused by enemy action unfair treatment by the Government, then you are trying the people of this country too much. You are trying them unnecessarily high. If you go round and talk to the small shopkeepers, the small business people, the small capitalists, and the small rentiers, you will find that they are beginning to believe that there is no hope for them even in victory. That is the position which largely caused the downfall of France. Let us face up to it and not bury our heads in the sand. Why has not the President of the Board of Trade tackled one of the most urgent problems and one of the greatest sources of manpower in this country? Why has he not tackled the concentration of distribution? There are. hundreds of thousands of shop-keepers in this country who have built up their livelihoods, over a number of years, by great sacrifice and effort, who are being pushed out of business as a result of the Limitation of Supplies Order.

What the the Government doing? They are allowing them to die with the coldest savagery, which has only been equalled in the worst periods of laissez faire. Why is nothing being done to help these people, whose commitments are causing them sleepless nights and days of misery? Is it because the problem is too difficult? If that is so, I would use the words employed by the Secretary of State for India on another occasion. I would say to the President of the Board of Trade and to the Chancellor of the Exchequer: "If you think this problem is too difficult, as I have heard outside, for God's sake go, and give way to men who have greater moral courage to tackle this problem." This problem can be tackled.

Then what of the production industry? Many of the smaller firms which will be closed down will be faced with the complete loss of their financial assets. To maintain morale it is vital to compensate these people. But do not do it at the expense of the consumer. Do not do it by raising prices. That is only regressive taxation and is another step on the road to inflation. Is the Treasury responsible for this refusal to face up to this question of fairness of compensation? Is the Treasury striving to preserve an outworn and unworkable financial system at the expense of fairness during war? If it is, let me say bluntly that the Treasury is doing more to help Herr Hitler than is the whole of his air force.

We are living in an "Alice in Wonderland" world as far as I can understand this concentration of industry. What is the President of the Board of Trade proposing to do? He is saying to an efficient management in an unsuitable locality that it will have to go out of business, and that it will have to hand over its production and turnover to what may be a thoroughly inefficient management in a suitable locality merely because that is the right locality, from the Board of Trade's point of view, in which that industry should be. Surely that is a monstrous scheme for trying to organise industry on an efficient basis. So much for criticism.

I should now like to make some concrete proposals for dealing with this situation. To secure the interests of the community, to achieve fairness arid efficiency, requires courageous, positive, creative policies, instead of the President's negative policy. My own view is that there are several different methods for tackling this job. There is the sane way of tackling this problem of the concentration of industry by forming operating holding companies, in which all firms in the industry participate. I should like to see a chairman appointed by the Government who represents the interests of the community, and no more than six other directors appointed equally by capital and labour. If there are more than six directors, it will be found that discussion will get out of hand. Then the board of directors would appoint the management of the factories which are left in production. In other words, they would not leave the original managements of a nucleus firm in control but would select the best possible managements out of the whole of the industry. I think such a scheme might enable us to get the advantage of State control and to combine it with private enterprise and initiative, because I am sure that is the problem that we have to face to win the war and also for the future of the country. Under such a scheme, of course, concentration of industry would mean the control of production. Production cannot be controlled effectively without controlling distribution, both at home and abroad. We know that the policy at home at the moment is to strangle the market. I say that the right policy at home is to throttle the market down to its minimum basic necessities and then to ration every consumer.

The biggest asset that this country will have in the future, as it has been in the past, is our foreign trade, and I think, when our appreciation of the Lease and Lend Bill reaches a true perspective, we shall realise that export is equally important to-day. I think we have to export in order to get on with the war. We shall be compelled to realise the changes that have come about in the export trade. I believe that barter in future will be the basis of exports. There is no escape whatsoever. The other general point that I would make is that foreign exchange control must continue long after the war, because we shall have the job of building up our foreign investments, those investments which we are so rapidly exhausting at present. As far as the export trade is concerned, surely concentration of industry offers us a glorious opportunity to do what we have never attempted to do in the whole of our industrial history. It will give us an opportunity to organise our production for export. It is a chance that we have never had before, because the home market has always been relatively more attractive than the export market to our producers, and that is one of the main reasons why we have fallen behind in the export race.

Now that we have concentration of industry, why not set about concentrating production for export in factories exclusively devoted to export production? As I see it, certain advantages would follow from it. Concentration in special factories would enable us to specialise in export production for barter purposes. Exports always require different styles and fashions from the home market, a thing that we have fallen down lamentably upon in the past and are falling down upon to-day. Profits from exports are far smaller than profits from the home trade. By segregating production we should be able to check up on the cost of exports and, if necessary, to subsidise it in a camouflaged way. That is something we shall have to face up to. Per-haps, more important than that, it will not be possible to filch export production for the home market, which is happening even now. There is a black market in the home market for goods prepared for export. It would surely enable trade marks and personal connections to be preserved. If production is controlled as I suggest, distribution overseas may also be controlled. We cannot possibly have export merchants fighting one another in the export markets to sell a reduced and limited output. That would only lead to price cutting. It is possible to control that and at the same time to maintain individual initiative.

I should like to say a word about South America, because concentration of industry offers us opportunities of placing our trade with South America on a sound basis and avoiding those tragic blunders which have lost us the Balkan markets. Already in South America the United States and Japan are cutting us out. They are hard at work. It is no good our attempting to fight for those markets by setting up the snobbery of the old school tie to meet the realistic efforts and attacks which have been made by our adversaries in those markets. It is hopeless to attempt to do it by receptions and banquets. The Willingdon Mission was sent to South America on the slogan, "Britain delivers the goods." We have not been delivering the goods, because of the shipping situation and our muddled control. In South America at present we are in exactly the same position as Germany was last year, when Germany had sold goods for delivery on the prospects of peace. I have a concrete suggestion to make here. Why not put our exports to South America into the stream of shipping going across to the United States and trans-ship at New York? Surely that is the sensible thing to do. It would mean extra cost, but surely we could subsidise this in a camouflaged way again and, if trans-shipment were used in the proper way, it would be another means of making closer contact with the United States.

I hope I have said enough to convince the House that this negative policy of limitation of supplies is not the only one. I believe that what we have to have are positive, concrete policies in order to enable us to win the war, and, more than that, we have to have them in order to enable us to maintain the standard of living in this country when the war is over. I hope that when we come to discuss this question of the industries of the country, we shall not have to say once again, as we have said so many times, that we must forget the past and all its lost opportunities.

Mr. Arthur Hollins (Hanley)

I wish to take exception to the statement of the President of the Board of Trade that there has been no dissent from these proposals in the pottery industry. There has been extreme dissent.

The Parliamentary Secretary to the Board of Trade (Captain Waterhouse)

What my right hon. Friend said was that there was no dissent in principle.

Mr. Hollins

The principle was accepted because, in the exigencies of the present emergency, we must bow to the inevitable, but we dissent, and I shall continue to dissent. The right hon. Gentleman gave a not very happy illustration with regard to the concentration of four firms into one. Those four firms happen to be under one company. That will operate in the pottery industry. Our difficulty is where there are three separate entities going to concentrate.

Captain Waterhouset

They were not in the hands of one firm. There were not four firms, but I think that there were two or three separate firms in four factories.

Mr. Hollins

Then I have no more to say on that point, but these difficulties will emerge. As secretary of the National Society of Pottery Workers, I am concerned about the effect of this scheme on the pottery industry. It will be seriously affected. I still maintain the view, which I put forward in the Press a few months ago and advocated before the employers and to some extent before Sir Cecil Weir, that the scheme should not have been applied to the pottery industry. That industry has characteristics peculiar to itself. It is a craft industry, and there has been little machinery introduced into it compared with other industries. There are several hundreds of factories, each of which has developed a certain type of ware which cannot be manufactured in any other factory. That is one of the difficulties. I can understand the necessity for the concentration of production in those industries which have to import large amounts of raw materials. I saw in the Press recently that in the cotton industry raw materials have to be cut down by one-third, and one sees in that case the inevitability of concentration of production. In the pottery industry, however, imported raw materials play little part; the total import of raw materials amounts in value to only 5 per cent. of the total production in the industry. That is an important factor.

I rather think that the Board of Trade, knowing that raw materials must be cut down, have, in going into the question of the concentration of industry, made it apply all round. In these circumstances I think that the scheme of the joint committee of employers and workers in the pottery trade for the recruitment of labour, which has been submitted to the Minister of Labour, should have been allowed to function. The scheme would have pro- vided all the necessary labour, and the hardships which will accrue from the proposals of the President of the Board of Trade owing to the closing down of factories would have been obviated. We were informed by the Minister of Labour that he did not want to disturb any of the existing machinery for the recruitment of labour and did not want to use any compulsion. The pottery industry has this machinery. A joint committee representative of the British Pottery Manufacturers' Federation and my Trade Union has been in being since the declaration of war and has prepared a scheme for the recruitment of labour for war work. Unfortunately, since the scheme was submitted to the Minister of Labour, the Board of Trade's proposals have been made, and they have cut right across the whole position. We have not received any approval for our scheme, and I do not know whether it has even had the attention of the Minister of Labour. When we get appeals from the Minister of Labour and other Government sources to give every assistance to provide manpower, we do not know where we are. A fault in our scheme which has been found since we submitted it is that it does not provide for the emergency of a factory or factories being requisitioned by the Government. This, however, could be dovetailed into our scheme.

I have previously said that the whole of the pottery industry should be harnessed, and I still take that view. Under the scheme for the concentration of industry provision is to be made for a nucleus factory when it receives its certificate to be in full working capacity to provide for the export trade, Government contracts and the minimum requirements of the nation. If our scheme had been accepted we could have provided all the necessary labour required by the Minister of Labour; we could have harnessed the whole of the pottery industry so that there would be no short time working, which I agree we ought not to have; we could have coordinated all the factories; and the industry could have kept up to full capacity. It is a well-known fact that in the pottery industry there is a surplus of export orders which cannot be executed. Why should not those orders be passed on to some of the struggling home-trade firms, which have only just managed to keep their heads above water owing to the quotas and the limitation of supplies? We are getting near the point when overhead charges are becoming too high for the output, and the only thing to do will be to increase prices. That could have been avoided. There is a disagreement between some of the employers and myself as to whether home trade firms could manufacture export ware, but I am convinced that they could. The present position is that one-third of the factories are doing four-fifths of the export trade while the remaining two-thirds are doing one-fifth together with the home trade and Government contracts. As a result, the exporting firms have been enjoying advantages from the exigencies of the war while the home trade firms have been suffering great hardships under the quota system.

Under the proposals of the President of the Board of Trade the wealthy exporting firms will be maintained in their fortunate position, while the poor home trade firms will be expected to stand the whole brunt of the concentration of industry. The only compensation which will be made to the firms which have to close down will have to be made by the nucleus firm which secures the certificate of the Board of Trade. This seems like feeding the dog on its tail. The nucleus factory will have to make sufficient profits to provide compensation for the other firms, but I do not think it can be done.

Like the previous speaker I am glad that the President of the Board of Trade is willing to give an assurance that he will accept the principle of a pool in this matter. I have here a copy of the interim report from the British Pottery Manufacturers Federation embodying this principle. They have done it extraordinarily well, but they do maintain that the wealthier firms who have had export trade dropping into their laps, without having to send out agents, should contribute. Those firms are in the position that there will be no need for them to take on an additional firm; they can apply immediately for a certificate; they have no obligations of any kind and can carry on with the manufacture of their production without suffering any of the hardships of the others. It is only reasonable to expect nucleus firms which are in that position to contribute something to the pool. I was gratified to hear the Presi- dent of the Board of Trade say that he has got a long way towards this idea, because it is one of the conditions of this scheme laid down by the industry that the President of the Board of Trade should not give a certificate unless firms have operated within that scheme and have given an assurance that they are willing to contribute to the pool.

In the White Paper which was submitted to us it is stated that the labour to be released must be adaptable and of a type likely to be readily absorbed into new employment, and that the release of labour should so far as possible be regulated to demand. Neither of those conditions can be guaranteed under the Board of Trade scheme, but they certainly could under the scheme for the recruitment of labour which has been formulated by the joint committee operating in the industry. Take the question of the adaptability of labour. Here I am speaking mostly of women, because in the pottery industry the demand will be overwhelmingly for women. The only definition of adaptability which can be given, in my view, is that of age. Two or three weeks ago I travelled from London to Stoke with an overlooker in a munitions factory, and asked her which was the most adaptable age for munitions work. She said that it was between 20 and 25 years; that when women got to 30 years they seemed to be scared of the machines and had not got the rhythm.

What will be the position in the pottery trade? Large exporting firms will be licensed right away as nucleus firms. The majority of those firms have taken most of the young labour in the pottery industry. The 50 or 60 firms which will be affected by the closing-down provisions are those which have some consideration for their workpeople and let them work on 30, 40 or 50 years. Therefore, blocks of labour will be released from the factories which are closed down which will not be suitable for munitions work and will come upon the unemployment market. The young labour which is with the nucleus firms will stay put."I have had complaints about the reserved ages for certain men in the industry being kept low, complaints of these young men being reserved while older men have had to join the Forces. The complaints will be a thousand times stronger in regard to the women when it is found that young women of from 18 to 25 are reserved in nucleus factories and older women have no alternative between going to munitions work or becoming unemployed. Again I say that our scheme would have made better provision for the adaptability of labour than does the Board of Trade scheme.

Then there is the point that so far as possible the release of labour should be regulated to the demand. That cannot be done under the Board of Trade scheme. Each nucleus firm will have its labour protected against transfer to munitions, have its raw materials safeguarded and, as I have said earlier, for those reasons all their workpeople will "stay put." The greater number of those who will be released by the closing down of factories will be older workers. The question then arises how this difficulty can be resolved. The position could be met by releasing the younger persons from the nucleus factories and substituting older workers for them. This would involve a tremendous transfer of labour. It would, of course, be a slow process owing to the fact that the scheme for the merging of the factories has to be formulated and approved. The industry is pressing it along with all speed, but it must be slow, for a number of reasons. It is stated that home trade firms should not merge with home trade firms but with firms doing five to ten per cent. of export trade. Such firms have to be found. Therefore, while we have the scheme drawn up on paper it will take some time to work out. The release of labour cannot be regulated according to the demand because blocks of workpeople will be released at intervals as mergings are effected and the releases will therefore be spasmodic. When those blocks are released we should transfer them to nucleus firms and release the young people working there to go to munitions work.

In my view, the scheme of the pottery industry should be brought into operation at once. That would mean that all factories would give their quota of labour, and that as other factories were closed down substitutes would be found for the young persons released from the nucleus factories. I am not saying anything against the scheme of the Board of Trade being proceeded with, but it should be complementary to our scheme if we are to have a regular flow of labour and to get adaptable labour for munitions. I had been thinking of making an appeal to the President of the Board of Trade on the question of compensation, but he has given us an assurance, which, I am sure, will clear up the position for those in the industry who will be hard hit and make them more ready to accept mergers with other factories. In those circumstances I hope that the Minister of Labour will consider the possibility of putting our scheme into operation in order to get this flow of labour, and of asking for a quota at once from all the nucleus firms so that the flow can be regulated. If any export firms have to give up their young people, as I am sure they must, during the transition period, there will be only a very temporary loss of export until their place is made up by the older men who will be released from the works closed down.

Irrespective of the criticism I have made to-day, I would say that the pottery industry working as a general committee, feel, along with every other industry, that something must be done in the direction of concentration. We feel, however, that there ought to be more flexibility in the scheme than was indicated by the President of the Board of Trade. A formula such as was laid down by him loses all flexibility. Firms must come into a formula, and unless they conform to it they cannot come within the scheme. That makes the scheme rigid and inflexible. That is my point of difference with the President of the Board of Trade. I hope that he will make the scheme a little more flexible so that the pottery industry will be able to do its best to help forward the aims which the President of the Board of Trade has at heart.

Mr. Hamilton Kerr (Oldham)

I understand that the holder of the world's mile record covers the distance in four minutes eight seconds. I will try and cover an equal distance in about the same time, for many other hon. Members wish to join in this Debate. I wish to make one or two points about the greatest of our export trades, the cotton trade. Like every other part of the country Lancashire realises that the need for concentration of industry arises primarily from the shipping position. It realises that every square foot in the holds of our vessels is as precious to us as are bars of gold, but it is a little surprised that the need for this concentration was not announced and planned for a little earlier. A short time ago I attended a cotton exhibition in my constituency, which my hon. and learned Friend the Member for Bolton (Sir C. Entwistle) graced with his presence, and which showed the numberless uses to which cotton was being put in the war services—in bombing planes and aeroplane tyres and even in the steel helmets of our wardens. It showed likewise the very attractive goods designed for export, including furnishing fabrics and ladies' dresses, designed to tempt the ladies of Rio and Buenos Aires to open their purses and return much-needed foreign exchange to this country. At that time an appeal was made for labour, especially female labour, to return to the mills and it was hoped that married women would leave their homes and return to the spindles. But almost immediately afterwards a scheme for the contraction of industry was announced.

I want to look at this problem from the point of view of the average man in the street. What does he think of this scheme for the concentration of industry? I believe that he is willing to play his part, if his part forms a section of a national plan to win the war, but that he will be intolerant of any tinkering or haphazard methods. I believe that the man in the street regards the problem as falling naturally into two parts, firstly labour, and secondly wages. He knows, as do hon. Members, that millions of people are working in the production of such commodities as coal, iron and steel, and others are working in the retail and distributive trades. He wants to feel that there will be no hide-outs and no shirkers in this war and that every available section will be making its contribution to the war effort. In regard to wages, he wants to feel a certain measure of security and stability. If wages are left to the old system of haphazard supply and demand he thinks it becomes inevitable that they will rise sharply in certain industries where there is a demand for labour, and that inflation will then advance upon us with seven-leagued boots. He wants an assurance that there will be no such fluctuations in wages.

How will this concentration of production affect the cotton industry? Let us suppose that a great Lancashire mill closes Down and that hundreds of workers are out of employment and are available for work in a filling factory. I would remind hon. Members that in Lancashire the social problem is always complicated by the fact that a large proportion of the workers in the factories are women, of which a number are married women. The married women have difficult problems to face connected with their homes and children. If they have to move to other parts of the country they may have to move their homes. Then there is the question of travelling expenses to a new destination. And workers who are transferred, whether they are male or female, have to find lodgings in the new districts, where, owing to a large influx of labour, prices may have risen. And finally, each worker may have to go through a period of training to make himself expert for the new job. There are three possible measures which can be taken to meet this situation.

I believe that workers should get free railway warrants, like members of the Armed Forces, to take them to their new centres of labour when they are transferred. When they get there, rents should be carefully restricted and, if necessary, there should be compulsory billeting. There should be no profiteering in this matter. Finally, it should be found possible to implement the unemployment insurance pay on which they will be living by a training fee. How will employers be affected? I think it should be possible for closed firms to be paid a certain amount of compensation by other firms who benefit from the concentration of production. Lastly, there is the question of how the towns are affected in which both workers and employers live. Some town councils will look with consternation at houses becoming empty because people are leaving, and shops becoming empty, while the rates problem will become acute. I believe that a partial solution of this problem is possible in Lancashire towns, because many great mills which have remained empty for years offer many acres of floor space suitable for arms production.

We desperately need foreign exchange in this country. Some time ago, the United States and this country carried out a transaction by which rubber was exchanged for cotton. Cotton is as much a part of our war effort as many other commodities, as it goes not only towards the making of aeroplanes but is put to every conceivable form of warlike use. Would it not be possible for our two countries to renew that transaction and to exchange rubber for cotton. America is now opening up new opportunities to us, and shipping space is being made available? Would it not be possible for the great surplus of cotton piling up in the United States of America to be transferred to this country so that the spindles of Lancashire might be kept working?

Mr. Summers (Northampton)

I rise to make my first contribution to a Debate in this House. I do so with both diffidence and apprehension, but I am fortified by two considerations, first by a feeling of thankfulness for that indulgence which the House in its generosity accords to Members speaking in such circumstances, and secondly by the knowledge that when I sit down there will come to me a feeling of profound relief—a feeling which, I trust, I shall not have to share with too many hon. Members present.

I hardly think that I need emphasise the essentiality of our utilising to the full our resources of man-power and materials. With a reduction in the output of many commodities, particularly those needed by the civil population in their ordinary ways of life, through circumstances connected with the war, it seems inevitable that there falls upon the Government a responsibility for seeing that production is reorganised on an economic basis and that some such scheme as is now put before this House naturally follows. I am sorry that the hon. Member for South Croydon (Sir H. Williams) is not here at the moment, for I find it incumbent upon me to take exception to several things that he said. In the first place, it surely is a sign of weakness, in building up a case to challenge this policy, that he must needs confess his style cramped by lack of sufficient figures, and, moreover, that he should depend upon what he would describe, no doubt, as universal ineptitude in other matters not at all connected with this question of concentration.

However, I would like to take one specific point, even in his absence if I may, to which he made reference. He said that he did not believe that there was to-day a shortage of labour. He said, moreover, that he was indignant. I confess that a remark of that kind makes me feel indignant, for in my own business I have been trying not only to get skilled men for war work but to prevent them from going away. Thinking that it was in the national interest, we have arranged that 120 jobs normally done by men should be done by women. We cannot get the women, and it does not impress me when the hon. Member quotes figures to show the money paid to people out of work, when those people are not where they are wanted and have not the skill to do what we want them to do. If possible, I should like to undo any misleading impression that was thereby created in suggesting that there was no shortage of labour, for, indeed, I know that there is.

My right hon. Friend referred to the importance of timing in a matter of this kind. There is little doubt that his decision to introduce the concentration of industry at this juncture was influenced by the Regulations of my right hon. Friend the Minister of Labour, for, clearly, unless the labour released by concentration can be found adequate and profitable employment, great hardship and waste will result. The importance of timing was stressed, and I was rather surprised that my right hon. Friend, whose name is familiar to everyone and whose family traditions are so connected with cricket, should have chosen golf to show the importance of timing. I do not know what cricketing experience my right hon. Friend the Minister of Labour has had, but I must confess that in dealing with the question of compulsory direction of labour I, for one, felt that he left his stroke so late that there was a fear that he was going to miss the ball altogether. In the Debate on that subject he made a late cut, for the Noble Lord the Member for Horsham (Earl Winterton), fielding first slip, and the hon. Member for Seaham (Mr. Shinwell), who is fielding I do not know what to-day, but who was then fielding second slip, both thought that there was an opportunity for a catch, and they were not successful. My hon. and learned Friend the Member for Montgomery (Mr. Clement Davies), who is not here at the moment, fielding third man, made a determined effort to make a catch, but without success. I am not here to make a catch. Indeed, those who sit in the back of the pavilion can take very little serious part in the game, but I would say that if that stroke proves to reach the boundary, we shall forget our apprehensions and duly applaud. I will not carry the analogy further than just to say that I hope that my right hon. Friend the President of the Board of Trade will not hesitate to go out to meet the ball, that he will recognise that there is too much loose bowling about, and that if he hits it hard I am sure he will be supported by all present.

I am glad that the Government have recognised that in a matter of this kind it is not possible to lay down hard and fast rules to be applied to all types and conditions of industry, and that the right hon. Gentleman has given an opportunity to industry to work out its own salvation. To enable it to do this, however, it is essential that it be given its objective. I recognise that in the White Paper which was recently issued the responsibility was left to the Board of Trade to state the objective for each trade, and I venture to stress the point because until that is done effective working concentration cannot be proceeded with. For instance, in the boot and shoe trade, in which a number of my constituents are interested, it cannot be for them to determine the degree of production which it is proper that they should do in the war. That is a responsibility which must rest on the Board of Trade. I would like to assure my right hon. Friend that whatever degree of restriction he finds it necessary to impose it will be accepted loyally and efficiently in the interests of the country. Until that objective is stated, the proper organisation cannot be proceeded with or indeed begun. I am glad, too, that it has been decided that it would not be a proper use to which to put public funds to compensate those closed down as a result of this policy.

There is, however, another aspect of this matter, and in that connection I was very glad to hear that it is the intention of the Treasury to admit as a charge against revenue in the account of a company paying such compensation such charges as may fall upon it as a result of this policy, but I would urge that the matter be carried even a stage further There are many products the prices of which are related to cost, and it is not uncommon for Government auditors to take out costs, fix prices and, as a consequence, assume that the marginal profit is reasonable. Unless the cost of compensation is admitted as a charge in the cost for price-fixing purposes, the margin which was previously regarded as reasonable will be diminished. My right hon. Friend has said that industry in its new form, which is only a temporary form, will be better able to deal with financial matters than in its present form. That, I suggest, is sufficient justification for admitting the cost of compensation whilst still expecting the price to the consumer to remain reasonable.

In the trade with which I have been associated for a number of years, the steel trade, I have had opportunity for seeing attempts to deal with redundancy in the past, the lessons of which may perhaps be of value now. I admit that the attempts made to tackle that problem were on a permanent rather than on a temporary basis, but nevertheless I think perhaps it might be useful to refer to them. Here may I say that there will be certain cases in which it would be folly to restart a firm which is now to be closed. I hope, therefore, that it will be recognised that a part, if only a small part, of this concentration will not necessarily be on a temporary basis. It was found in the attempts that were made by firms which perhaps had old plant, or were badly placed geographically for the reception of raw materials, in deciding the value which they put upon their business for the purposes of either closing down or selling, added to its intrinsic value an item for what I might perhaps call its nuisance value.

However legitimate that may be in peace-time, I trust my right hon. Friend, in examining proposals which may come to his notice, will not admit anything for nuisance value in the present situation. There were other firms which clearly would be expected to continue working, and which might be expected to have taken the opportunity of reducing the number or the strength of their competitors through concentration, but which nevertheless were reluctant to do so. The reason was that they were afraid, in the absence of safeguards against newcomers in the future, that any effort they might make would be nullified in the absence of those safeguards. For that reason, and because those to be closer) will also be particularly interested in this point, I welcome very much the assurances we heard to-day. If I am right in thinking that much importance will be attached to this question of new-comers, I trust that after the war those who will derive benefit from the safeguards will accept equally willingly such responsibilities or restrictions as may have to go with them at the same time.

I have no doubt that after the war the pendulum of control will swing, and that there will be an attempt to go back to freer and freer trading. But I hope it will be recognised, if we are to surmount the difficulties inevitable during a period of reconstruction, that a measure of control for a time at any rate will be necessary. It may be that despite the knowledge that these safeguards exist and will be applied there will be firms which will sit back and do nothing, regarding themselves as indispensable. I trust that in dealing with such cases my right hon. Friend will not hesitate to open the cupboard door and show the big sticks which I have no doubt are inside, and, what is more, show his determination to use them if compelled.

There are many difficulties inherent in a scheme of this kind, and, of course, there is a limited time in which to accomplish all that is desired. But I think that the chances of success of a voluntary effort on the part of industry will be enhanced if generosity to the firms which continue working is emphasised—in other words, if the advantages will be at least commensurate with the responsibility. Reaction to the public demand—and a very proper demand—at the beginning of the war that no unreasonable profit should be made out of the nation's necessity has, I regret to find, brought in places a feeling that it is more important to reduce profits than to reduce costs, and I trust that the motives underlying this policy, motives of efficiency and economy, will do something to restore the balance. The successful outcome of this war depends not on money but on the proper use of man-power and material. There will arise, as a result of amalgamations and of what I might perhaps call the leasing and lending of goodwill, problems connected with E.P.T. and matters in which the Treasury will be involved, and I trust that where they are able they will facilitate the task of those responsible, particularly with reference to the collec- tion of money through a central fund to deal with those firms to be closed down.

I would like to make one suggestion designed to accelerate the desired result. Export groups, which are the god-children of the Export Council, have been set up. In many trades there exists a proper, all-embracing trade organisation which I trust my right hon. Friend will not hesitate to use in this instance to facilitate his policy, but in others the Export Council is about the only umbrella under which many firms can shelter. Why should not the export groups themselves be expanded to bring within their purview the home trade, on the same lines as the Export Council itself has been expanded? I trust that when this war is over the export groups will play a prominent part in regaining the export trade which is the lifeblood of this country. Now is the time not only to utilise the groups for the benefit of the present policy, but to strengthen, for their task after the war, these promising products of the war.

Since the beginning of the war public opinion has tended to outpace the Government in its desire for a total effort. The Government are rapidly catching up. Let me urge on any who may find their livelihood affected by this policy now to lose none of their enthusiasm which they expended so lavishly in the past. Attacks by industry on Government administration and policy are frequent and not always misplaced. I trust they will take this opportunity of showing that it is the hazards of war rather than the fear of criticism which prevents their living in glass houses.

In conclusion, if there should be any doubt in the minds of any hon. Members, or others outside this House, that such a drastic policy as is now contemplated is necessary, I would say two things. Firstly, as a nation, and particularly as a nation fighting for its life, we are far too apt to postpone unpleasant decisions in the hope that they may not be necessary. Before the war we saw this in regard to rearmament; since the war we have seen it in our dealings with labour, rationing and other things. Valuable time is lost, and when the decision finally is taken, it is frequently more unpleasant than if it had been taken earlier and, what is even worse, the length of this ghastly struggle is almost invariably prolonged as a consequence

Secondly, only by a total effort can we expect to win this war. We can afford to dispense with nothing which will contribute to that end. Let us never forget that we hold in trust the sacrifices of the past and the hopes of the future. The eyes of the Empire and of America are upon us; the free peoples of the world look to us for their deliverance. Let us not flinch, therefore, but show in our industrial organisation the same courage which has been manifested so magnificently by our people and of which we are rightly proud. I feel confident that if tackled in that way, industry will respond to whatever demands may be made upon it in the interests of the Fighting Services of the Crown.

Sir Cyril Entwistle (Bolton)

I should like to congratulate the hon. Member who has just spoken on a very successful début. He was very felicitous in using a cricketing analogy, and, if I may say so, I think he has scored a century in his first test match. We shall look forward very much to hearing his contributions in the future.

I want to deal with these concentration proposals particularly in their application to the cotton industry, which affects my constituency more than any other industry. I consider that, so far as cotton is concerned, there has been a lamentable lack of co-ordination between the various Government Departments, and that this fact has been exercising a serious effect on the industry throughout the war. The cotton industry, unlike some other industries, has been affected by not only one form of action, but a variety of forms.

First, there is the Board of Trade, which, under the various Limitation of Supplies Orders, effects restrictions on turnover. That has an effect on certain branches of the industry. Then, we have had a different form of interference by the Minister of Labour. At various times the industry, particularly those parts engaged on Government work, has asked for a standstill order. That has not been given; though I understand that the industry may now have it in regard to the nucleus firms when the necessary concentration has been achieved under these proposals. Then there have been various alterations in the Schedule of Reserved Occupations, with a view to forcing labour out of the cotton industry into factories more directly concerned with munitions. Then we have another Department working in another direction. This is the Ministry of Supply, operating through the Cotton Controller, who is, I understand, that Ministry's direct representative. He is by far the most powerful of all, because the cotton industry, unlike most industries, depends for its raw material upon raw cotton which has to be imported, and the Controller can, through a system of licences, force anything he likes upon a section of the industry. He has complete compulsory powers. Now we come back to the Board of Trade, and these concentration proposals, which, again, seem not to be working in co-ordination with all the various other measures, but to be attempting again, in a rough and ready way, to achieve a further reduction of production. Needless to say, with all these interactions of the various Departments, there is considerable confusion and uncertainty in the minds of those engaged in the industry.

I should like to refer to a matter already referred to by my hon. Friend the Member for Oldham (Mr. Hamilton Kerr), regarding a cotton exhibition held in his constituency. I was asked a few months ago to investigate, on behalf of the cotton trade in conjunction with my hon. Friend the Member for Farnworth (Mr. Tomlin-son) —who has since been elevated to the exalted state of an occupant of the Government Front Bench—the shortage of labour in the cotton industry with a view to getting more operatives into the industry.. We took various steps. We made a strong appeal to married women to come back to the industry. We saw the Minister of Labour with a view to getting evacuees from other parts of the country into the industry. Among other things that we undertook was the holding of a cotton exhibition, in order to point out how important cotton was to the national effort. It was pointed out that cotton played as important a part in the prosecution of the war as those industries more directly engaged in the manufacture of munitions. There is no shadow of doubt about it. Here is the kind of pamphlet that we issued. This says: — Cotton in the front line. To-day, to win the war, the cotton industry must increase output in every way possible. Persons with skill in any textile operation are needed. It is a little disconcerting when one has been pointing out the supreme importance of the cotton industry to the national effort and endeavouring to get people to come back into the industry, to be now told that it is most important to get people out of the industry and into munitions. That shows a regrettable confusion of policy. The slogan that we adopted was that "cotton is munitions." Now we are told that one of the main purposes of the further cuts in the supply of raw materials to the cotton industry is to get more people into the large munitions shadow factories in Lancashire and the North Western Area. I want to ask the President of the Board of Trade whether some of the cuts which have been made, through the system of granting licences, in the supply of cotton do not go further than is in the long view in the balanced interests of the nation as a whole. Since these last curtailments, I have been told of one large combine which were engaged as to 48 per cent. of their work on direct Government work, and as to 50 percent. on the export trade; so only two per cent. of their turnover was left. The licences just issued cut them down to 60 per cent. of their previous sup plies. Assuming that their Government work has to be maintained, of this reduced production only 10 per cent. will be available for the export trade.

I am told that, as a result of these proposals, real havoc is being caused in the export trade of the fine-cotton spinning mills. I want to deal particularly with the Egyptian cotton aspect of the problem, because that affects my constituency in particular. Everybody knows that Bolt on deals with the fine kinds, made out of Egyptian cotton. I am told that the amount of production which was being done by the fine spinning mills for the export trade just before this last curtailment amounted to between 20,000 and 25,000 bales of Egyptian cotton per month, and that that could be transported from Egypt in two shiploads. This curtailment by 40 per cent. will presumably mean that, instead of two ships, there will be one ship per month. It does not seem to be a very serious shipping problem, or that it will have any really serious or calamitous effects, to get another ship a month from Egypt. I am told that the steamship "Kingswood" arrived from Egypt with Egyptian cotton on 23rd February and is still unloading. A little more effort in that direction would bear far more fruit from the point of view of the real welfare of the country than these rather blind and tremendous cuts in the supply of Egyptian cotton, which are having such a serious effect on the fine-spinning end.

Let us look at it from the nation's point of view. We are told how much export trade has been lost, and we understand that it is important to maintain our export trade. With Egyptian cotton costing is. 2d. per lb., the finished product can be sold in the export market at between 1oo and 150 pence per lb. Egyptian cotton is very transportable in 750 lb. bales, and it seems absurd that something cannot be done. There was an announcement the other day, with a considerable amount of pride, that the Cotton Board had obtained orders in Java for our export trade—that is in the coarser end of the trade. Surely, it would be better, from the long-distance point of view, that we should see that these valuable exports are obtained when the amount of transport required to get the raw material is so much less than in the coarser end. Moreover, we must not neglect the post-war aspects of these problems. The Lancashire cotton trade is suffering dreadfully, because since the last war there has been a constant shrinkage in markets overseas.

If there is one branch of the cotton trade in which we have been able to maintain our exports, it is the finer counts. Therefore, in dealing with this concentration of production and in the issuing of these licences more attention should have been paid to the Egyptian cotton side. Have all these matters been carefully weighed in the balance? I understand that the Minister in the Government who is the great coordinator is the Lord President of the Council with his various coordinating committees. Before arriving at this 40 per cent. cut which has so closely affected our export trade, have all these matters been carefully weighed in the balance by these coordinating committee? I should think not, and that the position is that the Ministry of Shipping made a report on the shortage of tonnage and so on and certain rough and ready rule of thumb methods have been applied, at any rate, as far as its effect on the fine section is concerned.

I want next to deal with the important question of compensation. The cotton trade at the moment knows very little of where it is on this question and the outline of the proposals in the White Paper is very vague. We are told categorically that on no occasion are the Government to be responsible for any of this compensation. I do not expect that it is any use my urging upon the President of the Board of Trade that he should reconsider that, although really I do not see why there is such an essential difference between the case of industries which are forced to be closed down owing to Government action, and the case, say, of the seaside towns which are closed down through invasion precautions or even the War Damage Act. It was first reported that no insurance scheme was possible because there were too many factors, but since then the Government have assumed the responsibility under the War Damage Act within certain limits, and they have assumed a certain responsibility for compensation to the seaside resorts. I do not see why, in principle, Government responsibility should be completely ruled out in these concentration proposals, because in certain cases concentration might be so great that sacrifices to the industry would result if the Government assumed no compensation whatever. However, I assume we must take it that the Government will not, under any conditions, give any guarantee or assurance that the compensation will achieve the purpose desired.

We are told by the Cotton Board, in connection with the proposals they have in hand in regard to compensation, that it cannot be hoped that such compensation will be anything more than a contribution towards care and maintenance. I do not think that a mere contribution towards care and maintenance is sufficient compensation for those mills which will be closed. I understand that they are considering arbitrary figures, that is, a contribution of so much per spindle and per loom, and that the closed mills will receive as compensation so much per spindle or loom. But we do not know on what basis that is to be arrived at. I think we all agree that spread-over of production is not a desirable thing, but I think we are also all agreed that it is most important to have spread-over sacrifice. There is no reason why sacrifice should not be spread over, and, therefore, it should be a very vital part of these con- centration proposals to see that compensation given to the closed firms is adequate. It would be a real scandal if the running mills were allowed to make profits while the closed mills were driven into bankruptcy.

The really important aspect of this matter is not only financial, from the point of view of the firms, but that of labour in the industry. I am most concerned in trying to safeguard the jobs of the cotton workers who are now so willingly going from the cotton industry into munitions at the request of the Government. Only last week I had interviews with all the leaders of the trade unions in my constituency. They took a very patriotic view of these proposals and are willing to assist in any way they can by the transference of labour, but they were most anxious as to whether there will be any jobs for the workers to go back to after the war. Therefore, I do urge on the President of the Board of Trade that the sine qua non of any compensation proposal should be that it is enough to keep the machinery of the closed mills in efficient working order. In the cotton industry that means quite a considerable financial burden. For machines to be kept in proper working order the mills must be heated and so on. I do not think that even that is enough. In addition, mills must be allowed to have enough working capital to start again when the war is over. As the result of being closed, they must not be forced into financial ruin. Whether the amount of production which is left to the nucleus firms will be sufficient to provide adequate compensation I do not know, but the sacrifices to be made by the mills that will be allowed to run should at any rate be made so severe that the essential condition of sufficient compensation to ensure jobs for the industry's workers when the war is over is secure.

I want now to say a word or two about industries as a whole, particularly the smaller industries. I suggest to my right hon. Friend the President of the Board of Trade that the Government should give more assistance than they are doing to enable an industry to act as a whole unit both in submitting proposals for concentration and for adequate compensation schemes. The only certain basis on which most industries can achieve the necessary compensation is by having some such method as a compensatory pool of which there is now ample experience and a good deal of detailed knowledge of its practical administration. But to do this an industry must be given certain enabling powers so that any scheme of this nature which is proposed, if it is proposed by a sufficient majority, and subject to the approval of the Board of Trade, should be made compulsory on any recalcitrant minority which is standing out against the interests of the whole.

Finally, I have heard a great many complaints that before the proposals were adumbrated by the President of the Board of Trade, there was a good deal of secrecy in the negotiations which took place between the Government officials and the representatives of the industry with whom they consulted. The result has been that firms engaged in the industry have been absolutely in the dark until they have been faced suddenly with these proposals. I suggest that the more information available to everyone in the industry the better, so that they may know where they are and be encouraged to go to other firms and make arrangements. I speak as one who is personally concerned with firms. It is very difficult to know where one is in these things, and it is difficult very often to get information from the representative association in the industry, because the negotiations have been kept more or less secret. That is undesirable, and the greatest publicity should be given at the earliest possible moment.

Mr. Shinwell (Seaham)

When the President of the Board of Trade first announced his proposals for the concentration of industry, considerable enthusiasm was aroused throughout the country. The scheme was hailed as a remarkable achievement, and hardly a dissentient voice was heard. The right hon. Gentleman was described as the Government's greatest discovery. An industrial Napoleon had emerged, and was about to expose the in competency of politicians and show them how to manage the nation's affairs. Unfortunately for the right hon. Gentleman, a close examination of his scheme has disclosed several defects, and many reservations have found expression. Indeed, the enthusiasm which greeted the original announcement of his proposals has now been displaced by careful scrutiny and considerable criticism. Instead of promoting, as many people believed, an industrial revolution, he has succeeded only in arousing a political storm.

With the ultimate objective of the right hon. Gentleman there is, of course, almost general agreement. In every quarter of the House, there is a desire to promote greater efficiency in production by concentrating on the most efficient and adaptable units in industry, to eliminate waste and unnecessary competition, and to use our resources in labour and materials more effectively. That objective is closely related to the war effort. It is rendered necessary by the exigencies of the war, the diminution of supplies, the need for curtailing civilian consumpution, and the insistent demands for material and labour. Therefore, let me say at once that the principle underlying the scheme is sound. Indeed, the acceptance of the principle is inevitable, because it is essential if we are to promote the vigorous prosecution of the war; but it is equally important if we are to survive as a great industrial nation when the conflict has come to an end. In fact, sooner or later British industry will be compelled to adopt the principle contained in this scheme, or we shall cease to exist as a great commercial nation. It was obvious at the beginning of the war—at least to those who sought to relate our economic policy to the war effort—that trade and industry could not remain undisturbed. "Business as usual" was a fantastic conception. Some of us said so, but we were ignored. Serious dislocation was inevitable, and, if at an early stage in the conflict the Government had prepared a considered plan, consulting the various interests, but exercising their own judgment in the light of knowledge available to them, instead of producing a hastily improvised arrangement, they would have avoided many of the pitfalls which now surround them and threaten to make the scheme unworkable.

My complaint is not against the principle, but is based on the neglect to embody in the scheme effective State direction, and the absence of essential safeguards for the protection of the small trader and manufacturer, the worker and the consumer. My right hon. Friend has failed to provide satisfactory assurances to any of these important interests, however successful he may have been in placating owners and directors of larger industrial concerns.

First of all, let us consider the amazing suggestion that if this scheme is adopted, industry will return to a normal condition at the end of the war. This statement is, no doubt, intended to appease the small manufacturers, but in my view it is a piece of downright deception, or, if that language is regarded as too strong, an indication of crass ignorance in face of the obvious developments in British industry. What is the purpose of the scheme if it is not to promote greater efficiency? Are we to understand that we intend to become more efficient during the war, and then, when it is all over, we are to return to industrial conditions, where efficiency is of less consequence? It is obvious, if the scheme was found in practice to be efficient and satisfactory, that we should never wish to abandon it. But does anyone really suppose, once the industrial power has passed into the hands of the large industrialists, that the small man will ever be allowed to go back?

My right hon. Friend furnished the necessary indication in the course of his speech, reminding us of the existence of the Export Council, and informing us of its reconstruction. We were told the names of two industrialists who were to engage in the task of assisting in the concentration of industry under the scheme. One of them was a representative of the firm of Unilever, and the other a representative of the firm of Guest, Keen and Nettlefold—two monopolistic undertakings. I make no complaint. I merely state the facts. Are we to suppose that these gentlemen, possessing great skill and knowledge in matters, of this kind and believing, as they must believe, in the desirability of concentration in industry and in the creation of monopolistic trade undertakings, are going to pave the way for a return at the end of the war to a whole series of heterogeneous trading units? It is inconceivable. My right hon. Friend himself furnished the reply to his own case. In my opinion this scheme sounds the death-knell of the small men. There is to be no resurrection for them. I am fortified in my contention by a statement which appears in to-day's Press. It is headed, "Big transport co-ordination plan is needed," and it says: Railways, motor services and other transport organisations, not one or two or three or four small units, but great key services difficult to handle, have battled courageously with the task since the outbreak of war, and have achieved a large measure of success, but 19 months of war-time working has also revealed deficiencies which have emphasised the necessity for pressing forward with plans for greater co-ordination. What I have said denotes the industrial tendency of the times. It is inescapable. I am reminded, as I use this argument, that my hon. Friend the Member for Northampton (Mr. Summers), who made such an excellent maiden speech, told us that he was associated with the steel trade. If there is one trade where co-ordination has been effective and there is not the slightest intention of returning to the small, however efficient, units, it is that trade. I should offer no objection to the elimination of the small firms if the necessary safeguards were provided, first of all, in the form of adequate compensation to those who are dispossessed—to the workers and the staffs, and when I speak of staffs I mean the management as well as the salaried employés who are likely to be displaced; and, last but certainly not least, for the community against rising prices and the exactions of monopolistic concerns.

Consider the question of compensation, to begin with. It is true that my right hon. Friend believes that the nucleus firms would protect the displaced firms. It is all in the White Paper. But does he suggest that the transaction would be based on equity? Supposing a small firm declines to be absorbed because of the financial arrangement, what happens? My right hon. Friend may say that that is provided for in the scheme because a nucleus firm must satisfy certain conditions, one of which is that it has dealt fairly with the displaced firm or firms. But if a firm is reluctant it will be politely intimidated by the knowledge that it can receive no raw material or labour or that a scheme will be imposed by the Board of Trade itself. That may be much worse than a private agreement. That is a form of blackmail which will have an immediate salutary effect. Will the President explain why he makes a distinction between a firm making munitions for the Government which, therefore, is quite secure and is making profits with no risk of being displaced, and another firm making woollens or hosiery or pottery which may be wiped out by the arbitrary decision of a large concern? Why should one be permitted to make profits and another driven out of existence with a bare subsistence and a vague promise about returning to the field of industry when the war is over?

What kind of equity is that? That is the first test to be applied—is this scheme based on the principle of equity? The answer must surely be in the negative. In some respects the principle underlying this scheme is Marxian in character. Marx always declared that the development of industry would lead to the creation of monopolies and the disappearance of the small man. What Marx failed to accomplish in his voluminous writings and propaganda my right hon. Friend proposes to achieve in a few weeks. But note the difference. Socialist policy provides that if traders and manufacturers are dispossessed they shall be compensated on a fair valuation. Has my right hon. Friend had any consultation with his colleague the Lord Privy Seal? If he had he might have learned about the repeated declarations of Labour policy.

Mr. Lyttelton

The hon. Member is talking about the policy of the Government, which numbers among its members the Lord Privy Seal.

Mr. Shinwell

I am obliged to my right hon. Friend for emphasising what I have just said, but he has missed my point, about which I make no complaint. My point is that if he had consulted his right hon. Friend the Lord Privy Seal, he might have learned that the desire of the Socialist party is that if industries are taken over by the State and are required for any purpose, it should be done on the basis of compensation on a fair valuation. For example, if the mines, the railways or the land are acquired by the State, we propose to pay adequate compensation. What, however, does my right hon. Friend propose? What are the small men going to receive at the hands of this Government? There is no guarantee of adequate compensation, but a raw deal—make no mistake about it— when it would have been just as easy to provide a sound scheme based on equity. Of course, the nucleus firms may in some instances provide adeqate compensation by adopting a simple device. They can raise their prices and pay the compensation out of the proceeds, and so the consumer will be called upon to pay, and in many cases the consumer will be the Government. Then why not provide a scheme with adequate compensation out of State funds, paying it in a direct form and not in a form concealed from the public? Moreover, will my right hon. Friend say why he makes a distinction between a firm bombed out of existence and one driven out of business by his scheme? I should like to have a clear explanation of what appears to me to be a gross injustice.

All this might be regarded as unimportant if the scheme promoted efficiency in production. That is the principal purpose of this scheme, but there is no guarantee that it will follow. On the contrary, it is clear that if the control remains in the hands of the nucleus firms without any Government direction, they may operate the less efficient units and fail to use the most efficient personnel. For example, a nucleus firm may decide to concentrate production in a factory which is most suitable for their own purposes but less technically efficient than others which are closed down. They may, in addition, use personnel more suitable to themselves, perhaps because of long service, but less efficient than the personnel in an absorbed firm. The result will be that many useful and skilled technicians and managers will not be used, and efficiency will suffer. I ask my right hon. Friend, What protection is there against that in his scheme?

Furthermore, what of the financial position? If funds are required for any purpose, for plant or the reconstruction of factories, who will provide them? I presume recourse will be had to the banks. Does not that mean that the larger concerns will, sooner or later, find themselves in the hands of the banks, and will the ultimate end be that a few monopolies will be created over which a few banking corporations exercise control? When the war is over will they restrict production as they did in the case of the closed shipyards? On the other hand, if the State is to provide funds I demand a measure of State control.

This is an important event in the progress of British industry. What we decide today will leave its impress on our trade and commerce after the war. It is a war measure, but there will be serious peace repercussions. It may, indeed, be the most momentous event since the beginning of the industrial revolution more than 150 years ago. I am convinced there will be no turning back. Drastic changes were inevitable in peace, because British industry was lagging behind. It was doubtful whether we could for long have maintained our standards of living without serious readjustment. This scheme, moreover, as my hon. Friend the Member for North Cornwall (Mr. Horabin) ably pointed out, is bound up with our export trade, and we are all aware of the grave position which existed immediately before the war, with our declining exports and our adverse balance of trade. In these circumstances, what should be the course taken by the Government? They should withdraw this Bill and consider the matter afresh. If industry is to be concentrated in fewer hands the State must exercise a larger measure of control—not in administration, which is always a matter for experts, but on questions of policy which affect the British consumer, the course of British trade and the position of the workers and others concerned.

If small men are to be driven out of business, that may be unavoidable, but if it happens as a result of a deliberate act taken by the Government, they must be fairly treated, so that no sense of injustice rankles in their minds. Otherwise we shall weaken morale among an important section of the population, and we shall have accomplished nothing of real value. If industry is to be reorganised, the State must play an active and not a passive part. Some hon. Members have suggested the creation of holding and other companies; if we cannot have complete State control, I am willing to accept the compromise, at any rate until there is time to evolve a complete plan. In each of those companies the Government must have representation. Directors appointed by the Government should have permanent seats on the boards, and the shares should be distributed as fairly as possible to all the parties concerned. Nor should the interests of the consumers be neglected. In each industry, an advisory council should be formed, to protect the interests of the consumers.

Finally, no scheme will be acceptable unless the workers are safeguarded against unemployment, not by the dole, but by the payment of full wages, and on their absorption into a new industry or factory there should be an assurance of regular work, even if this means eventually a reduction in the hours of labour. Without these safeguards, the application of the principle contained in the scheme may lead us forward—I speak most earnestly on this point—to industrial Fascism or syndicalism, neither of which is likely to benefit the people or to preserve the Democracy for which we are fighting.

The tests to be applied before we can endorse this proposal are: Is it likely to promote greater efficiency? Does it provide equity? Does it safeguard the interests of the consumers? Does it protect the workers, and is it calculated to advance British trade and commerce at the close of the war? It is because I firmly believe that the scheme fails to respond favourably to these tests that I beg my right hon. Friend to reconsider the whole matter and to return to the subject when he has carefully digested all the arguments advanced in this Debate.

Mr. Burgin (Luton)

I have no doubt that my right hon. Friend the President of the Board of Trade will devote a good deal of thought to many of the matters which have been raised in this Debate, including some of the suggestions in the speech to which we have just listened. In common with many Members, I am bound to say that many of the headlines and much of the leader writing that appeared when this scheme was first enunciated were very wide of the mark. I do not believe that the proposals of the Government are a step on the way to the nationalisation of industry or that they have a political objective at all. I believe that the objective is very much simpler and can be defined in the following way: Those concerned with the augmentation of the British war effort in the months before the war and immediately after the commencement of the war were rapidly made conscious of the fact that you cannot expand the country's war effort merely by expanding the war industries and that you have, at the same time, very drastically to reduce the peace industries. Otherwise your raw material, administrative ability and labour force are not sufficient to go round.

One of the reasons why American help was relatively slow in the early stages of the war was that the United States did not realise that increase of the war industries would not alone be sufficient. It is very much easier to talk in Debate of concentration of industry than it is to apply it in practice. It is very difficult to apply in practice; it is probably impossible to apply without considerable injustices being caused. The point to which I wish the President of the Board of Trade to direct his attention is the increasing frequency with which power and knowledge are divorced. The President in his speech referred to his Industrial and Export Council; he told us some of the names of the leading members and referred to their impartiality. Their impartiality is not in doubt, but the President went on to say that their impartiality would not be tested because in almost every case they were dealing with industries with which they had nothing to do. The point I wish to emphasise is that this increasing frequency with which power is vested in some executive body, which has not at its elbow detailed knowledge of matters over which it is exercising power, is one that is causing distress to the rank and file of this country.

I agree with previous speakers that the civilian effort is not wholly and adequately harnessed to the war machine, and I would beg the President of the Board of Trade to remember that the whole organism of industry is very much easier to cut down than to build up. I would beg him to remember that even in the Board of Trade there are whole areas of industry which are not adequately logged, cross-indexed and to be found in files. One of our difficulties in this freedom-loving land, where anybody could start a business as he wished and carry it on with individual enterprise in his own way, is that there is no index to industrial knowledge, industrial production and industrial distribution. Many of the handbooks that have been prepared on industry were completely defeated when it came to an analysis of the very large number of small distributing agencies there were and when it came to describing what was the average turnover of the average business. There was a whole field of industrial knowledge which was literally not available to any Government Department at all. I was relieved when the President of the Board of Trade said that he would give an absolute pledge that if businesses were so small that this dislocation involved by some application of compulsion to them would be greater than the contribution to the national effort, he would willingly leave them outside his proposals. We must press at a later stage for definition as to what is a very small business. I understand that at the other end of the scale, in regard to a very large business, concentration, rationalisation, amalgamation, the limitation of some of the factories under one management and concentration in fewer is a relatively simple proposal, but the whole broad effect of industry is somewhere between those two. It is neither in the very large nor in the very small, but in the whole welter of industries of all kinds, sorts and descriptions, no two of which are alike— somewhere in between a very large unit and a very small unit. The problem which confronts the Board of Trade is not one of principle; it is not a problem of the objective which he is attempting to pursue, but it is one of the focus on the particular yardstick which is to be applied within a particular industry. I agree with previous speakers that industrialists are doubt at the present moment as to what is expected of them and as to what is the contribution they can best make to bring about the desirable twin objective of releasing man-power and yet avoiding unnecessary unemployment.

I hope that, when the President of the Board of Trade looks over this Debate, and weighs and carefully considers the suggestions that have been made, he will not feel that all is happy merely because of the limitation of supplies, the requisitioning of factories, or because of telling firms to amalgamate. Under the Limitation of Supplies schemes the quota-selling racket has been a very discreditable reflection on British industry, and I beg the President not to introduce, in connection with his concentration of production, any further methods which will have any of the corollaries which some of us have experienced with regard to the sale of quotas. I was very relieved, and I expect many hon. Members of the House also were, to hear the emphasis which the President laid upon the necessity of retaining trade marks. But do not let anybody think that a trade mark can be maintained merely by advertising. Somebody has got to manufacture the goods to which the trade mark is applied. Trade marks very soon fall into disuse in the absence of manufacture, and it should not be thought enough merely to put a few advertisements on handbills and hoardings. If we are to keep, as part of the British industrial organisation, some of the proprietary articles which have a very big export trade, there must be a nucleus manufacture of the goods to which those trade marks belong, and it is of no use to shirk the fact.

I am not sure whether I heard the whole of the right hon. Gentleman's speech, or whether a reference has been made to-day to the sales side. I know, of course, that this is largely a concentration of production, and I know that the present proposals do not for the moment refer to the distributive trades, but I would ask the President of the Board to remember that, in connection with a very large body of industries where there is a healthy production and a good export trade, these are brought about by a sales force every bit as expert, every bit as essential to the industry, as the actual skilled hands who operate the machines and produce the article. It is essential that that sales nucleus should be regarded as part of the goodwill of the firm, and that it should be retained whether the firm is one of those which are closed down or whether it is a nucleus firm which is allowed to continue. I say again that these are matters of focus, they are matters of close approach between the Board of Trade operating these proposals and the different industries with which they come in contact. I have little doubt that many of them can be smoothed out by wise administrative methods, and probably this Debate will be of very great practical use to the President in showing him how a number of hon. Members are thinking.

May I ask one direct question? We hear that provided a firm complies with the conditions set out in the White Paper and becomes a nucleus firm, it receives certain protection. Can the right hon. Gentleman give an assurance that firms qualifying to be nucleus firms to be protected in this way will not at some period of time themselves be called upon to amalgamate in order to make bigger units? If the test is that a firm has to be working 100 per cent. besides complying with other conditions, to become a nucleus, you may have many more nucleus firms in one industry than efficiency would dictate, or the man-power position of the country would allow to be regarded as wise. Is a firm which becomes a nucleus firm and receives hallmark under this White Paper quite sure that it will not in turn, by a later application of the President's screw, be called upon to amalgamate itself with another nucleus firm? I ask, because there is rather a tendency to believe that if you hurry in and secure a provisional certificate, and class yourself as a nucleus firm, you are franked for the duration of the war. I think there is no such guarantee in the White Paper, and nothing inherent in what the President of the Board of Trade has said, which would justify industrialists in that conclusion. I ask the President of the Board of Trade to direct his mind particularly to that. I have no wish, at this hour, to take this matter further.

I hope the practical administration of the scheme will be increasingly dealt with, as so many Members have asked, by negotiation with the trade organisations and knowledgeable leaders of the industry. I hope that there will be less secrecy, and that there will be more contacts between knowledgeable industrialists and knowledgeable civil servants or knowledgeable members of advisory committees. The country has begun to lose faith in advisory committees. Their recommendations are not always followed by Ministers, notoriously so in the case of the Home Secretary. It is very necessary that we should not be fobbed off by being told there is an admirable Industrial and Export Council, with gentlemen of high repute upon it. We want to know that, opposite that Council, there is a knowledgeable person operating the scheme inside the Government Department, and that there will be the freest possible contact between the two to hammer out details. Impartiality without knowledge is capable of some of the grossest blunders in history. Some of us remember a gentleman of great eminence who forgot the five hours' difference between the stock exchanges of London and of New York. I ask the President of the Board of Trade to give us as much knowledge as he can; and the impartiality can be looked after by the industrialists.

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Tomlinson)

I confess that I woud prefer to have criticised from another seat the scheme which has been outlined. I probably should have been more at home doing so. Yet I have listened to the Debate with interest, because I wondered whether, by some stretch of imagination, somebody, because my right hon. Friend mentioned that I had sat on that all-important committee that I have just heard about, might regard me as one of the captains of industry.

As a representative of the Department of Labour, I was interested in the remarks of my hon. Friend the Member for South Croydon (Sir H. Williams). He employed his usual peaceful style. Some of the remarks he made about the Ministry are worth consideration, and some of the criticisms which he levelled might be answered, perhaps on another day. But the individual who does not see the necessity for withholding the information previously given in the "Ministry of Labour Gazette" is living in a fools' paradise. It ought not to be necessary to point out to men of his calibre that we cannot, as in peace-time, divulge the number of individuals in given occupations signing on at the exchanges during a certain period because of circumstances which have arisen; and to outline the incidence of unemployment in categories which have completely changed since the war began would be to give a false picture of the situation. The hon. Member mentioned half-a-dozen letters which he has received from individuals who have offered their services, and whose services have not been accepted. He suggested that, because of that, there was a great surplus of labour, which the Ministry of Labour was not tapping. The delightful maiden speech of the hon. Member for Northampton (Mr. Summers) answered that point admirably. Because all the people with organising ability have not been accepted at their own valuation, we ought not to keep hearing that there is a great surplus of ability that is available if only the Ministry of Labour will take it.

Mr. Davidson

Is the Minister aware that certain building organisations in Scotland are continually receiving contracts from Government Departments, thus leaving, in the Glasgow area and in Scotland generally, many firms almost completely idle, waiting for contracts?

Mr. Tomlinson

No, Sir, I am not aware of that. I was answering the point that this labour that we are seeking to obtain through the medium of the concentration of industry is available in the places where it is required. If as a consequence of some mismanagement or some mistake a body of men should be available in the North of Scotland, they cannot be of any use to the Minister of Labour who may be anxious to obtain female labour of a particular type in Chorley in Lancashire. Therefore, to pretend to convince the House that an individual case coming from a constituency is an indication of the general position does not seem to be treating the subject with the sincerity it deserves.

Mr. A. Edwards

(Middlesbrough, East) rose—

Mr. Tomlinson

I have only just got up with the object of putting forward what we at the Ministry of Labour are anxious to obtain from this scheme. I promised that I would not be long. There will be another Government speaker, and therefore, in this particular instance, I do not want to be under cross-examination, but on another occasion I shall welcome it. My hon. Friend the Member for Hanley (Mr. A. Hollins), who spoke on the potteries scheme, gave the House some indication of the progress that had been made by that industry, and pointed out some of the difficulties. He referred to the scheme put up to the Ministry of Labour in the hope that, if it were accepted, labour would be released quicker than otherwise would be the case. I have not seen the scheme, but I know that an agreement has been entered into on the part of our divisional officers at Stoke whereby the people who are to be available within the industry can be brought into the labour market even before the scheme is complete, gradually, as they are required, and to that extent I think it will meet the point.

My hon. Friend the Member for Oldham (Mr. Hamilton Kerr) referred to the cotton industry and the difficulties of the position in. that industry. He instanced the fact that we had just held an exhibition in Oldham appealing for married women to come back into the industry. Not only was my hon. Friend the Member for Old-ham at that exhibition, but I was there and made a speech appealing for them to come back. I have had, I might also say, the unfortunate experience of having to ask the same people whom I invited to come into the industry to go on to munitions. I attempted to do it on these grounds. I believe we are bound to do it. What may be looked upon as of paramount importance in one month may, in such circumstances as those with which we are faced, be of much less importance three or four months afterwards. Needs must when the devil drives, and in wartime the devil is driving all the time.

I have heard the criticism against my right hon. Friend the President of the Board of Trade that he ought to have introduced this Measure or a similar Measure earlier. The hon. Member for South Croydon said it ought not to have been introduced at all, and there was another suggestion that it might possibly be about the right time if only there had been some sense in it. It is, of course, utterly impossible to meet all the requirements, and it is a good deal easier to get on paper what is required than it is in actual practice. But I want the House to be assured that so far as one member of that Committee is concerned, there will be no missing the boat in New York because of not understanding at what time the Stock Exchange opened. I was anxious to know what happened to that individual who made a mistake with regard to the times in New York and this country. So far as I, as representing the Ministry, and every other member of that Committee, have attempted to deal with the problem up to now, I can say that there has been the opportunity and desire all the time to meet the requirements of industry, to face up to the situation and to be scrupulously fair. Indeed, I have seen indications of favour to the smaller interests rather than to the large combines.

What do the Ministry of Labour suggest? We suggest that production should be concentrated as far as possible in areas where competing demands on munitions industries are the least severe. Is there anything wrong with that? Is there anything wrong that the Minister should ask, when industry is being concentrated, that those areas where the demand for labour is not great for the munitions industries should be the areas where the concentration for other purposes should take place? I know all the difficulties, that geographically it will not always work out, that we are dependent on machinery and that there will be concentration in areas where there would not be concentration if we could please ourselves. I know that we shall cut across the standards which have been laid down but that will be because we shall be compelled to do so. We have suggested that industry should not be concentrated in small units, but if the machinery happens to be in small units, we shall have to depart from the principle which has been laid down in order to meet the requirements of the situation.

With regard to labour conditions and the adaptability of labour, I should like to assure my hon. Friend the Member for Seaham (Mr. Shinwell) that it is the intention to ask that adapable labour should be released. My hon. Friend the Member for Hanley asked the same question, which was implied in half-a-dozen other speeches. It is the intention that the nucleus firms should utilise the older labour and release younger labour for the munitions industry. All these things have to be taken into consideration, and in addition there is the determining factor that the necessary labour must be obtained for munitions work while unnecessary unemployment is avoided. Of course, my right hon. Friend the Minister of Labour will not encourage unemployment. It is in his interests, when answering questions here, that he should be able to say that people have been absorbed as quickly as possible and that there was synchronisation between the closing down of one factory and the opening of another I know that physical and other difficulties will make it impossible to have complete synchronisation every time, but that is the object at which we aim.

When the areas are set out, the divisional officers will give the people concerned in industry in a given area an opportunity of talking over their difficulties, and will point out where the labour is particularly required and where it is not quite so urgent, and in that way will give all the information available at the area office before they begin to decide definitely which places shall and which places shall not be closed down. The lists will be subject to revision from time to time as the situation develops. A question has been asked as to whether a firm that gets in now on a provisional certificate is earmarked as a nucleus firm for all time. My reply is that, in my judgment at any rate, the situation in regard to that aspect of the matter is exactly the same as was the situation some months ago in regard to cotton. At that time we thought it was absolutely essential. If a particular industry becomes less essential in a month's time, I hope we shall have the good sense further to concentrate, if necessary, in order to achieve our object.

As to the transference of workers from one district to another, all questions concerning billeting are in hand in exactly the same way as in the case of munitions workers. The difficulties with regard to married women in Lancashire and the possibility of their transfer, to which reference has been made, are matters which are vitally concerned in the steps that are being taken now. We are anxious that wherever possible the concentration shall lead to the release of labour in districts where it can be used in order to avoid the necessity of providing billets or money in lieu of lodging. This is a difficult task, but I believe that with good will and co-operation it will not be beyond the realms of possibility to effect the transfer of labour from one industry to another with a minimum of inconvenience. I believe that transfers have to be made. The change must take place, whether we desire it or not; and, therefore, the need for co-operation is urgent.

Mr. Hamilton Kerr

Will there be any travelling allowances for workers?

Mr. Tomlinson

Yes; where workers are called upon to move from one place to another, the same travelling facilities will be available as are at present available to munitions workers. I believe that Members in their constituencies can help a great deal in this matter by smoothing the way for what will not be an easy task; and in doing this I believe they will be carrying out in the highest sense a patriotic duty, and one which their position as Members of Parliament compels them to fulfil.

Mr. Richards (Wrexham)

My hon. Friend the Joint Parliamentary Secretary has done a great deal to clear the minds of some of us on certain questions, but it seems to me still that the right hon. Gentleman the President of the Board of Trade was hardly conscious of the fact that, in making his proposals, he was introducing a revolutionary Measure. I think hon. Members in every quarter of the House are agreed that something of this kind is necessary. We are all agreed on the principle that this is not the time to waste material, capital or labour, and that the time has come when we must take definite steps to co-ordinate these factors with a view to increasing production. The criticism has been that we have been too long in transferring industry to a war basis. I should like to refer to the contrast between this country and Germany. Germany has been boasting, and boasting truthfully for once, that she was able, at once, on the outbreak of war to change over from a peace basis to a war basis. Of course, that is not quite true, because Germany was working on what is known as a four-year plan, and that plan was war economy in a peace guise—it was the old case of the wolf in sheep's clothing. Consequently it was easy for industry to be transferred to what they call war economy. They go further than that, and say that the arrangement was so perfect that when Poland fell—which was not expected at that time—they were able to restrict the conditions they had placed on industry prior to that event. That is a very remarkable fact, that Germany had organised industry, even before the war, to such an extent that she was able to slacken the pace somewhat after the fall of Poland.

As far as I understand the White Paper and the speeches which we have heard to-day, it seems to me that there are three kinds of industries involved in this proposal. First of all there are the war industries—those engaged in war production; secondly, there are the industries engaged in export-trade and, thirdly, there are the industries engaged in providing for the needs of the consumers at home. I presume that the third class will be considerably reduced. I should like to ask the President of the Board of Trade —because it does not appear to be clear from the White Paper, or from the speeches we have heard to-day—whether this concentration applies to all three industries. Are those industries already engaged on war work to be grouped together and nucleated in the same way as those industries engaged in production to meet the needs of the consumers at home? Is this to apply to industries which are working for foreign markets? A great deal of emphasis has been laid by some speakers on the fact that concentration on the export industry will give us an opportunity of aligning our export-trade along entirely new lines. If concentration is not to apply to the first two classes of industries, I do not see that we are going to gain anything from that point of view.

Another thing that we must remember—and it makes the task of the President of the Board of Trade more difficult—is that industry in Germany is organised on a war economy basis, that is to say, the war industries are the first concern of the country, and the consumer gets only the surplus distributable produce which is left over. There is a fundamental difference between the economies of the two nations in that respect. We ought to keep that difference very clearly in mind, because it seems to me that it is one of the things for which we are fighting. We are fighting, not to make the military machine "top dog" in this country, but primarily for the interest of the ordinary consumer. That, as I have suggested, makes the problem of the President of the Board of Trade more difficult because in some way he has to dovetail the one into the other.

Coming to the method of concentration, I am afraid that most of the criticism to-day has centred upon the actual way in which concentration is to be brought about. I think there is a great deal of feeling in the House about allowing an individual firm—as we are doing if I understand the White Paper aright— in some way or other to persuade, or bring pressure to bear upon other firms to concentrate. When a firm succeeds in doing this, it gets very considerable advantages in the way of guaranteed labour power, guaranteed raw supplies and a guarantee, more or less, that its labour power will not be taken from it. I want to know whether any firm in any particular industry which is actually working full time, or Very nearly full time, can claim to become a nucleus firm, because if so, that gives it very considerable power. We learn that the nucleus firm must see to it that the other firms are completely closed down. For one competitive firm to have that kind of control and right over other firms seems to me to give a very formidable opportunity for exercising power that perhaps such a firm ought not to exercise. I hope the Committee of which my hon. Friend is a member will keep a careful eye on this very question because I think it is a most important one.

I rather agree with my hon. Friend the Member for Seaham (Mr. Shinwell) that, when you are transferring over—because that is what we are doing and this is the end of laissez-faire, whether we like it or not—it ought to be done only by the Government; at any rate that very careful regard should be had to the interests of the people who are being displaced from industry. Here, again, it is interesting to note that Germany has stolen a march upon us. She has done this thing from the very beginning. Germany's war work is concentrated in certain factories which get the best equipment, and all the expert labour and have a first claim upon raw materials. With regard to the firms that are closed down, I am sorry to say that our. Government is behind the Government in Germany in this respect. The German Government gives a subsidy to assist the firms that are closed down, but a difficulty has arisen. Its distribution is entrusted to the nucleus firm—to use the term that we have in this country—and there is a great deal of dissatisfaction. Another point is this. They say that the subsidy is not to be regarded as a grant. It is merely a loan which the firm is expected to repay when the war is over because, they remark, it is time that some of these firms ate into their reserve capital, and the reserve capital, I presume, will be used, eventually, to repay the Government loan. There is another thing—here they are rather more frank than the President has been with us. They say that certain of these firms have been closed down because they were inefficient and that there is no prospect of an inefficient firm being allowed to function again when the war is over. We may learn something from these suggestions, although we are not very willing nowadays to learn anything from Germany because she is an inveterate enemy, but it is as well we should know her ways, and where we think they are good I think we should emulate them.

The difficult question of compensation is causing a lot of heart-burning among Members generally. A small firm which may be very efficient may have to disappear under the stress of the proposals now before us. Will it be compensated? It is obvious, as the President said, that the nucleus firm will reap considerable advantages. Its competitors will have been removed, it will have no difficulty with labour or raw material and if it is to be more efficient—and that is the crux of the whole matter, otherwise there is no point in concentration—there will be increased profits. I suggest that these increased profits, which could be estimated easily in comparison with what the firm was doing before, should go to some central pool. I do not see any provision for that in the scheme. Ought there not to be a national pool for the different industries? It would not be fair to have a local pool, because the circumstances vary so much, but if there were a national pool for each industry it should be the duty of the nucleus firm) having these advantages, to put the surplus that it is making to a reserve with which to compensate the firms that have had to go out of production. I do not know whether the President of the Board of Trade will spend any sleepless nights considering all the difficulties to which he has been driven, perhaps by circumstances, but, at any rate, I think he should feel certain that he has the full support of the House provided he does this thing courageously, as we expect him to do it, and does it with as large a measure of equity as he can command.

Mr. Sutcliffe (Royton)

I am sure that the House and the country will welcome the further details about his plans which were set out so carefully to-day by my right hon. Friend the President of the Board of Trade, because every part of the country and every industry will be affected one way or another by plans of such a far-reaching nature. I was especially pleased to hear him say that the Government have no plans for the permanent contraction of industry and that this is purely a war measure, although the results may extend over some years into the peace period. In fact, what is to be done under the scheme cannot be undone at a stroke and is bound to go for some years. There are many industries which will never be able to go back to their old pre-war methods and there are many people who welcome that prospect—not only those who want the nationalisation of industry, but others, such as the chairman of the Cotton Board, who think that this is an opportunity for a long-wanted reorganisation of the cotton trade in the hope that we shall never return to the bad old ways. A good many of us have said for years that the cotton trade wanted a great measure of reorganisation all through, but let us make sure before we take any such step that we have something as good, or if possible, better, to put in its place in the post-war period. It certainly needs bringing up to date.

The old method, however, even in the cotton industry, did deliver the goods. On the export side, this is shown by the fact that in the 11 months ending November, 1940, our exports of cotton piece goods amounted to nearly 919,000,000 square yards, only 3,500,000 square yards less than in the corresponding 11 months of 1939. For the month of November, 1940, exports of piece goods at over 47,000,000 square yards showed an increase of more than 2,000,000 square yards upon the figures for the preceding month of October. I regard that as no small effort at this time, the war having reached such a critical period towards the end of last year. It does show that even in these most difficult days the cotton industry is still able to play a great part in the export trade, thereby helping us to obtain the credits which are so necessary.

I wish to say a few words on the export trade, with which I shall mostly concern myself in this Debate. My hon. Friend the Joint Parliamentary Secretary, whom we in the North are all so pleased to see elevated to the Front Bench, has already answered many of the points raised about the cotton industry, but there are one or two questions concerning the export trade which have not been referred to at all and on which we want much more information. I do not think we have been told how these plans will affect the export trade, or how much restriction will be placed upon it. Much has been said about the home trade, but, after all, it will be easy to regain the home trade after the war, because there will be a greater shortage of every commodity in this country than, I suppose, there has ever been before. But the position in the export trade will be very different, and therefore I would urge that the Government should not be too drastic in its plans affecting that side of the industry, and should not put into force more restrictions than are absolutely necessary, because we cannot think wholly of the war period, though I know it is vital at the moment, but have to think also of the peace period and the difficulties of foreign trade after the war. We all know the great difficulties there were after the last war. The leading article in the "Times" of Tuesday, which has already been referred to, said: While it is recognised that the requirements of the war are paramount the welfare of industry after the war must be clearly in mind. Industry and employment must be there for the workpeople who will want to return. There is need to beware lest wartime measures should impose on industry a rigidity not suited to conditions after the war. That should be kept very much in mind. We are rather in danger of forgetting there will ever be an "after the war" period. After all, it will be some little time before these plans are in operation, and the most critical period of the war will be now and during the next few weeks or the next few months at most. It may be a few months before these plans are anything like in operation, and unless we are very quick we shall do, I would almost say more harm than good to our trade after the war, though I do not minimise the need for drastic restrictions on account of our shipping position and the need for labour for munitions and other important work.

Mention has been made of the reversal of policy, but my hon. Friend the Member for Farnworth (Mr. Tomlinson) has explained how it arose. There was the holding of the cotton exhibition and his tour around Lancashire some few weeks ago trying to get women back into the mills. The same thing has happened with the export trade. There is a tremendous drive at the present time for the South American market, and we have been sending out most attractive designs for frocks and dresses of every sort. That has been done regardless of expense. I suppose there has never been such an effort to capture that market. On the other hand, if we are to be restricted, how are we to keep that market? The present campaign seems a waste of time and effort.

A booklet has been sent out recently to 14,000 buyers in 70 countries. That is a very creditable performance on the part of the Cotton Board, but I am afraid it is too late. It should have been done some time ago. I wish it could have been done in peace-time, but the Cotton Board was not then in operation. Inquiries are coming forward at a great rate as a result of the booklet, and little or no indication is given that the inquirers think there may be restriction of supplies. Great efforts have been made in Java to increase our trade. I read yesterday in the "Manchester Guardian" that Java and South America are particularly persistent in their efforts to secure supplies from this country. By air mail and cable orders are coming in almost hourly, from the Fiji Islands, Dutch Guiana, Montreal, Southern Rhodesia and British Columbia, to mention only a few places far apart from one another. It seems an awful pity, in the circumstances, that we may not be able to take anything like full advantage of the orders that are pouring in in far great numbers than for many years. I urge the President of the Board of Trade to do all he can to lessen the restrictions and to make as few restrictions as possible, in view of the policy which the Cotton Board is now carrying out.

We were told by the President of the Board of Trade that he was considering plans for restricting wholesale and retail trade. What about restricting the banks? Some banks have six or eight branches in one city or town, and I think there is room for some restriction. The banks will not have anything like the same business left when all the other restrictions are in force. Then there is the question of the workers. The greatest care is needed in transferring workers in order to avoid hardship and the breaking-up of homes. In many cases, elder married women will cease to work at all, if their husbands are removed to another town to work. The wives will stay at home, while their husbands, incidentally, will be earning more money on munitions. Therefore, in such cases you will have only one worker instead of two workers, and that will not increase production.

That is a point which needs watching. Many will not want to leave old friends and associations of a life-time or half a life-time. To avoid this situation, I sug- gest that workers be placed, so to speak, on block lines, if possible, so that a whole community of workers who have lived and worked together and who know each other should be able to settle and form another community in the new district. In such a case they would be ready collectively to face any conditions which would arise. Otherwise, to move individuals may in many cases easily have unfortunate results. When specific mills are chosen to carry on because of their efficiency and capacity, regard should be had for the welfare provision for the workers in those works because it is a well-known fact that a factory which is the most efficient in production is not necessarily also the most efficient in regard to raising the level of welfare for the workers.

On the questions of compensation and of the profit pool, a good deal more information is necessary. No doubt this will be forthcoming before long. We need a lot more information on this very vital point. The Minister told us that the assessment for compensation will be made on a spindles basis. It seems that in many cases that will operate unfairly, and there will be many anomalies. I think the Government might do worse than adopt the principle which has been adopted in the War Damage Act, and add a substantial amount to the pool for subdivision. Whether that is possible I do not know, but this suggestion of basing the compensation on the spindles wants very serious consideration before it is finally adopted. It may be that a danger of the extinction of smaller firms will be brought about by financial pressure from creditors, and that is a point which the Board of Trade will have to watch. It must not be possible for mortgagees or banks or others to step in and, by making their claims, compel a small firm which is not financially well off to join a group or else go out and be finally extinguished for ever. Such a position must be made impossible, or else many of these small firms will be sold out and will not find it possible to revive. If firms which are allowed to carry on make greater profits as prices rise, these should not be payable in dividends but should be payable to the compensation pools to help those which are shut down. We must also watch against a rise in prices to the consumer, who will need protection. The question of the Excess Profits Tax also arises, and surely that will not be levied upon payments made to the pool. I believe that the President in his speech did refer to that point and said that such payments would not be taxed as profits.

There is one more point, and that is on machinery. Let us take care of this most valuable machinery—Iam speaking at the moment only of the cotton industry, but it applies to every industry—because if it is to be of any use at all in the post-war period, it must not be thrown into the corner of some disused mill, which, I think, has rather been suggested. In the case of cotton machinery, at any rate, it cannot be kept in an efficient condition, or a condition in which it is ever likely to be efficient again, unless it is kept in a heated atmosphere. It cannot just be put in a corner where the weather can get to it and allowed to get damp. It will either have to be property stored or left where it is in a heated place. That is a very vital point. As we all know, we can do nothing but agree—we have no alternative but to agree—to the plans which have been laid before us more fully today. But I hope the Government will give every possible guidance and help to industry, because so far industry seems to have been left very much to itself to decide what it is going to do. That is all very well up to a point, but we need very definite help and guidance now that the plans are beginning to be formulated. Do not let us merely have a general order and leave industry to get on with it. I think I can say without hesitation that there was never a time when Government advice was more necessary than it is now, and I trust it will be forthcoming, and forthcoming at the right moment.

Sir George Schuster (Walsall)

I understand that the principle on which this Debate is being conducted is the precise opposite of that of the scheme which we are discussing. Time is a very limited factor and we are dispersing it among as many Members as possible. I, therefore, presume that the "limitation of supply" in this case restricts us to 25 per cent. of what we should otherwise say, although no doubt the President of the Board of Trade himself is entitled to make a nucleus speech. Indeed, I think his speech, on which I should like to congratulate him, might qualify for that description because he concentrated about 100 per cent. of interesting matter into it. Obviously anyhow, one must be brief, and I want to take up only a few of the points that have been raised in the course of to-day's Debate, and then to deal with one consideration of a more general character.

The President of the Board of Trade has told us that the essence of his plan is really elasticity, and I want to put to him one of the points raised by the hon. Member for Hanley (Mr. A. Hollins). If I understood him aright, he said that in the case of the potteries industry a scheme had been drawn up which would in fact have achieved all the objects which the Board of Trade desires to achieve, but because it did not succeed in concentrating all the work in one concern to be employed 100 per cent. it was not approved. Probably that is a slight exaggeration of the actual position, but I should like to have an assurance from my right hon. Friend that his own principle of elasticity will be allowed to operate as far as possible, for there are some phrases in the White Paper which frighten one with their suggestion of rigidity. I am sure, for example, that it cannot be possible to insist on 100 per cent. capacity operation in each particular case. I am raising this matter because I think in the case of a number of small miscellaneous industries it may be possible to get groups together which would agree to co-operate and adapt themselves to any variations there may be in the availability of supplies. If they were allowed elasticity to produce results, and if there is not to be an insistence on a particular type of scheme in all cases, I think it would be greatly to the advantage of everybody concerned. I hope, therefore, it will be possible to have some sort of assurance from the Government that they themselves will observe their own principle of elasticity.

Turning to another point, I understood my right hon. Friend to say that some sort of concentration in the distributive trades might eventually be necessary, but that the ground was uncharted, and that it was impossible to contemplate any complete scheme like that introduced for manufacturing industry. But it is quite possible to get into touch with representative organisations in the distributive industries. If there is any question as to whether the present Measure affecting manufacturing industry has been intro- duced too late or too early, I would say that it could, at least, have been announced earlier, so that people might have had more time to consider their plans. Therefore, if anything is to be done for the distributive trades, I hope that my right hon. Friend will try to get in touch with representative organisations, so that the people concerned may consider their plans in advance.

If I have understood the position aright, it is no use attempting to discuss details of schemes in particular industries now, because my right hon. Friend proposes to go seriatim through the various industries, allowing them as much latitude as possible to work out schemes, and then to deal with each industry according to the conditions of that industry. We have to wait and see how this proposal works out, and if we have any points of detail to raise, or any questions to ask about particular industries, it is for us to go to the Board of Trade and ask for guidance, which we may pass on in our constituencies. Personally, I have found the Board of Trade extremely helpful, and anxious to give information. I agree with what has been said, that one of the functions which Members ought to perform is that of getting points interpreted in this way, and of passing on the explanations in their constituencies.

Now, I can quite understand that in the case of well-defined homogeneous industries it will be possible to cover them in this way, and to draw up fairly effective schemes, but I wish to point out that there is a large class of manufacturing industries which, as my right hon. Friend the Member for Luton (Mr. Burgin) said, is not indexed in any way, or organised in associations. Dealing with that miscellaneous field of smaller concerns seems to me to present difficulties. In that connection I want to ask for two things. I want to ask my right hon. Friend to make it known that the Board of Trade will be glad to make the greatest possible use of chambers of commerce in matters of this kind. Very often, a chamber of commerce can be used to get into touch with these smaller miscellaneous industries. My second request is this. As my right hon. Friend goes, step by step, through the various industries, he, or his Export and Industrial Council, can gain a great deal of experience; various schemes will be suggested, new ideas will come into being; and it would be of the greatest value if information and hints on these matters could be passed on to chambers of commerce or to Members representing industrial constituencies.

I want to endorse a great deal that has been said about the need for giving guidance to industry. It is difficult, particularly in the case of the smaller people, to understand precisely what is proposed. I hope my right hon. Friend, and all those who are working with him, will be very patient and considerate of the difficulties felt by people working in provincial centres, and will do their utmost to help them; and that they will not merely wait for these people to come and ask, but will on their own initiative offer constructive help.

There is one other point to which I want to refer in connection with the terms of the scheme. It raises a very much wider issue—and one which has been touched upon by my hon. Friend the Member for Seaham (Mr. Shin well). It is the question as to whether this scheme is likely to lead to the creation of monopolies. I will not attempt to follow on the wider issue now, but wish to make the point that, in considering what industries shall be grouped together in a particular nucleus scheme, some consideration shall be given not merely to the points of immediate importance that are mentioned in the White Paper but also to what is likely to be the future pattern of the organisation of the particular industry. It would be disastrous if the result of this plan was to lead to unbalanced concentrations of concerns in a particular industry. The scheme must undoubtedly lead to the permanent grouping of industries into a smaller number of larger units, but we want to see that these larger units are as well-balanced as possible. That point should be borne in mind.

I was very glad to hear what my right hon. Friend said about the assurance which the Chancellor of the Exchequer had given him on the matter of taxation. It is a point which I had intended to raise myself, because although I see the difficulty of making any promises as regards financial arrangements, there is a great deal the Government can do to help these schemes by seeing that taxation provisions are interpreted in a way that it will make it easier for the nucleus firms to give out compensation.

I turn from these special points to a wider issue, and in this connection I for one am grateful to my hon. Friend the Member for Seaham for having called the attention of the House to the extreme importance of the issues that are raised in this Measure. We are ranging in our Debate to-day over a field which covers both immediate war issues and post-war issues. We cannot keep these things separate, and more than that, we will be failing to take advantage of a great opportunity if we try to keep them separate. We have now a tremendous opportunity. In the heat of war the general economic framework is malleable in a way it is not in normal times. There is an opportunity in war with the general influence of the emergency on people's minds, with their readiness to put aside their private interests and to work for the public purpose, to break down resistances and lesions which exist in peace-time and to open the way perhaps to better arrangements. There is an opportunity in war, when, as I have said, the general framework of the economic machine is malleable to mould that machine into a pattern which will satisfy the post-war need. That opportunity ought not to be lost. Therefore, it is a very great mistake to try to divide these war and post-war issues into watertight compartments.

There is a tendency to say that anyone who seeks to look ahead to post-war issues is unbusinesslike, is an idealist and has his head in the clouds, and that what we need to do is to keep our feet on the ground. Of course, we must keep our feet on the ground, but at the same time we must have our heads high enough to see where we are going. In this particular Measure I see one of these great opportunities. It would not be suitable at this stage of a long Debate to enter into an argument about what the future order of our society or economic structure is to be.

The President of the Board of Trade in his speech deprecated anything like what he described as a doctrinaire framework for the future. I do not want to suggest anything of the kind but I do suggest strongly that if we keep our eyes entirely away from the future we shall be losing great opportunities. I believe I could carry my right hon. Friend with me up to this point: That although none of us would wish to specify what he described as a doctrinaire framework for the future one thing which is absolutely certain is that society will henceforth demand that those who are engaged in private business should take a wider conception of the public duties which are put upon them in carrying out their activities; that no man in private business can regard himself as merely interested in his private profits but must accept the fact that he is also carrying a responsibility to work for certain public purposes. An appreciation of that is something which is being felt with ever-increasing force, and this increase will continue.

If this view is accepted, then if private industry is to maintain its position, if it is to be allowed to continue, it must so organise itself that it is able to operate not only for its own ends but in a way which contributes to the State's plans and public purposes. If that objective is to be reached links are needed between private industry and the Government which must be better than they have been in the past. What in fact we need in our economic machine is something by which the public purposes of the Government can get into gear with private industry. It private industry is to play its part in achieving that result it must organise itself into manageable units, with which the Government can get into gear. Here, in this Measure, we have the opportunity to start private industry in that direction.

We have heard a lot to-day about what the Government ought to do but I think something should be said to leaders of private industry on what they should do in these matters. Hitherto, there have been certain business organisations, federations, or associations—whatever they may be called—for particular industries. Some are effective and some are not; but no one who knows industry can fail to agree that the general tendency has been that the most efficient firms regard these organisations and associations as something which they do not need to take very seriously. The best concerns are inclined to say, "What can the federation or association do for us? We can get on much better by ourselves." That attitude will not do. I think an appeal must go out to private industry that they must back their own organisations and associations, put on them the best men that they can get so that there can be produced representative bodies which can speak with authority and constructive ability to the Government and which will see that all the experience of the industry is made available for useful purposes, as a guide for policy and as a source of information to the public, so that there may be fuller knowledge on all the country's economic activities. Speaking generally, I must repeat that I do not believe that private industry has yet lived up to its responsibility in these matters. And now when the Government says we must effect this concentration which involves a new form of organisation and co-operation between numbers of different firms, there is a very great opportunity which may be fruitful and of vast advantage to the country in the future. We shall fail in using that opportunity, and private industry itself may fail to get fair treatment if it does not itself organise well the bodies with which the Government can get into touch.

Before I leave this point, I wish to say that I hope the Government will consider giving an opportunity for the discussion of the wider aspects that are involved in this Measure. We none of us want to be impractical idealists, but the country needs to know that the Government are taking account of the wider implications of what they are doing now, and although it may not expect to see a blue-print of what will be produced in the future, it wants to know that those who are directing current policy are also devoting their thoughts to what will be required in the future, and are saying to themselves all the time "While we are fighting this war we mean to take advantage of the opportunities that war gives us to mould our economic structure aright and to build up a social order that will be worth fighting for."

Mr. Hammersley (Willesden, East)

The hon. Gentleman the Joint Parliamentary Secretary to the Ministry of Labour and National Service, whose elevation to the Front Bench is generally welcomed in the House, has replied to a portion of the Debate, and I should like to take this opportunity of congratulating him on his excellent reply to that part of the Debate. I do not want now to discuss the wide and general principles involved in the proposals for the concentration of industry. Many months ago a large number of people interested in industry came to the inevitable conclusion that it was impossible for this country effectively to prosecute the war while maintaining the production of unessental commodities and partial work on the manufacture of munitions. Whether we like or whether we dislike the principle, the plain fact is that the acceptance of a measure of this sort is quite inevitable. We must accept it because forces greater than we can resist are in command of the vessel. Therefore, my remarks will not be directed to the principle, but to the application of the principle.

We can only know what has been stated by the Government—by the President of the Board of Trade, and in the explanatory Memorandum. One of our chief difficulties lies in the vagueness of the information that has been given to us. It is true that the President of the Board of Trade has described the proposals as being flexible, and while one realises the importance of flexibility, certain guiding principles should be laid down, those guiding principles, for example, being that there should be no unfairness and that there should or should not be compensation. Implicit in everything that has been said on behalf of the Government has been the fact that grave unfairness is caused. It is inherent in the proposals that certain people can be put out of business owing to circumstances over which they have no control, and can be put out of business without receiving any compensation whatever. Of course, such an action can be justified in the national interest, and an appeal to the national interest is one which we must all regard. But inequitable treatment destroys morale. It was Napoleon who said that in war morale is to material as three is to one, and it is important that the President should not do more harm to the national purpose by destroying people's businesses than Hitler is doing by bombing them out of their homes.

On the practical application of these proposals, I am glad to be able to say, from my own private knowledge of industries with which I am concerned, that it is not quite so difficult and not quite so inequitable as one might be led to believe. I think the most useful contribution I can make to this Debate is to examine how some of the industries with which I am directly connected will fare. I should like to do that in the light of what appear to be four essential tests. My first test, which I think is the most important, is the test which the Government have applied: Does it or does it not further the war effort? That is the most important matter. Second, is it fair and equitable as between those who are stopped and those who carry on? Third, will it help and not hinder post-war development, and particularly will it assist the export trade? Four, does it provide that there shall be no exploitation of the consumer?

In this Debate a great deal has been said about the cotton trade, and I rather apologise for returning to it, but it happens that I am engaged in the cotton-spinning industry and do know the proposals and do know what is to be done. I think that the method of the Memorandum, which I feel is not unfairly translated as being "to cajole the first-comers and coerce the laggards," would, if it were applied to the cotton-spinning trade, cause great inequalities and injustices, but I must congratulate the President of the Board of Trade, as regards this particular industry of which I have precise and practical knowledge, on not applying the methods which appear to be indicated in the Memorandum, not applying methods which he himself says are the best methods, because the scheme does apply to the trade as a whole, and it does involve compensation. Running spindles are to be levied to assist the spindles that are stopped.

In the light of those four tests, I must say that the scheme for the cotton-spinning industry does definitely assist the war effort, does ensure the release of labour in munitions areas where labour is most urgently required, and does provide for mills working where such mills are not in a munitions area and where they are at present engaged 100 per cent. on the manufacture of material required for war purposes. Therefore, on the first point, this particular practical scheme gets full marks. On the point of fairness, it seems almost inevitable that the geographical position of mills will determine whether or not they are closed down. Therefore, both the workers and the employers are subject to some kind of unfair application, but it is not completely unfair, because there is the compensation scheme, and it will be on such a basis, as I understand it, as will provide means for keeping a mill in such a condition that it can return to production after the war.

Therefore, I award it half marks on the ground of fairness. It will undoubtedly help the organisation of the export trade. The machinery will be more rather than less effective in relation to exports, and the whole of the organisation for post-war development will probably be in a healthier condition. Therefore I have no hesitation in giving one full mark under that head. I think it can be said that there is some protection for the consumer. There is a situation existing in the cotton-spinning trade whereby the margin between the price of raw cotton and the price at which the finished yarn is sold is fixed by the Controller. Those prices will still be fixed, but I should like to suggest that the Controller might very well have some kind of advisory panel on which would be represented the opinion of the merchants and the manufacturers who are consumers of the cotton yarn. A very strict examiner might say three-quarters of a mark, but a lenient one would say one mark, and I am in the latter category. So the President's scheme, out of a possible four marks, gets 3¾Lest he should be too satisfied, let me say that it results mainly from a departure from his own scheme.

I should like to make one or two remarks on the rayon industry, without suggesting that I should here endeavour to mark the paper, particularly having in view the fact that the rayon scheme has not yet been agreed upon. Here the great danger in respect to the scheme which may finally come into operation is the possibility that it will injure post-war development and injure the position of the consumer. That could very well take place through the whole industry being in the hands of one huge combine. At present 80 per cent. of the productive capacity of the industry is in the hands of two firms. The President said that none of these proposals envisaged the permanent closing down of any particular industry. I would put to him for special consideration the case of the smaller firms. Owing to shortage of supply, they are already reduced to about 60 to 70 per cent. of production. It is impossible for any of these smaller concerns to reduce their production any more. If they should reduce it below 60 per cent., they had better close down entirely. If any one of them closes down entirely, it is closed down for ever. There is no possibility of starting up again. The scientific advance is so great, the depreciation of machinery would be so rapid, that that particular concern would be out of existence. Therefore I suggest that there is a case for concentrating production in the two large manufacturers who control 80 per cent of the industry, leaving the small independent producers to carry on, in order that they should remain in a position of competition when the war is over. I think that is the more reasonable when one realises the very small contribution to man-power which the closing down of those independent producers would cause.

There is a third section of the industry, consisting of the miscellaneous trades making unessential goods. Manufacturers in those trades have long recognised that their activities are not in line with the war effort. The far-seeing among them have switched over to war work, and a number of them are now not only on what may be described as 100 per cent. production, but, having regard to the war work which they have taken on, they are turning over at a quota of efficiency which was never previously appreciated. The position of those concerns is vulnerable. Unless they get continuity of orders from Government Departments, they lose both their civilian orders and their Government work. I would suggest that if such firms obtain the status of nucleus concerns, as I believe they are entitled to do, the Ministries giving orders to them should be informed by the Board of Trade in order that continuity of work may be obtained by them.

I have purposely not dealt with the generality of the scheme, but I have dealt with three particularities which I think are of practical importance. I think that the scheme in general is one to which industry has to adapt itself. It is the duty of the House to endeavour to assist the President of the Board to see that fairness is brought into the scheme as much as possible. If that is borne in mind and everybody plays his part, we shall do something very considerably to increase our war effort.

Mr. G. Strauss (Lambeth, North)

May I also open my speech by congratulating the Parliamentary Secretary to the Ministry of Labour for the most able, well-reasoned and vigorous speech which he delivered to the House and which gave us all very considerable pleasure? I agree, like everybody else, that some such scheme as this is absolutely necessary, and it would be waste of time to argue that case. I only hope that the scheme will be adopted and put into operation as quickly and as easily as possible. I rather fear that in some industries there may be some delays and difficulties. Most of the difficulties in the application of the scheme will arise from the present structure of industry and because it is on a private competitive basis; and because the actual managers and technicians, as well as the owners and directors of industries, are particularly concerned about the industry in which they are working and which is their livelihood. They are particularly interested in the future of their own industries. That is natural, and one cannot complain about it, but that will be the main cause of the difficulties in this scheme. If these conditions did not exist and industries were under some form of national ownership, the scheme would be very easy.

I rose to speak about the dilemma in which the President seems to be with regard to the future of the industries which are to be concentrated. He said when he first announced the scheme that it was the intention of the Government to see that those industries which were temporarily displaced should, as soon as possible after the war, be set going again and that every facility would be given by the Government for that purpose. That is all very well, and I take it that that half-promise was made in order to facilitate the working of the scheme so that those connected with any particular industry might be more ready to give up their rights or positions or interests during the war if they could be assured that after the war they would go back into those industries which would then be reopened. That promise may be appreciated by some people, but it is not appreciated by others, because it is very doubtful whether all these industries should be reopened, and, if they are, whether they should be opened as independent units as they were in the past.

Therefore the President of the Board of Trade has been in a dilemma. He has made a promise which is appreciated by those managers and directors of industry who believe they will benefit, although I am doubtful whether many believe, having made this omelet, it can be "unscrambled" again and all the eggs put back as separate units. Anyone who watches the tendency of industry must see that it is towards concentration, not just during the war, but permanently, under big control and in some form of monopoly. I think that the man who sees his factory closed under this scheme, whether he is worker, manager, or director, does not really believe there is any likelihood of it being reopened as the same sort of concern as it was before. It may be—and I ask the President of the Board of Trade to bear in mind the social undesirability of such a thing—that these units, which are placed in the wrong parts of the country, may open again, when there are a thousand-and-one reasons why they should not be reopened. I hope in any future declaration he makes in this connection he will bear that point in mind.

I wish to make this further point which rather follows from what was said by the hon. Member for Seaham (Mr. Shinwell). I think that the proposals put forward by the Government are incomplete, in so far as they say so little about the future. I believe that the man who is displaced should feel that he is being fairly treated whatever his position may be, and that if he has to undergo some sacrifice during the war his position afterwards should be secure. A much more definite pronouncement of Government policy should be made in connection with the future of industry under this scheme. As has been said, this is a most important measure. It alters the whole character of industry, and affords a great opportunity for putting industry on a sound footing. There is also the danger of it putting industry on a bad footing. It is clear that it contains enormous possibilities for good, and also enormous possibilities for evil. Several things may happen, and it is on these possibilities that we should have a future Government pronouncement.

As a result of this measure, whatever promises are made, there may develop a monopoly capitalism that would be disastrous because of the very serious social consequences which would flow from it. On the other hand, we may go back, if we follow literally the indications given by the President of the Board of Trade in his speech, to the laisser faire industry which existed before the war. We shall then be in exactly the same position as we were in before. That would be equally disastrous, and I hope there will be some clear indication by the Government that neither of those two things will happen. If they do, we shall again be faced with the serious difficulty of booms and slumps. There is this further point. That man whose position in industry is not usually considered sufficiently—the technician, the manager, and the administrator—if he sees that after the war the industry in which he has earned his livelihood, but in which he can no longer earn his livelihood, is developing into a monopoly, then the first Fascist movement which comes along posing as a champion of the small man against the monopolists will recruit him in tens and maybe hundreds of thousands. That is what we have to keep in mind.

I should like to have it made clear by the Government that a monopoly capitalism will not be established, whatever happens, and that we are not to go back to laisser faire. I do not know whether this Government would go so far as to say that the welfare of the major industries will be made a national responsibility. Such units as are thought desirable should be reopened in such places as are desirable, and prices of goods should be under some form of national control. I hope it will be made clear by the Government that those things will be done, and that every man in industry worth his salt, whether workman, manager, administrator or engineer, who can contribute usefully to that industry, will either be employed or will be fully compensated. If the Government could make some statement of that sort—there seems no reason why they should not—I believe they would find it far easier to operate the scheme. They would get it working much more quickly, with far less opposition. The people of this country would know that all the talk they hear, the perorations on Sunday evening on the wireless, about the building-up of a new order after the war was not just words, but that this scheme, accompanied by an announcement from the Government of their industrial plans after the war, would be laying in actual fact the foundations of such a new social order.

The Parliamentary Secretary to the Board of Trade (Captain Waterhouse)

In the earlier part of the Debate the hon. Member for South Croydon (Sir H. Williams) made a speech which he admitted was of some violence and vigour. I do not think the House looks as though it wanted to attack this policy with violence and vigour, and we have no reason to be dissatisfied with the way in which our proposals have been met. We said from the very first that these proposals were set out only in broad outline, because we hoped and expected that the industries themselves would fill in many blanks and details. I know that the House will not wish me to go over in detail ground which was so lucidly covered by my right hon. Friend, but it may be worth while to deal with one or two points, and especially to put this proposal into what I consider to be its proper place in the framework of industrial policy.

Both the hon. Member for Oldham (Mr. Hamilton Kerr) and the hon. and learned Member for Bolton (Sir C. Entwistle) claimed in different ways that there had been a confusion of orders. They expressed surprise that an earlier announcement had not been made and that this development was apparently not planned in advance. In making that criticism, they both forgot, I think, that this is not the first but the fourth or fifth of a series of orders and schemes which-have been produced since the war began. The first was the raw materials control of September, 1939, about the same time as the Import Prohibition Orders were introduced. Those two measures dealt with raw materials on the one hand and with imports of manufactured goods on the other; the latter was designed largely to safeguard our resources of foreign currency. At that time, neither shipping nor labour had become our main consideration. It has often been argued in this House that before the present Government took office little thought had been given to any preparations for the war. Therefore, it is interesting to note that these two important provisions were planned and ready in the pigeon-holes of the Board of Trade before the outbreak of war and that within a few days of the outbreak of war they were laid on the Table of this House.

The second stage was reached in the Limitation of Supplies Order introduced in April last year which dealt with the great textile trades—cotton, rayon and linen—and which was designed largely to encourage the industry to devote themselves primarily to the export trade and Government orders. The third stage was the Limitation of Supplies (Miscellaneous) Order, which extended the same principle to a much wider range of goods by limiting the supplies of these goods to the home market to two-thirds of the pre-war level. This Order covered pottery, hosiery, glass, cutlery and a great host of other goods, and there, for the first time, an imminent need to free factory-trained labour was a motive factor. As autumn advanced with many great factories nearing completion, my right hon. Friend the Minister of Labour saw clearly that if he was to man those factories effectively and if he was to fill them not just with raw labour, but trained labour, further control was needed. First we had an additional curtailment of supplies, and finally the proposal which we are considering to-day.

My hon. Friend the Member for South Croydon criticised the scheme in some detail. He opened, I was pained to hear, with a rather easy sneer at experts who sit on councils, and he rather ridiculed committees and their deliberations as a whole. Therefore, I was a little surprised when, at the end of his speech, he rose in his place and said that he himself would take the chair at a committee to-day.

Sir H. Williams

To the best of my recollection I did not sneer at any council. I said that I was present at an export group; I told them that I thought the thing was a wash-out, and subsequent events justified my conclusion. The only committee that I criticised was the one of which I myself was a member.

Captain Waterhouse

I am very glad to hear that explanation, and I am relieved to hear that the hon. Member confines his ridicule to committees of which he himself is a member. He took as an example a certain firm which made a certain product, and asked how it was possible to expect to get concentration of industries in the sense that one man has to make material for another. He asked whether it was not quite apparent that A cannot make the product of B, because A's customers will not like B's stuff. He quoted one particular instance. I am prepared, and most happy, to take this instance, because it is a very good one indeed. This particular firm, unhappily, was concentrated not by my right hon. Friend but by Hitler, because one of its works was blown up some months ago. Therefore, they had to rind someone else to produce their stuff or else cease to function altogether; and, in fact, they have been able to make highly satisfactory arrangements with another firm to produce certain important lines which they had hitherto always made themselves. I suggest that that is a perfect example of what will happen when we get concentration.

Sir H. Williams

That is not what they said in the last letter they wrote to me.

Captain Waterhouse

I think that if my hon. Friend makes inquiries, as I have on the basis of his request to me, he will find that what I have said is the fact. He went on to ask whether we were wise in concentrating at a time when the Government's policy was that of spreading risks. But really, I think that particular argument was rather beneath him. He knew perfectly well that when we talk about concentration we are not talking about geographical concentration. We do not propose to put all the cotton firms into one particular little part of Lancashire, all the woollen firms into one particular little part of the West Riding of Yorkshire, or all the industrial firms of some other kind into one part of London. He knows that when we talk about concentration we mean a reduction of the aggregate number of firms, but not a geographical concentration. The geography will be worked out largely at the instance of the Ministry of Supply and of the Ministry of Labour.

Sir H. Williams

I am very sorry to interrupt, but the President of the Board of Trade gave us only one example—the example of an industry which had four factories but which is now going to have only one.

Captain Waterhouse

The President of the Board of Trade gave one particular example of one particular form of concentration. It is perfectly true that there are three factories being shut down and that only one will be working. But those three are not going to disappear. If this one factory is blown up, any or all of the other three factories can be reopened, but one is no more likely to be blown up than any of the others. If it is, no more damage will be done if it is concentrated than would be done if it were blown up before concentration.

Sir H. Williams

I thought the other three were going to be commandeered.

Captain Waterhouse

My hon. Friend thinks these things, but they are not on a basis of fact. My right hon. Friend said nothing of the sort. It is possible that they may be commandeered, because the machinery, space or power may be of use, but it has never been stated that all would be commandeered. He then complained that we were taking people away to work instead of taking work to the people. There again he is completely without a basis in fact. The large munitions factories have, as far as possible, been planned with due regard to the labour available in the neighbourhood, and concentration will take place with that as a prime object, so that the labour released will be reasonably near to the factories in which it will subsequenly have to work.

My hon. Friend the Member for North Cornwall (Mr. Horabin) raised several interesting points, and one of his criticisms was that we are bringing in a corporative State by the back door.

Mr. Horabin

I only said that there was a danger that might arise.

Captain Waterhouse

I should like to assure my hon. Friend that I do not see that danger myself in the scheme we are at present considering, but I do see a good deal of danger of it in the scheme which he himself suggested. He himself suggested that the scheme should be in some way "syndicalised," and that a Government chairman should be appointed, to preside over a board containing three employers and three workers. Is not that exactly the system which we understand by corporate industry? Is not that very much the system which prevails in Germany now, except that, instead of calling the Government representative a chairman, they call him a Gauleiter? Surely that means direct and complete Government control? The hon. Member went on to say that that would mean direction of policy, and not of administration.

Mr. Horabin

I think my hon. and gallant Friend misunderstands my position. It is not that I hate so much the German type of organisation; what I object to very much is the type of corporate organisation that you get in Italy, which is fundamentally different.

Captain Waterhouse

I am afraid I am not fully familiar with those foreign systems.

Mr. Horabin

It is very necessary that representatives of the Board of Trade should be.

Captain Waterhouse

I want to make it clear that, whatever degrees of likelihood there may be of that sort of thing happening, less likelihood attaches to this proposal, under which we should go to the traders and say, "Will you get together, and see whether you can thrash out a scheme for yourselves, and shut down some of your works?" That seems better than for them to come to the Government, and say, "Please send down a King Stork to rule over us, and we will obey him."

My hon. Friend the Member for Sea-ham (Mr. Shinwell) made a very vicious-sounding attack on this scheme, but I do not think he bears it all the malice that he would have us believe. He started by saying that the principle was sound and that acceptance was inevitable—which was not a bad start. On the whole, although he dealt hardly with certain aspects of it, I believe he agrees that if this war is to be fought to a finish, as we know it must be, measures of this sort are quite inevitable

He asked what was the purpose of this scheme if it was not for greater efficiency. I say, straightaway, that there is no purpose in it if it does not make for greater national efficiency. It is because we believe that it is going to achieve greater national efficiency that my right hon. Friend has produced it. The hon. Member fears that power will pass into the hands of the large industrialists, and that it will not come back. His fear is enlivened by the fact that a member of Unilever's board and a member of the board of Guest, Keen and Nettlefold have been good enough to lend us their services. He went on to say that this was the death-knell of the small man. That was really the pith of his argument. I suggest that this is not the death-knell of the small man, but that a continuance of the present tendency would inevitably be. Without concentration, the small man can hardly continue to survive with the curtailment imposed by the Limitation of Supplies Orders. How long would his money last? How long would the bankers continue to support the small members of manufacturing industries when, month by month, they see the money they are lending seeping away and they know there is little chance of any revival in that industry? Our policy is not a ruthless method of destroying the small trader. To my mind—and this particular aspect of the thing is also in the mind of my right hon. Friend—it is a means of salvation to the small man who would otherwise be hard put to it to carry on for the rest of the war.

The last speaker spoke as to the repercussions, and said that this was a war measure. We were looking to the future; there can be no turning back. What would be the effect on the export trade? We know that there are these repercussions and dangers, but the dangers have to be faced. This is an immediate way of meeting an immediate problem, and it is because we know the urgency of the immediate problem that my right hon. Friend has suggested this drastic means of dealing with it.

I will briefly mention one or two things that the scheme is, and is not. I think it may help to clear the ground. It is not either "Socialism in our time "or" Fascism in our time." It is not an effort to entrench big business. It is not an effort to wipe out the small man. It is not a Departmental design to teach industry how to run itself, and neither is it, I am personally happy to say, either planning or rationalisation in the rather restricted and controversial sense in which these terms were often used before the war. It is, on the other hand, a recognition of the hard facts of the case as I have said already, an invitation to firms as a whole to get together and to curb for the time being their healthy competitive instincts and to work out some mutually advantageous arrangement designed to achieve the end in view. I want to make it clear again that our plans are neither stereotyped nor exclusive. This is the point which I think my hon. and learned Friend the Member for Bolton raised. There is no exclusiveness at all. There are certain broad underlying principles to be followed but, within very wide margins, each industry has in fact to find the way out of its own particular bothers. My right hon. Friend, the Member for Luton (Mr. Burgin), who is no longer in his place, said that we were not paying these experts to manage and advise in their own businesses and were divorcing knowledge from experience. That is not quite fair. The knowledge and experience of somebody engaged for the whole of his life in business is not so canalised as all that. It can be applied. Here is an instance I can give—my right hon. Friend, who has now applied his business knowledge and experience in a completely new field with, I think the House will agree, no little success.

Concentration is not curtailment. Many people think that under this scheme supplies will be cut down. This definitely is not so; the curtailment has already taken place, and concentration is a necessary counterpart of the reduction of civil production. Anybody who has any know-ledge of industry will agree that it is quite impossible to run a business profitably on half-time or anything like half-time. Once a profitable basis is reached, profits tend to mount rapidly as the percentage of the factory which is filled increases and, therefore, we are rendering a service to the economy of the nation if we fill our factories as far as possible. There is nothing so dispiriting to a man or a management as working in a factory which is running on half-time, or working in a room where half the machines have stopped. If men go through the gates of a factory and find large sections of the building shut up, how can you expect full efficiency from operatives or staff? Surely it is a great deal better to close down one factory and keep another running full blast.

I have dealt with the question of the small man. I do not think he need have any fear of this scheme. It will be definitely to his advantage. From the point of view of the customer too, I think all the advantages are fairly clear. Unconcentrated production must mean production at high cost, and whatever steps any Government may take, there is a tendency for prices to rise. The plague of inflation is one of the most dreadful that accompanies and follows any war, and I believe this policy will help to relieve us from the fear of this particular terror. The policy now before us is designed to reconcile traditional British industrial policy with the stringent requirements of a war-time economy, to retain, as far as possible, private enterprise and private initiative in a self-regulated system. In Germany there is complete regimentation of industry, which is controlled by Government-appointed "gauleiters." This is a negation of every vestige of liberty and a system which would, I know, be anathema to all sections of this House. We commend our proposals to this House and to the industrial community as best suited to see us through our present emergency, while preserving a basis for a rapid and healthy return to peace-time conditions when the war is over.

Question, "That this House do now adjourn," put, and agreed to