DEBATE ON THE ADDRESS

HC Deb 08 November 1951 vol 493 cc335-477

[THIRD DAY]

Order read for resuming Adjourned Debate on Question [6th November]: That an humble Address he presented to His Majesty as follows: Most Gracious Sovereign. We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament"— [Mr. Dodds-Parker.]

Question again proposed.

2.45 p.m.

Mr. Sydney Silverman (Nelson and Colne)

When our proceedings were adjourned last night, I had completed one-half of a sentence which, in justice to you, Mr. Speaker, I think I ought to complete. I had said: No longer does the Tory Front Bench say 'See what Tommy is doing and tell him that he must not'; they say instead—".— [OFFICIAL REPORT, 7th November, 1951; Vol. 493, c. 318.] and then you rose to your feet and said "Order, order." I had intended to complete the sentence by saying: They say instead, "Whatever you can do we can do better, provided it is sufficiently disagreeable."

When one contrasts—and only contrast and not comparison is in place—the speech which the Chancellor of the Exchequer made yesterday with the manifesto on the basis of which he became Chancellor of the Exchequer, there is a really lamentable lack of co-ordination between the two. Others of my hon. Friends have dealt with this and no doubt others will deal with it in more detail.

For myself, I am content to say this. If this, instead of being a political manifesto designed to win votes, had been a company prospectus designed to invite shareholders to contribute funds, then it would have been a matter which the newly-appointed Law Officers would have had something to say about and ought certainly seriously to have considered, because it seems to me that that kind of manifesto followed by that kind of speech is only another instance of the historical and I think, largely non-controversial fact that no Tory Government this century has won a General Election in this country except on false pretences.

In 1918 they were going to hang the Kaiser. In 1924 it was the "Red Letter" scare. In 1931 it was Post Office Savings and the desirability of remaining on the gold standard which they deserted on the morrow of the General Election. In 1935 it was collective security, and within a month of winning the election on the basis of a pledge to the people of this country to stand by the League of Nations and collective security, they had recognised Mussolini, and the King of Italy as the Emperor of Abyssinia. And now they have won this election, if indeed they did win it—it seems largely in doubt—[HON. MEMBERS: "Oh!"] Well, I was thinking of the Prime Minister's argument last time in which he said that that side won the election which had got more votes than the other; and, applying that simple test, we wonder how the right hon. Gentleman feels when he sits on what he must fee] to be, on his own test, the wrong side of the House.

What hon. Members opposite feel about the previous Government has been most eloquently expressed by the Prime Minister. He said: … the last five years—five years of futile good intention, five years of eager search for the line of least resistance, five years of uninterrupted retreat of British power, five years of neglect of our air defences… We have been reduced in those five years from a position of security so overwhelming and so unchallengeable that we never cared to think about it…when I think of the immense combinations and resources which have been neglected or squandered, I cannot believe that a parallel exists in the whole course of history. So far as this country is concerned the responsiblity must rest with those who have the undisputed control of our political affairs."—[OFFICIAL REPORT, 5th October, 1938; Vol. 339, c. 366.] That was what he said. [HON. MEMBERS: "Hear, hear."] But that speech was made in 1938. Now let hon. Members opposite cheer. I heard it; I was here; it was made from the seat I used to occupy until a few weeks ago and it was made on 5th October, 1938, about a Government largely composed of the selfsame Ministers of whom he is now Prime Minister.

We may, therefore, take the strictures and criticisms which hon. Members oppo- site now make of the Labour Government since 1945 not quite so seriously as might otherwise have been the case, and, indeed, no objective mind, such as the Prime Minister in his non-political and historical moments I think possesses, would deny that the record of the Labour Government from 1945 onwards has been a record of triumphant achievement unexampled in the whole history of this country and unparallel in any other country over the same period.

Mr. Archer Baldwin (Leominster)

With the help of shabby moneylenders.

Mr. Silverman

Yesterday the Chancellor of the Exchequer outlined what is recognised on all sides to be a formidable task in a dark and troubled phase of the history not only of this country but of the world.

Brigadier Terence Clarke (Portsmouth, West)

Because of the Socialists.

Mr. Silverman

He did not say so—and that is one of the things which nearly everybody on the other side of the House told the electors during the campaign but one of the things which the Chancellor yesterday most conspicuously avoided saying, because he knows, and most of his supporters know, that it is not true. For in 1945 our financial position was far worse than that which the Chancellor of the Exchequer has inherited. [Interruption.] I warn hon. Members opposite not lightly to interrupt or challenge my facts. I have the most unexceptionable witnesses to them, as I had to my statement when I opened my speech this afternoon, and I warn hon. Members opposite, in their own interests.

The statement that this country was bankrupt in 1945 is a statement which was made at the time by the present Prime Minister. [Interruption.] Interruptions only prolong my speech and I am trying to be as short as I can. The more interruptions there are the longer one is tempted to be. The witnesses to whom I referred will be regarded by hon. Members opposite as most unexceptionable. They are the Prime Minister himself, and Lord Woolton, the Chairman of their party. One of them spoke to a foreign statesman at the end of 1944 and the other spoke in another place when he was Minister of Reconstruction in the Caretaker Government which followed the break-up of the war-time Coalition.

Lord Woolton then said that, whereas in 1938 this was a wealthy country, with vast overseas possessions, in 1945 it was a bankrupt country. The Prime Minister—now Prime Minister and then Prime Minister—speaking at approximately the same period and about the same event and about the same date—I am paraphrasing now, but I hope it will be accepted that it is a fair paraphrase: the actual words can be found—said that there would be little for the returning soldiers to come home to and that he was afraid of presenting the grim financial facts to the House of Commons after the next Election because it would make him the most unpopular man in England. [HON. MEMBERS: "He was right."] I am not suggesting for a moment that he was not; it is only his supporters who say that.

He was perfectly honest and what I am saying is that on his evidence and on that of Lord Woolton, my right hon. Friends were faced in 1945 with a much grimmer and more formidable task than the one which the present Government face and yet, within five years, they had clone what no right hon. Gentleman and no hon. Gentleman opposite had thought possible. [HON. MEMBERS: "With American dollars."] Shall we deal with that point at once, since it is so much in the minds of hon. Members? There is no doubt that at that time our export trade had gone and every cent of our American investments had been sold in order to carry on the war under the then American policy of cash-and-carry. We had neither export trade nor foreign investments, and every penny we have received in dollar aid since 1945 amounts to no more than the income in pre-war years from our foreign investments.

Mr. R. T. Paget (Northampton)

A lot less.

Mr. Silverman

I think a lot less. Quite apart from the aid we received, over the same period we were ourselves aiding other countries to a financial extent greater than the aid we received. There is, therefore, no advantage to be gained by either side in referring to the inflow of American dollars to make good the trading gap between the cost of our imports and the price of our exports. The two things cancel out and there is nothing to be said about them. If there is any advantage at all, it is an advantage to the pre-war Government and not an advantage to the post-war Government.

Within four years the Labour Government had increased the production of this country by 50 or 60 per cent. [HON. MEMBERS: "Private Enterprise."] The right hon. Gentleman who is now Secretary of State for the Colonies told the Government then that they were setting their targets too high and that their targets were unattainable. Within a short period of the time fixed they had attained and exceeded those targets, yet at the same time the present Prime Minister himself proclaimed that the working class population of this country consisted largely of weary Willies and tired Tims and that the Government were paralysing the wheels of industry.

The facts were that within four years the country had, under Labour guidance, increased its production by from 50 per cent. to 60 per cent., and had produced a situation in which, instead of there being a dollar gap or a dollar deficit, there was a dollar surplus, our gold and dollar reserves were mounting, and we were paying our way in the world without foreign aid. We had terminated foreign aid 12 months before we need have done, and we had even begun to make arrangements for paying the interest on the American Loan which followed the war.

Mr. Nigel Fisher (Hitchin)

Where are we now?

Mr. Silverman

I am coming to where we are now, but first I want the House to realise that, despite those conditions of admitted bankruptcy in 1945, after four years of a Labour Administration this country was internationally solvent, without the aid of foreign investment—without foreign aid—for the first time for centuries, and that during that period poverty had been abolished in this country. Life for the mass of ordinary people in this country under the Labour Administration, beginning with a bankrupt country in 1945, was more secure. and they were better fed, better clothed, and largely better housed than at any time when a Conservative Administration with a wealthy country had charge of our affairs—and had produced unemployment, misery, poverty, stagnation and frustration, which was all they produced between the wars.

It is true that that is no longer the picture. The hard-won solvency has gone. We are no longer paying our way. No one will disagree for a moment with the recital of the facts as given by the Chancellor of the Exchequer yesterday, because they are virtually the same facts as had been given by the previous Chancellor, and they are indeed the facts upon which our policies have to be based. But the facts mean only one thing when related to the dates in which they stand. But for re-armament in this country and throughout the world that solvency would not have been lost. The Chancellor of the Exchequer would not deny that. It was quite clear from his recital of the facts and circumstances yesterday.

Quite apart from all the controversy on whether the scale or pace of rearmament is right or wrong, about which indeed there may be considerable controversy—and controversy not confined to any one party, but which cuts across party lines—whatever the rights and wrongs about re-armament on this scale and at this pace, the one thing that is clear is that our present financial position is due entirely to that scale and that pace of re-armament.

I say with respect to some of my hon. Friends that it is a mistake to suppose that the picture would be greatly different if this country were spending less upon re-armament than we are doing, and to think that the difference between £3,600 million over three years and £4,700 million over three years makes all the difference in the world between solvency and bankruptcy in this country. I am sure they do not believe that, because it is patently untrue, though they sometimes argue in a way that might lead other people to think so.

But what is clear is that not merely this country but every country in Western Europe is being driven into insolvency and bankruptcy by having entered upon, willingly or unwillingly, a scale, an agreed scale—an allied, internationally agreed scale—of re-armament for which it is beyond their capacity to pay. It must be the very first time in history that, in order to obtain the assistance of a powerful and wealthy allied country, in problematical or speculative circumstances, a whole continent accepted immediate bankruptcy.

Well, what is the remedy? [Interruption.] I do not know why hon. Members opposite find such a question amusing, unless it is because the General Election is over and they find themselves for a short period so safely here. It is a question which is being asked everywhere in the world, and not least in their constituencies. Indeed, if there is one thing which distinguishes this General Election from previous General Elections in our history, it is that it may well be described as the General Election which took the quotation marks from around "peace." Everybody was talking peace at the end, whereas at the beginning one dared hardly utter the word without being accused of all kinds of sinister and malicious purposes and intentions; but when we have a situation in which a Tory Prime Minister joins the fellow travellers on one day and the Chancellor of the Exchequer is going to the Bevanites on the next, perhaps it is easier to deal with that question in a more objective atmosphere.

The remedy is what the Prime Minister said on Tuesday, it was—to seek an alleviation in international affairs, to seek as best we can a lowering of the international atmosphere, reconciliation between the two blocs into which the world is tragically, perhaps fatefully, divided. He quoted his own message to Mr. Stalin of April, 1945, and I am going to repeat it because I think hon. Members opposite may well pay attention to it: There is not much comfort "— quoted the Prime Minister— in looking into a future where you and the countries you dominate, plus the Communist Parties in many other States, are all drawn up on one side, and those who rally to the English-speaking nations and their associates, or Dominions, are on the other. It is quite obvious that their quarrel would tear the world to pieces and that all of us leading men on either side who had anything to do with that would he shamed before history. Even embarking on a long period of suspicions, of abuse and counter-abuse and of opposing policies would be a disaster, hampering the great developments of world prosperity for the masses which are attainable only by our trinity."—[OFF:CIAL REPORT, 6th November, 1951; Vol. 493, c. 79] Within 12 months of sending that message the right hon. Gentleman was making a speech at Fulton, Missouri—the famous Fulton Speech on foreign policy—which called upon the nations of the Western world to do the very thing which in April, 1945, he was warning the Russians against doing. I have no time to quote the speech now, but I think that hon. Members will find there, and in the right hon. Gentleman's speech at Zurich a few months later, that he was taking the initiative in that policy of encirclement and containment which is one contributory cause of the present situation —a policy and a decision which really must be changed if there is to be any alleviation in international affairs.

Everyone knows, and no one can listen to these speeches without realising it, that the world is passing through a dark and troubled age; but it need not be, as hon. Members opposite are inclined to think it is, the twilight of a departing or vanishing civilisation which has had its day and which they merely regret. We have great powers to replenish the earth instead of destroy it. The scientific discoveries and the new power which man is winning for himself in the field of knowledge and control of the forces of external nature, those very powers which themselves will tear the world to pieces unless mankind learns a little sanity and a little common sense, could in our own day usher in a new age of peace, plenty and prosperity for all mankind.

In this country the Labour Government have, since 1945, managed to bring about a peaceful social revolution, a revolution without hatred and bitterness. [HON. MEMBERS: "Oh!"] Certainly; a revolution without bloodshed; a revolution, if you will, by consent; an agreed social revolution. Indeed, the choice before us was not a choice between revolution and no revolution. It was a choice between a peaceful revolution by consent and a revolution by bloodshed, tyranny, oppression and cruelty such as other countries have had to go through.

All over the world there are nations who are in the same position as were our own working class in those dreadful years between the wars; people who, knowing how others live, are not content with the poverty and the misery they have known for so many countless generations, who are now getting up on their own feet and demanding their own fair share and their own equal place with the other nations of the world.

The only choice for the world is to decide whether they are, as the Prime Minister might have put it, by their own exertions and ability, and all that that means for the peace of the world, to win their way through, or whether we, who have been blessed with our higher standard of living and our higher culture for so long, are willing to side with them, to be on their side, to be their friends and leaders, so that in co-operation the world may find a new peace and a new prosperity for all. That, I am afraid, is the real thing which divides the two sides of the House. It is not, in the last analysis, any disagreement about the facts, or any question about controls or limitations, or how much money a tourist abroad ought to have, or for what period we build up arms. It is the whole spirit and attitude of mind in which this country is prepared to accept its responsibilities in the leadership of the revolution of the world.

3.14 p.m.

Mr. Douglas Jay (Battersea, North)

Just because I agree with a great deal, if not all, of what my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman), has said, I found quite a lot to welcome yesterday in the speech of the Chancellor of the Exchequer. First, we welcome the fact that even in this Government the Chancellor of the Exchequer is a Member of the House of Commons. Secondly, we welcome the right hon. Gentleman's refusal to pretend that we in the previous Government refrained from disclosing, as the Gracious Speech rather hinted, the full economic facts to the country.

This was wise of the right hon. Gentleman, because one of the things that struck me about the General Election was that, after the speech of my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) at the Mansion House giving all these facts, and the publication simultaneously of a White Paper with a very great deal of up to date detail about the balance of payments, and after, incidentally, all that had been discussed that week objectively in "The Economist" in an article quite justifiably headed "Deep in the Red," the present Prime Minister gave a broadcast in which, so far as I can gather, he made no reference to the dollar gap at all. Even later in the Election Lord Woolton gave another broadcast with an unqualified promise of 300,000 houses a year and more "red meat."

Now it was not my experience in the Election that the public was unwilling to hear about the dollar problem. In virtually every speech I made—and I dare say this applies to a great many others—I did my best to expound it at length and to say what I thought ought to be done about it. I did notice, however, that the newspapers usually did not print that part of one's speech, because they apparently thought it dull. But the audiences struck me as being well aware that these were real facts, and they were very much more anxious to hear those sorts of facts than the sort of stuff which was served out to them over the wireless by the hon. Member for Luton (Dr. Hill).

Thirdly, we welcome most warmly the right hon. Gentleman's sudden conversion, with a few exceptions, to the main essentials of our economic policy—the planned regulation of imports and consumption applied through priorities and controls. We welcome also the decision announced just now by the Leader of the House to proceed with the necessary annual renewal of the Supplies and Services powers. Seldom, if ever, can any party leader have swallowed such a large mouthful of his own party's propaganda and promises as the unhappy Chancellor did yesterday afternoon.

As I listened to him yesterday, I thought that his speech was the most eloquent tribute I have ever heard paid to the work of Sir Stafford Cripps. We ought to remember Sir Stafford today, the truth of all that he said to us, and the levity of the attacks made upon him as one who believed in austerity out of some personal perversity or fanaticism. How right he was; and how small-minded and myopic his critics look today.

So we now enter a new phase. Lord Woolton's "red meat" has gone the way of all flesh—and it will doubtless be the job of the new Parliamentary Secretary to the Ministry of Food to explain its disappearance to his radio public. Lord Woolton's "magnificent" 300,000 houses have become, and I think will remain, rather less "magnificent" castles in the air. The great setting free of the nation by the abandonment of controls has already turned in one week into a replacement of import licences—of which we entirely approve—bigger than any single batch of controls applied at one time by either of the last two Governments.

Mr. John Profumo (Stratford)

Do I understand the hon. Gentleman aright? Is he suggesting that during the Election campaign the Conservative Party said that we would abandon controls? If he is, that is completely inaccurate.

Mr. Jay

I was merely suggesting, and I think it is on the record, that the present Prime Minister once said that his party's policy was to "set the people free."

In this new chapter we are not going to imitate the habit of the Tory Party in the last Parliament of pretending that all, or most, of the economic difficulties facing the country are due to the perversities of the Government. The truth is that the sterling area and this country face a very long uphill struggle against difficulties caused by world-wide economic change.

In the week following devaluation, I was bold enough to say, and I was criticised at the time for saying it, that the dollar problem will probably be with us for a lifetime. I still believe that is true. That is why I personally deprecate the use of the word "crisis in these discussions. Crises do not last 30 years. The word "crisis," I suggest, misleads the ordinary man into thinking that after six months' self-restraint we can all relax and he happy again. I believe that the briefest look at the historical causes of these changes shows that they are likely to be lasting. One can be a little freer in talking of these things from this side of the House, and perhaps a brief look into history may be a pleasant change from the ordinary party exchanges.

If we take first the dollar problem—by far the most important still, in my view—there are surely two outstanding causes at work. Let us remember that the dollar problem does not go back simply to 1945: it goes back to 1918, and it was really only American loans up to 1929, and a great flow of gold across the Atlantic in the 10 years afterwards, that masked it in those years before the war.

The first cause, of course, has been, as we all probably agree, the ravages of the two wars in Europe, and the dissipation of Europe's huge foreign investments. Secondly, I suspect and this is less often said—that the heavy cut in the flow of immigration into North America about the year 1910 has been one big cause of the dollar problem ever since. At any rate, it is just arithmetic to say that if the flow of human beings across the Atlantic from Europe to North America had continued since 1910 at the rate at which it was running in the years just before, there would be at least 50 million more people living in North America today and 50 million less in Europe—in which case, surely, the problem of North America's grain surplus and Europe's grain deficit, with all that it means for the dollar problem, would tend to disappear.

It would, therefore, be well to assume, in my view—and this is a matter for argument, I agree—that the dollar shortage is not likely to disappear altogether, so long as there are these heavy restrictions on immigration from Europe into the two North American countries.

Secondly, in our own United Kingdom balance of payments problem, also, the loss of foreign investments in the two wars has, of course, transformed the outlook for good. If one may put it in this way, before 1914, very roughly, we were earning about £200 million a year on our foreign investments and our food bill was only about £50 million more than that. We had only to export something like £50 million a year of goods to pay for our food. Between the two wars, our foreign investment income was about £200 million and our imported food cost about £400 million.

Today there has been a complete change. We are earning barely £100 million a year from foreign investments net, and our food imports cost nearly £1,000 million a year. We now have to export something like £900 million of goods, produced here, to feed ourselves. Surely that, put simply, is the brute fact which we are up against today.

In addition, the terms of trade generally have moved decisively against us. Indeed, the change in the terms of trade even since last year, plus stockpiling—and I do not think that the right hon. Gentleman would disagree with this calculation—account for almost the whole of the worsening in our own balance of payments which he had to report to us yesterday. But and I think that this is not so often noticed—even as recently as 1948, when we all thought the terms of trade very adverse, they were far better from our point of view than they had been in 1913 or 1890 or, indeed, for a long period of years before that. Surely, therefore, we should assume from now on that the terms of trade of the 1920's and 1930's were exceptional, and have departed for good. If that is so, I suggest we should all now become more realistic upon all sides and draw some practical working conclusions.

Do not let us any more assume, I suggest, that just round the corner, a few months or a year ahead, is some economic "normality" for this country, which will somehow resemble the conditions of the 1920's or the period before 1914. I do not think that is true; and I draw these inferences. First, the old free convertibility of currency which, of course, had great merits in its day, has gone, in all probability not just for a few post-war years but for a very long time. I very much doubt whether, so long as we have obstacles such as the immigration restrictions I have mentioned in North America, it is likely that European currencies will be freely convertible again into dollars for as far ahead as one can see.

Secondly, do not let us pretend that exchange control is some temporary aberration which is also likely to disappear in a few years. Without it, adjustments such as the right hon. Gentleman is making this week could not have been carried out, without drastic deflation and unemployment in this country. Exchange control is one of the permanent defences of the full employment and Welfare State. I do not see why we should not admit it.

Viscount Hinchingbrooke (Dorset. South)indicated dissent.

Mr. Jay

I see one dissenter.

Thirdly, as I see it, the whole idea that "liberalisation," as it has been rather clumsily called, of European trade would somehow solve Europe's economic and dollar problem, although, of course, this has some truth, seems to me also to be partly false. We accepted it in the last Government because we were exceedingly anxious to do all humanly possible to advance political unity in Western Europe. But we had great economic misgivings about it, and for that reason we insisted on safeguards in the European Payments Union, which the right hon. Gentleman has found so useful this week. I think that the cuts we have now had to make in imports from Europe have shown that these misgivings were justified. The truth is that Europe cannot solve its dollar problem by producing luxuries and exchanging them with itself. That is likely to be true throughout the re-armament period, and for a good many years afterward.

Next, do not let us start assuming—I am trying to give the right hon. Gentleman some help—that restrictions can be relaxed just as soon as the gold reserves start rising a little. I am afraid there is a sort of psychological cycle here in all sterling area countries, which partly —and only partly—explains why the dollar drain tends to re-appear regularly every two years. As soon as things get better, people want to relax, and because they relax, things get worse. I would advise the right hon. Gentleman to harden his heart most grimly against those who want to make relaxations because things look better for a few months.

Viscount Hinchingbrooke

Hear, hear.

Mr. Jay

I am glad the noble Lord agrees with me this time.

For all these reasons, I warmly welcome the right hon. Gentleman's decision to make drastic cuts in the least essential imports and in tourist expenditure. I hope, however, he will not forget the whole list of so-called invisible items—I am sure he is not going to—and that he will try to tighten up many of the weaknesses in the existing control machinery, as we did in the summer of 1949.

I was concerned, however, at the absence in his speech of any mention of direct dollar import cuts, which was rather striking, because, even allowing for the European Payments Union. I do not see—and this is frankly the gravest doubt I have about the Chancellor', statement—how the measures he announced yesterday can in themselves stop the dollar drain. Of course unless the weekly dollar drain is stopped, then almost nothing will have been achieved.

The difficulty here arises from the fact that we are bound to act in concert with the other sterling countries which mostly are independent countries, taking their own decisions. We arranged for confer- ences of the Finance Ministers to be held, as they were held in the summer of 1949. It may be worth considering whether there should not be some more regular machinery by which the dollar import programmes of all the sterling area countries are looked at jointly at regular intervals.

On this side of the House—and this is where we part company rather sharply with the right hon. Gentleman—we deplore what seems to us his weakness in giving way to City pressure and allowing a half per cent. increase in the Treasury Bill rate at a cost of £25 million gross to the taxpayer. Of course, when we allow for the proposed funding loan it will he a good deal more than that. I do not believe—and the Chancellor did not give a shred of reason yesterday for thinking—that this present of £16 million after tax to various City lending institutions at the taxpayers' expense will contribute anything in itself to the dollar shortage or to the balance of payments problem.

We, of course, have always been and remain entirely in favour in these circumstances of restricting credit and keeping down the increase in bank deposits. But as we see it, the right way is to ask the banks in the national interest not to raise their advances beyond whatever point seems the right one in the existing circumstances. After all, in the case of other essential resources such as building, food and so forth we ration directly according to whatever seems to be the right policy in the light of priorities and so forth. We do not have to increase the profits of the producers or the distributors in order to induce them to do what is right in the national interest. The right hon. Gentleman's argument yesterday, as far as I could follow it, if he were arguing anything, was that the banks could not be relied upon to do out of public spirit alone what the Chancellor wanted, and had to be given a financial inducement. We think that is unfair to the banks.

The right hon. Gentleman told us that it would have been "levity"—that is his own word for it—on his part to rush into Budget economies without weeks of study. I could have wished that he had not plunged in a few days into this drastic change in interest rates, but had left it for silent meditation in December and January when we understand that Ministers are going to think out their policies.

As it is, it amounts to this. The one material change so far due to the appearance of the new Tory Government has been an increase of £25 million in Government expenditure, which is really pure waste and will achieve nothing. I warn the right hon. Gentleman that that £25 million will swallow up a large part of the administrative economies which he quite rightly hopes to secure over the coming months.

I believe that the Minister of Fuel and Power, Mr. Speaker, is likely to catch your eye presently, and perhaps I may say one thing, in order to be brief, about the positive efforts to increase production and exports, which we all wish to stimulate. We all agree that still higher production of coal—and do not let us forget that it has steadily gone up and is steadily going up—is what we need. It can do more than anything else within our power to solve our difficulties.

I would beg the right hon. Gentleman to recognise from the start—and I am only saying what I said in my maiden speech in this House in 1946—that higher production of coal depends in the short term on a higher recruitment into the mines more than upon anything else. The failure to recognise that in some quarters has dogged us rather stubbornly in past years. The right hon. Gentleman's immediate predecessor, my right hon. Friend the Member for Derby, South (Mr. Noel-Baker) fully realised the overriding importance of increased manpower and recruitment, and I trust that the right hon. Gentleman will do the same.

As one whose job throughout the war was to organise recruitment in the munitions industries which were short of labour, I believe that this job can be done. I hope the hon. Gentleman, in particular, will study the measures adopted in the coal industry for recruitment in December, 1946, and again in November of last year, when a measure of success was achieved for, at any rate, quite a long period.

Finally, may I address a few questions to the Chancellor of the Exchequer, on the assumption that the present Government are going to answer questions in the House of Commons, at any rate in so far as Ministers are members of it, and during those few weeks when we are allowed to sit. First, can he give, as he did not do yesterday, the same categorical assurance that Lord Woolton gave in his pre-Election broadcast, that there will be no cuts in the social services or the food subsidies in the coming months or in the Budget next spring? Apparently the right hon. Gentleman is not now prepared to give that assurance, and therefore we will draw our own conclusions.

I will add this for his comfort. We approve the general procedure he announced yesterday for securing Budget economies because that is the exact procedure we followed last year, and which succeeded, over the whole field other than defence, debt interest, social services and the food subsidies, in offsetting all the unavoidable increases due to higher wages, salaries, and prices, leaving us about even on the whole of that large area of expenditure. Since the right hon. Gentleman told us yesterday—and we read it in the Press—that he has been sending out circulars, very rightly, enjoining the strictest economy on all Departments, perhaps I might remark that we also sent out such instructions from the Treasury in the late summer very soon after the Finance Bill was passed into law.

Thirdly, am I right in assuming—it may be that the right hon. Gentleman will answer this one—from his answers given to my right hon. Friend yesterday, that he has not that supreme authority as economic co-ordinating Minister over all other economic Ministers, including Lord Woolton and Lord Leathers, which both Sir Stafford Cripps and my right hon. Friend the late Chancellor of the Exchequer exercised? We are not to have any assurance, apparently, that the right hon. Gentleman has that authority either. [HON. MEMBERS: "Answer."] It may be that we are not going to get questions answered in this House after all.

I fully realise that one should hesitate to pronounce on these questions of the machinery of Government unless one has had a very great deal of experience. Nevertheless, speaking as one, who, starting, with the Ministry of Supply in 1940, has spent almost all the last 11 years in a variety of economic Ministries, I doubt whether there are many in those Ministries who would disagree that the system dating from 1947 set up under Sir [...]fford Cripps, with an indisputably [...]reme economic Minister uniting his [...]ctions with those of supreme financial Minister, has worked far better and more effectively than any other.

What the present Government are doing, if I understand it aright—it is all pretty vague—is really returning to the system of 1945–47, when we had economic co-ordinators other than the Chancellor. This was under the Labour Government; and, quite frankly, we did not find that that system worked very well. The system under Sir Stafford Cripps worked far better. The reason is that you simply cannot co-ordinate food and agriculture, or, for that matter, fuel and transport, if you leave the Treasury and the other economic Departments out of account. One could argue that matter at length, but I think that it is fairly obvious. I seem to carry the right hon. Gentleman the Chancellor some way with me, but not to the point of practical decision apparently. This seems to be one of the very gravest weaknesses in the new Government. I believe it is destined to cause us a lot of trouble over this next year.

Finally, I should like to ask the right hon. Gentleman questions about housing and building. Am I right in understanding from his speech yesterday that the number of new houses to be started in 1952 will be less than 200,000, and that the number under construction at the end of 1952 will be less than the number under construction at the beginning? That is what he seemed to me to say. It is perfectly clear, any way, that the 300,000 houses have gone with the wind. If I understood the right hon. Gentleman aright, the 200,000 houses are no longer very firm either.

The Chancellor of the Exchequer (Mr. R. A. Butler)

I think the hon. Gentleman is making a mistake. He has made a good many deductions, almost all of which are completely false, but, at any rate on the question of housing, in which the people of this country are very passionately interested, I would ask him to await further speeches which will take place on this Address, notably by the Minister for Housing and Local Government.

Mr. Jay

We shall await them with the very greatest interest. The right hon. Gentleman mentioned that he was going to put a stop to other forms of building, including office building in particular. I must remind him, however, that we put a ban virtually on office building several months ago.

For these reasons, we welcome the Chancellor's very extensive conversion to our policy. If he would go further and flatter us by altering the present ramshackle organisation of economic authority in the Government, I think that the chances of national recovery would he much brighter, and we would assure him, to that extent, of our further support.

3.47 p.m.

Mr. Clement Davies (Montgomery)

Before I come to the matter which is uppermost in our thoughts and dominates all our minds, the serious economic position of the country, I wish to deal with two matters, very shortly, as I should like a further opportunity of dealing with them at greater length later. May I thank the Minister of Fuel and Power for giving me this opportunity to deal with a wider matter than that with which he wishes to deal?

The first matter is the reference in the Gracious Speech to Scotland and Wales. For the first time in my recollection, and I should think it is the first time it has ever occurred, pride of place in home affairs is given in the Gracious Speech to Scotland and Wales. There is, however, this to be remembered: does anyone think that the people of Scotland or the people of Wales will be content with the proposals suggested in the Gracious Speech?

The long and honourable history of both those peoples, their traditions and their customs, entitle them to separate consideration. Furthermore, it is recognised by the two major parties that both those peoples have their special problems and interests. Otherwise, the post of Secretary of State for Scotland would never have been created. Now it is intended to add to the numbers of the Scottish Office. Nor would it have been proposed that a Minister should be allotted from the Government to pay particular attention to Welsh problems.

The people of Scotland and Wales should themselves debate and decide the problems which particularly concern them. I much prefer what has been suggested in the Gracious Speech, that a Minister should have special powers with regard to Welsh matters, to the Council that was proposed by the late Government. It was a kind of secret council appointed, either by the Prime Minister or the Lord President of the Council, to sit in secret and discuss matters about which they knew nothing. It was worse than a Star Chamber. I called it a Soviet Council for Wales. I hope that will now end. As the right hon. Gentleman the Member for Llanelly (Mr. J. Griffiths), has now become a Member of the Opposition I hope that he will in future join me again in making an eloquent appeal not only throughout Wales, but also throughout Britain, for home rule for Wales.

Mr. James Griffiths (Llanelly)

There are two things in which I will not join the right hon. and learned Gentleman. One is in abolishing the Council for Wales and the other is in urging Welshmen to vote Tory.

Mr. Davies

The right hon. Gentleman obviously does not like the reference to the fact that in 1935 he and his party put right in the forefront of their Welsh programme that they were in favour of home rule for Wales and that they have since departed from that policy.

This is linked up with the far wider question of our own method of government in this country. We have a sort of two-tier system at the moment; there is the central government and the local government. In 1946 the right hon. Gentleman who was then the Lord President of the Council asked me to preside over a meeting called in connection with the plan for Greater London. Within that area are 11 million people—more are pouring into the area all the time—and 145 local authorities. We met for a while and were fortunate in getting agreement upon the future of that area.

I was then asked by the right hon. Gentleman to preside over another committee to determine how the plan for the area should be carried out. This committee agreed that there ought to be a three-tier system, namely, the central government, a regional government, and the local government. The only matter upon which the committee disagreed was what should happen in the meantime until the regional government was formed.

That is a vital matter for the whole of the country. The time has come when there is so much interference in individual affairs, homes and everything of that kind, that we ought to have not only the central government and the local government of the two-tier system, but also a regional government intervening between the two. I propose now to leave that matter, but we have a precedent for it in Northern Ireland and why should Northern Ireland have a privilege denied to the rest of us? Northern Ireland has the central government here, the regional government, if I may so term it, in Northern Ireland, and also its own local government.

The second matter to which I wish to turn is the very important one which was referred to by the Prime Minister and which, I believe, has not been referred to by anybody else, namely, the state of the political situation in this country. Since February, 1950, we have had two General Elections. On one occasion one party had a small majority in the House with a minority of votes.

On this occasion we have another party also with a small majority in the House and a minority of votes. Even when confronted, as we have been since 1945, with enormous and complicated problems, both of those parties have spent most of their time denouncing the other and, what is worse, in trying to outbid each other and making promises in order to obtain votes. [Interruption.] I shall deal with both sides of the House; I can deal objectively with either side.

I want to know how long this is to continue because, as the Prime Minister pointed out, it cannot go on very much longer without causing serious damage to the democratic cause. Even if a General Election is held within the next 12 or 18 months, will there really be any very great change? A few thousand votes may affect just a sufficient number of seats to enable hon. Members now sitting in Opposition to take their place on the Government side of the House or to enable the Government to remain in power for a second term. Is that a desirable situation? There is a danger that in having frequent General Elections in which, depending upon a few thousand votes, there may or may not be a change, we shall make a mockery of democracy and bring this House to a position in which not only will it no longer be regarded as the pattern of all democratic institutions but will be held in contempt. I believe that the Prime Minister is sincerely concerned about these matters.

Mr. Wedgwood Benn (Bristol, South-East)

If the right hon. and learned Gentleman is truly logical, can he explain why he refused the opportunity which was given to him of adding the great weight of his own party, and thus giving some stability, to the present Government?

Mr. Davies

For the very good reason that my party and I remain absolutely independent. [Laughter.] Yes; there was no complaint whatsoever so long as I was supporting hon. Members who are now in Opposition. It was exactly the same throughout the last Parliament. Every time I said anything in support of the Labour Government I was loudly cheered and regarded as a very good supporter of the Government, but the moment I dared independently to criticise the Labour Government I was linked with the Tory Party.

That is the position to which the Opposition desire to drive everybody in the country. That is what happened during the General Election. We were able to put up about 100 candidates in 100 constituencies. What does that mean? [Laughter.] This is not a laughing matter. It means that in the constituencies where there were no Liberal candidates men who were Liberal-minded had to make up their minds whether to vote for the Conservative or the Labour candidate in spite of the fact that they did not like either of them, or not vote at all.

It is not right that some 3,000,000 people should be compelled to choose between two candidates neither of whom they like. As a result of that we had a large abstention on this occasion. [HON. MEMBERS: "No."] Yes, a large abstention, for about 6,000,000 votes were not recorded. That cannot be good for democracy, and, without a doubt, the time has come when we should have an inquiry into the electoral system, which is so obviously unfair and which is causing this considerable trouble that is likely to continue.

I turn next to our economic situation. It is admitted now on all sides that that situation is serious—nay, more than that, it is dangerous. I wish that both the other parties had said this more clearly during the Election. The ex-Chancellor of the Exchequer in his speeches did. without doubt, state a number of facts—for example, our increasing indebtedness both to the dollar countries and to the sterling countries, and the drain upon our gold and dollar reserves—and drew attention to the serious position as between our imports and exports. But it would have been better for all if he had said then what he said yesterday: that all this would mean inevitably that serious drastic action would have to be taken such as has been proposed by the new Chancellor of the Exchequer.

Mr. Hugh Gaitskell (Leeds, South)

I made it perfectly plain that cuts in imports would have to be made and that consumption at home would have to be kept down, and I have repeatedly said that the standard of living would have to fall.

Mr. Davies

It is all very well to leave it in that general way. [HON. MEMBERS: "Oh."] Knowing that deterioration was going on, certainly that it had started in July and earlier, at the time the late House was meeting and was adjourned until October, would it not have been better had the Government then remained in office, made these very cuts that they now agree should be made, making it all perfectly plain to the country and telling the people what was the position and what would have to be done, and then made the appeal to the country? Surely, that would have been the fairer thing to have done. Now, as far as I understand it, what is —

Mr. George Wigg (Dudley)rose—

Hon. Members

Order.

Mr. Speaker

The hon. Member is not entitled to stand up until the right hon. and learned Gentleman has given way.

Mr. Davies

As far as I understand it, the position between both parties is that they are agreed on what should be done, how it shall be done, and when it shall be done, and the only dispute between them is as to which of the two shall do it. [HON. MEMBERS: "No."] As far as we are concerned, we have never pretended otherwise than that the situation was serious, that the difficulties could only be overcome by our own efforts, by our own sweat and by our own toil. I am afraid, however, that both of the other sides are to blame in this matter. They have indulged either in painting a roseate picture of the amazing performances of the Government since 1945, such as was done by the hon. Member for Nelson and Calne (Mr. S. Silverman) this afternoon, or in making promises which could not be carried out.

We must, and we can, put our own house in order. It will mean austerity. I am afraid it will mean far greater austerity than that adumbrated yesterday by the Chancellor of the Exchequer. I hope that it does not mean real hardship, and it should, of course, not mean hardship upon those too weak to bear it. But it does mean that there has got to be better work and, possibly, longer and harder work.

The right remedy, of course, as we all agree, is that we should increase our income—that is, increase our product—

Mr. A. C. Manuel (Central Ayrshire)

Two months' holiday.

Mr. Davies

—of the goods that we make and the goods that we have for sale. This will take time, but it should be our ultimate object. I wish that the Chancellor of the Exchequer yesterday had said more about this. What are the Government going to propose to encourage production? What incentives do they suggest so that one gets not only the spirit of emulation, but also the spirit of adventure, back into this country? We cannot possibly have more production by merely asking for it, begging for it, and at the same time taking steps to punish the very persons who do produce more.

There is a reference in the Gracious Speech about creating a spirit of partnership between management and workers. Does this now mean that the Government are adopting what we in the Liberal Party have long put forward, namely, co-partnership in industry? [HON. MEMBERS: "Oh!"] I hear groans from the Opposition, but the right hon. Gentleman who was lately the Chancellor of the Exchequer has, in two recent speeches, made references to this and approved it very strongly. Now I find that it is also mentioned in the Gracious Speech, may I take it that all three parties in the House are now agreed that that would be a desirable thing? Moreover, it has been mentioned, if I remember rightly, with approval by the Foreign Secretary.

Now, I come to another matter. Very rightly, the Chancellor of the Exchequer yesterday said that our position depended very largely upon three major factors: steel, coal, and transport. I want to say a few words about the steel position. I take it that the Iron and Steel Act will be repealed and that, in the words of the Gracious Speech, the industry will be re-organised under free enterprise … with an adequate measure of public supervision. The position today is that the industry is carrying on under the Act as it stands today. Everyone knows that in some weeks' time or it may be months, that Act will cease to exist. That being so, it is quite impossible for the present Corporation under the Act, quite apart from their qualifications or anything else, to give effective guidance and leadership in this industry.

There is a call, according to the Chancellor of the Exchequer, for an extra one and a half million tons of finished steel to meet our needs. Obviously, the right step to take, and the one which should be taken, and taken at once, is to reestablish the Iron and Steel Board, which, for the moment, might follow the lines of the old Board—namely, as the House will remember, an independent chairman, two members from the management, two from the trade unions, one consumer of steel products and one independent member. Something of that sort should be set up.

Powers already reside in the Minister of Supply to do this. He has that power under the Supplies and Services (Transitional Powers) Act, for there roust be complete cohesion and oversight of the holdings. Unfortunately, that does not exist today, and I am sure that in order to meet our needs, to get the extra production, and even to maintain our present production, such an oversight is essential. So I beg of the Government—and I ask for the Prime Minister's special attention when I say this—that steps should be taken this week to put this matter beyond doubt and peradventure.

Mr. J. Griffiths

This is a very important matter. We hope to discuss it on Monday on an Amendment. May I ask the right hon. and learned Gentleman, since he is speaking for the Liberal Party, whether he proposes that the Iron and Steel Act shall he annulled by the use of an Order in Council under the Supplies and Services (Transitional Powers) Act?

Mr. Davies

No. I have not suggested anything of the kind. I understand that a Bill will be brought in. It will take quite a considerable time for it to become the law of the land; in the meantime, what is to happen to the industry" What I am suggesting is that it could be carried on under the supervision of a newly established board somewhat similar to the old board, with powers which can be transferred to it by the Minister of Supply under his present powers. Then, when we come to deal with the Bill, it may be found that further powers may be necessary for the board or that there needs to be a different way of dealing with the matter.

Mr. Griffiths

This is a very important matter. I understand that the right hon. and learned Gentleman is appealing to the Prime Minister to act this week—

Mr. Davies

Certainly.

Mr. Griffiths

There is no legislation before us; we are discussing the Gracious Speech. Do I gather that the policy of the Liberal Party is that an Act of Parliament shall be annulled and set at nought by an Order in Council?

Mr. Davies

No; but we are in a very difficult position.

Mr. Griffiths

indicated dissent

Mr. Davies

The right hon. Gentleman shakes his head, but this is a perfectly simple constitutional point. Here is an Act of Parliament on which notice has been given that the Government of the day, which is new, intend to take such steps as are possible to repeal it. Of course, that will take time. In the meantime, what is to happen to these people, who will ask, "Are we to go on under an Act which we know in a few weeks will come to naught?" Here is an industry absolutely vital to the country at the moment and, therefore, the best steps should be taken to get cohesion and proper supervision.

Mr. Griffiths

This is a very important constitutional point. The Prime Minister told us in his speech the day before yesterday that he does not propose to bring forward legislation on this matter before the House resumes in February after the Recess. In the meantime, therefore, the Iron and Steel Act, until it is repealed and annulled, is the effective Act under which the industry works and the Corporation set up by the previous Minister of Supply is the effective Corporation. The right hon. and learned Gentleman was appealing to the Prime Minister to depose that Corporation this week. Since the Prime Minister has told us there is to be no legislation until next year, is the right hon. and learned Gentleman asking the Prime Minister and the Government to depose the Corporation now, before a Measure is brought in to repeal the Act?

Mr. Davies

The Corporation, as the right hon. Gentleman knows or should know, deals with a small part of the industry. [HON. MEMBERS: "Nonsense."] It does not cover the whole industry and it has not come into full working order and detail. A considerable part of the industry is unaffected and power resides in the Ministry of Supply to supervise the whole matter. That being so, I am asking that the Minister should act now and act quickly. [HON. MEMBERS: "This week?"] This week, certainly, so that there should be continuity of production.

The Prime Minister (Mr. Winston Churchill)

I need scarcely say that His Majesty's Government are examining this matter with great care and a sense of urgency, but we must ascertain very clearly the exact legal position. My hope and expectation is that a statement on the point raised by the Leader of the Liberal Party will be made before the end of this debate.

Mr. Griffiths

May I ask the Prime Minister whether that statement will be made on Monday, when we are to debate this matter?

Hon. Members

Answer!

The Prime Minister

I hope so; that is the answer.

Mr. Davies

Increased production—

Mr. Jack Jones (Rotherham)

Before the right hon. and learned Gentleman continues—

Mr. Davies

I have dealt with this matter; we have had the answer of the Prime Minister and I cannot possibly carry it any further.

If I may turn to the question of increased production, as I have said, that is bound to take time and in the meantime something else has to be done. That is why we have had the proposals for drastic cuts put before us by the Chancellor. The truth is, as I have said on many occasions in this House since 1945, that we have been living well beyond our means. That brought about the crises of 1946 and of 1947 and on both occasions we were saved by America, but that is not the best way to overcome our difficulties.

Mr. Jones

On a point of order. Is it right that we should have to listen to a person who, I assume, has been put up as a stooge to put a question and draw an answer?

Mr. Speaker

That is not a point of Order.

Mr. Davies

On a point of order. Is it in order for an hon. Member to refer to another right hon. Member in the term that the hon. Member for Rotherham (Mr. Jack Jones) has just used?

Mr. Speaker

It certainly is out of order for such an offensive expression to he used, and I would ask the hon. Member to withdraw it.

Mr. Jones

I readily withdraw it, Mr. Speaker, in deference to your wishes, but I still have my opinion about the matter.

Mr. Davies

As I was saying, there comes a time when we have to borrow but there is a limit to that and I should very much rather that we cut down our expenditure than borrowed to meet those expenses. Having come through the crises of 1946 and 1947 with the assistance of America, we had the crises of 1949 and those we met by devaluation of the £. On each occasion I emphasised what is being emphasised on both sides of the House, by the ex-Chancellor and the new Chancellor, that we are trying to do too much at the same time and that we should limit our expenditure.

I have never doubted that we could and on every occasion I have given the answer which has now been given by the Chancellor of the Exchequer, namely, that, before expenditure is incurred, when proposals are put forward the very closest inquiry should be made by every one of the spending Departments as to whether it will be absolutely necessary to incur that expenditure or whether it can be postponed without doing irreparable damage to the country. The Chancellor now says that that instruction has been given and he hopes it will have very considerable effect, as we all do, in cutting down expenditure which hitherto we have been incurring.

The present crisis has been hastened by the immense re-armament programme which is being undertaken and which rightly, in my view, we are carrying out and by the fact that the world—free and totalitarian—is also engaged on piling up enormous armaments. This is bound to weaken every country economically. Millions of men are taken away from production and kept under arms while still more millions are engaged in making immense armaments.

This morning we read the statement that has been made by President Truman, that a fresh proposal is about to be put before totalitarian States as well as free States. I sincerely hope, and I am sure it is the sincere hope of every hon. Member in this House, that the proposal —which is a fairly modest proposal—will not only be carefully considered, but accepted by all countries. What a difference it would make to us all. Until that is accepted, I see no alternative but to go on, for to me freedom is of far vaster importance than any other material matter.

I should like to refer to what was said by the Chancellor and by the ex-Chancellor yesterday, to the effect that we must do all we can to put our own affairs in order and our own houses in order. That is our first duty, but success in that will in a large measure depend on what is done in regard to other countries who are partners with us in this matter. We have agreed to work together on a great defence programme. I have always believed that not only is a third war not inevitable, but that it can and should be avoided.

I have also thought that there was the very great danger that the free nations might collapse, not under active war but under the burden of re-armament, and become economically bankrupt. I have felt that it was no use having a common defence programme unless we had a common foreign policy; and furthermore, that we ought also, for the purposes of both the common foreign policy and common defence policy, to have a common economic policy.

I would draw the attention of the House once again to the most epoch making speech which I have ever heard, made by that very remarkable man General Eisenhower when speaking in this country last July. It is right that we should remind ourselves of what that general, who is charged with the defence of the free nations, said on that occasion: Although the security of each of us is bound up in the safety of all of us, the immediate threat is most keenly felt by our partners in Europe. Half the Continent is already within the monolithic mass of totalitarianism. The drawn and haunted faces in the docks of the purge courts are grim evidence of what Communistic domination means. It is clearly necessary that we quickly develop maximum strength within free Europe itself. Our interests demand it. Then comes this remarkable passage: It is a truism that where among partners strength is demanded in its fullness, unity is the first requisite. Without unity the effort becomes less powerful in application, less decisive in result. This fact has special application in continental Europe. It would he difficult indeed to over-state the benefits in these years of stress and tension, that would accrue to N.A.T.O. if the free organisation of Europe were truly a unit. But in that vital region, history, custom, language and prejudice have combined to hamper integration. Progress in the development of security arrangements has been and is being hobbled by a web of customs barriers interlaced with bi-lateral agreements, multi-lateral cartels, local shortages and economic monstrosities. How tragic. Free men facing the spectre of political bondage, are crippled by artificial bonds which they themselves have forged and they alone can loosen. Here is a task to challenge the efforts of the wisest statesmen, the best economists, the most brilliant diplomats. That is really the true task confronting us all today. That is the way to solve our difficulties, not only our present difficulties but our future difficulties. That means a close conference of us all, not only the Commonwealth and the United States but all the free countries of the world. To work together—that will mean a joint conference of both the dollar area and the sterling area, the strong as well as the weak working towards one common end.

We listened on Tuesday to the Prime Minister, particularly to the closing passages of his speech, and especially to the last paragraph. We should take every opportunity of bringing about understanding, agreement, and if possible, unity. The Prime Minister rightly referred to the letter which he had written to Stalin in April, 1945. Again, he rightly referred to the proposal he had made at Edinburgh in February, 1950, that there should be a meeting of the heads of the great nations.

If I may humbly refer to myself, I was one of the five or six who made the same suggestion in a letter to "The Times" in December, 1947, after the breakdown of the Four Power Conference of the Foreign Ministers. I have already referred to President Truman's proposal. If that is accepted all well and good, but if it is not then we must at least go on trying and try something else.

We are building up our strength until, as we say, we shall fear nobody. It is proposed that we should reach that position either in 1952 or in 1953. If that should be so, what is then to follow? Apparently we must still go on because the armaments of 1952 and 1953 will themselves be out of date in a few years' time.

In the meantime the world is beggaring itself—both totalitarian as well as the free countries—in preparing weapons of destruction against one another. What a wonderful thing it would be if we could bring about unity throughout the whole world so that all good men, wherever they may be, could work together for one common object, the great human one of the betterment of the human race everywhere. We ought not to lose any opportunity, from wherever it may come, to bring about that which we all desire.

4.26 p.m.

The Minister of Fuel and Power (Mr. Geoffrey Lloyd)

I know that the right hon. and learned Member for Montgomery (Mr. C. Davies) will not think me discourteous if I do not follow him in his arguments, as he knows it is my duty today to deal with the coal prospects for the winter.

In passing, I should like to say that I was very interested in what the hon. Member for Battersea, North (Mr. Jay) had to say about the manpower problem. He said that manpower was vital in the coal industry, and we would all agree with him. He said also that my predecessor as Minister of Fuel and Power had been fully seized of the importance of that subject.

I should say, however, that in spite of all the measures that have been taken up to the present, I am advised that unless further measures beyond those which the right hon. Gentleman was able to take are taken, we have an estimate that the manpower in the mines during the next 12 months will fall by 10,000 men. I can therefore say that I shall read with special eagerness the methods which the hon. Member recommended me to study with regard to that matter.

I wish to say a few words about what the right hon. Member for Leeds, South (Mr. Gaitskell) said yesterday afternoon. He said something about the stock figures, and he also made a rather more important statement to which I hope to refer later. Generally speaking, I do not differ from him in the figures which he mentioned, and I propose to incorporate them in the statement that I have to make this afternoon in what I believe is the proper context.

I should like to make one remark on what he said about the over-all stock figures at the beginning of this coal winter and last year. It is not so significant that the figure for the current year is somewhat larger than the other, as that the levels in both years are quite inadequate for safety, in my view.

Mr. Gaitskell

As far as I recollect, the stock figure at the end of the summer this year is at least as high as it has been in any year since 1944.

Mr. Lloyd

The stock figure is actually 1,300,000 tons higher than it was last year. I shall refer to that in greater detail later, and shall point out that unfortunately those levels have led us to acute positions during the winters. I will deal with that in detail later.

It is my task this afternoon to give a plain and, I hope, a realistic account of the prospect of coal supplies this winter. I do not want to overburden the House with statistics, but I shall give a few which are necessary for precision. In my view the country faces a dangerous prospect over-all on coal supplies and an acutely critical position in one sphere, namely, that of house coal. I shall first make a survey and shall then have to announce measures which are unpleasant but essential in the circumstances.

I should like to mention one or two broad features of this problem. I was brought up in the supervision of these great Government-controlled supply programmes in a hard school, when our programmes were continually buffeted during the war. Just as oil is the largest single supply programme in the world as a whole, so in this country coal is the greatest supply programme. It is so large that it is over half the tonnage of freight carried on the railways; and it amounts to over 200 million tons in a year. Although I find that to the layman this is always a surprise, there are about 156 different grades of coal and, not to exaggerate, there are 10 different classes of consumers, who all more or less require different types of coal. Thus it is really a gigantic and also a complicated problem and if it once goes wrong it becomes unmanageable for quite a time.

That is the reason we need the safety reserve of a large stock at the beginning of the coal winter. If I may make this just a little more precise, I would remind the House that in the six winter months the country consumes about 10 million tons of coal more than can be produced and transported during that period. It is for that reason that we have the crucial importance of the coal stocks on 1st November, that is broadly speaking, at this present moment. If we take the figure of 9 million tons as being about the minimum necessary for the distribution system to function properly, it follows that, if we allow for the run-down of the 10 million tons during the course of the winter, we need to start with an overall coal stock of about 19 million tons at the beginning of the coal winter if we are to face it with reasonable confidence.

I know, as the right hon. Gentleman said, that we have entered some recent winters with lower stock figures than that. But think of the risks we ran. Think of the situation we are facing today. Indeed, as a matter of fact, I am not sure that 19 million tons is enough to take the country through a really severe winter with transport dislocation, because we can very easily lose as much as 2 million to 3 million tons of coal by actual loss or transport delay in a very short time; and that could be really disastrous during the latter half of the coal winter when the stocks are already running down to a low figure.

As compared with that 19 million tons, we have, at the present time, over-all a stock of 16.8 million tons. That is a shortfall of 2 million tons, and I say that we are running considerable risks with that figure, particularly if we have a severe winter very much affecting the transport system of the country. Unfortunately the short-fall is concentrated largely in one section, namely, house coal, where the stocks are less than half of what they ought to be. Last year—I would go back to the figure of the ex-Chancellor—the overall stocks were 15½ millions tons, but they were much better balanced.

Nevertheless, even then the Government found themselves at the last moment faced with a critical winter position. They had to resort to the extreme measure of cutting down exports during the winter by 3 million tons. They also, no doubt reluctantly, had to take the extreme step of importing over a million tons of coal from the United States; and in their extremity in January the then Prime Minister made an appeal to the miners. who made a quite exceptional response and produced an extra 3 million tons during the first four months of this year.

Now, surely the right hon. Gentleman and his colleagues, even in spite of these last-minute measures, must have been haunted by a fear of what would happen if the winter had been so severe in its effect on the transport system as, for example, it was in 1947. Indeed, in spite of everything that was done there were considerable shortages of house coal during January, February and March. There were those shortages, and yet that is on the basis of starting the coal winter this time last year with a stock of 2 million tons.

After the experience that the right hon. Gentleman had of those days, he decided that the house coal stocks must be raised by 1st November of this year to 2½ million tons, and he announced this to the House of Commons on 30th April. In fact, our house coal stocks at the present time are only 1.16 million tons, half of last year's stocks, and lower than they have ever been since the war.

Here I ought in fairness to mention a favourable feature, to which the right hon. Member for Leeds, South drew attention yesterday, that 560,000 tons more coal than the year before have been delivered to householders during the course of the coal summer. It is difficult to state how much of that has been burned and how much remains in stock. It may be perhaps that somewhere between 200,000 to 400,000 tons remain in the cellars of the consumers.

But, unfortunately, I have to inform the House that boiler fuel is very short, and I am afraid we have to set the deficit of boiler fuel against this advantage to which the right hon. Gentleman drew attention yesterday. In any case it is absolutely clear that, with these dreadfully low house coal stocks, unless something is done at once we shall have a breakdown of supplies after Christmas, if not before, if the winter is severe. Hon. Members, unfortunately, have all experienced in recent years the personal privation and hardship which this causes in the homes and I would say that it is one thing to be discussing, a coal shortage or famine of house coal today, even though we know it may come in a reasonably short time, but it is quite another thing when it happens and the people are cold in their homes.

We cannot cut exports this year. We cannot do what the Government did last year and find an extra 3 million tons of coal for the home market by cutting exports, because, in fact, there is practically nothing of our exports left to cut. It is true that we are still exporting at the rate of about 7 million tons a year, but most of this coal is being exported under an obligation, under bilateral trade agreements, essential for the purpose of obtaining iron ore, meat, timber and tungsten. So I must report to the House that there is no help that we can get in the direction of cutting exports.

I now turn to the question of imports. The right hon. Member for Leeds, South, yesterday said that the late Government had given this matter careful consideration and he thought the matter was very evenly balanced. I imagine that what the right hon. Gentleman had in mind, at any rate to a large extent, in addition to the question of dollars, was the matter of interfering with the imports of other essential cargoes, as, for example, iron ore. In doing that he was attempting. so to speak, to draw a lesson from the unhappy experiences of last year. But if I may say so with respect. I think he has drawn the wrong lesson from the events of last year.

It is true that last year the sudden last-minute imports of coal caused grave interference with the imports of iron ore. But I would say that the important lesson of last year was that, whatever we may say or think in the summer, when the country and the Government are actually up against the immediate prospect of a shortage, an acute shortage, of house coal, then we have to import. Then, if we have to import at the last moment during the winter, we are in fact getting the worst of all worlds, because we have the maximum shipping difficulties, the maximum interference with imports of other vital cargoes and, very likely, the coal does not even arrive in time for the crisis.

Therefore, I now want to make a statement about the Government's position with regard to coal imports this winter, and if the House will excuse me I shall have to choose my words very carefully for reasons which right hon. Gentlemen opposite will understand, not because of anything in this House but because of people outside. The Prime Minister has announced that the Government will do all they can to import coal which, of course, in fact means coal from the United States. The House will see that the need which I have explained would justify imports larger than those last year, but in fact we shall not be able to import nearly as much because of the physical difficulty of getting it shipped and moving through the ports in the most difficult months of the year.

Also the amount of American coal that can be made available for shipment to Europe is limited, and the amount which we obtain will, of course, have to come out of this total. This means that the shipments to the United Kingdom should have little or no effect on the total demand for ships and, therefore, on the freight market. Also to ease the burden on shipping generally the United States are continuing to put into service more ships from their so-called "moth ball fleet."

If I may sum up on the question of imports, I would say that we shall do everything we can to get the coal, but I should be misleading the House if I left the impression that we are likely to get as much as last year.

In those circumstances, what other steps are there open to us in this critical position? We have got to rob Peter to pay Paul; or, in other words, we have got to take coal from industry to help the home. Luckily the industrial stocks are relatively good, but there are great disadvantages in this course to which we have had to resort. First of all, there are the risks to industry. Of course, the Department will watch this matter very carefully, and we hope there will be only slight dislocation unless, of course, there is severe weather, which would alter the position.

Secondly, this course is not really satisfactory from the point of view of the householders themselves, because industrial coal is mostly slack, which is suitable for industrial boilers but not for the domestic grate, and therefore I must warn householders that in this case, at any rate, the quality of the coal which they receive, resulting from the transfer from industry, is not the fault either of the merchants or of the National Coal Board, but uniquely results from the low stock position of household coal. Some steps to transfer coal from industry have already been taken by my predecessor, but I am sorry to say that I must advise that there is a definite limit to the help that can be received for the householders from this course.

When all is said and done, I am afraid that we have got to take special steps immediately to conserve our present meagre stocks of house coal. As hon. Members know only too well, householders in recent years have been able to buy up to a certain limited quantity during six-monthly periods. Under present regulations they can buy for immediate delivery the whole of the remainder of the permitted quantity up to the end of next April. With the present low stocks of household coal, if we continued to allow this it would mean that some would get the full quantity and others, I am afraid, would get nothing or very little.

Therefore, I am having to make an order which will limit the amount of coal any householder can buy during the next three critical months. Details are being published immediately and the order will come into force at once. [HON. MEMBERS: "How much?"] I must tell the House that it will be extremely complicated to explain this. Hon. Members who are aware of the position know that the quantities are different in the north and the south, that in the south people are allowed to take a larger quantity in the summer than in the winter and that this does not apply in the north. It would be perfectly practicable to explain in detail the effect of this order if we bad half an hour in Committee, but we should get into considerable difficulties if I were to try to do it in the House at this time.

As this matter is unfortunately not only disagreeable but complicated, I have been thinking what would be the best way of explaining the position particularly to the householder, and I came to the conclusion that I would take a leaf out of the book of my right hon. Friend the Chancellor of the Exchequer in dealing with an even more complicated subject, namely, Income Tax, and issue to the Press a full series of examples showing almost all the different gradations as the order would affect consumers both in the North and in the South.

The House will see, therefore, that during the last several days we have taken all the measures that seemed open to us to try to restore the acutely dangerous house coal position. Naturally I hope against hope for success, but I cannot guarantee it and I am afraid that we are inevitably very largely at the mercy of the weather.

The right hon. Member for Leeds, South, yesterday made an important statement on coal. It seemed to me to be thoroughly in accord with the Chancellor's appeal that we should tackle our basic national problems on a national basis, and that coal was a key factor. The right hon. Gentleman left no doubts that his party would do everything possible to encourage the maximum production of coal. If I may say so, that is what I would have expected him to do. It is, however, none the less satisfactory to hear him say it on behalf of his party, and I should like to acknowledge it. He asked me a question. He said that I could do a helpful thing. He said: Let the right hon. Gentleman put on one side all his party prejudices. Let him accept nationalisation."—[OFFICIAL REPORT, 7th November, 1951; Vol. 493, c. 221.] May I try to respond to the right hon. Gentleman? He will understand that what I say must not just be smooth words but must be honest and responsible. I think that in a way his question discloses a certain kind of misunderstanding, or rather a kind of overhang from the hard controversies of the past, because the fact is that the Conservative Party have at the last two General Elections accepted the nationalisation of coal. In the last Parliament spokesmen of the Opposition, as we then were, have repeatedly said that coal nationalisation is here to stay. I was one of them, although I was not the only one. I can, therefore, repeat those words with responsibility from this Box in reply to the suggestion which the right hon. Gentleman made to me.

I think I can go further. Surely something follows from what I have just said, and it is this. Once you have accepted the nationalised coal industry, you cannot sit around looking at it with neutral or even semi-hostile eyes, much less "mess around with it." to use a phrase of the right hon. Gentleman's. Once you accept it, then in the national interest you have got to back it and do your level best to make it a success.

May I say a further word about coal imports? Hitherto, I have referred to them on a strictly factual basis.

Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)

Before the right hon. Gentleman leaves the question of nationalisation, can he tell us whether there is any intention at all to make an alteration in the present set-up of the National Coal Board, so far as returning to district or regional arrangements is concerned?

Mr. Lloyd

May I, with respect, ask the House to give me a little grace—for this reason? I have been only seven days at the Ministry of Fuel and Power, and all my time has been spent in trying to deal with the critical winter house coal prospect. I have had the chance of only one short conversation with the Chairman of the National Coal Board, and I have not even had an opportunity of meeting the leaders of the National Union of Mineworkers.

Mr. Popplewell

Following that reply, and having regard to the policy advocated during the General Election by the present Prime Minister regarding the alteration of districts and de-centralisation, surely, in view of the right hon. Gentleman's present statement, if it bears any weight at all, he must have given thought to that particular point?

Mr. Lloyd

The hon. Gentleman has said "Following that reply." hut, as a matter of fact, I had not finished my reply. All I said was that I have been entirely engaged; and that I have not had a chance of meeting the leaders of the National Union of Mineworkers. I ask the House to give me this grace, and not to press me, in the conditions of inevitable inexperience in which I now am, to say something which. unwittingly, might do some harm at a later stage.

Mr. Gaitskell

We all appreciate that the right hon. Gentleman has had but little time on this matter, but I think he would be very helpful if he could give us an assurance that in no circumstances will any change in the structure of the coal industry be contemplated or made without the full consent and agreement of the National Coal Board and the National Union of Mineworkers.

Mr. Lloyd

I think that if the right hon. Gentleman, who has so lately left this Bench, will reflect on what his position would be if he were here and I were there and asked that kind of question, he will recognise that he is really going rather far in expecting me to answer it on the spur of the moment.

Mr. Tom Brown (Ince)

The right hon. Gentleman has made a very important statement so far as we in the mining industry are concerned, but it is far more important that he should tell us this afternoon what is the policy of the party opposite regarding de-centralisation in the coal industry, because, after all, it is a disturbing feature in the coalfields. Our men are now feeling that they are going to be let down by the party opposite. I appreciate that the right hon. Gentleman has been at the Ministry for only seven days, but this is a very important point affecting the men in the coalfields, and I ask him whether he will be good enough to tell us that the policy outlined by the party opposite during the General Election is now going to be withdrawn.

Mr. Lloyd

I appreciate the intervention of the hon. Member for Ince (Mr. T. Brown), but he will see that I could not give an answer—

Mr. E. Shinwell (Easington)

This is really a very important matter, and it ought to be cleared up. Is it not the case that the Prime Minister himself, in one of his speeches during the election campaign, stated that the policy of his party, if it was returned to power, would be to de-centralise the mining industry? May I ask the right hon. Gentleman whether it is intended to proceed with that policy, or whether it is the Government's intention to abandon it?

Mr. Lloyd

Everybody, even including the right hon. Gentleman, has had an opportunity of asking that question. I am not in a position to say more than I have done.

Mr. Shinwell

On a point of order, Mr. Deputy-Speaker. As I have said and as my right hon. Friend has indicated, this is a matter of great importance.

Mr. Deputy-Speaker (Colonel Sir Charles MacAndrew)

I should be glad to know what the point of order is.

Mr. Shinwell

On a matter affecting Government policy, surely we are entitled to a statement from the Prime Minister?

Mr. Deputy-Speaker

That is not a point of order. Mr. Lloyd.

Hon. Members

Answer.

Mr. Deputy-Speaker

I have ruled that that is not a point of order, and if the Prime Minister does not wish to answer, I cannot make him. I have called on the Minister, and I hope that the House will be more peaceful, because I cannot hear what he is saying.

Mr. Popplewell

In view of the very important statement made by the right hon. Gentleman in regard to the future of nationalisation of the coal mines, is not the House entitled at any rate to the courtesy of a further explanation in order to clarify exactly what has been said by the Prime Minister, or are we to infer that the statement means nothing at all?

Mr. Deputy-Speaker

I am not here to rule on courtesy. I am here to rule on points of order, and none has arisen.

Mr. Shinwell

Why does not the Prime Minister get up? What is he afraid of?

Mr. Deputy-Speaker

Order. I hope we shall have more peace for this debate. Hon. Members should not stand when I am on my feet. Mr. Lloyd.

Mr. Lloyd

If I may be allowed—

Mr. P. Bartley (Chester-le-Street) rose—

Mr. Lloyd

I think the House will realise that I have not in any way burked the point. [Interruption.] May I continue—

Mr. Philip Noel-Baker (Derby, South)

I have warned the right hon. Gentleman that I am going to ask him this question a little later in the evening, perhaps in about an hour and a half, and I hope that he may be able to answer it by then, because it is really absolutely fundamental on what he said about nationalisation working.

Mr. Lloyd

I was about to make some remarks on the question of imports.

Mr. James Callaghan (Cardiff, South-East)

Will the right hon. Gentleman allow me?

Mr. Lloyd

No; I have given way to quite a number of hon. Members.

I want to make one remark about imports, and here I think that this is a subject on which, fundamentally at least, in regard to the coal industry, we are really in agreement. I do not think there is any difference between us when I say that, as far as imports of coal into this country are concerned, they are something which really hurts everybody, including the miners. I know that everybody really agrees on this, and I think that perhaps the only difference between us on this subject would be on the degree of intensity with which the same view is held.

I want to mention to the House that abroad a rather harsher view is taken of this matter, though I am not saying rightly. The House ought to appreciate that this is something which really affects the credit of the country. Hon. Members and public men are aware of how public opinion fastens on some particular matter. For example, I can remember how in the Fleet 20 years ago the mutiny at Invergordon was something which was flashed over the world with peculiar intensity. I am not wishing to draw a close comparison between the two things, but in the economic field, in a slower and perhaps even more important way, the fact that this great coal-producing country has got into the habit of importing coal is having a tremendous effect in the outside world.

Hon. Members

Why?

Mr. S. O. Davies (Merthyr Tydvil)

Who closed down 1,800 collieries between the wars? You did.

Mr. Deputy-Speaker

Order. I did not close down any pits.

Mr. Davies

There is really a limit to what even the coalminers' patience can stand. The industry was ruined by the party opposite.

Mr. Lloyd

I am sure the hon. Member will have many opportunities of expressing himself in the future.

I want to tell the House the rather important fact that our preliminary figures for the coal budget for next year indicate a deficit of 4.½ to 5½ million tons. I agree with what was said during the first day of this debate on the Address by the hon. Member for Wallsend (Mr. McKay), that the primary job is to get the coal.

Yesterday my right hon. Friend the Chancellor of the Exchequer said that after 10 days at the Exchequer it would be a sign of levity on his part to introduce a complete programme of a financial nature. Even more as far as I am concerned after only seven days at the Ministry of Fuel and Power, would it be not merely levity, but actual folly to attempt today to state to the House a full programme for increasing the output of coal. But let us be under no delusions at all that in the light of the present situation, not merely in the coal industry itself regarding exports and imports, but in the light of the economic position of the country as a whole, an increase in coal production is one of the key factors of our future national life. It is a challenge not merely to the coal industry, but to the nation itself, and one which must be met.

5.4 p.m.

Mr. Michael Stewart (Fulham, East)

I think that of the remarks that have just been addressed to the House by the Minister of Fuel and Power the one to which we listened with the greatest interest was his emphatic assertion that he accepted the principle of nationalisation of the coalmining industry and all that followed from that. It was a little unreasonable, if I may say so, of some of my hon. Friends to expect the right hon. Gentleman to understand the meaning of the words in the Conservative election manifesto, because I am sure that many hon. Members on this side had the same experience as I did myself of putting the question, "What does the word 'decentralisation' of the coalmining industry mean? "to many Conservatives during the General Election and never receiving the same answer from any two of them. To my mind it ought to be understood that the right hon. Gentleman should require some time, possibly until early in February, before he and his right hon. Friends can properly answer that question.

But, more seriously, it is important that the right hon. Gentleman and the other Ministers who will be in charge of and responsible to this House for nationalised industries should very fully realise what their duty is going to be in this matter, and that they must not let any past partisan and doctrinaire objection to nationalisation cause them to neglect their obvious duty to this House and the country, but that they must see that that part of the national estate for which they are responsible is properly and effectively developed.

However, it was not my intention to speak exclusively on this particular industry which is, after all, only one example, though a very important one, of the general economic difficulties with which we are faced, and it is on those difficulties that I wish to address a few words to the House. In the first place, we must realise that those difficulties are the reflection of the fact that we live in a troubled world of whose continued peace we cannot even be as sure as we would wish. While I am mentioning this question of the peace of the world, I want to comment on a topic raised by some hon. Members opposite earlier in the debate.

The suggestion has been made by some hon. Members opposite that they were not as successful in this Election as they would like to have been because it was suggested that the policy of the Conservative Party involved a danger to the peace of the world. When they make that complaint, I would invite them to remember what happened in the early stages of the Election campaign. In the early stages of that campaign it was the obvious tactic of the Conservative Party to suggest that the policy of the late Government contained an element of caution or weakness which involved a danger of war.

In my own constituency, and, indeed, in others, there was a placard to be seen issued by the Conservative Party which stated, "Weakness means war." In some cases the accusation of weakness was made, followed by accusations of personal cowardice. One of the most unseemly spectacles which came before my eye in the General Election was that of a young man not yet of an age to have done his National Service, adorned with a large Conservative rosette, screaming accusations of cowardice at a Labour candidate who had served during the war with distinction and not without injury. What he was saying was what he had heard from his elders and betters.

I have never understood why it should be legitimate for a Conservative to suggest that a policy of a Labour Government might involve a danger of war and not legitimate for a member of this party to suggest the same thing regarding a Conservative policy. From anything we have heard so far, we are still obliged to believe that instead of reducing the dangers to the peace of the world and the effect on our economic problems at home, the presence of the present Government is likely to increase them.

Our reasons for believing this are as follows. I think that the task of making the whole world a more peaceful and civilised place is one which must contain two elements. The first is to see to the defences of this country, to make certain that we are strong enough to defend ourselves and to play our part in restraining and defeating aggression. The other—and in the long run the far more important—is the constructive task of trying to remove from the world the root causes of unrest and war.

The weakness of the party opposite—and the weakness, indeed, which appears in certain omissions from the Gracious Speech—is that they have never understood the importance of that second element of policy. After all, what is the greatest problem which faces this generation of mankind? It is surely that the white, brown and yellow sections of the human race are no longer prepared to tolerate or to live in a world dominated by a white minority, and the problem on which world peace, the solution of our economic difficulties and the lives of the rising generation depend, is whether the advance to an equal share in world power by the coloured sections of mankind is to be a peaceful and reasonable process, or whether it is to be by violent explosion.

One of the most important parts of the work of the late Government was their contribution, both in the political and the economic field, to seeing that this great world development, which will come whether any of us like it or not, should come in an atmosphere of reason and goodwill. That was the purpose of the political measures taken with regard to what was our Indian Empire, and of the many measures for raising the standard of life and of opportunity throughout our African possessions and other parts of the Colonial Empire.

It is a matter for regret, and a matter indicative of how little His Majesty's present advisers fully grasp the importance of this problem, that there is no indication in the Gracious Speech of any consideration of that policy, of extension of self-government, or of raising the a standard of life and education and opportunity of the backward people of the Colonial Empire.

The hon. Member for Oldham, East (Mr. Horobin) went so far as to suggest that the present Government in its search for economy, might consider abandoning the Colombo Plan. It is that kind of voice that is liable to become louder and louder as this Government remains in office. If it is listened to, the result will be disastrous for this country, and indeed for mankind. It is imperative that full emphasis is given to both those elements in peacemaking which I have mentioned. If we abandon the constructive job of trying to remove strain and tension in the world and put our faith in armament alone, we shall commit exactly the error all nations committed before1914.

But it was not my intention to develop this theme for too long, though I think we must remember that any solution of our economic difficulties is bound up with a proper understanding of how to make the world a more peaceful and more civilised place. But even to do that, to see properly to the defences of this country and to continue to give the help and encouragement to the Colonial Empire that is needed, we must step up production in this country. It is inescapable, that from whatever political problem one starts, Whether one discusses housing, fuel, the social services, the development of the Colonial Empire, the maintenance of peace and the strengthening of our defences, one is always driven back to this central question: "How can we increase the production of this country and avoid any part of that productive effort being wasted on luxury and on useless and trivial consumption?"

It is on this question of avoiding waste that I should like to say a few words to the House. Yesterday the Chancellor of the Exchequer said that cutting down public expenditure was a very great part of the fight against inflation. But 1 hope he will also realise that it is at least an equally important part of the fight against inflation to cut wasteful expenditure whether it is public or private. If labour is misemployed, if resources are wasted, the injury to the nation is exactly the same whether it is done through public or through private hands.

The Prime Minister has described the sacrifice of part of Ministerial salaries as a signal to the nation, a signal which we hope will be followed by all private firms paying considerable salaries to any of their employees or directors. May I suggest another signal that might be flashed out to an expectant nation? Could not the Conservative Party, for the period of re-armament, agree not to employ in its headquarters and local offices more able-bodied manpower and womanpower than is employed by the party on this side of the House? Could they not agree also not to occupy more premises, particularly premises which might be used to alleviate the housing situation, than are occupied in total by the party on this side of the House?

Hon. Members may smile at these proposals, but surely they would be quite as much a signal, and in quantity a much more important signal, than that which the right hon. Members on the Front Bench opposite have already given the nation. Could we not consider whether a more useful purpose in the national interest could not be found for the great premises in Victoria Street —

Mr. Harold Watkinson (Woking)

Or Smith Square?

Mr. Stewart

Could not a more useful purpose be found for the great premises in Victoria Street which displayed for sale so much literature and which used to display among its literature a book entitled, "A Dictionary of Clichés"? I say "used to display" because I have not noticed it there recently. I can only conclude that all supplies were bought up by hon. Members opposite during the recent campaign.

Mr. Robson Brown (Esher)

I have been following the hon. Member's statement with great interest. He mentioned an increase in production, and I rather sense that he is now going on to another subject. Would he suggest possible methods of increasing production other than the trifling matters he has considered?

Mr. Stewart

Certainly. I was concerned first with the avoidance of waste. If we want people to produce more, the people to whom we are appealing must feel that every possible kind of waste, whether of private or public expenditure, is cut down. That is why I would commend particularly to the Chancellor of the Exchequer the suggestions made earlier by my hon. Friend the Member for Edge Hill (Mr. Irvine) that he should have an eye on the effect of the Income Tax law on expenses accounts, particularly in regard to expenditure on entertainment and on advertising.

A great deal of expenditure of that kind in private industry today adds nothing whatever to the total national wealth; and it probably consumes far more of the national resources than half a dozen Government Departments put together. It is one of the things to which any Government concerned to avoid waste of resources should very seriously give their attention. Similarly, the Gracious Speech told us we must try to secure value for money in the social services. I rather regret that the principle of value for money, so far as the wording of the Speech goes, is applied alone to those Ministries which deal with the social services. It is an admirable principle, and it ought to be applied also to the defence services.

I know very well—and, if I may say so, some of the hon. Members who support the present Government will find it out for themselves—that it is very easy to exaggerate the extent to which one can make economies in many departments of public expenditure. I believe it is true that any Department concerned with preparation for war is always, by temperament, more in danger of wasteful expenditure than any other Department, because there is no way in peacetime of applying to it the test of exactly what value one is receiving for the money one is spending.

I should have thought that if the principle of value for money were to be applied in particular in the Gracious Speech to any one set of Departments, it would have shown greater realism if it had been applied to these Departments rather than to those concerned with the social services. After all, they are producing the things of peace and we have in front of our eyes every day some test of the value we are getting for our money. One can tell the quality of a hospital service in time of peace, but one can only tell by a kind of estimate what is the value in time of peace of the actual military preparations one is making.

I should like to make some comments on measures concerned with actually increasing production. My hon. Friend the Member for Battersea, North (Mr. Jay), in what I thought was a very important statement indeed, drew our attention to the fact that the problems we face are not problems of this month, this quarter, or this year, but of this generation at least. We are now moving into a whole new set of problems. Indeed, we have been so moving for the last decade, comparable to that entirely new age which faced the generation in this country after the conclusion of the Napoleonic War.

Consequently, when we consider any measures to increase production we ought to look at those measures which will have effect not merely in this month or in this quarter, important as that is, but which will help to create a new type of society appropriate to the new problems facing our generation, a society which in that background will be able to be most productive.

For example, clearly it will be of first-class importance to solve the problem of incentives and to make everybody engaged in work of any kind, whether with hand or brain, feel that it is worth while putting out his best effort. If we are to do that we must see that income is proportionate to effort. I am delighted to have agreement from hon. Gentlemen opposite, because I, as a Socialist, have been preaching for years, the principle of to each according to his usefulness I am happy to see that at last it is percolating, as the early Fabians said that it would, into the most unlikely quarters.

I am not speaking of those members of the community who, by reason of age or infirmity, cannot contribute to production; but I believe that it is entirely wrong that any member of the community and I mean this quite literally—who is of age and condition to contribute should get any income at all except in return for his productive efforts.

Mr. Henderson Stewart (Fife, East)

What about savings?

Mr. Stewart

If they are savings out of a man's own earnings, they are certainly a reward for his efforts, but if it is merely a question of property inherited from somebody else, that is a totally different matter.

We must make it a maxim of our taxation policy to seek always to whittle away, until finally we have whittled them away to nothing, incomes which arise in return for no productive effort by the persons who receive them. I trust that the Chancellor of the Exchequer, when he is applying himself to the budgetary and taxation problems, will ensure that every effort is made, difficult as it will be, to lift the burden, as far as it can be lifted, from those who are contributing to productive effort; and to increase the burden, where it has to be increased, mainly so as to give the result that income is proportionate to effort, as far as is humanly possible.

One of our difficulties today is that the wages and salaries structure of the country shows that very often income is not proportionate to effort. Some of my hon. Friends who know these industrial problems far better than I do will agree that the relation between the income of skilled workers, unskilled workers and professional workers, between older and younger workers, is often not satisfactory and not in the best interests either of abstract justice or the immediate national expediency

The solving of that problem cannot be done by the Government alone. It will need the very greatest help and sympathy from the trade union movement. We were all glad to see the public spirited message which the trade union movement gave to the public and the nation when we knew of the change of Government. I can only hope that when my right hon. Friend the Leader of the Opposition returns to office he will receive a similarly public spirited message from the Stock Exchange and similar institutions.

I am sorry that on this question of the apportioning of income to effort, the Chancellor of the Exchequer, to judge from his speech, is apparently prepared to do anything on earth to prevent dividends going up except to take actual action to prevent them going up.

One great measure which in time will transform our whole society is the deliberate setting up by the great parties of an objective of policy that we should get rid of that feature in our society whereby people can be born into it with enough property to free them throughout their lives from the obligation of working. I do not suggest that there are enormous sums to be got for the Exchequer in that way. What I suggest is that, unless that is accepted as an objective of policy by all parties, and unless both parties endeavour to go as fast as they can towards its realisation, any adjuration to people to work harder is likely to fall on deaf ears.

Major H. Legge-Bourke (Isle of Ely)

I have been trying to follow this argument as well as I can. Would the hon. Gentleman say what his policy is towards the savings movement, and whether he thinks that it is important to encourage people to save?

Mr. Stewart

I thought that I had already answered that point in reply to an interjection. I think that it is entirely proper that, when people work and save out of their earnings, that should be encouraged and they should be rewarded for doing so. What I object to, however, is people getting incomes which are neither the reward of their present work nor the reward of any work that they have done in the past, but possibly the reward of work, or other forms of acquisition of income, by their remote ancestors.

Major Legge-Bourke

Am I to understand that the hon. Gentleman does not consider that it is right that a father should try to give his son a better chance in life than he had himself?

Mr. Stewart

I do not consider that if a man gives his son the right to live without working he is giving him a better chance. I think the man is giving his son something extremely mischievous.

Mr. Henderson Stewart

As the hon. Gentleman replied to my earlier interjection, I should like to point out that he must address himself to this question. Either he is opposed in principle, or he is not, to the proposition that a father is doing right by the State in saving something and leaving it to his son. The question is not what quantity he leaves, but that of the principle of saving to leave money to his family. Is that principle accepted or not?

Mr. Stewart

The quantity is extremely relevant. It is altogether proper that a parent should leave to his children, or his ordinary natural heirs, a moderate sum which may be—[HON. MEMBERS: "How much?"] I If hon. Members want to know that, I invite them to study the Estate Duty policy of the last Government which is very much in point here. What I object to is inheritance on such a scale that it causes to be born into the world a group of people who are free for the whole of their lives, if they choose, from the obligation of working.

That is why it was right of the last Government to reduce taxation on small and moderate estates and to increase it on very large estates. I say that, by every expedient, all parties in the State ought now to make it their declared objective that we shall live in this coming generation in a community in which everybody of age and condition to do so will be expected to do his share of work. Fair shares must apply not only to the fair sharing of the results of work but to the fair sharing of the doing of the work itself.

Mr. Beverley Baxter (Southgate)

Is it not a fact that the hon. Gentleman, with this natural sympathy towards the community, in expressing as he does a high idealism, is really chasing shadows? Is he not talking of something which has gradually ceased to exist? Is it not a fact that in this country the number of young men who do not work is so unimportant that this question should not even be raised?

Mr. Stewart

I must invite the attention of the hon. Gentleman to certain periodicals which he can read, and for which he can write, during the months of December, January and February, which will give us a more accurate picture of some hon. Members opposite than we shall be able to get from HANSARD. I agree that the total amount involved is not now of major importance.

What I say is that we have to go round to one section of the community after another who are already working extremely hard saying that they must work harder. Toleration of idleness, even on a small scale, makes it impossible to do that. If the hon. Member doubts what I say, I would invite him to go and try to exhort a group of miners to work harder. He will see that, while they are anxious to serve the nation, they will have some comments to make to him on that topic; and if he listens to their comments he will be a little more in sympathy with the point of view I have expressed than he is at present. I have endeavoured to reply to the objections raised to what I have said so far and, in consequence, I fear I have delayed the House longer than I intended.

Now I should like to mention another matter, to my mind very important, which bears on production and which will help to recast our society for the whole of the next generation. It is the matter of education. Important though it is, I am not speaking now of the mere principle of justice that there should be equality of educational opportunity, but of the imperative need on the part of the nation to see that where there is natural talent it shall receive the training and education which is necessary in order to make it as serviceable to the community as possible.

Very considerable educational advance has been made in recent years, but we shall be deceiving ourselves if we imagine that we have yet reached equality of educational opportunity or are yet harnessing to the service of the nation all the natural talent which could usefully be used. We must reach that stage if we are to have the increased production per man, the increased discovery and effective use of new devices that we desire. It is one thing to invent a new industrial process and another to find enough people with the necessary trained intelligence to make it possible to apply that process on any considerable scale.

It is because I believe that education is one of the vital factors in production, quite apart from the other advantages it confers on society, that I profoundly regret the absence of the Minister of Education from the Cabinet. "The Times" a reservoir of historical precedents. has reminded us that this is the first occasion that has occurred in peace-time since the Government of 1931. I wish no ill to the right hon. Lady, but I am obliged to recall that the unfortunate gentleman who took office of Minister of Education in the Government of 1931, and who was a member of the Liberal Party and took the ill-advised step of attaching himself to the Tory Party, died broken in health and in spirit after less than 12 months of endeavouring to interest that Government in educational problems. I cannot think it was kind of "The Times"—it was not kind to the right hon. Lady—for them to quote that precedent.

Let us hope that the exclusion of the Minister of Education from the Cabinet will not be a symptom of the general neglect of education. There are. I am afraid, too many people in the party opposite who regard education merely as a sort of frill which can be cut off in time of emergency. That has been an old Tory Party maxim—when in doubt. economise on education. I do not hope to persuade them now of the benefits of education in that it gives amenity and grace and dignity to society. They will all vote, no doubt, when necessary, for the restoration of the university constituencies, but they would not be interested in an argument of that kind, so I will merely suggest to them that education is of some value in helping to create a productive society for the mid-20th Century.

I have mentioned two great measures which will help to transform our society into one which will be of a more productive character than it is at present. What I am suggesting is that we have today a society whose institutions are out of date and which does not produce as much as it might, and that those institutions have to be adapted to the needs of the mid-20th Century as described by my hon. Friend the Member for Battersea, North.

I have suggested alterations in the distribution of income and in our educational system. Finally, there is the point I mentioned at the outset of my speech: we must have a Government who are prepared to develop the nationalised industries to the full. In my constituency, although no one industry predominates, there are a considerable number of workers in the publicly-owned industries of gas and electricity. They know very well that there are still many improvements to be made in the organisation of those industries. The question of the part to be played both by the worker and by the consumer has still to be satisfactorily settled. The questions of appropriate opportunities for education, training and promotion for workers in the industry have still to be satisfactorily settled. I believe there is a good deal which those industries can learn from the very promising experience which the mining industry has had so far.

It will be the business, I trust, of the Government who have inherited this national estate which we acquired for them during the last six year; to set to work to try to solve those problems because, if they will, I believe a great leap forward can be obtained in production from those nationalised industries —and they happen to be the industries on which we most depend, as the Chancellor of the Exchequer has pointed out, if we are to solve our present economic difficulties. It will be the duty of the Government, surely, to apply themselves to the problem of developing and improving the national estate, rather than to try to find ways in which they can lop off a piece here and a piece there and dispose of it to private persons in order to gratify the more narrow-minded and doctrinaire of their own supporters.

I recognise that the measures I have suggested—public enterprise, the principle of distribution of each according to his usefulness, and real equality of educational opportunity—appear to have commanded a certain measure of agreement from the other side of the House. Those principles are not only those which are desirable and necessary if we are to have a really productive economy for this country today. They are also principles which, if applied, will bring us very much nearer to a Socialist society.

I am sure hon. Members opposite will not, through mere doctrinaire objection to the word "Socialism," fail to apply and work for principles which are demonstrably in the national interest, and I think we shall all watch with profound interest to see whether this Government, whose leader has often expressed his objection to merely doctrinaire views or party ideologies, will, when it comes to the test, be prepared to realise the needs of the nation and of the time that we live in, or whether they will waste their time or their energies, and the time and energy of the nation, in barren and partisan policies. It is on the answer the Government give to that problem that I believe the attitude of my hon. Friends towards them will largely depend.

5.38 p.m.

Lieut.-Colonel Walter Elliot (Glasgow, Kelvingrove)

We have listened with interest to the wide review which the hon. Member for Fulham, East (Mr. M. Stewart), has made of many subjects, some germane and some. I think not. There were some statements which he had authority to make and some which I do not think he had authority to make. We shall be interested to know whether he was speaking for his party when he said that he would have no objection to the evacuation of Transport House and the diversion of all the personnel there to more useful, productive work.

Mr. M. Stewart

I think it was understood that that was to proceed concurrently with similar measures by the party opposite.

Lieut.-Colonel Elliot

I am not therefore misquoting him; that was his proposal. I only wish to know whether that proposal had the agreement of his right hon. and hon. Friends. I do not think it had. I preferred his more constructive passages to those wilder realms of fantasy into which he wandered from time to time. When he spoke of the importance of adapting our modern society to the needs of our present times, for instance, he raised a problem of great interest to us all.

I thought that when he spoke of the necessity of developing the Colonial Empire, he was touching on a subject of great interest, although he suffered a little from the delusion which he has in common with a great many other right hon. and hon. Gentlemen opposite that the Colonial Empire was discovered when they sang the "Red Flag" on the Floor of the House of Commons. It was not so. A lot of hard work had been done before ever the Labour Party were heard of, and most extensive developments had been achieved.

The hon. Gentleman spoke of movements in India. There were enormous developments of road transport, of rail transport, of factory work of every kind. These were all done in days long before he or his party ever reached power. In more recent days there has been the enormous development, for instance, of the cocoa industry of West Africa, with which he had nothing whatever to do.

If I may, greatly daring, touch on so delicate a subject as development of groundnuts, I would also remind him of the 300,000 tons of groundnuts which were grown on the other side, the western side of the Continent and which suffered from the fact that the Labour Government had not sufficient intelligence to provide locomotives to pull them down to the sea, while a beetle, thinking that this stock must have been left for some good purpose, and seeing it was not being eaten by human beings, thought it might as well be eaten by itself.

However, I have cited some examples of the constructive work done throughout the world by the party to which I have the honour to belong, and long before the hon. Gentleman's party came to power, bemused by their doctrinaire convictions which he has been demonstrating with such assiduity to the House for the last 30 or 40 minutes.

I want to follow a moment the line that was embarked upon by the Leader of the Liberal Party in his opening remarks. He pointed out that for the first time for a long period of years the government of Scotland and the government of Wales occupied the first place in the Gracious Speech from the Throne. I commend that to the Prime Minister, who did not seem to have discovered that, and mentioned that when Scotland asked for bread it had not received even "the Stone." That was, perhaps, stretching the privileges of his position a little far.

Hon. Members

The Leader of the Opposition.

Lieut.-Colonel Elliot

Yes. I should have said the Leader of the Opposition.

Mr. Arthur Lewis (West Ham, North)

The next Prime Minister.

Lieut.-Colonel Elliot

Nobody can say in the hon. Gentleman's party who is to be the next Prime Minister without first seeking the permission of the right hon. Member for Ebbw Vale (Mr. Bevan).

The two countries of Scotland and Wales are exactly in the position with which we are wrestling both here and in other parts of the world, in linking up national units, with strong national self-consciousness, into associations, so as to obtain or retain the advantages of association without their losing their own identity. Some, like the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies), the Leader of the Liberal Party, wish to go to the length of breaking Parliamentary association, which would seem to me to be a pity. Others of us think more practical steps would be useful.

We have advanced here practical proposals, and I beg the attention, more particularly of the hon. Member for Fulham, East, but also of other hon. and right hon. Gentlemen, to these very points. I hesitate after the rather active controversy which arose over de-centralisation even to mention it in this connection, but, after all, the whole problem of government is the problem of de-centralisation, and somehow de-centralisation in our modern political set-up must be achieved. We propose to do it by means of largely administrative measures and we have not only put forward that policy but we have taken steps to implement it.

The first step has already been taken —the appointment of the Minister of State. The next steps, I think, will be taken in a very short time by the introduction of the legislation which is necessary to produce the extra Under-Secretary of State for Wales, who has been promised, and the extra Under-Secretary of State for Scotland, which also forms part of our proposal. We shall be able to have a good administrative set-up, with first the Secretary of State, and then the Minister of State largely resident in the Northern Kingdom, and three Under-Secretaries of State covering all the main fields in the administrative work. Here I think we shall find a very useful line of development.

We wish to go further, of course, with the appointment of a Royal Commission to inquire into the economic and financial relations of the two countries—with a full understanding, in the widest use of those words. Final decisions, of course, will have to be taken by the elected representatives of the people. No Government, drawn from either side of the House, could delegate to a body such as a Royal Commission great, important political decisions. These eventually will have to be taken under the responsibility of the Government themselves.

But we go further. We also say that the great economic blocks of activity which have been taken away—to our mind quite wantonly—and centralised here in London should be returned to Scotland where their natural home and habitat is. [Interruption.] I am not talking at all of the coal industry, but there are others, the gas industry, the electricity industry. The Scottish Gas Board, the right hon. Gentleman the Member for Derby, South (Mr. P. Noel-Baker), knows —he and I have discussed this matter long enough—is in no way an autonomous body. It is responsible to the Minister of Fuel and Power, and as far as the electricity boards, the South Eastern and South Western Boards are concerned, we have also discussed them at great length, in the Grand Committee upstairs, and he knows also—

Mr. Noel-Baker rose—

Lieut.-Colonel Elliot

Let me finish my sentence. The right hon. Gentleman has drawn an electrical frontier through Scotland and put the responsibility to the south of that upon the Minister of Fuel and Power. If the right hon. Gentleman wishes to intervene, I shall be only too happy to give way.

Mr. Noel-Baker

Is the right hon. and gallant Gentleman not aware that the gas boards are in fact fully autonomous both in the production and the sale of gas and that the Gas Council is an advisory body? Is he not aware that the electricity boards are autonomous in the supply of electricity, that they arrange their own tariffs and arrange everything to do with supply directly to their consumers?

Lieut.-Colonel Elliot

Does the right hon. Gentleman really expect a baby in arms to believe these things? What was he receiving his salary for as Minister of Fuel and Power?

Mr. Noel-Baker

Let the right hon. and gallant Gentleman consult the chairmen of the boards concerned.

Lieut.-Colonel Elliot

I have consulted the chairmen of the boards concerned, and if the right hon. Gentleman heard what they said he would blush. Really, the right hon. Gentleman does not know where Scotland is. What does he expect? This is the sort of thing to which my fellow Members from Scotland object. This is the sort of casual instance of a jack-in-office that makes our people sick. The right hon. Gentleman and his party destroyed the influence of the elected representatives of the people. He has destroyed the electricity authority of Glasgow, a democratically-elected body, and replaced it by a nominated body advised by a Consumers Council whose names nobody knows, whose address nobody has ever found out and this is supposed to be a substitute for self-administration.

We say that we have already taken steps, and that we shall take further steps, and that we hope very much that the Government will press on vigorously with the steps which they propose to take, in accordance with our statement of policy, to transfer the administration of and the ultimate responsibility for the South Eastern and South Western Boards into Edinburgh, which is the natural centre for these things, and not down here in Whitehall.

We do not propose any derogation from the present position of the Scottish Hydro-Electric Board, as in addition to being a hydro-electric board it is a development board for the Highlands and should not suffer any diminution of its authority or of its duties in such a re-organisation. We have more than once given assurances to that effect, and I am sure these assurances will find a place in the legislation which we hope to see brought forward. Scottish Members on this side of the House will watch with great interest the antics of hon. Members opposite who sit for Scottish constituencies trying to explain to their constituents that they do not think Scotland is fit to run its own gas or electricity boards.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

The Prime Minister, in his introductory speech, mentioned Wales but he did not mention the reference to Scotland in the Gracious Speech. Do we take it that the right hon. and gallant Gentleman is now giving the official explanation of that paragraph in the Gracious Speech?

Lieut.-Colonel Elliot

We do not all have that gift of verbosity which is privileged to certain hon. and right hon. Gentlemen opposite. No names, no pack drill. To suggest that the Prime Minister should go round the island cataloguing everything that was to take place in every corner of it would be to trespass far too much—

Mr. Woodburn

It was in the first paragraph, and since it was in the first paragraph of the Gracious Speech, I understood it to be a matter of some importance. The Prime Minister passed to the second paragraph, which refers to Wales, and I now ask the right hon. and gallant Gentleman whether we are to take it that he is now giving the official explanation of Government policy on Scotland.

Lieut.-Colonel Elliot

What I am giving is the official explanation of the policy for Scotland which has been published repeatedly by us, which has been expounded on dozens of platforms, and which everybody except hon. Gentlemen opposite know perfectly well. My right hon. Friend dealt with Wales because he had been challenged on Wales. He had not then been challenged on Scotland.

Mr. Paget rose—

Mr. John Taylor (West Lothian) rose—

Lieut.-Colonel Elliot

I am willing to give way to either of the two hon. Gentlemen who wish to interrupt, but not to both at the same time.

Mr. Paget

The point which has been worrying us all the time is which part of the Conservative Party policy is still standing up and which part has been abandoned.

Lieut.-Colonel Elliot

I wish the hon. and learned Gentleman would keep out of Scottish debates, which he does not understand.

Mr. J. Taylor

The right hon. and gallant Gentleman has just said that he is stating the official policy of his party on Scotland which has been published on numerous occasions. Earlier in his speech, when referring to the Royal Commission, he said that it was to be set up to inquire into the financial and economic relationship. Would he now make clear whether that is to be the extent of the terms of reference of the Royal Commission, if and when it is appointed? If so, why appoint that commission in view of the fact that the Catto Committee is already proceeding with that very inquiry?

Lieut.-Colonel Elliot

The hon. Gentleman has only recently arrived in the House and is not acquainted with the matter. The Catto Committee was set up to inquire into the possibility of having a commission. As I say, this explanation has been given repeatedly, and I stand by the official statement of policy, from which nobody on this side wishes to depart. We say that we shall proceed along these lines. We welcome the reference in the Gracious Speech to many subjects in which Scotland is vitally concerned—

Mr. J. Rankin (Glasgow, Tradeston)

Before the right hon. and gallant Gentleman passes from his reference to the Hydro-Electric Board, would he answer this question? He was referring to the fact that the Hydro-Electric Board will be merged into the South-Eastern and South-Western Regional Boards.

Lieut.-Colonel Elliot

No.

Mr. Rankin

I understand that is what is being aimed at. Is that not true?

Lieut.-Colonel Elliot

The hon. Gentleman not only does not read the party pamphlets—and I do not blame him—but he does not even listen to the speech which is being made. I said with the utmost emphasis, again and again, that we did not intend to detract—

Mr. William Ross (Kilmarnock)

Is the right hon. and gallant Gentleman speaking for himself or the Government?

Lieut.-Colonel Elliot

This has been stated repeatedly, and although it is a pity to have to teach the hon. Gentleman the very grammar of politics, we are quite ready to do so.

Mr. Ross

Will the right hon. and gallant Gentleman answer my question? Is he speaking for the Government or for himself?

Lieut.-Colonel Elliot

The hon. Gentleman has almost a monopoly of asking silly questions, if I may say so. I am explaining the policy of the party as stated repeatedly on the Floor of the House of Commons, in pamphlets, in speeches and in broadcasts. If he wants it stated in more detail, he will have to search elsewhere.

We fully recognise the special duties of the Scottish Hydro-Electric Board. I said a minute or two ago that it had not only special tasks but special responsibilities. We recognise these to the full; we certainly do not wish to merge that with the South-Western and the South-Eastern Boards. It remains the Scottish Hydro-Electric Board, with its full responsibilities, but responsible to the Secretary of State for Scotland, to whom we think the other two boards should also be responsible.

Mr. Rankin

The right hon. and gallant Gentleman blamed me for not understanding the position. Yesterday afternoon the Chairman of the Scottish Hydro-Electric Board, who should understand the position, was in exactly the same frame of mind as myself with regard to the intentions of the party opposite.

Lieut.-Colonel Elliot

On one or two occasions uneasiness has been expressed about the rashness of amalgamating it with the coal-fired stations of the South, and for the purpose of dispelling doubts I am repeating assurances repeatedly given on other occasions, that it is not our intention to amalgamate it with the coal-fired stations of the South.

Mr. Rankin

Does the Secretary of State agree with that?

Lieut.-Colonel Elliot

The hon. Gentleman can make his own speech when the time comes. I am speaking in full agreement with my right hon. Friend the Secretary of State, and we both agree with the official party policy.

I do not wish to take up the time of the House unnecessarily, because others wish to speak, but I must add that, in addition to those special steps, there are other general matters which are of very great interest to Scotland, and chief amongst them I would put the reference in the Gracious Speech to housing. The great need in Scotland is housing, and we welcome with the greatest enthusiasm the statement made by the Chancellor of the Exchequer that improvement and an increase in the number of houses built in Scotland was one of the primary duties of the Government.

Mr. Manuel

He did not say that.

Lieut.-Colonel Elliot

I have the passage here. I thought it probable that somebody would query that, so for the purposes of greater accuracy I have brought it with me.

Dr. H. Morgan (Warrington)

Why not read it?

Lieut.-Colonel Elliot

I can read the whole speech if necessary. Sometimes I think it would be a good thing if hon. Gentlemen did do so. He said: Among the more essential national requirements is a larger housing programme. It is the Government's intention to build more houses."—[OFFICIAL REPORT, 7th November. 1951; Vol. 493, c. 201.]

Mr. Manuel

In Scotland? Where did he say that?

Mr. S. Silverman

As a primary duty?

Lieut.-Colonel Elliot

The hon. Gentleman occupied the House for some time earlier today at the commencement of our proceedings and I do not think it is desirable to enter a controversy with him. One is very easily led into trespassing on the time of the House for too long.

Mr. Silverman

Where did the Chancellor say it was a primary duty?

Lieut.-Colonel Elliot

The duty of the Government is to increase the number of houses built in Scotland as elsewhere. The first duty is to build up to the programme upon which the Socialists have fallen down. The Socialists said that they would build 200,000 houses a year. This year they will not have built 200,000 houses. The Socialists said that they would build 26.000 houses a year in Scotland. They were falling down on their own housing programme, and the first duty is to get that programme up to at least the narrow ideals which they held, and then undoubtedly to increase it.

Mr. John Wheatley (Edinburgh. East)

Would the right hon. and gallant Gentleman admit that in the last four years more houses have been built in Scotland than in any other four individual years in our recorded history?

Lieut.-Colonel Elliot

In the last foul years the Socialist programmes which were at first satisfactory have been steadily falling. [HON. MEMBERS: "Answer the question."] In the last four years the production of houses in Scotland has been falling, and the production of houses in Scotland will have to be increased. Housing then, is the first priority in Scotland, and a considerable increase in housing must be the object of any Government.

Mr. Manuel

What standard housing?

Lieut.-Colonel Elliot

The standard of housing must be adequate. I cannot imagine a more bitter mockery to anyone having to use one water closet with some 30 other people than to say that some other family was going to be given two. Slums remain in Glasgow after 15 years of—[interruption.]

Mr. Deputy-Speaker (Colonel Sir Charles MacAndrew)

Order. I cannot hear what the right hon. Gentleman is saying because there is so much noise.

Lieut.-Colonel Elliot

While I appreciate your help, Mr. Deputy-Speaker, I neither asked for nor give quarter on this or any other matter. I say that slums remain in Glasgow after 15 years of Socialist rule and after 10 years of Socialist Secretaries of State. They have never once raised the figure of house building in Glasgow to what we got it. Both in municipal and general administration, they have been a failure in dealing with the problem of houses for the people of Scotland. There are one or two other things which I am anxious to say. In addition to housing, there is the necessity for proceeding to the utmost possible food production in Scotland.

Mr. Woodburn

I do not want to be controversial, but I should like to put one word of inquiry. I agree with what the right hon. Gentleman says about the need for housing in Scotland. Do I take it that he is now giving a pledge on behalf of the Government that whatever cuts must be made, Scotland will not suffer by cuts in housing?

Lieut.-Colonel Elliot

The right hon. Gentleman, who has shared the advantages and disadvantages of my present position, will not expect me to give a pledge on behalf of the Government, any more than he was able to give a pledge on behalf of the Government when he was standing here. The right hon. Gentleman knows more about the machinery of administration than he is willing, to use an old Scottish phrase, to let on. on this occasion.

I think that the immediate needs of the country are so great that we should seriously consider whether any steps should be taken which diminish immediate food production. I am referring in particular to afforestation of ground which is being used to produce wool and mutton. While I yield to no one in my admiration of forestry and the development of forest estates in this country, I would remind the House that for 40 or so years nothing will come out of any tree planted now. During that time, our sheep would have had 40 fleeces and some 40 lambs would have come from that sheep stock. For 40 years, by and large, trees will do nothing. I say that it is a great mistake to embark upon an extended forestry programme at the present time. I go further by saying that it is very doubtful whether it is desirable—

Mr. Richard Adams (Wandsworth, Central) rose—

Mr. Deputy-Speaker

Order. If the right hon. and gallant Gentleman does not give way, the hon. Member must resume his seat.

Lieut.-Colonel Elliot

I do not think that anyone will deny that a good tree takes 40 years a-growing.

Mr. Adams

I was going to ask whether the right hon. and gallant Gentleman included the Tory benches amongst the former or the latter.

Lieut.-Colonel Elliot

Such laboured jokes are out of place. If the hon. Gentleman wishes to intervene in a Scottish debate, he must think of something bright to say. I think, also, that ground which could be used for producing food should not be cleared even for military use. Most careful scrutiny will have to be given to this matter. We have been warned that a reduction in food imports into this country is going to take place, owing to the mismanagement of our affairs. I say that no diminution in our sheep stocks or wool-producing stocks should be allowed at the present time.

Mr. Manuel

I would ask the right hon. and learned Gentleman, in order to clear up the statement about trees not reaching maturity for 40 years, if he is aware that at regular periods thinning operations take place, which are valuable for providing pit props and for other pit purposes in this country. This must be taken into consideration against his sheep policy.

Lient-Colonel Elliot

A plantation as a whole does not reach maturity for 40 years; in fact, I think it is nearer 60 years. The thinnings before 40 years are very small indeed. I have some practical knowledge of this matter. I say that the amount of useful timber to be got out of these early thinnings is very small indeed. We should certainly look with the greatest caution at any programme of capital investment which is not going to yield a result within the fairly near future, because our crisis is now, and unless we do something to conquer it, it is little use aiming to conjure one away 40 years on.

Scotland is one of the great power houses of modern society. It is one of the foundation states of Europe, if not of the whole Western world. It is one of the ancient blocks of which Europe is built. I think that we have a contribution all our own to make both to the United Kingdom and to world politics.

Mr. Adams

And Wales.

Lieut.-Colonel Elliot

I will not venture to presume to talk about Wales. I am talking about my own country, and if other people would limit their observations to their own country, we might get along more quickly. I say that Scotland is a country with a great purpose, ancient traditions and full of power and force, which can yet make a great contribution to the solving of our modern problems. Let us be careful lest through mere centralisation or unification we trample out independence, originality, and efficiency in Scotland. Without her special gifts we should all be much the poorer. As Sir Walter Scott said: Un-Scotch us, if you will; but if you do, you will make us damned mischievous Englishmen.

6.10 p.m.

Mr. Maurice Edelman (Coventry, North)

I could not understand why the right hon. and gallant Member for Kelvingrove (Lieut.-Colonel Elliot) became so angry with hon. Gentlemen on this side of the House. We like him, and I should have thought that he would have found a more fitting object for his indignation closer at hand. We like him not only for his personality, but also for his contribution to Conservative thinking on house building. I believe it was he who made a most significant contribution to the conception of a target of 300,000 houses, and when the time comes to judge the Conservative performance in housebuilding, if I may mix my metaphors, the target of 300,000 houses will be the right hon. Gentleman's monument and memorial.

We can be certain of one thing, that now, when there are new faces and new hands in control of the housing programme and the country's general economic programme, there will be certain changes in policy which, if the Conservatives were to fulfil what they promised before the Election, might indeed result in considerable changes to the satisfaction of those who voted for them.

I am quite sure that at the end of this week the "Economist" will applaud the Chancellor of the Exchequer for his courage. For my part, I will not join in that applause, because if courage is to be applauded I should have thought it would have been much more suitable for the Chancellor of the Exchequer to have made his recommendations before the General Election when he knew all the facts, rather than issue his prospectus when he came to the House. denying entirely all the policies and all the programmes put forward by the Conservative Party.

Now he produces a brand of austerity which makes the austerity of Sir Stafford Cripps look rather like self-indulgence. I am not talking simply about the cuts in imported chickens and imported cherries and brandies. That, after all, is merely window-dressing to make "Daily Express" headlines. What I am talking about is bread and butter. This winter we have to look forward to a period of unemployment, misery and discontent arising from the form, the manner and the nature of the cuts which the Conservative Government have introduced and will continue to introduce.

Major D. McCallum (Argyll)

The result of Socialism.

Mr. Edelman

A great deal of the Chancellor's policy is merely improvisation. It contains much that is necessary and desirable, but I hope my hon. Friends will not join in the false description of those proposals put forward by the new Chancellor as Socialism, because they are nothing of the kind. While the right hon. Gentleman peeps out over the Despatch Box like a pixie looking from behind the buttercups, we can hear from behind him the growls of the City bankers in their jungle, and the proposals he has put forward, although he calls them disinflation, will add up in the end to nothing less than the familiar deflation of the 'thirties. I foresee a whole series of bankruptcies and large-scale transitional unemployment during this coming year, which will inevitably bring great hardship to the people of this country.

Mr. Niall Macpherson (Dumfries)

Has the hon. Gentleman any knowledge of the import cuts to which the former Chancellor of the Exchequer referred yesterday, and which he said he had in mind, and could he say how these would differ from the cuts that are now being suggested?

Mr. Edelman

As I shall endeavour to show, it is not even the amount of the cuts which will be damaging to the people of this country. What is important is the way in which the burden will be distributed. That is the crucial point, and that is the major difference between a policy of cuts as applied by a Socialist Government and a policy of cuts applied by a Tory Government. When the Tories apply cuts, they cut into the flesh of those least able to endure the hardship. When in difficult times a Labour Government had to inflict hardships through economic policies of the past, they always sought to shelter the weakest, the poorest and the infirm against the difficulties which resulted from those conditions.

Another sort of person who, on the morrow of the, Tory victory, is going to feel a grave disappointment is the little man. The Tories always claim to be the party of the little men. When one looks around, one can accept that that description is well justified. Millions of little men are going to be disappointed by the lack of fulfilment by the Tories of the promises which they made on the eve of the Election. The little men are going to have a sad awakening when the bankers turn on the credit screw, when supplies become less in the shops, when goods become scarce, and when forms multiply, because it is quite clear that the Government have driven the last nail into the coffin of private enterprise.

When these things happen, these little men are going to look round and say, "The Tory Government are much harder on us than a Socialist Government ever was." When the butchers cry out for red meat and get the "Radio Doctor's" castor oil, they are certainly going, to have a very bitter and grievous disappointment. I can very well believe that soon the little men will say, "Enough. How lovely it was in Tory Britain under a Labour Government."

No one will deny that the Chancellor of the Exchequer will have a very heavy burden in trying to bridge the export gap, and obviously he can do that only by stimulating the export industries of this country. The great need of the export industries today is, first of all, the materials required to keep the factories going; and secondly, to have the right type of men in order to produce the goods which are required for export. But the Chancellor will find, as soon as he turns his attention to this problem, that the defence industries and the export industries are today impoverished. That is one of the problems that will face him.

The second problem he will find is that the civilian industries, which may not at some future date be regarded as essential, are today absorbing materials and manpower which are needed for export and defence. That is the critical problem to which he will have to address himself.

Already one sees that, despite what has been said about shortage of manpower in certain vital industries there is already considerable redundancy. Redundancy, after all, is nothing new with the present Government. One of their first acts is to make Parliament redundant for two months in the year. But much more serious than that is the redundancy which today is growing in the Midlands, particularly in the engineering industries, owing to shortage of raw materials. Only the other day I was told in my own constituency that one of the largest factories in the country, which is vitally concerned with the export trade, is working short time. What is the use of asking men who are working short time to increase their productivity? When I addressed myself to the new Minister of Supply he, unfortunately, had not finished shaking hands with his senior officials, so he was not yet in a position to deal with this problem.

What is called for at the present time is flexibility in dealing with the switch of materials from one sector of industry to another sector which is concerned with the export trade. It is clear that exhortations to work harder will only meet with derision from men who are working short time unless something is done to bring them the materials which they require. I ask the Minister of Supply whether, during the present period when there is a kind of hiatus in the switch-over, he will make an emergency allocation of steel to those factories in the Midlands which are concerned with the export trade.

I have addressed him on the subject, and the answer I had was that there was no emergency stock available. That answer conflicts strangely with a reply which I had from the Department previously and which suggested that there is an emergency stock, either at the manufacturers of the materials or in Government hands, which is available for vital defence orders.

The great difficulty today is that the defence programme and the civilian programme are out of phase. It would be absolutely useless, whether by means of financial policy, through restriction of credit, or deflation, or whatever it may be, to close down civilian industries and to force men and women into the defence industries only to find that there are no defence orders placed and, worse than that, no materials in the export industries or defence industries to which they could apply their hands.

Therefore, I strongly urge upon the right hon. Government that he consider this point of making emergency issues of essential raw materials to factories which today are threatened by unemployment. As he well knows, the amount of redundancy in the engineering industry should never be measured merely by the number of men in a given factory who are put off at any given moment, because the consequences of redundancy spread throughout the whole industry. Men in one factory making one part, perhaps a motor chassis, are affected by redundancy among men making other parts. I therefore strongly urge the right hon. Gentleman as a matter of urgency to see that this redundancy question, which threatens so many homes in the Midlands today, is prevented by taking positive action, such as making an emergency issue of steel to those factories.

We are threatened by one other matter, the revival of German competition, to which the Prime Minister referred the other day. That revival derives directly from the fact that Germany is split in two. At one time, Western Germany was able to exchange manufactured products with Eastern Germany, but for a long time that has not been the case. Western Germany has been subsidised for the last five or six years by the Western Powers and is now coming into the market as an important exporter into the Western hemisphere and as a dangerous competitor of our own export industries.

How can that problem be tackled? One thing is certain. Our own employers will not be permitted to tackle the problem of German competition by forcing down wages in this country to the level of wages in Germany. That is clearly one way in which that competition will not be tackled. Western Germany, which we have helped at considerable sacrifice to ourselves, is today a most serious competitor of our engineering and motor car industries, and other industries on which we have learned to rely for our export trade.

Consequently, I ask the right hon. Gentleman whether it is his policy, in the first instance, to co-ordinate our export programme with that of Western Germany and other countries of Europe, and secondly, to try to take active measures to prevent the Germans from undercutting our own industries.

There is a last point to which I would refer, the over-all question of raw materials. We are suffering at the moment in this country from a shortage of steel. It seems quite certain that we shall not be able to rely to any great extent, in view of our dollar position upon an increase of imports of American steel. Perhaps the right hon. Gentleman will confirm or deny that statement. In addition to our problem of steel, we have the over-all problem of raw materials which we have to import from abroad.

I have often spoken in this House, particularly during the last Parliament, on the difficulty that we were experiencing owing to the rise of commodity prices abroad, due to the fact that so many producers were profiting out of the situation in which the world finds itself, and out of the difficulties in which this country is involved. I regret to say that among those who profited most extensively were many commodity producers either in our own Colonial Empire or in the countries of the Commonwealth. My right hon. Friend the Leader of the Opposition took the initiative last December of going to Washington to set up an International Materials Conference, as a result of which some attempt was made to bring order into the international commodity market and to bring down prices.

I regret to say, and it is a shameful thing to have to confess, that those who have stood outside this orderly organisation for controlling world prices and bringing about an international system of fair shares were the rubber producers of Malaya, the tin producers of Malaya and the wool producers of Australia and New Zealand. I ask the Secretary of State for the Colonies to try, when he goes to Malaya, to use his influence to bring the Malayan producers within the scope of the International Materials Conference so as to achieve some measure of international fair shares.

Although we may lose some immediate advantage in the earning of dollars through the high prices which have hitherto been charged for commodities, we shall get that back many times,by the advantage which we shall obtain in this country by the fact that our own costs of production will be lowered, if the price of commodities essential for our export industries is lowered in turn. Therefore, I trust that the attachment of the right hon. Member for Aldershot (Mr. Lyttelton) to private enterprise will not prevent him from urging those producers who are in the Colonies to take their proper place in the attempt of the International Materials Conference to bring about a fair and just allocation of raw materials which we vitally need.

To conclude, I am certain that the Opposition will do everything in their power to encourage the highest form of productivity, to encourage production and to seek to maintain full employment, because we all know what the misery of unemployment means to ordinary working people. That is the task to which we shall apply ourselves. But one thing is quite certain, and that is that only to the extent that the Chancellor of the Exchequer and the economic Ministers associated with him pursue Socialistic policies, abandon laisser-faire private enterprise and apply to our present difficulties a controlled economy will they be able to solve the grievous problems which confront the country, and only to the extent that they use those methods can they rely on the support of the Opposition.

6.32 p.m.

Mr. Anthony Fell (Yarmouth)

It is with a keen sense of humility, Mr. Speaker, that I rise to crave your indulgence and the indulgence of the House for the first time. I hope and trust that the plea which I shall make will not in any way tax the traditional tolerance and courtesy of the House, for I want to make a plea for people who are in great trouble and for whom, however urgent are the overall economic matters of the entire world and of this nation, something must be done.

My plea is for those who have been hardest hit by the rising cost of living and are least able to fend for themselves. I refer to all classes of pensioners. To name a few of them, there are the old age pensioners, who face the coming winter with the greatest trepidation and fear, disabled war pensioners, many of whom are in little better position, and war widows. some of whom face a desperate future because of the tremendous rise in the cost of living.

I appreciate, as I am sure everyone does, the great difficulties which face my right hon. Friend the Chancellor of the Exchequer at such a time of national and international crisis, and the call for help is doubly difficult to meet when the need is not to spend more but to spend less. However, the British people would not think well of any Government which shirked its responsibilities in this matter, and I feel that it may be possible for us to do something for these people, who, after all, have done much for us. They are worthy people.

In my constituency many of the aged people are the mothers and fathers of those who went to sea during the last war, and many of them went to sea themselves during the first world war. They are people who have given many years of sterling service to the nation on the Norfolk agricultural land. In the main, they have strived very hard throughout to make something of their lives. They are a thrifty people in Norfolk, but their thrift has been set at naught, and in the main they have no savings left because of the rise in the cost of living. Though one may argue that it is wise to encourage thrift in people so that it is not necessary to go to their aid with money, when people have been thrifty but their thrift has been set at naught by the depredations of the fall in the value of money, something must surely be done to alleviate their plight.

I wonder how it will be possible to help. Is it not a matter of priorities, and have we not perhaps got some of our priorities a little mixed? There has been reference to housing. Surely the housing priority is for simple decent homes rather than lavish houses. There has been talk of education. Surely the priority in education is for more schools and more teachers rather than lavish school buildings with fittings which may not be necessary.

The priority in the case of the welfare of pensioners is clear. If the Welfare State is to mean anything, it must mean a State in which all people are encouraged to become thrifty and responsible so that they can look after their own welfare, for if we attempt to do so much ourselves in respect of welfare and attempt to look after everybody's welfare we shall end by doing what we are doing now, neglecting the very people whose welfare should be of prime importance, those who through no fault of their own are incapable of looking after themselves.

Surely something can be done about priorities in order to stop forcing help upon those who ask for no help and would be perfectly happy to look after their own welfare, and proud to look after their own families and their own dependants and future. If we can do something of that nature, surely it will be possible to give urgent help to those who face the winter with great fear. After all, is it not true to say that a great nation has not only to play its part and shoulder its responsibilities in the world at large, but has also to find time to consider the many human problems of its own society?

6.39 p.m.

Mr. Philip Noel-Baker (Derby, South)

It is my privilege on behalf of the House to congratulate the hon. Member for Yarmouth (Mr. Fell) upon the speech he has just made. I am sure we all listened to it with great interest and with admiration. We admired his calm, cool delivery, and we shall hope to hear from him many times in the future. I am sure he will forgive me if I do not follow him in what he said, for I want to speak about coal.

I want to congratulate the Minister of Fuel and Power upon holding his office, to wish him well, to tell him that I sympathise with him in his many various preoccupations, and, with certain reservations, to congratulate him on the moderate and constructive speech he made this afternoon.

Let me come at once to the most serious matter which he laid before the House: the end-October stock of something under 1.2 million tons of household coal now in the merchants' hands. I frequently expressed my anxiety about household coal and my desire to do something better for the housewife compared with recent years. It is sometimes forgotten that she now receives two and a half times as much electricity as she did before the war, 50 to 60 per cent. more gas, and millions of tons more coke. But that does not alter the fact that she wants, and that she deserves, more solid fuel than she is now receiving.

In 1950 we increased the amount of coal and boiler fuel—anthracite and coke—by more than 2 million tons; 1.6 million tons more coal went to the merchants for the house coal market. We hoped to increase the coal again this year. Why has that not happened? The right hon. Gentleman, I expect, has learnt the answer: because the household market needs large coal, and, thanks to machine mining, the output of large coal has been going down. The percentage has been less even than the experts had allowed for. They thought that in 1951 the proportion of large coal coming from the pits would be 32.6 or 32.7 per cent. In fact, it has been 32.2 per cent.—an error of one-half per cent. Nobody can complain of an error of that magnitude in a vast enterprise like coal, but on the calendar year it means a million tons.

That is the real reason why all the large coal programmes—the house coal market, the gasworks and the railways—have this year been in trouble. I do not need to argue that we could not take a chance on gasworks or on railways. Gas consumption is rapidly increasing. The housewife depends upon it as much as she does on coal itself. The whole shortage of large coal, therefore, fell inevitably on the household market. That is why the merchants' stocks were a little under 1.2 million tons on 27th October, 860,000 tons below the figure of last year.

But we must get that figure into true perspective. Last year, at the urgent request of the merchants, the Co-operative movement and the Coal Board, we restored the pre-war practice of lower summer prices. The purpose was to get the household. consumer to buy coal during summer to stock up for winter needs. Well, he has done so. In 1950, he bought 1 million tons more than he did in 1949. This summer, from May to October, he has bought 566,000 tons more than in 1950. In other words, if the householder had only bought this year what he took in 1949, the merchants' stocks today would stand at 2.7 million tons, which is more, I believe, than they have been before and, if I remember aright, more than the present capacity of the merchants to stock.

As the right hon. Gentleman said, not all that 1.6 million tons of coal is still in private cellars. We had a bad May—it was cold and rainy; we had a bad August. Some of that extra coal has undoubtedly been burnt, but we had a good June, July, September and October. If the householder has kept only 400,000 tons, as the right hon. Gentleman suggests, the whole of the merchants' summer prices scheme has failed; it would have been better not to have had it.

But I do not believe that that is true. I have made elaborate inquiries from personal acquaintance in many parts of the country as I travelled around during the Election. I should be very much surprised if the amount actually still in the householders' private cellars is much less than the 800,000 tons by which the merchants' stocks are below the stock figure for last year. In other words, I believe that the merchants, in urging this scheme on us, were right, and that it has in a considerable degree succeeded.

There is another factor that will come to the Minister's attention in the returns which he receives. The Service Departments take large quantities of solid fuel —coal and coke. In the spring, we asked them to build up larger stocks in the summer in order that they should not compete with the household user in the winter months. Again, that has succeeded. At the end of August—I have no later figures—the Service Departments' stocks of coke and coal were 360,000 tons higher than they were a year ago. That figure today may be higher; it may be 500,000 tons. Like the householders' extra purchases, that of course has reduced the merchants' stocks. During the winter months it will help to keep the Service Departments off the market to that large extent.

It is, therefore, not only stocks that matter; it is current supplies as well. Indeed, stocks constitute only about one-ninth of what the merchants sell during the winter months—that is to say, 2 million against 16 million tons from current supplies. The overall supplies of coal will be greater this winter than a year ago. There will be difficulties, of course, about the large coal. I suggested to the merchants last July that they should take small coal—from the same seams that used to yield large coal, which is now broken up by machine mining—and canalise it on to their clients who have modern stoves and grates, because with a modern stove or grate one can burn small coal quite as well as large coal. I think it gives even less trouble. It gives as much heat, and it is cheaper.

The merchants did not take very kindly to that suggestion in July. In September they took much more interest. The diversion began, but rather late. So far, I think, it has meant about 100,000 tons. It may mean a good deal more during the winter months. I hope so. Small coal can also be used in any grate, ancient or modern, in the form of the briquette. In the summer we began to get briquette plants into full operation. Some of them had been closed down altogether. Both the Coal Board and the private makers of briquettes were very keen. I do not suppose it is possible to say what result will be obtained, but on the figures as I saw them last it seemed that it might be 250,000 tons extra, by the end of April, in the winter months.

Since last winter, the Coal Board have doubled their output of furnacite, which is a very popular boiler fuel. That amounts to another 150,000 tons in a calendar year, and, perhaps, 100,000 tons up to the end of April. The output of coke is going up. I do not know what it will be in the full year, but in the first 22 weeks of summer it was 600,000 tons greater than in 1950. For the year, I think, it must be more than 1 million tons. The industrial demand for coke is growing very fast, but it is certain that the domestic user will get some share of this increased supply.

I shall not trouble the House with other measures which were taken and which will, I think, produce some result. I only hope I have made it clear that we did not sit with folded hands to wait for Nemesis to overtake us; that we took many measures which are succeeding, both on the stocks side and on the supply side, and that, therefore, there are favourable factors with regard to household fuel which the right hon. Gentleman did not, with all respect, take wholly into account.

I entirely agree with him that further measures are required. I am in full agreement with what he proposes about the restrictions on purchases by domestic consumers for the next three months. I am sure those restrictions are necessary and right; I do not believe they will impose any undue hardship.

I should like to say a lot on imports, but, for reasons the right hon. Gentleman has given, which are quite decisive, I shall not speak of everything we did. We did buy some coal abroad. I think the right hon. Gentleman put in a very moderate and uncontroversial way the question: Ought we to have imported coal in the summer months when it was easy? A priori, other things being equal, in the summer, I would have answered now with an unqualified "yes." But things were not equal. There were very serious objections to imports of coal in the summer months. There were grave objections about shipping. We were advised that coal imports in the summer would very seriously affect the iron ore and timber programme. Iron ore and timber means steel and pit props—steel and pit props for mines. In other words, they mean coal.

Since the summer, as the right hon. Gentleman said, the United States of America have been bringing out more ships from "mothballs" and, to that extent, the shipping position is getting easier. There are some classes of ships which are free in winter but not free in summer, when they are fully engaged, and they might be used for coal in the winter without disastrous effects, to iron ore, timber and other things. It may be true that the shipping difficulty may be less in the winter than it was four months ago.

There were also difficulties about foreign exchange. Imports in the summer would have raised the shipping freights against us in a most formidable way and, as the right hon. Gentleman said, there were serious political and economic difficulties of other kinds. Our allies in Western Europe are very short of coal, and their economic interest has major importance of its own. Paradoxical as it may seem, the objections to imports in winter are considerably less than in the summer. It may be that we can get a truce in Korea, which I imagine is not improbable, and I think what I have said would very probably be true.

I come back to the question on which the right hon. Gentleman touched; can we afford the small coal for merchants and briquette makers of which I spoke? I think we certainly can. Our general stock position is, I think, better than the right hon. Gentleman suggested—16.8 million tons. He said our run-down of stocks in the winter was 10 million tons. He almost spoke as though we have serious coal crises very year, but we do not. We have had difficulties, and we shall have difficulties in the future, but in 1947, when we did have a very serious crisis, we started with a stock of 11 million tons. Last year the run-down was less than 6 million tons, including imports less than 7 million tons, and the year before it was under 7 million tons. Indeed, I cannot remember a year in which the run-down of stocks in winter was much more than 7 million tons.

If we are to make a valid comparison with 1950 of the stock position we must allow in this over-all figure for the household coal of which I have spoken, and which I believe is about 800,000 tons, and we must allow for the extra stocks held by the Service Departments. We must also allow—which offsets what the right hon. Gentleman said about boiler fuel—for the fact that the miscellaneous stocks are higher by about 160,000 tons than last year. We must allow for the extra coke, nearly 200,000 tons, taken in the summer months by domestic users.

If we look at the other detailed stocks we will see that the public utilities are all better off than a year ago. Gaswork stocks, measured in weeks' supply, are marginally less, 4.8 against 5.1, but the quantity is greater. The allocation per week this year is larger because consumption is more. The power station stocks are better, 6 weeks against 5.5 on a larger allocation, and railways 2.4 weeks against 2.2 weeks. Every industrial stock is larger than a year ago and, I repeat, on a higher weekly allocation. Engineering has 7.1 weeks' stocks against a target of 5.5 and against a figure last year of 5.2. Other industry is 5.3 weeks against a target of 5 and a figure of 4.3 last year. Coke ovens have 1.9 against 1.6 last year, and iron and steel 3.4 against 3.2.

I hope that the right hon. Gentleman will recognise that so far as this winter is concerned the main anxiety is about the large coal stocks, and I hope that he will press on with full vigour on the lines of the policy laid down—more Samson strippers in the pits which will take them, the highest priority of all, and blending of coals in the gasworks and the equipment which is required. The railways must carry further the savings they have begun to make, and more improved stoves and grates must be provided for the domestic user. Output is being largely increased.

Those, I admit, are measures which will take time to produce results, but, as the right hon. Gentleman said in the latter part of his speech, it is the longterm problem which really matters. He spoke of a deficit of 41 million to 5 million tons on his annual budget for 1952. If present trends continue it will be bigger than that in 1953. I say—and I am not speaking in a controversial spirit—that the right hon. Gentleman simply cannot begin to deal with the longer term problem unless he and his friends recognise quite frankly what are the causes of the difficulties we confront today.

Those causes are two—the immense increase in the home demand for coal now going on, and the inherent difficulties of reconstructing the coal industry after its long decline from 1913 to 1945. As I have often said, the increase in the home demand is today the most vital single factor in our national economic life. If we were using in Britain today the same quantity of coal we used on the average in the five years before the war, we should meet all our needs in Britain and have 45 million tons of coal for export. But we are using 35 million tons more than the average we used before the war, in spite of the fact that 6 million tons, at least, have been saved by the use of oil. That is due to full employment, to the rising productivity of labour, to more people working in the factories, to our immense investments—£10,000 million since 1945 and £2,500 million on plant and equipment, not buildings, which require power in the form of steam electricity or gas.

It is the present rate of increase which results from this investment that is so alarming. In 1949 our consumption went up by 5 million tons above 1948. In 1950 it went up by 7 million tons above 1949; in 1951 it is going up by 8 million tons above 1950–20 million tons in three years. If that goes on for another three years, apart from anything else, imports will be quite irrelevant to the problem with which the right hon. Gentleman, if he is still there, will have to deal. The ports could not begin to handle the quantities that would be required.

We have to do two things to meet what the right hon. Gentleman called this chal- lenge to our national spirit. First, we have to get more efficient use of the coal we have. I appointed two very eminent committees on this subject. They, like all other experts, are agreed that the waste of coal in Britain is literally appalling. Many millions of tons can be saved without capital expenditure of any kind simply by better training of those who use the coal, by better practice in the factories and elsewhere by greater care.

Many millions more could be saved by fuel efficiency equipment. The Government have done a good deal in the last few years to encourage fuel efficiency. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) started services of the greatest importance, which I think are already producing a considerable result. I expanded those services in the last 18 months. There may be more that the Government can do, and if the right hon. Gentleman will propose practicable measures he can be sure of our full support.

Fuel efficiency is primarily a task for the coal consumers themselves, for the industrialists, the commercial users and others. I hope that the right hon. Gentleman will bring home to all his industrialist, commercial and other friends that they themselves have a personal duty to the nation to use their coal better than they arc using it today. If he wants arguments to enforce the point, I hope he will remember that coal costs more than money. I hope that he will think of what happened in the last 12 months at Knockshinnoch and Easington.

As well as using our coal better, we must get more coal. That is very easy to say but very difficult to do. The right hon. Gentleman knows all about the Reid Report; he was in office when it was handed in. The Reid Report showed that coal had been in a constant and calamitous decline, with minor fluctuations, from 1913 to 1945. It showed how drastic, how long-term, how difficult and costly are the measures of re-constitution, reconstruction and re-equipment which the mines require.

Unless those measures had been started, unless the mines had been nationalised, the decline would inevitably have gone on. We should have fallen below, perhaps far below, the figure of 174 million tons which we touched in 1945. The mines were nationalized, the decline was arrested, year by year we have more coal. Output this year will be 37 million tons above the level of 1945.

I think that is a great result, but we need still more. I have never spoken without saying that our output must be speedily stepped up. This year we shall get seven million tons more than we got in 1950, a fine advance due to the efforts of miners and managements of every pit in Britain. But to keep it up next year two things are now required. Firstly, supplies of steel and timber must be assured. Steel, in the form of arches, joists and machinery, should and must have as high a priority as armaments themselves.

Secondly, we must get more miners. It can be done. For 20 months up to November, 1950, there was a grave and constant wastage from the pits, a net loss of 42,000 men. Many people said then that it could not be stopped, that the wastage was an inevitable result of full employment, that men could not be forced except by hunger to go down the mines. Of course, it is harder to man the pits when there are not 100,000 miners waiting for a job. but the Coal Board and the Government tackled the problem with vigour and imagination last November.

We were told that if the trend went on the figure at the end of 1951 would be 660,000 men. We stopped the wastage. It had got down to 686.000 and in the next five months we increased the manpower by nearly 17,000. It was not an accident. It was the result of a large number of different co-ordinated measures which the Coal Board and the Government took together. It is true that since April there has been a wastage, less serious than that previous wastage, but more serious than I had expected, due partly to seasonal factors but largely to the beginning of the competition from the armament firms.

We have to face it again. New measures must be taken. I spoke before the General Election of some of the things we had done. I set a target of an increase of 20,000 men by the end of April. I believe that if the right things are done that target can be reached. I assure the right hon. Gentleman that if the right things are done we on this side of the House will give our full support.

I have tried to show that on the immediate prospect, on the stock position, on the current supply even of solid fuel for the house coal market, things may be less grave than the right hon. Gentleman suggested this afternoon. Of course there are anxieties, I do not deny it for a moment, but I have tried to show that if industrialists and others will really tackle the problem of the efficient use of coal the long-term prospect may be much improved.

But I must say to the right hon. Gentleman, and again I say it in no controversial spirit, that while I welcome warmly the acceptance of nationalisation which he gave this afternoon, while I welcome what he said about the implications of his pledge, that if one accepts it one must really try to make it work; I must add in candour that if he wants to get more miners, if he wants the miners' efforts to go on, there are two other things he must do.

He must get his friends on the other side of the House and outside to stop suggesting, as they constantly do by implication and assertion, that all our difficulties are due to nationalisation and not to the major causes—full employment and the calamitous state of the pits in 1945, of which I have spoken. He must get his friends to stop sniping at the able and loyal men of all parties and of none who at all levels in the National Coal Board are striving with all their power to serve the nation now.

I promise that if he will do that we will not play politics with coal, and I hope, remembering Question time in the last Parliament, that hon. and right hon. Gentlemen opposite will do the same. Secondly, I must ask again the question which was put to the right hon. Gentleman this afternoon, that he will tell us now or at the earliest possible date that he will drop the vague but dangerous talk about imposing on the Coal Board some new organisation from above.

In the Coal Board there are the best brains the industry has ever had. There are some of the best brains in private enterprise. Trust them to organise the industry in the way they think right. The miners are bitterly suspicious of decentralisation, and the right hon. Gentleman and his friends must really understand why. Anybody who knows the history of their long struggle against district agreements will respect their feelings.

I have studied to the best of my ability all the arguments about decentralization, all the complaints put forward by hon. Members opposite, and 1 say without hesitation that they do not hold water. There is not too much centralisation in the Coal Board today. There is of course, a lot still to do, but it is going forward, and very well. Trust the businessmen who are in the Coal Board to see things are right. The miners have shown this year, if Britons ever did, that they are patriots. I hope, by doing what I have suggested, that the right hon. Gentleman and his Friends will do the same.

7.11 p.m.

Mr. G. R. Howard (St. Ives)

The right hon. Member for Derby, South (Mr. Noel-Baker), will forgive me if I do not follow him. I should like to ask my right hon. Friend if he would consider a matter with regard to housing. I speak of a policy of purchase of council houses. In that grave statement from the Chancellor of the Exchequer to which the House listened yesterday, it was said that there would be a meeting soon with local authorities to discuss the difficulties of finance and so on. I suggest that this policy of people being able to purchase their own council houses should be borne in mind at that time for three reasons.

First, it should encourage the savings movement, as people would save the money if they knew they were able to buy the council house in which they lived. Second, it will help local authorities with their finances. We all know the burden to local authority of finance in a matter of this sort. It would save the local authorities large sums devoted to the upkeep of council houses. I think the allowance to local authorities is £10 per house per year for the upkeep of that house, and I do not think any hon. Member would expect any local authority to maintain a council house for the sum of £10. Would it not be better therefore to relieve the ratepayer and the local authority by allowing people to maintain them for themselves?

I may say that in my division this scheme of purchasing council houses has the approval of many people in local authority. But there must be safeguards. First, the present tenants must be allowed to buy them. Second, there must be proper financial arrangements made for them to do so, and third, there must be security for those who cannot purchase. This short intervention of mine is made as a constructive suggestion and as something to help local authority at a very difficult time. It will help people who wish to purchase their own house, and it will help, I hope, local authorities to build more houses in the years that lie ahead.

7.15 p.m.

Mr. Cledwyn Hughes (Anglesey)

I rise with great diffidence to address this House for the first time, and I crave the indulgence of hon. Members of all parties, well knowing that it is a courtesy they are ever ready to grant. I also think it seemly that I should mention the noble Lady whom I succeeded, who served here for many years with distinction and who is regarded by hon. Members of all parties who know her, as she is by me, with affection and esteem.

It is not unusual on these occasions for hon. Members to devote part of their speech to their own constituencies and I should like to follow that practice. The County of Anglesey "Môn Mam Cymru" —the House is hearing a lot of Welsh these days—is very largely a rural community and its prosperity is dependent in the main on a sound and well-planned agricultural policy. As compared with the uncertainty of pre-war years, both the farmers and farm workers in Anglesey have enjoyed a substantial measure of security in the last few years. Because of that there is a new spirit and a new hope abroad in the island.

I was glad to observe in the Gracious Speech that an assurance was given that production by the agricultural industry will be encouraged by the Government. Farmers deserve to be encouraged, first and simply because they have been neglected in the past, and second, because our national recovery depends to an important extent upon their efforts.

On the question of housing, the position in Anglesey is acute, as it is in most rural communities, especially in the scattered rural areas. We have there the legacy of a very large number of small cottages which are quite unfit for human habitation. Some of these cottages look deceptively charming from outside but inside they are often a breeding ground of disease.

Local authorities in Anglesey have been hampered partly because of the lack of large-scale builders in the area and also partly because of the lack of water and drainage facilities. These latter deficiencies are now being remedied and I hope that the Government will do nothing to discourage the introduction of these essential amenities in our rural areas. But our present need in Anglesey is for more and more houses to let. In my submission, it would be disastrous if this principle were wholly or even in part to be abandoned by the Government. On the question of individual house ownership, it is significant to note —and here I am speaking of my own district—that more individuals own their own houses after six and a half years of full employment than ever before.

I should have liked to see in the Gracious Speech a reference to the relationship between this country and our near neighbour, Eire. This interests me particularly, because the prosperity of the town of Holyhead, which is the largest town in Anglesey and my own native town, depends on the traffic with Eire. It is noteworthy that the nearest large city to Holyhead is the City of Dublin, 60 miles away. I hope this Government will take every step to foster good will and increase trade between the two countries.

It is my desire on this occasion to avoid controversial territory, but I must inform the Government that the Ministerial appointments made and proposed for my country of Wales fall very far short of Welsh aspirations as I understand them. With the best will in the world, the right hon. and learned Gentleman the Home Secretary cannot serve Wales adequately, for at least two good reasons. First, he already has upon his shoulders the onerous duties of a great Department of State. We want to know which is to have priority—the Home Office or Wales. We are not prepared to take second place. Secondly, the right hon. and learned Gentleman is not a Welshman. We in Wales are tired of having bits and pieces thrown at us. We do not want these "crumbs from the rich man's table."

Our desperate anxiety in Wales is lest our language, which we prize above all things, our traditions and our way of life should perish from the earth for ever. To preserve them we need a measure of responsibility upon our own shoulders in Wales.

I hope and pray that the efforts of the Government to secure a lasting peace will be successful. There is not only a need to find an immediate solution to our international problems; it is equally vital to ensure that the seeds are not sown now which may result in a war in 25 or 50 years' time. We are the guardians of posterity. We must be concerned with those millions everywhere who are living in conditions of misery and poverty. It should be the prior aim of this Government to co-operate with all nations who are prepared to assist in raising the standards of life of peoples everywhere.

That is why, in my submission, the Colombo scheme may well be regarded by future historians as the greatest single gesture of this generation. We may no longer be the leading world Power physically and materially. We cannot compare with the Soviet Union and the United States of America in manpower and resources; but morally we can lead the world, and it is that moral lead which the world expects from us today.

7.22 p.m.

Mr. R. Maudling (Barnet)

It is a great pleasure to have the opportunity of congratulating the hon. Member for Anglesey (Mr. C. Hughes) on his maiden speech. I think everyone will agree that he spoke with great clarity and with obvious sincerity on problems which are of immense importance and also on questions which particularly affect his own division. He is very fortunate to be able to represent in this House his native town. I am sure I speak on behalf of everyone in the House when I say that we look forward very much to hearing from him further contributions of such quality.

Today's debate has ranged over a number of subjects and brought in many new topics. I want to turn to the subject of the speech of the Chancellor of the Exchequer yesterday afternoon. I want to return to the question of Britain's economic position.

We are at the moment facing the third balance of payments crisis we have had to face in five years: 1947. 1949 and 1951 have provided us with a series of balance of payments crises, the third of which is in some ways the most serious, because it comes last. Devaluation, which was a remedy forced upon the Government in 1949, cannot be carried out again. That solution, that remedy or that palliative, has been used once. It cannot be used again. The third crisis is, by the very fact that it comes on top of two previous ones, bound to be more serious.

It is also more serious for this reason. Previous crises came at a time of instability in world trade and, particularly, instability in the American economy. It seemed that when the American price level was moving upwards, we had a cost of living crisis in this country. When it moved down, we had a balance of payments crisis. That is what happened in 1947 and 1949. Yet this crisis has arisen at a time when the American economy is relatively more stable. That is alarming. What is also alarming is that our problem is not solely a problem of balance between the sterling world and the dollar world, but the problem of the United Kingdom's trading relations and indebted. ness with the whole of the rest of the world.

For all these reasons, it must be recognised that the crisis we have to face now is in some ways the most serious. I must apologise to the hon. Member for Battersea, North (Mr. Jay), for using the word "crisis," but I think that it is the right one. It is true, as the hon. Member for Nelson and Colne (Mr. S. Silverman) said this afternoon, that the demands of rearmament superimposed upon an already heavily loaded economy have much to do with our present difficulties. But it seems clear to me that the taking of our part in the re-armament programme of the West is a solemn obligation from which we cannot depart. We must shape our economy to meet our obligations and not to meet our wishes alone.

The other feature of this crisis which is rather exceptional is the speed with which it has come upon us. The dramatic change in the balance of payments from a surplus of about £300 million to a deficit which is now at the rate of £700 million is really most extraordinary. I think that it is partly due to the fact that we are still living in a period of fixed exchange rates. Just as in the case of the nationalised cotton exchange we get wider fluctuations in prices than we did under the old system, so with fixed exchange rates there will be much more violent jerks and movements in international payments and settlements. But we have for some time to face the problems that are inherent in fixed rates of exchange.

One of the problems is that speculative positions against sterling are liable to be built up very quickly and very extensively. It is not a matter of a few wicked financiers in certain small centres of the world planning the sort of raids on sterling, or on other currencies, as were sometimes planned before the war. This is the activity of traders throughout the world who, suspicious of the future stability and strength of sterling, deliberately take a position against sterling by, for example, withholding payments in the hope of getting a better rate later on.

There are these temporary factors which mean, in the first place, that the swing against us can be particularly speedy but also that drastic action, really determined action, can produce surprisingly favourable results. It is clear that what is necessary at the moment is the strengthening of confidence in sterling throughout the trading world.

For my own part, 1 think that the measures proposed by the Chancellor are the best measures that could be proposed in present circumstances for dealing with this problem. It is obviously a matter for regret on both sides of the House that we should have to withdraw from some of the proposals for liberalising European trade which we hoped to see extended into greater freedom and greater trade between the nations, but it has to be done.

We have to look at the short-term problems. It is all very well to look at the long-term problems as hon. Members have been asking us to do, but in the long term, as 1 think Lord Keynes once said, we are all dead. The point is what is going to happen now. How are we in the next few weeks and months to cope with a very serious and really frightening balance of payments problem?

The first step is to reduce imports. As I understand it, the import cuts are very much on the lines of what would have been introduced by the late Government had they been returned to power at the General Election. But there are other measures that we must introduce. Our main problem, in order to increase confidence in sterling, is to grapple with the problem of inflation in this country. That is still our greatest problem.

There seems to me to be four main ways of doing it. We must produce more: we must save more; we must borrow less and we must spend less. I will take first the question of production. We cannot ever-emphasise or exaggerate the importance of increasing production as a means of combating inflation.

Mr. S. Silverman

Short-term.

Mr. Maudling

Yes. It is both short-term and long-term. I think the hon. Member is not on his feet. If he would like to interrupt me, I should be glad to give way.

The question of production is obviously of very great importance. I agree very much with what was said by the hon. Member for Coventry, North (Mr. Edelman) when he said that generalised requests and exhortations to people to work harder make nonsense in circumstances where in some industries people cannot work a full week even now through shortage of raw materials. It is most important to tackle the question selectively. Nothing can be more important than to try to achieve greater output in the coal industry. That is the key to everything. It is the key to steel and to the whole of our balance of payments problem at the moment.

The fact is that the effect of the production of another 20 million or 30 million tons of coal would be electric. If we are to tackle the problem of increasing production really thoroughly, we must surely tackle the problem of the restriction of production and the disincentive effects of taxation.

Mr. R. Adams

Would the hon. Gentleman be good enough to give an answer' to a question which his own Front Bench refuses to answer? Does he think this very necessary increased production of coal is likely to be obtained by de-centralisation of the industry?

Mr. Maudling

I do not want to achieve the distinction which the late Oliver Stanley attributed to a Labour back bencher of being the Gunga Din of the Front Bench.

I was very glad to see in the Gracious Speech a reference to increasing the powers of the Monopolies Commission. I think that, despite the eminence and hard work of the members of the Commission, we have all been disappointed that the concrete results are relatively few. While the question of restrictive practices of monopolies is being tackled, we must at the same time tackle the restrictive practices which undoubtedly do exist on the labour side of industry. In 1948, the former Foreign Secretary announced that there was to be a committee of investigation into questions of restrictive practices in industry, but we never heard any result of that inquiry. I think this is a matter which, apart from party considerations ought to be given very urgent attention.

Similarly with the disincentive effects of taxation. In present circumstances it is too much to hope for substantial reductions in taxation in the immediate future with the weight of the re-armament programme coming down upon us, but what reductions can be made should be concentrated on direct taxation and relieving taxation at the point where it bears most hardly upon enterprise and effort.

Secondly, I come to the question of increasing savings. I think the Chancellor has a wonderful opportunity to re-create more faith in savings in this country than has been the case in recent years. This is largely a psychological matter. It is not a matter of a small increase in the rate of interest on Savings Certificates or Defence Bonds, but of giving the small investor confidence in the future value of the pound and also in the attitude of the authorities themselves towards investing. If we want people to save money, we must adopt the attitude that there is nothing wrong in deriving an income from savings.

I hope the Chancellor will follow up what he said when he declared that he would not reject any unconventional method if it looks like producing results. There are other ways of attracting small savings which have not yet been tried out but which could be tried at this psychological moment when a new Chancellor and a new Government have the chance of trying to bring a new spirit and attitude to this question.

My third point is on the question of discouraging borrowing. If we are to tackle inflation properly, we must try to reduce spending financed by borrowed money. That, as I understand it, is the purpose of the Chancellor's monetary proposals. The former Chancellor does not agree with the method adopted. His policy was to rely on the selective capacity of the banks and on the Capital Issues Committee to prevent excessive borrowing. But it does not work out in practice. There are many ways by which people can get round the Capital Issues Committee by making issues for less than £50,000 and so on, and there are very great difficulties in the way of expecting the banks to exercise a selection between different borrowers purely on the grounds of the national economic interest.

It is not the function of the banks to discriminate between one trade or borrower and another or to say that one is more worthy of financial support than another on grounds of national economic policy. That is the function of the Government. I think the former Chancellor expected too much of the banking system in expecting it to do what was really part of his own duty, while refusing to shut down the tap by which unlimited cash was available to the banking system.

Mr. S. Silverman

Will the hon. Gentleman allow me to intervene? I am most interested in his argument. Is he saying that there ought to be tighter financial control, because we all understood that his party thought otherwise?

Mr. Maudling

After all, the object of the Chancellor in increasing the Bank rate was to tighten up credit control. The former Chancellor referred to this as "mumbo-jumbo." and I think that he fell into an error into which we all fall sometimes of dismissing something as mumbo-jumbo just because we do not understand it. It is the advice of the monetary authorities that this method should be tried, and I think it should be tried. It will not be so expensive as has been suggested.

The Chancellor gave a figure of £25 million Government expenditure. I think the hon. Member for Battersea, North, was wrong when he implied that it did not include the cost of new Exchequer Bonds. I gather that it does, and also that the £25 million, after the reduction of Income Tax, Profits Tax and also Excess Profits Tax, will be only a fraction of that figure, so that the actual cost to the Exchequer of the new proposal will be very small indeed, while the gain to the nation's economy may be very substantial.

There is another way in which the credit proposal should be strengthened, and that is by further action regulating higher purchase transactions on the lines of the American Regulation W. I was surprised to see the other day in a very respectable periodical an advertisement in the following terms: A well known firm of retailers, with branches throughout the U.K., are interested in obtaining further large-scale facilities for discounting hatches of hire purchase contracts, in units of from £1,000 to £50,000. The fixed return available on the unit investment is 11 per cent. This approach to the question of obtaining additional discounting facilities is being made in this somewhat unorthodox fashion owing to the effect of Treasury restrictions on the normal sources of H.P. finance. That shows that it is not difficult to get round the type of regulation and control which the former Chancellor tried to exercise, and I think it would be for the benefit of the hire-purchase companies themselves and for the nation as a whole, which is the more important factor, if some tighted form of regulation such as the American Regulation W, could be introduced.

Finally, I come to the question of spending less. Government expenditure, we are told, will be carefully watched and proposals will he laid before us as soon as possible. The only point that I would make about Government expenditure is this. We can waste money in two ways—by buying something we do not need, and equally well we can waste it by buying something which we do need but paying too much for it. I agree with the hon. Member for Fulham, East (Mr. M. Stewart), when he said that value for money should be the real test of the whole of the expenditure of the Government, no less in the Service Departments than in the other spending Departments.

As one example which comes to my mind, I would refer to the education service. The divisional executives are quite unnecessary. I believe that education is being over-administered. There are officials in the county halls, there are school governors and managers, and the divisional executives are really unnecessary complications. I think that can be quoted as an example showing how a better or equally good service could be provided at considerably lower cost.

Mr. T. Charles Pannell (Leeds, West)

Since the hon. Gentleman's party fought the General Election on the de-centralisation of the coal industry, does he think it reasonable, in a county as large as Kent, that the whole administration of education should be dealt with from Maidstone, when it is a service which affects the life of every individual child? Is he expressing that view as a member of a divisional executive, or is it just a flight of theory?

Mr. Maudling

I am not speaking from theory, or even because I saw this suggested in "The Times." I have thought this for some time. We are running our county administrations from the county hall, and we also have these divisional executives, and the school managers and governors. Decentralisation would give more authority to school managers and would enable us to get on without divisional executives. That is one example of reducing expenditure in a social service without in any way impairing its efficiency.

Finally, I come to the question of taxation. My right hon. Friend the Chancellor told us that the Excess Profits Tax is to be introduced as from 1st January next. I think it most important that the country should be told as soon as possible what is to be the base year and what is to be the rate of the tax, because any uncertainty about such matters can be particularly harmful to business. I hope that whatever rate is fixed for the tax, it will be remembered that it is wasteful and bad to have taxation which runs up to 100 per cent. The Americans have introduced an Excess Profits Tax, but they have stipulated that the total weight of all taxation shall not exceed 70 per cent. so that there is some percentage left over to act as an incentive to managements to be efficient and economical.

I have tried to deal as briefly as possible with the question which seems to be the main one—how to combat inflation in this country. It is unfortunate that six years after the war we in this country should have to be starting again on increased burdens and tasks. But we have both the good fortune, the privilege, and, in some ways, the disadvantage of being born in an island which has become great. which has led the world in industry, commerce and science, and which has to provide the wherewithal for 50 million people on resources totally inadequate to sustain them. We must either be great or nothing; there is no half-way house. We must continue to be leaders and not to flinch from any problems whether they be in foreign affairs or economic. If we do that in a spirit of national unity, I have no doubt whatever that we can overcome all our difficulties.

7.43 p.m.

Mr. Richard Adams (Wandsworth, Central)

I am sure the House has listened with interest to the hon. Member for Barnet (Mr. Maudling), because he always speaks with a moderation and a knowledge which are somewhat unusual in the contributions we receive from the benches opposite. But I thought he was on dangerous ground in his recommendations in the realm of education, and I for one would certainly not agree with his views on the proposed Excess Profits Tax. I am sure his own Front Bench will read his contribution, since they are not present to hear it, with the same interest as we heard it, and, perhaps, looking at it from their point of view, his contribution will be welcome.

Although the hon. Member refused my invitation to usurp the functions of the Government Front Bench, I would remind him that the present occupants are just the first rank that has been put up and that there is always the chance that, as they disappear, his party may turn to persons with economic knowledge like himself to conduct the affairs of the Tory Government. Therefore, I would tell him not to give up hope.

Before I get down to some of the points on which the hon. Member touched, I want to say a word or two about the authors of the King's Speech. It would appear from the Press reports that the new Prime Minister spent his first weekend at Chartwell filling in a "treble chance" cabinet coupon. I say "treble chance" advisedly, because he made it quite clear that in addition to drawing upon his own team he wanted some outsiders to come in, and also at least one Liberal. I am only surprised that he wanted such a broad-based Government in view of the small quantity of policy that it had to support. But what a dismal failure in the result? "Ten homes, six aways, and not a single draw in the whole lot." That is the sum total of the Prime Minister's fulminations over the first week-end.

In 1950, the Tory benches were full of eager faces, full of keen men anxiously spoiling for the fray and determined to get a Tory Government in again. But what do we find today after their doubtful victory? Today the Tory benches are full of sullen, sad, and disappointed, men.

Mr. James Hudson (Ealing, North)

They are not full of anything.

Mr. Adams

I agree that they are not present in any quantity now, but when the benches opposite are occupied the faces we see are those of sullen, disappointed and disillusioned men. I notice, too, that somewhat symbolically the second bench is always left practically empty. It is left empty for the ermined shadows of big business to lean over and grasp the affairs of the nation which should be conducted in this elected assembly. I notice also that the Postmaster-General has been stationed in the Upper House. Presumably he has been stationed there in order to give his personal supervision to the speeding up of the messages that must now come from the marquisal masters of the present Government.

I suppose the stock answer we shall receive to supplementaries at Question time in future will be, "I shall have to ask milord." But there is at least one thing which we have learned from the creation of this new Cabinet. It is that, apparently, a period of time in the Upper House is needed in which to develop powers of co-ordination denied to the lesser mortals in the Commons. But time will show whether a Government which proposes to govern from some dark recess in the Upper Chamber is able to meet the needs of the country at the present time in its fight for survival.

I now wish to say a word or two about the King's Speech, although there is not much need to speak at any length on it because it is peculiarly empty of any policy. It is apparently a negative attempt to put back the clock at least six years, and perhaps even further. We shall have the opportunity later on to inquire how the negative, doctrinaire approach to steel and transport will help the country in its present struggle, and we shall also have the opportunity of seeing whether the introduction of bagpipes to the Welsh hills and valleys is going to be very welcome to the Welsh.

There is one serious point in the King's Speech to which I would draw the attention of hon. Members. It is that there is no mention in it, nor has there been any utterance by the Prime Minister or the Chancellor of the Exchequer in the last few days, of full employment. The term "full employment" disappeared the moment the Conservative Government took over, and the only reference we now find is to the maintenance of employment. I would ask the right hon. Gentleman who is now responsible for the Colonies whether we may attach any significance to the dropping of the word "full" when speaking of employment.

The Secretary of State for the Colonies (Mr. Oliver Lyttelton)

We attach no significance to that whatever. The hon. Gentleman ought to know by now that the problem which faces the country is a shortage of labour in almost every field of industry.

Mr. Adams

I see. We must attach no more importance to the dropping of the word "full" in this connection than to the rest of the Tory policy. I suppose, too, that we must attach no significance to the danger signal created by the Prime Minister in reducing his own salary and the salaries of his Cabinet colleagues by about £25 a year. That signal too, I gather, is of no significance.

Mr. Lyttelton

The hon. Gentleman is quite entitled to gather what he likes. I have given him one answer, but, unfortunately, what he is saying has no relation to the facts we are now discussing.

Mr. Adams

We are now told that we can gather what we like from Tory policy, but during the election we were told by the Prime Minister that we should not judge the Tories by their promises. Now we have the statement from a Cabinet Minister that we can gather what we like. Very well, we will leave it at that.

We have heard today, of course, a tale of woe from the Minister of Fuel and Power, which shows that the housewive's chance of getting coal is just as remote as her chance of getting the red meat that was promised during the election. We are glad to have the assurance of my right hon. Friend that things are not really quite as black as they were made out by the Minister.

I should like to turn to the important pronouncement that was made by the Chancellor in the first serious speech that has been made by the new Government, and I want to examine for a few moments the main factors which are concerned in the problems which face the country today. I would say that our standard of living in this island is based on four main factors: two pluses and two minuses. Our standard of living depends in the first place upon home production. It is upon our ability to dig coal and minerals from our mines, and upon our ability to plough the fields, and upon our ability to increase production in our factories and workshops, that is based our first main plank in our standard of living. Add to that our imports. Our standard of living can be improved by increased imports from abroad. They are the two pluses which go to make up our standard of living in this tiny island.

We come next to the first minus, which is our exports. To the extent that we have to export abroad we diminish the goods available to improve our own standard of living, and the second minus—and 1 will go through it all again so that the Secretary of State can understand it quite clearly in a moment, for I am merely giving the headlines in the first place—the second minus is re-armament. To the extent that our resources are devoted to re-armament we are diminishing our standard of living. With re-armament 1 would put those unrequited exports the Tory Party have had so much to say about in the past. I could never understand why the Tories could wholeheartedly support re-armament, which is the preparation for a possible future war, and yet wholeheartedly condemn unrequited exports which are the cost of a previous war.

If the right hon. Gentleman cares to examine what I have said, he will find that our standard of living in this country depends on what we can produce at home and what we can import from abroad, and that our standard of living will be diminished to the extent that we have, as we have had in the past few years, to export more in order to import the same quantities as before; and that our standard of living is bound to deteriorate to the extent that we devote our resources to re-armament. Cut imports, increased exports, continued re-armament—all these things mean inflation here at home.

All that the Chancellor announced in his speech yesterday were measures which are bound to increase the inflationary tendency at home here, and I predict that four months from now, when Parliament is still on holiday, inflation will be more rife in this country than it is today. All that the Chancellor has done has been to trim his sails to the international bad weather that has been blowing. He has announced no real steps to solve the problem. In my view the problem can be solved only by understanding on the part of the United States of America.

Just consider for a moment two events which have occurred in that colossal economic machine during and since the war. While the war was in progress the United States of America stepped up her civilian production side by side with her enormous output of armaments. That is factor No. 1, and the second factor is this, that during the past year or two the United States of America has increased her output by an amount in excess of the total production in this country. Therefore I say that unless the United States of America is prepared to recognise her responsibilities in this matter any efforts that are made by this country are bound to fail.

It is, I would say, a position comparable with that of a parent earning £20 a week with three small children each getting 5s. a week pocket money. How ridiculous and futile it would be to suggest that those three children with their money could influence the family spending, against a sum far in excess of the total sums available to the three children. It is obvious that the parent's expenditure and decisions must far outweigh those of the children, and the very fact that, as the Chancellor rightly said yesterday, we have this dual problem of the sterling bloc and of the European payments shows that it is quite impossible to set the economic difficulties of the Western democracies right unless the United States is prepared to co-operate.

Look at what has happened each time that a so-called crisis has hit this country since the war. Unlike the hon. Gentleman the Member for Barnet I do not consider they are crises, because this is a continuing process which has gone on for the past six years. Each time the decision has been to cut and cut our imports, and an effort has been made to increase our exports, and that has meant, by deliberate policy, a lowering of our own standard of living, made necessary because of the loss of our overseas assets in two world wars.

It is the new advent of the re-armament programme which has caused the same kind of difficulty that has occurred two or three times since the war already, and I say that the policy of cutting imports and expanding exports with continuing re-armament is no solution of the problem. If we pursue that policy, with the United States standing on the sideline, unprepared to take part in solving the problem, we shall eventually end up with a fully armed bankruptcy which can satisfy no one. And if the policy enunciated by the Chancellor yesterday is persisted in I forecast that there will be further economic difficulties, and that a year or two from now it will no longer be a question of guns or butter but a question of guns or bread and scrape, and the sooner the people of this country realise that it is an international problem which must be faced the sooner the Government can begin to take the right steps.

Now I must turn from the Chancellor's statement on the economic situation, which, as I said earlier on, is a mere trimming of the sails to the present bad weather that is blowing, and offers no definite prospect of a solution to the problem which still remains with us, to the financial suggestions that he made.

It will be well known to hon. Members that the Labour Party since the end of the war have quite deliberately maintained a policy of cheap money. We have deliberately maintained that policy in order to assist in capital investment, which was so badly neglected by previous Tory Governments before the war; and we have maintained a cheap money policy in order to keep down the rents of the million and more houses we have built since the war. However, it is obvious to anyone who knows anything about the situation that, in the inflationary situation that has existed since the end of the war, with a policy of cheap money, based on the reasons that I have given, it has been necessary to maintain physical controls.

If money is readily available we must ensure that the capital is used for the most essential needs of the country. That is why with our physical controls we have ensured the development of the old distressed areas, why we have ensured a consistent programme of new housing, and why we have diverted the resources of the country to the building of hospitals and schools. All that has been possible with a policy of cheap money readily available for investment, directed by the physical controls we have imposed since the war.

What has been the old Tory policy in a similar situation? The old Tory policy has been a policy of dear money. The reason why the Secretary of State has to work his passage out to the jungle in Malaya is because in the previous 12 months he openly advocated a policy of dear money. In the past, the Tories have believed that money—the cost of money and the rate of interest—instead of being the handmaiden of society, as we in the Labour Party believe, can provide the automatic check for ordering the affairs of our society. They have said that at a time of inflation spending must be cut down, and that they will do it by putting up the bank rate. That has always been their solution in the past. But yesterday the Chancellor stated a new policy; he announced a superficial rise of ½ per cent. in the bank rate.

Now, if the right hon. Gentleman really believes that the bank rate is the answer to our internal problems, why leave it at ½ per cent.? Why not raise the bank rate by 2, 3, 4 or 5 per cent. and really make a job of it? It is abundantly clear that the Chancellor does not believe that the bank rate is the secret to solving our internal problem. He has announced this½per cent. rise in order to keep his back benchers and the City quiet.

Just as the Chancellor has merely announced a superficial increase in the bank rate, so he has failed to announce that he is prepared to follow the wise Labour policy of physical controls, and that is what the Chancellor must make up his mind on. Will he maintain a policy of cheap money? Will he abandon physical controls and let chaos reign? Or will he follow the example set by the Labour Government in the last six years and employ the same physical controls that we have employed in order to see that money is readily available for the purpose in the best interests of society? That is what we shall watch anxiously and critically in the coming months.

It is an insult and an affront to the House that, with Government policy only half declared, this House should be asked to go on holiday until the beginning of February. The Chancellor has still refused to give us an answer to the question whether he proposes to attack food subsidies, and whether he proposes to give the old-age pensioners the increase that Tory candidates promised during the Election.

We want to know this from the Chancellor. His pronouncement yesterday dealt only with the external international situation. He has made the necessary trimming of the sails to meet the gale that is blowing from outside, but he has yet to announce what steps he will take to deal with the internal situation. We want to know whether the physical controls of the Labour Government are to continue. We want to know whether our policy of fair shares is to continue or whether the Chancellor will allow inflation to increase, as is bound to happen in the next three or four months, with the burden unequally borne by our people.

We shall await the solution which the Chancellor will eventually propose. If it is the right kind of solution, as suggested by this side of the House, we shall lend him our support, because, by heavens, if it is the right kind of solution he will need our support to protect him against his own angry back benchers. That is the dilemma facing the Chancellor. I believe that he is an honest man, and that in his examination of this problem he will be anxious to find the right solution. If he does find the right solution, he will need the support of hon. Members on these benches to defend him against angry attacks from the City and the boards of directors who sit behind him. 1 assure him that, if he is big enough, courageous enough and brave enough to produce the right solution he can depend on our going into the right Lobby with him against his own back benchers.

Meanwhile, while waiting for these solutions to be propounded, while waiting to see what this "broad based" Government intend to do, there are today thousands of disillusioned Tory voters who were expecting a start to be made on the 300,000 houses; there are thousands of disillusioned Tory voters who were expecting plenty of "red meat." What has happened to private enterprise? In our debates in the last year we were told that if the Tories were elected private enterprise buyers would be despatched to all the corners of the globe to gather in the extra meat that we needed. There has been no announcement yet.

I believe that the hon. Member for Luton (Dr. Hill) has been made Parliamentary Secretary to the Ministry of Food instead of to the Ministry of Health because he must now explain to the country how they can live on medical foods instead of on good raw red meat. That is the reason for his appointment. He must now turn his mind to synthetic foods instead of telling the people early in the morning how to keep themselves fit and well. He has our commiseration. We wish him well, but we beg and implore him to get those private enterprise butchers busy "scouring the world" for the additional 17 per cent. This country already imports 83 per cent. of all the surplus meat available in the world there is only 17 per cent. to go after, so he had better get his private enterprise buyers cracking.

There are also thousands of disappointed Tory voters who were looking forward to a greater variety of choice. They were told by Lord Woolton in his broadcast that under a Tory Government the housewives would have a greater choice, a greater selection. Yet the very first announcement of the new Tory Government is to slash the imports of food. That is why there arc thousands and thousands of disappointed Tory voters today.

I should be prepared to have a General Election next week, and to undertake to spend not a single penny on canvassing votes, because there are thousands of those disappointed voters, who voted on the false promises of the Tories. who would sweep the Labour Party back into power. But those voters were warned, and they have only themselves to blame, because the new Prime Minister himself said in his Election broadcast, "I do not want you to judge the Conservative Party by its promises." In the week or so since they have been elected the Tories have demonstrated that they have no intention whatever of keeping those wild and distorted promises which they made in the Election.

In the past few months, on advertising sites throughout the country there has been displayed a deliberate Tory lie, which the Chancellor was good enough to refute in his speech yesterday. I refer to that Tory lie, placarded on hoardings throughout the country, "The high cost of living is the high cost of Socialism." [HON. MEMBERS "Hear hear."] Hon. Members opposite say "Hear, hear." Those same posters today stand as a silent, bitter reminder to the disillusioned electorate that "The higher cost of living is the higher cost of Toryism."

8.10 p.m.

Mr. C. J. M. Alport (Colchester)

I felt when listening to the remarks of the hon. Member for Wandsworth. Central (Mr. Adams), that if that was an example of the contribution which the party opposite had to make to the consideration of the affairs of the nation at the present time, there was nothing to prevent them from going into Recess straight away.

The hon. Member for Wandsworth, Central, raised three points which, I think, are of particular interest. He prophesied that the policies outlined by the Chancellor of the Exchequer yesterday would lead to inflation of a most dangerous and difficult sort within the next few months. He will, of course, recognise that the Chancellor of the Exchequer was supported by the Front Bench of his own party, who presumably, therefore, stand for precisely the same policy at this serious moment.

The second interesting thing was the fact that at this time of crisis the hon. Member for Wandsworth, Central, instead of asking for more Socialism in order to improve the situation here, told us that the only solution of our problems was to get United States understanding and to rely on our being further buttressed, as their own Government was during their short period of office, with the increased wealth, power and strength of a great capitalist nation. It is remarkable that Socialism has fallen so far away from its earlier hopes and pretensions that now the only solution it has to advance to the problems with which our country is faced is to ask for further aid from the U.S.A. It is an example of the extraordinary inferiority complex of Socialism. We shall see that inferiority complex, ably demonstrated by the speech of the hon. Member for Wandsworth, Central, developing still further during the months ahead.

Mr. R. Adams

Does the hon. Gentleman agree or not that the present situation of the country is due to the immense sacrifices which we made in the last World War when, for one whole year, we stood alone against the forces of aggression, and does he suggest that any compensation made by the Western democracies to the recovery of this country today more than compensates for the stand we took then?

Mr. Alport

I pay the tribute which everyone pays in this House to the immense achievements of the United Kingdom and the Commonwealth during that period. Frankly, I do not think we have any right to suppose that the rest of the nations of the world owe us a debt to be paid in material terms for something which we were doing for our own survival, and which we would have done in any case at any time in history.

The third point which the hon. Member made was that we on this side of the House looked serious. I quite agree that at this critical time our features no doubt display the fact that the situation is extremely serious. That is a very interesting contrast to the levity and high spirits of hon. Gentlemen on the other side of the House.

Mr. Hector Hughes (Aberdeen, North) rose—

Mr. Deputy-Speaker (Mr. Hopkin Morris)

Order. If the hon. Member does not give way, he must be allowed to continue his speech.

Mr. Manuel

Can we have some control, Mr. Deputy-Speaker, over the back benches opposite. Owing to the repeated shouting, we cannot hear what is being said.

Mr. Alport

That is very interesting. I always enjoy the smile of the hon. Member for Central Ayrshire (Mr. Manuel). It is an example of the high spirits and the thoroughly boisterous behaviour of hon. Gentlemen opposite which derives from the fact that they know quite well that they have gone out of power just in time. They have gone out of power when difficult and unpopular measures must result from their mishandling of affairs during the last six years. They have gone out of power at a time which has prevented them from having to decide exactly what these measures should be. They run away from responsibility at a time when they should have carried their full burden of responsibility for putting our affairs in order. After all, the former Chancellor of the Exchequer admitted that some time ago. He said in his Mansion House speech and again yesterday that he was fully aware that this situation was arising and had already come into being.

Mr. Hughes

Will the hon. Gentleman answer a constructive criticism?

Mr. Alport

The right hon. Gentleman never gave any indication what steps he would have taken, or did take, in order to put our affairs right.

Mr. Hughes

Now, will the hon. Gentleman answer a criticism?

Mr. Deputy-Speaker

If the hon. Member for Colchester (Mr. Alport) does not give way, he must be allowed to continue his speech without interruption.

Mr. Hughes

Would not the hon. Gentleman—

Mr. Alport

I have no intention of giving way, Mr. Deputy-Speaker, to the hon. and learned Gentleman, who seems to think that he is standing in the back of a Conservative meeting at the Election. He should realise that the behaviour, becoming on that occasion, of his supporters is not becoming in the House of Commons.

Mr. Hughes

On a point of order. Is it in order, Mr. Deputy-Speaker, for an hon. Member to make an aspersion on me because I asked him to give way in order that I might put a constructive question?

Mr. Deputy-Speaker

I did not understand that any aspersion had been cast on the hon. and learned Gentleman.

Mr. Alport

It is quite clear that the present Opposition have done what they always intended to do, which was to make the most they could politically out of the circumstances in which we find ourselves, and do their best to escape from any claim of responsibility themselves.

It is most extraordinary, for instance, that the hon. Member for Coventry, North (Mr. Edelman) should just have discovered the dangers to our employment situation of German competition. It is even more extraordinary that he should suppose that German competition is purely the result of the division of Germany into two halves. He seems to be quite unaware that one of the prime reasons, which the party opposite have never acknowledged, for unemployment in the shipbuilding yards and in British engineering and coalfields before the war was, in fact, the competition from Germany during those years. At last the party opposite are beginning to realise the point of the argument which has been put forward from this side of the House with regard to unemployment in those pre-war days, and the significance of German and Japanese competition in that respect.

Mr. D. Murray (Durham, North-West)

Who closed the shipyards?

Mr. Alport

I want to turn from that point to the remarks on the right hon. Gentleman—

Mr. Hector Hughes

Before the hon. Member—

Mr. Deputy-Speaker

The hon. and learned Gentleman must not interrupt in that way.

Mr. Alport

It is quite clear that the party opposite are quite unable to take any criticism at the present time. They are not prepared to listen to any hon. Member from this side of the House who replies to the points that they make in their speeches. That was typical of the attitude of their party throughout the election, when they did their very best to prevent a proper, thoughtful and moderate expression of opinion.

Mr. Maurice Orbach (Willesden, East)

Has the hon. Member ever heard of Fulham, West?

Mr. Alport

Not only did the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) show how completely incapable he was, during the latter period of his term of office, of dealing with the economic difficulties which were apparent to him, but the right hon. Gentleman the Member for Derby, South (Mr. Noel-Baker) showed from his speech how incapable he was of dealing with the coal crisis when he was in office. He seems to forget, as does the hon. Member for Coventry, North, that the people who are suffering at the present moment from the coal shortage in the homes and houses of this land are the old people and the sick.

That has been the deliberate and obvious—no, I will not say "deliberate" as that would be unfair—it has been the obvious and easily foreseeable result of the policy followed by the Government during the summer months. It was quite clear during that time that, by encouraging householders to stock up coal during the summer against the winter months, those with the accommodation for storage of coal and the money to buy it would be able to bring their stocks up to the highest possible point, whereas those who have relied all their life on getting their coal from the coalman week by week—

Mr. Manuel

Not when they were unemployed.

Mr. Alport

—all the winter would be put in a grave position. That is precisely what is happening. What the Government gave the ordinary people of this country to suppose was that if they bought additional coal during the summer there would be plenty of stocks available during the winter to give them their normal deliveries of coal. But what is the exact situation? I should like to quote figures which I know well, because they come from my own constituency and because I investigated the position quite recently.

A month ago we had in my constituency 1,374 tons of coal in the coal merchants' yards as compared with 2,860 tons in 1950 and 3,861 tons in 1949. That means that the additional coal has, in fact, been distributed to the tune of about 1,000 tons, and we have about one-third of the stocks of coal today which we had in 1949. Thus those least able to bear the severities of winter, those who could not afford to put money aside to build up coal stocks during the summer, are now going to suffer.

When hon. Members opposite claim to be spokesmen for the old and poor, I hope they will remember during the winter months that it was the policy of their own Minister of Fuel and Power and their Government which was largely responsible for the failure to supply the coal. That will be remembered not only by their constituents but by the general public. In 1945 they promised us a cheap and abundant supply of coal. They promised that they would be able to give the industries of this country the power that was necessary to increase production so that Britain could regain her standard of living. The evidence produced this afternoon by the Minister of Fuel and Power shows us the degree by which they failed to carry out their promise.

It is nonsense for the right hon. Member for Derby, South to get up and say in this House that if we had not stocked coal for domestic purposes during the summer months, then the size of our household coal stocks would have been 2.7 million tons, which was more than ever we had before.

Mr. Albert Evans (Islington, South-West)

Correct.

Mr. Alport

It is true that it is quite correct, but that is not the point. Let any hon. Member opposite, and particularly the hon. Member for Islington, South-West (Mr. A. Evans), go and tell that to those who will be without coal during the winter months ahead.

Several Hon. Members rose—

Mr. Alport

I was giving way to the hon. Member for Islington, South-West.

Mr. A. Evans

The hon. Member for Colchester (Mr. Alport) is basing his argument upon the supposition that there will be an extreme shortage of coal in the coming winter. That supposition has yet to be proved, and it would be better if the hon. Member based his argument upon known facts.

Mr. Alport

All I can say is that I assume that the former Minister of Fuel and Power based his arguments on known facts, because that is precisely the impression he gave us this afternoon.

Mr. Manuel

On that same point, before the hon. Member leaves it—

Mr. Deputy-Speaker

If the hon. Member for Colchester does not give way, he should not be interrupted in this manner at all.

Mr. Manuel

The hon. Member gave way to me.

Mr. Alport

I gave way to you, Mr. Deputy-Speaker, because I thought you were going to rise.

I wish now to turn to the other side. It is all very well for the right hon. Member for Derby, South, and those who represent mining constituencies—and they are mostly to blame in this matter—simply to expect a solution of our coal problem to be found by increased coal production. They are constantly attacking—no, I do not say "attacking"; I want to be accurate in this matter—urging the miners to produce more. We on this side of the House entirely agree that a higher production of coal at the present time and in the future would make an immense difference to our economic situation.

It is not sufficient, in my view, to rely simply upon increased production of coal to solve our coal shortage. Some points relating to a fuel efficiency policy were made by my hon. Friend the Member for Kidderminster (Mr. Nabarro) in Tuesday's debate, and I should like to make a few remarks which are complementary to his point of view, and which relate to a fuel economy policy in household consumption of coal. I am quite certain that unless we have a double attack on the coal shortage problem, we shall never solve it. That double attack has got to be increased production, on the one hand, and a fuel efficiency policy, on the other.

It would be possible for us to save within a comparatively short time up to 7 million tons a year as a result of certain improvements in the usage of coal in our homes for space and water heating and cooking. It would be possible to—and we certainly should—introduce legislation to make it compulsory that any local- authority house built from now on should be equipped only with the latest standard pattern of fuel efficiency grate.

It is all very well for the right hon Member for Clackmannan and East Stirlingshire (Mr. Woodburn) to tell us. as he did during Tuesday's debate, that in 1940. the steps taken, in the design of new housing schemes, to provide grates which would allow a certain consumption, and although the scheme has not been as successful as it might have been very great strides were made in economy in the use of coal."—[OFFICIAL REPORT. 6th November. 1951; Vol 493, c. 129] That is perfectly true, but during the last six years this problem of fuel economy and efficiency has been tackled in an essentially half-hearted way. It is mad that we should allow new houses to be equipped with grates which we know to be only 20 per cent. efficient. I believe that it would pay the country to subsidise the installation of efficient grates in private houses. Indeed, there is much to be said for making it compulsory at the same time. I am certain that unless we tackle this problem with energy and deter mination, we shall not get a solution.

Mr. Manuel

More controls.

Mr. Alport

Yes, and I am prepared to use the necessary controls. [HON. MEMBERS: "Oh."] If hon. Gentlemen, who know very little about the political history of the Conservative Party, were to study it as it was during the 19th century, they would know that the Conservative Party have always stood for the proper use of the authority of the Government in the national interest, and that it was the Whig Party and the Liberals who stood for laissez-faire. It is not my place to try to instruct them in the matter now.

The increased standard of fuel efficiency in our houses depends upon seven things. We must ensure that local authority houses incorporate up-to-date standards of space and water heating in their construction. We must ensure that incentives are provided to speed up the installation of improved types of grates in both local authority and private houses. We should even go so far as to eliminate space and water heating appliances from the market, if possible, with the agree- ment of the manufacturing industry, where those appliances use an undue proportion of fuel, whether solid or electrical.

The Government must undertake a major publicity campaign, in conjunction with the local authorities and the voluntary organisations, to bring home to the domestic user the importance of fuel efficiency. The assistance of the building industry and of architects must be enlisted to provide improved standards of heating and insulation to modern houses. We need a national standard of fuel efficiency for the home. We must encourage further research into the whole problem. Foreign countries, such as Scandinavia and the United States, are very far ahead of us in this matter.

I had better close by saying that I believe that at this serious time it is the duty of all of us, to the best of our ability, not to make partisan-political capital out of the situation but to follow the example of the Prime Minister and the Chancellor of the Exchequer in trying to deal with these problems in an objective and constructive manner. It is not in the interests of those who elected us to this House, whatever party we may represent, that this debate should be, as it is rapidly becoming, simply a bear-garden in which hon. Gentlemen opposite are doing their best to interrupt any constructive speeches that may be made and to obstruct proposals of hon. Gentlemen on this side of the House—and sometimes on their own side of the House.

I believe that the policy outlined by the Chancellor of the Exchequer yesterday is our attempt to prevent ourselves from slipping down the slope. We have then to turn to recover the ground which we have lost during these last months and years. It is the duty of all of us to contribute in whatever way we can to bringing this country, as a united and great country, back into the position where we shall not only be solvent and safe but a respected leader in the world.

Mr. Hector Hughes

On a point of order. Should I be in order, Mr. Deputy-Speaker, in asking the hon. Member for Colchester (Mr. Alport) to deal with another matter?

Mr. Deputy-Speaker

That is not a point of order.

8.35 p.m.

Mr. Albert Roberts (Normanton)

I hope that my speech will not be controversial. I shall deal not with what the Minister of Fuel and Power has said, but with things which he did not say. I had expected him to say something about the coal industry

There is no doubt that before the nationalisation of the industry scores of pits were uneconomic and suffered financial embarrassments over many years. I have been connected with more than 30 pits in West Yorkshire, and I have more information at present about the industry than the Minister of Fuel and Power has. I have figures here which were probably in my hands before they were in the hands of the Minister, and they lead me to say that anyone who can speak against the nationalisation of the mines is not conversant with the position.

The economy of this country is bound up with coal and steel, and if there is to be a crisis this winter, the magnitude of the crisis will depend upon the severity of the winter. As one who has been in touch with thousands of miners and has traversed scores of miles underground, I say that the National Coal Board has done a splendid job during the last few years and that the men have responded well to the call from this House and the trade unions. We must always bear in mind, however, that there is a limit to the endurance of a miner.

An hon. Member opposite has said that the efforts last year were a failure, but 500,000 tons of coal have been distributed to domestic users this year, and the Minister did not mention the 25,000 tons of unscreened coal which is being distributed per week to domestic users. The output of coal during the first 43 weeks of this year was 6,500,000 tons more than that produced during the first 44 weeks during last year. Is that not progress? Unfortunately, we have not kept pace with consumption.

I listened most eagerly to the Minister of Fuel and Power. What steps will he take? It should be remembered—the miners remember it —that the last time the Conservatives imported American coal was to defeat the miners in 1926, and they did so. The Government's policy should be a positive one and not a negative one. All the Minister said today was that we must have recruitment; but we must have recruitment of the right material. The Minister said that we must import coal. To my mind there is something far more important, and it has not been said this afternoon. If I had been the Minister of Fuel and Power, I should not have been afraid to commit myself. He must not disturb the good relationships now existing in the coal industry.

I was present, together with the chairman of a division, when the Chairman of the National Coal Board told miners that they had all the decentralisation they wanted. The talk about decentralisation is a pure fallacy. I have been connected with the pits for more than 20 years, and the management today have as much power as they had under a private enterprise. In fact, they now have more power. There is no Member in the Chamber who has been in as many pits as I have. The only difference today is that whereas under private enterprise the directors would meet about every two or three months and, if things did not suit them, the manager was told that he could not do as he liked, the manager nowadays has a set policy. In the last five or six years a transformation has taken place in the minim industry, and I have seen it.

In 1941, the accident rate in mining reached a high total. From 1941, and particularly from 1945, it has progressively gone down to a low record. I know that mining is a dangerous occupation, and it will never be possible to eliminate all its risks.

I hope that the Minister, before he makes any other move, will give due consideration to the question of housing in the mining districts. It is all very well to speak about recruitment, but there must be houses. I am not suggesting that miners shall be a privileged class, but hon. Members opposite have admitted and the Minister has said, that the economy of the country is bound up with coal. If we want increased production, we must offer suitable housing facilities in the mining areas. If they are not forthcoming, we will not have increased recruitment of the right type of men for the industry.

I recall the words of my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), that we must not tamper with the nationalised industries. The Government will make progress if, first, they seek full consultation, but they must be very careful indeed when talking about decentralisation. The industry has the right spirit. If that can be enlarged upon, I am convinced that, providing the right incentive is given to them, the miners will respond.

But the right incentive has not been forthcoming. Why has no positive gesture been made by the Government this afternoon? We have not had any gesture whatever which will strike a note in the mining districts. My concluding word is to express the hope that before he reaches any final decision the Minister will act in full consultation with all parties concerned.

8.44 p.m.

Mr. Bernard Braine (Billericay)

When, some 18 months ago, I was approaching my own maiden speech with trepidation, I never thought that within so short a time I should be congratulating a new arrival in the House upon his maiden speech. I consider it a very great honour to congratulate the hon. Member for Normanton (Mr. A. Roberts) upon his maiden speech, upon the obvious sincerity and conviction with which it was delivered, and the skill with which he avoided controversy. May I also express the hope that upon the subject on which he has just addressed the House —of which obviously he has great experience—we shall hear him often.

I am sure the House was struck, as I was, by the speech of the Chancellor yesterday. His approach to the vast range of problems was, I think, masterly. What I liked so much about that speech was the way in which he told us the worst. He obviously understood the simple truth of what Disraeli said many years ago, that the British people are never so great as in adversity. [Interruption.] If the hon. Member for Nelson and Colne (Mr. S. Silverman) interrupts me, I will deal with him in his own language. I thought his contribution to the debate this afternoon was rather like that of a small boy who pokes sticks into the works of a grandfather clock and then, when someone remonstrates with him, turns round and says, "Look, it does not go." What I have to say is largely of a non-controversial nature and I hope to be constructive.

Mr. S. Silverman

May I apologise for having a conversation with a neighbour loud enough for the hon. Member to hear?

Mr. Braine

Out of the fullness of my heart, I forgive the hon. Member for Nelson and Colne, but when he carries on conversations I hope he will do so in such a way as not to interfere with the business of the House. He has now brought to my mind that in his speech earlier this afternoon, when talking of the massive achievements of the late Government and the way in which our gold and dollar reserves piled up in 1950, he did scant justice to the Empire. Surely, the hon. Member is aware that the accumulation of those reserves owes much to the contributions of the other countries in the sterling area. Surely, he is aware that in the year 1949, before devaluation, the dollar earnings of Malayan rubber and tin actually exceeded the dollar earnings of the manufactured exports of United Kingdom and, even after devaluation, when the exports of the United Kingdom were, I think, double in the year 1950, still the earnings of Malayan rubber and tin exceeded those of the exports of the United Kingdom.

The reason I make that point is that I was particularly struck with what the Chancellor said towards the end of his speech: The figures of the deficits in our economy are large, but look at our resources. Look at the wide range and strength of our Commonwealth of nations. Think of the latent power of this great confederacy."—[OFFICIAL REPORT, 7th November, 1951 Vol. 493, c. 209.] I have not heard much reference in this debate to the simple fact that, measured in terms of resources, manpower, extent of territory, or how you will, this confederacy of nations is second to none. The key to British survival lies in expansion, not only at home but abroad in the Empire, and in promoting greater Empire unity and speeding the development of Empire resources.

I welcome, as I am sure the whole House does, the news that there is to be a meeting of Commonwealth Finance Ministers in January. It is my belief that if full consultation had taken place between the Empire countries before we sought and obtained the first American loan, the post-war story of this country and of the sterling area might have been very different. However, I do not wish to indulge in any kind of recrimination. We are now making a fresh start and I particularly welcome the appointment of my right hon. Friend the Member for Aldershot (Mr. Lyttelton) as an indication that from now on greater emphasis is to be placed on the economic development of the Colonial Empire than heretofore.

A great many election speeches have been made during this debate. I wish to refer, however, to a tour I made in the West Indies during the Recess, and lo make one point, I hope of a constructive nature, which has some relevance to the economic situation with which we find ourselves confronted. As the House well knows, the West Indies is an area where the population is fast outstripping limited resources, and, as has been repeatedly stressed in this House by successive Colonial Secretaries, there is dire need to expand and diversify its economy.

The late Colonial Secretary, in a debate on the West Indies as recently as 11th July last, told the House that we should assist in every possible way in developing industry, particularly secondary industries. He went on to outline the fiscal encouragement given by the various colonial Governments in the West Indies to that kind of development. Obviously it is to the mutual benefit of not only Great Britain and the West Indies but of the whole Colonial Empire and the sterling area that such expansion and diversification of economic activity should be encouraged.

Taking the words of the former Colonial Secretary for granted, I went out to the West Indies and expected to find that kind of encouragement being given. I found the very reverse, and I feel it is my duty to tell the House what I found. Overseas industrialists are not likely to be attracted into a region like the British West Indies unless powerful inducements are given. Now such inducements are being given by the Governments of the principal Colonies. There is, for example, a five-year tax-free holiday for pioneer industries in respect of new factories operating not from the moment that the building of a factory is started but from the moment that it goes into production. There is Customs-free entry for building materials, plant and machinery necessary to build and equip such factories.

In response to this kind of inducement a large number of United States and Canadian firms are moving in. That is a good thing. I can see no possible objection to the investment of North American capital in Colonial Territories. I think we should encourage it. But the interesting thing which observed was that no British firms were establishing new factories. In fact, I found plenty of evidence that British firms were being dissuaded from going in. Why was that?

The reason was that a company operating from Great Britain in the West Indies, and presumably elsewhere in the Colonial Empire, may be considered a pioneer enterprise and may have these tax concessions extended to it, but these advantages are nullified because the United Kingdom Government insist on collecting the full United Kingdom rate of tax on profits. As a consequence there is no inducement to a British company to expand its operations, to go out into the Colonial Empire and develop new resources.

All over the West Indies I encountered from Chambers of Commerce, trade union leaders who were concerned about lack of employment opportunities and politicians of all shades of opinion at this restrictive, stupid, short-sighted and suicidal policy. In fact, West Indians of a variety of opinions seemed to take the view that the late British Government were not interested in speeding economic development in the Colonies. I suggest in all humility both to the Chancellor of the Exchequer and the Secretary of State for the Colonies that this restrictive, unrealistic policy, must he changed.

I should like to give the House one small example of the way in which these tax restrictions operate to the disadvantage of all concerned. One sugar estate in Jamaica operated by a company whose head office is registered in the United Kingdom, draws its water from subterranean sources. It has to pump into irrigation canals some 70 million gallons of water a day. If, on the other hand, an overhead irrigation system was installed, this consumption of water would be reduced by half. Water in a country like Jamaica is a valuable commodity.

The advantage of undertaking developments of this kind, is that on land irrigated by the surface method, productivity can be raised by something between 30 per cent. and 40 per cent., while on land watered by rainfall, productivity could be increased by something between 100 per cent and 200 per cent. In territories which are overcrowded, where the population is pressing upon steadily diminishing resources, to be able to reduce the acreage under one crop and so increase the acreage under other crops, would be of immense material advantage. It would create fresh employment and relieve the constant demand for grants-in-aid from the British Exchequer. It would add to income, and, most important of all, it would create fresh opportunities for British manufacturers.

Companies making installations of this kind are rewarded by the Jamaican Government by substantial tax concessions. Jamaican companies can take advantage of those concessions, but unfortunately, as I have already indicated, British companies cannot, and are thus deterred from undertaking such developments. Many West Indians told me that the fiscal policy of our late Government seemed to be expressly designed to frustrate and prevent expansion. Surely the task facing us in the next few years—and here I must carry the whole House with me, because we are all agreed on this—is to increase production of food and raw materials within the sterling area by whatever means we can, and thereby to provide for ourselves the additional advantage of expanding markets.

This may appear to some hon. Members to be a relatively narrow point, but is, I think, fundamental to 'the whole question of British and Empire survival. I hope that the new Chancellor will seek to examine these restrictions and at the earliest possible moment sweep them away, so as to encourage the Colonial Empire to believe that Britain seeks not only to expand her own economy but that of the Colonies as well.

8.59 p.m.

Mr. Woodrow Wyatt (Birmingham. Aston)

In the very few minutes I have, I wish to make an appeal to my colleagues to show a little more sympathy to hon. Members opposite, because, as we have seen, they are a very bewildered and unhappy lot. I think we should realise that they have suffered two savage blows since the General Elec- tion. First of all there was the formation of the Government by the Prime Minister. During the Election campaign hon. Members opposite had been telling us the Labour Party was split. Now, of course, they are beginning to discover what a split party really is.

They are now learning what we always knew—that the Prime Minister was not in the least bit interested in the Conservative Party. All he was concerned about was that it should have got him back to No 10, Downing Street, and once he was there he proceeded to pass over a number of extremely hard-working Members of this House who had worked hard at the Despatch Box for their party in favour of others who are little known in our political life, although they may play a big part in the Prime Minister's personal life.

Now we have six members of the other place in the Cabinet, instead of three, and we have three co-ordinating Peers, to such an extent that the Chancellor of the Exchequer does not even know his own powers yet. Yesterday he went on record in the OFFICIAL REPORT as having said that he would be grateful to the Opposition if they would help him in getting them clarified. Hon. Members opposite recalled the way in which this wonderful new Government were going to take bold, clear decisions, and then they found that the Foreign Secretary was made Leader of the House and within three days, before he had even met the House, he was relieved of his office. No rapid change of mind there.

We heard a great deal in the last Parliament about "jobs for the boys." It is interesting to see that the Prime Minister has not suffered from any inhibitions on this score. As I looked at the list of appointments coming out, I was reminded of what the Prime Minister himself said when Sir Thomas Inskip was made Minister for Co-ordination of Defence. He remarked that it was the most astonishing appointment since Caligula made his horse a Roman consul. At least, Mr. Speaker, we must be thankful that the Prime Minister has not yet found a place in his Government for Colonist II.

After they had begun to assimilate the first blow that fell upon them, when they had discovered that their party was wildly divided and split into those who had been lucky enough to receive office and those who had deserved it but had not got it, they then had a second blow. It was when the Chancellor of the Exchequer came to the Despatch Box yesterday and in a very brave speech, which was much better received on this side of the House than it was on the other side of the House, proceeded to tear up the Tory Party election manifesto and throw all the election speeches into the waste paper basket.

This, of course, was a really revealing experience for most hon. Members opposite who had always thought that it was wicked Socialist propaganda, when we said that Tory promises at election times did not mean anything and that they did not do anything about them when they got into power. They discovered, after all, that it was not Socialist propaganda: it was just the truth, and they saw it within two days of arriving at Westminster. Now they do not even have the consolation of being able to say that they did not know how bad the situation was, because the Chancellor expressly acquitted his predecessor of having concealed the true state of the nation's finances.

And, of course, we had many examples in the Budget debate last April, for instance, when the right hon. Gentleman the Member for Blackburn. West (Mr. Assheton), remarked: The Economic Survey is not a happy document. It is so gloomy that I can only hope that it will prove to be as unreliable as some of its predecessors, although I fear not."—[OFFICIAL REPORT, 12th April, 1951; Vol. 486, c. 1297.] That, no doubt, is why he has not been included in the present administration.

Having discovered that they were faced with a serious balance of payments situation and that the Tory millennium is to be less of everything and an increase in Government expenditure of £25 million, hon. Members opposite are naturally looking very gloomy and serious. But there is one point which we must make clear, and that is that the balance of payments situation has very little to do with our own re-armament programme here at home.

This ought to be made clear. It certainly would not have been less serious if we had had the £3,600 million rearmament programme instead of the £4,700 million programme. I think it will be agreed that the three main reasons for the balance of payments situation are, first of all, the higher import prices we have had to pay, which have nothing to do with our re-armament programme; the loss of the Persian oil, which, again, has nothing to do with our re-armament programme; and the fact that our exports, although they have gone up, have not gone up quite as much as we had hoped. Although that may have a little to do with our re-armament programme, it has not a great deal to do with it.

I would support my right hon. Friend in his plea yesterday that the Government should make it very clear to those responsible for the burden-sharing inquiry by N.A.T.O. that our own balance of payments situation does deserve very careful consideration, so that we do get some aid under that organisation. I for one should not be in the least loath to accept any aid, from whichever quarter it came, in order to maintain our own re-armament programme, because it must be admitted that our re-armament programme will make our economic situation more difficult.

But we must continue our re-armament programme because it is the minimum requirement for self-defence. I was rather sorry that my right hon. Friend the Member for Huyton (Mr. Harold Wilson) said yesterday that General Eisenhower was in favour, or seemed to be in favour, of scaling down re-armament. I do not think it is right to bring in a distinguished person like General Eisenhower, who is unable to speak for himself in this House, and attribute to him views which, in fact, he does not hold. I do not think he will mind me saying that when I saw him at his headquarters near Paris in mid-September, far from feeling that the re-armament programme ought to be scaled down, he felt that it ought to go rather more quickly. There has not come from America any suggestion that there should be a scaling down of the re-armament programme, as the proceedings at the Ottawa Conference demonstrated. Rather the suggestion was that re-armament should be speeded up.

Mr. Benn

May I interrupt my hon. Friend? This is a very important point. As he has chosen to quote General Eisenhower, may I remind him that President Truman yesterday initiated a proposal which he hoped would lead to a scaling down of re-armament.

Mr. Wyatt

I do not know if my hon. Friend has read Mr. Vishinsky's reply, but when he does he will see that it is not likely to have any effect on our re-armament programme.

On this question of re-armament and the defence programme, I do not find the very few references made to it in the King's Speech and by the Prime Minister in his opening speech very reassuring. For instance, I think it is a mistake to establish the Home Guard, if that means embodying the Home Guard, because to do so, in the first place, is to put into the public mind a feeling that things must he very serious indeed for the Home Guard to be mobilised. I thought it was always understood that the Home Guard should not be mobilised unless it was felt that war was imminent. Also, having once mobilised it, we should have to disband it later, and we should lose enthusiasm which would otherwise be valuable.

Again, it is not a particularly helpful thing to have a Secret Session on defence, which only tends to alarm people unnecessarily, and I would say that nothing which is very important could possibly be said in such a session, or, at least, that it ought not to be.

I think it is too early to judge yet about the performance of right hon. Gentlemen opposite, and I hope we shall be able to be kind to them, because, after all, they will not be there for very long. Right hon. Gentlemen opposite have formed the kind of Government which the Labour Government in 1929 was, only this time it is the other way round. In 1929, we had a weak Labour Government sandwiched between two long periods of Tory rule. This time, we have a weak and feeble Tory Government sandwiched between two long periods of Labour rule. To earn our tolerance and patience, hon. Members opposite must remember that they are a minority Government, and that the power and influence of this country resides with the Labour Party and with the Labour movement.

Once upon a time it resided with the Tory Party, whether they were in office or not. What I have said applies today, however much they may tamper with the other place, and therefore they should avoid such controversial acts as the reduction of Ministerial salaries, which left a very nasty taste, because it was so obviously a theatrical gesture which had no meaning. If right hon. Gentlemen opposite really wanted to make a sacrifice, why did they not offer a voluntary capital levy to the State, perhaps half their own fortunes, and keep their salaries? The State would have done very much better in that way than it has done under this arrangement.

Again, they must avoid such controversial acts as trying to reverse our nationalisation of steel and road haulage, because whatever they undo in that way we shall only do again in a very short time. Therefore, instead of removing suspense from the steel industry it is going to be put into a permanent state of palpitation. If hon. Members opposite have the effrontery to de-nationalise steel and road haulage, and they have no mandate for it, we shall certainly nationalise them again when we come back to power very shortly. They should remember that they are only a Caretaker Government and should behave accordingly. They cannot hope to have the support of the country for any action which they may take unless we give our sanction to it, and they should remember that among our supporters we have the majority of the productive workers of the country.

9.12 p.m.

Mr. Douglas Marshall (Bodmin)

I have but three and a half minutes at my disposal and, therefore, I hope the hon. Member for Aston (Mr. Wyatt) will forgive me if I do not follow him but get back to reality. In the month of October we were told by my right hon. Friend the Chancellor of the Exchequer that we were already running at a deficit of 320 million dollars and a deficit of £89 million on our European payments.

I listened to the ex-Chancellor's speech at the Mansion House and realised to the full the gravity of the position at that time. It may surprise him to know that on that speech, together with the one he made in the United States, which was fully reported in the "New York Times," I personally fought my election campaign. I found that people were not only interested in the matter, but realised the position and wished to make the decision as to which administration was best prepared to grapple with the situation. They chose this administration.

I have now only two and a half minutes left. The point I wish to make is simply this. I suppose that at no time in our history has our position been more grave than at the present moment. The Chancellor has already mentioned that a great deal rests upon the basic industries of this country, on the question of coal, steel and transport. I am gravely disturbed about steel. I observe that hon. Members opposite do not wish to go forward in the knowledge that nationalisation as far as coal is concerned is accepted by all this House and that we have to grapple with the situation and get the maximum amount of coal. Instead, they try to raise again and again old arguments which today have nothing to do with the situation at all. We must grasp the situation and handle it.

In the one and a half minutes left to me in order that the right hon. Member for Bishop Auckland (Mr. Dalton) may reply at the proper time, I want to make three points. I do not believe that we can grapple with this situation without an expansion within our Colonial Empire. I believe that it is within our Colonial Empire that this situation can, in fact, be put right. That is a longterm policy, but one which must be grappled with. Secondly, the Chancellor has already mentioned the question of the basic industries. I trust he will not be forgetful of the fact that the china clay industry of Cornwall has a very large dollar earning capacity, and that that industry desires to earn and should have priority in order that it may earn the hard currency so essential to this country at the present time.

Last but not least, I say this. A great deal of the world situation is due to the fact that there is an overall shortage of food, and that shortage of food cannot be properly attacked unless the full harvest of the sea, of the whole of the seas of this country and the Empire, are gathered for the people of this country and of the world.

I have now got 30 seconds left. Not very long ago I put a question to the right hon. Member for Bishop Auckland, which he had the courtesy to answer. It is no good talking today about the question of money here and money there. Already we know perfectly well that if we confiscated every single penny over £2,000 net yearly earning capacity we should get only about £53 million. This question has to be grappled with the spirit of combat, and we can never conquer it if we merely raise again and again the old party issues. The real question in front of us today is whether we are able to afford to buy the raw materials and be able to provide the necessary food to support and maintain the people of this land.

9.16 p.m.

Mr. Hugh Dalton (Bishop Auckland)

As my hon. Friend the Member for Aston (Mr. Wyatt) so truly said, it would be very unfair at this stage to pass any judgment upon the policy of His Majesty's new Administration: the time has been too short. But it is also true that in the three days during which we have debated the Gracious Speech there have been many matters which are still left in deep obscurity regarding the policy which is to be pursued. My purpose tonight is to be interrogatory rather than argumentative, and to put one or two questions which, I hope, will be answered.

I shall put certain questions regarding the proposed changes in the rates of interest to which, I gather, the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), who is to follow me, will be able and willing to reply, and certain other questions regarding housing which the right hon. Gentleman the Member for Bromley (Mr. H. Macmillan), who has succeeded me in the office which I held in the last Administration, though its title has been changed—I hope that that does not mean that there is to be no more planning done in that Department—will, I hope, have an opportunity of saying something at a later stage of the debate—next week, perhaps; and to him, therefore, I address those questions for consideration at that time.

With regard to the rates of interest, this matter has already been referred to with some cogency both by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), yesterday and also today by my hon. Friend the Member for Battersea, North (Mr. Jay); but I am anxious to ask one or two more questions in order to try to get certain points more clear. First of all, I want to know how much it is going to cost, this series of increases in the rates of interest which has been announced; and secondly, I want to get it more clear than hitherto what good it is thought these increases will do.

First of all, how much are they going to cost in terms of increased public expenditure? It is an awfully bad start—perhaps, something will come later to offset it, but it is an awfully bad start—to begin in a few days by announcing measures which are going to increase public expenditure by at the very least some tens of millions of pounds a year.

Let us begin with the Treasury bill rate. I take responsibility for having reduced that rate in 1945, as one of my first acts at the Treasury, to a half of l per cent., at which level it has stood ever since. In my opinion that was a beneficial, economical proceeding which saved the taxpayers more than £30 million a year at the start. That saving has continued up to now. But now it is to be thrown away.

Let us get the arithmetic clear. Treasury bills amount at this moment—last week's "Economist" is my authority —to £5,560 million, to which we add a small amount—a quite small amount—for Ways and Means Advances and T.D.R.'s, and as a result get a total of floating debt of £6,100 million approximately. If the Treasury bill rate is to go up, if the rate on the whole of that floating debt is to go up, by a half of I per cent., if we have an average fluctuating around 1 per cent.—and that, I should think, is very likely—then we have an increased public expenditure of more than £30 million a year. I should like to know what, if anything, is wrong with that calculation.

But this is not the end, because the Chancellor told us that not only was the Treasury bill rate to be raised, but there was also to be a funding operation—the particulars of which he naturally did not Five us, but which are published today in "The Times" and other newspapers —from which I understand that £1,000 million of the floating debt is to be funded at 1¾ per cent. That is to say, assuming I am right in assuming an increase of one-half of 1 per cent. over the whole floating debt, on this part of the floating debt which is now to be refunded, at very short-term indeed, there has to be added another three-quarters of 1 per cent. If I am wrong, I want it explained why I am wrong.

That would mean another £7½ million a year. Therefore, unless something can be explained which has hitherto not been explained, the gross addition to public expenditure as a result of those two operations will be more than £37½ million a year.

The Chancellor of the Exchequer (Mr. R. A. Butler)

indicated dissent.

Mr. Dalton

The Chancellor shakes his head. No doubt his right hon. Friend will explain what is wrong in that calculation. I shall be glad to know, because frankly we on this side of the House are very very shocked at this profligate expenditure so early in the life of this Government, this increase of nearly £40 million a year in public expenditure which will more than offset the struggling efforts with candle-ends 'and match boxes which, in the light of precedents, departmental economies may be expected to yield. So much for my question on the arithmetic. How much is to be added to public expenditure by these interest rate increases and by this funding operation?

My second question is: What good will it do? We should like very much to hear, because it has not been explained, and the Secretary of State for the Colonies will do better than the Chancellor if he can really convince us on this point. The bill rate which was spoken about in general terms by the Chancellor is, practically speaking, as I think he will agree, settled by the Government; it is the Government which dominate the bill market; Treasury bills are far and away the predominant element there.

Therefore, it would only be upon the conduct of the Government's own finances that they would have any repercussion. But I do not think this Government, or any other, will be deterred from borrowing merely by the fact that there is an increase of, say from per cent. to ½ per cent. on short-term. Quite clearly they will not be. They will borrow at short-term whatever it is necessary to borrow, in the light of the budgetary situation which they create. Therefore, the old-fashioned argument that rises in the rate of interest have a purpose in choking off demand cannot possibly apply here, and if, within the field of the bill market, it does not apply to the Government themselves, the effect on other elements must surely be very small.

I pass from that, which I think is a point with which the Secretary of State will deal, to another matter connected with the rate of interest which falls, perhaps, on the other side of the line, about which perhaps the Minister of Housing and Local Government will speak next week. That is the increase in the rate of interest which is proposed to be made for loans from the Public Works Loans Board to local authorities. That is to raised from 3 per cent. to 3¾ per cent., and I warn the right hon. Gentleman—perhaps he is already aware of it—that he will have a very rough passage with the local authorities when he meets them, including Tory-controlled local authorities, because on many subjects local authorities move as one. He will find the very strongest objection taken by the associations of local authorities whose representatives he is soon meeting, to this proposal to increase the rate at which they borrow.

It seemed to me yesterday that the suggestion made in the Chancellor's speech was that one of the purposes of this meeting of the right hon. Gentleman with local authorities was to assuage them, or to appease them, by offering a readjustment, I think it was called, of the housing subsidy. Unless this readjustment makes up to them the whole of what they will lose from this more costly borrowing, I am sure they will not be appeased they will be very indignant. And if it leads to an increase of subsidy, that will be a further example of an increase in Government expenditure at this very early stage in the life of the Government.

In either case, I think that the right hon. Gentleman will have difficulty straight away, either with the local authorities or with his colleagues in the Government. It is clear that this increase in the rate of interest will increase the cost of house building. It cannot do otherwise, and it will fall undoubtedly, unless it is offset by increases in subsidy, upon rent or rates, or both, and it will increase the cost of living, which, again, is not in line with what we heard at the Election as to what would happen if hon. Gentlemen opposite were returned to power. So much for the financial side.

Now I will turn to what I call the numerical aspect of housing. We are anxious to be completely fair and objective in judging the intentions and programme of the party opposite. During the Election, they promised 300,000 houses. That figure was stuck to and constantly repeated. I am not going to say that it cannot, under certain conditions, be reached. It would be possible, if we sacrificed enough other things, to do it, no doubt, but it is very important that we should know, first of all, whether this figure of 300,000 which was announced in opposition is still adhered to in Office, after the right hon. Gentleman my successor has had an opportunity of consulting the sources of official information which are open to Ministers but not to Members of the Opposition.

Is it still stuck to? Does the right hon. Gentleman still say that they are going to build 300,000 houses, and, if so, when does he think they will achieve that target or programme? Will it be this year or in the next Parliament? Secondly. what kind of houses will they put up, if there are to be 300,000 of them? Are the essential standards which have hitherto been maintained, particularly with regard to size of living rooms and bedrooms, to be maintained, or will these be sacrificed, and will there be a general lowering of standards under the new proposals?

A further question which arises here is what other buildings—let us asume that the right hon. Gentleman is aiming at his 300,000 houses—are they going to stop, and by what method are they going to be stopped. The Chancellor of the Exchequer spoke of a procedure relating to the putting back of starting dates aid so on. To what extent is that to be applied to buildings other than houses? He has said that it would not be applied to houses. Let us be clear at this early stage whether it is the Government's intention practically to stop, save in exceptional cases, the building of all schools, hospitals, factories and defence projects, and, as an hon. Member reminds me, churches.

Let us have some picture of just how drastic this policy of stopping building work is intended to be. We want to know, particularly in the light of the statement which the Chancellor of the Exchequer made about the consumption of softwood. He said: We intend that the consumption of softwood shall be maintained at its present level." —[OFFICIAL REPORT, 7th November, 1951; Vol. 493, c. 199.] A great deal of softwood goes into non-housing building work, and it would be very important, therefore, to know how it is possible to attain any figure approaching 300,000 houses, even if they are not very good houses, judged by our standards, unless we cut very seriously into other usages of softwood. I repeat the doubt, already expressed by one of my hon. Friends, whether the proposal of allowing the purchase of softwood to revert to the private trade is likely to cheapen the cost of softwood to this country. It has already been pointed out that such an experiment was made in Europe by the late Administration, and we found that it substantially put up the price. It may well be that the same will happen now if purchases are to be made by private traders in the North American Continent.

I should like to ask a question about steel. The Minister of Housing and Local Government will already have discovered, at the office he has now taken over, the great difficulty that has existed for some time about the supply of steel for the erection of working-class dwellings in London in particular, and to a lesser extent in one or two other cities. We were handicapped by the competing claims of other users of steel, and there was a considerable hold-up in the housing programme in London of flats requiring steel construction. Is he proposing any action about the allocation of materials to see that this difficulty will be overcome, or are we to look forward to the time when there will be no new starting dates at all for any schemes for new blocks of flats?

The final point to which I should like the right hon. Gentleman to address himself when he speaks in this debate is about the procedure by which these stoppages of building work and rearrangement of starting dates are to be handled. The building industry has a long history of discouragement. Its morale has not been high, and it has suffered much from unemployment from time to time. It is extremely important, in my opinion, that these matters should be put before it in such a way that the idea does not grow up that from now on the building industry will have much less work to do than before. If that were so, there would be great discouragement to all incentive schemes. I hope, therefore, that the right hon. Gentleman will at an early date consult with the various advisory bodies which exist in order that the matter may be thrashed out in consultation with them.

May I further say this? The right hon. Gentleman will find in existence some official regional machinery, which in our time was working pretty well; in which all the interested departments were represented region by region; and in which this question of fixing starting dates was taken into account both in regions as a whole and in particular sections of regions. It is particularly important that something on those lines should be kept in existence and fully used, because it may well be that the starting dates applicable to a district overloaded by re-armament work may be quite different and may produce quite different results from one where there is no such overloading, at all.

I hope all this will be explained in much more detail to the House and to both sides of the building industry, and that it will also be explained in such a way that all those electors who voted for the party opposite in the hope that they would soon see 300.000 houses going up will be led to realise a little more clearly now than in the heat of the election battle what the real difficulties are. I leave it there, and hope that the right hon. Gentleman will speak in some more detail about this next week.

9.34 p.m.

The Secretary of State for the Colonies (Mr. Oliver Lyttelton)

I have known the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), for many years, but I do not recall any occasion when I have heard him in such a piano mood as this evening. Gone are the days when his booming voice used to exhort us to look forward to Utopia. Speaking with very great respect, I much prefer the manner of 1951 to what we used to listen to in 1946 or 1947.

Perhaps one of the reasons for this new piano tune is because the official policy of the Labour Party is going to be announced in future by the hon. Member for Aston (Mr. Wyatt) after only a few months in a junior office, for he assured us that the official policy of the Labour Opposition was to nationalise the iron and steel industry if it were denationalised by us. [HON. MEMBERS: "Hear, hear."] Hon. Members on the back benches can cheer, but it will be interesting to know if that is the official policy of the party opposite, and to that I hope we shall get an answer.

I can understand why the right hon. Gentleman pitched everything at such a very low note, and I think he was right to do so, because he is by no means blameless for the inheritance which this Government has received. He is very largely the architect of the difficulties which we now have to surmount.

On this side of the House we feel that the debate during these two days has reached a very high level.

Mr. Wigg

Hear, hear.

Mr. Lyttelton

That is an agreeable Interruption, just the sort of interruption which I should have expected from the hon. Member. It shows that he has listened to our exhortations. I do not want to make a number of debating points, because things are much too grave for that. The right hon. Gentleman made considerable play with the fact that these terrible measures my right hon. Friend has had to announce are to meet a heritage which is not of our making. I did not notice that that was greeted with any great applause from Members opposite. The facts about our own economy have now become obvious to all, since foreign aid has been removed. I do not want to look too far back, because all this will be too embarrassing to the right hon. Gentleman, but to look forward and try to deal with the situation which confronted us 12 days ago.

It is a great delusion to suppose that you can divorce external influences from internal policy. That was one of the mistakes which ran through all the policies of the recent Labour Government. Let me at the outset say that the ex-Chancellor of the Exchequer certainly uttered a number of warnings and gave a number of figures before and during the Election; that is common ground. What he was not able to do—I am not blaming him—was to announce any steps early enough to prevent the full severity of this financial blizzard from striking the nation. The balance of payment crisis had been developing for some months and was clear enough even to an unofficial person like myself; but none of the necessary steps were taken. I do not blame the right hon. Member for Leeds, South (Mr. Gaitskell), at all, because the plain fact is that he never had sufficient political support in his own party to be able to carry the necessary measures.

The Leader of the Opposition expresses dissent, but I think that any impartial observer looking at the state of his party will know that what I am saying is quite true. In those circumstances a much more straightforward action on his part would have been to resign, but perhaps he thinks that that would not have been in the national interest. That would have been a much more straightforward course than to continue, as he did, while underlining the gravity of the situation, to adopt an entirely negative attitude towards all the measures necessary to put it right.

We can begin to understand some of the reasons which led the Leader of the Opposition to appeal quickly to the country. He must have breathed a sigh of relief when he found that he was not going to be entrusted with the task of solving the problems which are, to some extent, but not wholly, the creation of the Government which he led. I want now to deal with the speeches of the right hon. Member for Leeds, South, and of the right hon. Member for Bishop Auckland.

First of all, the speech of the right hon. Gentleman the Member for Leeds, South. Apart from his apologia for the speeches he made during the General Election, his speech contained one or two criticisms of the speech and policy of my right hon. Friend the Chancellor of the Exchequer. There was also an excursion, in very bad taste, into the subject of Ministerial salaries.

Mr. Gaitskell

Why say "bad taste"?

Mr. Lyttelton

It was bad taste. That is a matter of opinion, and I am giving my opinion. The rest of the speech was all blessings. The right hon. Gentleman said, "This is just what we should have done had we been entrusted with power "; but his party were entrusted with power and did not do any of these things.

I managed to extract that two of the criticisms in his speech were intended to be substantial. The first one was that my right hon. Friend had paid very little attention in his speech to the expansion of exports and that the immediate steps about which he had spoken were concerned only with cutting down imports, capital investment, and so on; but, of course, when it took office the Government were faced with an immediate crisis. I mention in passing that the right hon. Gentleman seemed to be rather surprised that the slip downhill was becoming greatly accelerated, but I would remind him that that is always a feature of financial crises, and it was, in fact, happening when we took office.

To deal with such a situation one has, first of all, to apply measures which are entirely within one's own control and which produce a clear-cut net result, and that can only be done in the case of things which one buys or imports. One can make a cut of £350 million and see that this is made by cutting imports, but, on the other hand, when it comes to such a subject as the expansion of exports one is clearly faced by a much longer-term problem, a problem involving an estimate of how much more of our exports the rest of the world is willing to take, what will be the impact of Japanese and German competition and whether the impact of our re-armament upon our engineering industry will be temporary or long-term, and so on. I do not think that the criticism of the right hon. Gentleman on this score is of any validity at this moment.

We were rather in the position of a man and his wife entering a new house—if hon. Members can imagine such a thing happening; let us take a flight of imagination—and finding the bank manager waiting for them on the doorstep. That is what happened to us. It is useless to talk about how one shall decorate the sitting room when the roof of the house is already beginning to fall around one's ears. It is no good asking why my right hon. Friend did not lay down a number of long-term policies. What he has had to do is to prevent immediate bankruptcy. The sooner hon. Members opposite get hold of that the better. [Interruption.] Does the hon. Member for Dudley (Mr. Wigg) wish to say anything?

Mr. Wigg

The right hon. Gentleman spoke about occupying a house. My comment was that it would not be the 300,000th house.

Mr. Lyttelton

That is a very intelligent interruption, one of the best the hon. Member has ever made.

I turn now to the general matter of expansion. As I have said, it is necessary first of all to prevent the country from going bankrupt, but I entirely agree with many right hon. and hon. Gentlemen opposite that it is no solution of the whole problem. That lies in expansion; naturally it does; but first of all one must take these measures which are nearly all restrictive before one can form any basis from which to expand production and solve the problem. Not only is it necessary to restrict now, but it is also necessary to concentrate the effort. In every speech which I made in the Election, I underlined the fact that any Government entering Whitehall on 26th October would be faced by the most severe financial crisis. I found that this terrible crisis was widely understood, and I think that the measures which my right hon. Friend has outlined will be accepted by the country as a whole.

I want to say one particular word about expansion with regard to the office which I now have the honour to hold. I do not think there is any field in which expansion can be more readily made, and where it will have wider effect upon our economy—or rather upon the economy of the sterling area as a whole than a development and expansion of the production and trade of the colonial territories. I shall indeed count myself fortunate to have the office which I now hold if I can make any contribution to these results and to helping my right hon. Friend in these ways.

It is very curious to me to think that I spent part of my life sitting on an Empire marketing board, the task of which was to try to find outlets for various productions from the Colonies which were slow of sale. Not many years later, we find ourselves in almost the opposite condition, with a ready sale for so much colonial production that our problem is in expanding production rather than engaging in research to find outlets for it. I profoundly believe—

Mr. H. A. Marquand (Middlesbrough. East)

What the right hon. Gentleman inherited was not, therefore, quite so bad as he pictured earlier in his speech.

Mr. Lyttelton

I am quite well aware that the right hon. Gentlemen opposite think that they discovered the Colonies. I will have a word to say about that later.

I believe that the solution of the economy of the whole sterling area lies in this direction, and I think that there may be some further, although they may be small, alleviations which can be drawn from the Colonial Territories, but I do not think they can be massive. Most of our hopes must be concentrated on the mid-term and long-term classes of projects.

I do not wish to make more than a passing reference, and I do not think I should have done so had the right hon. Gentleman not intervened, to the alarming growth of the sterling balances of the Colonies. They have gone up by over £400 million during the current year and have now reached a figure of over £1,000 million. I only want to point out—and this is no criticism whatever of my predecessor, who was caught up in a financial crisis—that a system of colonial development which leaves the Colonies to finance the Mother Country to the extent of £1,000 million cannot continue unchecked. I do not think that any hon. Member in any part of the House would dissent from that proposition.

Mr. Gaitskell

Would not the right hon. Gentleman give the other figures for sterling balances as well? It is rather misleading to take one particular group and not others. The right hon. Gentleman spoke, for instance, of the Mother Country financing itself at the expense of the Colonies. Is he quite so sure that other members of the Commonwealth are not involved in this also?

Mr. Lyttelton

As Secretary of State for the Colonies I am entitled to make some remarks about the indebtedness of the Mother Country to the Colonies.

The only other substantial criticism—or rather a criticism that was intended to be substantial—which the right hon. Gentleman made, and about which the right hon. Member for Bishop Auckland asked this evening, concerned the increase in interest rates. I am not going into the arithmetic, which is excessively complicated, and I only have a few minutes more left, but I can tell the right hon. Gentleman that the figure of £25 million is the approximate estimate of the additional charge which will effectively fall on the Budget by reason of the increase in the bill rate and the funding operation before any allowance is made for Income Tax. This estimate has to be approximate, because allowance has to be made not only for bills held by the Exchange Equalisation Account and other official funds but also for the fact that the bills rate will be fluctuating, with the result that the bill rate cannot be forecast and £25 million is the figure I can give the right hon. Gentleman.

The right hon. Member for Leeds, South made some extraordinary statements in his speech. I do not know whether I ought to accuse him of being ignorant or insincere—I hope only ignorant. He said the loss was: on the right hon. Gentleman's own figures, of £12 million or £13 million which he would be very glad to save in public expenditure if he could, to he made from the taxpayer to the bank shareholders. That is all it amounts to. That is exactly what is involved." [OFFICIAL REPORT, 7th Nov., 1951; Vol. 493. c. 228.] Surely he must know that this interpretation of the figures is entirely misleading. In the first place, although banks earn more upon their short term loans, it is in the nature of things that they have to increase the rates to depositors so that when he includes the net figures it is entirely misleading.

Mr. Gaitskell

Will the right hon. Gentleman say what he means by. "in the nature of things"?

Mr. Lyttelton

All interest rates rise and fall in relation to each other. In the second place, surely the right hon. Gentleman has not forgotten that a necessary thing in the banking system is to carry a large number of Government securities of all dates, and surely he knows that a rise in the interest rates generally would decrease the capital value of those securities. It is a curious kind of "bankers ramp" which inflicts losses on their principal assets. I have not come to explanations, but merely to explaining the highly tendentious and misleading statement of the ex-Chancellor.

Mr. Gaitskell

Are we to take it from what the right hon. Gentleman said that the Chancellor now expects a further rise in the long term rate of interest?

Mr. Lyttelton

I am not engaged in speculation or expectation, but I am saying that any general rise in interest rates depreciates the value of Government securities held by the banks, and it amounts to more than £1,200 million.

The only two criticisms made by the right hon. Gentleman really have no validity whatever. What I think I must address myself to is the question which the right hon. Gentleman put to me: What do we expect out of this rise in the Bank rate? The first thing it does is to announce that flexibility is to be restored to the financial system. In an unrehearsed moment of self-revelation, the Leader of the Opposition, in another context, said on Tuesday that he did not know what promoting flexibility meant. I suggest that if he applies himself to this question of the working of the money market he will begin to learn.

Mr. C. R. Attlee (Walthamstow, West)

I was dealing with the phrase, "flexibility in the nationalised industries," and I have not yet had experience of that.

Mr. Lyttelton

The right hon. Gentleman will remember that I said it was in another context. I was only suggesting that a general study of flexibility will be greatly served by looking into this subject. The catchphrase of today is that too much money is chasing too few goods, and one of the ways of adjusting this position—which has been entirely neglected—is by creating less money. Hon. Members who remember that there is such a thing as the law of supply and demand will agree with me that one of the ways in which the demand is reduced is by making the supply dearer. That is what a rise in the interest rate means to the business community. Business uses money, and when money starts to get more expensive the pressure begins to make itself felt on what are generally called marginal invest- ments. Of course a½per cent. rise in the Bank rate would not by itself deter an industrial company from expanding its plant or buildings because the cost of financing it had become by that much more expensive. I give that to the right hon. Gentleman.

But, in fact, it is broadly speaking true to say that no ordinary rise in interest rates by itself would deter the expansion of industrial building. [An HON. MEMBER: "Hear, hear."] I am glad that the hon. Member is able to follow the argument so far. In industry much shorter terms of ammortisation or writing off of capital are necessary. What does happen is, first, that the marginal propositions are put under pressure. Second, the propositions which are much less marginal begin to be put under pressure not only because of the increased cost of investment, but because the increase in the bank rate gives a signal to the business community that they are about to enter anti-inflationary conditions.

Mr. Gaitskell

Is £25 million the signal?

Mr. Lyttelton

Having pursued an entirely false line of argument, the right hon. Gentleman cannot contain himself while his arguments are being demolished. It is ridiculous to say that a signal which may be given of a considerable measure of anti-inflation is dear at £25 million without taking into account Income Tax.

Mr. Gaitskell

Would the right hon. Gentleman—

Mr. Lyttelton

Really, I cannot give way again. That is what is required today—a rise in interest rates—because it is the only effective measure that can be taken to ensure that industrial expansion begins to take place where it is most needed. It cannot be done by physical controls or by physical controls alone.

We witnessed once the absurdity of the Treasury saying that 80,000 vehicles were too large a capital investment in lorries for the road industry. I asked how they found out what was the right figure—was it 60,000, or 50,000, and for what reason did they say so? There was no answer forthcoming, I suppose because Hitler's astrologer was not available to give them the answer.

I was interested to hear the hon. Member for Battersea, North (Mr. Jay), still producing the same sort of argument this afternoon. He says that one has only to ask the banks—[Interruption.] The right hon. Gentleman is generally very courteous, but this evening he seems to be very restless.

Mr. Gaitskell rose—

Mr. Lyttelton

I shall not give way. I have already done so about three times.

The hon. Member says that one has only to asked the banks to restrict their lendings and everything will fall into place. Nothing could be more naive than that theory. The banks cannot judge, as between two borrowers who each offer the same security, which project is in the national interest.

How are they to judge between two borrowers who offer the same security whether it is in the national interest to put up a factory making plastics which will come into operation in 1954 or one to make galoshes to operate next year. The only way that can be ironed out is by the people who want to make plastics and galoshes, and they will be affected by the rate of interest which they are offered, for those projects. Until that happens we shall never get any sense into this system at all.

I think it is very wise to start with a small rise in the Bank rate. That does not mean that monetary technique—[Interruption]. The right hon. Gentleman is one of those who thinks that a thing he cannot understand does not mean anything. I repeat that that does not mean that monetary technique is to become the dictator of economic policy. It means that this flexible weapon is to be used as an adjunct in pursuing the economic policy of His Majesty's Government.

I should have liked to develop many of the arguments at greater length but, owing to the interruptions there have been, I have only time to say that even the right hon. Gentleman has not turned back all the pages of history, and that he will find that these traditional deflationary methods will make a substantial contribution to the objects which I think all parties have in mind.

It being Ten o'Clock, the debate stood adjourned.

Debate to be resumed Tomorrow.