HC Deb 17 November 1944 vol 404 cc2294-313

1.10 p.m.

Sir William Beveridge (Berwick-upon-Tweed)

I take the opportunity of this Debate on the Adjournment to raise a point relating to the control of capital issues and the development of local industries. The point which I want to bring before the House arises out of a Question which I put to my right hon. Friend the Chancellor of the Exchequer on 31st October. That Question related to a proposal by certain citizens of Berwick-upon-Tweed for the formation of a Berwick-upon-Tweed Development Company to promote local industry. However, the point I want to make is of quite general interest, affecting certainly not my constituency only but constituencies of many kinds in all parts of the country. When I put that Question, and followed it by a supplementary, I received an answer from my right hon. Friend which a young and rather vulgar friend of mine described as a "raspberry" followed by another "raspberry." I do not wish to use this term for anything done or said by my right hon. Friend the Chancellor of the Exchequer—

The Financial Secretary to the Treasury (Mr. Peake)

Hay I interrupt my hon. Friend? I could not quite understand what it was that followed the "raspberry."

Sir W. Beveridge

Another "raspberry" followed the first "raspberry." I found that diet not very satisfying, and therefore, I wish to raise this question again on the Adjournment. Let me, quite briefly, relate the particular circumstances which were dealt with in my Question, as an illustration of what I believe to be a general problem. The town of Berwick-upon-Tweed once had 13,000 inhabitants and now has about 12,000. It is a town which has been losing industry and population. At one time it had a prosperous fishing industry, both herring and white fish, but that is another question which I, in conjunction with many others who are interested in fishing, hope I shall have a later opportunity of discussing. Here I am concerned rather with the other industries. I should like to read to the House a very short statement of what has happened to the other industries of that town and is, I believe, happening to many industries of other towns. This is a letter from the Town Clerk, who says that in Berwick-upon-Tweed there were at one time: several large maltings and two breweries in the town which have closed as a result of amalgamation of breweries with a larger concern in another town. We have also had a firm of boilermakers, and a foundry for small castings, but these were closed by the trend towards bigger industry in the large centres. There are three fertiliser factories and sulphuric acid works established here. Recently, however, they have been purchased by one of the large combines, and there is a little local disquiet that ultimately the local works will be closed down. There is the story of the industries of a small town being swept away by this constant gravitational force to the large towns and to larger forms of industry. In this particular case it led to severe unemployment—at one time I think something like 30 per cent. of unemployment in that particular town. Of course, there is no unemployment now. But the citizens of that town are naturally extremely anxious as to what will happen after the war, when members of the Forces and men working in industries elsewhere return, and wish to live in their own town. There was a large public meeting in June at which it was decided to form, under the leadership of the mayor and prominent citizens, the Berwick Development Company, a finance company, whose purpose would be to provide capital for men of small means, to enable them to engage in fishing and other local industries. This list of industries was very practical in its relation to the circumstances of the town. They wanted to form this company with a capital of £50,000, of which only 1s in the £ would be called up. The remaining 19s. in the £ was to be called up, after the war, only when the need for it arose through men coming back and wishing to start further industries. Since the amount was £50,000 they had to apply to the Treasury for permission to float this company, but on 14th August they received a letter from the Treasury declining to sanction this capital issue on the ground that all issues of raised capital must be confined to those required to finance the production of services essential for war purposes. The Treasury stated that they were unable to consent to issue for post-war purposes even if the shares to begin with were only partly taken up.

That answer produced considerable dissatisfaction. There was another meeting in Berwick-upon-Tweed which developed into an indignant meeting. Since then I have had the honour of being returned for that constituency, and I was asked to take up this matter with the Chancellor of the Exchequer. I put a Question to my right hon. Friend on 31st October, asking him if he would re-consider his decision and I received an answer in the negative. I put a supplementary question to my right hon. Friend as follows: If the right hon. Gentleman is not going to allow these citizens to help themselves to provide the money that will be necessary when the war ends has he any plan for doing it himself? The reply was: The point of my answer was that this project is designed for a post-war purpose and that for the moment we have to concentrate on war purposes."—[OFFICIAL REPORT, 31st October, 1944; Vol. 404, c. 634.] That answer received a good deal of cheering from the other side of the House, and I must confess that I nearly cheered myself, because I quite agree that we must concentrate upon war purposes and that the war comes first. But the point of that answer was entirely beside the point of my Question, which related to the raising of money not during the war but after the war, when I hope we shall be allowed to have money not for war purposes but for post-war purposes. This company would give any undertaking or accept any condition about. the call up of their capital, because, obviously, they would not call up the capital until the men were there wanting to use it. Therefore, there is no question of diverting any energy from war purposes to post-war purposes. But unless the promoters of this company know they can get the capital they want they cannot make their plans; they do not want to go ahead unless they are assured of sufficient support.

I refer to this particular question relating to Berwick-upon-Tweed only as an illustration of a perfectly general problem. And I am not asking for anything for Berwick-upon-Tweed which I should not like to see granted to the neighbouring friendly countries of England, Scotland and Wales—

Sir Percy Harris (Bethnal Green, South West)

And Northern Ireland.

Sir W. Beveridge

Yes, and Northern Ireland. I hope that representatives of these friendly countries will support me in the appeal I am making to the Chancellor to reconsider his "raspberry." The question is perfectly general in another and very important sense. It is not merely a question of getting capital for post-war development in localities; there is the general issue of the dispersal of industries, and doing something to stop the drift to the great towns. This has been a general feature all over the country; I want to suggest that a better way of life is in the small town, rather than in the large town. In the small town people can feel themselves to be members of the community; they can live within reach of the country and their work. That is the better way of life which we want to preserve for our people as much as possible. That way of life is being threatened by the continual gravitational drift to the large towns. I hope we shall form a league for the defence of small towns against being swallowed up by large towns, although I realise that we have a hard fight ahead of us, because so many Members in the House represent large towns, which they want to see grow and become still larger, But I hope that we of the small towns will be assisted by the Government in defending ourselves, and will not be stopped from defending ourselves.

Of course, there are advantages in large towns. One of the things I hope we shall take as a moral for all our postwar action is to give to people living in small towns and in country districts the advantages which large towns have in light, power, water, education and many other services. Only in that way shall we be able to stop this fatal drift to the large towns, and be able to pro-serve that valuable local patriotism and initiative which is typified by the particular development company to which I have just referred. Of course, a little thing like this is not anything like all that is wanted. I hope the Government may have larger plans for the dispersal of industries, and for securing a market for what local industries produce. But, at any rate, this is something which should be done. In asking that my right hon. Friend should reconsider his treatment of capital issues of this kind, I am not, of course, suggesting for a moment that all control of capital issues should be abandoned, That would be entirely contrary to what I think is necessary after the war in dealing with the problem of investment. But I suggest that there should be a revision of the instructions to the Capital Issues Committee, so as to make it possible for others than the Government to get post-war plans ready. This revision cannot be confined to making possible such local schemes as this. The Government will have to take account of the control of capital issues generally, so that all people wanting to plan for capital expenditure after the war shall know that they can plan with some hope of being able to carry out those plans.

The reason that was given for declining this company's request is no reason at all. Of course, there are other reasons that can be given, and I have no doubt that the excellent and ingenious officials who help my right hon. Friend will be full of arguments about the danger of creating precedents. Having been an official, I know it is the business of an official to be continually dreaming nightmares about thin ends of wedges, and slippery slopes, and doors which insist on opening. Sometimes the dreams get a bit confused. I believe that if the Financial Secretary looked into the files of the Treasury he would find somewhere a Minute saying: "This project of the hon. Member must be resisted because it would open the thin end of the wedge of a very serious door." I heard and saw, just now, the Secretary of State for War being regretfully and politely obstinate and immovable. I beg my right hon. Friend the Financial Secretary not to be obstinate and immovable on this matter. I am not suggesting the complete revision or abandonment of control of capital issues—I want to keep control— but I suggest that they make an immediate revision of the instructions to the Capital Issues Committee which will make it possible for local schemes such as I have described, not only in my own constituency but everywhere, to be developed. The Chancellor of the Exchequer and my right hon. Friend the Financial Secretary are both well-known as people of highly constructive ingenuity. I ask them to use their constructive ingenuity to find ways of getting things done after the war, and not to find reasons for stopping them.

1.28 p.m.

Mr. Clement Davies (Montgomery)

As a representative of one of the countries which maintain most friendly relations with Berwick-upon-Tweed, I rise for a few minutes to support the case which has been made so well by my hon. Friend the Member for Berwick-upon-Tweed (Sir W. Beveridge). As he says, this in itself is an interesting scheme, but it is a matter which affects not only Berwick-upon-Tweed but all rural areas and, in particular, the little market towns which are the centres of these rural areas. It may interest my hon. Friend, and possibly the House, to know that a scheme somewhat similar to the one suggested by Berwick-upon-Tweed has been put forward in my ancient borough, where the people are anxious about their future, and especially so about their young men and boys.

For over 100 years there has been a drift from country areas to industrial areas, which have now become congested. It is a sad story, which I have told to the House on more than one occasion, and I have given figures with regard to my own country. Recently, there was a report dealing with the whole matter which showed that, out of a population which has never exceeded 2,500,000, there has been, between the two wars, an exodus from Wales of 400,000 people, in the main young people. We want to stop that type of export. The Government, in refusing the application which was put forward by Berwick-upon-Tweed, are taking up a negative attitude. Indeed, they are encouraging people to leave the rural areas. Their policy at the moment is to say, "We will not assist you where you are, but if you would like to go to a congested area which has suffered so much unemployment between the two wars we will assist you."

We have now been given plainly to understand that the Government's policy at the moment is to mark out South Wales, Lancashire, West Cumberland and Midlothian for priority in this matter. If perchance, Mr. Deputy-Speaker, you or I wanted to start a new industry and said, "Let us go somewhere where the amenities are good, where the health of our workers will improve instead of deteriorating, and where we can get the best production by means of small units working together"—which is in the country districts—the answer of the Government would be, "We will give you no assistance there at all, but if you like to go to South Wales, Midlothian or Lancashire, we shall give you priority." What is wanted is a reversal of that policy. There is a wonderful opportunity before them now to encourage these people to remain at home. My hon. Friend the Member for Berwick-upon-Tweed has talked about the amenities that are necessary. Housing, which has been so disgraceful throughout all these years; electric light at the same price at which it is obtainable in these other places; transport on equal terms—all those facilities which are now to be found in these industrial congested areas should be given to rural areas.

We want more than that. These people should have not only amenities; they must also have the means to live, and that is what we are anxious about now. Every little borough has been drawing up plans for the future—such as new housing schemes—hoping that their young men who got married during the war will stay there. But they know that the young men will leave unless there is some industry which will enable them to live, and the industries that they are asking for are industries which will fit in with the area. They want something in connection with agriculture. In my county they want new creameries and butter factories, cabinet-making, woodwork of all kinds to keep our young boys at home. There is only one thought in the minds of every soldier to-day, dominating everything else—the desire to go home. My boys will come home to Montgomeryshire. The boys of Berwick-upon-Tweed will go back there. They will receive an amazing welcome. They will be feted for perhaps a few weeks and then will come the question "What are you going to do with them?" and the answer will be returned, "There is nothing for you at Berwick-upon-Tweed but, if you like to go to Lancashire, they are opening new factories." To my boys they will say, "Go to South Wales and the Government will assist you, but leave Montgomery," one of the finest agricultural counties, with a population less than in 1800. For 150 years we have been steadily denuded of population. What these people are trying to do, is to create employment at home for their boys so as to stop this export from the country districts. May I then add my appeal to that of the hon. Member?

1.34 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

I am very glad that the hon. Member for Berwick-upon-Tweed (Sir W. Beveridge) has raised this extremely important issue, because there are many national issues of vital importance underlying the local problem to which he has directed attention. This question of local development involves issues of principle. The psychological moment for registering such companies is now. The psychological moment for calling up the capital will be immediately after the war, because the capital will be available both nationally and locally. But, if we are to judge from the experience of the years 1920 and 1921, we cannot count upon that capital being available for an indefinite period. We shall have to strike while the iron is hot, if we want to get the capital that has been saved up during the war made available for local development. Capital has a way of dissipating over a period, especially if by any mischance we strike another depression, as we did after the last war. It would therefore be much better to have some capital already safely invested in local development companies for these post-war years. The purpose of the development companies that my hon. Friend has in mind is not to engage in trade on behalf of local authorities as such, but to encourage the development of local industries and private enterprise—particularly by the small man—and to improve the local amenities of these towns.

Speaking as a representative of another friendly neighbouring country—I have for a long time thought and hoped that Berwick was in my country, but I gather from what has been said to-day that it is an alien city, although tied to us in many ways historically and geographically—but speaking from a friendly neighbouring country to the North, I should like first of all to emphasise that there is really a great opportunity after the war for an expansion of tourist traffic in what is after all one of the most beautiful countries in the world; and that you will never be able to do that unless you get a vast improvement in hotel and boarding house accommodation in these small towns. People will simply not go there, if they are going to be as uncomfortable as they have been obliged to be in many of the rural districts in Scotland for the last 50 years; and, if our tourist traffic is to be revived, improved hotel and boarding house accommodation, and the provision in certain districts of holiday camps, is absolutely essential. It seems to me that that is a purpose for which these development companies might have been particularly designed.

The question of housing in the smaller towns also arises in connection with these development companies. Rural housing has already had consideration by the House; and, of course, housing in our blitzed industrial areas is constantly in our minds; but the housing position in the small country towns particularly in Scotland, will be almost as bad, relatively to numbers, after the war. I take a bleak, almost an alarmist view, of our housing prospects after the war. The shortage everywhere will be terrible—in the small and large towns, and in the countryside. In Scotland alone we want 500,000 houses. I have always believed that, when it comes to the point after the war, we shall require an effort comparable to that made by the Ministry of Aircraft Production in 1940 to get Spitfires in time in order to get houses in time for the boys who are coming back from the war. I see no signs of such an effort. I should like to see Lord Beaverbrook made Minister of Housing to-day, and told to get on with it just as fast as he was told to get on with the production of Spitfires. The problem is of that order. But, as we are going on at present, what is it that we have got? Seven Government Departments directly involved, all engaged, as Government Departments so often are, in hot action against each other. The construction of houses after the war should in my opinion be regarded as the greatest adventure in supply ever undertaken by this country in peace or war. Speed is essential; costs must also be reduced to the lowest possible level, and this must depend on the provision of raw materials in bulk, and the avoidance of competing claims for labour. I believe that the task is beyond the capacity of 1,000 separate local authorities; but, in the absence of a single Government Department, and of centralised direction and control under a Minister possessed of overriding powers, much will depend on the efforts of the local authorities.

I was very interested at a recent meeting, with members of the town council of Peterhead, which is a town of much the same character as Berwick-upon-Tweed, and much the same size. They put it to me that they were terribly worried and anxious about the housing position when demobilisation began. They said, "We are not in a position to provide housing accommodation for all the people who will be coming back, some of them newly married. We just have not got it." In the neighbourhood there are one or two extremely good granite quarries, and they suggested to me—this was before the hon. Member for Berwick-upon-Tweed told me about his projected company—that it might be possible to form a company locally to exploit these granite quarries, and supply themselves and the neighbouring district with granite for the construction of houses, thus avoiding transport charges and higher costs. They also put it to me that it might become necessary, as a temporary emergency measure, to take over some of the Air Force camps when they are abandoned, which are at least supplied with water, light and other amenities for the temporary accommodation of people coming back. All these things come under this development company idea. In addition, there is in the more outlandish parts of Scotland the whole question of small harbour and marketing and transport facilities which are so vital to the economic development of that area, which again would come within the scope of these development companies. Every step should be taken to encourage local activity and effort and without delay. Not only should local authorities be granted permission to form development companies of the kind envisaged by my hon. Friend, but they should also—and this is an important point—be allowed to borrow money, not only from Government authorities like the Public Works Loans Board, but from any quarter where they can raise it cheaply.

I am sure my hon. Friend would agree that there must be some permanent control over the total volume and general direction of investment. We do not want to repeat the experience of the 1920's, when we saw millions of pounds being poured into Germany and Central Europe by the City of London, most of which we never saw again. But hampering controls, and unnecessary restrictions on capital issues, which hold up the internal development of the country, ought to go at the earliest possible moment. I was reading half-an-hour ago a most interesting speech delivered the other day in Scotland by Sir Steven Bilsland, and I should like to quote two or three remarks that he made. First of all, he said that the development of light industries is not only essential, but most urgent for the future of Scotland. The impression that Scotland could not develop light industries had given rise to the myth about the drift to the south, which had never been necessary. We must cater for the light industries by providing factories on a lease basis. Last, but not least, Sir Steven said that local authorities should do everything possible to assist new industries in their area.

The root of the problem is dispersal. I can only speak for Scotland; but I know that the immense concentration, first of all upon the heavy industries as against all other types of industry, and secondly, on the industrial belt, particularly Glasgow and Dundee, has over a period been disastrous to the economic structure and balance of Scotland, and to the social welfare of her people. It is essential that we should get a better balance in our population and in our economic structure. This is one of the means by which we can do so, and I hope my right hon. Friend will be able to give us some assurance on the point.

1.44 P.m.

Mr. Moelwyn Hughes (Carmarthen)

I also am glad that my hon. Friend the Member for Berwick-upon-Tweed (Sir W. Beveridge) has raised this matter. He has established a great many institutions in his time, and he has now suggested the establishment of another—a league for the defence of the small towns. I am sorry that I cannot join a league with that title. I want to join a league for the development of the small towns. I am a small-town boy myself. There is a great deal about small towns which this country should cherish. It is in the small towns, for instance, that we find the highest sense of civic comradeship. I have sat upon local authorities in large towns. I know the difficulty of arousing at elections for the local authority, the interest of the community in the large towns. I can remember occasions when we could flatter ourselves that we had aroused considerable civic interest when we got a poll of 35 or 40 per cent. of the electorate. In the small town in which I was brought up, there was no need even to try to enthuse the people or rouse interest. It was there, and the number of people who registered their views on local affairs was of the order not of 35 or 40 per cent. but of 80 or 90 per cent. One finds in many other directions in the small towns that development of neighbourliness and civic sense which it is impossible to realise in the larger agglomerations of population. Forty per cent. of the people in these islands live in the "millionaire" towns—agglomerations of population of 1,000,000 or more—and in them it is most difficult to get the population as a whole interested and enthused in the matters which concern them.

These small towns cannot survive as effective entities unless they are encouraged and given help. My hon. Friend the Member for Berwick-upon-Tweed has given the example of a town which was seeking to help itself by getting the power to raise money. I respectfully suggest that that method is not the only one. I want to ask my right hon. Friend the Financial Secretary whether, in regard to these small towns and their development for the future, he is prepared to say that they shall be given facilities themselves to raise money from the Treasury if need be. Not all small towns will be able to finance themselves. They should be given facilities from the centre to raise money and to go forward with development that will bring to them the small industries they want. My hon. and learned Friend the Member for Montgomery (Mr. C. Davies) has mentioned his own constituency, what they are seeking to do there and the type of industry they need to develop. It is a constituency very much like mine—small towns, Carmarthen, Kidwelly, Llandilo, Llandovery, and other small places like Llanybyther and St. Clears. They are all anxious to have the possibility of developing the kind of small industry that will fit in with the economy of their area. I mention them not because they are peculiar.

The same can be said of every other type of countryside area in this kingdom. Why should the pulp factories for timber and the processing factories for milk products all be concentrated in the middle of large populations? Why cannot they be dispersed up and down the country? We have had declared to us the policy of His Majesty's Government on the allocation of industry. That envisages direction of fresh industries or the maintenance of those that are now in places of large agglomerations of population. Everybody accepts that. We do not want to see South Wales denuded as it has been before. What is being suggested now does not run counter to that policy. The putting up of small industries, employing their tens and twenties, in the countryside does not run counter to the maintaining of the large Royal Ordnance factories and metallic industries in the populous areas of South Wales. In fact, it fits in with it. All we desire is that by the development of small industries in the countryside we will maintain our small towns.

One other thing that I would say, in reinforcement of what has been said by my hon. and learned Friend the Member for Montgomery and my hon. Friend the Member for East Aberdeen (Mr. Boothby), is that the provision of facilities for the loan of money to establish these industries is not enough by itself. The small towns must have the facilities of the big towns. Small towns in my constituency and in similar constituencies up and down the Kingdom are paying 9d., 10d. and 1s. 1d. for a unit of electricity. They are deprived of water supplies and have not sufficient transport facilities. We can get our letters sent for 2½d. Why should we not get our electricity for the same price as it can be supplied in the larger centres? Why cannot we get our transport? Put them on a postage stamp basis. That is the only way to give the small communities their proper place. I would suggest as a motto for the society which I will join if my hon. Friend the Member for Berwick-upon-Tweed accepts my Amendment, the words "Feed them with factories, supply them with services." Then the small towns of this country will flourish as they ought to do in the national interest.

1.53 p.m.

Mr. David Eccles (Chippenham)

It is time that England had a voice in this Debate, and I would like to give an example of what is happening in Wiltshire as a result of the Chancellor's refusal to permit capital to be raised for anything which has a flavour of post-war. There is an approved list of men wanting smallholdings, and the county council feels that it is the right authority to provide them and to see that the men, who start on what is an arduous life and one in which it is difficult to make ends meet, should start in decent circumstances. They, therefore, requested power to borrow some money, because they not only had the applicants for the smallholdings but a good piece of land in mind and they thought the time was opportune to get it for this purpose. They were refused by the Chancellor of the Exchequer on the ground that the acquisition of land for settling these men, some of whom I believe had been released from the Army, was a post-war project. Therefore, the county council was not allowed to borrow any money. What is the result? These men are impatient. They see the price of land tending upwards, and they buy from somebody who sells it at the wrong price. Very often the land has no buildings and proper services, and the men start with practically no hope of ever making a success of being small farmers. The time has come when this ban should be lifted. If the county council knows of men whom it can trust to start in this way, it should be allowed to borrow money to get them going.

I hope that the Financial Secretary will say something about the general economic argument, because I do not follow the Government's policy. The Government have power to control consumption and, therefore, they can without fear permit a certain amount of money to be raised for post-war projects, because they are perfectly capable of holding the price level by the rationing system that is in force. The only argument against allowing some hundreds of thousands of pounds to be raised now must be that the money would in some way start inflation. I do not believe that is true in view of the amounts involved and given the controls which the Government possess. Already the Government are allowing certain firms and technicians to start on post-war projects and are allowing them materials and machine tools. None of these things are any good unless the firm has money behind it. A big firm which has cash and liquid resources can start on post-war projects, but a small man with no cash is stopped. I do not think that that is fair. Therefore, I hope that the Government will regard the provision of reasonable capital resources, over which they would have the greatest possible control—for no one wants a free market in capital issues—as all of a piece with any reconstruction projects to which they give their blessing. Without the money behind him, a man cannot get started, either in a small industry in a small town, or in a smallholding, or in fact in any new development which may well be the result of experience during the war and was not thought of before.

1.58 p.m.

Mr. W. J. Brown (Rugby)

It seems to me that the hon. Member for Berwick-upon-Tweed (Sir W. Beveridge) has not merely raised the case of a small town, but has raised an issue which is of profound long-term importance to the whole country. It is an issue which has occupied my mind increasingly of recent years the more I have seen of the world. I would proffer as a general truth, that one of the biggest liabilities that we have had in this war is the circumstance that 25 per cent. of the entire population of Britain has been concentrated within a radius of 20 miles of Charing Cross. That has been an enormous military liability, quite apart from liabilities in other respects which it has involved. The everlasting drift from the country to the town is not peculiar to this country. When I was in Australia in 1938, I was staggered to find that out of the population of 7,500,000 in a comparatively new country, 4,500,000 were already concentrated within half a dozen cities. When I was in Canada in 1942, I saw a country with a population of roughly 12,000,000, and again with the same phenomenon of more than half the population centred in a number of vast urban growths, with a countryside practically depopulated. It is bad on military grounds, economic grounds and social grounds, which includes health grounds. Every year we are drawing more and more of the comparatively healthy population of the countryside into the cities where, in two or three generations, they lose their vitality. Then we are confronted with everlastingly increasing standing charges on the health social services, as the direct result of that drift, which could have been foreseen and planned against, if we had had the will to do so.

The Government showed some sense of the existence of this problem in the White Paper on the Location of Industry, but it is no good recognising the problem unless we do something about it. The hon. Member for Berwick-upon-Tweed has made a practical suggestion which would give employment to a certain number of people in his area, and I hope that the case he put up will be conceded by the Financial Secretary to the Treasury. I see no conceivable reason why he should not, and I hope he will. I beg him to relate his reply to the problem, which is of very great importance in Britain, of arresting the drift to the towns, because if we can do that, we shall achieve a very much better balance in Britain than we have at the present time.

2.2 p.m.

The Financial Secretary to the Treasury (Mr. Peake)

This Debate is an example of how a Debate on the widest issues of policy can arise out of small beginnings—if the hon. Member for Berwick-upon-Tweed (Sir W. Beveridge) will permit me so to describe the Question which he put to the Chancellor of the Exchequer. I have no quarrel with the statement that he made, so far as the facts are concerned. My hon. Friend has shown himself in the short time that he has been in this House—I say it as a compliment to him—to be an old Parliamentary hand in more senses than one, and he has certainly succeeded in initiating a most interesting Debate upon this subject.

The Debate has ranged over some very important topics. Hon. Members on both sides of the House have deplored the drift from the small market towns to the great cities. Those hon. Members who have enjoyed reading, as I have, Trevelyan's "Social History" are aware that this same drift was being deplored 140 years ago. As one who was brought up in a small market town, I have the greatest sympathy with what my hon. Friend said in that regard. Big questions are raised, of course, such as whether industry should be conducted in large units or in small. Many of us who have lived in small market towns have seen how small local industries have been encircled, enveloped and indeed obliterated, sometimes, by those huge commercial octopi which try to cartelise the various forms of production.

The speech of my hon. Friend also raised the question of the location of industry, a very important issue because it is related to the question of reconstruction priorities, about which I shall have a word to say. The particular application by Berwick-upon-Tweed was a proposal to form a company immediately, with a capital of £50,000, of which only 1s. in the £ on each share should be called up now. My hon. Friend the Member for East Aberdeen (Mr. Boothby) said that the present was the psychological moment for the registration of such companies. There is nothing in the Defence Regulations or in the recommendations of the Capital Issues Committee to prevent the registration of a company of the character my hon. Friend has in mind at the present time. If my hon. Friend will also refer to the Capital Issues (Exemption) Order, 1941, he will find nothing there to prevent such a company calling up capital to the extent of £10,000 in any twelve months. That is to say, anyone can raise up to £10,000 a year at the present time without consent.

Mr. Boothby

Has not the £10,000 to be the total capital of the company? One cannot just call up a proportion, up to £10,000.

Mr. Peake

I quite agree. The nominal capital and the subscribed capital of the company have both to be limited under the regulations to £10,000 in any twelve months. By adopting this procedure, Berwick-upon-Tweed could raise more money at once than they sought to do under the proposal which they placed before the Capital Issues Committee. This proposal was that the company should issue 50,000 shares of £1 each, and should call up £2,500 at the present time, postponing the further call up of £47,500 until after the war.

Sir W. Beveridge

That is just what they do not care about doing. They do not want £10,000, and it is no good not being able to get £50,000 when they do want it.

Mr. Peake

Under the regulations, a call on outstanding instalments of share capital is not subject to control, but to allow the issue of capital now, with a provision that 19s. in the should only be paid up after the war, would mean in effect that we should have committed ourselves to a postwar capital issue.

Mr. Cove (Aberavon)

Why not?

Mr. Peake

I am coming to that. My hon. Friend must not be in such haste. The point is that we cannot yet begin to give consents for issues after the war because, among other thing, such issues will normally be subject to the grant of the necessary licences by the Departments concerned with physical controls. My hon. Friend the Member for East Aberdeen made a very important point when he said that permission to raise capital must go hand in hand with permission to spend the capital on physical assets. It is clear that the two things must go together. I have pointed out that there is nothing whatever to prevent a local company of this kind being formed, and up to £10,000 being subscribed at the present time, and as much planning as possible being done for post-war proposals. Speaking on behalf of the Treasury, I should like to give every encouragement to the planning now of proposals for post-war spending of this character.

When we come to the more general issue I must remind the House that my right hon. Friend the Chancellor of the Exchequer was asked a Question a few days ago by the hon. Member for Kirkdale (Sir R. Rankin), who inquired whether the Chancellor would state the future policy of the Capital Issues Committee. My right hon. Friend replied as follows: It would be premature at present to anticipate the details of the policy to be adopted by the Government in the administration of the capital issues control after the war. The primary object of that policy, however, will be to ensure that access to the capital market conforms to the accepted priorities; and to measures taken in other fields for the purpose of giving effect to those priorities."[OFFICIAL REPORT, 14th November, 1944; Vol. 404, c. 1805.] I think that is the point which has been made on both sides of the House, and that it is the general desire that there should not be an ugly scramble in the capital market immediately after the war. There should be some plan and some order in this matter.

In answering the Question in those terms, my right hon. Friend was following a statement in the Government's White Paper on Employment Policy about post-war control of capital issues. The main principle on which the control will be administered after the war—and by "after the war" I mean, of course, after the cessation of organised hostilities in Europe—is that the provision of finance should be allowed in conformity with the physical controls of labour and materials. Capital issues will normally be subject to the grant of the necessary licences for labour and materials, and we cannot go into details on the financial side until the Government's intentions on the physical side have been announced; but the House may rest assured that the whole object of the financial control will be to ensure that those projects which are judged to merit priority for labour and materials shall likewise have prior access to the capital market. The fact that firm promises of consent to capital issues after the war cannot yet be given in individual cases need not delay the planning of industrial development and expansion, which the Government desire, for obvious reasons, to foster in any way they can.

My hon. Friend the Member for Chippenham (Mr. Eccles) spoke of the provision of capital for the purpose of land cultivation. The case to which he referred was a proposed borrowing by a local authority.

Mr. Eccles

By the county council.

Mr. Peake

By the county council. My right hon. Friend the Chancellor of the Exchequer announced in July a scheme whereby loans would be made to local authorities out of the Local Loans Fund. A scheme is at present under discussion with representatives of the local authorities and, of course, when those discussions are completed, a further announcement on the subject will be made.

I hope that what I have said will go some way to meet the view of my hon. Friend on the particular case which he raised. Hon. Members have raised issues of much greater importance than I, at any rate, am competent to deal with to-day, and I would, in reference to them, only draw my hon. Friend's attention to the very important statement on post-war controls which was made by the Prime Minister yesterday. My hon Friend the Member for East Aberdeen emphasised the necessity for the provision of capital for housing, and I would, therefore, pick out from the Prime Minister's statement this phrase: The shortage of houses, both permanent and emergency, must be grappled with as if it were a war-time measure."—[0FFICIAL REPORT, 16th November, 1944; Vol. 404, c. 2113.] The Prime Minister was only saying in rather different words what my hon. Friend said in his speech to-day. I would, therefore, refer my hon. Friends to this important statement and emphasise that the Government must make financial controls go hand in hand with physical controls. I would add that everything hon. Members have said will be carefully weighed and borne in mind before future announcements on the subject are made.

Mr. Hughes

Before the Minister sits down, may I ask him whether, so far as small towns are concerned, it is the case that all they can expect now is, if they on their own initiative float a £10,000 company, that they can raise that money as and when they like; but if they go beyond £10,000 they are still subject to control and if they cannot raise the money locally no encouragement is given for them to get it from the centre?

Mr. Peake

That is the existing position.