EXPORT TRADE AND INDUSTRIAL CHANGE-OVER

HC Deb 06 December 1944 vol 406 cc565-683

12.10 p.m.

Mr. Summers (Northampton)

I beg to move, at the end of the Question, to add: But, while welcoming the intention to create conditions favourable to the expansion of our export trade and the re-equipment of our industry humbly regret that the Gracious Speech contains no proposals for the reorganisation of the Board of Trade and no mention of the other steps necessary for such expansion or for dealing effectively with the change-over of industry from war to peace production. The Amendment falls into two parts, the first dealing with the expansion of our export trade and the second with the change-over of industry from war to peace production. There will be many speakers, no doubt, who will desire to take part in this Debate, and for that reason I intend to confine myself to only a limited part of the ideas brought up by this Amendment despite the temptation to wander over a wide field. It is becoming the fashion to state the assumption on which any case is founded, and, to save time, I intend to take it for granted that it is generally admitted that we must greatly increase our export trade and that it is generally desired that there shall be an orderly transference from war to peace production. The case which I would ask the House to consider may be summarised by saying that the Board of Trade as at present staffed and constituted is not competent to discharge either of these functions satisfactorily. It would be easy to quote illustrations of misguided advice on the location of industry, of cases where export licences were granted for articles three inches wide and refused for articles four inches wide, of cases where designs of buses were desired to be changed to facilitate exports and to take account of modern developments in science where refusal was accorded, and also of cases where, without any apparent explanation, licences were refused for exports of an important character where the labour and materials were available. That would be easy, but it would do no more than describe the symptoms of the disease and would not attempt to get down to the root cause.

I am well aware that in this matter of the change-over the claims of war production must come first. Nevertheless, there are matters which it is within our control to change so that we may be ready when the time comes for greater opportunities. I shall hope to show that those results which I have described in brief are only to be expected from the kind of set-up which we have in the Board of Trade at the present time, The change-over from war to peace must be a necessary precedent to a full export drive. The other day I asked the President of the Board of Trade in a written Question to give the names of those in his Department who had had previous business experience and the nature of that experience. The reply was extremely disappointing. There are but a handful of people who have had experience of industry and commerce sufficient to enable them to deal adequately with the problems with which they are confronted.

We learned the other day of modifications in our Lend-Lease arrangements with America which, among other things, forecast a greater opportunity for the export of steel. It is not unlikely that the demands made upon the steel industry will make it imperative that such steel as is exported shall be in the most highly finished form, so as to take the greatest advantage of that material. For that reason as well as others it behoves us to give every possible encouragement to the engineering industry to make a major contribution to increased exports, and yet there is nobody with adequate experience of the engineering industry in the Board of Trade who can deal with the complicated ramifications of that industry.

It is a tradition of the Civil Service that one individual or firm shall be treated similarly to another. Their traditional philosophy is one of impartiality, and I make no complaint on that score, but by the very nature of the case the change-over from war to peace production cannot possibly be carried out on a purely impartial basis. If the production of guns or tanks or some other war stores is examined it will be found that those engaged in a great variety of industries are, in fact, making similar war stores, and since curtailment of production is necessarily in war stores the capacity which becomes released has a wide variety. It may well follow that one firm making a particular type of stores may be faced with the fact that its pre-war competitor in the export trade becomes free to engage in the export trade because its war programme is cut, whereas the first firm's war production must necessarily be continued. For that reason there will inevitably be unfairness between one type of trade and another. Even if it were possible to be impartial and to treat various firms alike I question whether it would be desirable to try to do so. There will be heavy demands for new equipment in industry. It is not unlikely that the demand will exceed the supply and that we shall have to import certain machinery and equipment from America or other countries if our industries are to be adequately equipped to sell the goods at the right price. Foreign exchange also will be scarce. For that reason it is almost certain that there will have to be a measure of selection in deciding which firms shall have the advantage first of the equipment or exchange or other help which they may need to build up exports.

This policy of selection is in large measure the key to the success which the Supply Departments have achieved during the war. They have selected certain firms whom they believe to be best qualified to undertake a certain jab, and I submit that a similar policy will need to be followed in changing over from war to peace production.

In the Supply Departments, and it may be, too, in the Ministry of Production, there must be many whose jobs are now virtually completed. Most of our programmes for war materials are not increasing but diminishing, with the result that the activities of firms formerly engaged upon producing war stores are not now of interest to the Supply Departments but of interest to the Board of Trade. It is in the Supply Departments that the technical knowledge and experience of the firm's capabilities and personalities is to be found, and yet it is the other Departments that need that knowledge now. It would seem, therefore, that it is to the Supply Departments primarily that we must look for experienced people to handle the change-over and transfer them to the Board of Trade for that purpose.

For some three years during the war I was concerned with the regional organisation of the Ministry of Supply, and it was borne in upon me, and I think upon the whole Department, that the formulation of sound policy and its application cannot be achieved without an adequate regional organisation providing the centre with local knowledge. That has been proved on many occasions, but I submit that the care which the Board of Trade has exercised in the selection of its local representatives and the prestige accorded to their position does not show a proper sense of proportion, and that added weight should be given to those engaged in the regional organisation, so that proper people may be attracted to it and confidence engendered at headquarters in the advice they may tender. Another lesson which has been borne out by experience during the war is the advantage of keeping the employees of leading firms working with the firms they have grown up with and for whom they are accustomed to work. Our productive units, which have done such great work during the war, are one of the country's national assets, and it would be the greatest pity if in dealing with the question of manpower in the transference from war to peace production those units which have operated so effectively were dispersed instead of being retained. For that reason I urge that as capacity becomes released, when programmes are curtailed, the manpower which is made available should not be dispersed but left with the firms, which would thus be enabled to build up exports as soon as the raw materials can be provided.

That brings me to the question of exports. It is no less essential that the right men should be available in the Board of Trade to guide the development of our export trade, nor is it any less essential that help should be provided where it can be most effective, but what is even more essential is that the Department should have a policy for export trade. It is not sufficient for pious aspirations, capable of half a dozen interpretations, to be put forward. There must be a policy evolved in relation to individual trades, taking account of the potentialities of each trade and of its difficulties, and, above all, it must be explained to the trade. We have had far too many instances of a refusal to do this and no explanation has not been accorded. During the war the technique of explaining to the workers the reasons for many of the decisions that had to be taken and may perhaps have affected them adversely has proved to be of the utmost value. It is surely just as important that managements should be acquainted with the reason for decisions which are taken. Here, by way of interjection, may I urge that the technique which has been evolved during the war of explaining to the workers the value of their individual contributions to the task in hand may be continued in peace. Many an individual when his particular job in relation to the whole—be it the production of a tank or a gun—has been explained to him for the first time, has taken an entirely fresh and more forceful interest in the work, and I submit there is an equally fruitful field in connection with peace production, particularly for the export trade, for interesting the workers in their particular task.

I am not the first to point to the anomalous position in which the Department of Overseas Trade is placed. It is well known that it is responsible partly to the Foreign Office and partly to the Board of Trade. I can only assume that the absence of the Secretary to the Overseas Trade Department may be due to the calls made upon his time by the Foreign Office. [HON. MEMBERS: "Where is he?"] Be that as it may, I suggest that there cannot be adequate collaboration, as there should be, between this Department and the Commercial Relations Department of the Board of Trade. The Department of Overseas Trade should be 100 per cent. responsible to the President of the Board of Trade, and only then can the proper merger of the Department on one hand and the Commercial Relations Department on the other be brought about.

Mr. Shinwell (Seaham)

I am sorry to interrupt my hon. Friend, but he has raised a point of great substance, the absence from this Debate of the Secretary to the Overseas Trade Department. May I ask my right hon. Friend the President of the Board of Trade, seriously and with no desire to embarrass the Government, whether it is not improper that the man who is primarily responsible for overseas trade matters is not present at this Debate upon export trade?

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

Steps are being taken to procure the presence of my right hon. Friend.

Mr. Shinwell

My right hon. Friend will forgive me, but is it necessary to "procure" the presence here of the man Who is responsible for at any rate a large part of the Debate? May I ask my right hon. Friend to regard this matter seriously? Is it not an insult to the House? Can we have a more rational explanation?

Viscountess Astor (Plymouth, Sutton)

May I ask the Minister what the House would say if this particular Under-Secretary had been a woman?

Mr. Dalton

That is a very penetrating question and I think I would like to reflect upon the answer. I hope my right hon. Friend will be here shortly, but I am the Minister primarily responsible for these matters, and I will make my statement, if Mr. Speaker will permit me, at the right moment.

Mr. Summers

I am much obliged to my hon. Friend the Member for Seaham (Mr. Shinwell) for his interjection. It only lends weight to the view which I find so widespread that there is no confidence at present in the Board of Trade. I ask the House to turn for a moment to the overseas representation of the Board of Trade, which I find very curious. In the Empire there are Trade Commissioners in the principal cities of the Dominions, who are responsible to the Department of Overseas Trade, and broadly speaking, they do very good work. When it comes to other countries with foreign markets, as far as I can see the Commercial Counsellor in the Embassy is the only person directly responsible to the Department, the only one to whom they can look for guidance and advice on local market conditions. It may well be that it is necessary for the protection of British subjects abroad to have a network of officials in the shape of consuls answerable to the Foreign Office, but I am not at all satisfied that the work in that field enables them to do justice to the work in which the Board of Trade calls upon them for help, and to expect one man to fulfil both functions is surely asking too much.

Moreover, it is difficult to justify a position in which, with the exception of the commercial counsellors, the only people from whom the President of the Board of Trade can obtain first-hand reports of foreign markets are people not directly responsible to him, and not selected by him. It has been suggested that there are grounds for change, and if, as sometimes happens, manufacturers are criticised for being inadequately represented abroad and not taking sufficient note of their customers requirements abroad, how much more vulnerable is the Board of Trade on that score?

I was glad to note in the Gracious Speech that reference was made to increased help for the export credits department. No doubt a useful purpose was served before the war by this Department in enabling traders to have insurance as regards the credit-worthiness of their buyers, although there is something to be said for leaving traders to seek such protection as they can in that sphere, but what I want to stress is that it is the risk in relation to the transfer of funds which is the dread of the trader, and which it is not within his power to assess. Everything points to an era of fixed exchange, varied at intervals by substantial amounts, with the result that when such changes are made, they will have far more devastating effects on traders than was the case when there were gradual fluctuations from day to day arising from the process of free buying and selling of foreign currency. I am not suggesting that we should go back to that system, but I would point out that the system which is likely to prevail will make far more hazards for traders, and it is in that connection that the Government should put adequate cover at the disposal of traders.

I have endeavoured to show some of the ways in which the present set-up in the Board of Trade is not satisfactory and ways by which it might be improved, but I suggest that that is not enough. Before the war, the Board of Trade was primarily a regulating department. It was concerned with such matters as bankruptcy, weights and measures, life-saving devices, invention, company law, and a host of other matters, important in themselves, but quite ancillary to the real task of building up trade. However appropriate the conception of the Board of Trade may have been before the last war, I suggest that the conception is quite unsuited to the task which will lie before it after this war.

It is not necessary for the Government, unreasonably, to interfere with business, nor to take over those responsibilities which the managements and workers alone can shoulder. But I submit that it is absolutely necessary that the Government, and this Department in particular, should develop a far more positive outlook than anything they have displayed hitherto. That change needs to be made manifest. It must be clear to all, that the Department is a help, and not a hindrance. Its status should be raised. What we need is a champion of British industry against foreign rivals and other Departments. But the change of heart that is called for in that conception cannot, in my judgment, be achieved by the mere issue of directives within the Board of Trade. What I believe we need is a Ministry of Industry and Commerce with directorates modelled on the Supply Departments, properly staffed with experienced people and working through a competent regional organisation.

The day will soon come when the Supply Departments will have outlived their usefulness, but it may well be that when that time comes there will remain certain functions still to be discharged, although not sufficient to justify prolonging their life. When that time comes, it is surely to the Board of Trade that those tasks will have to be assigned. It is difficult, now, to suggest when the time for the merger will arise, but it is not yet. Nevertheless, it is possible now to build up a suitable nucleus, to give the necessary prestige, and to provide a central point which will command the confidence of all, and enable traders to receive the help and assistance which they need. But, as at present constituted, there is no confidence in the Board of Trade. Modifications in lease-lend that we have heard about are steps in the right direction, but it is up to us to see that our administration is satisfactory so that, when conditions permit, we may have the necessary instrument at our command to do justice to the opportunity. It is not enough, in the words of the Gracious Speech, for the Government merely to try to create conditions favourable to the development of our export trade. The Government must put its house in order; there is little enough time left in which to do it.

12.37 p.m.

Sir Oliver Simmonds (Birmingham, Duddeston)

I beg to second the Amendment.

The House is indebted to you, Mr. Speaker, for having given us the opportunity of discussing this vital matter here to-day, and it is certainly also indebted to my hon. Friend the Member for Northampton (Mr. Summers), for having placed this Amendment on the Order Paper, and for having so brilliantly introduced this subject to the House.

As we proceed through our public careers, I think hon. Members will agree with me that, possibly, on one or two occasions—and only on one or two occasions—do we feel a deep personal alarm at the course on which the ship of State is being steered. Some of us—the Prime Minister, the present Minister Resident in West Africa and my hon. and gallant Friend the Member for Hertford (Sir M. Sueter)—were members of a small band who, in the early years of this Parliament, felt a deep emotion over the inadequacy of our air defences. Perhaps I shall express my own position when I say that I feel about this matter to-day, exactly as I felt about our air defences before the war—that we are neglecting a vital issue in national policy. We have now committed ourselves to a voyage of great social experiment in the course of the next few years, and no one will claim that we can complete that voyage successfully without a buoyant and successful export trade.

Beyond that point, I think there is some divergence of opinion. Some, not necessarily in the House, but certainly in the country, seem to feel that this good, ripe fruit will fall into our mouths without any great effort on our part. Fewer, perhaps, on the other hand, having studied this question, are less prone to under-estimate the magnitude of the problem. Fortunately, as my hon. Friend has said, the approximate dimensions of the issue are not widely disputed. The fact is that before balancing our international accounts we must improve our annual income from overseas—from other countries—by some £200,000,000 per annum. I would like to interject here—and I am sure hon. Members on the other side will do their best to support us on this point—that this £200,000,000 is not to enable pomegranates to get on to the rich man's table; it is to allow us to continue the enjoyment of beef and lamb, and wool and butter. It is, indeed, to maintain the standard of living to which the people in this country have been accustomed; and not only that, it is the very foundation stone of the whole of the social experiment upon which we are shortly to embark in legislative discussion in this House.

Mr. Bowles (Nuneaton)

May I ask the hon. Member a question? I agree that we have to increase our imports by £200,000,000. [HON. MEMBERS: "Exports."] I understood the hon. Member to say "imports," and I would ask him to repeat what he said.

Sir O. Simmonds

The point I was making was that we shall have to increase our exports by £200,000,000 annually.

Mr. Bowles

The hon. Member did not say that.

Sir Granville Gibson (Pudsey and Otley)

I assume that my hon. Friend does not mean £200,000,000 above to-day's exports, but above pre-war exports?

Sir O. Simmonds

If my hon. Friend will look into the figures which show that both exports and imports will have risen in value, I think he will find that £200,000,000 sterling is a fair, approximate figure—although no two people will probably agree on the exact figure—compared with the immediate average pre-war figure. I trust that this Debate will show and, indeed, the support which my hon. Friend has received gives me hope that we shall find that there is not any real party cleavage on this question. If we can stand together, with our friends on the other side of the House, on this issue, then I can say right away, that some of the alarm which I feel will be much relieved. But the average figure of £200,000,000 is almost exactly one-half of the average pre-war annual exports from this country. Another 50 per cent. is no mean increase, and will demand an appropriate effort. It is true, as after the last war, that the world is clamouring for our exports, but that will not continue endlessly. There will come a time when the curve of demand will fall. Indeed, in many countries industries have been established which we shall not hope to remove. As an instance of this I will tell the House that I was amazed when I was in Australia early this year to find that, of 52,000 complicated machine tools now in Australian industry, 7,000 came from the United States, 5,000 came from this country and 40,000 had been manufactured in Australia. That is a staggering figure for this country to have to contemplate. Therefore, let us not minimise this problem. There is also a problem of payment, that may or may not be about to be solved by some of the conferences that have taken place with our American friends. It is an issue which we should do well not to forget.

Again, there is the question of the competition of the United States of America. I would remind hon. Members that only last week the President of the United States said that they must aim to treble their export trade after the war, compared with the pre-war period. We should do well to be in no doubt as to the energy with which the United States will pursue this aim of building up their export trade, and I think we should note the recent Air Conference at Chicago as an example of what we would do well to expect if we are to be realist in this matter. Many hon. Members will have noted that "The Economist" newspaper devotes a considerable study to American affairs. Indeed, when I was in America, I often heard the capacity and accuracy of those reports on the American economy referred to. I would like to read briefly to the House what "The Economist" says about the Chicago air talks and what we should learn from them. Here are the words, used on 2nd December: This would seem to be another instance in which the fine moral principles proclaimed in Washington turn out to have very special definitions, tailored to fit self-interest. The United States, in its bid for a mastery of the air comparable to Britain's mastery of the sea in the past, is running counter to the hopes of all for a fair chance to operate international lines. I say no more on that subject except that if we are going to be realist we will start by assuming a rugged self-interest in these matters on the part of the United States of America.

It will be generally agreed that to attain and maintain an export trade one-and-a-half times our pre-war level, while by no means impossible, is a major task and will not come our way without a national consecration to and concentration upon this issue; but are we, as a nation, facing up to the magnitude of this problem? Is the policy of the Government, and above all, as has already been said, is the administration of that policy, adequate for the day? I would like, on two or three counts to examine this question. First, there is the impact of Lend-Lease on our export trade. What are the figures? Excluding munitions, our exports, expressed as a percentage by volume of our exports in 1938, were, for 1942, 36 per cent. and for 1943, 29 per cent. Although the basic cause of that abyssmal fall has manifestly been the war, every hon. Member knows that a powerful contributing influence has come from the conditions of Lend-Lease, as interpreted by His Majesty's Government and expressed in the White Paper.

But last week there was issued from Washington a most significant document. It came from the Committee on the future of Lend-Lease, of which Mr. Stettinius, Secretary of State, Mr. Morgenthau, Secretary of the Treasury, and Mr. Crowley, of the Foreign Economic Administration, are members. This is what is says: The Committee understand that,"— and these are four very important words —as in the past, the United States and the United Kingdom will both endeavour to ensure to the extent practicable that neither United States nor United Kingdom importers receive undue competitive advantage over each other as a result of the war situation. I had to read this a second time, to be quite sure that I was not misunderstanding the force of these words. This was certainly news. Perhaps, indeed, we have here one of the basic rules of export trade as agreed on by our two respective Governments. To call into question the policy of the United States Government is no part whatever of my submission to-day, but with regard to the United Kingdom Government we have a very precise and specific obligation to our constituents.

What I want to ask the right hon. Gentleman who is to reply is, Do the Government claim that the administrative policy that they have been following is consistent with the statement by Mr. Stettinius's committee as to what is the understood basis of our export trade? Every hon. Member who represents an industrial constituency must have received many letters of protest from those who are in industry in his constituency, at some or other, of the many fractious difficulties to which my hon. Friend has referred, on which I believe we shall hear much more in the course of this Debate and which are tiring the people to whom we have to look for this great and vital effort. I have been vastly interested, in the course of the last few weeks, in a daily paragraph in the "Daily Mail" headed "Strangle-hold on Britain." If hon. Members have not noticed that, I would recommend them to read it. There each day the "Daily Mail" is giving chapter and verse of how we are throwing away our birth-right.

Mr. Ellis Smith (Stoke)

They nearly threw Britain away.

Sir O. Simmonds

No-one other than a political ostrich will by now fail to realise that we are operating our export trade under serious disadvantages. I would like to give an example. There is a firm in Birmingham which apparently supplies all the railway rolling stock for one great country in South America. They were urgently in need of spares, which were in the yard in Birmingham, and had stood there for years, because the policy of the company was to look after its customers overseas. They prayed the Board of Trade to allow them to export, so that those vehicles could be put into operation on the railway tracks. The answer was a blank refusal. They were told they must go to the United States, but the United States will not tool up specially for a component part of a British manufactured piece of rolling stock. What is the final result? That rolling stock must be shunted on to the siding, incapable of being used until we take a more realistic attitude towards our obligations, economically and commercially, to our friends overseas. Then I read, in the statement of the Committee in Washington, that the United States and the United Kingdom shall have no undue competitive advantage.

Perhaps we reached the sublime in a speech last week by Lord Halifax, the British Ambassador to the United States, which he made in Chicago. These are his reported words: Even if the White Paper should lapse after the conclusion of hostilities, it will be a long time before Britain is able to satisfy Latin-American demands. I cannot conceive a more perfect entry into the South American Continent for every sales representative of every United States firm. I am going to ask my right hon. Friend, and I trust that the House will be behind me, on whose authority this cold douche to our export trade was made, in an area traditionally British for many products? I shall hope that the Government will give us an answer. I can scarcely believe that Lord Halifax made this remark, unless it was substantially in accord with the spirit of the policy of His Majesty's Government, and we are bound to ask ourselves—I know many hon. Members have been asking themselves—whether there is by any chance a taint of economic servility in some aspects of our policy.

The statement of Mr. Stettinius's Committee says that as in the past so in the future there shall be "no undue competitive advantage." Let us then gauge the future by the past. The past can yield us some figures. In 1943, excluding Lend-Lease, the United States maintained its 1938 value of export trade. In 1943, the United Kingdom figures were half of the 1938 United Kingdom figures. Is it really a continuation of this situation, then, with which the Government expects the House and the country to be satisfied? I am certain that hon. Members would say: "That will not do." In this respect I recall a conversation which an eminent business man had with me this midsummer in America. He said to me: "Some of you people make the mistake of thinking that because we are Allies in arms to-day we have got to be Allies in the export trade to-morrow. You are making a grave mistake. America proposes to roll up her sleeves and have a crack at it." If Britain does not roll up her sleeves too, it is no good moaning diplomatically and making speeches in Chicago.

We have to get down to this problem. To try to convert the more nationalistic elements in American industry into economic friends of Britain by a policy of appeasement based on a reluctance to see too clearly the need for our own export trade is to court failure and, in American eyes, to court ridicule. Let the Government take full advantage of the dispensations of the new Lend-Lease and, in the spirit of the announcement of the Stettinius Committee which I read, let them end these vacillations. Let them present us with a bold imaginative policy which will be supported here and respected in America and which will rejoice the hearts of all our pre-war customers.

I wish next to deal briefly with two or three other points, most of which have already been touched on by my hon. Friend. The first is the internal organisation of the Board of Trade here. I merely want to add that during 1945, perhaps for longer, the export trade will have to fight its way through the barbed wire of the controls, the tank ditches of the quotas, and the dragon's-teeth of the man-power boards. It can never do it unaided, and this was a lesson which was learned very early on by Lord Beaverbrook when he went, in those terrible days of 1940, to the Ministry of Aircraft Production. He learned that he had to fight for those who were supporting his Department, and that is the spirit we want in the new Ministry of Industry, or whatever it may be called. They need a section of counter-Departmental warfare, because they have to be certain that for the export trade, we get what we need, and that neither the Admiralty, the War Office, the Ministry of Supply nor the Ministry of Aircraft Production can sneak, by their own counter-Departmental warfare sections, those essential materials which are due to play their part in our export trade. We must have, in fact, in the Board of Trade not a whole host of controllers, but an army of crusaders. Here I will make mention of one addition to the Board of Trade staff, Sir Charles Bruce Gardner. I have not the slightest doubt he will bring to the Board of Trade many new points of view and a substantial energy, but my right hon. Friend the Prime Minister reminded the House only the other day that "one swallow does not make a summer." That is what I would say of the appointment of Sir Charles to the Board of Trade. I am certain he will strengthen that Department, but that is only a start.

The third point I would briefly refer to is the question of labour. We are committed to planning, but however much planning is done, we shall never make a real start on our export trade, until we have men in the shops capable of making the prototypes, samples and first production batches. I have been dismayed to find that apparently the policy of the Ministry of Labour is that when the war contracts of a firm run out, they sweep the place of labour rather than take those they need, leaving those they can spare to start building up the export trade. I believe that very soon the working men and women of this country will get tired of this principle of "general post" and will ask to be allowed to stay with the firms they have served in times. gone by. If we are to be told that the time has not yet arrived for us to have this labour available for export trade purposes, I wonder why it is so important, when we need them for the export trade, that men and women must be idle, because they are not permitted to, be discharged, and in some places play cards at the expense of the British taxpayer.

Fourthly, I would refer to the problem of the development of an adequate volume of export trade, in the light of the demands of the home market. There have been various suggestions from Ministers that we must have quotas of export trade in relation to our home manufactures. There have been suggestions that perhaps we should have to have an understanding that if we retain labour or receive raw materials a certain percentage of export trade should be done. I pray the Government not to proceed on those lines. It will merely tend to perpetuate the wretched attitude towards the export trade which has been recently prevalent. If we are to make this popular with industry some of the controls upon it must be removed, not new ones placed in its way.

Fortunately there is a very simple way of achieving this end. If the Chancellor of the Exchequer, realising both the relative hazard of the export trade compared with the home trade, and also the vital importance of this matter to his own finances, would see his way to relieve the export trade, as to a part of its profits, from taxation, and permit a reserve to be built up for this purpose, that would at once make the export trade attractive to industry, and it need certainly not be any handicap to the finances of the State, provided that remission was not made at too high a level.

Mr. Kenneth Lindsay (Kilmarnock)

Does the hon. Member mean, to subsidise exports?

Sir O. Simmonds

No, I particularly do not mean the subsidising of exports. What I mean is this. If we are to go right out for this export trade we must run risks. Some industrialists will incur losses. If we are going to make that effort, which is a much more perplexing effort, which calls for much more day to day effort than the home trade, and if we are not going to force people into it, we have got to attract them into it. That is the plea I make to the Chancellor of the Exchequer.

I wish finally to refer to one essential tool of the export trade, that is, civil air transport. Here I merely want to appeal to the House to do its best—and this applies particularly to my hon. Friends on the other side—to remove civil air transport in this country from the strait jacket in which it now lies. We are operating it through one chosen instrument, established in 1939. We are excluding for the moment all the virile private enterprise that is anxious to come in and run risks in the same way as the Americans have done in this vital field. The reason the Government cannot permit private enterprise in this field, as I see it, is that hon. Members opposite, and ourselves on this side, take a diametrically different view on the question of nationalisation and private enterprise. A General Election will settle this issue, will settle the pattern of our air transport operation overseas for the next five years, or the next decade. I would ask hon Members opposite, Must we wait for the General Election? Can we not now release our air transport energies so that we can build up a force which will be a match for the virile private enterprise in America. If we could do that I am certain that we, from our side, would not dissolve B.O.A.C. because it is a chosen instrument and State owned, for it could be used to obtain vital comparative factors on this issue, by operating on certain lines while private enterprise operated on others.

I am certain I express the general Conservative point of view when I say if hon. Members opposite would meet us half-way by permitting some private enterprise now, there would be no question of our wishing, if, as I believe we shall have at the next General Election a sufficiently resounding majority to do it, to alter the constitution of B.O.A.C. and not permitting it to show what can be done by State enterprise in this particular field. Therefore, I ask my right hon. Friend and hon. Friends opposite, knowing the impasse we have reached in the organisation of British air transport, to think well before they turn down this proposition.

I claim that nothing I have said need prejudice the war effort. It is a question of thinking wisely, of planning and of action. We are playing, in our post-war economic and social schemes for high stakes. It requires an equal effort in the export trade. Let us remember that over every reform we plan for the post-war period hangs this sword of Damocles of £200,000,000 per year. I trust that the Government will at least face up to this issue and play their part. I am quite certain that the men and women in this country will play theirs.

1.12 p.m.

Mr. Harcourt Johnstone (Secretary, Overseas Trade Department)

I should like to express to the House my great regret at having missed the first portion of the speech of the hon. Member for Northampton (Mr. Summers). The reason was that I was in the chair of the Overseas Trade Development Council, the most important advisory body the Department has. I am sure that as the hon. Member is so keen about the export trade he will forgive my having missed that portion of his speech, the rest of which I thoroughly enjoyed.

1.13 p.m.

Mr. A. Edwards (Middlesbrough, East)

I have listened to the two first speeches with a considerable amount of agreement with what was said, but I am bound to say much of their criticism of the Government was rather thin. Those of us who have spent considerable time in Government Departments and factories have had some difficulty in deciding for ourselves from time to time, whether the Government have really been controlling industry or whether industry has been controlling the Government. If it is industry which has had control, what becomes of their criticism of the Departments? I remember mentioning some of the criticisms to a chief of the Civil Service a few years ago. He put this to me. He said, "We have taken the best business men we could get in the community, and put them in jobs in these Departments. Who is to blame if things are not going well?"

The House is familiar with the Platt Report, recently published, and those of us who know something about what is going on realise there are two other reports to come, which I think will make the Platt Report seem not so very bad after all. One happens to be about an industry with which the Mover of this Amendment is connected, and the second is one with which the Seconder of the Amendment is not unconnected. I believe that the reports when they come, will be about the coal and steel and electrical industries and will be pretty bad. I hope the hon. Gentlemen who have just spoken will re-read their speeches, and ask themselves what authority they have to pass the criticisms they have been passing here to-day. They might have come better from people who have less responsibility for the difficulties in which industry was placed both before the war and during the war.

Mr. Summers

Would it be correct to infer from what the hon. Member has said that he is satisfied with affairs in the Board of Trade as they are?

Mr. Edwards

I certainly am not. I wanted to have some balanced criticism. I merely wanted to suggest that people who have had the uninterrupted and unlimited control of this country since the last war, themselves carry the responsibility. What they criticise is themselves, and the system which has led us into such conditions. I wish they would take a little of that responsibility, and apologise occasionally for what they have done. It never occurs to them that the industrial system, of which they are both fairly substantial upholders, is largely responsible. They must not evade their responsibility.

I pointed out some time ago—and got into some slight trouble for doing so—that we have an Empire on which the sun never sets, and a Minister upon whom the light never dawns. We have had an example of that to-day. It did not occur to Ministers that this was so essentially a debate on export trade that the Minister directly responsible should be here. That was not complimentary to the House, and not very complimentary to the Department. I cannot speak as an economist or as an expert on finance, but, as a practical business man, I have had to wrestle with some of the problems of economics and of finance, and try to understand how they work. I had a very fine market for goods which I shipped to America. American tariffs destroyed that business entirely. The matter did not stop there. I built up a business almost equal to what I had lost in America, within the British Empire. Then increasing American business activities, sometimes assisted by the subsidising of exports, cut me out in the British Empire. It is a serious matter, and we have to talk about it to America first of all, because it is America who determines by her policy the policy that will be practicable for this country. We have had enough experience during the war of pooling our resources to enable us to deal with all the problems that have arisen, but when we are going to put that knowledge into practice remains to be seen. The President of the United States made this statement, in a speech on 28th October: I am confident that, with Congressional approval, the foreign trade of the United States can be trebled after the war, providing millions more jobs. The Prime Minister said the other day that Lend-Lease was a defence for the United States and for the effective prosecution of the war by the Allies. If they are going to treble their exports after the war, and to maintain that increase, what is to happen to this country? I want to put it as a matter of fair dealing. I do not think that Americans will respect us any more for mincing words about it. It is time we did away with this double language, this verbal smoke-screen of half-truths, which leads to many misunderstandings, and even to suspicion. We shall help ourselves most if we speak very plainly to the people who made these statements. The President said that he wanted to treble American foreign trade. This is what is put into the Report of the Foreign Economic Administration, published in September of this year: Commercial exports from the United States in the first six months of 1944 are, by value, of an annual rate higher than pre-war exports to all areas, including those areas cut off by the Axis, and the rate has been rising steadily over the year. Including Lend-Lease, the total United States exports in the first six months of 1944 were at the rate of 14,400,000,000 dollars—nearly three times higher than the peace-time level. The President has already achieved his object. Do they expect to maintain those figures? On page 39, the Report says: American products from trucks and machine tools to packaged foods in a volume and variety never approached before. After the war the people of many countries will want to continue to obtain these and similar products from us by buying them. Here is a remarkable statement. They say that their method is "to contribute most by creating a high level of international trade." But is it to be one-way traffic? International trade does not mean one-way traffic at all. What is America going to do to get this trade? How is she to take payment for all these things she is selling? They make it perfectly clear in this Report—Members should read it—that post-war trade is part and parcel of their post-war strategy. These markets that they win here they intend to maintain. As previous speakers have said our exports to South America have been practically wiped out. The Minister was wrong yesterday when he said, in answer to questions, that contracts were not turned away to America. I will show him letters from his Department, telling people to refer inquiries to America. To Latin-American countries the United States have increased their cash exports. Have the Government any policy for balancing things?

Let us come a little nearer home. This Report makes it clear that in Italy, where before the war they used to supply twice as much as we did, their advantage is now four to one. I believe that if we could have the figures for France they would show that the position there is even worse. The Americans are creating a taste for American goods, and establishing machinery, for which spare parts can be supplied only by America. Once you get a country's machinery, if it is good, nothing on earth can drive you from it. If you have a Rolls Royce you want Rolls Royce spare parts, and if you have a Ford you want Ford spare parts. These countries will want their spare parts and new equipment from America. Here is another thing, right on our doorstep, where we have all the advantages. If you take the European countries, they have been buying twice as much from America as from ourselves, and the American countries have been selling twice as much as they have bought. Under the old system of multilateral trade it was all right, but America does not follow that system, and that is playing havoc with the rest of the world. America has many advantages. I suppose our productive capacity is now 85 per cent. engaged on war production alone, while I do not believe that in America it has exceeded 60 per cent. America is encouraging her people to maintain their exports. The Lease-Lend Clause was grossly unfair to us, but we must acknowledge that there is a reason. For example, we are taking a radio valve from America for which the Government pay 9d., and the manufacturer makes five cents profit. It is sold here for 9s. The Government are setting a bad example. If the valve cost them 9d. it should be sold at a fraction more than 9d. in this country. The Department, of course, think that they are being very clever in making profits, but there is another valve which is sold by the ring at an even greater profit. We are never going to have a radio industry here on that basis. The right hon. Gentleman should apply himself to this ring, which forces up prices. There was a certain lamp on the market, which lasted 5,000 hours. The ring made them take it off, and bring in a lamp which lasted for only 1,000 hours.

We have to lay the main trouble for the present position at America's door. I believe that the Americans will be sensible if our people will talk frankly to them, instead of acting like a lot of cissies and being afraid to hurt their feelings. We are not going to them cap in hand, like poor relations. Let us ask the President, if he is going to have 300 per cent. in his exports after the war in order to provide jobs for his people, whether he intends that there shall be unemployment in Europe. Does he expect to refuse imports, to collect his debts, and still to have an export surplus? He can do it in one way only. We taught him that way, over a very long period. We lent people our money to buy our goods. He might recall that out of the £12,000,000,000 invested by this country over that period, £6,000,000,000 was lost. That might deter him or at least steady him. America would not have all the money she has to-day if Americans had played the game—and there is such a thing as playing the game in international commerce. You cannot expect to go on collecting your debts from abroad and selling your goods in order to keep your people employed and others unemployed. The time will come when that has to stop. It happened in 1929.

All will go well if they are going to give things away. According to great economists, people can afford to do that—it does not matter if you do not get paid. If there is to be universal Lend-Lease, there is something to be said for that. But if some day they are going to stop because somebody gets hurt or gets the wind-up, what happened in 1929 will happen again. The moment you stop, you will bring depression to all the industrial systems of the world. Americans must face frankly the tremendous responsibilities that they have, and I hope that our people are putting this fact to them just as bluntly as I am trying to do. These conferences answer a very good purpose, but all the sophistry of Bretton Woods cannot overcome these evils. Manipulating international currency systems really will not avoid the problem you have got to face. Ultimately, you have got to take somebody else's goods in payment, and so let us not go on fooling ourselves any longer. American business men are the most superficial people in the world when it comes to facing economic facts, and, if you continue this sophistry of Bretton Woods, I am afraid the whole structure of Dumbarton Oaks will fall like a pack of cards around you.

If there are to be economic wars, inevitably they will be followed by military wars. No law on earth can prevent that, and so now is the time when our people need to be up on their toes, as America is on her toes. You cannot blame the Americans, because they must face their responsibilities. They are on their toes trying to get a move on very quickly, but I am afraid that our people are down at heel. I really believe that, if our people would talk a little more fearlessly to America, instead of going there and making these reports about agreements which we know, underneath, are not agreements at all—there is much more disagreement—and would be a little more frank, I am pretty sure that the other people would respect us much more.

I want to say a few words about the right hon. Gentleman's Department, because it is making arrangements with America and we have seen something of what America is doing, while these things go drifting along in the way in which the Board of Trade has been doing. Take a case quoted in the "Daily Express" a few weeks ago by Sir Edward Crane, the Birmingham bicycle manufacturer. He wanted to get some materials for producing bicycles, but was told by the Department that there were none available, while another man had his place littered up with material and said that if he could not get it out of the way, he would have to stop producing. This was an instance of the Department deliberately holding up trade.

Here is another case of a business man with whom I have close association. He saw that either America would sell to us certain machines, or we could get the right to manufacture them in this country. He got the rights after a two-years' struggle, and I saw the agreement signed by the American side. The Bank of England come into this kind of thing. They would only act on a recommendation from the right hon. Gentleman's Department. Not a thing was done. Here was a valuable contract, probably representing millions of pounds' worth of business for a manufacturer in this country, who held the sole rights for Europe. The other machines in the same kind of business were quite obsolete, and so this man went to all this trouble to arrange for manufacture here, and to get the rights for Europe, but, month after month, the Department would not move a finger to help him.

Then there is the case which I quoted to my right hon. Friend a few weeks ago, and in which he said he would like to do something about it. A man in America—an Australian—was placing very considerable orders for goods for Australia, but he held up the final signing of the contract until he got back here, to see if these people would make a move to get the business for this country. He could not get anybody to give him the slightest encouragement. Americans promised delivery six weeks after what they called "D" Day. I have a letter showing that one firm tried for very many months to get one machine from the Board of Trade, but the matter still went drifting on. Meanwhile, American machinery, representing many thousands of pounds, was obtained and sent to Australia, where workmen put it into operation, and it is to-day operating within a space of four months, while we here are still hammering away at the door to get one single machine. It seems to me that there is nobody interested in this business. I am not criticising the Minister so much as those people who have had the major part of the control of Government in this country for many long years. This system, and this Department, does not seem to us to be likely to be interested in post-war trade, which might become a very serious and menacing thing immediately the war is finished.

I now want to mention another matter which the right hon. Gentleman must do something about. We had an opportunity of tendering in this country for a big contract in Egypt. A friend of mine—and one of the drectors of the company, sits on this side of the House—told me that he tried to get permission to go across to tender for the job. Nobody would help; every Department sent him from one to another. He came to me in despair and said, "We are going to lose this job." I got in touch with the man who had held it up. If you can do that sometimes, you can shame them into doing something. In less than four days, my friend came to me and said, "I am flying to-morrow." I saw him when he came back, and found that he had got his tender submitted in time, and had got the job, worth £2,000,000. A director of that firm is sitting in this House. What nonsense that Members of Parliament should have to go and fight like that to get the privilege of tendering for a contract of that nature.

But, as the Americans say, "You ain't heard nuthin' yet." There is £500,000 worth of steel in this Egyptian contract which I want up in my constituency, and when people wanted to quote a price for a contract, they were told they could not do so, because the Americans were quoting £5 per ton less for that steel, so that the contract must go to the Americans, unless the right hon. Gentleman does something about it. I have a note from the Ministry of Supply which explains why the price of steel is £18 per ton, against the £12 which it used to be, and the note says that the Minister cannot alter it as over £2 is a levy on the industry to equalise the cost of American steel coming into this country. You cannot make Egypt pay that, but that is what we are trying to do. At this moment, there is £500,000 worth of steel waiting to be handed over to Dorman, Long in Middlesborough, if the Government says "Yes, we will quote the same price as America." That is not unconnected, of course, with Lend-Lease. There is no doubt about it that we are being out-mechanised and out-organised and out-financed by our foreign competitors, and, with the best will in the world, even the continuation of the National Government will not help that. Has anybody ever tried to be of one mind on these things? Pretence of political unity when there is none, is nonsense, but here is a matter on which we are all of one mind, and on which we ought to compel the Government to move.

There is one thing on which the Department should make an immediate start. They have advisory boards—I have been on one myself—and I think most of them would say, as a trade union said last week, "We do not deny that we have been consulted, but we do deny that our advice has ever been accepted." The trade, of course, must be taken into consideration, particularly regarding export. Exporting people in this country are very depressed. They do not seem to know where to make a beginning, and I hope the House and the Minister will realise that this Party is as much concerned about industrial welfare, as the hon. Members on the other side. If we come into power, we shall inherit the system which exists to-day. We cannot change it all, but we shall want to make it work, and make it work better than the people who have had it so long have been able to do, until we can transform it into an instrument for a nobler purpose altogether. To-day is a grand opportunity for the right hon. Gentleman at the Board of Trade, to assure the House that he has the capacity and the determination to take a stand. Let us do a little clipping of his red tape. It is rather belated, I know, but the sooner we do it the better. I hope that, when the Minister replies, we may have a little further light thrown on the Department of Overseas Trade. I do not believe we have had a report from that Department since I have been in this House; at least, not during the war. I hope the Minister will show us that he has the determination to put us on a level with our American cousins, in the transition from war to peace and in the post-war world.

1.41 p.m.

Lieut.-Colonel Gibbons (Bilston)

It is very necessary for me to ask for that kindly consideration which the House always gives to a maiden speaker. I am a person engaged in trade or industry, but I have been away so long that I cannot pretend that I am fully conversant with all the present problems. Nor can I, as a novice, pretend to be able to reach the very high level of this Debate. In addition to the tremendous honour of being in this House at all, I have the honour to represent the constituency of Bilston. As I expect my much respected predecessor often told the House, Bilston is a constituency which comprises three of the towns of the Black Country district of South Staffordshire. That district is the very fountain-head and source of the iron and steel trade of this country, and of all the heavy engineering trades which derive from it. It has played, and it still plays, a great part in the industrial life of this country, and will do so in future.

I think, roughly, the reactions of anybody coming back to industry after five years' absence in the Forces are these. First, he feels a sense of admiration, amounting almost to awe, at what industry has done during this war. We hear so many compliments by industrial hon. Members of this House that I would like, as a Service Member, to make my first observation a compliment to the enormous work which our workpeople have done throughout the war. One's next reaction on returning to industry is to note that people are getting a little tired, and are looking forward to a return of their old freedom and their old jobs, but are still frightfully keen to get on with this war. The third reaction is that, while people are getting tired, plant is very tired indeed, and there is a tremendous work in front of us in the way of repairs and modernisation. My fourth reaction is that there exists amongst people in industry the sense of uneasiness, almost of pessimism, which we have heard during the Debate to-day, in particular about the export trade.

I hesitate rather to speak on the first part of the Amendment now before the House. I do not want to be contentious or critical in a maiden speech. I realise how very difficult a job the Board of Trade must have had during this war, when it has had to play second fiddle to the Supply Departments of the Services, and I know how dangerous it is to draw upon separate instances and then to make a deduction from them. Nevertheless, my main impression supports those that were put forward by the hon. Member for Northampton (Mr. Summers). As far as normal trading goes, the various Departments of the Government are talking to industry with different voices, and I feel that we want a Board of Trade with a stronger voice than the one we have at present. In this matter, we want something of the single-minded direction of operations that we have had in the operations of this war. That is all that I would say on the first part of the Amendment.

On the second part—the betterment of the chances of our trade—we have to remember that the trade of the present and the trade of the future are two different things. At present, we have a position in which orders are easy to come by, but in which the difficulty is to supply the goods. In the future, we shall have a position in which we hope we can supply the goods, but we shall have to do so, in competition against all the manufacturers of the world. We must use this present time to some extent, as a manufacturer does during periods of bad trade, when he tries to obtain small sample orders, not for their intrinsic value, but with the hope that they will bring other orders in the future, and will increase his goodwill. I believe that in all their actions on the present trade position, the Board of Trade ought to consider what the effect will be on the future goodwill of the exporters of this country. We shall not get goodwill unless we maintain the good old principle, which has been the foundation of the success of the British export trade, that the world knows the British manufacturer will supply goods to specifications, and at the time specified. It is much better to tell customers definitely where we cannot supply the goods, than for the Board of Trade to give additional export quotas to certain industries without having first ascertained that the labour will be available to produce the goods, and that is happening to some extent.

Everybody in industry welcomes very sincerely the extension of the list which is going to enable us to export a certain amount, though a very limited amount, of steel. I hope that that extension can allow us to export very small parts of plants which are necessary to us, but which, at the moment, we are forbidden to send away. May I give a small example of what I mean? A little time ago a firm in my constituency obtained a small order for the supply of gasworks plant to Iceland. It was an unimportant matter, but then the export trade is made up of a multitude of unimportant matters. The firm in question were very pleased to get the order, because previously the Germans had done all the business in that country. They made the goods, and at the last moment discovered that a few bolts, which were necessary to keep the whole plant together and which amounted in value to a quarter of 1 per cent. of the whole value, could not be despatched under the Board of Trade Regulations. The whole had to go off without this tiny essential, and it was expected that all the goodwill that had been gained by the first order would be lost again. Fortunately an intelligent foreman, no doubt surrounded by camps of Allied military engineers in Iceland, managed to find the bolts from another source.

I come now to the future of trade. The main consideration we should have in our minds is that the preparation and gearing up of industry is a long job and time is precious. The more we can do to gear up industry for our eventual exports during the period between the defeat of Germany and the defeat of Japan, the better. I believe the following is wanted for the clearing up of industry. First, the managements must have a clearer idea of policy than is possible to them at present. They want more information. They want to know what countries are likely to take the goods, what kind of goods we are most likely to export, and where to start. Having got that information, they want to consider what capital they will have available to enable them to prepare their plants for the production of those goods economically. They look forward to a decision on the matters foreshadowed by the Chancellor of the Exchequer in the last Budget, by which money put back into industry is taxed in a different manner from the money distributed in dividends. Then, they want to get on with the job of modernising their plants and getting them ready. It is very difficult because the war has to have first consideration and houses the second, but every opportunity should be taken during this waiting time for exports really to start again to get on with the tasks of modernisation.

That brings me to the subject of labour. For the tuning of plants, certain skilled specialists are very much required in industry. My hon. Friend the Member for Duddeston (Sir O. Simmonds) referred to the same thing. They have been retained in industry hitherto, because industry was producing capital goods for our Armies, and now there is a tendency for them to scatter. I do not think that any trade has the right to ask for any type of man to be excluded from the Armed Forces. The war must be so much the paramount consideration, that only those knowing the future of our man-power can take the decision, but we are entitled to point out that, if skilled people are not here now, it will very much delay the return of industry to normal times, the start of our export trade and the full employment of our people. I am referring particularly to draughtsmen and toolmakers.

The question of subsidies was discussed in the speech of the hon. Member for East Middlesbrough (Mr. A. Edwards). I hope very much that we are not, in the post-war world, going to see the return to the position which existed when other countries were heavily subsidising their exports. All of us who were connected in any way with the export trade will have very bitter memories of the difficulties of competing with Germany during the years before this war, owing to her policy of subsidies. The one reparation we must be sure to exact is to lay down after victory, that our enemies never compete with us again in the form of subsidised exports. The hon. Member for East Middlesbrough also referred to the export of capital goods. There is a very great market for the export of capital goods with the developments which are now going on overseas, in Russia and in the East and in the construction of secondary industries in the Dominions. I hope that we are able to advance a financial policy in backing up the export of capital goods. It seems difficulty not to loan money abroad on capital goods when we make loans on consumer goods.

With regard to the export of capital goods and plant, I should like to support what my hon. Friend the Member for Kidderminster (Sir. J. Wardlaw-Milne) said on Friday on the subject of exports. He referred to the foremen, technicians, and workmen that we sent abroad to build our plants. It has often been said, and very truly, that the British Army is our best Ambassador. Wherever it goes abroad, it secures, by its conduct, the good will of the country where it serves. In a modified degree, that same remark applies to technicians and workmen who have been sent abroad. I am in entire agreement with statements that have been made regarding the need for principals of firms to go abroad, and to go abroad very quickly, to secure first contacts and to get business going. But in the plant industry, once business is going, the goodwill of that business depends on the skill, the integrity and the initiative of the British foreman and workmen who go abroad to build or to start up the plant. In my experience, these men have no superiors and very few equals in any nation and I hope that, in the forthcoming legislation on national insurance matters, it will be seen that British workmen working for British firms abroad are completely covered. It is time that I finished, if I am to have any reputation for speaking briefly, but may I say this? I do not think that any business firm starting on a sales drive has ever done any good unless the drive starts with a real belief in the quality and value of its goods, and expects success. I believe that the same principle applies to this country. Generally speaking, our goods are of the right quality. The recent figures in the White Paper, comparing our costs with American costs, show that, generally speaking, they are of the right value. Because the export trade depends, after all, on international conditions which we cannot altogether control, we cannot command success but I believe, by our organisation now, by forethought now, and by unity when the time comes, we can deserve it.

Mr. Benson (Chesterfield)

I am quite sure that I shall be expressing the feeling of the House when I offer my most hearty congratulations to the hon. and gallant Member for Bilston (Lieut.-Colonel Gibbons) upon his maiden speech. If we cast our minds back to our own maiden speeches, very few of us would have dared to speak without a note when taking up the points of previous speakers. Those of us who are older Members of this Chamber realise very clearly what a success the speech of the hon. and gallant Gentleman has been from the point of view of technique, and I congratulate him most heartily.

I listened with great care to the speeches of the hon. Gentlemen who moved and seconded this Amendment and I must say that I am very disappointed with the line they took. They seemed completely unaware of the opportunity that this Debate gave for sketching broad and fundamental changes in industrial organisation. The hon. Member for Northampton (Mr. Summers), who moved the Amendment, offered a few niggling criticisms of the internal organisation of the Board of Trade. The seconder offered us a few vague generalisations and, so far as I could see, did not put forward a single idea, or make a single suggestion, which would indicate what the line of hon. Gentlemen opposite is to be with regard to the principles of industrial policy after the war.

There has been for some time past a great deal of concern expressed by industry, and in the newspapers, on the danger of the United States forestalling us in the post-war scramble for trade. Unquestionably we shall have to face the problem that we are likely to be forestalled, but I want to suggest that although this may be a disadvantage, it is only a temporary disadvantage — with the exception, possibly, of capital goods which require continuous service, such as spares and the like. There, whoever gets in with the capital goods, stands to attract the repeat orders for spares and the like, but the vast bulk of our exports are not of that type. We have lost markets in the past that we have held for generations, and the mere fact that America gets in on a good market, or in a particular article, does not mean that America has that export permanently; America can be ousted, if we are in the position to oust America.

Sir Herbert Holdsworth (Bradford, South)

Yes, but would not the hon. Gentleman agree that if we were in at the same time, we should stand a much better, or at least an equal, chance in the struggle for recovery?

Mr. Benson

"If" we get in at the same time. I am well aware that there is a disadvantage in not getting in equally early but I am not prepared to admit that that is a permanent handicap.

Sir H. Holdsworth

It is a very serious one.

Mr. Benson

That may be, but there are much more serious handicaps which we have to face, handicaps that it would be as well if this House faced now, permanent handicaps. There is the question of our relative efficiency in industrial production. That is a major matter to which we ought to be addressing ourselves in this Debate. America may steal an advantage over us because she has mobilised to nothing like the extent that we have for war production, but that, I repeat, is a temporary advantage. It will be a temporary advantage, however, only if we bring our industrial efficiency up to the standard of American efficiency.

What is the position with regard to the relative efficiency of industry in the world? The United States has an efficient producing machine. Not only that, but in industry in the United States they have retained a very large amount of profit made out of the war. They had no Excess Profits Tax until they came into the war, and they made enormous profits. Even now they are making profits which they are retaining in industry, and, what is more, they are ploughing back those profits into plant.

Sir H. Holdsworth

We do not get the chance.

Mr. Benson

Maybe not during the war, but previously we had the chance but did not take it. The industries of France, Belgium and Holland have been devastated but they will not remain devastated, they will be rebuilt very largely from American plant financed by American credit, and, when they do reconstruct their industry, it will be upon the latest and most efficient lines. I think it was the seconder of the Amendment who referred to the fact that in Australia they were themselves building machine tools. Our Colonies, and the netural countries, owing to the shortage of consumer goods, have been building up their industries on modern lines. In time, Germany will rebuild her industry, and she will rebuild her industry once again on the latest and most modern methods. It is that handicap which we have to face—a permanent handicap unless we take steps—which is far more important than the mere question of America getting in 12 or 18 months before we do.

What about this country? I think it can be said that engineering is thoroughly efficient because this has been an engineering war and we had to re-tool our engineering industry partly from our own production of machine tools but very largely from the import of American machine tools. What of the rest of industry? Modernisation and development in this country ceased in the 1920's. Throughout the whole of the 1930's there was no development, no modernisation. Very large profits were made but they were put into gilt-edged, not into tools, not into plant, and we shall start with that handicap. The United States certainly has had the advantage during the wartime period——

Colonel Greenwell (The Hartlepools)

May I interrupt for a moment? The hon. Gentleman has made a very sweeping statement indeed, and I think it would be only fair to ask him to produce some justification for his remarks. He may select isolated cases, but a broad generalisation of that sort needs a little substantiation surely.

Mr. Benson

It is perfectly simple. During the 1930's in this country we spent little more on the development of industrial plant than the mere depreciation allowances allowed for income tax. If the hon. and gallant Gentleman wants evidence of that, he had better go to the figures of Colin Clark, they cannot be disputed. Take the figures given in the White Paper on National Income. They show that in 1938, which was a re-equipment year because of the threat of war, we spent, in addition to replacements, barely £20,000,000 on industrial plant and buildings. If the hon. and gallant Gentleman thinks that that is not an adequate justification for my statement, what more does he want? Our handicap, far more serious than the possibility of America entering into the trade markets 12 months ahead of us, is the fact that we shall have face the world with obsolete plant. I am not sure that we shall not face it with an even greater handicap—obsolete minds in our British industry. The hon. Member for Northampton deplored the fact that there were no business men in the Board of Trade; I think it is a very much more serious matter that there are very few business men in British industry——

Sir H. Holdsworth

Ridiculous.

Mr. Benson

The hon. Gentleman says "ridiculous." It is not ridiculous. Why is our industrial plant 20 years behind the times?

Sir H. Holdsworth

Because our taxation policy is absolutely wrong.

Mr. Benson

Our wrong taxation policy before the war did not prevent hundreds and millions of pounds being put into reserves and into gilt-edged and not into plant. Those are the facts that the hon. Gentleman cannot get over, and they are the facts which British industry may not be able to get over unless something very drastic is done in the next two or three years. I know there will be a big tendency to try to get in first, to try to get the change-over quickly, in order to exploit the easy markets which will arise inevitably in the first 12 months or two years because the world is absolutely starved of consumer goods. If we are to cast away the substance for the shadow, we may be able to mitigate the amount of forestalling which the United States can do in the first two or three years but we shall have to pay for it later on. This is the Government's responsibility. What is it going to do during the turnover to see that British industry is brought up to an adequate standard of efficiency? That is the question we have to ask the Board of Trade, and to which we want a reply this afternoon. What is their plan for making British industry capable of standing up to American competition, capable of standing up to the competition which will develop from the occupied countries, capable of standing up to the competition which must inevitably develop as a result of the tooling-up and the industrialisation of Australia, India, and the neutral countries? That is the problem that is facing this country. Merely to talk about niggling re-organisation of the Board of Trade, to talk—as the seconder did—of consecrating ourselves to an export drive, is just sheer nonsense unless we have the tools with which to consecrate ourselves.

I would like to point out to the House that we have an opportunity now that will never occur again. In the change-over to peace-time production, we shall have British industry in a state of physical fluidity in which it has never been in the past and never will be again. We shall have to de-concentrate. There are vast quantities of machinery which have been swept out of the factories in order to make room for engineering and for Government stores. An enormous amount of machinery at the present moment has been removed from its old position and put in storage. There will be a physical readjustment in industry, an actual physical readjustment of plant which, as I say, makes British production physically more fluid now than it has ever been. The Government are in an ideal position to control the development, and to insist upon the stepping-up of British industrial efficiency during the next two years which they will never be in again.

Labour will have to be rationed in between defeat of Germany and the defeat of Japan, and materials will have to be rationed. It was suggested that there would have to be priorities. Well, let there be priorities but let them be by the criterion of efficiency. Stored plant, curiously enough, is largely concerned with export industries, for instance, cotton machinery—and we know the standard of our cotton production at present. The leather and pottery industries are other examples of the high degree of concentration which has taken place, where machinery has been swept away to make room for war-time production. Do we intend to replace obsolete machinery or not? If we do we may get in to the markets six or 12 months earlier, and we may retain that market for another six or 12 months, but then we shall lose it.

There is another matter in which the Government can give powerful aid, and that is the question of finance. I am not sure how fluid is the finance of British industry. There is a lot of talk about the effect of E.P.T., and although this may have hit some industries it has not hit them all, and my impression is that as a whole industry is financially in a fairly fluid state. We have no data so we cannot say definitely. What I am certain about is that financial fluidity is extremely patchy. Some industries have large reserves, but there are others with little or no reserves. If we are to retool British industry finance will have to be found from somewhere, and I suggest that it will have to be found to a very large extent by the Government. [An HON. MEMBER: "Subsidy."] No, not by subsidies at all. The financing of industry by Government controlled institutions is not a new experience. It was done very largely in Germany before the war, where industrial loan institutions lent money to firms which were too small to go on to the ordinary capital market to float their own loans. Something like 70 per cent. of British firms at the present time are in that condition. They are too small to have access to the ordinary capital market, and it is these firms that are likely to be very short of capital. There is no reason, therefore, why that capital should not be forthcoming through Government institutions, not at seven, eight or nine per cent. as was paid for capital after the last war, but at 3½ per cent. The various German institutions proved extraordinarily successful, and were all financially sound. They lost practically no capital because, invariably, as a condition of making the loan, a high standard of technical efficiency was insisted upon, and if a firm was not in a position to employ efficient technicians the loan institution provided the technical advice. There is no reason why that should not be done here.

There is another large area of industry which will be tight financially, namely, those concerns which have put by their depreciation reserves only to find that they have done so on the basis of 1930 costs, and that they will have to replace their plant on the basis of 1945–50 costs. Here, again, there is every opportunity for the Government to insist upon a high standard of industrial efficiency as a condition of financial assistance. This question of the change-over is extremely important, because the quality and method by which it is done will standardise the type and quality of British industry for the next decade. Not only have the Government a wonderful opportunity—which will not recur again—but it is highly important that plans should be announced at an early date, that industry should know that it is expected to toe the line of efficiency, and that it should tool up in the right way. Let me give the motor industry as an example. Everybody knows that a great deal of discussion has been going on lately about the horse-power tax. This tax, in the past, has been a magnificent barrier for the British motor industry against American imports. It has given the industry a far higher protection than a mere tariff. Moreover, it has given large firms in the industry fantastically large profits. It has been the source of Lord Nuffield's millions, and the enormous dividends paid by Austins. It has killed American competition inside the home market, but it has killed British exports in the world market. In 1938 this country exported over £400,000,000 worth of manufactured and semi-manufactured goods of which the contribution of the great motor industry was something under £12,000,000. If the motor industry is allowed to tool up for the small engine it will have to spend millions of money. You cannot tool up for the mass production of motorcars without spending millions of money on jigs, tools and presses. If that money is spent on the small engine it will mean that we are going to abandon, for good and all, hope of exporting our cars into the world. Industry cannot re-tool twice in a few years; the strain is too great, and if we are going to seize the opportunity of utilising the motor industry to help us obtain an enormous increase in our exports then that industry must tool up in order to produce a car that the world will buy, and not merely a car that this country will buy.

Sir Patrick Hannon (Birmingham, Moseley)

From where does the hon. Gentleman get his figure of millions which the motor industry will have to spend on retooling?

Mr. Benson

I am not an expert in the motor industry, but I was told by somebody of high standing in the industry that to produce a particular 10-horse power car for the first time required the expenditure of over £1,000,000 on tools. I may be wrong, and my informant may be wrong, but I do not think it will be denied that tooling up for the mass production of motor cars involves very great expense, and one which the industry cannot stand twice in two or three years. If that is agreed I am not concerned whether the cost is 5d. or £5,000,000. I am quite seized of the necessity for speed. I want the industry to make progress rapidly, and I want the turnover to be rapid but I want to see that we make speed to a system of 1949 and not go backwards to a 1939 system, which in this country was the industrial, system of 1929.

2.26 p.m.

The Minister of Production (Mr. Lyttelton)

May I add my congratulations to those which have been offered to my hon. and gallant Friend the Member for Bilston (Lieut.-Colonel Gibbons) for his very thoughtful maiden speech, to which we all listened with admiration? We shall hope to hear much more of him. I cannot enter upon the very wide topics which this Amendment and the speeches of the mover and seconder have raised to-day without first saying that even first thoughts, about post-war trade cannot be formed, much less expressed, unless against the background of the grim and sombre realities with which we are still faced. It is the wish of my colleagues in the War Cabinet, as it is mine, to begin the reply to the first part of this Debate by giving a warning. It is winter; Germans are not beaten and the Japanese war is still raging in China, Burma, the Philippines and at sea and in the air. We may yet have to face battles sterner and bloodier than any we have yet fought, and although victory is certain the time of victory is uncertain. At no time in the war have we had greater need for singleness of purpose and greater exertions. We must be strung up to the highest pitch we have yet achieved to exploit our successes and press home our attacks

Even by the discussion of such things as trade after the war, the impression may gain ground that we can now start to improve the civilian standard of living and resume exports in a substantial way. Such an impression is false. If such an opinion were allowed to diminish our efforts we should be betraying the men who are fighting our battles and we would be throwing away the opportunities which our sacrifices have won for us. It would mean delay in victory and, with it, the loss of tens of thousands of men who are the flower of the country, and to whom we look to be the fathers of our future. No tragedy could be more poignant than that. There will be changes in war production, and there may even be releases next year to civilian employment. Men and women will be taken from their present work and given other work, but because the scale of production is reduced in certain factories, those who are left at work in them must not relax the tension under which they have laboured for so long. Every hour lost now, may mean another hour of war, and of death. The only way in which we can make the last round a short round, is by not relaxing. In the field of action there is still only one word, "War"—unremitting and unrelenting.

I must say that I listened to the speech of the seconder of the Amendment with my usual admiration for his facility, but with something very like astonishment. He seemed, first, to suggest that the export trade of this country had been allowed to wither through inefficiency and the cold hand of officialdom. Our export trade has not withered; it has been cut down as an act of policy. It has been cut down to make its contribution to winning the war.

Again I was astonished to hear some of the phrases in which it was suggested that the Board of Trade must now get into the posture in which it could win the counter-departmental battle against the Ministry of Aircraft Production, the Ministry of Supply and the Admiralty, who, it is said, must not sneak through their requirements for this, that or the other. These remarks are entirely unrealistic. They may be applicable to other targets but not to the one with which we are faced to-day. The task of reconversion from war to peace is vast and complicated. We can see how great it is when we look back and remember how long it took to turn our peace industries into the field of war production. We did not reach full war production until the end of 1942, and the task of going back the other way is even greater, because war not only destroys in the economic sense but also distorts. Considerations which have nothing to do with economics—military considerations—supervene, the broad rivers of trade are diverted into channels in which they have never flowed before, and considerations of cost and profit have to give way to considerations of conserving man-power, shipping and foreign exchange, and it is on cost and profit that any industry, whether controlled by the State or by private enterprise, must ultimately depend for its vigour and for its survival. All these things in war are swept away.

Again, in the field of man-power the young men are fighting and their places at the bench and the lathe are taken over by young women. It is still true that one worker in three in the munitions industry is a woman. I have several times mentioned, here and elsewhere, that our production, in terms of volume or value, has now reached the highest point ever recorded in history whilst at the same time our imports—this is an important qualification—judged by tonnage, are only about 40 per cent. of what they were before the war. I am discussing this subject to show how artificial is the distortion, and how unnatural is such a situation, because we can only reach that position by first, living on our capital. The instance that occurs to me is that we are now producing and consuming something like four times the home-grown timber that we used before the war. That, of course, is a diminishing asset and we have only achieved this almost miraculous result—less than half the imports and maximum production—by the most grinding economies, which are utterly unacceptable in peace-time, in the use of certain commodities. The one which naturally occurs to one is paper. The savings that we have effected in paper run into tens of millions of tons of shipping but, at the other end, the price that has to be paid is this most unpleasant inability to print the copies of the books which we require to disseminate our points of view. The hon. Member for Berwick-upon-Tweed (Sir W. Beveridge), I think, is rather dis- tressed that his book is very difficult to obtain, so I was a little surprised to see in the middle of it a quotation which seemed to suggest that we can go on living on this very small scale of imports. If he had been here, I should have told him and the House that, if we go on with that small scale of imports, his next book—I hope there will be many of them—will be equally unobtainable.

The point that I am on now is that the present situation is highly artificial and distorted. But in our approach to a subject which has very few political aspects and is in the political sense quite uncontroversial, I must try to deal with things in chronological order, and I hope it will be for the convenience of the House if I start upon the third part of the Amendment, which deals with the reconversion of industry from war to peace. There seem to me to be two reasons for adopting this course. The first is that the release from war production must come first in point of time. Of course, the release of capacity also carries with it the release of man-power and, on these subjects, in my Ministerial capacity I do not sing, like the poet, "Arms and the Man." I sing "Arms" and the Ministry of Labour sings "The Man," and we have to try to, keep in tune and in time.

Mr. Shinwell

Like a jazz band.

Mr. Lyttelton

No, the harmonies are much more melodious. I will deal first with the release of capacity, which comes first in point of time. There is another reason, which was explained by the Prime Minister in answer to a question about the definition of the areas of responsibility lying between myself, my right hon. Friend the President of the Board of Trade and my right hon. Friend the Minister of Labour. It is that up to the point of the release of capacity it is my responsibility, its absorption into peace production is the responsibility of the Board of Trade, whilst the Minister of Labour remains the partner of both throughout the whole process. The reasons for this distinction are quite unassailable. The Supply Ministries are mainly concerned to-day with the engineering and allied trades, which provide the bulk of the munitions, but there are many industries which even in war have nothing very direct to do with munitions and which are still under the control of the Board of Trade. I think of the dis- tributive trades—pottery, for example, and many others. As the release takes place from war production we must look to a peace-time Department, with catholic responsibilities, if we are to get the right balance. That does not mean, of course, that the Supply Departments are to release capacity and man-power wherever it suits the production of munitions best. They have to consider all the time whether that capacity and that man-power is being released in places, and for production, which will suit the plans of the President of the Board of Trade.

Sir P. Hannon

With regard to the division of responsibility between the Departments concerned with the future development of the export trade and the post-war re-orientation of industries, is there some machinery, created by my right hon. Friend and his colleagues, to maintain contact between the various Departments in developing the point that he is now submitting?

Mr. Lyttelton

I will come to the methods by which this change-over is to be effected. At present I am only defining the area where my responsibilities end and those of the President begin. I will describe a little later on the methods by which these things are handled. In order to show that we are in the main in agreement with what the mover of the Amendment said about the necessity of the Board of Trade assuming more responsibility for industry than before, I have already arranged with my right hon. Friend to make the capacity offices of the Regional Boards, with which some Members are familiar, available as a common service both to the Ministry of Production and to the Board of Trade. They are now housed in a Board of Trade building. Furthermore, on a rather larger topic, the regional boards are now acting as a common service. They, too, are chiefly concerned with engineering and the allied trades, but as the emphasis of our needs and our production becomes more directed towards peace-time products it will be necessary for the regional boards to evolve and for their representation to change and to expand. As far as is in my power—the decision will obviously rest with another Government—I am doing everything I can to give the regional boards a permanent part in a consultative capacity in peace-time, and it is through that particular medium that I should also expect to get that consultation and dissemination of knowledge, both to management and to workers, which will always add, first to the efficiency, and also to the satisfaction—that is not a small thing either—of carrying out the job. It is a great advantage to know what you are up to.

The main subject of this Amendment, I think, divides itself into three. First there is the policy that we follow; then there is the release of capacity, and then there is what capacity should be released first and for what production. I will try to deal with these three sections of the subject in order. Of course, the policy is very simple. The policy must be, without damage to war production, to release capacity and labour in those areas where they can be most readily absorbed, and for purposes which will make the greatest immediate contribution to the re-establishment of our commercial, financial and industrial life, of which the export trade is only one. In formulating either the policy or the method, we were suffering from four main uncertainties which dominated, if they did not strangle, the whole of the planning upon which we are resolved. Those four uncertainties were, first, when will Hitler be beaten; secondly, on the day when he is beaten, how far forward in the Pacific will our American Allies be, and how far forward will our own troops be in Burma; and then, what will be the nature of our deployment against Japan? A very different deployment would be called for to-day from what might be called for towards the end of the year. Lastly, what aid, munitions and non-munitions, can we count on during the war with Japan from the United States? The last of these four uncertainties has been resolved by the recent negotiations. We now know in very definite form what munition and non-munition supplies we shall receive from the United States during that period, and we shall receive them on the most generous scale which the provisions of the Lend-Lease Act permit.

On the first stage of reconversion we can do more than plan; we can act, and we have acted. The first step obviously is to release, as far as war conditions permit, designers, draftsmen and technicians with the object of starting on the production of prototypes and samples and carrying on experiments with different products, always with the proviso that it must not interfere with war production. The Board of Trade have invited applications from industry for these facilities, and, subject to that proviso, the Board are willing to grant facilities in generous measure. The applications, although they are numerous, are, I must frankly say, rather disappointing, and I hope that Members will help in making it known that the Board of Trade are anxious to provide, wherever they can, the facilities for preparatory work. On another point I must add that, once a scheme is approved, the Minister of Labour undertakes not to remove the labour, unless some emergency production of higher priority should make it impossible for him subsequently to carry out that promise; but to get the scheme approved by the Board of Trade carries with it, as far as possible, the right to hold the labour for these jobs.

Sir O. Simmonds

Of these applications, how many have been granted by the Board of Trade?

Mr. Lyttelton

My right hon. Friend the President of the Board of Trade will give the figures. More than half of the applications have been granted. My point is that on the whole the number of applications is disappointing, and we would like to see it more buoyant.

I must say a word about the raw materials for preparatory work. There is no bottleneck here at all. The quantities involved are insignificant, and with one or two obvious exceptions, of which rubber is one that will occur to hon. Members, I do not see any difficulty in supplying the raw materials for preparatory work.

Mr. Wootton-Davies (Heywood and Radcliffe)

Does that apply to cotton goods? Is there plenty of cotton available?

Mr. Lyttelton

I do not think that for preparatory work or for samples, raw materials ought to be a bottleneck.

Mr. Burke (Burnley)

Will manufacturers be allowed to make samples of cotton goods for the export market?

Mr. Lyttelton

It depends on how extensive the samples are. I do not think that, speaking as a whole, we shall be up against shortages of raw materials for samples. The actual release from war production of capacity and consequently of man-power, although it may be substantial, cannot reach massive proportions until after the end of the German war. I would remind hon. Members that, even one year after the end of the German war, more than 50 per cent. of the resources now engaged on war production will still be required for the war against Japan. Re-conversion from war to peace is going to be a much harder business than the turnover from one type of war production to another. During the last 18 months or so large numbers, running into hundreds of thousands, of workers have been shifted from one form of war production to another, and the amount of unemployment caused has been very small. This has not happened by chance. It has happened only as the result of an elaborate piece of organisation——

Mr. Gallacher (Fife, West)

And control——

Mr. Lyttelton

Certainly—the most elaborate piece of organisation and by very careful liaison arrangements between the Ministry of Labour and the Supply Departments. In re-conversion from war to peace we have no longer at the end of the day an absolutely definite customer such as we have when we are dealing with weapons of war. In war production, when we change from guns to aircraft, the Government is the buyer in all cases, but that cannot apply in peace time.

Mr. Gallacher

Why not?

Mr. Lyttelton

I thought the hon. Member would ask that. The reason is, especially when we are talking about exports, that we have to cater for the demands of buyers, the nature of whose demands cannot be foretold with great accuracy, some of whom are even in the occupation of the enemy at this moment and the ability of some of whom to pay will be greatly impaired by the sufferings through which they have gone during the war.

Mr. Gallacher

In view of the exceptional difficulties that will arise, does the right hon. Gentleman wish to impress on the House that it is better to leave the export trade in a disorganised way than to organise it and overcome the difficulties?

Mr. Lyttelton

If I gave the hon. Member that impression it is a quite erroneous one. I am now elaborating what are the problems we have to solve. To put the Government in as the buyer at the end of the day for everything which we cannot sell elsewhere is an economic solution which is very distasteful to me and to many hon. Members on this side. The problem is not so bad as it sounds because there will be, immediately after the war, an insistent demand for all classes of goods all over the world. Therefore, the problem, to put it in true balance, is first, to prevent transitional unemployment, which may quite possibly occur, even though the total demand may be in excess of the total supply, but that can be solved by organisation; and, second, to try and direct, or to influence if you like—I do not want to be controversial—our short resources into those industries and activities which can make most contribution to our immediate needs.

At this point I want to deal with a subject which was raised by the mover of the Amendment and which is very important. That is whether in this re-conversion we can pay much attention to justice between one firm and another. Is it possible to cut down the munition programme so that firms are treated justly and so that it is done equally among the members of an industry? Although I have given this matter a great deal of thought, I do not think that, as a rule, it will be possible for considerations of equity as between one company and another to enter very often into our calculations. It would be comparatively simple if the whole of an industry was engaged upon the manufacture of a particular war-like store. Then you might aim at an apportionment of the cut down so that the production fell in perfectly steady proportions, but, unfortunately, the pattern of war production is not like that at all.

I will give the House an instance. The 25-pounder gun carriage has been manufactured by no fewer than 18 firms. Of these in peace time, four were making food processing machinery, three were on railway equipment, including two railway workshops, two were on gas and oil equipment, two on printing and others on weighing machines, pumps, excavators, mining machinery and general engineering. All these diverse industries have been turned over in war time to the manufacture of the 25-pounder gun carriage. If we start to cut down the 25-pounder carriage, how is it possible for us to arrange the pattern of these diverse industries so that one manufacturer of food processing machinery does not get a start over another? I must tell the House, frankly and bluntly, that I believe a just apportionment between company and company in this kind of field will prove, in 90 cases out of 100, if not more, to be impossible. In this matter the national interest alone can govern our plan, but where we can deal equitably the House may be assured that we shall do so.

I do not want to weary the House with a lot of detail, but I must set out in broad terms what the drill is in the re-conversion programme.

Mr. Tinker (Leigh)

Go on, it is very interesting.

Mr. Lyttelton

I am afraid that this part is purely administrative and a little dusty. At the moment the Supply Department—and this will apply to re-conversion as well as to alterations in war production—receives notification from the Service Department which it supplies of a cut in its requirements, that Department makes a preliminary plan based on what it thinks will cause the least dislocation to production and will produce its war stores with the greatest efficiency, taking account of the need to free particular industries and firms for civil production, for the needs of development areas, and so forth. That is only a preliminary plan made by the Supply Department. The plan is communicated to the Ministry of Production, the Ministry of Labour and the Board of Trade. A meeting is held, called the "Programme Meeting," and it arrives, not at general conclusions, but at clear-cut decisions. All the firms affected are notified by letter what the cuts are and when they will take place. Two days before these letters go out to the firms, the Regional Boards are notified of the proposal in order that we may mobilise on our side the local knowledge and the knowledge of local conditions which they have gained in such large measure in the war.

We know full well what industry wants. It wants to know how much capacity and how much labour can be released from war production, and when. That is what the Government wish to tell it. But I must emphasise that at this moment it is not very easy to be precise because all these questions depend, not only upon the duration of war against Germany, but also on the nature of the war as it unfolds. The House will have seen in the correspondence between the Prime Minister and Sir Walter Citrine, the kind of thing that happened when we had reduced our ammunition programmes, at the beginning of this year we restored it to full vigour, and the House will also have noticed that the Americans have had to retrace a few of the steps they took towards reconversion, because the course of the war took an unpredicted form. It is very difficult to be precise, but that is our aim and we shall do our best. I know that we shall fall short of perfection. We shall sometimes be convicted of inconsistency. Some hon. Friends will think that firms in their constituencies have been singled out for an unpleasant discrimination, and it may even be that, on occasion, we shall actually be proved to have made mistakes.

I have dealt with the first two parts of this subject—the policy and the actual process of reconversion—and I now wish, in a general way and quite shortly, to touch on the third, which is, What production should be released first, and for what object? There is a general answer which I think is quite clear. We want to release the plants and man-power which will make the largest contribution to our export trade, to the re-equipment of industry, to the housing of our people, to the raising of the civilian standard of life, which is painfully low, to the easing of transport, which I mention specially as a feature of the civilian standard, and to the needs of the development areas. No one, I think, can give any of these particular subjects priority. We want to move forward on a broad front, but it would obviously be inappropriate for me this afternoon to do more than make one or two remarks about one of them—our export trade. After all, the export trade cannot be looked at in isolation; it has to be looked at as part of the whole demand. There is no such thing as an export trade in a box. The export trade is part of the whole trade, and very often the home demand will prove to be the larger part.

We have, perhaps, the most important psychological task in front of us in all these matters, which is, to realise that we are now the world's greatest debtors. We have always been creditors, and the creditor mentality is deeply ingrained in our outlook. We have to change that to meet our changing circumstances. We have to realise that we cannot afford to buy abroad anything which we can economically make ourselves. We simply cannot afford it, and there are occasions when our rather grand seigneur manner will have to be altered in order to match our rather shabby and somewhat shiny coat. That is, perhaps, the most important psychological change we have to make, because, without exports, it is impossible to maintain the standard of life, to import the balanced quantities of food necessary, or to bring in the raw materials which form the basis of the whole of our industrial production. The task of raising exports is an immense one, because the target is 50 per cent. above the exports reached in 1938. It can only be achieved by practical measures, industry by industry.

Each industry engaged in the export trade before the war should set itself a target and raise its sights above the point reached before, and should then ask the Government, day by day, to remove the obstacles which impede its programme and to give it facilities, and so enable us to achieve our object. I am sure it can be achieved, but it will, no doubt, require some time, and it will require great drive and push. If I were asked my reason for saying this, I would point to the recent White Paper on the war effort of this country. That White Paper is, in the main, devoted to the art of destruction.

Mr. Burke

Can the Minister tell us how it can be done, industry by industry, when some of the industries are a mere heterogeneous collection of firms?

Mr. Lyttelton

It comes down, in the last analysis, not only to industries, but to firms themselves. That is the only way it can be done. It is no good theorising. In the end we have to come down to the strictly practical proposition of a firm which wants to raise its exports and wants facilities and help from the Government to do so. If we can make, as we have done, such a large contribution to war and the arts of destruction, we can certainly achieve in the arts of peace no less a contribution.

Mr. Wootton-Davies

Would my right hon. Friend please develop that a little further, because it is very important? During the war we have had an outlet for everything, but what is the use of telling industry to export if the trade barriers absolutely stop that export? In one case, there is freedom of output, but when we come to the end of the war many nations will be right against us.

Mr. Lyttelton

After the war, I think, there will be a great excess of demand over supply, but as that condition fades, it will often be necessary to enlist Government help to prevent our exports being discriminated against. It is no good complaining, unless the Government get definite applications for help in this direction. There are other directions in which help is required. The Chancellor is trying to give help for depreciation allowances in connection with obsolescent plant. It may also be necessary to give financial help here and there, but the main——

Commander King-Hall (Ormskirk)

Before my right hon. Friend proceeds will he allow a question? Does he visualise, when he makes this comparison between export problems after the war and the war output, that the Government will be in a position, through the Foreign Office, to give practical information to firms as to where there will be markets, because that is one of the difficulties they are up against? The war exports have, by Government direction, been directed against the enemy. It has been too simple.

Mr. Lyttelton

That develops a point which I was making. The matter cannot be looked upon in a simple way. We must give industry the best facilities. I am afraid I have detained the House much too long already——

Miss Ward (Wallsend)

Can the right hon. Gentleman develop the financial side of the matter?

Mr. Lyttelton

I am afraid I have already exceeded my time, and I cannot develop the matter further. I want to end on the one remark that I am absolutely sure, in my own mind, that if we adopt a strictly practical approach, if we break down the programme industry by industry, we shall get the best results.

3.10 p.m.

Mr. Shinwell (Seaham)

When the hon. Member for Northampton (Mr. Summers) opened the Debate, I suspected that he was about to launch a violent attack on the President of the Board of Trade. Fortunately he was deflected from that purpose—if, indeed, it was his purpose—by a high appreciation of the need for developing our export trade. After all, the development of our export trade does not depend on the person who occupies the post of President of the Board of Trade. It depends on policy, on direction, on national guidance and co-operation among the trading and industrial elements of the country. It might be otherwise if the President of the Board of Trade could assume a dictatorial position, could instruct traders how to conduct their trading operations, but that is not the constitutional position. More often than not, instead of the President of the Board of Trade ordering people about, the President of the Board of Trade is ordered about by the trading elements of the country, and no doubt that is quite proper procedure.

Moreover, my hon. Friend the Member for Northampton, in a very clearly-expressed and interesting speech—of that there is no doubt—seemed to indicate that if only we could have a re-organised Board of Trade, where what are described as petty restrictions were abandoned, and licences for traders to step up their production or to prepare their plans were granted speedily, our export problem would be solved. If I may say so, that is a most fallacious, and indeed dangerous, assumption. At the very best, supposing all the restrictions were abandoned, and all the conversion and reconversion plans referred to by the Minister of Production were adopted, we might get back to the position of 1939, but we are constantly informed that that position is far from satisfactory in the light of the new situation and that we must step up our exports by at least 50 per cent. beyond the 1939 level.

Therefore, my first submission to the House is that to rebuild, reinvigorate, rehabilitate and re-inspire our export trade, in the situation we envisage when the war comes to an end, we require more from the Government than mere reconversion plans, however desirable they are—and they are desirable—and merely a readiness to respond to the demands of exporters. We require from the Government a policy and an indication that the Government have a conception of what will be required after the war in order to step up our export trade and to assist in maintaining a high standard of living for our people. That is the problem as I see it.

My right hon. Friend has disclaimed any intention of engaging in controversy. I found that profoundly disappointing. If only he had repeated the speech he made at Birmingham the other Saturday, in the course of which strangely enough, having regard to his diffidence this afternoon, he did state what he described as Conservative policy, we could have got to grips with this subject and the full mind of my right hon. Friend would have been disclosed. We might have had at any rate some faint conception of what is in the mind of my right hon. Friend, as regards the industrial system that will emerge after the war, and on the basis of which we are to step up our exports by 50 per cent. above the 1939 level. This talk about reconversion is beside the point. It all comes back to policy, and policy must be considered in its proper international setting.

Something has been said in the course of the Debate, and quite properly, about the possibility, indeed the probability, of a trade conflict with the United States of America. I want to say at once that if ever that trade conflict emerges in an acute form it will be fatal to international co-operation. Everybody recognises the difficulty of promoting adequate international co-operation in the economic field. It is much more difficult to promote co-operation of an international character in the economic field than it is in the sphere of war, but at any rate, as part of our policy, and no more than that, we must seek to promote international co-operation in that sphere.

Note what has happened. The Government have been occupying their minds and our attention with the possibility of a monetary, international agreement that would be largely dominated by the United States of America. Instead of which, in this field of export and international trade, and particularly Anglo-American economic co-operation, it was necessary, in the first instance, to seek to promote a commercial and trading agreement. That should have been the first step. I do not deny that advantages might have accrued if, simultaneously, we had sought to promote a monetary agreement in order to effect stabilisation in our foreign international exchanges, but certainly that was the first step. Instead of which, what has happened? Here we have the exporters, entrepreneurs and the trading community of this country almost in a panic about the need for reconversion, and for abandoning controls and restrictions so that we might gain access to the foreign markets.

That is quite a laudable ambition, and one I applaud. But the same process is going on in the United States of America, and all that we can do is to complain that the United States of America is getting in on the ground floor, and we are being left in the lurch. Surely in those circumstances the right thing to do was to speak frankly to the U.S.A. and ask the Government of that country what is their considered policy. My hon. Friend the Member for Duddeston (Sir O. Sim-monds), again in a very interesting speech—except, if he will permit me to say so with the utmost good will, that it contained very few positive suggestions as to how we should escape from the impasse in which we find ourselves—referred to statements made by Mr. Stettinius and other representatives of the American Administration in relation to competition between the United States and this country. Apparently Mr. Stettinius and others disclaim any intention of engaging in trade rivalry. Why should not we have taken advantage of that?

I can add to the quotation that my hon. Friend the Member for Duddeston gave, by another quotation. I very rarely quote from documents in the House but this seems to me to be relevant. I quote from "The United States in the World Economy," published by the United States Department of Commerce. What they say is very illuminating of the discussions we have had on these trade subjects. First they say: As the most practicable means of lowering the tariff wall, the reciprocal trade agreements program"— Note the language— should be prosecuted as vigorously as possible not only after but also during the present conflict. There is an invitation. I beg the Presi- dent of the Board of Trade to note that this refers not to multilateral but to reciprocal trade agreements. When Members on this side and in other parts of the House ventured to assert that by means of bilateral trading agreements it might be possible to step up trade, at any rate in the transition period and some time afterwards, we were condemned on the ground that we were violating the spirit of internationalism. We were also told that this conflicted with the policy laid down by the United States. Now, we find in this most important document that the United States agree, not only that we might effect reciprocal trading agreements but that there might be a lowering of tariff barriers. How fundamental that is in relation to Anglo-American co-operation in the economic sphere.

Is it not obvious when we speak of exports—away with all this petty stuff about reconversion and all the rest—we speak in terms of markets? It is markets that matter, not so much in the transitional period—even the Minister of Production has urged that the transitional period may not present any serious problem; let us hope so. But as a long-term policy we have to consider markets. Unless the United States market is accessible to exports from this and other countries there is no hope of repairing the ravages of war. Clearly, we ought to take advantage of these statements.

That is not all. I quote again: If the record of the past proves anything, it is that other countries have consistenty tended to purchase American goods and services in larger and more regular volume than the United States has bought of foreign goods and services and that the major handicap to exports has not been trade restrictions a broad— So much for the condemnation of the Ottawa Agreements—— —so much as the underlying shortage of dollars. The latter difficulty will be intensified— This is not, I would remind hon. Members, from a British document— —unless the United States renders possible a freer flow of imports. "A Daniel come to judgment." That is the stuff of which trade agreements are made. It is the kind of thing that is heartening. These are the kind of statements that give us hope, and I trust are the kind of statements that will encourage traders in this country to believe that when we consider exports markets will be available.

I cannot leave the question of accessible markets without suggesting to the Government that much depends upon the direction of trade. Let me put it in this form. It is said, taking it by and large, we must increase our exports by 50 per cent. My hon. Friend the Member for Duddeston said that represented another £200,000,000 of exports per year. He is not far wrong, because it must be borne in mind that there has been a great change in the price level, and it may be that another £200,000,000 worth of exports will suit our purpose, enable us to pay for imports, for after all, as I may remind hon. Members, the sole purpose of exports is to pay for imports. Where are we to find markets for the other £200,000,000? Remember we have to find markets for the other millions in order to reach the pre-war level. We have also to get another £200,000,000.

It may be that in some of our exporting trades and industries we may not be able to increase the flow of exports. Indeed, it is a fair assumption that so far as coal is concerned, and textiles, particularly cotton textiles, and it may be in the sphere of machinery production, we may not be able to secure an increase for all exports; it depends. I do not commit myself to any particular but it is a possibility. Therefore in the measure that exports are not increased in one category of production they must be increased in other directions.

May I ask this very pertinent question? Are the Government giving any consideration to what we hope to export? Why do they talk about exports at large as if one need not discuss the details of exports? What are we to send out of the country? What can we afford to send out? If we intend to adopt a policy of exports, (a) by selling our goods at lower prices which do not bear a reasonable profit or may not even meet the cost of production, and (b) by depressing wage standards in the export trades, we are in for a great deal of trouble, and we shall not have solved the problem. Those are the matters to which the Government should be addressing themselves.

I hope this is not disappointing to my hon. Friends the Members for Northampton and Duddeston, who, of course, may think I am decrying their efforts to remove restrictions and the like. I admit all that, but it is the larger issues with which we ought to concern ourselves. Let me indicate some further factors that seem to me to be likely to impede our foreign trade. The first bears on what I have just said. It is the inability to take advantage of the fact that the British market is the biggest bargaining factor we possess. I know that this may be unpalatable to some people, even Members on my own side of the House. But suppose we could not secure multilateral trading agreements. We should still have to export: we should still have to find work for many of our people, and pay for imports. We must trade. We shall have to say to other countries, "We must take your imports of raw materials, semi-manufactured goods, and so on, so that we can convert them into manufactured goods and sell them abroad; but you, in turn, must take our goods." That is fair. I hate to put it in so blunt and simple a fashion, almost a vulgar fashion, but I would say to them, "If we are to buy from you, you must buy from us." That is a reasonable proposition.

We have also to consider the direction of those exports. I see my right hon. and gallant Friend the Colonial Secretary before my eyes—that almost seems like paraphrasing Shakespeare, but he is the most useful illustration I can submit to the House. The Colonies have 60,000,000 people. They are vast territories, with almost illimitable opportunities for expansion. I do not pretend that we can do it in the next two or three years, during the transitional period. According to my right hon. Friend opposite, we do not need to worry about the transitional period. But as part of our long-term policy why not head in that direction? After all, it is in the true spirit of international co-operation, of human wellbeing, that we should come to the aid of these people, not in the old imperialistic, exploiting sense, but in the sense of human good will, and, in turn, accept from them services, labour and material, which we can use to raise the standard of living of our own people. I would have liked to discuss that at some length. It is not merely a question of whether it should be £50,000,000 in 10 years, or £500,000,000 in 10 years. It is a question of the use you are going to make of the finance you give them. It should be used to promote a two-way traffic, industrially, socially, and otherwise.

I come to what I regard as the most pregnant issue of all. My hon. Friend the Member for Chesterfield (Mr. Benson) referred to the subject of efficiency. Everybody in this House will agree that if we are to promote our export trade, and indeed to promote our internal trade, we must have greater efficiency. But what do we mean by efficiency? More machines, better machines, more equipment, better equipment—and to what end? If there had been greater efficiency in British production before the war, we might have had more unemployment; more rationalisation would have led to unemployment. What we want is efficiency accompanied by effective distribution. Otherwise, we cannot achieve our purpose. For, a time trading concerns will profit thereby; but unless there is consuming power based on effective distribution, the problem, in the long run, will remain. On this subject of efficiency, let us consider the position of some of our great industries and services. I hope that in this matter I shall not be unduly controversial. There is a large measure of agreement in the House. We all desire to promote greater export trade, to improve the standard of living of the people at home, to promote international co-operation, and to prevent war. We part company when we come to the question of policy. That is what I am going to consider now.

Take the coal industry. Everybody must agree that the cost of coal and power is an important ingredient in production. It is certainly an important ingredient in steel production and in steel costs. In the recent shipping Debate, I ventured to point out, as other Members did, that the cost of steel in relation to shipbuilding in this country was, apart from labour, the biggest item, a formidable item, much too big an item. It has been said by representatives of the Motor Manufacturers' Association that the cost of steel in this country before the war was 50 per cent. higher than world prices. That may be an exaggeration, but undoubtedly it was higher. I expect that my hon. Friend the Member for Northampton would make the rejoinder, because he knows about the steel industry, that that is because of the high cost of coal. That may be so. We must reduce coal prices. But not at the ex- pense of the miner. You can reduce coal prices only by more extensive organisation, by new equipment, by Government direction, by removing the dead wood. I believe that you can reach those desirable objectives only by taking the mines out of the hands of the people who have got them now. That is my firm conviction. My hon. Friend the Member for South Bradford (Sir H. Holdsworth) shakes his head, but we have tried all sorts of devices to put the mining industry on its feet, and it is now in a bigger muddle than ever. If we are to provide the necessary motive power, to step up our export trade and produce efficiency, we have to deal in a drastic fashion with the coal industry.

Take the case of transport. Surely transport costs are a very formidable item in production. We have to reduce transport costs, not at the expense of the transport workers, but by promoting more effective organisation, by adjustments here and there, by State direction—I believe by State ownership, but, at any rate, I will give my hon. Friends what they want: State direction.

Sir H. Holdsworth

We do not want that.

Mr. Shinwell

I will tell you what you want. You want to throw the whole thing into the melting pot, to get back to the higgledy-piggledy system which existed before the war, the "dog's breakfast," which overwhelmed this country in the inter-war years.

Sir H. Holdsworth

Have we not had more and more control, and has not the cost of transport gone up terrifically, because of the mess that was made of it with the controls imposed?

Mr. Shinwell

My hon. Friend knows that in war-time costs have been stepped up for many, reasons, due to the war itself. He knows that well enough, and I need not argue the point. But nobody is going to argue that it is because of State control that the cost has gone up. In other words, State control is an excellent device for winning a war, and is of no use for anything else. What an absurdity. What a monstrous suggestion. I said that this was going to prove controversial: this is in the spirit of the speech that my right hon. Friend de- livered at Birmingham. If you like you can go back to the old system: no restrictions, no State guidance. Then for heaven's sake tell me, why you are always coming to the Government and asking for assistance? It seems strange to me. At any rate, you will not get the removal of controls just now, and not for a long time afterwards, because every Tory Member of the Government has said so, even the Chancellor of the Exchequer, even the Minister of Production—and there could be no more true, dyed-in-the-wool Tory than he. I am convinced that, in order to promote greater efficiency, we must reorganise the coal industry, reorganise transport, and I think we shall have to reorganise the steel industry, but I will leave that. [Interruption.] I am asked about the cotton industry. There have been many attempts to promote efficiency in that industry and a recent report indicates that it needs greater efficiency. No doubt, it will need a great deal of State guidance, and I notice that all those in the cotton industry, workers and employers alike, are always coming to the Board of Trade and asking for guidance.

I think there is a great deal more to be said on this head, but I mention only one further point. How are we going to deal with imports that are related to exports? Are we going to allow them to come into the country in an unregulated, chaotic fashion? Of course not. That will not make a present to agriculture. We must exercise State direction and provide a method of purchasing imports in bulk, not in every category, but in the majority of cases. That is going to help agriculture, and the agriculturists know it, even if Conservatives and National Liberals are not aware of it. But I leave it at that. We want more exports because we must import and maintain our trade, maintain our standard of living and improve on it, but we must not seek to promote exports at the expense of the workers in the export trades. We must seek a method of arriving at agreement with the United States, and with other countries, but particularly with the United States because her economy will be very important after the war. Therefore, I particularise. But, if we fail to achieve a measure of agreement, then we must go all out for trade—we cannot help ourselves—either multi-laterally or bilaterally.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

Or regionally.

Mr. Shinwell

I am obliged to my hon. Friend—or regionally. I have previously touched upon the need for some kind of regional organisation which might, indeed, emerge from the suffering of the post-war period and the relief measures that require to be taken. It is very important just now—I am not impinging upon the foreign policy Debate—that we should make friends in Europe everywhere, because friends in Europe in the political and diplomatic spheres mean friends in the economic sphere later on. Go out for trade in the Colonies, and let us not worry ourselves unduly over the point raised by the hon. Member for the Duddeston division about Australia becoming self-sufficient in industrial production. After all, that is the purpose of Empire—to see your sons and daughters flourishing and the more flourishing industrially they are in Australia and throughout the Dominions and Colonies the better it is going to be for us all. That is the kind of policy we want.

Sir O. Simmonds

I did not complain of it; I drew attention to the change in international economy.

Mr. Shinwell

I am all the more gratified, because I should be sorry to misrepresent my hon. Friend. This must be our purpose. If I have seemed to deflect from the original purpose of the Debate, namely, the reorganisation of the Board of Trade and the removal of restrictions, let me just add this. I was delighted to hear the hon. Member for Northampton say that he wants a Ministry of Commerce. Is my hon. Friend aware of the fact that that was an idea promoted by the Labour Party many years ago? I believe he will find in one of the books written by the late Ramsay MacDonald a passage dealing precisely with that point of Board of Trade reorganisation. I do not know whether the hon. Member for Northampton reads Labour documents, but, at any rate, that is from where it was originally derived.

Mr. Summers

May I remind my hon. Friend that it is still true that "one swallow does not make a summer"?

Mr. Shinwell

That saying has been used more than once in recent days, but I may remind my hon. Friends in what connection it was used. It was a Conservative Member of Parliament who asked the Prime Minister whether he would consider an aspect of nationalisation. My hon. Friend must be very careful; he is treading on very delicate ground.

Mr. Boothby

May I suggest to my hon. Friend that he must surely remember that any good ideas the Labour Party ever had have always been taken over, sooner or later, by the Tory Party?

Mr. Shinwell

Not only have they taken over our good ideas, but they have taken over our good men. The Tory Party, if I may be excused a seeming irrelevance, suffers from a kind of blood transfusion. If it has not been National Liberal—and that blood has run very dry—it has been Labour. They will even be prepared now to tolerate the Young Tories. In due course, we shall have a Ministry of Commerce designed to promote trade internally and also foreign trade, and the sooner we get rid of restrictions the better. But we have got to win the war, and we are wholeheartedly in agreement with the Ministry of Production that this is number one priority, even if it means suffering and sacrifice, and that our traders cannot get in on the ground floor. That is the primary consideration, but inasmuch as the Government can provide some facilities to assist the export trade of the country, they will receive the support of every hon. Member of the House.

3.48 p.m.

Mr. Higgs (Birmingham, West)

I intend to be critical of the Board of Trade and of the Department of Overseas Trade, particularly for their activities, or absence of activities, during the last six months and for the policy they do not possess. Before embarking on that line of thought, I should like, however, to give some figures and to give the credit to the Board of Trade for what they have done up to six or nine months ago. Three and a half million workers have been released from civilian home and export production; 200,000,000 square feet of floor space have been released for the same purpose, 50 per cent. of the workers in the textile industry have been taken for Government work, 40 per cent. of those in the clothing industry, 20 per cent. in the boot and shoe industry, and other industries have contributed 80 per cent. These are the results of Government policy since 1940, and the Board of Trade has deliberately denied civilian production on account of war purposes. By the middle of 1944, of the people in the manufacturing industry, 60 per cent. were on Government work, 20 per cent. on home work and 3 per cent. on export. Nevertheless, our exports have only fallen to 30 per cent. of the 1939 total. That deals with the past.

I now refer to the future. There is no problem that is receiving so much lip-service and less help from any Government Department than that of overseas trade. All responsible Ministers advocate the expansion of overseas trade and yet the Department of Overseas Trade puts every possible obstacle in the way of expansion, and so do other Departments as well. Here is a letter from the Industrial Exports Council of the Board of Trade, dated September, to the Metal Bedstead Manufacturers' Association. I will read four lines of it: The falling tendency of exports must not be merely arrested, it must he reversed as quickly as possible. The President has asked me to urge upon your industry the importance of preparing plans now for the opportunity to cone. In November, the President of the Board of Trade, in a speech said: It is a delusion that already there are large resources of men and materials able to be released from the war effort in order either to increase civilian supplies at home or extend the export trade. It is fooling manufacturers, one day to advise expansion, and another day to say it is impossible to release men and materials in order that we can expand. Can the President of the Board of Trade inform the House why it takes from four to six, and up to eight, weeks to get a permit to export goods overseas, if such a permit is to be granted? On three-quarters of the occasions, the day after it receives the application for an export permit, the Department of Overseas Trade knows whether it can be granted or not. Why should not these requests be dealt with promptly? How can we get help with our exports when such a lackadaisical attitude is adopted towards our requests for information? Requests are turned down, and very often rightly so. I have taken up one or two instances with the President of the Board of Trade, and I will state one to show the ridiculous attention that people in my constituency receive. A certain firm wanted to export to somewhere in the Near East, to Persia or Turkey perhaps, a sample of electrical goods of the value of ros., which they were prepared to send free of charge and the export licence was refused. I put a Question down to the Minister asking him why. He somewhat resented my doing so, but within two or three days of putting that Question down a permit was granted for export. Why could not such a permit have been granted before? The Minister apparently did object to my exposing the shortcomings of his Department, but that is what I am in the House of Commons for, and I shall do it whenever similar circumstances arise.

The Minister of Production has already expressed his surprise at the few demands which have been made for permits to manufacture goods for export or for samples. I represent a constituency which does a lot of exporting, and I suppose that I receive as much correspondence on this problem as I do on any other matters concerning my Parliamentary duties. I will give a brief résumé of what one of my friends experienced, for it is not an exceptional, but a typical, case. The correspondence started on 10th October and is still continuing. My object in giving this is to reply to the Minister of Production, and explain why the Department does not get more demands for manufacturing samples for export. On 10th October, an application was made for a licence to make some samples up in silver and also in nonferrous metals. This company had nonferrous metals in stock. They replied that they wanted the names of the workers who were to be employed on the work, so that they could be submitted to the Ministry of Labour, and they also regretted that they could not give permission to export non-ferrous metals. The House knows the reason and I need not go into that matter. Twelve names were sent and the average age of the individuals was 57. The Board of Trade replied again and wanted to know the types of samples to be made, together with the quantities and the raw materials and the man-hours required.

This is in reply to the Minister of Production. It is the reason why there are not further applications for export licences. My friend again wrote another letter in reply to the Board of Trade and said that they wanted to export teapots and tankards made of pewter, and photograph frames. The Board of Trade again replied that metal photo-frames came under a different section of the Department. They were not for them to deal with but he would have to apply to somebody else and give particulars. The Ministry of Labour's recommendation had not been received. My friend again wrote for further information, and the Board of Trade replied that the photo-frames were controlled under Class 13 and that the application for the labour had been referred to the Ministry of Labour. They are drawing red herrings across the path all the while. My friend again replied to the Board of Trade and said that their range covered 150 patterns, and they would be obliged if the Board of Trade would let them have permits. The correspondence is still continuing. That is the reason why we are not getting on with our export trade.

There is another difficulty which we are experiencing. It is necessary to fill in too many forms before you can get anything out of the country at all. Obviously an export licence is wanted, and an import licence is wanted from the country to which the goods have to be exported. Then one has to get allocations of materials and labour. Then one has to get authorisation for shipping space, and the priority for export trade at the moment is none too high. Then we are asked why we do not get on with the work. People who have not had experience in export trade before the war cannot enter it to-day because the work is altogether too complicated. Then there is the paper control; there is not a sufficient supply of paper for printing export catalogues. If we cannot prepare our catalogues, how can we make any preparation at all for exports? My hon. Friend the Member for Northampton (Mr. Summers) referred to the necessity for a Minister for Export. I really cannot understand why, if this problem of export is of such great importance, we cannot have a Minister for it. We have a Minister of Production, a Minister of Supply, a Minister of Agriculture, and we are to have a Minister for Civil Aviation. We are told that our future depends upon the export trade, and a subsidiary Department to another Department deals with it—I will not say much about the other Department. The Department of Overseas Trade at present has a personnel of something like 120 people, and from this Department we are getting no results at all. How many people shall we want before we do get results?

The Export Credit Guarantee Department sadly needs reorganisation. One of the great difficulties at present is that exporters have pressure put upon them to insure 100 per cent. of their exports, irrespective of the country to which those exports are going. The Department's attitude towards this comprehensive cover prevents firms from insuring. If one insures their shipments overseas, the insurance department does not compel the shipper to insure every consignment he sends away; he can make his choice. So it should be with the Export Credit Guarantee Department. It plays too much for safety; it is not an insurance at the present moment. It may be reasonable to insure the total business for any one country—of that I am not altogether convinced—but the present method is altogether unsatisfactory. I should like to know if that Department is self-supporting and, if it makes a profit, what becomes of it? Does the Treasury take it, or is any profit devoted to the reduction of premiums? It should be. The Department is too conservative and puts a premium on trade.

My opinion is that the prospects for export trade, if propertly handled by the exporter and the Government, in the immediate future are exceptionally good. Competition with the United States has been referred to, but the fact that Germany is out of the export trade, and likely to be, that Italy is out of it, and Japan and France—[An HON. MEMBER: "And as customers"]—possibly compensates for the competition we shall experience from the one or two nations that still remain. The development of our Dominions has been referred to because they will be making a lot of the products that we have been manufacturing and exporting to those particular countries. I would remind the House, however, that this country is one of the most completely developed countries industrially in the world and yet, in 1939, we imported no less than £260,000,000 worth of wholly or partially-manufactured goods. That being so, my belief is that the sooner those other countries become as completely developed industrially as we are, it will be of assistance, rather than other- wise, to our exports. We shall not export lamps, we shall export lamp-making machinery; we shall not export cotton goods, we shall export the machinery for making cotton goods; and so on with boots, shoes, and so forth. To give an example, it is said that as industry progresses and machinery is introduced, skilled labour is not wanted. That is a fallacy. There is more skilled labour wanted to-day. So, as and when those countries become developed, using more of their primary products, then our export market is likely to increase rather than decrease.

One of my hon. Friends referred to the disadvantage we have experienced from the present form of motor taxation. The problem does not end there. On the motor car industry depends the development of the machine tool industry, and because of that unreasonable tax, to a large extent the development of many branches of our machine tool industry has been prevented. That tax has been a curse to the engineering industry in particular, and I hope that some considerable modification will be made at an early date.

I would just remind my right hon. Friend the Secretary to the Department of Overseas Trade, that we have had one Colonial Secretary who did more for our export trade than probably the Department of Overseas Trade has done in its existence. To-day he is known overseas, and particularly in the Dominions, better than many recent Prime Ministers; I refer to the late Mr. Joseph Chamberlain, the industrialist. Will the present Secretary to the Department of Overseas Trade follow his example?

4.7 p.m.

Mr. Cove (Aberavon)

We have had a very wide-ranging and interesting Debate and I do not propose, even if I were competent to do so, to endeavour to cover the range of subjects that have been brought before the notice of the House. The Debate to me has also been an ominous one. It seems to me that previous speakers, more particularly on the other side, have learnt nothing from the experience of the last 25 years, and particularly from the catastrophe of the war. I want to be perfectly frank. We have heard on the opposite side the voices of economic aggression. "We must roll up our sleeves," said one speaker. For what purpose? To fight for trade against America, to fight for markets against other nations in the world. That, I say, is the policy of economic aggression which has been one of the great contributory causes of landing us into the present war.

Sir O. Simmonds

I am sure my hon. Friend would not wish to misrepresent anything I said. What I said was that an important American industrialist said that the Americans proposed to roll up their sleeves. That was the whole force of my argument.

Mr. Cove

Does my hon. Friend say that we should roll down our sleeves?

Sir O. Simmonds

No, Sir. I say that we should not appease other nations.

Mr. Cove

The hon. Member made it perfectly clear, and must stand by it, that if America rolls up her sleeves in the world market, we must roll up our sleeves too, and that is equivalent to fighting. What do hon. Members mean? Quite clearly, they have put forward to-day a policy of intense economic nationalism. No picture of world organisation has been presented, no intimation at all that, economically, the world is a unified whole, and that every industry of any importance in this country or in America depends upon the resources of the world for its raw materials and the markets of the world for its products. I was looking recently at a significant book by Professor Stay, called "World Economy in Transition", in which were given details of the materials needed for the manufacture of a motor car, and I believe he said that 184 different materials were required before you could see the finished product, materials that came from every part of the globe. The economic fact is that so far as production of motor cars is concerned it depends upon the whole world for raw materials and for its markets.

It is time hon. Members opposite realised that although we have to fight Germany, Japan and others for political and other reasons there can be no doubt that from an economic point of view the smashing of those countries will leave us with added problems in the future. We are economically destroying potential markets. When we emerge from this war, the economic problems that will face us will be greatly intensified, and we shall not meet those problems by showing a spirit of intense national economic aggression. We can only do so on the basis of brotherhood—I say it unequivocally and unashamedly—and on the basis of the co-operation of all the peoples of the earth. We have come to the point in our development when it pays to be brotherly, when it pays to realise that the whole interests of mankind are one and equal.

As I have said, the Debate has been ominous. Such policies as have been advocated are a prelude to the next war. Behind some of the speeches we have heard to-day there was—perhaps not consciously—the fear of the next tragedy that might come upon us. We must be strong, but for what? To meet the exigencies of a competitive world, a world of struggle where the weakest goes to the wall. That is retrogressive, not progressive. This Debate has made me more confident than ever of the basic Socialist principles which I hold. I want completely to controvert the idea of the seconder of the Amendment, that special security depends upon our export trade. I say the complete opposite, that our export trade depends upon our social security. The main factor, even in international trade, is the purchasing power and income of our own people at home. That is not merely the opinion of a stupid Socialist like myself; I find I have capitalist sanction for that statement. I have here that remarkable document, "The United States In the World Economy," from which I would like to give two or three quotations to support my contention that the fundamental fact in home and world economy, and in foreign trade, is the material wellbeing of your own people at home. To reduce the purchasing power and lower the standard of life of your own people, is to injure your export trade. The basis of the health of the export trade is the health of your own economy. In America, they are even further away from Socialist thought and action than we are. In a foreword to this document by Mr. W. Taylor, Under-Secretary of Commerce, it is stated: Although numerous salutary lessons are to be drawn from the experience of the past the conclusion that emerges most emphatically from the survey"— that is the survey which follows— is the fundamental importance of maintaining conditions conducive to a more stable and ample flow of dollars in our transactions with other countries. I want to draw particular attention to this sentence: The most essential of these conditions lies not in the field of foreign economic policy as such, but in the attainment of a fuller, more smoothly operating domestic economy, the major determinant of the volume and course of our purchases of foreign goods and services. Later, the Report itself says, in the section headed, "Future Problems and Policies": Two main sources of instability and disturbance in the international feelings of the United States stand out—one, the extraordinary magnitude of the fluctuations in domestic economic life, with concommitant variations in our purchases of foreign goods and services? It is quite clear that these people accept the doctrine that I have been enunciating. We are suffering from a deficiency of effective demand. We have to get effective demand before the wheels of our own industry and the wheels of world trade can turn. To impoverish our own people is to impoverish the whole of our foreign trade. That means an economic and social change in this country which amounts to a social revolution. Wealth in this country is probably more unevenly owned and income more unevenly distributed than in any other country in the world.

I was looking the other week at a book published for business men where figures were given as to the distribution of wealth nationally and locally. I was astounded at the great variations and discrepancies that it gives between various grades. It took first of all family incomes and it said there were 635,500 families, that is 5.2 of the whole of the families of the country, with an income of over £10 a week. There are 2,580,300 families, 21.3 per cent. of the whole, with £4 to £10 a week. There are 4,581,000 families, 37.8 per cent. of the whole with incomes from £2 10s. to £4 and there are, or were in 1938, 4,318,200 families, 35.7 per cent. of the whole number, with under £2 10s. a week. In that maldistribution of income lies the main cause of endemic unemployment. We have had tariffs, quotas and subsidies and we have had Free Trade, and persistently all the time we had a hard core of unemployment, Tariffs, subsidies, quotas, Free Trade and laisser faire are all irrelevant. At the heart of the problem lies the fact of the poverty of the masses of the people. Study, if you like, the depression in America, even more gigantic than ours, which had drastic and catastrophic world repercussions. Right at the heart of the American depression lay the fact of low purchasing power. Let us have a look at personal income. According to this survey there were in this country in 1938 23,725,000 incomes. Over 20,000,000 of them were below £5 a week and over 15,000,000 were below £3 a week. When you come to the distribution of wealth, it is even more unequally held. Two-thirds of the wealth of Britain is owned by 1.6 per cent of its population, that is, 370,000 people having an average holding of £26,000. At the bottom of the scale, 5 per cent. of the national wealth is divided amongst 78 per cent. of the adult population and 17,300,000 on an average, hold £40 each.

Mr. Spearman (Scarborough and Whitby)

If the hon. Member will allow me to interrupt him I think he is a little out of date with his figures. If he refers to the Budget White Paper he will find that there has been a colossal redistribution of wealth. For example, there were 1,750,000 people with an income of between £250 and £500 a year before the war, and now there are over 5,000,000 people with that income.

Mr. Cove

The hon. Member for Berwick-upon-Tweed (Sir W. Beveridge) says you can transfer from war economy to peace economy. I profoundly disagree. War economy is entirely different from peace economy. War economy means destruction and waste. A cannon does not compete against a cannon, but a pound of butter does compete against a pound of butter. It is an entirely different economy. If hon. Members opposite really want to help the export trade they have to make this country good customers of the products of other countries. How can you make this country a good customer of the products of other countries? By a complete redistribution of the national income.

Mr. Spearman

It has been done.

Mr. Cove

The hop. Member does not understand war economy if he says that. He does not understand the nature of the Debate. You have to redistribute the ownership of land, and you have also to redistribute the national income. A pros- perous world trade depends on the prosperity and the welfare of the common people of Britain, France and America, and I would dare to say of the common people of Germany, Japan, Italy and elsewhere. It is one of the great tragedies of war that we are likely to disrupt that financial basic fact of world economy. The prosperity of our Dominions and our Colonial Empire, mainly devoted as they are to the production of raw material and food, depends again on the prosperity of industrial countries like ours. It is a completely exploded fallacy to think that we could prosper on the troubles, tribulations and difficulties of other nations. What hon. Members opposite have recently been saying is, "We cannot provide full employment because the capitalist economy will not allow of that. We shall have unemployment and we shall have our trade depressions. What we have to prepare for is to export, as it were, that unemployment to other countries." That is not the way. Imports under capitalism have not been designed to pay for exports. The history of our exports does not prove that at all. The basis of our export trade has been found in the export of capital for the purpose of the exploitation of other countries, bringing income to the people who first get their surplus here and invest it abroad to get a return.

Sir Wavell Wakefield (Swindon)

It also provides a great deal of employment in this country. In the case of the Argentine there is a considerable replacement of railway material.

Mr. Cove

You cannot discuss the export trade apart from the foreign policy of the Government, and we have not done that clearly to-day, of course. We cannot complain of that. I reiterate confidently that there is no way out along the lines that have been suggested in this Debate. It is no good turning our eyes to Timbuctoo. Let us turn them here to our own country, think of the standard of life of our people, and be prepared, as we must be in these revolutionary days, for revolutionary changes in order that the nation may have a higher standard of life and a raising of the welfare of our own people.

4.31 p.m.

Sir George Schuster (Walsall)

The hon. Member for Aberavon (Mr. Cove) has been attacking a spectre of his own imagination. I certainly do not recognise the figure on these benches. I shall not attempt to follow him in detail, but I hope that, if he listens to what I have to say, he will realise that for many of us on this side of the House the purpose that lies behind our interest in the subject of our Debate to-day is to create stability at home and to raise general standards of living. I want to come back to the main theme of the hon. Member for Seaham (Mr. Shinwell), which was that he desired to see a policy. He put export trade first and turned later to a policy for the increase of industrial efficiency. I would reverse the order. I think that an increase in productive efficiency comes first, and I would meet his challenge quite straight by saying that my desire to see an increase of productive efficiency is because only thereby can we provide a sure foundation for all the advanced social policies which all parties desire.

I would like, before developing that theme, to say a word to my right hon. Friend the Minister of Production. I do not think that the warning which he gave in his opening passage, that we must put the war first, was necessary. We are not children in this House. We are serious people, and we know that the war must come first. All that any of us are asking for is that that margin of resources which is not required for war purposes should be used to the best advantage, and that the best possible plan should be made for the peace which is certain to come after this war. We have been put off this Debate for a long time. We have always been met with these alibis—"There is a war on"; or "You must not talk about these matters or you will upset America"; or "We cannot have any plan because everything is so uncertain." All these points are completely irrelevant. There is one thing which is absolutely certain—that if we are to succeed in any of our peace policies we must put our own house at home in order. That is the purpose about which we ought to think first, and the tasks which are necessary for this purpose are, I submit, if we rightly appreciate our situation, comparatively clear.

It helps to clear thinking on this matter if we visualise the future and look ahead to three stages. First, there is the state of total war in which we are now engaged. Second, there will be the stage of half-war, the stage of conversion and the stage of clearing up the mess. The period for three or four years after the end of the German war must be regarded as one period, and I have no hesitation in expressing the view that during that period we ought to be pursuing a carefully planned policy, for which the regulation of the use of our resources will be just as necessary as it has been in war. Third, there will be the stage of normal production. That will be a highly competitive stage, a stage of great difficulty in which we shall have to meet our debts and redeem our promises of social improvements, of raising the standard of living, and all the rest. Although I think we should visualise the position in these three stages, there is one point that I want to urge. That is that we must not separate our consideration of them in watertight compartments, but that we must in each of the stages look forward to the stage which will succeed.

It is with the second stage—the stage of what I have called "clearing up the mess"—that I am chiefly concerned in what I have to say now. This will be a period when demands will enormously exceed resources, when there will be no difficulty in selling exports—indeed when we shall be able to sell any rubbish. Allocation of priorities will be necessary in this stage, and there are certain great dangers to be borne in mind. I would mention four—(1) letting men go into the wrong occupations; (2) keeping men idle because plans have not been got ready in time for conversion from war to peace; (3) taking advantage of easy openings for export sales and not concentrating our efforts on those markets which we can rely upon as permanent connections; and (4) spending too much on meeting consumption demand and not enough in the restoration of our capital equipment. As I have said, it is the problems of this stage which we ought mainly to be considering to-day. In order to plan a programme for this, the Government ought to have a clear picture of what is necessary for improving our productive efficiency, for making the best of our national resources, and for creating the right organisation, that is the organisation of industry and the organisation of Government and the right form of interaction between the two.

I came to this Debate ready to advance two charges against the Government, that I hoped would be effectively answered. The first is that the Government have not gone far enough in working out adequate plans for putting our house in order or in giving private concerns sufficient guidance to enable them to get on with their own plans. My second charge is that the Government organisation, as far as we can see it on the surface, is totally inadequate and such as to create a presumption that the Government are not sufficiently conscious of the urgency of these matters.

As to the first charge, I do not, of course, expect all our plans to be complete, but we can prepare plans even if we are not ready to execute them. I am sure nobody realises more than does my right hon. Friend the Minister of Production what a long lag there will be in getting industry working again in peace and what a danger there is of an interval of unemployment and waste of our resources if plans are not made before the time for conversion comes. I think further, that we want evidence—here I pick up points made by the hon. Members for Seaham—to convince us that the Government are visualising what will be necessary to make the most of our national resources. There are certain things which seem to me to be absolutely clear and they are, indeed, now becoming generally admitted. It is generally admitted that, if we are to be able to maintain good wages in the coalmining industry and get reasonably cheap coal, we must have very large scale re-equipment, mechanisation and improvement of methods of raising and working coal. I have seen it estimated that something like £200,000,000 to £300,000,000 will be required for that purpose. We have already heard references to the report on the cotton industry, which again seems to reveal the need for enormous capital expenditure. I believe that if we are to be truly competitive and efficient, sums of almost the same magnitude as are required in the coal industry will be required also in iron and steel.

What evidence have we had that these necessities are being faced? I recall indeed the very welcome statement from the Chancellor of the Exchequer that he recognises the need for modifying the taxation of industrial profits, so as to enable more money to be available for re-equipment, but, beyond that, we have had no evidence at all. I want to ask whether the Government have attempted to make any esti- mate in terms of finance or of material resources of what will be required to reequip British industry and put us on a level of efficiency comparable with the United States or with the reconstituted industries of other countries? As regards the coalmining industry I understand that a technical inquiry is now being carried out by a committee under the Minister of Fuel and Power and that its report, if published, is likely to give the public some idea of what the requirements in capital expenditure will be in order to increase technical efficiency in the coal-mining industry. Is anything being done like that in any other industry?

These are questions to which we are entitled to an answer. I know that the President of the Board of Trade will tell us that he has been having conversations with the industries on this matter and has been asking them to put up plans telling him what they want. I submit that that kind of request for plans, or answers to the sort of questionnaires that have been sent out, will not produce the sort of plans that we require. I ask any hon. Member on any side of the House to compare the sort of plans which have been put up by the cotton industry itself with the necessities which seem to be revealed by the report of the Cotton Textile Industry of America. I am afraid I must express the view that certain of our major, basic industries require something in the nature of a major surgical operation. I have yet to find any patient capable of planning and carrying out a major operation on himself.

Turning to other requirements, take housing. Here there is no uncertainty. Everyone knows the programme; we want 4,000,000 houses over the next 10 years. That necessity can be converted into terms of industrial requirements. I want to know whether the industries concerned not merely with building the houses but with equipping them have been informed of the Government's programme. Have they been given a programme of demand such as the industries are given who are engaged in producing shells and guns? That is a matter entirely within our own control. I submit that it can afford a solid foundation for the proper use of a great part of our resources which would provide a sound nucleus for a general programme and reduce chances of resources running to waste.

Let me take another case. Take all the producers of aluminium, and light alloys, materials of which there will be an enormous surplus capacity in the world after the war. I want to ask whether any producers of aluminium and light alloys have been given any idea by the Government of what will be the arrangement for dealing with their products when the curtain falls and war is over? Most of them are not fabricators themselves of their materials. They are dependent upon the demands of the fabricating industries, which themselves do not know the future. Therefore, each man is uncertain because he does not know where the next step is going to be taken. Under all these headings, what has been done? Where does the responsibility rest to survey our national resources when we look forward to peace? Is the Board of Trade attempting anything like this?

That brings me to my second point, the question of organisation. There, my right hon. Friend did throw some fresh light on the situation. He told us, if I understood him correctly, that the Ministry of Production is responsible for handling the reconversion programme up to the point of the release of resources from war purposes. As soon as that point is reached, as I understand it, his responsibility ceases and the President of the Board of Trade takes over. I find it very difficult to conceive of a division of responsibilities of that kind. I must confess that I remain entirely confused. I look to the White Paper on Full Employment, and there I find it set out that the Board of Trade is to be responsible for all general questions of industrial policy and is to be suitably strengthened. I have already asked when that strengthening, is to happen. We have seen very little sign of it as yet. There is another passage in the White Paper, where it goes on to say: It would not be satisfactory if the public were left to deal with a number of different Departments on different aspects of the same problem. Certainly, that is not satisfactory. But in my submission it is exactly what is happening at present.

My real fear is that in this transition period all the power rests with the War Production Ministries, who are not interested in the future and that insufficient power rests with the Board of Trade; so that we are in the position that the Ministers with power are not interested and the Minister who is interested has not the necessary power. I submit that there are three essential points for which we ought to press in this Debate. First, we want to know that the Board of Trade is equal in power with the war production Ministries and able to stand up and make its case equally with them. I fully appreciate the point made by my right hon. Friend in taking tip the expression which was used by the seconder of the Motion. We do not want, of course, to strengthen the Board of Trade in order to be able to fight down the war Supply Departments, but we do want to know that when the Government have decided, as a matter of policy, that a certain percentage of the national effort is available for non-war purposes, that that case is fairly put forward when the decision for allocation of resources has to be taken. We want to know that the Minister of Production, so long as he remains with the supervising power of allocating resources when there are competing claims between different Ministers, will take the Board of Trade into account and see that it gets fair treatment in competition with the War Ministries. If he has that responsibility I submit that he must acknowledge that he has an interest in and responsibility for the future.

My third point is that the Government should abandon this division into watertight compartments of war and post-war activities. They really are essentially interconnected, and all the time what we are learning through our war organisation can be used for post-war purposes. That point has already been made, and I was very glad to hear the Minister of Production saying that the Government recognises the wisdom of that, and that certain arrangements have already been made for enabling some of the machinery set up by the war production Departments to be used by the Board of Trade. That is satisfactory as far as it goes, but what remains unsatisfied is my doubt as to where the overriding responsibility rests. I think it is worth our while—I hate always referring to the United States—to refer to what is done over there. A very interesting and informative report on reconversion was submitted to the President in September this year. That report was made by the Director of War Mobilisation. He is the man in the United States who makes a report on reconversion. I submit that that is the logical and sensible arrangement and that, in our Government, the Minister of Production really should take full responsibility, not merely up to the point where resources are released, but beyond that to supervise how they are to be used in the future.

Mr. Lyttelton

If my hon. Friend will pardon me, it is not the Chairman of the War Production Board who is making the plans for reconversion in the United States, so that the point he is making is not quite correct. It is the Office of War Mobilisation.

Sir G. Schuster

I accept that correction. My right hon. Friend knows much more about the American organisation than I do, but surely if it is the Director of War Mobilisation one is entitled to assume from that that one of the very important responsible authorities for war production in the United States is in fact concerned with the reconversion programme. That is the only point I wish to make.

What I am concerned with all the time is whether the Board of Trade has really sufficient power to fulfil its own responsibilities. The whole of this question of reconversion — restoring our industries — involves so many matters. There is the question of efficiency in the coal mines, to which I have referred and on which all our industry depends. There we have the Minister of Fuel and Power, not the President of the Board of Trade, carrying responsibility. And what about the iron and steel industry? I very much doubt whether my right hon. Friend the President of the Board of Trade has the chance at present to probe into the mysteries of the iron and steel industry. I suspect very strongly that the Minister of Supply would interpose some obstacles to that. Or again, take the question of a piece of the organisation like the machine-tool control, which has generally been recognised as one of the most efficient bits of the Government war machine. That might be most usefully used in the allocation of Government owned machine-tools for reconversion purposes. Has the President of the Board of Trade any sort of communication with the machine-tool control? Can he get information from the machine-tool con- troller? I shall be very glad to get an affirmative answer.

I have raised a number of general points. I should like to conclude, not with oratory but with a list of some specific points which I think require attention. I wish to be as brief as possible. Beyond the three major points which I have already made, I think we ought to ask for satisfactory answers on certain others. First there is the point which has already been made most effectively by the Mover of this Amendment—the need for an improvement in the Board of Trade organisation. All of us who represent industrial constituencies know only too well, and I am sure my right hon. Friend the President himself knows only too well, the sort of complaints which are made. The leading one, which has already been mentioned, is that the officials at the Board of Trade are not experienced in industry. Manufacturers say that the War Ministries have managed to collect together a team which knows what industrialists mean when they talk about plans and methods of production; but that in the Board of Trade that knowledge is absent. They say, too, that there is little appreciation of all that is involved in the making of market surveys and the preparing for export plans, and that there is generally a lack of helpful information.

I am sorry that my right hon. Friend is not here, because I particularly want to ask him to pay attention to these points, as they are points made again and again by the industrialists we meet. One particular form of complaint is as regards the methods of procrastination in the Department, that when they cannot give an answer they just "stall"; they do not say they do not know, they give an evasive reply. Manufacturers are never give any positive information. They are not told, "You can have certain materials," "You can export to certain markets." They are asked to find out whether they can do so. The result is they are really left in the position of a hostile force probing an unknown situation to find a soft spot. That is a very unsatisfactory procedure, most wasteful of time and liable to cause the greatest possible irritation. Therefore I say that the Board of Trade needs better personnel and better methods, and that there is also a need for greater facilities for sending representatives abroad.

My second point concerns the Department of Overseas Trade. I submit that there should now be a complete review of all overseas representatives. The whole team should be checked over, and openings should be made for good men. I think this is one of the cases in which men coming from the Services might be given the opportunity of a really good career. Thirdly, I submit there is a need for overhauling the Export Credits Scheme, particularly in relation to capital goods.

I turn next to the problems which face manufacturers on reconversion. These differ greatly in different places. All those manufacturers who have had to turn over almost entirely from their peace to their war production emphasise the point that a great deal of time will be needed to reconvert. They want to start planning now. They want their key men back; they want to be able to use some of their existing staff for working out plans. We have been told to-day that that facility is to be given; and indeed industry has even been criticised for not asking for more facilities. I should like to give some reasons why there has been some holding back on this matter. On 25th September the President of the Board of Trade sent out a long circular letter of somewhat pious generalities, telling everyone they ought to get busy about export and asking them to give information as to what their requirements were. I can only say that at any rate among all the smaller maufacturers in my own constituency I found a great reluctance to supply information as to labour they had, which might possibly be spared for such matters as preparing for export orders, for making samples and so on, because they were afraid that once it had been given, it would be an invitation to the Ministry of Labour officials to say, "These men are not required for war production, and therefore are going to be directed to work elsewhere." That is an impression which exists throughout industry. I urge most strongly, now that we are told that this kind of work is to be encouraged, that not merely at the top of the Ministry of Labour here, but right down throughout the machine, my right hon. Friend should see that directions are issued to local officials of the Ministry of Labour that they are to keep in step with the general policy of the Government.

Another thing that manufacturers particularly want to know is what facilities there will be for replacing worn-out machinery. They ask, "Is there to be any official in the Government from whom we can get a list of machine tools that are available?" We have often been told in Debates that the Government have no complete inventory of machinery of that kind. But it is most urgent that intelligible lists should be made available so that manufacturers should know where they can get the machine tools and so on which may be required for conversion. Lastly, I would like again to stress the need for a comprehensive statement on the lines of that report on reconversion issued in America. Many manufacturers have told me that a general statement on those lines would be of enormous help to them.

Mr. Austin Hopkinson (Mossley)

Before my hon. Friend finishes his speech, will he touch upon what is really concerning manufacturers for the export trades, which is the question of what prices they are to quote in future? Because we do not know what is to be the labour policy and the financial policy of the Government we have no means of quoting prices.

Sir G. Schuster

My hon. Friend might perhaps make his own speech on that point. It is important, but it really is irrelevant to what I am trying to say. I am not so much concerned with the immediate encouragement of exports. I am much more concerned to know that the Government are doing everything they can to make it possible for manufacturers to prepare for the future. It is the future that matters. At present or in the immediate post-war years we shall, as I have already said, be able to sell almost anything, the markets will be so very short of goods. So I do not propose to deal further with my hon. Friend's point, but as he has interrupted, I want to emphasise that I have not attempted to give an exhaustive list. I only wished to put on record a number of points which I believe are worth attention. If the detailed points of which I have just given a list are attended to, together with the three major points that I have made about responsibility, I shall have some confidence that the Government are going to do their best to make our post-war effort a worthy sequel to our magnificent accomplishments in war.

5.5 p.m.

Mr. Hammersley (Willesden, East)

The Debate has gone over a very wide field, which I do not intend to cover. I want to deal with one point. Underlying the speeches of most Members has been considerable concern about our efficiency of production. It can be said that the efficiency of our production is the basic problem on which the future of this country depends. I propose to deal with this one subject alone. Productive efficiency is the resultant of many forces. It is perfectly true that it depends in the main on the scientific application of man-power to machinery, but that is a very great simplification. The root of the problem is the human factor: conditions of work, security of employment, health and tranquillity in the home, adequate housing. [An HON. MEMBER: "Good wages."] Yes, adequate wages. All those factors are just as relevant to production as, for example, the payment of bonuses on production. It is quite impossible to have an efficient, happy industrial population if after this war they are going to suffer the same fate that the industrial population suffered after the last war. They are entitled to more than mere promises that mass unemployment shall not recur.

In order to get the best from our workers, they must be assured of industrial stability and security. Without that, it is idle for us to expect that many modern inventions, the application of which will probably require immediate sacrifices from many sections of the community, will be put into force. The technical improvements that are required cannot be achieved unless we have this atmosphere of industrial stability. We can be quite sure that, without this care for the human factor, we shall return to the atmosphere of restricted production that was a major factor in our last post-war difficulties. That is why I attach great importance to the policy of the White Papers—full employment, national security, and improved education and health and housing. I welcome the statement made by the Leader of the House the other day, that it is the intention of the Conservative Party to see that the policy which I have described as the policy of the White Papers is put into force. On that assumption, we can pay attention to the more technical aspects of industrial efficiency. But I want to make it quite clear that we can turn our attention to the technical aspects only if we are reasonably sure that the human aspects are right.

Modern industrial efficiency is the product of two efficiencies—the productivity of the worker combined with the productivity of the machine. That sounds very much like a truism and a glimpse of the obvious, but when I read statistics, books, and even the speeches of Members of Parliament on this subject, I am not sure that they have really appreciated the importance of the efficiency of the machine. Every one of these statements recently issued has dealt with production per man-hour—has concentrated upon the productivity of the worker. The inter-relationship between the productivity of the man and the machine in a machine age does not seem to be thoroughly understood. Of course, it is a highly technical problem, and it can only be understood by persons in the particular industry who thoroughly understand that industry. It varies very much between one trade and another, and that is why I, personally, have never felt competent to talk about the coal industry. The problems of the coal industry, it seems to me, are tied up very much with technicalities only understood by the people in the industry, and I do not propose to suggest that I am capable of dealing with this subject in toto.

I prefer to take, as my example, the cotton industry. This is an industry with which I am intimately associated; it is also an industry on which a Report, commonly known as the Platt Report, has recently been published. Moreover, it is an industry to which a great deal of publicity has recently been given. I do not suggest that the conclusions that I shall draw in respect of the cotton trade are applicable, word by word, to every other industry, but I suspect that those conclusions have some relevance, even to other trades. Turning to the Platt Report, hon. Members have probably been shocked by the revelation of how far, apparently, we are behind the United States. This is a valuable Report, which contains very useful information, and there is no doubt that there are many lessons which this country can learn. But I would assure the House that it is a very great mistake to take this Platt Report at its face value, and I propose to give my reasons. In the first place, the report applies only to approximately half the trade. Its recommendations are based upon the acceptance of an organisation for the production of standard lines. If hon. Members refer to page 32 of the report, they will find that it states: The vital requirement in the British cotton industry is a modification of the methods of distribution, which will have due regard for the conditions necessary for economic production and labour employment. This is the most important sentence: The most important of these conditions are (a) production of standard yarn in cloth types and (b) the bulk production of the standard yard or cloth types for which a mill's equipment is most suited. In other words, the recommendations were based on the production of standard lines. Whatever conclusions we may draw about the cotton trade, it is certain that you cannot have standard lines for the whole of the industry. For the export trade you must have variety, specialities and, most important of all, you must have quality. I am quite convinced that the export trade of this country in the future must depend upon quality. Nations all over the world are developing the production of ordinary bread-and-butter articles for their own markets, and our future does lie in variety and quality, though, of course, we must have standardisation as well.

The second point is that the Report only refers to production per man-hour. It does not refer to cost of production, and it perpetuates the fallacy that productivity of the man can be divorced from the productivity of the machine. I would like the House to appreciate the fact that it is possible to put up the productivity per man-hour, and, at the same time, increase your cost of production and reduce the machine efficiency. Let me give an example—a practical example, which I hope will bring the point home to the House and the country, because these facts are not sufficiently understood. You take a machine which normally requires three people to look after it. In normal times, the production of that machine would be 9,000 pounds weight of yarn per week. That is to say, the production per man-week was 3,000 lb. By reason of the war, you have to staff that machine with two people and, as a result of that, the production, instead of being 9,000 lb. per week, is 7,000 lb. per week, but the production of the two men, instead of being 3,000 lb. per man-week, is 3,500 lb. per man-week. In other words, the production per man-hour has gone up by 16⅔ per cent.; the industry has lost the production of 2,000 lb. from that machine; the standard of quality has certainly gone down, because you have two people looking after what should be three people's work; and, fourthly, the cost of production has gone up, because you have to pay the two people three people's wages, and you have less production.

The reason why you have to pay two people three people's wages is because, under modern conditions, when you ask them to try to do three men's work, that is a necessity. Reinforcement of my argument can be found. If hon. Members turn to page 48, table 4, of the Platt Report, they will find there that, because of the war, the productivity per man-hour in British production has gone up, but nobody will pretend that the efficiency has gone up, because, in fact, it has gone down. The cost of production has gone up, while productivity per man-hour has gone up. I want to assure hon. Members that, by merely following published figures, indicative of the fact that productivity per man-hour in this country is very much lower than productivity per man-hour in the United States, they are not in possession of the whole tale. I do not want to stress it beyond that, but it certainly is not the whole tale. You must take into consideration the efficiency of the machine itself, because we are living in a machine age, and it is the combination of the two—machine efficiency and man efficiency—which constitutes the factor which we have to watch.

Mr. Hopkinson

As I understand my hon. Friend's argument, it is that, if you pay two men three men's wages, the cost of production goes up. Am I right?

Mr. Hammersley

No. I am afraid my hon. Friend has not followed me. I pointed out that, by reason of the war, two men were doing three men's work, and that the result of two men doing three men's work was that production per man-hour has gone up, but, because the two men had to be paid three men's wages, the cost of production had also gone up.

Mr. Burke

Can my hon. Friend tell us where, in the spinning trade, two men are paid three men's wages? Where does this happen?

Mr. Hammersley

Throughout the whole of the spinning trade. If my hon. Friend wants to know, I will give him chapter and verse. In Lancashire, when they were forced by the war to revert from the normal staff, and had to reduce the number of people, invariably, in the cotton spinning trade, the people who did the extra work, got the extra wages. I am not complaining about it.

Mr. Mainwaring (Rhondda, East)

I do not quite follow my hon. Friend. If it is a fact that, owing to war conditions, two men are doing three men's work, and are paid three men's wages, surely that equalises itself? There is no increased cost of production in that itself.

Mr. Hammersley

I think that if the hon. Member reads my speech he will understand. He has quite overlooked the point that I related the matter to the machine efficiency and said that production had gone down by 2,000 lbs. If the production goes down by 2,000 lbs. and you still pay the same wages, obviously it will put up the cost of production. I cannot make it any plainer. There is another point in the cotton textile Report to which attention ought to be drawn, because publicity has all been given on the side of inefficiency. What has not been drawn attention to is, that Lancashire uses cheaper cottons than they do in America and produces better yarns. If this Report is read carefully, that fact will be made quite clear. Further, the quality in Lancashire is better, the machine production in Lancashire is greater, and there are one or two other points that indicate that, in the treatment of cotton itself, Lancashire has very little indeed to learn. Nothing in the course of my remarks is intended to deny the very great value of this Report. I am trying, however, to put it in its proper perspective and to make the House appreciate that the whole of the Report applies to the production of standard lines and that Lancashire, though she ought to make standard lines, cannot make the whole of her production on standard lines.

Mr. A. Edwards

Will the hon. Member make clear the Report where it says that 8½ men are used whereas one alone is used in America?

Mr. Hammersley

I do not want to delay the House. It is a technical matter and I am very anxious to give other Members an opportunity to speak, but I think it relevant to ask the Government, in view of the fact that so much of this Report depends on standard lines, what steps they are taking to see standard lines are organised in the industry. I would like to turn from the question of the technical efficiency of the industry to the national side, and to refer to taxation in order to help industrial efficiency. A great deal has been said about the need for re-equipment. Broadly speaking, there is a great deal of truth in it, but it is beyond the financial resources of the ordinary individual firm to go in for complete re-equipment. It may be too great a financial risk. I have put forward the suggestion that, instead of an individual firm going in for re-equipment, there should be a co-operative linking of those concerned with making the same kind of products to go in for large-scale experimental re-equipment. There are special sub-sections of the cotton spinning and weaving trades and of many industries which could co-operate together for large-scale experimental re-equipment.

Here the Chancellor of the Exchequer could help. I put forward the suggestion that the E.P.T. Post-War Credits, if used co-operatively in this way instead of being used individually by the various concerns, would not attract Income Tax. If that is true, it is clear that their resources available for re-equipment from E.P.T. Post-War Credits would be twice as much. I suggest this for the favourable consideration of the Chancellor of the Exchequer, and I mention this point also to the right hon. Gentleman the President of the Board of Trade and ask for his good offices in this matter. I ask that they may very well consider the question of giving some incentive to firms to use their E.P.T. credits co-operatively. It would help in respect of the matter of re-equipment, and also help the concerns which have been stopped by reason of the concentration of production. There is a further point, which I will not go into as it was metioned before, that of adequate depreciation. There is no doubt that the depreciation allowances given at the present time are not enough on the basis that you have to replace at costs which are very much higher than the original costs of the machinery. The suggestion is that, provided replacement does take place—and only if it takes place—much more adequate deprecation allowances should be given. I do not take a gloomy view. The maximum industrial production is the combination of the optimum use of man-power with the optimum use of the machine. There are three parties—the employed, the employers and the State, and co-operation is essential. If we unite for a common effort, for a common purpose, we can achieve success. We have the most skilled workers in the world. The human factor is the most critical. We should not overlook it here, but if any one of these parties either the employed, the employers or the State seek to secure for themselves the whole of the proceeds of modern invention and improvement we shall indeed sink to a second-class Power.

5.27 p.m.

Mr. Bowles (Nuneaton)

I was interested in the remarks of the hon. Gentleman the Member for East Willesden (Mr. Hammersley), particularly those concerning the cotton industry. I remember that in 1936 I fought a by-election in Preston and I found one or two conditions there which perhaps I might mention to the House. The first was the complete inability of the cotton industry to organise itself. Extreme pessimism existed among the various sections of the cotton mills and although the Manchester Chamber of Commerce tried over and over again even during the short time I was there, it was impossible to get the cotton industry organised on anything like an efficient basis. The second thing I remember well was that the wages paid in the cotton industry were so low that it was impossible for me, as a Labour candidate, to complain at that time as to the lowness of the unemployment insurance benefit that was being paid. The position was confused, and I ought to add that men and women in that part of Lancashire were prepared to take any kind of work to get their cards stamped with the necessary 26 stamps in order to qualify them for unemployment insurance benefit. It had a tremendously depressing effect upon the standard of wages in the cotton industry.

An hon. Member of the Tory Party spoke about the need not only of exporting goods, but of exporting machinery for making goods. I am sure that my hon. Friend the Member for Burnley (Mr. Burke) and others who represent that part of Lancashire will remember what a great deal of competition the Lancashire cotton industry was facing during the inter-war years. It arose very largely owing to the owners of cotton machinery in Lancashire having sold their machinery to manufacturers in India, China and Japan, with the result that that machinery was used, and lower wages were paid to Eastern labour, and the Lancashire operatives were very seriously undercut as far as competition was concerned. I also remember that pleas were made to the operatives as ordinary decent loyal British subjects to accept reductions in their wages in order that their industry might be able to compete in the foreign markets of the world. I say frankly that if ever there was an industry which is a perfect example of capitalism gone mad, it is the cotton industry in this country.

I have listened to a good deal of this Debate, and one of the thoughts that came to my mind when I was wondering whether to take part in it was one which came to my mind last year. It was in the words, slightly paraphrased, of a well-known concert artist in this country, Ronald Frankau, "Do we export because we have to or because we think it is the right thing to do?" I am not quite sure in my own mind, having heard the speeches made by hon. Members on the other side of the House, and even the statement of the Prime Minister last week, when all this emphasis is placed on the need for exports, whether it has not just become a fetish in this country, or whether there is something behind it, to which I will refer in a few minutes. I am very glad to see my right hon. Friend the President of the Board of Trade on the Front Bench, because he has taught me more economics than he has forgotten. I remember asking him a supplementary question a few days ago when he was assuring some hon. Gentleman that he, the President of the Board of Trade, would do all he possibly could to see that as much cotton goods as possible were exported. I had the impudence to ask whether he thought it a good idea to export cotton goods from this country until everybody in this country had a sufficiency of them, and he said that I had better come and see him afterwards.

Mr. Dalton

And the hon. Member did not.

Mr. Bowles

The right hon. Gentleman whispered to me and nobody else in the Chamber heard him, so we left it at that. However, I will ask my right hon. Friend, when he makes his reply, to try to continue my education on this question of exports, because, quite frankly, I am not at all impressed by the speeches I have heard. I as a Socialist would like to put this to my right hon. Friend and I hope he will answer me as a Socialist: Does he really not think that the right test to apply first is, what have we to import to maintain or to increase the standard of life of our people—in addition to pomegranates, to which the hon. Member for Duddeston (Sir O. Simmonds) referred? He talked about importing pomegranates for the rich man's table in order to keep up a standard of life, and when I interrupted with a question when he was talking about £200,000,000 sterling he suddenly switched because he saw some of his Tory friends thinking he had really spoilt this. What he was saying was that our imports amounted to £200,000,000 sterling, and that to pay for all those it was necessary to export £200,000,000 and then we should be all right and able to maintain ourselves.

I put this to my right hon. Friend. He or some other Minister should make up his mind what this country, by the very situation in which it finds itself, has to import in the way of rubber, oil, citrus fruits, and so on. I do not propose to enumerate them; I do not suppose I know them all. Surely the Board of Trade or some central Department can estimate what it is necessary for us to import and then, having decided that, they should decide to export a more or less equivalent value of commodities to pay for the imports, and then go on to develop the standard of life of our people by sharing production.

I have been told by various people and hon. Members, and I think I have seen it in the Press, that we have lost nearly all our foreign investments. That must be frightful. Whether it is very serious I do not know, but I remember that during the inter-war years, when we had not lost them, we had in this country an average of 1,700,000 registered unemployed. Therefore, in spite of that great foreign investment we were embarrassed so far as employees were concerned. [AN HON. MEMBER: "In America they had 8,000,000 to 11,000,000."] I am obliged to my hon. Friend. I think this ought to be said from these benches. The hon. Member for the East Willesden Division began to make an election speech, and I shall make one as well. Of course, he was very pleased to hear the right hon. Gentleman the Foreign Secretary state on Friday that his own party were quite in favour of getting through all this social legislation. They will tell us so at the General Election. They will tell the people of this country, "Of course the Conservative Party is just as anxious as the Labour Party to see national insurance—or social security or whatever it may be called at the time—and we also would like to see you having decent houses, much better houses of a permanent nature, but, of course, you must remember that we have already lost a large proportion of our foreign investments. It will be necessary in order to keep up the standard of life in this country to which we have become used, to export." Having established that in the minds of people, particularly of men, who think they are slightly more of an economist frame-of-mind than women, who get the wind up anyhow to start with——

Viscountess Astor

Oh, no, they will not. They have common sense.

Mr. Bowles

The ordinary man in his house may be appealed to more readily on the basis of economics than a woman in the house. I am not talking about hon. Ladies who have managed to get themselves here——

Viscountess Astor

And stay here.

Mr. Bowles

And resign when they want to do so——

Viscountess Astor

They are not kicked out.

Mr. Bowles

—by virtue of necessity. Further, I am certain that it would be easy for the Conservative Party to play on the feelings and intelligence of certain men in the houses they will be canvassing. They will say, "After all, you understand that we cannot possibly live without exporting, and, of course, we have lost a lot of our export trade——

Mr. Deputy-Speaker (Mr. Charles Williams)

It is not for me to understand.

Mr. Bowles

I was trying to explain that this is the kind of canvassing that will be done by the Conservative Party during the election.

Viscountess Astor

May I ask a question, Mr. Deputy-Speaker? The hon. Gentleman said he was making an election speech.

Mr. Deputy-Speaker

Does the Noble Lady wish to ask me a question?

Viscountess Astor

Is it right for a Member of Parliament to get up during a Debate and say, "I am now going to make an electioneering speech"?

Mr. Deputy-Speaker

I have heard all sorts of people making electioneering speeches here.

Mr. Buchanan (Glasgow, Gorbals)

I have never been known to make an election speech here.

Mr. Bowles

I am probably a little more frank. However, the Noble Lady will not be interested in the next election, so it will not be of much value to her, though it may be to her friends who will fight the election next time. This is the kind of thing that will be said, "We believe, we Conservatives, that you should have houses and social insurance and national security insurance, and so on, but, of course, you must realise that we are much poorer."

I very much regret to say that the right hon. Gentleman the Minister of Labour said that this country is "broke." I think that ought to be denied. I do not believe it at all. It is to my mind completely untrue. The wealth of this country depends on its man-power and woman-power, on its natural resources, on creative ability, on its skilled workmen and so on. I think we should make it quite clear that we are not broke, that our ability depends upon the skill with which the men and women and the natural resources of this country are organised. I think a great deal of the wealth that is produced should be retained in this country for the purpose of maintaining the standard of life, and I say that unless we are very careful on this side of the House to make things perfectly clear to the people, we shall have election scare tactics. The Conservatives will say, "Of course we believe in social insurance, and so on, but we have lost our foreign investments so we must increase our export trade by 50 per cent." I think the Minister of Production said that in a speech.

All I should like to say in conclusion is, that having heard the speeches of hon. Members for Birmingham and others, I think it is obvious that they are visualising a period of the most angry competition with those who are our closest Allies at the present moment. The hon. Member for Duddeston (Sir O. Simmonds) referred to the break-down of the Civil Aviation Conference. That shows exactly the spirit which will last so long as industry and exports are retained in the hands of private interests. There will be that kind of competition; and I say further that there is nothing more likely to reduce the morale of soldiers, sailors and airmen who are fighting the war to-day than for them to feel, from the break-down of the Chicago Conference and other things, that they will return to a world of anger and that the world organisation which people thought we should enjoy when the war is over is now being pushed aside by private interests who are competing with one another. I ask my right hon. Friend to say whether he does not accept the proposition that the amount of our exports must be directly conditioned by the amount we have to import in order to maintain, or increase, our standard of living and, more than that, that our production should be concerned with developing and increasing the standard of life of our people.

5.41 p.m.

Captain Thorneycroft (Stafford)

Unlike the hon. Member for Nuneaton (Mr. Bowles) I do not propose to make an election speech on this occasion. I hope, however, that I shall be able to say one or two things which will shock him very much about exports. For over a year in this House we have been discussing various measures of social reform and national insurance which would have the effect of distributing the national income. The purport of our discussion to-day is not the distribution of wealth, but its creation. A number of hon. Members have pointed to the obstacles which exist in the way of developing our export trade or re-equipping our industries, and I think everyone will agree that those obstacles are substantial. Some point to the re- strictive conditions of Lend-Lease, others to the war-time shortages of material, and others see in the existence of my right hon. Friend the Secretary to the Department of Overseas Trade the principal barrier to an expanding economy. But whatever the truth about these difficulties they have one thing in common—they are all transitory. If they be evils they are evils which will pass, and I want to deal with certain more permanent and fundamental issues.

There seems to be in the country, as a whole, the general impression that the moment our war-time difficulties are over, and peace returns, then, somehow or another, almost automatically, we shall return to the standard of living we had in 1938, or even an increased standard. I think that impression, unless it is linked with positive action on our part, is mere wishful thinking. A high standard of living in this country can only be obtained by hard work on the part of labour, by efficiency on the part of managements and willingness on the part of capital to take risks. I do not wish to talk about hard work on this occasion, but I do not believe that a spectacular reduction in hours of work will be the first step towards an increased standard of living. I believe that the British workman is prepared to do his job, but that if he is to do it he must have the right tools put in his hands. He must have the most modern and up-to-date machinery which is available. That is not the case to-day. It is a sad fact that in 1938 the productive efficiency of the United States of America, over a whole range of industries, was substantially better than our own.

Mr. Kenneth Lindsay

Will my hon. and gallant Friend explain why there were 8,000,000 unemployed in 1938?

Captain Thorneycroft

I will not do anything of the kind, because I do not want to be diverted from my argument. In 1938 America was producing more efficiently than we were and their productive efficiency was increasing at a greater rate than ours—nearly double. We were behind in the race, and were falling still further behind. They were producing more per worker and more per man-hour, and at lower costs. They were even able to pay higher wages. That is a situation which cannot be tolerated. Many people think that the war has changed all that, but it has not. It is true that our industrial war effort has been magnificent, that we have done a fine job, but it is not true that America has done a less fine job. She has devoted just as high a proportion of her national effort to the war as we have. [HON. MEMBERS: "No."] The figures are practically the same. [HON. MEMBERS: "No."] America can provide more consumption goods and more exports because she produces more efficiently. I believe that the British workman is every bit as good as his American cousin. The reason the American produces more is because he has more horse-power in his hands. Therefore, the first task of the Government, and the first purpose of this Debate, is to get a clear statement of policy from the Government that it is their avowed intention to enable industry in this country to be equipped to the most efficient standard, a standard equivalent to that of any comparable industry in any other part of the world.

Mr. Stephen (Glasgow, Camlachie)

Socialise it.

Captain Thorneycroft

The Government must implement that intention by every means in their power. They must remove the obstacle of Lend-Lease, they must influence or direct the flow of investment and the allocation of war materials between capital and consumption goods, and, through their taxation policy, must make allowance not only for the maintenance of old equipment but for establishing new equipment. The Government have a wide range of weapons at their command which must be used for that purpose. Not only the Government but management, too, has a role to play in this matter. The question being asked to-day is: Is management still as chronically slow-minded as it was before the war? Is it going back to the old restrictive practices of the 1930's? I do not want to enlarge on these restrictive practices at the moment, but we have heard of tyre manufacturers who used to slash tyres so that they could not be retreaded. Are they going back to those practices? Tyre manufacturers are at the present time forming a new ring, the same as before. [HON. MEMBERS: "Why?"] I am coming to that in a moment. There are other rings—the gas cooker ring and the steel ring, about which my hon. Friend the Member for Northampton (Mr. Summers) knows something. I do not say that all the operations of the steel ring are bad, but the fact is that it was difficult to get into the steel industry before the war, and in excluding new competitors you automatically exclude new ideas. To-day, the price of steel in this country is substantially higher than in America. The basic evil of these rings is that prices tend to be fixed to those of the higher cost producers all the time. That means inefficiency and militates against the re-equipment which my hon. Friend wants to see.

Organised labour is not altogether blameless in this matter. It has its own restrictions of output, for instance, the number of bricks that can be laid per hour, the number of men working on a machine and the qualifications of those men. I heard of a case the other day where the rule was that workers had to go to a control point, from which they were not allowed to go to their work on a bicycle but had to walk at a speed not exceeding three miles per hour. You cannot cuter the second half of this century at a speed not exceeding three miles per hour. The lesson management and labour must learn in this matter is that in the long run it is impossible to consume more by producing less.

Mr. Shinwell

This is all very well, but, when the hon. and gallant Gentleman makes an allegation about certain workers, would he give us specific details? Cite a case so that we can deal with it. Do not make general allegations.

Captain Thorneycroft

I am not making allegations against anyone. In the conditions that existed between the wars, perfectly sensible men on both sides, management and labour, entered into all sorts of restrictive policies. We heard in the last Session reference to legislation dealing with these restrictive practices. What is going to happen about that legislation? Will the Government say that those restrictive practices are anti-social and militate against re-equipment and must be justified to a Government body before they are allowed to continue?

I turn to the question of exports. As the hon. Member for Nuneaton has left us, I will not seek to justify the ordinary plain argument that exports are necessary to pay for imports, except to say that our standard of living in 1938 was largely supported on the basis of cheap food. After this war, food may not be so cheap. Even before the war we helped ourselves along by the interest from our overseas investments, and occasionally by the sale of those investments. On the basis of paying for imports it was necessary in 1938, and it will be vital to us after the war. But I want to support the export policy on other and separate grounds. I do not believe we can have a prosperous Britain, or a prosperous United States of America, amidst a starving world. Poverty in any part of the world tends to drive out prosperity in the rest of it. Our first task, therefore, is to re-equip this country, and to make it the most modern and efficient in the world. These islands are, after all, our own best shop window. Our second task is to develop our Colonial Empire. Our third is to enable our sister Dominions to develop themselves up to the most efficient standard; and our fourth, in co-operation with the United States, is to develop other industrial parts of the world, such as China. In the past we have pursued the policy of buying food and materials in the cheapest markets, and the result is that all over the world there are peasant populations eking out a miserable existence, often on the very verge of starvation. We cannot export high quality goods to Chinese coolies. They cannot afford to buy them.

We have pursued that policy of buying cheaply, not only in the world but, to our lasting shame, within the confines of our Empire, and that does not conform to my views of our Imperial responsibility. The folly of that policy is largely recognised. In the future, we may have to pay more for our food, but we shall be able to export capital goods to get secondary industries started in this country, and to build up their standard of living, by degrees, to something comparable with our own. I know there is a popular belief that there is something morally wrong with developing industry anywhere where there is a native population. [HON. MEMBERS: No."] I know perfectly well that the hon. Member for Aberavon (Mr. Cove) would call it industrial exploitation. In fact, he used those very words to-day. We have reached a stage where the tradition of Clive in India, or Rhodes in Africa, is reduced to a current catch-word. In India alone there are 400,000,000 people who are living very largely on the brink of the abyss of famine. Their problem is not religious, political or racial. It is an industrial and economic problem that they face. All over the world to-day there are thousands of His Majesty's subjects who are going about their rather humdrum tasks with bare hands. In the new world into which we are entering we do not want bare hands. We want bulldozers, and this country has the responsibility of supplying the capital. What is the Government's policy on these matters? What are they going to do about the export of capital equipment to the Dominions? Have they consulted the Dominions? Is there going to be an Imperial industrial conference? What information have they given to industrialists in this country as to Colonial development? Are we going to pursue the rather niggardly policy that we adopted in the past, or are we going to develop our Colonies on the most lavish scale with all the resources at our hand? Let us have a statement of policy.

What about the Board of Trade itself? I will not talk about its detailed organisation. I do not mind what organisation exists behind the elaborate façade of Thames House. What I am interested in is what comes out of it. What about the personnel? There are in the Department some very able men, whom we have all met from time to time. I met one yesterday. I would ask the right hon. Gentleman to consider whether he has men of engineering, technical and industrial ability to deal with a policy of capital expansion on the sort of scale of which I have been talking. I doubt it very much. If there is one matter in which the Government can help industry more than any other it is in up-to-date information. There is no one firm which can have an intelligence system that covers the whole world. But the Government can do it. In the past they have produced interesting little booklets showing what has happened in different countries in the past year. That is no good to an industrialist. He wants to know what local authority in Mexico wants six fire engines. The right hon. Gentleman ought to have an intelligence service to find out what goods are required, so that our tenders can get in on the top of the market. It was done in America before the war, and there is no reason why it should not be done here.

I do not believe that a high standard of living for the people of this country can be got on a national insurance scheme. That is where I differ from the hon. Member for Aberavon. I do not believe that, simply by making provision for the sick or the aged or the unfortunate, we shall necessarily increase prosperity. I do not believe that we can increase the standard of living even by devices to secure some sort of regularity and stability of work and output. I believe there is only one way of doing it, and that is by putting modern machinery into the hands of men who are prepared to work hard for high wages and to take big risks for big rewards. To-day, with modem scientific methods, it is very nearly true to say that you can move mountains. You can drive roads through the jungle and bring cultivation to the desert places of the world. Let us, not as a small country concerned with our own petty domestic problems, our own little questions of security, but as an Empire wring from the good earth the means whereby mankind can live in the dignity he deserves.

6.1 p.m.

Sir Wavell Wakefield (Swindon)

The hon. Member for Nuneaton (Mr. Bowles) said that he was making an electioneering speech. I hope he will continue with his electioneering speeches and saying that there is no need for exports for this country. He will find the people are not so unintelligent and "dumb" as he thinks. Perhaps he does not realise that we produce only enough food in this country for five days of the week. Where does he think we are to get the food for the other two days, except by exports? Without exports we cannot live.

Mr. Bowles

I did not say anything of the kind. What I said was that we had to export exactly what was necessary to pay for imports. If two days' food have to be imported, we must export the necessary commodities to pay for it.

Sir W. Wakefield

I understood the hon. Member to say that exports were not necessary. The hon. Member for Walsall (Sir G. Schuster) expressed grave anxiety at the difficulties which exporters were facing, and he asked the President of the Board of Trade a number of pertinent questions. As the result of a recent visit with an Empire Parliamentary delegation to the Union of South Africa, and of returning through the Middle East, I would like to reinforce everything that the hon. Member said. I believe that we ought to feel great anxiety at what is happening in the Dominions and in foreign countries. In South Africa we found a great market for our goods and great good will. We found machinery needing replacement and a great shortage of consumer goods. We found also that the people were fed up with having expensive goods from the Argentine and Brazil which were not comparable in quality with British goods. We found, too, that Americans were there doing their utmost to get contracts. I was astonished with the reply given by the President of the Board of Trade yesterday to a supplementary question by my hon. Friend the Member for Moseley (Sir P. Hannon), who asked: Is there any truth in the allegation that, at the instance of the Department of Overseas Trade, contracts offered to this country are from time to time passed to the United States. The right hon. Gentleman replied: No, Sir, I do not think there is any ground for such a statement."—[OFFICIAL REPORT, 5th December, 1944; Vol. 406, c. 334] That reply absolutely astounds me. I have here a long list of goods dated "Durban, 26th September," and headed "A Report on the switching of orders from Great Britain to the United States of America." The same thing is happening in Egypt, and it astounds me that the President of the Board of Trade, the head of the Government Department responsible for the export trade, should not have knowledge that orders are being switched from Great Britain to the United States.

Sir Percy Harris (Bethnal Green, South-West)

Who did the switching? Was it the Board of Trade?

Sir W. Wakefield

That might be one of the things for the President of the Board of Trade to answer. It is a point which ought to be cleared up. We found in South Africa that a great sales push by the Americans was going on. They were offering an immediate supply of all kinds of goods, half cash down, the balance of payment to be made in two, three or four years' time, as and when possible, without interest. All these things very much reinforce what the hon. Member for Sea-ham (Mr. Shinwell) said. I agree with him that a policy is required, and that it will be necessary to speak frankly to the United States, and ask what their policy is. From some of the things we saw in South Africa I think it would be an advantage, both to America and ourselves, for same of these questions to be asked and answered. We found that American salesmen were taking advantage of the difficulties which this country has, because it is engaged to its utmost capacity in war production, to offer the attractive terms which I have described.

It is of the utmost importance that much greater facilities should be given to our representatives and to our principals to visit these countries and other countries, in order to prepare the way for post-war trade, not just for the next few months, but for the years to come. Samples are required and markets must be studied by principals and their agents. All that takes time, and a lot of it can be done without hindrance to the war effort. Not one of us wants to hinder the war effort. The complaint we are making is that greater facilities and much more help can be given without hindrance to the war effort to the development of post-war export trade than is being given. Travel facilities are of the utmost importance. I came across the case of the chairman of an export group in this country who was urgently wanted in Egypt for a £2,000,000 contract. He was responsible for the turning over of some 17,000 people from war to peace conditions. There was grave doubt whether he could get a permit to travel to Egypt. The Americans were offering to fly Egyptians to America in order to get the contract. The chairman of the English export group eventually got the trip, but there ought not to be any question about giving travel facilities to a man of his calibre seeking such orders from this country.

I would like to stress the importance of strengthening the staff of the Department of Overseas Trade. The very best men are required. I would like to say a word in praise of the trade commissioners and other representatives whom we met. They are short staffed, but they are doing a fine job of work. They ought to be given more help than is being given to them. I have heard rumours that the commercial diplomatic branch of the new combined Foreign Service is to be admin- istered by and placed on the Vote of the Foreign Office. I hope that representatives of the Department of Overseas Trade, who represent the business community, will not be placed directly under the Foreign Office. The interests of the Foreign Office must be primarily diplomatic, and those administering the diplomatic service have a diplomatic rather than a commercial background. If they receive their instructions from the Department of Overseas Trade, they will primarily be serving United Kingdom exporters whose contacts are with that Department and who have a day-to-day knowledge of the export trade to foreign and Empire countries. These men collect the information required by and for the benefit of the export trade. I hope that that set-up will not be altered.

In the few minutes remaining to me I would like to emphasise the seriousness of the position, and to say how much the exporters want help which they feel is not forthcoming. For instance, what is the position in the Middle East? Is the Middle East Supply Council to continue to direct that all orders and contracts placed in Egypt and the Middle East are to be given to America? I am sure that the House would he grateful if the President of the Board of Trade gave some information on that matter. In that connection I would like to say that the activities of the U.K.C.C. are not above reproach. There is monopoly there, and it will not help British goodwill and trade in the future. They are supplying types of goods—they cannot help it, because there are no others available—which are not up to standard, and when those who receive them find they are no good and ask for credit, the U.K.C.C. say: "No, you cannot have credit." If legal action is threatened to recover they say: "You will be struck off the list and you will get no more supplies." That is the sort of thing that is happening out there and it will not do any good to British trade.

Exporters ought to know what prices are to be charged for raw materials under the new Lend-Lease arrangement. I came across an instance only the other day of certain materials which could be obtained from the United States of America, but were sold to another foreign country at about half the price. It is much cheaper to obtain them from that other foreign country than from the United States of America. What is the policy of the Government in relation to obtaining raw materials? What prices are to be charged? In South Africa we saw many British machines in the secondary industries which South Africa has established, which were much better than American machines. The American machines were costing, either under Lend-Lease or for cash payment, twice or three times as much under war conditions as the British machines, but the prices being quoted for post-war trade were lower than the British prices. Where are we? I would ask the President of the Board of Trade for information on this matter. Could we have some statement of policy so that British exporters may know their position and where they stand in relation to competition with the United States.

The export business is handicapped by all these licences, many of which seem to be unnecessary. My hon. Friend the Member for West Birmingham (Mr. Higgs) drew attention to a number of cases; I want to draw attention to one, concerned with the trading licence which is required where a trader buys in West Africa from our Colonies or the French Colonies in order to sell to America. He has to send full particulars all the time to the Government Department concerned, but Americans can buy as they wish. The result is that we are losing that trade which provides valuable employment for cur shipping, insurance, and so forth, in order to get them to this country. That sort of thing is no help whatever, and we are getting only hindrances. That is the kind of example which discourages exporters from getting on with their job. They feel frustrated all the time.

Take the question of man-power direction. I know of a man—and in this connection I was interested to hear what the Minister of Production said about the action taken for the release of designers and other people doing development work and work ahead—who has been on urgent war work. That work has ceased, because it was work ahead. He is now required for the export trade, but because he has been on essential war work the Department of Overseas Trade cannot even support his application. The same is true of workers in many other directions. I hope that we shall have assurances from the Minister that all the difficulties which have been expressed by so many hon. Members this afternoon will be resolved, and that we shall have a statement of policy from the Government on these and other matters which are causing anxiety to exporters, who realise their responsibility in connection with the post-war world.

6.16 p.m.

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

This Debate has been very interesting to me at least, and, I think, to the House at large, and it has become more lively as the hours have drawn on. The last three speeches in particular have been most animated. In the time that remains before further Business is transacted just before 7 o'clock, I cannot hope to do more than deal with a certain part of the ground that has been covered, and to answer a certain number of questions, but I will do my best in the time I have.

The hon. Member for Northampton (Mr. Summers), who opened the Debate, asked about business men in the Board of Trade and he said that an answer which I had given him to a Parliamentary Question, and which gave a list of the business men who are now working in the Board of Trade, was very disappointing. I am sorry that he thought that. It may be that he did not fully realise, and if so it was not his fault, the amount of work that has been done by all those people whose names I circulated in the OFFICIAL REPORT, in answer to his Question. A number of business men in the Board of Trade whose names were given in the answer, although they do not serve in what is called an executive capacity—their names were given in the answer—have, none the less, been of the greatest assistance to me and to British industry generally.

I would like to mention, in particular, Sir Samuel Beale, who is chairman of a committee of business men meeting regularly at the Board of Trade and constantly in touch with the needs of industry through trade associations, export groups and the like. Sir Samuel, in addition to that work, to which I wish to pay public tribute now, because this is a good occasion on which to do so, rendered most valuable service last summer when, at my request, he went to Washington and took part in discussions on Lend-Lease and kindred matters. He did not succeed at that time in bringing back an agreement, but I have no doubt that his intervention paved the way, and partly contributed to the recent success of the mission headed by Lord Keynes. An hon. Member suggested that someone should go to the United States and talk to the Americans, not as "diplomatic cissies"—I think that was the expression used—but in more frank and direct language. Those who know Sir Samuel, will agree that he is capable of such a form of speech. I want to thank him on behalf of the Government for that valuable work which he did, and which is only one of a great number of services which he is continually rendering to British industry through his work at the Board of Trade.

There are difficulties about getting a larger number of business men to assist the Board of Trade. One of them is that as the war proceeds, business men are more and more keen to get back to their own businesses. The number of those serving in Government Departments is already diminishing, and is likely to diminish further and faster, but it is quite true that there are possibilities and I am exploring them. As the field of work of the Supply Departments is reduced, it will be possible to transfer to the Board of Trade, at any rate for a period during the transition, some of those who have been working in those Departments. I have, indeed, secured one such reinforcement, a rather notable one, within the last few weeks, in the person of Sir Charles Bruce-Gardner, who has come over from the Ministry of Aircraft Production. I am extremely glad to have him with me. He has already rendered most valuable service and he has contacts and commands confidence over a wide range of industry. Nor do I intend, if I can help it, that he shall be the last person transferred from the Supply Departments to the Board of Trade.

So much for that matter of business men. These business people who are working in the Board of Trade render a very valuable daily and weekly service, which is given little publicity, in maintaining touch with individual industrialists and with export groups, trade associations and the like. Moreover, I should like to emphasise what my right hon. Friend the Minister of Production said, that on the regional level a good deal is also going on in the direction which has been desired by several hon. Members who have spoken to-day. None of us can see very far into the future, and it might be that my right hon. Friend and I will before long both have returned to the irresponsibility of private life. However that may be, there will certainly still be Ministers who will have to get up in this House and answer for their conduct or misconduct, and it will be of great advantage to our successors that this regional organisation should have been developed and unified in the way in which it is being unified now. This was explained by my right hon. Friend, and I will not go into that in detail again. Putting it in a sentence, we are working together, as a common service, the regional organisation which serves the Ministry of Productlion for war-time purposes, and the Board of Trade for peace-time purposes. We have constituted it, through the Regional Boards, to be a common service between the two Departments.

When victory has been won, and war production has no longer the predominant importance it has now, this machinery will continue as a most valuable element in the future relations between the Government and industry, not only between the Government and employers, but also between the Government and representatives of the trade unions, who are represented on the regional boards. I think that these arrangements will contribute much to the efficiency of industry and to an understanding of its problems, both by representatives of the Government, who will learn from the employers and trade unionists they meet regionally, and also by representatives of capital and labour. Moreover, it is most important that, as far as possible, we should devolve decisions on all matters not of major importance from Whitehall into the regions where these problems are more clearly seen and apprehended. It is part of my intention and that of my right hon. Friend to encourage, so far as we can, these regional bodies to take decisions within a limited field, and not bottle-neck these matters through Whitehall. This is being increasingly done now.

Reference has also been made by several speakers, including the hon. Member who has just sat down, to our representatives abroad. Perhaps it will be convenient for me to deal with that at this stage of my remarks, as it is also a question of staffing and recruitment. The hon. Member said he hoped it was not true that in future the Commercial Diplomatic Service was to be part of the Foreign Office. I would like to remind him that that is a matter which has already been decided. There was a Debate on 18th March, 1943, when the present Minister of State explained the plan for the new foreign service, based on the White Paper issued at that time. It is there quite clearly laid down, and the House has assented to it, that in future the Commercial Diplomatic Service will form part of the Foreign Service. In so far as they are appointed by a Minister they will be appointed by the Foreign Secretary, though there is a passage in the White Paper, which the hon. Member may care to look at—a passage which the Board of Trade succeeded in having inserted—that in regard to appointments to the higher commercial diplomatic posts there shall be, on the Committee which makes recommendations to the Foreign Secretary, representatives of the Board of Trade and of the Department of Overseas Trade. That is safeguarded, but it is settled that the Commercial Diplomatic Service is part of the Foreign Service and comes on Foreign Office Vote. [Interruption.] My right hon. Friend informs me that it comes on the Department of Overseas Trade Vote, and that there will be an opportunity for discussing it on that Vote.

The point I wish to make is this. It is sometimes said that we are not well represented by Commercial Secretaries and Ministers abroad. Sometimes, I think that is unjustly said. No doubt some of our commercial representatives abroad are good and others are better, and a few may be worse. In the future, there will be an opportunity for the recruitment of good men into this Service, partly because it will be merged in the wider new Foreign Service, including all the consular officers and other branches of the Foreign Service as a whole, partly because, at the conclusion of this war, it will be necessary to recruit a substantial new intake. It will be impossible to do that by the ordinary competitive examinations that prevailed in peace, and a number of people will have to be brought into the Foreign Service, selected on their war record and other qualifications. It will then be possible to bring in young active men of the type who will be useful in this kind of work as part of the block recruitment to cover the five or six years' period during which no annual recruitment has taken place.

Sir P. Hannon

May I ask the right hon. Gentleman this regarding the rela- tion of the Commercial Secretariat to the Foreign Office? Suppose an organisation in this country which is interested in our export trade, makes representations to my right hon. Friend, and he has to employ our overseas agency to push that particular trade in a particular country; will he send direct instructions, or will he have to act through the Foreign Office?

Mr. Dalton

We have direct communication between the Department of Overseas Trade and our representatives abroad. The Secretary of the Department of Overseas Trade is not only a Parliamentary Secretary to the Board of Trade, he is also a Parliamentary Under-Secretary of State at the Foreign Office. He receives direct communications from our commercial representatives abroad, except in the case of something of very major importance, which the Ambassador would send to the Foreign Secretary. But since it would be a major matter it would automatically be communicated also to the Board of Trade and the Department of Overseas Trade. It will be clear that we shall have a great opportunity, at the end of the war, for recruiting good men, for this work in the future.

Sir G. Gibson

Is it not one of the conditions that these recruits shall have passed some period of time in industry before they are appointed as Commercial Counsellors?

Mr. Dalton

I understand that is the case before the appointment is made final. No doubt these recruits will be picked out and selected as likely young men. Following on that, they would be required to have a period of practical contact with industry before proceeding to carry out their new duties.

My hon. Friend the Member for Nuneaton (Mr. Bowles) put to me a question, "Why exports?" I really do not think there is any controversy on this between persons of intelligence in any part of the House. The question is very simple. The name of Britain may stand very high abroad, but it does not stand so high that people will hand over to us large quantities of food and raw materials as a gift. These goods have to be paid for. In order to pay for them we must export some of our own products, or make available some of our services in some form or other, such as shipping.

Therefore, in order to buy the food and the raw materials which we need in order to feed our people properly, to maintain a good and, as we hope and intend, a rising standard of life, and to attain that full employment which we also intend to achieve, we must export in sufficient quantity. I am merely putting in a slightly different way what my hon. Friend said. It is easy to estimate, and such estimates are constantly being made in the Government Departments concerned, what quantities are required. It is quite clear that there must be a corresponding flow of exports to enable payment for imports to be made. There are minor complications when goods are sold on credit, and so on, but I do not think that that matter admits of dispute. We would otherwise prefer to keep the goods we make in this country, but we get better results by exporting some of the products we make in order to buy other things from abroad.

Mr. Bowles

I did not say "Why exports?" Would my right hon. Friend agree that, having decided how much we intend to import, we should decide how much to export?

Mr. Dalton

There is nothing left for us to argue about. Our exports have been greatly reduced—I will make some observations on that fact shortly. Although they have been greatly reduced in the interests of the war effort, and although it has been possible to reduce them by reason of Lend-Lease, they are still very far from negligible. Hon. Members will have read the Export Accounts. They will have seen that we were exporting in 1943 £232,000,000 worth—rather less than half what we were exporting in 1938. But it is not true that our exports have dwindled away to nothing.

Mr. Shinwell

Does my right hon. Friend include munitions in that figure?

Mr. Dalton

No, I am excluding munitions. I am referring to the first table in the Export Accounts. I would like to cite two industries in particular—because this is of great consequence to post war exports—which have been making a very substantial contribution to this limited quantity of exports. One is the chemical industry—and I exclude munitions—in which we have increased our exports in terms of money values. Our exports of chemicals increased from £22,000,000 in 1938 to £27,500,000 in 1943. That is very remarkable. In terms of volume, our chemical exports in this last year were just over 80 per cent. of pre-war.

Mr. de Rothschild (Isle of Ely)

How do they compare in quantities?

Mr. Dalton

I have just said that in money values they increased from £22,000,000 to £27,500,000, and in bulk they were 80 per cent. of pre-war. In addition, I would cite the case of rayon, which I regard as one of the most promising and the most enterprising of our industries. Sometimes a comparison is made between the elasticity shown by the rayon industry and, I will not say what commodity, but something which might occur to you if you are thinking of textiles. Exports of rayon have gone up from £5,500,000 to £12,500,000. [Interruption.] Never mind the explanation; it is a very interesting fact. It is not due only to price increases. In terms of volume, rayon exports have gone up by 10 per cent. between 1938 and 1943. I mention this, not in order to dwell upon it unduly, but to show that there are bright spots and possibilities for the future.

Sir P. Hannon

Are these exports influenced by the war effort?

Mr. Dalton

Certainly. But the industry has been capable of reacting in the way I have described. None the less, it is true that our exports have been drastically cut down. I re-emphasise, in the light of speeches made to-day, that the very heavy reduction of our exports during the war has not come about by accident: it is not due to the fact that the people at the Board of Trade do not take any interest in exports; it is not through inaction by the Government or lack of enterprise by industry; it is a deliberate act of war policy. I have, during the period that I have been at the Board of Trade, frequently had to take deliberate decisions to reduce exports of this or that kind of goods in the interest of the war effort, as it was interpreted to me by my colleagues of other Departments or by decisions of the War Cabinet. It has been quite deliberate. For anybody to suppose that the fall in our exports is due to the fact that somebody was kept waiting for a licence for six weeks, as my hon. Friend the Member for West Birmingham (Mr. Higgs) suggested, is a fantastic misrepresentation of the position.

Equally deliberate must be our decision to increase our exports again—if I may quote from the Gracious Speech—"as opportunity serves." As opportunity serves we must increase our exports equally deliberately and determinedly from this low level. They have undoubtedly in this current year reached a turning point, and already there are signs of an upward move, which will certainly be accelerated in the first months of 1945. From 1st January we shall have more freedom, in principle at any rate, from Lend-Lease restrictions. We shall have more freedom especially in regard to exports containing iron and steel and certain non-ferrous metals, notably aluminium and magnesium in respect of the Lend-Lease limitation, which will cease to apply as from 1st January. It is still true, if I may return to my hon. Friend the Member for West Birmingham, that, although he did not agree with what I said, there will be no large turnover—and the emphasis is on the word "large"—of capacity and labour to the export trade. The Prime Minister on Thursday said that there can be no significant release of resources until the end of the German war. But beginnings can be made, and, in particular, beginnings in regard to prototypes and post-war planning and so on.

The hon. Member for Walsall (Sir G. Schuster) made an interesting speech. I regret that I was not able to hear it, as I was snatching a little brief refreshment, having been in the House continuously until that time, but I shall read it with interest in HANSARD. Notes have been taken for me of the points that he made. On export credits, it is definitely stated in the King's Speech that a Bill will be introduced—and it will be my duty to introduce it—for the extension of export credits. That will be part of the new Session's legislative programme. It should not be very long before the Bill is ready to be introduced in the House; and it will be gratifying, I think, to hon. Members when they see the terms of it. I will not quote figures, because they are not finally settled, but the intention is greatly to extend export credits, and to remove certain limiting conditions which have been referred to by speakers in this Debate.

May I say a word about travel permits? With a view to this Debate, I asked for the most recent information about the rate at which permits on business grounds were being dealt with. We hear complaints about some of these cases, but it often ends up with the statement that the man got the permit after all. He got the permission; that surely is the point—that he got his exit permit.

Sir W. Wakefield

If I may interrupt I would point out that his case was of such urgency and importance that there should have been no anxiety at all about his having a permit.

Mr. Dalton

Well, I am sorry he should have been anxious, but, evidently, his anxiety was ill-based, because we are now in the position—and everything has been greatly speeded up in recent months—to grant exit permits quite expeditiously wherever there is a reasonable case, and this was obviously an exceptionally good case. Between 22nd October and 25th November—roughly a month—593 applications were made for exit permits on business grounds. Only two of these were rejected, and the remaining 591 were all sent forward to the Passport and Permit Office, and I have no reason to doubt that practically all were granted. Of these 591 cases in the course of a month, it so happened that 182 were for Eire, which seems to be a relatively popular destination, while 130 were for France and 279 for all other destinations combined. We have been able to speed up our procedure so that the period for clearing these applications is now only between two and three weeks. There has to be some consultation with other Departments which may be concerned, but, between the formal application being received and the matter being passed forward to be dealt with by the Passport Office, the period is now shortened to between two and three weeks.

There is another matter about which I would like to speak and give the House some further information. I attach very great importance to it myself, and so, I think, do industrialists. That is the question of prototypes and post-war models. My right hon. Friend referred to it in his speech to-day, when he said that he was rather disappointed that industrialists had not made more use of these facilities. I hope they will, in future, apply in increasing numbers, but the number of applications, and the number of cases which have been granted, have been going up pretty rapidly just lately, and I have here the latest information up to yesterday.

Up to 5th December, we have granted 549 applications from industrialists for permission to employ labour and materials on post-war work. These are industrialists who are working for the Supply Departments, and the figure of 549 granted has to be set against 27 not granted. A certain number are outstanding, having come in recently, but the total number received up to date is between 700 and 800, of which 549 have been granted and 27 provisionally rejected. Why were they rejected? The answer is extremely simple and I would like the House to understand it. We only reject the applications of firms to do post-war work if the Supply Departments, for whom they are working, say that they are behindhand with their contracts and that it will militate against the war effort if the permits are granted. I do not, as the hon. Member for Duddeston (Sir O. Simmonds) suggested, indulge in counter-Departmental warfare on these issues. I take the word of the Ministries of Supply and Aircraft Production and the Admiralty for it, and I shall go on taking their word for it. Because they have raised difficulties in only a small percentage of cases I shall not press them, unless they tell me the situation has changed, to give permission in this small minority of cases. Any industrialist working for a Supply Department who wishes to get permission for post-war work—for labour, materials, designers and so on for preparatory post-war work—will have his application expeditiously dealt with, and the chances are that he will get his permit. The Ministry of Labour has agreed that labour is not to be withdrawn in these cases solely because it is engaged on post-war work.

The number of industries represented in the total I have given is very considerable. I can briefly say that, among those industries in respect of which preparatory work is now going on under this scheme, are textile machinery, road and rail transport, gas and electric domestic appliances, miscellaneous engineering machinery, food preparation plant, machine tools and so on. It is a long list, covering practically all the major in- dustries of the country. I think that these arrangements are going well, and I hope that, as a result of the publicity given to the matter to-day, there will be more applications, and I will undertake to push them forward as rapidly as I can, subject to the Supply Departments having the right to object.

May I say a word or two about the prospects for our exports, which have been referred to by several hon. Members? I think we should very sharply distinguish, in the interests of clear thinking, between the immediate prospects and the more long-term future. I think the immediate prospects of being able to sell our exports abroad advantageously are very good. Whatever goods we can produce for export, there is going to be a sellers' market for some years. There is going to be a tremendous demand from many parts of the world. The world will be hungry for our products. I think that these conditions of a seller's market will continue for several years to come. When you get further into the future, a good many matters arise on which this House and this Parliament are not competent to speak. There are questions of commercial policy which may well look rather different after the next General Election than they do now, and commercial policy is one of the factors which is going to determine our long-term exports. Further, and this point was raised by the hon. Member for Chesterfield (Mr. Benson) and the hon. Member for East Middlesbrough (Mr. A. Edwards), a great deal does depend upon the technical efficiency of British industry in the future, but that might lead to a very controversial Debate. The short point however, is that, if our industries are not as efficient as those of America and elsewhere, the long-term prospect for our exports, in competition with America, will be pretty poor. If, on the other hand, whether through private initiative or public stimulation, we do improve the efficiency of our industries, that, surely, will greatly improve the long-term prospects of our exports. But in any case the short-term prospects for our exports are undoubtedly very good.

The hon. Member for Seaham (Mr. Shinwell), who said he could not be in the House at this hour, said a very true thing—that Anglo-American trade rivalry would be a most unfortunate thing from the point of view of international cooperation. Without wishing to be unduly critical of the way people express their thoughts, I do regret some of the references to the United States, particularly in relation to trade and Lend-Lease, which have been made to-day. I believe that this world is quite large enough to hold both the United States and the British Commonwealth. I believe that the trade of the world can readily be expanded to absorb both a substantial increase in our exports—the target of 50 per cent. increase is often mentioned, and we may hope that British trade can be increased at least to that extent—and a large increase in American exports. If we can make a success of the expansionist policy which we are always declaring to be our aim, there should be plenty of room for both of us in future, and, just as there is room both for British and American soldiers on the battlefields of France, where you have no rivalry, but rather emulation and comradeship, so I would hope that, if we can hold Anglo-American friendship in the political field, so we should have understanding in the economic field and there should be continuing good will and co-operation and it should not be thought that one country is doing down the other. There is no doubt—and this has been referred to several times to-day—that our exports have been limited, because we have been receiving Lend-Lease aid from the United States—and where would we be to-day if we had not? It has been quite indispensable to our war effort and the success of our Armies, backed by our civilian war effort.

Mr. Cove

Something for nothing.

Mr. Dalton

I hope that it is not to our discredit. When the Americans proceeded to introduce this great and unprecedented Lend-Lease provision, they asked us, in our turn, to give certain undertakings, which were given in 1941. They are embodied in the White Paper of 1941, when my right hon. Friend the present Minister of Supply was President of the Board of Trade. A number of my Labour colleagues who are in the Government were, to that extent, responsible for the agreement, and it was right that we should have given that agreement. It was natural that the Americans should have desired it, and most appropriate that we should have given it. We gave them our word and, as is our habit, we have kept our word, and as a result we have suffered in some directions in our export trade, but we have gained immeasurably in our military position in the course of the war.

Finally, we have now reached an agreement with the United States which was embodied in the statement by the Prime Minister on Thursday of last week, as the result of which, in full agreement with the American Administration, there is going to be a relaxation of those limitations, due to Lend-Lease, on our exports as from 1st January next. I hope that hon. Members will re-read, in the light of this Debate, when so many matters have been touched upon, the statement which the Prime Minister made last week. It means—to take one simple and important illustration, that of goods made of iron and steel, and also of certain non-ferrous metals, such as aluminium and magnesium—it will be possible for our exports to go forth without any Lend-Lease limitation as from 1st January, and, as from the defeat of Germany, it should be possible for them to go forth in substantially increased quantities. As the Prime Minister stated, there can be no significant release for export, and therefore no substantial export flow of these articles, until the defeat of Germany. From now on the flow should be increased and industrialists will be able to plan, as they have not done before, having regard to this new situation.

The conclusion which I offer to the House is this. Our export trade has been going through a very difficult time for the reasons which we have been discussing and of which we all know. It cannot quite suddenly, over night, recover its full freedom, and in particular the war effort must continue to be the overriding consideration until victory has been achieved. My right hon. Friend the Minister of Production gave to the House to-day a careful and deliberate statement, and a grave warning on behalf of the War Cabinet, against getting this matter out of focus and out of perspective. I do not think that the House as a whole will get it out of focus or out of perspective, and a number of speakers have said in this Debate that everything said here was subject always to the absolute and unquestioned overriding No. 1 priority of the war effort. That is common ground amongst us, and subject to that we shall all do our best and I, as President of the Board of Trade, will do my best and I am sure that my colleagues will co-operate with me both to lay the foundations now for that greatly increased export trade which is the lifeblood of this country, and a necessary condition, after victory has been won, for obtaining a proper standard of life for our people. I intend for my part to do my best, within these conditions to stimulate the export trade.

Sir W. Wakefield

Can the right hon. Gentleman say something on the Middle East Supply Council?

Mr. Dalton

With regard to the M.E.S. Centre, what I denied in my supplementary answer—and I stand by my answer though it was given quickly and without careful phrasing—is that it is at the instance of the Department of Overseas Trade that contracts are switched from this country to America. There are arrangements for combined planning at Washington, and plans are drawn up there which have resulted very often in contracts being allotted to American rather than to British firms but that action is not taken at the instance of the Department of Overseas Trade and I stand by my reply.

With regard to the Middle East, we have an Anglo-American body, and I have no doubt that, now this new agreement is in operation, as indicated in the Prime Minister's statement, there will be changes in the sources of supplies. The M.E.S.C., like other joint Anglo-American bodies, will continue for the present its work and we must work through it. As regards restrictive practices, I have not yet given up hope that it may be possible for the Government to reach agreement in time to allow a Bill to be introduced this Session, but this is an all-party Government and sometimes it takes it a long time to make up its mind.

Mr. Summers

Although I cannot suggest that one's anxieties are fully allayed by the speech to which we have just listened, nevertheless, it is not a matter which those who are associated with me would wish to press to a Division. I therefore beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Main Question again proposed.

Ordered: "That the Debate be now adjourned."—[Mr. Beechman.]

Debate to be resumed To-morrow.