§ 3.52 p.m.
§ The Minister of Supply (Mr. G. R. Strauss)
In moving the Supplementary Estimates Class IX, I propose to say only a few words at this stage. I hope that I shall not be accused of discourtesy if I cut my remarks short because I understand that quite a number of hon. Members want to take part in the debate and there is not very much time. - I think, therefore, that it would be better if I confine any remarks that I have to make to answering questions which may be put to me by hon. Members during the debate.
The first Vote on the Paper is an additional sum of £1,300,000 required for clothing and textiles. About £1 million of that is due to acceleration of the original defence programme together with rising prices, and about £300,000 is due to the new defence programme. Under heading F.2—general stores—we are asking for a Supplementary Estimate of £2 million. Out of that about £1,250,000 is needed because of the additional defence programme and the balance of £750,000 is due to improved deliveries and increased prices on the original programme.
The next item of £3,500,000 for machine tools may be of some interest to the Committee and I should like to give the following information. It was announced by the Chancellor of the Exchequer in his statement to the House on 15th February that we would have to spend something like £115 million on machine 1551 tools for the increased defence programme. We have since reviewed that figure and it now appears that the final figure may be somewhat less; one cannot say exactly.
It is difficult to calculate the amount or value of the machine tools required because of the difficulty of estimating, at this stage, what the sub-contractors are likely to need. It is however the duty of my Ministry to get the machine tools that may be necessary and our task is made the more severe by the need to get them urgently—within 12 or at the most 18 months. The £3½ million asked for in this Vote is for machine tools ordered abroad during recent months. It is normal to make some cash payment in the form of deposit or some advance payment when these are ordered.
The total number of machine tools that we are likely to require to carry out our defence programme is about 27,000. Since the Supplementary Estimate was framed the Committee will be pleased to know we have progressed further, and ordered a substantial number of machine tools. We have paid out already £5½ million on about 9,000 machine tools ordered in the United States and on the Continent. Most of them have been ordered in the United States. These machine tools were bought through normal trade channels, and I should like to express my gratitude to the importers for the skill and energy which they showed in placing these orders.
One of our most difficult problems is to dove-tail foreign purchases, which must be substantial, with the machine tools available from home production. That is a very grave problem, in which we will be assisted by the recent appointment which I announced on Monday of Mr. S. W. Rawson as Director-General of Machine Tools. In order to assess the present output of machine tools, and the extent to which the tools are being used for essential purposes, and the uses from which they could possibly be diverted to the defence programme, we are examining in agreement with the industry, the order books of about 30 manufacturers of Machine Tools, which are most important for the defence programme. Not only are we looking at their order books, but we are trying to find out for what purpose these machine tools, which have been 1552 ordered, will, in fact, be used. Until that has been done we cannot assess properly the extent to which it may be possible to use home-produced machine tools—we know it will be a very large number— for the defence programme.
While we would be reluctant to do so, it is possible that we may have to divert some of our normal exports of machine tools for this purpose. I say that we shall be reluctant to do so, because nearly all these machine tools go to Commonwealth countries for essential purposes or to countries in the North Atlantic Treaty Organisation. We very much hope we shall not have to divert any kind of machine tool exports from these countries to our own defence programme, because it is clearly in the general interests to maintain our exports to those destinations which are building up their own, and, thereby, of our common defence.
We are also taking steps to increase our output of machine tools. We are in touch with the Ministry of Labour to see whether it is possible to man up some of the machine tool works which are undermanned, and we are also doing everything we can to encourage tool manufacturers to sub-contract. If necessary we shall have to go into a programme of new production, taking over existing factories and building new ones.
I have spoken about orders which my Department placed with overseas suppliers and I mentioned the United States. The United States is an absolutely vital source of supply, because when it comes to the bill we cannot complete our defence programme without their help. Many of the tools we need cannot be obtained anywhere else, and because of the difficult world supply we shall not be able to meet the full extent of our requirements without help from the United States. It is not, therefore, too much to say that the full realisation of our defence programme depends on the orders we have placed and the further orders about to be placed with American industry. We are in constant consultation with our American friends on this matter both in Washington and in London.
That is all I want to say at this stage on the subject of machine tools, but I should like to add one word on the purchase of materials for strategic reserve. Unfortunately, there is not very much I can say about that. The matter was 1553 covered generally in the debate which took place on Friday week, and the general policy of the Government on the purchasing of raw materials was outlined. I do not want to add anything to what was said in that debate. Moreover, as the Committee is aware, we do not want to make public the details of our stockpile.
We feel there is a strong security objection to doing that, and, therefore, all I propose to say is that we have acted as energetically as we can to get the materials which are likely to be in short supply during the coming months. We would like to buy much more, but we have been debarred from so doing because the materials are not available. I hope that the Committee will not press me to go into the details and break down the total amount, of £7,700,000, into types of metal and so on.
§ Mr. R. S. Hudson (Southport)
The right hon. Gentleman referred to the debate last Friday week on the subject of raw materials. The outline of Government policy was delivered by the President of the Board of Trade, whose whole speech was devoted to the raw materials under his control—wool, cotton and so forth. So far as I can remember, the right hon. Gentleman made hardly any reference to any of the materials controlled by the right hon. Gentleman the Minister of Supply.
§ Mr. Strauss
Some reference was made, but I am perfectly prepared to speak later on non-ferrous metals. I do not want to take up too much of the time of the Committee now, but I shall answer any questions put to me about our policy for stockpiling. I do not want to enter into a general policy statement now, because it would take up a large part of the time available for this debate.
§ Mr. R. S. Hudson
We are being asked to vote this sum of over £7 million, and we should like to know what articles it covers and what the general policy is. It is better to take it short now, than at much greater length later on.
§ Mr. Strauss
Our general policy is to buy as much as we can of raw materials which are in short supply and which affect the engineering industries of this country, such as non-ferrous metals and various alloy metals for steel, and in some cases 1554 some types of ore. We want to buy as much as we can and so far as we can without seriously curtailing the present production of industry, and to put these materials in our stockpile. This figure of £7,700,000 contains a substantial range of articles, and I am anxious not to give the details, because we feel that, for strong security reasons we should not do so.
If any hon. Member wishes to put specific questions to me I will do my best to answer them when the debate comes to an end. I do not think I can do better, and I am perfectly sure that the Committee will endorse the general policy of stockpiling these materials to the extent that it is possible to do so. We are pursuing that matter energetically, and using all possible channels—private trade channels and all others—in carrying through that task.
§ Mr. Walter Fletcher (Bury and Radcliffe)
The right hon. Gentleman said that the policy was to buy those articles which are in short supply. Does he not also mean those which are not in short supply but may become so in the future? Is he entirely confining his activities to materials which are in short supply now?
§ Mr. Strauss
We are not only buying articles in short supply now, but also those where there is any possibility or probability of them being in short supply during the next year or two.
§ Mr. R. S. Hudson
This is not in the ordinary sense of the term a Supplementary Estimate. This is a new service, and it is outside my experience for a Minister on an Estimate of the kind which the right hon. Gentleman has introduced —one of his main Estimates—to give such an extremely cursory explanation to the Committee. He has not told us in the slightest degree what he desires to do, what articles in detail he requires, what he intends to cover, and how he intends to get them. I think he must.
§ Mr. Strauss
The last thing I want to do is to appear to give less detail than the Committee would require. I understood after some conversations that I had with hon. and right hon. Gentlemen opposite, that it would be to the general convenience that my introductory remarks should be 1555 as brief as possible. I mentioned the time. I hoped that it would take no more than 10 minutes altogether, so as to allow ample time for hon. Members to ask me questions. I will answer those questions afterwards. It was in conformity with that undertaking that I cut my remarks short. I think that we shall be using our time much better if I answer questions that are put.
On the general policy, there is really not much more that I can say, particularly as I am reluctant to give details of the goods that we have stockpiled—exactly what they are or how much we have bought—except to say that we are anxious to buy all those goods which are short, or which we think are likely to be short during the next two or three years, and that we should have liked to buy very much more if they had been available. I hope that the Committee, after questions have been asked and replied to later, will then agree to the Supplementary Estimate.
§ 4.12 p.m.
§ Mr. David Eccles (Chippenham)
The Minister says that the general policy is to buy as much as we can in all directions. We are discussing a Supplementary Estimate for money which is wanted up to the end of this financial year, that is to say, it has only a fortnight to run. Our disquiet is that that has not been the general policy during the period when this money has been spent. It may be all right for the Minister to come down and say in March, 1951, "We have made up our minds to stockpile and to get all the raw materials we can." That is not good enough.
We have to look backwards, over the year when this money has been spent, and to ask whether the shopkeeping during that year has been well or badly done. It seems to me that the right hon. Gentlemen in charge of our raw material supplies have done the very reverse of what an intelligent shopkeeper would do. After all, we have the reputation of being a nation of shopkeepers, but we must have lost it by now, because the two right hon. Gentlemen sitting there have failed to keep their stocks of raw materials, for which they now ask what seems a very small sum indeed, in line with the anticipated changes in supplies and prices.
1556 We heard the other day as an excuse for this that no warning was given to the Minister to go out into the world and buy more of the available raw materials. I cannot speak for the warnings given by the trade or by trade associations. It may be that one of my hon. Friends knows more about that than I do. All I know is that the clearest warnings were given before Korea by the prices of the shares of the great companies who produce our raw materials. Those prices are by far the most sensitive indicators. There is not a shadow of excuse for His Majesty's Ministers for having misjudged this market.
The hundreds or even thousands of investors who bought shares, the prices of which are based upon the production of important commodities, did so not because they took the Ministers' view that it was a good thing to run down stocks of those commodities because prices were going to fall. They made their purchases of shares because they felt certain that the underlying products would go up in value and be more profitable. Let me take tin for a start. I suppose one of the leading tin companies, which I have taken at random, is Tronoh Mines. Exactly a year ago, in the middle of March, the price of the shares of that company was 23s. By the middle of June, a week or two before Korea, the price had gone up to 27s. Everyone could tell that tin was a good thing. Take zinc. By far the most prominent company there is Consolidated Zinc of Australia. In the middle of March the shares were 23s. By the middle of June they were 28s. Our stocks of zinc were being run down. Zinc contracts were being cancelled at a time when the whole of the investing public in the world were taking an opposite view to that of Ministers.
It was just the same with international nickel and rubber. The leading firm in the rubber business, I suppose, is the United Sua Betong. These shares went up from 30s. to 36s. during that period before Korea. We come to newsprint and pulp supplies, in which Bowater's paper shares are the index of what is going on in the paper world. They went up from 40s. to 48s. There is not a shadow of excuse for not stockpiling sooner and in greater quantities.
§ The President of the Board of Trade (Mr. Harold Wilson)
What date was that?
§ Mr. Wilson
In the four months preceding Korea both rubber and newsprint were bought by private merchants, not by the Government.
§ Mr. Eccles
I should like to ask the President of the Board of Trade a question. I think I am right in saying that the private purchase of pulp was only made free last March. When the Board of Trade allowed private buyers to go back into the pulp market they were too late for that season's purchases of pulp in Scandinavia, as the right hon. Gentleman very well knows. They could have got pulp if they had been encouraged to do so before, but the right hon. Gentleman held his control on too long.
I believe it would be true to say that our private stocks of rubber compare very favourably with the Ministry's stocks of non-ferrous metals. I think the rubber manufacturing industry has about kept level, while the national stocks of non-ferrous metals in the hands of the right hon. Gentleman have gone down. The history of this business shows that Ministers took a wrong judgment, which shows that they are not competent housekeepers when it comes to the provision of stockpiles and raw materials generally. It is not only that the Ministers are incompetent. I believe that the system of buying, the machinery of Government, is not suitable.
It seems that we shall get more of these unsatisfactory Estimates so long as the purchasing and responsibility for raw materials are spread through a number of Ministries. We ought to have learned the lesson of the last war, which was that when we get into a period of scarcity and want to stockpile, it is no good having different Ministries responsible for different raw materials. It is far better, both with raw material supplies and with machine tools, and certainly with international negotiations, when we are trying to allocate scarce materials, to draw those together into one Ministry.
In the last war we were too late. The Ministry of Production was set up too late. Why not let us profit by that 1558 experience now? Why not take these matters out of the hands of right hon. Gentlemen opposite, at the Board of Trade? Let us have a Ministry of Common Services. We might at least get these things looked at in a more national way. Stockpiling is of immense importance in defence. The plain question that I should like to ask the Minister to deal with when he replies is: Can he give us some idea how important the Government really think stockpiling is? We have no idea on these benches. What is the good, for instance, of building a great antisubmarine defence, if war should come and we have not stocks in this country to tide us over the two or three months when things will perhaps be difficult and before the Royal Navy have taken, as undoubtedly they will, the measure of the enemy?
Does it really make sense to go on with the rest of the defence programme and not press the question of stockpiling? I fear that it is getting very late for His Majesty's Government to stockpile on their own. Other governments have done it. I had an opportunity the other day of talking to two or three of the leading manufacturers in Belgium. They told me that, apart from sulphur, they are well stocked up in Belgium. We are not; yet we are supposed to be just as good at international trade as the Belgians. I believe that we should find many other countries better off than we are.
Can we have from the Government a clearer statement of where they put stockpiling in priorities? What are they prepared to do to get these stockpiles? Can they tell us now whether there is any hope at all except by international agreement? It is very late in the day, but perhaps it is just possible. What I believe would be a mistake would be to go on in conditions of scarcity, such as we have now, bidding against each other. What are the Government going to do about it? We have not had much in the way of results so far. The Committee would be grateful if we could have some assurance that the common services, machine tools, international negotiations, stock-pilers and raw materials will all be centred in one place and under the responsibility of one Minister, and we should also like to know the priority given to stockpiling.
§ 4.22 p.m.
§ Mr. Edelman (Coventry, North)
There will be no disagreement in the Committee today that stockpiling is necessary, but we may have different views as to what methods of procurement should be employed so that we may have an adequate stockpile in this country. For that reason we cannot divorce today's debate from the debate on raw materials which took place a fortnight ago. It is interesting to find that the hon. Member for Chippenham (Mr. Eccles) now tends to be more inclined towards some kind of central agency for obtaining these materials. Only a fortnight ago, had he spoken, I am quite sure that he would have supported the proposals for the private enterprise procurement which were put forward by his right hon. Friend the Member for Southport (Mr. R. S. Hudson).
The hon. Member for Chippenham spoke about the lack of foresight on the part of the Government in not laying in stocks before the Korean period and contrasted it by inference with the prevision of private enterprise which had bought stocks when the market was low. I would point out that nickel, wool, sisal, hides, silk, tin and rubber were all obtained on a free market and were all bought by private enterprise; yet the fact remains that the prices of those materials have risen and, relatively to the basic quantities available, all of them are in short supply.
I want to speak for a moment about the question of the rise in prices because there has lately been a trans-Atlantic brawl which cannot have produced any favourably economic results to either this country or the United States. Hon. Gentlemen will recall that recently the Preparedness Sub-committee of the United States Committee on Armed Services presented a report on tin in which they accused the Malayan tin producers of "gouging" the United States. This was rather a modification of the previous attack on producers when, in their report on rubber, they charged the producers in Malaya with "gouging the United States unmercifully." The fact remains that the United States have receded from the technique of private enterprise procurement, which is the method advocated by hon. Gentlemen opposite and the method put so passionately by the right hon. Member for Southport a fortnight ago.
§ Mr. Edelman
I will give way to the right hon. Gentleman, although I would recall to him that a fortnight ago, when I rose in order to present a point to him, he declined to give way. None the less I will give way.
§ Mr. Hudson
I was not misquoting the hon. Member at the time as the hon. Member is misquoting me this time. I never said anything about private enterprise procurement. I was not discussing private enterprise procurement as against bulk buying.
I am glad to see that the right hon. Gentleman has now renounced the whole principle for which his party stands. In the past the Conservative Party has always made the claim, whether it be in regard to meat or metals, that the technique of private enterprise procurement is the best way to obtain the commodity cheaply and in full supply——
§ Mr. Hudson
That is completely incorrect. The hon. Member has been in the House long enough to know that he ought to quote hon. Members in any part of the House correctly. If he will look at my speech on that occasion he will find that I said nothing of the sort.
In that case I understand from the right hon. Gentleman that he now recognises that private- enterprise procurement is not the best way to obtain the raw materials which we need for our stockpiling purpose——
§ Mr. Hudson
If the hon. Gentleman wishes to attribute views to me, he should take the trouble to read the speech in which I set out my views.
§ Mr. Edelman
If I understand the right hon. Gentleman correctly, it is quite clear that he is in favour of obtaining raw materials for this country neither by private enterprise nor by central purchase.
I want to deal specifically with the question of tin. The United States Preparedness Sub-committee said the following in the first paragraph of their recommendations:To avoid further price increases resulting from the frantic and indeed almost hysterical competitive scramble for tin by domestic consumers and the Government, all purchasing of tin metal and concentrates from abroad for 1561 use both by industry and the Government should be centred in a single Government department, as was done during and after World War II.Hon. Gentlemen, on this side of the House certainly, will welcome the recognition by the United States that the only way in a period of scarcity to obtain the materials which we need vitally for our stockpiles is to have some kind of central control in order to make sure that those materials do not fall into the hands of the speculator who will be anxious to push up the price contrary to the public interest.
In the latter part of this report the American Sub-committee says:Speculators throughout the world have been acquiring stocks and continuing to bid up the price.The Americans have recognised quite clearly that, in the case of a commodity like tin, if the market is left to the normal competitive scramble of private enterprise, then the price will be forced up and supplies will be inadequate. In the case of tin, one of the most essential materials for both our current civilian production and our arms production, the Sub-committee says:… as recently as November, 1950, the representatives of the producing countries… peared still to be in greater fear of surplus tin capacity than of Communist imperialism…In other words, it is quite clear that at the time that the hon. Member for Chippenham says that the Government should have gone into the market in order to buy tin, the tin interests were getting together in order to keep the price of tin high. I submit that that process——
§ Mr. Edelman
Will the hon. Member allow me first to say this? As in the case of his right hon. Friend the Member for Southport, I would remind him of two occasions when I sought to put a point to him in the Raw Materials Debate a fortnight ago, but on each occasion he refused to give way. I am nonetheless prepared to give way.
§ Mr. Fletcher
I want to make quite certain that accuracy prevails. The hon. Gentleman in a letter to "The Times" today, quoted tin as being at £600 a ton when it was released from control in 1949. The facts are that tin was released 1562 in November of last year and that the price was then £1,100. Private enterprise up to then had had nothing to do with fixing the price.
§ Mr. Edelman
I have here the official figures issued by the Board of Trade. I would only tell the hon. Gentleman that the quotation recently, before the United States decided that it would control the purchase of tin, was something like £1,450 a ton. It was only when the United States decided that it would buy the tin centrally that the price began to decline, both in the interests of the United States and ourselves, and both in the interests of the Defence programme and the housewife at home who has to buy part of her foodstuffs in tins. It is no use the hon. Member suggesting therefore that the fact that tin was put on the free market was in any way beneficial to the public as a whole. It is quite clear that in every case when these commodities we need so urgently for our stockpiling at home have been put on the free competitive market the prices have gone up and the goods have tended to go into short supply.
I do not want to detain the Committee by speaking again on the question of rubber, because I have often spoken on the way in which this country has been forced to pay extravagant prices for the rubber we need so vitally for our defence programme and current production. One thing that emerges clearly from the case of rubber and tin is that it is quite clear that the problem of our stockpiling is not how much we can buy hurriedly with a few million pounds at our disposal. Our problem is the problem of the West. It is the problem we must face in conjunction with our American Allies. We cannot view it in isolation.
For these reasons, it becomes all the more necessary that we should attempt to concert our actions with the United States so that we shall not only be able to get our raw materials at fairer prices, but also that when the United States gets the tin and rubber they need so urgently we shall be able in our turn to ask them, and to ask them with even more moral justification than we can ask them at the moment, to release from their stocks the sulphur we need so urgently.
It is not simply an economic problem, but a political problem as well. It means that not only should my right hon. Friend go into the market, whether by central 1563 purchase or by allowing private enterprise to do its best, but that it is essential that the Government should try to coordinate with the United States their activities not merely through the independent commodity committees, which in my view will prove to be ineffective, but through the establishment of some kind of combined resources board, referred to rather nostalgically in the American Sub-Committee's Report, to obtain a coordinated economic strategy which will have some reference to the North Atlantic Treaty Organisation.
§ Mr. Eccles
Does not the hon. Member agree that his policy, if put into operation, means that the Colonial Office must requisition the whole of the output of rubber and tin in Malaya? Is that what he wants to see done?
§ Mr. Edelman
I think that every effective method must be used. Whatever method may be necessary should be used in order to see that the cost of living is kept down and that we get the physical materials we need. I should shrink from no method, carried out in fairness to the interests concerned, which would bring about these two results.
Yesterday the Chancellor of the Exchequer said that so far as the coordination of committees was concerned, he must avoid too much over-co-ordination. I am inclined to agree with him. We do not want to multiply the international economic committees which are already prolific, but what we must have, if we are to get the materials at a fair price, is some kind of central co-ordinating body, a body which will enable us to talk on a fair basis with the Americans so that we can get all these vital raw materials that we need so urgently and that are now departing from the market.
§ 4.36 p.m.
§ Colonel J. R. H. Hutchison (Glasgow, Scotstoun)
I hope that the hon. Member for Coventry, North (Mr. Edelman), will excuse me if I depan a little from the line he has been putting before the Committee, a line which he put before the House a fortnight ago and again today. It seems to me to be largely a question of taking a particular article and arguing from the particular to the general on the theme of private enterprise as against 1564 State buying. I do not think this is really pertinent to our debate today, or to the debate a fortnight ago.
We are presented today with the problem of dealing with the requirements of industry in strategic raw materials. Undoubtedly the country would have been in a much happier position and mood if we had done what many other countries have already done, and that is establish stocks of these scarce materials. To say that, is something very different from giving a carte blancheto accumulate these stocks. I wonder how far accumulation is in fact, feasible at the present time. I think there will be no disagreement that it is feasible only after our full defence programme has been satisfied. No one will quarrel with that.
I should like to ask what is our full defence programme, when is the nation satisfied with the articles that are being supplied, and where do they stop. There is no value or virtue in large stocks themselves. Stocks are only of value when they have found their way into the finished article, whether it be radio sets, jeeps, ships or anything else. It would be madness for us to accumulate stocks and then to neglect our essential needs. The Prime Minister said that engineering must be expanded and talked about new works and activities. Is it really possible to lay up stocks in considerable quantities when we have to meet the essential needs of the country, to adopt a policy of expansion of engineering, while dollar exports rank almost as high as defence, with Commonwealth exports very little behind? I do not know whether the right hon. Gentleman will be able to say whether his purchasing facilities will allow him to do all these things at the same time.
It is clear that we are moving back into a world of controls, and that the web we have suffered from for so long is being spun finer and wider. Whether we agree or disagree with the hon. Member for Coventry, North, some form of international control may be desirable as an ad hoc measure. The real problem that confronts the Government is not the invention of controls but the invention of controllers. We have created a machine for which there is no competent mechanic. It is not possible for human grasp to take hold of the enormous implications of all the committees and controls. We have seen from a recent speech 1565 of the President of the Board of Trade just how deeply the tentacles of sulphur and sulphuric acid enter a number of activities in the country. That was only one item. What are we to think when the whole field of industry, and international industry at that, is affected at the same time?
In order to be able to understand a little of this control system it is time that the Government published an edition of "Who's Who" of these various international organisations. We have E.C.A., O.E.E.C, E.C.E., the Brussel Treaty Organisation, the International Metals Conference and the Commodity Groups and the Defence Production Board of the North Atlantic Treaty Organisation, which is now to be replaced by a new organisation for collective mobilisation of industry and finance.
Are we satisfied that there is not a great deal of overlapping and, even if there is not, how are we poor ordinary industrial mortals to find our way about the bodies which control our destiny without some sort of guide as to who they all are and what they all do? However eminent the man, however high-sounding the title of the organisation, are we likely to get much success out of it? History has not been very reassuring. I can remember the muddle of the steel allocations and how shipbuilding suffered so much a few years ago. Then we were told in August and September that stocks were sufficient—that was after Korea— and industry was discouraged from doing anything towards stockpiling.
Nevertheless, during the past year our imports fell in aluminium, in lead, in zinc, in tin, in softwood, in cotton, in wool and in jute goods. The classic example is perhaps sulphuric acid where, on the Government's own statement, two and a half years ago American producers warned us of a scarcity, and in July notice was given that supply for acid production would be much less. Yet, during 1950, we exported a little more sulphuric acid than in 1949 or in 1948, at a time when we had been warned over and over again that this shortage would create grave problems. I should like an explanation from the right hon. Gentleman on this point.
§ Mr. G. R. Strauss
Does the hon. and gallant Member realise that sulphuric 1566 acid does not come under my Vote? It is the responsibility of the President of the Board of Trade.
§ Colonel Hutchison
Then I hope it will be mentioned to the President of the Board of Trade, or maybe he will be able to read it, because I hope what I am about to say may be in a minor way a constructive suggestion. There is sulphur obtainable in Chile. It is true that it is obtainable under considerable difficulties but the sulphur position, as a long-term problem is one where we can afford to ignore no source of supply. So I think the Chilean possibilities are worth mentioning.
I should also like to ask what happened in that curious story of the transshipment of 47 tons of molybdenum. I believe this will come under the sphere of activity of the Minister of Supply. The right hon. Gentleman said in December that an examination was being made of how we could stop the trans-shipment to Russia of such valuable and rare material. The Minister said he would look into the recommendations of the Governments concerned and let us know what conclusion he reached. Perhaps he will be able to tell us about that later on?
Finally, I want to make an appeal that industry should be used properly. When hurried and ill-considered steps are suddenly taken because the situation has hit the Government in the face, they only impede the flow of industrial products. Too often industry is presented with a fait accompli, and it is only when things have gone sour that the right hon. Gentleman calls in the industrial specialists to see what can be done to put them right. He really must not complain if industry and trade associations can give no guidance unless they are in, and consulted, from the beginning.
It is quite impossible to advise right hon. Gentlemen unless we know all the facts in the early stages. Too often we feel that we are called in at too late a stage. In some of the industries with which I am connected I have seen substitutes found for many things provided warning is given that there will be a shortage, but it is quite useless coming on Wednesday to an industry and saying, "Your supply of this, that or the other thing will be cut off next week. You must find a substitute." We must have time 1567 to look round in order to make arrangements.
The Chancellor of the Exchequer in' a recent speech said that there must be a general directive, supplemented by advice and guidance on industrial problems in addition to statutory controls. That is a very estimable attitude of mind. I like the suggestion of my hon. Friend the Member for Chippenham (Mr. Eccles) of having a single Services purchasing organisation or supplies organisation for making all the purchases which we are discussing today. It might be modelled on the joint committee with industry which is considering how to tackle the problem of Civil Defence. In that case there are two groups: there is the Government staff group and the industrial consultant group. The problem is put by the Government staff group to the industrial group, who go away and think about it, discuss it amongst themselves, and then bring it back to the joint committee, when some solution is reached.
I understand that the commodity groups in the United States, about which we have heard a good deal, are not to have any representatives of industry or commerce on them. If that is so, it underlines the importance of Government representatives who go there having more information from industry before they communicate with the commodity groups in the United States.
These are defence problems I know, but many of them are industrial problems, and we cannot have the defence weapons we require without the full cooperation of industry. So I beg the Government to use industry properly. It is only too anxious to help. It avoids its own difficulties to begin with, it facilitates the flow of the production which both right hon. Gentlemen want, and so I hope they will set up some system of using industry in that way.
§ Mr. Jack Jones (Rotherham)
Before the hon. and gallant Gentleman sits down, would he mind answering a question? Some of us are gravely concerned about the fact that the Government have, on occasions, to pass on a decision which has a grievous immediate effect upon industry. Would the hon. and gallant Gentleman advise the Minister how he can combat the fact that other nations from whom we get our raw material 1568 supplies also make sudden decisions which cause this nation to have to make them? How can the hon. and gallant Gentleman put that position right?
§ Colonel Hutchison
Surely the rôle of the Government and of the right hon. Gentlemen is to anticipate these difficulties, to try to look ahead and see what supplies can be obtained from here, there and elsewhere.
§ Colonel Hutchison
If they can see that a shortage is coming about, they can surely anticipate that other governments will take steps to meet that shortage.
§ Mr. H. Wilson
How can we anticipate what decision the United States Government will take next week on sulphur supplies to this country for the month of April?
§ Colonel Hutchison
That is not the problem. The problem is what are we going to do anywhere about sulphur supplies. The right hon. Gentleman has said that representations have to be made to the United States Government to increase the allocation. I say the Government have a great many more things than that to do. They have to consult industry on how to find substitutes for sulphur. They have to hunt up the Chilian production, and so on. While the right hon. Gentleman was absent I gave an illustration of how to obtain a further small supply of sulphur.
§ 4.48 p.m.
§ Mr. Ellis Smith (Stoke-on-Trent, South)
I understand, Major Milner, that we are considering the Supplementary Estimates and that policy cannot be discussed. Therefore that limits the contribution we can make. Within those limitations, I appreciated the approach made by the Minister to these Estimates.
§ The Chairman
I may be able to assist the hon. Member. He is in error in thinking that we cannot discuss general policy because, for instance, machine tools and the purchase of materials are, in effect, services, so they are open for discussion.
§ Mr. Ellis Smith
Thank you, Major Milner. We must all make allowances 1569 for limitations of secrecy, and the difficulty emphasised by the Minister in regard to the purchase of material. Having made those allowances, one is bound to feel uneasy about the large sums involved. For example, the total of the original Estimate, as shown on page 66, was £115 million, and now we have a Supplementary Estimate for another £14½ million. It is upon these additional sums that the Committee are entitled to ask questions with a view to seeking information which will enable us to see the position more clearly than at present.
Page 66 states that the Supplementary Estimate includesthe supply of munitions, aircraft, common-user and other articles and atomic energy …As far as the additional Estimate for atomic energy is concerned, I do not want to bring out anything which should be withheld, but there are rumours in the vicinity where a certain amount of this work is taking place, that extraordinary sums are being paid out to people engaged in this kind of work. Within recent weeks a number of trade union officials in the Manchester area have raised this matter with me. They are very concerned about it, and I should like to know whether there is any truth in these rumours that large sums are being paid out to people of all grades who are engaged on this work.
With regard to research and development, I want to ask whether we can be given more information. In a large number of industrial establishments, research is taking place, and it must be taking place not only on——
§ Mr. G. R. Strauss
On a point of order. My hon. Friend is asking me a number of questions on matters which are contained in the preamble on page 66 but which do not appear to be in the Supplementary Estimate. I do not want to be so discourteous as not to reply to him after he has put these questions, but I understand that it would be out of order for me to reply to them or, indeed, for the matters to be discussed. I should be grateful for guidance on this, Major Milner.
§ The Chairman
I am obliged to the right hon. Gentleman, who is, of course, quite correct. We can discuss only those 1570 matters which are included in the subheads of the Vote, and not those items which appear merely in the preamble.
§ Mr. Ellis Smith
I appreciate the point which my right hon. Friend has made.
An additional £3½ million is to be found for machine tools. Then, on page 67, we find that provision is to be made for the setting up ofa pool of machine tools and ancillary equipment and of other production equipment …In view of the fact that we were engaged from 1935, and especially between 1937 and 1945, in importing a large amount of machine tools, and were also engaged on manufacturing a large quantity of these tools, can we be told what machine tools we are now having to import? I know that the Americans have specialised on certain machine tools, and to that extent I make all the allowances which are necessary, but even having made those allowances, £3½ million is a very large sum. Those of us who are familiar with the machine tool industry require some explanation of what this figure includes. The same paragraph on page 67 goes on to state thatThe equipment will be used in Government establishments"—one can understand that—and by contractors under schemes of capital assistance, while some may be sold to contractors.…Already there is a great deal of uneasiness about the disposal of machine tools after the war. It is well known that from 1945 to 1947 and 1948, there was talk in all the large industrial centres about the disposal of large numbers of machine tools for relatively next to nothing. Now we find ourselves again embarking upon a policy of assisting contractors who are engaged in private work—making profit —and they are having this kind of assistance. Before the additional requirement is voted, we are entitled to some explanation.
The same paragraph, dealing with plant, machinery, etc., also uses the wordsin advance of delivery of the equipment.We are bound to be very concerned about this in view of its serious effect upon our export trade. I happen to live in an area which has been more affected by the fluctuations in the machine tool industry than has any other part of the country. In the Manchester, Altrincham, Timper- 1571 ley, Broad Heath, Stockport and Red-ditch districts, a large number of engineers were for years dependent upon the machine tool industry for their livelihood.
We found that at a certain period countries in Eastern Europe were giving enormous orders for machine tools, which were being financed by London and manufactured in Germany, while our own men were lining up at the employment exchange. Later, because of the indignation which this aroused, the Conservative Government introduced a Bill—if I remember aright, the right hon. Member for Southport (Mr. R. S. Hudson) was connected with it—which made an improvement in the Trade Facilities Act in order to guarantee the insurance upon the large orders that were being given.
Now that I have reminded my right hon. Friend of this, he and other right hon. Gentlemen will readily understand our uneasiness. Between 1925 and 1930, had it not been for Government assistance and the guaranteeing of the insurance payments, thousands would have been unemployed in that area and we would not have been in as strong a position later for embarking on large-scale rearmament. We are bound, therefore, to ask my right hon. Friend, before we vote these large amounts, to state in more detail the policy which his Ministry intend to adopt to safeguard the position and to prevent a repetition of the events to which I have referred.
I read in the Press the other day that the Ministry have appointed seven advisers to advise them on matters of this kind. I should like to ask my right hon. Friend whether that is correct.
§ Mr. G. R. Strauss indicated assent.
§ Mr. Ellis Smith
The Ministry have also appointed another three gentlemen. Although they may be first-class men, there are a number of public-spirited people who are very well informed on the machine tool industry and who, I should have thought, should have been included in a committee of this kind. I refer to men like Sir Greville Maginness, for example, and to others, but I mention him only as a typical example of the kind of man who served so well in the last war. There is also, of course, the labour side, and one would have thought that a prominent trade unionist, who knows the 1572 industry and everyday difficulties and who remembers the background of those difficulties, would have been called upon to service upon this committee.
I am uneasy also about the contracts for machine tools for the Soviet Union, about which there was controversy a few weeks ago. In the Manchester area there are being manufactured large machine tools for which not many countries could give orders. Therefore, before we vote these large sums of money we are entitled to know what is to be our policy in regard to those exports. It is in days of difficulty and adversity that we find out who are our best friends and, while there are great political difficulties in the world, that should not affect our trading relationships to the extent which it may unless we keep an eye on this kind of thing.
I ask the Minister: What is to be the policy of allocation of raw materials? For example, I have seen that the motor industry is getting very concerned, and the light industries in the Birmingham area are becoming concerned, about the prospect of shortage of zinc and other valuable materials, and in the Manchester and North Staffordshire area they are becoming uneasy because of the prospects of difficulty over shortages of raw materials. Will the Minister be good enough, before we vote this large sum of £7,700,000, to inform the Committee what policy it is proposed to pursue on the allocation of raw materials? I liked my right hon. Friend's attitude in opening the debate. It was obvious that he is prepared to go as far as he can and I hope that he will go as far as he can, in replying to the many points which will be raised in the discussion.
§ 5.2 p.m.
§ Mr. Watkinson (Woking)
I only wish to put a few points because the major portion of the Minister's remarks dealt with the machine tool industry. I will not follow the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), except to say that I do not think he need worry too much about the standing of the gentleman to whose appointment reference has been made.
§ Mr. Ellis Smith
I was not making any reflection on them whatever. All I was saying was that the record of other prominent men, who played a considerable part in the war, should receive consideration.
§ Mr. Watkinson
I agree and the hon. Member mentioned one who is doing very valuable work. Will the Minister keep in mind that he is today left with a large number of machine tools, ex-last war, which are not of very much use to anyone? I imagine they have been looked at from the point of view of whether they can be adapted in any way, but I hope we shall not be landed again in this way in the purchases we are making. There have been changes in techniques and manufacturing methods and the remaining tools which we have in stock, through no one's fault, are perhaps out-of-date. I hope every effort will be made to see that we are not again landed with machine tools which have to be stored away and are quite useless.
The Minister said that he was going to talk to the Minister of Labour about the possibility of getting additional labour for the machine tool industry and I would like to say how valuable that would be if it could be done. But, while the right hon. Gentleman is prepared to do that, we have to remember that we are not using the machine tools we have on the production lines to their full extent and if we were to get the maximum out of them they should be working 24 hours a day. There is a possibility there of stretching our existing stock of tools now in use by merely utilising them to a far greater extent. I think that it is something at which the Minister of Labour might look. It might relieve further purchases in dollar markets.
While talking of dollar purchases and machine tools from America, I hope that it is not in any way implied that the Americans are not doing all they can to supply us with the necessary tools. I think they will do their utmost, but we should bear in mind that if we had gone to them 12 months ago and given some indication that we were going back into the market for American machine tools we would have had a friendlier reception, because then the industry was working short time. Today, it is quite different. I appreciate that it is easy to "job backwards," but the difficulty today is that we go to them when they have more orders than they can fulfil. I am sure, however, that they will do what they can and, in answer to a Question, the Minister assured me that he was trying to dovetail our orders into the demands for American 1574 home production. I hope that will be done to relieve the burden on the American supply, which is already fully committed.
Will the Minister also bear in mind that the machine tool industry requires certain special steel, for example, special cutter steels and, although "we may make the machines, they will not be very much good unless they have the cutting tools. Will he bear in mind that overall priority should be given to steel for special cutting tools, barbide steels, and so on?
One point on which I was not clear was that I thought the Minister said that £5,500,000 has been spent, or orders have been placed. Are those merely initial payments, or will that represent the total sum?
§ Mr. Strauss indicated assent.
§ Mr. Watkinson
The Minister mentioned the question of exports. There is a point here which is of some importance. If I heard him correctly, he said that we might have to cut down exports to Commonwealth countries to meet our own needs at home. I would like to make one plea in this matter. We have entered into certain definite commitments with Commonwealth countries, certainly with the Canadians, who have gone a long way to help us in getting their machine tool business. Canada has made things easy over electrical standards and that kind of thing and I hope that, in return, nothing will be done to let them down over delivery. It may be wiser to buy machine tools from Germany to help us here, rather than let our Canadian friends down, now that we have gone into their industry in a big way. I hope that letting down our Canadian friends would be the last thing we would do.
§ 5.8 p.m.
§ Mr. Albu (Edmonton)
I support the hon. and gallant Member for Scotstoun (Colonel J. R. H. Hutchison) in the plea that we should not allow the stockpiling programme to interfere with the rearmament programme itself or with the almost equal priority export programme while building up these stockpiles. These 1575 stockpiles must be built up as fast as we can do so, but there is a serious danger that if we were to build them up in a very short time the results would be so disastrous to our economy generally that we should, in fact, lose much more than we gained. If we do not spend the exact sum we are voting tonight I shall understand it if that is the explanation.
I hope we are being quite brutally frank with our American friends on what the effects may be if we cannot obtain these materials in the course of the next few months. This seems a matter not only for my right hon. Friends now on the Front Bench, but a matter of the highest foreign policy. I would have thought that the obtaining of materials which are available in American stockpiles, or the reduction of the rate of American stockpiling, is a matter of the utmost importance to the whole Western alliance and if we are not able to obtain these materials because they are not made available in the market we should make it extremely plain how far we can go in the alliance. I am speaking very frankly, because I think it is very important that in this House statements should be made as frankly as statements made in Washington. I hope that what I am saying will, in fact, assist my right hon. Friends in their negotiations.
The hon. Member for Woking (Mr. Watkinson) said how easy it is to job backwards. During the speech made by the hon. Member for Chippenham (Mr. Eccles) I thought how much easier it is to have hindsight than foresight. After all, the decisions which the Government had to make, the number of choices open to them 12 months ago, were very limited. [HON. MEMBERS: "No."] Yes, I will explain why they were limited for any Government, and will be for a long time in this country. After all, we are more dependent on imports than any other country in the world; indeed, to such an extent that it is not comparable to talk about countries like Belgium or any other small country. We are a country which has been making greater efforts to balance our trade, and particularly our dollar exchange, than any other country.
Previously, the attack on us was that we were not building up our dollar or gold balances, and at that time we had to choose whether we should do that or 1576 whether we should buy these materials. It was clear at that time that neither private buyers nor Government buyers expected the rise in prices and the sudden shortage which afterwards took place. The real reason for this is that the supply of almost all these commodities is marginal. Quite apart from the defence programmes of the western world a small increase of economic activity, in the United States— let alone any expansion in the undeveloped parts of the world, where a small increase will mean very great new demands for commodities—will produce a shortage of commodities. That is the problem as it seems to me—and that is why I support my hon. Friend the Member for Coventry, North (Mr. Edelman) in his continual pressure for the building up of some international allocation machinery. I do not believe that the ordinary market mechanism can deal with the violent change from surplus to shortage that occurs when there is even a very small percentage change in world economic activity.
I do not agree with the hon. Member opposite who said that what we need is international allocation machinery as an ad hoc measure. I do not believe that the market will ever be able to deal with this problem again, at least not in a way satisfactory to this country. I believe that under the conditions of the market it will never be sufficiently attractive for commodity producers so to increase their production as to be able to cover the periods when economic activity is at its peak. It is at those periods that we shall always get such a shortage that the market price will rise to such astronomical limits that we shall not be able to afford to buy.
I should have thought that the type of international allocation machinery which we want to build up now is one which we should envisage as having to exist for a long time. It is clear that the economic activity deriving from the Western Defence programmes is going on for a long time, and I do not believe there is any other way by which we shall satisfactorily obtain adequate supplies of raw materials.
I wish to ask my right hon. Friend, with reference to the question of countries in the western world, not necessarily in the western defence system, which are not making the effort to balance their pay- 1577 ments, about Germany. Is there anything in the suggestion that the extremely adverse balance which Germany is acquiring in the European Payments Union has anything to do with stockpiling not by the Government but by vast purchases of some of these raw materials by German manufacturers? After all, we have a fairly large economic staff in Germany— J sometimes think it is too large—and I would like to know whether we have any information about that and whether we have taken any action to prevent this taking place?
We have recently contributed a further credit for Germany to the European Payments Union, and I think we have some right to know whether the effect of that has been to increase their imports, whether, quite apart from that, because of their high rate of imports, we are to be asked for further credit; and whether this additional deficiency in their balance of payments is due to their purchase of the materials which we are now trying to obtain for our own stockpiling?
§ 5.16 p.m.
§ Mr. R. S. Hudson (Southport)
The hon. Member for Coventry, North (Mr. Edelman), and the hon. Member for Edmonton (Mr. Albu) share the failing, only too common among hon. Members on the benches opposite, of inaccuracy in quotation. Hon. Members have accused us on this side of the Committee of opposing the accumulation of dollars. To the best of my knowledge we have never done any such thing. The hon. Member for Coventry, North, has still less excuse, because he only had to look at my speech of a fortnight ago to realise that his statement was completely untrue. He accused me of devoting a lot of time to proposing private buying against bulk buying. As a matter of fact I said:A good deal of time has been taken in discussing the relative merits of private enterprise and bulk purchasing. I do not propose to spend any appreciable length of time on that topic, except to say that we on this side of the House do not"—and the hon. Member will be interested in this, because it is precisely opposite to what he said I said—maintain that private enterprise in purchasing is necessarily the best thing in all circumstances, or that bulk purchasing is necessarily bad in all circumstances. We say that the real defect of bulk purchase is that if the person in charge makes a mistake he makes it on a colossal scale.…"—[OFFICIAL REPORT. 2nd March, 1951; Vol. 484, c. 2609.]1578 That is precisely what I hope today to show is the case.
The hon. Member for Edmonton said that it was very much easier to have hindsight than foresight. I agree with him. But it does not lie in his mouth, or in the mouths of any hon. Members opposite, to say that from those benches or elsewhere, because they have been at pains, during the whole period they have been in office, to explain to the country that they had foresight, that they were a Government of planners. What right have they to talk about it being easier to have hindsight than foresight? I would remind the hon. Member of a quotation I am never tired of using; one which he had better learn, mark and inwardly digest, which came from the Secretary of State for Foreign Affairs, who said:The real problem of statesmanship in the field of industry and economics is to see trouble coming"—that is, to have foresight—and to prevent ourselves from getting into the smash. We are determined that we are not going to be caught unawares by blind economic forces under this administration.
§ Mr. Hudson
I am obliged to the hon. Member. That is precisely the point I propose to deal with this afternoon. I hope to show, on the strength of his own publications, that that is not true; that prices were beginning to rise and were rising substantially; that trade was rising and prices were rising before Korea; and that was the time they ought to have taken steps to purchase. The hon. Member for Coventry, North, said the Government should try to co-ordinate as soon as possible their work about raw materials with the Government of the United States. I agree. But he gave the whole case away by saying, "as soon as possible." Our case is that the Government ought to have done it a year ago and that what they are doing now is too little and too late—as usual. I am most grateful to the hon. Member for his contribution to the truth of my argument.
I am not in the least surprised that the Minister of Supply spent most of his time 1579 talking about machine tools. I am not blaming him for that, because he gave us some very interesting information. But he spent a much longer portion of his time talking about machine tools instead of raw materials. If I had been in his place, I think that I should have done much the same. Clearly, he has no defence on the question of raw materials and the demand for £7,700,000 for the creation of a stockpile. For the purpose of my argument today, I accept that bulk buying is desirable.
§ Mr. Hudson
I propose to assume that Government bulk buying is desirable. What I say is that in the national interest the Government ought to have had efficient bulk buying—efficient Government buying. I do not think that the right hon. Gentleman or his Parliamentary Secretary would challenge the statement that the first task of anyone buying in bulk for the Government should be to guarantee supplies of raw materials to manufacturers. I take it that the right hon. Gentleman will accept that.
§ Mr. Hudson
The Minister did not reply. Apparently, he does not accept that it is the first duty of his Department to provide, let us say, non-ferrous metals. Even he could accept that the first task of his Department is to be able to guarantee supplies of raw materials to manufacturers.
§ Mr. G. R. Strauss
I will answer the right hon. Gentleman's questions when I come to them in my speech. Obviously, I cannot answer "Yes" or "No" to a question of that sort.
§ Mr. Hudson
Why not? The right hon. Gentleman is reluctant to accept the simple proposition that it is the duty of his Ministry to guarantee adequate supplies of raw materials to manufacturers. My second suggestion is that the task of his Department is to avoid undue fluctuations in prices. Does he accept that? I suggest that over a period of years the Department, in buying raw materials, should make neither a profit nor a loss. Surely the right hon. Gentleman accepts that.
§ Mr. Hudson
The hon. Member must not be so naive. It was not I who said that the Government claimed foresight. It was the present Foreign Secretary who said that. I agree with the hon. Member that it cannot be done.
§ Mr. Hudson
It cannot, but I am merely pointing out the folly of a party which is tied to the principle that it can. It is because they are tied to that principle that they have made this mess. I am sorry to have to come back to it, but I repeat that the duty of the Ministry of Supply is, first, to guarantee supplies to manufacturers; second, to avoid undue fluctuation in prices; and, third, over a period, to make neither a profit nor a loss.
I am very sorry that the right hon. Gentleman refuses to say "Yes" to those statements. They happen to be the definition given by the Permanent Secretary of his own Department in answer to a query before the Committee of Public Accounts. Hon. Members can see the statement in the Report of 26th May, 1949, paragraph 3,192.
§ Mr. Hudson
It is rather a pity that the right hon. Gentleman does not know what his own Permanent Secretary describes as his duties.
I suggest that, in the light of what has happened over the last three or four years, the right hon. Gentleman is bound to accept the obligation to provide raw materials in adequate supply to manufacturers. As he will no doubt agree, last year he ordered manufacturers not to hold 1581 stocks of more than three months' supply. That was definitely prohibited. If he is to say to a manufacturer, "You may not buy ahead yourself; you may not cover your own requirements; I will make myself responsible for providing you with them," then I say that there is an obligation—as indeed the Permanent Secretary accepted—on the right hon. Gentleman and his Department to ensure that adequate supplies are available.
If that proposition is accepted, it follows that the task of the Ministry of Supply is always to maintain in this country a really adequate stock. It is not an answer to say that this will involve the Department in holding a stock much greater than that which private persons would maintain. That may be true, but private persons are prevented from acquiring a stock where they might think it wise. Therefore, there is an obligation on the Government, if they make themselves responsible for supplies, to see that there are adequate stocks in the country. That is a task which the Government have signally failed to perform. They have been wrong on every possible occasion over the last 18 months, as far as we can tell. I hope to show how that has arisen.
In 1949 there was a recession in the United States of America, and prices fell as a result. The end of that recession coincided, roughly speaking, with devaluation. I do not think that they were inter-connected; I say that they happened to coincide. By the spring of 1950, that recession had turned into a mild business boom and prices were already getting firmer. I do not think that the Minister will deny that prices were getting firmer all through the spring of 1950, and before Korea. If he were tempted to deny that. I have only to call in aid his own Bulletin for Industry of January, 1951, which states:World re-armament and strategic stockpiling …"—This is one of the reasons why conditions are bad—superimposed on an already high and rising level of demand.The hon. Member for Edmonton will be interested to know that that comes from the Economic Information Unit of the Treasury. I take it that he will not question the orthodoxy of this organ of the Government. They say that the rise 1582 in prices and shortage of supplies took place before ever war started in Korea and before world re-armament started to exercise its admittedly heavy effect.
§ Mr. J. Jones
This is an argument that we all get at home. The argument is that when we had the least amount of dollars to spend—when there was a slight recession in the United States and the shelves began to fill up—we should have bought. I remember when my wife could not buy from an empty purse at a time when she saw the shelves filled to overflowing.
§ Mr. Hudson
I agree that it is a fact, but the trouble was that the hon. Member or I, being sensible people, under the influence of our wives, who probably do the shopping, would have bought.
§ Mr. Hudson
The trouble with the Minister of Supply and, to some extent, with his Department, was that they were continually believing that there was a surplus just around the corner. They refused to believe that the surplus did not exist and that prices were going to rise. They did not believe it in the autumn of 1949. They did not believe it in the spring of 1950, and, so far did they carry it, that in the early months of 1950 they cancelled a Canadian contract for 50,000 tons of zinc. By the early months of 1950 not only were prices generally hardening, but we were rapidly accumulating dollars. It is not unreasonable to believe that in the early spring of 1950 the Treasury said to the Ministry of Supply, "Instead of accumulating all these dollars, which may well help to prove to the United States that it is time Marshall Aid came to an end, would it not be a good idea to spend some—but not all by any means—in buying some raw materials in the United States?" But the Ministry of Supply, still believing that there was a surplus just around the corner, refused to agree.
Over the year as a whole the Ministry of Supply allowed our raw material stocks to run down to the tune of £40 million sterling what time our dollar reserves 1583 were increasing by £576 million. I ask anyone in the Committee whether it would not have been much better to have had £40 million worth more of raw materials in this country today rather than the £40 million of dollar reserves or gold. I think there is no doubt as to what the answer to that question would be.
The fact is that it will be almost impossible for the right hon. Gentleman to get any of these raw materials with which to create his stockpile. Indeed, the figure for which he is asking today, the figure which the President of the Board of Trade will ask us for shortly, and the figure which the Minister of Food will ask us for tomorrow, are themselves insufficient even to restore the stocks in the three Departments to what they were in January, 1950. How can they suggest that they will be able to accumulate any reserves on top of that?
As one of my hon. Friends has said, it would be a very good thing if the Government would consult industry. We believe that would be a good thing, and we also believe that up to now consultation so-called has taken the form of calling industrialists or associations of important manufacturers to the Board of Trade or wherever it may be, and telling them what has been decided. It would have been far better had they been consulted at all stages and asked for their advice. The President of the Board of Trade said last Friday and the hon. Member for Edmonton repeated it today, that hindsight was much easier than foresight. He said that no one had warned him, that no voices were raised about a shortage that was going to occur, and that the rise in prices could not be anticipated.
I do not want to weary the Committee too long, but I trust Members will bear with me if I relate the story of what happened about copper. On 5th October, 1949, the trade suggested a round table talk between the producers, fabricators and the Ministry of Supply to discuss devaluation and its effect on supplies. The Ministry refused. Copper was then available at £112 per ton. The price today is £202 per ton. Zinc was £71 per ton; today's price is £151.
On 2nd January, 1950, the trade warned against the declining stocks of 1584 zinc and suggested that a strategic stockpile of both copper and zinc should be created. The Ministry said they expected things to get better. The price of copper was then £124 per ton; today, it is £202 per ton. The price of zinc was £79 per ton compared with today's price of £151. That is over a year ago. That is the time when the Ministry thought that things were going to get so much better that they cancelled the Canadian contract for 50,000 tons of zinc.
While referring to that cancellation I must interpose that in the "Bulletin for Industry," from which I have quoted, and which is supposed, according to the Prime Minister, to be an objective document, there is a reference to zinc, as follows:Widely used in engineering, zinc is wholly imported, either as ore or metal. Recently supplies from Belgium and the U.S.A. have dried up, and Australian and Canadian supplies are smaller.Who would think that it was because of the cancellation of the Canadian contract for 50,000 tons? There is not a word about that. One might think that it was one of those blind economic forces which hon. Members opposite dislike so much. There is no question of the United States Government or any other Government or anyone else but the Ministry of Supply in this country being responsible for cancelling that contract for 50,000 tons of zinc.
I now turn to 3rd April, 1950. The trade again complained about the falling zinc stocks and said that they expected a further rise in the price of copper. The Ministry of Supply said that they expected things to be better by June. Copper was then available at £125 per ton whereas it is now £202 per ton. It does not look as though things are much better. Zinc was £84 per ton; now it is £151. On 5th June the Ministry told the trade that they were doing everything in their power to get more zinc. They still would not allow private importers, who could have got supplies of zinc, to buy on their own. That reinforces the point which I made earlier that the Ministry are solely responsible to the manufacturers for the mess we are in today.
§ Mr. Edelman
The right hon. Gentleman is attacking the Ministry of Supply on the ground that during this period it has had to pay high prices and has failed to get the metal. Will he also give the 1585 figures for tin, nickel, tungsten, molybdenum and secondary aluminium scrap, which have risen relatively far higher in price than those metals purchased by the Ministry of Supply, and which are equally and, in some cases, even more in short supply?
§ Mr. Hudson
I should be delighted to do so if I had time but I am giving this one example, one out of many to show that the Government were consistently wrong throughout all these months when there were supplies, and that when the price was likely to rise they consistently refused to take action because they thought that a surplus was just round the corner.
I could go on with further examples, but this one is surely sufficient to persuade anyone so far as zinc and copper are concerned, and these are two of the materials which the hon. Member for Coventry, North (Mr. Edelman), should know are in shortest supply in his constituency. All I am trying to show is that his constituents are in their present mess because they were not allowed to buy zinc when they could have obtained it, and that the Minister who should have bought zinc refused to do so because he took a wrong view about what was coming.
Imports of copper into the United States in June were 79,400 tons, and we could have got some of this. On 26th August the Minister issued their circular about zinc, saying he had ample supplies —a matter to which I have previously referred. On 10th October he found he had to start a rationing scheme. Immense amounts of copper were exported from this country to China during the summer. Repeated representations were made by the trade against this being allowed, but it was not until 11th September, 1950, that copper exports were put under licence. I have quoted only copper, but I could have quoted more materials had I had time to do so.
The problem that now faces the country and the Minister is where he is to get this stockpile which he is talking about. He can get it from only two places. There is the way suggested by the hon. Member for Coventry, North (Mr. Edelman), by going to the United States and trying to get them to allow us to have a share of their existing stockpile, or arranging that we should be allowed in future to buy, while they hold off the market. Even 1586 assuming that it can be done, we say that it should have been done 12 months ago, and that, if it had been done then, we should not be in such difficulties as those in which we now find ourselves.
The other alternative is to cut off supplies to the domestic market still further and to try to accumulate stocks, but the result of that is dreadful to contemplate. We have been told already that we have to rely on increased industrial production to help to carry the rearmament programme, and, if we are now to cut off still more supplies of raw materials to industry to create the stockpile which we have not got at present, it will clearly prevent that increase in production which we all need and upon which we rely. In addition to that, if many of these raw materials are denied to industry on any scale, it will create substantial unemployment in many of the areas affected.
Therefore, the gravamen of our charge against the Government today is that they have been grossly inefficient, and that the money for which they now ask will provide, owing to rising prices, far less of those raw materials for stockpiling than would have been the case if it had been spent, as it should have been spent, early last year. They have allowed our stocks of raw materials to fall well below the danger point, and the reason is because, if mistakes are made in bulk buying, the results are on a far greater scale and create far more damage to the national economy than would a series of guesses, some right and some wrong, by private persons.
§ Mr. Nabarro (Kidderminster)
On a point of order. May I have your guidance, Mr. Diamond? I understand that this Vote and the Board of Trade Vote have to be concluded by 7 p.m. As a large number of hon. Members on both sides of the Committee wish to speak on the Board of Trade Vote, may we have your guidance whether any time will be allowed for the discussion of that Vote?
§ The Temporary Chairman
I am grateful to the hon. Gentleman for drawing the attention of the Committee to the fact that there is another Vote which must be finished by 7 o'clock, and the only guidance that I can give him is 1587 to ask that all hon. Members on both sides of the Committee who desire to speak on this Vote should have regard to that fact.
§ Mr. J. Jones
Further to that point of order. May we have your guidance in this respect, Mr. Diamond? We had an indication that hon. Members on the opposite benches want time to discuss what are very definitely serious matters affecting the nation's welfare, yet the same right hon. Gentleman and the cohorts behind him are prepared to waste all night three nights a week on things that do not matter at all.
§ Mr. Ellis Smith
Before you reply to those points of order, Mr. Diamond, is it not a fact that the House proceeds at 7 o'clock to consider a Private Bill, and that afterwards we shall revert to Committee in order that the Government may obtain this Vote? Is it not right that the grievances of the people should be ventilated before the Vote is put?
§ Mr. R. S. Hudson
I had some talk unofficially with the right hon. Gentleman opposite and with Mr. Deputy-Speaker, and it was suggested that, if the Minister of Supply agreed, we could take the Vote, and, if it suits the Government, we should then be able to have a discussion on the Board of Trade Vote as long as time allowed. I do not know whether that meets their convenience or the convenience of the Committee.
§ Mr. J. Jones
May I have your guidance, Mr. Diamond, on whether it is in order for back benchers, who have some comments to make——
§ The Temporary Chairman
Order. I gather that the Minister of Supply was rising to a point of order.
§ Mr. G. R. Strauss
With reference to the point of order raised by the right hon. Gentleman opposite, I had proposed to follow him, but when I saw the hon. Member for Eye (Mr. Granville) rise from the Liberal benches, I thought it would only be courteous that I should wait to hear what he had to say. If the hon. Gentleman wishes me to reply now, I will do so, but if he likes to say a few words, I will wait to hear what he has to say.
§ 5.45 p.m.
§ Mr. Edgar Granville (Eye)
I will detain the Committee for only a few minutes, and it is not my intention to follow the general argument which has been going on from one side of the Committee to the other on whether the Government can be severely criticised for having stockpiled dollars as against vital strategic raw materials which are in short supply. Nevertheless, I do not think we shall settle this problem of the shortage of vital raw materials until, as the hon. Member for Edmonton (Mr. Albu) inferred, we can have something in the nature of international fair shares.
§ Mr. Granville
In view of the announcement of the Chancellor with regard to our balance of payments position next year, it is quite obvious that it will be only with the greatest difficulty that the Government will be able to satisfy the requirements of raw materials for consumer goods and the export trade and, at the same time, supply the re-armament industry and build up a stockpile for strategic reserves.
What we feel about it is that, after all, we are being asked to vote £7,700,000, and I quite appreciate that, for security, marketing and other reasons, the Minister of Supply could not give us a great deal of detailed information today. But I did hope that he would be able to give us some more reassuring information with regard to the point raised by the hon. and gallant Member for Scotstoun (Colonel J. R. H. Hutchison) on whether the Government are proceeding with research to find substitutes for vital raw materials which are at present in short supply and likely to be more so in the future. There was also the point raised by the hon. Member for Chippenham (Mr. Eccles) concerning the possibility that, if the situation becomes more difficult, the right hon. Gentleman may be forced to impose some sort of allocation of priorities upon industry, for consumer goods, for export, for the re-armament industry and so on. Are the Government getting ready for it properly, and is such a system ready to be put into operation if the market should turn against them?
Much of the dollar balance was created from the sterling area, but now that prices have gone against us, the Government are buying late, and I assume that they will 1589 have to buy at a rather high price. We want some sort of assurance that this buying will be done with some efficiency, and also that the right hon. Gentleman has explored every possibility of the use of machine tools from Germany. Further, I cannot believe that, if proper representations were made to the United States on this question of machine tools, the tools themselves would not be forthcoming, and I hope that Mr. Herod, when he comes here, will be able to help us both with machine tools and with raw materials.
I had also hoped that the Minister would have been able to tell us something of what is happening at the Washington Conference on these strategic raw materials, because this matter can only be settled by international action. We have a representative there, and presumably he will be discussing this question of vital raw materials. I also understand that several committees have been set up. There was a newspaper report that the President of the Board of Trade was himself going to visit the United States—I am only quoting a newspaper report—in order to use his good offices on this vital question of the shortage of essential raw materials. While I agree that Lord Knollys is a distinguished representative with great business experience, I should have thought that the representation on this all-important question should have been at the highest level. One hon. Member said that this is a Foreign Office question as well. I hope that if the point is reached at the Conference on raw materials at Washington where we think that we cannot carry on our programme—both as regards exports and re-armament—without serious inroads into consumer goods, the Government will find it possible to send over there someone at Ministerial level to make the strongest representations to the American Government on the matter.
There is one other point I wish to raise. When listening to the suggestions that were made for international action between the Allies, I could not help thinking of the enormous contribution which the British Empire can make in the matter of raw materials. I am not sure that I would go as far as the suggestion made by one hon. Member regarding one Minister being responsible for the purchase of those materials, but I should have thought that there was a pre-eminently strong argument for setting 1590 up the body for which the hon. Member for Stoke-on-Trent (Mr. Ellis Smith) used to argue, the Commonwealth Commodity and Materials Board.
§ Mr. Granville
I am sure the hon. Gentleman said that with some knowledge of the inside working of the Board of Trade, and it may be useful to my argument.
It is no good waiting before doing something in this direction. If we do, we may go into the market too late and have to pay higher prices. We may even find it impossible to get raw materials unless we go to America for them. I should have thought this was the opportunity for calling together the opposite numbers in the Commonwealth for the purpose of setting up a Commonwealth Commodity and Raw Materials Board and for dealing with ordinary commodities at the same time. The £7,700,000 for which the Minister is asking us is a big hunk of money for this House to vote, and I hope that when the right hon. Gentleman replies he will tell us that serious plans are being considered for dealing with the situation which we have discussed this afternoon.
§ 5.53 p.m.
§ Mr. G. R. Strauss
In replying to the various points and suggestions that have been put forward, I will, if I may, deal straight away with the speech of the hon. Member for Eye (Mr. Granville). I would tell him that I can assure the House that this matter will be dealt with in future, as in the past, with the greatest efficiency; that we will take this problem in the future, as in the past, with the greatest seriousness, and that we will serve the nation as well in the future as we have in the past.
§ Mr. Granville
To make that assurance completely effective, will the right hon. Gentleman delete the references to the past which make it political and give us an assurance that his Department will do what he says in the future?
§ Mr. Strauss
No, Sir, I will not delete those words because I maintain that the protection given to British consumers by the Board of Trade and the Ministry of Supply in carrying out this policy of purchasing materials, and particularly the policy of bulk purchase, is something 1591 which they could never have enjoyed had any other system been in existence. I maintain, moreover, that we have a sane and proper policy in this matter, and that there is no foundation whatever in the accusations that we have been foolish, uneconomical, lacking in foresight, or in any other of the allegations made today. But before I deal with the main criticisms, I should like to deal with some of the minor, though important, points put forward by a number of hon. Members.
The hon. and gallant Member for Glasgow, Scotstoun (Colonel J. R. H. Hutchison) asked whether we were holding adequate consultations with industry about all these matters. Quite frankly, it is always difficult to consult every section of industry on every matter which is likely to affect them. Raw materials affect a huge range of the engineering industries, and one cannot always guarantee to consult every section. But it is our policy to consult industry at the earliest possible stage on all matters of importance. I think that we do so with some success and that our consultation is fully appreciated.
§ Mr. Strauss
Well, it is appreciated by those whom we do consult on these matters, because they have expressed their appreciation to me over and over again.
The hon. and gallant Member for Scotstoun also suggested that we should have industrial and commercial advisers to help us at the International Commodity Committees which are sitting in Washington. I can assure him that we do have such advisers to help us; we are getting the best technical advice from industry itself on all matters concerning the commodities with which these Committees are dealing.
My hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) asked me a number of questions about machine tools. A very large range of machine tools, some types of which are not generally made in this country at all, are required for the re-armament programme. Therefore, it is essential that we should buy a large quantity from abroad. We could not possibly rely on our production here. We can produce neither enough machine tools in this country, nor the special types that we need. I can assure 1592 my hon. Friend that the purchases we are making will in no way interfere with our home industry or its future.
We are trying to dovetail our purchases from abroad with the purchases we are able to make in this country, and, as I indicated in my opening remarks, it is almost certain that we shall have to ask the home industry to expand production in order to enable us to fulfil our defence programme. My hon. Friend was mistaken in thinking that the individuals whose appointments to positions in my Ministry I announced the other day are members of a committee. That is not so. They are each charged with a specific job. One is charged with looking after machine tools, and the others with production matters affecting the air side and the land side of munitions supplies in my Department.
§ Mr. Ellis Smith
That is very satisfactory as far as it goes, but the machine tool industry have a committee of their own. Have they been, or are they going to be, consulted with regard to the special difficulties that are bound to arise?
§ Mr. Strauss
There is a Machine Tool Advisory Council which my Department consults on all matters affecting this industry. Such consultation will continue, but what we want is an individual in my Department who will be responsible for providing the machine tools required for the defence programme. Mr. Rawson will be responsible for that.
The hon. Member for Woking (Mr. Watkinson) asked me a number of questions. I can assure him that we are looking at our stocks of machine tools. As I told him in answer to a Question the other day, most of them are quite useless for our present defence requirements, but where they are or are likely to be useful, they are being reconditioned and put into operation. We shall not overlook any machine tools which are in our stocks and which could be used either by the Royal Ordnance Factories or by any firm concerned with the defence programme.
I entirely endorse what the hon. Member said about the importance of maintaining our exports to Commonwealth countries, particularly to Canada. Our industry has made great efforts to meet Canadian requirements of machine tools, and we are very anxious, 1593 in the interests of our own economy, of the Commonwealth economy, and of our mutual defence needs that that export of machine tools should not be interfered with, but should be continued, and, if possible, expanded.
The hon. Member for Edmonton (Mr. Al'bu) also asked me a number of questions. He asked, in particular, whether I had any evidence of stockpiling in Germany and whether purchases of materials by German industry may have been one of the reasons for Germany being in a bad position in the E.P.U. We have no evidence about that. It appears that Germany has been buying fairly large quantities of raw materials, but her consumption of such materials has also been going up. I am afraid that, at the moment, I cannot give any positive information on that point. I agree with the hon. Member entirely when he urged that the import of machine tools from the United States is important and that we cannot possibly carry out our defence programme in the time planned unless we are able to get delivery of these tools very quickly indeed. The whole success of our defence programme depends upon out ability to get them quickly.
§ Mr. Strauss
It is also true of raw materials of which we are particularly short. We must have them, otherwise we cannot carry on.
§ Mr. Granville
If, as the Minister says, the whole thing depends upon America supplying us with vital machine tools and bearing in mind that America has enormous demands upon her production of machine tools for her own re-armament programme, and if we must get these tools over and above our ordinary orders, can the Minister give us an assurance that representations have been made to Washington at the highest level?
§ Mr. Strauss
I can give that definite assurance. They have been made on the highest level in Washington. I hope we get those machine tools; unless we do so we shall be in great difficulty.
I should now like to turn to the main point in the debate, and that is the charge made by the hon. Member for Chippenham (Mr. Eccles) and later by the right 1594 hon. Gentleman the Member for South-port (Mr. R. S. Hudson) that we have somehow been defective in our policy on stockpiling, that we should have bought greater quantities at different times and that, if only we had been wise and had listened to their advice, to the advice of industry and to Conservative representations in the House, we should have had adequate stocks and everything would be lovely. The right hon. Member for South-port largely repeated the interesting, plausible but wholly unsound speech he made a week last Friday about this subject. What.are the facts? There are two aspects which have got a little muddled. One argument put forward is that we should have bought these materials when it appeared to us that prices were going up.
The hon. Member for Chippenham also put forward a most extraordinary argument—that we should have known prices were going up because the value of shares in the mining companies concerned were going up. That is an extraordinary argument because shares go up for a hundred and one reasons. There may be a general rise in Stock Exchange values, or the profit for last year may just have been declared. If any industrialist or consumer is going to assess his buying programme on Stock Exchange values, he is likely to go astray most of the time, I am, indeed, surprised that that argument was put forward.
The fact is that if two or three years ago, we had (a)all the dollars we required and we had (b) anticipated Korea, then we would have bought substantial stocks; but, in point of fact, a year or so ago we could not go into the American market and buy large quantities of goods, whether food or materials, because we did not have the dollars to do it.
§ Mr. Strauss
Say 18 months ago, Secondly, I ask the Committee to appreciated this: there would be no shortage of metals at all at the moment, so far as we can see if it were not for Korea and the consequent big re-armament programme undertaken in America, in this country and elsewhere. If the case of hon. Gentlemen opposite is that we should have anticipated Korea and therefore bought large quantitiesof metal, then it is a permissible 1595 argument. But if, given the impossibility of anticipating Korea, they say, "You should have spent dollars in buying large quantities of metals" when in fact there would today have been no shortage of metals if it had not been for Korea and the re-armament programme, then the argument falls to the ground entirely.
§ Mr. R. S. Hudson
It is not true, on the Minister's own paper. It is admitted there that prices were rising because of the increased demand before Korea.
§ Mr. Strauss
I am not talking of the rise in prices. They go up and down for a variety of reasons. I am talking about the thing which matters—the shortage of stocks. I understand the criticism against us is that we are short of stocks because we did not buy long ago. My answer is that unless we had anticipated Korea and the need for re-armament, nobody in his senses would have anticipated a shortage of metal.
I will go further and say that industry was not taking up the supplies it could have bought, of some of the commodities in which we deal—non-ferrous metals, for instance—because it did not believe there was any need to do it and because it believed prices were falling. Neither industry nor the Government nor anybody else had reason to believe there would be a serious shortage of stocks, or even any shortage. Nor, indeed, would there have been one except for the intensive rearmament programmes undertaken throughout the world.
§ Mr. W. Fletcher
Would the right hon. Gentleman believe that if he had read reports of his own study groups which were before him and gave him all the facts, figures and predictions, and if he had realised that his own Government's export programme was going up the whole time, as was the case with other countries and it was perfectly obvious from the beginning of last year that there was going to be a shortage in a very large range of these raw materials quite, irrespective of Korea?
§ Mr. R. S. Hudson
I quoted to the right hon. Gentleman chapter and verse. I gave him dates of meetings held in his own Department with the trade, before Korea, on three separate occasions, at which the trade definitely urged him to 1596 increase stocks and buy because of rising prices. What is the good of his coming to the Committee and saying it is not so? It is on record in his own Department if he chooses to look.
§ Mr. G. R. Strauss
It is true that some people thought prices were going to rise and urged us to buy more stocks. Others took the opposite view. I am just coming to that point. It is all very well hon. and right hon. Gentlemen opposite accusing us of not buying metals six months, nine, 12 and 15 months ago when they were criticising us for over-buying at high prices at that time.
§ Mr. Strauss
The right hon. Gentleman says it is not true. I remember, for example, the hon. Member for Chippenham attacking me when we had a debate on raw materials some time ago.
§ Mr. Strauss
The hon. Member for Chippenham was attacking my Department for buying metal on a monthly basis, because by the time the metal was delivered, prices had gone down. He said we ought not to have bought that metal by bulk purchase.
§ Mr. Strauss
The whole case put against us is that we should have been buying before Korea. I do not think the argument should be confined to the first six months of 1950.
§ Mr. Eccles
In May, 1949, when I made that remark, the whole price level was going down throughout the world. Therefore, as the right hon. Gentleman is responsible for buying stocks, at least he ought to have anticipated that fall. After devaluation a change took place and he was wrong again. He was wrong when prices were falling and he was wrong when they were rising. He is always wrong.
§ Mr. Strauss
We were buying metal regularly either at monthly or three-monthly averages throughout. If we had done as the hon. Member for Chippenham suggested, we should have bought less metal and should have less metal in stock today.
§ Mr. Strauss
May I come to the interesting attitude of hon. Members opposite, shared by many in the industry, which was expressed in "The Metal Bulletin," an important and entirely independent paper. The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) made a somewhat critical and very amusing statement, as he often does in his speeches, attacking the Government for buying metal for a stockpile. He suggested that we should not have bought metal and that it was a dangerous and stupid thing to do.
But we have had some more recent and important statements made by an hon. Member opposite who is most knowledgeable about metal affairs and who is heard with respect in all quarters of the House. I refer to the hon. Member for St. Albans (Mr. J. Grimston) who has a very considerable knowledge and experience of the metal industry. In making this quotation I am in no way suggesting that he was being foolish to make these statements. He was expressing the typical view held at that time by people who follow these matters. Let me give the Committee quotations and then set them against the criticisms which have been made today by hon. Members opposite.
First of all, when we were discussing the Supplementary Estimates of my Department last year—Estimates which consisted very largely of increasing our stocks of metal, and against which the Opposition voted—the hon. Member for St. Albans said:I am sorry to say that we are again in this position at the moment. The Minister is holding extremely heavy stocks of metal. The price today is roughly as high as it has ever been since 1917, and the Minister is in a most vulnerable position. What the right hon. Gentleman will do when prices fall, as they will one of these days, is again to come to the House.…"—[OFFICIAL REPORT, 14th March, 1950; Vol. 472, c. 982.]That view was not contradicted by anybody. That was the view held by hon. Members opposite, who had no right to make the criticism they have done today.
§ Mr. John Grimston (St. Albans)
Was not the whole burden of my argument on that and on subsequent occasions that if the Minister would only allow the London Metal Exchange to re-open he 1598 would hedge that particular risk and would ensure stocks of metal which the London Metal Exchange had always held? I was simply concerned that the Minister should not make further trading losses and that he should get out of the metal business while he was able.
§ Mr. Strauss
I agree. The hon. Member's main argument was that we should re-open the London Metal Exchange so as to save the Government from making losses which they would do shortly because prices were going down. The hon. Member criticised the Government for holding stocks on which they would very soon make substantial losses.
I should like to quote another criticism of the hon. Member. In June last year, a very critical period, he said:…the Minister's last chance of getting out of the basic copper market is with him today. Unless he gets out on a rising market, he will never get out without being faced with enormous losses."—[OFFICIAL REPORT, 20th June, 1950; Vol. 476, c. 1251.]Incidentally, the American price of copper then was 20½; today it is 24½. It has gone up. I do not blame the hon. Member for misjudging the market—anyone can do that; but criticisms have been levelled at us by hon. Members opposite—knowledgeable people—who have said that our stocks were too large and that this was dangerous because the market would fall.
§ Mr. J. Grimston
Will the right hon. Gentleman not agree that my argument on the two occasions was perfectly consistent with saying that he must only get out of the metal business on a rising market? He had at that moment a rising market, and he had the opportunity of getting out. By so doing he would have insured himself against making a loss.
§ Mr. Strauss
Of course, we could have got out but there were other reasons which made it quite impossible. However, I will not go into those reasons now. Incidentally, what would have happened is that somebody else would have made a profit instead of us, but of course the hon. Member could not anticipate that. We were told all along the line that we should not be buying metal at these high prices and holding it. We took little account of price on those occasions. We wanted all the metal that we could get for industry. We wanted as large stocks as we could get, bearing in mind that we could not go out and use our dollars 1599 for buying without limit. We bought substantial quantities for dollars, but we did feel that there was a limit. However, in spite of the demands from hon. Members opposite that we should not hold big stocks, we continued to hold these big stocks.
If it had not been for the Korean situation and the extra demands which were made on these metals as a result of rearmament, leading to increased demand and higher prices, there would have been ample metal available in the world. Therefore—I repeat this point for the last time—it is wholly false to accuse us of lack of foresight, for without the war in Korea we would have been well covered indeed.
The only other matter worth pointing out is that other nations which do not bulk buy also find themselves short today. Some have stockpiles and others have not got stockpiles. Where they have got stockpiles—in the United States, for example—civilian consumption is cut as much and in some cases more than in this country. This is a world-wide phenomenon resulting from the worldwide need to re-arm. As a result of our consistent bulk purchasing through long-term agreements, which have covered two-thirds or three quarters of our major metal requirements from Commonwealth countries, and as a result of our ability to use ordinary market sources and pick up in ordinary times substantial quantities of metal in the world markets, we have served the consumers in this country exceedingly well.
It is true that we find ourselves today with a much smaller stockpile than we would like, but we will continue to increase that stockpile as and when opportunity occurs. At the moment we have not been able to do very much in that direction—through no fault of ours, but because the metal was not available. When I am asked what is our stockpiling policy, my answer is that we want a stockpile but that we are not going to divert metal to it from essential uses. It may be that we shall be able to reduce some inessential uses of some metals, in order to make a stockpile which can, later on, be used for essential purposes. That is our general policy. I am sorry if I have engendered some heat, but I have had to reply to criticisms, and, after this general 1600 explanation, I ask the Committee to give us this Supplementary Estimate.
§ Mr. Edelman
Would my right hon. Friend say a word about our endeavours to co-ordinate our stockpiling activities with the United States, which is obviously of the greatest importance?
§ Mr. Strauss
That is exceedingly important. That is our wish, but we shall have to see what comes out of the commodity Conference at Washington before we can say what success we shall have.
§ 6.19 p.m.
§ Mr. John Grimston (St. Albans)
The Minister made a brief reference to speeches made by myself, and I am sure he will admit that they had one aim and one aim alone, namely, to see that the London Metal Exchange was allowed to re-open. As I see it, a bulk buyer must one day get out of his buying or else stay there for ever. I believe that he must not stay there for ever. He has got to get out, and he should get out at a profit. Therefore, on those occasions I was urging the Minister to get out at a profit on a rising market, because if he did not do so he would be faced with heavy losses. The burden of my argument in every case has been just that and simply that. Any other extract which he likes to make from my speeches will always be a statement made with that view in mind.
As a further confirmation, may I read this extract from the minute of a meeting held in his own Ministry on 2nd January, 1950–15 months ago? This is a representative view of the trade and it is an extract from a minute agreed with his Department:The spokesman of the Federation"—which is the trade—did not view with equanimity the running down of zinc stocks. Quite apart from commercial needs, there was room for stockpiling for strategic reasons of both copper and zinc.That is the clear view of the trade put to the Minister in a perfectly straightforward manner and certainly nothing I have said in the House has contradicted it.
§ Question put, and agreed to.
That a Supplementary sum, not exceeding £10, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of
March, 1951, for the salaries and expenses of the Ministry of Supply for the supply of munitions, aircraft, common-user and other articles and atomic energy and for research and development, inspection, storage, disposal and capital and ancillary services related thereto; for administrative services in connection with the iron and steel, non-ferrous and light metals and engineering industries; for the operation of the Royal Ordnance Factories and Official Car Services; and for miscellaneous supplies and services.