COST OF LIVING

HC Deb 07 November 1950 vol 480 cc774-825

3.36 p.m.

Mr. Macdonald (Roxburgh and Selkirk)

I beg to move, as an Amendment to the Address, at the end, to add, But humbly regret that the Gracious Speech contains no reference to the rising cost of living and makes no adequate proposals to relieve the growing burden of increasing prices on consumers, particularly on the lowest income groups. During the last few days, the House has shown in this Debate on the reply to the Gracious Speech its awareness of the urgency and gravity of the increase in the cost of living. The discussions in the House are a reflection of the fact that all over the country people are worried and feel insecure about this question. They realise that the new situation created by rearmament has probably aggravated the steady increase that they have noticed in the costs of their necessities of life. They read day after day of the fantastic rise in the price of raw materials—wool, cotton, tin, rubber and so on.

A few months ago, it seemed, to most of us, that our economic recovery had reached a stage where we could allay the feeling of insecurity which had been with us since the war, and the possibility of another major economic crisis, with its renewed austerity, seemed to have receded. A welcome move towards decontrol had been made, and, generally speaking, the country was at last beginning to feel that, in spite of its severe housing shortages, we were all getting back to a fuller life, provided we could keep the cost of living in check.

May I take this opportunity of congratulating the Chancellor of the Exchequer on his first great speech since he was elevated to his present high office, and on giving the House a remarkable review of our economic problems. No one will dispute his technical understanding of the situation, but it is disturbing that he appeared to have no fresh policies to offer to the House to combat the inflationary dangers which at present confront us, and will confront us still more in the near future.

Let us examine our situation to assess its strength and its weak points, as we must beware, on the one hand, of those fatalists who insist that we are moving into a war economy, and that there is no escape from siege-like restrictions and a serious fall in living standards, and, on the other, of those people who believe that a reasonable degree of rearmament is beyond our resources if we are to maintain our present standard of living.

Let us took therefore at our productive potential and the likely calls which are to be made upon it during the coming year. On the assets side of the balance sheet, we should not under-estimate our strength. Firstly, our gold and dollar reserves have doubled during the past year, and for the first time since the 1930's we have a surplus on our balance of payments. Secondly, our production is increasing satisfactorily, although not as greatly as some claims have been made for it from the Government benches. There is no doubt, however, that productivity is increasing, notably in the motor vehicle industry, in engineering, in steel and in chemicals, upon which the main impact of our rearmament will fall. It would not seem to be an over-estimate to put the prospective addition to our national output, in real terms for the next 12 months, at some additional £400 million. Furthermore, devaluation has to a great extent assisted the export of many of our manufactured products.

Mr. Logan (Liverpool, Scotland Division)

Is it in order for an hon. Member to keep reading his speech?

Mr. Speaker

I always deprecate it. We are not supposed to read speeches, but we can use notes, and copious notes at that. It really is an abuse of the Rules and a mistake to read speeches. which, I find, happens too often.

Mr. Logan

If a speech is to be read. I submit that it would be better if we could have advance copies.

Mr. Churchill (Woodford)

Does that Rule also apply to The Prime Minister?

Mr. Macdonald

I apologise to the House for the need to refer to notes more than is perhaps usual, but I am dealing with a very intricate subject. It is a very vital subject, and I want to cover a great deal of ground in as short a time as possible, so that as many Members who wish to take part in the Debate, and can catch your eye, Mr. Speaker, will be able to do so. I ask, therefore, for your indulgence in the matter, and I hope that I shall not have to ask for it again in any other speeches I have to make.

We have had in the last year a most notable recovery. It would not seem to be an over-estimate to put the productive increase to our national income at £400 million for this year. Thirdly, devaluation has to a great extent assisted the export of many of our manufactured products, although when dealing with the other side of the ledger, we must also mention its ill-effects. The whole problem turns upon our ability to increase productivity. What are the increased demands on that increased productivity of approximately £400 million, likely to be?

Firstly, there is rearmament, which we understand is likely to cost approximately £400 million this year, in addition to the £800 million we have put aside for our Armed Forces. Obviously, as we cannot use our full increase in productivity purely for rearmament, it is essential for us to come to some arrangement with America whereby she will grant us as much help as possible in this rearmament programme. I believe that America's contribution to us could be in the form of equipment, and, as we shall be United Nations forces, it would seem to be essential that we should use standardised equipment as far as possible.

No country in the world is more capable of producing large quantities of standardised equipment than America, particularly if she has the benefit of the combined brains in armament production of the scientists of the United Nations. Some types of armament would, undoubtedly, have to be made in this country, but by America providing practically all armament requirements, it would save a very big switch-over of manpower by us from some of our export and more important industries to war production, and therefore cause less dislocation in our vigorous attempt to reach economic stability.

Further, through O.E.E.C., or by direct negotiation with America, it is essential for ourselves, and all European countries who have to purchase the bulk of their raw materials from abroad, to come to some agreement with America, by which this wild scramble for wool, rubber, tin and other metals is kept in check. By a purchasing arrangement between the United Nations, the ridiculously high figures now being obtained for these commodities could be substantially reduced. A general agreement between the United Nations on this matter would prevent the likelihood of a serious shortage in raw materials cancelling out our efforts to increase productivity.

The second demand upon our increased productivity is the wage increases for the lower paid workers, which must be considered and, wherever possible, granted. These amount, I understand, to approximately £200 million, and it is reasonably certain to believe that if these rates are granted those skilled workers now earning slightly higher wage rates, will, in turn, ask for these differentials to be maintained. This would, of course, result in a far greater strain upon our resources. It is impossible to expect the wage freeze to continue much longer with rapidly rising retail prices; as the Chancellor of the Exchequer has said, he anticipates that by December the retail price index may be 116, and we know that the T.U.C. has stated that if and when it reaches 118, they can no longer retain the wage freeze.

The third demand is our export need to meet the increased cost of raw materials, which necessitates our exporting £250 million extra. Our export trade has shown a most encouraging rise for some time past, but this rise will need not only to be maintained, but increased, if our raw materials cost us an increased amount and we wish to balance our trade receipts. Fourthly, there is the vital need to help the old age pensions, and others, on a very low fixed pension income. By this statement, I mean the old age pensioners, the widows and disabled pensioners, each of whom live on £3 per week or less, and we must also help all children up to school leaving age. In the case of pensioners on £2 per week or less, I find it impossible to appreciate how they can live today with the high cost of everything that they need. Fifthly, there is the capital investment programme, such as houses, power stations, oil refineries and so on.

Now, what remedies can we suggest that the Government should take to increase productivity? I will put these under seven separate heads, some of which will be considered as highly controversial. Many of them, the House will recognise, do not represent vote-catching methods, because they will be extremely unpopular. However, I feel that it should be said. I believe that, in order to increase productivity, we must have a far greater feeling of partnership in industry between capital and labour. This can be achieved by co-ownership. During the last 10 years, as I have been interested in this subject, I have had the privilege of going through a large number of factories in the country, and in no case have I found, where the scheme is a generous one and well organised, and where the idea is continually re-sold to the workers, that the increase in output has been less than 6 per cent.—in some cases it has been very much higher.

We have had the examples for 60 years of the voluntary schemes introduced by people, such as Mr. Theodore Taylor, of J. and T. Taylor and Co., or the South Metropolitan Gas Company, and many others. As the House will be aware, J. and T. Taylor have distributed to their workers some £2¼ million from profits in the last 60 years in a highly competitive industry. The South Metropolitan Gas Company, in the same time, distributed approximately the same amount, and in neither case have these companies ever had one day or, possibly, one hour's labour dispute.

The Liberal Party has hoped that the industrialists would follow the examples of these and other' companies which I could have mentioned, who have proved the value of co-partnership in industry. But owing to short-sightedness or greed on the part of many employers, and to incomprehensible opposition by some trade union officials to the schemes, there are only 2 per cent. of the working population of this country today who benefit from such schemes, after 60 years of trial and error on a voluntary basis.

Therefore, we suggest to the Chancellor that as co-partnership and co-ownership in industry form one of the corner stones —they are not the whole solution to our problem—to a far greater industrial partnership, he should be prepared to give a tax inducement to those firms which are prepared to bring into force generous profit sharing schemes on behalf of their workers; and if, after a period of trial of that inducement, he finds that it has had very little effect upon the industrialists, we believe that it must be brought in by legislation.

The Liberal Party have examined this question of legislation. Compulsion is anathema to the Liberal Party, but we believe that this is such an important national development, if we are to give the worker far greater status in industry and a far greater interest in it than he possesses today, that it should become a national matter. Had we not brought in by legislation the Factory Acts how many of the factories today would have the present protective devices for their workers? How many would have had the washing facilities and other equipment that the workers need? They might by this time have had them but it would have taken a great many years more than it has taken. Therefore, let us give inducement an opportunity, but we believe that inducement will fail and that there will be no alternative to legislation, and we consider it to be so important that that must be undertaken.

Mr. Harold Davies (Leek)

I am interested in what the hon. Member has said about getting the confidence of both sides of industry, and on that I think that both sides of the House would agree. I remember raising this issue in 1947 in connection with the Companies Act and the Macmillan Report. I think that all the cards of profit should be on the table so that the trade union movement can see clearly how much profit is earned in industry. That is a great need, and I believe that we should have legislation to that effect, which has been demanded for many years.

Mr. Macdonald

I agree. We hear raised from time to time from the other side of the House the question why, if we have a wage freeze, there should not be a dividend freeze. That is a perfectly fair question to ask. I am against a wage freeze and I am against a profits freeze also because I believe that a profits freeze freezes incentive, initiative and efficiency in our industrial drive. I believe that profits should be unlimited—I underline unlimited—provided that they are not made by price rings or monopoly, that they are made in fair competition and are shared generously with those who have created them.

To limit dividends would, as I have said, be to limit efficiency and initiative. I have noticed with great pleasure some recent statements by Members on the other side of the House. The Parliamentary Secretary to the Admiralty, speaking at Colchester on 19th May, suggested that the return on capital should be limited by law and that surpluses should be divided fairly between workers and employers. That was reported in the "News Chronicle." Mr. Jack Tanner, President of the A.E.U., speaking to the national committee of his union on 12th June, suggested that dividends should be limited by law and that any additional surplus should be divided fairly between workers and employers. That was reported in "The Times."

This is not quite what we on these Benches want, but at any rate it is beginning to seep through. Here lies an opportunity for a closer relationship between labour and capital than has existed in the past. The Government of India are introducing legislation for compulsory profit sharing in the iron and steel, textile, cigarette and jute industries. In North Rhine Westphalia, two of the parties have decided to bring in by Government decree profit-sharing in their industries. In Norway, Sweden and Holland there is legislation on profits which is apparently of a temporary character, but this practice is growing in various parts of the world, and I hope that this House will not be laggard in realising that here is real progress.

Mr. Pannell (Leeds, West)

The hon. Member quoted the president of the A.E.U. Can he at the same time give the House any instance of any representative engineering employer being of the same opinion?

Mr. Macdonald

Is the hon. Member asking me whether any engineering employer is a sharer of profits?

Mr. Pannell

The hon. Member expressed a belief in profit sharing. In view of the present excessive profits in the engineering industry, the engineers consider that they ought to have something, and that is the reason why their president expressed that view. This is a two-way street. The engineering employers are represented on the other side of the House. The hon. Member will vote with them tonight.

Mr. Macdonald

I thank the hon. Member for his intervention. It is not that I cannot quote a case but I have not brought with me the list of firms concerned. That list includes many more than 1,000 concerns of which I know at the moment, and there are probably many more. I will lcok through that list and will undertake to inform the hon. Member, in writing if necessary, whether there are any engineering companies on that list.

Mr. John Grimston (St. Albans)

Is not Lord Nuffield a proud case of an engineering employer who has a profit-sharing scheme?

Mr. Pannell

I worked for Lord Nuffield for a period, and he is one of the bitterest anti-trade unionists in the country.

Mr. Speaker

It would be just as well to get on with the subject of the Debate, omitting these side issues. We should get on with the moving of an Amendment. I have not yet heard any reference to it.

Mr. Macdonald

I turn to my second proposal for helping productivity. Though we have all welcomed a reduction of working hours to a 40-hour week, it may be necessary, during the period of rearmament, which may mean the next three years or unfortunately longer, for us to ask ourselves whether we can any longer afford the 40-hour week. I believe that if this country is to increase its productivity it must increase its working hours by an extra half-hour per day for five days per week, that is two and a half hours per week, and that there should be no extra payment for that time. I believe that is one of the few ways of getting greater productivity and a cheaper cost of production. I believe it should be tried. if necessary, we may have to work still longer, but let us hope we can limit the increase to that.

The third point I suggest is that we should lower still further the Income Tax on overtime rates for those earning up to £500 per annum. I was very pleased that the Chancellor's predecessor reduced this rate in his last Budget, but I believe that it can be made still lower with very beneficial effects to productivity.

Fourthly, we must increase the labour force. We are undoubtedly experiencing a shortage of labour. All of us, on all sides of the House, welcome the full employment policy, and we Liberals, particularly, are pleased to see the success that has attended the Government's efforts in this matter. There is, however, a valuable source of labour which we are not using at present, and which can increase our productive effort very considerably. I refer to the group of people who we describe as old age pensioners. I have stated before in this House that I believe that their nomenclature is wrong and that they should be considered as long service pensioners. Psychologically, when we speak of them as old age pensioners, we think of them as fit only for the scrap heap.

In a great many instances these men and women are able and willing to work for a number of years beyond 65 for a man, and 60 for a woman. Provided that they are medically examined each year to ensure that they are fit to carry on, I believe that they should be permitted to remain in their work without losing their pensions. In other words, I mean that a contributory pensioner who, if he retires, would obtain his pension of 26s. per week at 65—or, if a woman, at 60—would not, as at the present time, lose the whole of his pension until he is 70 if he or she earned £2 6s. per week or more, over and above their pension. This is one of the greatest disincentives to people to continuing in their work.

Next is the question of the Monopolies Commission. which was created to deal with the activities of price rings and monopolies generally. It has sat for a year without producing a single report. This state of affairs should be remedied by strengthening the Commission and giving it a real part to play in cost-of -living policy. The next point is the problem of the network of protective tariffs which exist throughout the world and which are a fetter to the increased circulation of trade. I hope that the Torquay Conference, which is now meeting, will achieve substantial success in reducing these tariff barriers and thereby assist in reducing the cost of living.

I also believe that a high-powered expert committee should be formed to investigate Government expenditure throughout each of the Government Departments and each of the nationalised industries. I cannot tell the House where specific economies of any size can be made in the various Departments or nationalised industries, but in a Budget of Government expenditure which reaches approximately £4,000 million the services of a committee of this kind would surely be worth while, not in acting as a Geddes axe but in being able to effect substantial economies. These economies should then be passed on, in a graduated reduction in taxation, towards further increasing incentive and productive effort.

Finally, I hope that the Government will not act upon the proposal of the hon. Member for Coventry, East (Mr. Crossman), who suggested another capital levy. If such a levy were imposed, it would be disastrous to large-scale national savings, the lack of which contributes very much to the inflationary pressure. Who among us is likely to save if he anticipates that from time to time the Government will raid his savings by further capital levies? I will add a little note on National Savings. In the financial year ended 31st March, 1950, withdrawals of National Savings exceeded new savings by almost £68 million. The level of withdrawals was £67 million more than in the previous year. In 1948–49, small savers put into savings £37 million more than they took out.

In concluding this long speech I would explain that I have tried to suggest that the outlook for the cost of living is grim indeed, if we are to continue to rely solely on the Government's negative policy of piling on taxes and controls, and of bludgeoning the economy in a vain attempt to include in it a great arms drive. We shall get a certain increase in production automatically in the coming year, but it will be inadequate to meet the claims likely to be imposed upon it by the new defence bill, by demands for higher wages and by the need to increase exports to pay for dearer imports.

We must, therefore, first seek all ways of increasing production still further, and to the extent that we do so stiffer controls and compulsions will not be necessary. A reduction in Government expenditure as a result of a thoroughgoing investigation by a strong ad-hoc committee may enable taxation to be reduced slightly at points where it is most likely to call for the maximum additional effort. Longer hours, a lifting of compulsory retirement rules and of penalties upon the pensions of those who continue in work, plus a vigorous attack upon monopolistic practices and a world movement to break down barriers to trade between nations, together with a profit-sharing scheme throughout industry would, I believe, enable Britain to take re-armament in her stride without undue strain on the cost of living. It would create a far greater feeling of unity in the common effort than exists today.

Unfortunately, I have not seen any attempt in the Chancellor's able and quite courageous speech to face up to some of the sacrifices which we must make, both in leisure and in money, if we are to overcome this grave menace of a rapidly increasing cost of living.

Mr. Logan

Before the hon. Gentleman resumes his seat, may I ask him whether I understood him correctly to say that he would add half an hour a day without any increase of pay, and whether that is to be applicable to underpaid labour?

Mr. Macdonald

I believe that there should be half an hour's extra work per day for the five-day working week by all, including the under-paid worker. I believe that measures must be taken to meet the wage claims of the under-paid workers. Every class in this country has to face the sacrifices of rearmament. We must all do what we can to help those who are worse off than ourselves, because we all have to help in this productive effort.

4.7 p.m.

Mr. Donald Wade (Huddersfield, West)

I beg to second the Amendment.

If I may, I will read out the Amendment, which regrets that the Gracious Speech contains no reference to the rising cost of living and makes no adequate proposals to relieve the growing burden of increasing prices on consumers, particularly on the lowest income groups. In seconding this Amendment I wish to draw attention to a factor in the situation which I believe is most important and must be taken into account in considering this problem. It is that this is not a temporary emergency but that the conditions which we have to face are likely to continue for a number of years and that that must affect the remedies which we can apply. Even if there were a case to be made out for a capital levy it would not be suitable because we cannot successfully impose a capital levy year after year. The consequences would be disastrous to our economy. We have to consider remedies which would be applicable to more than one year.

We have to think not only of the day to day purchases which have gone up, but, of, for example, the young couples who are getting married. If they have been successful in getting houses to live in, they have to furnish them. That is a very heavy burden. We have to think of additions to the family, which means buying articles necessary when the babies arrive. We have to think also of the need to replace household articles. After the restrictions of the war years and the shortages of the post-war period, the need for replacement is greater than normal. Moreover, in the "bad old days" before the war many people, owing to unemployment, were unable to buy the things that were necessary. Many examples have been given of increased costs. I have a list here, with which I do not propose to burden the House. I have collected items from time to time at meetings which I have held in my constituency. I hold periodical meetings for women only, and I also hold the usual "surgery."

I have made a list. I have been surprised at the number of items about which housewives of all classes are genuinely concerned. Let me consider one or two examples. Frequently I hear about towels. I have checked the figures with my local chamber of trade. Utility towels, which one can buy for 5s. 1d., could have been purchased before the war, I am told, for about 1s. That is not the only trouble. If one cannot get hold of this utility towel one may be able to get an almost identical article for 7s. 11d. That has also been checked by the president of my local chamber of trade. I have also been asked about dusters. Before the war one could buy them for about 6d., but in June the cost was about 1s. 3d. and now it has risen to 1s. 7½d. and in some cases 2s. It is not original to produce an article in the House but I have been asked to draw the attention of hon. Members to this floorcloth which I have in my hand. I am told that this was about 6d. before the war, but in August it was 1s. 10d., a month later 2s. 1d., and now it is 2s. 2d. Bedspreads cost 3s. 11d. to 4s. 11d. in 1939 and today the utility price is 35s. to £2. So one could go on.

In a leading article in the "Manchester Guardian" on 4th November attention was drawn to the problem of the price index. It is the most difficult thing in the world to persuade the ordinary housewife that the cost of living has not gone up more than is suggested by the cost of living index. I think this is a fair comment. It says: The official index surely understates the impact of the higher prices on family budgets. While it no longer includes the price of such Victorian necessities as iron bedsteads and tallow candles, it does register a sharp fall when the gravity of beer is raised, and it does not reflect a rise in the price of sausages if their meat content increases at the same time. These methods are quite logical; but they would be more convincing if a man could ask for two-thirds of a pint of beer in the public house and make up the rise with water. He would then have something similar to last April's glass of beer for the same price. The article continues: The index makes no allowance for the declining quality of many articles it includes. Household bills have certainly risen more than the official two per cent. in 12 months. Finally, there is this comment: The pressure falls"— particularly heavily— on the low paid labourers, the pensioners, and particularly on the salaried middle class. We have to think of all classes and it is right to mention the middle-class. It may be that they have different standards than others and that they regard as necessities some things which others do not regard as necessities, but, after all, they are human beings with human feelings and they know what it means to feel the pinch and to face the hardships and difficulties of shopping.

I now return to the point I made at the beginning, that we are not dealing with a temporary emergency. It has an important bearing on the subject of controls. As I understand it, the Government view, as very ably set out by the Chancellor of the Exchequer, is roughly this, that the cost of living has not gone up as much as we thought, that it is going up a little more and that it is necessary to deal with the situation by strict price controls and other regulations. I read a very interesting report of a speech made by the President of the Board of Trade to the Standing Joint Committee of Working Women's Organisations in London on 31st October. I think it clearly represents the point of view of hon. Members opposite. The President referred to the necessity for controls and said: We shall in this difficult period which lies ahead of us maintain and, where necessary, extend the controls and the policies which have been successful in maintaining, in this country more than in almost any other country in the world, the purchasing power of our family incomes and the standards of living of our people. The point I wish to make is that these price regulations and controls will not in themselves solve the problem, though they may prevent it from getting out of hand. I shall not discuss the kind of world in which I should like to live; for the purpose of this Debate, at any rate, I shall take it as I find it, a controlled economy. I recognise that in that controlled economy hon. Members opposite believe in the necessity for probably tighter controls in order to prevent the situation getting out of hand, but that in itself will not ease the lot of people who are suffering now from the high cost of living.

In considering the remedies, we must remember the great variety of causes of the present state of affairs. These include rearmament, stock-piling in America and the problem of world prices. As my hon. Friend said, there is also the effect of import duties. For example, the duty of from 10 to 33⅓ per cent. on agricultural machinery has its indirect effect on agriculture. There are also price rings which have not yet been adequately tackled. There are also restrictive practices.

When I mentioned restrictive practices in a Debate some time ago I was challenged by the hon. Member for Reading, South (Mr. Mikardo), and as a result considerable correspondence has taken place between us, in which I have quoted a number of examples. I want to quote a paragraph from that correspondence because it leads to a further point that I wish to make. I suggested that in this matter of industrial relationships it was important that we should apply: The principle that where labour-saving machinery and increased turnover leads to increased profits, these additional profits should be shared by all engaged in the concern. According to a report in the Press on the Ogden factory dispute, Mr. Percy Belcher stated, 'We do not want to interfere with progress or with more efficient methods of production, but unless the workers in the factories get something out of the new methods—their share of any profits—we are not prepared to see these methods introduced without some kind of fight'. The question of industrial relationships has an important bearing on the whole problem of productivity and therefore indirectly on that of the cost of living. The fear of unemployment and the belief that men should not work only to make profits for the boss are ideas which still linger on and they account for some of the restrictive customs which we wish to see brought to an end. I read in the "Observer" on Sunday a paragraph about the new committee of eight which has been set up to consult with the Chancellor and to advise the Government on production and other economic problems arising from rearmament. I read that: It will also advise its parent body, the National Production Advisory Council on Industry, on what emergency measures or new controls are needed, and on how the idea of partnership in industry can be applied at all levels, from the bottom up. I hope that it will not be a matter of lip service but that something really effective and radical will be done in the way of increasing and improving the degree of partnership in industry.

The view I am trying to put across is that there are a great variety of causes for the present high cost of living and that there are a great variety of remedies. I believe that economies in administration by Government Departments, the demand for which we hear so often, will have a cumulative effect. I know it is easy to say that a particular example does not amount to much, but these add up, particularly if all the other remedies are applied.

The womenfolk of this country have had a pretty difficult time. They have borne their share of hardships during the war, they have had rather more than the average since the war, and they have been very patient. But how long will they go on putting up with it? In time of war we are all ready to work together and put up with all kinds of hardships. It is not necessary to exhort people; everybody responds as a matter of course until the victory is achieved. And in time of peace, if there is some temporary, grave emergency facing the nation, people will also respond. Here, however, we have a long-term problem which may last for years. Controls by themselves will not solve it. People will get more and more disgruntled. Hon. Members opposite ought themselves to be concerned about this because, if it is not tackled, it will be increasingly difficult to maintain the restraints which they believe necessary.

I see a long vista of disturbed international relations, with the threat of war and with preparations for war, and all the consequences these are bound to have on our economy. Unless this matter is tackled courageously, unless all possible remedies are brought to bear, I do not believe that it will be possible to increase, or even to maintain, the standard of living of our people.

4.24 p.m.

Mr. Jenkins (Birmingham, Stechford)

The hon. Member for Roxburgh and Selkirk (Mr. Macdonald), in moving the Amendment, gave us a moderate, wide-ranging survey of our general economic problems. However, I do not think he put forward anything which will be helpful, at least from a short-term point of view, in dealing with this immediate and pressing problem of the cost of living. Indeed, I thought it was a little cruel of his hon. Friend the Member for Huddersfield, West (Mr. Wade) to start by reading the Amendment which his hon. Friend had nominally moved.

Neither did the hon. Member for Huddersfield, West, tell us much about how we could deal with this problem. He talked in his peroration about a wide range of remedies, all of which would have to be applied to solve the problem, but the only one I heard him put forward clearly was the one his hon. Friend mentioned, the extension of co-partnership in industry. Whatever may be the merits of co-partnership, how much do hon. Members opposite really think it would help us in dealing with the cost of living during the next few months?

I do not think either hon. Member has cleared up what seems to me a central confusion in the heart of this Amendment. What is the nature of their primary charge against the Government? Is it that the Government are not stopping the rise in the cost of living which is taking place, or is it that the Government are not allowing an increase in the incomes of the less well-to-do to compensate for that rise? Because these two things, both of which are hinted at in all the speeches we hear from the other side of the House, from both parties opposite, are fairly near to being directly mutually contradictory.

We all know that there are a lot of external factors which are exerting inflationary pressure upon our economy. Last week the "Economist" listed three of them: the effects of devaluation, the Korean war, the boom in the United States. Those are all working outside our economy and are tending to exert an upward pressure. If the primary task of the Government, which they put before everything else, were that of keeping up the value of money, of preventing the right hon. Gentleman for Woodford (Mr. Churchill) from being able to say that the pound has gone down by such and such an amount, then Government policy is bound to be a policy of letting the outside inflationary pressure work itself out on real wages, that is, of letting real wages pay for it, of letting real wages go down.

If, however, the Government are more concerned, as I believe they should be, with the standard of living than with the cost of living—this is an important distinction which we should keep in mind in all our discussions of this problem; if the Government are more concerned with the standard of living, then it may be that certain wage increases can be allowed to take place. It may be also that certain adjustments in social security and in the National Assistance scales should take place, and that we should keep up the standard of living by those means. Certainly, the Liberal Party cannot ask us to improve by methods which might add a little to the inflationary pressure, the position of the low paid people, who are suffering most from the rise in the cost of living, and also at the same time say to us, "But, of course, if the purchasing power of the pound goes down by a penny more, we shall denounce you."

The main Opposition suggestion on how we might deal with the cost of living is simply the old and vague cry for a smaller Budget. That was certainly the main point we had from the right hon. and learned Member for Montgomery (Mr. C. Davies) last Thursday. It was certainly the main thing on this subject which we had from the right hon. Member for Aldershot (Mr. Lyttelton) on the same day. We on these benches are tired of waiting to be told how such Government savings could be effected. But assuming for the moment that they could be effected, we ought at least to be told how they would affect this question of the cost of living, but we are not told that either.

I can think of two ways in which they might affect the cost of living. If it were possible to make slashing reductions in Government expenditure and to use the resultant saving to reduce the duties on tobacco and beer, there would be a fall in the cost-of-living index as a result of the fall in the cost of those two things, but there would not be a general fall in the price level outside those two commodities. And any such reduction in Government expenditure could not be made by cutting the food subsidies if it were to serve this purpose—that is very important—and after all food subsidies provide the main Opposition target for retrenchment.

But whether such a fall would have a beneficial effect on the standard of living generally, and particularly of the standard of living of the people referred to in the Liberal Amendment, would depend entirely on what the saving was made. Unless it was made on defence or on the service of the National Debt—neither of which are favourite Opposition candidates for axing—it would probably have an adverse effect on the standard of living, because the people mentioned in the Liberal Amendment would be affected more by the loss of the real wages which would follow upon those economies than they would be by any reduction in the price of beer or tobacco.

I think that the Opposition have something a little more general in mind when they talk about a smaller Budget bringing down the cost of living. Perhaps they are thinking in terms of reducing the general pressure on resources, and by this means getting a fall in the general price level. Of course, that would only happen in so far as a smaller Budget led to a reduction of total demand. It would not happen at all merely by substituting increased private demand for reduced Government demand. Therefore, this move could only help the cost of living under two conditions.

The first of these is to reduce one side of the Budget but not the other; to reduce expenditure, if possible, but to keep up taxation. The concessions must not be distributed, but must be kept in the form of an increased surplus. The other possibility is to distribute, at any rate, some of these savings, but only to people who would themselves save a great proportion of the concession they received. That, of course, means the rich. Not all the rich would do that, but at any rate, the rich would do a good deal more saving than anybody else.

There are two things which follow from this. First, this method of tackling the cost of living by means of reducing the size of the Budget is a rather less simple thing than some hon. Members opposite seem to think. Second, any attempt to do the job by these means would have a strongly regressive effect upon the distribution of wealth. It has long been the Tory method to shelter behind the cry that the move towards big Budgets harms the poor even more than the rich. Perhaps I may remind the Liberal Party that the Tory Party said precisely that about the Budget of 1909; it is exactly what Mr. Austen Chamberlain said in those days. Of course, it was not true then, and it has never been true since. The move towards big Budgets and towards equality and a higher standard of living for most people, have been all bound up together, all part of one and the same process.

Another point which follows is that in any attempt to tackle the cost of living, to get prices stable or even to get them down by this method, especially in present circumstances with world prices moving so sharply against us, there would be a great danger that we would have to go so far in reducing total demand that we might put ourselves in a position of endangering full employment. The hon. Member for Chippenham (Mr. Eccles), in a speech last Thursday, said that if only it were not for Government extravagance we could perfectly easily have both full employment and stable price levels. That was a very interesting proposition, and I only wish that he had produced some evidence to support it, because I cannot think of any country with a relatively free economy in recent years which has enjoyed both full employment and stable prices at the same time.

Mr. David Eccles (Chippenham)

May I say two things? The first, of course, is that the size of the Budget affects the proportion of the people of working age who are on unproductive jobs; if we reduce the size of the Budget, we most certainly increase the number of people who are producing goods to get into the shops. That is one reason. The second thing, of which the hon. Member has spoken—and I agree with him—is the dilemma of our age: can there be stable prices and full employment? Because it has not been done, does not mean that I do not believe it can be done—I am sure that it can. One condition of having those two things is to be moderate in the proportion of the national income which is taken by the Government.

Mr. Jenkins

I am extremely glad to have the hon. Member confirming me in my view that there is no single example in a free economy of the combination of stable prices and full employment ever having occurred. He is perfectly entitled to say that as an act of faith he believes it is possible. That is all we have to go upon. Even the assurance that the hon. Member for Chippenham thinks it is possible, however, does not weigh as powerfully with me as would a few examples from countries which had achieved it.

Mr. Eccles

On his reasoning, the hon. Member says that there must always be rising prices as a concomitant to full employment.

Mr. Jenkins

Certainly, under the kind of economy with the attitude to controls which the Opposition are to advocate later today, we are bound to have that. Certainly, full employment creats a problem so far as rising prices are concerned, but it might well be a problem which in rather easier world conditions a planned government believing in controls would overcome.

Mr. R. S. Hudson (Southport)

Can the hon. Member name an example?

Mr. Jenkins

The example of this country between the time when we had a disinflationary Budget and when the world boom started came very near to achieving that aim, and so did certain Scandinavian countries—far nearer to it than any other countries which the hon. Member for Chippenham talked about. The countries of the free world are divided sharply into two classes. There are those which have full employment and have a price problem, and those which have heavy unemployment and may have had stable or falling prices.

Mr. Sydney Silverman (Nelson and Colne)

And a price problem, too.

Mr. Jenkins

Yes, of a different sort. There is no doubt that within the first category—countries which have had full employment—this country, except for the Scandinavian social democracies, has done far better in holding prices steady than has any other country—and, of course, we are still doing it. We may have price rises taking place, but they are very little compared with what is happening in Australia, New Zealand, or even the United States today.

It is not only what is happening around us in the world at present, but what has happened in the past in this country, which makes the attitude of the right hon. Member for Woodford—the noble Lord, Lord Woolton does it very much, too—when he implies that the simple fact that the purchasing power of the pound has fallen by a certain amount since 1945, is in itself a damning and complete indictment of the economic policy of the Government, particularly unconvincing.

That opinion must be based on a very curious view indeed of our monetary history. The fact is that there has been a secular fall in the value of money for many centuries. I do not suppose that many hon. Members opposite would suggest that we are worse off, economically at least, than we were many centuries ago. Those on the other side must also take a curious view of our recent history in the years before the war. There were periods then—my right hon. Friend the Chancellor of the Exchequer mentioned one of them last week—when the purchasing power of the pound increased quite sharply. The first was between 1920 and 1922, when the value of the pound on a 1914 basis went up from 8s. to 10s. 11d. The second was from 1930 to 1933, when it rose from 12s. 8d. to 14s. 3½d. But during both those periods the unemployment figures were going up much faster than was the value of the pound, and the general health and productive achievement of our economy were going down much faster.

Indeed, when we get on into the 'thirties and the period of "Tory recovery"—the period of the boom in the late 'thirties of which we are now hearing so much in connection with housing, and when things were at any rate somewhat better than at the worst of the slump—we had what the right hon. Member for Woodford now calls "the money cheat." Between January, 1933, and January, 1939, the pound fell from 14s. 3d. to 12s. 8d. [An HON. MEMBER: "It fell more in the last five years."] Yes, but we have got unemployment down to nearly 250,000, whereas then it never fell below 1¾ million. So far from the right hon. Gentleman's test being an adequate test of the general health of the economy, the fact is that the system in which he believes has been at its worst when prices were falling and at its best when prices were rising.

Therefore, I return to my original point that we must be concerned more about the 'standard of living than the cost of living. I think that an excessive preoccupation with the value of money might prevent us from allowing certain increases in wages possibly accompanied by certain adjustments in the National Assistance scales to which the nation is entitled at present. In my view, the wage stabilisation policy has served us well for a number of years, but circumstances are different now. Our danger today is not that of being priced out of world markets, but rather that of selling our exports too cheaply. The "Economist" said these things several times in last week's issue. This is a very serious matter. A year ago we devalued the pound to two dollars 80 and, by so doing, deliberately turned the terms of trade against us to help our dollar balance.

But what has happened since then has had the effect of carrying the terms of trade still further against us, far more than is necessary to help our dollar balance, and we have been put in a position such as we might have been in a year ago if we had devalued to the needlessly low level of two dollars 50 or two dollars 40. It means that we are continually giving a free gift to those with whom we trade. With all our commitments, and particularly the new rearmament programme, this is a thing we certainly cannot afford to do.

How do we propose to prevent this? One solution would be revaluation of the pound. There are cogent arguments for that, some of which were put forward in a letter to "The Times" yesterday by Mr. Dudley Seers. But, despite those arguments, I am inclined to accept the view that for international and other reasons revaluation of the pound is not possible at present. I believe the alternative is to allow a moderate rise in wages—not something without limit, or something which gets out of control, but a moderate rise which will put our export prices up and turn the balance of trade in our favour. By these means I think we can do much to preserve the standard of living in the months ahead.

I do not think the Liberal Amendment helps at all. I do not think it puts forward an effective policy for dealing with this enormous problem, or that it pays enough attention to international influences. I think it is too much preoccupied with the value of money and not enough occupied with the standard of living. As for the Tory Party, which is presumably going into the Lobby in support of the Amendment, every single aspect of their present policy suggests that, unless there were larger unemployment, there would be an increase, and not a reduction in the cost of living to a far greater extent than we have ever seen. I prefer the method of the Government which has kept the standard of living up, and will, I believe, continue to keep it up, to a higher level than we have ever previously known in this country.

4.45 p.m.

Mr. Maudling (Barnet)

I have listened with great interest, as I always do to the hon. Member for Birmingham, Stechford (Mr. Jenkins), when he speaks on economic problems, and I thought he gave a very good explanation of the policy of continuous controlled inflation, although I think it would have been a little more fashionable in the spring and summer of 1947 than it is today.

As I understood the hon. Member's argument, it was that there are no examples of economies which combine stable prices with full employment and that, therefore, if we want full employment we cannot expect, at the same time, to have stable prices. I believe his outlook is that we must choose between stable prices and full employment and cannot have both; and that his party chooses full employment.

Mr. Jenkins

I thought I made my point on that clear in reply to an interjection by the hon. Member for Chippenham (Mr. Eccles). I certainly do not think that in an uncontrolled economy we could have stable prices and full employment and there is no example of that to be found. As far as a controlled economy is concerned, I still think it is a difficult task, but it can be achieved, provided world conditions are not working against us as they are today.

Mr. Maudling

The hon. Member says that a combination of full employment and stable prices should be possible under a controlled economy. We have been living under a controlled economy for the last five years, but the possibility has yet to materialise.

I support the Amendment because it emphasises the importance of the problem of rising prices. I do not think it is easy to exaggerate the gravity of this problem, but I think it quite easy to underestimate how prices can be driven upwards in the next few months and the next year or two. In my opinion it is not a question of bringing prices down, but a question of stopping a further and more rapid rise in prices. That is the real danger of the problem. I doubt whether the expenditure at present contemplated on rearmament will prove to be enough. The cost of armaments is rising rapidly. A fighter aircraft. I am told, now costs £25,000. Very soon it might cost £100,000. A bomber may rise from £100,000 to half a million pounds. We may well have to pay more for rearmament than we contemplate at the moment.

I suggest that there are three major influences working to increase prices. First, there are the effects of devaluation which, strangely enough, the hon. Member seemed to regard as an external factor. I should have thought it was internal. The first factor is devaluation working itself out and the second is the rearmament demand, internationally and internally. There is international competition for scarce resources, in metals, and so on, and internal demand from manufacturers stocking up for rearmament orders, which is another factor in driving up prices.

Finally, there is the pressure of wage increases and the undoubted increases in wages to be expected over the next few months which are fully justified. I am sure both sides of the House fully recognise that many wage increases must inevitably take place in the near future, although it is to be hoped that they will be restrained as they have been in the past year or two by the good sense of the trade union movement. I agree that, at the same time, there are increases in dividends which, on a small scale are having a psychological effect which may be greater than the economic effect. The economic effect has been nil in the last few months.

How are we to tackle the question of restraining the rise in prices? Surely the first thing to aim at is increased production, because the object of reducing the cost of living is to increase the consumption of the ordinary people. When people say that they want the cost of living to come down, they mean they want more to consume, more to eat, more to wear and more to put in their houses. As the "Economist" pointed out the other day, if we increase wages while maintaining prices stable and do not increase production the effect will be merely further inflation. We must have more production.

I echo what was said by the mover of the Amendment, that there may be a need for increasing working hours in the next few months, but I do not think it is a practical proposition without increased pay. It does not seem to me to make sense. When there is spare capacity in the aircraft industry on a large scale and big rearmament orders to be met in the near future, surely there is a case for increased hours of work.

The next point I should like to make is in regard to reducing restrictive practices both of capital and labour. I know that a great deal about restrictive practices is said on both sides of the House that is perhaps inaccurate, but I should like to know what is happening about an inquiry into restrictive practices of labour which was mentioned by the Lord President of the Council in April, 1949. A sub-committee of the National Joint Advisory Committee was to produce a report on restrictive practices so that the House and the country could judge the position and try to suggest what could be done. Nothing more, to my knowledge, has been heard of the work of that Committee since April, 1949.

Then, on the other side, there is the Monopolies Commission, to which reference has been made. I agree that it is desirable that the first report of that Commission should be issued as soon as possible. Both sides of the House will be interested for varying reasons in the reports which are to be made, and the sooner they are available the better, because surely if we are to reduce prices one of the most effective methods is to stimulate competition.

Much is said about the level of profits. and it is an easy argument for hon. Members on the other side of the House to say, "Look at the level of profits. There is great scope for bringing down prices without affecting anyone's standard of living." Hon. Members forget that at least 60 per cent.—and in the long run more than 60 per cent.—of profits go to the Chancellor of the Exchequer. The second point to remember is that it is misleading to refer to the global level of profits, because in this global figure of profits many companies are having difficulty in maintaining their capital intact, while other companies are certainly earning or have been earning inflationary profits. Despite the high level of gross profits, according to the White Paper, many companies of substantial stature in industry have been unable to maintain their working capital, and are having to go to the market for further capital, such as The Imperial Tobacco Company. There has been a move recently out of Daltons into Dulvertons. So if any attempt to reduce profits is not selective, it will do a great deal of harm. Surely the only way to eliminate any excessive profits is by more competition. I hope we shall have some action in the aspect of encouraging competition and reducing restrictive practices.

My next point is the question of credit control. I believe that the Government have not exhausted the possibilities of selective credit control.

Mr. Woodburn (Clackmannan and East Stirlingshire)

The hon. Member suggests that increased competition would tend to restrict excessive profits, and the one instance he gives of that is in connection with the capital of the Imperial Tobacco Company. Is he suggesting that there is any possibility of introducing competition into that field?

Mr. Maudling

If the right hon. Gentleman will look into the industry mentioned he will see that it is by no means a monopoly industry. He should remember that the existence of an industrial giant is not quite the same thing as the existence of a monopoly.

I believe it is true that instructions have been issued recently from the Treasury to our banking system to tighten up control of credit on a selective basis. That is a wise move, but surely the Government should make quite certain that in their own credit policy they support this movement which they are imposing on the banking system. The movements recently in the volume of bank deposits suggests that we have seen a certain return to what I might call the 1947 system of Government monetary policy. I hope the authorities will resist the temptation to dress up the gilt-edged markets in advance of a new issue of nationalised stock if this involves more credit creation. That would not be in the interests of reducing or holding the cost of living.

My next point refers to the value of the pound to which reference has already been made. I agree that there is much evidence at the moment that sterling is undervalued, particularly in relation to the dollar, and any under-valuation may increase, because the American inflation may be faster than ours. Their rearmament effort and the extent of the assistance they are offering to other countries overseas will tend to put a much greater pressure on their economy than the pressure exerted on our economy. If the pound is undervalued, we are selling our exports much cheaper than we ought to do; for example, it is the experience of many business men that it is not price competition so much as tariff regulations which impede us in the American market.

What is the solution? I agree that revaluation to a new fixed parity would not be satisfactory. For one thing the present closing of the dollar gap may be only temporary. It depends a good deal on the level of commodity prices, and that depends on the extent of the stockpiling demands of the American authorities, which is unknown to the general public and may well be unknown in detail to His Majesty's Government. Secondly, I doubt if other members of the International Monetary Fund would agree to a revaluation of sterling to a higher fixed value unless it were accompanied by measures for increasing the convertibility of sterling. I would ask His Majesty's Government if they should not look again at their whole attitude to the question of fixed parities in foreign exchange, and the doctrines that have been adopted in these recent years, because we have been getting some very peculiar circumstances as the result of fixed parities.

We have had an economic crisis in this country because we have had an adverse balance of foreign trade. Australia has had a favourable balance of trade, but also it has had a crisis. This suggests that the position is a little difficult, and certainly the present system of fixed values is an encouragement to speculative movements of hot money which Members opposite so much oppose. There is a greater movement of that kind of money under this system than there would be in a free exchange market. I would ask the Government to consider following the example of the Canadian Government, who have freed their dollar. It would be possible, while maintaining present controls over capital, and, if necessary, current payments, to allow the pound to find its own level in a free exchange market. That would be a higher level and the movement in the valuation of the pound would have an immediate effect, though a small one at first, on the cost of living through its effect on import prices.

My next point is the question of the purchase of commodities. The Chancellor of the Exchequer the other day referred to measures the Government were introducing to co-ordinate the purchase of strategic commodities by the Western Powers. I hope that will be pressed ahead, but I cannot but look with concern at the new trade agreement with Russia, whereby sterling will be made available to the Russians for the purchase of wool, rubber and other commodities which are in such demand in international markets. I hope that measures were taken before we entered into this agreement, and made this sterling available to co-ordinate policy with our Western allies.

I come, finally, to the question of the budgetary position in this country. I have left it till last, because I do not want to deal at any length with the budgetary position. Quite clearly, if we are to be faced with this heavy rearmament programme on top of rising prices we shall have to have another Budget surplus, and that Budget surplus must be met somehow. I hope that, so far as possible, it will be met by reducing Government expenditure. One thing I hope the Chancellor will not do is to introduce another capital levy, for this reason: it is economic nonsense, and hon. Members opposite who study these matters know that it is economic nonsense. The idea of a Budget surplus is to take money out of current expenditure. By reducing a man's income one stops that man spending money; but by reducing his capital one does not stop him spending money. As a distinguished lawyer said to me the day after the last investment income levy, "I am going to spend my capital before the rats get at it." He was not referring to hon. Gentlemen opposite, but merely expressing a general point of view.

We cannot stop the expenditure of capital by curtailing capital: we merely stop savings. A capital levy is economic nonsense. I know that we shall be told that it is psychological sense, but all hon. Members opposite mean by this is that they will try to console the ordinary voter by saying, "We cannot reduce your burden, but we shall put an extra burden on another chap for good measure so that you can enjoy seeing him having a bad time." I also ask the House to remember that there is already a substantial capital gains tax inherent in the heavy rate of Stamp Duty which falls at this moment on both capital profits and capital losses.

I have been trying to outline a number of ways in which the problem of rising costs can be tackled and I want to end as I started. The problem is not one of reducing the cost of living so much as of holding it steady, as far as we possibly can, and every possible weapon should be brought into play in solving this vital problem.

5.2 p.m.

Mr. W. F. Williams (Hammersmith, South)

I hope that the hon. Member for Barnet (Mr. Maudling) will forgive me if I do not follow him over the very wide area he has travelled, partly because I have promised to be brief. I may, however, in what I have to say speak incidentally on some of the points he has raised.

I have listened with great interest to this Debate. It has seemed to me that, in general, the Opposition understand as the only means, or at least the most effective means, of holding or reducing the cost of living some method of limiting and controlling Government expenditure. If I may say so, that seems to me to be in one respect irrelevant and in another dishonest at this juncture. Irrelevant, because anything that the Government do in the limitation of expenditure must be a long-term matter. Clearly the speeches from these benches have shown that the urgency of the problem is one that demands immediate and immediately successful action. Dishonest, because it is admitted generally, I believe—certainly by those who have studied the subject—that any reduction in Government expenditure immediately could only result immediately not in a reduction of prices but in an increase.

We have heard considerable criticism of the Government bulk buying programme, and an attack has been made again in this Debate, as in previous Debates, on the Government policy subsidies. Well, it is clear that if bulk buying were abandoned the consequences would be an immediate increase in prices. Secondly, whatever the long-term effects of changes in any policy subsidies, it is perfectly clear that the only effect on the mass of the working people in any way would be an immediate increase in their cost of living.

Perhaps, it would be as well if we were to ask ourselves what immediate action should be taken to discuss ways and means of reducing the cost of living on the actual cost of articles sold. There are five things which I suggest might be regarded as the essentials which go into the price of any article on sale: raw materials; wages, distributive costs; profits, and general overheads.

Brigadier Thorp (Berwick-upon-Tweed)

What about Purchase Tax?

Mr. Williams

And Purchase Tax, yes. It is true to say that, generally speaking, the Government policy on raw materials has succeeded at least in holding prices level, and in making it possible, by means of subsidies, to reduce the cost of the article beyond even the cost to the Government for the purchaser at the retail level. My hon. Friend the Member for Stechford (Mr. Jenkins), spoke at considerable length on the way in which Government expenditure in these matters has succeeded in maintaining a stable level of prices in this country.

On the other hand, too few speakers in this Debate so far have concerned themselves with the contribution of wages to costs. I suggest that, so far from the position being as suggested by the hon. Member for Barnet—that, unless there were increased productivity, increased wages without increased prices would result in a further inflationary pressure—the reality is rather that our economy can now, and indeed will have to, bear an increase of wages of about 5 per cent. I think the Government recognise that. Undoubtedly the negotiations that are going on for wage increases at the moment will result, and must result, in some increases, and I believe our economy can bear it.

The important thing is to emphasise a point on which I believe the Government are on strong ground; what has happened in this country is that increasing costs have been related closely to the increase in real wages, so that the standard of living has not suffered. In this difficult situation the Government ought more pointedly to make real to the people the fact that the standard of their living has been maintained by Government policy.

I should like to say a few words on distributive costs. This is something about which the Government really could do a great deal more than they are doing. Distributive costs in this country are far too high. Already there are far too many people who make little or no contribution, but who in distributive costs take profits out of industry. It was some months ago that I had the honour of leading a debate in this House on the scandal of re-sale price maintenance. At that time the President of the Board of Trade was good enough to say that the matter was being looked into, and was engaging his close attention. From that time to this we have heard nothing. Re-sale price maintenance continues, and protects the inefficient to the sacrifice of the consumer.

I am proud to be a member of the Co-operative movement, and I think the Government might make far greater use of the Co-operative movement than they are doing in this respect, because, as I think the President of the Board of Trade would be the first to admit, the movement has been successful in helping to keep down our cost of living—and I do not refer to dividends. Recently an approach was made to the President of the Board of Trade from a large distributive agency asking that the margins of profits on distribution should be increased, and I have no doubt that the hands of the President were greatly strengthened by the fact that the Co-operative movement dissociated itself from that demand, so that my right hon. Friend was able to say that the movement found its distributive margin sufficient, and so protected the consumer.

However, the particular point about which I want to speak, and which I should be glad if you would permit me to elaborate a little more fully, Mr. Deputy-Speaker, is the relationship of profits to the cost of living. Here I think I shall find myself at loggerheads with hon. Gentlemen opposite. From researches which I have made, I believe that it cannot be contradicted that it is still true to say that profits, in the words of our last Chancellor of the Exchequer, are still frightfully high in this country. The rise in profits of private enterprise from 1938 to 1948, according to Cmd. 7649, was from £1,173 million to £2,857 million, or to 274 per cent. of 1938.

In the same period, wages and salaries rose by 205 per cent., but the increase in employment was 4 to 5 per cent., so that the wages per unit employed rose to 196 per cent. over 1938. This figure falls further, to 175 per cent., if coal miners are omitted from the table.

Mr. Maudling

Could the hon. Gentleman quote the index figure for the rises in the cost of capital equipment and stocks which have to be met out of gross profits?

Mr. Williams

I expected that question, because it has become fashionable for the Opposition to say that depreciation allowances are inadequate and that the cost of replacements, and so on, is high. In 1948 provision for depreciation for business, private and public, was 2.3 times the 1938 figure, compared with a rise in wholesale prices of 2.0 times the 1938 figure. I quote from the "Economic Journal" for 1949. In money terms, out of a total of £7,100 million earned by private enterprise in 1948, 47 per cent. went in wages, 13 per cent. in salaries and 40 per cent. in profits.

Profits, therefore, are a substantial factor in prices. According to H. Champion's "Public and Private Property" the pre-war value of private industry was roughly £7,000 million. I suggest that, excluding the nationalised industries, at 1948 prices this may be put at £15,000 million or £16,000 million. The gross profits of private enterprise represent 19 per cent. of this figure and net profits represent 14 per cent., so that, since this is the average, I suggest that the returns on capital at the highest levels must be considered handsome.

In the light of this data, I suggest to the Government that there is a real possibility of deliberate price reduction at the expense of profits. I know that the answer will depend on whether one believes that 14 per cent. is right, or that profits should be allowed to rise wherever they will, or that they should rise by 2½ per cent. or 5 per cent.; but at least I believe that nobody could think it unreasonable if profits were regarded as fair which gave a rise equal to the average rise in wages. It should be remembered that in 1938 profits were the highest for 15 years.

If this were done, £700 million would be available for price reduction. That would be equal to a magnitude of price reductions over the whole field, spread over consumption, Government purchases, capital formations and exports, of up to 7 per cent.

Mr. Maudling

If £700 million is knocked off profits, would not £420 million be knocked off taxation?

Mr. Williams

That I admit. But it must also be borne in mind that if we are to have this change, it would be a change in the distribution of income among the whole of the people. If it is true that the Exchequer would lose, in some respects, it would gain in others by the gain in taxation at lower levels. Surely it is admitted that the heaviest burdens fall upon the poorest. The Government should seek to obtain the greatest relief for the poorest among the nation even though it might cause headaches for the Chancellor of the Exchequer. Though I could not work out the whole policy in the time at my disposal. I suggest that these are the lines upon which the Treasury should be working.

In view of the frightfully high profits which, as the former Chancellor of the Exchequer said, are being earned by private enterprise, and the fact that replacements are allowed at a very Generous level, and that it is not true to insist—as has been constantly insisted—that depreciation allowances and so on are too low to permit a lower level of profits, it is of the highest importance that the Government should seek to explore the levels of profits to discover if there is no way by which direct relief may be given to the people, specifically at the expense of profits.

I have tried to keep within the 10 minutes allowed me, Mr. Deputy-Speaker, and I conclude with one final argument. This, too, is controversial. It is possible that hon. Gentlemen opposite will again ask such questions as, "If this happens what follows from the point of view of the Exchequer?" I have not the time—and I could not do it at this point even if I wanted to—to explain or follow out all the implications of my suggestion. Nevertheless, I suggest that it is a substantial level at which the cost of living should be attacked by the Government with direct benefit to the people, to industry and the nation generally.

I suggest that, among other overheads which are greatly increasing the cost of living, possibly coal stands as one of the supreme charges on industry. One of the questions which the Government might easily explore—and I should be glad to know if it was being done—would be whether a direct subsidy should be given to coal. If the cost of coal could be reduced, then the effect upon all our industry would be progressive

5.18 p.m.

Major Sir David Maxwell Fyfe (Liverpool, West Derby)

I did my best to follow the hon. Member for Hammersmith, South (Mr. W. T. Williams), but I think, as he rather indicated towards the close of his speech, the point would have come out more clearly if he had devoted more attention to the contribution which the profits which he was discussing are making to the Revenue at present. Certainly, without a full allowance for the fact that over 60 per cent. goes to the Chancellor of the Exchequer, the relevance and weight of his point are much more difficult to perceive.

I welcome this Amendment from the Liberal benches, largely because I believe that the two statements which will go out to ordinary people in the country from these days of debate will be, first, that the Government believe that they have succeeded in holding prices; and, secondly, that the Government believe, as was shown yesterday, that the rate of house building cannot be increased. These are the points affecting the ordinary life of the ordinary person after all economic difficulties have been considered. We have had two additions today. The hon. Member for Stechford (Mr. Jenkins) has put forward a plea for greatly inflationary increases in wages and prices of exports, and, again let us face what that means. It is a planned attack on savings. I do not believe that saving is the prerogative of a class. I know, as hon. Gentlemen opposite know, that saving is a quality which goes through every income range among our people and must be recognised and respected wherever it exists.

In the very short time which I promise to detain the House. I want to devote my remarks to factors which I believe are within the control of the Government in dealing with the problem of the cost of living. The first is that of Government expenditure, and the second is the price of the products and services of the nationalised industries in this country. In my view, and nothing that I have heard has shaken it, there are three aspects in which the Government expenditure affects the cost of living. There is, first of all, the incidence of taxation; and I calculate that direct and indirect taxation means a total payment to the State on the average of £2 10s. out of the average worker's income of £6 10s. per week, and, in the case of a married man, where the P.A.Y.E. goes down, there are corresponding increases in articles subject to indirect taxation.

The second point is a perfectly simple one. [Interruption.] Perhaps the hon. Gentleman will do me the honour not to interrupt. I have promised to take only 10 minutes, and, though I generally give way, I am afraid that I cannot do so tonight. The second point, and this again is an incontrovertible one, is that, if we have a Government expenditure in the region of £4,000 million, we must increase the competition for the goods that are left in the country, putting up the prices of those goods. The third point, which is also indisputable, is that, if we believe in a highly centralised and top-heavy system of administration, ipso facto we take people from productive industry into that work and occupy people normally engaged in productive industry in form-filling and the various requirements of centralised Government.

That is the position, and therefore I believe that if we are serious about this —and, believe me, if anyone goes round any shopping centre in his division, he will find out how serious it is for the ordinary person at the present time; we all know it and cannot get away from it— we have to do at least four things immediately. I believe that, as my right hon. Friend the Member for Aldershot (Mr. Lyttelton) said, we must attack the expenditure at the centre. Secondly, I believe that we must have some form of check, which does not exist at the moment, on local extravagance. I find wherever I go that somebody knows a number of cases of local extravagance. There is no method by which they are being checked at the moment, and unless a check is instituted that extravagance will go on.

The third point is that I believe that we have to eliminate bulk buying in the case of non-strategical goods, and, once again, I come to the frills. I say that, in a situation like this, when Government expenditure is one of the factors, to have these frills of expenditure that we have seen on groundnuts, on Government publicity, on Civil Service travelling, on Government building, is something we cannot afford at the present time. I believe that, if we were to take it irrespective of party and ask our own people in our own constituencies, "What is your priority?" they would say, "Cut these frills now and reduce Government expenditure," with the results which I have indicated.

The other point which I believe must be dealt with is that of the cost of the products of nationalised industries. It simply is not good enough to turn losses into an even keel or profits by putting up the prices of the products to people who have no alternative place to which to go or no alternative product to buy. These are really the economics of Bedlam. If we take coal, electricity or transport, we all know that they are hitting our people because the Government has not made any efforts or adopted any suggestions towards improvement and increased efficiency in our nationalised industries which would reduce the prices.

I can only put it in outline, but we believe in decentralisation for this very good reason—that it is in accordance with the traditions and genius of the British people that local problems can be dealt with best by local people who understand them and local conditions, and that is the basis of our decentralisation proposal for coal, electricity, and transport. We believe that, if it was only given a real trial—not a pretence, but a real trial—it would bring not only greater efficiency but the lower prices which are so essential at the present time. We have had seven years' investigation miles removed from the problem. We have created monopolies; we have created a Monopoly Commission. Let us have the State monopolies examined by the Commission to clear out the classic faults of monopoly, which are resting on your laurels and lack of efficiency, and—let us face it—laziness when we have a complete market.

I have tried to indicate shortly and in outline the lines on which we think this problem can be attacked, and these are under the control of the Government. Therefore, my hon. Friends and I will vote for this Amendment to show our desire that these things shall be done and our realisation that this is a problem not for talk in economists' classrooms, but for immediate action for the benefit of the people of our country on whom the burden falls.

Mr. Woodburn

May I ask the right hon. and learned Gentleman two questions? Would he make clear whether he regards profits and losses as the index of efficiency? For instance, I understand that the nationalised industries are condemned for making losses, because that is inefficient, and now the right hon. and learned Gentleman seems to attack them for making profits, because that is overcharging. The second question is: Is it his policy to pay any regard to the index figures of the economists?

Sir D. Maxwell Fyfe

I am always glad to answer questions from the right hon. Gentleman. On the first question, the point I made is this. When nationalised industries have made enormous losses—as coal did in the first year, and as transport did in the first year, the second year and again in the third year—the one way in which we must not allow the industry to slide into destroying that loss is by passing it straight on to the consumer. That is not fair to the consumer. The way to get rid of that loss is by the increased efficiency of the undertaking and I have suggested that in a broad way. In regard to the index figure, I do not think the index figure can be anything like right. In September, it showed a drop from 114 to 113. But there are 32 articles in general use by the ordinary housewife which have gone up since March this year. I do not think that the basis of the index figure can be right when it produces that result.

5.30 p.m.

Mr. Grimond (Orkney and Shetland)

The hon. Member for Stechford (Mr. Jenkins) accused us of being too preoccupied with the value of the pound. I dare say that, in certain circumstances, that would be a fair criticism, but it is with the value of their money, with what it will buy, that the people of this country are deeply concerned today. Further, he asked us to draw a distinction between the standard of living and the cost of living. Our Amendment is intended to draw attention to the fact that unless the cost of living is reduced, the standard will inevitably fall, and many of the benefits which have been won during the last 20 or 25 years will be lost. I think it will be generally agreed, at any rate in private, that this question of the cost of living is something which is of the very deepest concern to ordinary people. It is something which for many people even overshadows housing and the threat of war.

One would have thought that a Government who believe in planning—and I believe in planning if by planning we mean the direction of the resources of the country on broad lines for the benefit of the people—would have put this problem in the forefront of their thinking. Although I believe it is mentioned in the King's speech there does not appear to have been any new thought on it since the last Budget. I do not suppose that anyone believes that either the buying of the shares of the Beet Sugar Corporation which are held in private hands, or the Bill for the restriction of salmon poaching in Scotland are going to do much towards lowering the cost of living.

The Government remain tied to their two practices which they announced in the spring—subsidies and controls. At that time we had a small incentive by way of a slight reduction in Income Tax which was, in effect, taken away again by a swingeing increase in the Petrol Duty. The position with regard to subsidies today is curious. I have nothing against subsidies; on the contrary, I accept that we must have subsidies as part of our general plan when they are likely to achieve their objective. But what I do not believe is that subsidies are fixed at their present level as part of any plan at all. I think they were caught at that level when the taxable resources of the country ran out and all our ceilings became floors.

We are told that there is no possibility of a reduction in the size of our annual Budget. I quite agree that no Government of whatever party could make a slashing reduction in the Budget at this moment. It is obvious that rearmament will cost a great deal, that pensions will have to be increased, and that the cost of our social services will tend to mount over the years ahead. But, nevertheless, certain practical proposals have been put forward. For instance, we proposed that the Ministry of Civil Aviation might be abolished. Furthermore, while I believe that on administration it may be very difficult for anyone not inside the Government machine to point out exactly where the wheels are sticking, no one can get away from the fact that countless people in the country today have to deal with Government Departments, and, again and again, we meet men who point out where two officials are doing a job which could be done by one, or where two journeys are made where one would suffice.

It is very difficult to believe that that can all be explained away. Therefore, we say that some reduction in the administration of Government offices is possible. Even if it is only a small reduction, it would have a great psychological effect. Everyone knows that an inflationary situation is increased so long as people believe that it must continue. Even if the reduction were small, it would give some promise to the people that increased taxation was ending, and that the Government were going to set an example in the economy which they so often call on others to practice. On the one hand, therefore, we hope for some indication of Government economy, and, on the other, we suggest that the only way eventually to bring down prices, to fill our shops and to stabilise the cost of living is by greater productivity—greater than 5 per cent. or even 15 per cent.

On wages, up to now the Government's policy has been to hold what we may call the "Cripps' Line," and we must be exceeding grateful to the trade unions for the battle they have waged to hold that line whatever we may think of the strategy which made that battle necessary. But it is obvious that before rearmament came on the scene the line was already crumbling, and rearmament will make it almost certain that the line will be smashed. It can only be reformed elsewhere by a wages policy and higher productivity.

The reports of nearly all the committees that went to America to investigate production there go to show that one of the great differences between that country and this is that in America there is an expansionist outlook in their industries. They believe that by selling more goods at a cheaper price they will meet the needs of the ordinary people. They also believe in the right to promotion of the ordinary worker, and we on these benches think, at any rate, that some of those ideas should be put into practice over here. We want to see workers climbing up in their industries. We must face this fact that wages in most industries should be a reward for effort and are not yet a social security payment. By all means let us have a basic wages policy with a minimum wage, but after that it is necessary that the man who is prepared to work harder or better, thus adding to our production, should be given some reward for that extra production.

Earlier in the Debate we had suggestions regarding profit-sharing as it would affect wage earners. I wish to draw attention to the fact that this question of productivity is, in the first instance, primarily one of management. The Government may do a great deal to hamper or to help managements. One of the things they can do to help managements is to make their plans known, to stick to them, and to give as much information as possible. I believe that once again we cannot get a fixed price for ships because the shipbuilding industry will not quote a price owing to their apprehension concerning the cost of steel after nationalisation. Again, I think we may well have to have an even greater differential between the tax levied on unearned income and that levied on earned income so that the man who is earning by his efforts and who is showing initiative receives some reward for doing so.

If the hon. Member for Hammersmith, South (Mr. W. T. Williams), when he talks of high profits, is condemning the system by which a guaranteed profit margin is given to many monopolistic firms, efficient or inefficient, then I think there is a great deal in his criticism which is valid, though I think he should quote net and not gross profits. I have no doubt that the correct way to deal with the matter is to encourage competition in those industries, and to break up monopolies. But, at the same time, he must bear in mind that it is with these profits that our capital is built up; and it is very doubtful whether we are able to build up quickly enough today even with the profits that are being earned. There is a case for distinguishing between Death Duties on what one might call inactive capital and Death Duties imposed on what one might call active capital in, for instance family businesses.

We do not believe, today, that the main problem facing this country is any longer, in the first instance, the redistribution of wealth. We believe the party opposite have been too much obsessed by the mentality of the 1920's—the need to "whang" the rich. They have been effectively "whanged," and, if there is to be any more "whanging" to be done, the margin is small. The need today is to create more real wealth for all the people of the country—to increase production. We need for that an entirely new outlook. I do not believe nationalisation is going to do it. I do not believe that the people of this country believe that nationalisation is going to do it, and I do not believe that workers in the industries that have been nationalised would say, privately, that it was going to do it.

I do not believe a restrictive outlook will do it. Let us break down this restrictive practice on both sides of industry. We must have an expansionist outlook and believe in making and selling a lot of goods and bringing down prices. I do not believe that centralised bureaucratic control will do it. Controls we must have, but controls themselves will be smashed inevitably by rising prices. We on this side want to see some indication on the part of the Government that they appreciate the problem not as one of statistics but in terms of human values and that they have some new thought to offer upon it.

5.42 p.m.

The Secretary of State for the Home Department (Mr. Ede)

We have had a very interesting and I think, compared with yesterday, a very placid debate on this subject; and I hope that nothing I shall say will disturb these smooth waters over which most of us have sailed during the course of this afternoon. Of course we were greatly helped by the fact that the speech of the hon. Member for Roxburgh and Selkirk (Mr. Macdonald), who moved the Amendment, was really one that ought to have been delivered last week in the general debate on the Address because, as Mr. Speaker said, he did not find very much about the Amendment in it.

After all, in the opening phases of his speech, he supported the policy that His Majesty's Government have been pursuing and are, at the moment, pursuing, with increased activity in extending bulk buying to international bulk buying as the only way in which to prevent an inordinate increase in the cost of those materials that will be required by all the Western nations in their rearmament programme. But the hon. Member for Huddersfield, West (Mr. Wade), who seconded the Amendment, said one thing which I think has been largely absent from the rest of the speeches on the other side. He said he wanted to deal with the world in which we are living. After all, that is the problem that confronts the Government, We have to deal with the world, not as we would like to have it, but as it is, and to face this topic in its real relationships not merely with this country but with the rest of the world.

Judged by that standard, this country has been more successful than any other country in dealing with the post-war problems that confront us. The right hon. Gentleman the Member for Woodford (Mr. Churchill) from time to time quotes the extent to which the pound has fallen since the end of the war. What other currency is there in Western Europe or America that has fallen less than ours? At the present moment, and I suppose it is winding up today, there is a great deal of attention being given to this problem in the United States of America. Some kind gentleman sends me every week a copy of the American journal "Newsweek," and I see in the last issue that reached me a cartoon out of the "Sioux City Journal-Tribune" about the shrinking dollar. To quote that cartoon, the dollar has shrunk to 57 cents over a period of which I am not quite aware. I think it goes back to something earlier than 1945, let me be quite frank on that. Of course this has been used in the United States as one of the propaganda weapons of the Republican Party to discredit the Government there.

But with all their resources, the fall in United States currency has been approximately the same—I think slightly more. I do not want to press it too hard—as the fall in the value of the currency in this country over the period since the war. That is an indication that the policies pursued by this Government have, at least, been as successful in dealing with our situation as the policy of what is now the richest nation in the world and one with the greatest economic opportunities. After all, we have had to face the loss of all our overseas investments. We now have to pay by the current products of this country for all the goods we require, whether for feeding our people or for providing them with raw materials——

Mr. Pickthorn (Carlton)

In making these comparisons of devaluation of the pound and the dollar, will the right hon. Gentleman tell the House which is the giving end and which is the receiving end of the Marshall Aid scheme?

Mr. Ede

Really, after all, we have now reached a stage, owing to the policy of this Government and, I admit, with a bit of luck, where we find ourselves in a position where Marshall Aid is no longer a requisite of our economy. But the right hon. Gentleman the Member for Wood-ford at the Conservative Party Conference in 1945——

Mr. Churchill

Is this to be taken as a declaration that the Government do not expect any continuance of Marshall Aid?

Mr. Ede

Certainly not. I was dealing with the economy before the rearmament programme. Undoubtedly the rearmament programme has——

Mr. Churchill

I really think this ought to be put quite plainly, because we see in the papers that questions have been raised as to whether Marshall Aid should be continued now, and a statement like that coming from the Home Secretary at this moment may conceivably lead to decisions which I was not aware, from anything we have been told, that the Chancellor of the Exchequer is either expecting or welcoming.

Mr. Ede

The discussions are proceeding, but it does not alter the fact that we are now in a position where, over the last few months at least, we have been able to balance our payments.

Mr. Pickthorn

What about my question?

Mr. Ede

I was trying to get to the hon. Gentleman's question, but I was interrupted by his right hon. Friend the Member for Woodford. The right hon. Gentleman himself said at the Conservative Party Conference in March, 1945, when he thought he would have the task of dealing with our post-war economy: We have given our all in the common cause and may claim assistance to recover our normal economy from those we have helped to victory.

Mr. Churchill

The right hon. Gentleman might also bear witness to the efforts which I made to commend to the people of the United States the Government's request for the thousand million loan, and we did not call them "shabby moneylenders."

Mr. Ede

My memory of the Loan is quite clear. The right hon. Gentleman himself abstained and advised his hon. Friends to abstain in the division that was taken in the House on that question. [Interruption.] A further effort is being made by the hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite) to divert me from what I am trying to say.

We have been urged by many hon. Members opposite to do something to increase productivity. This Government have a better record with regard to the productivity that has occurred during their term of office than any other Government who have held office in this country. From January, 1949, till September of this year, taking the 1946 production index as 100, the figure of production has risen from 124 to 142 or 143. We shall continue to do all that we can to encourage productivity, and we want to bear our testimony to the willing way in which both management and workpeople have co-operated to ensure that magnificent result.

We recognise also the splendid self-discipline that has been displayed by the workers of this country in the demands that they have put forward during the past few years. They have been in a position of tremendous economic power where, had they decided to exert their economic power to the full extent of its capacity, they could have completely brought to a standstill any hope of our economic recovery. Their attitude has been in strikine contrast to that of the employing section of the community in the period between the two wars when economic power rested with them. We recognise that there may have to be in the near future some reconsideration of some of these levels, but we believe that the same patriotic self-discipline will be exercised by these people, for they at least know that the future of their prosperity depends upon this country being able to maintain the high position that it has managed to achieve through their efforts during the last few years.

I accept the view expressed by my hon. Friend the Member for Stechford (Mr. Jenkins), in his very able speech, that we must have regard not merely to the cost of living but to the standard of living. By securing full employment, we have given to the people of this country the opportunity, among the lowest paid workers, of enjoying a higher standard of living continuously than has ever been the case in the past. I recollect the days when I was a schoolmaster and had to deal with working class children in schools before there was any unemployment insurance or anything else like that —just the poor law. Unemployment was rampant, and the miseries and hardships that were then suffered presented a picture in this country very different from that which confronts us today. We shall continue with our policy of full employment, and we shall take every step that we possibly can to safeguard and perfect it.

I have been asked by one or two hon. Members about the continuance of bulk buying. For most of the commodities bulk buying has now ceased, except in the food markets. The commodity in which the price hay risen most, wool, is one that is now entirely controlled by private buying. With regard to food, however, and some other materials that are essential for the maintenance of our economy, we shall continue to use bulk purchase. We are fortified in the belief that that is the right policy by the Report of United Nations Economic Commission for Europe, which was quoted once or twice last week, and which I think I ought to

quote again so that there shall be no doubt about it. In their Report for 1949 they say: European countries were able to protect their economies from the unfavourable effects of the changed price structure in the world at large, partly through the methods of bulk buying which enabled the United Kingdom in particular to obtain basic foodstuffs at relatively low prices. That policy we still believe to be right.

We cannot in this country—and I should have thought this would have been widely recognised on the Liberal benches —isolate ourselves from world conditions. We are living in a world in which prices are bound to rise, and to talk of reducing prices is in fact to declare oneself completely out of touch with what is taking place throughout the world. Our policy has secured during the past five years that the cost of living has risen less in this country than in those countries which have abandoned the policies of control that we have used, and has enabled our people to get both food and raw materials in conditions that cannot be equalled by any other country in the world.

We recognise that it is impossible in this world, divided as it is at present, to anticipate that there will be any reduction in the cost of living, but what we are determined to do is to ensure that in that world there shall be the exercise of such powers by the Government, assisted by all connected with industry, as to ensure that we are able to maintain full employment for our people and that the standard of living shall remain as high as possible. With the continued rise in productivity we believe that we shall manage to get through the difficult period of the next two or three years without inflicting hardship on any members of our community.

Question put, "That those words be there added."

The House divided: Ayes, 284; Noes, 299.

Division No. 2.]	AYES	[5.55 p.m
Aitken, W. T.	Beamish, Maj. T V H	Bowen, R.
Alport, C. J. M.	Bell, R. M.	Bower, N.
Amery, J. (Preston, N.)	Bennett, Sir P. (Edgbaston)	Boyd-Carpenter, J. A.
Amory, D. Heathcoat (Tiverton)	Bennett, R F B (Gosport)	Bracken, Rt. Hon. Brendan
Arbuthnot, John	Bennett, W. G. (Woodside)	Braine, B.
Ashton, H. (Chelmsford)	Bevins, J. R. (Liverpool, Tox[...]eth)	Braithwaite, Lt.-Comdr J. G
Assheton, Rt. Hon R (Blackburn, W	Birch, Nigel	Bromley-Davenport, Lt.-Col. W
Astor. Hon. M	Bishop, F. P	Brooke, H. (Hampstead)
Baldock, J. M	Black, C. W.	Browne, J. N. (Govan)
Baldwin, A. E	Boles, Lt.-Col D C (Well[...]	Buchan-Hepburn, P. G T
Banks, Col C.	Boothby, R.	Bullock, Capt. M.
Baxter, A. B.	Bossom, A. C	Bullus, Wing Commander E. E
Burden, Squadron Leader F. A.	Hudson, Sir Austin (Lewisham, N.)	Pitman, I. J.
Butcher, H. W.	Hudson, Rt. Hon. R. S. (Southport)	Powell, J. Enoch
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)	Hudson, W R. A. (Hull, N.)	Prescott, Stanley
Carr, L. R. (Mitcham)	Hulbert, Wing Cdr N. J.	Price, H. A. (Lewisham, W.)
Carson, Hon. E.	Hutchinson, Geoffrey (Ifford, N.)	Prior-Palmer, Brig. O.
Channon, H.	Hutchison, Lt.-Com. Clark (E'b'rgh W.)	Profumo, J. D.
Churchill, Rt. Hon. W. S.	Hutchison, Col. J. R. H. (Scotstoun)	Raikes, H. V.
Clarke, Col. R. S. (East Grinstead)	Hyde, H. M.	Rayner, Brig. R
Clarke, Brig. T. H. (Portsmouth, W.)	Hylton-Foster, H. B.	Redmayne, M.
Clyde, J. L.	Jeffreys, General Sir G.	Remnant, Hon. P
Colegate, A.	Jennings, R.	Renton, D. L. M.
Conant, Maj. R. J. E.	Johnson, Howard S. (Kemptown)	Roberts, P. G. (Healey)
Cooper, A. E. (Ilford, S.)	Joynson-Hicks, Hon. L. W.	Robertson, Sir D. (Caithness)
Cooper-Key, E. M.	Kaberry, D.	Robinson, J. Roland (Blackpool, S.)
Ccrbett, Lieut.-Col. U. (Ludlow)	Keeling, E. H.	Robson-Brown, W. (Esher)
Craddock, G. B. (Spelthorne)	Kerr, H. W. (Cambridge)	Rodgers, John (Sevenoaks)
Cranborne, Viscount	Kingsmill, Lt.-Col. W. H	Roper, Sir H.
Crookshank, Capt. Rt. Hon. H. F C	Lambert, Hon. G.	Ropner, Col. L.
Cross, Rt. Hon. Sir R.	Laneaster, Col. C. G	Ross, Sir R. D. (Londonderry)
Crosthwaite-Eyre, Col. O. E.	Langford-Holt, J.	Russell, R. S.
Crouch, R. F.	Law, Rt. Hon. R. K.	Ryder, Capt. R. E. D.
Crowder, F. P. (Ruislip-Northwood)	Leather, E. H. C.	Sandys, Rt. Hon. D.
C[...]thbert, W. N.	Leggs-Bourke, Maj. E. A. H	Savory, Prof. D. L
Darling, Sir W Y. (Edinburgh, S.)	Lennox-Boyd, A. T	Scott, Donald
Davidson, Viscountess	Lindsay, Martin	Smiles, Lt.-Col. Sir W
Davies, Rt. Hn. Clement (Montgomery)	Linstead, H. N.	Smith, E. Martin (Grantham)
Davies, Nigel (Epping)	Llewellyn, D.	Smithers, Peter H. B. (Winchester)
de Chair, S.	Lloyd, Rt. Hon. G. (King's Norton)	Smithers, Sir W. (Orpington)
De la Bére, R	Lloyd, Maj. Guy (Renfrew, E.)	Smyth, Brig. J. G. (Norwood)
Deedes, W. F.	Lloyd, Selwyn (Wirral)	Snadden, W. McN.
Digby, S. Wingfield	Lockwood, Lt.-Col. J. C	Soames, Capt. C.
Dodds-Parker, A. D	Longden, G. J. M. (Herts[...] S.W)	Spearman, A. C. M.
Donner, P. W.	Low, A. R. W.	Spence, H. R. (Aberdeenshire, W.)
Douglas-Hamilton, Lord [...]	Lucas, Major Sir J. (Portsmouth, S.)	Spens, Sir P. (Kensington, S.)
Drayson, G. B.	Lucas-Tooth, Sir H	Stanley, Capt. Hon. R. (N. Fylde)
Drewe, C.	Lyttelton, Rt. Hon. O.	Stevens, G. P
Dugdale, Maj. Sir T (Richmond)	McAdden, S. J.	Steward, W A. (Woolwich, W.)
Duncan, Capt. J A L	McCallum, Maj. D	Stewart, J. Henderson (Fife, E.)
Dunglass, Lord	McCorquodale, Rt. Hon. M. S	Stoddart-Scott, Col. M.
Duthie W. S	Macdonald, Sir P. (I. of Wight)	Strauss, Henry (Norwich, S.)
Eccles, D M.	Mackeson, Brig. H. R	Stuart, Rt. Hon. J. (Moray)
Elliot, Lieut.-Col. Rt. Hon Walter	McKibbin, A.	Studholme, H. G.
Erroll, F. J.	McKie, J H. (Galloway)	Summers, G. S.
Fisher, Nigel	Maclay, Hon. J. S.	Sutcliffe, H.
Fletcher, W. (Bury)	Maclean, F. H. R.	Taylor, C. S. (Eastbourne)
fort, R.	MacLeod, lain (Enfield, W.)	Taylor, W. J. (Bradford, N.)
Foster, J. G.	MacLeod, John (Ross and Cromarty)	Teeling, William
Fraser, Hon. H. C. P. (Stone)	Macmillan, Rt. Hon. Harold (Bromley)	Thomas, J. P. L. (Hereford)
Fraser, Sir I. (Lonsdale)	Macpherson, N. (Dumfries)	Thompson, K. P. (Walton)
Fyfe, Rt. Hon. Sir D. P. M	Maitland, Comdr. J. W.	Thompson, R. H. M (Croy[...], W.)
Galbraith, Cmdr. T. D (Pollok)	Manningham-Buller, R. E	Thorneycroft, G. E. P (Monmouth)
Galbraith, T. G. D. (Hillhead)	Marlowe, A. A. H.	Thornton-Kemsley, C N
Gammans, L. D.	Marples, A. E.	Thorp, Brigadier R. A. F
Gamer-Evans, E. H. (Denbigh)	Marshall, D. (Bodmin)	Tilney, John
Gates, Maj. E E.	Marshall, S. H. (Sutton)	Touche, G. C.
Glyn, Sir R.	Maude, A. E. U. (Ealing, S.)	Turner, H. F. L.
Grimston, Hon. J (St. Albans)	Maude, J. C. (Exeter)	Turton, R. H.
Grimston, R. V. (Westbury)	Maudling, R.	Tweedsmuir, Lady
Harden, J. R. E.	Medlicott, Brigadier F.	Vane, W. M. F.
Hare, Hon. J. H. (Woodbridge)	Mellor, Sir J.	Vaughan-Morgan, J. K.
Harris, F. W. (Croydon, N.)	Molson, A H. E.	Vosper, D. F
Harris, R. R. (Heston)	Moore, Lt.-Col. Sir T.	Wade, D. W.
Harvey, Air Codre A. V. (Ma[...]lesfield)	Morris, R. Hopkin (Carmarthen)	Wakefield, E. B. (Derbyshire, W.)
Harvey, Ian (Harrow, E.)	Morrison, Maj. J. G. (Salisbury)	Wakefield, Sir W. W (St. Marylebond)
Hay, John	Mott-Radclyffe, C. E.	Walker-Smith, D. C.
Head, Brig. A H	Nabarro, G.	Ward, Hon. G. R. (Wo[...])
Headlam, Lieut.-Col Rt. Hon Sir C	Nicholls, H.	Ward, Miss I. (Tynemouth)
Heald, L. F.	Nicholson, G.	Waterhouse, Capt. C
Heath, Edward	Nield, B. (Chester)	Watkinson, H.
Henderson, John (Catheart)	Noble, Comdr. A. H. P	Webbe, Sir H. (London)
Hicks-Beach, Maj. W. W.	Nugent, G R. H.	Wheatley, Major M. J (Poole)
Higgs, J. M. C.	Nutting, Anthony	White, J. Baker (Canterbury)
Hill, Mrs. E. (Wythenshawe)	Oakshott, H. D.	Williams, C. (Torquay)
Hill, Dr. C. (Luton)	Odey, G. W	Williams, Gerald (Tonbridge)
Hittchingbrooke, Viscount	O'Neill, Rt. Hon. Sir H.	Williams, Sir H G (Croydon, E.)
Hirst, Geoffrey	Ormsby-Gore, Hon. W. D.	Wills, G
Hollis, M. C.	Ore, Capt. L. P. S.	Wilson, Geoffrey (Truro)
Holmes, Sir J. Stanley (Harwich)	Orr-Ewing, Charles Ian (Hendon, N.)	Winterton, Rt. Hon Earl
Hope, Lord J.	Orr-Ewing, Ian L. (Weston-super-Mare)	Wood, Hon R
Hopkinson, H. L. D'A.	Osborne, C	York. C
Hornsby-Smith, Miss P	Peake, Rt. Hon. O.
Horsbrugh, Miss F.	Perkins, W R. D.	TELLERS FOR THE AYES:
Howard, G. R. (St. Ives)	Peto, Brig, C. H. M	Mr. Grimond and Mr. Macdonald.
Howard, Gerald (Cambridgeshire)	Piekthorn, K.

NOES
Acland, Sir Richard	Field, Capt. W J	MacColl, J E
Adams, Richard	Finch, H. J.	McGhee, H G
Albu, A. H.	Fletcher, E G M (Islington, E)	McGovern, J
Alien, A. C (Bosworth)	Follick, M.	McInnes, J
Allen, Scholefield (Crawe)	Foot, M. M.	Mack, J. D
Anderson, A (Motherwell)	Forman, J. C.	McKay, J (Wallsend)
Anderson, F (Whitehaven)	Fraser, T (Hamilton)	Mackay, R. W G (Reading, N)
Attlee, Rt. Hon C. R	Freeman, J. (Watford)	McLeavy, F
Awbery, S S	Freeman, Peter (Newport)	MacMillan, M K. (Western Is[...]
Ayles, W. H.	Gaitskell, Rt. Hon H T [...]	McNeil, Rt. Hon H
Bacon, Miss A	Ganley, Mrs. C. S	MacPherson, Malcolm (Stirling)
Baird, J	Gibson, C. W	Mallalieu, E L (Brigg)
Balfour, A.	Gilzean, A.	Mallalieu, J P W (Huddersfield, E.)
Barnes, Rt. Hon. [...]	Glanville, J. E. (Consett)	Mann, Mrs J
Bartley, P.	Gooch, E G	Manuel, A. C
Bellenger, Rt. Hon F [...]	Gordon-Walker, Rt. Hon. P C.	Marquand, Rt. Hon H. A
Benson, G.	Greenwood, Anthony W J (Rossendale)	Mathers, Rt. Hon George
Beswick, F	Greenwood, Rt. Hon Arthur (Wakefield)	Mellish, R. J
Bevan, Rt. Hon. A. (Ebbw [...])	Grenfell, D. R	Messer, F
Bevin, Rt. Hon. E. (Woolwich, E.)	Grey, C. F.	Middleton, Mrs L
Bing, G. H C.	Griffiths, D. (Rother Valley)	Mikardo, Ian
Blackburn, A R	Griffiths, Rt. Hon J (Llanally)	Mitchison, G. R
Blenkinsop, A.	Griffiths, W D (Exchange)	Moeran, E W
Blyton, W. R.	Gunter, R. J	Monslow, W
Boardman, H	Haire, John E (Wycombe)	Moody, A S
Booth, A	Hale, J. (Rochdale)	Morgan, Dr H B
Bottomley, A. G	Hale, Leslie (Oldham, W.)	Morley, R.
Bowden, H W	Hale, J. (Gateshead, W.)	Morris, P. (Swansea, W.)
Bowles, F G (Nuneaton)	Hall, Rt. Hn. W Glenvil (Colne V[...])	Morrison, Rt. Hon H (Lewisham, S.)
Braddock, Mrs. E M	Hamilton, W W	Mort, D. L
Brookway, A. Fenner	Hannan, W.	Moyle, A
Brook, D (Halifax)	Hardman, D. R	Mulley, F W
Brooks, T J (Normanton)	Hardy, E. A.	Murray, J D
Broughton, Dr A D. D	Hargreaves, A	Nally, W.
Brown, George (Belper)	Harrison, J.	Neal, H.
Brown. T J (Ince)	Hastings, Dr. Somarville	Noel-Baker, Rt. Hon. P J
Burke, W. A	Hayman, F. H.	O'Brien, T
Burton, Miss E.	Henderson, Rt. Hon A (Rowley Regis)	Oldfield, W H
Butler, H. W (Hackney, S.)	Herbison, Miss M	Oliver, G H
Callaghan, James	Hewitson, Capt, M	Orbach, M
Carmichael, James	Hobson, C R.	Padley, W E
Castle, Mrs B. A	Holman, P	Paget, R T
Champion, A J	Holmes, H. E (Hemsworth)	Paling, Rt. hon W[...] (Dearne V'lly)
Chetwynd, G R	Houghton, Douglas	Paling, Will T (Dewsbury)
Clunie, J.	Hoy, J	Pannell, T. C
Cocks, F S	Hubbard, T	Pargiter, G. A
Coldrick, W	Hudson, J. H (Eating, N.)	Parker, J
Collick, P.	Hughes, Hector (Aberdeen, N.)	Paton, J.
Cooper, J (Deptford)	Hughes, Emrys (S Ayr)	Peart, T. F
Corbet, Mrs. F. K. (Peckham)	Hynd, H (Accrington)	Poole, Cecil
Ccve, W G.	Hynd, J B (Attercllffe)	Popplewell, E
Craddock, George (Bradford, S)	Irvine, A J, (Edge Hill)	Porter, G.
Crawley, A.	Irving, W J (Wood Green)	Price, M. Phillps (Gloucestershire, W.)
Crosland, C. A. R	Isaacs, Rt. Hon G A	Proctor, W T
Crossman, R. H. S.	Janner, B	Pryde, D J
Cullen, Mrs. A.	Jay, D P T	Pursey, Comdr H
Daines, P.	Jeger, G. (Goole)	Rankin, J
Dalton, Rt. Hon H.	Jeger, Dr S W (St. Pancras, S.)	Rees, Mrs. D.
Darling, G. (Hillsboro)
Davies, A. Edward (Stoke, N.)	Jenkins, R H	Reeves, J
Davies, Ernest (Enfield, E.)	Johnson, James (Rugby)	Reid, T. (Swindon)
Davies, Harold (Leek)	Johnston, Douglas (Paisley)	Reid, W (Camlachie)
Davies, R J. (Westhoughton)	Jones, Frederick Elwyn (West Ham,S)	Rhodes, H
Davies, S O (Merthyr)	Jones, Jack (Rotherham)	Richards, R
de Freitas, Geoffrey	Jones, William Elwyn (Conway)	Robens, A
Deer, G.	Keenan, W	Roberts, Goronwy (Caernarvonshire)
Delargy, H. J.	Kenyon, C.	Robertson, J. J (Berwick)
Diamond, J.	Key, Rt. Hon. C. W	Robinson, Kenneth (St Pancras, N.)
Dodds, N. N.	King, H. M.	Rogers, G H R (Kensington, N)
Donnelly, D.	Kinghorn, Sqn -Ldr E	Ross, William (Kilmarnock)
Dugdale, Rt. Hon J (W Bromwich)	Kinley, J	Royle, C.
Dye, S.	Kirkwood, Rt. Hon D	Shackleton, E A A.
Ede, Rt. Hon J. C.	Lang, Rev. G.	Shaweross, Rt. Hon Sir H
Edelman, M.	Lee, F (Newton)	Shinwell, Rt. Hon E
Edwards, John (Brighouse)	Lee, Miss J. (Cannook)	Shurmer, P. L. E.
Edwards, Rt. Hon. N. (Caerphilly)	Lever, L M (Ardwick)	Silverman, J. (Erdington)
Edwards, W. J (Stepney)	Lever N H (Cheetham)	Silverman, S. S (Nelson)
Evans, Albert (Islington, S.W.)	Lewis, A W J. (West Ham. N.)	Simmons, C. J.
Evans, E. (Lowestoft)	Lewis, J. (Bolton, W.)	Slater, J.
Evans. S N (Wednasbury)	Llndgren, G. S.	Smith, Ellis (Stoke, S.)
Ewart, R	Lipton, Lt.-Col M	Smith, H. N. (Nottingham, S.)
Fairhurst, F.	Logan, D. G.	Snow, J. W.
Fernyhough, E	Longden, F. (Small Heath)	Sorensen, R. W.

Sparks, J. A.	Tomney, F	Wilcock, Group-Capt C A B
Stewart, Michael (Fulham, É.)	Turner-Samuels, M	Wilkes, L.
Stokes, Rt. Hon. R. R.	Ungoed-Thomas, A. L	Wilkins, W. A.
Strachey, Rt. Hon. J	Usborne, Henry	Willey, F. T. (Sunderland)
Strauss, Rt. Hon. G. R (Vauxhall)[...]	Vernon, Maj. W F	Willey, O. G. (Cleveland)
Stross, Dr. B.	Viant, S. P	Williams, D. J (Heath)
Summerskill, Rt. Hon. Edith	Wallace, H. W	Williams, Ronald (Wigan)
Sylvester, G. O.	Watkins, T. E.	Williams, Rt. Han. T (Don Valley)
Taylor, H. B. (Mansfield)	Webb, Rt. Hon. M (Bradford, C.)	Williams, W. T. (Hammersmith, S.)
Taylor, R. J. (Morpeth)	Weitazman, D.	Wilson, Rt. Hon. J. H (Huyton)
Thomas, D. E. (Aberdare)	Wells, P. L. (Faversham)	Winterbottom, I. (Nottingham, C.)
Thomas, George (Cardiff)	Wells, W. T (Walsall)	Winterbottom, R. E. (B[...]rightside)
Thomas, I O (Wrekin)	West, D. G.	Woodburn, Rt. Hon A
Thomas, I. R. (Rhondda, W.)	Wheatley, Rt. Hn. John [...](Edinbergh. E)	Woods, Rev. G. S
Thorneycroft, Harry (Clayton)	White, Mrs. E (E. Flint)	Wyatt, W. L
Thurtle, Ernest	While, H (Derbyshire, N. E.)	Yates, V. F.
Timmons, J.	Whiteley, Rt. Hon W
Tomlinson, Rt. Hon G	Wigg, George	TELLERS FOR THE NOES:
		Mr. Pearson and Mr. Collindridge.

Main Question again proposed.