HC Deb 15 February 1951 vol 484 cc623-70

Order read for resuming Adjourned Debate on Question [14th February]: That this House approves the policy of His Majesty's Government relating to Defence contained in Command Paper No. 8146.—[Mr. Shinwell.]

Question again proposed.

Mr. Speaker

Before I call upon the right hon. Gentleman the Member for Woodford (Mr. Churchill), perhaps I might inform hon. Members that we are below the 100 mark today, but there is still a great number of Members who wish to speak in the debate. I cannot possibly get them all in. Again, let me say that it is no good coming and canvassing me and suggesting that one has special claims. I intend to make up my mind and do what I think is fairest all round. [HON. MEMBERS: "Hear, hear."] That is all I can do. I cannot say in advance who will be called.

3.38 p.m.

Mr. Churchill (Woodford)

I beg to move to leave out from "House," to the end of the Question, and to add instead thereof: while supporting all measures conceived in the real interest of national security, has no confidence in the ability of His Majesty's present Ministers to carry out an effective and consistent defence policy in concert with their allies, having regard to their record of vacillation and delay. I do not intend this afternoon to make a detailed examination of the defence position, and I shall not on this occasion ask for a Secret Session. We feel that the issue between us requires to be set before the nation on broad and general lines, to which I shall endeavour to adhere.

The Motion before the House asks us to "approve" the White Paper which represents the latest version of the Government's defence scheme. I very much regret to say that I and those for whom I speak feel it impossible, after the best examination we could give to these proposals, to record an unqualified vote approving the military methods and proposals of the present Government in these affairs.

When, at the beginning of the Parliament—on 16th March last year—a similar request was made to us to approve a White Paper on defence, I asked the Prime Minister to substitute for the word "approves" the words "takes note of." Such a step, I said, on our part, as voting afterwards proved, might be regarded hereafter as to some extent committing us to sharing, albeit indirectly, in the Government's responsibility. The Prime Minister agreed to the substitution of the words "takes note of" for "approves," and there was no need for a Division.

We considered very carefully whether this procedure could be repeated today, or whether, if the Prime Minister refused the substitution of "takes note of" for the word "approves," we should divide on that issue. We rejected this course for two reasons. We feel it necessary, firstly, to re-affirm in positive terms our resolve to support "all measures conceived in the real interest of national security," and secondly to declare our want of confidence in the ability of His Majesty's present Ministers to carry out an effective defence policy, especially under the unfortunate conditions now prevailing in our country. On this, we shall take the opinion of the House tonight.

It is very likely, and I fully recognise it, that the terms of our Amendment will have the effect of inducing the pacifists and other dissentients on the benches opposite—

Mr. Emrys Hughes (South Ayrshire)

Nothing doing.

Mr. Churchill

—to express their approval of the measures which the Government now propose. That may do them some good; it can certainly do the country no harm.

We therefore prefer the method of direct challenge to what might have been represented as a Parliamentary manoeuvre. Should our Amendment be defeated, we should have placed our views on record, and we should not oppose the vote on the main Question when put in due course from the Chair. [Interruption.] It is just as well that hon. Members should hear what course of action is intended to be taken by a party almost as numerous as their own, for the convenience of the House, and especially for hon. Members who have so little experience of it.

Since March last—I was referring to what we did on 16th March—much has happened abroad, and the Government have made large changes of policy. The White Paper of March, of which we took note, has been superseded by successive editions of the Government's defence plans. The extensive re-armament programme now before us is the third version we have had. The first was when we parted at the end of July, when fighting in Korea was already in full swing. On this occasion, the Minister of Defence made very alarming disclosures to the House—I see that the right hon. Gentleman the Minister of Defence is just coming in: hon. and right hon. Gentlemen ought to find room for him on the Front Bench.

The Minister of Defence made very alarming disclosures to the House about the overwhelming Russian strength in Europe, and also confirmed to a large extent the detailed assertions which I had made upon the Soviet armaments on land, on sea and in the air. The Minister of Defence, who, I have no doubt, is doing his best according to his lights, then proposed an interim expenditure of £100 million, and we separated without a Division for the Summer Recess.

A few days later, and without any new facts being presented, or indeed existing, a far larger set of proposals was adumbrated. That is not a word I like, but it seems to me appropriate to the Government action at this moment, and, on the whole, the best and most accurate word to adopt. A far larger set of proposals was adumbrated, but the Government refused to call Parliament together until the beginning of September, and an uneasy interlude followed. When we met in September, the new plan which they put before us was for the expenditure of £3,600 million spread over three years, and for raising the term of National Service to two years.

The Prime Minister appealed to us on that occasion for national unity on defence, and I replied, on behalf of the Conservative Party: We shall, on this side, of course, support the Motion.… We shall vote for it, and we shall help to resist any Amendment…to it. We shall also support the Bill to extend … military service which is to be introduced. Several points may well arise upon that Bill for discussion in Committee, but I should hope that it can be passed through this House … in a single day."—[OFFICIAL REPORT, 12th September, 1950; Vol. 478, c. 971.] This was in fact done, and its effect must have been beneficial to our friends and Allies all over the world.

The Prime Minister acknowledged this, I should remark in passing, by announcing the very next day, or almost the very next day, that the vesting date of steel nationalisation was fixed for 15th February. I do not suggest that we should be governed in our actions on defence by a single episode of that character. It was, none the less, a milestone in the history of this Parliament. [Interruption.] I am glad that hon. Members are agreed. Nothing could have been done to make national unity more difficult, and, combined with the uncertainty about the date of the impending General Election, on which the Prime Minister has given no indication of his wishes, it creates most unhappy and most unsuitable conditions in our country for the solution of our national problems, alike of defence or foreign policy. The responsibility for this, in my opinion, rests with the Prime Minister in a degree unusually direct and personal.

Since then, the Government have moved from the considered demand for the £3,600 million to be spread over three years, which was put before us in September, and they give us this new White Paper on Defence, which we are now asked to approve. This makes a new estimate of £4,700 million, equally spread over three years, and also provides for the 15 days' call-up and several other measures.

Evidences and examples of the ineptitude and incompetence of the Government are brought almost daily glaringly before us. We are convinced that the mismanagement exhibited in civil and domestic affairs extends also to the military field, and that that is the growing opinion of the nation. Therefore, we feel it impossible to do as we did in September, and are bound to place on record an Amendment which sets forward the exact position which we occupy.

Mr. Sydney Silverman (Nelson and Colne)

Although you were in favour in September?

Mr. Churchill

Yes, but things have happened since September, and I am, in principle, in favour now of the whole of these demands, subject to their correct examination. I think that is perfectly reasonable. But they are entirely new demands; they are a new version, an afterthought, and a reconsideration of the facts which were long before Parliament and the public, and which simply arise out of requests which I will mention before I sit down.

Let me now illustrate by a few major examples the mismanagement of our Defence Forces, which is the gravamen of our charge. For this purpose I must go back, to some extent, into the past.

Mr. Shurmer (Birmingham, Sparkbrook)

Do not go too far back.

Mr. Churchill

If I went too far, I should come to that period of complete victory over all our enemies which was at that time thought to be a subject of general rejoicing. But I am not going back so far as that. After the end of the war, on 22nd October, 1945, I urged the Government to speed up their demobilisation plans, which the National Government had made, so that as early as possible in 1946 the Forces should be reduced to definite ceilings pending the work of settling peace-time requirements. I gave the following figures: Army, 1 million; Navy, 150,000; Royal Air Force, 400,000—total, 1,550,000.

If these suggestions had been accepted, two or three million men might have been spared the ordeal of standing about needlessly under arms at a time when they were not wanted, when no new dangers appeared upon us and when at least £1,000 million might have been saved from the expense to which we were put, quite apart from the loss in delaying our getting into our stride on domestic production. The £1,000 million could have been used to take proper care of the immense mass of those serviceable weapons which have a long life and take a long time to make. Instead of this, much that would be of high value today was dispersed, destroyed, sold, or given away.

I do not agree with the Minister of Defence in his view which he expressed a little while ago, that troops should only be sent into action with the latest weapons. That is no doubt the ideal and what we would all like, but it has never happened in any war that has ever taken place.

The Minister of Defence (Mr. Shinwell)


Mr. Churchill

I am not arguing with the right hon. Gentleman. [HON. MEMBERS: "Give way."] I have all the afternoon before me in which to unfold the arguments I wish to make, and, consequently, I am not at all restive under interruptions. Any serviceable weapon is better than no weapon at all.

Mr. Shinwell

It may be a small point, but the right hon. Gentleman was accusing me of saying something which I have never said at any time. I did not say we should not send men into battle unless they were equipped with the most modern weapons; I said we ought to ensure that when men are sent into battle they are well equipped.

Mr. Churchill

They would have been a great deal better equipped if a wiser process had been followed. The squandering and destruction of what might have been carefully put away in care and maintenance, and thus preserved for use should other trouble come, was a lack of foresight. [Interruption.] I never said anything about the Lord President of the Council, although I have no doubt that he had as much to do with it as anybody else, and much more than his right hon. Friend the Minister of Defence on his right flank. [HON. MEMBERS: "Get on with it."] I shall not be hurried at all; I shall take my time in dealing with every interruption, because I feel I have a perfectly legitimate right to unfold this case in my own way.

In the United States, in spite of many temptations, less improvidence was shown, especially in respect to warships. I may remind the House again that the figure for the Services which I mentioned of 1,550,000 is double that to which the Forces were later reduced. And even now, according to the Defence Minister's speech of yesterday, it will not be until 1952 that an overall figure of 900,000 can be reached. I say this because this has been made an accusation against me. I think it was the Under-Secretary of State for Foreign Affairs who made that attack the other day. I sent him some figures correcting it, which he had not the courtesy to acknowledge. I agree that the mistakes made at the beginning put us on the wrong line, but no British Government in time of peace has ever had the powers that Socialist Ministers have wielded, or the resources they have consumed.

In 1946, they took the step, with our full support, of introducing National Service in peace-time. First, 18 months was the term, then 12 months, and then 18 months again according to the changing winds. Now it is two years. Before the late General Election, I said to the House that the principle which might help us in economising our money and our manpower, and in getting better value from the sacrifices demanded, would be to take fewer men and to hold them longer. We all know how that was used at the election. Nevertheless, we have supported the Government in their further steps. Undoubtedly, the two years' service was far more suited to our dangers and to our special problems than anything else they proposed before. If it had been introduced in 1947 or 1948, when the skies began to darken—and we should certainly have supported the Government—how much better off we should be in effective military formations today?

One has the feeling that if the position had been studied by the Minister of Defence and other Ministers responsible —and they have changed often, not always for the better—very good solutions might have been reached. But the Government deal in words, in declarations, in projects and in schemes which seem to indicate impressive action. Alas, it is mainly on paper—committee to committee, declaration to declaration, one edition after another of their proposals for National Defence.

But with the control they have demanded over our manpower, and with the vast sums of money voted so constantly by the House, it ought to have been possible to produce a substantial and efficient Army. I do not say an adequate army, but a substantial and efficient army. But what has happened? With Defence Estimates of nearly £1,000 million a year for five or six years, and with their unprecedented control of manpower, they have produced so few effective tactical units that when the Korean trouble broke out and it was necessary for us to send a token force—I have never advocated sending more than a token force—to Korea under the authority of the United Nations, it took over three months to produce even a brigade group of good quality. But talk and waste and muddle have robbed the nation of the results of resources which, whether adequate or not, Parliament at their request conferred upon the Government on a very large scale.

Another subject of grave complaint is the inability of the Government to produce any atomic bombs of our own in the five and a half years which have passed since the war. When we remember how far we were ahead, and how we were able to deal on equal terms with the United States, it is indeed depressing to feel that we have been outstripped by the Soviets in this field. I take the opportunity of repeating now my request that the document I signed with President Roosevelt in the war should be made public at an early date.

We must not forget that by creating the American atomic base in East Anglia we have made ourselves the target, and perhaps the bull's eye of a Soviet attack. On 28th March, last year, I said in Parliament: If, for instance, the United States had a stock-pile' of 1,000 atomic bombs—I take the figure as an illustration merely; I have no knowledge of any sort of kind of what they have—and Russia had 50, and we got those 50, fearful experiences, far beyond anything we have ever endured, would be our lot."—[OFFICIAL REPORT, 28th March, 1950; Vol. 473, c. 201.] I say the total failure of the Government to hold its own and to keep up development—

The Prime Minister (Mr. Attlee)

The right hon. Gentleman really ought not to mislead the country on a matter like this. He knows perfectly well it was by his agreement, and the agreement of the Government of which I was a Member, that the development of the atomic bomb and the making and everything took place across the other side of the Atlantic, and it is utterly untrue to suggest there has been a failure to develop it here. It is entirely wrong of him.

Mr. Churchill

At the end of the war we resumed full freedom to make the atomic bomb ourselves. The only reason we did not make it during the war was that we were under air bombardment. We had not got a safe place here and the United States therefore had the facility and the credit of making it. At the end of the war we were perfectly free to resume manufacture. Is not that correct?

The Prime Minister

Certainly, I have answered "Yes." I am sorry if the right hon. Gentleman cannot hear me. I said "Yes."

Mr. Churchill

Then what is the complaint about what I have said, that in the five and a half years no success has rewarded our efforts in making it?

The Prime Minister

The right hon. Gentleman is quite wrong. There has been successful development. He is not producing any evidence whatever to show that, given the resources and possibilities over here as compared with the resources they have in the United States of America, we could have done more than we have done now.

Mr. Churchill

What is the meaning of that interruption? I say we have not succeeded in making the atomic bomb completely in this country in the five and a half years since the war. Does anybody challenge that? [Interruption.] All right, find something to cheer at if you can.

Mr. Shinwell

Is not the right hon. Gentleman satisfying the enemy? [HON. MEMBERS: "Sit down."] I am asking a question. When the right hon. Gentleman makes the declaration that we have done nothing in the production of an atomic bomb in five and a half years—[HON. MEMBERS: "No, he did not."]—that is what he implied—[HON. MEMBERS: "No."]—is he not giving satisfaction to the enemy in making that declaration?

Mr. Churchill

If I were wrong, the Government would readily correct me. If I am right it is more important for people to know the facts than it is for the Russians, who are constantly doing their utmost. And after all, we have of course the aid of the United States to look to in the matter, which I quite agree is incomparably greater than anything we could have done.

I said when we met last year: The decision to form a front in Europe against a possible further invasion by Soviet Russia and its satellite States was at once grave for us and also imperative. There was a school of thought in the United States which held that Western Europe was indefensible and that the only lines where a Soviet-satellite advance could be held were the Channel and the Pyrenees. I am very glad that this view has been decisively rejected by the United States, by ourselves and by all the Powers concerned in the Brussels Treaty and the Atlantic Pact. I find it necessary to say, however, speaking personally, giving my own opinion, that this long front cannot be successfully defended without the active aid of Western Germany."—[OFFICIAL REPORT, 16th March, 1950; Vol. 472, c. 1288.] The Prime Minister immediately denounced this view as irresponsible, but he has now adopted it—" in principle," I must say. When the Foreign Secretary went to America in September last, he said to the reporters who asked him on landing whether German troops should not be integrated into the Atlantic Pact Force: I do not think that is the way to bring Germany back into the comity of nations. A few days later he was converted by the American arguments and it became the official policy of the Socialist Government.

That was the policy reiterated by the Prime Minister last Monday. With many of his arguments we on this side of the House will agree. But he was also anxious to deprive them of as much meaning and reality as possible by stressing various conditions. Let me give two of them: Obviously, the re-armanient of the countries of the Atlantic Treaty must precede that of Germany. Second, I think the building up of forces in the democratic State should precede the creation of German forces."—[OFFICIAL REPORT, 12th February, 1951; Vol. 484, c. 67.] These conditions if strictly enforced would undoubtedly involve a delay of two or three years. The realisation of this had no doubt eased the Prime Minister's difficulties with his own party. It was no doubt designed to placate his tail. It is one of those compromises which do not arise from any measurement of the realities or practical facts. There is great danger in trying to have things both ways. It almost always results in falling between two stools.

Mr. Hamilton (Fife, West)

That is what the right hon. Gentleman is trying to do tonight.

Mr. Churchill

Safety is not to be found in searching for the line of least resistance.

So much for this question of the German Army. Then there is the European Army. All these months, eight of which are since the fighting began in Korea, have been marked by the Government doing what they can, behind the scenes, to discourage the French from their plan of a European Army. On 12th September, in our debate on the £3,600 million plan—it was as late as that—I said: The Prime Minister has spoken …scornfully about a European Army …and about the Germans being included in our Western defence system. Where does he stand about these matters now? …Is he still opposed to Germans being armed as a part of the Western defence forces or as part of an armed Germans police force; or does he still think the only Germans to be armed are the Communist Germans, whom the Soviets have formed into a powerful Army in the Russian zone? "—[OFFICIAL REPORT, 12th September, 1950; Vol. 478, c. 984–5.] I said that six months ago. I am glad to see that in some respects the normal process of belated conversion to the obvious is going forward.

There is no doubt that a European Army will be formed as a part of the Atlantic Army, and I trust that a German contingent will take its place in the European Army on honourable terms. The conference that starts today in Paris is of great importance and all efforts to build up a defensive front against Russian Communist aggression in Europe will benefit from it, and I set great hopes upon it. It is a direct issue between the two sides of the House this afternoon, though not a major issue, that although our vital interests are intermingled with those of our continental Allies, Britain should be represented at this conference only by an observer. I say to the Prime Minister —beware how you continue this halfhearted policy.

I place my hopes in General Eisenhower's efforts, and I was very glad to see the courageous support which he and Mr. Truman have received from Mr. Dewey, the Republican candidate at the last Presidential election. But it might well be that if the United States were convinced that no effective European Army including a German contingent could be formed within the Atlantic Pact Army, the school of thought which regards the defence of Western Europe as impossible and looks to the Channel and the Pyrenees as the only lines where a stand can be made, might again come into favour, and they would certainly be supported by the Hoover-Taft body of opinion in the United States.

If that were so, we should certainly have the vacuum which the Prime Minister condemned on Monday. Nothing is easier than to get this vacuum. We have only to break down the hopes of making an effective front in Europe to produce it. In that case all the civilisation of Western Europe and the democratic way of life would have to come to terms with the Soviets, and we should see a process of Communist infiltration and control begun which would end, as the Prime Minister seemed to argue—and I agree with him—in Western Europe suffering the same fate as Czechoslovakia.

If the Soviet menace, which is now on the Elbe, were to advance, possibly without fighting, possibly under some kind of agreement, to the Channel or even to the Rhine, the danger to this island would be very great. It might not be possible for the Russian armies to cross the Channel, but their air power might enable the descent of paratroops to be made in numbers hitherto unprecedented and, I think, hitherto not taken into practical calculation. We should be under continued bombardment from rockets and other pilotless missiles, and the growing stock of Russian atomic bombs might well render the ports by which we live and breathe unuseable.

There is also the Russian U-boat danger which is so much greater, both in numbers and in the improved types which science has created, than was the German at the beginning of the late war. I dealt with this matter at some length when I spoke in the House at the end of July. I shall not attempt to repeat that argument today but, since the Minister of Defence was so haughty when the subject was mentioned yesterday by my right hon. Friend the Member for Bromley (Mr. H. Macmillan)—

Mr. Mikardo (Reading, South)

Fetch him in; the boss has sent for him.

Mr. Churchill

I can assure the hon. Member that, if he is calculating on divisions inside our party he is making a calculation which is as woefully inaccurate as most of those of his leaders have been about this great question of military policy. Since the Minister of Defence was so haughty, I will quote what I said on 27th July last: Reliable naval reference books estimate the present Russian U-boat fleet at 360 divided, no doubt, between the Pacific and the West, of which between 100 and 200 are ocean-going and capable of high speeds. These seem to me very large figures, and I am not at all accepting them as final figures, but what is the truth about them? I do not see why the Minister of Defence should not give us his best estimate, considering the information which has been given about other portions of the Russian forces.—[OFFICIAL REPORT. 27th July, 1950; Vol. 478, c. 708.] And considering that, if his information happened to be correct, it would be nothing new to the Russians to learn the facts about their own forces. I could not understand why he could not give some figure nor see any reason at all why he should not give an estimate of the number of U-boats available in just the same way as he gave the number of divisions, the number of tanks and the number of aircraft.

Even if only a half or a third of these figures were available, we should be confronted with a danger of the first magnitude on the seas. Secrecy is used as a shield to cover the Government shortcomings, and I have no doubt that the main facts of our naval construction are well-known to the general staffs of Europe, and certainly to the Russians who have many ways of obtaining information about the work going on in our shipyards and dockyards. We were told by the Parliamentary Secretary to the Admiralty on 25th October that this year's conversion programme of fleet destroyers to anti-submarine frigates had been doubled. That statement was very much on the same lines as those followed in so much of his speech by the Minister of Defence yesterday. Doubled from what? In this case it has been ascertained, only from the public statements, that they were doubled from three ships to six.

Mr. Shinwell

"Doubled" is what the right hon. Gentleman used to say.

Mr. Churchill

It is undoubted that in my long life I have used the word "doubled." The only additions to the new construction announced last March are 41 new minesweepers and some small craft. Is that sufficient, when we con- sider the enormous increase both in output and in numbers with which we should be confronted in Russian U-boats over those of the Germans, which, at the outset of the war, were such a very great immediate pre-occupation to us?

When we reflect that the menace that we shall have to meet from the modern Soviet U-boats may be anything from five to 10 times as great as what we suffered then, before we brought our vast flotillas and anti-submarine fleets into being in the last war, then this subject is one which leaves me deeply anxious, and I do not think the House should let it pass idly from its mind. Since the war many ships have been sold or scrapped, among them four aircraft carriers, 148 destroyers, 90 frigates, and 214 motor torpedo boats. Should war come—which God forfend—the wholesale scrapping and selling of vessels which would have been of value in this sphere of antisubmarine defence, where numbers are of the utmost importance, will, I say, subject those responsible to very severe and direct accountability.

Take another instance of the kind of compromise system in which the Government revel—taking away with one hand what is given with the other, making a parade of what appears to be large action while, at the same time, giving it a form which deprives it of much of its usefulness. I mean, of course, the decision to call up 235,000 men from the Z reserves for 15 days' training in the summer months. There is a widespread feeling that the Government have succeeded in striking the exact balance which combines the maximum disturbance and cost with the minimum of practical military advantage. But, anyhow, the Government have, to all intents and purposes, presented Parliament with an accomplished fact. Their plan is virtually in operation. The Secretary of State for War said last night: Our warning notices, which give the dates on which the men will be wanted, begin to go out from the War Office tonight."—[OFFICIAL REPORT, 14th February, 1951; Vol. 484, c. 551.] The programme of camps and permanent staffs for the coming summer is, no doubt, fully drawn up. To attempt to modify such a plan at this stage, when the training season is so close at hand, would certainly cause confusion; but there was nothing to prevent the Government pro- ducing their plans before the end of last year. Nothing at all need have prevented them from thinking these matters out and presenting them, when there would have been time to have had them debated, and any decision to amend and improve them could have been taken. But they present us with an accomplished fact.

I shall not, therefore, attempt to deal with the detail of this scheme. I shall content myself with quoting a leading article in yesterday's "Manchester Guardian," which I commend to the noble Lady the Member for Anglesey (Lady Megan Lloyd George), who is now discharging the duties of the leadership of the Liberal Party, and who has certainly a right to speak with freedom upon these defence matters, because she voted with the Chamberlain Government—[An HON. MEMBER: "Stop courting."]—before the late war in support of introducing a system of National Service, of conscription, when the present Prime Minister distinguished himself by leading his party into the Lobby to vote against it. I commend to her these words of the "Manchester Guardian": The Government has had the courage to call up for three months a small number of fighter pilots and aircrew reservists, so as to train them on the latest available planes (though these are already obsolescent). It has not had the courage to carry out any comparable Army scheme. Instead a great number of Class Z men will be called to camps, given uniforms, allowed a brief glimpse of the latest guns and tanks, and sent home again. Unless some new announcement is made the men will go home without knowing whether they will he wanted next year or for any further training. A new announcement was, however, made yesterday, and an assurance has been given that these men will not be called upon again except in the case of an emergency. Where, then, is the possibility of making any effective welding together of the reservists into cadres to which they belong, let alone reviving a sense of military comradeship and association? For all these purposes the 15-day proposals seem to have no meaning. In fact, the Secretary of State for War said last night: The public, however, have been a little apt to think that individual refresher training was the main, or even the sole, purpose. I would put it … probably fourth of the purposes, important as it is."—[OFFICIAL REPORT, 14th February, 1951; Vol. 484, c. 550.] In other words, which I remember hearing years ago at the Admiralty, a saying which was the definition of a naval officer's cruise: "There and back." That is a very fair description of what is to happen to the reservists who are to be called up in large numbers, and—

Mr. Shinwell

The right hon. Gentleman is talking a lot of nonsense.

Hon. Members

The Minister cannot take it.

Mr. Churchill

Let me return to the "Manchester Guardian"—I choose this paper because it does not belong either to the Labour or to the Conservative Parties. It belongs to a middle party—a party which, in this matter, takes an impartial view. [An HON. MEMBER: "So did the right hon. Gentleman once upon a time."] In an article today the "Manchester Guardian" states: And the limelight yesterday shone on a farce. Mr. Shinwell gave an assurance that the men recalled this summer will not be wanted for similar training in future years, and he dropped a broad hint that the number of men to be recalled this year would be reduced. It looks as if the Government had got very cold feet about its Class Z scheme. The farce is that men will be called up for fifteen days, given uniforms, marshalled into units, and then sent home—never to return, unless war comes. The training they receive is bound to be negligible, for few will he physically in first-class condition, their previous experience will differ, and they will probably not be allowed more than a look at the latest weapons. Units will be built up to strength, only to be broken down again. The prospect for commanding officers is appalling. By the time they are beginning to know the many new faces in their units the men will be departing, never to be seen again.

Mr. Harold Davies (Leek)


Mr. Speaker

The right hon. Gentleman has not given way, and the hon. Gentleman cannot make him give way.

Mr. Davies

How long would the right hon. Gentleman call them up for?

Mr. Churchill

What I have just read is not what I said, though I agree with it. It is what is said by a paper as detached as the "Manchester Guardian." What the hon. Member should do is to write a letter to the editor.

In the situation in which we now are there is a danger in dealing in shams and pretences—[HON. MEMBERS: "How long?"]—not only because they mislead us here at home—[HON. MEMBERS: "How long?"]—

Mr. Speaker

Order. These continual interruptions should not take place. After all, the final speech tonight may be somewhat provocative, and how am I to call the other side to order if the Government side is disorderly now?

Mr. Churchill

I certainly do not feel called upon to propose an alternative time so that hon. Members opposite may go round from door to door trying to make political capital out of it, but if the Government had proposed a longer period of training we would certainly have supported them, and if we were responsible we would face our obligations, as is our duty.

In the situation in which we now are there is a danger in dealing in shams and pretences, not only because they mislead us here at home but because they will be used as justification for additional real measures taken in cool calculation and in design by our potential opponents on the Continent. The Government produce this small mobilisation, but they do not know what other measures will be balanced against it: measures which will be real measures and not measures that have to be subjected to the tests of public opinion or free elections; measures taken with all that design and purpose with which we feel ourselves confronted, and the more we are confronted with which, the more we are deeply impressed with the formidable character of the dangers which lie before us.

I have had the opportunity several times of seeing in conditions of grave business some of these commissars who form the oligarchy in the Kremlin and their chiefs, and I can tell you that these men are apt to form designs and to carry them out, and that when confronted with farces and shams they very often retaliate by strong and real measures. We are playing with fire when we pretend that we are taking very large steps, and we may only bring the very evils which we all hate nearer by this pretence. This is, in fact, another instance of getting the worst of both worlds. How can we approve—and "approve" is the word we stick at—and thus accept a certain amount of responsibility for a measure of this kind, which seems designed to thread its way through political difficulties rather than add appreciably to our security?

The Minister of Defence said yesterday that the danger of war had become more acute in the last few months. I follow these matters as closely as I can, and I am not aware of any facts which justify this assertion. On the contrary, I think that the gigantic measures for re-armament adopted by the United States—the declaration of a state of emergency, 10,000 million dollars additional taxation, 27 months' military service and the appointment of General Eisenhower—have all improved the chances of the rearmament of the free democracies, and the formation of a European front which will be a real deterrent upon Soviet Communist aggression in Europe; they have all improved the chances of this being achieved before the vast American superiority in the atomic weapon has been overtaken by the Russian stockpile.

If any important facts have occurred justifying the statement made by the Minister of Defence about the increased danger of war they should be imparted to the House, if necessary in secret Session. To make a statement of that kind is to give, I think, a wrong view, apart from causing alarm.

I return, in conclusion, I am glad to say—as no doubt hon. Members opposite are also glad, or they ought to feel glad that I am nearly at the end of my remarks—to the direct issue that is before us. The figure of expenditure, about which we shall presently hear the Chancellor of the Exchequer, has been raised to £4,700 million over three years without, as I have said, any new changes or reasons of a fundamental character being adduced.

Last year, in March, July and September, I stated the full story, so far as it was possible in public, and I do not know of any decisive facts which have occurred to alter it. The fundamental issues were not created by the United Nations intervention in Korea. They have only been brought more violently and more vividly before the masses here and in every country by these exciting and varied events which fill the newspapers from day to day.

Still less have the basic facts of the European peril been altered in the interval, after the third or fourth versions, if we take in the March White Paper. If the proposals now submitted to us are right, they would have been more right, in the sense of being more timely—and here is where time is vital—six or eight months ago, or, better still, much earlier. The Government have been in full control; they have had all the national resources at their disposal for nearly six years; their responsibilities for telling the truth to the country and giving the necessary leadership and guidance are grave, and it is by their whole conduct of our military and foreign affairs that they must be judged. Although most people feel that things are getting worse, it is not true that the basic situation has changed. All that has happened is that the Government have felt themselves forced into making a further interim scheme. They are not dealing with the realities of the situation now any more than on former occasions.

We are witnessing a process of gradual education of those who ought to know best and have all the power, but who have to reach agreement by an endless series of compromises among themselves and with their military advisers. All we are dealing with here today is a new state of mind in those who have so long held our fortunes in their hands. It is hard to imagine a situation which gives fewer chances for the British nation to make the best of its resources and authority, and thus play the great part which might be open to us of preventing the drift into a third world war with all its indescribable, immeasurable, unimaginable horrors and perils.

4.40 p.m.

The Chancellor of the Exchequer (Mr. Gaitskell)

We were somewhat surprised yesterday afternoon to find that the right hon. Gentleman the Member for Woodford (Mr. Churchill) and his right hon. and hon. Friends had put down this Motion of censure at such short notice. We have been even more surprised in listening to the speech which the right hon. Gentleman made. I must say that I have never heard before from him, nor, I think, from anybody else, a speech on a censure Motion so completely feeble, so largely irrelevant and so completely lacking in serious argument of any kind. Indeed, it is not easy to find points which we should be called upon to answer, and it is perhaps fortunate that my right hon. Friend the Minister of Labour, who is to wind up for the Government tonight, is a man with a vivid Celtic imagination who will, no doubt, be able to find bits and pieces on which to pick.

It is quite true that in the course of the speech we were treated to the usual Romeo and Juliet account, complete with quotations from the "Manchester Guardian," to try to win a few Liberal votes. At times, I thought that the right hon. Gentleman was so mild in his strictures that he must be seriously considering trying to win over my hon. Friend the Member for Ayrshire, South (Mr. Emrys Hughes). Of what has the right hon. Gentleman accused us? At what point does he say that we should have embarked upon a larger and more burdensome defence programme? We have never had a clear answer on that point. We have been told that we should have demobilised faster in spite, of course, of the fact that to have done so would have meant breaking with the principle of age and length of service which the right hon. Gentleman himself accepted. We were told that there should have been a longer period of call-up at an earlier date. There is one fairly crucial point of time—[Interruption.]

Mr. Churchill

May I tell the right hon. Gentleman that I was only looking for a jujube.

Mr. Gaitskell

I am sorry that I cannot help the right hon. Gentleman; I left mine outside.

We may reasonably ask whether the right hon. Gentleman is suggesting that before, for example, the last General Election we should have embarked on these additional defence preparations; whether, for example, at that time there should have been a longer call-up. If so, there was no sign from him or from any of his right hon. Friends that this was their view. They were exceptionally careful when it came to their election programme, far from recommending any increase in the period of National Service, to hint rather delicately that if they were returned to power it might be possible, by increasing the strength of the Regular Forces, to reduce the period of National Service.

Perhaps the right hon. Gentleman will remember—it is very nearly a year ago now—the broadcast which he made on 17th February, 1950—a broadcast, in the course of which he said that the Conservative Party would revise and reduce both direct and indirect taxation. As for defence, he referred to his idea of a talk with Stalin. That may seem a little out of place at the moment. [HON. MEMBERS: "Why?"] I did not gather that the right hon. Gentleman was still suggesting that he should do that. It certainly was not referred to in his speech this afternoon, and I imagine that if he had been putting it forward as something the Government should do, we would have heard about it. In his broadcast, he said: Even on the material basis of finance, the present arms race can only cause increasing danger, increasing military expense and diminishing supplies to the homes. If he had been appealing to my hon. Friend the Member for Ayrshire, South, I could have understood. But I do not imagine that he was, except to get his vote. He was surely thinking of other votes at that time. We cannot ignore the record of the Conservative Party in this matter. It really will not do to come along now and say, "You should have re-armed faster and earlier," when in their election manifesto they were proposing reducing expenditure in some directions, increasing it on the social services and reducing taxation. Out of nearly 20 pages of their election manifesto, precisely nine lines were devoted to defence, and nothing whatevre was said about an increased armaments programme.

I now leave the right hon. Gentleman to the tender mercies of my right hon. Friend the Minister of Labour, and turn to more serious matters—that is to the economic implications of the defence programme. I am not concerned this afternoon with all the economic implications, since clearly it will not be possible to discuss the fiscal and financial consequences—not properly, at least—until the Budget, and I must content myself today with only a few general observations on these consequences. For the most part, my remarks will be confined, therefore, to rather wider issues—the nature and scale of the real burden, the different ways in which it can be met, the real loss which re-armament is likely to impose, the repercussion on our exports and balance of payments, the problems created in industry, and how we should try to solve them.

The House knows that the cost of this programme is expected to be about £1,300 million in the financial year 1951–52 and that if the programme is fully achieved the total defence budget over the next three years may be as much as £4,700 million. These figures, I should say, include neither money spent on stockpiling—for which I may tell the House we shall be asking Parliament to provide £140 million next year—nor capital expenditure on new plant which private industry—with substantial Government assistance—will have to incur. The figures are based on present costs and costs may well go up. We cannot be sure obviously in a programme of this size that everything will be produced according to schedule. The figures must, therefore, be rough approximations only—the best estimates we can give today.

The total cost, apart from stockpiling and the capital expenditure I have mentioned, will rise to about £1,800 million in the third year. This next year we shall be spending £500 million more, and in the third year possibly as much as £1,000 million more than in the current year. The cost of defence on the assumption I have given will rise from £16 per head of the population in the current year to £36 per head in 1953–54. When we look at the details of this programme, we find that, of the £1,000 million increase, over 70 per cent. is accounted for by higher defence production, research and works. Overwhelmingly, therefore, this is the form which the increase in the burden on our economy will take.

We have to carry this programme through at a moment when our economy is faced with two other difficulties. One of these, the deterioration in the terms of trade, is in effect an additional load on our backs: the other—scarcity of raw materials—may hamper our ability to carry the load. The deterioration in the terms of trade—that is, the continuing rise in the prices we must pay for our imports as compared with what we get for our exports—cost us last year about £250 million worth of additional goods which we had to export and which therefore were not available for consumption at home.

This year I am afraid that the terms of trade will again be worse, and the cause, of course, is simply the impact of world re-armament on prices. I believe it will cost us at least £300 million. That will be the extra burden we would have to carry in the first year over and above the direct cost of re-armament if we are to hold the balance of payments at the same highly favourable level as 1950. Whether the same trend of prices will continue after the first year I cannot say, but I am assuming today that it will not, and that there will be no further deterioration although there will also be no improvement.

There are four different ways in which we can find the means of coping with this double problem. We can expand production; we can reduce consumption; we can reduce investment; we can allow our balance of payments to deteriorate either by exporting less or importing more. I think there will be no dispute in the House that the best of these four methods is the expansion of production, and to that subject I must now briefly turn.

How much can be done? The position is very different from what it was in 1938 when there were nearly 2 million unemployed. Today there are not much above 300,000. Here and there it should be possible to increase the labour force in industry by reducing the unemployment figure still further; it may be possible, too, to induce more women to go back to work in industry, and older men to stay longer at work; it is very likely that more overtime will have to be worked in some cases. But it is no use pretending that we can expect a very substantial increase in the national total of man-hours worked. We must rely mainly for increased production, as we have done in the last few years, and the last two years particularly, on a higher output per man-hour, higher productivity or efficiency.

Here we meet the second unfavourable factor to which I have just referred—shortage of certain raw materials. I shall have more to say on this subject later. But it is quite obvious that the extent to which we can expand productivity and so solve our problem in this way is enormously affected by the raw material situation. And the situation is most uncertain, and, in the case of some materials, very serious indeed. That being so, and bearing in mind also the inevitable dislocation which must occur due to the switch-over to defence, we should be unwise to assume that we can expect an increase in production of more than about 4 per cent., or half what we got last year. If this is the maximum which it is reasonable to expect from higher production, it is certain that we must also depend on one or all of the other three possibilities—reduced investment, reduced consumption or a deterioration in the Balance of Payments.

Without doubt it would be far better for our economy that, so far as we are able, we should meet the greater part by reducing consumption, meeting it now, and thus protect our future. But with the best will in the world, there is a limit to the extent to which we can put this principle into practice, because of the way in which the direct impact of defence production will affect our economy, for it is bound to be concentrated very narrowly on certain sectors.

For example, of the £2,850 million involved in the three-year programme for production, research and works, some £1,700 million will be spent on production by the engineering and vehicle industries, in which I include shipbuilding and aircraft; some £500 million on building, and some £200 million on textiles, so that these three industrial groups between them will absorb no less than 85 per cent. of our total expenditure. The first two of these are to an overwhelming extent producing for investment or exports. They do not minister directly to the needs of home consumers except to a small extent. Over half our exports are drawn from the engineering groups of industries —the metal-using trades—alone. It follows that, in so far as defence orders displace existing production, which to a considerable extent they must, they will directly displace exports or investment. This makes the task of taking the burden on ourselves as consumers far more difficult.

I now turn to consider in rather greater detail just what the implications of the programme will be within these three groups of industries. First, then, the engineering or the metal-using groups. Here, again, there will be a considerable concentration of orders. For example, of the £350 million or so to be spent in the first year within this group, approximately one-third will be for aircraft, one-sixth for vehicles, one-sixth for shipbuilding and marine engineering and a much smaller proportion, not much above 7 per cent., for the radio industry. Nearly 80 per cent. of the main contracts will fall on these four sections alone.

A considerable part of the increased production is planned to come from R.O.F.s, aircraft works and shipbuilding yards, where spare capacity is at present available. It is obvious common sense that we want to use that capacity first. The first step is to ensure that it is fully used, in some cases by working double or even treble shifts. This creates the problem of finding the necessary labour. Fortunately, the R.O.F.s and the shipyards, with one or two exceptions, are in areas where there is still some unemployment and even the aircraft works are not, for the most part, in places where the pressure of demand for labour is exceptionally high at present. It will not be possible, however, to find all the labour required without taking some from other employment.

The next group from which additional defence output can be obtained consists of those firms which, though engaged at present on civilian, trades, can, without a great deal of re-tooling, be switched relatively easily to defence production. In so far as they use their existing labour force, obviously no special problem arises. But there may also be cases here where the firms have hitherto been working only single or double shift and where again, in order to obtain additional capacity, it is desirable to increase the labour force.

To draw the additional labour required in such cases away from the production of consumer goods or services for the home market would obviously fit in with the general considerations which I mentioned earlier. But in the main this extra labour will have to come from within the engineering industry itself, because of other shortages—raw materials, skilled labour, and certain tools and components. This leaves, however, as a natural source of extra labour one section of the engineering industry, that engaged in the production of metal consumer goods—all those metal articles which we buy for our personal use in our homes and elsewhere, and which it would be no great hardship to be short of for a little time. A switch-over by manufacturers of these products to defence orders would clearly do the least possible damage to our exports or investment, and where this is not feasible we may have to take steps to secure some movement of labour from this group of industries into defence.

But we must have no illusions; it will not be possible to carry through our full production programme without the creation of some additional capacity, particularly for the production of tanks and aero-engines. My right hon. Friend, the Minister of Defence, referred to this briefly yesterday, when he said that plans have already been made, but I must emphasise—and this was taken up by the right hon. Gentleman the Member for Woodford—that the speed with which this extra capacity can be brought into operation will depend almost entirely on whether we can obtain the necessary machine tools.

This is bound to impose a great strain on our own metal-working machine tool industry, as the following figures will show. The output of this industry last year was some £40 million. The mere re-tooling of existing plant will involve expenditure of some £50 million upon machine tools in the next two years. In addition to this, the new capacity to which I have just referred will require in the same period a further £65 million worth of machine tools. It is clear, therefore, that we cannot possibly meet our requirements solely from our own production.

Accordingly, steps have already been taken to place orders abroad, in Germany, Switzerland, France, Italy and Belgium, as well as the United States. I may say that the American authorities have already begun to give formal priorities to our orders for those tools which can only be obtained in the United States. I very much hope that arrangements will be made to ensure that the remainder are obtained in good time.

Mr. Ellis Smith (Stoke-on-Trent, South)

Have the representative organisations in the principal industries affected been consulted and asked for their suggestions in order to avoid difficulties that might probably arise?

Mr. Gaitskell

My hon. Friend can be assured that the Minister of Supply and I are in continual touch with the associations concerned.

All these changes in the industrial pattern naturally bring up the question of priorities. The Prime Minister's statement makes it plain that we do not favour giving an overriding priority for defence. But of course there must be no doubt in the minds of all those engaged on defence production that it is essential that they should fulfil as rapidly as possible the contracts placed with them. But a simple overriding priority, as experience in the last war showed—I do not think there is any disagreement on this point—is of little benefit to defence production and does immense damage to the rest of the economy. It is in any case extremely difficult to apply in practice.

Therefore, we say that where a conflict of priorities arises in a specific case, as of course it will, the firm concerned should at once consult its production Department and obtain its guidance, which means that it must obtain the views of the Government on the specific question that arises. Where the guidance cannot be given at once by one Department because another Department is concerned—it may well be the Board of Trade in addition to the Ministry of Supply—arrangements have been made for swift consultation to take place between the Ministries concerned, and for a decision to be given to the firm without delay.

Mr. Edgar Granville (Eye)

On a regional basis?

Mr. Gaitskell

Yes, on a regional basis, with reference to headquarters if necessary in the case of big issues.

Nevertheless whatever steps are taken to shift the burden of re-armament elsewhere in the ways I have suggested, and to protect our export industries, engineering exports are, I am afraid, bound to be affected. A substantial fall is, I must remind the House, also in prospect in the volume of exports of some important classes of raw materials and semi-finished products, in particular coal, steel and nonferrous metals, because of increased demand at home. This reduction must, therefore, be balanced by increases in exports from other industries at the expense of the home consumer.

Obviously we must aim to increase further exports of other sections of engineering less affected by defence. But we shall also have to rely on higher exports of consumer goods such as textiles, pottery, glass, etc. The total exports of this group in 1950 were some £600 million, and of these over two-thirds, £420 million, were in textiles and clothing. And one must not forget that the textile industry, as I mentioned earlier, will have to make its own contribution to the Defence programme. Expenditure for defence purposes in the case of textiles will be some £50 million in the first year, rising somewhat above that in the second and the third years.

The main problem here, in the light of the total size of the industry, will certainly not be so much the meeting of defence demands as the stepping up of exports. The Government are at present engaged in working out export targets for this and other industries so as to provide a measure of the efforts needed to achieve our objects, and bearing in mind the problems—they may be quite serious—of overseas marketing that may arise.

I now turn to the effect of the programme on building. The Minister of Defence said yesterday that nearly every aspect of the defence programme will involve works services, such as airfields, storage and factory space. The total for the first year, including Civil Defence, may be of the order of £120 million, a formidable figure amounting to some 10 per cent. of the total output of the building industry. It is clear that if this is to be fitted in the first step must be to do all we can to reduce the new load on our building resources. We shall try to do this in two ways—by economies in works services and by full use of existing space. We shall review all works services to secure the reduction or postponement of any item planned under earlier programmes but now less urgent, and eliminate as far as possible' any work which does not contribute directly to defence preparations.

There will have to be requisitioning of land and buildings, not only for defence production, but also for the accommodation and storage requirements of both the Service and Civil Departments. When therefore the present requisitioning powers expire, the Government will seek Parliamentary authority for their extension. In the meantime, new requisitioning will take place, if necessary, under existing powers, and land and buildings now held will be retained if necessary to meet Government requirements and to avoid new building.

Nevertheless there will have to be a good deal of new building. We shall not only have to reduce some of the civilian claims in the investment programme but also use the local licensing machinery to give important defence works the necessary priority in a particular area. We may run into difficulties in some places, and there may be some interference with the completion of local housing programmes, but it is not our intention to reduce the housing programme as a whole. We shall do everything we can to maintain the present rate of building of roughly 200,000 houses a year.

How are we to bring about all these very substantial changes in the pattern of our economy? There are, I suggest, broadly two types of policy. First, there is fiscal, monetary and credit policy. Its object in this situation must obviously be to limit civilian expenditure, and so reduce the pull which the home market would otherwise exert on those resources of labour, materials and capacity which we want to see devoted to exports and defence. Secondly, there are physical controls designed to achieve the same movement directly.

In the opinion of the Government both these policies will be absolutely necessary. Fiscal and monetary policy is not enough by itself because it cannot ensure, by limiting expenditure in a general way, that the particular resources are released which are needed for defence and exports. It is a blunt instrument and does not work very fast. More exact and swifter methods are necessary. But these direct methods—the physical controls—will not be nearly so effective if they are working against the tide. They must, therefore, be accompanied and helped by a strict fiscal and monetary policy to restrain civilian expenditure. Unless home demand is limited, inflationary pressure will grow and prices will rise faster, or the whole switchover to defence will be delayed, or the desired level of exports will not be reached.

How will the physical controls operate? At this stage it is not possible to be very precise. Control over the allocation of raw materials will be introduced whenever a shortage is in prospect. As an adjunct to allocation schemes it may also be necessary, as has already been done in the case of zinc, to prohibit or at any rate limit the use of some materials for some inessential purposes. To what extent direct controls over production will be needed even where raw materials are not scarce remains to be seen. It will no doubt be necessary to direct firms to accept particular orders. This is not because we expect them to refuse to engage on defence production, but because it may be necessary to protect them from consequential difficulties they might have with civilian customers here or abroad.

The more general type of control, such as limitation of supplies orders limiting the amount of supplies to the home market, which was very much used in the last war, may perhaps be needed too, though caution will be needed in applying such instruments. Controls of this kind are not likely to be of much value simply for switching labour and capacity to defence—because of the fact that defence demand is bound to be far more localised and, of course, not nearly so great in relation to civilian production as in the last war. They may be needed in special cases, however, or in order to increase exports to the required level.

Let me summarise this section of my speech on industry as follows. Our object is to get the re-armament programme carried out, but to do so in such a way as to do the least possible damage to the essential foundations of our economy. In the case of the very big main engineering contractors, the situation permits of very little elasticity. The aircraft manufacturer must make aircraft, the motor manufacturer vehicles, the shipbuilder ships, the ordnance factory munitions or tanks.

But after this is done, bearing in mind that the whole programme represents a load on the average of only some 20 per cent. of the engineering industry's output compared with at least 80 per cent. in the middle of the last war, there will be room for choice and adjustment in the placing of re-armament contracts and subcontracts. Our objective will be so to adjust this as to cause the least possible interference with essential exports and essential items in the investment programme.

Firms, whether main or sub-contractors, which feel that pressure to which they may be subject to accept orders which in their best judgment would run counter to these objectives, would be act- ing rightly in raising the question with the department concerned, making quite clear what is at stake in the export field. On the other hand, firms not heavily involved in the re-armament programme—and there will be many of these—should redouble their efforts to increase exports, above all exports to North America and the sterling Commonwealth.

So every device and effort which will enable exports to be continued, while the re-armament programme is being carried out, will materially help the country to get through this difficult phase. Such a task as this can be carried out only if there are adequate supplies of raw materials, labour and components, and only if in all ranks and all industries there is a concerted drive for higher productivity.

Let me now turn to what I believe is the most important factor in determining the success or failure of our effort to sustain a great defence programme while preserving the basic strength of our economy; I refer to the supply of raw materials. This problem, as the House is aware, is essentially international in character, and there is very little we can do on our own to solve it. We were keenly aware of the problem of shortage last September, and when at the end of that month I went to Washington, the serious situation which seemed likely to emerge was one of the subjects I discussed with American Ministers and officials.

The House will also be aware of the discussions of O.E.E.C. throughout the autumn. It was not possible to set up effective international action until very recently. As the House will recall, I was able to announce this week the establishment of several commodity groups. While we must not underestimate the difficulties of this problem, I very much hope that these groups will be able speedily to alleviate the position.

We have, of course, difficulties in respect of several materials, notably nonferrous metals, sulphur and cotton. I cannot deal this afternoon in detail with these—it may be that an opportunity will arise in the course of our debates for a fuller discussion of the raw material situation—but I would like to say something on one of these materials—sulphur—because its uses are so widespread and the effects of shortage on our economy are so grave.

Approximately 90 per cent. of the world's export of sulphur comes from the United States. About 2½ years ago the American sulphur producers intimated that because of the way in which their reserves were running out, they could not see their way clear to provide more sulphur for acid manufacture than would be required for plants then operating or in course of erection, and appropriate action was taken at once by my right hon. Friend the President of the Board of Trade. But no suggestion was made until June, 1950, that they would be unable to meet requirements within the limit imposed. At that time, in June, the producers desired, owing to the fall in their visible reserves, to cut supplies for the remainder of 1950, and intimated that the United Kingdom would be wise to plan production at 80 per cent. of total capacity in 1951 as a maximum. We imposed cuts accordingly. Unfortunately, in December last, the American Government felt that they had to institute export control for sulphur in order to conserve their natural resources of this material.

The first allocations under this scheme for the first quarter of 1951 were made only just before Christmas. The allocation made to us involved a cut of 25 per cent. on the already reduced rate of consumption in force during the latter half of 1950 and on that planned for 1951. If we can obtain no increase in supplies, I must tell the House that we face very serious consequences in a number of essential industries. Sulphur and sulphuric acid is used widely for rayon, fertilizers, iron and steel, oil refining, paints, dyestuffs, and over the great part of the chemical industry itself.

We have of course encouraged the erection of new sulphuric acid plants, using other materials such as pyrites and the conversion of existing sulphur burning plants. But with all priority for this task, it must necessarily take time, and we cannot expect satisfactory results within two years. I can only hope that as a result of the meeting of the committee in Washington it will be found possible to release to us, for the time being, and until alternative methods of production of sulphuric acid are available, a larger export allocation from the United States.

Mr. Maudling (Barnet)

Could the right hon. Gentleman tell us what are the prospects of getting further supplies of Italian sulphur?

Mr. Gaitskell

They are very small. I need hardly say that the persons concerned in industry are doing all they can to get supplies from every other part of the world, as they must do, in order to substitute other chemicals or materials for the natural sulphur.

This example will show why the success of the experiment in international co-operation now being undertaken in Washington is a matter of the most profound concern to this country. Unlike the United States and some other countries, the United Kingdom is almost entirely dependent on imports of raw materials for the maintenance of production. For five or six years past, we have fought our way to economic recovery, largely through increased production which in turn depends upon the availability of materials from overseas. We have had substantial and generous help from the United States, not only in the acquisition of those materials, but also of foodstuffs as well.

Now comes re-armament—a burden upon our economy greater than those even of the last few years. The conditions of success are just the same. We must continue to step up production as rapidly as we can, and we must have the materials to do it. With the best will in the world, neither the ingenuity of employers, nor the skill of workers can make goods without materials. Some of the shortages now confronting us would mean, not just sectional hold-up or inconvenience, but a dislocation or slowing down of the entire production machine.

Mr. Leslie Hale (Oldham, West)

Could the right hon. Gentleman say a word about raw cotton? What he has said about the demands of the rearmament programme on the textile industry will obviously add to the concern in Lancashire about the raw cotton situation.

Mr. Gaitskell

I would ask my hon. Friend to forgive me if I do not deal with that at the moment; it is a question of time. I have no doubt that there will be opportunities later on for further discussion of this matter. I would just say, however, that we do not view the cotton situation as seriously as we do the sulphur situation.

Moreover, although we may take the burden of these shortages, as far as possible, on home consumption, we cannot take it on our export programme without frustrating our whole economic plan. If we cannot export, we cannot pay for imports and, before long, we shall not get the imports. If we produced all our own raw materials, no one would suggest that we stopped producing them and transferred the economic resources engaged in doing so to the sphere of defence. Obviously that would be absurd. But it would be just as absurd if we were to stop or slow down the production of exported goods which pay for our raw materials. In fact one may say that our export producers are our producers of raw materials.

I come back now to the questions raised earlier in my speech. If we assume industrial production increasing at about half last year's rate, that is about 4 per cent. per year, how far can we, and should we, maintain investment, how far can we, and should we, maintain the surplus in our balance of payments, and what will the consequences be on home consumption and therefore on our standard of living?

As regards investment, we certainly cannot expect any increase, and on the building side we must allow for a small decline. But we do not consider that it would be wise policy deliberately to contract industrial investment further than this below its present level—though it will certainly be held in check—because of its vital relationship to future productivity.

On the other hand, in view of the double burden—defence and the worsening of the terms of trade—and in view of the difficulty of expanding the volume of total exports on the scale that would be required to retain last year's surplus and simultaneously complete the defence programme, we have reluctantly come to the conclusion that for the time being we must be content to maintain a balance only between total exports and total imports and drop the target of a substantial surplus.

We also feel that in so far as purchases of imports for stockpiling mean simply a change of one asset for another, we must accept even a deficit on the balance of payments to the extent of the value of the stockpile purchases. There will not necessarily be no surplus at all in the first year. The change may only appear as the defence programme begins to affect our economy more and more, though with prices in such rapid movement as they are today one cannot be too sure of that.

But the maintenance of a balance, apart from stockpiling, is absolutely vital. Even to forego a surplus means that to the extent that we invest abroad or repay debt, there will be either a corresponding increase in short-term liabilities—sterling balances—or a decline in gold reserves. We believe that for a short time, during the period of re-armament, we can accept the absence of any improvement on capital account in our external balance-sheet; but we must not allow the position to get any worse. If the balance of payments were to fall into heavy deficit again and our liabilities were to rise in relation to our assets, the consequences to the stability of sterling and to our economic position and our power to bear our share of defence in the future might be exceedingly grave.

On these assumptions— production increasing at 4 per cent., a level of exports sufficient to balance our overseas accounts, a very small fall in investment—what is the propect for consumption and our standard of living? There must be some absolute reduction, but according to the best estimate I can make, it should not be a very large one. Of course, in the case of some articles in the field of manufactured consumer goods the fall will be much greater than in others. It will probably he most rapid in the middle of the period, since at first we shall draw upon stocks, and at the later stages productivity should be catching up with defence demands. Shortages will, of course, occur, but they will be very much less than existed during and immediately after the war, when the output of manufactured consumer goods was as much as 40 per cent. below the pre-war level—so we need not think in those terms.

These consumer goods of which we have to export more are of course only a part of our standard of living. We shall have to do with less clothing and fabrics, radios, domestic equipment, pot- tery and glass and so on. About one-third of what we consume, of what we spend on consumption goods of this kind, takes this form. But there is also fuel, light, living accommodation, services of all kinds, and food above all. I must tell the House that I see no reason why there should be any reduction in that more essential sphere.

I must however remind the House that, except perhaps in war-time, it has almost become a normal feature of our social and economic climate that people should expect a continually rising standard of living, and this expectation is naturally enough all the greater when money incomes—wages and salaries and profits—are rising. Well, for some time to come there is no prospect of any rise in the flow of real goods to match the rise in money incomes. So far as manufactured consumer goods are concerned, there will be a fall. It means, therefore, that increased money incomes will have nothing extra to buy. It will be my duty through the Budget and in other ways to try to keep home expenditure down to a level which will be enough—not too much, not too little—to buy only those things we can afford to consume at home, and in due course our plans to that end will be unfolded to the House.

All hon. Members on all sides will fully understand, and indeed share, the disappointment which every one must feel at this turn in our affairs, just when we should be reaping great benefit from our six-year recovery effort. Certainly as Chancellor, I would have been looking forward to the prospect of giving the country news of a far more cheerful and acceptable kind than they have had for over 10 years. Well, it is not to be—not yet.

It would be quite wrong to see only a black outlook, with nothing to hope for or look forward to. On the contrary, our re-armament programme represents a peace policy, and a peace policy which we expect to succeed. We think that when the inherent strength of the Western Powers is more effectively deployed in military terms in Europe and elsewhere, it will act as a deterrent so powerful as greatly to reduce the prospect of attack upon us. In economic terms, this means that we are entitled to look upon the setback to progress in our standard of living, and the check to our recovery, as most probably temporary.

I do not mean by this that we can necessarily forecast a fall in the annual cost of defence after a few years. That may come, once we have made up the necessary leeway, and things will be all the better when it does. Even if the burden does not grow less in absolute size, it will weigh less heavily in relation to a growing national output. We are entitled to regard, and indeed we ought to regard, such gains in national productivity as those of last year and the year before as normal. There is enormous progress still to be made in industrial equipment, organisation and methods. Provided we have the materials to do what certainly can be done, the burden of re-armament even at the level of this three-year programme will weigh less and less heavily, and the improvement in civilian standards will be resumed.

I was much encouraged to find that some leading American spokesmen are saying to their countrymen that in due course, assuming peace is preserved, the American community will be able to get back on to its rising curve of prosperity while bearing its defence burdens. This is equally our own aspiration. It is even more than an objective which we and our Allies seek for ourselves. It is also proof that prosperity and freedom can go together—an example which the Western world can hold up before the eyes of the poorer and less-developed peoples of Asia and Africa, and indeed before the eyes of the beleaguered and oppressed and silenced masses in the satellite countries and Russia itself.

Let us keep the colours of that picture and that prospect bright and clear before our eyes here at home among ourselves. It will sustain us, during the next few years of shortage and struggle, when putting aside for the time being the greater comforts and satisfactions of a higher standard of living, we build up our defences for the safety of our country, the defence of democracy and the preservation of peace.

5.30 p.m.

Mr. David Eccles (Chippenham)

I was sorry that the Chancellor began what was a very interesting speech with criticisms of the serious statement made by my right hon. Friend the Member for Woodford (Mr. Churchill). The public outside will not pay much attention to those criticisms. They will all remember that in the 1930's my right hon. Friend gave the country a warning which none of us will forget, and that in the 1940's he led us to victory. Now, again, with the full weight of his experience and authority, he has uttered a solemn and awful warning this afternoon.

He has told us that His Majesty's Ministers are not to be trusted with the safety of our country which, as all hon. Members know, my right hon. Friend sitting below me puts above everything else. That is censure indeed, because the first and foremost thing for which a Government are elected is to keep their country safe. After the indictment of my right hon. Friend, I cannot see that any of us who really care for sound defences can do other than demand a General Election.

Mr. Ronald Williams (Wigan)

Is the hon. Member seriously suggesting that it is possible now and in the future for a British Government to subsist only if it meets with the approval of his right hon. Friend the Member for Woodford?

Mr. Eccles

I am saying that the value which the world puts on men's words depends on what those men have done, and that my right hon. Friend has made a most serious statement about our capacity to defend ourselves. In my judgment—and I may be wrong—we ought to go to the electorate and ask whether they endorse that statement or not. Now let me answer some of the things which the Chancellor of the Exchequer has said.

I agree with my hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) that there is not much point in discussing whether £4,700 million is too big or too little. We do not know whether prices will go on rising. The Russians and the Chinese may make some new move which calls for changes in our policy.

But there is one point on the figures which we ought to press upon the Chancellor. When we were told in September that the Government were going to spend £3,600 million, the announcement was accompanied by a statement that the plan could not be fulfilled without dollar aid. The figure has since been put up by £1,100 million, and there has not been a single word about dollar aid.

We must know whether the Government have abandoned all idea of getting American help to fulfil this programme. We must realise that the additional strain of this programme will be much greater if we are to get nothing from America.

Mr. Gaitskell

I thought that the hon. Gentleman and the House generally knew what the position was. The question of American aid and the share of the burden of re-armament among the North Atlantic Powers is under consideration in the North Atlantic Treaty Organisation, and a study is being made of what that burden will imply to the different countries concerned, and therefore how any aid in the form of equipment or dollars which may be available is to be shared. For the moment there is no more to be said on the matter.

Mr. Eccles

I thank the Chancellor for his valuable information. It leads me to my next point. The really practical and urgent question today is with what speed and vigour the programme is to be put into operation. The Chancellor described a complicated machinery for fitting war production into our civilian industry. The machine may be all right, but the point we want to know is in what gear the machine is to be driven. Are the pacifists at West Bristol going to win and get their feet on to the brake, or are the official warriors in the Cabinet to get somewhere near the accelerator?

How many factories are to be turned over to war production? It all depends upon the vigour of the drive behind the programme. I know an aircraft manufacturer who cannot expand his output today because a factory which was part of his organisation during the war is now making Christmas cards. Is the Minister of Supply, if he is the correct authority, going to exercise his powers in that instance and similar instances?

The Minister of Supply (Mr. G. R. Strauss)

Perhaps the hon. Member will give me details about the case.

Mr. Eccles

Yes. It is Saunders Roe—the Minister has surely heard of them—in the Isle of Wight. There is a case in point. The Minister of Supply has popped up and asked me for details. He ought to know. Our charge against the Government is that it is now 12 months since the last election and although during that 12 months most tremendous changes have taken place, which have lit up the intentions of the Soviet Government—they may not have altered them—since there has been the aggression in Korea, almost nothing has been done.

Commander Pursey (Hull, East)


Mr. Eccles

Let hon. Members go to Southern Electricity Board shops. There they will find, even up to two days ago, the board touting for sales of electric washing machines on the instalment system.

Commander Pursey

What does the hon. Member expect to find? Fish and chips?

Mr. Eccles

There is no urge on the part of the Government—

Mr. Woodburn (Clackmannan and East Stirlingshire)

The hon. Member seems to think from what he is saying that after we have decided to produce something the factories can start work on it. Has he any idea how long it is after deciding to design equipment, say, before it can actually be put into production and how long it takes in any factory for that point to be reached in anything concerned with military matters?

Mr. Eccles

I worked in the planning office of the Ministry of Production. I ought to know as much about that matter as the right hon. Gentleman.

My point is that we see no urgency when we go round the country. The urgency with which a programme of this kind is put into operation depends upon the Government's estimate of the risk of war this year. I have no knowledge of that, but I should have thought that if any of us were sitting in the Kremlin, considering when to strike the blow to smash the West, we would have seriously in mind gobbling up Europe before the United States and the British Commonwealth have combat troops with which to come to the rescue of the Continent. I cannot estimate the risk. I merely say that it is great enough to convict the Government of criminal negligence if they do not make a really great effort this year.

It is not only the Russians whom we have to deter from aggression. Many hon. Members have said that we also have to think about the effect of our re-armament upon Western Europe. Perhaps the House will allow me to draw for a minute or two on my experience. I go to Strasbourg and meet groups of back benchers from various Parliaments of Europe. These men can speak more plainly than their Prime Ministers or Foreign Secretaries because those great men always have their eye on Washington. My back bench colleagues of Europe tell me—and they all say the same and say it in the same breath—that not one of them will fight if we do not give the lead, and that if we do give the lead they will fight.

That goes especially for the Germans. Hitler defeated every Western European country he attacked except Britain, and Britain defeated Hitler. The result of that is that the Germans respect our rearmament and only our re-armament. They may be making a big mistake. Personally I believe that there are deep sources of strength in France and that if the coming French general election gives a stable majority to a patriotic coalition we shall see a great revival in France. But one of the facts of Europe today is that in the matter of military preparations the Germans think first, and think only, of the United States and Britain.

Commander Pursey

What do they think our troops are doing on the Continent?

Mr. Eccles

The Americans, with all their power and all their abounding generosity, cannot by themselves move Europe to rid itself of its neutralists and to arm itself for defence by a positive alternative to Communism.

Mr. Crossman (Coventry, East)

is the hon. Gentleman's point that it is our strength which will really encourage Europe? Does he think that this debate, in which the Opposition is trying to denigrate the armed strength of this country, will help in re-arming Europe?

Mr. Eccles

I am thinking of our armed strength under the administration of my right hon. Friends who alone, I believe, can manage this business.

An example of the faith and works which Europe is seeking must come not only from America but also from our small island. That lays a great responsibility on us because the rate at which we re-arm this year will have a multiple effect in Europe, and especially upon the Germans. But how many of the people who voted for me or for hon. Members opposite understand that it will be our effort which will turn the scale in the history of Western civilisation? Some of them think of defence as America's business. That is a very unfortunate thing because we cannot get the best out of a nation when it does not believe that the next war, should it come, is its business.

But there are others like the Secretary of State for War, who frankly tells us that, no matter what is happening elsewhere, economics comes before defence. Last night the right hon. Gentleman said that the Government were wise to delay re-arming until the British economy had recovered to its present position. I ask the House to notice that the right hon. Gentleman's test for expenditure on defence is not the menace of aggression but the state of the domestic economy. I wonder if Britain has ever had a War Minister who used such an argument before.

Of course, behind the speech of the right hon. Gentleman and the speeches of his friends in the country lies the conviction that re-armament and Socialism are deadly rivals who must struggle until one gets the upper hand and, therefore, that he who supports the fighting Services is the natural enemy of the social services. That is a tremendous distortion of the truth. [HON. MEMBERS: "Hear, hear."] Nevertheless, that is what is said up and down the country.

We know that social security and national security are both essential elements in the stability of modern Britain, and the problem is how to strike a balance between them. In present times in this country, on the Continent of Europe and in Asia we must first have the means to keep the peace before we can have confidence in any kind of social or economic progress. In spite of what the pacifist intellectuals say, the common people everywhere, when told the truth about Russian aggression, understand the primary need for defence. I do not believe there is a single family, however poor and yearning for better things, living north, south, east or west, who would thank us for more benefits now at the price of an atomic war later.

If this deep instinct for safety now lies half asleep in Britain, the Labour Party is largely to blame. They failed in two things. They failed to explain the extent of the danger and they failed to explain to the people that their contribution to avert that danger would be decisive. Now they have left the public in the dark and that is why the Government go slowly and why we can have no confidence that under their leadership this programme will be put into operation with vigour.

I now turn to the Chancellor's speech. He put first the expansion in production, and there I entirely agree with him; but if the right hon. Gentleman wants the women of Bristol to go into the B.A.C. factory at Filton and make more aircraft, he must stop his hon. Friends going down there and preaching pacifism. He cannot have it both ways.

Mr. Leslie Hale

Would the hon. Gentleman tell us what steps he proposes to take to restrict freedom of speech in this country?

Mr. Eccles

I should withdraw the Whip from a disloyal member of my party.

Mr. Mikardo

Hon. Members opposite always toe the line and do what the Whip tells them.

Mr. Eccles

The right hon. Gentleman next used the very serious argument that the expansion in production will be impeded by a shortage of materials. That is not a perfect alibi. A great deal of the shortage of materials is due, as my right hon. Friend the Member for Bromley (Mr. H. Macmillan) has said, to bad buying by the Government. The Chancellor knows as well as I do and as well as the Minister of Supply does that 12 months ago we could have placed contracts for more zinc and non-ferrous metals, but it was not done.

Mr. Gaitskell


Mr. Eccles

The Chancellor is clever enough to take the one case of sulphur where the supply is very limited and in the hands of a few American firms, but had he got on somewhat better with Spain he would have got more pyrites from Spain. That has been left exceedingly late.

After the two questions of adequate manpower and adequate raw materials, the Chancellor has done the usual Treasury exercise of looking into the figures of the Economic Survey and telling us where he can find something to cut to make room for the defence programme. I believe that in the last few years we have paid too much attention to transferring from one category to another the resources set out in the national income statistics. It is not transfers we want but expansion of output. We could get that extra effort. There is still a large amount of effort in this country which could be obtained. We could get it if in these critical times we were led by a Government which clearly put the nation above its party.

It is the concern with equal shares rather than greater production which will make it impossible for a Socialist Government to find the resources without starting a bitter controversy over who ought to be made to pay. It is worth considering the Chancellor's analysis of where he would find the resources. Before I come to that I should like to say that I believe that politics dominates the whole affair and that unless we get the politics right we shall not get the resources. Let me consider for a moment what any government would be faced with in finding the resources in an economy bled, bullied and bedevilled like ours has been for the last six years.

I made an analysis which seems to be much the same as that of the right hon. Gentleman. There are four main instruments which this or any Government could use in an attempt to reduce demand in one direction or another so as to make room for the defence programme. They could try to curtail personal consumption and private investment by deflation, by taxation, by restrictions and physical controls or they could allow rising prices and lagging incomes to do the job for them. Given the economic and social consequences of a 10 per cent. bank rate, given the present level of taxation, given the resistance to drastic controls at a time when a national emergency is not felt, given in short the muddle and mess which we are in—I maintain that a Socialist Government, for all the reasonableness of the Chancellor this afternoon, must choose the instrument of inflation.

Let me examine the alternatives in an attempt to assess their value. What could the Chancellor do next April in his Budget? Just as the Minister of Defence has to call up the reservists whose skill will serve the need of the country, so the Chancellor, if he makes changes in taxation, must conform to the demands of industrial efficiency and financial stability. He will have to accept two principles in his Budget, to which I believe the whole House would agree. First, any increase in taxation must not be offset by a fall in savings or a spending of capital because, if it is, no resources will be released. Secondly, any increase in taxation must not discourage productive effort or the export drive.

Let us be realists. There are no substantial increases in taxation that can be discovered which do not offend against one or other of those principles. As we all know the Chancellor has lost the room for manœ;uvre. If he wants, as he does, more savings and more production, he is bound to come down to this House in April and tell us that by far the greater part of the re-armament programme cannot be financed out of new taxation, but must be financed either out of economies in Government expenditure or out of the ravages of inflation.

I turn for a moment to the subject of restrictions and physical controls. Speaking for myself, I think that the defence programme, if it is to be started with vigour, calls for raw material allocations and production directives to deal with scarcities. But unless a sense of urgency takes hold of the public, who really believes that the war-time restrictions could work today? This is the heart of the problem of controls. The Government are in a great difficulty. Their internal divisions forbid them to create that sense of national urgency which would make reasonable restrictions acceptable. On the other hand, if they try—as they will be driven to if they want to carry this programme out under their administration—drastic controls as a substitute for national unity, those controls will not work.

Therefore the conclusion is inescapable: since there is no reserve of taxable capacity and there is no national unity, the Government will be driven to use this blind, brutal weapon of inflation. Inflation has its charms for the Chancellor. It relieves him of the search for new taxes. Rising prices, profits and incomes will float the Treasury off the rocks. For it is obvious that with a progressive system of taxation like ours the more the cost of living increases, dragging incomes after it, the larger is the share of the taxpayer's income which goes to the Treasury.

Hon. Members opposite are looking puzzled, but if we had an inflation on the continental scale we should all be paying Income Tax at the rate of 19s. 6d. in the pound. Therefore I think the House will see what a temptation it must be to the Chancellor to allow the inflation to proceed, and what an interest the right hon. Gentleman has in a fudged statistic of the cost of living, which enables him to rake in extra revenue while pretending that the hardships of the poor are not increased. It is because the Government have got themselves into a position where they cannot choose anything but inflation, that they ought to go.

Mr. Jenkins (Birmingham, Stechford)


Mr. Eccles

On this side of the House—[HON. MEMBERS: "Give way."] No, I have given way five or six times. On this side of the House we set our faces against this dishonourable surrender to the depreciation of the pound and all the social misery that must accompany it. Our policy would be very different. We would bold steadfastly to the two overriding objectives of greater production—it means harder work—and stable purchasing power. Why should they be put at the top of the list? Because the personal sacrifices involved in working harder and in holding the price level while we are re-arming are far less than the personal sacrifices involved in the Government policy of transferring resources from one class or section to another, and using a rising cost of living to float off the Treasury.

We should not forget what a terrible thing inflation is. It is a subject on which Karl Marx and Lord Keynes agreed. They both said that if you want to overturn the existing basis of society, the easiest way to do it is to debauch the currency. That debauch is beginning in Britain today. We cannot dodge the disagreeable consequences of imposing a huge bill for re-armament on our extended economy. Indeed these difficulties make it all the more necessary to be firm and resolute about our main objectives. My conclusion on that score is first of all that a significant increase in taxation will have to be paid by all classes and will mean lower savings and less productive effort.

Let us, therefore, have the courage to go to the country and make the case for reductions in Government expenditure as an alternative to runaway prices and more taxes. Then let us tell the electorate how strong defence and stable purchasing power can be attained by a judicious mixture of harder work and temporary economies. If we find that our price level is dragged upwards by an inflation in America, we can go to the leading members of the Commonwealth and discuss with them how to loosen the link between the pound and the dollar. Finally, and most important, we ought to explain to people what they do not understand now, that a vigorous lead from Britain in 1951 would both deter Soviet Russia and inspire Western Europe.

My whole argument is directed to show that politics are now much more important than economics—

Mr. Mikardo

The hon. Member ought to know.

Mr. Eccles

I do very well, and it is true. Unless the party in power has its heart in its policy, that policy cannot succeed. Last night the Secretary of State for War confessed that his party think first of the economic state of the country and second of the safety of the nation. Well, we can have no confidence in such men. We need a new Parliament and a new government, backed by a loyal party and led by a man whose services to peace and freedom will leave no one here or abroad in any doubt where Britain stands.

6.0 p.m.

Mr. Shackleton (Preston, South)

The hon. Member for Chippenham (Mr. Eccles) is no doubt in very great demand at Tory weekend schools for his innocent lectures on elementary economics, but it is getting rather trying for the House to listen to these remarks which he himself so aptly termed "distortions of the truth." It was grossly insulting to my right hon. Friend the Chancellor of the Exchequer for the hon. Member to accuse him of encouraging inflation, when the hon. Member knows perfectly well that the policy of this Government has consistently been to resist inflationary policies.

When the hon. Member brings up, as the party opposite are doing today—I admit, very hesitantly—the question of national unity, they should remember the Amendment which appears on the Order Paper. I should like to deal mainly with that Amendment, because it has altered the whole nature of the debate and, thanks to right hon. and hon. Gentlemen opposite, it is no longer possible to discuss the question of defence in a way which could be described as objective, because they have imported the party political aspect into it. The right hon. Member for Woodford (Mr. Churchill), indicated at the beginning of his speech that this was a direct challenge to the Government, but it is interesting to note that even now an attempt is to be made to have the best of both worlds by voting merely for the Amendment and refusing to vote on the main Question.

It was obvious that in his speech the Leader of the Opposition was extremely ill at ease. Indeed, I have never heard him deliver a speech which was received with less enthusiasm by his supporters behind him, and I am not surprised. I am not surprised that certain of the more responsible Members opposite—and that goes for some of the Members of their Front Bench—must regard the decision to put down an Amendment as an act which is designed to do harm to the country. There must be hon. Members who regret this action.

The right hon. Gentleman looked back over the past few years. He referred to his own actions and recommendations, and to how he attempted to speed up the rate of demobilisation—indeed, how he did his best to wreck the ordered system of demobilisation which the Government were carrying out. There were complaints also of what he called the repetition of proposals, but surely it would be fair to remember that the Americans also have repeatedly put forward new proposals—

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