ECONOMIC SITUATION

HC Deb 10 March 1947 vol 434 cc963-1094

3.42 p.m.

Mr. Speaker

Before calling on the right hon. and learned Gentleman the President of the Board of Trade to move the Motion on the Paper relating to the economic situation, I might inform hon. Members that, so far, about 120 have indicated their desire to speak in this Debate. In addition to that, there are 10 or 12 speakers on the Front Benches on both sides, and, therefore, I am afraid a great number of Members will be disappointed.

Mr. Bowles (Nuneaton)

May I ask, Mr. Speaker, whether you will now make it clear to the House that any hon. or right hon. Gentleman writing to you, gets no priority as regards catching your eye?

Mr. Speaker

Would the hon. Gentleman repeat the question? I did not hear it.

Mr. Bowles

I was wondering whether you would indicate to the House that an hon. or right hon. Gentleman in writing to you and indicating that he would like to try to catch your eye, gets no preference over other hon. Members by so doing.

Mr. Speaker

Naturally, one has regard to the chief speakers who are representing particular groups, but, apart from that, I only select Members who I think will best contribute to the Debate.

Mr. Scollan (Renfrew, Western)

Is it not perhaps preferable that hon. Members should put their names down on a list, instead of standing in their places and taking it for granted that they will be called?

Mr. Speaker

It is sometimes convenient to know the line which a Member will take, but I choose Members quite regardless of whether they tell me in advance or not.

Mr. McGovern (Glasgow, Shettleston)

May I ask, Mr. Speaker, whether a Mem- ber, if he desires to catch your eye, must now send in his name?

Mr. Speaker

Certainly not. I have been rather discouraging that idea.

3 44 p.m.

The President of the Board of Trade (Sir Stafford Cripps)

I beg to move, That this House welcomes the laying before Parliament of a survey of the nation's requirements and resources for the year 1947, is concerned at the seriousness of the situation disclosed, and will support the Government in all practical measures taken in co-operation with all sections of the people of the country to overcome the difficulties and to make secure the foundations of our industry so as to provide a high standard of living for our people. In laying before the House "The Economic Survey for 1947" set out in the White Paper, Cmd. 7046, it will probably be convenient to Members if I follow broadly the arrangement of the White Paper itself. This falls into three parts: First, the principles of and the machinery for economic planning in this country; second, the achievement of the first 18 months of peace up to December, 1946; and, third, the situation in 1947. But before coming to these three parts, I think it is necessary to say a word or two about the general setting in which we approach our economic problem, and it is, in particular, essential to bear in mind two antecedent periods—first, of course, the war years, and, second, the period between the two wars. That is the latest period during which we experienced what might be termed normal peacetime economy. I am sure it is not necessary for me to stress in any detail the effects of the six years of total war upon our peacetime economy. It has been equally serious upon our internal and external trade.

Internally, many of our civilian industries were heavily concentrated. Their factories were taken over for wartime use. their labour forces were dispersed, and there was no new entry of young persons who could be trained up to the required degrees of skill. Our transport and communications suffered from lack of maintenance and renewal, piling up a huge backlog which must be dealt with now. Wartime industry absorbed vast quantities of labour, and the whole balance of our industries was completely changed from its peacetime pattern. The great destruction by bombing of houses, factories, docks, storehouses and other buildings left us acutely short of every kind of building, and with an enormous volume of repairs to carry out, apart altogether from the deferred maintenance which was postponed during all the war years. In our industries we had not only been unable to provide new and up-to-date machinery and equipment during those years, except where it was required for war production, but we had been unable to maintain the old machinery, much of which was worn out by long use. These and other direct effects of the war—a part of the price we willingly paid for victory—presented in themselves a very difficult task if we were to put them to rights in a reasonably short period of time.

In the matter of our external trade, the effect of the war was equally severe. During the latter part of the war our exports were cut to ribbons. We were forced to abandon a great part of our overseas markets so as to concentrate upon war production, with the result that at the end of the war when Lend Lease had to be discontinued we found ourselves with exports that could hardly pay for one-third of our then reduced standard of imports. It was in those circumstances that we obtained the lines of credit from the United States of America and Canada because the commodities we were bound to have, principally food and raw materials were not obtainable from any other part of the world and had to be paid for. Unfortunately, the position is still most difficult because we are taking 42 per cent. of our imports from hard currency areas, whereas only 14 per cent. of our exports are going to those same countries. In the result, not only are we still experiencing a deficiency of our general balance of payments due to the fact that we are not yet exporting enough, but there is a special and much greater deficiency in our dollar balances. That is another direct effect of our work for victory during the war. It was an inevitable result of the cessation of Lend Lease and the devastation of other countries from whom we had formerly been able to draw our essential supplies.

These internal and external difficulties directly resulting from the six years of war are, however, only part of the historical background to which we must look. In the period between the two wars we had not, of course, fitted ourselves for the great increasing productivity which we now, in completely changed circumstances find to be essential to our economic survival. Nor had we pressed forward with the reorganisation of our basic industries, which were competitively out of date in many respects, especially in their mechanisation. In a condition of continual large-scale unemployment labour-saving machinery had seemed less necessary; indeed, there was a tendency to repeat the Luddite cry that machinery created unemployment, and "rationalisation" became a much suspected, and indeed hated word.

The large and continuous volume of unemployment reduced our own standards of living. Yet we were unable, in accordance with the then dominant economic theories, to utilise the available labour for the much needed reconstruction of our industries. It is this industry of ours, with all its wide diversification in buildings and equipment, that, after a further six years of war, we are now expecting to be able to expand at an unexampled rate, and in a properly phased manner. There is now a lack of balance in industry, which has grown out of the war and the inter-war years. Some industries tend to have more labour than they can fully employ with the limited supplies of material at their disposal, while others are short of the labour that is needed to meet their targets when they have ample supplies of materials. This is partly because during the war we were obliged to curtail and concentrate many of the industries making particularly consumer goods, in order to put our greatest possible effort into war production. In the textile and clothing industries, for example, we deliberately cut down production so as to allow workers to be spared for the production of munitions and for the Armed Forces.

The difficulty of rebuilding the labour force in those industries reflects the sacrifices that were made during the war. But it also reflects the long period of depression in the textile industries before the war. We have to start rebuilding those industries at a time when manpower is scarce, and when there are plenty of other opportunities for workers who would normally enter the textile industries. Even if the textile industries were highly attractive in their amenities, pay and so forth, they would still have to contend with a famine in juvenile workers because of the fall in the birthrate and the raising of the school-leaving age, and a rather less obvious shortage which is rapidly approaching in women workers, which can ultimately be traced to the fall in the birthrate in the 'twenties. The same kind of problem has arisen in coalmining. It is obvious that even if the war had not come we should have had difficulty in arresting the decline in the number of coalminers, which everybody took for granted in the years between the wars. Sooner or later it would have been necessary to call a halt to the gradual process of wastage, and to increase the share of coalmining in the number of new entrants into industry.

The reason, I think, why a good many people have been alarmed and depressed at the facts set out in the White Paper is because they never have fully realised what effect two world wars within a generation have inevitably had upon our economy. The first world war struck us a violent economic blow from which, in fact, we had not fully recovered when we were struck by the second world war. We have not been able, in the period between the two wars, to readjust ourselves to our new economic situation, and the measure of that failure was the continual mass unemployment from which we suffered. It is not, therefore, any matter of surprise that we should emerge from the second world war—which was both longer in its duration and more intense in its dislocations than the first—with a more battered and distorted economy, and one for which the ineffective palliatives that were tried during the inter-war years would be even less effective.

Since this Government came into power hon. and right hon. Gentlemen opposite have often made the suggestion that we on these benches were unaware of the difficulties that were bound to face the country in this postwar period, and consequently did not disclose them to the electorate at the time of the General Election. Now, this is so contrary to the fact that I should like to dispose of the suggestion by quoting from a broadcast which I made, during the Election, on 20th June, 1945. I said this: While we have been fighting we have been hard put to it, and we shall be after the war, to get enough produce to support and protect our people. We need the same determination and self-sacrifice, and the same sense of values that have brought us through to victory in the war. We know, and we emphasise, the difficulties that lie ahead. But we know, too, that the ordinary men and women of this country can overcome them if they will."

We do not depart one iota from those statements, which are as true today as they were when they were spoken, and were a not inaccurate forecast of the conditions as we now find them.

Let me turn to the first section of the White Paper, dealing with economic planning. The method of that planning must be worked out in accordance with our own democratic institutions and ideas, and also to fit the very complex economic structure that has been built up in this country over the last century. We cannot take a theoretical plan suited perhaps to some other country and apply it to our own very different circumstances. We shall work out our own method of planning in the empirical way that suits our temperament as a people. Hence the somewhat tentative nature of the machinery that we have so far set up. We must have experience of planning and its results before we can attempt to finalise the form of the machinery that we must use. There is one particular drawback from which we are at present suffering, and that is the lack of accurate statistical knowledge as to our peacetime production and distribution. The last relevant census of production was taken 12 years ago, in very different circumstances, and we have never yet had a census of distribution. Though our wartime statistics were far fuller than any that we had collected before, they are largely inapplicable to present problems, because they deal with wartime and not peacetime production. As the House knows; we are trying to make good these shortages by the Statistics of Trade Bill. But it will be some years before we can have all those fuller statistics, and in the meantime we must do the best we can with what we have got.

Another matter to which I draw the attention of the House is the way in which the possibilities of planning are determined by the measures available for enforcing the plan. There is a wide difference between what may be termed totalitarian planning, and democratic planning. The essence of the former is that the individual must be completely subordinated to the needs of the State, even to the extent of depriving the individual of free choice of occupation. Democratic planning, on the other hand, aims at preserving maximum freedom of choice for the individual while yet bringing order into the industrial production of the country, so that it may render the maximum service to the nation as a whole. We are attempting to make a success of democratic planning, and, save for emergency measures such as were necessitated by the war, or may be necessitated by some urgent economic crisis, we have decided, in accordance with what, I am certain, is the wish of the country, not to employ, as a normal matter, methods of direction or compulsion of manpower outside the necessities of defence.

We must, therefore, adapt our methods of planning to our means of control and enforcement. We cannot plan our industries as, for example, we plan our Armed Forces. In that case, because we positively control the manpower intake, we can, with accuracy, lay down full details of all the Services to be available and the exact number of men to be employed in each. That is a precise and accurate plan, of which an exact estimate of cost is given in the Service Estimates every year. There is no question of buyers of the output: there is complete certainty that, one way or another, it will all be utilised. In planning our industrial production we cannot have such a strict plan. We must deal in broader classifications, and we must attempt to guide production into those classifications, not by direct control of manpower, as with the Services, but with other regulatory controls which are available, such as those of raw materials, capital, investment, machinery allocation, taxation, and so forth. But, apart from those various controls, we must also rely upon the individual co-operation of both sides of industry. It is of the essence of democratic planning that it is, to a very considerable extent, dependent for its implementation upon the willingness of employers and employees to join in working out the plan; and it is to deal with this sort of democratic planning, as I have defined it, that we have set up the machinery which is dealt with in the first part of the White Paper.

There are two important changes which we are making, on the basis pf our experience up to date, in connection with the reorganisation of economic planning. These are changes since the White Paper. First is the strengthening of the staff for economic planning, and the second is the arrangement for ensuring the co-operation of industry in the planning organisation. The foundation of this economic planning work must, of course, be done in the departments concerned with trade, industry and economic affairs. In recent months these Departments have been constituting their planning staff. In future, it will be the recognised practice that each Department will have a whole-time planning staff under a senior officer, charged with special responsibilities in that field.

The most important development on which His Majesty's Government have decided is the strengthening of the interdepartmental planning arrangements. They propose, therefore, to appoint a joint planning staff, somewhat on the lines of the procedure that was so successfully developed in the war, as, for example, in the joint war production staff. The main strength of this staff will be departmental planning officers. But it is essential that the staff should work under effective direction from the centre, and it has been decided to make a new appointment of a full-time executive head of the interdepartmental planning staff. The man selected will need to be a man of very special attainments and experience. Each of the departmental planning officers will have on his staff at least one officer whose duties are so arranged that, while he does not lose contact with his own Department, he can devote a considerable part of his time on the central work of the joint staff. It is contemplated that these assistants will frequently meet together to work as special groups under the staff. Under these arrangements, the head of the organisation will not himself require to have any large staff of his own, but he will need a small, picked staff of persons with programming experience and a small secretariat.

The function of this inter-departmental staff will cover the whole field of forward planning; but they will also be specially concerned with the more immediate task of reviewing the programme for the rest of 1947 in the light of developing conditions, so as to weigh up the calls which that programme makes on productive resources, and to recommend how resources and requirements can best be brought into balance continually. The inter-departmental planning staff will, of course, work in the closest relation with the other central organisations, in particular the Economic Section of the Cabinet office and the Central Statistical Office, both of which have important contributions to make towards economic planning. The arrangements outlined above are a development or evolution, and will be calculated to ensure strong direction from the centre, where it is needed, without interference with departmental responsibilities.

The second point concerns the arrangements to ensure the co-operation industry in the organisation for economic planning. There will, of course, be a very large number of questions on which the Government will need to consult with the representatives of a particular industry or group of industries, apart from problems which affect those industries in the planning of our economic affairs. That will be done, as now, through the Departments primarily concerned. But, over and above these particular questions, there are many wider issues on which His Majesty's Government feel the need of consultation with industry as a whole in regard to economic planning; and they intend to suggest to the various organisations concerned on both sides of industry, that there should be a small board representative of the Government's planning staff and of both sides of industry, which would meet from time to time throughout the year to follow development of the plan. The Government recognise that, if they are to get the best out of our forward economic planning, they must have the help of both sides of industry in formulating and carrying out the plan. Industry must be brought into the planning processes at an early stage, and must have before them the facts which the Government Departments have at their disposal. They must know the difficulties to be resolved, the gap between demands and requirements, and the results to our economy as a whole if we fail to bring the two into line. They must have all this, in order that their help may be obtained in the formative stage of planning.

As the White Paper states, the planning in the White Paper is based upon two main sets of facts—first, the actual division of the labour forces of the country, and second, the allocation to various purposes of the gross anticipated national income. The total available manpower of the country is subdivided between the various industries, as far as possible, in accordance with the needs of the nation, and so as to achieve an allocation of the national income which is to the greatest benefit of the people as a whole. These so-called budgets are, of course, very different in their nature from the budgets of the Chancellor of the Exchequer. They are dealing in men or materials, even though the common denominator can be expressed in terms of money. They must automatically balance, and if they do not balance in accordance with some plan, they will, nevertheless, still balance by deficiencies appearing, perhaps, on the very things of which there is the most vital need. It is the task of planning to see that those deficiencies, if they must occur, fall in the least inconvenient places.

I now pass to the second part of the White Paper. This records the achievements of the country during the first 18 months after the end of the war with Germany, that is, down to 31st December, 1946. Looking back to what was expected and predicted in the spring of 1945, it seems to me that the technical processes of reconversion have been accomplished more smoothly and satisfactorily than we then expected. Nearly the whole of that 18 months has been occupied in the reconversion of industry and manpower from wartime to peacetime tasks. It must be borne in mind, that the disturbed conditions of the world have been such that it has not been possible during those 18 months to bring down the defence Services to peacetime levels. The occupation of Germany, the troubled conditions in the Far East and Palestine, and other inescapable demands have meant we could not reduce the Armed Forces below the level at which they stood at the end of last year. Despite this factor, we have, during the period, demobilised from the Forces over 4,250,000 men and women, and from munitions production upwards of 3,250,000. This process has been carried through with a minimum of industrial disturbance, due to the co-operation of industrialists and workers, and with only a very small percentage of unemployment over most of the country, though in the Development Areas the rapid demobilisation of wartime industry has resulted in a higher and, unfortunately, a more persistent degree of unemployment.

What these 7,500,000 people, returning to peacetime work, have accomplished, after their long absence from production and other jobs they are doing, can be judged by the levels to which our production has risen over that period. By the end of 1946 the volume of goods exported had risen to about 113 per cent. of the prewar figure. Apart from shortages of raw materials and power, there is no doubt that we should have seen a further substantial rise in exports in the early months of the present year. So far as the home market is concerned, we cannot always judge the achievement in production by the degree of satisfaction of demand, because of the great increase in demand arising from the higher standards of wages and salaries, and the accumulated deficiencies of wartime, together with the large wartime savings. It is quite apparent, too, that the quality standards have risen generally in the country, which fact is, I think, not unconnected with the comparatively higher standard which so many people have experienced during their service in the Armed Forces. This pressure of demand has meant that even where production has risen well above the 1938 standard, there is still a shortage of supplies.

Table B on page 34 of the White Paper sets out the comparative production of a number of important commodities for the last two quarters of 1946 compared with two prewar years. Some important articles, particularly in the category of engineering, like motor-cycles, agricultural tractors, and commercial vehicles, show large increases on prewar production. The same can be said of merchant shipbuilding compared with 1938. On the other hand, textiles, with the exception of rayon yarn, show a large deficiency. The consumption of gas and electricity has greatly increased, as has the consumption of non-ferrous metal. Those are all signs of generally increased production, though there is a marked unbalance, with some severe deficiencies, particularly in the field of consumer goods. The summary in paragraph 58 shows what, on broad lines, we have accomplished during these 18 months, and in view of the war damage from which we suffered, and our total mobilisation for war purposes, those are results with which, I think, the country can be reasonably satisfied. Moreover, we have been able to obtain some approach towards a balance between our different requirements, though it has not yet reached more than the first stage, and much remains to be done.

We have throughout this period been operating in circumstances of world shortages and of internal shortages as well, so that our margin of stocks in most cases has been fluctuating about a very bare minimum. It was liable to be upset at almost any moment by weather, or shipping difficulties, or labour troubles in other countries, as well as by the position in our own basic industries. We have had to impose bread rationing for this reason, and our coal and power situation has been growing increasingly dangerous as consumption leapt forward ahead of supplies. We have now over a series of years, as the House knows, been living on a coal overdraft. We drew on our stocks in 1943 by over 1,000,000 tons, in 1944 by 1,500,000 tons, in 1945 by 3,600,000 tons, and in 1946 by 4,000,000 tons. In addition, we have used up almost all the accumulated stocks of opencast coal which, at the end of 1944, amounted to over 2,250,000 tons. I will deal with the whole coal matter in detail later. These shortages of materials and stocks have not only meant the use of a good deal of manpower in rationing schemes of various kinds, but have also created an atmosphere of uncertainty which is inimical to high efficiency in production.

I now pass to the third and most important part of the White Paper. This is introduced by the sentence: The central fact of 1947 is that we have not enough resources to do all that we want to do. The Government have constantly emphasised that fact, and indeed we have often been criticised for too much austerity, for diverting goods from the home market for export, for not allowing more home consumption of goods, and for not doing this or that other extravagant thing that was considered desirable. I believe that anyone who reads the White Paper will now agree that the policy pursued was the right one; indeed, judging by some current Press and other criticism, our mistake has been that we have been too easy-going. One thing, anyway, no one say say, and that is that they have not been kept acquainted with the facts. The "Monthly Statistical Digest," of which I hope all hon. Members have at least seen the cover, was published for the first time by this Government, and it gives monthly all the current information that is available. The fact is—and this must be made clear to all our people—that we cannot do everything at once, and that we must, therefore, make up our minds as to what it is upon which we should concentrate our resources.

The third part of the White Paper sets out to show how we should do that for the year 1947. It does not purport, of course, to be a long-term plan. That we shall get out as soon as we can with the staff that is available. Here, let me say that any one who looks upon this realistic picture as portraying disaster or forecasting catastrophe must completely misunderstand the temperament of the British people. It is a challenge to achievement by the people, and it is not a record of their failure or their impotence. As matters of first importance are the payment for imports—that is, of course, principally by our exports—and the basic industries and services without which the rest of our economy cannot function.

So far as payment for our imports is concerned, this raises two questions—the overall balance of payments, and the balance of hard currency payments. We can, and indeed, must, operate on both sides of these balances. Our imports are not a fixed figure, but can be varied to some extend according to our ability to pay for them in exports. There is, however, an almost irreducible minimum below which we cannot allow imports to fall if we are to have enough food for our people and maintain the flow of raw materials essential to our industry. The import programme for 1947 is set out in paragraph 69 of the White Paper. This is a little larger than the rock-bottom minimum in that it envisages a certain variety of foodstuffs, although not much more than at the present time, a small increase of consumer goods made from imported raw materials, and the continuance of the token imports and the war devastated region imports, which both come within the £35 million of imported consumer goods.

There are, too, the items tobacco and films as to which a number of people have made suggestions. It certainly is unfortunate that smoking has increased as much as it has since the prewar years. It is now between 130 and 140 per cent. of prewar, which is really much more than we can afford, and yet I am constantly being asked Questions about supplies, and suggestions are made that more should be manufactured. It is not an article that is easy to ration. It would take a very large staff indeed to do it because of the immense numbers of points of distribution. It is, moreover, a commodity in which a black market is very easily created and quite impossible to suppress. We, therefore, concluded that for 1947 at any rate we will not ration tobacco. We shall, of course, continue the policy of using all the Empire tobacco we can get. Films are an important factor in providing people with relaxation in difficult times. We shall have to introduce a new Cinematograph Bill early next Session because the old Act expires next year, and we do not feel we should embark upon any hurried policy of cutting such imports, even if that policy would have any effect. We are trying to counter this tendency to use too many foreign films and spend too much on them by improving our own output and by stimulating our own exports of films. In both these directions we are having very considerable success, so that the net loss on foreign exchange on films is falling. We must always remember, with regard to imports, that there may be extra emergency items that we shall have to include by way of imports, such, for instance, as coal for double bunkering at the present time. So much then on the import side.

How are we to meet that bill for imports? Our total need for foreign exchange will be £1,450,000,000 for imports and £175,000,000, the balance on Government overseas expenditure against receipts, making in all £1,625,000,000. We cannot, of course, cover all that by exports. Our net invisible income is estimated at £75 million, and if we fix the limit of our borrowing at £350 million for this year, we shall have to aim at £1,200 million from receipts from exports and re-exports. The proportion between borrowings and exports must, of course, be determined in the light of our capacity to export, but the fact that we have put borrowing in 1947 at so high a figure as £350 million shows that we have not to the smallest extent exaggerated the need for exports. The 140 per cent. increase in volume over 1938 is not a wildly optimistic hope; it is the irresistible conclusion to be drawn from the fact about our balance of payments. We conclude, therefore, that our home consumption must be so adjusted as to enable us to reach our export target of 140 per cent. by the end of 1947.

So far, I have dealt with the balance of payments as a whole. I must now say a word about the hard currency situation. It is an unfortunate fact, but an inevitable sequel of the war, that, just at the tam when we are critically short of dollars and other hard currency, we are driven by circumstances over which we have no control to purchase a greater proportion of our import needs from those very countries whose currencies are the hardest for us to acquire. The position is, therefore, that although our overall balance shows a deficit to be met by borrowing of £350 million sterling, there is within that overall figure a larger potential deficit of hard currency, especially so far as dollars are concerned. It is not our choice, but the availability of commodities which determines where we buy. We must buy in the market where the goods are available, or else go without. In order to try to meet this situation, we have to do two things.

First, we must try to get back to purchases in soft currency or sterling 'markets as soon as ever the goods are available, and secondly, we must send the maximum possible amount of our exports to the hard currency countries. Both those steps are part of our plan, and are in fact now in course of being carried out. We are negotiating with many European countries to get as much as we can, not of luxuries but of necessities, in return for the goods we send there. At the same time, we try to encourage as large sales as possible of our goods in the difficult currency countries.

My right hon. Friend the Chancellor of the Exchequer and I have both urged industry to give their immediate attention to this problem. Detailed discussions with particular exporters and groups of exporters are now being started by the Board of Trade and the Ministry of Supply. There can, of course, be no question of a sudden and fundamental change in destination of all our exports; nor do we intend to introduce a mass of new controls to force exporters into hard currency countries. Each type of export must be considered on its merits, and we shall have no hesitation in relying upon exporters to appreciate the seriousness of the hard currency problem and on their readiness to work out, in consultation with the Board of Trade, the precise steps which can best be taken for its solution.

It would take too long to go through all the reasons against a policy of indiscriminate re-direction of our exports to hard currency markets, but perhaps I may mention one or two of them. We have a long-term problem of markets ahead of us, as well as a short-term problem, and it would be foolish to throw away, perhaps for ever, a good long-term market, it may be in a Dominion, for the sake of a purely temporary market in a hard currency country. Then there is the question of our responsibility which we cannot burke, for the supply to our own Colonial Empire of essential goods. Nor would it serve any useful purpose to divert our exports away from a good sterling market overseas to a dollar market if the vacuum that would thus be created were to be filled promptly by exports from a dollar country. One fact which is perhaps not appreciated is that the proportion of our exports going into hard currency markets has increased by about i per cent. per quarter during 1946, so the trend is in the right direction, but we must try to accelerate that trend. I have every confidence that exporters will treat this problem as really urgent, important and vital in the national interest.

I referred just now to our long-term need for markets. Our 1947 target for exports is 140 per cent. by volume of that of 1938 by the end of the year, but our long-term target is 175 per cent, by volume of 1938. To achieve this when the sellers' market has gone, as it will have gone before very long, will be a task demanding all our traditional skill and enterprise as exporters, and all the competitive strength in price, quality and design that we can muster. Even so large an increase in our exports would mean that, unless world trade expands very appreciably, we should need to win an enormous proportion of the total world trade in manufactured goods, just about one-third, and that, of course, is impossible for any one country. That is why the Government attach so much importance to the plan for an international trade organisation, with its declared objective of providing full employment and increasing the total volume of world trade.

We also believe that if this project is reasonably successful it will assist in putting right one of the causes of the world's economic ills which was noticeable in the 1930's and which can be seen in another form nowadays, accentuated as a result of the war, in the shape of a quite alarming disparity between exports from the Western Hemisphere to the rest of the world and the imports to the Western Hemisphere from the rest of the world. In saying that, I do not mean that an international trade organisation can put this right by, as it were, a stroke of the pen, but it can provide the essential framework to enable rectification of this great disparity to be gradually achieved. Here I should add that this country must have a great interest in seeing the disparity put right, suffering as we are from our own acute dollar shortage, which is an acute and special instance of the more general problem.

I am not suggesting that, in the long-term, if all goes well, there will be no need for us to pay special attention to our own exports to hard-currency countries. Though the problem may be especially acute just now the need for dollar exports will, so far as I can see, be with us permanently, anyway for the next 50 years. The four objectives of policy, so far as the balance of payments is concerned, are set out in paragraph 79. It is along those lines that we are now working. I would emphasise once again the point set out in paragraph 81. This export programme must be a prior charge on our resources, and we shall therefore have to content ourselves with what is left over. There is of course flexibility as between industry and industry. Some will exceed the target greatly, as they are doing now, and others will fall far short of it; as, for instance coal. Something like 25 per cent. of our manufactured goods will have to go abroad, if we can get them there, and we shall have to content ourselves with living on the other 75 per cent., together with such imports as our exports can earn for us.

I now pass to the all-important matter of our basic services. The fuel and power situation has been debated fairly recently in the House, so that I need not deal with the present situation in detail. Coal, steel, power, and transport, together with the building industry, capital equipment and agriculture, are fundamental to our economic system. Upon their productivity will depend to a large extent how quickly we can achieve targets we set ourselves over the rest of the economic field. Our main task in 1947 is to get these basic industries and services right.

I turn first to coal and power. Ever since 1941, when a large number of skilled miners were withdrawn from the mines for the fighting Services, we have been in trouble about coal production. During the war, by measures of economy and by drawing on our stocks, we managed to make both ends meet, though each year there was growing anxiety as to whether we could get through the late winter period In 1942 a scheme for rationing was worked out, but it was never applied. We were lucky enough with the weather in the following years to get through the wood. Weather such as we have had this year must inevitably have meant breakdown.

So far as electric power and gas are concerned, during the war periods there was no marked increase in domestic use. Indeed, there could not be, as very few appliances were being manufactured, and generally, in order to get a new appliance, an old one had to be handed in in exchange. In addition to that, there was the economy of the blackout. When however a time came before the end of the war to plan the new housing programme, emphasis was rightly placed on the need for having up-to-date labour-saving houses. As part of the housing programme a very large manufacture of electric and gas appliances was stimulated. I remember when I was at the Ministry of Aircraft Production being asked to facilitate the turnover of some of the factories making aircraft accessories to the manufacture of those power appliances. That type of manufacture is very easily started and developed. As a result of those plans, one of the first civilian industries that greatly increased its production was that of electrical and gas household appliances, with the result that the domestic consumption of gas and electricity increased greatly, not only in the new dwellings but through the purchase of appliances by others

Mr. Churchill (Woodford)

Has not there been a corresponding reduction in the domestic consumption of coal?

Sir S. Cripps

No, Sir. The right hon. Gentleman is quite wrong. There has not been a corresponding reduction at all. Perhaps it would be easier if I were allowed to continue. There have been very large scale purchases of those appliances. It will be noticed in the statistical returns, Table 68, that the really big jump came between the third and fourth quarters of 1945, which had, of course, been planned much earlier. Electric fires jumped from 41,000 to 122,000, and electric irons from 79,000 to 170,000 in the same three months. At the same time, of course industry was being rapidly electrified and every scheme for modernisation included an increased degree of electrification. This, no doubt the House understands, is inevitable, because we look very largely to the substitution of manpower by electric power to give us our economy in our production programme.

The output of electric generating plant to come into operation this and next year meant orders being placed three or more years ago and power stations being planned and built. That was the job of the electricity generating undertakings, but, in the circumstances of the war at the time when the orders should have been given, it was impossible to place more orders. Under war-time Government control, a balance was struck between manufacture for the home market and for export, including I may say a great deal of much-needed plant for Russia. Contracts were made and planned on that basis, and they cannot now be gone back upon. Even if it were practicable to divert exports to home use, which it is not in fact, we would risk losing for ever one of our most valuable and stable markets for export. That would be the result if we were to cancel contracts. So we find ourselves today unavoidably short of genera, ting plant and unable to carry a peak load. We have, in fact, arrived at the point towards which we have been moving for nearly five years and during which demand for fuel has outrun supply, and no stocks remain to be drawn on, while at the same time electricity demand has swamped generating capacity.

The question is: Can we stimulate production so as to overtake the ever-rising demand? Successive Governments have done their best, but we on these benches have always believed that it was only through a complete reorganisation of the means and the conditions of work in the coal industry that we could get the fuel we need. That process has now been set on foot under the National Coal Board. Although production has improved, it must be some years yet before the full effect of reorganisation can be felt. The target for coal production which is fixed in the White Paper, is 200 million tons in the present calendar year, but in order to achieve that target, a number of measures will have to be, or are now being, taken. I shall deal with them in a moment, the result of which it is not possible to foretell with certainty. We must have a new, planned distribution of output, at least for the next six years, and we must continue planning, not taking a target figure but a fair estimate. Otherwise we may find a deficit of one vital need, such as stocking up, through over-consumption for some other purpose.

The House will be aware that the holiday period falls chiefly in the six summer months. That is one of the reasons why the average production in those months is lower than for the winter period, though there are compensating factors, such as greater ease of transport and better health during that period. We have taken an estimate of 89 million tons as being available during the six summer months—83 million tons deep-mine coal, and 6 million tons opencast. Of this total, the first charge is for stocking up. We expect to start with 5 million tons of stocks, and we have decided the best we can do this year is to make that up to 15 million tons by 1st November. Ideally, it should be more—another 3 million to 5 million tons; but it we were to try and make it all up in this six months, it would mean so little was left for industry that the position would be made impossible.

I will now give the House the rest of the budget figures. In millions of tons stocking up, 10; electricity, 11.8; gas, 9.7; coke ovens supplying town gas, 5.2; water,.2; railways, 7; colliery consumption, 5.3; miners coal, 2.1; merchants disposal, house coal, 12.8; others, 1.2, larger non-industrial consumers, 1.5; Northern Ireland, 1.2; coastwise bunkers, .5; Service Departments, .5; miscellaneous, 1.3, leaving 17.6 for iron and steel, coke ovens not supplying town gas and other industries, making an inland total of 87.9, to which 3.1 exports and bunkers are added, making 91 million tons, from which should be deducted a saving by coal-oil conversion of 2 million, leaving a figure of 89 million tons. These figures are based, so far as gas and electricity are concerned, on full industrial use, consistent with allocations of solid fuel to industry, and continued substantial restrictions on domestic and non-industrial users. We want to save an average of 80,000 tons of coal a week on domestic and non-industrial gas and electricity consumption during the summer. We have not yet finally decided how this shall be done, because we want to make the inconvenience and worry of that saving as small as possible. We must do our best to get that saving, and if we do not get it, it will mean a further industrial cut, as there is nowhere else the coal can come from. We shall certainly have to prohibit certain wasteful and unnecessary usages during the summer, such as domestic space heating. It may be we shall be driven to the necessity of a domestic fuel rationing scheme.

Transport is to be on the basis of a ten per cent. cut on passenger services as compared with last summer, and the introduction of the summer services a month later—1st June, instead of 1st May. As I have mentioned, we intend to save 2 million tons from the coal-oil conversion scheme; we shall also have to secure some saving from double bunkering and supplies of bunkers to depots abroad. On that basis, there is left for iron and steel and coke ovens and for all other industry, 17.6 million tons for current use, apart from stocking, which is exactly two-thirds of the total estimated requirement if industry were to be running full out.

If the output of coal rises above our estimate, that will mean more for industry, and if it falls below, there will be less. We are now going to examine with industry how best we can allocate this quantity to give the maximum output, while maintaining a proper balance between the industries. It is unfortunate, but inevitable, that when all the other users have been cut to a minimum, industry has to get what is left over.

The House will observe that with an extra 8.8 million tons, industry can get all it needs, so that our immediate production problem is to get an average increase of about 10 per cent. above the present estimate in the next six months, if we are to maintain full industrial production. We shall do our utmost in that direction, and shall appeal to the miners to give up just that extra bit necessary to keep our industries going full out. Every extra ton will count. It is an attainable target, and I know that the miners will do all in their power to help in this vital struggle to keep their fellow workers fully employed throughout the summer, and to get the exports which are of such supreme importance to us at the present time.

I have not the time to go into all the details as to the various measures we are taking to increase production. They consist of two parts: To enlarge the total labour force, and in particular, the total number of face workers—that is the ratio of pit workers to other workers—to increase the output per man-shift, and secure regular attendance. Even with present limited pit room, there are vacancies for face workers in some mines. If we are to get a substantial increase we shall need more face-room, and that will be developed as quickly as possible, but it takes time. More workers will be trained. Ex-miners from the Forces will be encouraged to return to the pits and from other industries by more intensive propaganda, and by putting no hindrance in their way whatever work they may be doing. In the long run, we must depend on British miners to get the coal. We shall certainly fail to get our own people into the mines if we create the impression that it is such an unpleasant job that we cannot expect British people to engage in it, and so we must get foreigners to do it for them. By all means, as a temporary help, let us introduce Poles or any one else with whom our miners will agree to work, but our main purpose must be to make the industry attractive enough to recruit our own men into it. That is why we propose to exempt from call-up to the Forces for the next five years underground coal miners as well as to make the industry more attractive by the provision of houses, hurrying forward with pithead baths, the supply of more food and consumer goods in the mining areas and so forth.

To cope with the electrical situation, we require steps which are not merely coal saving, but which also deal with the problem of the peak load. We must, if we are to get sufficiency of production, avoid load shedding at the peak. To this end, we have decided that a wholesale staggering of industrial hours is absolutely necessary, and we hope that the arrangement of two staggered day shifts will avoid the danger of large-scale shedding, without having to have recourse to night-shift working. This will only be so if we secure a very considerable economy in the domestic use of electricity, which is equally important from this point of view, as it is from the point of view of coal saving. We shall, at the same time, encourage the use of auxiliary diesel generating sets of about 50 kilowatts, or slightly more, which will make some contribution to the easing of the peak load. Before passing from the fuel and power difficulty through which we are passing, I should like to put it in its true perspective. This country has massive reserves of coal, and it has a strong, healthy and courageous population, amongst whom the miners have not always been recognised as men contributing a vital service to their country; perhaps latterly some of us, hearing stories of how they have struggled through deep snow to get to the pits to win coal for us, have gained a deeper appreciation of their contribution to our economy.

Our embarrassments at the moment arise through three causes—the running down of stocks during the war, the failure hitherto to get back to prewar levels of manpower and output and shortage of electrical generating plant. All these are temporary, and they will be put right because the British people will put their backs into this job as they always have done and do when there are difficulties to be overcome. The improvement required is marginal. A ten per cent. increase of output over the estimated figures would, as I have shown, clear us of all our internal difficulties as to fuel, provided that we did not indulge in the wasteful manner in which we used our fuel prewar.

The steel position is not quite so critical since the limiting factor will be coal and coke and we shall not be able to produce up to full capacity. Even so, if we balance the use of fuel by the iron and steel industry against that used by other industries we should be able to get through.

When we come to transport, we find that the railways are in a very difficult position. During the war their maintenance of permanent way, rolling stock and loco- motives, had to be sacrificed to war necessities, while at the same time an ever-increasing load of traffic was thrown upon them. The utmost is being done to build up their wagon stocks, including the use of Royal Ordnance factories, and to increase the number of locomotives available, including the repair abroad of the wartime utility locomotives. The position regarding permanent way is particularly difficult. Here we are met with the impossibility of obtaining enough timber, although we have combed the world for it. Unfortunately, the Baltic and Russian supplies are not available at present, and that used to be our main source. We are doing what we can to provide substitutes and step up their manufacture, but the shortage is acute, and may have a serious effect upon traffic this year if it cannot be made good. Coal and industry will take priority over passenger traffic during this year, especially during next winter.

I now come to agriculture, which is an important priority as a saver of imports. I will not now repeat what our policy is in this field, but I would point out that our difficulties are labour and machinery. Hitherto we have been able to maintain a labour force by the use of the Land Army and large numbers of prisoners of war. The former is falling off in number, and the prisoners are being repatriated. This labour must be replaced if we are to maintain our output. Here we are anxious again to recruit our own people, but we are planning to get help, as far as possible, from foreign labour, especially where it can replace prisoners of war. So far as machinery is concerned, our own output has gone up very greatly since prewar years, and at the same time we are importing foreign machines which will improve our efficiency. We have, in fact, the most highly mechanised agriculture in the world. The prospects for agriculture are good, now that for the first time the industry is to have a stable basis, under the terms of the Bill now before the House.

I pass now to our programme for capital equipment. As to this, I think there has been some misunderstanding. The objective of the White Paper is stated to be that 20 per cent. of the national income, after allowing 7 per cent. for depreciation, should be expended upon capital equipment and maintenance. How that should be divided up is set out in paragraph 117. By way of indicating the sort of comparison with prewar, it is pointed out that the 1947 programme will exceed, by at least 15 per cent., that of a normal prewar year. That is the programme for capital equipment, and maintenance, excluding housing and housing maintenance. No one doubts the pressing need for industrial re-equipment in this country, and so far as possible we want to provide our own machinery and plant. If we cannot, and it is urgently needed for our industries, we must import it from abroad.

I want to make it quite clear that there has never been any question of withholding scarce currency in such cases. The difficulty has been to get orders placed, and the very long delivery dates offered overseas. In the past, of the country's total expenditure on capital equipment and maintenance, not more than a quarter has normally gone on industrial plant, and a great deal of that was for the simple replacement of existing machines. The net addition to the stock of equipment was a relatively modest matter. That is why we find ourselves today in many ways ill-equipped to carry out extensive industrial re-equipment ourselves with new plant, and why we have encouraged the expansion of those industries which manufacture such equipment.

The proportion of the expenditure on capital equipment and maintenance that will go to supplying machinery to industry under the plan will be very much more than 15 per cent. over prewar. That is the figure assessed for the whole category, and within that category the proportion of machinery for industry would be much higher than prewar. It must not be forgotten that during the war the engineering industry had enormous access to new equipment, much of which is still available. The fact that the very large wartime surplus of machine tools has been disposed of so smoothly, without any interference to the machine tool industry, shows how eagerly this new equipment has been absorbed in other parts of industry.

To take another case, the cotton industry, we are trying to give Government assistance to stimulate the ordering now of new equipment which is badly needed. In another case, we have brought in the capacity of the Royal Ordnance Factories to assist with the building of special machinery such as, for instance, that for fully fashioned silk hose. We should like to see re-equipment going forward even faster, and our greatly expanded engineering industry playing the major part in the re-equipment. So far as orders for goods from overseas are concerned, we, too, are disappointed that not more have been placed. Within this capital re-equipment scheme there are, of course, vital priorities, such as coal mining machinery and electrical generating plant, to mention two obvious ones, and we are taking steps to see that these two categories get a more complete and unequivecal priority than they have in all cases hitherto enjoyed. It is the old wartime difficulty of chasing through to each sub-contractor and sub-sub-contractor, and applying the same material priorities to his part of the job as to the main contract. On the whole, I believe that if this matter of re-equipment is examined, industry by industry, and factory by factory, it will be found that the cases where desired re-equipment has been held up, except by the length of time to execute the order, are extremely few, whether the machinery is manufactured at home or abroad. Indeed, we have been putting pressure on industry to re-equip, but there is a limit to the speed at which it can be done.

As to building, with special reference to new capital equipment and maintenance for industry, we have a sufficiency of labour provided the division between housing and other forms of building is kept sufficiently flexible, so that if materials are short in one category the labour can be switched across to another in which there is not the same shortage of bricks, timber, or steel, or whatever material it may be. There is, undoubtedly, a great deal of new factory accommodation which will ultimately be needed in industry in this country but it is not, at the moment, such an urgent priority—except in the Development Areas, where special efforts are being made—as raw materials, fuel, or machinery. In the building industry, perhaps more than anywhere else, there is an ample opportunity for increased output per man hour, and this is one of the cases in which we believe that a proper incentive system would have a marked effect.

So far, I have been dealing with those basically important forms of production to which we must especially devote ourselves this year. Until these deficiencies are remedied we shall not become fully conscious of our acute shortage of manpower, but, as soon as they are, we shall find ourselves up against a manpower problem. I do not propose to deal with the manpower employed in the Defence Forces because that topic merits more than a cursory reference in what I am afraid is already an over-long speech, and it will be fully dealt with by my right hon. Friends the Minister of Labour and the Minister of Defence tomorrow when they speak in this Debate. In the total volume of manpower available, it is calculated that we shall be able, by the end of this year, to have got 100,000 foreigners to work They may be Poles, or other imported labour. That figure has been criticised as being too small. We could have written in a quarter or half a million if we had wished, but the figures would not have been realistic. In this country we are not, like France or other Continental countries, accustomed to use foreign labour in bulk, and it is essential to go carefully with its introduction, or more harm than good will be done.

It is not only trade unionists who are anxious about the introduction of foreigners. The same attitude rules in professional bodies, indeed everywhere where competition or unemployment is feared. Nor is it the slightest good to force foreign labour upon an unwilling industry. To do so will not increase, but reduce, production by the unrest and dislocation that it causes, The language problem is a very difficult one. In the mines, for instance, from the safety point of view, a foreign miner must be able to understand English. There is also the accommodation difficulty. We are most anxious to get in as much foreign labour and employ as many Poles as we can, but we believe that the realistic figure is roo;000 placed in industry by the end of this year. That, of course, is not a maximum. If the measures we are taking to get them are more successful than we anticipate then so much the better for everyone.

This gives us a total estimated manpower of 18,400,000, and a question arises as to how we want to see it distributed under the main heads. On page 29 of the White Paper there is set out the approximate distribution for December, 1946, and December, 1947, the latter being appropriate to the plan set out for 1947. Substantially, what it comes to is this: We hope for 278,000 more people to be available in 1947 than was the case in 1946, and we have expressed how that extra labour is likely to be spread over the different uses, a small reduction being made in the public services, which is also added back to the other items. The changes are not large or striking, and an explanation of them is given in paragraph 129. I do not propose to go through all these items, with a number of which I have already dealt, but there are one or two observations I must make on them. This distribution of our labour force, although it is the best we can achieve, will not by any means restore our prewar position in a number of consumer commodities, particularly the textile group, where there will still remain a very serious and marked deficiency. We are going to do our best there to help with foreign labour, and hope for some success. We are also trying very hard to get the cotton industry moving on a plan of re-organisation and re-equipment which will, we hope, with a smaller manpower, give a greater production. But it is a very slow job, and as the weeks and months go by, without any final decision by the industry, the time for getting results is further and further postponed.

It will be noticed that the distributive and consumer services, other than transport, take up a very large volume of labour—4,500,000—and that it is recognised, in the plan, that that may slightly expand this year. The growth of the tourist industry, which we are trying to foster, will mean a growth of the labour employed in that industry. A large part of this industry is to be found in the distributive and wholesale and retail business, as to which, unfortunately, our present knowledge is very limited. In December last, 2,300,000 people were employed in distribution. While this represents an increase of 15 per cent. on the previous year, it is still well below the prewar figure of 2,900,000. As against this total, the volume of goods handled by the distributive trades was probably little less than prewar, so that there is already an economy of labour in distribution. More goods are now being handled per person employed. That, of course, we welcome, but we must go even further. It is the national duty of those engaged in distribution to make every possible economy in the employment of man and woman power which may be used in productive industry. I am sure that they will recognise that, and shoulder that responsibility. We ask them for their cooperation. We should all like better distributive services, fewer queues, quicker service and better delivery, but we just cannot afford to increase the numbers employed in distribution while important industries, like textiles, have to go without.

Another item I may mention is public services. The figure of 2,130,000 is made up of: National Government employees, 1,016,000, of whom the Post Office and industrials number 615,000; local government, 1,014,000, of which the fire services and police number 89,000. The first total, 1,016,000, is under the direct control of the Government. The second is not. The target reduction for the combined figure is 80,000, but this will be immensely difficult, especially while the present shortages make rationing of many kinds essential. If fuel rationing is to be done in any form, we shall need additional manpower to administer it. Some part of this manpower is, of course, doing what used to be done outside Government service, and, therefore, is not an addition. Some of the staff of the National Insurance Department provide an illustration of that. Other staff is still employed in winding up wartime commitments — demobilisation, disposal of services, many matters connected with the occupation of Germany, and so on. A large block is employed in rationing food, clothing, furniture, and in the allocation of raw materials. These categories will, it is hoped, be reduced as soon as world and domestic shortages start to disappear. A good many of the minor controls have in fact already been got rid of, and others will progressively' be abolished as the supply situation improves. Having set out the desirable labour distribution for the end of 1947, this is related to the expected distribution of resources during the year, which is on page 31, paragraph 137.

The figures for 1946 are not yet available, but will be published in association with the Budget of the Chancellor of the Exchequer in the usual way, when the inter-relation of our financial and commercial situation can be more fully dis- cussed in the light of the survey he will then make on the past year's financial policy, and any proposals which he has to bring forward for the coming year. The comparison, therefore, must be with 1945, which is not of much help owing to the very great change in circumstances—for instance, Defence falling from 49 per cent. to 11 per cent. The comparison with prewar is perhaps better. It shows a lower percentage on personal consumption, with a higher percentage expenditure on Defence, other public expenditure, capital equipment and maintenance.

I now come to what is of fundamental importance, and a matter which has led to a great deal of criticism, that is: How is the plan to be put into effect? The general line of criticism has been that, while setting out the facts, the White Paper fails to show how the difficulties are to be overcome. That is a very understandable criticism, especially from those who find it difficult to distinguish between totalitarian and democratic planning.

It is an interesting fact that most of this criticism is really inspired by the same unconscious reaction towards planning: "You need not worry about me, I will do my bit, so leave me alone, but make the other man do what he ought to do in the national interest." Employers urge that they should be freed from controls, but that labour should be disciplined. There is a demand for a wages policy, but not for a profits policy. Employees tend to take the view that employers should be strictly controlled in their profits, prices, and so on, but they, the employees, should be left free to bargain as best they can in what is now a sellers' market, so far as labour is concerned. The manufacturer would like the wholesaler's and retailer's profits regulated, but not his own profits; the retailer and the wholesaler, curiously enough, take the opposite view. This perfectly natural reaction of each wanting to be free, from restraint or control himself, but wanting others to be controlled so as not to affect him adversely, makes the idea of democratic planning somewhat difficult to implement.

Yet we all recognise that there must be some method of planning in the postwar world. The plan in the White Paper is very widely accepted but the crucial and critical question is: How far are we to use compulsion to enforce the carrying out of the plan? When a complaint is made, that the Government have not shown how the plan is to be realised, it really means that the Government have not expressed themselves as ready to compel this or that section of the people to conform in their actions to the national interest. It is here that we believe that a clear distinction must be drawn between the lack of control over the individual in the choice of his occupation, on the one hand, and, on the other, the controlled use of those material factors which are necessary for production. The material factors are the social and economic instruments available to the nation, the use of which must, under modern conditions, be planned, and, therefore, to some extent, controlled by the community. The great difference between our present and our prewar economy is that labour, which before the war was looked upon as a comparatively cheap commodity in full supply, of which, in fact, there was always a surplus, has now become in very short supply—that is to say there will be an overall deficiency as soon as the supplies of fuel and raw materials are readily available. While there was a surplus, no one pressed for a wages policy, except in the sense of a minimum wage to protect the worker, because the ever present mass unemployment was in itself sufficient to moderate the demand for improved wages and conditions. Now, however, the circumstances have been reversed, and with the prospects of over-full employment and the pressure of the shortage of labour upon wages and conditions of employment, a demand is made for what is in effect a Government policy to restrain the employee from using the shortage to his own advantage.

In fact, the White Paper contains a wages policy, but not the sort of policy that some people are demanding. We are proceeding upon the basis that despite the difficulties created by full employment, employers and employees should remain free to settle the conditions of work or wages in industry, where the employers are private or public companies or corporations. But as is stated in paragraph 28 they must, we believe, take a much broader view of the national interest in their negotiations than has been done in the past. They must have regard to national economic tendencies and dangers, and not merely to those of their own industry. As stated in paragraph 131, the undermanned industries, the less pleasant and heavier industries, must have their conditions improved, so that they become less unattractive. They certainly must not repel the manpower it is sought to add to them. That process has been going forward with Government help in the way of granting building licences and allocating materials.

Any question of increase in wages and profits must be accompanied by a corresponding increase in production. So again, it is emphasised that the nation cannot afford shorter hours of work unless the change can be shown to increased output. Finally, in paragraph 134, stress is laid upon the need for having some incentive element throughout the wages structure which will be an inducement to a higher rate of productivity. The policy, therefore, is I think quite clear: First, we cannot afford increases in wage levels or shorter hours unless they increase productivity per man year. Second, in the less attractive industries which are undermanned, there should be improvement in conditions to overcome the comparative disadvantages from which they suffer. This must not lead to a competitive race for improvement in all industries, or its purpose will fail. Third, incentive schemes should be introduced into wage systems wherever possible. Fourth, the Government will provide both sides of industry with all the information and assistance possible through the National Joint Advisory Council and otherwise, but they leave the implementation of the policy to the two sides of industry.

Mr. Boothby (Aberdeen and Kincardine Eastern)

Will the right hon. Gentleman say what the incentive must be?

Sir S. Cripps

Piece rate work, bonuses and other incentives, which vary greatly in each industry. The circumstances of today undoubtedly offer a great opportunity for inflationary tendencies to develop. The tremendous pressure of demand, with only a limited capacity to supply, means that there is a tendency to enter a price wages spiral. So far, we have been able largely to avoid this danger, and this has been to a great extent due to the restraint and good sense of the workers and their leaders, who have not pressed unduly their advantageous position in the labour market. It is more than ever necessary in the circumstances disclosed by this White Paper that the restraint and good sense should continue, for if we were to experience a rise in wage levels or a shortening of working hours which seriously reduced the volume or increased the cost, of our production, we should undoubtedly risk a most serious worsening of our position. The policy, as I have said, is broadly agreed by everyone. The difference that exists is as to how it should be put into operation. We believe that the best way to get such a policy operating is to leave its implementation to the leaders of both sides of industry, in the light of a full knowledge of the economic difficulties of the country, and this is the course which we have decided to adopt in the plan for 1947.

So far, I have dealt with this one aspect of implementation of the policy. There are, of course, special steps which I have mentioned with regard to the various basic industries and services which are being taken to implement policy, but when it comes to the general question of the productivity of our industry, we must, of necessity, fall back upon the voluntary efforts of both sides in industry, except where a whole industry can be taken over and reorganised or can be persuaded with Government assistance to embark on a considered scheme of productive improvement. Broadly speaking, the job of production is divided between the management and the worker; the management providing the tools and the worker doing the job. By tools, of course, I mean not merely the machinery, building, finance, and so on, but also the skilled management whether it be works management, production, or personnel.

The condition of maximum production by the worker is determined by the environment in which he works, both physical and psychological. More and more it is coming to be realised that the worker's reaction to his daily surroundings will determine his morale and so his keenness and concentration on his work, and thus his volume of production. Without any mechanical change whatsoever in the present set-up of our industries, we could, undoubtedly, get a considerable increase in production if every worker were happy in, and keen on, his work. It is along these lines that there is still much to be done in the science of management, and it is for that reason that the Government, as part of their plan to increase productivity, have financed, in its initial stages, the British Institute of Management, which will, we hope, help to develop to the highest point possible the management techniques of this country.

Another way in which much saving could be made is by redeployment of labour in our factories. In the past, with a plentiful supply of labour, this matter was not deeply considered by industry as a whole. The trade unions, anxious to keep their people in employment, looked upon it as an advantage if extra hands could be kept in employment, even if they might have been dispensed with by some rearrangement of the work. Now that there will be a shortage and not a surplus of labour, it is essential that we should study the deployment of labour in our factories to see what savings can be made. Such savings would not only conserve our labour reserves, but also reduce prices as well. In the long run, we should look to the raising of our standard of living along the line of reduced prices and stable wages, rather than on the basis of ever increasing wages and prices chasing one another, and so far as past experience goes, prices always winning. One of the uncertain factors in the situation about which there has been much discussion is the change that has taken place in the tempo of production or the rate of output per worker. All sorts of statements have been made as to the fall of production per man hour compared with either the wartime or prewar experience. The fact is that no figures existed upon which any general judgment can be based. I know of individual cases where it has gone up and where it has gone down. Even in two factories working side by side and drawing on the same labour force often wide differences of performance are to be found, influenced, for example, by the degree of skill of management in one factory compared to the other. During the dislocation of reconversion, with the attendant difficulties of the shortage of many raw materials and retooling, it would be surprising if there were not some fall in production per man hour, but it was little good to try to ascertain the facts until that stage had been passed through. We are now instituting inquiries to try to find out what these trends are.

In the concluding paragraphs of the White Paper we stressed the need for getting rid of all those restrictive practices and ideas which may have been applicable to a condition of large scale unemployment, but which have no place in a time of full employment. We need a great degree of flexibility of mind on both sides of industry if we are to adapt our industries to the new economic circumstances. The Government have done their utmost to help along those lines. The production departments are in various ways suitable to the particular industries with which they deal, bringing the workers and employers together to work out ways and means by which each industry can improve its performance in production. The working parties and the Industrial Organisation Bill exemplify how this is being done. The Production Efficiency Department of the Board of Trade and the intensive course of education for foremen and others organised by the Ministry of Labour are other examples and they could be greatly multiplied. It is impossible to compel people to produce. We can persuade them and help them, and that is what the Government are trying to do, but the result will depend upon the response and co-operation of industry as a whole, and it is for that cooperation that we ask for in the White Paper.

I have tried to lay before the House and the country in some detail, and I fear at great length, the main lines of our economic situation as it has developed since the war, and as it now presents itself. There are, of course, many important points upon which I have been unable to touch, but they will, I am sure, be covered up by my right hon. Friends at a later stage in the Debate. There is no doubt that this is one of the most important if not the most important Debate which has ever come before this House. For the first time in this long democratic history, it passes in review, the economic condition of the country, and the steps that should be taken, as is stated in the Motion which I have moved, in co-operation with all sections of the people of the country to overcome the difficulties and make secure the foundations of our industry s as to provide a higher standard of living for our people. Democratic planning to this end is something towards which we must feel our way with care and we must not be driven along the path. upon which some would apparently have us travel of compulsion and direction, or into the jungle of chaotic failure which luxuriated in the aimless and unplanned laissez-faire atmosphere of the period between the two wars. Nothing that has so far happened, leads us to believe that there is any better way than the way which we are now pursuing, and we shall continue upon it with, I hope, the support of the people and the co-operation of both sides of industry, whose help we shall need, and whose assistance we seek.

The picture is undoubtedly a dark one, but it is dark, not because it is hopeless of solution—let no one make that suggestion for one moment—but because the way to its solution is hard, and calls upon us all to make sacrifices of present comfort to the future stability and prosperity of our country. The defeat of our enemies in six years of total war preserved for us our freedom and opened the way to a democratic future of prosperity. But it also left us with the gravest deficiencies and the most tremendous tasks, if we are to take advantage of the opportunity which we had won for ourselves and for others. The first easier stages of reconversion are safely and successfully negotiated, and we have now come face to face with the real difficulties of the situation—difficulties which are not transitory in their nature, but which will require all our most determined efforts to overcome.

This is not the time for a supreme emotional call to service for some short time of emergency as in the days of Dunkirk, but rather for a steady drive like that which followed the Dunkirk period of the war, when the people, never sparing themselves, remorselessly drove forward production on every front, but particularly upon those which were then critical. Today, fuel, power, transport and agriculture are critical fronts, not for the destruction of an enemy but for the preservation of our own future. Never have the people of this island backed, helped and encouraged by the sister nations of our great Commonwealth, failed themselves or the world when, with native intelligence and with high hearts, they have gone out to meet and break through the difficulties that have confronted them. Today, they meet a new challenge, a challenge to their capacity. It is one which is well within their competence but which demands of them renewed efforts and sacrifice. They will meet that challenge as they have met others in the past; and history will recall these months through which we are now passing, as a great opportunity, boldly seized and courageously undertaken by the whole British people.

5.38 p.m.

Mr. Oliver Lyttelton (Aldershot)

We have certainly listened to a very painstaking and conscientious speech by the right hon. and learned Gentleman the President of the Board of Trade. It must have been a considerable feat of endurance to deliver it, but speaking for myself, I would not say that it was a feat of endurance to listen to it. There is much of it, however, which went into many details caused by the fact that the first things have not been put first, but with that I will deal later on. Just about a year ago, the Prime Minister, in reply to a speech which I had made on economic affairs, said: I must say I was a little surprised because I gather that he"— that is I— classed himself amongst the lively and optimistic people…I think it was rather excessively gloomy."—[OFFICIAL REPORT, 27th February, 1946; Vol. 419, c. 1951.] I wonder whether, if the Prime Minister had the opportunity of making that speech again in the light of the present conditions, he would hold the same view.

Personally—and I hope the House will forgive something personal—I have felt increasing anxiety about the future of our country three times in my life. The first was in 1918, in the battles in Flanders, when I thought that three German armies were going to overrun the Channel ports, and the second was when I first became a Minister in 1940, and realised how great our weakness was. I admit that my own personal fears and anxieties in 1918 were relieved by being in the battle itself and seeing the field grey of the German armies, 100 yards ahead and lapping round our flanks, and in 1940 by the incomparable leadership of my right hon. Friend the Leader of the Opposition, whose ringing words will, I believe, only perish with the English language. I am much more anxious now, because the enemy is invisible and intangible, and because the extent of our peril in peace does not bring with it, as it does in war—and for this the Government have to bear a share of the blame—that almost automatic national unity in our race, a race which can be disputatious, awkward, apathetic and even sullen in workaday times, but upon whose ears the alarums of battle and the silver snarling trumpet of battle, has never yet fallen in vain.

We heard the sound of the guns in 1918 and in 1940 and may we be given the hearing to hear the sound of our dangers now. We must all do what we can to help. These are not the times for faction and dialectics. They are times for a sane recognition of our dangers, and if I have a criticism of the right hon. and learned Gentleman's speech I think that it tended to underestimate the dangers, but with him I believe we are not going down. I do not think he underlined the dangers as he should have. This is not the time for carping criticism dictated by party interests, but I think a time for ruthless criticism, and only when we do that shall we be able to recognise our mistakes and set a new course. The White Paper makes a survey of our economic state. It shares the misfortunes which have disarranged many authors and writers before in that if was completely out of date when it was published. The White Paper was assembled, I believe, in October, November and December of last year, drafted in December, emasculated in January and published in February. By the time it came out silence reigned over a whole number of our factories and the hum of power was stilled. We witnessed the largest industrial dislocation which we have had since the General Strike.

There are parts of the survey dealing with 1945 and 1946 which are certainly complacent and tendentious, but I do not wish to stress those parts of the Paper, but rather to praise that part of the diagnosis which is blunt and clear. At least we can agree with any attempt that the Government may make to place a clear diagnosis in front of the people. I express the hope that every instrument of publicity will be used so that every man and woman in the country will be able to see the economic enemy as clearly as we saw and heard and felt the human enemy during the two wars. But in spite of what the right hon. Gentleman has said, it is when we turn to the cures that I confess to a feeling of deep disappointment which is not far from despair. It seems almost as if the diagnosis had been written by a team of competent officials and the part which deals with action by a team of Ministers. All through the document one gets the impression that the horse is being gathered and balanced to jump the fence, and that then, at the last moment, the rider has funked it and the horse has refused. I still believe that the Government, although at long last wishing to tell the people the truth, burk at telling thorn the consequences, and I say that the motto which is written all over the White Paper is, "Let us turn our backs on the future."

If I am not to over-try the patience of the House I must endeavour to concentrate my speech on what I consider to be the essentials, and it may be that the first subject upon which I should touch is that of controls. The House is aware that we on this side think that controls are overdone, that they go down too far, and that they are cumbersome and clogging. We think that although risks may be involved many of the down-the-line controls could be done away with altogether, but I will deal with this later. To suggest that we believe—and it is often suggested—that the Government should not have a central and overall plan for extricating the country from its present difficulties is manifestly absurd and insults our intelligence. To say that the Government must not have a plan would be tantamount to saying we must not have a Government at all, because plans are to Government like eggs are to omelettes or treaties to Foreign Offices; they are the nature of the thing.

But the Government in our circumstances must certainly ration their plans as well as other things. They must plan the key essentials; upon that we are all agreed. But they must also plan them right and must be prepared to enforce the key controls, whatever the consequences, whether they are popular or unpopular, and whether or not they inflict hardship. In the field of economic control the old slogan of Colonel Henderson, the author of "Stonewall Jackson", on which I was brought up as a soldier, remains doubly true: "Centralisation, the last refuge of administrative incompetence." Let me add that to imagine that centralisation by itself co-ordinates, simplifies and hastens action is the last refuge of intellectual ignorance and bewilderment. In my opinion, the Government have an over-elaborate mechanism—which they are making even more elaborate—and no plan. It is not concentrated on the essential strategical controls and orders without which our economy can never be brought into balance.

I do not ask the House to take it as a mere assertion when I say that I think that the Government have a mere elaborate mechanism and no plan. I want, if I may, to demonstrate that they have no plan by one or two examples concerning fuel and power. I cannot go very deeply into this, but I claim that when 2,200,000 men are put out of work, the greatest industrial areas in the country shut down, and almost every householder subjected to miserable discomfort and even hardship, and when we find that at the end we have saved less than one day's output of coal, then that means that there has been no plan. What of an economic plan—the right hon. and learned Gentleman has touched on this point—which, ends up, as it will, in having to ration our only indigenous raw material, namely coal, all of which is produced in our own country, and leaves untouched commodities like tobacco, every shred of which has to be imported from abroad, mostly at the cost of precious dollars? What kind of plan is that?

Then with regard to power. The right hon. and learned Gentleman, with all his forensic skill, tried to take the poison out of the arrow by owning up himself, but he cannot get away with it like that. It is well known that electrical appliances have been springing up all over the country like mushrooms, not made by big firms but chiefly by new manufacturers. The House will remember that in October, 1945, domestic cooking and heating appliances were exempted from Purchase Tax, and electric kettles in 1946. What was the song which Ministers were singing at that time? I will go no further than to quote the Chancellor of the Exchequer—since he is here—as reported at Nottingham in June, 1946: In the home market the country is forging ahead and goods of many kinds are now reaching the shops in greatly increased quantities. Compared with a year ago there is an increase of no less than 530 per cent. in household electrical goods. The right hon. Gentleman did not mention at the time that before the end of the winter there would be no electric power to work these appliances.

Mr. Skeffington-Lodge (Bedford)

It is easy to be clever now.

Mr. Lyttelton

I take that as a compliment.

Mr. Skeffington-Lodge

It was not meant to be such.

Mr. Lyttelton

I am only trying to prove that the right hon. Gentleman was foolish in the past; we are coming to the cleverness in the present. What are the key controls and the overall strategical plans which must be laid down right and upon which all else must depend? The first is the policy of the Government, which has not been mentioned, on the supply of money. The control of the volume of money is the first and most important instrument by which the whole economy of the country can be kept in balance. In fact, it affects every aspect of our national economic life. Let me examine briefly how the Government have used it. First, I think we agree that all wars in more or less degree are financed by inflation; they cannot, in fact, be financed in any other way; but as soon as a war is over it is necessary first to check the momentum with which money is being created, then to stabilise it, and then to move as quickly as possible towards a balanced Budget.

What has happened? I must trouble the House with some figures, and for convenience I add together the two modern forms of money—note circulation and clearing bank deposits. In 1938, the money of those two sorts in circulation amounted to £2,762 million. By January, 1946, that is over a period of seven years and largely due to the war, the money in circulation had risen to £6,077 million. That is, an average yearly increase over the war period of £475 million. But between January, 1946, and January, 1947, it rose by £806 million. In other words, the rate at which bank deposits and notes in circulation had increased fell not far short of twice the average rate during the war, and we are only a month or two away from the end of the second year of peace.

There are three main reasons for this having happened. First, continuing budgetary deficits on a huge scale, some of which are due to subsidies; second, a cheap money policy carried to excess; and, third, nationalisation, the effects of which have not yet been fully felt. Nationalisation has the effect of turning inert, unspendable assets into quick purchasing power. For example, a shaft, a head-frame and a washing plant in a colliery become over-night, as the result of the Government's nationalisation policy, a Government security which is quickly realisable. As I have said, it makes inert assets quick. One of the effects of all this has been a very sharp fall in the value of sterling abroad. We must just face this unpleasant fact. The extent of it' cannot be measured because the control of exchange and the pegged rates disguise the effect. I am not going to support this statement by actual figures unless I am pressed to do so. If we are to fight off the enemies which are surrounding us this fatal process must be reversed, and reversing it is going to be a much harder and much more painful task than if the Government had produced their economic survey and had had some kind of economic policy three months after they came into Office. And there was no reason why this kind of survey should not have been produced or such a policy formed.

Reversing the process means, above all, a reduction in Government expenditure. It means moving towards a balanced Budget as quickly as we can, and it means taxes designed to drive labour and resources away from the unessential and towards the essential industries and occupations. The present policy can only lead to one of two results. Either controlled inflation—and we have all to recognise that it is controlled inflation—will get out of hand and become uncontrolled, or further price controls, further subsidies, further rationing, and further licences will become necessary in order to keep the exiguous supply of goods away from the bloated supply of money. In that process of putting down further controls the last remnant of the ingenuity, liveliness and buoyancy of the British people will be finally suppressed. We have already gone a long way towards that dungeon. I make no apologies for talking on these financial, questions, because the idea that we can have an economic and manpower survey in isolation from a financial survey is quite nonsensical.

At this point a word is necessary about food subsidies, the cost of living and wage levels. I think I am right in saying that when the Coalition Government first introduced food subsidies they were about £50 million a year compared with £450 million today. Sir Kingsley Wood, who was then Chancellor of the Exchequer, said: I put this forward as a most important development of policy and I hope we may thus create conditions which will enable the wages situation to be held about where it is now Since the beginning of the war industrial wages have risen by rather more than 65 per cent., and food prices by 22 per cent. So some stark facts have to be faced. If this subsidy is allowed to grow uncontrolled it will end by defeating the very object at which it is aimed. A general inflation, to which this subsidy will make a great contribution, will so lower the purchasing power of money that the advantages of a low, pegged price of food will be swept away by huge rises in the price of other necessities, houses, clothes, boots and shoes, household linen, pots and pans, and so on. So to tackle the food subsidies is, in the long run, a protection to the people.

Unfortunately, here the Government were faced with a dilemma. What about the salaried classes, the clerk and the professor and the pensioners, whose salaries and pensions have not risen like industrial wages? What, for instance, is to happen to the small investor, who drew his income from shares in railway companies? So far from his having had a 65 per cent. rise in his income, his income has actually been halved by the compensation which is to be given him by the Chancellor. What will happen to him? We ask the Government what is the answer. They have to find the answer, but I can help them to this extent by saying that, in finding the answer, I do not for one moment suggest that the milk subsidy should be lowered. That is a thing which I think we all wish to see maintained at its present rate.

The most powerful instrument for restoring our battered economy is restricting the growth of money and ceasing to budget for deficits on the present scale. Too much money chasing too few goods, in the Chancellor's words. It is true; but it does not appear to have occurred to the Government that the first thing to do is to adopt the method of creating less money and progressively releasing sources of production to swell the volume of goods. In short, the answer is to make less money and more goods. The more money is created, the more controls over goods and services will be necessary. Create less money, and we will be able to reduce controls, and reduced controls will mean more goods. The last act of the Government's tragedy is full of dramatic irony: the only thing in the Socialist state which is cheap and plentiful is money, everything else is scarce and dear. The Government, like the Meteorological Office, has entirely misread the economic weather. They were on the crest of a scarcity boon, which calls for a check in the creation of money, but the Government have expanded where they should contract and have contracted where they should expand.

I turn to the next control, which is not at all a desirable form of control, but which is imposed upon us by our straitened condition—the control of foreign exchange. No one, I think, would contend that, today, we should allow anyone to spend dollars abroad as he likes or invest money abroad as he likes by selling sterling. Our resources are far too slender and are being diminished too fast to allow us to make any such freedom possible. But, if the Government are to ration foreign exchange, then they must inevitably assume some responsibility for seeing that that foreign exchange is wisely spent. This is common ground. The wrong way to do it, except, possibly, for certain foodstuffs, is by bulk purchase by a central authority and allocation by the Government down to the individual buyer and factor.

The result of this, despite what was said by the right hon. and learned Gentleman, is an ever-increasing army of officials, dealing with an ever-increasing range of commodities and with an ever-increasing ignorance of what they are doing. It is the operation of this policy which has meant the enormous rise in the number of people in the Government service. The Civil Service embraces three times the numbers employed in the coalmining industry, and, even if such numbers help production, instead of hindering, which they most assuredly do, we cannot afford it. We are continually saying that we are short of manpower. What is the right way—and I am talking about imported raw materials from abroad? It is, first, to open the commodity exchanges which are now closed and to ration their use of foreign exchange. This is what has happened in rubber. The fact is that the price mechanism, without the help of which no speedy distribution can ever be made, begins to operate.

Where very scarce raw materials, including those originating in this country, have to be dealt with, where there were no commodity exchanges in the past, the right thing for the Government to do is to allocate the exchange, in the one case, or the raw materials, in the other, in accordance with a rather simple statistical, or, if they like, "hit or miss," scheme. Let the industries through voluntary bodies, whether trade associations, the joint industrial councils or the right hon. and learned Gentleman's new found development councils, use them to redistribute raw materials to industry factory by factory. In these matters, it is a case of devolve or die—die strangulated by red tape or smothered in a bolster of papers—and that is just what is happening. The Government are taking just the opposite course by imposing more controls. I see an hon. Gentleman below the Gangway nodding his head. No doubt he will have something to say on that.

The building of a power station, to give one example, which is described by the Government as work of the highest priority, involves permits, licences, clearances and priorities from no fewer than eight different Ministries and public authorities, all at war with themselves and only united in carrying on a war with the applicants for the licences. The average period—and I have been at some pains to check this up—taken to clear such a project is little less than 12 months. That has nothing to do with the manufacture of equipment; it is the time which is taken to clear the project through the Elizabethan maze of Government Departments, priorities, forms and what-not.

I next turn to the subject of manpower. Today, I confess that I am more haunted by the fear of our production being held up, by shortages of raw materials, or a few of them, than I am by actual shortage of labour. I agree with the right hon. and learned Gentleman that, if and when we recover from the disaster of fuel and power, we shall again be faced with a shortage of manpower and the problem of the unpopular industries. It is the problem of how to act in a condition of full employment, when there are more jobs to do than there are men and women to do them, and the problem of how we are to keep up the supply of labour in the unpopular industries. We on this side of the House refuse to accept the direction of labour as a solution, and we have always done so. The last remnants of democratic institutions would follow freedom of discussion and would go by the board if we had to revert to the direction of labour. We rejected it, just as the Government have done, but, once rejected, as it must be, that is the end of economic planning of the sort to which this Government is wedded and in the sense in which those words are popularly used. The Government have at last had the courage in the White Paper, to own up to this inescapable and unpleasant fact. What does the White Paper say? Indeed, the task of directing by democratic methods "— I interpolate that that means without direction of labour— an economic system as large and complex as ours is far beyond the power of any Government machine working by itself, no matter how efficient it may be. That, again, is a kind of economic planning which the right hon. and learned Gentleman has been describing at very great length as quite impossible in a democracy. That is the point of view which my hon. Friends and I have always taken up. We can only do these things by co-operation, by persuading and not, by compulsion, and that is the antithesis of the sort of planning which the right hon. and learned Gentleman has been elaborating.

I return to the question of how labour is to be wisely distributed and used in the most essential task in the condition for which we all devoutly hope—the condition of full employment. The White Paper gives no answer, at least, on the surface. I have very closely studied it and the pronouncements of the right hon. and learned Gentleman, and I have come to the conclusion that the Government's answer is to bring about a redistribution of labour by the use of the allocation of fuel and raw materials as the instrument. We are told that certain industries should have priorities in fuel and raw materials, since, admittedly, there are not enough raw materials or fuel to go round. What does this mean in unvarnished terms? It means that the President of the Board of Trade intends to create artificial unemployment in certain industries by cutting down their allocations of fuel and raw materials in order that the law of supply and demand may begin to operate and may lead to a redistribution of labour.

That is a policy of despair. Every one, Conservative, Liberal, or Socialist, deplores a condition when the distribution of labour is forced upon us by only one thing —fear of unemployment. That is a bad social condition. We are all agreed about that. Yet, here is a Socialist Government who have rightly rejected the direction of labour, saying that we can bring about redistribution by this particular means. I warn the President of the Board of Trade here and now that it will not work, that it will fail. What that means is that workers in the light industries, and women in particular, are thrown out of work in order to help the priority industries which it is desired to man up and, particularly, the mines and foundries. Perhaps some of these workers will find their way back into the textile industry. I say that to use the allocation of fuel and raw materials as a system of redistribution is the antithesis of all orderly production. It is the method of using the utmost hardship with the minimum of efficiency.

What is the answer? Is the answer a wages policy? Such a policy would have to be based on a controlled basic wage, while permitting the basic rate to rise above the general level in the unpopular industries, but such a system has many disadvantages. It is restrictive, as all the Government's policies have so far turned out to be. It will doubtless be resisted, as any stability in wages has been resisted, by the trade unions, and in the face of any threatening grimace by the trade unions the Government are always in full flight. There remains the policy of "tit bits" to which the Government are committed. By this policy, better rations and more houses are given to the unpopular industries. What is the Government's policy? Is this all, or are we to be told more about it? At least, I can tell the Government that I know that mal-distribution of labour is caused primarily by an unsound monetary policy, but, after that, one of the keys is, no doubt, houses, and I suggest to the Government that they might get after the housing programme by properly organising the building industry. The building industry can build many more houses at far lower costs in labour than it is doing at the present time. At the present moment, the building industry is hopelessly out of phase and hopelessly hamstrung by the Ministry of Health, and the Government know it.

The next subject upon which I wish to touch is the export trade. Here, the right hon. Gentleman has not earned the repu- tation of being realistic. Let me warn the Government that the figure of 140 per cent. for the export trade of 1947 is manifestly unattainable.

Sir S. Cripps

That is not the figure. If the right hon. Gentleman will look at the White Paper, he will see that we hope to achieve that figure by the end of, 1947.

Mr. Lyttelton

Yes, to achieve a rate of 140 per cent. by the end of the year would be more accurate. But to expect to reach that figure is just loose optimism. The Government under-rate the effect of the industrial shut down, and the effect of getting industry out of phase, which they have succeeded in doing by a badly arranged system of switch on, just as by the disastrous and panicky system of switch off. The only way to have done it would have been to have, say, three days' work all over the country, instead of a five-day week here and a no-day week there, The result is that industries are out of phase. There has also been a parsimonious allocation of solid fuel to industry.

As I have said, the White Paper, when published, was out of date. I think that some piece of mechanism has gone wrong, and that some official has not altered the figure of 140 per cent. towards the end of the year, as he should have done. That figure cannot be attained now; and the White Paper almost admits it. The Government point out that there can be no increase of exports in the first half of 1947, and that, during the whole year, there can be no increase in steel or textile exports. Therefore, special reliance has to be placed on the engineering, vehicle, chemical and miscellaneous groups. If these groups are to make up the deficiencies in the exports from other industries, they will have to increase in the following way. These figures are empirical. Taking 1938 as 100, machinery will have to go from 147, the rate in the second quarter of 1946, to 219 in the second half of 1947; chemicals from 161 to 235; vehicles from 177 to 251; and miscellaneous from 122 to 178.

I do not regard those figures as practical. I would remind the House that the figures of the Government target—confessed to by the right hon. Gentleman—have been arrived at by a process of deduction. The Government have begun by fixing what they think is the dangerous level of borrowing—£350million—and have worked back from that level to try to determine what would get them out of their mess in the international balance of payments. In order to achieve the general level of exports aimed at, for instance, in 1948—in a normal year—it would mean that we, a small island of 45 million people, should have to do about 35 per cent. of the export business of the whole world. Turning back to 1947, and faced by such an intractable problem and, as I think, unattainable target, it is indeed astounding to learn that export targets are now, for the first time, being worked out industry by industry, and will be discussed with them shortly. But why only now? The President of the Board of Trade and the Chancellor of the Exchequer—

Sir S. Cripps

The right hon. Gentleman knows quite well that they have all been worked out on this new basis.

Mr. Lyttelton

I know quite well that the idea that an actual industrial target must be worked out industry by industry has always been resisted. For instance, the export groups have been abolished, and nobody has any idea what their export targets are expected to be. They may reach the Board of Trade, but they never reach industry.

The next matter on which I wish to touch is that of the school-leaving age. Nothing is more repugnant to my feelings than to have to delay raising the School-leaving age. [Laughter.] The hon. Member is not entitled to question other people's sincerity; he is only entitled to question their sense.

Mr. Stokes (Ipswich)

Why did not the right hon. Gentleman's party propose raising the school-leaving age years ago?

Mr. Lyttelton

I can only say what my feelings are, and that it is repugnant to my ideal—and it is an ideal—which I embrace with the greatest sincerity. I also feel, if one likes to take a more mundane thing, that, for industrial reasons, it is something which, one day, is going to pay us a great national dividend. I do not ask the hon. Member for Ipswich (Mr. Stokes) to believe that, but it happens to be my point of view, and I am entitled to put it to the House. Having said that, I agree that there is probably a very good practical argument against raising the school-leaving age just now, but we must have more information before we can make up our minds on this point. By raising the school- leaving age in 1947—and this is one part of it—would it simply mean increasing the size of the classes, and overcrowding the schools? Have we got the men and materials at this moment with which to build the schools, and have we got the teachers? [An HON. MEMBER: "And the text books."] Yes, and the text books. If we were to delay this highly desirable step, are we sure—and this is the other side of it—that we can absorb into industry this year all those youths and girls when industry has been so severely dislocated, and when the present restrictions on fuel and power are so great? We ask for further information from the Government on these matters.

Mr. Kenneth Lindsay (Combined English Universities)

I believe that last week the right hon. Member for Saffron Walden (Mr. R. A. Butler) endorsed the raising of the school-leaving age. Am I to understand from what the right hon. Gentleman has just said that, before he agrees to the principle, he wants further facts?

Mr. Lyttelton

I am taking the simple point of view that, before making up my mind to do something very repugnant to me, I am entitled to know from the Government all the facts because, when they are disclosed, I may, or may not, change my mind.

I will now come to the question of coal, but I will leave a detailed examination of the coal prospects and problems to my right hon. Friend the senior Member for the City of London (Sir A. Duncan). The White Paper states that, at a pinch, we could do without new houses—I would remark in passing that, industrially, that is nonsense—and without holidays—that is nearer to sense—but that we cannot live without coal and power. After this startling discovery, why is the target set so low as 200 million tons? If this is attained, we shall be on the narrowest margin, and, although the Government say that our recent experiences will not be repeated, I believe that they will, unless that target is raised. The recent experiences may not be repeated for a certain length of time, but, unless the target is raised, they certainly will be, sooner or later.

It is wrong that the whole future of industry should hang on such a thread, and that we should all depend upon the ability or the willingness of the coalmining industry to reach that target. Should we not have some insurance policy, by im- porting a few million tons of coal? I think that we should put our pride into our pockets and take that step now. If right hon. Gentlemen opposite are going to say that coal is unobtainable, I can only tell them that, if they used some of the resources of private enterprise, they would be able to get it. I say that we must have an insurance policy.

I must now refer to the output per man shift, which the Government praise so highly. We all agree that the effort made to increase production in exceptional weather has certainly been great, and it shows what might have been attained in normal weather. But the plain fact is that, whether or not output per man shift is now praiseworthy, it is far below what it was, and far below what it needs to be, if we are to survive. I must also say that today's figures of output per man shift are not strictly comparable with the output per man shift before the war, owing to the great fall that has taken place in the quality of saleable coal, and which has had the affect, whether by design or not, of swelling the figures.

There remain only two other subjects on which I propose to speak—incentive and hours. We all feel that the answer to the problem is more production. We suspect that it may be held back—we hope only temporarily—by the shortage of fuel and material. We know that, if these difficulties are overcome, we shall have a shortage of manpower. Therefore, the subject of incentive becomes one of vital importance. I said earlier that we must move towards a balanced Budget, and, in the interests of incentive, some reduction in taxation is imperative. If we cannot do both, we shall have to content ourselves with a mixture of moving by reducing taxation somewhat, and of moving not so quickly to the balanced Budget, but move towards it we must.

All engaged in industry know that the lack of incentive is one of our great difficulties. We should begin by revising the system of P.A.Y.E. We have to raise large sums of money from the masses of wage earners, but, as it works at the moment, P.A.Y.E., so to speak, lays the emphasis on the extra hours and overtime—on the last part of production. The tax requires spreading and modulating. On the other hand, one of the great difficulties in industry today is how to provide incentive for those who are selected, because of their ability and experience, for the highest posts. In the present situation, it is sheer nonsense that, when a man rises from a good position to one at the top of his profession, he can only be given £150 a year more purchasing power. That is simply ridiculous, and, of course, it is sheer folly, for the sake of a small sum compared with the total Budget, to kill the incentive of men whose brains and energy have, in the past, and may, in the future, rescue this country from its difficulties. Yet the Chancellor of the Exchequer recently put back a reduction of Income Tax to the Surtax payer, and, by saving £7 million on a Budget of little less than £4,000 million, probably cost the country many times that sum in loss of incentive.

My last point is output per man year. If hon. Members will turn to the White Paper, they will see that in each of the paragraphs—"Shipbuilding" on page 23, "Agriculture" at the top of page 23, and "Building" at the bottom of page 24—stress is laid upon the need for increasing output per man year, and those arguments are all gathered together again in paragraph 132, which is headed "Output Per Man Year." Among other things, this last paragraph states that, in the long view, output per man year is the only way to expand output and the standard of living. "In the long view," is the correct expression, and, in the long view, this is incontrovertible. But, while the White Paper everywhere stresses the need for increased production per man year, it is silent as to how this is to be achieved. That is a startling, if not to say disastrous, omission.

One way of gaining extra production when up against it is by working rather longer hours. I do not say that is the only way, but I do say it. is the only sure way when one is in a jam. Five per cent. extra work by all of us would be equivalent to the addition of 900,000 workers to our industrial labour force. Where do the Government stand on this all important question? There was not a word about it in the right hon. and learned Gentleman's speech; there were only references to more departmental planning officers, and no concentration on the essentials. Notwithstanding that, by everybody's admission, coal is the conductor which sets the tempo for the industrial orchestra, do the Minister of Fuel and Power and the National Coal Board still persist in their policy of reducing the week in the coalmining industry to five days?

Mr. Ellis Smith (Stoke)

Yes.

Mr. Lyttelton

What is their attitude to demands for a shorter working week in the docks, on the railways and in other essential services? Where do the trade unions stand on this matter? We shall press for an answer and we are entitled to get one. I greatly fear that the Government will give way under the pressure for shorter hours, and thus discard not the only way, but the only sure way, of raising those industries upon which all others depend. Here again we shall find one of those ironies which seem to beset Socialist policy.

Mr. O'Brien (Nottingham, West) rose—

Mr. Lyttelton

If the newspaper reports are correct, the Government—

Mr. George Brown (Belper)

The right hon. Gentleman is too busy reading.

Mr. Lyttelton

That was a most discourteous interruption.

Mr. G. Brown

An hon. Member wanted to ask a question.

Mr. O'Brien

Does the right hon. Gentleman, in his question to the Front Bench, imply that the arrangements made between both sides of industry should be disregarded?

Mr. Lyttelton

I wish to know what is the Government's attitude regarding this matter, because we have had a most flimsy statement from the right hon. and learned Gentleman on the subject. He has only stated that he believes in shorter hours if they raise output. That is a nonsensical statement. Where do the Government stand on this matter? Do they intend to persist, in the face of this national emergency, in reducing the days in the coalmining industry to five? I do not think we can afford it. I do not mind whether I am considered to be reactionary or not. I just state the fact that I do not believe we can afford it.

Sir S. Cripps

In paragraph 136 of the White Paper, it states categorically what the position is: Action which serves to reduce output per man-year in any industry is directly endangering the attainment of these objectives. The nation cannot afford shorter hours of work unless these can be shown to increase output per man-year.

Mr. Lyttelton

I accept the right hon. and learned Gentleman's point. Therefore, I alter my question. Will he kindly place before the House a report by the National Coal Board upon what effect a five-day week will have upon the output of coal—and will he publish not only the majority report but the minority report? Will he do that?

Sir S. Cripps

I know nothing of any such report, either a majority or a minority report.

Mr. Lyttelton

It is rather infelicitous to intervene then. Can the Minister of Fuel and Power be brought here? If the right hon. and learned Gentleman takes the view that nothing should be done which will reduce output, can we have a report from the National Coal Board—both a majority and a minority report—on what the effects on production will be if the week is reduced to five days in May? The policy of shorter hours will provide another piece of ironical Socialist policy. If the newspaper reports are correct, the Government will follow a policy of shorter hours and more leisure, and will prevent those who gain the leisure from having any opportunity of enjoying it. The Government are credited with the intention of forbidding mid-week sport, including racing, cricket and football. This policy of shorter hours will match the policy of creating more money on the one hand and creating less goods on which one can spend it on the other hand. Now the Government are going to create more leisure and decrease pleasure, treating like a lot of naughty school children the population upon whose honour we have to depend over fuel rationing and upon whose willingness to produce we have to depend for our very existence. There are to be no shirts in Merrie England except hair shirts.

I have detained the House over long. [HON. MEMBERS: "Hear, hear."] Again I thank hon. Members opposite for the courtesy with which they have received that statement. We on this side of the House listened without interruption to the right hon. and learned Gentleman the President of the Board of Trade for two hours. I have now been on my feet for 45 minutes, and yet so accustomed are hon. Members opposite to being discourteous that they cannot even pass that remark without jeers. I have detained the House over long. By "over long" I mean nearly half as long as the right hon. and learned Gentleman. My excuse for all this is the wide nature of the subject and the really gripping anxiety which I feel for the life of this country. National bankruptcy is not far away. That is a hard statement. If our power to buy abroad remains where it is, and we either cannot or feel that we should not borrow again, our standard of life will drop by perhaps 40 per cent. Too often the man in the street thinks about international balances of payments and standards of life as if they were abstractions existing only in the minds of the banker and the economist. Too seldom does he understand that the standard of life means what we eat. what fuel we have to warm ourselves and to cook our food, what clothes we wear and what shelter we have over our heads.

At the end of these long economic dissertations by the right hon. and learned Gentleman and myself a simple and human issue emerges. Because it is simple and human, it is perhaps comforting. We must all work harder, or harder and longer. Those who were Ministers in the Coalition Government—Labour, Liberal or Conservative—in those days of 1940 and under that historic leadership, have some idea of what the British people can do when they are told and when they are roused. Let us tell them and let us rouse them. We all agree on our dangers, but not all upon the means to combat them. I shall conclude by reading paragraph 64 of the White Paper. It says: Those things which are fundamental to our national life must come first. Does that throw a message to the Treasury Bench? The danger in our present situation is that there is so much that we want to do and so much that seems important that too little effort will be concentrated on the things that are really vital. If that represents a change of heart by His Majesty's Government we welcome it, but the Government must follow the change of heart with a change of policy and cease putting Z at the. top of the alphabet. I have as unshakable a belief as anyone else in this House in the future of this country and in the steadfastness and courage of its people. If only the people can be made to realise, which the right hon. and learned Gentleman has not done, the dread dangers which are crowding in upon us from every side, they will one day triumph again. Any practical step, however hard, that leads us out of our troubles will have the support of His Majesty's Opposition. What we will not tolerate are indecision and the placing of sectional interests in front of national interests.

6.40 p.m.

Mr. David Thomas (Aberdare)

I consider it a privilege to have the honour of making my first contribution in this democratic institution on this historic clay. As a comparatively new Member, I would like to offer my personal congratulations to my right hon. and learned Friend the President of the Board of Trade upon his very brilliant address, and for the analysis concerning our present position. I know that many Members wish to speak during this Debate and, therefore, I will try to confine my remarks to a short space of time. The Government are to be congratulated on the two White Papers which they have issued concerning the present position. There is no doubt that, as a country, we have a tremendous task confronting us. But, having emerged from a major war, due to our tenacity, courage and determination, I see no reason why we cannot get through this crisis in the same manner and thus win the second Battle of Britain. The Economic Survey states: Coal is the basis of our whole programme, and that means, as each one of us realises, that without coal in this country we, as an industrial nation, are doomed. I would say, as the Minister of Fuel and Power stated in the recent Coal Debate, that the coal crisis from which we are emerging is a blessing in disguise, and I think every one of us will have learned the lesson. The mines are now nationalised and there is a better spirit prevailing throughout the whole of the British coalfields. The officials and men are co-operating today as they have never done before, and in support of that statement I would point out that we have had an increase in output over the past 12. months.

During the years between the two wars, and indeed prior to 1914, labour in the coal industry was regarded as being extremely cheap. That is to say, the men were a reservoir of unemployables, and when such a state of affairs exists, the product which those men produce is sold at a cheap rate and at the expense of their own livelihood. Now there is a marked change. There is not sufficient manpower in the industry, and without men we cannot get coal. This will result in the whole of the other industries coming to a standstill, as was seen recently. It is not possible in such a state of affairs to provide a livelihood for 40 million people. In 1942 a committee sat and reported in June of that year, concerning coal as follows: If output is to be maintained, still more if it must be increased, the labour force in the industry must be prevented from shrinking any further. In spite of the fact that the Essential Work Order has been applied to the industry and that men are not therefore at liberty to leave at will, there is a wastage of 25,000 per annum. I will now proceed to give a few figures, because I believe they are essential when considering this very grave subject. For the years 1942, 1943, 1944, 1945 and 1946, these were the wastage figures in the mining industry: 32,441, 37,998, 44,715, 66,019, 76,134. As has already been stated, the Government of the day made a grave blunder during the war period, at the time of the fall of France, when they took so many men out of the industry. It is to be hoped that at any rate now it is not too late, and that we can adequately man the pits again.

I come from a coal mining district, and therefore can claim to know the problems of the miners. We are asked, from time to time: Why the reluctance on the part of boys to enter the mines? The reply is this. In South Wales there are thousands suffering from pneumoconiosis and silicosis, and other industrial diseases. These men are no longer fit for arduous work. When we ask ourselves what reward these men get after giving the best years of their lives to the coal mining industry, I should say the reward is deplorable. A single man, totally disabled and unfit for any work, who is suffering from these terrible complaints, gets 35s. per week for the first 13 weeks, after which he gets 40s. per week. A married man gets 40s. and 50s. a week respectively. I do not think any hon. Member of this House would say that those are adequate allowances for these disabled workmen.

I am wondering whether, in order to give some incentive to those who are at work at the moment, the Government could bring into operation the provisions in the National Insurance (Industrial Injuries) Act, instead of waiting until the vesting date. If they did that, the men who are now working would say: "If I have to give up due to ill health, I will be provided for in a better measure than what is provided at present." The parents of the boys in the mining valleys know of this scourge, and ask: "Why should the country always expect our boys to go into the mines and dig the coal on which the prosperity of the whole nation rests? Let the other boys come along." That will not solve our great problem. It would, however, tend to solve it if the National Coal Board and the Government took a bigger interest in allaying the dust in all the coal mines of Great Britain. The position is terrible in the whole of South Wales. Week after week men are coming out suffering with these complaints, and are confronted with compensation, or partial compensation, and unemployment benefit. While such conditions prevail the boys say: "We are not going to go down the mines. We have seen our fathers, our uncles, and other relatives come out from the mines in the prime years of life." If we want boys or men to go into the mines we must make the conditions as attractive as possible.

Much has been done by the National Coal Board and the men's organisations to allay the dust by introducing water cutting, water infusion and spraying. But that has not cured the problem. Water cutting certainly allays the dust made by the machine, but immediately the collier starts hewing the coal there are clouds of dust throughout the whole of the conveyor face, and the man who is working at the bottom end of the conveyor face gets the whole of the dust from the top end of the face. There is still much that could be done, because an all-out effort has not yet been made to cure these very serious complaints.

I now wish to say a few words about those who are suspended from the mining industry as the result of these disablements. In our valley, Aberdare Valley, there are thousands who are suffering from these complaints, standing at the employment exchange waiting for something to come along. Of course, promises have been made. I am not blaming the Government too much for this, because I know they have had a tremendous task ever since they have been in office. But having made promises to erect factories to employ the disabled miners, some evidence ought now to be given that the Government mean to fulfil those pledges. These men cannot be expected to leave home; they need constant care and attention from their mothers or their wives. They say: "We ought to be provided with work here." I go so far as to say that in this grave period, when there is a shortage of manpower, to keep thousands of men idle in South Wales is a scandal. If we were at war, it would take but very little time to erect a dozen factories, place the machines in those factories, and employ these men. In fact, it was done during the war, If that could be done during the war, it can be done again.

I now deal with the miner who is at work. From time to time we have heard about the output per man-shift—the output per man-shift throughout the colliery, at the face, and so on. The output per man-shift at the face is taken to be somewhere in the region of 2.75 tons per shift. That is rather misleading to those who are not conversant with the mining industry, because "face worker" includes the collier, the packer and the repairer, etc.—those who are engaged mainly on the face in keeping the face open. If, however, we ask how much the individual collier hews per shift, we in the coal fields know full well that an individual collier on a machine cut conveyor face can produce up to 12 and 13 tons per shift. I do not say every collier performs that task. Where the coal is hand cut each individual, in some collieries, produces an output of five tons per day. I just point out those few figures in order that we can appreciate exactly what the collier is doing.

We are rather hesitant about giving the miner sufficient food in order that he can perform his task adequately. One of the tasks of the Government, which they should face without any hesitation, is to feed the miners of this country as well as we fed the men who served so valiantly in the Forces during the war. A farmer would not dream of endeavouring to work a horse unless he fed it well. How much more is the value of human beings? I say the miner deserves very much more than he gets. If there are any complaints from other sections of the community, my answer is: "You can have the same conditions if you go down the mines." It is only right that I should also point out to the House that, were it not for the miners' efforts during the last year the crisis would have been upon us a few months before it actually commenced. In the period 5th May, 1945, to 2nd February, 1946, an output of 131,399,000 tons of coal was produced. In the period 4th May, 1946, to February, 1947, 139,517,000 tons of coal was produced. Were it not for that increase of over 8 millions tons we should have had the crisis long ago. This increase was obtained with 3,400 fewer miners. The miners deserve great praise for this effort.

In paragraph 119 of the White Paper the Government state that the target for 1947 is 200 million tons. They also say that we cannot afford to fail on this objective as all depends on coal. I point out that this output of 200 million tons has to be obtained in a period of 49 weeks, and not 52 weeks, because approximately three weeks for holidays, and so on, have to come out of the 52. Therefore, there will have to be an output of over four million tons per week in order to attain the target. The average weekly output of saleable coal for the first seven weeks of this year was 3,570,313: that is 429,000 odd per week short of the target. I have not, of course, included open-cast mining.

I am afraid I have taken too much time already, but I should like to stress one other point which concerns the miner very much. It relates to the Control of Engagement Order. I live amongst miners, and have lived and worked amongst them all my life. They ask me: "Why should we be tied to the pits while other workers, except agricultural workers, are able to choose their own jobs?" It is true, that miners can give 14 days' notice. But immediately the notice expires they are directed by the exchange to another pit, and they cannot possibly get out except by reason of illness or some other incapacity. I would ask the Government very respectfully to lift this Order, and allow the miner the same freedom as all other workers have, except the agricultural worker—and I would certainly allow him that freedom as well. That does not mean that the miners would run out from the pits. Provided the mines are made as attractive as possible, the wages in the industry increased, and the conditions improved far beyond what they are at the moment, there is every possibility that the men will remain at their tasks.

I also want to refer to a set of figures which, I think, are exceedingly important. The manpower at December 1946 was officially said to be 692,000, and the target figure for the end of the year 1947, 730,000; an increase of 38,000. The wastage figure is not included in the 38,000, so far as I can gather; but, assuming that the wastage is only 25,000—and that is a very modest figure—it means that between now and December, 1947, the Government have to find 63,000 men for the mines—in my view, a colossal figure. As I stated at the commencement, if every individual in the land realises the situation in which we find ourselves it is possible for us to get through in a very satisfactory manner. The miner these days is the Atlas of this country. Unless assistance is forthcoming very soon he will crash under his burden, and bring down with him, the whole economic structure of the country. The spotlight has been on this industry for years, due to the fact that all the statistics relating to the mining industry have always been published. Other industries do not publish their statistics. I would say that the spotlight now should be turned on all the rest of us, especially upon those who are not producing, or not performing any work. Those are the idlers: They toil not neither do they spin. I thank you, Mr. Speaker, for having given me the opportunity of speaking in this important Debate.

7.3 p.m.

Mr. Quintin Hogg (Oxford)

I, too, should like to ask the indulgence of the House, in case, owing to a physical disability, my voice does not support the task which is imposed upon it. I feel I cannot begin my remarks on the Motion on the Order Paper without congratulating the hon. Member for Aberdare (Mr. D. Thomas) upon a maiden speech which, I am sure, was appreciated in all quarters of the House. The hon. Member has, if he will forgive me for saying so, a high standard to keep up, not only because of his present effort, but because of the well-loved and popular figure whom he succeeds in this House. He will, I know, be glad to carry back to his constituency the feeling that his first words—which are always very difficult words—have scored a success, and that he is now well launched upon his Parliamentary career. The part of the hon. Member's speech I liked best was the beginning, in which he showed such an evident patriotism and determination that we should succeed in averting the worst consequences of our present difficulties. I am sure that his sentiments will be echoed on this side of the House.

It is, therefore, in no spirit of despair that I should like to begin on a somewhat sombre note. One of the greatest tragedies, certainly in my lifetime, has been the economic and social history of France from the years 1919 to 1939. There was a country which had secured the admiration of the whole world by the mere force of the spirit with which it supported, during the great war, more than one would have thought it possible to have borne; but then, at the end victorious, fell down in the years of peace which followed, and showed, despite its victorious efforts in the war of 1914–18, all the marks of a defeated Power. I am perfectly certain that we, in 1945, were faced with exactly the same kind of challenge—and it faces us still today—that faced France in 1919.

The question which we have to answer, and which we must answer, is whether, despite our victory, we are, none the less, going to show ourselves a conquered nation. The marks of a conquered nation are these: a dwindling and disillusioned population; a sharp fall in the material standards of existence; an increasing exacerbation in sectional antagonism; a gradually lowering standard of public and private honour; and an increasing sense of frustration, and loss of purpose and spiritual mission. I dare say that there is no one in this House who would not answer to that challenge a determined "No," whatever his political opinions might be. But I am none the less persuaded, that what matters is not whether we answer "No," but how we answer "No." What we must ask ourselves at this present time, before it is too late, is not whether we desire this country to answer that question successfully, but whether we can see any honest grounds for believing that it is now being answered successfully; on what basis we can see any hope in the policy which is being proposed to that end.

Now, I cannot but note a marked divergence in the White Paper between the degree of clarity with which it diagnoses our complaint, and the almost complete absence of any adequate, practical expedient prescribed to cure it. I do not think that that is coincidence; because, as it seems to me, and as I shall endeavour to show the House, there is a fundamental divergence and opposition between the basic ideology, philosophy and policy of the Labour Party and what requires to be clone now in order to avoid even worse economic difficulties than those with which we have just been passing.

The publication of the White Paper marks an end of the Government's attempt to govern in accordance with the mandate of 1945. The policy which they now pursue is fundamentally different, and, as I hope to show, totally inconsistent. The Mandate of 1945 was based on a document which we have heard quoted from time to time. The policy which it is now proposed to pursue is based upon certain precepts which were, indeed, being preached in 1945, but which were being preached, not by the party opposite, but, by the Conservative Party at the Election, and amongst the Conservative Party, I think I can say, notably amongst those Members of it who had formed the Tory Reform Committee. The need for national unity, the insistence upon the over-riding importance of the balance of payments, a demand for greater productivity and the re-equipment of our industry and even, to quote verbally, insistence upon such elementary principles of common sense as having a practical approach and the necessity for first things first, were emphasised in the controversial politics of the day, but this emphasis was contained in a series of articles in the "Economist and a series of pamphlets which my hon Friends and I published to the community at that time.

What the Labour Party laid down in "Let us Face the Future" was something fundamentally inconsistent with what is now proposed. The right hon. and learned Gentleman who opened the Debate, in a speech on which he will perhaps allow me to congratulate him, both for its lucidity and for the great physical strain which it must have put upon him, complained that an injustice was being done to him and to his Friends by the allegation which was made against them that the White Paper and "Let us Face the Future" were two inconsistent documents. But they are inconsistent. The policy of the White Paper is based upon the need for the co-operation of all classes and all important sections of the community; but that was not the thesis of "Let us Face the Future." The thesis of that document was contained clearly in the first two pages. The thesis was that the peace could be won provided that the Tories were defeated. The thesis was that the last peace was lost because the hard-faced men whom I see around me who had done so well out of the war had won the Election immediately following 1919. That was the thesis of "Let us Face the Future"; but now we are told that this party of hard-faced men, which commanded, even at the nadir of its fortunes, some nine million voters, must rally behind the Government in a Dunkirk spirit. This is a new departure. It is a new departure which the Government will have to justify by a slightly better policy than is proposed in the White Paper.

The publication of the White Paper marks the end, especially when it is read in conjunction with the right hon. and learned Gentleman's speech, of all the rubbish and lies that have been told for such a long time about 10 or 20 years of Tory misrule. No one can approach the present economic problems plausibly, or even honestly, without facing the fact that what this country will go through in the next two years, and probably in the next 10 years, is something far more severe and tar more painful to experience than anything which was suffered, except perhaps in the most desolate of the distressed areas, during the 20 years of so-called Tory misrule. That is a fact. The right hon. Gentleman the Chancellor of the Exchequer, in a recent speech outdoors, sought to avoid responsibility for it. He put the causes of our present crisis down to the war and the weather. I venture to point out to the right hon. Gentleman that the party opposite cannot have it both ways. If, and to the extent that, it is true that the present much direr situation is due to international causes, over which the Government have no particular control, to that same extent it is utterly dishonest for them to lay every economic evil which took place between 1919 and 1939 at the door of the wicked Tories. But if they go so far as to blame the serious economic evils of the inter-war years on the wicked Tories, then, and to the same extent, the Labour Government of today must assume full responsibility for the far greater evils which the country is going through now and which it will certainly go through in the next two or three years. We hope, although our past experience of hon. Gentlemen opposite teaches us that they are somewhat slow to learn that the publication of the White Paper, followed by the right hon. and learned Gentleman's candid admission that we had not really recovered from the first of the two world wars by the time we fell into the second, will mark the end to a somewhat dishonourable period in the propaganda of the Labour Party.

But it is not merely in the central thesis of the need for national unity that the White Paper shows a fundamental difference from the policy of "Let us Face the Future." The hon. Member for Devonport (Mr. Foot), in an article last week in the newspaper which employs him to see that "the damned Whigs do not get the best of it", to follow Dr. Johnson's phrase, said that the party opposite was engaged at present in using its democratic liberties in order to make a revolution. That was his claim. Now, Sir, revolutions may be sometimes necessary, they are even sometimes desirable, but there is one thing which a revolution never does; a revolution never unites a people. It must, from its very character, divide a people from top to bottom. It must exacerbate political and class differences. Therefore, I say that the arty opposite must be driven now, and will be driven increasingly in the future, to choose between the revolution which it seeks to make, and the policy in the White Paper which demands the co-operation of all classes. It is because I feel convinced that the whole ideology and philosophy of the party opposite will drive it to its revolution rather than to national unity, and drive it to put its party interest in front of that of the country, that I feel the greatest apprehension about the future.

It is idle to talk as if opposition to the policy upon which His Majesty's Government are at present engaged is confined to a few professional Conservative politicians or a handful of interested financiers. At the bottom point which our fortunes reached in 1945, we still commanded nine million votes. We do not, of course, know what would be the result of an Election now, but, at any rate, I can state it as my own opinion that not much less than 100 Members opposite would be defeated. That is a personal opinion, but certainly I think that not the most optimistic Member opposite would claim that the position of the party opposite would be likely to be materially improved over that of July, 1945. I will simply tell hon. Members opposite—I think this is almost uncontroversial—that if they think they will get national unity by bulldozing through Parliament a policy of which nine million voters are convinced that it is the major cause of our misfortunes, they are utterly and completely mistaken. They must choose between their revolution and the national unity which they profess to want. It is precisely because they are unable to make the choice, and for no other reason, that the White Paper, for all its lucidity of diagnosis, makes no serious attempt to prescribe an effective cure.

Let me deal with one or two of the matters with which the White Paper completely fails to deal. The opportunity which we had in 1945 of recovering our national position before the collapse and exhaustion of the American line of credit—which had not then been granted—has now been irretrievably lost. I think we shall not recover without a further series of economic crises of which the one through which we have just been passing is only the first and the least. That is my opinion. I hope and pray that I may be mistaken about it, but I feel bound to say what I think. The Chancellor of the Exchequer in a speech upon the fuel situation some little time ago, taunted hon. Members on this side of the House with wanting those evils to happen. That was an unworthy gibe. This is our country no less than it is theirs. We fought for it no less than did hon. Gentlemen opposite. The future of our children is bound up with its prosperity, no less than in the case of hon. Gentleman opposite, and our future is no less bound up with that of our country than is theirs. So I would say this quite plainly, to the Chancellor of the Exchequer, that what the country expects from a man in his position at the present time, a member of a Cabinet asking for national unity, is something a little better than a posturing politician attitudising at the Despatch Box, with a foolish song in his heart, and a self-satisfied smirk on his face. The attitude of the Labour Party is rather better summed up by the more statesmanlike, if less rhetorical, utterances of the Prime Minister, both in this House and on the wireless. I hope that the Prime Minister will be here for a very long time, because at any rate, so long as he is in that position, I know that we shall be represented in the councils of the world by a patriot and a gentleman.

Let me deal with some of the ways in which the White Paper betrays a funda- mental incapacity to deal with the practical essentials of the situation. Let us take first of all, the question which is admitted to be overriding, that of the adverse balance of payments, and in particular our adverse balance in regard to what have now come to be called the hard currency areas. It is obvious, and I think notorious, that when the American loan comes to an end, we shall be placed in the gravest possible economic position and that we shall escape from the difficulties in which that situation will place us, only by the smallest and narrowest of margins. Yet we are allowing ourselves now to fritter away the American loan on matters which cannot be regarded as necessary to the life of the nation. I give as examples the question of tobacco and the question of films, on which I thought the right hon. and learned Gentleman for all his austerity, was all too little austere. The fact of the matter is that whether we are dealing with the balance of payments under the loan, to America, or with man power, the Government have shown themselves utterly unwilling to restrict what I can only describe as the opiates of the people. We used to be told that religion was the opiate of the people, when hon. Gentlemen opposite were in Opposition. Now they are using such things as greyhound racing and pools, tobacco and films, to restrict which no attempt has been made to divert the attention of the people from their present misery, and if hon. Members opposite have shown no particular reluctance to develop the policy of opiates, they have at the same time, failed noticeably to show any enthusiasm for religion.

Mr. Skeffington-Lodge

Will the hon. Member accept a challenge to quote any hon. Member on this side of the House who has ever said that religion was the opium of the people?

Mr. Hogg

I thought the hon. Gentleman was better aware of that well-known phrase than he appears to be. I must have heard it at least half a dozen times since I have been a Member of Parliament, but I cannot at the moment quote any hon. Gentleman. [HON. MEMBERS: "Withdraw."] The next thing to which I want to draw attention is the size of the cost-of-living subsidies. The present seriousness of our economic position is masked by two facts, of which one is the continued currency of the American line of credit, and the second is the cost-of- living subsidy. Unless I am mistaken the cost of those subsidies on last Budget day, was in the neighbourhood of £335 millions. At the turn of the year the cost had risen to £370 millions, or thereabouts, or about 3s. on Income Tax. It is still rising. Nobody in any corner of the House has quarrelled with the policy of subsidising the cost of living. It was one of the sheet anchors of our war economy. But when it was very much lower in extent, the predecessor of the right hon. Gentleman told us that we could not go on indefinitely with those subsidies. It is fatuous to produce a White Paper dealing with our economic crisis, if it does not tell us how long and how far the policy of increasing the ever rocketing cost-of-living subsidy is to be taken.

Now we are told that there is a great shortage of manpower. That makes it all the more remarkable that no serious attempt is being made to redistribute manpower in an efficient way. What has happened to the use of manpower since the war, and in the year and a half since the Government has been in power?

I suggest that there are three major evils that have to be combated. The White Paper has offered no solution for any of them. In the first place it is apparent that the balance of reward between the skilled and the unskilled worker has been seriously disturbed. The result is that all over the country our skilled workers are complaining that their rewards are inadequate, compared with those of unskilled labour. What has been done to remedy that situation? Secondly, it is apparent that for a long period of years, for one reason or another, the balance which should exist beween productivity and reward has been almost completely obscured. What has been done to remedy that? Thirdly, and most striking of all, there has been a complete failure to balance the use of manpower between trade and trade. What is the sense of talking about the shortage of manpower, when we have about as many people—and in spite of the "Digest." I think more—engaged in the manufacture of drink in this country as we had in 1939? What is the sense of talking of shortage of manpower when we actually have more people manufacturing tobacco than we had in 1939? What is the use of talking about manpower shortage when we are not even allowed to know what the position is about those people em- ployed by football pool organisations? What is the honesty or sincerity of purpose which fails to deal with those fundamental questions? The right hon. and learned Gentleman says, "We do not want to direct labour". I thoroughly agree with him. It should not be difficult for the Government, with their new planning staff, to arrange a wages policy which will attract people naturally into those industries where it is most desirable it should be done.

Sir S. Cripps

When the hon. Member says "arrange a wage policy", is he suggesting enforcing it on all industries?

Mr. Hogg

I should have thought it was only too easy for the right hon. and learned Gentleman, with the powers of persuasion he claims to exercise over industry, to try to develop incentives in such a way as to attract workers to those trades where they are most needed. I am not asking him to be more unconstitutional than he normally is; indeed, he goes too far in this direction as it is.

Sir S. Cripps

Would the hon. Member give an example of how I go a great deal too far unconstitutionally?

Mr. Hogg

Yes, Sir, the Guillotine. To return to wages, the right hon. and learned Gentleman cannot come before this House claiming, in the course of an exhaustive speech, to have put a serious policy before the country, if he does not claim to deal with this fundamental problem.

Before I conclude, I will say a word on taxation. There is no doubt whatever that outside the range of the weekly wage-earner, the whole system of taxation, which was designed at a time when the level of tax was such that the anomalies it created did not matter very much, has been so worked out that it now acts as an almost complete deterrent to the professional classes in the country. The Chancellor of the Exchequer had a splendid opportunity in the Budget he has already presented, and in his Interim Budget, to give some promise that this obsolete instrument would at least be revised, so as to relate, both for the weekly wage earner and the professional classes, productivity to reward. But again, there is absolutely no hope or promise of this in the White Paper. I cannot but think that the Government must expect from now onwards—now that we observe them governing without any pretence of a mandate in pursuance of a policy never put before the country, in every increasing hardship and crisis—that they will find we are increasingly critical of their activities. They ask us for alternatives, and I have endeavoured to make one or two constructive suggestions.

I have now a story to tell the House, and then I am done. I once had a very agreeable friend who was something of a drunkard. He was sadly addicted to the bottle. As a result of his infirmity he suffered from pimples and insomnia, from dyspepsia and recurrent poverty. From time to time, as those evils proved too much for his endurance, he would gather his friends around him and ask for remedies. He used to complain that they were not usually very helpful in their suggestions, because whenever anyone used to suggest that the one cure for his troubles was to give up the bottle, he used to tell them they were being rude and unfair. Now, Sir, we have in office a Socialist Government who for two years have been dosing us and the people with copious potations of their favourite beverage as a result of which we are suffering from recurrent economic crises, from shortages, from dislocation of the whole system of distribution and from impending economic collapse. They ask us for an alternative. I will give them one. Let them give up their favourite remedy. I do not ask them to repeal those Acts of socialisation which have found their way to the Statute Book, because that would be to repeat the unutterable folly of their political tit-for-tat over the Trades Dispute Act. I ask them to call a halt to this process of nationalisation, and to show their sincerity, because that is what is in question in this White Paper. I ask them, with the knowledge that the people will support them if they do try to pursue a policy of national unity, to try to tackle the really serious practical issues which have to be tackled. As it is, the White Paper is a diagnosis without a prescription the diagnosis of a doctor who at the commencement of the disease made a totally different diagnosis of the complaint, and who has thereby lost any degree of confidence on the part of the patient.

7.36 p.m.

Wing-Commander Millington (Chelmsford)

I always consider myself fortunate if I follow the hon. Member for Oxford (Mr. Hogg), for I stand in amazement at the vehemence of his indignation, the inaccuracies of his quotations and the girlishness of his giggles. He interposed into this most serious question a speech which is manifestly opposite to the kind of speech any Member in this House ought to be making on this most important and serious occasion. I would ask the right hon. Gentlemen who sit on the Opposition Front Bench whether they seriously suggest that the economic position of this country, which is so delicately balanced that a few weeks' bad weather can upset the whole of our industrial system, is a result of the last 18 months' administration. Do they seriously suggest that this nation could have gone through a war of six years, with a national expenditure of something like £16 million a day, without its economic structure suffering? I suggest that time would be better spent by those who intervene in this Debate in making a char examination of the state of the country, and suggesting how we can improve our fortunes. Before I leave the hon. Member for Oxford I should like to pose him a question. I do not know for how long he has been a Member of this House, but according to my knowledge of history, Lenin died a long time before he became a Member. I would point out that the quotation "Religion is the opium of the people"—not "opiate"—comes from the works of Lenin, and not from any member of the present Administration.

Mr. Hogg

Since the hon. and gallant Member has posed me a question, perhaps I may be allowed to pose him a reply. The words I put were those uttered by Members of the party opposite. I was of course aware that they got most of their doctrine from Lenin, and that this particular doctrine came from Lenin, but that did not stop them from putting it forward.

Wing-Commander Millington

What is the basic fact about our economic position at this moment? We finished the war with an adverse balance of payments,£6,000 million worse than before the war. That means, if we are still to import foods, raw materials and capital machinery, and to maintain our standard of living, we have to alter that adverse balance step by step. As the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) said, during the war we had to run under a condition of controlled inflation, and at the end of the war, regardless of what has happened in the succeeding 18 months, the amount of loose purchasing power, in relation to consumer goods, was such that the tendency towards further inflation has to be very dexterously held by the President of the Board of Trade and the Chancellor of the Exchequer. I am not one of those who parade my religious beliefs in public, but I say with all sincerity, realising what I mean, that I thank God that we had a Labour Administration, because of the danger of inflation, running our affairs at the end of this war.

The problems which we must face, economically speaking, are, first of all, How can we progressively write off that debit balance of payments, and how can we progressively release goods to our home market to soak up surplus purchasing power if we are progressively to ward off the dangers of inflation? That means that we must provide a big and growing stimulus to the exportation of goods, particularly to the dollar and hard currency areas, while, at the same time, giving our own people sufficient consumer goods in the shops to make the job of the Chancellor of the Exchequer, in resisting inflation, a little less arduous and difficult.

This can he summed up in this way: There is one answer to both these problems, and it is simply to increase the productivity of our great industrial machine. Productivity is determined by manpower and I want, in a few minutes, to discuss some aspects of the manpower situation which, so far as I know, have not been fully dealt with by any Government spokesman in the few months that this has been as urgent a subject as it is today. The first question is the number of men and women whom we ought to have working in our industry. When I say, "men and women," I have in mind the fact that we have lost an enormous female labour force since the end of the war. The way to get women back into industry is to give them the rate for the job. It is the inducement above all others which women in industry and the professions understand. If there is any valid reason for His Majesty's Government, and particularly the Chancellor of the Exchequer, not making that concession immediately they should say that they accept the principle, and that they will make the concession as soon as possible.

The second source of manpower for industry is the one and a half million young able-bodied men and women employed in the greatest non-productive industry there ever was, namely, the Armed Forces of the Crown It is said that when we have demobilised down to the Government's peacetime figure something over 1,000,000 men under arms will be necessary in order to fulfil our commitments efficiently. I ask, first of all, whether anybody in His Majesty's Government, in the Cabinet—and I am particularly grateful for the coincidence that the Minister of Defence is here—is really satisfied that the deployment of our troops is carried out with maximum efficiency, the period of service of the men available and all other considerations having been taken into account. Every Member of the House, including those in the Cabinet, must be beset weekly by correspondence from constituents, or if he is an ex-Service Member, from friends in the Services, all telling the same story of how unemployment in His Majesty's Forces is probably greater than it has ever been in the whole of our history.

In relation to this point, there is one other question which I would like to ask the Minister of Defence, with a certain amount of embarrassment in case any of my Socialist friends misunderstand me. When we look at the military governments and armed forces in our occupied ex-enemy territories and the territories over which we hold a Mandate, instead of flaying over 100,000 men in Palestine, inefficiently carrying out the job of occupying that country, could we not do that job just as efficiently with 10 to 12 squadrons of aeroplanes, just as we did in Iraq in the twenties? Could we not economise on the tens of thousands of men engaged on the military occupation of Germany by replacing them with modern up-to-date efficient air units?

Major Legge-Bourke (Isle of Ely)

When the hon. and gallant Gentleman says that our troops in Palestine are inefficient in the way that they are looking after that country, would he explain what he means by that, because it would be highly disgraceful if it was thought that we here thought their behaviour was inefficient.

Wing-Commander Millington

I am not criticising the G.O.C., or any rank under his command. The test of efficiency is practical. Occupation by British troops has one purpose—the maintenance of peace, law, and order. If there is not peace, law, and order then our troops are being deployed inefficiently. I think that that is a sufficient answer.

Further, we have men and women engaged in the industry of betting and, in particular, the administration of football pools. If the Government have not the courage to say that this is an anti-social industry, and should be abolished by Governmental action, then, at least, let them say to those who run the industry, "You can go on provided that you do not employ any man under 60 or any woman under 50. You can carry on your great superstructure so long as you do not take one man or woman who is capable of making a positive and economically constructive effort to meet the tremendous problems that lie in front of us." If we release some men from the Armed Forces, and some from the betting industry, if we provide the incentive which brings women back from wherever they are—and I do not think they are idle—we shall have to consider how we can get the maximum productivity of such of our labour power as is deployed throughout our industry.

I would argue that we should have a wages policy. My own thoughts were repeated by the President of the Board of Trade in his introductory speech. We cannot ask the trade unions of this country to accept a wages policy, which may mean the freezing of wages in some industries, unless we go to the employers and impose upon them a profits limitation policy. If the Government are to have the co-operation and good will of the men who are constantly being asked for better effort and greater output per manshift, they must see that the extra productivity does not, in the main, go back in the pocket of the employer. Unless they do that the men will be suspicious, and will not have the full desire to co-operate.

What else would a profits limitation do? It would, by Statute, compel the employer in British industry to do what he has failed to do for the past 50 years; that is, to make adequate provision for the re-capitalisation of its own industry. Hon. Gentlemen above the Gangway are now talking, for the first time in the history of their party, of how far behind in the development of capital equipment, in manufacturing methods and in the technique of production on the machine side, British industry really is, particularly in relation to the U.S.A. I would say that to compel surplus profits to go back into capital re-equipment is far more necessary than the encouragement of output per man hour, because it would result in greater output per machine hour. We must look at the role of the individual worker, the hourly paid operative, in the tremendous task ahead.

We heard the President of the Board of Trade say this afternoon that it was necessary that there should be fresh incentives to productivity, particularly in those industries where piece rate incentives were riot commonly practised in the past. In my submission, the general output per man shift in the building trade is probably as low as in any industry, except for those groups of building trade operatives who are working as hard as they can. I was interested to receive from a constituent, who is a builder, some statistics which were the result of a controlled experiment, namely, the building simultaneously, with the same labour force, of a group of houses for a local authority, to whom he was not permitted by the conditions of his contract to pay anything above the national agreed rate, and a group of houses of approximately the same number which he was building privately for sale. This man is a political supporter of the Government, and he carried out the experiment as honestly and as fairly as he could. At the end of it, when he produced his statistics, they revealed that at a cost of approximately 5¾d. per man per hour, paid as a bonus, the bricklayers working on that incentive for one year averaged 462 bricks per man per day The bricklayers working on a flat rate, with no incentive whatever, averaged 80 bricks per man per day. These statistics are, I believe, the only statistics available, as a result of a controlled experiment over one year in the same neighbourhood, with the same labour force. They will, of course, be made available to the Minister of Health, because they give a message to the building industry which is of extreme importance to the country at this moment. The Government had the task of providing incentives in those industries which had been depressed—whether the hon. Member for Oxford (Mr. Hogg) likes it or not —throughout the 20 years of Conservative rule. They failed to provide houses for the young men who have now been demobilised from the Forces and who are married with families in the neighbourhood of the industries to which they want to attract fresh men.

One suggestion which I would like to make to His Majesty's Government relates to two tasks which the Government have to perform at the present time. The first is to restore our adverse balance, and the second to try to release more goods to soak up the extra purchasing power which is a potential inflationary danger in the country. I would ask the Government to consider fixing an industrial output target, industry by industry, until the end of the year. If, at the end of the year, this target has been outstripped by the combined efforts of all sections of industry, then the Government should grant an export holiday for the first three months of next year. I make the suggestion because the incentive to work, particularly for a married man is not just how much spare money he has in his pocket but what his wife can buy in the shops. We are all desparately looking for some brightness and colour in our lives, but we do not look for it nearly as much as our wives and families do. We have seen in the exhibition "Britain can Make it" exactly the things which the average housewife would like in her own home—cups and saucers made of fine decorated pottery, attractive curtain fabrics and brighter clothing. If we could achieve an industrial target by the end of the year which would enable the export trade to fulfil its orders for the first three months of next year, I think that the people of this country would have earned a rest, and it would have the added value of assisting the Chancellor of the Exchequer in his difficult job of absorbing spare purchasing power.

Finally, in re-echoing what has been said by other hon. Members, I believe that we are a great people and that we can overcome this crisis, as we have overcome crises in the past; but we can only overcome it not by monthly summaries of statistics and the publication of Government White Papers, but by the Government telling the people, through every form of propaganda, the elementary and basic facts of the situation, in terms which they can understand. If the people of this country are told the task which lies in front of them they will put their shoulders to the industrial wheel and produce the goods. We have to remember, and go back to, the old Victorian virtues. I offer the Government a motto on which they could go to the country in this campaign: "Courage, Economy, Endeavour." We must have the courage to face the dangers that lie in front of us. We must have the determination to work harder, and we must, by economising in our private lives and by saving decrease the amount of available purchasing power. We must do our best to give the Chancellor of the Exchequer a much more joyous song in his heart next year.

7.59 p.m.

Major Peter Roberts (Sheffield, Ecclesall)

The first point which struck me with regard to the speech by the hon. and gallant Member for Chelmsford (Wing-Commander Millington) and his reference to my hon. Friend the Member for Oxford (Mr. Hogg) was that although he discussed policy I seem to remember that the policy on which he was elected was a Common Wealth one. As he is now speaking from a Labour point of view, I think it is rather difficult for the House to follow the gravamen of his arguments. I was, however, glad to hear him stress the question of incentives and if I may I should like to come back to that very important point later.

At this stage I do not think that we need dwell very much on the past, or elaborate upon the lack of administration and foresight which led up to the crisis through which we are just coming. But with regard to the present I think we need to say—as indeed my hon. Friend the Member for Oxford and my right hon. Friend the Member for Aldershot (Mr. Lyttelton) have already said—that whereas the White Paper sets out the problem it does not give the fundamental answer. I suggest to the House and to the Treasury Bench that we should look at this problem more from the point of view of raw materials and the consumption of raw materials than from that of production. During recent months the President of the Board of Trade, the Minister of Supply and the Prime Minister have gone through the country asking for greater production and output. That is all right, but it must obviously mean the greater use of raw material. of fuel and of coal. There is a gap, as we know, between coal consumption and coal production, arid the problem is how that gap is to be closed. It can be closed in one of two ways, either downwards by cutting off consumption, or by bringing production up. As far as I can see, the President of the Board of Trade, in his speech this afternoon, stressed the first alternative—the one of restriction and of allocation which must inevitably lead to less production and, in the long run, to smaller exports and bankruptcy. Surely, the proper way is to close the gap by bringing the fuel position higher, and there are two main ways of doing that. First, there are incentives to production, but, in addition, as has been sail by my right hon. Friend the Member for Aldershot, there is the possibility of obtaining coal from outside. I do hope that this matter will be seriously considered. I first heard it suggested in this House by my hon. Friend the Member for Bury (Mr. W. Fletcher). I do not mind how the coal comes, whether through Lend-Lease or some form of insurance scheme, but the point is that at this moment there is one shipment of 4,000 tons of coal going from America to Holland. If coal can go from America to Holland, why can it not also come to this country? At the moment, also, coal from the Ruhr is going to Italy; if to Italy, why not to this country? Coal is also going from Silesia to Russia; if to Russia, why not to this country?

Just as after 1926 coal was brought in from abroad when there was a great shortage, I suggest that it should be brought in now. It was only a temporary measure in those days and I suggest it as only a temporary expedient now because I know too much of the coalfields to suggest it as a long-term arrangement. We should use all our power to bridge that gap of 10 million tons, not by closing down and restricting during the summer but rather by filling up our stocks and driving ahead on coal production throughout the rest of the winter, the spring and the summer. That will give us 18 months to get out of the trouble. I suggest that that is a task we could well achieve, and one that is comparable with Mulberry, Pluto and other great feats which we performed to overcome our difficulties. But unless we get the coal we shall have the cutting down and restriction which will be fatal. If we can overcome this problem we can then face the question of pro- duction, the increase of output per man year and so on.

I agree with what was said by my right hon. Friend the Member for Aldershot, by the hon. and gallant Member for Chelmsford and also by the hon. Member for Aberdare (Mr. D. Thomas) stressing the necessity for incentives. If I may I should like to make a few suggestions to the Government. I put these forward sincerely as practical suggestions. How are we to obtain these incentives? I believe we should reduce Income Tax on earned incomes, particularly so far as concerns overtime. Where a man has done a full week's work overtime beyond that should enjoy a drastic reduction of Income Tax. In that way we should obtain the incentive we are after. Then I come to the question of what is termed a wages policy. I do not believe that a wages policy necessarily means fixing all wages entirely; we should have a minimum, but above that we should have added payment for individual output rates. That is a matter to be arranged between the industries and the trade unions. I have lived in the coalfields of Yorkshire for a long time, and there is a feeling there that each Yorkshireman is as good as the next and that, therefore, each should receive an overall wage, particularly in the mines; but I believe that it is only by allowing each man to be paid exactly what he merits and to take it home with him that we shall provide the incentive.

Thirdly, there is the matter of the five-day week, and here I think it is a question of whether the Government are sincere or not. Where the five-day week can be proved to increase production then, as I said in this House last summer, I believe that it should be put into effect. Let us relate that to coal, which is very interesting. In highly mechanised collieries there are cases where the five-day week will mean increased production by concentrating the available manpower, but in the less mechanised collieries—in Wales, Scotland and Durham—we should not get that increased production with the five-day week. I suggest, therefore, that the five-day week should not be blindly operated and enforced throughout like a rubber stamp. That is too much of Socialist planning for my liking. Let there be elasticity. Where it can be shown—to the responsible Minister if you like—that output can be increased, let us have the five-day week, but where that cannot be shown then, by voluntary renunciation of the five-day week—I put it no higher than that—it should be temporarily postponed by agreement until we have come through the storms which lie ahead.

I also agree with my hon. Friend the Member for Oxford and my right hon. Friend the Member for Aldershot with regard to subsidies. In point of fact, these food subsidies are not subsidising the essential food commodities. What they are doing is to allow the person with money in his pocket to spend his surplus on other things. He pays so much for subsidised foods and is left with more in his pocket to spend how he likes, on gambling or racing, for example. I have no objection to that, but it is subsidising that industry and not the basic food industries. If the Government are prepared to face up to this there should be a great reduction of subsidies so that the cost of living index is subject to a controlled rise. Admittedly, this means saying that we are poorer, but I am not frightened of stating that. I think the President of the Board of Trade was frightened of making this point and drawing the conclusions from it. After two wars such as we have had we cannot expect to come out more prosperous and to have an easier life and to work less. Therefore, I say in all sincerity that until the trade union leaders of this country are prepared to tell their own people that they cannot yet have some of the advantages for which they have been fighting for 20 years—the five-day week, basic rates and so on—but must sacrifice them for another 18 months—I am afraid we shall have recurring crises one after the other.

Let me turn briefly to the financial aspect. I appreciate that the concessions in Income Tax which I have suggested to the Government will mean that the Government income will go down. I suggest that that can be offset by indirect taxation because indirect taxation does not have that dragging down effect upon production which is the result of direct taxation. It can also be offset by higher rates of saving. I believe that if everybody were asked to save £500—not at the measly 22 per cent. which is being offered now but at something higher—the incentive would be such that the money which was earned would not necessarily be spent but would be saved. I would also say, in order to save our economy and the fact that we have already lost income, that we must postpone some of the most expensive items of health, education and insurance. I appreciate that that is an unpopular thing to do. Politically, it may be a silly thing to do—

Mrs. Leah Manning (Epping)

And nationally.

Major Roberts

—but, quite sincerely, we cannot afford it. I think the hon. Lady the Member for Epping (Mrs. Manning) agreed with me when I said we were poor. Surely it follows from that, that we cannot afford some of the more expensive items. That is my opinion, and I think the time will come when that will have to be faced, and the sooner it is faced, the sooner it will get over to the mass of the people.

Mr. Shurmer (Birmingham, Sparkbrook)

Would the hon. and gallant Gentleman not agree that in the past we have sacrificed the lives and health of the nation to pounds, shillings and pence, and that the time has come when we can do it no longer?

Major Roberts

The time has not come when we can sit back and relax. I am not dealing with the past but with the future, and I am trying to deal with it in a realistic way.

The other point which 1 want to put is this. I am perturbed at the question of reparations from Germany, Italy and Japan I see great demands on us from other countries for debts incurred during the war. I saw the gesture of America in wiping out the Lend-Lease debt which was incurred during the war. Would it not be sensible for us to freeze the debt which we incurred during the same time, to other outside countries, until the whole problem of reparations from Germany, Italy and Japan has been settled? I put it no higher than as a suggestion. If we follow those lines I believe the gap in income will be met to a large extent and if not entirely, and although I admit that a balanced Budget is a healthy sign, I am not frightened at having a Budget which is unbalanced to a certain extent.

Nationalisation has already been mentioned and I am not going into a long dissertation on the question. It was stressed most admirably by the hon. Member for Oxford. I agree with him that this is not a time to press on with the schemes which the Government have in hand. After passing so quickly over the question of nationalisation, I want to touch on that of bulk purchases. That was also mentioned by my right hon. Friend the Member for Aldershot. I believe one of the greatest mistakes the Government made was the institution of Government bulk purchasing, because it sets up against us the whole question of other Governments bulk selling, and in our present position in the world we cannot afford to enter into competition of that kind. I believe that behind all this problem, is first the question of getting coal and filling up our stocks now from outside sources, rather than curtailing during the summer. Secondly, there is the question of incentive in production. If necessary, we must make economies to effect it; but, above all, we must have leadership. I have no confidence that, at the moment, the leadership we have got is going to rally the country. I must, at this point, draw attention to a newspaper suggestion, contained in the "Sunday Times" yesterday, in regard to a Coalition. It has been followed by other newspapers today. I think that is a question which has been raised in the country—

Mr. McAdam (Salford, North)

It was only in the newspapers—in the Kemsley Press.

Major Roberts

—and it cannot be ignored in this House. It was the Socialist Party which demanded party politics at the last Election. The suggestion which has been made that we need a Coalition presupposes first that party politics should be abolished—

Mr. Mitehison (Kettering) rose—

Major Roberts

If the hon. and learned Gentleman will allow me, I want to finish my argument and then he can ask a question. I say that if party politics are to end, then hon. Members opposite who introduced them after the war, must resign. That is their duty. That is my answer to the people who talk about a Coalition.

Mr. Mitehison

But who does want a Coalition?

Mrs. Manning

Other than the "Sunday Times"?

Major Roberts

I can answer that. It is the "Sunday Times", which is an organ of opinion, and though hon. Members might like to ignore it, nevertheless we must pay it attention.

Mrs. Manning

We do not want it.

Major Roberts

I wish to put the point that if there is any question of a Coalition there must be resignation by the Government. [Interruption.] I said that particularly, because I wanted to see the reaction from hon. Members opposite. What they are saying is exactly what I have said. If I may summarise the constructive arguments which I have tried to put over, they are these. At the present moment I see the country like a great ship sailing towards a storm, but the coal is low and the steam pressure is going down. Beyond the storm is the harbour. We can curtail the amount of fuel which we use and, if we do, the ship will go slower and slower, until the time comes in the crisis of the storm, when we shall lose way altogether. I suggest that it is far better to take in the stocks of coal now, keep the steam up—

Mr. Shurmer

And keep the same pilot on the bridge.

Lieut.-Commander Gurney Braithwaite (Holderness)

No, drop the pilot.

Major Roberts

Unless we do that—[Interruption.] If hon. Members opposite are not prepared to see the seriousness of this situation, if they are not able to see the storm that is rising ahead and if they still want to laugh and joke about these most serious matters, they are perfectly entitled to do so. But it is leadership which we require and the time has come now, when we should call back on to the bridge the pilot who upheld and led us during the years of war.

8.17 p.m.

Mr. Harold Neal (Clay Cross)

I regret that I am unable to follow the hon. and gallant Member for Ecclesall (Major Roberts). He brings to this Debate knowledge acquired in the coal industry, in his capacity as a former mineowner. I can only contribute from my practical experience as a miner, and as a local trade union leader. In the time at my disposal, it is impossible for me to attempt to reply to many of the amusing arguments which the hon. and gallant Gentleman has adduced. If I were to attempt to do so, I think I would be imprudent in detaining the House at a time when so many Members want to catch Mr. Speaker's eye. But I want in the course of my remarks to make some reply to some of the points which were made by the hon. and gallant Gentleman. In paragraph 83 of the Economic Survey is an expression of opinion with which I think Members on both sides of the House will agree: The 1947 industrial problem is fundamentally a problem of coal. The target of 200 million tons that has been fixed by the Government in this White Paper appears to be a very modest one. In my submission, it is much better to fix a target that is realisable, than to put down some fantastic figure that cannot be achieved. Coal is the currency that will preserve our solvency, and that can only be preserved by the indispensable minimum which the Government has fixed. This is a target of 200 million tons, representing an increase of 11 million tons on the 1946 output, and it cannot be achieved without a substantial increase in manpower; additional incentives to the men engaged in the industry and those who are expected to come into it, and a speed-up in the provision of mining machinery.

With regard to the question of manpower, there are, at the present time, engaged in the industry 695,000 to 696,000 men, and the Government propose that the manpower shall reach 730,000 by the end of 1947. Superficially, it would appear that only 35,000 men are necessary to make up that figure, but, when one considers the wastage that is taking place in the industry, and has made allowance for that, it means that the number required will be an extra 80,000 to 90,000 men coming into the industry to make up the figure to 730,000. I, therefore, ask from where is this additional manpower to be recruited? The President of the Board of Trade, in his admirable speech referred to the fact that the National Union of Mineworkers have already agreed to the engagement of Poles in the mining industry. I want to say at once, as a responsible member of the Miners' Executive, that the guarantees that have been offered us, so far as unionism and redundancy are concerned, are guarantees with which nobody will quarrel, but, when that proposal was first made, we heard that there were 1,000 men, English-speaking Poles, who were immediately available and capable of working at the coal face. That was in May of last year. By November, this figure had become reduced to 270 men, as the Poles had been screened into three separate categories.

I have heard some hon. Members glibly talk about importing hundreds and thousands of displaced persons into the mining industry. They talk as glibly about that as if it were opening the doors of a factory to dilutee labour. From my experiences, in visiting displaced persons camps on the Continent, I cannot imagine that there is within them the preponderance of younger men whom we want in the industry in this country. Furthermore, the standard of physique of displaced persons is so low, because of the low number of calories which they have been consuming, that they are unfitted for the laborious work of the mining industry. I have seen some miners in pits on the Continent who were working underground on 1,500 calories, and I can say from experience that they could not do as much work as an English schoolboy on our present rations, I cannot look forward to any very extensive recruitment from that source.

Must I repeat that the problem really is that mining is an arduous, skilled and dangerous occupation? Hon. Members have only to peruse the documents issued by the Ministry of Fuel and Power to be convinced of that. They will notice that the accident rate is continuing almost at the same figure as that of seven years ago. Every time the miner strikes at nature, nature strikes back, and the coal in the domestic grate and in the industrial furnace represents men's lives. Before a man can be taught to get coal, he has to be taught to keep himself safe. Consequently, any foreign labour that might be introduced into the industry would take a long time to train before being capable of undertaking the operation of coal getting. Indeed, I question whether there is, at the present time, pit room for more than 20,000 men in the industry. My hon. Friends on this side of the House who have practical experience of the industry will confirm my statement that, for years, the technique of the mining industry has been developed along lines of a contracting manpower. Many of us on this side of the House have bitter memories of the days when we tramped from colliery to colliery in search of work. We are paying dearly for that policy now. If pit room is to be made for these extra men, the National Coal Board will have to insist on new places being opened up, so that work for these men may be found.

Inseparably bound up with recruitment is the question of housing. It is no good talking about bringing new people to work in the pits when there are no houses for them to live in, and, as a consequence, immediate recruitment for the mines will have to depend on the mining areas only. I beg the Government to use every possible endeavour to recruit the young men of our own country, and particularly those in the mining areas, into this industry before they talk about any others.

I was glad to hear the President of the Board of Trade declare that the Government were prepared to offer every facility for ex-miners returning from the Armed Forces to go into the industry, but the facilities to which he referred do not cover those men engaged in the regular Armed Forces. No facilities are available to them to come out of the Forces in Class B, and, as a consequence, they have to remain in the Forces and are lost to the industry. There are many men in the regular forces with experience of mining, men who would be of valuable assistance to the country at the present time, much more valuable in the mines, I think, than where they are today, and I beg the Minister of Defence to look at this question again and see if these men cannot be returned.

Paragraph 87 of the White Paper declares that the policy of the National Coal Board is to make the industry attractive enough to draw the necessary number of recruits. This job of mining can never be made as attractive as a job on the surface, and 25 years experience underground qualifies me to say that, but there is no reason why it should be less dignified and less honourable. The miner in 1947 is contributing as much to his country as the airmen who fought in the Battle of Britain. I once heard the right hon. Gentleman the Member for Woodford (Mr. Churchill), speaking at a secret conference of miners' delegates, say that where there is danger there is honour. I think we might implement that statement now, and offer to the miners all the necessary inducements—the maximum food and so on—to get us out of this economic crisis. The miner is in no mood to hold the country up to ransom. All he needs is the honourable recognition of his value to the community and some sense of security for the future. An hon. Member opposite referred to the inducements that ought to be put before the men. That is the one burning question that is talked about in the mining areas, and it must be within the recollection of hon. Members that this is the only country where rationing obtains and where miners do not get more allowances than other workers.

I think the Government ought to take steps to improve the rations of miners if they intend to achieve the increased output of coal. I know that there would be protests from other sections of the community if more food were given to the miners, but, after all, those people who are outside will always have the chance of availing themselves of the additional rations if they are given to the miners. I believe that the country will forgive error after error, but they will not forgive the Government lack of courage in anything they do in this crisis.

One of the chief incentives to make the industry attractive is the five-day week, which it is proposed to introduce in May of this year. I warn the Government that there must be no attempt to snatch back the promise which has been made to the miners to introduce it in May. Nothing could be more calculated than that to frustrate the spirit of the miners and to create dissension in the coalfields. It is all right people thinking that all that is necessary is for the miner to work harder and longer. That is a mistake. What we require is not harder and longer work. but better work. In this connection, I appeal to the Government to do something with regard to improving and speeding up the provision of machinery in the mines. Miners are often blamed for hold-ups in production which are no fault of their own. Equipment has deteriorated much during the war, and hon. Members on this side of the House could tell of reports in coalfields of worn-out motors and broken conveyor belts. which continually hold up production. Therefore, priority ought to be given in the matter of machinery for the industry in order to get the coal that is required.

Between May, 1946, and February, 1947, with an average of 3,400 fewer millers in the industry, eight million tons more coal were produced than in the corresponding coal year. If that increase had not been achieved by the miners, as the hon. Member for Aberdare (Mr. D. Thomas) reminded the House this afternoon, the crisis which is now upon us would have developed months ago. I am sure that my colleagues will agree that there is a better spirit prevailing in the industry at the present time than, in their experience, has ever prevailed before. Everywhere there is a willingness in the mining communities to make this Socialist experiment a success. Whatever may be the shortcomings of the Minister of Fuel and Power, he has recovered the good will of the men engaged in the industry. There is no industry so dependent upon the good will of the men in it as the mining industry. If there is any clamour for the right hon. Gentleman's resignation, it certainly does not come from the mining areas. The mining areas appreciate the unexampled difficulties with which he is confronted, and they know that, since assuming office, he has had more difficulties to meet than any of his predecessors.

In conclusion, I assure the Government as a member of the Executive of the National Mine Workers' Union that the miners will co-operate with the Government to the fullest possible extent, in achieving the target of 200 million tons of coal in 1947. But I hope the Government will not respond to the clamour to import coal from other countries. Coal is the only natural wealth we have in great quantities in this country, and it is a sad commentary on the way the mining industry has been conducted in the past, that the suggestion should ever be made that American coal should be brought into this country. Given the necessary short-term and long-term improvements proposed by the Government in this White Paper and given a prevalence of the spirit which is now in the mining communities, this target can be achieved. Finally, I commend to the House, and to the country the words spoken by the Prime Minister to Congress in America: We did not stand up to our enemies for six years to be beaten by economics.

8.35 P.m.

Mr. Butcher (Holland with Boston)

The hon. Member for Clay Cross (Mr. Neal), who has just resumed his seat, said how greatly the miners are co-operating in an endeavour to bring the country out of the grave economic condition in which it is at the present time. I am sure all of us in this House who represent rural and urban areas would ask him to convey to his colleagues at the coal face the assurance of their fellow countrymen that their efforts are not overlooked or unrecognised, and, indeed, that all sections of this community will play their part in restoring the fortunes of this country.

But I believe that the largest share in the restoration of the fortunes of this country must, necessarily, rest upon His Majesty's Ministers, for there is no doubt that, since we had a Debate on the economic position some 12 months ago, the condition of the country has seriously deteriorated. In his speech this afternoon, the President of the Board of Trade referred to the fact that exports must be a first charge upon the production of our industry. I agree with him, but, on the other hand, let us realise that that has to be reconciled with the observation made by the Prime Minister 12 months ago when he said: Ordinary every day consumption must be encouraged to rise materially in 1946…. You cannot ask people to work harder if they have not got something coming in as a result of their extra work. I would remind the House that, in that same Debate, the Prime Minister went on to say: National recovery does not depend just upon the number of workers; it depends upon securing continuity of work."—[OFFICIAL REPORT, 27th February, 1946; Vol. 419, c. 1960–4.] Those are observations full of wisdom. But, if those things were said, and said so truly, 12 months ago, what responsibility must this Government accept for knowing these facts, and yet allowing this appalling crisis of a coal shortage to come upon us, when the mills of this country, which were working to satisfy the export demands of our customers overseas or the legitimate hopes of our people at home, were silent for want of fuel and power, and yet so tiny a saving was made.

Before the war, there was an economy on which I do not propose to dwell, but in which the price factor was the main controlling element. It had its misfortunes, it had its harshnesses, and it had its failures. But, on the whole, the shops were full, and it was a system that the people understood. During the war, we had another system, one under which the multitude of private customers was re- placed by one great customer, the State itself, who, by means of the most rigid control over materials, and, above all, over the labour force in industry, demanded, and secured, the goods. That system was new to the people of this country, but it worked very largely because the whole people were united in the one task of winning the war.

We now have a system in which, I believe, we are pretty well getting the worst of both those former systems. The controls are pulling one against the other. The money incentive is there, but it is so diminished as not to have any real effect upon the people. The real task of this Government is to recognise that the motives which inspired the people during the war are not those which animate them at the present time. I think it can best be put in the words of John Buchan in his "Memory Hold the Door," when, dealing with 1919, he said: Except in America, which seemed to be in a fair way to rake in the wealth of the globe, the ordinary man was struggling with private problems so difficult that he had no time for private affairs. Further on he says: In common with most of my country men I felt that for the time being I had done with civic duty and might reasonably return to my own affairs. That is the natural feeling of exhaustion which comes to any community and to the members of any body if they have been engaged for long periods of years in the exertions to which the people of this country have been exposed. Let the Government admit that their task is to reconcile the national interest with the interest of the individual. It will not be easy to get the national interest and the individual interest both leading in the same direction. So far from endeavouring to reconcile these two interests, the Government have moved in an entirely contrary direction. By their nationalising plans they have alienated large sections of the community. Hundreds of small businesses in the transport industry alone are liable to be put out of business without adequate discussion in this House. The Government preach the value of thrift and saving and yet they allow the thrifty members of an earlier generation who put their savings, not into wild cat speculations but into the public utilities of this country, to suffer the most penal reductions in their income. The linking of the national with the individual interests, must, if the economic health of this country is to be saved, be translated by this Government into practical measures. There must be more practical measures to attract the woman worker to the textile mills rather than to the shop. They must recognise that, having blundered into a fuel crisis they are next likely to be confronted with an equally disastrous failure in the realms of agriculture. We can save the coal we need by shutting down the plants and turning off the switches. We cannot save the food which we ought to have gathered by starving the children for three weeks, and unless this Government is more careful, the food crisis will soon be upon us. The Government must realise that each control, while it may be perfectly justifiable on its own account, yet multiplied to the extent that it is at the present time, joins with other controls to cause frustration and delay and frequently to pull in the contrary direction.

The question of a wages policy has been raised. The Government must be prepared to accept unpopularity. If need be—and I believe the need exists—it must be prepared to abandon its traditional approach to wages and be prepared to take an active part in the fixing of wages. When I say, "take an active part," I do not mean that they should necessarily come in and fix wages direct, but certainly that they should concern themselves far more than they do under the present system where the fixing of wages is not the concern of the Government. Some active part must be taken by the Government in fixing the wages so that the work which is of the greatest national importance must have the greatest individual reward. This may result in decreased power of the present wage fixing authorities such as the trades unions and employers' associations. But, above all, it is a change in the infallibility of the Government itself which is needed.

The eloquent and lengthy speech of the President of the Board of Trade to which the whole House listened with interest this afternoon was not the first speech that he has made in this House on a great occasion. I would venture to quote to him some words that he used on another great occasion: It is not some isolated blunder or mistake from which we are suffering. There will always be isolated mistakes, however good the direction of affairs may be. We are suffering today from the inability of our leaders to concert and carry through definite policies, from a lack of leadership of the people… The people of this country are not afraid of the truth, nor will they hold back from any sacrifice that is necessary. But they will not stand wasteful and inefficient administration or doubtful and hesitant leadership…. Every hon. Member today has a duty which I believe far transcends any party loyalty; it is a duty to the people of the country as a whole. To allow personal interests or party loyalty to stand in the way of necessary changes of government is at the present time to act as a traitor to one's country."—[OFFICIAL REPORT, 8th May. 1940; Vol. 36o, c. 1297–98.] Those words of complete wisdom were spoken by the President of the Board of Trade a few hours before the Chamberlain Government secured a majority in the Division Lobby.

From that Debate there was a coming together of sections in this House, a change of Government, more vigorous and more courageous leadership was brought in, and from that date the fortunes of this country improved. I believe it was because that new Government in which the right hon. and learned Gentleman himself played so distinguished a part, did not approach this matter from a theoretical or party point of view. He was not determined that the only way in which the country could be saved was on a raft painted in Socialist colours. He was prepared at that time to work with men of goodwill from all parts of the House. I am not one of those who believe in a Coalition at present, but I am one who says to this Government, "If you are sincere in your desire for national union, if you believe that the position is as grave as you declare it to be in the White Paper, show signs of your sincerity by abandoning such things as nationalisation." Is that too much to ask? [HON. MEMBERS: "Yes."] I notice that all the dissent comes from the benches which are not charged with the actual responsibility for the management of affairs. I address my remarks, therefore, to the back benches and say, "Let the ladies and gentlemen on those back benches realise that the problems of ro4o were just as difficult as they are today.' Many of us in those days made difficult decisions, and I for my part do not believe that our patriotism in those times of difficulty is any greater than that of my friends opposite is today."

8.48 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

This afternoon we have been taking a lot about ourselves and the fate of our country. It does not do us any harm occasionally to listen to what other people are saying about us. We have two great friends in the United States, in the journalistic world, the "New York Herald Tribune" and the "New York Times." The "New York Herald Tribune" said the other day: With the passing of the British Empire, one of the great balance wheels of the r9th century world has disappeared. There is a great vacuum in the world which is going to be filled by the Soviet Union or by the United States. A day or two later a very distinguished correspondent of the "New York Times" wrote from Sheffield in this country: Britain is an old run-down country. Even before this last war it was an old rundown country. Private enterprise is coasting and risking almost nothing. Too many people are fighting old battles, and not the battle for Britain's survival.

Mr. Jack Jones (Bolton)

We stood firm when they were wondering what to do.

Mr. Boothby

Our business is to make these observations, which are partially true today, totally untrue tomorrow. For this purpose it is, in my submission, necessary to have a plan. The Government claimed once to be a Government of planners. The essence of good planning is to see ahead. That the Government have most signally failed to do. They have never at any point or period been able to grasp the gravity of the crisis with which we are now at grips; and we should not be in half the mess which we are in today if they had had the vision to see what the President of the Board of Trade claims they have seen. Controls, yes, plenty of them; snoopers in abundance; civil servants by the thousand. The White Paper itself admits that there are 2,130,000 people now employed in the public services as against 1,465,000 before the war—and this at a moment of desperate shortage of manpower. The White Paper goes on to say: A high level of employment in this field is bound to continue. The Government talk as if this was productive employment. On the contrary. This multitude of controls at the lower levels is a pure wastage of manpower. For the most part they merely jerk the elbows of the men who are trying, as best they can, to drive the machine. In the White Paper there is an elaborate mechanism of planning; and this afternoon the President of the Board of Trade elaborated it still further. The number of committees of different sorts and kinds that have been set up in Whitehall is most impressive In addition, we are to have—naturally from this Government—a statistical Bill; that, of course, is absolutely essential. This Government thinks that nothing can possibly be done without legislation. It never occurs to them that administration is sometimes of some slight importance; they do not think that any improvement of any kind can be achieved without a Bill, rushed through the Committee stage by means of the Guillotine. That is their fundamental conception and idea. They are so busy with Bills that they have no time to attend to administration. If they want statistics they really can get them without a Bill. The right hon. and learned Gentleman the President of the Board of Trade said that the statistics we have got at the present time are no use because we obtained them in the war. If we got them in the war we could get them in peacetime without a Bill, by means of effective administrative action. I ask the right hon. Gentleman: What is all this planning for? What is all this mechanism for? Just, I suppose as the Americans would say, "For the hell of it." A very large part of the right hon. Gentleman's speech was devoted to proving that in a democratic society like ours we could not have a plan of any kind, or put it into effective operation—

Mr. Edward Evans (Lowestoft)

is it not a fact that America has a much more elaborate system of getting statistics than we have? They get statistics every month.

Mr. Boothby

At the moment I happen to be talking about this country. However, I am quite sure that in America they do not have to pass a Bill every time they want statistics, so the hon. Member's interjection is very helpful. I am only arguing that we could get statistics without a Bill.

I have a sustained argument to address to the House, which I am afraid will take a few minutes—quite a few minutes. We listened to the President of the Board of Trade, for what seemed to me to he a sizeable amount of time, in complete silence, and with very good will, so I hope hon. Members opposite will allow me to develop my argument. The right hon. and learned Gentleman tells us that we are now to have co-operation in industry. That is very good. I only say, I should hope so. But why did not it happen a year and a half ago? Why, particularly, have not the Government long ago called in the technical experts and production managers of industry? We do not want only the chairmen, managing-directors and trade union officials. We want the actual men who are running the job on the spot. Why has the right hon. and learned Gentleman not got hold of them? If he is now going to get hold of them, what for? What is it all about? What does he want to do?

I quite agree, there are some people who do not want a plan of any kind. There are some people who think we ought to return to the laissez faire economy of the 19th century, and to the price mechanism of the free market. There is a good deal to be said for their point of view, though I do not happen to agree with them, for reasons which are familiar to the House. I do not think it is possible or desirable for this country, in present circumstances, to go back to a free market economy. I believe that following the war we must have a long-term, overall plan for the economic reconstruction of this country.

I would remind the House that such a plan, a four-year plan, was, in fact, promised by the Coalition Government. If the Coalition Government had continued, that plan would have been duly presented to the nation. I agree there is an alternative, which is to return to laissez faire. But I cannot for the life of me see the point of a planned economy without a plan. That seems to me to be getting the worst of every world, and leading nowhere. If I am asked, "What plan?" I point to M. Monnet's master-plan for France. It differs fundamentally from the White Paper with which we are confronted today. This White Paper is a diagnosis. M. Monnet's plan is also a diagnosis; but it prescribes a cure at the same time. There is not much cure about the present White Paper, however hard we look at it. Moreover, M. Monnet's plan is not based on a preconceived political doctrine of any kind, but upon the reality of clinically established facts.

Mr. Mitchison

A 48-hour week instead of a 40-hour week.

Mr. Boothby

I daresay that might be necessary for the French economy at the present time.

Mr. Mitchison

And imported foreign labour in thousands.

Mr. Boothby

Excellent. It should have been done here long ago. All I am concerned to say at the moment is, that in a full employment economy it is essential to have a comprehensive production plan for several years ahead; including the production targets clearly presented for exports, borne investment and consumption, together with manpower, fuel and raw material requirements for each industry, industry by industry. There is no reason at all why it should not be a flexible plan. We have not got anything approaching that from the present Administration, which got into power largely because they said that they could not only plan, but could plan better than anybody else.

The problem confronting this country today is quite a simple one. It is a problem of the balance of payments, as the right hon. and learned Gentleman the President of the Board of Trade said; and therefore, fundamentally, of production. The fuel crisis is merely a symptom of the disease from which this country is now suffering. It is accompanied by a steel crisis; it will be followed by a food crisis; and finally, by a dollar crisis, which will be the most serious crisis of all.

Tonight I want to deal primarily with monetary policy and trade policy. Before doing so, I should like to say a word or two about the mechanics of production. We have heard a great deal of talk about coal this afternoon, some of it authoritative, from members of the Miners' Federation, and other people who know well what they are speaking about. The White Paper says this is of basic importance. If it is of such basic importance, I wonder why they plan only for 1947, and do not look one inch beyond 1947. I ask the Government: Have they abandoned altogether the possibility of coal exports from this country? We must look beyond the end of 1947. I want to know: Is it to be the national policy of this country that there is no hope of ever again exporting coal? If it is, I think our outlook is indeed dark and dire. If we were back to the 1938 level of production now, we should be earning another £100 million a year in foreign exchange. I suggest to the House that we cannot afford to do without that £100 million. The target of 200 million tons a year is quite inadequate from the long-term view, and the projected manpower in the mines is also quite inadequate. What of 1948, 1949 and 1950? That is what we want the Government to tell us about. Just look, for one moment—this great planning Government—beyond 1947. The years 1948, 1949 and 1950 will be just as important for all of us.

I wish now to say a few words about agriculture. It is common ground to both sides of the House that we must aim at least at a 25 per cent. increase in production of "protective" foods in this country over the next two or three years if we are to get through. We will loose 130,000 prisoners of war within the next five or six months.

Mr. Stokes

More than that, I hope.

Mr. Boothby

The hon. Member hopes it will be more than that, and I would not dissent. It raises a considerable problem. We are suffering from an acute shortage of houses at the present moment in rural areas. The Housing (Rural Workers) Acts have been deliberately repealed entirely owing to the insensate prejudice of the Minister of Health against tied cottages. We are suffering, through the omissions of the Board of Trade, from a shortage of tractors. Last year we exported £3,000,000 of tractors from this country. That is not planning. It is sheer lunacy.

Finally, we are suffering, and have been suffering for a long time past, from an acute shortage of feedingstuffs, and I would say to the House—to right hon. Gentlemen on the Treasury Bench—that it is very much better to import feeding-stuffs at a quarter the price or at least half the price we are paying for the finished articles we could produce in this country. [HON. MEMBERS: "Where from?"] We must go get them. [HON. MEMBERS: "Where?"] America, the Argentine. Let the Minister of Food get feedingstuffs, and lay off the turkeys. I have already made several suggestions, but we could get them from the Argentine and other South American countries, and, I hope, the United States as well.

I want to say one word about priorities. In a world of scarcity, I must say—I am bound to admit—that I think we must have some allocation of raw materials and fuel, so long as that scarcity prevails. It is not the fact of allocation, it is the method of allocation I protest against at the present time. I think that, in spite of the qualifications the right hon. and learned Gentleman the President of the Board of Trade gave, the amount to be allocated for industrial re-equipment in this year in this country is quite inadequate, even though it may work out at more than 15 per cent. of a normal prewar year. Considering what we have to do, and the vital necessity for modernisation and mechanisation, I think the amount to be allocated in that respect is far too small. What will be the result? We are going to export four hours of labour for every one hour we import from the United States, and that is not a fair balance. Investment in the apparatus of production should have precedence over the social services of this country for the next three or four years; otherwise I do not see how we are going to get on our feet.

Next, practically all allocations and licences today in this country are given by reference to some prewar standard. This is the negation of all progress and all competition. One Minister of the Crown, who shall be nameless, told me there was quite a queue of industrialists in his Ministry asking not to be decontrolled. I can well understand it. They get the stuff dished out on the basis of 1937, 1938, or 1939; they get a margin between the wholesale and retail price fixed; they then lie back and take the profit at the end of the year. There is not the slightest competition of any sort or kind. This method of allocation in relation to prewar standards is forcing the national economy to keep pace with the slowest. No one is allowed to have any advantage out of enterprise and hard work. I admit that that is in strict accordance with true Socialist doctrine—that any advantage of any kind is utterly unfair. Nevertheless, it does mean, as Mr. Geoffrey Crowther pointed out the other day, that at the present rate we shall soon all be starving and freezing in perfect equality.

It is really no good going on howling for increased output per man-year. That is a sort of recurring theme, a kind of Greek chorus or dirge repeating itself all the way through this White Paper—"We must have an increase of output per man- year." It used to be called man-hour, then it became man-week, and now it is man-year; but I think the meaning is very much the same. I do not think we shall get a great deal of additional effort from the workers of this country by mere exhortation. They are getting tired of that. We are suffering not only from maldistribution of manpower, but also from an overall shortage of manpower. Direction of labour is impossible, as all hon. Members on both sides of the House agree. So what? I suggest that some discouragement of employment in unessential industries, somehow achieved, is absolutely vital; and I suggest, further, that some encouragement of labour into the under manned industries is equally vital.

Mr. James Hudson (Ealing, West)

What about whisky in Aberdeen?

Mr. Boothby

I hasten to say that I regard that as an absolutely essential industry. The Government say that we are to have an increase this year of 50,000 in the distributive trades. How do they know, and what are they going to do about it? During the last six months, the increase in the distributive trades has been 200,000. How do the Government know that the increase will not go on at the same rate? Does the President of the Board of Trade think that his little sermon this afternoon will stop a couple of hundred thousand workers coming forward and saying, "I am one of the 50,000 the President of the Board of Trade said we could have"? Something more is needed if we are to get a balanced ecenomy in this country, and I am afraid—and this is the only point on which T rather disagreed with the otherwise admirable speech of my right hon. Friend the Member for Aldershot (Mr. Lyttelton)—that we shall have to face up to a few "titbits," from time to time. I think we must neglect no means. The miners of this country are the shock troops of our national economy, and should be treated as a Corps d' elite, and as such given special treatment. I am persuaded that we must do something on these lines. We may have to give extra food to heavy manual workers generally during the next two or three years, if we are to get out of our difficulties; and other workers will simply have to face that. I think we shall also have to give favourable treatment to some industries as against other industries. On the question of foreign labour, I do not want to enter into an argument with the Miners' Federation, but I would remind them of the error of the Minister of Fuel and Power when he said in September last: It is a completely erroneous conception that more men are required in the coalmining industry. Even from the Minister of Fuel and Power, that was going a bit far. He added that the situation was not half as bad as we thought it was. He said that last September. I think the mining industry will have to face the necessity of some importation of foreign labour into the mines, and if they had faced up to that 18 months ago, when the French did, we would have been in a very much better situation today, and we would have got a very much better class of labour into the mines. Every hon. Member has some prejudice against, and some objection to, some of the measures which this country must take. The President of the Board of Trade was quite right in that matter. Both sides of the House will have to overcome many prejudices before we shall get out of this crisis.

I turn now to the penultimate subject of the observations I am addressing to the House, namely, monetary policy. We are suffering in this country today from a partially concealed inflation. At present, it is an inflation of costs rather than of prices. The index of wages has risen by over 20 per cent. since the war, and it goes on rising, and will go on rising. The general level of prices must therefore continue to rise as well. The inflation is concealed to a very large extent by a combination of controls, rationing and subsidies. The fact remains that £7 billion of purchasing power is chasing about e billion worth of commodities. Somehow or another that gap has to be closed. The most satisfactory way of doing it would be by a great increase of consumer goods, but it is clear from the White Paper and from what was said by the President of the Board of Trade that that way is going to be quite impossible.

Therefore, I suggest to the House and to the Chancellor of the Exchequer that the only alternative is a moderate deflationary monetary policy, for the time being. For 15 years I pleaded in this House for a policy of moderate inflation. Incidentally I say to the President of the Board of Trade that I also pleaded for the rationalisation of industry, although that was not a very popular thing to do at that time. I did it because we were then going through a period of depression caused by glut and lack of purchasing power. I now plead for a mildly deflationary policy because we are in a period of boom caused by scarcity and surplus purchasing power. I suggest to the House that we are all in danger of suffering from what I can only describe as a hangover from Lord Keynes. Lord Keynes, when he published a great many books and pamphlets, was living in a period of depression and lack of purchasing power; and therefore an inflationary policy was the correct one; but we think that he advocated nothing but inflation.

I say that an essential corollary to the Keynes policy of planned economic expansion is that, in periods of boom caused by scarcity, you must have a corresponding and contrary monetary policy. The city editor of "The Times" accused the Chancellor of the Exchequer the other day of contracting out of this business; but I do not know whether the right hon. Gentleman is doing so or not. I suggest, however, that he has a very vital part to play, and I am sure the right hon. Gentleman will agree that a policy of inflation on the one hand plus rationing, subsidies and controls to check it on the other, is no use from the long-term point of view. The unlimited creation of credit has brought about an unhealthy rise in the stock markets, and untaxed profits as a result, which are in themselves inflationary.

The enormous food subsidies are concealing the realities of the situation from the public and have aggravated the disequilibrium between demand and supply. I do not think it would be untrue to suggest to the Chancellor of the Exchequer that the two industries which have been most favoured by his policy, above all others, are the industries of speculation and gambling. The only luxury in this country today is leisure; and that is not a good thing for any country. I suggest to the right hon. Gentleman that the remedy is simple enough, if he has the courage to apply it. It will want some courage. He will have to embark upon a policy of considerable financial stringency. This means, for the time being, slightly dearer money; and it also means a balanced Budget.

I suggest to the right hon. Gentleman that he should now allow the price mechanism to operate over as wide a field as possible. I am not suggesting that it can roam over the whole field. My suggestion means not only the removal of some price controls, but also a moderate reduction in the food subsidies. We shall really have to face up to that, with the exception of milk, which I regard as vital from the nutritional point of view. I think we ought to accept a moderate increase in the prices of sugar, bread and bacon. In order to balance the Budget it will be necessary not only to reduce to some extent the food subsidies but also to increase taxation which is not a deterrent upon enterprise; in other words, to increase indirect taxation, including the Purchase Tax. I joined in the merry game last year. I would remind the Chancellor of the Exchequer, of asking him from this side of the House to abolish the Purchase Tax on many articles. I regret it—at least I do not regret it, hut T now see that it was unwise. We shall have to reimpose some of that Purchase Tax. I give the right hon. Gentleman clear notice, here and now, that I do not intend to move, as I moved last year, a reduction in the tax on whisky.

He ought at the same time to aim at reducing taxation on earned incomes at every stage and every level, and abolishing P.A.Y.E. on all earned incomes up to £500; and increasing indirect taxation proportionately. It may be argued that this is not a fair method of taxation. Indirect taxation is never quite so fair as direct. But this is a question of equity or efficiency; and we have got to come down on the side of efficiency. It is unpalatable, but the position is unpalatable. If a great many people who passionately love smoking have to pay 5s. for a packet of cigarettes, they may work even harder to earn that 5s. I only put that as a suggestion.

I come to the question of trade policy. I will tell the right hon. Gentleman that I am not going to bore the House or himself with a further dissertation on the subject of the American Loan. I will content myself to say that it has proved to be a shot of morphine, and little more. We have been doped by the Government for a year, with films, tobacco and subsidised foods; and the President of the Board of Trade has virtually admitted it. The gradual return to full consciousness is necessarily an exceedingly painful process. The country has not, of course, yet realised the situation. There is no doubt about that. We are a small island with a population of 47 million, brought into being under wholly artificial conditions, and suddenly found to be without any foreign assets. It has taken two world wars to undermine our economic strength; but it has been done. I am quite prepared to admit that the responsibility does not lie solely upon the shoulders of this Government. Others will have to answer as well at the bar of history.

The only assets left to us today are our coal, our soil, our industrial skill and our markets. Unless we make full use of these four things I do not see how we shall get through. We have to convert this island into an agrarian and industrial country, as well as a mercantile country. The idea that we can get through with restrictions on output, guaranteed weeks and minimum wages, paid without any relation to results, is almost as ludicrous as the idea that next July we can make sterling freely convertible, and thereafter match our imports with exports. Those who talk so glibly about a return to laissez-faire and multilateral free trade blind themselves to the realities of the position. In a world of scarcity, markets are no longer the magnets they used to be, which means that a purposeful direction of trade is more and not less necessary. In a buyer's market, which might easily come in two or three year's time, we shall be faced with the most intense competition from the United States, who are preparing a tremendous export drive. In the situation which faces us, only sales against hard cash can bring us any real advantage. Yet, according to the right hon. and learned Gentleman, we are drawing 42 per cent. of our imports from the Western Hemisphere, and selling in return only 14 per cent. of our exports to it. That is a very serious situation.

To suppose that we can ever sell a large volume of goods to the United States for the next 50 years, as the right hon. and learned Gentleman suggested, is to be a victim of a completely lunatic illusion. It is quite out of the question. President Truman, only the other day, accepted the escape clause to the Reciprocal Trade Agreement, which allows the United States to terminate any concession which, in fact, increases American imports. If the right hon. Gentleman thinks that for the next 50 years America will accept imports in large quantities, then he had better go and have a look at the United States. He will find that that "just ain't going to happen."

I believe that there is only one hope for this country, and that is planned trade on a reciprocal and regional basis. I believe that in the end we shall be driven to it, but only after much unnecessary suffering on the part of our people. Meanwhile His Majesty's Government have tied themselves to the greatest deliberately unplanned economy in the world. There is not a vestige of a sign of a comprehensive plan for world trade. But we are not allowed to have a regional plan. We are committed to a policy of non-discrimination. Let me give one brief quotation, from the "Economist": Whatever else the Labour Government may be able to escape from, the operation of the law of supply and demand—that law of the jungle that Socialist orators are so fond of denouncing—they will have to face it in export markets. However much they may succeed in the domestic market, in substituting the welfare of the producer for service of the consumer as a test of economic efficiency, they cannot do so in exports. They can only hope to solve the problem the Loan has set them by adopting the principle from which the trade unions shy away as the devil from holy water, the principle of cutting costs of production to the lowest attainable figure.… They have just about three years to prove that their economic policy can meet the brutal test of economic efficiency. Of course, they will not meet that brutal test.

I believe that the deep answer to the problem of how we shall eventually find our way through this crisis is a threefold one: It lies, first, in the integration of our national economy with that of Western Europe. I believe that by ourselves we are too small; second, in an intensive policy of Colonial development; and third, in reciprocal trade and payment agreements with our own Dominions. I do not think that these policies are contradictory. On the contrary, I think that they are entirely and completely complementary. Take France, Her Monnet plan for exports is much the same as that put forward by the President of the Board of Trade. If this country and France are going in for reckless competition with the same class of goods for export, in the same limited markets, where does anybody think we shall be at the end of it all? We are already doing so in the case of certain goods. If we go in for reckless competition with France in the export markets of the world, we shall come to a sticky end.

Take the heavy industries of Western Europe. Are we going back to the days of the 'twenties, when there was competition and ruthless price-cutting between the industries of the Ruhr, the Saar, Luxembourg; Belgium, Lorraine and this country, which resulted in the total ruin of the whole lot by 1929? Or are we to have a policy of co-ordination and integration of the heavy industries of Western Europe administered, so far as the broad lines of policy are concerned, by an international authority? I believe that the alternative to the economic integration of Western Europe is the final collapse of Western Europe and, with it, the values of Western civilisation. What would happen then? Sooner or later, Communism would reach the Channel, and we should become the 49th State. I should view that prospect with greater equanimity if I did not see the possibility of two great opposed groups facing each other in a way which might easily end in another explosion, with this country as an advanced aircraft carrier for the United States. I do not want this world to he divided into two great opposing blocs; I want to see a middle and balancing bloc in which we can play a most important part.

I have never made so long a speech as this before in the House of Commons, and I do not think that I shall do so again. I have already had to leave out four or five most important points. I want to conclude with a quotation which I think we should all do well to take to heart. [An HON. MEMBER: The "Economist"?] No, not from the "Economist," but from a man who lived long before the "Economist" was thought of. He is my political hero, the first of the Tory democrats, Viscount Bolingbroke, one of the greatest statesmen this country ever had. [An HON. MEMBER: "Exiled."] We have often exiled some of our best men. This is the quotation: The glory of a nation is to proportion the ends she proposes to her interest and her strength; In this connection I would ask the Government to consider whether we can really continue indefinitely to maintain well over one million men under arms, and not concentrate on a much smaller, technical, mechanised and highly-skilled force for the years immediately ahead, as, under the guidance of the right hon. Gentleman the Leader of the Opposition, we did after the first world war. Lord Bolingbroke continues: The means she employs to the ends she proposes; and the vigour she exerts to both. We have to realise that we are inhabiting a different world from the one in which we went to war in 1939. Unfortunately a great many people in this country, of all parties and classes, have not yet begun to realise that. When they do, and take the necessary steps, we shall get through all right, as we have always got through before.

9.26 p.m.

The Chancellor of the Exchequer (Mr. Dalton)

Far from contracting out, as the hon. Member suggested, I am anxious to make a brief intervention on financial points raised in the Debate. The House will appreciate that I am speaking under some obvious limitations, because I shall have to speak again before long on certain matters of which it would be premature to speak now. I am anxious not to say tonight anything which might, between now and that other speech, give warning of action which might be profitable to those concerned. This limits me a little; nevertheless, I will endeavour, subject to that limitation, to reply to certain points raised by the right hon. Member for Aldershot (Mr. Lyttelton), and others, on financial topics.

Questions have been raised about taxation, on which, obviously, I cannot say anything. I have listened with attention, and I will ponder all the advice which I have received. Questions have been raised also about the overseas balances in regard to which I would refer those who have spoken, particularly those who have spoken in terms of great gloom, to a very clear and cogent article, which I read this morning in the "Daily Herald" by my hon. Friend the Member for North Battersea (Mr. Douglas Jay). I am sure that any hon. Member who has not read his "Daily Herald" this morning, would profit by reading, at any rate, this article. I do not recommend the leaders, because they are not invariably 100 per cent. in support of His Majesty's Government. That, however, illustrates that the freedom of the Press has penetrated even to the firm of Odhams.

To return to the serious contribution of the right hon. Gentleman the Member for Aldershot, if I may, I would dispute with him the meaning of his figures. I think he took too gloomy a view, based upon some figures which he gave regarding the growth of the supply of money, by which I think he meant—he will correct me if I have not understood him—the note issue plus deposits in the banks. If we break that up, we find that the increase in notes was, of course, very considerable in the years of the war. I have had the figures checked since the right hon. Gentleman spoke. The note circulation rose by some £150 million a year in the war years, and afterwards, from Jannary, 1945, to January, 1946, it rose by about £110 million; but I am glad, and I am sure he is glad, that in this last year, from January, 1946, to January, 1947, this rise has practically flattened out and the increase was only £33 million, as compared with over £100 million before. I hope that that is a trend that will continue. Thus, so far as the note circulation is concerned, there was a rapid rise, which flattened out to a curve which we hope may, in a moderate degree, be reversed. As regards bank deposits, these have declined, and this decline is rightly connected with the fact that, in the last month or six weeks, there has been a substantial surplus of current revenue over current expenditure.

Mr. Lyttelton

That is always the case at this time of the year. It is seasonal.

Mr. Dalton

Yes, because this is the time when people pay their Surtax with pleasure, and money comes in well. The question is whether the phenomenon of the surplus, from week to week, of revenue over expenditure may continue in the future; but I must be careful, for the reasons already given, not to say much more, other than that this has happened in the first months of the new year. The point I am making is that the fall in bank deposits has been definitely associated with the fact that, in this period, the surplus of revenue over expenditure has not merely arisen in the usual seasonal way, but has been substantial, and on a much bigger scale than in previous years.

We may well be entering on a period when this statistical phenomenon, which has disturbed the right hon. Gentleman, may take another form. It is my hope that that will be so, and that this continuing rise will be checked in regard to note circulation and to bank deposits. Having said that, let me quote from "The Times" of this morning. "The Times" this morning said in an article concerned with the Debate today: Nevertheless the inflation has fallen well short of its extent in 1919–20. It went on to say: Any large dislocation of industry through strikes has been avoided. Those are two very important plus points, if I may so put it, in the present situation.

Mr. David Eccles (Chippenham)

In reading "The Times" article this morning I came to the conclusion that there was great confusion of thought. What they had failed to see was that today we are furnished with the physical controls to restrain rises in prices, which we had not got in 1919. Therefore, "The Times" article was quite wrong because the writer was thinking of rises of prices. What I am sure the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) was thinking of was the potential inflationary danger.

Mr. Dalton

That may well be so; indeed the hon. Gentleman has forestalled a point which I was about to make. He and I are in agreement on this matter. These controls have been very helpful in checking the development of actual inflation. This is what "The Times" leader writer also apprehended. He points out—the hon. Member for Chippenham (Mr. Eccles) has supported his argument, and I agree with them both—that the actual inflation—and we are not now talking about potential inflation—has been very much less during these immediate postwar years, than it was in the corresponding period after the first world war. I think that is right enough, because we should learn from our experience of the past.

In order to illustrate and emphasise the point which the hon. Member for Chippenham has made, I should like to give here one or two figures of prices which I think the House should have. I am not trying merely to make points; I am trying to develop a serious argument, as did the right hon. Gentleman, and I think that, while not wishing to minimise the gravity of the problems confronting us, we can take some courage from the fact that, so far, we have avoided the extreme fluctuations which marked the post-first world war period. I will take two indices in turn. Taking the cost of living figure for 1914 as 100, that figure rose to 249 in 1920. This was a tremendous actual inflation; there was no question of a potential price rise, but an actual rise by nearly 150 per cent., from 100 to 249. There was then a slump associated with a deflationary policy. I will not argue which was cause and which effect. We had both; we had deflation and we had the slump, and we had them together. As a result, the price level came down with a crash from 249 in 1920, to 174 in 1923. There was also a tremendous increase in unemployment, and in general depression.

That was what happened after the first world war. Since the second world war, still taking the figure for 1914 as too, the index has risen from 158 in 1939—the year in which war broke out—to 203 in 1945. Since that time, we have held it stabilised by means of the food subsidies, which have been referred to. That is a rise of only 30 per cent. as compared with 150 per cent. in the comparable period after the first world war. Surely that is much better? We can discuss the subsidies, and I promise not to omit the subject from my Budget speech. But, whatever else may be said about subsidies, they have prevented runaway inflation such as we had after the first world war, and, I hope also, the danger of a corresponding downward movement in a deflationary direction. In the light of these figures, comparing the increase of 150 per cent. after the first world war, with the increase of 30 per cent. in the corresponding period after the second world war, it would be true to say that we had nearly five times as much inflation after the first world war as after the second, in the corresponding periods. That is a very reasonable proposition. Why should we regret this? Hon. Members opposite are against inflation, as are we all, and they should, therefore, rejoice with us at this.

One of the things which have held it in firm bonds has been the system of controls which we have developed. The right hon. Gentleman said as much in one passage of his speech; and these controls might, indeed, have been very valuable after the first world war, in order to prevent the deflationary downfall which then overtook us. I am a little perturbed at the re-entry upon the scene of advocates of deflation. That is a word of very evil memory. One must not pay too much attention to words, apart from their substance, but it is a word which has been associated in the past with very foolish policies. One hon. Gentleman has told us how he stood up, in a minority in the House of Commons, and declared himself against the deflationary tendencies of that time. Let us be very careful not to commit ourselves to the proposition of deflation—

Mr. Boothby

Could not the Chancellor find another word for it?

Mr. Dalton

I was about to say that what we should seek to do is to lessen the inflationary pressure. While recognising that these controls, operated by this Government, have prevented any inflationary pressure from becoming an inflationary break-through, as it was after the first world war, every one knows the difference between pressure which does not succeed in its object, and pressure that breaks down the dams, which is what happened after the first world war.

May I now give two illustrations of what happened following the first world war, which I am sure we shall all wish to avoid now. I take my illustrations from two basic industries which, we all agree, we must sustain and strengthen. One is coal and the other is agriculture. In the case of coal, there was a rise in coal prices up to the peak—which was inflationary—of 33s. 8d. in 1920; then they fell to 19s. 9½d. in 1923. They crashed down to that figure. How much better would it have been if a steady course could have been kept intermediately between those two extremes? But that would have needed controls.

Mr. R. S. Hudson (Southport)

What about the price of coal now?

Mr. Dalton

I am talking about what happened in 1923. The right hon. Gentleman the Member for the City of London (Sir A. Duncan) knows a great deal about this, because he was Coal Controller at that time. He was what the Leader of the Opposition sometimes calls a high functionary. He was Coal Controller until March, 1921. At that date, controls were completely removed from the mining industry; and the result we all know. There was a collapse of prices, a collapse of wages, a collapse of employment, a series of stoppages in the industry, and the industry never subsequently recovered anything approaching its former prosperity. [interruption.] I have just drawn attention to the fact that there were long stoppages during which no coal was produced, culminating in the great stoppage of 1926, lasting many months and imposing many hardships. Believe me, it is of more advantage to have a Government in power which has the confidence of the miners, with the result that we do not have these stoppages. Whether that would have been the case if the party opposite had won the General Election is a matter for debate. I was responding to the intervention of the right hon. Gentleman; but I was seeking, before that, to develop the argument that, after the first world war, we had inflation, which passed from the potential to the actual, and then we had an inflationary collapse, and the result was disastrous. I submit that, having learned from that experience, we should now seek to follow a steady course, in which inflationary pressures are, indeed, relieved, but in which inflation is not permitted to set in.

With regard to agriculture, it was the same story, if not worse. The Corn Production Act was introduced in 1917. In 1921 there was a tremendous slump in agricultural prices, and the price of wheat collapsed from 95s. a quarter in 1920, to 47s. in 1921, and to 4os. in 1923. In 1921, the Government of the day, under the leadership of Mr. Lloyd George, as he then was, repealed that Act, and thereby put the farmers into bankruptcy and the agricultural workers into penury. So much so, that the wages of agricultural workers fell from 36s. 10d. a week in 1921 to 27s. 10d. a week in 1922, and there was a drop of 104,000 in the manpower employed on the land, which has never been recovered. Between 1921 and 1923 the manpower fell from 996,000 to 892,000. These two cases of coal and agriculture, illustrate the unhappy series of events after the last world war, when we allowed, first, uncontrolled inflation, and, following that, a wild deflation, to occur.

I offer the House just one further statistical thought. As we all know, we have been suffering from a freeze-up, and from many inconveniences and much wretchedness, following upon the shortage of fuel. We know that; and we know to what figure unemployment rose at its worst, and how long it remained at its highest peak. It rose to 2,373,000, including unemployed persons who were not drawing benefit. The figure of 2,373,000 represented 15½ per cent. of the insured population. It stood at that figure for a week or so, but, since then, it has rapidly declined. That was a most deplorable situation. But in 1921 there was an average of 16.6 per cent. of the insured population unemployed throughout the year. For five years, from 1931 to 1935, the percentage of unemployment stood higher than the top point at which it stood in this last week of trouble. This is history, and is not in dispute; and it helps us to see these things in their proper perspective. Before the war, the average number of unemployed stood at two million, month after month and year after year Those were deplorable days to which we have no intention of going back. They were brought about by the foolish policies pursued after the last war. I would hasten to add that, although it is important that we should see these things in their proper perspective, none the less, it is our determination never to permit to happen again what happened during the past few weeks. We are all united on that; but we do not get any nearer to our achievement if we fail to draw the proper lesson from what has happened in the past.

The last point on which I should like to say a word is on the subject of interest rates and cheap money. A certain agitation has been going on lately against the policy of cheap money. To fortify myself to meet these arguments, I have checked up the money rates in the corresponding period at the end of the first world war. One thing is quite certain—

Mr. Lyttelton

May I interrupt the right hon. Gentleman? There has been no complaint against cheap money, but there has been criticism of the money rate being forced too low, and resulting in an inflationary tendency. That is quite a different thing

Mr. Dalton

Let us put it this way, for I do not think that there is really any disagreement between us. A number of persons, including writers to the financial papers, have been arguing that the rate of interest has been too low, and that it would have been better if it had been higher. This has been linked up with the argument about the inflationary pressure. We have been told that the inflationary pressure has been increased by the cheap money policy, which the Government have pursued. I have looked up the figures, and it seems to me that dear money in the years immediately following the war prevented neither inflation nor deflation. Under both, the rates of interest were too high and, therefore, I believe, this question of interest rates may be largely set aside, so far as the general argument about deflation and inflation is concerned. Whereas we are now paying only ½ per cent. on Treasury Bills, in 1919, when uncontrolled inflation was going on, the Chancellor of the Exchequer was paying 4½ per cent. in October, and in November 5½ per cent. on Treasury Bills. When deflation had set in, they were still paying too much. In 1921 they were paying 6 per cent. in March for Treasury Bills. They were paying too much both when inflation was taking place and when deflation was taking place.

The same is true with regard to long-term rates, on which we are now paying about 2½ per cent. In 1919, when inflation was at its height, the Government were issuing 4 per cent. Victory Bonds at a discount of 15 points, a thing I would never do. My present advisers at the Bank of England would never allow me to do that, and a more discreditable thing one could not imagine. When deflation gets under way, when we get to March and April, 1921, 3½ per cent. Conversion Loan was issued in exchange for 5 per cent. War Bonds at a price of 163. That is a shocking thing, as I am sure right hon. Gentlemen opposite will agree. Whether inflation or deflation was the policy, too much was being charged by those who lent money to the State and those who lent money to industry. We have sought to correct that; I shall be prepared, and, indeed, I fully intend in my Budget speech, to offer an explanation and a defence of the cheap money policy which has been pursued by the Government in the last 18 months. This must be presented in relation to the Government's policy as a whole; and that is too wide a subject for tonight.

But I am prepared to say this, in order to dispel any uncertainties which may have arisen, in the City of London or elsewhere. I still regard, as I did a little while ago, 2½ per cent., and not any higher rate, as the appropriate long-term rate, in present conditions, for British Government borrowing. And I would like to repeat what I said at a gathering at the Mansion House on 16th October last year in this connection: We have been gradually conditioning the capital market to a long-term rate of 2½ per cent. for gilt edged. We have met some psychological resistance, but I am convinced that it is in the national interest that this should be overcome. The advantages of low rates of interest, both to the Budget and to the financial operations of local authorities, of public boards and of private industry, and hence to our great aim of full employment, are so clear that I am sure that our cheap money policy should continue to be resolutely pressed home. I added these words, the general meaning of which should always be in our minds —and I am sure the hon. Member for East Aberdeen (Mr. Boothby), who has aften developed this point, will agree with me—that when a country has a National Debt, as we have now, of more that £24,000 million, this Debt is only endurable if the average rate of interest is kept low. Indeed, this is a necessary condition of any substantial future relief of taxation. Reference has been made to tax reliefs; but we cannot hope for any substantial future tax relief, unless we hold down the rate of interest, firmly and deliberately, on this enormous dead weight mass. I went on to say, on that occasion: Any appreciable rise in the rate of interest would be the surest road to inflation, which would then seem to the plain man the only way of escape from a burden which would have grown beyond all bearing. My predecessor in office is not present, but I have often discussed the matter with him, and I think he would be in complete agreement with that statement. I think that should be in our minds when suggestions are made that it would be beneficial to allow the rate of interest to rise.

I hope to be allowed to ask the House for greater indulgence when I come, soon after Easter, to make my Budget speech. I shall then be able to deal much more fully with many of these topics. I hope that, with the exception of those matters which cannot be touched upon tonight without imperilling the Budget plans, I may have at any rate, offered some reply to the arguments adduced by the right hon. Gentleman opposite.

9.56 p.m.

Mr. Christopher Shawcross (Widnes)

I find it a little difficult to follow my right hon. Friend the Chancellor of the Exchequer, in so far as he has dealt with many of the points made by hon. Members opposite, and in particular has dealt with some of the extraordinarily fallacious suggestions made in regard to inflation. I must crave the same indulgence of the House as did the hon. Member for Oxford (Mr. Hogg), because I have a very bad cold, and it may be a little difficult for me to make myself heard. We have heard a series of speeches from the Opposition, in not one of which, except that of the hon. Member for East Aberdeen (Mr. Boothby), was there the slightest suggestion of any constructive policy.

Major Roberts

Nonsense.

Mr. Shawcross

I did not happen to be present to hear the speech of the hon. and gallant Member for Ecclesall (Major Roberts). I have no doubt his was a very remarkable exception. All those that I have heard, with the exception of that of the hon. Member for East Aberdeen, seemed to me to contain nothing but a lot of criticisms, some of them good and some of them bad, of the White Paper. Many of them, I am sorry to say, were criticisms which some of us on this side of the House would have liked to make ourselves. However, I did not hear any alternative policy or plan proposed by the Opposition to deal with the future situation. I rather expected that might be the case, in spite of the tabling of this Amendment—which, of course, I cannot anticipate, because it has not been moved yet. I thought it might be the case that no coherent plan or policy would be put forward from the benches opposite.

I made an attempt over the weekend to try to ascertain what the Conservative Party policy for the future was in the present circumstances. I made some inquiries, and eventually I was referred by a staunch supporter, and a very old one, of that party, to that excellent organ of Conservative opinion, "The Recorder." I do not know whether it is to be regarded as an official publication; but certainly it is a highly representative one. Although it may not be representative of views put forward in this House, I am sure hon. Members on this side will agree with me that it is typical and completely representative of the views put forward in their constituencies and throughout the country. On the front page of this edition, if I may be permitted a very short quotation from it, one finds what is the alternative, and what would be the policy that that alternative Government would carry out. I ask the leave of the House to quote these few words. It starts off with a headline saying that the Government will fall within three months. It then winds up: Who will take over? If there had been a resolute Conservative Opposition they could have taken over. Already some of the Tory leaders are appalled by the undoubted difficulties. But there are at the call of the Conservative Party plenty of potential leaders, some of them yet unknown, and some with down to earth experience of Britain's needs today who can inform the Government—

Sir Peter Macdonald (Isle of Wight)

On a point of Order. May I ask on what authority the hon. Member is reading out of the newspaper to this House?

Mr. Shawcross

I did ask permission, and I said that with the permission of the House—

Sir P. Macdonald

I rose to a point of Order. I asked if hon. Members are allowed to read newspapers in this House of which we have never heard.

Mr. Speaker

I have always understood that an hon. Member could quote an article. If an hon. Member has never heard of that paper, I cannot answer for that.

Mr. Shawcross

It goes on: Who will lead? The crisis and the chaos are here. The man to lead is Winston Churchill. He can lead until a new leader from the present shadow Cabinet, or a new leader altogether, has emerged and proved himself. Then Mr. Churchill would be happy to return to dictating his story of the war. That is the alternative Government. What is their policy? This is the policy: The Government would pull Britain through, and give freedom to our industrialists and traders, who alone can bring Britain back to solvency. On an inside page the policy is said with more definition to be: Hard work. thrift, and independent personality. But there is another thing here, which is most important, and that is that the complete and immediate remedy for the coal crisis—

Sir P. Macdonald

On a point of Order. May I be allowed to read the leader of the "Daily Worker" of this morning?

Mr. Speaker

The hon. Member is making quotatons from a newspaper. It does not matter of what colour or party it is. He is entitled to do so.

Mr. Shawcross

This is the immediate and overdue remedy for the coal crisis: The wise man would have prepared, but the Cabinet preferred to let Mr. Shinwell, their Minister of Fuel, gamble on warm weather, rather than offend their masters, the trades unions, by allowing 50,000 willing Poles to go underground to produce coal who could have been placed strategically throughout the country. I read that because that is typical of the kind of—I was going to use the word "drivel," but I will refrain from doing so. That is typical of the kind of idea that hon. Members opposite and their supporters throughout the country have about the conditions of industry and coal getting. Indeed, we had a typical example today by the hon. Member for East Aberdeen. He quoted out of context with a great show, as though he were producing an enormous point, some words of the Minister of Fuel saying it was a misconception to think that the solution of the coal crisis was the introduction of more labour into the industry. What the right hon. Gentleman no doubt meant and the hon. Member for East Aberdeen, who is not here, like other hon. Members opposite did not understand, was that although many of them have been in the pits and even done some work in them, a colliery pit is not a sort of large quarry into which we can put masses of unskilled labour and immediately get coal.

I want to refer a little more to this paper, because it contains some rather useful things. For example, if we turn to the back pages we note that they are full of reports of company meetings. There is company meeting after company meeting, and reports of speeches made by the chairmen, which are not boastful but which all record dividends, even of 25 per cent. In one case, an investment trust has produced an addition from eight per cent. last year to nine per cent. this year. If we turn from the back to the front page, we find complaints about the shortage of food and if we turn to the middle, we find a large advertisement for an American patent medicine which claims to be an immediate cure for over indulgence in food and alcohol. I do not know much about that newspaper, except that it is typical of, and represents the views of, the party opposite. It is typical of their kind of thinking, or lack of thinking, and the kind of policy that we should have as an alternative.

I would like to refer to one matter in particular in regard to what has been said about planning, and this, again, relates to the ignorance of the party opposite and their supporters in the country. There is an old Chinese saying that if you want to plan for a year you plant corn, if you want to plan for 10 years you plant trees, and if you want to plan for 100 years, you plant men. We have had some rather annoying references to Tory misrule for the last 20 years, and I do not want to deal with that matter, but is it not a fact that we are now suffering from what was sown in this country by free, uncontrolled -private enterprise 100 years ago? Certainly, that is so in the basic industries in Lancashire. [An HON. MEMBER: "Under the Liberals."] I thought I spoke quite clearly of uncontrolled, free, private enterprise. I said I was not going to refer to Tory misrule.

These are plain historical facts which the House should remember as a background to the White Paper and as a background to what my right hon. and learned Friend the President of the Board of Trade said when he spoke about what had taken place between the two wars. One has to go back further than that in the case of the basic industries. One has to go hack to the time when the children were planted in the mines and the cotton mills 100 years ago. One has to go back to the machinery in many of the pits and the cotton mills which was already obsolete long before the first World War. One has to go back, it may be, only as far as the beginning of this century to the preparations and armament for the first World War. Those are facts from which nobody can escape; these are the results of free and uncontrolled private enterprise. Therefore, I could not help feeling that it might have been a little more than a coincidence when one hon. Member opposite said that his remedy, reluctant though he would be to propose it, would be once again to make use of child labour and delay the raising of the school leaving age.

I hope I have not taken up too much of the time of the House. [An HON. MEMBER: "You have."] If so, it has been because of certain interruptions. I want to deal with one aspect of this plan, and that is the figures in relation to defence. [An HON. MEMBER: "What plan?"] hon. Member asks what plan. I suggest—and I hope my right hon. and learned Friend would not regard this as superfluous—that one should remember, when considering the plan which he exposed and explained so lucidly, that even hon. Members opposite could see it plainly this afternoon, that this must be considered against the background of the, plan put forward and accepted by the country in "Let us Face the Future" [Laughter.] Hon. Members may laugh, but I assert, and I day contradiction, that nothing has proved more clearly and firmly beyond all possible doubt than the present cold weather crisis, call it what you will, the absolutely essential need to carry out that plan in full with the utmost speed—to nationalise the mines, as has been done, and too late in the opinion of some, to nationalise electricity, and to nationalise transport.

That is the basic plan, and though hon. Members may laugh, I invite them to say whether, if they were now in power, they would return the mines to private enterprise, whether, if they were now in power, they would reverse the policy of nationalising transport, and whether they would return to private ownership what is already in public ownership in the electricity industry. [Interruption.] We have no answer at all to the question whether hon. Members opposite would return the coal industry to private enterprise. If hon. Members take that view, the fact is that thousands of their supporters—I think they still have thousands—believe that if a Conservative Government came into power, one of its first actions would be to return the mines to the former private owners. Whether that be true or not, I will leave it aside, and go to more immediate and detailed plans contained in the White Paper, which is only a plan in detail for operations based upon the basic plan of nationalisation, and it can be carried out only on that basis. It is nonsense to say that it contains no plan.

I come to the one point which I want to make concerning diversion from the total labour force for the production of wealth in this country, to defence. There are figures in all these various papers—the White Paper on Defence, the White Paper on—[HON. MEMBERS: "The Recorder.'"]. I was not including "The Recorder" although there are a good many figures in it. They remind me more of the great ballad "The Hunting of the Snark." There are three White Papers, and I have taken the trouble to look at them, in regard to the three Service Estimates. From those Estimates I have found that the maximum number of personnel in the Forces who are to be provided for when those Estimates are passed is no fewer than 1,772,000.

If we take the mean of that figure with the figure to which, according to the White Paper, they are to be reduced at the end of the year, we get 1,428,000, which is just about the figure which the White Paper said was current at 31st December, 1946. The next figure I want to go to is related to those who are engaged in production for the Services, and it is 459,000. I take that to mean, unless I am corrected, people employed in armament factories, arsenals, shipyards, workshops and so on, and directly engaged in the manufacture of ships, guns, armoured fighting vehicles and so forth, and does not include people engaged in the extraction of coal, the manufacture of raw materials, transport and other services to supply those factories.

There is another figure which does not appear anywhere, in terms, but it appears under the heading to what are called "Miscellaneous Items" such as the supply of food, fuel oil, transport, personnel and other items to maintain the Forces. The figure is 189,000. If we add those three figures together we get £413,000 to be spent on building supplies, stores and services. That means, according to the best calculation I can make, that there are between two million and three million workers in industry devoted whole time directly or indirectly to the supply of the Forces.

Mr. Maude (Exeter)

May I ask the hon. Member which part of the "Hunting of the Snark" he proposes to quote, and when?

Mr. Shawcross

I am obliged to the hon. and learned Member, and I could tell him the answer to his question. I would have to look again at the illustrations, because I am not sure whether he more closely resembles the Beaver or the Bellman. I was referring to the best calculations I can make on the published Estimates and the White Paper.

I wish to ask the Minister of Defence, when he replies, whether these figures can be confirmed or denied, or whether the correct figure can be given. I will give him the details later. What it means is that during the coming year roughly between three million and four million are either engaged directly in the forces or are otherwise on warlike purposes. I want to ask whether that is so. It is plain that what we have now is the 10-year rule in reverse. Hon. Members will remember that after the last war there was instituted, at the instigation, I believe, of the right hon. Gentleman the Member for Woodford (Mr. Churchill), what was known as the "ten-year rule." It was a kind of directive to the Service and other Departments and to Chiefs of Staff that no major war was to be expected within 10 years. It was a good rule when it was introduced, but the trouble was that it ran on year by year until 1935 or 1936. I suggest that we now in effect have that rule in reverse; in other words, the Service Departments have to plan on the basis of having to contend with a possible major war within the next 10 years.

I ask the Government to tell this House and the people a little more frankly how much it is necessary to devote in preparation for war, and why. I think Members will agree that the people are extremely worried about the amount which has to be devoted in preparations against war, for securing our commitments and police duties. If this Government from the outset have made a mistake of a major character, I would say it is that they have lacked boldness. They have too quickly removed austerity because hon. Members opposite seemed likely to complain, secondly, they have allowed imports which we could, perhaps, have done without, and thirdly, they have not warned the country sufficiently of the troublous times which lie ahead. I should like the Government to say if it is right—and I think it is right—as the hon. Member for East Aberdeen has said, that bad as things may look at the moment, it is possible they will become infinitely worse; in fact, we may be on a slippery slope, or whatever the metaphor may be, moving in a swift current towards the rapids. I do not know why hon. Members opposite laugh. I urge the Government not to be frightened, but to be bold. The people of this country can take it, and will take it, and will do what is necessary if only they are told in clear and certain terms. As the President of the Board of Trade Said, we have a great asset in this country, namely, coal, but we have a far greater asset than coal, something which no other nation has, something which has proved itself over and over again, and that is the spirit of the people.

10.20 p.m.

Sir Andrew Duncan (City of London)

The primary purpose of the White Paper is to bring home to the country just how serious the national position is, so serious indeed as to constitute a challenge to all. The survey does not pretend to outline a long-term plan for the rehabilitation of our position, but I was encouraged, by what the President of the Board of Trade had to say this afternoon, to hope that the Government have it in mind still to prepare—speedily, I hope—a long-term plan. However, valuable surveys and short-term plans are they can only be properly appraised against the background of a long-term plan. We find it extremely difficult to assess properly, without a background, the part of the White Paper which seems to constitute the plan for 1947. But there is a further difficulty, and that is that the present breakdown must have caused some change in the plan, either immediate or later in the year. So, we do not quite know yet what qualifications we should apply to this plan in respect either of the coal or general industrial position.

Whether the recent weather did, in fact, cause a breakdown, or whether it merely accelerated and accentuated a crisis which was already on its way is not a matter that we need have controversy about, but there are two lessons, as I see it, that we ought to draw from this breakdown. The first is that stocks were inadequate for such emergencies as may develop in winter and did, in fact, develop this winter. We should begin now to calculate what stocks should be put in for next winter. The second lesson—and it is equally important—is that it is quite hopeless to expect to replenish depleted stocks during winter months, except at dreadful cost. Warned, as we have been, the country will certainly expect the Government to make ample provision for next winter.

There is another consideration which we must keep in mind. When the war came to an end, as the President of the Board of Trade said today, industrial firms, returning to their peacetime activities, although they had equipment, manpower, and coal stocks, did not have, in many cases, the raw materials in stock, or the parts or components which were necessary to marry to a regular flow of production. But rise in productivity in the last quarter of 1946 demonstrates; I think, that industry was just beginning to find its way through all these embarrassments. Progress was being made in fitting together the different processes of essential industry. That is an encouraging thing, because it means that in spite of postwar difficulties we were successfully emerging from our immediate problems. It is also true, as the right hon. and learned Gentleman said, that there were other longer term problems that were still to be solved, but we were emerging, not unsuccessfully, from our immediate difficulties. Now, this breakdown in coal, besides causing a widespread breakdown of production in coal areas, has certainly caused serious dislocation in many of the intricate and innumerable crossings and channels that go to make up the industrial stream. If I may vary my metaphor, it may be that bottlenecks will survive a long time yet before we can get back into the rhythm of major production.

What is the plan proposed for 1947? We may argue as we choose about the past or our hopes for the future, but I am sure that what this country wants most to know is what is the prospect for this year. Therefore, I ask the House to consider that this plan is based upon the target of 200 million tons of coal per annum. Coal, as the President of the Board of Trade reminded us recently, is not just coal; there are infinite varieties of coal. I would like to pay tribute to the Mines Department and more recently to the Ministry of Fuel and Power for the admirable work which they have done in promoting and furthering coal economies. But I fear that they have been so busy taking the motes out of the eyes of industry that they have forgotten the beam in their own eyes.

It would be true to say that for the last few years the economies made in fuel utilisation have been more than neutralised; at any rate, they have been neutralised to the extent of many million tons. On a calculation carefully made, they were, I believe, neutralised last year to the extent of 10 million tons. That was by reason of the increased impurities in coal, mainly dirt and stone, and by the fact that firms had now to draw their supplies from a great many more sources than in the past. This resulted in firms being asked to take coal which was not always good in quality, and which was not always suitable for the purposes required. When tonnage is the major preoccupation in coal supply there is always a natural tendency for both quality and uniformity to fall. I suggest that the Minister of Fuel and Power should devote his full energies to such savings as can be made this year. I believe it is a matter of great discouragement to industrial establishments to have to spend time, thought and money on making fuel economies, and then find that their allocations have been cut down. That is bad enough, but to find that the allocations which have been made are of poor quality coal is a very great discouragement. It is an even greater discouragement to firms who have spent considerable sums of money—for the purpose of augmenting their fuel supplies—by converting some of their plant to oil. I do not pretend that disappointment can be avoided so far as allocation is concerned, but I urge that it should be avoided so far as quality and uniformity are concerned.

As to the coal budget, I know that the President of the Board of Trade would not expect us to regard the figures which he gave today as anything more than provisional. I should say that one can only get a fairly broad picture of what is proposed in the plan. It seems that in building up coal, the steel industry has to operate on a reduced level compared with 1946. The capacity for a substantial increase on the 1946 level is there. By maintaining the 1946 coal supplies, a greatly increased production of steel could be obtained this year because the steel industry has been converting to oil on a large scale. The Government are planning for the steel industry to run at anything from three-quarters of a million, to a million tons less capacity than they are capable of running at even if they were able to obtain only their 1946 coal supplies. Manpower and capacity will be used inefficiently at a time when maximum production per man hour is of the highest importance. The same restraint follows right through to the engineering and metal using industries.

Sir S. Cripps

The right hon. Gentleman has not quite accurately understood what I said. It we could get 200 million tons of coal we did not think it would be necessary to reduce the consumption of the steel industry. The reduced figures I gave were on the basis of what we estimate we shall get, without taking into account the improvement we hope to get. We were taking the firm estimate which had been given for production in the next six months. We hope the target will be higher, but that is not a firm enough basis on which to make an estimate. On that basis, I agree, we should not be able to have full steel production for industry.

Sir A. Duncan

I quite follow what the right hon. and learned Gentleman said, and I do not quarrel with it. But the situation is extraordinarily difficult, and far be it from me to add to the difficulties of estimation. I was, however, founding my observations upon the White Paper, which has postulated 200 million tons of coal, and I was not founding my observations upon the provisional budget on which the President of the Board of Trade was, quite rightly, speaking today. The White Paper founds upon the 200 million tons of coal, and founding upon that, it does say that the steel available will not be appreciably less in 1947, compared with 1946. I am saying that if we had only the same coal supplies for steel as in 1946, we should get an output of three-quarters of a million tons more than the White Paper suggests.

Mr. Jack Jones

Before the right hon. Gentleman leaves this question of steel production, will he say whether he has taken into account the greatly intensified oil conversion in the industry?

Sir A. Duncan

I am sorry if my words did not carry to the hon. Gentleman, but I started by saying that it was because we had converted and were still converting.

Mr. Jones

I got that point clearly. The point I wanted to make was this. Has the right hon. Gentleman taken into account intensified oil conversion in the future twelve months?

Sir A. Duncan

I have not made any calculation beyond 1947 because I am dealing with the coal budget and the industrial budget for 1947. I was observing that this restraint upon steel follows through into engineering and all metal-using trades. The White Paper budgets for a lower rate of home usage of steel by the metal-using trades than they had achieved in the last quarter of 1946. It declares its intention, at the same time, of discouraging further expansion of labour in the major steel-using industries, in the hope they will thereby get greater productivity per man within these trades. As in steel, so it was in the steel-using industries; they were gathering momentum in the last quarter of 1946. To envisage a less production in these trades in 1947 than in the last quarter of 1946 is to check back to a lower rate than had already been reached in the last quarter of 1946. I would ask the President of the Board of Trade to have this matter fully examined. The plan is based upon subnormal operations in the steel and steel-using industries, and those industries, as well as being of the greatest importance for export, provide the basis for the re-equipment of British industry. Even in spite of all our difficulties now, I suggest to the House that it would be quite wrong for us to be content not only to give up any idea of further advancement in 1947 as against 1946, but actually to check back to below the rate we had arrived at by the end of 1946. Therefore, the 1947 plan—which I am taking is based on 200 million tons of coal and to which I shall return shortly—must be bolder, I suggest, if it is to set the pattern for subsequent years. It also must be bolder if it is to use the full productive effort possible within those industries with their present manpower. I suggest that that is vital to the country.

If what I have said is true—and I ask that it be investigated—then it follows that the coal target is too low, and I believe that zoo million tons today is too low a target figure. I admit that if we were sure of getting 200 million tons of genuine coal of the quality that we want, it might he a different story. But the target of 200 million tons of coal is too low. I realise that we might not get 200 million tons produced this year, because there are such problems as that of recruitment for the mines being affected by the raising of the school-leaving age, and there is the prospect that the five-day week will reduce production. [HON. MEMBERS: "No."] Let me put it another way then. It would be very unsafe to take the risk of taking it for granted that there would be maintained output. I am not saying anything against the miners in that, but reduced hours might mean reduced output, and the Government are right in saying that there should not be a reduction in hours unless output is not thereby reduced. Third, and equally important, there are transport difficulties and the possibility that next winter will be worse than that through which we are passing. With all these reasons facing us, I wonder if anyone can think it wise to take chances upon too low a coal target. Obviously that leads to the question: Where are we going to get the coal? The White Paper itself says that failure to produce 200 million tons of coal in 1947 will set back the productive efforts of the country generally. I have tried to show that even the 200 million target will curtail productivity in the country, but never mind my argument. Let us take the Government's own argument, as to what will happen if we do not get the 200 million tons. I do hope that the Government will still consider the question of imports, because I think that the President of the Board of Trade will probably agree that 15 million tons is too narrow a margin for stock. I accept his suggestion of 16 million; others preferred 18 million. Those are arguments which we have all had in earlier years. I myself, always plumped for 16. I know that there are authorities in this country who think that 18 is the right figure. I am not quarrelling too much with 15 or 16 million, except to say that this country would never forgive us if in severe weather conditions next winter, we got into a jam because of shortage of stock.

It is very important to pay attention to public feeling on this matter. I think the feeling of all sections of the House is really quite serious that this question is the responsibility of the Government. We ought not, as a nation or as individuals, to allow pride to stand in our way. We must not feel that it is too humiliating, because we have been a great coal-exporting country in the past, to import coal now. There should be only one test—can we get the coal? If the Government tried hard and then said that they could not get the coal, I think the country would accept the situation. The nation is looking to the Government for a lead in this matter, and it will resent us tying ourselves to a policy of sharing shortages. Much less should we want to restrict or restrain—we are against restrictive practices in other directions—because we are nervous about importing coal. Above everything else, we must not run the risk of another breakdown next year, and I ask the House to consider how much happier the country would have been, if another 10 million tons had been imported during 1946. There is no hon. Member of this House who would dare face public opinion next year, if this situation were repeated and if it could have been avoided by importing coal.

I therefore make the point that it cannot be the right policy merely to make the best use of resources which we know to be inadequate. We must strive also for adequacy of resources. I was very interested to hear the President of the Board of Trade say how much further still the Government was proposing to develop the machinery for surveying the whole field. I take no exception to that. I think that that, perhaps, is one of the most satisfactory operations of Government machinery in modern times, but I wish the President of the Board of Trade and the Government would pay more careful attention to the controls they operate. After all, what is the use of having objectives propounded unless you have the machinery for working towards those objectives, and our controls today are very varied? While considerable variation may be necessary in dealing with raw materials, we have had an extension of some controls which I fear may only increase the friction and frustration. All I would ask of the President of the Board of Trade is that he should consider whether this is not a subject that might be included amongst those which the Government indicate in the White Paper, they will discuss with industry. At the moment, it is fair to say that the risk to which a firm or an industry may be subjected because of the inadequate allocation of coal in relation to other raw materials is very serious, but it is no more serious than the risk of an insufficient allocation of raw materials in relation to coal. In either case, the chances are against coal and materials being in balance and in line with productive capacity. I feel that the President of the Board of Trade should examine this point, and consider whether it would not be wise to include it in the proposed discussions with the various industries.

The foreword to the White Paper on Employment Policy in 1944, concluded with these words: Without a rising standard of industrial efficiency, we cannot achieve a high level of employment, combined with a rising standard of living. And the White Paper makes it perfectly plain that this can only be achieved by an acceleration of industrial re-equipment and development, on the one hand, in an effort to make up for the leeway lost through the war, and by greater productivity on the other. What is the proposal in the White Paper with regard to capital equipment and maintenance? As the President of the Board of Trade indicated this afternoon, a 15 per cent. increase over pre-war is the figure named in the White Paper. But he proposes to have a great deal of flexibility and easement as to how the 15 per cent. will be applied in different industries. I suggest that, no matter how shared out, 15 per cent. is a completely inadequate increase for 1947, as compared with the maintenance rates of prewar days. The figure should be at least 50 per cent. Working from Tables 117 and 137, if the figure of 50 per cent. were accepted for capital equipment and maintenance, it would only involve allocating something like 23 per cent. of our total resources to all capital expenditure, including houses, as against 20 per cent. in the White Paper. This increase could be obtained without any curtailment at all of the other things for which expenditure from national income is required. It could be obtained by the more effective utilisation of manpower, steel, engineering and building capacity, which are the things, according to the White Paper, that limit the amount.

This amount of 50 per cent. is confirmed, I suggest, from Table. C, where it is recorded that the manpower employed in metals and engineering for home civilian use were, in June, 1939, 1,200,000. Today, they are 1,822,000, so that we have an increase there of a little over 50 per cent. I further suggest that these two things tie up to make quite possible an increase allowance of 50 per cent. for equipment and maintenance. I emphasise this point of more rapid modernisation of our industrial equipment because it would contribute so substantially to the more efficient use of both manpower and fuel, and also because it would greatly increase our ability to supply better and cheaper products when overseas conditions of sale become more difficult than they are today. We must not allow ourselves to be carried away by an easy sellers market.

I certainly should not wish to minimise in any way the present need for exports. I would like to pay my tribute to the work of the President of the Board of Trade in this connection, but I ask him to consider whether it may not be true that there is a little too much forcing of immediate exports, without regard to the overriding need to build rapidly an efficient economy for future credit-worthiness. Our credit-worthiness is what will count in the future. I feel both on the import and the export sides, there is an absence of care for this overriding need. For instance, the Chancellor of the Exchequer told us the other day that in the last six months of 1946 our purchases from the United States were only 5 per cent. for machinery, 7 per cent. for films and 32 per cent. for tobacco. The Chancellor of the Exchequer quoted these figures tonight. I do not know what view lending Governments take, but I am perfectly certain that if any one of us had lent a friend money so that he might rehabilitate himself, we would have thought he was spending it in a very profligate way indeed if he had spent it in that kind of fashion. We must consider, for the future, what impression is being formed now as to how we are spending the money.

On the export side, it is probably fair to take the railways, which are as good an example as any. The railways within the last year have been second only to coal in imposing limits on our productive effort. The margins on which they have been working and their inability to handle traffic without bottle necks, even in good weather, have caused serious inroads on production, and we find that two of the main difficulties are a shortage of locomotives and a shortage of wagons. Locomotives have been switched in considerable quantities for an expansion of our passenger traffic. That could be corrected probably without any serious inroad at all on our locomotive export. But I believe as much as 40 per cent. of the wagon production of this country last year was exported at a time when our railways were calling out for wagons. I call upon the President of the Board of Trade to take this question into very serious consideration. I do not know what the Chancellor of the Exchequer has in mind by way of preparing for the period when the loan comes to an end, but surely there is nothing more important than to stimulate the rapid growth in capacity and efficiency of industries on which, in the long run, our exporting interests depend.

As representing the City of London, I might be permitted to draw the Chancellor's attention to the contribution that can be made to our export trade by rebuilding and developing those services which the City of London has traditionally rendered. The commercial and financial activities of the City, including its wholesale markets of raw materials, its insurance and its banking services have combined to make London the most important export centre in this country and, indeed, in the world. The stability and maintenance of these services was of great importance in maintaining the balance of payments prewar. I suggest to the Chancellor of the Exchequer and the President of the Board of Trade that they should be quickly restored and encouraged, as they are most important elements in our essential services and exports. Unless we ultimately pay our way by industrial and commercial efficiency, it is quite futile for us to talk of rising standards of living, increased leisure, social security and all the other improvements at which we rightly aim, and indeed in which we are proud to lead the world now. But their continuance, improvement and expansion depends, in the end, upon our industrial and commercial efficiency. It will be some time before we can measure the consequences of the present crisis and breakdown. But there can be little doubt that our economic position has had a serious setback, and that the recuperative power of the country has been badly shaken. This has, unhappily, occurred at 'a time when, in any case, as the White Paper says, no policy has yet been formulated for building up our longer term position. The formulation of a policy cannot be longer delayed.

As I started, so I should like to end, by saying that I was glad to have encouragement from the speech of the President of the Board of Trade—that he was of opinion that a longer term policy was needed. Fortunately, the White Paper at least reveals how desperately serious that position is. If ever there was a time, in peace or in war, when the efforts of all were needed to surmount our difficulties, it is now. No one can escape personal responsibility for co-operating to the full in the restoration of the foundations of our national recovery. But the Government must accept the responsibility for creating an atmosphere and an outlook which will permit a total constructive effort to be possible in what the White Paper so rightly describes as this critical moment in our affairs.

Debate adjourned.—[Mr. William Whiteley.]

Debate to be resumed Tomorrow.