GOVERNMENT POLICY

HC Deb 28 October 1947 vol 443 cc699-819

3.35 p.m.

Mr. Churchill (Woodford)

I beg to move, at the end of the Question, to add: But humbly regret that the Gracious Speech, while clearly revealing the intention of Your Majesty's Government to continue their partisan policies, gives no assurance of the national leadership, the administrative competence, or the measures necessary to meet the economic crisis and so give relief to Your people from their ever increasing hardships. Last week the Minister for Economic Affairs made an important and courageous speech. In it he proclaimed the complete failure of the whole policy of State planning and management of industry in time of peace, of which he has long been the leading exponent and, lately, an important executive Minister. He also confessed to some of the grave miscalculations and wrong estimates made by himself and by the Government of which he is still a member. He revealed with more precision than any of his colleagues has yet done the depth of misfortune into which we have been led since this new Parliament was elected two and a quarter years ago upon a flood of high hopes and promises. He called for perseverance in his policy of restrictions, controls and arbitrary direction from Whitehall. He read out a further list of pains and penalties to be inflicted upon the British public, and he called for a spirit of unity from the whole nation in bearing these new sacrifices so that he could continue with ever greater vigour the experiments in Socialism which have already made what he described as "our economic survival" a matter of uncertainty. In the same week the Prime Minister announced the Government's intention to nationalise the iron and steel industry as a contribution to our industrial recovery, and his intention to establish what is virtually single-chamber Government as a stimulus to national unity.

These various declarations taken together constitute in themselves, apart from all other facts and arguments, the fullest justification for the Amendment to the Address in reply to the King's Speech which we have placed on the Paper. Let us, therefore, examine these issues with attention. The need to increase our export trade is, of course, paramount. We shall do our best to help the Minister for Economic Affairs to reach the targets for export at which he is aiming. It is the duty of all parties to promote by every means in their power the productivity of our country. However, it is most important that the people should not be misled. Nationalisation has proved a failure. Dear coal and, soon, dearer transport gravely weaken our competitive powers in foreign markets. It is more in the interests of the wage earners to work for private employers than to be the servants of an all-powerful but ill-instructed State machine. This they are finding out for themselves. Nationalisation, so far as it has proceeded, has had at any rate a definite though limited educative value.

The speech of the Minister for Economic Affairs, with its long series of damaging admissions, was in fact a confession of fundamental error. Confession is good for the soul, but after confession should come penance, not praise. I would not therefore attempt to occupy the time of the House with eulogies of the right hon. and learned Gentleman. While giving full support to the export drive, I cannot bring myself to believe that the course upon which the Minister for Economic Affairs urged the country to embark on a voyage of several years—even if no other industry is to be nationalised—I cannot believe that this voyage can bring us out of our misfortunes and difficulties, and the right hon. and learned Gentleman certainly gave no undertakings that it would do so. No one can say he encouraged false hopes in his speech the other day. I feel myself a strong conviction that he is leading us down the wrong road and that at the end of all his efforts and our privations, we shall in a year or two be worse off than we are now.

I will venture to give two main reasons for my anxiety. The first is that I do not believe that a successful export trade can be founded upon a starved home market. I pointed this out two years ago when I asked how we could suppose that a fertile and healthy export trade could be maintained, except on the overspill of a very much larger internal and domestic trade. The President of the Board of Trade, which was the position the right hon. and learned Gentleman then occupied, I said, was under the profound delusion that he could build up an immense and profitable trade while keeping everything on a minimum here at home. No doubt it is right to put all possible emphasis upon the export trade, and, as I have said, we shall assist him in every way possible, but exports are only the steam over the boiling water in the kettle. They are only that part of the iceberg that glitters above the surface of the ocean. No long-term scheme for keeping a vast community alive can be based on an export trade alone. Down this path we shall only get into ever-narrowing situations. At any moment foreign price movements or our own rising costs of production may vitiate and overthrow all our carefully worked out calculations.

The United States, from an immense volume of home production, throws down its surplus of exports. How can we compete with that in any neutral market? The conception that any community can make its living without a healthy and vigorous home market and strong domestic consuming power is a fallacy condemned by every one of the great economists of the past. There was indeed an interval after the victory when there was what is called a "sellers' market," of which a temporary advantage could be taken and was to some extent taken. I supported the American Loan because I hoped that with this external aid and the sellers' market we might revive our normal peacetime fertile activities here. But the sellers' market is departing, and the American Loan has gone. Meanwhile we have not been able to create free thriving business and productive activity at home. The right hon. and learned Gentleman and the Government are now inviting us to follow them further into a dark and narrowing tunnel at the end of which there may be no daylight.

My second reason for differing from the Minister for Economic Affairs lies even deeper. I do not believe in the capacity of the State to plan and enforce an active high-grade economic productivity upon its members or subjects. No matter how numerous are the committees they set up, or the ever-growing hordes of officials they employ, or the severity of the punishments they inflict or threaten, they cannot approach the high level of internal economic production which, under free enterprise, personal initiative, competitive selection, the profit motive corrected by failure, and the infinite processes of good housekeeping and personal ingenuity, constitutes the life of a free society.

It is, no doubt, true that the State can always present large projects to the public gaze; large projects can be unfolded. The difference between what is seen and what is not seen was often noticed by the old economists. What is not seen is the infinite variety of individual transactions and decisions which, in a civilised society, within the framework of just and well-known laws, inure to the advantage not only of the individual concerned, but of the community, and provide that general body of well-being constituting the wealth of nations. All this is blotted out by an overriding State control, however imposing some of its manifestations may be. It is this vital creative impulse that I deeply fear the doctrines and policy of the Socialist Government have destroyed, or are rapidly destroying, in our national life. Nothing that they can plan and order and rush around enforcing will take its place. They have broken the mainspring, and until we get a new one the watch will not go.

If these general ideas applied to any country in the world, they would apply to this island, where we cannot grow much more than half the food we need, and where we have to purchase the rest of it and many raw materials by selling goods or rendering services to foreign countries. We have never been unable to do this before. A vast population grew up here under free enterprise and the capitalist system. Immense investments were made in foreign countries which refreshed and stimulated our home market with imports. Half of these have now gone in the war in the common cause, but half remain. The loss of half of our foreign investments is no sufficient explanation of our plight. We could certainly by a united effort fill that gap.

Why is it then that suddenly we should have to be told that the system by which we lived at a higher standard than any other country in Europe has come to an end? This is an important question for the House coldly and deliberately to consider. What is the new factor that has intervened to ruin our affairs, and to prevent us from holding our place in the world? I would only attempt to answer such a question after many heart-searchings and with many misgivings about my power to do so, having regard to the fallibility of human judgment. All the same, I will venture to give to the House my opinion for what it is worth. The reason why we are not able to earn our living and make our way in the world as a vast, complex, civilised community is because we are not allowed to do so. The whole enterprise, initiative, contrivance, and genius, of the British nation is being increasingly paralysed by the restrictions which are imposed upon it in the name of a mistaken political philosophy and a largely obsolete mode of thought. I am sure that if Parliament set the nation free it would be able to earn its own living in the world. I am sure that this policy of equalising misery and organising scarcity, instead of allowing diligence, self-interest and ingenuity to produce abundance, has only to be prolonged to kill this British Island stone dead.

We are told, and I am told, that we Conservatives have no policy. Hon. Members say that we complain of the hard times, we criticise the Government, who are doing their best according to their lights, but that we have no positive policy of our own. Here is the policy: Establish a basic standard of life and labour and provide the necessary basic foods for all. Once that is done, set the people free— get out of the way, and let them all make the best of themselves, and win whatever prizes they can for their families and for their country. Only in this way will Britain be able to keep alive and feed its disproportionate population, who were all brought into existence here upon the tides of freedom, and will all be left stranded and gasping by the Socialist ebb. Only in this way will an active, independent, property-owning democracy be established. I repeat, therefore, that our policy is an adequate basic standard, and above that, within just and well-known laws, let the best man win—[Laughter.] The crackling of thorns under a pot does not deter me. Ministers may not agree with this, and their followers still cling to the shibboleths which they have learned to substitute for any other more ameliorative mental process, but at least they must admit that here is a policy, a theme, a proposition, a method which reaches into every sphere of human thought and action, and constitutes the division between us, which will be brought one day to the decision of a country far better instructed upon these matters than it was on the last occasion.

It is not nature which has failed us. It is not nature which has failed mankind. It is Governments, which, misled and steeped in folly or perversity, have rejected and squandered the fruits of nature, endeavouring to prevent the normal working of its processes, even though those fruits are presented by the ever more efficient servitors of an ever-widening science. The true path is still open if we could only have the wisdom and the courage to enter it. But we shall never enter it by substituting Whitehall planning on anything but the highest and most general level for the native genius and infinitely varied capabilities of our race.

At this point I must turn to the United States with whom our fortunes and interests are intertwined. I was sorry that the hon. Member for Nelson and Colne (Mr. S. Silverman), whom I see in his place, said some weeks ago that they were "shabby moneylenders." That is no service to our country nor is it true. The Americans took but little when they emigrated from Europe except what they stood up in and what they had in their souls. They came through, they tamed the wilderness, they became what old John Bright called: A refuge for the oppressed from every land and clime. They have become today the greatest State and power in the world, speaking our own language, cherishing our common law, and pursuing, like our great Dominions, in broad principle, the same ideals. And the hon. Member for Nelson and Colne calls them "shabby moneylenders." It is true that they have lent us a great deal of money. They lent us £1,000 million in the first World War, a debt which we solemnly confirmed after the war, in time of peace. But all that they let drop. Then there was Lend-Lease, before they came into the second war, in all about £7,000 million.

Mr. Sydney Silverman (Nelson and Colne)

What about cash-and-carry before that?

Mr. Churchill

Two years ago we borrowed another £1,000 million sterling from them, or nearly four billion dollars. I asked the other day a rhetorical question, "What are dollars?" Dollars are the result of the toil and the skill of the American working man, and he is willing to give them on a very large scale to the cause of rebuilding our broken world. In many cases he gives them without much prospect of repayment. Shabby moneylenders!

For the purposes of my argument this afternoon, I wish to refer chiefly to the economic policy of the United States. Their high tariff and buoyant internal production make it difficult for them to receive imports. [HON. MEMBERS: "Hear, hear".] That is what we are endeavouring to achieve here by the method of prohibition of consumption. It is regrettable, because there can for no long time be a fertile importation or exportation without the corresponding operation. I like to hear these old Free Trade principles come forth. On the other hand, their capitalistic competitive system gives them an enormous home productivity far greater than ours per head, even with nationalisation in the wind. During the war we have seen them perform astonishing feats of mass production, like building all the Liberty ships, a prodigy of creative force and the salvation of Britain and her Allies.

Very strict controls were imposed in the United States during the war, as they were over here during the war, by general consent. Strong men pushed about in America, and under a free Constitution gave orders which the nation was eager to obey. What happened when the war was over? Advantage was not taken of the wartime measures in order to enforce the particular conceptions and doctrines of any political party. What happened when the war was over? In the summer of 1946 the major step was taken of making a clean sweep of almost all controls; and all legislation supporting the Office of Price Administration fell to the ground. And, of course, the cost of living bounded up. It is now 60 per cent. above 1939. But what is the corrective of price rising? It is production. American production is now 80 per cent. above 1939. Where prices rise through scarcity, there is evil. That evil can always be corrected by production.

Mr. S. Silverman

rose—

Hon. Members

Give way.

Mr. Churchill

I am capable of deciding for myself. That evil can always be corrected by production. Where prices rise in spite of abundance, it is not a sign of evil, but often of strength. It must have been a heart-shaking decision of the American Government and of the President, who has great executive power, to abandon price controls and, as it were, throw the reins upon the horse's neck. The strong horse is pulling the wagon out of the mire. I know what many hopes are on the opposite side of the House, but they will not be cheered by the results. We have a strong horse too. He is not so large but he is strong. Alas, he is bitted and bridled and hobbled and haltered till he can hardly move.

The American cost-of-living index after the total casting away of controls is, as I said, 60 per cent. above 1939. The British cost-of-living index has been held down by the immense food subsidies, but our wholesale price index, which is the nearest comparative figure, in spite of our controls and, as I hold, largely because of them, is 90 per cent. above 1939. The United States, therefore, have high prices in spite of abundance, and we have high prices as well as scarcity. According to all the economists I have ever studied, to have high prices in spite of abundance is good, and to have low prices because of scarcity is bad. I do not say that in our peculiar island economy, with all the complications of our artificial life for so crowded a population, with the position created by the last two years of wartime controls maintained in peace—I do not say that we could afford to act with the drastic, sweeping gestures which have characterised the policy of the United States. We must preserve our basic standards. All the same, I feel fortified by what has happened in the United States, in the view which I expressed a few minutes ago, that the sovereign remedy for our present ills and darkening misfortunes is to set the people free. In principle, and subject to all necessary adjustments, that is the counter-policy with which the Conservative, Unionist, National Liberal and, I hope and believe, Liberal Parties, confront the Socialist Government.

The first count in the indictment of His Majesty's Ministers I have been describing is the fundamental difference between free enterprise with its rewards and forfeits directed by social legislation, on the one hand, and State planning and meticulous governessing on the other. That is the first count which remains and it is very necessary that we should put these matters out plainly. After all, we have an educated democracy in this island. One would not think it from some of their temporary aberrations. It is very necessary that it should be realised how great is the moral and intellectual division of thought and of argument between the two sides of the House in these matters. That is the first count against the Government for leading the nation into an ever-darkening alley.

The second count is their incompetence in administration and executive action. Of this I will give some instances. The first that confronts us at home is, of course, the collapse of the housing schemes. This is a perfect example of the evil consequences of crippling private enterprise. All conceivable agencies should have been employed to repair the havoc of the war and make up for the cessation of cottage building during its course. The local authorities, the large private building companies and, above all, the small men throughout the country, should have been given a fair and equal chance and generous encouragement to build the vast number of small houses which the people so urgently need. Instead of this, a bitter campaign has been waged by the Minister of Health against the small private builder and against private enterprise in building. What is the result?

A quarter of a million houses are now in the present stage unfinished, half finished or quarter finished. Enormous numbers of people are crowded together in circumstances most painful to them, producing unfavourable reactions on family life in many cases—a great hampering and impediment to them all. These buildings all stand unfinished, as it were young ruins amid the old ruins of the war and all around there is an immense mass of grandiose capital expenditure projects now cut short by the right hon. and learned Gentleman the Minister for Economic Affairs. He told us the other day that the housing target for 1949, in the fifth year after the war was over, is to be no more than 140,000 houses.

If, on the other hand, the Government would only set the building trade free and give it a fair chance, we should find tens of thousands of cottages growing up—[Interruption.] Try it and see. We should find tens of thousands of cottages going up all over the country additional to the local authority programme and without requiring any materials—[Laughter]—which have to be imported from hard currency countries. There are all kinds of devices that can be used to construct habitations suitable for people to live in and all ought to be tried before our people are condemned to live under the present conditions. We are delighted that hon. Members opposite are able to show hilarity and keep up their spirits amid their grievous responsibilities and the unpleasant exposure which it is my duty to make of them.

One hundred and forty thousand houses in 1949, in spite of our bitter need, under the Socialist Government. That compares with 350,000 houses built in the year before the war—and now laugh—by private enterprise under a Tory Government and without any agitation and with half the present need. [An HON. MEMBER: "Nonsense."] Why does the hon. Member say, "Nonsense"? The figure told us by the right hon. and learned Gentleman for 1949 was 140,000. Let anyone dispute the fact that we were building at the rate of 1,000 houses a day or 350,000 houses a year before the war began. That is a practical proof not only of the fallacy of Socialist theories, but of the ineptitude which defaces their administration.

I will conclude my strictures in the social and domestic field—I have a large field to cover and will endeavour to distribute them evenly—by reading the latest economies proposed by the new Minister of Fuel and Power, who represents, I believe, Socialist intellectualism and the old school tie. According to what I read in the public Press—and I have made some inquiries about its authenticity—he advocated a policy of fewer baths. I really must read the words which he is reported to have used, as I think they constitute almost a record: Personally, I have never had a great many baths myself, and I can assure those who are in the habit of having a great many that it does not make a great difference to their health if they have less. As for your appearance"— said this representative of His Majesty's Government— most of that is underneath and nobody sees it. When Ministers of the Crown speak like this on behalf of His Majesty's Government, the Prime Minister and his friends have no need to wonder why they are getting increasingly into bad odour. I had even asked myself, when meditating upon these points whether you, Mr. Speaker, would admit the word "lousey" as a Parliamentary expression in referring to the Administration, provided, of course, it was not intended in a contemptuous sense but purely as one of factual narration.

Now I turn from this vision of the new Utopia to wider and far more tragic scenes. Since we separated for the Recess, the consequences of the Government's policy in India and in Burma have become apparent. Burma has been cast away, and India plunged into the first of the long series of sanguinary convulsions which I have, through the last 20 years, repeatedly predicted would follow our departure. At least half-a-million Indians have already perished at each other's hands by violent means, and now some seven or eight million are homeless fugitives. All the racial and religious hatred, all the dynastic feuds held in suspense under the Pax Britannica are now in full and devastating career. We have not, on this side of the House, obstructed Socialist policy in regard to India, but we have repeatedly disclaimed all responsibility for the measures and methods followed by the present Government, and the Prime Minister has always accepted this responsibility both for his party and Government and in an exceptional degree for himself.

The Secretary of State for Burma, or whatever is or was his title, has spoken of the butchery in India as a trifle compared with what any other course would have entailed. The slaughter of 500,000 human beings, and the misery of so many millions more is not an event which even the most callous and the most brutalised of beings should describe as a trifle or which should be compared to some hypothetical alternative. It is not a trifle; it is a horror, which should raise grief and heart searchings in all concerned. I will only quote the words which I heard John Morley speak in this House nearly 40 years ago as the apostle of Irish self-government. That great leader of uncompromising Radical opinion said: There is I know, a school of thought who say that we might wisely walk out of India, and that Indians can manage their own affairs better than we can. Anyone who pictures for himself the anarchy, the bloody chaos which would follow might shrink from that sinister decision, … When across the dark distances you hear the sullen roar and scream of carnage and confusion, your hearts will reproach you with what you have done. Let the Prime Minister reflect on that.

The Government have at last adopted the policy which I urged upon them in the summer of 1946 of laying the Palestine Mandate at the feet of U.N.O. and giving a time limit for our evacuation of the country. It is a measure of their inadequacy and of their embarrassment in taking decisions, and of the curious balance of forces in their Cabinet, that more than a year and a half of expense and discredit and waste of our limited military Forces, has been allowed to flow out since then. Yet they came to the same conclusion which should have been taken, with all its consequent saving, nearly 18 months ago. There is no dispute between us as to policy; we support them in their policy. It is the delay to which I am drawing attention, and the strange impotence of will and lack of control and leadership which render these fatal and ghastly compromises, prolonged for month after month, at the present time. Whoever was responsible for our staying in Palestine with five times the Army we were keeping in India, at a cost of at least £80 million a year, to say nothing of the torturing ordeal of our troops and officers, and a world-wide prejudice excited against us, whoever that Minister was, he bears a guilty load.

I now come to the astonishing maladministration and mismanagement of the Armed Forces, on which we are now spending the huge sum of £800 million a year. I believe in the civilian control of the Armed Forces by political Ministers of the Crown. They have most important functions to discharge, which cannot be discharged by the professional experts. The chief of these is to secure good value for the men and money voted by Parliament. Since the war, there has not been, to all intents and purposes, any Air Minister. Lord Stansgate, better known as Mr. Wedgwood Benn, was hardly ever at his office. He was absent for long periods in the Egyptian negotiations, and a year ago he was replaced by the right hon. Member for Derby (Mr. P. Noel-Baker), who has a new place now. He was replaced I say, by the right hon. Gentleman, but before this capable Minister could possibly master the complicated details of the Air Force and, just, perhaps, as he was about to make his personal influence effective on his day to day administration, he is moved elsewhere and someone else put in. I declare that there has been no competent Parliamentary control over the Air Force since this Government was formed, and that tens of millions of pounds—to say nothing of manpower—have been lost to this country by this negligence.

Then there is the War Office. I will say nothing harsh about the two Secretaries of State who have, in two years, successively been dismissed from that most important post. It cannot be pretended that during their short tenures they were capable of making any effective contribution to the strict economical administration of the Army. And now the War Office, which is spending nearly £400 million in the present financial year, and has 600,000 men as its disposal, most of them of only indirect military value, has been turned into a receptacle for the most flagrant, though not the most penitent, of Ministerial failures.

Lastly, I come to the Navy. I said two years ago this very month that 150,000 men was quite sufficient for the Navy, having regard to the general situation in the world and the size of other navies. But the Government persisted on squandering our money on an additional 40,000 or 50,000 men borne on Vote A, by far the greater part of whom lived ashore. It is, perhaps, not necessary that the Navy should require to avail itself of the Conscription Act. Certainly, once the time of service was reduced from 18 months to 12 it was very little use to the Navy. But, having gone on this bloated, enlarged scale, it became cumbered up with large numbers of conscripts and great numbers of people to teach the conscripts and to manage the food, and so forth. And now, suddenly, without the slightest relation to foreign affairs or military considerations, the Navy is reduced to 147,000 men, and in consequence of this violent change of policy, for reasons as I have said, entirely unconnected with national safety or any coherent scheme of defence, the Home Fleet is reduced to one cruiser and four destroyers, and the Minister of Defence has to call them "battle" destroyers in order to deceive the ignorant.

We have no battleships and no battle cruisers. It does not cost anything to call a destroyer a "battle" destroyer. That is what we are reduced to. And this naked statement is flung all over the world as another proof to foreigners of our decline and weakness. We are paying in the Estimates of this year no less than £196 million for the Navy—a figure altogether unprecedented and unheard of in time of peace, even on the eve of the Great War. And even when the present cut has been effected, we shall have a far larger manpower than we had at the outset of the late war; we shall have 147,000 to 133,000. Yet, owing to incompetence and lack of political grip, we cannot man a quarter of the ships that were in commission in 1939.

The Foreign Secretary said the other night that he as Foreign Secretary would be no party to "taking the chances the Chamberlain Government took, which landed us in a mess in 1939." The fact remains that there was a far larger sum of money, and with larger manpower, actually producing barely a quarter of the ships which were in commission, armed and on the high seas at the time when the war broke out. I have not the slightest doubt that with 147,000 men on Vote A, and with a money Vote two-thirds of the present amount, a perfectly adequate fleet could be maintained by any competent Administration. I am sorry that the Minister of Defence should so soon have frittered and cast away the credit which he gained in the National Government of which I was the head.

The first count in the indictment is the wrong choice of all policy and thought. The second is the ineptitude and inefficiency of administration. The third count in our Amendment is an indictment of the reckless and malignant partisanship of the Government, and the inconsistency of that partisanship with the appeals made for national unity, the Dunkirk spirit, and all that. We consider that this Government, except in the field of foreign affairs, have forfeited all claim to be the faithful guardians of the national interest, and that they are just playing a low-down party game from start to finish. Nothing could prove this more clearly than the behaviour of the Prime Minister about steel nationalisation and the Parliament Act. According to common report, widespread division arose in the Cabinet about the nationalisation of steel. Those Ministers who are opposed to it at this juncture, on the ground that it will hamper production, claimed that there should be a year's delay. As the purchase price of this year's delay in doing a wrong and foolish thing, the extremists in the Cabinet were offered a corresponding diminution of one year in the powers left to the Second Chamber by the Parliament Act. On this petty and unworthy ground, the Prime Minister thought it right to reopen the Constitutional settlement which was reached in the Parliament Act of 1911, and which has formed the basis of our Constitution for the last 36 years.

The Prime Minister has admitted that he has no complaint against the conduct and behaviour of the House of Lords. All this disturbance is to be raised for the sake of some political deal inside the Cabinet to enable them to carry on from month to month. The levity of these proceedings, which even in quiet times would be grossly culpable, is at this moment, when frantic appeals are made simultaneously to us for national unity for the sake of the economic survival of our country, base and shameful to the last degree. I had as much to do with the Parliament Act, 1911, as anybody. For nearly a fortnight, in the absence of Mr. Asquith, that great Prime Minister of former times, I conducted the Bill through the House of Commons. They were stormy days and nights, and early mornings. I shall always be proud of my association with that Measure. I was in favour of it then, and I am in favour of it now. It resulted from fierce political battles and two General Elections in a single year. The second General Election was necessary because the Crown refused an extraordinary creation of peers without a renewed appeal to the electorate. On this subject I presume this is the ruling precedent.

The Lord President of the Council (Mr. Herbert Morrison)

Would the right hon. Gentleman forgive me? He has made a reference to the Crown, and said that this was the ruling precedent. I wonder if he would develop that point, because we ought to be clear what he means.

Mr. Churchill

I merely recited the history of those days, and that is the latest precedent which is available upon the subject.

Mr. Morrison

Why drag in the Crown?

Mr. Churchill

It must be clear-almost clear enough for the right hon. Gentleman, even in his most comprehending moments. The object and spirit of the Parliament Act was not to enable the House of Lords to veto the will of the people, but to make sure that the will of the people was, in fact, made effective. For this purpose the life of a House of Commons was reduced from seven to five years, and a provision was inserted to enable a Bill to be carried forward under the Parliament Act procedure across a General Election. The Dissolution of Parliament in no way affects the efficacy of the Parliament Act. No Government are hampered by it in carrying through their legislation unless they are afraid that the people will not support them at the polls. The fact that the Government now wish to shorten the term of the suspensory powers of the second Chamber proves conclusively that they fear they would be defeated at a General Election. What they are, therefore, trying to do is not to give effect to the will of the people, but to carry through their party legislation irrespective of the will of the people. This is not democracy. It is authoritarianism. [An HON. MEMBER: "What an incredible muddle."] I quite understand that may be the hon. Member's condition. Total powers are to be given to any Government obtaining power at a General Election, no matter how abnormal the conditions of that election, to carry whatever legislation they choose during their five years spell, irrespective of whether the people wish for that legislation, and irrespective of whether the Government still have their confidence or not.

Mr. George Hicks (Woolwich, East)

Hereditary powers.

Mr. Churchill

We will come to that in a minute. What is now proposed is, virtually, single-chamber Government, and the granting to the Cabinet, which already has taken it in time of peace, the whole of the arbitrary wartime powers and regulations—a monstrous invasion of our liberties and a vile breach of faith between man and man who have to work together. What they are now proposing to do is to obtain for the Cabinet irresistible power to pass any Measures they may wish to bring forward, without regard to the will of the people or to their own foundation in public confidence. This is a formidable issue to fling out at this time of economic crisis—at this time when, in full peace, despotic wartime powers are ruling—and to be flung out, not as a result of grave historic and prolonged constitutional controversies, but as a cheap, paltry, disreputable deal between jarring nonentities in a divided Administration.

Since the matter has been raised, it is my duty to point to the Preamble of the Parliament Act. This makes it perfectly clear that its authors contemplated the abolition of the hereditary principle. Let me read the paragraph: And whereas it is intended to substitute for the House of Lords as it at present exists a Second Chamber constituted on a popular instead of a hereditary basis, but such substitution cannot be immediately brought into operation … On this we have lived for 36 years. In the face of this unprovoked aggression against the constitutional settlement of 1911, the House of Lords is evidently free to propose any alterations in its own composition which it may consider necessary for the stability of the State, and to use the powers reserved to it by the Parliament Act, as it may think fit.

Now let us take the case of steel, for the sake of which this further assumption of dictatorial power is demanded by the present Cabinet. There is no doubt that the ruling forces for the time being in the Cabinet have lost faith in the nationalisation of the steel industry as one of the remedies for our immediate troubles. By a handful of votes, freely published in the Press, the Prime Minister and the Leader of the House managed to obtain from their party meeting permission to put this Measure off until a more opportune season. Anyone can see from the speech of the Minister for Economic Affairs—and, after all, he is the man labouring at the oar—what his opinion is. He said: The main raw material with which we are concerned is steel, and those engaged in the steel industry are doing a magnificent job of production. Many of them are working seven days a week … and they are already well on the road to their optimum target of 14 million tons."—[OFFICIAL REPORT, 23rd October, 1947; Vol. 443, c. 277.] He might have added that the British steel industry had never had a strike for 40 years, except the General Strike which was for political purposes and was forced upon them, and that this "magnificent job of production," to use his own words, has been carried out under the shadow and uncertainty of Ministerial threats and vacillations. Yet this is the moment when the Prime Minister declares that he intends to nationalise steel within the lifetime of the present Parliament. In order to placate those who complain of the delay he throws this serious constitutional issue of the House of Lords as a sop into the political stewpan. It was just in order to prevent such discreditable party and Ministerial manoeuvres gravely affecting the life of our country that the authors of the Parliament Act made provision for the people being consulted and for their will to prevail.

I have now, I think, covered the ground set forth in the Amendment placed upon the Order Paper and on which we shall vote tomorrow. People sometimes say to me, "How lucky you were to be dismissed from power at the moment of victory. If you had been the head of a Conservative Government the Labour Party would have arranged and fomented a series of strikes, or even a general strike, in order to regain by industrial strife what they have lost at the polls." There may be some truth in that; it cannot be proved; but I should not have been afraid to do my duty had I been supported by the will of the people constitutionally expressed. I am sure that this Parliament has exhausted its usefulness, and that every month it continues, the deeper will be the divisions and the harsher the discords of our national life. Of course, Ministers and their supporters may cling to office till the last dregs of their self-respect are gone—and the last remnant of our financial resources has been scattered. But the longer they wait, the worse it will be for their party fortunes and their personal reputations—and the worse it will be for our unhappy country, torn by feud and faction, and strangled by incompetence and folly.

It is with deep anxiety about our affairs and our country that I move this Amendment to the Address. It seems hard that we should have come to this melancholy pass. Of course, nations who are beaten in war, who fail at the moment of supreme national trial, must expect, and nations who embark on wrong and wicked courses of tyranny and aggression deserve, the chastisement of fortune. But we have won all our wars. In this most terrible war of all, we not only saved ourselves but kept the flag of freedom flying in the world alone for more than a year. We gave all we had to the common cause. We gave it freely: we coveted no territory; we had no racial hatreds to gratify; we had no vengeance to slake. We were always, being a peaceful nation, backward in preparation. But we always won. In all the long wars I have seen in my life we have always won; and in the last of them our glory and our virtue have been admired by friend and foe. And yet, after all this, we now find ourselves reduced to the grim—that is the word I see in the newspapers—the grim and meagre plight exposed to us last Thursday by the Minister for Economic Affairs. I am astonished and stricken that we should have reached this pitch after all our victories, after all the services we have rendered to the common weal of mankind. Only by true regerenation of theme and spirit, carrying with us the whole force of the nation, shall we save our souls alive.

4.45 p.m.

The Lord President of the Council (Mr. Herbert Morrison)

After the last General Election—

Mr. Shurmer (Birmingham, Sparkbrook)

Do not pull the punches.

Mr. Morrison

—there was some speculation as to whether the policy which was advanced by the right hon. Gentleman the Leader of the Conservative Party was framed by himself; particularly as to whether it was the case that his first broadcast was framed by himself, or whether it was framed for him by Lord Beaverbrook or the right hon. Gentleman who now sits for Bournemouth (Mr. Bracken). Listening to his speech today, which was a plea for laissez faire, a plea for the Manchester school of the 19th century; a plea for economic anarchy—I asked myself: Who advised the right hon. Gentleman this time? Was it the right hon. Gentleman the Member for Bromley (Mr. H. Macmillan), who, notoriously, is in favour of planning, and even a fair dose of Socialism and nationalisation? Or was he advised by the right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden), who has made speeches of another order? Or was he advised by the hon. Member for Orpington (Sir W. Smithers)? I am bound to say that the more I listened to the right hon. Gentleman the more I came to the conclusion that the hon. Member for Orpington, who had been repudiated at Brighton by the chairman of the Orpington Conservatives, had at last won a great victory in persuading his leader to come into line on these matters.

It was a dreadfully reactionary speech, that was far more fitting for the early part of the 19th century—not even for the latter part of the 19th century—than it was for the 20th century. He says nationalisation has proved a failure, and he quotes coal, and he quotes transport—which is not yet nationalised. That, at least, was a forward-looking move—to cite an industry not yet nationalised as a case of established failure.

Mr. E. L. Gandar Dower (Caithness and Sutherland)

What about civil aviation?

Mr. Morrison

The right hon. Gentleman did not mention it and I do not see why the hon. Member should.

Mr. Gandar Dower

It is transport.

Mr. Morrison

In the case of coal, does the right hon. Gentleman seriously urge—because this is the implication of what he says—that it would have been better to let the coal industry go back to where it was before the war than to have nationalised it? Does he think that there would have been more industrial peace if it had gone back to the old prewar conditions than if we had not nationalised it? Does he think the situation would have been better as it was under the coal-owners than if we had not nationalised it? If the right hon. Gentleman is going to advance these arguments I invite him to have the frankness with the country to say that it is the policy of the Conservative Party to put the coal mines back where they were before, and to undo the painstaking and constructive work that this Government have done in relation to the coal mining industry.

The right hon. Gentleman really does not know where he is with regard to exports. He says that exports are, or may be, irreconcilable with a starved home market. Does not the right hon. Gentleman see that these are all matters of relativity and balance and of priority? Later on he said that we could not live on our own home-produced food, that we could not produce more than half our food supplies. I am not sure that he is right about that. But if it be the case that we must import a material amount of our food supplies, then surely it is the case that we have got to have the exports to pay for them. The whole case that my right hon. and learned Friend the Minister for Economic Affairs put on export policy was that, first of all, because of the balance of payments, and, secondly, because of the need to import food and raw materials, we must have a bias in favour of exports at the present time, otherwise the food of our people is risked and the whole economy comes to a standstill for lack of the raw materials with which to work. It is no good the right hon. Gentleman engaging in these platitudes and generalities. He must face the facts of life as they are before us at the present time; and that, if I may say so, he was not doing.

He also said that committees in White-hall cannot replace competition and the profit motive. Well, he can see something of the profit motive in certain Stock Exchange news which appears in the newspapers today. But what does all this mean? It really means that the right hon. Gentleman wants to scatter State intervention, State control and State promotion of co-operation in industry, and to leave industry to do what it likes, He believes that if free and unfettered competition goes ahead, and if the profit motive is allowed full play, somehow or other all will come well.

Colonel Sir Charles MacAndrew (Ayr and Bute, Northern)

It succeeded before.

Mr. Morrison

His hon. and gallant Friend supports him by saying that it did the trick before. If that is the case, what was the right hon. Member for Saffron Walden (Mr. R. A. Butler) doing with the Tory Industrial Charter? Moreover, why was it that the right hon. Member for Warwick and Leamington said in a speech at Blackpool, according to "The Times" of 3rd October: We are not the party of unbridled, brutal capitalism, and never have been. Although we believe in personal responsibility and personal initiative in business, we are not the political children of the laissez-faire school. We have opposed them decade after decade. [HON. MEMBERS: "Hear, hear."] It is all very well for hon. Members opposite to say "Hear, hear," but the speech to which we have just listened was eminently, essentially and absolutely a speech of the laissez-faire school, so that now the unfortunate Leader of the Opposition has the misfortune to listen to cheers which repudiate the speech he has just made. Where, in fact, did this system of free competition and the unbridled flow of the profit motive land us? Where did it land us between the wars? It landed us with persistent depressions, persistent crises—

Colonel Dower (Penrith and Cockermouth)

What have we got now?

Mr. Morrison

We have not got a depression; we have not got mass unemployment. The party that, in the main, was in power between the wars, and which had its way in leaving capitalist profiteering a free hand, and in leaving free competition to rip—except in so far as they subsidised private enterprise out of public funds—that party which had its own way about free competition and the complete operation of the profit motive in the North East had to admit that in South Wales, in Scotland, in Lancashire and elsewhere there was great and persistent depression with not merely weeks, but literally years of unemployment for many people. And the Welsh, the Scots, and others do not forget it. I do not say the right hon. Member wants to get back to those conditions; I know him too well; that would not be just, and it would be unkind; but I do say that he wants to get back to the political and economic setup which would inevitably produce those conditions, if we went along that road. Therefore, I think he made a speech which is indefensible from the point of view of the welfare of the people and the progress of the nation. But let it be understood; let the people know, let the electorate know that the leader of the Conservative Party stands for free competition, and for the free play of the profit motive. In fact, he wants a return to the political and economic conditions which obtained between the wars. Let that be understood and we shall be content.

Lieut.-Commander Gurney Braithwaite (Holderness)

We had something to eat then.

Mr. Morrison

I assure the right hon. Gentleman that he will hear more of this speech before he is much older. It will not do his political friends much good.

Mr. Churchill

The Lord President ought to be pleased about that.

Mr. Morrison

I hope the right hon. Gentleman does not think I am complaining. On the contrary, he was useful to us at the General Election, and he looks like continuing to be useful. I wish he would go on, because I think this Orpington influence has grown. I am all in favour of him continuing to sit close and take counsel with the right hon. Member for Bournemouth. He went on along the same lines in saying that if Parliament would set the nation free, we should be able to earn our living in the world. The case at the back of the right hon. Gentleman's mind is that things would have been either well or much better if the Conservatives had been returned to power and if the Labour Party had not formed a Government. It is also part of the Conservative case that at the General Election we argued that, if we were returned to power, all would be well and nobody need worry.

Mr. Churchill

They said all would be much better.

Mr. Morrison

I shall prove that both of those assertions are untrue; that, as a matter of fact, the right hon. Gentleman himself does not believe that, if the Conservatives had been returned, all would have been well. I shall further prove that we never said at the General Election that all would be well; but, on the contrary, as I can show from three of the broadcasts made on behalf of the Labour Party, we warned the country that there were grave problems and difficulties before us.

There is in "Collier's Magazine" for 18th October a chapter of a diary which has apparently been written by Mr. Henry Morgenthau Junr. I am going to quote a fair passage from what he says about the right hon. Gentleman and certain action he took in relation to the President of the United States towards the end of the war. Let me say at once, there is nothing discreditable—I emphasise, nothing discreditable—to the right hon. Gentleman in what I shall read. On the contrary, it is an indication that at that time he was doing his very best in his relations with the United States to take care of the economic and financial future of the United Kingdom. I read it in relation to the assumption that the Conservative Party make, that all would have been well if the Labour Party had not been returned at the General Election. Of course, if at the end the right hon. Gentleman says that he did not say it, I will accept that at once. I tell him that there is nothing discreditable to him in the article. This is what Mr. Morgenthau says: Lend-Lease for war was an indispensable factor in our victory. Through it we sustained the British in their darkest hours, and the Russians in the grim days of Stalingrad. But Roosevelt had even more far-reaching conceptions of Lend-Lease. He saw its potentialities, not only as a weapon of war, but also as a foundation of peace. Through a so-called Phase 2 of Lend-Lease"—

Mr. Churchill

The right hon. Gentleman is not quoting me?

Mr. Morrison

No, this is Mr. Morgenthau. that would follow V-Day, we could continue to supply raw materials and food for our Allies, which would enable them to start their war-devastated economies on the road to reconstruction and prosperity. While I was in London in August, 1944, Winston Churchill talked to me about Britain's future. He was exceedingly pessimistic. The day the war ended the country would be bankrupt, and the returning soldiers would have little to come back to. Laying the grim financial facts before Parliament after victory would make him the most unpopular man in England, he said. But I do not care' he added, 'for I am approaching 70, and it is time I began to make peace with my Maker.'

Mr. Churchill

It is not a bit like me: [Laughter.]

Mr. Morrison

I do not think all this laughter about Providence is appropriate. Mr. Morgenthau went on—

Earl Winterton (Horsham)

On a point of Order. I always understood, Mr. Speaker, that a Member could not read a newspaper article in this House. I raise this point of Order to make it clear that this is a special occasion for the right hon. Gentleman's little diversion, but that, in general, an hon. Member cannot read a newspaper article in this House.

Mr. Deputy-Speaker (Major Milner)

I think the Rule to which the noble Lord refers has a quite different connotation. The Rule is that a Member cannot sit on the bench reading a newspaper.

Earl Winterton

Further to that point of Order. May I point out that all of us could sustain the arguments we desire to put to the House by reading wholly irrelevant articles?

Mr. Morrison

I still hope to see the day when the noble Lord, the Father of the House, understands the Rules of Procedure. Mr. Morgenthau continued: When Churchill went to Quebec a month later, the problem of getting Britain back on its feet was uppermost in his mind. Britain, he pointed out, raised only half the food it consumed. Its post-wax survival therefore required the building up of its export trade but the nation had expended its economic reserves, its very lifeblood, in the war against the common enemy; and the abrupt termination of American aid would leave Britain without the resources to reprime its economy. The article goes on to recount certain conversations which took place, and Mr. Morgenthau expresses his own bitter disappointment that Lend-Lease was brought to a sharp end. The point I am making is that if this statement be true, or approximately true, it shows that the right hon. Gentleman, towards the end of the war when he was Prime Minister saw coming the very troubles which were referred to last week by my right hon. and learned Friend the Minister for Economic Affairs. He saw them coming and anticipated that the country would have a bad time, and if he anticipated that the country would have a worse time when Lend-Lease came to an end, who is he to point the finger of scorn at my right hon. and learned Friend for truthfully painting the picture about the situation? The truth is that the right hon. Gentleman is one man when he is Prime Minister and a very different man when he is Leader of the Opposition. He is the great champion of the cause of freedom when he is Leader of the Opposition, but not so keen about it when he is a Minister of the Crown. [An HON. MEMBER: "What about 18B?"] As a matter of fact that was not mine. It belonged originally to the right hon. Gentleman and his Friend, the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson). I am not proposing to exchange Cabinet reminiscences with the right hon. Gentleman, because we might get ourselves into trouble.

In the Labour broadcasts, we were frank, honest and upright. [Laughter.] This really is material. It is so often claimed that we led the country to think that there would be paradise, and that the Conservatives did not do that. Let me prove conclusively the scrupulous honesty with which we addressed, not merely local constituency meetings, but the millions of our fellow countrymen in broadcasts through the B.B.C.

Mr. Quintin Hogg (Oxford)

"Let us build the houses quickly." "Vote Labour for Prosperity." Tell us another.

Mr. Morrison

The hon. Member for Oxford (Mr. Hogg) is not a good example of getting out of control. He should not do it.

Mr. Hogg

When the right hon. Gentleman strains my credulity to this extent, I must confess that it is a little difficult to restrain one's obvious sense of disbelief.

Mr. Morrison

I accept the explanation and apology of the hon. Member.

Mr. Hogg

It was no apology. It was an explanation.

Mr. Morrison

I can only say that when some of my hon. Friends tried to help the right hon. Gentleman get some fire into his speech, there was great indignation. The Conservatives cannot take it. [HON. MEMBERS: "Oh."] It is all right, I had some practice last night at Lewisham.

Mr. Churchill

I am glad that things are looking up there.

Mr. Morrison

I did say to my constituents last night how grateful I was to the right hon. Gentleman for visiting the constituency on the eve of the poll. Let me tell the House what was said by three official spokesmen speaking for the Labour party on the B.B.C. at the time of the General Election. My right hon. and learned Friend the Minister for Economic Affairs said this: It is no simple task. The ways of peace will prove themselves as hard maybe as the paths of war. Everyone will agree that he is living up to that observation made at the time of the General Election. It was perfectly honest and perfectly true. This was before the polling day, on 20th June. My right hon. Friend the Minister of National Insurance, on 18th June, said: We do not promise ease and comfort; we do not offer you presents. What we offer is the opportunity for every man and woman to use his or her capacities to the full, whether at work or at home. Let me add that my right hon. Friend, as a Member coming from South Wales, knew what he was talking about, for hundreds of thousands of his fellow citizens had been denied, by the Tory Party, the opportunity to use their capacities to the full. Then I broadcast on 29th June, and I said this, which might almost be one of the speeches I have been making recently in the country, or one of the speeches of my right hon. and learned Friend the Minister for Economic Affairs. I said: Before the war a big slice of our exports was made up of cotton and coal. We shall be more than lucky if we can keep either of these up to prewar level, let alone increase it by half. The rest of our exports must be increased, not by half, but by 100 per cent., or 200 per cent., and more. This is not scare-mongering; it is facts. Whether we shall be able to pay our way in world trade is a big and doubtful question. It is extraordinary how that has worked out in the economic circumstances of today. It is a complete illustration of the scrupulous honesty of our policy at the General Election. It is not beyond the experience of all Members, when they are speaking on a platform outside this House, and are going well, and making good points, for a member of the audience to ask him about something else. Directly that point has been answered somebody asks about another point. The hon. Member for Oxford (Mr. Hogg) would make good in the band of Tory interrupters who are floating about at public meetings at the present time.

The right hon. Member for Woodford went completely wrong in the deductions he drew from the experience and economics of that great country the United States of America. I join with him in expressing my own regret that anybody should make needless, gratuitous, or offensive attacks on the United States. I am anxious that we should live in friendship with all people, and I do not think there is any reason, if we wish to be friends with the Soviet Union, why we should be bad tempered with America. Of course, the ideas of the United States are very different from ours. Their whole conception of politics and economics is different. They are nearer to the Leader of the Opposition and, therefore, they are liable to be critical of our outlook sometimes. We are liable to be critical of theirs, and we have a right to be, but I think the two countries can stand a bit of frankness as to what we think of the systems that obtain.

The right hon. Gentleman opposite said that the United States had made a clean sweep of war controls, and I detected a sort of envious feeling that he wished we had done the same. He was obviously pleased that the United States had made a clean sweep of all war controls. He went on to admit that the cost of living was 60 per cent. above the prewar level, and said that production was 80 per cent. above prewar. I cannot answer, on the spur of the moment, for the accuracy of those facts, but I am not challenging them. But in the ordinary way if his laissez faire economic outlook is right, if there is an 80 per cent. increase in production there, I cannot see why there should be a 60 per cent. increase in prices. If the competitive system is still running, why should there be that great increase in prices? If it be true that all is well, that controls have come off while prices have risen, I wonder if the right hon. Gentleman can tell me why the President of the United States has suddenly decided to call Congress to deal, among other things, with this very question of the inflationary movement in prices in America, consequent on the removal of controls.

My hon. Friend the Member for North-East Leeds (Miss Bacon) tells me that a trade union leader in America said to her and her friends, "The British worker is being driven to austerity by shortages. The American worker is being driven to austerity by inflation." There is a great deal of truth in that, and it would be a totally false deduction that the removal of controls in America has led to benefits to that country. It has undoubtedly led to a great increase in prices, and those increases are affecting us, incidentally, as well as the United States.

Mr. Spearman (Scarborough and Whitby)

Would not the right hon. Gentleman agree that to a great degree inflation in the United States is due to their generous supply of goods to Europe?

Mr. Morrison

I should not have thought so.

Now I come to housing, and my answer on that is very short; indeed, it is to compare the houses completed in the first two years after this war with the houses completed in the first two years after the first world war. [HON. MEMBERS: "Oh."] Is it not a fair comparison? There is now a Labour Government, and there was then a Coalition Government. [An HON. MEMBER: "What about Lord Addison?"] He was not a member of the Labour Party. We sometimes pull the leg of the Leader of the Opposition for what he used to say when he was a Liberal, and I do not complain if it is mentioned that Lord Addison was once a Liberal himself. But I cannot take responsibility for Ministers in other political parties, in Governments which existed a long time ago. I shall be asked next to take responsibility for the right hon. Member for Woodford. After the first world war there was a Coalition Government and the Leader of the Opposition was actually a member of it. He had the chance, with all his skill, of building houses without importing raw materials. What are the broad facts? I think this is conclusive. The number of houses completed in the first two years after the 1914–18 war was 36,000–

Mr. Hogg

Shoddy.

Mr. Morrison

The hon. Member for Oxford is very petulant. He wanted to know about housing, and I am telling him, but he is no happier now.

Mr. Hogg

The right hon. Gentleman's comparison is dishonest and shoddy, and he knows it.

Mr. Morrison

I will try not to provoke the hon. Gentleman again, because I am getting frightened as to what might happen to him. The number of houses completed in the first two years after the recent war is 226,000. Thirty-six thousand were built under a Tory Coalition, and 226,000 under this Labour Government.

Mr. Churchill

Will the right hon. Gentleman be so kind as to allow me to direct his attention also to the comparison which I made, because after the first world war there was no havoc by bombing? There were not a million houses knocked down, and hardly any damage here. I do not remember that housing was at that time one of the leading questions. We had many other matters, and grave labour questions, but I do not think there is any comparison between that situation and this, when we have a million houses destroyed. Will the right hon. Gentleman explain why, not now but even in the year 1949, only 140,000 houses are to be constructed here, with all our efforts, when before the war, with no particular effort at all, just in the normal working, as many as 350,000 houses were completed?

Mr. Morrison

The right hon. Gentleman has strengthened my case. It is true that there was great bombing in the recent war and very little bombing in the 1914–18 war. But that strengthens my case. A whole lot of building and labour has had to be diverted to patching up these houses and to getting them on a care and maintenance basis—making them wind and watertight. The assumption of the right hon. Gentleman that there was no such grave housing problem after the end of the previous war illustrates his undying affection for the 19th century. It is true that 1914 was in the 20th century, but it was not far off the 19th century, and the right hon. Gentleman has an undying, sentimental affection for the 19th century which he believes was one of the greatest centuries in the whole of history.

Mr. Assheton (City of London)

It was.

Mr. Morrison

The City of London says that it was. Does not the right hon. Gentleman know that the Liberal Party for years and years were trying in those days to draw attention to the great housing problem, and even the Conservatives were beginning to learn about it. As for the Socialists, they had been grumbling about it for years and years. But the right hon. Gentleman says that it was not a great issue at the Election. Has he already forgotten the slogan of Mr. Lloyd George, at the time, when he said, "We are going to build houses fit for heroes to live in?"—[HON. MEMBERS: "Homes?"] Yes, homes. It was one of the great calls of the Coalition at that Election. I think that the Opposition had better give up this talk. If the right hon. Gentleman would let the Minister of Health, the Secretary of State for Scotland and particularly, the Minister of Works and the Minister for Economic Affairs know where all this raw material is that will build houses, without importing any raw material at all—

Mr. Henry Strauss (Combined English Universities)

The right hon. Gentleman did not say that.

Mr. Morrison

Yes he did—I say, in all sincerity, we shall be much obliged; and if he does so we shall be all very grateful. That is exactly what we are looking for.

Mr. Strauss

The right hon. Gentleman did not say it.

Mr. Morrison

After all the hon. and learned Gentleman did not make the speech; it was made by the Front Bench. Surely, he has not been appointed P.P.S., or something, to the Leader of the Opposition? If the right hon. Gentleman thinks that I am misquoting him, he is quite capable of looking after himself, as we all know.

The right hon. Gentleman then went on to discuss India, Burma, and Palestine. I would only say this about these subjects: The promise to India has been made for many years past that she should move towards Dominion status and to self-Government. Government after Government predicted that from the days of Mr. Montagu onwards. It was the right hon. Gentleman who authorised my right hon. Friend the Minister for Econo- mic Affairs to go to India and to negotiate on some such basis, if not, indeed, on a more advanced basis than that. When the Prime Minister said that the Government had decided upon this policy, and India had accepted Dominion status, I was delighted when the Leader of the Opposition got up and expressed his pleasure, his concurrence and his support.

Mr. Churchill

No. I said that if certain conditions were fulfilled and" among them, a blood bath was avoided, then I was free to give my congratulations.

Mr. Morrison

I think that what I have said is fair and to the best of my memory. He did accept the solution. What was the choice? We all deeply deplore the blood that is being spilt in communal riots and disturbances in India at the present time, and we hope very much that it will not last; but to say that that is an action precipitated by His Majesty's Government is to say something outrageous. It is not within our control. If we had stayed in India and insisted on the British Crown remaining in a position of power in India there would still have been trouble, and probably violence and bloodshed in which our own troops and nationals might well have been involved. Apart from this, it was natural and inevitable that India should move towards self-government. Statesmen had promised it, and the truth is that the right hon. Gentleman, just as he is old-fashioned about economic affairs and stands for laissez faire, still thinks that in this modern age our country should still remain on the road of old-fashioned Imperialism. We cannot; we have got to go on. The right hon. Gentleman says that we have thrown away Burma. The amazing thing is that after condemning us for getting out of India and allowing it to grow to Dominion status, and having come to the decision about Burma which he says we have flung away, he then goes to Palestine and says, "Why didn't you get out of Palestine before?" That is not exactly logical.

Mr. Churchill

The right hon. Gentleman should realise that Palestine is a mandated area, and as he and his colleagues have broken their pledges to the Zionists, there was no moral reason why we should not, and every practical reason why we should, give the Mandate back to the United Nations organisation. There is a great difference between British territory built up and held for generations and a Mandate which we accepted

Mr. Morrison

That will not do either, because when my right hon. Friend the Foreign Secretary came to the provisional agreement, which did not eventuate, with Egypt, he strongly condemned him, alleging that we were skedaddling out of Egypt. Egypt was not even a mandated territory. [An HON. MEMBER: "There Was a treaty."] Certainly there was a treaty, but it is equally illogical for the right hon. Gentleman, because he has certain views about Palestine, to urge us to skedaddle out of Palestine and to condemn us for leaving other territories. The fact is that on this matter also, he is living in a past age, and he has to face the fact that in Imperial affairs democracy is marching on.

The right hon. Gentleman has picked up a lot of newspaper stories. He says that the proposal to amend the Parliament Act, 1911, is a nasty, horrible, unclean deed within the Cabinet over the Iron and Steel Bill. He is wrong. This is not a new subject to be discussed in the Government. We seriously considered putting this into the Sessional programme of the last Parliamentary Session over 12 months ago. It was not put in that Sessional programme because we had enough in it already, as I think he will agree. So we decided to postpone consideration in order that it might be considered in connection with the Session of 1947–48. That was done, and we have decided to put it in.

The case for this change is quite simple. There is no question here of precipitating a constitutional crisis. There is a question here of avoiding a constitutional crisis. If this Bill had not been introduced, it might well have been the case that a constitutional crisis would have been precipitated by another place. The right hon. Gentleman himself said that the Government ought not to do this and had no need to do it unless we were afraid of going to the polls about any issue that might arise. But what does that assume? It assumes that another place would reject one of our important Bills, and then we should have a General Election on whether another place was right or wrong. Another place was not invented, in our judgment, or, at any rate, it ought not to be recognised as a place which can determine when a Government should go to the country. In short, the right hon. Gentleman wants another place to have the power to order a referendum on specific measures. We all know his affection for referendums. That is not right. Another place ought to have no power or influence to determine when a General Election should take place or the issue upon which that election shall take place.

Mr. Churchill

There is nothing in the Parliament Act about that.

Mr. Morrison

I am not talking about what is in the Parliament Act but about good constitutional doctrine, and if the right hon. Gentleman seriously wishes to urge explicitly that another place ought to have the power to determine when a General Election shall take place and the issues upon which it shall be fought, let him say so and we shall argue it out.

Mr. Churchill

The right hon. Gentleman must be very hard up to find something to say. Since when have I been in favour of the House of Lords having the power of Dissolution? I have never heard of such a doctrine and I should be absolutely opposed to it. They have a control given them by Parliament over legislation, but they have absolutely no power to determine the length of the sittings of this House, nor when there should be an appeal to the country.

Mr. Morrison

I am delighted to heat it, but in that case I do not see what was the relevancy of the right hon. Gentleman's observation, when he said that we ought not to be afraid of going to the polls if trouble did arise between us and another place. I am very glad that he has modified that position.

Mr. Churchill

I must really clear the right hon. Gentleman's mind. If a Measure is sent back under the suspensory veto of the House of Lords, there is no obligation upon the Government to go to the country. There is no obligation to go to the country before the expiration of their full normal term, and they lose nothing by that because the procedure of the Parliament Act carries on properly.

Mr. Morrison

The right hon. Gentleman is now coming back to the same point. First of all, we lose the Measure for the time being. Secondly, it is said that we can pass it when we come back after the General Election. That is very kind of the right hon. Gentleman, but does not that mean that the House of Lords is, in fact, referring that particular Measure to the country and forcing something like a referendum about it? No, Sir, that is the drift of what the right hon. Gentleman is saying and, we are beginning therefore to see this strange constitutional doctrine.

Colonel Dower

Why one year?

Mr. Hogg

rose—

Mr. Morrison

I really have been very good to hon. Gentlemen opposite. Supposing the Government does nothing about this, we run the very material risk in these remaining years of this Parliament that the House of Lords may amend a Measure in ways which are not acceptable to us, or may reject important Measures passed by the House of Commons. That is the risk we run even though those Measures are within the mandate we received from the electorate of the country in 1945. If that happens, then we immediately drift into a constitutional crisis. If, however, by a moderate Bill—and this is a moderate Bill—we can reduce the period of the veto within what is I think a reasonable, fair and practical limit, then we shall avoid drifting into the very constitutional crisis that I do not want, the Government do not want and I do not think any fair-minded or good citizen wants, if they can avoid it. Therefore, this Bill is to avoid a constitutional crisis and not to make one.

Let us remember the experience of the Liberal Government of 1906. That Government and that Parliament became almost impotent in many respects because of the interference of another place, and we are liable to drift into the same situation unless we pass suitable legislation under the Parliament Act, which we are perfectly entitled to do. I could not understand why the right hon. Gentleman mentioned the Crown. Under the Parliament Act we are perfectly entitled to pass this Bill, and either their Lordships will pass it in one Session, or pass it in due course, and it will get the Royal Assent in three Sessions within two years. Personally I hope they will pass it in one Session and it may be they will. The right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies), the Leader of the Liberal Party, who does not agree with us about this, gave us a picture of the antics of another place in the Parliament of 1906 that really ought to be a warning to all my hon. Friends on this side of the House as to the trouble we could get into and the importance of putting this thing straight. Speaking on Friday he said: I have the bitterest recollections of the action of that House between 1906 and 1911, when my party had a far greater majority than the present Government, and what is more a complete majority in the country. The country has had to wait for practically 20 years for the social reforms which we would have carried out then, and which we proposed, debated and discussed on the Floor of this House, day after day and night after night, and which went to another place only to be mutilated, torn and ultimately thrown out. One major Bill which had taken the greater part of a Session was thrown out. A meeting of Peers was held the night before in private, and after the Second Reading of the Bill had been moved by a Member of the Government, a Member of the Opposition got up and moved that they take the vote upon it. Without discussion, the Bill was thrown out. I have bitter memories of that period which culminated finally in the throwing out of what became known, because of the name of the then Chancellor of the Exchequer, as the Lloyd George Budget. Then we had to go to the country, and we came back. In the course of 12 months, we had to go again and we came back."—[OFFICIAL REPORT, 24th October, 1947; Vol. 443, c. 389.] That is an experience for the rest of this Parliament which this Government is not going to risk. That is all, and I cannot understand why the leader of the Liberal Party does not back us up on the amending Bill. I shall be shocked if he votes against it. I hope he will support the Bill. That is the material part of our case.

Mr. H. Strauss

The right hon. Gentleman says that the Government are going to put through a material Measure of reform of another place under the Parliament Act. They are going to reduce the suspensory veto from two years to one year. The question I wish to put to the right hon. Gentleman is: Does he say it will be equally in order and constitutionally right if the Government use the Parliament Act to reduce the period of veto to two days instead of one year; and, secondly, does he say that, if he does carry through the Government's present intention, there will be any security at all and that another Measure will not follow in due course?

Mr. Morrison

On the merits of the alternative that the hon. and learned Gentleman has put into the heads of my hon. Friends, I, personally, would not agree with it; and I do not think that my hon. Friends would agree with it. As to its constitutional and lawful Parliamentary possibilities, Parliament could do it, if it wished, either under the Parliament Act as if is, or under the Parliament Act as amended. Parliament is supreme. It is one of the virtues of our system that Parliament can do anything it likes. Therefore, the answer is constitutionally "Yes," but I think that on the merits I would say "No."

That is the reason for the Government's action. I say that we discussed it most seriously the year before. We gave grave consideration to whether it should go into the King's Speech at that time. We found that, owing to the nature of the programme then, we ought to postpone it for a year and then to consider it again. We have considered it again, and we have decided to go forward with it. I submit to the House that the proposed Bill is a moderate, rational and fair reform, unless it is to be the case that we are to get something like single-chamber government when there is a Conservative majority in this House, or else to get a Conservative veto in the last two or three Sessions of Parliament, when there is a Labour or Liberal majority in the House of Commons.

The right hon. Gentleman says that if the Conservative Party had been returned, the Labour Party would have organised general strikes to upset them. That really is unfair. [An HON. MEMBER: "He did not say so."] We have never been parties to the organisation of a general strike to upset the constitution and the authority of the Government. Even the general strike, or what was called the general stoppage, of 1926, had no such purpose. It might have been right or wrong, but it had an industrial purpose. It is unjust and untrue.

Finally, the right hon. Gentleman said that this Parliament had exhausted its usefulness. It is quite untrue. This Parliament has been one of the liveliest, most vital and most useful Parliaments in the history of this great institution. It is not halfway through its valuable life and career. We have put before the House a programme in this King's Speech of which we are proud. Its programme of social re- form alone would have occupied whole Parliaments in previous times, if indeed the Measures had gone through. As to the accusation that the Government lack administrative skill, ability and competence, I would like to fill these two Front Benches up and let any impartial observer decide where the ability lies. I do not see a particularly competent alternative Government opposite.

The Amendment should be rejected. This Parliament will go on with its work. It will do much more valuable work before it comes to its end. In all the circumstances, and in view of the fact that all that the right hon. Gentleman has done is to make a thoroughly backward-looking and reactionary speech, I ask that the Amendment should be rejected with a decisive majority as it deserves.

5.44 p.m.

Mr. Hollis (Devizes)

The Amendment we are discussing calls attention to certain alleged defects here and now in the policy of His Majesty's Government and in the programme which they have laid down for this Session: I do not think any Member would have gathered from the speech of the right hon. Gentleman who has just addressed the House that the Amendment was being discussed. His speech dealt only with one point that was at all relevant, and that he entirely misunderstood. Otherwise, there was no reference at all to the policies of His Majesty's Government. Instead, we were led through a fascinating history lesson, somewhat tendentious, but after a fashion a learned disquisition. I always enjoy the right hon. Gentleman's speeches, as we all do, but I can never understand why he thinks himself to be a progressive. I know of no hon. Member of this House whose eyes are more consistently fixed upon the past and who is more incapable of speaking or thinking about anything but the past. While he calls himself a progressive, I almost think of him as one of those mythological animals like the hippogriff of whom it is not quite certain whether they did or did not survive the Flood.

I would like to recall the House to the Amendment we are discussing. I sympathise with the right hon. Gentleman in not being able to deal with the Amendment. Whether he takes it as a compliment or not, the fact of the matter is that the right hon. Gentleman is not the villain of the piece. To some extent he personally, as a Member of the Cabinet, is an accessory before or after the fact, as the case may be, but he is not primarily the villain of the piece. The right hon. Gentleman spoke about the economic anarchy which may or may not have existed in the 19th century, and about the economic anarchy which may or may not reign under the coming administration of my hon. Friend the Member for Orpington (Sir W. Smithers). I prefer to talk about the economic anarchy which does reign under the present Government, now in power.

The right hon. Gentleman talked about the necessity for relativity, balance and priority. I entirely agree with him. My complaint about the present Government is that there is no relativity, no balance and no priority. My hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) once said in a brilliant speech that whatever we might accuse this Government of, nobody could accuse them of planning. It is precisely because the Government have not been guilty of those things that we arraign them.

Who is the villain of the piece? What is the test by which we can judge a Government? The Government's activities should be coordinated by the traditional method of finance. The Chancellor of the Exchequer should be the great coordinating factor in the policy of the Government. The reason why the policies of this Government have lapsed into chaos and planlessness is precisely because there has not been that coordinating hand over them. Last Friday, the Chancellor of the Exchequer attempted to answer the critics of his policy. It was quite clear that he was not only unable to answer the critics, but that he did not understand what that criticism was. The line of the Chancellor of the Exchequer was that he had to accept the obligation of convertibility under the Loan Agreement. He did not like it, but the majority of the House wished to have the Loan Agreement, and therefore everything inevitably followed from that, and he was not to blame. I happen to be one of those who were opposed to accepting the Loan Agreement, on balance. I am not going to take the House through all the arguments now, but I am going to put it to the House that it is fantastic to imagine that because we accepted that Loan Agreement everything inevitably followed from that and that the Chancellor of the Exchequer need accept no blame.

Among those who did not wish to reject the Loan Agreement no voice was more weighty than that of my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson). He said: Unless all help and encouragement is given to those industries on which we have to depend for the development of our export trade, and unless everything possible is done to maintain the prestige of sterling, and to create conditions of confidence throughout the world … I think that a breakdown is inevitable."—[OFFICIAL REPORT, 12th December, 1945; Vol. 417, c. 454.] That was the only condition upon which responsible opinion supported this policy. Our complaint against the Chancellor is not that he accepted the Loan Agreement but that, having accepted it, he then pursued a policy which made it absolutely mathematically impossible for it to work. Instead of encouraging the export trade, we have had a price policy which has made exports more and more difficult. Instead of doing everything possible to maintain the prestige of sterling, we have had an inflationary policy, which was insane in the circumstances, making it quite impossible to maintain the prestige of sterling.

The Chancellor's next point was that when 15th July came near certain people urged upon him to apply for a postponement of convertibility. The Chancellor's first answer to that is that it was not open to him to apply for a postponement of convertibility, and he suddenly adduced in favour of that argument the surprising line that Article 7 of the Loan Agreement spoke of exceptional cases but said nothing about exceptional circumstances. He thought there were exceptional circumstances but not exceptional cases, and therefore he could not have made the application. If that be the basis upon which the Government's policy is defended, it would have been only courteous on the part of the Chancellor to have conveyed as much to the Financial Secretary to the Treasury, because when we debated the matter on 31st July, the Financial Secretary was entirely unaware of this argument. On that occasion the Financial Secretary, with a fine imperial gesture, clapped a pair of spectacles to both his blind eyes and said, "I see no exceptional circumstances." The phrase he used was: It is a matter of opinion whether exceptional circumstances have arisen so far as this matter is concerned."—[OFFICIAL REPORT, 31st July, 1947; Vol. 441, c. 780.] He was apparently entirely unaware of the great truth known only to the Chancellor that exceptional circumstances existed but exceptional cases did not. In any event, the Chancellor's argument is a fantastic one. If his conscience was so tender that he could not have applied under Article 7, he could have applied under Article 12, which says: Either Government shall be entitled to approach the other for reconsideration for any of the provisions of this Agreement, if in its opinion the prevailing conditions of international exchange justify such a reconsideration with a view to agreeing upon modifications for presentation to their respective Legislatures. It is quite clear that the Chancellor's argument here was hardly a serious one at all.

There is the further question of why we suggested that the Government should approach the United States with a request for postponement. Everybody understands that the obligation undertaken on 15th July was a comparatively small obligation—to convert for current transactions. The argument that we used was that in the circumstances that existed this was the straw which was only too likely to break the camel's back. That has, unfortunately, been proved all too wholly true.

I should like to make three points clear. First, as Mr. Snyder has shown in his letter and as everybody admits, there has been this drain of dollars on unrequited exports, on the payment of debts. If the Chancellor is so strong upon standing on what is nominated in the bond, by what right did he allow dollars of the loan to be used for that purpose? Article 6 says quite clearly: It is understood that any amounts required to discharge obligations of the United Kingdom to third countries outstanding at the effective date of this agreement will be found from resources other than this line of credit. The second point I want to make is: Why did other countries draw upon their sterling balances during those days? The Chancellor spoke as if it were just one of those things that happened. Apart from war debts, before the war other countries kept sterling balances for their countries permanently in this country. During those months they ceased to be willing to keep them in this country. What is the reason for that change of attitude? Was it because of the hot weather or because they did not like the House of Lords? The reason was obviously that they kept the balances in the years before the war because they had confidence in the policies pursued in this country and refuse to keep them here now because they have not got confidence in the policies pursued by this Government. This is the reward which has come to the Chancellor from his silly speeches about songs in his heart and the danger of inflation having vanished, at a time when everybody knew that the danger had not vanished. The song in his heart is the nail in his coffin. This is the world's vote of censure on the Chancellor, and it is a very serious vote of censure.

Mrs. Jean Mann (Coatbridge)

If the hon. Member's thesis is correct, how does he explain that the balance in the dollar fund for the latter half of 1946 was a big one and that it was only reversed in the first half of 1947?

Mr. Hollis

The drain took place during the months after convertibility.

Mrs. Mann

Yes, but it was the same Labour Government.

Mr. Hollis

It was the same Government doing another silly thing. They could not get the money before. As soon as they could get the money out, they got it out. The Chancellor has a great fertility in thinking of arguments but seems never to understand to what conclusions they lead. He is like the lady in Saki who, it was recorded, knew the difference between right and wrong but could never remember which was which. The Chancellor is like a murderer in a detective story when one clue is still lacking. He did not seem to be aware that he was providing that last clue himself by his speech on Friday.

This third point is the most serious. The peculiarity about a camel's back is that a straw may break the back, but once the back has been broken, removing the straw does not necessarily mend the back. Convertibility has taken place. As Mr. Snyder truly said in his letter, there has been a drain at a rate greatly in excess of the normal flow of current transac- tions. That being so, the question is whether stopping the convertibility of current transactions will stop the flow. As we all know very well, it has not yet done so. On the contrary, the flow is still taking place at what the Chancellor, even with his optimism, could not deny was a ruinous rate.

I will give a couple of examples—I could give 200–to show how other Ministers are hindered, whether their policy be wise or foolish, if there is not at the Treasury the co-ordinated plan which there ought to be. The Foreign Secretary, in a very brilliant and powerful attack on the Chancellor which he delivered at Southport, has said that it is no good crying over spilt milk. I do not agree. There is every good in crying over spilt milk. If the hand that spills it still holds the saucer, it is the only way to stop it spilling the milk again. In the summer a very interesting book was published by the hon. Member for North Battersea (Mr. Jay). I say "published" advisedly because it was first written in 1937. Socialist intellectuals think that the problems of 1947 can be solved by publishing the solutions of 1937. Conservatives have to face the future. In it he admitted that under Socialism certain secondary liberties would indeed have to be interfered with, but he said that we did not have to worry because the great primary liberty that really mattered would be safeguarded. What was that primary liberty? The hon. Member writes: Any sort of compulsion on the individual in his choice of a civilian job in peace time involves an infringement of essential human liberty which is utterly incompatible with the fundamentals of democracy and socialism. The Prime Minister himself wrote a preface to that book in which he stated that in his opinion "these arguments were unanswerable." I happen to be a publisher myself, so I know very well what a long time it takes to bring out a book. Therefore, I have great sympathy with the Prime Minister. My hon. Friend the Junior Burgess for Oxford University (Sir A. Herbert) and some of my hon. Friends and I have a Motion down calling attention to the present state of the book trade, and I wonder very much that the Prime Minister does not add his distinguished name to that Motion. I have no doubt at all that at the time when the right hon. Gentleman wrote those words, nine or 12 months before, he honestly believed that these things were "utterly incompatible with the fundamentals of democracy and Socialism," and that the last thing that would ever happen would be that they should be brought in by his Administration. It was his misfortune that this book appeared almost on the same day as the Government decided to introduce the direction of labour.

Let me take another example. In the conference at Southport to which I have referred, Ministers came during the first week and tried to explain, without any great success why things were so much amiss, and when they did not have much luck they said, "You do not have to worry, the strong man of the Government is coming, he will tell us what is what"; the Foreign Secretary came and said, "I believe in Empire economic union." That was very interesting. We would like to know exactly what he means by it before we say whether we are for or against him, but it was interesting. However, he added this extraordinary sentence: I speak very seriously, purely on my own responsibility and not for the Cabinet because they have not come to a decision. Is it not about time they came to a decision? Here we are, at the supreme crisis of our affairs, the time is desperately short, the sands are running out, it is a matter of months and weeks, and all that the strong man of the Government can say is that the Government have not yet come to a decision. Let us cast back our mind seven years. Suppose, on the day after Dunkirk, the present leader of the Opposition had gone to the microphone and said, "The British Army has had to evacuate Dunkirk. The times are very serious. The Government have not yet decided what their policy is to be. We will let you know later." Where would the world be now if we had then had such leadership? Why have we such a lack of leadership today? It is not that the Foreign Secretary or the Prime Minister, the Lord President of the Council or the Minister for Economic Affairs are exceptionally incompetent men. That is not part of my thesis. They may or they may not be. Some people think they are, some think they are not. Some split the difference and think that some of them are and some of them are not. My thesis is that if we had a Government of archangels, which we have not, sitting on those Benches opposite, it would still be impossible for them to conduct the affairs of this country so long as they were utterly lacking in co-ordination at the Treasury, which every Minister has a right to demand.

It is for that reason I make my major point. We listened on Thursday with interest and sympathy to the very able speech of the Minister of Economic Affairs. We reserve our right to criticise details, but everybody recognised his high sincerity and, if he can bring this country out of the valley of the shadow of death, he will have earned a high place amongst the leaders of this country, and our gratitude. However, it is utterly impossible for the Minister's policy, or any other policy, to succeed so long as there is no coordinating power at the Treasury, and so long as there is a total lack of confidence at home and abroad in the policy pursued at the Treasury. It is for that reason I say that this confidence cannot be restored until the office of Chancellor of the Exchequer is entrusted to our hands.

6.5 p.m.

Mr. Ronald Mackay (Hull, North West)

The hon. Member for Devizes (Mr. Hollis) has continued the Debate this afternoon by suggesting that the nigger in the woodpile is the Chancellor of the Exchequer because the American Loan has been mishandled—because we have not spent it in the way we should and because there has not been proper coordination of affairs by the Chancellor; that that is the cause of our troubles today and the reason why this Amendment has been moved. I do not want to cover all the points made by the hon. Member for Devizes, but it is ridiculous to suggest as he does that even convertibility is a major factor in the economic situation with which this country finds itself faced today; and much less can it be suggested that convertibility has been responsible for a large part of our troubles.

There has been published recently in the United States of America by the National Federation of American Shipping an interesting table indicating the way in which the loan went. The right hon. Member for Woodford (Mr. Churchill) suggested that the loan had been squandered. They refer to that in this table which gives figures for the months ending 30th June this year as follows: Food, 385 million dollars, raw materials 415 million dollars, machinery 216 million dollars, purchase of ships 108 million dollars, tobacco 185 million dollars, films 62 million dollars, and food for Germany 169 million dollars, giving a total of 1,540 million dollars. No one can say truthfully that these dollars were squandered.

I want to suggest that if we try to regard this matter purely in terms of money, and the exchange of money, we are not looking at the real nature of the problem at all. In the Debate last Thursday the Minister for Economic Affairs set out quite clearly that in his view the key to the problem was the balance of payments, and I want to take up some time of the House in examining this to see if it really is the point, because it is the same sort of line which the hon. Member for Devizes took up today. There are other factors which are much more important than the balance of payments. It is axiomatic of course, that these payments must always balance. It may be that they will, if we do without certain things, but even the short-term measures taken now will not take effect until the third quarter of next year, so we shall see in the coming 18 months or two years a drain on the larger part of our gold reserves.

However, I want to get down to the main problem which is much bigger than the balance of payments. There are a number of variables to be considered in analysing the balance of payment. The first is the volume of imports. Today we are importing about 85 per cent. of what we imported in 1939. The second variable, just as important, is the price level in this country which is affected greatly by restrictionist measures all round—I shall not argue that they are only on one side—costs of all kinds and swollen margins of profit. Of course, these all clearly affect the problem of our balance of payments. The third is the terms of trade. I will devote a little time to this because it is so important.

The Minister for Economic Affairs said the other day that by the end of next year we might balance our exports and imports but we would not balance our dollar payments, and there would still be a deficit in dollars with regard to the United States of America. I suggest that our problem lies more in the terms of trade which in the past have been favourable to this country but which is favourable no longer. In the past we could buy food cheap and we were able to sell our exports abroad dear or dearer.

If one makes a graph of the last 30 or 40 years it reveals the real cause of our economic position today, and is the answer to most of what the right hon. Member for Woodford said in the early part of his speech. In 1913 our exports and imports did balance and they have never balanced since. That is the plain, blunt fact, and one to face today. If we put imports in 1913 at 100, then for the five years prior to the last war—1935–39–imports were 125 and exports about 65. In other words, in terms of imports, exports have been halved during the last 30 years, even though the terms of trade have been really favourable. I am not speaking of the last two years, but trying to get at what the position was in 1939. By 1939 every individual in the country each year had imported 20 per cent. more and exported 40 per cent. less. This is reflected in the balance of payments, but the problem is how are we to deal with the situation, and why has it arisen?

Why is it that we were able to export cotton goods at the beginning of the century, which we are not able to export now? I think the answer is fairly easy to see if we look round the world at the countries who took our exports and on whom we were dependent in the past. They are all building up industries of their own, and they are not in the position to take the same goods that they took in the past. I can give an interesting example of one of those countries, interesting because it is one of the countries where that would be least expected to happen.

New Zealand presents a most amazing position. After the depression of 1931, New Zealanders decided that they were never again going to be dependent on the vagaries of world markets; that they were not going to risk selling their primary goods, wool, butter and meat, cheap in order to buy manufactured goods from other countries, but would make their own manufactured goods. They passed an Industrial Efficiency Act, the sole purpose of which was to set up secondary industries in New Zealand. The figures are quite fantastic. I wonder if anyone would have thought that today there would be more people employed in industry in New Zealand than in agriculture? But that is a fact and it staggered me, coming as I do from a Dominion not far from New Zealand. The same is true of other countries. The industrial population of New Zealand has grown from about 60,000 in 1935, to 120,000 today.

In the major industries of New Zealand the quantity of production has doubled and trebled in the last 10 years. When we look at the sort of industrial things they are manufacturing, what do we find? They are making clothing out of their own wool instead of exporting the wool in the large quantities in which they used to export it; they are making clothing for their own people so that they do not have to buy the same amount of British clothes any more. They are making their own linen goods out of their own flax, and out of hides they are making boots and shoes which normally they would have bought from Britain. This situation, which I have described in some detail so far as it relates to New Zealand, is common to a large number of countries in South America, the other Dominions and other places In the world, and I seriously ask hon. Members to look at our economic position not in terms of money, but in terms of goods and to realise that our position as exporters in the world has changed.

I take off my hat to the Minister for Economic Affairs for the way in which he always shows his realistic grasp of things, his determination to see that what he thinks is right is done, but he has been talking, as have many others, about the unbalance between the Western World and Europe and about the extent to which America is outstripping Europe. I can imagine the manufacturers of Manchester one hundred years ago laughing if the President of the Turkish or Spanish Boards of Trade said they were being outstripped by the British. That has been going on for a long time and we have to realise that we are living in a changing world. We outstripped others in the 19th century; today the Americans are outstripping us. After the middle of the 19th century we were not only a great exporter but a great lender, a part which the United States is unable to play in the 20th century partly because of the greatness of her production and partly because she does not require to the same extent to import food such as this country has to import.

When we come to look at this problem we have to realise that the economy upon which the whole of British life has been built up in the last 80 years is an economy which was breaking down from 1913 onwards and was never repaired or improved between the two wars. I am not going to complain about that now, because in order to be dealt with the problem has to be understood. In this changed position, we have to adjust ourselves, and to adjust our economy. Perhaps those in the United States of America see it a little more clearly than we do. They are further away and can look on impartially. A very eminent professor, Professor Viner, of Princeton University, has been writing on these lines in "Lloyd's Bank Review." He says: Americans will watch further developments with sympathetic interest. I feel confident that they will applaud any steps which seem well adapted to promote the restoration of vigour and productivity in the British economy, even if these steps should not conform to an American pattern or should impinge somewhat upon American interests. They will be seriously disturbed, however, if the programme of action should reveal that the balance-of-payments problem is being dealt with as if it were only a shortage of dollars that was involved, or if the overall British economic problem were dealt with as if it were only a balance-of-payments problem, or if further American aid were dealt with as more than a relatively minor ingredient in the prescription needed for England's economic ills. That is a very important statement in relation to the discussions which are going on at present. I am conscious as everyone is of the lack of balance between imports and exports, but it is not new. We have never been a big exporter to the United States of America. We always have had an adverse balance with the U.S.A. of about £100 million. Our imports from America have increased today threefold because we are buying goods from America which we normally got in prewar days from Denmark and Australia, but when the world shortage of food is overcome—and that is the fundamental question—these things will be changed.

What is the answer to the position of Britain in a changing world economy? Can we rely on increased exports when all the time we are facing a declining world market for the export trade? We used to manufacture three-tenths of the manufactured goods of the world, but today we do not manufacture one-tenth. We used to have two-fifths of the trade in manufactures in the world, but today it is one-fifth. The most important thing of all is that whereas the trade in food and raw materials has been going up over the last 30 years, the trade in manufactures has been going down, and of the eight big industrial countries of the world, the trade in manufactures of America, Britain, Sweden, Switzerland, France, and Holland have gone down by 20 per cent. over the last 20 years. Yet we are trying to increase our exports by 140 or 160 per cent. during the next year, when obviously that is not the way in which we can solve the problem. It is suggested that we should try to get back to multilateral trade. The Minister for Economic Affairs, when he was at the Board of Trade, said in a remarkable speech in the Debate on the State of the Nation: These are, therefore, the inescapable facts of the situation. We had hoped, as hon. Members have pointed out, and as most countries had hoped, that somehow or other we should be able to achieve an expansionist world policy, based on multilateral trade. By increasing the volume of world trade it was hoped that we should be able to even up the productivity of the rest of the world so as to obtain at least an approximate balance with that of the Western Hemisphere. It has become quite obvious that such a balance is much further off than we had hoped and that far more fundamental measures than had been anticipated will be required if ever we are to attain that balance. Let us, however, have it quite clear in our own minds that nothing we can immediately do, either by saving imports or by increasing exports, can in the present world situation bring a permanent solution to our difficulties."—[OFFICIAL REPORT, 7th August, 1947; Vol. 441, c. 1763–4.] The problem is not necessarily to increase world trade, because in the 20th century any increase in world trade is going to take place in raw materials and food, and not in manufactured goods, and therefore we have to face a new position. We are told to get back to multilateral trade, and we are also then told we must combine bilateral trade with it. I wish to issue a warning that neither of these policies is going to solve the problem. Under bilateral trade we will lose approximately two-fifths of our exports. I ask any hon. Member who is convinced that bilateral trade will do it to examine our trade in the last 20 years, and to look at the countries with which we have a favourable balance, and those with which we have an unfavourable balance in any one of those years. If you look at 1930 you will see that our surplus in trade from the countries with whom we had a favourable balance was £250 million, and our deficit from those with whom we had an unfavourable balance was the same. It is only by having an unfavourable balance with some country that we can have a surplus with others. If we are to cut off the surplus and say that we will only trade with those who buy an equal quantity of our goods we shall lose two-fifths of our export trade. That is no solution.

For months we have been engaged in the International Trade Organisation talks trying to cut down tariffs here and there. In this sort of world, with America producing the enormous quantity of commodities which she can produce, that is no solution. If the Americans want British woollen goods because we can make them better in the West of England than anywhere else in the world, they will buy them at any price; tariff or no tariff. That is not the solution to the problem. It needs to be realised that the great secret of success of American productivity today is very largely the ability to produce a large quantity of goods for which there is a big selling area, a large free trade area. The export trade is only a small proportion of the total turn-over of the American manufacturer. He knows that he can carry on business solely in his home market, which, in the main, no British manufacturer can do. If the different countries of the world were not building up self-sufficiency or wanting to build up their industrialisation, we might go back to multilateral trade which was an integral part of the 19th century economic mechanism. It worked because we were big traders, both importers and exporters, and we were willing to finance any deficit. Nor will bilateral trade provide the solution in the world today. The thing to do is to look round the world to see which areas are successful, and why.

We shall always be importers of food, and so will Europe. It is no use saying that there is an enormous unbalance of trade between Europe and the U.S.A. Europe was always in the position of having a deficit with the dollar area before the war. Under the Marshall Plan provision is to be made to give Europe 22 million dollars over a period of five years; that is about four to five million dollars a year. That is exactly the amount of dollars Europe required in the days before the war. If one looks at the deficit of European countries in 1935–39 it will be seen that they were approximately four to five million dollars a year. So this is not a question of an enormous unbalance. There is a world shortage of food. There is a set-back in production of Europe and Asia because of the war. None of these were present in the period from 1935 to 1939, when our exports were 65 per cent. as against our imports of 125 per cent. of 1913. That is the economic problem which Britain has to face. There is only one way it can be faced.

Suggestions have been made this afternoon in relation to the speech which the Foreign Secretary made about an Empire Customs Union. One has only to quote the statements of the Prime Ministers of Canada, Australia and New Zealand to realise that that is not an effective solution for which we can hope, even if we want it. Yet we have to get a large free trade area, and that area is in Europe. Europeans are waiting for the British Government to give a lead in this matter. It is more than a matter of a Customs Union for that cannot be brought about unless there is a political structure behind it to give it real force and effect.

Why was the 19th century, on the whole, a century of prosperity and expanding production? I do not say that this applied to all sections of a country or all countries but it was, in a general sense, a prosperous century. It was because there was free movement of goods and free movement of people, and because there was, in fact, one currency in the world, the gold standard. That has broken down. There are people who think we can re-create it but the facts show that that cannot be done.

We are wanting to know if the Americans are to provide aid for us. Their economic position makes it possible for them to do so but they cannot play in this century the role the British played in the last. I have no doubts that they will put dollars into circulation in the next few years. They want to build up their trade, but it is foolish for us to think that our prosperity comes from bilateral direct moves. It comes because we have always had a triangular or quadrilateral method of trade. The important thing is free movement of people and goods.

Free Trade was the secret of the 19th century prosperity. If we are looking for an expansionist policy today it is to Europe that we should look. We should go full tilt for a federation of Western Europe. Instead of our Ministers spending their time at Lake Success in demagogic harangues, which are sheer futility today, they should be in Paris working out the structure of a European Federation. There is not one world. There is an American section of the world, a Russian section of the world, but there is also a British and European section too, which has greater skill, greater technical ability, resources and ability than any other nation. It is the old story of a bundle of sticks being easily snapped if divided, but being strong if they are together. We can solve this problem of there being 16 or 17 States with tariff barriers and quotas by giving a real lead.

I should have hoped that the Marshall talks would have given the Foreign Secretary and the Minister for Economic Affairs the opportunity not so much to bother about a shopping list of what Europe was to spend in America, but to work out with the European Ministers a political structure for Europe in the next two years. We can build up in that time a Federation of Western Europe which would give, in an economic sense, a free trade area for all, which would also provide freedom for the movement of population so that we can get goods and populations moving about to the places of industry where they are needed. I laugh when I hear people talk about overpopulation. There is no over-population where there is industry to absorb the population. Fifty per cent. of the trade of the world came from Western Europe, the biggest trading area the world has ever known. We have cut down production in Germany, because we are frightened of the next war, and I am not going to argue on that subject, but there is no solution to Europe's economic problems until Germany is producing to the full. We must have her in some kind of political structure in Western Europe so that she can produce to the maximum without danger of war as we have known it.

We have to tackle this problem. I would ask the hon. Member for Devizes (Mr. Hollis) not to be moved so much by problems of the American Loan and convertibility. The real problem is that Britain's place in the world has changed, and that this is a changing world. We are a manufacturing country, we cannot give up being one, and, therefore, we have to look for export fields. Those to which our exports have gone in the past are being closed to us. We have to discover why the Americans are prosperous. One reason is a big free trade market. The secret of the success of the 19th century was Free Trade, free movements of population and a common currency. We must create those conditions in Europe.

I ask Members to think of this problem in wider terms. We are confronted with the greatest crisis this country has ever known. It is just as great as that in the two wars. There is not a Government in Europe today which can remain stable in the economic conditions operating there. If we wish to see Europe decline and fall, we can go on acting as we are acting now, but if we are thinking of our own prosperity and thinking in constructive terms of the political and economic future of Europe and the world, we will realise that the future for the British people lies, while still in the closest association with the Commonwealth, in going firmly into a Federation of Western Europe, and by giving a lead to the Governments of the sixteen States who were at Paris, for which they are now waiting, in the creation of such a Federation.

6.30 p.m.

Mr. Gerald Williams (Tonbridge)

I listened closely to the eloquent and well-informed speech of the hon. Member for North-West Hull (Mr. R. Mackay), and I am in entire agreement with a great deal of what he said. The fact remains that we must get the food to this country and, in order to pay for it, we must export. The experts will decide which are the best places for our manufactured goods to be sent. For my part, I want to put forward some constructive ideas about the way in which we can enable the people to produce enough goods for export to put us on our feet again.

I listened very earnestly to the grave speech of the Minister for Economic Affairs. He told us that he was determined to maintain our idea of true democracy. He also mentioned that he would like to see in this country a return to Christian ideals and ideas. I think all hon. Members agree with those sentiments. We wish to support him. I did all that I could to remove the late Minister of Fuel from office, but at the same time I switched out the lights and sometimes I went cold in order to help the right hon. Gentleman to get through the trying times. These small efforts are not enough. Fortunately, during the six grave years of war we had that wonderful quality for which the English are so famous, called patriotism. That got us through those difficult years. We then passed on to the era of exhortation, but exhortation has failed dismally. The people merely say that it is just the same old stuff hashed out in a different form. It gives them very little incentive to work harder.

We are at rock bottom now and it is time that we took steps, even though they be drastic, to put our country on its feet again. I suggest to the Chancellor of the Exchequer that he should take risks with his Budgets in the next few years. If he reduced Income Tax considerably, by 2s. or more, he would then give us an incentive—something to work for. I believe also that he could reduce Income Tax on overtime. There may be administrative difficulties of which I have no knowledge, but it would not be beyond the wit of the Chancellor to devise a means of making all overtime work free from Income Tax. If we are to give the people an incentive, at the same time we must fill the shops with goods. Many hon. Members have quoted the ease of Belgium which, after the war, said, "We have to export, but let us produce the goods at home first." They filled the shops with goods and reduced Income Tax. The consequence was that all their workpeople, from bosses down to humble workers, put their best foot forward and produced the goods. They are now one of the most prosperous countries in Europe.

When it is suggested that we should do the same here, many hon. Members may say that it is too late and that we should have done it two years ago. But I wonder whether it is too late. We still have the gold in the Bank of England and a considerable number of overseas investments. Could we not use some of this reserve for filling the shops, possibly with perambulators, or clothes which we need to keep us warm, or even with dog biscuits? The shops must be filled if we are to encourage the people to work harder. The Minister told us that it is essential that we should help ourselves. I entirely agree. It he encourages us to help ourselves by reducing Income Tax and by filling the shops, he will not only get the exports but he will raise our standard of living from its present low standard. Incidentally, it will do a great deal towards killing the black market, with all the bad effects the black market may have on the people.

For that reason, I deplore the fact that basic petrol has been taken away. I am not going to waste the time of hon. Members, because we know from previous speeches what time is wasted by not having our cars to get to industry, and how our morale is lowered by not having them for pleasure purposes. I wish to point out that it is one less inducement. If a person knows that if he works hard one day he may own a motor bicycle or even a car, that is an inducement, but that inducement is now being taken away.

Food is the most important of topics today. Recently the Government gave us an Agriculture Act, a great deal of which we supported. If only they had given us the feedingstuffs for our animals so that we could increase the production of eggs, bacon and milk, we would have been a great deal better off. The Government have forgotten that there are a large number of allotment holders in the country. In that Act nothing was done for the allotment holders. I regret that the Gracious Speech makes no reference to revising the Allotment Act of 1925. The Prime Minister might have thrown out a challenge to gardeners. Gardeners would have taken up that challenge willingly. They would have produced the food we need if only they had been encouraged, but they are given no help in the Gracious Speech. Instead, we merely hear of the Government tinkering with gas and with Peers. During the war years, £20 million worth of food was produced by allotment holders—a not inconsiderable amount. That was produced at a time when none of us had time on our hands. Then we were working for the country and were hard put to it in every way.

Now we have a five-day week, there is very little beer in the public houses, we have no petrol and very few other attractions. Now is the time to help the allotment holder to produce the little bit of food that will make just the difference in the coming months. This is the golden opportunity, but instead of encouragement, we see that land is being taken away from allotment holders. Some allotments have been neglected through the fear of the holders that their land would be taken away from them. Allotments are good for the individual, good for health and recreation, and they are good for the nation in what they produce. Why, therefore, are so many obstacles placed in the way of allotment holders?

Mr. Austin (Stretford)

Would the hon. Member inform the House who is taking away land from allotment holders?

Mr. Williams

Yes, the local councils.

Mr. Austin

If the land is required for housing, does not the hon. Gentleman believe that the local authorities are justified in taking it?

Mr. Williams

They have said they needed land for houses, but in many cases alternative land has not been offered, and they have had no guidance from headquarters. What the allotment holders want is security of tenure, and they should be given that by Act of Parliament, just as the farmers have it. Farmers' land can still be taken away for building houses, but they are offered an alternative, and what the allotment holders want is security. Many of them have had their land taken away by the commercial growers, and they are not receiving the assistance they need. The Minister of Town and Country Planning has given us no guidance as to what are his plans for allotment holders, but if he could tell us that these people will have security of tenure, the allotment holders would be safeguarded. The Government should tell the local authorities what they want them to do. They should also speed up the loans advanced to local authorities which want to provide allotments for their people. At present it takes some months to get a loan from the Ministry of Health. We want the food, but we are not giving any help to the people who could produce it, and I believe that, if we helped the allotment holders, we could improve our food situation very considerably.

May I return to my previous suggestion for giving incentives and inducements to the people of this country by lowering the Income Tax, by taking taxation off overtime, and at the same time spending the small reserve that we have left in filling the shops? If we do that, and at the same time produce more goods, we may possibly get through this crisis, but we must do something drastic. The Minister for Economic Affairs told us that, in spite of all his suggestions, in 1949 we should still be £250 million down in our payments. This is the time when we ought to do something drastic, and I hope that, in these agonising times, my words will not have fallen on the deaf ears of Cabinet Ministers.

6.43 p.m.

Mr. Baird (Wolverhampton, East)

I think that all of us on this side of the House, and many hon. Members on the other side, will agree that, if there were an Election tomorrow, this Government would go back, perhaps with a smaller majority, but still it would go back. We must all be proud of the great loyalty which the people have shown to the Government, but there is a danger that the Government may become a little too complacent about the mood of the people. There are grumbles, and many of them; and one of them is about basic petrol. The Government have done a good job, but, while withdrawing the basic petrol ration, they have done nothing to tackle the black market in commercial petrol. I am told that, in the North of Scotland, anyone with a car can get his tank filled any time without any coupons at all, because it is a purely agricultural area. Further, there has been an announcement that the Government are going to ration potatoes, but nothing is done about it, while all the working-class housewives know that the wealthy people are filling their cellars with potatoes.

I want, first, to say, not in any critical spirit, that at the present time the people are behind the Government, first of all, because they know that the Government have done a good job in the last two and a half years, but they are not convinced up to now that the Government have yet started to tackle this crisis in a really forthright manner. Their morale has been kept up because we on the back benches have promised the people that the Government will tackle this problem in a forthright manner. Up to now, I have listened to some very admirable speeches in this Debate, but I think we must all admit that there is very little in the Gracious Speech which is going to help or hinder us in our crisis—certainly, as far as legislation is concerned. It is impossible, I believe, for the King's Speech to do it. So far as the situation of the people of this country is concerned, it is not a King's Speech or legislation which will give them the incentive they need; it is the coming Budget. Therefore, I say that it is most important that the people should get a proper incentive in the forthcoming Budget.

There is one item which I regret has not been introduced into the Gracious Speech and that is mention of a Bill to give statutory authority to production committees. I live in an industrial area, and I know quite well that we cannot possibly make a production committee in a factory a success simply by making it statutory. At the same time, there are many factories where no steps towards industrial democracy have been taken and where production might be increased if production committees were established, but in which, because of the reactionary managements, these committees do not exist. Furthermore, many of these committees should have their functions broadened and they should be extended to a much bigger area of the industrial organisation. Therefore, I regret that there is no mention in the Gracious Speech of legislation to make production committees statutory.

The hon. Member for North-West Hull (Mr. R. Mackay) made a very important contribution to this Debate when he told us that the important problem today was presented by the fact that markets for manufactured goods are falling. He suggested that the best way for us to solve the problem is to widen our economic boundaries. I entirely agree with my hon. Friend. I do not, however, believe we will ever be able to compete in the markets of the world with mass production goods from America. We can, I believe, always hold up our heads and can compete favourably so far as high-class goods are concerned. I agree with my right hon. and learned Friend, the Minister for Economic Affairs, when he said: There are two general principles which we must bear in mind, though we must treat them flexibly. We should always attempt to sell goods with the highest possible conversion value, preferring those with the higher value to those made of the same material with a lower conversion value."—[OFFICIAL REPORT, 23rd October, 1947; Vol. 443, c. 285.] That is a very fine sentiment, but what are the Minister for Economic Affairs and the Minister of Supply doing to see that that principle is carried into effect? From my own personal experience, there has been very little encouragement given to firms producing goods of a high commercial value. I will give one example. In my Division, there is a small town which produces almost all the locks of this country, and, indeed, of the world. It is world-famous for its production of locks for doors of all kinds, for cars, and, in fact, every kind of lock. The workers there, through their efficient trade union, have told me that certain mass-producing firms have cashed in on the sellers' market and are now producing a large number of goods of inferior quality with which they are flooding the foreign market. I am told that these firms producing shabby goods are getting as much raw material as the firms producing high-class goods. What discrimination is the Minister for Economic Affairs going to make to see that the raw materials available in manufacturing industries are allocated to the firms producing the goods which will bring us the most dollars?

I will give one other example which is even more interesting. It has to do with my own profession. It is a very small matter, but I am told that the same sort of thing is happening in all industries. Dental instrument makers produce what is known as the "dental burr," which is made of steel. It is a very small thing, and we all know what it is like. At the present time, it sells at a very high price. During the war, a very good dental industry was built up in this country, and we can sell this particular instrument in Australia, Canada, America, Sweden, and, indeed, throughout the dollar area. The amount of steel required for its manufacture is very small, but the firms which are producing raw and semi-raw materials are not interested in supplying small quantities of steel in order to help to produce a high-class article. They are out for the mass market all the time. We cannot get the steel, even though we want only a few hundredweights a month, with which to manufacture the article, which would bring many dollars to this country, because it does not pay firms to produce in small quantities the high-class steel necessary. What is my right hon. and learned Friend the Minister for Economic Affairs going to do about that problem which, to a certain degree, is affecting the whole of British industry today? What are we going to do to make firms produce high-class goods with good convertibility?

As I said, I believe that the people of this country will be sustained, and their morale kept high, not by anything contained in the Gracious Speech, but by what is contained in the forthcoming Budget. The workers are being asked to work harder and longer, but to the workers' minds that simply means putting more profit into the bosses' pockets. That may not be true, but it is the sentiment among the working classes today. Therefore, in order to get increased production, we must convince the workers that their harder work and their bigger contribution to output will not simply mean extra profits in the pockets of the bosses.

As far as the Budget is concerned, in the coming months we must see to it, first of all, that nothing is done to reduce the food subsidies if we are to get increased production. Secondly, I should like to know, as a simple man, and certainly not as an economist, why we have not called in our currency as Belgium and other European countries have done. Some people say it is because the problem of printing is so tremendous. I do not know, but everywhere I go in my constituency that is one of the questions which people are asking, and to which, as far as I know, no satisfactory answer has been given.

Then there is the question of a profits tax. It is essential that we should have such a tax in the coming Budget, and, furthermore, it must be a tax without any loopholes. I was speaking to an industrialist the other day who said, "By all means have a profits tax. It will be easy for the industrialist to hand on that tax by increasing his prices." We do not want merely the shadow of a profits tax; we want, as I have just said, a profits tax without any loopholes.

Colonel J. R. H. Hutchison (Glasgow, Central)

Is not the hon. Gentleman aware that there is already a profits tax?

Mr. Baird

I am talking from the worker's point of view. He feels that, at the moment, he alone is making the sacrifice. I think that the commonsense and the logic is with the workers. We must have further taxation and less profits if we want the worker to put his back into it.

There are many other points which I am sure the Government have in mind, and which they will consider. There is, for instance, the capital levy. I hope that they will look at that again as an emergency measure in this time of crisis. There is another class of things for which there is a ready market in America-works of art. In England today, not only in our art galleries, but in country houses, there are tremendous numbers of works of art lying idle. Could we not make a levy on such things by way of a small contribution to the export drive? We could sell them to our American friends. [An HON. MEMBER: "The hon. Gentleman has no culture."] I am told that I am not cultured, but that is a small contribution which could be made at the present moment.

Mr. Brendan Bracken (Bournemouth)

What works of art has the hon. Gentleman in mind.

Mr. Baird

There are all sorts of works of art; I have no particular kind in mind.

Before I finish, I want to say that, as far as the workers are concerned, they are doing a grand job at the present time. They can produce still more of the right type of goods if they get the right lead from the Government; but at the moment they feel that all the sacrifices are being asked from them. In the Budget, the Government must make it doubly clear that the sacrifice will fall on the people most able to bear it. The working-class people have made their sacrifices. I am confident that their spirit is good, and that they will work harder if the Government give them a strong lead, and convince them that the aim is to build a better England, not only for the wealthy people, but for all classes of the community.

6.57 p.m.

Major Peter Roberts (Sheffield, Ecclesall)

There are some points in the speech of the hon. Member for East Wolverhampton (Mr. Baird) with which I definitely disagree, and I will mention them later in my speech. He started off by saying that he considered that, if there was a General Election, the Government would get in with a reduced majority. I hoped he was going to say why he thought their majority would be reduced, but he did not.

Mr. Baird

I would point out to the hon. and gallant Gentleman that I did not say I thought the Government would get in with a reduced majority. What I said—and some hon Members opposite obviously agreed with me—was that they would be returned with, perhaps, a reduced majority.

Major Roberts

I beg the hon. Gentleman's pardon, but I understood him differently. He went on to say that in the Gracious Speech there was very little to help us through the crisis. If I may take him further on that, I would suggest to the Prime Minister that there were a number of things with regard to the social services which might have been considered in the Gracious Speech. Admittedly, it says in the Speech: This will complete the all-embracing scheme of social security the main lines of which have been laid down in the Measures already enacted. But I would point out to him that it is one thing to pass legislation, and another to carry it through. I want, for a moment, to draw his attention to the Health Act of 1946, because I consider there is a real danger that a great deal of planning work which ought to be done with regard to the social services under that Act, is not being done. I refer, particularly, to the appointed day. As hon. Members know, the appointed day for the Health Act has not yet been mentioned. But before that comes about, a great deal of work must be done. I am talking now from the point of view of an hon. Member representing the industrial area of Sheffield, where nurseries, dispensaries and accommodation for local specialists are required. None of that work is being carried forward at the moment. The time will come when we shall want to put the Health Act into effect, but the necessary building and planning will not have taken place, and the result will be that the people who have paid their increased premiums will not get the increased benefits.

I suggest to the Government that that is the sort of thing to which they should have been applying themselves at this moment. As well as that, there is the carrying on of the planning of education, and in this respect, I would mention the desirability of doing something in regard to spinsters' pensions. But what do we get instead? Gas nationalisation. There is no necessity for it at this time. The Minister for Economic Affairs did not mention it at all last week in his short-term or long-term plan. He said something about capital expenditure. Now those critics of the gas industry and those who put forward gas nationalisation proposals talk of the economies and advantages which will come from the reorganisation of the industry. But those advantages, if there are any, come from capital expenditure. If the Government intend to go forward with nationalising the gas industry, I would like to know whether they are going to allocate capital expenditure or not. So far as I can see, the Minister for Economic Affairs does not intend to allocate any capital expenditure to these schemes for nationalisation; nor do I think he should do so, because it is not a matter of first priority. Yet the legislation is being rushed through irrespective of the administration required to carry it out.

I have put forward criticisms of a more destructive kind. I now wish to offer some more constructive criticisms which have already been uttered from this side of the House. I consider that the greatest principle of all which the Government have omitted from their present programme is the principle of incentive. The hon. Member for East Wolverhampton referred to incentive. I thought at first that he was going to encourage incentive, but finally he advocated the placing of more restrictions on incentive. The people will work for many various things, and surely it is work that we want at the moment. During the war, people worked for one incentive, and that was to win the war. Nowadays some people work for money, others for their children, and others to buy houses. There are many things for which people will work. Some people work for pleasure, such as going out in a motor car. Some will work for travel, and some will even work for fur coats. I do not mind so long as we get the work done.

I would like to make certain suggestions which the Chancellor might bear in mind for his Budget. First, it is essential that there should be a relief of direct taxation on production wages. It is essential that that incentive should be given to the working man. When he works overtime and produces, more goods, he should be allowed to make more money and keep it; Pay-As-You-Earn tax should not apply to that extra work. That is one incentive which would produce greater output. Opportunities for travel should not be curtailed. Some people work to buy a motor cycle to take them into the country. The Government should relieve from taxation those industries into which we want people to go. I am convinced that the real weapon in the hands of the Government is the method of taxation. Heavier taxation could be imposed in those industries where we do not require the people to go, and there should be taxation relief in those industries where we require the work. It is easier to induce people to go into industry that way than it is to use all the police methods and sanctions which the Government seem to be trying at the moment.

I wish to refer to coal nationalisation, to which the Lord President of the Council referred in his speech this afternoon. It is very dangerous to talk about the denationalisation of the coal mines because, first, one has to decide to whom one is to de-nationalise them. We have to find people who are willing to take the coal mines from the Government, and it may not be easy to do that. I suggest that there is an alternative method which the Government should use when they find that this great centralised organisation will not work efficiently That is the possibility of allowing the State to be the landlord of the collieries or groups of collieries, and to lease the collieries or groups of collieries to individuals, as a landlord leases to a farmer. In this way it would be possible to create colliery concerns which would not need a very heavy capital shareholding; in which managers, men, and working capital partners could join together, and after the rent for a particular working year had been paid, the proceeds and profits of the pit could be divided among the people working in it.

In other words, it boils down to the question of incentive. It is hopeless to ask a miner to work when he knows that he is merely one of a million people working for a basic wage. I say, give him the initiative to co-operate in his own pit; build up the team spirit in the pit. Let the Government realise that if the miner can keep some of the rewards for his extra labour in the pit, he will do the extra work. There will be competition. I would not mind the Coal Board running certain pits of their own, but if they had the competition of these other rented collieries the miners and the managers would be encouraged and spurred to work all the harder. On that basis, incentive should be introduced into our production machinery of today. Unless incentive is given for extra production, I do not think we shall get out of our difficulties.

Above all, at this time we need leadership. We need it morally spiritually and physically. I am convinced that the country had a grave shock when it heard, as it did recently, of the Government's political desires to deal with such matters as the House of Lords, nationalising the gas industry and so on. It shattered the confidence of many reasonable thinking persons. The great duty of the Government at the moment is to make way for those who can govern properly with the confidence of the country.

7.7 p.m.

Mr. Awbery (Bristol, Central)

We have listened this afternoon to an interesting and entertaining speech by the right hon. Member for Woodford (Mr. Churchill). Half of his speech was filled with humour which this House always enjoys, especially when the humour is spontaneous. Half of the speech was filled with abuse to which the Opposition are perfectly entitled. I am afraid the right hon. Gentleman almost exhausted his adjectives when he was abusing the Government. The speech was intended to bolster up a policy-less Tory Party. When a man has no case, he sometimes abuses his opponent. Some of the abuse might stick. The country will certainly appreciate what is abuse and what is constructive criticism. Abuse is not a substitute for a programme or a policy. The speech was an attempt to get the nation to forget the dark period they suffered under the Tory Party.

The right hon. Gentleman referred to the question of housing, using the figures which prevailed in 1939. I would remind the right hon. Gentleman that in the city which I represent, in the two years following the first world war we built 173 houses. For every one house built in the two years following that war we have built 20 houses in the two years following the recent war. The right hon. Gentleman referred to the increase in wholesale prices. The inference to be drawn from his speech was that subsidies should be removed, and that a 90 per cent. increase should be placed on the prices paid by the consumer. The Government are not of that opinion. Finally, the right hon. Gentleman referred to the House of Peers. In 1909 the right hon. Gentleman said: The House of Lords is representative of nobody. Most of its members are there because of the accident of birth. Nearly all of them represent property. That was his opinion in the exuberance of his youth. Last week he said it was a deliberate act of social aggression."—[OFFICIAL REPORT, 21st October, 1947; Vol. 443. c. 35.] I am going to agree. Listen to another quotation which I should like to make: Lord Knutsford was asked by a gentleman if he would give £25,000 to the London hospital, and that if he did he would be as likely to get a title as if he gave the money to the party funds. Lord Knutsford told him he was more likely to get a baronetcy if he gave the money to the party funds. Within a short time the gentleman appeared as a baronet, not having subscribed to the hospital. That is a quotation from a Tory Party M.P. of 1919.

Mr. Bracken

Show that to Lord Inman.

Mr. Awbery

Throughout the discussion on the Gracious Speech two matters have been raised prominently, and I should like to deal with both of them. One is the question of dollars from America, and the other deeds by the people of this country. In the Gracious Speech we have the programme for the third Session of Parliament with the Labour Government in office. We have placed upon the Statute Book during the last two Sessions a considerable amount of legislation, and we are satisfied that, with what we have done, we still retain the confidence of this nation. At least, we have not yet lost one of the 22 by-elections which have taken place. We know that during this period storms have blown up, many of them quite unexpectedly. The world knew in 1945 that the Government that then took office would be fettered and hampered by the inevitable consequences, political and economical, of the most devastating war of all time. Every nation today, victor or vanquished, is reeling and staggering as a result of the dislocation caused by the war. The Opposition know this—that the cause of the economic crisis today is not the Labour Party or the Labour Government. The cause is the war. Still, they endeavour to blame the Government for it all. Hitler said that if Germany went down, it would take Europe down with it, and he has been more successful than most of us dreamed of.

The determination of the workers to help us out of this difficulty is tremendous. The determination is greater, in my opinion, than the difficulties themselves, but I should like to suggest to the Government that if they want the workers to pull their weight three things are essential. They must be told in explicit and unambiguous language three things—what the difficulties are, why the difficulties exist, and what measures are to be adopted in order to meet them. I believe that then all of the workers of this country will respond. They struggled to establish this democratic system of ours, and they will not see it taken from them so very easily. They pulled us through in the past, and they will pull us through again. I suggest that our Ministers should use the wireless more than they do, not so much for party political propaganda, but in order to enlighten the nation of the full facts of the case. Rumours circulate, and they do us a great deal of harm. They scatter dangers, fears and despair in the mind of the nation; and these are our enemies. I feel that some of the speeches that are made outside by Members of both sides of the House are not very helpful. Political capital may be made out of some of the speeches, but they do not help the country in its dire distress.

I should like to say a word on the question of deeds, and what I think about them. I have been a representative of a trade union, a representative of a large number of men, for 25 years. The basis of our future progress is going to be upon the work and the deeds of the people in our workshops and in our factories. The Government are going to redress the balance of payments by production—by deeds. We do not want to see this increase in production, which will be brought about by the workers, to be by means of unfair competition among the nations; but we want it in order to increase the standard of living of the common people. The salvation of this country lies not in the hands of the financiers, not in the hands even of this Parliament: it lies in the hands of the producer? by hand and brain. We are helpless without them. It has been said in this House on several occasions that coal is as valuable as gold. What has been done in the Rhondda Valley in the mining areas is of greater consequence to this country today than what is done in Threadneedle Street. It is interesting to note that losses today are not measured, like they were, in pounds, shillings and pence, but in the tons of coal which have been lost by any particular strike.

Are we going to increase this production? I think that we have to create confidence and the right atmosphere in the minds of the people in the factories and workshops. We must develop among our producers greater social consciousness than exists at the present time. We want to create a feeling amongst them that they must give to the nation—not to the boss; not to the capitalist: but that they must give to the nation according to their ability; and the nation must give to them according to their needs. To do this much bitterness has to be removed. For a large number of years there has been a great deal of bitterness between the employers and the employees. That has to be removed. A great deal of antagonism has to be wiped out. I believe that this workers' Government, sent here by the workers, can do that job, and I do not think that the Tories could ever do it because of their past. Our Tory friends may smile. They are entitled to smile. But we have had experience in the mines. The feeling in the mines is so bitter that it is going to take a long time to remove it. Men have been drawn from the land, and now they have to be won back to it. I fought a by-election in 1945 in a textile area where 75 per cent. of the town had been unemployed for eight years.

We have to break down that feeling; we have much to undo as well to do. The workers are not unmindful of their past position under a Tory Government. I remind the House that two years after the war, in August, 1922, there were 1,450,000 unemployed in this country. I remember sitting in a parish room for two hours in order to draw 3s. 6d. parish relief for my grandmother. But there was no crisis then; the country was not a poor country but a rich country, and at that time there were eight million people in this country who were undernourished. During the period when there were distressed areas we were a rich country, but the Tory Party was in power and the people can never forget that. There was no millenium under Toryism, and there is no illusion amongst the working people today that if ever we returned to Toryism there would be a millenium. We won the Election on "Let Us Face The Future." Hon. Members opposite want to win the next Election. They can win that next Election only by getting the people to forget the past.

Before concluding, I wish to say a little about dollars from America, because that is important. We heard this afternoon that there were "shabby moneylenders" in America. Probably there are. So are there "shabby moneylenders" in this country. But that is not a characteristic of the American people generally. I believe them to be kind and generous. Indeed, we are deeply grateful to them for what they did under Lend-Lease and the help they gave to us, which was referred to this afternoon by the right hon. Member for Woodford. Up to the moment, we have appealed to the commercial and business mind of America. I say to our politicians and statesmen that we ought to appeal to their hearts, because then I am sure they would respond. We ought to appeal to the spirit of the American people, and not only to their business acumen.

It may sound sentimental but I believe we ought to say to the American people, "We held the fort alone for 12 months. If you had been in the war during that 12 months it would have cost you £2,500 million. We are now asking you to give us that money as a contribution towards our effort. We want you to treat us as gallant, fearless, intrepid and honourable allies, and to help us out of our present difficulties. Do not let the commercial instinct outweigh your moral obligation to a partner who stood alone in the most critical year in the history of the world, to a nation which stood alone in order that government of the people, for the people and by the people should not perish from the earth." I am confident that there are chivalrous people in the United States who are capable of responding to such an appeal. There are people in America, originating from every county in this country, who are ready to respond; they left the homes of their fathers, but they have not forgotten them If we appeal to the sense of fair play of the Americans, and to their hearts, I believe a response would be made. They are prepared not only to lend but, in my opinion, to give.

No, no, my friends! The American people are not all hard-hearted businessmen trying to squeeze the lemon till the pips squeak; they are not all men endeavouring to get the maximum price from this old country of ours. They have a sense of moral obligation for what we have done, and they will respond magnificently, as I believe this nation would have responded had our positions been reversed. I do not want to go to America—as was said by an hon. Member last week—as a mendicant, cap in hand, pleading for a dole. I would go in a dignified manner, explaining to them and the world what a victorious war has meant to this nation. Had Hitler been successful we would have shared with America the resultant misery and impoverishment, and the loss of all that is worth while in human life. Why, then, should we not appeal to America and ask her to share at least some of the good things which she has to spare with us who are in such desperate need, and ask her, in justice, to re-introduce Lend-Lease for a few years until this country can recover its economic position?

7.28 p.m.

Mr. Spence (Aberdeen and Kincardine, Central)

I hope that the appeal of the hon. Member for Central Bristol (Mr. Awbery) will receive the response that the sincerity with which he made it deserves. We know that the renewal of Lend-Lease would solve many of our difficulties, but that is not the topic on which I wish to concentrate the attention of the House tonight. I wish to concentrate rather on the Amendment to the Address standing on the Order Paper in the names of my hon. Friends, at the end to add: But humbly regret that no immediate steps are proposed to provide the essential resources, particularly feedingstuffs, houses for agricultural workers and steel and timber for agricultural equipment, needed to ensure a speedy increase in home food production and better rations for the ordinary consumer. I remember well the speech made last Thursday by the Minister for Economic Affairs, and I am sure it will be in the clear recollection of everyone else who heard it. He was lucid and uncompromising in telling us the exact position in which this country stands; and he explained in detail the steps that had been taken and the privations that must be suffered if we are to recover.

In the course of this Debate I have noticed that speaker after speaker from the Government benches has emphasised the fact that the crisis which is now upon us was foreseen. That is true, for the economic White Paper published early this year did foreshadow in detail the position in which we find ourselves today. However, I feel there has been an omission in the speeches delivered from the Government benches, in that they have not attempted to reconcile the Government's legislative programme and administration, under the shadow of the coming crisis, with the facts as they have turned out. To my mind, the Minister for Economic Affairs made three main points. First, the need for the production of home-grown food; secondly, the need for the encouragement of export; and, thirdly, the need for the restriction of imports. I wish to examine the Government's actions in the light of those three needs.

I take first the production of homegrown food. There are three things which the farmer and those who work on the land need today—houses, tools for the job and animal feedingstuffs. With these three things, we can get a large uprising in the output of home-grown food. I want to place against that background what the Government have been doing. One of the first legislative acts of this House of Commons, when it originally met in August, 1945, was to repeal the Housing (Rural Workers) Act. Under that Act were reconditioned some 30,000-odd houses, and under it a further 20,000 were scheduled for reconditioning. I maintain that that Act was repealed as a matter of blind party doctrine and class prejudice—to hit at the landlord—although local authorities had availed themselves of it. We are denied many houses in the country through the cancellation of that Act.

I note that the production of rural houses over the two years as a result of the Government's plans, has been only some 22,000, of which only a small proportion are occupied by agricultural workers. The reason for the cancellation of that Act was that it was supposed to help stamp out what has been called "the abomination of the tied house," which are the words used by hon. Members opposite. If it were an abomination, then why has that principle been adopted in the case of the Water Bill for Scotland, the Health Bill for Scotland and the Forestry Act? It is quite inexcusable that the Government should deny to the fanner or the landlord the right to improve accommodation on his land, so as to make conditions such that more people will be attracted to the industry.

I have not a great deal to" say on the question of tools for the job, but I will quote some figures and ask for an explanation to be given of them in due course. We know that tractors and agricultural machinery are in short supply, but already this year we have exported over £3 million worth of tractors and over £2½ million worth of agricultural machinery, as well as a large quantity of tractor tyres. These are things which are vitally needed to help to get the maximum from the land. Of all the failures of the Government, the worst has been in connection with animal feedingstuffs. For some reason, I presume it is due to custom, the purchase of animal feedingstuffs has always been in the hands of the Minister of Food, although when it comes to the animals they are under the control of the Minister of Agriculture. I will quote figures to show what is the position this year. So far, we have imported £111 million of cereals for home consumption, and only £11 million of animal feedingstuffs.

I maintain that animal feedingstuffs are vital, and that the Government have failed to get them. I make that a definite and specific charge against the Government, which I hope to substantiate by referring to the Canadian Wheat Agreement. This Agreement was made in 1946, and under it we undertook to take from Canada, over four years, 600 million bushels of wheat. It was an admirable agreement from the point of view of getting our bread. In the second part of the Agreement, however, this Clause occurred: Of the total quantity of wheat specified, the United Kingdom Government agree to take the following quantity in the form of flour. I wish to make my point in detail. All the wheat under the Agreement has been bought, but we have agreed to take 1½ million tons of it in the form of flour. Canadian wheat is milled at an extraction rate of 75 per cent., and therefore there is 500,000 tons of wheat offal or animal feedingstuff arising from the flour. I maintain that this offal belongs to us, but not one word occurs in the Agreement about it from start to finish; nor have we obtained this animal feedingstuff from Canada. I have checked the figures up to March this year, and I find that we have taken 470,000 tons of flour to the value of £13½ million, and imported from Canada 88 tons in the form of animal feedingstuffs to the value of £761.

The point is that if we have had our fair share of this year's offal, we should have received something like 150,000 tons of animal feedingstuffs already. Questions have been asked about this Agreement, which was mentioned very briefly in the food Debate on 1st July. This is the first occasion I have had the good fortune to be able to draw attention in detail to the loss of animal feeding-stuff which has been going on through the ignorance or neglect of the Minister of Food. I hope that as a result of this Debate some action will be taken to bring animal feedingstuffs into this country to help us to produce food at home. Let us see what has been happening in this country, by instancing the humble pig. Before the war we normally slaughtered approximately 50,000 pigs a week for bacon, and 50,000 a week for pork. Today, the figures are 16,500 and 2,500 for bacon and pork, respectively. We could sustain the same amount of livestock as before the war if we had the animal feedingstuffs.

In the food Debate on 1st July, the Minister of Food took us on a travel tour around Europe, promising us jam tomorrow and bacon and eggs next week, but not saying a word about animal feedingstuffs. The countries with which he was making these agreements included Czechoslovakia, Roumania and Bulgaria which, according to the F.A.O., had been, only nine months previously, on the borderline of starvation. If they could build up their agricultural economy, could we not have built up ours if we had imported animal feedingstuffs and grown our own food. The ratio between feedingstuffs and finished products is approximately 2½ to one; in other words, if we could import the feedingstuffs we could produce 2½ times their value in the form of food. Another point is that the old establishments, such as pig sties and poultry runs are ready in the country, if only the Government had carried out this policy instead of buying the finished products to the exclusion of all else.

I wish to refer to a point raised by my right hon. Friend the Member for Woodford (Mr. Churchill), namely, the preoccupation of the Government with a mass of details. Last Tuesday when I went to the Vote Office, I found that on that day no less than 201 new S.R. and O.s had been tabled comprising 513 pages. I have read part of them, and I find that they cover a variety of matters some of which are important, but most of which are quite unimportant and should never be occupying the time of Ministers. We have such matters as the basic petrol ration cut, the cut in bacon and the direction of labour, which are all important. We then have a mass of detail like scrap iron, jam, penicillin, hollow-ware, fertilisers, fish and tomatoes. It will interest hon. Members no doubt to know that they can receive now only 61/28oths of an ounce of butter as nonresidents for a meal in a catering establishment, and that snap fasteners less than half an inch in diameter and hooks and eyes over size four are free from control.

Mr. Eric Fletcher (Islington, East)

Does not the hon. Gentleman realise that for a long time past Members of his party have been complaining about delegated legislation, and arguing that a great deal of that legislation should be passed on the Floor of this House?

Mr. Spence

It is not a question of delegated legislation; it is this mass of minutiœ, this detail, which is thrust into the hands of Ministers. Industry should be told to get on with its job, instead of having to read, for instance, that two new hair grips, one "Lady Madcap" and the other "Dirkie," are to be raised in price. Is there any wonder that Ministers have no time to get on with their job? We cannot have good legislation while this enormous volume of detail has to be dealt with by each Minister.

Mr. Fletcher

Is the hon. Gentleman seriously arguing that these matters should not be subject to Parliamentary control?

Mr. Spence

I suggest that a general regulation about prices might be made, but that there is no need for a No. 4 hook and eye, or a snap fastener, to appear on the Floor of the House.

Earlier today we had an appeal from the hon. Member for East Wolverhampton (Mr. Baird) on the question of conversion value. I support the hon. Member because, as an exporter, I know how much raw material is being frittered away on the export of inferior articles of the wrong type. Very often a manufacturer has to run two production lines, one for articles for the home market and the-other for articles which he can make supremely well, and which go to the export market. Industry should be trusted more; it should be given its target, and put on its honour. It will not let the Government down, any more than it has done in the past. Industry is more capable of running its job intelligently than the bureaucrats who have never had experience within industry. I speak from bitter personal experience. Recently, the Minister for Economic Affairs made an appeal to the country which we must all support. That appeal will, I am sure, be answered, but we should like to know that something concrete is being done by the Government along the lines of the suggestions which have been made for helping, instead of hindering, our recovery.

7.44 p.m.

Mr. Christopher Shawcross (Widnes)

I hope the hon. Member for Central Aberdeen (Mr. Spence) will excuse me if I do not deal with all the points he made, particularly those which I am not capable of answering. I would, however, like to agree with him on two or three, particularly the last one he made about the importance of the conversion value of articles for export. I think that too little attention has been paid to that, although it is difficult to see how the remedy which the hon. Member suggested will improve matters, as the extra steel allocated to manufacturers would enable them to put more into the articles required for the home market.

The speeches which have been made by some of the back-bench Members opposite are in marked contrast to the speech of the Leader of the Opposition. For instance, the hon. Member for Central Aberdeen apparently agrees with price control although not with its details. That is welcome news, and he will not mind if I say that I also agree with some of the criticisms he made about the minutiœ of these various orders, with one exception—penicillin. I am sure that, on reflection, the hon. Member would not wish to compare penicillin with such things as hair grips. Penicillin is a most vital and important substance. It is so important to life and health in this country that it is the only commodity so far as I know the export of which this Government has restricted so that the home market could be supplied. That was done recently, I think by the former Minister of Supply.

The great speech which we heard last week from the Minister for Economic Affairs—a speech which has been acclaimed on all sides—was, in effect, a declaration of insolvency on the part of Great Britain. I do not now want to go into the causes of that insolvency—they were dealt with fully this afternoon by my right hon. Friend the Leader of the House—but I hope it will not be thought carping or unfriendly criticism if I say that that great speech might almost be regarded as bankrupt in another sense. It seemed to me that it was bankrupt of any idea or proposal for the solution of our long-term difficulties, of any means by which we could recover our solvency. My hon. Friend the Member for North-West Hull (Mr. R. Mackay) has today referred to a subject which he developed in an earlier Debate when the Minister for Economic Affairs, who was then President of the Board of Trade, gave him the highest praise. That was in the Debate on the state of the nation, last August. But in my right hon. and learned Friend's speech we heard nothing of any long-term solution. We have heard how we may, if we are lucky, get through the next two years, and how at the end of that time, by the measures which are now to be applied, we shall face the possibility—I would have used the word "probability"—of starvation. My right hon. and learned Friend also used these striking words: If our economy and that of Europe should collapse our democracy will in all probability"— I should have said "certainly"— collapse, too, and disappear, and with it will go the last stronghold of Western democratic civilisation in Europe."—[OFFICIAL REPORT, 23rd October, 1947; Vol. 443, c. 293.] I welcome those words, because they seem to point to knowledge in the Minister's mind that not only are we on the edge of the immediate crisis, but that there is a far greater crisis which lies ahead, a crisis which, compared to the present economic difficulties, is like a hurricane to a storm in a teacup. But no solution is even suggested.

I am referring to the international crisis which is already developing in the world before our eyes, and which may easily overtake the present economic crisis. During the Recess I have been in various countries and at international conferences in Europe. I have met representatives of all shades of political opinion, members of all kinds of political parties and in different walks of life. Quite recently, I have been at a Socialist conference at which representatives attended from almost every free country in Europe, including Poland, Greece and Germany. I would like to tell the House—and it is only my opinion, gathered as best I could from these many contacts—what is the feeling on the Continent of Europe at this moment.

There is a feeling that the economic crisis—which in France for example is, in an immediate sense, far worse than anything we have here—is relatively unimportant. There is a feeling that they are living in the last hours of liberty. That may be right or wrong. I am only trying to report what I have observed: they feel, and in particular all Socialists feel, that unless something is done very soon, the whole of Europe will be subjected to totalitarianism in one form or another.

But Socialists at this Conference—and it was a very representative gathering—did not accept that situation. They are not prepared to sit back and hope for the best and for dollars from America. They intend to do something about it. The proposal we discussed is in effect what has been mentioned by my hon. Friend the Member for North-West Hull in his speech this afternoon, that is to say, that there should be formed some federation of those countries in Western Europe which are still under a democratic form of Government. Whether it should be called the United Socialist States of Europe or the United Democratic States of Europe—[Interruption]. I wish that the hon. Member opposite who betrays his ignorance on these matters and who is laughing, will reflect for a moment and he will find that there is practically no State in Europe capable of joining such a Federation not now governed or supported by a Socialist majority in its Parliamentary assembly.

Mr. Douglas Marshall (Bodmin)

I was thinking that political changes occur and that when the hon. Member is referring to long-term policies, he should be mindful of this fact and not colour the name by reference to a particular political philosophy.

Mr. Shawcross

It is because political changes occur that this matter is so urgent at the moment. It could not be better demonstrated than by the result of the French elections last week. There we see the Socialist Party has been slightly strengthened. But another Party has grown up which, if it ever came into power, would not be regarded by anyone on any side of the House as representing a democracy. We see there the imminent danger of Fascism in modern dress, may be with velvet gloves for a short time. [An HON. MEMBER: "Nonsense."] I am sorry to hear an hon. Gentleman on the other side say that was nonsense. I suggest that he does not know enough about it. If he would examine the constituents of that party—those who have risen to the top and advise its leader and those who are now joining it and the reasons why they are now joining it, he would, I think, agree that there is a little more in what I have said than he seems to think.

I cannot overstate, indeed, I cannot find words to describe to this House the terrible sense of fear and urgency which prevails on the Continent at this moment. People there regard it as if a conflict—I do not mean an actual military war—had already begun, just as in the years 1936 to 1939. They regard the time as being very short. They feel certain that unless something is done immediately—it may be six months or six years, but in either case a very short time—these disasters will befall, that is, there will be conflict between West and East, in which again once more and this time finally, Europe will be ravaged by warfare. Whether that happens or not they believe that unless something is done to stop these dangers the whole of Europe will be subjected to totalitarianism. What they propose to do is to establish a United Socialist States of Europe.

I do not want to develop, and I could not do so as ably as the hon. Member for North-West Hull has done, the economic advantages of such a federation. I want to turn to an aspect with which he did not deal. I invite the House to consider what a great thing it might be if indeed only the great Colonial powers—Great Britain, France, Holland and Belgium with Colonies in Africa and the Far East united in a joint administration and trusteeship to develop these Colonies and give to their peoples the education, emancipation and standard of living to which we all in principle are pledged. It may be that we shall be able to do a lot alone, on the lonely path to which the Minister for Economic Affairs in his speech pointed. But can we ever do as much as we ought, for example, in Africa, when, although we have great Colonies there, alongside and in its midst are large areas and great populations under the rule of other Powers.

I suggest that is an aspect which cannot be over-emphasised. Hon. Members opposite and on this side of the House know better than I do the great economic and so far largely undeveloped resources of the African Continent. They must realise that if those resources and those immense populations were incorporated in this great area, together with the Commonwealth of Nations of the Empire if they would join with a federated Europe, not only should we not need more dollars from America but we should be able to produce in time and properly organised on a Socialist basis a far greater mass of wealth than was ever dreamed of in the U.S.A.

Moreover—and here I cannot do better than repeat what was said yesterday in the debate on Germany—there is no real or permanent solution for what is called the German problem which treats it as outside Europe or deals with it regardless of other nations of Europe. The only solution, I suggest, of the German problem is one which incorporated Germany as a part of a federated state in Europe and which thereby would dispense with any thought of Germany having an army or armaments of any kind. A federation such as that would not only make arma- ments impossible and unnecessary but might at last enable a great European people to make a great contribution to the civilisation and prosperity of Europe instead of forever trying to destroy it.

I want to make clear that this project of United Socialist States of Europe is nothing like what has been called the Churchill Plan. I found that the opinion of most people on the Continent was that that was a horse that would never run. It could hardly stand up under the weight of its jockey, the right hon. Gentleman the Leader of the Opposition. This United Socialist States is not intended as a military alliance to counter Soviet expansion or Communist infiltration. It is not something to be set up in order to help American Imperialism. It is, on the contrary, to be a third force which will stand between those two and which, if conflict ever comes between them will either stand aside secure in itself or, what is more hopeful, provide a bridge of peace between them. I want to make it clear that this conception which, I hope will be officially adopted in a short time by most of the Socialist Parties of Europe, including the French Socialist Party, is not something which will take the place of what is called the Marshall Plan.

Here may I say a word in agreement with what has been said on both sides of the House about the help which we have had and hope to get from the U.S.A. I think that it is utterly wrong to refer to American bankers or any Americans as thugs or moneylenders or anything of that kind. I am personally acquainted with some of these American bankers and I know that suggestion to be utterly false. I have never had the honour to meet General Marshall, although I have a friend who is intimately acquainted with him, but I believe that if it could be said of any one man that he was the architect of the allied victory in the late war, that man is General Marshall. Therefore, I believe that any plan which comes from him is likely to be a very good one. I am also convinced that he who has put forward that suggestion and many of those on the other side of the Atlantic who want to see it accepted in America and put into operation in Europe have no idea of enslaving Europe or exploiting European workers for the benefit of American capitalists. On the contrary, they want to secure liberty in Europe. That view of the Marshall Plan I find also very largely held by the Socialists I met who support this project for a United Socialist States of Europe. At the same time, they believe that certain elements, treacherous elements, in their own countries would be only too glad of the opportunity to make their countries depend on American capital.

These elements would be only too glad to see the particular country concerned entirely dependent on loans financed in Wall Street and administered by private enterprise and the manufacturers of the country concerned. Therefore, if it is said that this project is to guard against the menace from the East on the one hand, and the menace from the West on the other, it is only in the last sense that I have just explained, that the term "menace from the West" is used. Indeed, the Marshall Plan would be essential for the establishment of and initial stages of any such federation as has been proposed by the hon. Member for North-West Hull.

Finally, I would ask the House to look a little beyond and see whether I am not right in saying that behind this immediate economic crisis there is a very much greater one ahead. I would ask them to agree that the time has long past when this country by its own efforts could save itself and at the same time save Europe by its example. It can, I suggest—and I earnestly ask the House to agree with me—only save itself and only recover the solvency of this great Britain by saving Europe and saving it now. That can be done in the way that my hon. Friend the Member for North-West Hull and I have outlined. The word "Europe" like "Socialism," is too infrequently on the lips of some right hon. and hon. Members on the Government Front Bench. Europe is the cradle, the home, the castle of our civilisation. If we act now we may save Europe, although even then it may not be for long. Who live, if Europe die? Better fifty years of Europe than a cycle of Cathay.

8.3 p.m.

Mr. Spearman (Scarborough and Whitby)

I am very glad that the hon. Member for Widnes (Mr. C. Shawcross) joined with other hon. Members opposite in repudiating the most unfortunate, remarks made by the hon. Member for Nelson and Colne (Mr. S. Silverman) about America, which I think were indeed unworthy of any Member of the House wherever he might sit. The Lord President of the Council told us that he was speaking at Lewisham last night. I see that "The Times" attribute a statement to the right hon. Gentleman that if there was no controversial legislation, then that would be the end of the official Opposition because there would be nothing to oppose. It may be if Members of the Government put off some of their legislation and paid more attention to their own administrative duties and enabled their staffs to do the same, there would indeed be less cause for criticism at the present time. I suggest that if many hon. Members opposite voted as they think and as they sometimes speak, we would have a majority in criticism of the Government. After the Debate yesterday I would include in that some of the displaced persons who sit below the Gangway.

The point of criticism I want to make tonight is with regard to what the Chancellor of the Exchequer has described as the dollar events of the last three weeks. I think he attached a good deal of importance to this matter, because he spent a great deal of time last Friday talking about it, but on that occasion he did not choose to exercise that talent for lucidity about which he received so much admiration. It may be that he did not want to enlighten us completely on this matter. It is not an unknown device to confuse the details to conceal unpleasant facts. The Chancellor told us that in the period from July, 1946, until August, 1947–that is the period from when we started to draw on the loan until convertibility was suspended—the amount of sterling balances to be withdrawn was £230 million. That is a very large sum, but I am not satisfied that this is the total sum.

The adverse balance of trade during that period amounted to approximately 600 million. These figures can be obtained from the officially published figures. The amount that we drew from the American Loan was £939 million plus £20 million we received from Australia, making a total of £959 million, which leaves a gap not of £230 million, as the Chancellor told us, but of £359 million. It may be that that extra amount escaped through a leakage which ought to have been avoided, or it may have been spent in buying and retaining gold. If that is so, why was this concealed from us, because it was a relevant fact about which we should have been informed.

As regards this £230 million, the Chancellor seemed to think that it was creditable to the Government that only £50 million of it had been converted into dollars. I would point out that it is just as damaging to the people of this country if it goes in unrequited exports—that is exports from which we received no return. Indeed, it may be said to be worse. The Government have resented very much any criticism of how that money has been spent, and it may be that the American loan was spent correctly, but I am not quite sure that I would not rather have luxuries like tobacco and films than nothing at all. It seems worse to squander the money and receive nothing whatsoever in return. I should like to ask why this enormous withdrawal occurred. Did the Chancellor not expect it? It certainly looks as though he did not from the many speeches he has made, and in particular I would refer to the speech he made in this House on 10th March, which certainly implied that he did not expect this sort of thing to happen at all. On the other hand, if it was not expected, then I say that it was due to lack of foresight, which may cost this country very dear and which may cost tremendous suffering in the next few months. Is not what has happened that the Government have opened the door of Great Britain as international bankers, with totally inadequate and indeed borrowed cash resources? That experiment has failed as it was obviously bound to do.

If a finance institution in South Africa or in this country tries to trade on a scale far beyond its resources and it fails and by that failure creates great hardship, it is generally held to have behaved disgracefully. Is a Government immune from that criticism? I suggest that the Government have not properly distinguished between our capital liabilities and our current liabilities. We have got immense capital liabilities, over £3,000 million, a burden most honourably undertaken because we put all we had into our war effort. We do not, of course, think of repudiating that. It is absolutely and utterly impossible, whatever self-sacrifices we went through in this country, to pay this off at the present time. That must be blocked. It is no good our trying to be generous on this scale. We cannot afford to be generous with other people's money.

On the other hand, if we only had to convert sterling for the things which we imported, that' is something which is much more manageable. I have no criticism of convertibility, but rather of the manner in which convertibility was carried out. I believe that, had these sterling balances been blocked and had we been responsible only for the actual net current liability on current purchases, we could have done all that was necessary to promote multilateral trade. As I understand the situation, something about one-third of the Loan has disappeared without our receiving any return. If we take the Chancellor's own figure I think, according to the new Minister of Fuel and Power, it is equal to about 35 times what we shall save on the petrol ration. It looks as though the people of this country are to be put to immense suffering and deprivation for most unjustifiable reasons.

The Minister of Fuel and Power (Mr. Gaitskell)

Would the hon. Gentleman say that the sterling areas get nothing?

Mr. Spearman

The point is that we cannot afford to send to the sterling area, or outside, unlimited sums up to our total liability of £3,000 million.

Mr. Gaitskell

Surely the loan was entered into on that understanding?

Mr. Spearman

I understand that the loan was agreed to on the explicit understanding that we did not spend it outside this country. I suggest that, to put it bluntly, the till has been robbed. I think that it is comparable to a friendly society in which the cashier has made a mistake and has paid out vast sums to the wrong people, with the result that the rest of the members are left under an appalling liability. That would not necessarily be regarded as a reflection on the honesty of the cashier, but the members might be rather dissatisfied with his management and they might even ask for a change of management.

People who are unfortunate enough to live in dictator countries have to accept assurances of infallibility from their government, but in a democracy we are entitled to have chapter and verse and to have things proved. I do not claim to have made out a case tonight that, owing to the gross negligence of the Government, vast sums have been lost to the country, but I suggest that I have made a case to be answered and I ask that this immensely serious matter shall be inquired into. I think there was a fear in the mind of Lord Keynes, who had so much to do with this loan agreement, of some such result as has now occurred. Whether the inquiry should take the form of a Select Committee or not, I do not know, but I urge the Government to grant an inquiry. If mistakes have been made, ought not the people of the country to know? If they have not been made, and if the Government are perfectly happy about things, why should the Government fear an inquiry? Our people will face in a much better spirit in the months to come any deprivations which may await them if they know that the position is not caused by our resources having been most unnecessarily dissipated.

8.15 p.m.

Mr. Alfred Edwards (Middlesbrough, East)

The Leader of the Opposition this afternoon made the point that exports are paramount. We all agree. He went on to say that high food costs hinder exports. I wonder why, knowing that, he has allowed his own followers constantly to demand that we take off the subsidies from food, an action which would make food much more expensive and, on his own statement, make our position more difficult. It would be a great mistake to interfere with the subsidies on food. If there were time, I could make out a good case for expanding subsidies. It would be possible, with proper controls and proper profit and loss accounts, to run certain basic industries very profitably to the community even at a loss to the particular industry.

As the Leader of the Opposition said, it is true that every time we increase the costs of our raw materials we make it more difficult to compete in the export markets. The Chancellor and the Government should give a little more attention to this important fact. When they insist on coal paying its own way, and put another 4s. a ton on the price, it means that the steel industry has to put another 10s. on the price of steel, and not a single business in this country, however remote from the steel industry, can avoid increasing its prices in due course. It seems that no one has tried to think out this problem and to stabilise our price structures. The Opposition should give a little more thought and cooperation in this matter. If we pay a subsidy, and if necessary stabilise the price, as the Government is doing in coal, transport, power, food and cost of living, we shall at least have stabilised something, and there is then no excuse for the spiral; there is no excuse for other people increasing their charges, and no excuse for constant rises in wages. But if we do not stabilise the cost of living, we are not going to stop the demand for increased wages. The Government should give a little more thought to the question of using subsidies—not abolishing the food subsidies, but extending them and endeavouring at some point to bring stability into our price structure.

I congratulate the Government on deciding not to nationalise the steel industry at this time. Whatever merits there may be in the case for the nationalisation of steel, it is in quite a different category from the public utilities we have already taken over. We come into an entirely different sphere with a different set of conditions, and to run that industry we should need different people from those running public utilities which have been taken over. In this matter I have not seen eye to eye with some of my colleagues. I am in the steel industry and I know what troubles might come to it. If there is a case for nationalising steel on its merits at some time, there is absolutely no case at this time. To do the right thing at the wrong time is just as bad as doing the wrong thing, and timing is just as important in these things as anything else.

We strengthen our position on this side if we face certain facts, and if there are answers, let us give them. What are we to gain from nationalising such industries as steel? I have heard it said very frequently that we are going to take out some of the profits. I say without fear of contradiction that if we nationalise the steel industry, we shall increase costs, and prices will rise. It has been so in the case of coal. [An HON. MEMBER: "Nonsense."] The hon. Member for Eccles (Mr. Proctor) says "Nonsense"—

Mr. Proctor (Eccles)

I made no such remark.

Mr. Edwards

Then we agree it is not nonsense.

Mr. Stokes (Ipswich)

Does not my hon. Friend believe that if we nationalise steel in the right way at the right time, we shall get a much better quality steel at a lower price?

Mr. Edwards

I do not think there is any evidence to support that. [An HON. MEMBER: "There is."] I have asked all my colleagues who ought to know and they really cannot tell me.

Mr. Keenan (Liverpool, Kirkdale)

What kind of colleagues? It all depends which way you look at it.

Mr. Edwards

Well, we are watching. This Government has authority to try Socialism. It is foolish to suppose that the country has been converted to Socialism; it has not had time to try it. I am anxious that we shall introduce just as much Socialism as will convince people that it will be cheaper and more efficient.

Mr. Stokes

Has my hon. Friend really studied the experience of Richard Thomas?

Mr. Edwards

Yes, it was one of the mistakes my colleagues made. They think that by proving the case against capitalism, they thereby prove the case for Socialism. It is a complete fallacy.

Mr. Keenan

The hon. Member belongs to the wrong party.

Mr. Edwards

My case as a Socialist is that we have a few years to demonstrate what we have preached for 20 years, and a serious mistake will mean that we shall never get another chance to demonstrate it. If we carry out the programme which this party has advocated, and which the leaders of the party have said leaves 80 per cent. of our industries under private enterprise, then the 20 per cent. must demonstrate that the programme will help that 80 per cent., or it fails. How is it going to help? I claim that we have a very good case indeed, because, if you give industry and private enterprise cheaper money, if you can give it cheaper coal—so far, unfortunately, we have not, since the price of coal has gone up—if you can give it cheaper transport and cheaper power, then you demonstrate that under Government controls you can help the nation and you help the 80 per cent. which, for the time being, we as a party are committed to leaving under private enterprise.

Mr. Keenan

But is it not true that that is only part of the programme at a given period of time, and that the other will follow?

Mr. Edwards

That is what I am saying. The party has stated that for the time being it will not nationalise steel. When it does, let us consider it on its merits. We shall have to satisfy the country that we will do what the hon. Member for Ipswich (Mr. Stokes) said—give better and cheaper steel because under nationalisation we have a more efficient organisation. No one would suggest that by turning over the steel industry at this moment this would happen. You would do exactly the opposite, and it would be the greatest disservice to this nation and to this party that could be done. I am glad that the Government are not being hurried into nationalising the steel industry at this moment.

I am interested to understand how it is that, having nationalised the oil industry in effect, we are now to de-nationalise it. Perhaps, as the appropriate Minister is here, he will tell me? It does not seem to be a very progressive step. During the war we took over the complete industry, we had as much in our grasp as we could possibly have, and I cannot understand why we should now turn back to these hundred and one competitive organisations. I think the Members of this party are entitled to some explanation as to why that progressive war step is now, without any explanation and for no reason that I can see, to be reversed.

As the party is planning to take over steel, I hope it will give those Members who are interested in the industry a fair opportunity, not only of seeing the plan, but of helping to mould the plan. So far, those of us in the industry have been consulted very little. I know of no plan for taking over the steel industry. The last plan put forward, I was told a week or two ago by one of my trade union colleagues, was in 1924, and it was put forward by the Steel Workers Confederation. The year 1924 is a little out of date in 1947. The fact is that I think we have no plan for taking over steel, and if we have no plan that is a very good reason, for the time being, for not taking it over and making things worse, in spite of any threats of resignation. We might survive threats of resignation, but I do not think we would survive nationalising steel at this time.

The new Minister for Economic Affairs made a splendid speech in this House the other day. He and other Ministers have been appealing to the workers throughout industry to make strenuous efforts to increase output. I thought, listening to him as he finished that speech on that wonderful Christian appeal, that it might have been said to him, thinking of his production appeals, "Physician, heal thyself." I had a good deal to do with his Department when he was at the Board of Trade. I wonder whether there has ever been a production drive in any Government Department. My right hon. and learned Friend dealt with the question of the turn-round of trucks, and said that if we could get a quicker turn round of transport vehicles it would be equal to 100,000 more trucks. I wonder if he could make a calculation of a quicker turn-round in Government Departments—this question of waiting for certificates for this and that. I do not know why my colleagues should take offence at anything said about Government Departments, because we did not build up Government Departments. It has never been a part of the Socialist case that it would introduce bureaucracy. We have always strenuously denied it, and I have always defended the party against such charges. We have boasted many years about being superior planners: why cannot we plan Government Departments and really prove that we can organise efficiently?

I will give the House one or two recent experiences of Government Departments to show what utter nonsense it is to make appeals for production and then, within the great department of the Board of Trade, have everything held up. I do not think it is an exaggeration to say that the only thing which has been speeded up is the rate at which that department is slowing down. This party will come to grief unless it tackles this problem. Some two years ago the Ministry of Supply asked the company with which I am associated whether we would extend our production capacity, and we agreed to increase it. About 18 months ago the present Parliamentary Secretary to the Board of Trade visited my constituency, and I happened to be present with him at one of the "pep" talks in the district, and the manager of the Northern Trading Estates who was there said he had just been appointed to the Manchester district. I said to him, "For goodness' sake, do not leave us with this application on our hands and nothing done about it." He said, "I can assure you that everything is completed and permits will be issued before I leave the district next week." That was 18 months ago, and we received permission to proceed about a month ago.

What can one do about a thing like that? What is the use of talking about production if we allow Government Departments to hold up things? If hon. Members think that is an isolated instance, let me give another one. At Cardiff we were promised a factory in August last year. The matter dragged on for many months, and we got to the point at which all that was left to do was to put some waterproof covering on the roof. The matter went on wearily, with the managing director 'phoning me week after week. He said that he could get someone to do the work privately, and I said "get it done." A man turned up and said that he would do it in a few days, but he was refused admission to the estate, and told that the work could be done only through the official architect, who employed particular firms to do work there. Production was held up for at least seven months.

Let me give a different type of case. I am deeply serious about this. We cannot get production if every one who is trying to produce goods is held up by matters of this kind. There was the case of a little factory which was started during the war, when there was a certain commodity which we could not make in this country. There was a foreigner who could make it. We got a little factory going and that man was producing that commodity, though not economically. I persuaded some of my colleagues to put some money into the factory. I would never have done so had it been a competitive set-up, because it could not have stood up against I.C.I., who were in the same business. In order to get all the production we could in this country, this man was given a subsidy. His cost was much higher than that of other people, who volunteered, at the suggestion of the Board of Trade, to give him so much per lb.—it was very expensive stuff. There came a time after the war when there was no subsidy. The Board of Trade agreed that this man should continue, and an official said, "We must do something about the price." He wanted to fix a fair price, so he took the lowest and the highest cost, which happened to be that of my friend, divided the total and announced the price. I explained that that would put this concern out of business, as it was much lower than their costs. The official said, "What fairer thing could I do? I took the highest and lowest costs and divided them." Would it be believed that was said by an official in a responsible department? [HON. MEMBERS: "Yes."] My appeal is to my colleagues here. I do not think the Opposition can beat this party, but refusal to face these facts will. We shall not run a production drive successfully if we encourage this kind of thing.

Let me take a specific case related to the export trade. At this moment we have about £20,000 worth of goods lying at a warehouse in Liverpool, bought after an understanding—not a definite agreement—with the Board of Trade that they would welcome anything we could do in this country which would collect dollars. The managing director bought in America an enormous amount of material, which was shipped to this country to be manufactured by British labour and sent out to collect dollars worth—several times as much as the import costs. The authorities insisted on collecting import duties, and would give no undertaking that when the goods were shipped to America that sum would be paid back. The goods are still lying at Liverpool, a dead loss to everybody, and no dollars. Is there not a Minister on that Bench who can take in hand a matter like this and say, "What nonsense. It is dollars we want. We want swift action, we will give an undertaking that you will be debited with this duty formally, as the Treasury have made a ruling, but you will be credited with that amount when the goods leave the country." The Board of Trade said they could not allow them to do that as the Treasury had made a rule that duty had to be paid, and under no circumstances could it be repaid. What is the use? That is not government. That is sheer ineptitude and suicide. I can give the House a dozen similar cases, if necessary. I have the correspondence. They got everything—sympathy, encouragement—everything except action from the Treasury. That is not good enough.

Mr. Stokes

It has always been like that with the Treasury.

Mr. Edwards

It is not much better when we get trouble between local authorities and Government Departments. Another firm in my constituency was asked to send all its men down to London to do war damage work. It was said that nothing was more important than to get people back into bomb-damaged houses. The firm did what they were asked. They sent 60 men to London and the work was completed two years ago. I have tried everything with local authorities and Government Departments to get a settlement. The local authorities owe more than £2,000, and the firm cannot get a penny. Why? It is because they have not had time to get round to it. Yet the work was completed two years ago.

Where is all this nonsense leading us? Is anybody going to tackle it? Businesses cannot be run by civil servants. Lest anybody should think that I am attacking civil servants, let me say that only once in my experience in this House have I attacked a civil servant. When I did that I was the means of that man losing his job and I discovered afterwards that the informant was at fault and not the man who lost his job. I was very sorry that I ever mentioned a name in this House, and I vowed I would never do it again. There is all the difference in the world between attacking men who are doing the best they can under the circumstances, and attacking a silly system which no man can work. A civil servant who is one of the highest men in the land and is well known to hon. Members, told me, "We do not want to do it; it has been forced on us against our will." But this is a criticism which I have a right to level at some of my Front Bench colleagues.

Mr. James Hudson (Ealing, West)

Does my hon. Friend observe that while he is making very serious complaints, there is nobody on the Front Bench to take a note of them? Is there to be a reply to these complaints? Do they count for anything when they come from this side of the House, or is it only when they come from the other side that complaints are considered?

Mr. Edwards

Never in my fondest moments of optimism have I thought that I would get a reply to these complaints. It is not done. At the end of a Debate, naturally one picks out all the easy things; one does not deal with things like this. But it is going to be too late if my colleagues do not wake up to the fact that this system, if anything—and not the Opposition—is going to pull this party down. If the Government will use what they have power to use today in a sensible, businesslike way, and not be afraid of having people with business experience talking to them occasionally, things might be better. The young men from the universities, however good as economists, could never have earned their living running a business. It is about time that the Government woke up to that simple fact.

We were told that the question of the allocation of steel was being dealt with. It would be difficult to estimate the damage done to industry and the export trade through the stupidity of these allocations. The other day we heard that a year ago we had issued three times as many allocations as we had steel to fulfil them. One firm was offered 60 per cent. of the material required. The poor innocent people in the department do not understand that if there is a bolt one must have a nut before there is anything of value. Another firm required tubular steel and steel sheets. When there was difficulty with the allocation, I talked to the man responsible. He said, "I am awfully sorry; I am doing my best. We will give you 75 per cent. of the steel plate, but no tube." I said, "That is no good. Give your steel plates to someone else and tell us to close down." That would be more sensible. The industrialists are not concerned. They are not arguing whether or not they should close down so much as they are asking, "Will you talk with us intelligently, or will you have people in the Departments who can talk intelligently, with us?" Men who have spent their life in the Civil Service cannot do that. That is why the Government are having trouble with the Coal Board.

That is what the men in the industry say; I know nothing at first-hand, but I get it through their trade unions. Why is it that the things that could be settled by a local manager must go to a board, which must refer it to the National Board? These are things which could be settled by an assistant manager in the case of any one of us in our own businesses. The classic case, of course, is that of selling a drink in a canteen, which could not be clone without the consent of the National Coal Board. That is bringing things into ridicule, and if the people responsible for perpetuating them do not want to be ridiculed, I would say that the way to stop being ridiculed is to stop being ridiculous. This thing is absolutely ridiculous, and it is just asking for trouble, if not committing suicide altogether.

Mr. Blackburn (Birmingham, King's Norton)

Before my hon. Friend leaves the question of steel, may I remind him that the most staggering thing of all is that there is no record of the total amount of the steel which has been allocated. We all know that more steel has been allocated than actually exists, but no record of the total allocation has been made.

Mr. Edwards

When a man came to see me the other day, he said he had been trying to do something about it, but the young lady in charge could not tell him anything—and young ladies are in charge.

Mr. Keenan

Why not?

Mr. Edwards

My hon. Friend says Why not?" I will tell him why not. Some people with whom I am associated—the people who wanted the tubular steel and steel plates—had fixed up a contract to manufacture an American machine in this country. To import the machine would have meant many hundreds of thousands of dollars, so they took out a right to manufacture on a royalty basis, and a very modest one, of 2½ per cent. When these people came to me, they had been struggling for 18 months with a Department but had got no further, so they asked me if I would take up the matter. I took it up with the person in charge, who happened to be a young lady, a charming young lady, whose job it was to decide matters like that. She said, "Well, I looked up the directories and catalogues, and found that people were making machines like this in this country, and there is no need to import machines like that when they are being made here." This young lady, who did not know anything about it, made the final decision, and these people lost 18 months' production. They got their permit within six weeks of my taking it up with the department. That is the reason young ladies should not do that sort of thing, though they are very useful elsewhere.

Lieut.-Commander Braithwaite

Old women.

The Joint Parliamentary Secretary to the Ministry of Supply (Mr. Jack Jones)

Is the hon. and gallant Member referring to the present members of the Front Bench as being old women?

Lieut.-Commander Braithwaite

I do not think the description would fit the new Minister who is so anxious to make a success of his job. I described His Majesty's Government, after two years of crisis, as being old women.

Mr. Edwards

I do not see how we can carry on two Debates at the same time. I want now to say a word about some things which have been said about the United States. Some people say rude things about America, and others are afraid to say true things to America. I think that America should realise that the main reason for this country's difficulty today is that it is bearing too large a part of the cost of the war, which it ought never to have been asked to bear. Lend-Lease agreements have been referred to. The Leader of the Opposition also referred to the last war debt, and to how generous the Americans had been. Of course, they were generous, but I think that it is in the Lend-Lease agreements that we find this remarkable paradox, that the purpose is to defend American shores in Europe—a very convenient place to have American shores; a very safe place indeed.

It is true that the Americans have done a great deal, but they should remember that the Lend-Lease agreements, if I remember rightly, were to operate for the duration of the war, and the Lord President this afternoon read an interesting extract from an American magazine which rather confirmed that that was the American view. According to the American Constitution, the war does not end until the President declares it to be at an end, and if he has yet done that. I do not know of it. If he has, it was in January this year. According to our Constitution, on the other hand, the war does not end until we sign the Peace agreement, which has not yet been signed. It was the Americans who suggested that we should do something which would allow them to cancel those agreements.

Again, if I remember rightly, I believe that our request was not for a loan, but for a grant-in-aid. We said to them, in effect, "If you must cancel these agreements and if you do not want to carry on to the end, we cannot get back to sufficient production after we have given you most of our export trade and spent right down to our last million pounds." They started the first munition factories with our money and not theirs. They built shipping with our money and not theirs. I remember, when in Baltimore, being shown a factory which they said was started with our money. It is only right that we should remind them of these things, because most of them seem to have forgotten them, even if they ever knew them. But we had a solemn agreement with them that they would see us through, and they only saw us half-way through.

As I say, we did not ask for a loan' at any time, but for a grant-in-aid if they wished to cancel their agreement. If I am wrong, I would like to be corrected, but I think I am right. A year ago, the "Chicago Tribune" said in a full page advertisement that, of all the money they had lent us during the last war, we had not repaid one dollar, either in interest or in principal. A lot of Americans believe that, whereas, as a matter of fact, I think that more than 80 per cent. of the money lent to us was repaid to America. What happened, of course, was that they were charging us interest at the rate of 5½ per cent., that after we had been trying to repay what we owed, we found that the principal was not reduced. It is utterly impossible to pay debts in that way. Another thing which is utterly impossible is to pay for goods which were destroyed in the war. Goods which we consume and which we sell again, we can pay for. This country has never defaulted on anything like that. Indeed, we are the only country which has always paid its debts.

We are entitled to refresh American memories about these things. All those goods—food, munitions and things like that—were sent across here, not only for us, but for our Allies who could not afford to pay America for them. In any case, America did not wish to send to them direct. In American jargon, we "backed the note." Had we collected our debts from our Allies in Europe we could have repaid every dollar we owed to America and could then have been left with 100 million dollars, or was it £100 million, after we had paid our way. There is only one way in which we can repay debts of that kind, and that is by sending goods to our creditors. America has put most of the difficulties in the way of settling the last war debt.

I would remind this country and America that the present situation is very similar to the situation in 1929. In 1929 America was exporting very much more than she was importing. She was doing it because she was lending money to Europe. In 1929 the Wall Street people—not always the wisest people in America—kicked up an awful noise and said that if they went on lending money to Europe it would be lost and they would not get it back. Therefore, they said, they had better revise their plan and stop lending. They stopped lending. When Europe did not have loans from America, she could not buy those American goods which, when exported, make the difference to America between bread, and bread and butter. That export surplus gave her that luxury standard which she has enjoyed for so long; I believe it was only about 10 per cent. When Europe could not buy from America, because she did not have any more loans, America naturally had some unemployment, and when the investors in America saw the first falling away in orders, there was a mad rush. The Stock Exchange people in America remember what is known as Black Friday, in September or October, 1929, when millions of transactions took place throughout the Stock Exchange in America. It was the blackest day they had ever known. As a result of that, what the Leader of the Opposition called the economic blizzard began there, and swept round the world, and within four years there were 15 million unemployed in America.

That is the lesson which America ought to learn. Had she continued lending, she would only be doing what this country did for more than 60 years—investing abroad. Having cast our bread on the waters, it came back after not many days because in 1938 we were able to import £1,000 million worth of goods in return for having sent out only £500 million worth. That is the lesson which America ought to learn. It is not charity, but good business to go on giving loans to people who can consume one's surplus production. Today America is taking too much advice from the same people who advised her in 1929, and she will pay more heavily than this country or any country in Europe if she refuses aid where aid is needed and deserved.

8.53 p.m.

Air-Commodore Harvey (Macclesfield)

I hope the hon. Member for East Middlesbrough (Mr. A. Edwards) will-forgive me if I do not follow the line of his remarks, because my purpose in rising tonight is to give to the House my views on a recent trip during the last two weeks of the Recess to Pakistan and to India, where I went out as a member of an aircrew carrying refugees from one Dominion to the other. My purpose in raising this matter is two-fold. First, I believe this country, through the Government, have a great moral responsibility to render assistance in those two Dominions at the present time. Secondly, it affects our economic position in the future, particularly in regard to trade which is rapidly coming to a standstill in that great country. There are millions of people at the moment in that country facing starvation and death. When Lord Listowel goes to India and Pakistan for a matter of a few days and says that it is a local affair, all I can say, with the greatest respect, is that he is not right in the head. There are casualties estimated at between half a million and three quarters of a million. Many more are going to starve this winter. They are starving now. I saw two or three thousand of these people waiting on the aerodrome, and we had the greatest difficulty in landing in order to take them away. We had to select who should go aboard. Many of them went on their knees, begging for a lift out of one State into the other.

I believe the Government have a great responsibility in facing this issue. They may be free legally from any responsibilities in India and Pakistan but, never- theless, they have a great moral responsibility to go to the aid of that great country. I had a long talk with Mr. Jinnah just before I left Karachi to come back for the opening of Parliament. I think he is doing a fine job of work in Pakistan. He is keeping on the best of his British civil servants. He has given them long term contracts, and they are happy in their jobs, and they all feel that they are rendering a good service to Pakistan in keeping some law and order.

Mr. Jinnah explained to me at great length that he had sent a cable to our Prime Minister asking for some assistance from the British Empire, suggesting that observers should go out to both Dominions as neutral observers and bring about mediation. It might have some effect. Mr. Jinnah was most disappointed that, although his cable had been sent to Australia, New Zealand, and South Africa, he had had no satisfactory reply. He said to me, "What is the good of being in the British Empire if we do not help one another?" There is a case for getting together and appreciating the problems out there. Mr. Jinnah said to me, "My greatest worry is that if we have mob rule in Pakistan and in India—make no mistake about it—we shall have the Russians in Delhi in two weeks." I was staggered by that remark. He went on to explain why. He said, "In Afghanistan the Russians have already infiltrated. They are promising Afghanistan an outlet to the sea. If we get mob rule and lose control here, the Russians will certainly be in Delhi, in a matter of two or three weeks."

There are many aerodromes in the Punjab. Many of them were built when the Germans were going through Russia at great speed in 1942, and we had to be ready to defend the North-West Frontier against a German invasion. It gave me some assurance to see that those aerodromes are there. I wanted to speak in the Debate last night on the Services only because I believe it is absolutely essential that we should maintain a strong Air Force. Let no hon. Members make the mistake of thinking that for the sake of saving a few million pounds now, we can afford to do without a strong Air Force; because a strong Air Force will be nothing but a good insurance policy against any trouble that may come in the future. I implore the Government not to neglect this point, and I ask them to see they get value for their money in the training, by having a striking force ready. Other countries are doing it. Why should not we? Why should not we be on the top line? Because if Pakistan or India are in any trouble—I pray they never will be on the lines that I have suggested—we shall have to go and play our part there with America and other countries in a position to help.

In Karachi at the moment, ships are docking from this country laden with goods. The money has been advanced by the bankers against bills of lading, and the Hindus who bought them have cleared out to India from Pakistan. Unless we get some semblance of order to help these people, trade will be brought completely to a standstill, and there will be unemployment in this country amongst people who previously made goods and machinery for export. It is already becoming practically impossible to trade between the two States. A cheque written in Delhi on a Karachi banking account is not honoured, and vice versa. Telegrams are held up. Postage stamps are not recognised. The taxes are not paid. People are travelling as refugees on trains without paying their fares. We must do something to get moderation on both sides, and help them.

I believe that if we follow Mr. Jinnah's suggestion, even if we cannot get the Empire to do so with us as a complete unit, we might give some help. He asked if some Members of Parliament could go out there and act as mediators and neutral observers for a matter of a few weeks. He thought that would be of assistance. I offer that only as a suggestion to the Government that they might care to follow up. I did ask the Secretary of State for Commonwealth Relations if I could have an interview with him before I spoke. I did not want to say anything that might make the situation more difficult. I have made numerous attempts during the last few days, but I have not been successful in seeing him. I hope I have said nothing to make the situation more difficult for the Government, but I say again that they have a great responsibility which they cannot neglect. They cannot put a Bill through this House to give India partition and independence and then wash their hands of it. We have kept law and order in India for over 160 years, and we have a great responsibility now to protect the 450 million people who are facing death and starvation. I hope the Prime Minister personally will take the lead. He got all the credit a matter of two months ago for what he had done; let him now ponder on his great responsibility, together with his colleagues.

9.1 p.m.

Mr. Michael Foot (Plymouth, Devonport)

The hon. and gallant Member for Macclesfield (Air-Commodore Harvey) has recently been to India. He has told of the tragic events in India; he has told of the threat of starvation in India; and he has said that we in this House have a moral responsibility. I entirely agree with him. We have a moral responsibility as fellow members of the British Empire, and we have a moral responsibility as human beings living on this planet. I am very glad to see that responsibility now recognised by hon. Members opposite, because I remember a Debate in this House on the subject of bread rationing, little more than a year ago, when the Minister of Food, on behalf of the Government—and as I believe to the eternal honour of this Government—said that we had entered into arrangements with other nations whereby we might send assistance to India in her plight. But at that time not one voice was raised on the other side of the House to support that action of His Majesty's Government. [HON. MEMBERS: "Nonsense."] Not one voice was raised in that bread rationing Debate to repudiate the attacks which were made by the right hon. Member for Woodford (Mr. Churchill)—

Mr. Godfrey. Nicholson (Farnham)

Surely, the hon. Member must know, if he has followed the Debates on India in this House, that many hon. Members on this side of the House have supported the Government in all their measures, and have underlined our continuing moral responsibility towards the people of India?

Mr. Foot

I certainly agree that there are hon. Members opposite who have underlined their moral responsibility towards India, and in particular the hon. Member for Farnham (Mr. Nicholson), but I was saying something quite different. In the Debate on bread rationing, the right hon. Member for Woodford made a very bitter attack on His Majesty's Government because we had entered into international plans to assist India. In another place Lord Woolton attacked the Government on the same ground. Yet not a word was spoken in that Debate by any hon. Member opposite to repudiate the attack on His Majesty's Government for entering into those measures to assist the Indian people.

As the subject of India has been introduced, I should like to make one brief reference to what was said by the right hon. Member for Woodford earlier in this Debate. That right hon. Member is very good at dishing it out, but he is not so good at taking it. He made an attack on the Prime Minister which I thought was entirely illegitimate; it was a most scandalous attack, because he said that the Prime Minister of England—I forget the exact words—should reproach his own heart for the measures that he had taken about India because of the tragic events which had occurred in the last few months. The right hon. Member for Woodford said that about half a million people had been killed in these appalling tragedies in India. When the right hon. Member for Woodford was Prime Minister of this country very many more than half a million people died in India of starvation, but I would not charge the right hon. Member for Woodford with a personal responsibility for those deaths by starvation in India in 1943 and 1944. It was scandalous for the right hon. Member to make such an attack, particularly as on the last occasion when the subject of India was raised he made the best of the arrangement by his intervention at that time in congratulating the Prime Minister on the appointment of Lord Mountbatten to his post, so that he could have it both ways, however the situation turned out. That is the way in which we usually expect the right hon. Member for Woodford to deal with these matters.

I come now to the Amendment. I have always understood that an Amendment to the Address must be regarded as a Vote of Censure on the Government. At least, that is what I was informed when a year ago I put my name to an Amendment; I was informed that it must be regarded as a most serious act in this Parliament. All I can say is that if this is a Vote of Censure, it is the most feeble, the most futile, the most debilitating and the most dispiriting Vote of Censure which has ever been seen in this House. If that is the best thing they can do, they would be much wiser to leave the whole thing to us. We always look forward with great anticipation and enjoyment to the right hon. Gentleman's speeches, but today's speech was the weakest I have ever heard him make. It was a poor, miserable effort. As usual, I see that the right hon. Gentleman has so little interest that he has quickly departed. What is the charge that the right hon. Gentleman makes? One of the main charges is that the Government have been responsible for introducing partisan legislation and stirring up class warfare. The climax of this campaign is apparently to be seen in the Government's proposals in regard to amending the Parliament Act.

I believe that the case made out by hon. Members opposite is based on the fallacy that there is really big common ground of agreement which might be reached between all parties of this House on how this economic crisis could be dealt with. I believe that to be a fallacy. If the right hon. Gentleman thinks it is conceivable that the Government could adopt the kind of policy, if we can call it such, contained in the early part of his speech, he is expecting something which is impossible to happen. It is a fallacy that there is common ground of agreement between us. What we are confronted with is two different philosophies, two different methods and two different plans by which the economic situation of this country can be tackled.

I say that the real danger to this Government is not that it will be too realistic in carrying out its socialisation measures, but that it will be blackmailed, either by the Federation of British Industries or by the campaign of sabotage in the Tory newspapers, to abandon the policy and plans which the Government were elected to carry out. Because I think that is the danger, I welcome the announcement about amending the Parliament Act. I think it is a good step on the part of the Government; and will show the people of this country that they intend to go forward with the programme for which they were elected. Does anyone think for one moment that the Tory Press, which is conducting this campaign of vilification and sabotage against the Government, will be content to get hoarser and hoarser in their attacks on the Government for three years more? The idea is that the campaign shall be brought to a climax, and that in order to bring it to a climax the Opposition shall resort to the only weapon in their power, and that is the undemocratic power of the House of Lords.

The right hon. Gentleman comes to this House and says that it is undemocratic to interfere with the House of Lords. If the House of Lords is a democratic institution, then words have lost their meaning. Does anyone think that the right hon. Gentleman is such a' stickler for constitutional etiquette that he would not use the House of Lords against the elected majority of the House of Commons? He ought to know the Tory Party better than that. They were once prepared to stir up high treason against the elected Government of this country to stop measures they dislike. It was done in the case of Ireland, and no one knows that better than the right hon. Gentleman. Now that he has become a prisoner of the Tories, it is possible that he might learn a few tactics from them.

We are told that by some extraordinary means this proposal about the Parliament Act will impose a new crisis on the economic crisis. Much as I have meditated on this problem I cannot work it out. Will the miners strike because we are going to take over the House of Lords? Are the steel workers going to down tools because there is to be an amendment of the Parliament Act? Will the land workers refuse to milk cows because of this constitutional change? It is rubbish and humbug, and the Opposition know it. I can understand the rage we see on the opposite side of the House when it is known that the Government are to take measures which will deprive the Opposition of their undemocratic weapon. They see the giant on whom they relied about to be laid low and impotent. I hope that we shall see the House of Lords reduced to the position of the giant who is described thus in "Pilgrim's Progress": As for the other giant, though he be yet alive, he is, by reason of age, and also of the many shrewd brushes that he met with in his younger days, grown so crazy and so stiff in his joints, that he can do little more than sit in his Cave's mouth, grinning at Pilgrims as they go by, and biting his nails, because he cannot come at them. That is the state I would like to see the House of Lords reduced to, and I congratulate the Government on the salutary action which they intend to take.

What is the case put by the right hon. Gentleman the Member for Woodford on this Amendment? It is that the Socialistic experiment in this country, the Socialist Government now in power, has paralysed the productive system of this land. That is the whole of the Opposition's case. The right hon. Gentleman says that we are witnessing the complete failure of State planning. He says that the mainspring has been broken, and the whole of his attack is based on the charge that we have paralysed the country's productive system. But what are the facts? The right hon. Gentleman said that he had spent a lot of time in trying to discover the position. It is a pity that he did not look up the facts, because anyone who does so will discover that the people of this country are producing more goods today than they ever did in their lives.

If anyone will read such a paper as the "Economist," which is hostile to the Government, he will find that they say that the British community is producing between 10 and 20 per cent. more than it did in 1938. I agree with the hon. Member for East Middlesbrough (Mr. A. Edwards) that some things could be done to improve the Civil Service, but even with those difficulties, with all the other difficulties we had after the war, in view of the fact that two years ago 8,000,000 people were devoted to war purposes, and that we have had an immense upheaval in the world since then, the people of Britain are producing more goods today than ever before. I say that it is the duty of every patriotic citizen who wants to help his country at this time to tell the world those facts. Why does not the right hon. Gentleman the Member for Woodford do it?

Colonel J. R. H. Hutchison

Will the hon. Gentleman also tell the world that there are more people in Britain engaged on this work than ever before?

Mr. Foot

I congratulate the hon. and gallant Gentleman on making the best speech which we have had from that side of the House.

Colonel Hutchison

Then we are all square, because the best Tory speech we have heard today came from the hon. Member for East Middlesbrough (Mr. A. Edwards).

Mr. Foot

I will give the hon. and gallant Gentleman the palm in point of grammar and pithiness and everything else. I presume that he meant to infer that full employment was much better organised now than it was before, but that productivity per man was not so great as it was before the war. That is the charge we have heard at various intervals. If anyone examines the Bulletin of the Oxford University Institute of Statistics he will find, in the July issue, on page 235, that it says that the level of productivity today per man is, if anything, greater than it was before the war. The details are given in that document. One can cite many industries where the facts can be proved. It is a monstrous thing, both for this country and for the world, that the right hon. Member for Woodford should use the powerful position he has for acting as a megaphone in the U.S.A. to tell them that we have paralysed the productive system of this country, when in fact we are producing 10 to 20 per cent. more goods than ever before. Of course, it is not sufficient to do the job 10 to 20 per cent. better than the Tories, but it is necessary to do it 40 to 50 per cent. better, and that presents, I agree, considerable problems.

The right hon. Member for Woodford compared our balance of payments situation today with that before the war and he asked what were the factors which had intervened to make the situation different today. I agree that that is a very important question. I forget what was the right hon. Gentleman's exact answer to his own question, but I think it was that we had enslaved the nation, or something of that kind. These facts can be discovered, and if anyone wants to know the answer, I suggest that he look at the Bulletin of the Oxford Institute of Statistics and then he will see that there are two main factors which affect our present balance of payments situation as compared with what it was prewar.

First and biggest is the rise of world prices against us, and if anyone examines the details of this, he will come to the conclusion set forth on page 235 of this document, which is perhaps the best way of illustrating it. It says that we can say that "at 1945 prices there would have been an adverse balance of nearly £400 million in 1938. It was actually £70 million, due to the lower and more favour- able prices then." That is a very big Number I item in the change in our balance of payments situation today as compared with prewar. If prices before the war had been as much against us as they are today, we would have had an adverse balance of payments of £400 million in 1938. The second factor which accounts for the greater adverse balance is that we are now spending between £200 million and £300 million a year for overseas payments as compared with £16 million to £20 million before the war. These two factors alone account for the difference in our balance of payments situation as compared with prewar. These are the facts. If anyone wants to tackle the situation, he must start by tackling these facts.

Wing-Commander Millington (Chelmsford)

The hon. Gentleman referred to £200 million and £300 million for overseas payments. Does he not mean overseas commitments?

Mr. Foot

No, I mean that our overseas military expenditure was given as £300 million in 1946. I am sorry if I got it wrong. As the Opposition have made a wrong analysis of this problem, it is not remarkable that they are suggesting all the wrong remedies. We have had some remedies proposed by the right hon. Gentleman, which no one takes seriously, and other remedies proposed by the hon. Member for Monmouth (Mr. P. Thorneycroft) and his colleagues and by the "Economist"—one can always know what the Tory Party will think three months ahead if one reads the "Economist" today—and by the right hon. Member for the Scottish Universities (Sir J. Anderson). If you amalgamate all these plans, you get the simple list of proposals. They say that we should not have started family allowances; that we should cut food subsidies, and cut houses drastically; restore the price mechanism; stop inflation; and create a pool of unemployment. Those in brief are the measures which have been adumbrated at various times by hon. Members on the opposite side of the House. I say that if these measures had been put into operation, they would have made the position of the country much worse than it is today. If we had not introduced family allowances when we did, and if we had cut the food subsidies drastically, we would not have been able to hold in check pressure for wage increases. I hope that the Govern- ment will not take any advice from any quarter about cutting our food subsidies.

As for the second remedy—to cut the housing programme—it must be very gratifying for the Minister of Health who was told not so long ago that he was not producing sufficient houses, to read in "The Times," the "Economist" and other lordly newspapers, that he is producing too many houses. Certainly, I do not believe it is any solution to this problem to cut the housing programme. I come from a city where we are suffering more from bad housing and from a shortage of housing than perhaps any other city. We have built an enormous number of houses. We are proud of the great achievement we have accomplished in Plymouth, but still every week we have more applicants coming along to ask for houses than we have new houses to offer them. I say that, apart altogether from the appalling human distress involved in these facts, the most difficult economic factor which the Government have to contend with is the whole rigidity of our economic system.

Mr. Peter Thorneycroft (Monmouth)

The hon. Member for Devonport (Mr. Foot) has attacked the policy of the Tory Party, and he is now attacking the Minister for Economic Affairs, who has announced a cut in the housing programme. Before he sits down, perhaps he will tell us what his policy is.

Mr. Foot

I shall be glad to give the hon. Member for Monmouth (Mr. Thorneycroft) some indication. I will not be able to tell all of it to him, but I will tell him some of it. I was very glad to hear that there would be more houses built in 1948 than in 1947. That is not a cut in the housing programme. I do not like the figure of 140,000 proposed for 1949, but I believe that we must tell the people of this country that it is up to them to work to see that we get the timber to maintain the whole programme. What I am criticising and condemning is the folly and stupidity of those people in the "Economist" and other newspapers who think that somehow we can have a mobile supply of labour without any houses for the people to live in. It is a most ridiculous proposal; and as for the proposal to restore the price mechanism, which I believe the hon. Member for Monmouth advanced last Session, no one has ever yet explained how the restoration of the price mechanism will get the right people into the right industry. It never did before; in fact, the criticism of the price mechanism was precisely that it got the right people out of the right industries, and was largely responsible for a lot of the difficulties we have to face today.

Mr. Thorneycroft

What would the hon. Gentleman have instead of the price mechanism? I know that the hon. Member has only a few moments left, but the House is waiting anxiously to hear what is his policy.

Mr. Foot

I support to a great extent the policy which has been pursued by the Government. Instead of allowing the price mechanism to operate as it used to operate before the war and as the hon. Gentleman would like to see it operate again, because of the physical handicaps imposed upon us and because we cannot move labour around the country I ask that the work be brought to the workers. That has been the Chancellor's policy in the distressed areas, and but for it the situation would be very much worse.

Mr. Thorneycroft

The right hon. and learned Gentleman the Minister for Economic Affairs has announced a cut in the erection of factories. What is the policy of the hon. Member for Devonport?

Mr. Foot

We are going to have a cut in the building of factories. It is necessary to limit it to the very minimum. It is not a policy that anyone likes, and if the American Loan had lasted two or three years more, the plans for the erection of factories would have brought further great benefits to the people of this country. It is an expansionist policy, and what the hon. Gentleman the Member for Monmouth really wants, though he may not know it yet, is to get back to the old system where we get this pool of unemployment, which can be used to bring down wages.

Mr. Thorneycroft

What is the hon. Gentleman's policy?

Mr. Foot

That is really the policy that he wants to follow, and that is the philosophy which comes from the opposite side of the House—the philosophy that we can read in all their newspapers. [HON. MEMBERS: "What is yours?"] I will endeavour to explain some of my policies for the edification of the hon. Member. One very good rule for the Government would be to look along the line proposed by the hon. Member for Monmouth and his friends, and to say to themselves: "Go thou and do otherwise." That policy of the hon. Gentleman would bring some of the restrictionism that we had before. If anyone thinks that we can destroy restrictive practices in this country while creating a large pool of unemployment, I say that it is absolute madness.

Major Haughton (Antrim)

What did the hon. Member mean by saying "if the American loan had lasted longer"?

Mr. Foot

I meant exactly what I said. That goes for all the other things that I say. The hon. Member for Monmouth asks, "What would you do about it?" There are various proposals. I will not go into them in great detail although there are some that I would like to go into in detail. I hope to come to them shortly, for the benefit of the hon. Member who is seeking instruction. The biggest revolution we have to go through domestically in this country is to make sure that we pay the biggest amount of money to the people who are doing the real work. We have to pay the real producers, and we have to cut down the number of unproductive people in this country. I would certainly agree that we should have an inquiry into the Civil Service, possibly by a Royal Commission, to ensure that the machine is working efficiently. I would like a similar inquiry into some of the friends of hon. Gentlemen opposite, such as those middlemen who have been running up the prices of vegetables. We have to increase the number of producers who are really producing goods. In order to achieve that, we need to have some form of national wages policy. I would be very happy to entertain the House for the rest of the night discussing this matter, but there is a particular point which I would like to elaborate for a few moments.

I do not believe that the Minister for Economic Affairs, in spite of the justified tributes that have been paid to him during the Debate, will find it possible for us to reach the targets which he has set forth on that basis. Therefore, I agree with the statement that has been made by my hon. Friend the Member for North-West Hull (Mr. R. Mackay)', and other hon. Members, that we must search for some method by which we can extricate ourselves from this position. If we do not reach the targets set by the Minister for Economic Affairs, and if it becomes clear in a few months that we are not reaching them, it is probable that all our reserves will be gone by March. That is the position we have to face.

Is is of paramount importance that we should recognise that we cannot solve this problem alone. Therefore, many of us on this side of the House were disappointed that the Government had not taken an even bolder initiative in order to get the Paris Conference going upon a much more imaginative and wider basis. I was alarmed by the speech of the Minister for Economic Affairs when he again placed unqualified faith in the principle of multilateral trade upon the American pattern. I would agree with multilateral trade on the basis suggested by my hon. Friend the Member for North-West Hull, which is incontrovertible. The proposals, which have been made by the Americans, and which have been to some extent forced upon us in the last two years, have prevented us from starting on plans upon which we ought to have started two years ago. I am, therefore, sorry that the Minister for Economic Affairs still pays lipservice to those principles.

We must have a different approach to this matter. While we try to build up this wider area of trade, which I believe should be built up in and based on Europe, I believe also that we can make immense strides in increasing production within the British Commonwealth. I recently paid a visit to a part of the British Commonwealth, the Island of Jamaica. There are many products which we can get from Jamaica and of which we can increase the production there. Jamaica produces sugar, bananas, coffee, citrus and other commodities of which we can increase the production.

But there is one condition. If we are to increase the production in that part of the Colonial Empire—and the same thing applies to most other parts of the Colonial Empire—we have to be prepared to conduct a new form of trading with them. This is where the Tory Party have not yet woken up to the elementary facts of the situation. What everyone in Jamaica wants—manufacturers, politicians and others, are agreed 100 per cent.—is bulk purchase and long-term contracts. If they can get that, they believe they can get an enormously increased production. Therefore, bulk purchase, as it has been initiated and carried on by the Government during the past two years, is by far the biggest and most advantageous development we have seen in Imperial relations for generations. Hon. Gentlemen on the other side who like to pretend that they believe in the Empire had better make up their minds. Are their ideological prejudices so strong that they will continue the attacks on bulk purchase and long-term agreements? I was glad to see in the Gracious Speech the reference to long-term contracts as one of the means whereby we might increase production in the Colonial Empire. It is high time that the Tory Party stated whether they prefer to carry on the ridiculous campaign against bulk purchase and long-term contracts, or whether they really want to do something effective to increase production inside the British Empire.

One of the interesting facts about the bulk purchase and long-term contract agreements which are desired by the producers in the West Indies is that it makes the issue of Imperial Preference largely irrelevant. If the Government can make a bargain with the United States of America whereby we get our rubber and other commodities into the United States—I do not think that is a very good long-term prospect but they would get some dollars immediately—and go forward to build up production inside the British Empire on the basis of bulk purchases and long-term contracts, I believe we shall have started something which can ensure that the British Commonwealth makes an enormous contribution towards solving our difficulties. That is the way out.

Another remarkable thing happening in the Island of Jamaica is that white people and coloured people together have made a greater advance towards the solution of the colour problem than anywhere else in the world. I do not believe any nation is better fitted to make a mighty contribution to the solution of that problem than the British people. Therefore, while we build up an area in Europe where we can save ourselves and Europe, let us also go forward bravely in the assurance that throughout the British Commonwealth we can carry out the same ideals which the Government are pledged to apply in this country.

9.34 p.m.

Mr. Hurd (Newbury)

The hon. Member for Devonport (Mr. Foot) has enjoyed himself and given a lively stimulus to the flagging feelings on the Government Benches, but the country will welcome the speech of the Leader of the Opposition as the mature wisdom of a national leader, a leader who is convinced that our country can and will regain her greatness. After all, if we are to do that we must free the enterprise of our people. There are many ways in which that can be done, but it is the enterprise of the individual, whatever his job, that gives us our output, either great or disappointingly small. We have to come back to the fundamental fact that the individual will work harder for himself and his family than he will for the State and the community. We may one day reach that state of human perfection where the individual will put the community and the State first and subordinate his own interests, but we have not got there yet and we must face facts as they are.

In contrast, the Lord President gave the country little cause for confidence in His Majesty's Ministers. It was not one of his best speeches, and I feel—and I am sure the public will feel—that the country is entitled to more substantial leadership from the Lord President, especially as the Prime Minister has delegated all his authority in that sphere. Now the ordinary man and woman, whatever their politics, are much worried for themselves and for their families. The last food cuts have brought home to many people how grim our prospects are, and it is the things of the home that count with the ordinary family much more than the little snippets they may read in the newspapers about Debates here, or the little pieces they may happen to hear broadcast. The spirit of our people is faltering because, if people are deprived of too much, the heart goes out of them.

That is the real danger this country is facing today, especially when some of the restrictions are accompanied by irksome regulations which really are performing no worthwhile function. Yesterday I addressed a Question to the Minister of Food about the effect of bread rationing. He gave me an answer comparing the 30 weeks before bread rationing with the last 30 weeks, showing that the reduction in flour sold to the trade amounted to 4 per cent. It is a very small saving for the tribulations that the housewife and the baker have to undertake, and I suspect that in that 4 per cent. is some of the reduction effected in the supply for industrial use.

The point I wish to pursue is that we can do much more to feed ourselves. I happen to be a farmer and I know how faltering our food production policy is in this country today. I welcomed the words in the Gracious Speech which promised that: My Ministers will give all possible help to those who work on the land in order to increase still more the home production of food. We are all agreed that that is desirable and necessary. It is absolutely vital if our people are to be sustained by a decent diet so that they can work hard, so that a man can go out to his work with something inside him to keep him going. I am not thinking only of those who enjoy the facilities of category A canteens—4s. worth of meat a week—but of the ordinary chap who does not get anything like that.

The Minister for Economic Affairs spoke of British agriculture as our greatest dollar saver. He was quite right. The Chancellor said the same thing, but it was eight months ago, when the Agriculture Bill was before this House, that we on this side urged the Government to provide for a fully productive agriculture and to set targets for increased production. The Minister of Agriculture told us that was quite unnecessary, and that they had the whole matter in hand. We see today provision made for a fully productive agriculture, and targets set for increasing production but eight months late. Meanwhile the resources essential to developing that programme have been frittered away, and we are liable to miss another growing season. My hon. Friends on this side of the House welcome what the Government are trying to do, and wish to offer them further advice, because they have very few constructive ideas of their own. That is the object of the Amendment put down in the names of several hon. Friends and myself, which has not been called.

[But humbly regret that no immediate steps are proposed to provide the essential resources, particularly feedingstuffs, houses for agricultural workers and steel and timber for agricultural equipment, needed to ensure a speedy increase in home food production and better rations for the ordinary consumer.]

The House should know that very little is stirring in the agricultural world today, because the resources for increased output are still lacking. We should also recognise that our output of food has fallen since 1945. We had a drought this year, but apart from that, if we had had normal crops, our output of food has fallen, and even at a time when the world, especially Europe and India, is very hungry we have not produced from our own soil what could have been produced. That is a very serious indictment of a Government that pays lipservice to the Food and Agriculture Organisation of the United Nations. They have fallen down on the job of getting production to full capacity from our own soil.

We now have new targets set for production, and I do not agree with the hon. Member for Devonport so far as food is concerned, that we cannot achieve these production targets. I am sorry he has left the House; he might like to hear from one Member engaged in productive industry that masters and men in that industry mean to do the job which the country expects of them. These targets are pretty stiff. We are asked to increase the milk output by one-fifth; we are asked to increase the beef output by one-sixth, to double the egg output, and to treble the pig meat output. Pig meat, Ministers who are so removed from our daily affairs might need to be reminded, is bacon and pork. We have forgotten what pork looks like, and now we have almost forgotten what bacon looks like.

Man does not live, or still less work hard, on calories alone. The Minister of Economic Affairs told us that we are going to suffer a diminution of calories in our diet, but that it would not be all that serious. I am thinking of the ordinary consumer who does not get any extra facilities, and I say that it is vital for the spirit of this country that we quickly bend all our energies, on whatever side of the House we may be, to providing agriculture with the essential resources, so that our own land can feed our own people better. These essential resources, as we list them in this Amendment, are feedingstuffs, houses for farm workers, steel and timber for farm machinery and equipment.

On feedingstuffs what has been happening? We can learn a little by looking at the latest Trade and Navigation Returns, which show the imports of feedingstuffs for the first nine months of 1938 and the first nine months of this year. In the first nine months of 1938, we imported 2,200,000 tons of maize and 1,427,000 tons of oil cakes and other feedingstuffs. That was largely the raw material for our livestock industry, which produces what the ordinary man and woman want to give them a decent diet. In the corresponding period of 1947 we imported 330,000 tons of maize as against over 2 million tons in 1938 and only 379,000 tons of oil cakes. I want also to quote a comparable import of a product for which we use maize, that is dried eggs. In the first nine months of 1938, we imported £53,000 worth of this product whereas in the corresponding period of this year we imported £20,700,000 worth. The Chancellor assured us that the American Loan had not been squandered, but we could have produced £50 million worth of real eggs ourselves, those nice things in shells, if we had spent that £20 million on feedingstuffs.

Mr. Alpass (Thornbury)

From where would the hon. Member have got the feedingstuffs?

Mr. Hurd

I am coming to that. The hon. Member must not be so impatient. We are now forced to use more discrimination in how we use our dollars. I have no doubt that if my right hon. Friend the Member for Woodford (Mr. Churchill) had been in charge of the country's affairs we should have got feedingstuffs from the United States and also from Russia, instead of those dried eggs, because he would have said quite bluntly and frankly to them, and they would have understood him, "We cannot afford to spend the Loan in this way, buying dried eggs. We must spend our money on raw materials so that we can produce more of our own food at home." That is sound business economy. Twenty shillings spent on feedingstuffs will produce 50s. worth of eggs. My view is that my right hon. Friend would have done that. He was accustomed during the war to speaking plainly to the Americans and the Russians, and they usually listened. If the feedingstuffs can be found—

Mr. Alpass

Hear, hear.

Mr. Hurd

—I am coming to that, if the hon. Member will wait—we at home can treble the bacon ration instead of having this one miserable little sliver of one ounce a week; we can double the egg ration; and produce another 140 million gallons of milk per year. The Minister of Food puts the blame on the dry season for the cut in the babies' milk. It is not that at all. The reason is his failure to get feeding stuffs so that the cows can give the yield of which they are capable. We want to be able to keep more of our own grain for livestock to turn it into those products. The smaller farmer needs more help than he is getting in organising his silage, making a tough and laborious job, and he wants help in developing the admirable grass drying co-operative arrangements which have been started by the Milk Marketing Board in the Division of the hon. Member for Thornbury (Mr. Alpass). We want more of that. I see no sign of the Minister of Agriculture doing anything more effective to help the small farmer in that way. I fear that the 1948 season will pass, and that no better arrangements will be made to help the small man to get for himself some of these essential raw materials.

Another thing which the Government have just decided upon is an increase in the home production of linseed. If we can grow 400,000 acres of linseed here, it will be of great help in producing oil for paint and linoleum and oilcakes for our cattle. That will need organisation. I have spoken to some of those engaged in the oil crushing mills and who were accustomed to dealing with Plate linseed. They are anxious that a proper organisation should be started in the country so that English linseed reaches the mills in good condition free from weeds. If we can do that, we stand a real chance of holding that market. If we let this opportunity slip and do not organise ourselves properly with the help of the Minister of Agriculture in regard to drying and cleaning machinery, then we shall have lost a great chance.

The Minister for Economic Affairs assured us that the Government were scouring the world for more feedingstuffs. The results are not very impressive. I am sorry that neither the Minister of Agriculture nor the Minister of Food are here, but perhaps I may get a reply tomorrow. What has happened to the 700,000 tons of maize which the Minister of Agriculture said on 8th July that the Minister of Food had bought in the Argentine, but which he could not get shipped? He said he had only got 50,000 tons shipped and he could not get the rest moved. The Argentine market reports show that there are today 4,000,000 tons of maize available for export. Also, in Rumania possibly another 500,000 tons are available for export. Russia is not taking all of Rumania's maize. What are we doing about that? Are we going to get it here? It is vital to the egg ration of our people next year and the year after. That is the way I look at the matter.

The Minister of Food has been disappointed in his efforts so far. I suggest that he should put the business into the hands of the traders who know the Argentine and Rumania and who, possibly through that terrible thing the profit motive, succeeded before the war in getting that maize here and distributed so that it could be used for producing eggs and bacon. I would like to see that tried again. Of course, it means that the Minister would have to put aside his Socialist theories and throw some little doubt on the efficacy of bulk purchasing on Government account, but that is a sacrifice that is worth taking if we can get the feedingstuffs here. I would like to sec it tried. The farmers and the housewives would welcome it.

Are we using the feedingstuffs we have to the best advantage? I doubt whether we are. I think the Minister of Agriculture must look again at his feedingstuffs rationing scheme. Today he is allocating on the basis of the number of pigs and poultry people kept in 1939 and 1940. He ought now to look at it in this way. He should give the feedingstuffs—and I hope he will soon have more to distribute—to those who make firm contracts with the egg packing stations and bacon factories, so that we do not have charabanc loads of men who come from South Wales offering fantastic prices for forward store pigs at auctions and carrying the pigs home with them. That is not right. The feedingstuffs which we have should be directed to producing food for the general community. They should go to the farmer who makes contracts with the bacon factory or the egg packing station.

I wish to say a word about houses for agricultural workers and raw materials for our industry. The Government talk about transferring 100,000 men to agriculture. They are going to allocate, or require the local authorities to allocate, a proportion of their new houses for newcomers to agriculture. That may mean much; it may mean little. So far the rural district councils have built only 900 houses for agricultural workers. Let us make quite sure that the newcomers who are to be given these houses are men who intend to stay in agriculture. We cannot have misfits occupying the precious houses and drifting from one job to another. In my view, the most effective way of providing more houses for agricultural workers would be to encourage building by landowners and farmers, but will the Government have the courage to do this? I doubt it. We know, too, that we need a straightforward effort to improve existing housing where the accommodation is poor, and I am thinking of the older cottages which desperately need improvement today and which would have been improved if a Conservative Government had been in power.

Now I come to steel and timber for agricultural machinery and equipment. The Minister for Economic Affairs gave us the impression that agriculture was going to have all the steel and timber it could possibly need, but then we discovered from the Minister of Agriculture yesterday that this two per cent. of the country's steel output which is to go to agriculture has to cover the export trade in agricultural machinery as well as the home trade, and we know that high targets have been set for the export of agricultural machinery. Is the home producer going to get much extra machinery out of this new allocation? I hope so, and it is our duty in this House to see that he does. Otherwise, we shall fall down on this job of getting the extra food produced.

British agriculture can and will serve the country to its fullest capacity. We have no strikes and no malingering in our industry. But wherever I go now, I find that the spirit of endeavour has been dimmed by frustration resulting from incompetence in high places. [HON. Members: "No, no."] Oh, yes. Hon. Members will find any number of farmers and farm workers to endorse what I say. The Minister for Economic Affairs wound up his speech by telling us that this country needs a deep draught of the Christian faith. That is true, but it is also true that for two years, the Government had thrust away the cup by putting their party interests before the good of the whole nation. There are unclean spirits hovering around the Prime Minister who are fomenting divisions among our people. Some of our Ministers are groping for the team spirit again. The agricultural community have been set high targets for increased output. We have the determination to do it, if the Ministers themselves will show the necessary determination on their part. We can do this job between us but, if we are to have the fumbling that we have had over the last two years, the land of Britain will fail the consumers of Britain.

I sense in this Debate that all hon. Members have returned to this House braced by contact with their constituents. That is democracy in action, and as public opinion grows, even the most slavish of Ministers' adherents will realise that this Parliament has drawn near to the end of its usefulness.

Debate adjourned.—[Mr. Snow.]

Debate to be resumed tomorrow.