ECONOMIC SITUATION (GOVERNMENT PROPOSALS)

HC Deb 27 October 1949 vol 468 cc1529-643

Order read for resuming Adjourned Debate on Amendment to Question [26th October, 1949]: That this House approves the lines of action to deal with the present economic difficulties as outlined in the Prime Minister's statement made on 24th October; which Amendment was: In line 1, to leave out from "House," to the end of the Question, and add instead: regrets that in the National Emergency to which we have been brought, His Majesty's Government, while taking no sufficient measures to prevent the ever-increasing dangers of inflation at home and the consequent rise in the cost of living, or to restore the national credit abroad, at the same time make no positive proposals to stimulate production by the necessary incentives to individual effort throughout the nation.

Question again proposed, "That the words proposed to be left out stand part of the Question."

3.53 p.m.

Sir John Anderson (Scottish Universities)

With the indulgence of the House, before coming to the more immediate matters which are our concern today, I should like to go over some of the ground of the previous Debate last month in which I was prevented from taking part by my absence in Canada. As I see the matter, we are confronted by two distinct problems which, though interconnected, ought to be considered separately. This is essential in order to avoid certain confusion which has arisen, as I hope to show, through failure to make that distinction.

Here I shall refer briefly to the speech made by the hon. Member for Oldham (Mr. Hale) at the end of yesterday's Debate. The hon. Member made a great point of the undoubtedly most heavy and grievous losses suffered during the war in war damage, loss of production, deterioration of plant and equipment, and so on, and he sought to attribute to those losses much of the difficulty which we are discussing today. That discloses a complete misapprehension and much confusion of thought. In my opinion those losses are reflected in the heavy burden of taxation which apparently we are destined to bear for a long time to come, and in the dispersal of the large sums that we have received from abroad, from America and Canada, which are now no longer available.

The broad problems are, first, the complex of matters arising in connection with the drain on our reserves and the dollar gap; and, secondly, the question—in my view the separate question—of the deterioration in the value of sterling. To mix up these two sets of questions in argument tends to obscure the responsibility, on which attention must be concenrated, for the state of affairs that has necessitated the devaluation of sterling.

As to the first set of questions, there are many contributory factors, some of the most important of which have been entirely outside our own control. If I may review them briefly. Parts of the sterling area which formerly had a favourable balance are now in deficit. In other cases the balance is reduced. There has been a certain falling off in American demand for goods from the sterling area, attributable to such causes as the cessation of stock piling, the competition of synthetic rubber with natural rubber, and so on. There is the question of customs restrictions, both in the incidence of duty and in the manner in which the customs regulations are enforced. There has been a notable worsening in terms of trade with the dollar area.

All these matters were discussed—I agree fruitfully discussed—at Washington, and we may hope for improvement in those respects, particularly if international confidence can be restored to the point of encouraging foreign investment by the United States. There has been a welcome indication of a trend of opinion in that direction and, in my view, the ultimate solution of our difficulties may depend largely on that factor. It is absolutely vital that confidence in this country—in the management of our economy and our finances—should be restored to a point at which investors in the United States will be willing to risk their resources in the sterling area.

May I in that connection emphasise that for many years prior to the first European war we stood in relation to the outside world in much the same position as that in which the dollar area stands in relation to the sterling area today. We had a continuous, large, favourable balance of trade with the outside world and we invested our resources freely. In that way a great gap was kept continuously filled. Now within our own control there has been the external drain from this country, particularly in the matter of what are called unrequited exports, to which the Chancellor of the Exchequer referred, and the continuing excess of consumption in this country over such part of our production as is either retained at home or exchanged for goods from overseas.

The Chancellor made a welcome statement indicating a change of policy in regard to the sterling balances, but in how much better a position should we have been had that change taken place a year or two ago. I do not know the precise amount of gold and dollars which we have lost through following too generous and lenient a policy in regard to those sterling balances, nor do I know how far there has been a leakage in other ways across the frontiers of the sterling area. Two years ago I raised that very question with the then Chancellor of the Exchequer and received from him a qualified assurance that that matter was being attended to. I should very much like to know whether the Government are now satisfied that adequate control can be maintained throughout the sterling area so as to prevent any further disastrous and unforeseen leakage of resources in that way.

As a result of all those factors which I have briefly mentioned, we have what is called the "dollar gap," a gap closed temporarily from time to time by recourse to our reserves and to external aid. So far as my argument has proceeded, the exchange value of sterling has not come into the picture; but it is obvious that, as we cannot go on drawing on our reserves, and as external aid is tapering off, the gap must be filled in the future by reducing consumption or increasing production, or both; and since we need certain supplies from abroad in large quantity, a sufficient part of our production must be devoted to paying for these.

There we come up against the problem of exchange The sellers' market that prevailed after the war has gone; a buyers' market is now firmly established. We realise now with a shock that our costs of production in terms of sterling at the old value have priced us out of the dollar market—that we have to accept as a hard fact. We may take it that it has been established as a hard fact to the satisfaction of the Governors of the International Monetary Fund. Apart from that hard fact, devaluation would not have been necessary nor, indeed, justifiable, but—this is a point I want to emphasise—the gap has not been a factor in producing the maladjustment which is now reflected in the devaluation of sterling.

That brings me to what I regard as the second problem. What is the real truth? It was very clearly brought out yesterday by my hon. Friend the Member for Monmouth (Mr. P. Thorneycroft). There has been a fundamental disequilibrium, and devaluation is the inevitable consequence. It is the culmination of a process that has been going on steadily throughout the last four years. It is not, as, indeed, the Chancellor has recognised, primarily a remedy; it is a recognition of hard facts.

But more than that, it is a declaration of the inability of the Government to reverse the process by which the necessity for this devaluation has come about. It is not an inspired solution of an existing problem; it is not, as my right hon. Friend the Member for Woodford (Mr. Churchill) said, a timely stroke of policy, but a tragic necessity forced upon us as a result, in my submission, of the mismanagement of our financial and economic affairs during the past four years. I further submit that it is also a measure of the failure of economic planning.

In that connection let me point out that the difference between 4 and 2.8 is not the full extent of the depreciation in the value of sterling, for during the past four years dollars have also depreciated to some extent. Neither, I assert, is the problem an international one. It is a domestic problem. That is true despite devaluation by other countries. This aspect requires to be closely watched, for the sympathetic devaluation by other countries—I call it that—has pro tanto diminished the trading advantages that might accrue to us from the fact of devaluation.

In the course of my speech I shall have to use some harsh words which I think necessary, because it is essential at this juncture to bring out clearly the basic facts. Unless these are understood, and unless the understanding results in appropriate action, devaluation may—and, I think, undoubtedly will—do more harm than good. Its immediate effect is undoubtedly adverse. In theory, it may bring increasing benefit as time goes on, but the dangers inherent in the situation must be clearly envisaged. Devaluation is unquestionably inflationary in tendency.

It is absolutely essential, therefore, as has been universally recognised, that the devaluation which has come about should be accompanied by other appropriate steps. Our business today is to see whether the action proposed by the Government, set out in the statement by the Prime Minister last Monday and developed in detail by the Chancellor yesterday, is well devised and whether it goes far enough. That action must, in my opinion, be clearly related to the causes of the fundamental price disequilibrium.

How far are those fundamentals understood? I suggest that the first necessity, as the hon. Member for Northern Dorset (Mr. Byers) emphasised yesterday, is to sweep away the world of illusion—what he called the "Alice in Wonderland complex" that has come into existence. In that connection I must refer to the speech by the Prime Minister at the conclusion of the Debate last month. That speech seemed to me to display a complacency which was profoundly disturbing. The right hon. Gentleman said: We have not failed to tell the people of this country's difficulties.… We have never for a moment suggested that to get through these difficulties we shall not need hard work, hard thinking, from management and from workers alike.' —a very negative approach, quite inadequate to the occasion. He went on to say: The great mass of the people of this country know very well the great benefits they have received under four years of the Labour Government. [HON. MEMBERS: "Hear, hear."] I am glad to hear those cheers. They justify what I am going to say. The right hon. Gentleman first of all claimed credit for the maintenance of full employment, although everyone knew and it was clearly set out—[HON. MEMBERS: "Oh?"]—it was clearly set out in the employment policy White Paper of the Coalition Government that in the opinion of the Government of that day, which included the most prominent members of the present Socialist Government, there was in fact no danger of unemployment in the first years after the war. The Prime Minister went on to make a much more serious statement. He said that the people: will not forget how very much different and better their life is today than anything they had under previous Governments."—[OFFICIAL REPORT, 29th September, 1948; Vol. 468, c. 437–8.]

Mr. Shurmer (Birmingham, Sparkbrook)

The right hon. Gentleman does not understand that.

Sir J. Anderson

I certainly do not understand it. Have the people in fact been so much better off?

Hon. Members

Yes.

Mr. Shurmer

Come into the slums and see.

Sir J. Anderson

Is it not a fact that they have been consistently misled into thinking they were better off, when in truth they were only enjoying temporary advantages derived from the accumulated savings of the community and gifts from our good friends overseas? That is the plain fact, and it is absolutely terrifying to me that one should find the Prime Minister of this country basing himself upon a view of the situation which is so completely divorced from actuality. That is recognised by His Majesty's Government in the action they are taking at this juncture. There is no question about it. The community must be got back into the position in which they can earn their own living.

We have had statements about the productive efforts of the country since the war. I confess I do not feel entirely happy about the figures which were quoted by the Chancellor in his speech in September. According to the Census of Production—for I suppose the figures are derived from the Census of Production—there has been, he said, an overall increase in production of 30 per cent. as compared with 1938, and he said on another occasion that that was a magnificent effort. He used the word "magnificent." He went on to refer to an increase of 4 per cent. in industrial production per man-hour during the preceding year. I think I am correct—

The Chancellor of the Exchequer (Sir Stafford Cripps)

Per man-year.

Sir J. Anderson

That is a very material difference. The words were: Last year output per man-hour in industrial production rose in this country by about 4 per cent."—[OFFICIAL REPORT, 27th September, 1949; Vol. 468, c. 15.]

Sir S. Cripps

The same figure. It is the productivity figure which I gave the other day; it is the man-year figure.

Sir J. Anderson

This is a figure per man-hour and, unless we take account of the working hours, the figure is quite meaningless.

Sir Arthur Salter (Oxford University)

Would the right hon. Gentleman make clear the difference between 4 per cent. per man-year and 4 per cent. per man-hour?

Sir J. Anderson

It is not quite the same. There may be fewer hours in the man-year. I wonder how far those figures reflect the real situation.

Mr. John Wilmot (Deptford)

Before the right hon. Gentleman leaves this point, will he explain how the two measurements differ?

Sir J. Anderson

Production per man-year depends on the number of working hours in the year—[HON. MEMBERS: "Percentage?"] Hon. Members had better take some time off for reflection.

Mr. Wilmot

rose—

Mr. Speaker

The right hon. Gentleman the Member for Scottish Universities (Sir J. Anderson) is in possession of the House, and if he does not give way the right hon. Member for Deptford (Mr. Wilmot) must give way to him.

Sir J. Anderson

I am sorry, but I have a fairly long speech to make. If we may assume for a moment that those figures are correct, one cannot help asking where all that production has gone and, further, one might ask where the raw materials came from which enabled that increase of production to take effect. In any case, the figures of increased production, even if they are correct, do not fully justify the encomium of the Chancellor of the Exchequer. May I remind the House of the speech made by my hon. Friend the Member for Edgbaston (Sir P. Bennett) who, speaking from practical experience, told the House that in an industrial concern of which he had knowledge what he called technological improvement represented a 50 per cent. increase in productive effort which had been substantially offset by a decline on the human side.

In this matter I am not attempting for one moment to disparage the efforts of the workers—[HON. MEMBERS: "Oh."]—not for one moment. There have been some particularly black spots. As all hon. Members know, there have been some very unfortunate episodes, and I hope His Majesty's Government now realise fully the folly they committed when they brought about the complete repeal of the Trades Dispute Act. The very heavy loss to which the community was subjected a few months ago by a deplorable stoppage in the docks would not, I think, have taken place had that Measure not been wholly repealed. As the Chancellor and his colleagues have now made abundantly clear, the productive effort of the country has as a whole been inadequate. But I say, and this is an essential part of my argument, the workers of this country are not to blame. I attribute the blame to lack of leadership.

It has been said that the choice which lay before the Government was between drastic deflation and devaluation. I am one of those who would never wish to see repeated what happened in this country in the years after the first war. But surely it is a profound mistake to suppose that there was no middle course falling short of drastic deflation. Gradual disinflation would surely have been possible. Do hon. Members realise, when they think of the hardships which resulted from drastic deflation, that devaluation involves great hardships to a section of the community least able to protect itself—people on small fixed incomes, pensioners, people trying to live on their savings accumulated in better times? All those people suffer grievously as a result of devaluation, which is only a reflection of the deterioration in the purchasing power of sterling. Even the social insurance allowances have in fact been automatically cut by devaluation; that is the truth.

We are all agreed, I think, that we have to do our best to see that any further inflation is eliminated. How is that to be done? Taxation is far too high. As the late Governor of the Bank of England has said, we cannot go on staggering under the present rate of taxation. But the Government seek every possible opportunity to add to the burden and thereby they destroy incentives. [Interruption.] Hon. Members will laugh at that but incentives are very important. I would point out that the full effect of the destruction of incentives has not yet been experienced because people go on buoyed up by the hope that there will be some material change in that respect in the near future.

The Chancellor said the other day that in his opinion taxation—I think he was referring to the profits tax—is not an element in costs. I absolutely disagree. In the short run, of course, it is not because taxation does not fall due until the profits have been made, but when people are considering whether they will risk their money in some new venture they make a calculation as to what the net return is likely to be. In that respect taxation certainly is in the long run an element, just as Income Tax is an element, though it may not always obtain prominence in wage negotiations. The short-term and the long-term aspects must be clearly distinguished.

We have to reduce expenditure and capital investment which is not directly productive. What we have been doing is to maintain expenditure and mop up any margin of taxable capacity that could be found anywhere, a most dangerous process, carried much too far, which ought to be brought to an end. For that reason we have to have large economies—[HON. MEMBERS: "How large?"]—much larger than those now in contemplation.

In this connection I must refer to the abject failure of the Government's cheap money policy which has had so disastrous an effect upon savings. Let us get back as quickly as possible to some rational system. I welcome the representations which the Chancellor has thought fit to make to the banks. I wish he could have gone further in the direction of reintroducing the traditional method of checking capital inflation by the deliberate contraction of credit and an intelligent use of interest rates. The fact stands out that the effort of the nation has not so far been commensurate with the reward which the people have been receiving.

I now come to the question of the inadequacy, as I think, of the cuts which the Government have proposed. Let us consider what has to be achieved in terms of disinflation—the magnitude of the disinflationary effort which we have to bring about. We have been told that the Budget surplus, which I think was estimated at almost £500 million on revenue account and I think £14 million overall, has been substantially reduced. I do not know whether that has in fact been converted into a deficit—I gather not, but we are not at the end of the year yet; we have a considerable way to go. At all events that deterioration must be made good.

We have to make good the heavy loss in savings; we have to provide the increased cost of dollar goods already on order which will come forward in the next few months; we must have, the additional exports required to compensate for the increased cost of dollar imports to be obtained in the future; we require extra dollars to replace Marshall Aid. We need, in my opinion, a budgetary surplus in order to make possible the necessary reduction of taxation which will restore incentives, and we have to counteract the still continuing inflationary tendency and introduce a disinflationary trend to help in the gradual restoration of the value of the pound. I hope that on that there will be universal agreement.

The reduction of capital expenditure contemplated by the Government seems to me to be pitifully small although I do not in any way underestimate the great need for capital expenditure on productive purposes, essential in order to replace plant and equipment at the new high level of values, and to finance stocks, etc. Industrial development is vital but its cost has been increased by devaluation. Reference was made by one speaker in the Debate yesterday to the disincentive resulting from the incidence of Income Tax. Some time ago I thought it might have been possible to modify the system which is known as P.A.Y.E. so as to mitigate the impact of the higher scale of tax on marginal earnings. On further consideration I doubt whether that is practicable. What was done was to alter the gradation; I was speaking of altering the structure of P.A.Y.E. It may be that that process could with advantage be carried still further, even at some sacrifice of revenue. I hope that these matters will be carefully considered.

I want to emphasise to the House that it is futile to suppose that any Government can plan a community out of the range of economic forces. I have always thought that there is great truth in an often quoted dictum of Horace: You may fling nature out with a pitchfork, but she will always get back on you. I spare the House the original Latin. Control is no substitute for incentives; and I must here make some reference to a speech by the Home Secretary which was reported in yesterday's newspapers. If he was correctly reported, he said something to the effect that if industrialists could not, or did not, send their products where the Government thought they ought to go, recourse would be had to some extension of the range of economic planning. Let us get it all out. The Home Secretary is not one of those Ministers to whom one would naturally look for guidance on economic matters. But he has, as a responsible Minister, made a very grave statement and I think the House is entitled to know whether that represents in fact the policy of the Government. Is that the sort of thing that the Chancellor or the Prime Minister has in mind?

In this workaday world we have to take human beings as they are and not as we would like them to be, and that is where many high-minded men go wrong. I am thinking of a speech made in the last Debate by the hon. Member for Ashton-under-Lyme (Mr. Rhodes), and I would respectfully include the Prime Minister in the same category. He seems to me to be clinging pathetically to the belief that a new spirit of service is going to make itself manifest under the Socialist regime. There is precious little evidence of it—[HON. MEMBERS: "Oh."] Do we find it so in the nationalised industries? Where is this new spirit of service?

Mrs. Leah Manning (Epping)

In the mines.

Sir J. Anderson

We must take men as they are if we are to preserve any element of freedom in the country—[HON. MEMBERS: "Freedom for what?"]—freedom for the people. As I have said before, I was not disposed to blame the Government over much for the mistakes that they made, as I think, in the first flush of enthusiasm after a resounding victory at the polls. But I do condemn them for not having realised long ago the situation into which their policy was inevitably leading. They should have addressed the nation in ringing tones, with a united voice, not as so often in quavering accents, contradicting each other most of the time. It would have brought the people to a sense of reality instead of constantly misleading them. The people would have responded and the painful measures which have now to be taken could have been introduced gradually and in a much less painful form.

Even now the task is not insuperable, given the right conditions and the right leadership. All we want is a Government with a new outlook which can re-establish a healthy economy and restore international confidence. That beneficent change is for the moment withheld, and I can only say to the Government for the remaining term of their retention of office, "For mercy's sake stop fooling the people."

4.35 p.m.

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

We must presume that the right hon. Member for the Scottish Universities (Sir J. Anderson) has spoken officially on behalf of the Opposition. I must say that if I were in any sense responsible for the conduct of the Opposition, I should be alarmed at some of the things he has said. He admitted very fairly that there had been in the situation some unfavourable economic factors which had faced the Government, and which would have faced any other Government. Well, we are obliged to him for that. It is the case, and it is the kind of thing I would expect him to say, because the right hon. Gentleman does usually seek to be fair-minded. He says that devaluation is no solution for the problem in itself. We entirely agree, and indeed Ministers have asserted that from the moment that devaluation took place. Certainly we did not run after devaluation as a magic stroke of positive policy. We did it because in all the circumstances of the case it had become necessary. There is no secret about that, and therefore what he has said is a repetition of what Ministers have said.

He also referred to the Prime Minister asking people in industry on both sides to be hard thinking, hard working, and so on, and he regarded that as negative advice. I should have thought it was the exact opposite; that it was positive advice, and that if it were more carefully followed in some quarters in industry with which the Conservative Party is in close association it would be a very good thing indeed. I think it would be to the public good if the leaders of the Conservative Party were to preach to industry those very positive doctrines which were urged on both sides of industry by my right hon. Friend the Prime Minister.

Instead of that we had a statement by Lord Woolton round about the time of the Conservative Party Conference which read to me as a positive incitement to the employing and managerial sides of industry to go slow. I took the opportunity of asking Lord Woolton publicly whether he would kindly amplify what he had said. The "Daily Herald" repeated the challenge, but Lord Woolton has never replied. Therefore I must assume—[HON. MEMBERS: "Read it out."]—that the possible interpretation which I give to the observation of the Chairman of the Conservative Party organisation is the explanation which he himself accepts. Therefore I would recommend the right hon. Member for the Scottish Universities not to decry the Prime Minister when he makes a positive appeal to industry, but himself to urge upon his colleagues on that bench that they might do some of it themselves.

Mr. Peter Thorneycroft (Monmouth)

Would the right hon. Gentleman read it out?

Mr. Morrison

He says—

Mr. Thorneycroft

On a point of Order. The Lord President of the Council has made what, so far as I can understand it, was a very serious accusation against Lord Woolton. He said that Lord Woolton had issued some statement which was a direct discouragement to industry to get on with the job. At least, he put that interpretation on it. Are we not entitled to ask the Lord President to read the statement of which he complains?

Mr. Deputy-Speaker (Major Milner)

Certainly not.

Mr. Godfrey Nicholson (Farnham)

Further to that point of Order. Today at Question Time, Mr. Speaker made some serious remarks about allegations against Members of another place—

Mr. Deputy-Speaker

The right hon. Gentleman, like any other Member, is responsible for the statements he makes. Other hon. Members cannot compel him to read anything.

Mr. Morrison

A further statement that the right hon. Gentleman made was that full employment had been the policy of the Coalition Government. It is perfectly true that the Coalition Government published a White Paper in which they urged a policy of what was called full employment. That Government did not live long enough to implement it. But, as a matter of fact, that White Paper made a fairly firm assumption that there would be under full employment—and I am not quibbling about whether it is legitimate so to call it—as far as insurance funds were concerned, about 8 per cent. of unemployed. For some time past the percentage of unemployed has been less than two per cent. In fact, speaking from memory and subject to correction, I do not think that unemployment in this country has been more than two per cent. since this Government got effectively to work.

Captain Crookshank (Gainsborough)

The right hon. Gentleman is quite wrong. There was a fuel crisis with two million out.

Mr. Morrison

I do not know about two million, but that period was an exception. It is not legitimate to call that a normal instance. I only say that what is perfectly clear is that this Government has done much better than the forecast contained in the White Paper.

It is said by the right hon. Gentleman that it is curious that we have been claiming that people are better off. Then he adds the quaint observation that people have been misled into thinking that they are better off. It is the case that most reasonable people do think that; certainly the working class people of the country do when they compare their position with what it was before the war. It is the most glaring illustration of the old argument about fooling all the people all the time that I have heard.

Let me assure the right hon. Gentleman that the British are not the kind of people who are disposed to exaggerate the wellbeing of their position. They are a critical people. They exercise their right as free citizens to complain about anything under the sun. I still have a horrible feeling that we shall be held responsible for the weather either this side or the other of a great electoral event. At any rate, we have it from the right hon. Gentleman, speaking officially for the Conservative Opposition, that the people think they are better off than they were before the war. Well, that is good enough for me.

Mr. I. J. Pitman (Bath)

On a point of Order. Is it in Order for the Lord President to attribute a statement to my right hon. Friend which he did not make?

Mr. Deputy-Speaker

All these things are said in the hearing of Members of the House and hon. Members are in a position to judge for themselves. The Chair is not in a position to say whether a statement is correct or not.

Mr. Pitman

rose—

Mr. Deputy-Speaker

The Lord President.

Mr. Pitman

I have a point of Order on your Ruling, Sir. It is that the words "before the war" were not mentioned at all. It could have been equally the Caretaker Government or any other Government. My right hon. Friend did not say "before the war."

Mr. Deputy-Speaker

That may or may not be, but whatever was said was said in the hearing of Members of the House, and no question arises for the Chair.

Mr. Morrison

I am bound to say that this technique of points of Order for the purpose of making a comment on the speech of somebody else is a new development. I hope that it does not become contagious.

Mr. Churchill (Woodford)

You clutch at any straw now.

Mr. Morrison

After all, if in any way the right hon. Gentleman the Member for the Scottish Universities thinks I have misinterpreted him, I should have thought that it would have been him to intervene and put me right.

Mr. Henry Strauss (Combined English Universities)

"He."

Mr. Morrison

All right. If my grammar is wrong, that, of course, is where the Conservative Party is notably superior, even though they may be notably inferior in what they say about their political opponents. I would urge the Leader of the Opposition not to get bad tempered so early in the day. He has to wind up. The time for the right hon. Gentleman to begin to filibuster and to get cross and bad tempered is tonight, not this afternoon.

We are scorned because we have had assistance from Marshall Aid, as other countries have, but why is it that this is always said? Why when we come to our difficulties about food supplies and various other necessities from the Western Hemisphere, in a time of dollar shortage, is it steadily claimed by the Opposition that things were better in the days of the Minister of Food in the Coalition wartime Government? Why, that Government in those respects were on velvet, despite the admitted risks to shipping, which I certainly appreciate, as a result of submarine attacks. That was a time when the United States Government under Lend-Lease were sending food and other supplies to us with the greatest freedom and alacrity. It is not, therefore, an argument which I think is fair.

The right hon. Gentleman has implied that such trade disputes as there have been under this Government have resulted from the repeal of the Trade Disputes and Trade Unions Act.

Sir J. Anderson

I referred to one particular dispute.

Mr. Morrison

To one particular dispute. Well, Sir, we know that it is the policy of the Conservative Party to reenact as much of the Trade Disputes Act of 1927 as they possibly can. We note that this is a confirmation of that policy. But it is the case, as was revealed in answer to a Parliamentary Question last week by the Minister of Labour, that the number of working days lost under this Government as a result of industrial disputes has been very, very much smaller than it was during the similar period after the First World War. It is, in fact, I am told, one-seventeenth of the figure for a similar period after the 1914–18 war.

Therefore, in this respect, this is a Government of stability, under which industry gets going, whereas under a Conservative Government, under the operations of the right hon. Gentleman the Leader of the Opposition, industry was in a state of upset, turmoil and interruption one way and another, from which we are still suffering. Indeed, I was very glad that the right hon. Gentleman the Member for the Scottish Universities, who I think was not reflecting upon the consequences of what he said, made such a specific and complete repudiation of the financial and economic policy pursued by the present Leader of the Opposition.

Mr. Churchill

The right hon. Gentleman is deliberately mixing up two quite different periods. The statement of my right hon. Friend who has just spoken referred to the years immediately after the war. A period of five or six years intervened before I became responsible in any way for the financial administration of the country, and I have no doubt that he has in mind the return to the Gold Standard, which I so conclusively answered the other day. My right hon. Friend is being misrepresented if he is said by the Lord President of the Council to be reflecting upon the decision to return to the Gold Standard in 1925.

Sir J. Anderson

I was referring merely to what had happened within my knowledge at the beginning of the post-war slump in the early 1920's.

Mr. Morrison

rose—[Interruption.]

Mr. Churchill

In order to clarify this comparatively joyous moment in our Debate, will the right hon. Gentleman allow me to say, on behalf of my right hon. Friend, and with his full authorisation and speaking with all his authority as a former official head of the Treasury, that he was entirely in favour of the return to the Gold Standard?

Mr. Morrison

This little episode will live in Parliamentary history. I happened to be, under the Prime Minister, an active co-ordinating Minister in His Majesty's Government, and I almost offered my services to go and sit between the two right hon. Gentlemen opposite and try to reconcile them. If there is anything I can do for them at the "Shadow Cabinet," perhaps they will send me a special invitation, and I will ask the Labour Party if I can go.

Really, we are no better off. I had it in mind in my clear recollection, though if the right hon. Gentleman says I am wrong, I will accept it, that he referred to after the war, but in any case 1924 was after the war, and not very long after it, either.

Mr. Churchill

So is 1949.

Mr. Morrison

The right hon. Gentleman the Leader of the Opposition is not much better off, because if he confines these evil events to the years immediately following the first war, he was a Member of that Government, and he shares responsibility and I presume that he agreed with everything they did.

Mr. Churchill

No.

Mr. Morrison

Now, we are getting a very crude repudiation of the whole doctrine of Cabinet responsibility, and I am shocked that the right hon. Gentleman should engage in observations of that kind. As long as he did not resign from that Government, he must, of course, accept all joint responsibility for these terrible things which happened and which have now been so emphatically condemned by his right hon. Friend the Member for the Scottish Universities. In any case, the right hon. Gentleman was responsible for going back to the Gold Standard, which had a grave effect in precipitating industrial dislocation and industrial disputes soon after the war. [Interruption.] Whether the right hon. Gentleman now agrees with what he did about the Gold Standard, I do not know, but I will willingly give way to him if he will tell us whether he does not agree now with what he did then.

Sir J. Anderson

The right hon. Gentleman is having a great deal of fun, but surely he knows that, at the time of the return to the Gold Standard, there was practically universal opinion in its favour?

Hon. Members

No.

Mr. Morrison

Nearly all the fun I am having is not fun of my own creation. The right hon. Gentleman whom I was asking for an answer to the question is not the right hon. Gentleman who has just spoken, but the Leader of the Opposition, who evidently is not willing to say whether he now agrees that he was right in going back to the Gold Standard.

Mr. Churchill

I think I was quite right in going back to the Gold Standard, but it would have been better to do it at 4.50 than at 2.80⅔.

Mr. Morrison

We can take it then, that if the right hon. Gentleman had been returned here, he would have done exactly the same thing.

The Opposition and the Press which supports the Opposition are getting very worked up about the problems with which they are dealing and the economies which they think are necessary, and I make no complaint about that, because I think that the urge for public economy is always good and that it is a view which it is desirable should be expressed and considered. The main argument in this Debate and in the criticisms outside has been that the Government have not been severe enough in the cuts which they have made, and that it was essential, as a consequence of devaluation, that bigger, more severe and more substantial cuts should have been made.

Devaluation was announced by my right hon. and learned Friend on 18th September. About four weeks afterwards, a Conservative Party Conference considered the new policy declaration "The Right Road for Britain." It was adopted about a month after devaluation was announced by the Conservative Party Conference by an overwhelming majority. It is interesting, in the light of these demands that the Government should have been more savage in their cuts, that in this document there are a series of propositions which would actually involve an increase in public expenditure. This document has a preface by the right hon. Gentleman the Leader of the Opposition. For example, they promised, on equal pay, that the next Conservative Government would proceed with the application of the principle as it affects the Government service. If this principle were applied to the Civil Service only, it would cost £10 million a year. But it could not stop there; it would inevitably have to be extended to the teaching service and, therefrom, to the local Government service generally, and would involve another £24 million a year, making £34 million a year as a whole. That is only one example.

They also proposed to make available to all the free school meals. That would slap on about another £25 million a year, and is in complete contradiction to the policy urged last night by the right hon. Gentleman the Deputy Leader of the Opposition. And so I could go on with other illustrations from this document that was overwhelmingly and specifically approved by the Conservative Party Conference round about one month after devaluation was announced.

From that experience, one can estimate the depth of the convictions of the Opposition, and the assertions and the allegations that they have been making in this Debate. In our judgment, it is no good for the Opposition, for the nation or for Parliament to swing from one extreme to another in these matters. What the nation needs is a steady, realistic, consistent anti-inflationary policy such as the Government have followed in the last two Budgets—for which some people criticised us, and they were not all on this side of the House—and which they have now reinforced and adapted to deal with the new circumstances which arise out of devaluation.

On the credit side of the account, in our examination of our economic affairs, it is fair to point out and to stress the indisputable fact that our country is producing more than ever before, and that practically every available worker is employed. Some workers—I will say most workers—are working hard. There are others who are working less hard. Some managers are managing with great skill and energy, but others with less skill and little energy. Compared with any previous year, either in war or in peace, the size of the national output is larger and is more concentrated on the things that matter. Exports are high and are rising. But, on the other hand, compared with requirements and with what is possible, our performance is still inadequate. We are not producing enough goods and services to meet the demands which are being made upon them, and we are not making and selling enough exports to pay for our minimum imports, especially from the dollar area, and so on. The picture since the war is one of remarkable improvement, but of not nearly enough improvement to solve our problem.

Let us consider where cuts come in. It seems to me that there is a disposition in some quarters to think that severe cuts are, in themselves, a solution of our difficulties. That is not true. Cuts cannot achieve anything—apart from easing the budgetary situation, which is important—except to clear the road for more, better and lower cost production, which is the real remedy. Cuts are needed to enforce and to stimulate more restraint in public and private demand while we are building up our production to new heights. Cuts have become necessary because, although production is increasing, demand has been increasing faster and because of devaluation we have to divert more goods from home use to the export market.

There is a disagreement between the Labour Party and the Opposition on the method of making cuts, the nature of the cuts, and, perhaps, upon the degree of the cuts. The main disagreement about cuts is whether the cuts are sufficient, and whether they will be carried out so as to restore the balance between production and consumption, and, therefore, halt inflation. But there are some people in this House and among our critics in the country outside who seem to regard the idea of cuts as though, so to speak, it must be a sacrifice of blood, a physical operation that really hurts people personally and physically in some way or another. It is like the practice of savage tribes who, when they fear that the gods are irritated, think that somebody has to be offered up as a sacrifice, and, too often, such critics think it is the working classes who have to be the people to be sacrificed.

The real question between His Majesty's Government and the Opposition is not whether there should be economy in expenditure, but how that economy should be achieved. With respect, it seems to me that the Opposition take a very crude and simple view. They think of economy in terms of cutting off a huge lump of expenditure from a solid and lifeless mass. They do not realise that economy is mainly a question of people, and how people will behave. Therefore, their instinct is to reach for something like the Geddes Axe or the 1931 sledgehammer, and to lay about them creating havoc in the name of economic sanity. And there are associated with this body of opinion, and body of agitators, those who really want a deflationary situation, those who really wish for material unemployment so that prices can crash and so that we can go through the experiences of between the wars, not necessarily because they are always spitefully-minded people, but because they think it is an economic necessity in order that the working classes may be kept in their place, and so that the superior bargaining power of capitalism may be restored. That is behind a great deal of this agitation, and I want to tell the Opposition, and to assure my hon. Friends, that a policy of deliberate deflation calculated to damage the wellbeing of millions of our fellow citizens and to plunge them into misery is a policy which this Government will not adopt.

Let us recall how the economy cuts were made after the 1931 financial difficulties. Those cuts were presented to the House by the Coalition Government in September, 1931, and they aimed at saving not £250 million, but £70 million. Of course, the budgetary total was materially less in those days than the budgetary total is now, but they made a saving of £70 million in 1932 and only £22 million in the remaining part of the financial year 1931–32. Let us see how they went about it, because the illustration of how they went about it then is an illustration of how they would go about it now. I cannot believe that in a nation where we need the active consenting co-operation of the working people and the middle classes of the country who work also, that kind of cut would achieve the psychological results which are vital at this time.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

May I ask the right hon. Gentleman to recollect who actually did it? Was it not Mr. Snowden?

Mr. Morrison

I said who it was; it was the Coalition Government. In so far as the Conservative Party were very grateful and had reason to be grateful for the electoral assistance of Mr. MacDonald and Mr. Snowden in the election of 1931, they really ought not to try to blacken and condemn them, especially as those men are not here to defend themselves. These were the acts of the Coalition Government predominantly Conservative, and they were presented in September, 1931. A White Paper which is available in the records of the House show how those economies were made, and I present them as an interesting list because it is illustrative of how economies can be made. Half of the saving was over unemployment, chiefly by cutting the rate for a man from 17s. to 15s. 3d. a week and for a woman from 15s. to 13s. 6d. The application of a means test and the raising of contributions from employers and workpeople were the other major items. A further £10 million was obtained at the expense of education, chiefly by cutting teachers' salaries by 15 per cent. Perhaps somebody will tell us before the Debate is over whether that would be desired by His Majesty's Opposition at this time.

The pay of the Defence Services and of the police was also cut, and one result of this ham-handed effort at economy was the revolt in the Navy, the Invergordon Mutiny. It also gave an opening for the Japanese—I think it may well have been a factor in their minds—promptly to invade Manchuria, and touched off the great cycle of aggression that led up to Dunkirk and Pearl Harbour. Colonial development and the Empire Marketing Board were each cut by £250,000 and expenditure from the Road Fund by nearly £8 million.

Let us consider the results of this orgy, because that is what it was. One of the results was that all the necessary kinds of public investment which could readily have been done in the thirties by men who were then unemployed tended to be neglected and left to be carried out after the war. The economies of 1931 are still being felt in arrears of education and agricultural and colonial development and in other fields. I would ask whether this is the sort of thing that hon. Members opposite would like to see repeated.

Mr. Churchill

The right hon. Gentleman ought not to exclude from his account the fact that after the bulk of these economies had been made the Socialist Party were swept almost out of Parliamentary existence by the overwhelming vote of the nation.

Mr. Morrison

That is perfectly true, and therefore the right hon. Gentleman is now not only reaffirming what was done but reaffirming the electoral wisdom of it. If it was politically so wise, if it turned out such trumps for the Conservative Party that the working classes even voted for their own injury and for their own cuts, why are the Opposition so backward in this Debate in saying what they would cut? However, if we may take it from what the right hon. Gentleman has just said that that is the kind of economy for which the Tory Party stands, and that they believe that they will win the next election with it—

Mr. Churchill

rose—

Mr. Morrison

I have not finished my sentence yet. If that is the kind of economy in which they believe, if they believe that electorally it will pay them, the implication is clear and the common man may draw his inferences from it.

Mr. Churchill

The right hon. Gentleman has no right to foist on to us or on to me any particular scheme of reduction or retrenchment. He was telling a story to fill up the time, of this great occasion, dragged up from what happened 20 years ago, and I merely venture to complete it in its historical symmetry by reminding him that the national judgment of a vast electorate utterly condemned him and his party and those who acted with him.

Mr. Morrison

That does not add anything to the point at issue. I have no doubt that in the long term it contributed to the triumph of the Labour Party at the election in 1945. I do say to the right hon. Gentleman and to all hon. Members in the Conservative and Liberal Parties that, seeing that they have been so emphatic that we have not cut enough, they have a duty to tell the House and the country by what additional sum they would cut, and to tell us broadly how they would do it. We have not had it yet.

Mr. Frank Byers (Dorset, Northern)

If the right hon. Gentleman reads my speech in the OFFICIAL REPORT he will find that there are at least eight specific proposals.

Mr. Morrison

I did read the hon. Gentleman's speech, but I do not recall that the speech met the point that has been put, namely, that the cuts ought to have been, as some people say, doubled. I want to know where they would make that saving and how much in the respective services.

Mr. Byers

It adds up to £200 million more.

Mr. Morrison

That can be considered. If the country is prepared to vote for the policy which the hon. Gentleman urged I shall be very much surprised. I do not know whether the hon. Gentleman was speaking with the full authority of the whole Liberal Party—

Mr. Byers

indicated assent.

Mr. Morrison

I am very glad to meet somebody who can speak for everybody in his own party.

Mr. Churchill

Where is the Minister of Health?

Mr. Morrison

The Leader of the Opposition has his hands full with the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson). I think that the country has a perfect right to know, in view of all that is said by the Opposition by way of criticism and denunciation; not only has the country a right to know, but I submit that it is the elementary duty of His Majesty's Opposition, claiming to be the alternative Government, clamouring for an election, to tell this House and the country how much they would cut and what they would cut. I ask the Leader of the Opposition to tell the House tonight and to tell the country what cuts he would make in these circumstances or, alternatively, to refrain from the wholesale and reckless criticisms of the Government that he and others have been making.

We have reached a stage in our postwar economy and reconstruction in the world when the task of fitting the British economy into the post-war world economy can and must be tackled. It could not fairly be tackled earlier because neither we nor the world had got far enough towards settled conditions. [An HON. MEMBER: "Round recovery corner."] One element in this task was a revaluation of world currencies in relation to the dollar, and to say that this was exclusively a British problem was wrong. It was a problem of the sterling area in which a number of countries, in addition to ourselves, were involved; but it is the case that, as the leading country in these matters in the sterling area, we took the lead. As a whole it has been carried through with an encouraging degree of international agreement and co-operation.

The second necessity is to check inflation and to keep costs down. We are tackling this by a variety of measures of which the cut of £140 million in next year's investment programme, in addition to the cuts in public expenditure, are only a part. Equally important is the meeting, out of personal incomes held down at the existing level, of the higher import prices resulting from devaluation, through the exercise of the severest restraint on increases of personal incomes and profits. Simultaneously, another big squeeze is being applied to dollar imports which have already been so much reduced since the war.

These five main measures—devaluation, reduction in dollar imports, reduction in the investment programme, reduction in public spending and the checking of increases in personal incomes—will, in our judgment, if they are vigorously followed through, enable us to overcome our difficulties. But weakness or laxity in any one of them will put us back into a mess. The Government do not regard the problem of economy in public expenditure as one which can or should be solved by any sudden orgy of cuts. We have made the present instalment of cuts to serve notice on everyone, inside and outside this country, that the Government mean business about economy, but it would be quite wrong to assume that economy begins and ends with the cuts announced by my right hon. Friend the Prime Minister on Monday and further explained by my right hon. and learned Friend the Chancellor of the Exchequer yesterday.

On the contrary, a number of substantial cuts had already been carried out earlier and others will be made in the light of reviews which are now proceeding of various branches of public expenditure. We cannot get sound economy in public expenditure solely by melodramatic gestures nor, on the other hand, can we re-establish it after a war solely by day-to-day pressures behind the scenes. Both of these things have really to go together and the public application of the curb must and will be followed through and reinforced by a thorough comb-out of every service and every department as the estimates for the next financial year come forward. By gathering together into one group all the economies already announced, some large and some small, we have simply served notice on all concerned that the tendency to press for or develop expenditure without sufficient regard to how and where the resources can be found must stop. Anyone who imagines that the present list represents the end of the Government's efforts to achieve economies is going to be undeceived before long. And, of course, apart from the inflationary considerations, the actual budgetary considerations must be taken into account in all these matters.

I would only add to the House of Commons in this respect that if one looks through the records of Parliamentary discussion one finds a considerable amount of pressure on the Government to increase expenditure in many respects, and not all these pressures have come from this side of the House—they have come from the other side as well; and if the Government had not resisted these pressures then, indeed, the situation would materially be worse than it is now. We believe that this is, as a whole, a balanced series of economies as a contribution to one of the items of policy which it is necessary to consider in these respects.

We have, moreover, within recent times reduced the total numbers of the Civil Service by 10,000, but I would add, as an old local government man, that local government servants, notwithstanding the transfer of services to the state, have risen by 6,000 despite the recent transfer of many of these services, and it is suggested to the local authorities, and indeed to public corporations as well—all these great bodies—that they should watch their own expenditure, their own manpower problems, and consider whether they are acting as adequately as they ought. Of course, industry itself has again a responsibility to be bold and vigorous in going ahead to earn the extra dollars which the nation needs, and we shall all watch very closely the performance of all these firms which have new opportunities in the export market to see whether they will get cracking and seize them.

I should like to say to some of the chairmen of public companies that they might be a little more logical and a little more encouraging in some of the statements that they make. Here is the speech of the chairman of the United Dominions Trust in August this year: The Company has had an all-time record year both in turnover and profits earned; the record group profits amount to £408,557, but we expect the Government will require £195,082. When their profits have gone up, even though taxation takes part of it, they really ought to be a little appreciative, but what does the chairman do? He goes on to say: Enterprise in Britain today is stultified and frustrated at every turn by the policy and by the enactments of our present Government. I do say that is a little ungrateful. Here is a report from Telephone Rentals Limited on 29th August: It is with great pleasure that I am able once again to review another successful year of your company …. The profit, before providing for taxation, is £322,034, compared with £264,381 for the previous year. He adds: It would seem appropriate to state here that it is your directors' opinion that industry in this country cannot forge ahead when the Government takes more than half the profits earned to finance Socialistic schemes which the country cannot afford, however desirable these schemes may be. That is the propaganda effort that goes on at most of the company meetings.

Mr. Marlowe (Brighton)

Have these companies had regard to the Chancellor's request to limit dividends or did they follow the contrary example?

Mr. Morrison

My right hon. and learned Friend hopes that they acted in accordance with his advice, but the hon. and learned Gentleman, no doubt, has means of finding out, because he knows whence these political speeches are inspired, and the people there can, no doubt, tell him about that point as well.

Lord John Hope (Midlothian and Peebles, Northern)

rose—

Mr. Morrison

There has been, by Question and otherwise, some criticism of the Festival of Britain. I am very much obliged for the observations the hon. Member for the Combined English Universities (Mr. K. Lindsay) made last night. I think, indeed, that the whole House, or those Members who were here, would join me in thanking him for the whole of his speech, which was in a good spirit. This effort of the Festival was started with the good will and general blessing of the House, and on the Festival Council all political parties and walks of life are represented.

Lord John Hope

Would the right hon. Gentleman give way?

Mr. Morrison

If the noble Lord is personally involved.

Lord John Hope

That is the point. I am obliged to the right hon. Gentleman for giving way. I am a director of United Dominions Trust, and I want to inform him that, in fact, the company did observe the dividend limitation request. Secondly, I would have the right hon. Gentleman understand that the chairman of the company knows a great deal more about economics than does the Lord President.

Mr. Morrison

But if the chiefs of companies who have done very well in profits have got to become the propaganda instruments of the Conservative Central Office they really must expect to be criticised by their political opponents.

Now, the Festival of Britain was started with the good will of all people, and that good will, I hope, is going on. The ideas which were worked out under the Council's advice would have involved a possible expenditure of, I think, round about £14 million. I have been insisting upon economies all the way through; that is to say, that we should be as economical as possible; and I shall, as I promised the House, make a fuller statement at a later date. We actually got the gross cost of the Festival down to slightly over £11 million—that is gross—and, with the receipts and disposal of assets, the net expenditure—the cost to public funds—is anticipated to be somewhere round £9 million; this is, spread over a period.

I suggest to the House that that is not excessive for a venture of this kind. The House must consider whether it is a desirable course to adopt. Do we want, in this time of difficulty and stress, to put Britain on the map; to show what has been done over the last 100 years; to encourage our technicians, and the various other people related to our economic and social activities of one sort and another, to do their best; above all, to encourage foreigners to come to this country, particularly from the Western Hemisphere? Or do we want to pursue the alternative policy of going into mourning—of looking rather like that figure on the Minister of Transport's poster—the figure of the black widow that lately was posted upon the hoardings of our cities? Is that the way to buck ourselves up when in difficulties? I do not think it is, and I would appeal to the Opposition not to make this a party question. I do not think the Front Bench have done so, and I would appeal to other hon. Members to give us their co-operation in this matter, because we think it will do good to the country itself, and we think that, by and large, it will pay us for the venture to go on.

Now, let me sum up the situation and the Debate so far as I see it. I think the Opposition have played a purely destructive part in the Debate, and I would urge that those who speak later, and the Leader of the Opposition who winds up, really ought now to be positive and constructive. They have put forward no alternative. They have sought to create a false atmosphere that really can be dangerous to the economic well-being of the country. They are pursuing a campaign which is not calculated to help industry or the country, and I would beseech them to reflect where their course of action would lead.

Mr. Eden (Warwick and Leamington)

May I remind the right hon. Gentleman that I made a number of points yesterday, and incidentally mentioned the German Control Commission and other means of saving? The right hon. Gentleman has not answered one single one of them, and so it is not fair to attack us for not making proposals.

Mr. Morrison

I do not recall that the right hon. Gentleman firmly plumped for any particular thing. He did mention the Control Commission, and I can tell him that that is in hand and is being dealt with in a way which, I think, he would regard as satisfactory. That is not an alternative, because we are already doing it. [HON. MEMBERS: "Oh."] They have put forward no firm alternative, and have sought to create a false atmosphere caused by Election rumours, and then by an attack on the Prime Minister's statement. [Laughter.] Excuse me. We know they have started these activities, and why.

Mr. Eden

What about the "Tribune"?

Mr. Morrison

The fact is that there is no magic remedy, no mere gesture which will get us out of our difficulties. I will give the right hon. Gentleman, not the "Tribune," but the New York "Herald Tribune."

Mr. Eden

I read that.

Mr. Morrison

The interesting thing is that the United States, which are detached from this situation, received the Prime Minister's statement, according to "The Times," with a general measure of approval, as distinct from the way in which it was treated by the newspapers of our own country. It may be that they are more impartial, being removed from these election rumours and other such considerations. Here is what the New York "Herald Tribune" said when it summed up the situation on Tuesday in an editorial. It said: If the work plan outlined yesterday is generally supported, and implemented with courage, Britain can face the coming year with new hope. That is much better than some of the things that have been said here. [HON. MEMBERS: "It is untrue."]

This Government have, ever since they have been in office, attached primary importance to these economic matters. [HON. MEMBERS: "Oh."] They have done more than any other Government. They have taken the people into their confidence and told them the facts, and that alone has contributed enormously to the industrial and public morale of our country.

Mr. Henry Strauss (Combined English Universities)

Will the right hon. Gentleman allow me?

Mr. Morrison

No. I do not agree with the right hon. Gentleman that there is something wrong in trying to get the best out of human nature in the way of public service and industry. I do not believe that, in the long run, men are going to do their best solely for material rewards. Material rewards do matter, but if we have a society in which it is boasted that nobody will do the right thing unless he is making something out of it, there is something morally wrong with that society. It is true we have gone in for economic planning. So has the Port of London Authority—

Mr. H. Strauss

rose—

Mr. Morrison

—in which the right hon. Gentleman holds an important position. There is nothing essentially wrong with economic planning.

Mr. H. Strauss

The Government have not done it.

Mr. Morrison

In fact, if there had not been economic planning—[HON. MEMBERS: "There has not."]—this country would face an infinitely worse position, and I say that, taking the thing by and large, the Government have done excellent work in this field. I ask the House of Commons to reject the Amendment, and to carry the Motion of the Government, when the time for the Division comes tonight.

5.40 p.m.

Mr. Walter Fletcher (Bury)

I have noticed that whenever right hon. Gentlemen and hon. Gentlemen on the other side of the House take part in an economic Debate and need backing up the Lord President puts himself up to speak, because he is a great adept at not only trailing his coat but disguising his complete lack of knowledge of real economic facts by very clever political shadow-boxing.

He has made some astonishing statements. He says that His Majesty's Government have attached primary importance to economic facts since they have been in power. Let us take one or two instances. It is worthy of observation that he has relied throughout his speech almost entirely on getting back to what he considers to be the Tom Tiddler's ground of his party—the years between the wars. He has not said anything at all about the economic crisis which is upon us. He seems to me to have a 1922 mind in a 1900 chassis. That is not a very up-to-date model.

Let us come to some of his statements. What economic theory was in the mind of the Government when only about three years ago the blunder of convertibility was perpetrated? What economic theory put forward by the planners was in the mind of the Government during the last three or four years when they turned an entirely deaf ear to what we on this side had been putting forward about the sterling balances? It is only now, for the first time, that the Chancellor of the Exchequer and his colleagues appear to have been able to think of sterling balances in anything but money terms. They never appeared to have thought at all when they were rushing all over the world making these settlements about which the Chancellor of the Exchequer, in very cavalier fashion, refused to answer questions in this House, that these in turn would have to be implemented by the work of the people in the factories of this country who would not be rewarded by the import of raw materials and food but by a little tick in the Bank of England against a row of noughts.

What is the result today? This economic planning, without adjustment to economic affairs, has not made itself felt in a very satisfactory way to the worker in export industries who is doing between half-a-day to a day's work for no direct reward. Nor has it been of help to this country. I am not pretending for a moment that one could have immediately cancelled the sterling debt accumulated during the war. But that a legacy was left to the Government by the right hon. Member for Woodford (Mr. Churchill), with the high reputation which we had and the memory that there was in the minds of the people of India, Egypt and elsewhere of what we had done with the money already borrowed to protect them as well as ourselves, we could have sat down and made a far more satisfactory and comprehensive settlement, which would have led us to make economic plans which had reality and would not have resulted, as their plans have today, in the Chancellor of the Exchequer, very late in the day, coming forward and pointing out the danger we have through sterling balances and exports which are not requited. What are they going to do to put that right?

What economic plan was there in the mind of His Majesty's Government on the question of their bilateral agreements, which are the greatest hindrance to exports at the present time? We are exhorted the whole time to export to the dollar and hard currency countries. I must confess that I am personally interested in export. The hon. Member for Cannock (Miss J. Lee) put a question yesterday to one of my colleagues as to whether he was personally interested. I am personally interested in exports. I am not a professional politician like the hon. Lady and others.

Miss Jennie Lee (Cannock)

I suggest that when Members of this House do not respect their status and their profession as Members of this House, they are not fit to sit in this Chamber.

Mr. Fletcher

I was only pointing out that some of us can speak with a certain amount of first-hand knowledge, as well as the professional politician. These glib exhortations from the President of the Board of Trade and the Chancellor of the Exchequer, do not make the position really clear. No one is keener than myself on exports, as are other hon. Members on both sides of the House who are connected with the export industry. It is useless to pretend that it is a question like turning on the wireless or turning on the tap to obtain dollars or hard currency. Why? Because there are iron curtains which are let down in South America, South Africa, Egypt, Pakistan and India, as a result of which whole rows of goods cannot be exported, although lying in the warehouses ready for export.

They talk about the export drive, but it is not really a drive owing to the difficulties of regulations, of currency, and of import licence in other countries themselves; it is very like an export crawl. That is where the great danger lies. What we are facing now is not a long-term economic crisis but a short-term economic crisis which is going to make itself felt within the next six months. The Chinese torture Li, or death by a thousand cuts, which the Government are trying to impose on us, will not produce the result necessary to ward off the effects of the short-term crisis.

Returning to the export drive, it is, as I have said, one of the main difficulties. Where there is the alternative of being able to ship one's goods quickly to a country, thereby keeping up a flow in our factories and our export business, and the country to which one is sending them is a soft or semi-soft currency country and, on the other hand, having to wait two or three months before the ban is lifted in hard currency countries, the exporter automatically exports his goods to the first buying countries. We cannot possibly change that by exhortations only by seeing that the countries concerned are willing to take the goods.

On the top of that, we have the new factor of competition. For three or four years we have been immune from competition from certain countries. I believe that I was the first Member of this House to issue a note of warning about Japan and Germany, and I have been issuing that same warning ad nauseam ever since. Turn to Harrogate and hear that note of warning in the textile industry, no longer as something distant but as something present, which is causing the greatest uneasiness in Lancashire and making it difficult to see how the wheels can be kept turning.

What is the use of saying "Manufacture for export" when in half a dozen countries Japanese goods are being imported today, copied absolutely from ours and cheaper. I returned from a visit last week to Germany, and if anyone will study the figures of output in Germany for 1938, 1947 and 1949 they will see how very close we were to enormous competition from that country, which is willing to accept orders for many of the goods mentioned by hon. Members opposite in this Debate as being particularly desirable to export to hard currency countries. In every case, the delivery is earlier, the price is better and—I am not saying that the quality is better—but the price is lower and the specification in many cases is quite as good as ours. Why? Because there is present in Germany a spirit of firm determination to get back again and of accepting much greater sacrifices, much longer hours of work and lower rates than in this country. [Interruption.] It may not be comparable, and I am not saying that I agree with it, but that is an incontrovertible fact.

If we do not face these facts we are doing the Government as well as the country and ourselves a great disservice. Whole areas of exports have been cut out. The whole of the Far East is taking in very much less. It is not very useful talking in vague terms of an export drive and of increasing exports. Once that is broken down two salient facts are found: the unwillingness of the country to which we would like to export to take our exports, and the competition that is springing up which cuts us in price, and in many cases possibly equals in quality. I think it would be more realistic, instead of relying on this cushion of an export drive to sit down and ask ourselves: shall we really be able to bridge the dollar gap before us?

One of the most dangerous things His Majesty's Government do—both the Prime Minister, the Lord President, Chancellor of the Exchequer, and all their speakers—is, when they are mixing together the cocktail of exhortation, putting in a little dash of, "Oh, you must do, better," they nearly always finish up by putting in a large cherry and saying, "It will not really be quite so bad."

Mr. Francis Noel-Baker (Brentford and Chiswick)

The hon. Gentleman has given two examples of countries in which very low standards of living and mass unemployment are helping to solve the export problem. Is he suggesting that we in this country should follow the example of Japan and Germany?

Mr. Fletcher

That is an irrelevant, misguided and misleading question. It is not a question of what the hon. Member and I think about it. I have expressed my views on this many times. That is a menace and a great danger, and sitting as I do for a working men's constituency in Bury, it is quite obvious that I would not want to lower the standard of living. Whether or not one agrees makes no difference. Those are the hard facts, and they are the things which must be taken into account.

Let me return to what I consider to be the major sin in all the speeches made from the Government Front Bench. It is this: that they have produced in the country the extremely dangerous state of mind—"It never can happen to us. It never can happen to me."After the original Sunday afternoon announcement of devaluation by the Chancellor people went back to work on the Monday, carried on their ordinary lives, and not the slightest difference was perceptible to them. It is the danger of the gradualness of the effect of devaluation and inflation that I want to emphasise.

During the "phoney war" the French Government produced in the French people the idea that the Maginot line protected them and that they need not worry very much about invasion. But what was the truth? They ought to have protected the Maginot line. Today the 2.80 rate is being put forward as a sort of financial Maginot line which is protecting the industry, trade and lives of the people of this country. That is not so. It is up to everybody to protect the 2.80 line, otherwise the same fate will overcome us as that which overcame the French.

I now turn for a few moments to the question of productivity and incentives in industry. Incentives vary between two widely separated points. The strongest and the worst incentive is fear. The best and the rarest incentive is, undoubtedly, the very high, altruistic clear-minded attitude of those who understand the problem, and who, with no sort of thought of advantage to themselves, take an action which they know may harm them. There are certain numbers of individuals in both those categories, but the vast majority are somewhere in between, and it really is not right that the Lord President should deliver, as he did this afternoon, moral lectures of the most spurious order if people are fair-minded and courageous enough to get up and say of their fellow citizens that it is quite obvious that to them incentives are of great importance.

The greatest incentive in this country—and it does honour to our citizens—is quite obviously the desire of the head of the family to protect the members of the family, and to see that they are properly housed, clothed, fed and warmed. That is the main incentive, and the incentive which will come into play very soon in this country. Speaking as I do for a working men's industrial constituency, I think that I can speak with some sort of knowledge of how those men's minds will operate. It is perfectly obvious that, once we having devalued—and I am not going into the rights and wrongs of that—it is a phoney suggestion to say that there will not be a rise in the cost of living, that the Government will be able to damp it down, even with the cuts, or that it does not mean the direct inflationary effect which devaluation quite inevitably brings in its train will appear.

I would point out to the House that there are different sorts of inflation. There are the examples such as we saw in Germany after the 1914–18 war, in China after this last war, and in Greece, where the inflation is of such violence that it sweeps the currency away until it is of no value at all. Then there is the other sort of inflation, such as we have seen in France since the last war where, from a rate of 200 francs to the £ we have gone by gradual steps up to 1,090, and now back to 980. The step that His Majesty's Government took is very much in line with the French. It is useless to raise too much, by use of the word "inflation," the bogy that we shall suffer the same fate as was suffered by countries which had a major sweeping away of the currency; but it is idle to pretend, or even to attempt to stop what must be the inevitable result of a 30 per cent. devaluation.

In reply to a Question of mine last week the President of the Board of Trade gave a set of figures which showed that in primary dollar earners from the sterling bloc—not the manufacturers of this country—we are getting less dollars; and we continue to get less dollars. That makes the situation all the more serious. Incidentally, within the time of the crisis—six to eight months—taking into account our reserves as they stand today, it makes it very doubtful indeed whether, taking account of the resistance there is in hard currency countries and competition, we shall be able to bridge the dollar gap.

It is always supposed to be wrong and unpatriotic—and I have been taken to task on one occasion by the Financial Secretary to the Treasury for daring to point out things like these—to dare to point out that the assessment of the rest of the world of the value of sterling is the dominant factor. Having accepted that rebuke in good part, because it was given in good part, I would point out that every single factor I predicted has come to pass, regarding both unrequited and frustrated exports, and the eventual devaluation this year has taken place in much worse conditions than those under which we could have done it two years ago. I believe it is the highest patriotic duty of those who are informed, and whose daily life is spent in dealing with these things and in getting information from the world, to point out these things. As one who has probably turned into the Treasury as many dollars as most people, I would say that at the present time it is highly dangerous, at the end of this Debate, to go away in the belief that all is well; that because we have had a Debate, that because we have got a certain number of cuts, we can now sit still and wait for the Budget next year.

What was the economic policy of the Government on the question of leakage from the sterling bloc, which was mentioned by the Chancellor? I think the Treasury will bear me out here. For over a year I have been getting at the Treasury and pointing out the leakage. But what did we find? Did we find a sense of urgency, or a sense of drive? I do not wonder that the Lord President should wander up and down so much; we can well understand his uneasiness. We found nothing of the sort. There was vacillation and hesitancy. There was the feeling "Are we going to be able to do this? Will the Foreign Office be upset if it is revealed that such-and-such a country has poached on our reserves? "There was never any sense of urgency. There was always drift, and the Micawber spirit of waiting for something to turn up.

I want to say a few words on the very difficult and vexed question of production and restrictive practices. I believe that one has to be blunt, outspoken and honest about this. There is a story going about of a Cabinet Minister who recently inspected a factory and asked a man on the bench how many men worked there, to which the man replied, "About half."

Mr. Tiffany (Peterborough)

That was in 1913.

Mr. Fletcher

It may have been, but the egg is still good today. I was going on to say that I do not believe it is true. The real truth is that the honest-to-God working man wants to do a jolly good job. What the honest-to-God working man bitterly resents is the scrimshanker who slips away 10 minutes before time and is eating his meat course by the time the honest worker reaches the canteen. The scrimshankers and the hangers-back are breaking the heart of the honest man who really wishes to do his job. It is the influence of the shop stewards and not the leaders of the trade unions that is notably slowing down production in this country.

It is the scrimshanker who is usually the biggest trouble-maker, whether it be in industry or agriculture. This is really one of the root causes of our not producing so much. I exhort Members opposite, because the remedy is much more in their hands than in the hands of anyone else—they are traditionally the people who have the influence—when occasional glimpses of the crisis seems to break in, to ask themselves whether, in their heart of hearts, they are not absolutely certain it is the bad influence of a minority which is frustrating the country, and to do what should be done; otherwise they will lose the confidence of the workers and there will be the change which I for one will not regret.

The best incentive to production is to suppress the scrimshankers and the trouble-makers, and to see that the really honest workman who wishes to work, not merely for his personal advantage but because he knows it is the right thing to do, can get on with his job. [HON. MEMBERS: "What about the management?"] What I have said goes equally for the management. I know that there are just as many "bad hats" among the employers.

Mr. Ivor Owen Thomas (The Wrekin)

Why does the hon. Member bring in the managers as an after-thought in his comments on slacking? Why did he not refer to them in the main part of his remarks?

Mr. Fletcher

I did it because I happen to want to make the speech in this form, which seems to me to be sufficient reason.

This is a short-term crisis. We do not know how short it is, because we have not the figures of our reserves and the rate they are being drawn upon. Business people can only sit down, not in a hostile spirit, because it is childish to think that it will help them if we devalue again, and try to work out how near it is. It seems to me that on the figures, with the difficulties the export trade is running into on all sides and with the restricted areas to which we can export and the competition we are meeting, it is possibly much nearer than we have been led to believe.

The right hon. Gentleman has made a great point about it being up to us, but I make the suggestion that he sees to it that we get really clear and comprehensive figures, in a form which is understandable to every man and woman, as to what our situation is—our exports, our invisible exports, our frustrated exports and our unrequited exports. Let us really see month by month where we stand, because the people will make an effort if they understand what is the situation. They get sick of exhortations and the dull presentation of the same facts. I put that forward as a contribution. Time is short and no long-term remedies for the second half of 1950 are going to be effective. The outside world estimates us on what we can do and wants us to succeed, but it is being puzzled and to some extent turned against us because it does not see sufficient devotion to the economic side of this problem but far too much political mountebankery, such as in the speech of the right hon. Gentleman today.

6.8 p.m.

Mr. Blyton (Houghton-le-Spring)

I listened with great interest to the remarks of the hon. Member for Bury (Mr. W. Fletcher). For years we have heard the same cry that it is never the management but always the workers who are to blame. It is the old cry I heard when leading a miner's union. The hon. Member asked us not to look to the past but to the future, but I suggest that the history of the past teaches us a lesson for the future. The hon. Member's party is not now in a position to do what they did in the inter-war years when they were placed in these financial difficulties.

I was amazed when the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) said the people were misled to think that they were better off. I suggest that he goes to any mining village and asks the people whether they are better off today than under private enterprise between the two wars. I can assure him that if he tells them they are worse off now than in 1928 and onwards, he will be seeking a quick exit from the miners' meeting. He also suggested that we should resurrect the Trades Disputes Act. We all know that the Tory Party have said that when they get to power they will do that and try to cripple the trade union movement, as they tried before. I know quite well that the people will never again vote for the reintroduction of that Act.

Since the Prime Minister made his statement on Monday the Tory and Liberal Press, with the Opposition, have been arguing that the cuts are entirely inadequate. There would have been howls and groans from them if the Government had suggested a capital levy. The Opposition Amendment would have been in very much stronger terms had we attempted to stop some of their capital gains. Yesterday, the Leader of the Opposition said the cuts were not sufficient. I would like to ask the Tories what they intend to do about their booklet "The Right Road for Britain," which their Leader so contemptuously referred to as "This little book?" Is it their intention to fight the Election on the policy outlined in that booklet? Where do they stand in relation to the cuts? Will the Leader of the Opposition, who has said that his party would not offer bribes, relegate that booklet into the limbo, to enable the Tories to ask for a blank cheque to do in the future the sort of thing they have done in the past?

Twice in my lifetime we have had to face a financial situation of this character—in the early 20s and in 1931. I remember, on coming out of the Navy, seeing a Tory Election poster which said that the Tories would make this country fit for heroes to live in. Well, they did; it took a hero to live in the country in the succeeding years. In the first crisis we were told, as the hon. Member for Bury said, that to get into international markets we would have to suffer. Then, the Geddes "axe" slashed the social services and reduced working-class wages throughout the land. Those who worked for weekly wages knew the harsh effects of those cuts. They suffered from the strikes and lockouts which arose from those cuts. Then we had the May Report. My right hon. Friend the Lord President of the Council referred to the effect of those cuts, but he did not add that as a result of the means test which the Tories operated we had to advise young men and women to leave home, so that their parents could get unemployment benefit. It is these lessons which make working people say, "It is a good job we have a Labour Government in power today to deal with this situation, or we would have the same medicine this time as we had in the past."

We have heard a lot about incentives. I will give way to any Conservative Member if he can tell me of any incentive which his party gave to working people from 1919 until the last war broke out.

Several Hon. Members

rose—

Mr. Blyton

I will tell the House some of the incentives we got in the early 20s. We got a minimum wage, but there were rules whereby a man over 55 years of age was not entitled to that wage. In fact, if a man produced more coal he got less wages by joint committee procedure. He got the sack if he looked the wrong way at the manager, and if he was militant and sought better wages he had to travel the countryside looking for a better job. If he was injured he was paid 21s. per week compensation. This was the rate paid until 1939 to a man totally incapacitated. Many such men had families and had to seek public assistance in order to live. The Tories brought wages down to 7s. a day, they gave us chronic unemployment and the "Not genuinely seeking work" regulation, as a result of which a man had to be untruthful to get unemployment benefit. These are the kind of incentives that the Conservative Party gave to working men in industry during the inter-war years.

Today, the incentive is full employment. We are not going back to the days of Lord Balfour and 4 per cent. unemployment, to the days when there were always men at factory gates seeking the jobs of the men inside. Today, we have a social security scheme by which a man who is injured is given a higher standard of subsistence during his incapacity than has been known before. The regulations governing compensation are more humane than they were in the 1924 Act, passed by the Tories; there is higher sickness benefit; there is no more seeking public assistance or spending savings during sickness; there are no more doctor's bills and there is no means test. There is a better chance than ever before of people staying in their own homes, instead of having to tread their way to the workhouse. These are the incentives which the Government are offering to the people to maintain full employment. It does not lie in the mouths of the Opposition to talk to us about incentives in industry, in face of their terrible history.

I should like to say a word or two about the mining industry in relation to the present situation. Even at this time I ask the Government to reconsider some of their capital expenditure cuts. There ought to be rapid development in the mining industry on a short-term basis, but our long-term policy should come more quickly into operation than is intended. A general statement of policy was submitted to O.E.E.C. by the Government. We stress in that report that the export of coal from this country is estimated to be 40 million tons in the year 1952–3, and that we anticipate that output will be somewhere in the region of 250 million tons to 260 million tons. At the present time there are being imported from the United States into Europe 25 million tons at a dollar cost of 275 million dollars. The substitution of British exports to these markets would most certainly save these dollars and help Europe's balance of payments. We also know that if we could supply further coal shipments to the hard currency areas of Canada and the Argentine, they would help as dollar earners. We on this side will most certainly do our best to bring that about, but there must be a recognition of the difficulties.

In a constructive way I put some suggestions to the Government in the hope that they will analyse and examine them. The target for this year is 215 million tons to 220 million tons. That means that if we continue at the rate of increase per man-year, we will reach the target of 250 million tons to 260 million tons by 1952–53. To do that there has got to be an increase of output of 5 per cent. each man-year. That is a colossal task in the present situation.

While I am not despondent and while we shall try to reach that target, the economic facts of this matter ought to be looked at. The miners have responded magnificently in this financial crisis, and up and down the country the men, by resolution in their lodges, are declaring their intention to start working on two or three Saturdays per month in order to attain this year's target. It will still be difficult, but ultimately we hope we will get there.

If these targets are to be reached in the next three years, three things must be tackled quickly. We must keep on mechanising the pits on short-term and quick development. Secondly, we should instruct every manager in the country to get on quickly with the long-term policy of new sinkings and developments to meet the loss of receding coalfields and the closing of uneconomic pits. If new sinkings are developed there will be an output of new coal when our present uneconomic pits have to be closed, so that output will be maintained in the years that lie ahead. Thirdly, there must be an increase in manpower in the next three years if we are to achieve the targets that we have promised in our report to O.E.E.C. It would be a shortsighted policy if we did not recognise that for what we spend on a long-term policy we shall be recouped in the future. If we refuse to embark on that long-term policy we shall meet the position of receding coalfields without new developments to provide the output that will be necessary.

I want to speak for a short time on this third problem of manpower. I am very much disturbed about this issue, which is why I raised the matter. It has become very serious. Only 28 per cent. of the annual intake into the industry are juveniles. The rest are made up of Poles and ex-miners, which is nonrecurring recruitment. Unless this industry gets more boys into the pits, then I feel that the average age of the miners with a 28 per cent. intake of recruitment is going to create a very serious position in the future because of the high average age.

This year it was estimated by the Government that there would be 736,000 men in the pits, and that there would be an average over the year of 303,000 face workers. In January of this year the face workers were 296,100 men and in March they had gone up to 298,700; but on 15th October, that figure had dropped down to 294,200 face workers, which is 4,000 fewer as from March, and at least 2,000 fewer than in January of this year. Then when we take the overall manpower position, the target was 736,000 men, but on 15th October there were only 710,600 men in the pits, which is 14,200 fewer than a year ago and 26,000 under the target. The simple point about these figures is that on 15th March this year there were 726,000 men in the pits and now there are only 710,000, which is a reduction since March of 16,000 men in the overall manpower in the mining industry. In spite of all this, up to 1st October the men produced four million tons more than they did in the previous year in the first 34 weeks.

On the question of recruitment, in the first 34 weeks of last year, from all sources 50,955 men and boys entered the pits, which was 7,300 over wastage. From all sources for the first 34 weeks of this year compared with a year ago there are only 36,769, which is 8,178 fewer than the wastage, but there are 8,178 fewer men because wastage now is exceeding intake. Since the middle of this year wastage has slowly overtaken intake. In face of these figures, of which I take a serious view, I ask the Government to consider this whole problem in the way I have tried to outline it. I should like to speak at great length on it, but there are others who want to address the House.

The Government should seriously consider this matter, because it is on the basis of the production of coal that we can maintain full production in this country as well as full employment. Unless we are going to get an inflow of young men to meet the wastage at the other end, and unless there is capital development on the long-term basis to meet the receding coalfields in the future, then I am not too optimistic that the target we have set will be reached by 1953.

In conclusion, I should like to say that the cuts which are now proposed by the Government can be defended in the country. We know from our own knowledge what happened to the people in other years, and from bitter experience we can tell them that had some other party been in power more tragedies would have been created, as was the case in the inter-war years.

6.30 p.m.

Sir Arthur Salter (Oxford University)

I will comment a little later on some of the things which the hon. Member for Houghton-le-Spring (Mr. Blyton) has just said. I want first, however, to refer to a contrast that the Lord President of the Council has just made, not I think quite fairly, between an alleged 8 per cent. of unemployment in the Coalition White Paper of May, 1944, and the less than 2 per cent. of recent experience. I could not remember, and on a hasty reference I have been unable to find, any such 8 per cent. in the White Paper. In the Appendix there is a purely hypothetical 8 per cent., used to illustrate a particular form of contribution, but there is nothing to suggest that the White Paper thought of any such percentage as being a successful application of the policy it was advocating.

Indeed, the meaning given in the White Paper to "a high and stable level of employment" is almost identical with the meaning given by the Chancellor of the Exchequer yesterday to the employment policy which he described. I entirely agree with the Chancellor, if I understood him to mean that the full employment policy which is a desirable and practicable goal of policy means as many jobs in the country as there are men, but does not mean as many jobs as there are men in every industry, in every occupation and every locality. I gravely doubt, however, whether there is in the present or the prospective policy of the Government anything which will effectively secure a redeployment of labour to the more essential industries on the scale required to give full effect to the Chancellor's conception of what the goal of policy should be.

Before discussing the adequacy of the present economy proposals, I must ask again why it is only now, five weeks after devaluation and with a special meeting of Parliament in between, that they are forthcoming. Time for preparation was necessary, but the preparation should have preceded devaluation and not followed it. As early as the late spring or the early summer it was already clear that there must be a crisis this year, and that the pound would be seriously threatened. During the intervening months no resolute action was taken to prepare for that position. It is obvious that devaluation, when it is inevitable, has at the best certain serious dangers. The way to avert or reduce them was, first of all to concert devaluation with our fellow members in the Monetary Fund and, secondly, to prepare for the consequences, so that when the act of devaluation came it could be accompanied at once with a comprehensive and drastic policy such as would give confidence to the world that at least the new and reduced rate would be successfully and safely maintained.

I do not criticise the act of devaluation itself. If we cannot give to a currency the value of its exchange rate then clearly, before our reserves are exhausted, we must let the exchange rate fall until it equals the value. It is clear, as indeed has been admitted, that devaluation in September was not an integral part of a carefully prepared policy; it was a surrender to necessity. It was a barometer of the inability of the Government and of the Government's policy, in the face of a very minor and short-lived American recession and of the onset, long inevitable and expected, of a buyers' market, to maintain either the value of the pound or confidence in the maintenance of the old rate.

When the weather is bad it is foolish to curse the barometer. I do not therefore criticise the act of devaluation. All that I criticise is the previous policy, the defects of which were reflected in the devaluation, the timing, the method, the amount, and in particular the absence of any accompanying policy and, now, the inadequacy of the subsequently announced policy.

As to the first of those points, it obviously covers the whole ground of the last four years. I do not propose to go over that ground now. As to the second point, it is clear that the timing of devaluation was extremely unfortunate. We waited until we were in full crisis and there was no more elbow room for choosing the method or choosing the amount. It was for that reason that, in full crisis in September, the devaluation was unilateral. It was not concerted with our fellow members. Hence the subsequent trouble with India and Pakistan and the justified complaints from France. Hence also the obvious embarrassment to the developing co-operation in Western Europe.

As to the necessity for so drastic a devaluation, month by month throughout the summer the expectation of future devaluation had mounted. As it did so, it depressed the value of the pound further and further below its purchasing parity. It was at this lower level that the rate in September then had to be fixed. That, as I shall show in a moment, has had very serious consequences.

As regards my last point, I shall have to discuss it later rather more fully. We are now discussing primarily economy proposals put forward for the purpose of disinflation. But the amount of disinflation required depends partly upon the extent of our new dollar export drive. It is well therefore to remember that what we and the sterling area have to do in that drive is measured first by the drain on our reserves during this current year, as reduced by Marshall Aid; but secondly, we have gradually to prepare for the tapering off of that Marshall Aid and finally its termination.

In this process, this very difficult task, devaluation will both help and hinder. It will first do the very considerable once-for-all damage of depriving us of 30.5 per cent. of the dollars we should have earned on goods already delivered or ordered and not paid for. That is sheer loss.

When we come to the new transactions, if, and so far as, dollar prices and sterling prices remain the same, we shall, in order to obtain not more dollars but the same amount of dollars as before, need to export in volume 43.9 per cent. more. Of course, some prices will change. That only means that the devaluation policy will not be, for good or for ill, fully effective. We shall sell some goods at a higher stering price. In other cases we shall not be able to offer—this is the obverse—such an attractive price reduction as the 30.5 per cent. which the devaluation apparently promised. So far as it is fully effective we have 43.9 per cent. more to export to get the same amount of dollars and to get back to scratch before we earn any more dollars at all. That is a very formidable thing to do.

What is likely to happen in these circumstances? I believe that we shall export a great deal more to Canada and to certain oil producing countries like Iran and Venezuela, and perhaps some other neutral hard currency markets; very probably so much more as to earn actually more dollars and hard currencies. We shall also have the further advantage that this devaluation will give a further impetus to the search for non-dollar imports from soft currency countries; it will supplement and reinforce the Governmental exclusion of imports by adding an economic motive for buying elsewhere or buying less in dollar countries.

However, when we come to the problem of increasing our dollar earnings in America, the situation is extremely difficult. We must remember that we have to export a great deal more even to get back to the amount of dollar earnings which we had before. We have to do that by competing in almost every case with things which are made, and made well, in America itself. From the point of view of the American manufacturer who is asking perhaps for the retention perhaps for the increase of tariff protection, we must remember that he can say, and say, truly, that he is being competed with in his own market with the double advantage to the foreigner of lower wages and what he would call exchange dumping.

I know perfectly well that even in those circumstances it is to the advantage of the American economy as a whole that extra imports from us should be received; I have no doubt that the American administration fully understands that. But I need not emphasise in the Parliament of a free country how extraordinarily difficult politically is the task of an administration in trying to secure the removal of tariffs in those circumstances, when the manufacturer desiring protection can claim that he is suffering from both low wage competition and exchange dumping.

Mr. Stokes (Ipswich)

Is the right hon. Gentleman trying to tell the House that really our great problem is exports to the United States of America and not exports to Canada?

Sir A. Salter

Certainly not. I started by saying that I believe we should have a definite and considerable advantage in regard to Canada. I said however that in estimating the total of what we should secure by devaluation we must be very careful before we overstate what we are likely to get into the American market direct. That was my point and only my point.

I will also say that we must remember that the American manufacturer who finds our competition inconvenient is also able to offer to the American retailer the very great advantage that he can supply in most cases within 24 hours on a telephone and truck transport basis. Therefore the retailer in America can afford to run on very low stocks indeed which he cannot do so far as he relies upon British goods. I do not say that these are insuperable difficulties but they are very considerable handicaps. We shall do something if we export enough to that area to earn as many dollars as before devaluation. I hope we shall do better. After all, a very small additional proportion of the American market would make all the difference in the world to us. But we must not under-estimate the difficulties or overestimate the probable results.

I have said that as a preface before trying to estimate what disinflation now has to cover and whether the amount proposed is sufficient for that purpose. It has, first of all, to cover existing inflation before devaluation. Secondly, it has to cover the loss of goods in the home market from the present import cuts. Thirdly, it has to cover the loss of goods in the home market through a switching of goods to the export drive, both of goods manufactured at home and those imported in return for exports to soft currency areas. It does not, however, have to offset what is obtained by a switch from the unrequited exports paid for by sterling balances, and for that reason I greatly welcome what the Chancellor said about the sterling balances yesterday.

I have always thought that the Government lost a very great opportunity at the time of the American Loan when the American Government was quite rightly pressing us hard to deal drastically with the sterling balance problem. I should have liked the British Government at that moment to invite the American Government to convene a conference of Allied debtors and creditors with a view to surveying the whole of the post-war debt position, a conference at which America would have been in the admirable position of having in Lend-lease done all that we hoped in part to secure in settlement of the sterling balances. It may perhaps be possible even now, perhaps in a rather different form, for America to help the British Government in the solution of this problem of the sterling balances. At any rate, I welcome the Government's intention to make another effort at it.

Lastly, in my view, as in that of the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson), any disinflationary measures we take should leave a margin to enable some incentive tax revision to be made. I shall not develop that further at the moment because it has already been argued.

If disinflation has to cover all this, are the present proposals adequate? The sum of £250 million is very substantial and I believe it would go a very long way to meet the situation on four conditions. The first is if it was real in the sense that it was a reduction on Government expenditure as we know it in the Budget of last April, supplemented only by the published Supplementary Estimates of June and not merely a reduction on expenditure now swollen by later increases which have not been reflected in any Supplementary Estimates yet in front of us. The second condition is if it had not to deal with any previous inflation, the third is if it was precise and certain, and the fourth, if it was as prompt in its operation as the inflation with which it has to deal.

Unfortunately, none of those four conditions is satisfied. As regards the first, I do not know what will be the Supplementary Estimates which will face us before the end of this fiscal year. Last February we had Supplementary Estimates of £221 million, and further Supplementary Estimates in June. I should be extremely happy to think that the economies now proposed would actually be operative in the remainder of this fiscal year to an extent equal to the new expenditure which will be reflected in future Supplementary Estimates, or even a half, a third or a quarter of this increase. I ask the Government whether they can assure us that it will.

Secondly, as the Chancellor has admitted, there was already a considerable recrudescence of inflation before devaluation. This means, in effect, that in view of the increasing Government expenditure this year, of the negative national savings and, in general, of the excess of expenditure on replacement, repair, maintenance and capital extension over savings of all kinds, governmental and private, there was already a considerable inflation which had to be dealt with. I much doubt whether the cuts now proposed, having regard to their character, amount and timing, will be equal even to the inflation that was developing, apart from the consequences of devaluation. I would like to know what the view of the Government is on that matter.

As to the want of precision and certainty my right hon. Friend the Member for North Leeds (Mr. Peake) dealt so fully with that point yesterday that I will not refer to it again. What is important is the slow operation of the cuts. My right hon Friend the Deputy Leader of the Opposition yesterday suggested that the cuts would not amount to more than £75 million before the end of this fiscal year. I believe he was too generous to the Government. I do not believe they will amount to three-quarters of that sum. I should like to know what the Government think. That would be all right if the inflation with which the economy had to deal was also operating at the same rate, but much inflation has already developed before devaluation and a great deal more will happen much more quickly as a result of devaluation in the next six months.

It is quite clear that there is no final or satisfactory solution of our problem merely by way of economies and reduction. It lies in the sphere of production. Over this part—the major and most important part of the Government's policy—the Prime Minister skated very lightly. I do not think the Chancellor would disagree with this formula as suggesting the gravity and the need of our present situation. I think that all the improvements in technique and mechanisation that we have achieved or shall achieve for a number of years to come will be fully required to offset the new adverse factors outside our control, such as the loss of dividends from our foreign investments, the loss of foreign trade, and so on.

If that is true, it means that we cannot hope to maintain an average standard of living as high as before the war, to say nothing of the improvement in our social services, unless, in addition to improved technique and organisation, the average standard of individual contribution in effort—in intensity and duration together—is equal to what it was before the war. Now it is not. I do not say it is not in some industries.

The Deputy Leader of the Opposition yesterday quoted a speech of the Minister of Transport. He perhaps rightly criticised that speech as being rather too general in its terms. There are industries to which the Minister's reference to "not playing the game" and "letting the Government down" could not fairly apply. But undoubtedly it had truth as regards large and important industries in our country. If I am challenged to say what, I say quite frankly the docks, the mines and, above all perhaps, the building industry.

Much reference has been made to the statistics of increased productivity. I do not challenge the accuracy of the statistics on that subject on the basis on which they are prepared. But I am quite sure that they have been used in such a way as grossly to mislead the public. I should be glad on an appropriate occasion to discuss the full significance of those statistics. They clearly reflect a larger population than before the war and the impact upon employment of the back-log of post-war demand. They also reflect improvements in mechanisation and in technique. They do not reflect a greater personal contribution, on the average throughout the country, of individual effort in intensity and duration. In particular they do not do so in some of our basic industries which I have mentioned. Personally, though I think perhaps the Deputy Leader of the Opposition was right in making some criticism, I welcome the candour and courage of the Minister of Transport.

Neither the speeches of the Prime Minister and of the Chancellor nor the policy of the Government encourage us to think that they will inspire the greater and more economical production that the situation of the country needs. Are we to go on for ever tail-spinning down into poverty and misery? Are we to go on for ever huddling more closely around the fire without replenishing the fuel? How are we to get the extra incentive required? Exhortation without inducement will certainly not supply it; nor can any penal compulsion that can be applied in a free society.

Reference has been made to some rather vague threats by the Home Secretary of further compulsion. Let us realise that nothing we can do in a free society can possibly have a force at all comparable with that of the pervasive, comprehensive, intimate, compulsive effect of conditional loss or profit, a conditional rise or fall in wages. Goering, indeed, when asked how he would get the money for his schemes said, "Discipline is my money." Yes, but he had concentration camps and machine guns at his disposal. We have not and, please God, we never shall. Without a discipline so harsh, we cannot dispense with a much greater use of the monetary and profit or loss motive, covering both enterprise and wages, than we have at this moment if we are to secure the results we want.

I do not know whether we shall get now the leadership we need. I am sure that with a stable policy and worthy leadership our task, difficult as it is, more difficult than it need have been, is not impossible. The gap between what we are consuming and what we are earning is wide but it is not too wide for a full effort of the country to bridge. The very measure of our failure to secure the fullest possible personal effort is now the measure of the opportunity there is now to expand that effort. In the not distant past we had a leadership which meant that the country increased its efforts to the measure of its needs. We could have it again but we need both the appropriate policy and worthy leaders.

Perhaps, Mr. Speaker, an expiring University Member may be allowed in his concluding remarks to make a Latin quotation, and in this respect to be bolder than was my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson). We can accomplish our task but— "Non tali auxilio nec defensoribus istis Tempus eget"— it is not those leaders or the support of that party that the country needs in its crucial hour of fate.

7.0 p.m.

Mr. Rhys Davies (Westhoughton)

I do not intend to detain the House for long; I want to make a few rather pointed observations. The right hon. Member for Oxford University (Sir A. Salter) will forgive me if I do not follow his very scholastic and academic address. All I know about trade in America—and I suppose I know America as well as most; I should like the Chancellor to listen to this—is that 18 months ago the £1 note was sold openly in New York for 2½ dollars. I guessed then that there was something wrong with the currency of my country.

There is something else I ought to say so far as I know America. Every country produces something better than any other. This country will always sell our highest quality goods in America. Our bicycles, china ware, suitings and, above all, our whisky will always sell there. It is tragic, but in spite of devaluation and currency problems, the Americans will buy Scotch whisky.

I have looked at the figures of the economies proposed by our government in this crisis; and I should imagine that if the Tory Party knew their literature as well as they know finance and economics, they would sum up the whole of their complaints against these proposals in the famous sentence: And the mountain was in labour and brought forth a mouse. That is the substance of their complaint about the cuts. As an old Member of this House I have seen similar cuts before. I sat on the benches opposite and on behalf of my party challenged the right hon. Gentleman who is now the Leader of the Opposition, and was then the Chancellor of the Exchequer, when he made a cut of £2¼ million per annum in the subsidy to the National Health Insurance Fund. The late Mr. Lloyd George sat next to me and summed up his action in this way: What is the right hon. Gentleman doing? He is plucking the feathers from the sick man's pillow. —and that is what the right hon. Gentleman by his policy has been doing ever since.

Let me say something which, so far as I know, has not been mentioned in the Debate. In explaining the present position to the audiences whom I address—I suppose I speak in public as often as anybody—I say that every Government in days of war, whatever its political colour, always promises a glorious time when the war is ended, knowing that it is deceiving its people when it says so. Then, every Government in every country postpones paying for wars as long as it can. In short, therefore, to meet the present crisis in this country, we must all realise that the accounts for the last war have now been rendered and must be met at long last. Nobody during the Debate has mentioned the colossal National Debt which stands against us of £25,000 million, or the equivalent of £500 for every man, woman and child in the country. That deadweight depresses the whole of our economy and defies all the exhortations of the Government Front Bench for greater production.

I am sorry that my right hon. Friend the Minister of Health is not present. He is the giant at our Labour Party conferences; the Chancellor of the Exchequer and his colleagues are as pygmies by comparison. Now, when the Chancellor brings forth his cuts, what does he do? Out of a total of £250 million, some £35 million is from the Ministry of Health. Bearing in mind the awful housing conditions in my constituency, I am not quite certain yet that I shall feel able to vote for the Government tonight. The Minister of Health, I suppose, has done his very best, but so far he has hardly touched the fringe of the housing problem. The thought that there are to be cuts in the housing programme in one year to the extent of £25 million is almost more than I can bear.

I should like the Chancellor or his deputy to answer a simple question which has been put to me. How can one penny addition on school meals help to close the dollar gap? That is a fair question. I do not know much about the dollar gap or about high finance, but I know that nobody on either side of the House has really tackled the major problem confronting us. There are to be cuts of only £30 million in Defence and £35 million from the Ministry of Health—that is, 11 per cent. on the Ministry of Health and 4 per cent. on Defence. If my party were on the opposite side of the House tonight and the Tory Party were over here, I am almost sure that our proposal would be to wipe out all these other cuts, take £250 million from Defence expenditure and leave the rest as they stand.

Some of my hon. Friends are a little annoyed with me, but I have been here longer than most and am not liable to be deceived by anybody. I repeat what I have said before. What was wrong in the past when we sat on the benches opposite cannot be right now merely because we are sitting on this side. I do not know whether I am rightly informed, but it is suggested in some of the speeches that the cut of £30 million on Defence may be nullified later on by bigger Supplementary Estimates for the Defence Forces. I should like the Prime Minister to answer that and to tell us whether, because of inflation, we are likely to be asked in due course to pass a Supplementary Estimate for Defence of anything up to £100 million.

I have made a little contribution in my time in helping to build the social services. One thing of which I am proud is that our Government are doing nothing to damage them. I see my hon. Friend the Member for Moseley (Sir P. Hannon) on the benches opposite; he may remember the time in 1922 when I moved a Motion in favour of widows' pensions. All the Tories voted against me, simply because, they said, we could not find the money. Lady Astor, however, did not oppose me, thinking, perhaps, that some day she might need to avail herself of one of these pensions.

During my lifetime in the House the Tories have fought strongly against two reforms; against the social services and against nationalisation and municipalisation. One thing, therefore, can be said in favour of nationalisation and municipalisation; that although the Tories have struggled against them on the Floor of the House, when their party has got into power they have never denationalised or de-municipalised anything. That alone is to the credit of our nationalisation and municipalisation plans.

Mr. Osbert Peake (Leeds, North)

The hon. Gentleman referred to having moved a Resolution in 1922 in favour of widows' pensions. Will he complete the story by telling the House who actually introduced widows' pensions on to the Statute Book in 1926?

Mr. Rhys Davies

The public is always educated by Labour Party advocates, the Tory Party then puts our ideas into legislation and endeavours to reap party benefit in the process. I am not taking part in this Debate, however, as a rehearsal for the General Election. All I say to hon. Members opposite is that people in my division will not forget what happened to them in the past. Everyone of the 29 coalmines was closed down for good between the two wars and for 15 long years the people were in abject poverty with 75 per cent. of them unemployed for very many years. I am not going to argue that Tory Governments are responsible for all that. I go nearer home than that and say that every one of the coalowners responsible for closing the pits was a member of the Tory Party. Consequently, the people I represent will vote Labour. They will not forget those years of degradation, of poverty and destitution; and in spite of what is happening here and all the talk about economic crises, so far as I can see the mass of the common folk of this country still have faith in the Labour Government.

7.11 p.m.

Mr. Mott-Radclyffe (Windsor)

By a curious coincidence, three times during the last two years I have had to follow the hon. Member for Westhoughton (Mr. Rhys Davies) in Debates in this House. It was not surprising, therefore, at least not to me, when I heard him advocate as a solution of our economic problems practically the complete abolition of the Defence Forces.

Mr. Rhys Davies

While I would like to see the total abolition of all the Fighting Services, what I said was that I would take the £250 million off the Defence Services.

Mr. Mott-Radclyffe

Having taken £250 million, the hon. Member would press for a further £250 million to be taken off until the figure was reduced to nil. I wish to ask the Prime Minister a rather different question about Defence. Statements made hitherto by the Front Bench have been alarmingly vague. It appears to me, and I think to many hon. Members, that a certain proportion of Defence expenditure is obviously vital and cannot be cut because there are certain overseas commitments which we must discharge if we are to continue to function as a world Power. There is another portion which is not vital and which could be looked into more closely. I hope that when the Prime Minister replies tonight he will tell us how soon he thinks he will be able to give us any information as to the cutting down of the unnecessary portion of expenditure on the three Defence Forces.

I listened to every sentence of the speech of the Lord President of the Council this afternoon and began to wonder as I listened whether really there was any crisis at all. There were to be a few cuts now and a few cuts later on, but the actual nature of those cuts had not yet been decided upon. They had to be worked out, and so on—the phrases we all know so well, putting off a decision until tomorrow which ought to have been taken yesterday. I thought it unfortunate that the Lord President himself should have tried to make the well-worn, hackneyed, party point about full employment, because he knows perfectly well, as does every right hon. Gentleman on the Front Bench, that there is not in fact any party point to be made about full employment since 1945.

Mr. S. O. Davies (Merthyr)

Why?

Mr. Mott-Radclyffe

I will tell the hon. Member. Since 1945 two factors have operated, one, Marshall Aid, and the other the sellers' market which is now drying up. Hon. Members who consistently claim that world events outside their control are responsible for all our economic difficulties cannot claim for themselves the credit for the sellers' market, which was inevitably caused by world events outside their control.

Mr. Jenkins (Southwark, Central)

If the hon. Member attributes full employment solely to world events, will he explain why so many other countries in the world, presumably affected by the same events, such as Italy, Belgium, Western Germany and, to some extent, the United States, have not succeeded in maintaining the same degree of employment as we have?

Mr. Mott-Radclyffe

We are a great manufacturing country and during the first three or four years after the war we could sell almost everything at almost any price but, unfortunately, that state of affairs does not now exist. There was one sentence in the Chancellor's speech yesterday which I hope all hon. Members will repeat ad nauseam to their constituents at every meeting they hold from now on. The sentence was this: Unless we can all quickly produce more and get our costs down, we shall suffer a tragic fall in our standard of living accompanied by all the demoralising insecurity of widespread unemployment."—[OFFICIAL REPORT, 26th October, 1949; Vol. 468, c. 1354–5.] We have been saying that in our constituencies for two or three years, but we were merely told that that was Tory economics, and pessimistic economics at that.

I do not know what is the definition of a "damp squib" in the Oxford Dictionary, because I have not looked it up, but if in any future editions reference should be made to the Prime Minister's statement on Monday as a definition of a damp squib, I should not quarrel with it. The nation was keyed up to expect some pretty drastic cuts. Ministers were rushing all over the place. The Lord President of the Council, when called away from some public function to attend a Cabinet meeting, said that quick thinking and quick action were required. But the cuts were totally ineffective and many of them will not come into force until well into 1950.

I believe that hon. Members in all quarters of the House will have failed in their duty if they do not convince the country how grave is the situation now and not merely how grave it may become in 1950. So long as the country believes that the cuts will not hurt very much, that all our economic difficulties are the fault of someone else rather than our own; that these economic problems are the intellectual playground of the experts to be discussed in a language the people do not understand, and so long as the Government take a negative and not a positive action, for so long I believe the response will be half-hearted. We are all well aware that we are not the only country suffering from dollar difficulties; of course we are not. That is not the point. If I am going bankrupt, it is comparatively small comfort to me to know that my neighbour is going bankrupt also, and it does not relieve me of responsibility for adjusting my own expenditure to my earnings.

Hon. Gentlemen opposite have been singing a rather different tune in the last 10 days from the tune they first sang about devaluation. They realise now that it was not some brilliant brainwave of the Chancellor to give exports a terrific boost and to close the gap. Devaluation was forced on him for the simple reason that the economic crisis is fundamentally a crisis of confidence, and unless devaluation is accompanied by greatly increased production and greatly reduced expenditure it is a completely empty gesture. It is just tinkering with the problem. One can tinker with the carburettor of a car so that in theory the performance of the car is improved, but if the driver, in this case the Government, proceeds to drive the vehicle in second gear with the hand brake on, the performance of the car after the adjustment of the carburettor is no better than before. That is what we are in danger of experiencing in regard to devaluation.

We have continual exhortations and advice from the Prime Minister, the Chancellor of the Exchequer and others about reducing costs. We have had lectures on management, leadership, salesmanship, etc. I wonder how they justify all that? I believe that one of the principal duties of the Government is to practise itself what it preaches to others, and in that respect I wish to put the Government to the test. In the handling of the dock strike, was the management and leadership completely above reproach? Has the price of coal, gas, electricity or transport been reduced since nationalisation? When we are told to reduce costs, I ask how it is expected that production costs are to be reduced when the Ministry of Supply have put up the price of copper by 30 per cent., the price of zinc by 38 per cent. and that of lead by 40 per cent.?

Does the right hon. and learned Gentleman really think that if the objective is to earn dollars the best way of doing so is to nationalise insurance? He knows the answer to that. Equally, does he think that the right way to encourage the American investor to invest his money over here is to clap on an additional Profits Tax and suspend bonus issues? He may not like bonus issues, he may not like profits being made, but if we wish to encourage individual Americans to invest money over here, as my hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) said yesterday, the action which he has hitherto taken and which he now proposes to take is calculated to achieve a result directly contrary to the one desired.

In his broadcast last week the Prime Minister said the national effort was unequal. I think we all agree that it is. Two obvious examples are the coal industry and the steel industry. Is the right hon. and learned Gentleman under the illusion that the proposals to nationalise the steel industry will restore confidence in the pound sterling? I ask why on earth these cuts were not made two years ago? These are not merely idle questions. They are questions to which the country has required an answer for a long time.

I wish to say a word about incentives. That blessed phrase "increased produc- tivity," stripped of all its technical trappings, means persuading large numbers of men and women in any capacity in any industry to work a good deal harder than they wish to do either for existing working hours or for longer hours, I do not know which. But will these men and women, in whatever capacity they are engaged, respond with the knowledge that the more they earn, whether in wages, salaries and profits, the less they will keep? So long as Government expenditure is on a scale which necessitates a burden of tax which removes all incentive neither devaluation nor exhortations nor anything else will achieve the objective. The Chancellor of the Exchequer makes appeals about saving, but how on earth can the individual respond with taxation at its present rate; and if in successive Budgets the Chancellor discourages savings how can the nation collectively accumulate enough reserves upon which to draw on a rainy day or in times of crisis?

The mathematical formula austerity minus incentive equals nought, and the prospect of being invited to go on sharing a progressively smaller portion of a progressively smaller cake may be good Socialism but it is very bad psychology. Unless there is a real incentive to earn and a real encouragement to save, two things will follow as night follows day. The first is that the welfare State, which all parties have combined to build up, will topple over. I say that because if one insures one's house against fire one has to earn the money to pay the premium. If the nation collectively wishes to insure itself against the various vicissitudes of life—unemployment, sickness, old-age, accident, etc., and to maintain proper health and education services, the nation must first collectively earn the wealth with which to meet the financial cost of those social services. As the Chancellor reminded us in his Budget speech, the existing wealth is not enough. We must earn fresh wealth to carry the strain, and fresh wealth can only come out of profits, not out of losses. Does the right hon. Gentleman and any hon. Member opposite think that if all the United States industries had been nationalised and were all running at a loss, any Marshall aid, by which alone we breathe, would be available today?

The second result of failure to earn and save enough is that we shall be unable to fulfil our obligations as a world Power. If we fail in that because we are not financially or economically strong enough, I believe that the chances of avoiding a third world war are remote. The question which the country has shortly to ask itself is whether we can remain a world Power for any length of time so long as we are governed by men with small minds.

7.28 p.m.

Mr. Cove (Aberavon)

I do not intend to enter the main stream of this Debate. I shall confine myself to one topic; I shall be very brief. I wish to congratulate the Government on the policy which they have adopted towards the service of education. I am sure that what has been proposed will be received in the ranks of educationists, teachers and administrators, with great relief. The structure of education remains intact, there is no doubt about that. One regrets that there has to be an added charge for school meals, but it is quite true to say that progress will continue in the field of education.

I also wished to ask briefly and pertinently what is the attitude of the Conservative Party towards the service of education at this moment. I hear the plea all the time for cuts. I hear the criticism that the cuts proposed will not become effective immediately. I should like to ask the Opposition what immediate cuts—and apparently they want immediate cuts in order to make a contribution towards a solution of the crisis—other than what has been suggested by the Government would they inflict on the service of education? Would they, for example, lower the school-leaving age or would they raise the age of entry into the schools? Even if they agreed to that it would not be an immediate contribution such as is demanded to what the Opposition call "a solution of the crisis."

I desire an answer because if the Opposition look at the Education Estimates they will see that what my hon. Friend the Member for the Combined English Universities (Mr. K. Lindsay) said last night was perfectly true, namely, that to effect immediate substantial savings in the educational service there is only one way to do it—by cutting teachers' salaries, because those salaries form 75 to 80 per cent. of the cost of education. I want to ask a simple question which I think it is fair to ask, since there is pressure for immediate cuts. Are they prepared to effect an immediate cut on the services of education through reduction in teachers' salaries? I have heard Debates on the Education Estimates. What we heard then was that the Government must select priorities for savings. But when they were questioned as to the order of priorities there was no answer; and no answer has yet been given, after repeated requests, as to what particular items the Opposition would cut. I invite them tonight to give an answer to that question.

I can remember very vividly in 1931 the "Geddes axe" and then—

Mr. Peake

It was not Geddes; it was May.

Mr. Cove

I remember the first suggestion was a 20 per cent. cut. Then there was pressure behind the scenes, and eventually it became a 10 per cent. cut. Is the Opposition in favour of a 10 per cent. cut? I doubt if they would say that openly at this moment. I can also remember a phrase in this House used by the right hon. Member for Woodford (Mr. Churchill) about the 1931 crisis. He said it was greatly exaggerated and largely manipulated. I do not know whether the present crisis is largely manipulated; apparently not. But I am quite sure that it is greatly exaggerated by the Opposition. The cold propaganda policy of the Opposition is to cause unrest, dismay, doubt and anxiety. I submit that is very bad, not only for the productive energies of this nation but for the schools and for the children in the schools.

The whole educational atmosphere, as it were, is being charged with anxiety and uncertainty by the acts and speeches of Members of the Opposition. It is utterly wrong to look upon the social services as a charge upon industry. It is certainly wrong to look upon the educational services as a burden and a charge upon industry. I wish to read an extract from the minority section of the May Report: The growth of the social services"— and I think this is profoundly true— is a natural corollory to the development of industry and commerce, and it cannot be denied that these have profited materially from services often narrowly regarded as mere amenities; and it is not an overstatement of the case to say that improved health and sanitation, better education, wider and cleaner roads, quicker communications and even open spaces and playing fields are essential to modern large scale industry. There is no relevance in the assertion that the cost of education and even other social services causes the unbalancing of our trade and the unbalancing of our payments. What will make it more difficult and cause the maintenance of equilibrium in the future to be more difficult and uncertain is the cutting down of the social services; in particular the service of education. I am glad that the Government have given a message of certainty and confidence to the teachers and administrators in education throughout the country by the proposals they have made so far as this crisis is concerned.

7.35 p.m.

Mr. A. R. W. Low (Blackpool, North)

The hon. Member for Aberavon (Mr. Cove) has been speaking mostly about education. So far as I am concerned, I am the last person who desires to see a cut in the salaries of teachers. Indeed, some of the things which the hon. Gentleman said indicated to me that he thought that I and indeed all of my hon. Friends wanted cuts of any kind. Of course we do not want cuts. There is no hon. Member of this House who desires to see cuts imposed. But today we have a situation brought about, the Government say by things beyond their control—or the Government supporters have been saying that but we say it has been brought about largely by their mismanagement of the affairs of the nation—in which cuts have become a necessity.

As regards the salaries of teachers, the hon. Member is probably aware that the value of those salaries has dropped compared with what they would have been at the same level in 1945. He knows it is wrong, in talking about cuts in the social services to ignore the fact that the drop in the value of money—about which I propose to speak in a moment—is an automatic cut in the value of the social services. The hon. Member also made one other point which has been made frequently by his hon. Friends and that is that we on this side of the House, and the people outside this House who think like us, have been trying to create an atmosphere by so-palled propaganda and threatening the people with disaster. Let me read some words spoken by the Leader of the House on 16th October, I think it was, at Doncaster. He said: The critics have been right many times in pointing out how closely disaster was threatening us, and I have even done it myself. There does not seem to me to be much difference between the attitude we have taken and the attitude of the Leader of the House. I would say to the hon. Member and friends of his that if they have been trying to persuade people that disaster was not threatening in any way, then they have been doing a grave disservice both to themselves and to the country. One lesson which we all of us have learned, whether we are in this House or not, is that the English people, the people of Great Britain as a whole, can be trusted if they are told the truth.

In this Debate we are concerned with a fight to avoid inflation, to increase production and thereby re-establish our place in world trade and enable this country to pay its way. We should judge all measures proposed from any quarter of the House by the one simple test of whether they can reduce inflation and increase production. I was rather astonished when the Chancellor of the Exchequer reminded us that an inflationary tendency, as he calls it, had developed even before devaluation, and that devaluation added to that inflationary tendency. Yet he has never been able to give to us any indication of the exact effect which the measures now proposed to the House will have in restoring the budgetary position to that proposed in April this year, or indeed to a better position than that. Neither has any right hon. or hon. Gentleman opposite been able to do that.

In answer to a question—I think it was almost as an aside earlier this afternoon—the Chancellor said that there would be no deficit on this year's national account. I imagine that he meant that there would be no deficit on revenue. Indeed, there ought not to be because the Budget surplus was in the region of £470 million. Perhaps the Prime Minister would assure us that there will be a real surplus—not only a surplus on revenue but what is known in Government jargon these days as an overall surplus. It is most important that we should be told. It is inconceivable that the Government should have worked out these proposals without having in their minds the exact effect on the nation's budgetary position so clearly that they could tell the House the position without notice.

It has been said by Government supporters that it is the duty of the Opposition to make proposals, to propose in detail extra cuts which they think are necessary. The right hon. Gentleman the Deputy-Leader of the Opposition yesterday made certain proposals which were clear and easy to understand, but we had no comment upon them from the Leader of the House this afternoon and we have had no reasonable comment from anybody opposite. Indeed, it would appear from observations made last night that some hon. Members opposite did not understand what he said: for example, they did not understand in any way my right hon. Friend's reference to the food subsidy problem. It would appear from the "Daily Herald" this morning that that paper meant the people who read it not to understand what my right hon. Friend said about food subsidies. They meant to persuade the people that he had said quite simply, "Slash food subsidies" just as many hon. Members opposite have accused us of saying that in the past few years. What my right hon. Friend said was quite clear. The proposal was set out in such a way that people in the lowest income classes and those who suffer most would be given compensating allowances.

Mr. Palmer (Wimbledon)

rose—

Mr. Low

I will not give way because I promised that I would not take up a lot of time.

I should like to refer to the charge that we are in favour of cutting the social services. Of course, we are not in favour of that. I would remind hon. Members that earlier I said that the fall in the value of money has already, to a certain extent, caused a cut in the value of the social services. Do hon. Members realise that an allowance that was worth 26s. in 1946 is now worth only slightly over 22s., and that that is a cut of nearly 4s. already? If the cost of living goes up following devaluation, and therefore the purchasing power of the pound goes down, there will have been a cut of nearly 20 per cent. That is an automatic cut which we all regret—at least, I hope we all do—but we must recognise it. It is an automatic cut which we should try to avoid repeating.

It is for that reason that I attach great importance to any effort to try to restore the value of the pound. It is for that reason that I pay so much attention to the anti-inflationary effect of the policy of the Government. That is why I ask the Prime Minister to give more details so that we can understand clearly the degree of the anti-inflationary effect which the Government think that these small cuts will have. It is during the next six months, when we shall begin to feel the rise in the cost of living which will take place in any case because of devaluation, that we want these cuts and the Government proposals to have their anti-inflationary effect. It is during the next six months, and not during the 12 months thereafter, that these matters are so important.

The second part of the test is whether these measures help production. My right hon. Friend pointed, as so many others have pointed, to the importance of encouraging extra work so that there should be extra production—in other words, the importance of incentives which so many hon. Members opposite say are of no importance. There has been no comment from the Government Front Bench on the proposal that there should be an alteration in allowances to enable reasonable overtime to be worked with less Income Tax deducted.

I am interested in people in my constituency who, by reason of their occupation, are not able to cause a direct result in the drive for extra production which they would like to see. I hope that from time to time Government spokesmen will address their remarks to these people as well as to those others who are, by their calling, playing a more direct part in productivity. I believe that office workers, workers in Government and private services can play a large part in our effort to increase production at a lower cost. They can play their part by working that little bit harder so that the cost of their services can go down and so that fewer people may be required to perform the same services.

I should like the Prime Minister to pay close attention—I expect that he has done—to the hours of work in Government Departments. I believe that only by giving a lead to the country in hours of work and in the hardness of work done in Government offices can he really effect the hard work we all want to see in administrative offices and in the services of the country as a whole. I express that view knowing that probably I have as many Civil Service constituents as any hon. Member in this House, and I am certain that I shall lose nothing by recommending to them and the Government that this is a time when longer hours of work might well be introduced for the benefit of the country.

I pass from production to a matter of enormous importance to industry and to our whole future. I refer to savings. We hear a lot about the National Savings campaign for individual savings. I have supported that campaign throughout the life of this Parliament and I support it today. However, it is a vital prerequisite to the encouragement of small savings to be sure that the Government really intend, as they say they intend, to maintain and to increase the value of the pound. All that they say to small savers applies, or should apply, to larger private savers and to industrial savers. These savings are required not for current expenditure but to enable industry and the nation to replace and improve capital equipment.

It was therefore somewhat surprising to find that the Economic Secretary to the Treasury, speaking about ten days ago, said that the Government have not the slightest intention of abandoning the policy of financing the social services out of the taxation of industrial profits; that is, using the savings of industry directly for current expenditure. If the hon. Gentleman meant the ordinary Income Tax position, that is another matter, but in the course of his speech he seemed to be referring to the Profits Tax on industry, which is adding an increased burden on the profits of industry. If that tax had any justification at all, its justification must be that it is, so to speak, a forced saving with a disinflationary effect in order to build up the capital investments of the country. It was rather an extraordinary remark, anyway, because it seems to accept the doctrine that individual taxes and revenue were parcelled as a matter of Government policy in favour of one particular type of expenditure.

Reference has been made to the problem of the sterling balances. Perhaps I should declare that I happen to have a slight interest in this matter, because I am a director of a bank which is interested in India, but that is the sole amount of my interest. These sterling balances amount to £3,230 million, which is an enormous sum and a liability at the back of our national financial position. In 1948, they were drawn down at a rate of over £200 million, and that meant that exports workers were working one day in seven for nothing as far as this country is concerned. That is a position which cannot go on. The whole sterling balances position affects other countries in the sterling area and in the Commonwealth with which we are in close relation and with which we wish to continue in close relation, and whose economic future is a matter of importance for the people of this country. We sometimes forget, and we are justified in doing so, that it is not a matter of so much importance as is our own position.

It is now clear that to go on drawing down the sterling balances at the rate at which we have been doing will bankrupt Britain, the banker of the sterling area, and therefore bankrupt the sterling area itself. I am sure that that is a thing which members of the sterling area cannot stand; but that is not the whole problem. This tremendous liability does no good to the strength of sterling, and it has been pointed out in agreements made in Washington that something must be done about these sterling debts.

I should like to hear from the Prime Minister what proposals he has. If he has no proposals on which he has yet decided, has he any proposals for calling our creditors together and discussing with them the future of this position? Of course, it is much more difficult now than in 1945, when these matters ought to have been discussed. I cannot understand the Prime Minister nodding his head; it must be more difficult for this reason. Since this Government and the Governments of other countries did not let their people know what was the real cause of these balances and what their effect is and will be upon the economic life of the sterling area and the world, their existence has been used by politicians in all countries with nationalist inclinations in favour of particular policies. For example, it is going to be very difficult in India for any Indian politician to agree to the scaling down of any of these sterling balances. I recommend to the Prime Minister the idea that, late though it is, now is the time to let the world, and particularly hon. Members of this House, have some understanding of the cause of these sterling balances and of their amount, and I would ask the right hon. Gentleman to consider very closely whether he will not issue a White Paper showing how the balances were brought into existence and setting out the different causes—war expenditure, loans and so on.

In a rather sketchy speech, I have tried to build up one or two points of importance. I am convinced, partly by the ineffectual speech and exhortations which the Prime Minister made the other day, and partly by what little knowledge I have of the financial situation of the country, that these proposals are totally inadequate, I say that these inadequate proposals can only have disastrous results. It is for that reason that I oppose the Government today.

7.57 p.m.

Miss Jennie Lee (Cannock)

The hon. Member for North Blackpool (Mr. Low) used the word "politician." I hope that we shall not become too mealy-mouthed about this business. Earlier this evening, the hon. Member for Bury (Mr. W. Fletcher) was apparently levelling a term of abuse at me when he called me a politician. To be strictly fair, the same statement came from this side of the House as well. I would appeal to all hon. Members to remember that one of our great exports is the knowledge in the rest of the world that Great Britain has always given of her best blood to the House of Commons from all sides. Really, this is not the moment for hon. Members of this House to denigrate their own status. If they do not think that it is the highest status in this country, then they ought not to stand for election. If they do come to this House, they should come in the knowledge and belief that they are here to give of their very best, and, very often, to lose fortunes instead of making them. That goes for all parts of the House, so please let us leave it to the hon. Member for Orpington (Sir W. Smithers) to use that kind of silly language.

I am glad that the hon. Member for North Blackpool talked about unrequited exports, and particularly in relation to India. If one thing has made me sick during this Debate, and I think I have heard almost every speech, it is that we have been strangling ourselves with generalisations. We have talked about unrequited exports and about Defence policies and about some employees behaving better than others. I hope that, when my right hon. Friend the Prime Minister replies tonight, he will explain how India was brought into the war, will explain the circumstances of India today and will point out that, if we have to cut down on unrequited exports, there is a difference between India and countries like Egypt, both in their circumstances and in our responsibilities to them.

We ought to be very proud of the fact that our relations with India at this time are as fine as they are. They are a people embittered by many past memories who now look to us for help. Let us always remember in our relationship with India that we are the creditor, that we are the richer of the two countries and that India is the poorer; that Prime Minister Nehru is fighting against difficulties in India, fighting the battles of civilisation, and fighting to maintain standards that will prevent India in despair from becoming Communist or Fascist, or what you will. Therefore, I ask the Prime Minister, when replying, to be more specific about what particular cuts are going to be made in unrequited exports.

The next point which I hope will be stressed by our representatives is something which we all know is not in their power alone. We in this country realise that it is impossible for us to continue maintaining Defence expenditure at its present level. I have a great respect and a great liking for the American people, and I do not think we have sometimes quite played the game with them in the rather furtive way in which we have presented our case. I think that any American could understand the simple proposition that if we paid the same proportion of our national income for Defence as America pays, we would be relieved of more than the total of £250 million which is the sum of our economy cuts. I think that a proposition should be put to America that there ought to be common budgeting in matters of defence. Let us try to see that on the other side of the Atlantic they understand that although our national wealth per head of population is only about half of theirs, we are spending about twice as high a percentage of our national income on Defence as they are. That is just an impossible position, and it cannot go on. If we pretend that it can, we are just trifling with the position today.

I am not going to talk about the economy cuts; I accept them. It would be the easiest thing in the world to quibble and to say, "I do not want this cut and I do not want that cut." But let us pass on to what is the real problem which this House and the country have to consider. Roughly, £250 million of economy cuts are being imposed. They are not pleasant; we do not like them. We should like to see a very close survey of all our Defence Services. We believe that other cuts could be made there apart altogether from a new arrangement with America. I think that the row that is going on in America at the present moment between the generals and the admirals is a very healthy one. All services, particularly military services, need to be stirred up in order to find out whether they are doing a modern job in the way it should be done.

But what has troubled me most throughout this Debate is that I have felt, if I may say so with all respect, that practically every speech from both sides of the House has finished where the problem really begins. We accept the cuts and we accept that devaluation was inevitable. We know there will have to be a curtailing of unrequited exports, but what is the gist of the whole thing? Surely, it is that British industry is so unequal when one compares the best units with the worst, that we cannot possibly get through unless we tackle the problem with something more than general exhortations; because the dreadful thing is that it is the good people who turn up in the body of the kirk who are lectured about the sinners who have not bothered to come.

I believe we have got all that we are going to get both from the trade unions, from industry and everywhere else by general exhortations. We are getting heartily sick of repeatedly being told to do this and that. What I am asking the Government to do, and what I would ask responsible Members of the Opposition to co-operate in doing, is to stop generalities and to begin doing a precision job. I hope that hon. Members read the most excellent letter in "The Times" last Saturday by Sir George Schuster. There have been very many letters of a similar kind. It was an excellent letter, and I think it ought to have been the beginning of the discussions on this matter in this House, because in it he dealt with the basic problem of unequal efficiency. He dealt particularly with Lancashire, and I hope that hon. Members will look up this letter and read it for themselves. I will paraphrase it.

He said that it is truly alarming, even when a working party has gone in representative of employers and of trade unions—and we have also had our Anglo-American Production Committee—that only a fraction of the industry has adopted the new system. If they have taken the trouble to go into specific factories, and if they can go into specific mills, factories, workshops, and the rest of it, we can surely follow up their work. What alarms me more than anything is that this is only one tiny fragment of the evidence put at our disposal. Here we have—I take Lancashire simply as an illustration—in this great industry so important for our exports, a situation where the great majority of the employers, I am informed, are not prepared to carry through innovations which would not cut wages, but which would actually increase them, and which have the backing of the trade unions. I do not know why the employers are not doing this.

Mr. Peter Thorneycroft (Monmouth)

To what industry is the hon. Lady referring?

Miss Lee

I am referring to the cotton industry, and particularly to the investigation made under the chairmanship of Mr. Moelwyn Hughes. Many serious investigations have been made, and I do not think that anybody is going to challenge the fact that they were serious, disinterested investigations. We are told that the majority of employers are just not willing to bring their part up to the level of general standards of efficiency. One can leave Lancashire and go to the potteries; if one likes, one can leave the private sectors of industry and go to some part of our nationalised industries. What we need to do is to be specific. We cannot expect great masses of working men and women to do their best in any place of employment if they either know or have reason to suspect that less than an efficient job is being done by the employers.

Mr. Molson (The High Peak)

The hon. Lady will not deny that exactly the same thing applies in the case of the trade unions. There is a cotton mill in my own constituency where redeployment rather on the lines suggested by the Moelwyn Hughes Committee has been accepted, but it is still opposed by the work people. It must apply the whole way through.

Miss Lee

If there is something wrong on board ship, one begins with the captain. One makes quite sure that the captain is fit for his job.

Mr. P. Thorneycroft

Where is the captain?

Miss Lee

The hon. Member for Monmouth (Mr. P. Thorneycroft) is a good old fashioned class warrior, but I would be terrified if I thought that either he or his friends were to handle these problems. The only criticism that I am making of our Government is that I think they have been a bit too gentle in going after some of the friends of the hon. Member for Monmouth.

Yesterday the Chancellor of the Exchequer said that he hoped that the bankers would not encourage industries with an inflationary tendency. He also said that he hoped that manufacturers would reduce their prices rather than increase their profits. On the basis of information in our possession, has not the time passed for merely asking people who are misbehaving industrially not to do so, and should we not work out sanctions? Reference has been made to the trade unions. I think we are the luckiest nation on earth to have the type of trade union movement we have. One reason why our trade union movement has been so tolerant is because it has confidence that it is in the hands of a Labour Government and not a Tory Government—[Interruption.] I am only saying that the record of hon. Members opposite in the past was so bad, that even if they had in fact reformed they would still not be trusted.

What are we to do when we find Member after Member on the other side of the House talking about incentives and psychology? There is psychology in the pits, factories and fields as well as in Wall Street and on the Stock Exchange. There was a classic City editorial in the "News Chronicle" yesterday—I think the "News Chronicle" was once a Liberal paper—which began by saying that the Prime Minister's statement made a very bad impression in the City. It went on to say that they were all keyed up for great sacrifices, and it finished by asking why he was interfering with people getting away with bonus shares. I agree that psychology is extremely important, but one of the problems is: can we have a policy which will satisfy the psychology of the Stock Exchange and Throgmorton Street and at the same time satisfy the psychology of men and women in the fields, factories and pits? Have hon. Members opposite tried to work out the answer to that?

There is so much that I should like to say, but it is getting late and I really cannot do more than begin what I want to say. I beg hon. Members to realise that our trade unions have done a great deal already. They will do even more. We shall have leaders of this great movement who are prepared seriously to consider longer hours and all the things which are anathema to them, but they must do it in an atmosphere in which they feel there is real fair play. I saw quite a lot of factories during the war. For a time I was working under Lord Beaverbrook who was Minister of Aircraft Production. I have never agreed with anything he has done before or since the war, and I did not agree then with everything he did, but at least he was unorthodox. At least he knew that if he wanted the job done well he could not expect, even in wartime, that workers in the factories would play a game of blind man's buff. They had to know what was happening and what they were doing.

What people were hungry for was the knowledge of what they were doing. Even during the war there were factories which were riddled with rumours which had no foundation. I can remember going into one factory where the people were in a state of complete demoralisation; the rumour was that they had got a boss who was a Nazi spy. The real truth was that a very hard working management was waiting for supplies which were at the bottom of the Atlantic, and we could not tell them that at the time. However, we could go in and kill the silly rumour. There were rumours in factories where sometimes it was the men and sometimes the management who were not playing the game, and then there were other factories where everybody was playing the game.

The way to tackle this problem with which the nations is confronted is not by scolding and exhorting the best of the employers and workers, but by finding means of tracking down the problem. We must explain to the people of Great Britain exactly what they are doing and why they are doing it. I am convinced that if that is done, and if we take this economic situation as seriously as we took the war situation, we shall get through. But do not let any hon. Member opposite say to me that it can only be done by dropping our Socialist politics and by forming a Coalition. It cannot be done in that way. Before people went into the factories during the war they did not ask that the factories should be nationalised. That is too shallow a point. As the Chancellor said, we have a chance by means of economies and devaluation to begin to do the job. The job cannot be done by generalised exhortations. We have come to the end of that.

Let us get going in our industries. Let us give credit where credit is due; let us give names and addresses. Let us also find the people who are treacherous to the country's interests at the present moment. If there are factories where there is no exploitation and where there is first-rate management, but where the working folk are not playing the game, it will be the easiest thing in the world to bring them into line because they are always generous. Many have bitter memories of the past and believe that while some of the rumours going round at the moment are false, others are true and that some people are exploiting the country's need. If we start this job seriously as a precision job we shall get through. If we as a Government and as a House of Commons cannot work out the means to do that, we are only at the beginning of our crisis and not at the end of it.

8.20 p.m.

Mr. I. J. Pitman (Bath)

It is always a pleasure to listen to the hon. Lady the Member for Cannock (Miss Lee) and I think we all agree that she has spoken with very great sincerity and with a real intention and the right spirit of getting team work going in this country. I shall hope to be constructive in my speech, and within that spirit of teamwork. She has asked that we on this side of the House should say what is our answer to this psychological problem of cementing together entities which she says are incongruous. I say that the need for initiating action lies primarily with the Government. They should lay the foundation of that teamwork and should next be supported by hon. Members, and in the course of my remarks I hope to give, as the hon. Lady requests, precise rather than general suggestions.

I wish to address my remarks more particularly not to the issue of the cuts—that is to say, the slices off the coat—but to the issue of more cloth with which to maintain the existing coat and later make it even bigger. I think we all agree that we do not wish to be in the position of having to cut the number of houses. We do not wish to be in the position of having to cut meals at schools. Again, I do not think we wish to be in the position of having to cut vocational education which, after all, is directed to getting greater output. I think, moreover, that all these cuts are secondary to the issue which is much more important—the issue of how we can obtain more cloth. I propose, therefore, to say first what I think the Government should do, then what will be the consequences of that action; then what are the difficulties they face, and finally the remedies I think they can adopt.

First of all, I agree entirely with the hon. Lady that it is hopeless to go on with exhortation. There must be something more precise and effective than that. Moreover, the imposition of a wage ceiling is something equally negative, and, I would submit, equally destructive of success. But if all this is no good, what are we to do in order to obtain greater productivity? What can the Government do, that is not exhortation, in order to obtain greater productivity? I should have said that fiscal policy is definitely a tool of Government. Certainly Mr. Gladstone would have said that the first duty of a Government in such a situation was not to exhort but to use the very tool which, as the fiscal authority, it has at its disposal. What the Government want to do, surely, as a deliberate policy, is to encourage longer hours, to obtain greater intensity of effort and to get those people within the unions and within management really to wish to remove the restrictive practices. Do not let us forget that, if there is an average of under 4½ days a week being worked in the coalmines, then, since no doubt a lot of people are working more in the coalmines, there are necessarily a lot who are working less than three days a week who bring the average done. The same sort of thing is happening elsewhere, as the senior Burgess for Oxford University (Sir A. Salter) said: and we all know that the present intensity of effort is something about which, if our grandfathers were alive today, they would turn round and say, both as to hours of work and intensity of work, "My Gosh, I am ashamed of my grandchildren."

Mr. Gallacher (Fife, West)

That is not correct.

Mr. Pitman

I think we all admit, in our honest souls, that that is correct, and we must surely also know that it is the job of the Government to try to produce a climate in which that problem can be solved. What are the things they can do? Have they thought, for instance, of the possibility of cutting the exemption allowance for Income Tax on earned income? That would have the effect of enabling them to lower the rate throughout the whole of the earned income level. Make this miner who is working only three days a week have really to scratch for his living and to wish to work the other number of shifts because of the reduction which would then take place in his income if he only worked three days. That is one fiscal device. We might even have a poll tax. That is the second fiscal device. Then there is a third, provided we are prepared to meet the case of the old age pensioner. Incidentally, must we always penalise the old-age pensioner after he has earned 20s.? I ask the Minister: is not that yet a further fiscal device which could produce greater productivity? If, as I say, we correspondingly raise the payments to the old-age pensioner, the Service pensioner, the recipient of family allowances, as a consequence of any comparable reduction of food subsidies—which has been suggested—then by increasing the prices of commodities we could make people desire to work longer and to work harder, and that is the real issue with which we are faced.

What efforts has the Minister of Labour made within his sphere to get greater work? Has he called the various industries together in order, in collaboration with a fiscal policy, to get longer hours of work and more intense work? I think the hon. Lady will agree with me that exhortation gets us nowhere. We must get down to precise industries and precise cases so as to obtain action by the individual for the reason that he wishes to work more fully. That will mean two consequences. We have to face the fact today that if we had really intense production we should inevitably have competition between firms, and hon. Members opposite would be astonished at the reduction in prices which would take place the moment we had real productivity and plenty. There is very little wrong with management that a little healthy competition will not cure. It is all very well for them to say that production is uneven. The firm which is inefficient will very soon begin to fall out immediately there is really effective competition, and prices and profits will go down the moment productivity really goes up.

The Government must face up to this further fact; if they get a really important improvement in productivity there will be in some industries an absorption of all those people already engaged. They can work harder and longer and still remain in work. However in other industries there must be an adjustment, and I was glad to hear the Chancellor a sufficient realist to say that he himself regarded the policy of full employment as one in which there would have to be moves from job to job, and that there is no guarantee of continued employment for everyone in that particular job in which already he is employed.

Each industry will need to work out its own plans and it seems to me that the Ministry of Labour ought to call a conference of every industry to work out the precise terms for that industry, for the re-deployment of workers from that industry or the absorption into that industry of workers from other industries. Let the Government consider the possibility of giving genuine transitional benefits and moving expenses. It is easy for the bachelor to move from job to job and from place to place, but it is not so easy for the married man who has a family to move. We have to meet that serious difficulty, which is inherent, if we are to solve the productivity problem.

What are the difficulties? I submit the difficulty is not at T.U.C. level and it is not at the bottom. It is not the man in the workshop who is against productivity, but it is the hard core of trade unionism brought up to class hatred—the hard core in the middle. It is the local lodges and the trades councils. They are spending all their time trying to save the trade unions from this new policy of adjusting past trade union policy to the new policy appropriate to full employment. They do not believe that full employment is a reality and they say to themselves, "No, if we work more and produce more it will go into the bosses' pockets and it will mean less work"—the very opposite to what would happen. What is the answer? The answer is to educate the hard core of trade unionism in the middle; to tell them that the encouragement of class divisions will get us nowhere in this country.

It is all very well for the Chancellor of the Exchequer and the Prime Minister to call for team work and immediately to do everything they can to denigrate one side of industry. If anybody likes to study the Debate of 27th September, he will see the way in which the Chancellor of the Exchequer presented the figures of output as an alleged satisfactory increase of 30 per cent. with a 4 per cent. increase in man hour output and an increase in Britain more satisfactory than that in America. All three are utterly phoney. [Interruption.] I am strictly limited for time, but I could document all those points fully. There is no reason why they should not be documented and I will do so if any newspaper will accept the article.

The issue is, this—are we going to get teamwork by sneering at managements all the time, elevating the worker and making a political issue of the difference? We on this side of the House have nearly as many trade unionists voting for us at the elections as the party opposite. Members opposite have only to do some mathematics to find out who voted against them at the last election. They are a minority party, and however they look at the statistics in each income group in this country they will inevitably find that there is not that perfect linkage between the trade unionists who are automatically Labour and those who are not.

Hon. Members opposite have here a good opportunity. They are people who can put aside the call for class warfare. We will get nowhere unless they do. It is ridiculous for the Chancellor of the Exchequer, the Prime Minister and the Lord President of the Council calling for a team spirit and at the same time doing that which works against teamwork. Look at the Lord President of the Council today. He quoted the names and cases of companies which were declaring big profits and the chairmen of which were making political speeches. The reference to high profits was entirely irrelevant. He had a point to make about these chairmen making political speeches, but I have heard speeches at Co-operative society meetings which were certainly not in favour of the then Government. The reason why the right hon. Gentleman imported high profits into his speech was because he wanted to import an atmosphere of class warfare and divisions.

My final word to the Government is that they will never get teamwork until they give up their deliberate attempt to create class division. Members opposite could go round the country and say some of the good things that can be said in the interests of a combined effort. My grandfather's generation worked 80 hours a week, and in occasional cases the husband worked at the loom in the morning and the wife at night. What has happened to improve that? A great deal of intelligence has been brought to bear on the question, and the working classes of this country have with less effort and no contribution from themselves benefited enormously from the educated classes. They have benefited by developments in methods of work and through inventions. Let us, therefore, have a change occasionally from hon. Members opposite, who should try to build up teamwork, for which this country is crying out.

8.35 p.m.

Mr. Dodds (Dartford)

The last speaker had the audacity to make use of the word "denigration." In the few minutes that I have at my disposal, I shall have something to say on that score which probably will not be to his liking. For hours on end in this Debate, and on the occasion of the Debate on devaluation, I have listened to speeches from hon. Members on the other side, and also to a strong case being brought against them for misrepresentation of the wonderful achievements of a Socialist Government, as a result of the efforts that have been made by the working people of this country. Hon. Members opposite have been an evil influence in the world in lowering confidence in this country, and that has resulted in our present position. In that work, the chief culprit has been the person who is now preparing his speech, the right hon. Member for Woodford (Mr. Churchill). Much has been said in the Press by way of denigration. One quotation could be made from a New York newspaper.

I wish to discuss another factor which has not been mentioned in the Debate. A lot of money has been given by industrialists to an organisation in this country for one purpose—it is a form of investment—to get rid, by hook or by crook, of the Labour Government, so that they can have freedom to exploit the people. The result of it is that there has been built up a great political machine which has brought into itself some high pressure salesmanship. I speak as a publicity man. It is not concerned with half truths or with untruths. Before I give my evidence, I would like to bring on to my side the chief Liberal Whip, who took part in a Debate on 24th May, when he remarked about the dishonest posters which were coming out of that evil organisation, the Conservative Central Office.

As a result of my studies I have been able to build up a talk entitled "Tory Fairy Tales." On Friday, 30th September, I had a meeting to address in the evening. I received by that morning's post a political pamphlet in the form of an invoice purporting to be sent out by "C. R. Attlee & Co." Many of those pamphlets have been sent out. At half-past ten that morning I rang up Whitehall 8181, that is the Conservative Central Office, and asked if they could give me the details how the £75 million lost in nationalised industry was made up. I explained that there was to be a Labour meeting on "Tory Fairy Tales" and that questions were to be allowed at the end when I should like to raise this matter, so they assumed that I was a Conservative. I was passed from department to department. It was worse than anything I have experienced in a Government Department. Eventually I got into touch with a young lady who said: "There is only one person who can give you the answer. It is Miss Wilcox, and she is out."

I said that surely there must be someone who could give me the answer on this most important topic. She said that if I rang back at 12 o'clock they would get out the details. At 10 minutes past 12 I rang again and she told me that the details had not been got out, but that if I rang again at one o'clock they would be ready. I rang again at 10 past two and had the same trouble again, and the result was that I was put in touch with a Mr. Stebbings, who was in charge of the library. He told me that he had not got the figures. I said, "Do not tell me to ring back again. This is the third time, and I will hang on for them." Eventually he told me, "Be very careful how you use these figures at the meeting tonight because we have estimated that there would be a loss on the railways of £25 million, and, of course, that is not correct."

This has caused a bit of bother in the Conservative Central Office. Two weeks ago this was in the national Press, but the Conservative Central Office were not prepared to make a statement about it. Now they have been so bothered about this matter that orders have been given that they must do nothing about it, and they have been asked to make up figures which will correspond with the £75 million in the next issue of "Tory Challenge" which is not due for 10 days.

When the case is made out, I should like my colleagues on this side of the House to get for themselves copies of "Picture Post" of 8th October which shows that one prominent Member of the Conservative Party made use of this brief. There is an article by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) which gives the loss on the nationalised railways as £25 million. If I had time I could provide much more evidence of the dishonesty of the Conservative Central Office. In millions of leaflets and posters they are deliberately issuing material denigrating the great efforts of the people of the country. It is a great betrayal of the British people.

8.44 p.m.

Mr. Deputy-Speaker (Mr. Bowles)

Mr. Walker-Smith.

Mr. Churchill (Woodford)

rose—

Mr. Deputy-Speaker

I understood that the right hon. Gentleman wanted to open his speech at five minutes to nine. Was that not so?

Mr. Churchill

I am entirely in your hands, Sir. With the indulgence of the House, as so often shown to me, I had thought of beginning at a quarter to nine. However, I gladly yield to my hon. Friend the Member for Hertford (Mr. Walker-Smith).

Mr. Deputy-Speaker

The right hon. Gentleman may speak now if he so choose.

Mr. McGovern (Glasgow, Shettleston)

On a point of Order, Mr. Deputy-Speaker. I submit to you for your advice that we are now concluding a two days' Debate and not one hon. Member for a Scottish division has been called upon to speak. This happens in a number of Debates and it is rather scandalous that in this House hon. Members should be passed over and not one Scottish hon. Member called in a Debate of this kind.

Mr. Deputy-Speaker

I cannot help that, and I cannot allow any criticism of the selection of speakers by Mr. Speaker.

Mr. Walker-Smith

I had hoped to address the House for a few minutes, but I am well aware that the House would much rather hear more from my right hon. Friend and less from me.

Mr. McGovern

If the hon. Member does not want to speak, I will.

Mr. D. Walker-Smith

May I, therefore, Mr. Deputy-Speaker, in yielding place as I feel will be appropriate, merely say that it is wrong of the Lord President of the Council, at a time when there is no pressure on the Parliamentary timetable, to limit this Debate to two days—[HON. MEMBERS: "Hear, hear."]—with the consequence that of approximately 100 Members who have sought to catch your eye, only a small minority have been successful, and thereby the country has been deprived of a full and representative Debate on matters so nearly touching its interests.

8.46 p.m.

Mr. Churchill (Woodford)

Although my hon. Friend the Member for Hertford (Mr. Walker-Smith) has set an example in brevity which I trust will never be made uniform and compulsory, he has none the less made a point which has gathered support behind it from all quarters. I regret that, having an engagement in a constituency—constituencies now are becoming very important since they become more alive as the House becomes more dead—I was not fortunate enough to hear the concluding speeches of the Debate last night.

However, I feel sure that the House will realise the full value of the weighty speech of my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson). Although on account of his rank he speaks from this Bench, his was not a party speech and therefore, no doubt, incurred the censure and derision of the supporters of the Government. He gave some openings which cheered up the depressed spirits below the Gangway and were a great relief to the Lord President of the Council who, as usual, was hard put to it to fill in the time which it was his duty to devote to a major political pronouncement. The record of my right hon. Friend's experience and action before and during the war, all the high posts he has held with efficiency and courage, all the responsible work he has done, is known to all parties, and the great confidence with which he is regarded should make serious people in the Government, if such there be, and even below the Gangway—weigh carefully his deeply considered opinions.

The speech of the Lord President of the Council to which I also listened was a typical debating performance in which his object was to confine himself to diverting the attention of the House from they grave issues to the solution of which he was expected to make at least some contribution. I did not notice a single point which had any other object but to confuse debate and darken counsel. He dwelt at length upon economies of the National Government which succeeded the Socialist collapse in 1931, and I venture to complete his historical account in one important particular.

The object of the right hon. Gentleman in dwelling upon all this—apart from filling in the time—and all the measures taken then was, of course, to create class prejudice and to rouse party cheers. He outlined the economies which were made in those days by a Government sustained during the course of them by the earnest and overwhelming vote of the nation. He tried to pretend that those were the economies which we should introduce should we have the power, although they, obviously, have no relation to the circumstances and facts of today.

There is, however, one point which he did not mention. All but one of those economies, be they well judged or harsh, had been previously approved, not only by Mr. MacDonald and Mr. Snowden, then at the head of the Socialist Government, but by the Socialist Cabinet. Every one of those points, with the exception I have mentioned, to which he has referred in such prejudicial terms, were approved by the Cabinet of the Labour Party, carrying their party with them, with the one single exception of the reduction in unemployment pay. [HON. MEMBERS: "Ah!"] I give you that.

Mr. H. Morrison

It is a well-known rule that Members of Cabinets and Privy Councillors do not reveal Cabinet proceedings—[Interruption]—and I am certainly not going to do so, especially in my present position as Lord President of the Council, but I wish to say that I do not accept the statement which the right hon. Gentleman has made.

Mr. Churchill

Fortunately, I have brought my authority with me. My authority is Mr. Snowden, who says in his autobiography that the Labour Cabinet had agreed to cuts in Government expenditure of £56 million, of which the unemployment insurance for transitional benefit amounted to £22 millon, and that the split and division happened not upon the bulk of the cuts, which the right hon. Gentleman has enumerated with so much gusto in order to throw upon us the odium which belongs to his own colleagues of the Labour Party, under whom he was so proud and eager—and lucky— to serve, and also, of course, to cast prejudice upon us. All that the right hon. Gentleman has been trying to do this afternoon is holding up to odium the decisions of the Labour Government of those times. There is a saying— It is an ill bird which fouls its own nest. The right hon. Gentleman made great play with our publication known as "The Right Road for Britain." It is quite true that it is the road we should like to tread. Perhaps, if the party opposite had not got in our way, it is the road we should have already trodden. The Lord President of the Council greatly exaggerated the cost of these proposals. Apart from the question of equal pay between men and women, to which both parties are equally, or at any rate largely, committed, these proposals in our opinion do not involve an expenditure of more than £10 million a year, or a sum equal, shall we say, to the loss incurred on Civil Aviation alone under its present nationalised system. In any case, I and my colleagues have made it absolutely clear that in present developments we shall not go an inch further than the financial resources of the country warrant and, in view of all that has occurred and is occurring, we shall hold ourselves entirely free to take a new view of the position should we be granted the opportunity.

Parties differ on a great many matters of principle. I was brought up to believe that taxation was a bad thing but the consuming power of the people was a good thing. The Chancellor of the Exchequer please note—the consuming power of the people is a good thing. Many of his predecessors have opened their Budgets with the statement, "The consuming power of the people is well maintained," but he adopts a different tone. I was brought up to believe that trade should be regulated mainly by the laws of supply and demand and that, apart from basic necessaries in great emergencies, the price mechanism should adjust and correct undue spending at home, as it does, apart from gifts and subsidies, control spending abroad.

Mr. Ivor Owen Thomas

A happy day for Victorian capitalism.

Mr. Churchill

The full force of that interruption has not dawned upon me. I trust I may be pardoned for not digressing to answer it.

Mr. Ivor Owen Thomas

rose—

Hon. Members

Sit down.

Mr. Deputy-Speaker (Mr. Bowles)

If the right hon. Gentleman does not give way, the hon. Gentleman cannot interrupt.

Mr. Churchill

I have also—

Mr. Ivor Owen Thomas

On a point of Order. I made reference to a statement by the right hon. Gentleman and he referred to my statement, questioning whether he had heard the whole of it. I merely ask whether—

Mr. Deputy-Speaker

Order. That is not a point of Order. Mr. Churchill.

Mr. Churchill

I was not dealing with the controversial part of my speech. I will come to some parts which might be thought by enthusiastic persons to have a controversial flavour, but I was dealing with the grave foundations of economic law and policy.

I was also taught that it was one of the first duties of Government to promote that confidence on which credit and thrift, and especially foreign credit, can alone stand and grow. I was taught to believe that those processes, working freely within the limits of well-known laws for correcting monopoly, exploitation and other measures in restraint of trade, as the old phrase had it—that those principles would produce a lively and continuous improvement in prosperity. I still hold to those general principles.

However, between the terrible wars which have rent the world, we were subjected to violent convulsions in world trade. To guard against their coming upon us again when the Second World War was at an end the National Government—my colleagues, in large numbers, are on the Bench opposite—at my suggestion or by our common instinct, set up a formidable inquiry into the means of preventing and forestalling the effect of world fluctuations upon our employment. There is the White Paper of 1944 which was presented to Parliament. The Lord President was a party to it, not in the vague way of being connected with the Government; he followed these things with great perspicacity and attention—he will surely not deny that—and the Chancellor of the Exchequer and the Prime Minister and others of great importance in those days.

This White Paper was praised by the Foreign Secretary only three years ago. It is a modern and enlightened statement of the ways of meeting world wide fluctuations and preventing the kind of terrible surge of unemployment which wrecked the Socialist Government of 1929–31. I believe that all those ideas and methods, for what they are worth, are an essential part of a wise and up-to-date outlook and policy in economics. I may say that this White Paper said that there would be no problem of general unemployment in the years immediately after the war in Europe, and that the difficulty would be to find the labour to do the jobs. The right hon. Gentleman today, finding fault with this, said that his prophecy as well as mine—he is as much involved in it—referred to a statement that we were at the time contemplating a normal rate of 8 per cent. unemployment whereas we had had only 2 per cent. That is really not so. It is in the Appendix and is not on the authority of those who prepared the Report. It was in fact a statement by Sir William Beveridge on his plan and on what would be the cost of meeting unemployment if its proportions reached such a point. We must have a little accuracy in these discussions.

But all the principles which I have unfolded on taxation being an evil and consuming power being good, etc., are all violated and repudiated by the policy and outlook of the present Government. Socialists regard taxation as good in itself and as tending to level our society. Come on, give a cheer to that. What a pity the Minister of Health is consistently absenting himself from our Debates. This would have been the point where he might have come in and gathered some followers behind him on the great theme for commercial and hard pressed Britain of having a redistributed taxation based upon retribution—a great contribution to all the work which the Chancellor of the Exchequer has been left to do.

The Socialists rejoice in Government expenditure on a vast scale, and they believe it is a sure method of preventing unemployment, which it may be for a short time. Apparently increased consuming power, except by the Government, even in the home market is an evil which must be curbed by every form of Government intervention. The laws of supply and demand, regulation of consumption by price mechanism, apart from the basic essentials, are ruled out as part of the devices of outworn capitalism; while exhortations to thrift and saving are reiterated until they have become almost continuous—I mean unceasing. Everything possible is done to discourage and stigmatise the inventor. The Chancellor speaks in slighting terms of profit earners. What a lot of contempt he put into it—"profit earners!". When I pressed him upon the subject he received it with one of his mirthless smiles which is the common form in which his personal philosophy has to express itself.

There was the old Gladstonian expression, "Let the money fructify in the pockets of the people." That is regarded as a monstrous device of a decadent capitalist system. As for maintaining confidence and credit what is to be thought when one of the most powerful Ministers, to whom I have already referred, is able to speak about redistribution of wealth in a spirit of retribution, at this junction of all others? And when the Prime Minister under whom he is serving does not feel strong enough—[Interruption]—strong enough to disallow it?

The Prime Minister has not dared to contradict his Minister of Health. But even the Prime Minister's submissive demeanour and docility—unbecoming in one holding such great power and bearing such responsibility—has not, so far as I can see induced this future leader of the Socialist Party and its highly acclaimed spokesman at the present time, to come within the precincts. I want to ask, how are the Government going to restore confidence and credit when they show themselves in every mood and action the enemy of wealth gathered, accumulated or inherited in private hands; when they penalise enterprise and deny thrift and good housekeeping their due reward?

Thus we have been led for four years of unprecedented and unbridled expenditure, of ceaseless interference in every form of private enterprise and activity to taxation unparalleled in times of peace and unequalled throughout the whole world today—[HON. MEMBERS: "We have heard that before."] Hon. Members say they have heard that before; they will hear it again, and over and over again. We see the Government taking 40 per cent. of the entire national income into their far from competent hands. We have spent—I have said this before and I will say it again whenever I speak in the country—in the four years since the war we have spent £16,000 million; nearly as much as was spent in the whole 20 years between the wars. Are not these among the more important explanations of the plight to which we have been brought?

It must be remembered as we sit here tonight that Britain is a capitalist society, and that 80 per cent. of its whole industry is in private hands. It is this part alone which earns the profits which the Chancellor of the Exchequer censures but on which he lives, taking over 60 per cent. of them by taxation, and on which the 20 per cent. loss-making nationalised industries are at present carried.

Under the Communist system all capital is sequestrated, all capital-owners are liquidated, and society is reduced to a strong hierarchy and army of officials and politicians by whom the proletariat are ruled under a one-party system with absolute tyranny, and a very considerable measure of ease. However abhorrent this conception may be to our spiritual outlook, and our physical resolves, on both sides of the House no one can say that it is not a system which has a hideous and logical symmetry about it.

Luckily, that is not an issue in our country today. But what we have here now is a capitalist society on which we are dependent for our daily life and survival, and a Socialist Government which views it with the utmost hostility and is trying continually to gain credit with its own extremists by casting a baleful net over its activities, by denouncing and threatening it all the time and stabbing it with gusto whenever a chance offers.

No one can possibly devise an economic theory that can fit or can even explain such a process. In a progressive and ever-broadening society, many corrections of emphasis can be made and are made as the years pass by. But a deliberate attack on the capitalist system by a Socialist Government, responsible and in power, a Socialist Government which has, I am glad to say, neither the hardihood nor the wickedness to embark on Communism, cannot be reconciled with any theory based on principle or any policy which can be accompanied in peacetime by a wide measure of prosperity and social well-being. Sir, the violent assault of Socialism upon the intricate and artificial economy of Britain at the moment when it was exhausted and quivering from the ordeal of total war has so far been fatal to our recovery.

Two or three years ago on several occasions I asked for a large reduction in Government expenditure. I named the figure of £500 million, I will not read out the quotation, because time is short and I have to consider the Prime Minister. We are all waiting to hear from him his views upon the present situation. I named the figure of £500 million. What was the reply of the Government? It was the same as they are so anxious to use today, namely, "Please say exactly what your economies would be." They do not ask this in order to gain good advice but in order that their canvassers at by-elections, or at a General Election, can go from door to door and endeavour to accuse the Conservative and the Liberal Parties of being the enemies of social welfare and improvement. That has certainly been the atmosphere in this Debate.

Now I find that expert financial opinion agrees that far larger reductions than the £250 million of capital and Government expenditure which the Government propose are the least that can enable us to escape from an unmeasured disaster. If the economies of £500 million a year, for which I asked in the name of the Conservative Party two or three years ago, had been made at that time, we should never have reached the situation in which the ghastly measure of devaluation which the Chancellor announced so jauntily would have been our lot. That £500 million of Government expenditure—current expenditure, apart from capital—would have been saved in the intervening period, and we should have been confronted with a very different situation from that in which we find ourselves—of a great impending collapse, when, our reserves are far below what this Government itself declared was the least that could be tolerated.

We are presented now, at the end of all this, with a cut of £90 million in the current national expenditure of over £3,300 million. That is really hardly worth making out to be a great achievement. But I had never contemplated that a reduction in expenditure of £500 million should take place without giving more or less corresponding relief to the taxpayer. In the same sentence of my speech in Brighton, I said that the relief in taxation should be used in every way to stimulate incentives to production and should be accompanied by a vast sweeping away of war-time controls, dear to the Socialist heart because they represent the overweening power of the State, but profoundly injurious to the national wealth-producing forces and those elements upon which our finances and economy rest.

I also urged for many years the evil of unrequited exports. I think it is scandalous that we should be made to repay to Egypt, India and some other countries money which we borrowed from them to pay for the supplies which maintained the armies by which they were protected from German, Italian or Japanese invasion. I have always considered that we should make a counter-claim for the services rendered by us to them, and that the one should be set off against the other.

No one hesitated to make this claim about the United States. The United States have repeatedly been reminded by us how we fought alone for two years before they came in.

The United States acknowledged this and not only treated all wartime expenditure under Lend-Lease but made these subsequent vast grants, gifts and loans to us which we have been spending so freely during these four profligate years. More than that, United States opinion has been that we had no right to take no steps to deal with our war debts to the countries we defended—sterling balances they are called—while appealing to them continually for further aid. I was glad to hear the Chancellor of the Exchequer, for the first time yesterday, speaking of the need to curtail on a far greater scale unrequited exports, but no one is more responsible than he for the vast and accelerating scale on which they have been proceeding.

One of the main foundations upon which our standard of living can be maintained is a stable value of money. In theory, though not always in practice, Socialists view money with great disdain. It is, however, the sole means by which the innumerable millions of ordinary transactions of daily life, the exchange of goods and services, all the thought and provision that can be made for the future, all our social services and the like, can be maintained. Surely, the maintenance of this stable rate should be one of the first duties of any civilised and democratic Government?

The Communist Party take a different line. They say, "Give us control of the currency, and we can overthrow any capitalist country in the world." We can see in every direction the fall in the value of our money, not only at home, but abroad, and we are now to face a new crop of depression as a result of devaluation. The devaluation of money, arising mainly from the astounding extravagance in Government expenditure, causes anxiety even in those most responsible for it. The word "disinflation" has been coined in order to avoid the unpopular term "deflation."

The Socialist Party are very mealy mouthed today, and the Chancellor of the Exchequer is very delicate in his language. One must not say "deflation," but ony "disinflation." In a similar manner, one must not say "devaluation," but only "revaluation," and, finally, there is the farce of saying that there must be no increase in personal incomes when what is meant is no increase in wages. However, the Chancellor felt that a certain broad prejudice attaches to the word "income" and that consequently no one would mind saying that shall not increase—but wages, no. However, it is wages that he means. I am sure that the British electors will not be taken in by such humbug. I suppose that presently when "disinflation" also wins its bad name, the Chancellor will call it "non-undisinflation" and will start again.

Whatever name one cares to use, the maintenance of a stable medium of exchange for the ordinary transactions of daily life is one of the first tasks of Government—[Interruption]. I was only anxious to consult my colleague in order to make sure that I shall not violate the time at my disposal. I am going through the experience, which no doubt many hon. Members have had, of wondering what on earth I can find to say, and then, when I had started to assemble it, of finding I had about three times as much as I should be able to get out. It is not only the value of money that we are interested in—the purchasing power of money—but the steady and grievous fall in Government securities which is a direct result of financial mismanagement and the attempt to bring about "Socialism in our Time."

In this affair, the two Chancellors of the Exchequer whom we have known in late years, and whom I see before me and under whom we have suffered, have shared a responsibility which I think I may say is gradually becoming more equal. If I may use a sporting term, it looks as if there will be a "pretty close finish." For the Consols called "Daltons," in compliment to the right hon. Member for Bishop Auckland (Mr. Dalton), which were issued at £100 three years ago, only £66 can be realised today. What an encouragement to saving; what a sinister advertisement of the financial insecurity and depression which have been brought upon us. It cannot even be claimed as part of the policy of the Minister of Health of retributive redistribution. The loss is not redistributed; the value has vanished into thin air. This is a serious matter for the whole country and particularly for the many thousands of people whose savings have been slashed by this fall.

The latest statement of the National Insurance Reserve Fund shows that on 31st March this year the Fund held £201 million worth of these securities. The current value of their stock is now £133 million, representing a loss, unless they have been realised, of some £68 million. All that is taken out of the subscriptions of the wage-earning population of this country. The Government are continually exhorting the people to save, and we for our part have always lent our support to the National Savings Movement, but how can people be expected to save and invest their savings in Government securities when they see what is happening? The fact is that the public at large have lost all confidence in this Government's financial administration, and they are pretty clear on what the financial intentions of the party behind the Government are.

I had meant to deal with the cuts proposed by the Government. I have just one word to say on them. I am strongly of the belief that if the great policy and decision of national military service had been used properly and a smaller number called up for a longer time, great economies might have been made and might still be made in the Military Services. I have no time to elaborate that, although I am not in the least bit afraid to do so. The Government have failed in their duty to the nation and they will be severely judged by it. That is no reason why we for our part should fail. We shall do our utmost to encourage everybody in the country to work as hard as they can in order to get things ready for the day when there will be a Government capable of aiding their efforts.

Anyone who has been in this Debate must feel that the main issue that is before us tonight is the need of a new Parliament. We are indifferent to the date of the election. We do not mind if the Government put it off. Many experts think that the longer the drop the surer the execution, but nothing could be worse for the country than a very long period of electioneering uncertainty. We have before us two malignant Bills, relating to steel and the alteration of the Parliament Act, which are bound to divide this House more than ever and bring fierce party fighting. We have apparently to live for three, four or five months in the present state of increasing domestic strife and uncertainty. It is not giving the country a chance not at least to curtail this period and to impart an element of certainty into it.

I say to the Government: you have the fortunes of this great country in your hands. For four years you have had power and wealth such as no Government have ever possessed. It is not only devaluation but bankruptcy which confronts us now. Here we are concerned only with party manoeuvres and calculations. The Government have devalued the pound and devalued the British nation, but most of all they have devalued themselves and brought us to bankruptcy. They have shown themselves not only financially but mentally and morally bankrupt, and the sooner they appeal to their fellow countrymen the better it will be for all who wish to see this country rise again in its own strength.

9.31 p.m.

The Prime Minister (Mr. Attlee)

I was interested to hear the note on which the right hon. Gentleman ended his oration, in which he declared that the Government have brought this country to bankruptcy. I cannot help remembering that he declared before the end of the war that this country would come out of the war bankrupt because of the war.

Mr. Churchill

The right hon. Gentleman is, I presume, quoting from a statement made by Mr. Morgenthau. It purported to be a one-sided report of a private conversation, and I accept no responsibility at all for the verbiage used.

Hon. Members

Withdraw.

The Prime Minister

Certainly, if the hon. Gentleman says he did not use those terms, I will withdraw; but the statement has been made before in the House and the right hon. Gentleman did not withdraw it.

Mr. Churchill

I do not want to take up the right hon. Gentleman's time, but I had some talks with Mr. Morgenthau. Naturally I was making out as good a case for the continuance of Lend-Lease as was possible, but those were private conversations and ought not to have been published.

The Prime Minister

I do not like to press the point at all, but I am quite sure the right hon. Gentleman was making out a case when he said that the country would be bankrupt through the war, as he is making out a case now when he says that bankruptcy is here. I greatly admired the gallant way in which the right hon. Gentleman covered up the breach in the ranks made by the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson). I am never quite sure whether he is a regular member of the team or not. I thought he had been brought in to add a certain amount of weight to the attack, and I must say I was reminded of an incident in history. The right hon. Gentleman, who is very well versed in history, will remember it; it is the one in which the Carthaginians employed a heavy, sagacious, and most amiable animal called the elephant, but unfortunately the elephant ran the wrong way and disordered the ranks.

I am trying to take up the chief points made by Opposition speakers. I gather that the right hon. Gentleman who has just concluded had hardly got through more than the introduction to his speech. He had hoped, I gather, to say something about the actual proposals of the Government. Instead, we had what I enjoyed immensely—a most interesting exposition of the mid-Victorian Liberal economic creed. He talked about Mr. Gladstone's phrase, "Money fructifying in the pockets of the people," and "the consuming power of the people." Which people? In the period which he looked back upon, his Liberal days, he must often have said how very badly distributed was wealth, and what a pity it was that the consuming power of the masses of the people was so inadequate. After that, the right hon. Gentleman turned—and I am not surprised—to say a few words about the Minister of Health. I think he was smarting from a castigation he got the other day. [HON. MEMBERS: "Where is the Minister of Health?"] He is here.

Mr. Churchill

Perhaps the Prime Minister will thank me for having helped to bring this lamb back to the fold.

The Prime Minister

I am sure that the right hon. Gentleman will be gratified to know that, although apparently he did not actually see the Minister of Health, the Minister of Health was here. The right hon. Member then proceeded on this ancient Liberal laissez faire line, which must have been so agreeable to his supporters behind him. He began an attack. I gather that he wanted us to return to that kind of laissez faire. Then he came in with a denunciation of all Socialist measures. He will remember that on every occasion during the war he had to turn to Socialist measures to get the production from this country. Those were the days when the right hon. Gentleman was appealing not to private profit but all the time to public service. I must say I was sorry to hear the right hon. Member for the Scottish Universities pouring scorn on the incentive of service. He has an immense and very fine record of public service.

Sir J. Anderson

I did not pour scorn.

The Prime Minister

He put it very, very low. I will not say any more than that.

Sir J. Anderson

It is folly to rely solely upon it.

The Prime Minister

And it is folly to rely solely upon profit. We live in the days of a mixed economy. The right hon. Gentleman is quite wrong when he suggests that this is a purely Capitalist economy. It is neither purely Capitalist nor purely Socialist, but a mixed economy in a transition period. In order to make such an economy work, we must not appeal solely to the profit motive but also to the motive of service. However great may be the power of appeal of hon. Members, if they make appeals to the country they will not get very far if they merely preach a selfish motive.

I must deal with one other point made by the right hon. Gentleman—I think it was the only other one—and that was the question of whether the Opposition should give any advice on these matters. We have had a great deal of criticism, and we have sought in vain for any suggestions. Except for some by the right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden), which I will deal with later, we have had no suggestions as to what were the particular services which the Opposition would like to have cut. When we ask the right hon. Gentleman for that information, he says, "Oh, no, I could not do that because if I did people would go round the houses telling people what it was and I should be very unpopular." Was that intended to give us an indication of the sort of things he had in mind? Is that an example of taking the people into your confidence? No, we are not to have anything of that sort.

The other curious note in this Debate was that there has been a continual chorus suggesting that the economies which we have proposed are far too small, and yet not one of those who have spoken has tried to fit these figures into the needs of the time. I do not suppose that hon. and right hon. Gentlemen opposite want to inflict cuts just for pleasure. They do not want to hurt people. I am quite sure that the right hon. Gentleman would not want to do it. What we did was to examine, with the assistance of our experts, what the position was. My right hon. and learned Friend the Chancellor of the Exchequer set out at considerable length yesterday what that was and how we had arrived at it. We then proceeded to make economies in the best possible way we could. It is surprising how little criticism there has been about the actual economies instituted and the kind of economies necessary.

What have the Opposition done? The Opposition have taken the line laid down for them, as so often, by the cheaper organs of the Press. The great Press scream was started, saying: "Tremendous cuts are going to be inflicted." Figures were given of £600 million, and all the rest of it. The sole object of this was that when the time came for the Government to produce their plans they would be able to say, "Ah, these are totally insufficient," Parrot-like, hon. and right hon. Gentlemen have been repeating that cry and there has been no suggestion anywhere as to what the true figure should be. It is, in fact, a political stunt. This is shown very well by the comment that we get in the American papers.

Air-Commodore Harvey (Macclesfield)

And in Australia.

The Prime Minister

I am dealing now with America. Although they, naturally, have no particular love for a Socialist Government, they are not trying to work up a political stunt. They take a very realistic view, and responsible papers say that, looking at the thing as a whole, we have done just about right—and that, in spite of all the screaming of the newspapers, is what the ordinary man-in-the-street in this country thinks.

Mr. Byers

Would the Prime Minister—

The Prime Minister

I have not very much time—[Interruption.] I understand the hon. Member to suggest that we ought to have another £200 million in cuts?

Mr. Byers

Yes.

The Prime Minister

That is the particular Liberal creed, but I was talking of the major Opposition.

Mr. Byers

rose—

The Prime Minister

I have no time to give way—

Mr. Byers

The Prime Minister is being unfair to "The Times" and the "Manchester Guardian," both responsible newspapers, and other newspapers, who are not suggesting these cuts for any masochistic reasons, but because they believe it is in the interest of the nation. The Prime Minister may be right and we may be wrong, but we are entitled to put this forward.

The Prime Minister

I did not suggest that it was masochistic. I expressly said I did not think that people wanted cruelty. What I said was that it was a political stunt. That would apply quite as well to the Liberal Party as to the Conservative Party.

As I say, there have really been no constructive suggestions except by the right hon. Member for Warwick and Leamington, and I will deal with his suggestions. The right hon. Gentleman suggested the abolition of the food subsidies—[HON. MEMBERS: "No."] I understood so. Abolition or reduction—[HON. MEMBERS: "Yes."]—with a set off—I am trying to be scrupulously fair—by way of payments to various selected persons—the aged, the sick and the rest. I do not think that is unfair. The right hon. Gentleman will correct me if I am wrong.

Mr. Eden

The quotation is in HANSARD—[HON. MEMBERS: "Oh!"] I am trying not to interrupt in order to save time.

The Prime Minister

That is a perfectly intelligible proposition but I do not think it is a good one, for this reason among others: the food subsidies have been an important element in maintaining a certain stability in the price structure and if we abolish or reduce them very much, we shall at once set up a series of repercussions on wages and all other money payments. It is a point worth looking at, but I think the right hon. Gentleman would find that the disturbance to our economy would be far greater than any possible gain we could get from it, quite apart from some other objections.

A point has been raised with regard to incentives and disincentives. There has been some reference to P.A.Y.E. as a disincentive. I think that did operate a good deal, but my information is that it does not operate nearly as much as it did before and is not really a major thing because of what was done in the last Budget. However, I would remind hon. Members—it was well brought out in a previous Debate—that one of the things which must always be remembered is the hangover from the days of unemployment. Talking with people in the cotton trade, in the mines, in the building trade or anywhere else, one finds that their minds have been affected by years and years of unemployment and it has been a disincentive to effort.

Now one of the important results of maintaining full employment is precisely that there does not arise again that kind of fear which is a real hindrance to production. That is one of the many reasons why we do not accept the view of those economists and publicists who openly say that they would like to see a considerable dose of unemployment in this country. That is something which is put forward by people who claim to know about these things. I think they are entirely and utterly wrong.

As I said just now, I think that our appeals must be not only to personal incentives but to public incentives, and I deprecate some of the appeals for more selfishness that are put up in this country. One of the ones I dislike most and see fairly often is that the Conservatives will let you build your house. No question of whether the house is needed or not, no question of priorities, no question of anything but just a sheer appeal to selfishness.

May I deal with one other point made by the right hon. Gentleman the Member for Warwick and Leamington? He said there was a great delay in producing a long-term plan for the Fighting Services, and made what I thought was quite an unwarrantable attack on my right hon. Friend the Minister of Defence. Looking back, it will be seen that there was, first, the long period of demobilisation and the rundown, in which it was extraordinarily difficult to get out a long-term plan. Secondly, there was a period, which is now still running, in which we had a number of exceptional calls of all kinds due to the kind of disturbance which was to be found all over the world—for example, the Berlin air lift, Hong Kong, the Middle East and the rest. We have also been working up for Western Union and for the Atlantic Pact. Although we have been working on this problem, it is difficult in the early days to see exactly the form and shape of the Armed Forces. I do not think, therefore, that it is fair to suggest that my right hon. Friend the Minister of Defence has been remiss.

I want to deal with a point mentioned by the hon. Member for Blackpool (Mr. Low): the question of the sterling balances, to which the right hon. Member for Woodford (Mr. Churchill) also referred. We ought to try to get some sense of proportion and to dispose of the kind of idea that these sterling balances have all been piled up in some utterly unwarrantable way. Someone even seemed to suggest that they were moneys which were borrowed. They were not. They consist of payments that we made at the time for goods and services we received in the war. Some were from people who were not fully in the war; others were from countries, such as India, which were in the war and had to abstain from many things they would have liked during the war because they supplied us with things we needed. All this makes up a large total of money of various sorts, partly of sterling securities and partly owned by private bodies, and the present large size of these balances is due to the war.

Undoubtedly, that is a strain on us. It is obviously quite impossible that we should pay off these sterling balances. At the same time, to close down right away on them would be to ignore all their wants. [HON. MEMBERS: "We did not suggest that."] I know. We have very great interests in trying to preserve peace and stability, especially in South-East Asia. These matters have been under close discussion. We hoped earlier that we might have got a settlement. We have not obtained a settlement, and I do not think that this is the kind of matter that, for instance, with India we could have settled regardless of the views of the Indian people. We could not have settled it straight off at that time. The Chancellor of the Exchequer has made it clear that we realise that there is a case for a settlement. We have kept releases down as much as we can, but there have been some overdrawings. We shall have to be far tighter in the future than we have been before, but eventually, as was said by my right hon. and learned Friend in Washington, there must come a settlement of all these things. We cannot, however, disregard the rights of other people. The sterling balances were piled up in the war. They may have been piled up wrongly, they may have been too big, but that is what has happened and we cannot repudiate them at this time. The question of the balances was, I think, the major point that was made.

In the Debate as a whole, there has been no attempt to show, if the total of the proposals is not the right amount, what the right amount should be. There has been no serious attack on the way in which the economies—

Mr. Gallacher

Some of us did not get a chance.

The Prime Minister

I gather that the other half of the hon. Member's party was heard yesterday. They have not, therefore, had a bad representation.

There has been no real suggestion of other things that should have been selected by the Government. On the whole, considering the difficulty and unpleasantness of any economy move of this kind, the Government can be well satisfied with the general course of the Debate as regards the actual proposals.

I would like to say a word or two on the other side of this matter, which has not been stressed quite so much in this Debate. We have never suggested, and I do not think anyone would suggest, that by mere economies of this kind we could set things right. There has been a good deal of confusion between the internal position in this country and the external relationship of this country with other countries in the sterling area and with the non-sterling world, but no one has suggested that we can overcame our difficulties by merely negative efforts. We have to have positive efforts for production.

The Government are taking active steps and that is not an easy thing in an economy such as ours, which is not completely controlled as the Soviet economy is. It is not possible for the Government to take all the action; it has to have a response from workers and management. I believe the response of this country has been very good. I have had abundant evidence of that in cases where trade unions and employers have got together, and I do not think it should be thought so wrong to say that the effort is uneven. It is quite true that it is uneven. It is quite true that if all were as good as the best we should be in a far better position than we are in today. I cannot see any reason for not being allowed to say that. I am denounced for having made what someone said was a very tepid broadcast. I do not know what is the use of shouting exhortations on a matter of that kind when essentially it is a matter of people getting together. It would not have been any good to make a broadcast asking people to be selfish and to work for their own profit.

An election is coming along sometime in the next eight or nine months, but I think it is up to everyone in the country, whatever their party, to realise the importance of this matter from the point of view of the whole country. There is no doubt that there are elements in this country who habitually denigrate this country and do not help. The Leader of the Opposition in the remarks he made after I made my statement asked, "Ought we not to have national unity on these matters? Could we not get together?"—

Mr. Churchill

I did not.

The Prime Minister

Yes, the right hon. Gentleman said "Let us get together and throw overboard the Steel Bill and we will all work together." That is only saying, "Why do not the Labour Party adopt Conservative policy so that we can pull together?" I will make the offer to the right hon. Gentleman and say, "Why not get the whole country behind us by accepting the Steel Bill, by accepting the Parliament Bill?" Why should the appeal always be, "Drop your policy and let us all work together"? The theory always is that there is some strange orthodoxy about Conservative policy as against Labour policy. That was so years ago, but it is out-of-date now because the policy which is going to win through is the policy of the Labour Party.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 353; Noes, 222.

Division No. 261]	AYES	[10.0 p.m.
Acland, Sir Richard	Burdon, T. W.	Ede, Rt. Hon. J. C.
Adams, Richard (Balham)	Burke, W. A.	Edelman, M.
Albu, A. H.	Butler, H. W. (Hackney, S.)	Edwards, Rt. Hon. Sir C. (Bedwellty)
Alexander, Rt. Hon. A. V.	Callaghan, James	Edwards, John (Blackburn)
Allen, A. C. (Bosworth)	Carmichael, James	Edwards, Rt. Hon. N. (Caerphilly)
Allen, Scholefield (Crewe)	Chamberlain, R. A.	Edwards, W. J. (Whitechapel)
Alpass, J. H.	Champion, A. J.	Evans, Albert (Islington, W)
Anderson, A. (Motherwell)	Chater, D.	Evans, E. (Lowestoft)
Attewell, H. C.	Chetwynd, G. R.	Evans, S. N. (Wednesbury)
Attlee, Rt. Hon. C. R.	Cluse, W. S.	Ewart, R.
Austin, H. Lewis	Cobb, F. A.	Fairhurst, F.
Awbery, S. S.	Cocks, F. S.	Farthing, W. J.
Ayles, W. H.	Coldrick, W.	Fernyhough, E.
Ayrton Gould, Mrs B.	Collick, P.	Field, Capt. W. J.
Bacon, Miss A.	Collindridge, F.	Fletcher, E. G. M. (Islington, E.)
Baird, J.	Collins, V. J.	Follick, M.
Balfour, A.	Colman, Miss G. M.	Foot, M. M.
Barnes, Rt. Hon. A. J.	Comyns, Dr. L.	Forman, J. C.
Barstow, P. G.	Cook, T. F.	Fraser, T. (Hamilton)
Barton, C.	Cooper, G.	Freeman, J. (Watford)
Battley, J. R.	Corbet, Mrs. F. K. (Camb'well, N. W.)	Freeman, Peter (Newport)
Bechervaise, A. E.	Corlett, Dr. J.	Gaitskell, Rt. Hon. H. T. N.
Bellenger, Rt Hon. F. J.	Cove, W. G.	Ganley, Mrs. C. S.
Berry, H.	Crawley, A.	Gibbins, J.
Beswick, F.	Cripps, Rt. Hon. Sir S.	Gibson, C. W.
Bevan, Rt. Hon. A. (Ebbw Vale)	Crossman, R. H. S.	Gilzean, A.
Bevin, Rt. Hon. E. (Wandsworth, C.)	Cullen, Mrs.	Glanville, J. E. (Consett)
Bing, G. H. C.	Daines, P.	Gooch, E. G.
Binns, J.	Dalton, Rt. Hon. H.	Goodrich, H. E.
Blackburn, A. R.	Davies, Edward (Burslem)	Gordon-Walker, P. C.
Blenkinsop, A.	Davies, Ernest (Enfield)	Greenwood, Rt. Hon. A. (Wakefield)
Blyton, W. R.	Davies, Harold (Leek)	Greenwood, A. W. J. (Heywood)
Boardman, H.	Davies, Haydn (St. Pancras, S. W.)	Grenfell, D. R.
Bottomley, A. G.	Davies, R. J. (Westhoughton)	Grey, C. F.
Bowden, H. W.	Davies, S. O. (Merthyr)	Grierson, E.
Braddock, Mrs. E. M. (L'pl. Exch'ge)	Deer, G.	Griffiths, D. (Rother Valley)
Braddock, T. (Mitcham)	Diamond, J.	Griffiths, Rt. Hon. J. (Llanelly)
Bramall, E. A.	Dobbie, W.	Griffiths, W. D. (Moss Side)
Brook, D. (Halifax)	Dodds, N. N.	Guest, Dr. L. Haden
Brooks, T. J. (Rothwell)	Donovan, T.	Gunter, R. J.
Broughton, Dr. A. D. D.	Driberg, T. E. N.	Guy, W. H.
Brown, George (Belper)	Dugdale, J. (W. Bromwich)	Haire, John E. (Wycombe)
Brown, T. J. (Ince)	Dumpleton, C. W.	Halt, Leslie
Bruce, Maj. D. W. T.	Dye, S.	Hall Rt. Hon. Glenvil
Hamilton, Lieut.-Col. R.	Manning, Mrs. L. (Epping)	Silkin, Rt. Hon. L.
Hannan, W. (Maryhill)	Marquand, Rt. Hon. H. A.	Silverman, J. (Erdington)
Hardman, D. R.	Marshall, F. (Brightside)	Silverman, S. S. (Nelson)
Harrison, J.	Mathers, Rt. Hon. George	Simmons, C. J.
Hastings, Dr. Somerville.	Mayhew, C. P.	Skeffington-Lodge, T. C.
Haworth, J.	Medland, H. M.	Skinnard, F. W.
Henderson, Rt. Hon. A. (Kingswinford)	Mellish, R. J.	Smith, C. (Colchester)
Henderson, Joseph (Ardwick)	Messer, F.	Smith, Ellis (Stoke)
Herbison, Miss M.	Middleton, Mrs. L.	Smith, H. N. (Nottingham, S.)
Hewitson, Capt. M.	Mikardo, Ian	Smith, S. H. (Hull, S. W.)
Hobson, C. R.	Millington, Wing-Comdr. E. R.	Snow, J. W.
Holman, P.	Mitchison, G. R.	Sorensen, R. W.
Holmes, H. E. (Hemsworth)	Monslow, W.	Soskice, Rt. Hon. Sir Frank
Horabin, T. L.	Moody, A. S.	Sparks, J. A.
Houghton, Douglas	Morgan, Dr. H. B.	Steele, T.
Hoy, J.	Morley, R.	Stewart, Michael (Fulham, E.)
Hubbard, T.	Morris, Lt.-Col. H. (Sheffield, C.)	Stokes, R. R.
Hudson, J. H. (Ealing, W.)	Morris, P. (Swansea, W.)	Strachey, Rt. Hon. J.
Hughes, Emrys (S Ayr)	Morrison, Rt. Hon. H. (Lewisham, E.)	Strauss, Rt. Hon. G. R. (Lambeth)
Hughes, Hector (Aberdeen, N.)	Mort, D. L.	Stross, Dr. B.
Hughes, H. D. (W'lverh'pton, W.)	Moyle, A.	Stubbs, A. E.
Hynd, H. (Hackney, C.)	Murray, J. D.	Summerskill, Rt. Hon. Edith
Hynd, J. B. (Attercliffe)	Nally, W.	Swingler, S.
Irvine, A. J. (Liverpool)	Naylor, T. E.	Sylvester, G. O.
Irving, W. J. (Tottenham, N.)	Neal, H. (Claycross)	Symonds, A. L.
Isaacs, Rt. Hon. G. A.	Nichol, Mrs. M. E. (Bradford, N.)	Taylor, H. B. (Mansfield)
Janner, B.	Nicholls, H. R. (Stratford)	Taylor, Dr. S. (Barnet)
Jay, D. P. T.	Noel-Baker, Capt. F. E. (Brentford)	Thomas, D. E. (Aberdare)
Jeger, G. (Winchester)	Noel-Buxton, Lady	Thomas, Ivor Owen (Wrekin)
Jeger, Dr. S. W. (St. Pancras, S. E.)	O'Brien, T.	Thomas, John R. (Dover)
Jenkins, R. H.	Oldfield, W. H.	Thorneycroft, Harry (Clayton)
Johnston, Douglas	Oliver, G. H.	Thurtle, Ernest
Jones, Rt. Hon. A. C. (Shipley)	Orbach, M.	Tiffany, S.
Jones, D. T. (Hartlepool)	Paget, R. T.	Timmons, J.
Jones, J. H. (Bolton)	Paling, Rt. Hon. Wilfred (Wentworth)	Tolley, L.
Jones, P. Asterley (Hitchin)	Paling, Will T. (Dewsbury)	Tomlinson, Rt. Hon. G.
Keenan, W.	Palmer, A. M. F.	Turner-Samuels, M.
Key, Rt. Hon. C. W.	Pannell, T. C.	Ungoed-Thomas, L.
King, E. M.	Pargiter, G. A.	Vernon, Maj. W. F.
Kinghorn, Sqn.-Ldr. E.	Parker, J.	Viant, S. P.
Kinley, J.	Parkin, B. T.	Wallace, G. D. (Chislehurst)
Kirkwood, Rt. Hon. D.	Paton, Mrs. F. (Rushcliffe)	Wallace, H. W. (Walthamstow, E.)
Lang, G.	Paton, J. (Norwich)	Warbey, W. N.
Lavers, S.	Pearson, A.	Watkins, T. E.
Lawson, Rt. Hon. J. J.	Peart, T. F.	Weitzman, D.
Lee, F. (Hulme)	Perrins, W.	Wells, P. L. (Faversham)
Lee, Miss J. (Cannock)	Poole, Cecil (Lichfield)	Wells, W. T. (Walsall)
Leonard, W.	Popplewell, E.	West, D. G.
Leslie, J. R.	Porter, E. (Warrington)	Wheatley, Rt. Hn. John (Edinb'gh, E.)
Lever, N. H.	Porter, G. (Leeds)	White, H. (Derbyshire, N. E.)
Levy, B. W.	Price, M. Philips	Wigg, George
Lewis, A. W. J. (Upton)	Proctor, W. T.	Wilcock, Group-Capt C. A. B.
Lewis, J. (Bolton)	Pryde, D. J.	Wilkins, W. A.
Lewis, T. (Southampton)	Pursey, Comdr. H.	Willey, F. T. (Sunderland)
Lindgren, G. S.	Randall, H. E.	Willey, O. G. (Cleveland)
Lindsay, K. M. (Comb'd Eng. Univ.)	Ranger, J.	Williams, J. L. (Kelvingrove)
Lipton, Lt.-Col. M.	Rankin, J.	Williams, Ronald (Wigan)
Logan, D. G.	Reeves, J.	Williams, Rt. Hon. T. (Don Valley)
Longden, F.	Reid, T. (Swindon)	Williams, W. T. (Hammersmith, S.)
Lyne, A. W.	Ridealgh, Mrs. M.	Williams, W. R. (Heston)
McAdam, W.	Robens, A.	Willis, E.
McEntee, V. La. T.	Robertson, J. J. (Berwick)	Wills, Mrs. E. A.
McGhee, H. G.	Robinson, Kenneth (St. Pancras, N.)	Wilmot, Rt. Hon. J.
McGovern, J.	Rogers, G. H. R.	Wilson, Rt. Hon. J. H.
Mack, J. D.	Ross, William (Kilmarnock)	Wise, Major F. J.
McKay, J. (Wallsend)	Royle, C.	Woodburn, Rt. Hon A.
Mackay, R. W. G. (Hull, N. W.)	Sargood, R.	Woods, G. S.
McKinlay, A. S.	Scollan, T.	Wyatt, W.
McLeavy, F.	Scott-Elliot W.	Yates, V. F.
MacPherson, Malcolm (Stirling)	Segal, Dr. S.	Young, Sir R. (Newton)
Macpherson, T. (Romford)	Shackleton, E. A. A.	Younger, Hon. Kenneth
Mallalieu, E. L. (Brigg)	Sharp, Granville
Mallalieu, J. P. W. (Huddersfield)	Shawcross, C. N. (Widnes)	TELLERS FOR THE AYES:
Mann, Mrs. J.	Shinwell, Rt. Hon. E.	Mr. William Whiteley and
Manning, C. (Camberwell, N.)	Shurmer, P.	Mr. R. J. Taylor.
NOES
Agnew, Cmdr P. G.	Baxter, A. B.	Bossom, A. C.
Amory, D. Heathcoat	Beamish, Maj. T. V. H.	Bowen, R.
Anderson, Rt. Hn. Sir J. (Scot. Univ.)	Beechman, N. A.	Bower, N.
Assheton, Rt. Hon. R.	Bennett, Sir P.	Boyd-Carpenter, J. A.
Astor, Hon. M.	Birch, Nigel	Bracken, Rt. Hon. Brendan
Baldwin, A. E.	Boles, Lt.-Col. D. C. (Wells)	Braithwaite, Lt.-Cmdr. J. G.
Barlow, Sir J.	Boothby, R.	Bromley-Davenport, Lt.-Col. W.

Brown, W. J. (Rugby)	Hudson, Rt. Hon. R. S. (Southport)	Pitman, I. J.
Bullock, Capt. M.	Hulbert, Wing-Cdr. N. J.	Ponsonby, Col. C. E.
Butcher, H. W.	Hurd, A.	Poole, O. B. S. (Oswestry)
Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)	Hutchison, Lt.-Cm Clark (E'b'rgh, W.)	Prescott, Stanley
Byers, Frank	Hutchison, Col. J. R. (Glasgow, C.)	Prior-Palmer, Brig. O.
Carson, E.	Jarvis, Sir J.	Raikes, H. V.
Challen, C.	Jeffreys, General Sir G.	Ramsay, Maj. S.
Channon, H.	Jennings, R.	Rayner, Brig. R.
Churchill, Rt. Hon. W. S.	Joynson-Hicks, Hon. L. W.	Reed, Sir S. (Aylesbury)
Clarke, Col. R. S.	Keeling, E. H.	Renton, D.
Clifton-Brown, Lt.-Col. G.	Kerr, Sir J. Graham	Roberts, Emrys (Merioneth)
Cole, T. L.	Kingsmill, Lt.-Col. W. H.	Roberts, H. (Handsworth)
Conant, Maj. R. J. E.	Lambert, Hon. G.	Roberts, P. G. (Ecclesall)
Cooper-Key, E. M.	Lancaster, Col. C. G.	Robertson, Sir D. (Streatham)
Corbett, Lieut.-Col. U. (Ludlow)	Langford-Holt, J.	Robinson, Roland (Blackpool, S.)
Crookshank, Capt. Rt. Hon. H. F. C.	Law, Rt. Hon. R. K.	Ropner, Col. L.
Crosthwaite-Eyre, Col. O. E.	Legge-Bourke, Maj. E. A. H.	Ross, Sir R. D. (Londonderry)
Crowder, Capt. John E.	Lennox-Boyd, A. T.	Salter, Rt. Hon. Sir J. A.
Cuthbert, W. N.	Lindsay, M. (Solihull)	Sanderson, Sir F.
Darling, Sir W. Y.	Linstead, H. N.	Savory, Prof. D. L.
Davidson, Viscountess	Lloyd, Maj. Guy (Renfrew, E.)	Scott, Lord W.
Davies, Rt. Hn. Clement (Montgomery)	Lloyd, Selwyn (Wirral)	Shephard, S. (Newark)
De la Bère, R.	Low, A. R. W.	Shepherd, W. S. (Bucklow)
Digby, Simon Wingfield	Lucas, Major Sir J.	Smiles, Lt.-Col. Sir W.
Dodde-Parker, A. D.	Lucas-Tooth, Sir H.	Smith, E. P. (Ashford)
Donner, P. W.	Lyttelton, Rt. Hon. O.	Smithers, Sir W.
Dower, Col. A. V. G. (Penrith)	MacAndrew, Col. Sir C.	Spearman, A. C. M.
Dower, E. L. G. (Caithness)	McCallum, Maj. D.	Spence, H. R.
Drayson, G. B.	MacDonald, Sir M. (Inverness)	Stanley, Rt. Hon. O.
Dugdale, Maj. Sir T. (Richmond)	Macdonald, Sir P. (I. of Wight)	Stewart, J. Henderson (Fife, E.)
Duncan, Rt. Hn. Sir A. (City of Lond.)	McFarlane, C. S.	Stoddart-Scott, Col. M.
Duthie, W. S.	Mackeson, Brig. H. R.	Strauss, Henry (English Universities)
Eccles, D. M.	McKie, J. H. (Galloway)	Stuart, Rt. Hon. J. (Moray)
Eden, Rt. Hon. A.	Maclay, Hon. J. S.	Studholme, H. G.
Elliot, Lieut.-Col. Rt. Hon. Walter	Maclean, F. H. R. (Lancaster)	Sutcliffe, H.
Erroll, F. J.	MacLeod, J.	Taylor, C. S. (Eastbourne)
Fleming, Sqn.-Ldr. E. L.	Macmillan, Rt. Hon. Harold (Bromley)	Taylor, Vice-Adm. E. A. (P'dd't'n, S.)
Fletcher, W. (Bury)	Macpherson, N. (Dumfries)	Teeling, William
Foster, J. G. (Northwich)	Maitland, Comdr. J. W.	Thomas, Ivor (Keighley)
Fox, Sir G.	Manningham-Buller, R. E.
Fraser, H. C. P. (Stone)	Marlowe, A. A. H.	Thomas, J. P. L. (Hereford)
Fraser, Sir I. (Lonsdale)	Marples, A. E.	Thorneycroft, G. E. P. (Monmouth)
Fyfe, Rt. Hon. Sir D. P. M.	Marsden, Capt. A.	Thornton-Kemsley, C. N.
Gage, C.	Marshall, D. (Bodmin)	Thorp, Brigadier R. A. F.
Galbraith, Cmdr. T. D. (Pollok)	Marshall, S. H. (Sutton)	Touche, G. C.
Galbraith, T. G. D. (Hillhead)	Maude, J. C.	Turton, R. H.
Gates, Maj. E. E.	Medlicott, Brigadier F.	Tweedsmuir, Lady
George, Maj. Rt. Hn. G. Lloyd (P'ke)	Mellor, Sir J.	Vane, W. M. F.
George, Lady M. Lloyd (Anglesey)	Molson, A. H. E.	Wadsworth, G.
Glyn, Sir R.	Moore, Lt.-Col. Sir T.	Wakefield, Sir W. W.
Gomme-Duncan, Col. A.	Morris, Hopkin (Carmarthen)	Walkden, E.
Granville, E. (Eye)	Morris-Jones, Sir H.	Walker-Smith, D.
Gridley, Sir A.	Morrison, Maj. J. G. (Salisbury)	Ward, Hon. G. R.
Hannon, Sir P. (Moseley)	Morrison, Rt. Hon. W. S. (Cirencester)	Watt, Sir G. S. Harvie
Harden, J. R. E.	Mott-Radclyffe, C. E.	Webbe, Sir H. (Abbey)
Hare, Hon. J. H. (Woodbridge)	Mullan, Lt. C. H.	Wheatley, Colonel M. J. (Dorset, E.)
Harris, F. W. (Croydon, N.)	Neill, W. F. (Belfast, N.)	White, Sir D. (Fareham)
Harris, H. Wilson (Cambridge Univ.)	Neven-Spence, Sir B.	White, J. B. (Canterbury)
Harvey, Air-Comdre. A. V.	Nicholson, G.	Williams, C. (Torquay)
Haughton, S. G.	Nield, B. (Chester)	Williams, Gerald (Tonbridge)
Head, Brig. A. H.	Noble, Comdr. A. H. P.	Willoughby de Eresby, Lord
Headlam, Lieut.-Col. Rt. Hon. Sir C.	Nutting, Anthony	Winterton, Rt. Hon. Earl
Henderson, John (Cathcart)	Odey, G. W.	York, C.
Hinchingbrooke, Viscount	O'Neill, Rt. Hon. Sir H.	Young, Sir A. S. L. (Partick)
Hogg, Hon. Q.	Orr-Ewing, I. L.
Hollis, M. C.	Osborne, C.	TELLERS FOR THE NOES:
Holmes, Sir J. Stanley (Harwich)	Peake, Rt. Hon. O.	Mr. Buchan-Hepburn and
Hope, Lord J.	Peto, Brig. C. H. M.	Mr. Drewe.
Howard, Hon. A.	Pickthorn, K.

Main Question put.

The House divided: Ayes, 337; Noes, 5.

Division No. 262.]	AYES	[10.10 p.m
Acland, Sir Richard	Anderson, A. (Motherwell)	Bacon, Miss A.
Adams, Richard (Balham)	Attewell, H. C.	Baird, J.
Albu, A. H.	Attlee, Rt. Hon. C. R.	Balfour, A.
Alexander, Rt. Hon. A. V.	Austin, H. Lewis	Barnes, Rt. Hon. A. J.
Allen, A. C. (Bosworth)	Awbery, S. S.	Barstow, P. G.
Allen, Scholefield (Crewe)	Ayles, W. H.	Barton, C.
Alpass, J. H.	Ayrton Gould, Mrs. B.	Battley, J. R.
Bechervaise, A. E.	Gibson, C. W.	Mallalieu, E. L. (Brigg)
Bellenger, Rt Hon. F. J.	Gilzean, A.	Mallalieu, J. P. W. (Huddersfield)
Berry, H.	Gooch, E. G.	Mann, Mrs. J.
Beswick, F.	Goodrich, H. E.	Manning, C. (Camberwell, N.)
Bevan, Rt. Hon. A. (Ebbw Vale)	Gordon-Walker, P. C.	Manning, Mrs. L. (Epping)
Bevin, Rt. Hon. E. (Wandsworth, C.)	Greenwood, A. W. J. (Heywood)	Marquand, Rt. Hon. H. A.
Bing, G. H. C.	Grenfell, D. R.	Marshall, F. (Brightside)
Binns, J.	Grey, C. F.	Mathers, Rt. Hon. George
Blackburn, A. R.	Grierson, E.	Mayhew, C. P.
Blenkinsop, A.	Griffiths, D. (Rother Valley)	Medland, H. M.
Blyton, W. R.	Griffiths, Rt. Hon. J. (Llanelly)	Mellish, R. J.
Bottomley, A. G.	Griffiths, W. D. (Moss Side)	Messer, F.
Bowden, H. W.	Guest, Dr. L. Haden	Middleton, Mrs. L.
Braddock, Mrs. E. M. (L'pl, Exch'ge)	Gunter, R. J.	Mikardo, Ian
Bramall, E. A.	Guy, W. H.	Millington, Wing-Comdr. E. R.
Brook, D. (Halifax)	Hairs, John E. (Wycombe)	Mitchison, G. R.
Brooks, T. J. (Rothwell)	Hale, Leslie	Monslow, W.
Broughton, Dr. A. D. D.	Hall, Rt. Hon. Glenvil	Moody, A. S.
Brown, George (Belper)	Hamilton, Lieut.-Col. R.	Morgan, Dr. H. B.
Brown, T. J. (Ince)	Hannan, W. (Maryhill)	Morley, R.
Bruce, Maj. D. W. T.	Hardman, D. R.	Morris, Lt.-Col. H. (Sheffield, C.)
Burden, T. W.	Harrison, J.	Morris, P. (Swansea, W.)
Burks, W. A.	Hastings, Dr. Somerville.	Morrison, Rt. Hon. H. (Lewisham, E.)
Butler, H. W. (Hackney, S.)	Haworth, J.	Mort, D. L.
Callaghan, James	Henderson, Rt. Hon. A. (Kingswinford)	Moyle, A.
Carmichael, James	Henderson, Joseph (Ardwick)	Murray, J. D.
Champion, A. J.	Herbison, Miss M.	Nally, W.
Chater, D.	Hewitson, Capt. M.	Naylor, T. E.
Chetwynd, G. R.	Hobson, C. R.	Neal, H. (Claycross)
Cluse, W. S.	Holman, P.	Nichol, Mrs. M. E. (Bradford, N.)
Cobb, F. A.	Holmes, H. E. (Hemsworth)	Nicholls, H. R. (Stratford)
Cocks, F. S.	Horabin, T. L.	Noel-Baker, Capt. F. E. (Brentford)
Coldrick, W.	Houghton, Douglas	Noel-Buxton, Lady
Collick, P.	Hubbard, T.	Oldfield, W. H.
Collindridge, F.	Hudson, J. H. (Ealing, W.)	Oliver, G. H.
Collins, V. J.	Hughes, Hector (Aberdeen, N.)	Orbach, M.
Colman, Miss G. M.	Hughes, H. D. (W'lverh'pton, W.)	Paget, R. T.
Comyns, Dr. L.	Hurd, A.	Paling, Rt. Hon. Wilfred (Wentworth)
Cook, T. F.	Hynd, H. (Hackney, C.)	Paling, Will T. (Dewsbury)
Cooper, G.	Hynd, J. B. (Attercliffe)	Palmer, A. M. F.
Corbet, Mrs. F. K. (Camb'well, N. W.)	Irvine, A. J. (Liverpool)	Pannell, T. C.
Corbett, Dr. J.	Irving, W. J. (Tottenham, N.)	Pargiter, G. A.
Cove, W. G.	Isaacs, Rt. Hon. G. A.	Parker, J.
Crawley, A.	Janner, B.	Parkin, B. T.
Cripps, Rt. Hon. Sir S.	Jay, D. P. T.	Paton, Mrs. F. (Rushcliffe)
Crossman, R. H. S.	Jeger, G. (Winchester)	Paton, J. (Norwich)
Cullen, Mrs.	Jeger, Dr. S. W. (St. Pancras, S. E.)	Pearson, A.
Daines, P.	Jenkins, R. H.	Peart, T. F.
Davies, Edward (Burslem)	Johnston, Douglas	Perrins, W.
Davies, Ernest (Enfield)	Jones, D. T. (Hartlepool)	Poole, Cecil (Lichfield)
Davies, Harold (Leek)	Jones, J. H. (Bolton)	Porter, G. (Leeds)
Davies, Haydn (St. Pancras, S. W)	Jones, P. Asterley (Hitchin)	Proctor, W. T.
Davies, R. J. (Westhoughton)	Keenan, W.	Pryde, D. J.
Davies, S. O. (Merthyr)	Key, Rt. Hon. C. W.	Pursey, Comdr. H.
Deer, G.	King, E. M.	Randall, H. E.
Delargy, H. J.	Kinghorn, Sqn.-Ldr. E.	Ranger, J.
Diamond, J.	Kinley, J.	Reeves, J.
Dobbie, W.	Kirkwood, Rt. Hon. D.	Ridealgh, Mrs. M.
Donovan, T.	Lang, G.	Robens, A.
Driberg, T. E. N.	Lavers, S.	Robertson, J. J. (Berwick)
Dugdale, J. (W. Bromwich)	Lawson, Rt. Hon. J. J.	Robinson, Kenneth (St. Pancras, N.)
Dumpleton, C. W.	Lea, F. (Hulme)	Rogers, G. H. R.
Dye, S.	Lee, Miss J. (Cannock)	Ross, William (Kilmarnock)
Ede, Rt. Hon. J. C.	Leonard, W.	Royle, C.
Edelman, M.	Leslie, J. R.	Sargood, R.
Edwards, John (Blackburn)	Lever, N. H.	Scott-Elliot, W.
Edwards, Rt Hon. N. (Caerphilly)	Levy, B. W.	Segal, Dr. S.
Edwards, W. J. (Whitechapel)	Lewis, A. W. J. (Upton)	Shackleton, E. A. A.
Evans, Albert (Islington, W.)	Lewis, J. (Bolton)	Shawcross, C. N. (Widnes)
Evans, E. (Lowestoft)	Lewis, T. (Southampton)	Shinwell, Rt. Hon. E.
Evans, S. N. (Wednesbury)	Lindgren, G. S.	Shurmer, P.
Ewart, R.	Lipton, Lt.-Col. M.	Silkin, Rt. Hon. L.
Fairhurst, F.	Longden, F.	Silverman, J. (Erdington)
Farthing, W. J.	Lyne, A. W.	Silverman, S. S. (Nelson)
Field, Capt. W. J.	McAdam, W.	Simmons, C. J.
Fletcher, E. G. M. (Islington, E.)	McEntee, V. La. T.	Skeffington-Lodge, T. C.
Follick, M.	McGhee, H. G.	Skinnard, F. W.
Foot, M. M.	McGovern, J.	Smith, C. (Colchester)
Forman, J. C.	Mack, J. D.	Smith, Ellis (Stoke)
Fraser, T. (Hamilton)	McKay, J. (Wallsend)	Smith, H. N. (Nottingham, S.)
Freeman, J. (Watford)	Mackay, R. W. G. (Hull, N. W.)	Smith, S. H. (Hull, S. W.)
Freeman, Peter (Newport)	McKinlay, A. S.	Snow, J. W.
Gaitskell, Rt. Hon. H. T. N.	McLeavy, F.	Sorensen, R. W.
Ganley, Mrs. C. S.	MacPherson, Malcolm (Stirling)	Soskice, Rt. Hon. Sir Frank
Gibbins, J.	Macpherson, T. (Romford)	Sparks, J. A.

Steele, T.	Timmons, J.	Willey, F. T. (Sunderland)
Stewart, Michael (Fulham, E.)	Tolley, L.	Willey, O. G. (Cleveland)
Stokes, R. R.	Tomlinson, Rt. Hon. G.	Williams, J. L. (Kelvingrove)
Strachey, Rt. Hon. J.	Turner-Samuels, M.	Williams, Ronald (Wigan)
Strauss, Rt. Hon. G. R. (Lambeth)	Ungoed-Thomas, L.	Williams, Rt. Hon. T. (Don Valley)
Stross, Dr. B.	Vernon, Maj. W. F.	Williams, W. T. (Hammersmith, S.)
Stubbs, A. E.	Viant, S. P.	Williams, W. R. (Heston)
Summerskill, Rt Hon. Edith	Wallace, G. D. (Chislehurst)	Willis, E.
Swingler, S.	Wallace, H. W. (Walthamstow E.)	Wills, Mrs. E. A.
Sylvester, G. O.	Warbey, W. N.	Wilmot, Rt. Hon. J.
Symonds A. L.	Watkins, T. E.	Wilson, Rt. Hon. J. H.
Taylor, H. B. (Mansfield)	Weitzman, D.	Wise, Major F. J.
Taylor, R. J. (Morpeth)	Wells, P. L. (Faversham)	Woodburn, Rt. Hon. A.
Taylor, Dr. S. (Barnet)	Wells, W. T. (Walsall)	Woods, G. S.
Thomas, D. E. (Aberdare)	West, D. G.	Wyatt, W.
Thomas, Ivor Owen (Wrekin)	Wheatley, Rt. Hn. John (Edinb'gh, E.)	Yates, V. F.
Thomas, John R. (Dover)	White, H. (Derbyshire, N. E.)	Young, Sir R. (Newton)
Thorneycroft, Harry (Clayton)	Whiteley, Rt. Hon. W.	Younger, Hon. Kenneth
Thurtle, Ernest	Wigg, George
Tiffany, S.	Wilcock, Group-Capt. C. A. B.	TELLERS FOR THE AYES:
		Mr. Popplewell and Mr. Wilkins.
NOES
Gallacher, W.	Solley, L. J.	TELLERS FOR THE NOES:
Hutchinson, H. L. (Rusholme)	Zilliacus, K.	Mr. Platts-Mills and Mr. Piratin.
Pritt, D. N.

Resolved: That this House approves the lines of action to deal with the present economic difficulties as outlined in the Prime Minister's statement made on 24th October.