ECONOMIC POSITION

HC Deb 30 July 1952 vol 504 cc1491-621

Order read for resuming Adjourned Debate on Question [29th July]: That this House welcomes the determination of Her Majesty's Government to maintain the progress so far made towards improving the balance of overseas payments and to take such further measures as may be necessary for the economic security of the country.

Question again proposed.

Mr. Sydney Silverman (Nelson and Colne)

On a point of order, Mr. Speaker. I apologise for taking up the time of the House but this is the only opportunity I shall have to make a correction.

May I draw your attention to the Amendment on the Order Paper to the Motion of the Chancellor, which stands in the name of myself and two of my hon. Friends—in line 4, at end, add: with special reference to the necessity of removing all political, diplomatic or other restrictions which now limit at present mutually advantageous trading with all countries, whatever their governments, so as to expand the volume of world trade, free the United Kingdom and other Empire countries from their dependence on dollar markets, and contribute to that freedom from want without which the world cannot be freed from fear. There are two misprints in the Amendment which are no doubt due to my bad hand-writing, but which I think ought to be corrected. The first is a purely verbal misprint. The word "now" before "limit" is correct, but the words "at present" after the word "limit" are obviously redundant and unnecessary. But the second one is of more substance. The word "Empire" appears, whereas I wrote "European."

Lieut.-Colonel Marcus Lipton (Brixton)

On a point of order, Mr. Speaker. May I ask, for the convenience of all hon. Members, why the Chancellor's Motion is not set out on the Order Paper? Unless hon. Members go to the Vote Office and get a copy of yesterday's Order Paper, it is very difficult to link up the Amendments with the substantive Motion.

Mr. Speaker

The Motion is as it was on the Order Paper, containing Votes and Proceedings, circulated to every hon. Member this morning.

3.52 p.m.

The Prime Minister (Mr. Winston Churchill)

There is no doubt that our financial and economic position has improved substantially in the first six months of this year as the result of the considerable measures taken since we became responsible. Nevertheless, at the beginning of June my right hon. Friend the Chancellor of the Exchequer informed his colleagues that the margin of safety was not sufficient. He asked for a further effort to restore the balance between exports and imports by substantial economies, and he asked that these should be effective in the last six months of the present calendar year.

The Chancellor convinced us that a new and strenuous effort was necessary and urgent. Since then we have been engaged upon a severe scrutiny of our resources, unusual at this time of the year. The first objective was to find economies in imports and improvements in exports which would yield their results within the short period specified. This made the task particularly difficult because of the limited sphere of economies which come to hand in so short a time.

This involved a mid-summer overhaul of our expenditure in a good many fields. It was, however, a special and a short-term study, and it is in no way a substitute for the detailed, long-term examination of the estimates which usually begins in November and is the foundation of the Budget for the coming year; that is to say, the financial year 1953.

What we sought to achieve was a stronger protection for our gold and dollar reserves which at less than 1,700 million dollars, leave us too much at the mercy of unfavourable episodes outside these shores or in the immense sterling area of which we are the bankers. We are therefore now apprising the House and the world of a further tightening up and consolidation of our resources on a scale which, taken with all that has gone before, should not in any way be underrated.

I thought that the Chancellor's speech yesterday was somewhat ill-treated, both here and out of doors, considering the commanding position which he has made for himself in Parliament and the immense load he has had to bear. I have helped him all I could in those efforts to further economies and he has been successful to a remarkable degree. I am told of differences between us. I was not aware that any existed—[HON. MEMBERS: "Oh."]—but they are certainly nothing like the differences between a contented cat purring over a substantial meal—including a second helping—and the ravenous jaguar who, six weeks ago, was prowling round our spending Departments in search of prey. I think that if my right hon. Friend found reasons for satisfaction yesterday, he may well justify himself by the very remarkable economies which he has effected by his influence and by his pertinacity at this period of the year.

Let me summarise shortly what he told us yesterday. Imports of unrationed foods will, in the second half of this year, amount to only three-quarters of what they were in the same period in 1951. That is a cut of 25 per cent. Imports of raw materials and manufactures will he even more drastically reduced. Pulp and paper imports, for example, will be less than half of what they were in the second half of 1951, and imports of manufactured goods will be reduced by 40 per cent. Exports of coal will be sharply increased in the remaining months of the year.

Mr. Hugh Gaitskell (Leeds, South)

I wonder whether the Prime Minister would clear up one point—

The Prime Minister

Today it is the desire that speeches should be kept as short as possible—

Mr. Gaitskell

I do not want to interrupt the right hon. Gentleman, but I should be obliged if he would tell us whether the import cuts which he has just mentioned constitute new decisions, adding further to the total of import cuts which the Chancellor announced in his Budget statement.

The Prime Minister

Well, I am giving the facts as I gathered them from the speech my right hon. Friend made yesterday. [HON. MEMBERS "Answer."] Exports of coal, as I said, will be sharply —[HON. MEMBERS: "You do not know?"] I do not mind at all being interrupted. I think the habit of disorderliness which I have noticed on the benches opposite recently only shows what guilty consciences hon. Members have. The aim at the end of the year—[HON. MEMBERS: "Answer."]—the aim at the end of this year—[HON. MEMBERS: "Answer."] I will not answer a question if I do not choose. You distinguish yourselves by denying me a fair hearing. [HON. MEMBERS: "Answer."] I could not have been making a simpler or plainer statement of what was said of our policy yesterday as announced by the Chancellor of the Exchequer.

By increased sales of military equipment we expect to earn another £10 million this year. All this was said yesterday, and then it was argued that no effective statement had been made. As a matter of fact—[Interruption.] I am not apparently allowed to adduce and define the statement to show that that assumption which has been so impatiently made by hon. Gentlemen opposite is as devoid of foundation as many of their other dogmas.

These measures to strengthen our reserves and to increase confidence in our resolve to maintain solvency must not be viewed by them selves alone. Apart from their beneficial effect upon the United Kingdom economy, they are the preliminary to the economic conference of the Commonwealth Prime Ministers which I announced to the House yesterday and which is to open here on 25th November. At this conference the whole position of the sterling area will be searchingly reviewed and we shall enter upon the discussions all the stronger for the action we are taking now.

Various questions were asked yesterday about the conference. It will be a meeting of Prime Ministers and, in accordance with custom, I shall preside. But I shall, of course, have the help of my colleagues who are directly concerned with the special matters under discussion. The preparations for this conference concern a number of Ministers, including particularly the Foreign Secretary, the Secretary of State for Commonwealth Relations, the Chancellor of the Exchequer and the President of the Board of Trade. These preparations, which are already in hand, are being supervised on my behalf by the Foreign Secretary in his capacity as Deputy Prime Minister.

The Chancellor of the Exchequer spoke yesterday mainly about the civil economy. It falls to me to speak more at length about defence. One of our greatest problems in the hard discussions which we have had has been that of finding means by which, despite our economic difficulties, we can still maintain a defence effort in accordance with our duties and our needs. We shall not weaken in our resolve to do our utmost in the defence of the free democracies. We reaffirm our determination to stand fast with the Commonwealth, with the United States and our other Allies, in resisting the encroachments of Communism. In particular, in the West, we are resolved to stand shoulder to shoulder with the United States and our Allies in Europe in resisting any aggression.

But there can be no assurance of lasting military strength without a firm economic foundation, and no defence programme can stand without the economic resources to carry it through. The defence programmes must be kept within the limits of our economic strength. The right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) seemed to suggest that no review or revision of our armament scheme could be undertaken by us except in conjunction with all the other Allied Powers.

I trust indeed that we shall continue to set an example to the European States and no doubt when the meetings of N.A.T.O. take place in the autumn we shall all discuss together our common affairs and how we have got on. But to suggest, as the right hon. Gentleman did, that we have no right to make necessary or even beneficial changes in our own military organisation and expenditure without a general meeting of all the N.A.T.O. Powers would be an abrogation of our rights and an alteration of our ordinary practice such as I have not hitherto seen in peace or war.

Let me now look back a little. Two years ago, after the outbreak of the war in Korea, the Socialist Government, with praiseworthy zeal but little study, announced a re-armament programme of £3,600 million to cover both new equipment and the maintenance of the Forces, spread over three years. Five months later, for reasons which were not made clear at the time, they raised this figure to £4,700 million. Now, by the decline in the purchasing power of the pound, it would be about £5,400 million.

The original £4,700 million at the old prices was divided by the late Government in their three-year plan as follows: 1951, £1,250 million; 1952, £1,531 million; 1953, £1,694 million, making a total for the three years of £4,475 million, to which they added £225 million for civil defence and stock-piling, thus making up the total of £4,700 million.

I pointed out, however, in December that it would not be possible to complete so vast a scheme in the period prescribed. There are the inevitable time-lags which may be put, in the first two years, at between 10 per cent. and 20 per cent. In the first year, 1951, actual expenditure amounted to only £1,132 million as compared with the programme figure of £1,250 million. In the current year, 1952, we expect, though this is nothing more than a very speculative estimate, to spend £1,462 million against the forecast of £1,531 million made by our predecessors. I thought that the House might like to have these figures in their minds.

Nevertheless, had we not made a considerable slowing down of the programme to which we had been committed, spreading it into the fourth year, the total bill for these three years would have been far above £4,700 million. Actually, on our present decisions and calculations, we and our predecessors, allowing for the price increase, which has been continuous, will have spent in the three years a sum not far short of the £4,700 million originally proposed.

But, through the time-lag and increased costs, there will be a short-fall in the results achieved in the first three years. Our resources are not expanding at the rate we need to enable us to recover in any period which can be foreseen the position which we held before the war. As a contribution to the immense new burden of the re-armament plan, we are receiving in this year, 1952, about £175 million from the United States; but this is quite different from the £400 million or £500 million a year enjoyed by the late Government before the arms programme was begun, in loans or gifts from the United States and, to a lesser extent, from Canada and the Commonwealth. It must never be forgotten that this foreign aid, on which the Socialist Government lived for its whole tenure of power, virtually made good the loss of foreign investments that we suffered at the beginning of the war. Now we are facing the increased burden without having either the one or the other. Now we are striving to repay the American loan with interest.

All these facts might well, I think, be taken into consideration by all fair-minded people friendly to Britain and her survival. If this cold war ordeal is to continue—and it certainly does not rest with us—we must organise our defences on lines which do not require a constantly expanding expenditure of money and materials over an indefinite period. Within those boundaries, very great improvements and economies, in the true sense of a higher fertility, will be possible, and it is to this that the Ministry of Defence, under Lord Alexander, whose knowledge in all these matters is of the greatest value to us, and the three great Service Departments, are now devoting their unremitting attention.

The original programme was conceived by the late Government in the mood of the crisis which came upon them when the Korean war began. Many of the resources and much of the equipment in hand at the end of the war had been improvidently dispersed or destroyed. Virtually no new equipment had been provided. For five years the Forces had lived on vanishing war stocks, and there was a heavy lee-way to make up.

Re-armament was such a violent reversal of the policy previously pursued that many errors in the programme were inevitable. Since we assumed office nine months ago, we have made a comprehensive review of defence policy and strategy, and we are now engaged in reshaping the original programme so as to bring it into accord with the results of our new assessment of the position.

There are two requirements to be met. First, we have to take account of the ceaseless technical developments which affect our preparations for a world war, should such a disaster come upon us. In the two years that have passed since the original programme was launched, some weapons, on which immense sums were to be spent, have become obsolescent, and new types and devices of a greatly improved character have come into view. These technical advances have resulted in changes in military tactics, and, in turn, changes of emphasis as between the various sectors of the defence production programme.

Immense strides have been made by the United States, not only in their stockpile of atomic weapons, but in the power of atomic weapons, and in the range and accuracy of their delivery. All this is reinforced by the advent of new aircraft which profoundly affect the tactics of air warfare, and anti-air defence. Remarkable progress has also been made in our own development of guided missiles, or guided rockets, as was mentioned by the Minister of Supply the other day. On the other hand, the development, such as it may be, of the atomic weapon by Russia is a factor which, though unknowable, we must increasingly bear in mind.

At sea, we have to be prepared to meet new and faster types of U-boat and novel methods of mining. All these developments change the picture of the likely course and character of a future war, and many consequential changes are enforced upon the scale and pattern of weapons and equipment required.

We must not think of a possible third world war in terms of the first, or even the second, of these vast human catastrophes. The days of prolonged artillery bombardment, of immense and almost stationary armies, had vanished before the Second World War came. The expenditure on ammunition in the future may be far less than in the Second World War, and merely to proceed on the previous conventional lines would be to squander our military treasure and our strength.

These developments have affected the views of our military experts on the character and course of any future struggle, and this process of change continues, and even accelerates, with the remorseless march of the science of human destruction.

The second requirement we may have to meet is the continuance of armed peace or cold war, as forecast by the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison), for a prolonged period. The technical developments which I have just mentioned will not help us much in that. It is by more conventional armaments, mainly, in fact, by the infantry soldier serving in so many parts of the world, that we have to make our current contribution towards security against Communist encroachment.

The need to maintain this kind of military strength in peace must be balanced against the other need to ensure that, if war comes, we shall be able to meet the first intense phase with all its new inventions. I do not doubt that, if the party opposite had continued in power, they would also have been impelled by these developments to review and recast their original scheme, which we supported.

To sum up this part of the argument, I would say that, allowing for the time-lag on the one hand, and the increase of costs on the other, we shall in four years have spent more on re-equipment than was proposed by the late Government for three. But the improvements in types of weapons will have enabled many practical economies and reductions to be made in the original programme with a positive increase in war power. Had that original programme been allowed to continue in its expanding course after the third year, the expenditure would have risen enormously beyond our power to bear.

I will repeat in a varied form what I have said before—that a period of rearmament follows the rule: first year, nothing; the second, not much; the third year, more than you can pay for. With the great complexity of modern weapons, and particularly of aircraft, this rule must now to be extended into the fourth and even the fifth year.

If we had followed up to its logical conclusion the defence programme which we found descending upon us when we took office, in 1954 or 1955 we should have been exposed to enormous increases in expenditure, unforeseen, so far as we know, at the time when the programme was originally launched, and utterly beyond our economic capacity to bear. Even if we had not been called upon at this time to make new efforts to stimulate exports and to reduce the investment programme and social expenditure at home, it would, in any event, have been necessary to grip the whole position in order to prevent the automatic growth of defence expenditure from rising in the third, fourth and fifth years far beyond the limits of our economic strength.

It must be remembered that the process of re-armament is a continuous one. Modern weapons take two or three years to make. Modern aircraft take four or even five years. It is wasteful to the highest degree to spend many months retooling factories for re-armament and moving labour for that purpose, and then, while the weapons are still good and current, to break them up and disperse the labour. Very good reasons must be shown in every case where contracts are modified or cancelled with heavy costs in compensation and ineffectual employment of skilled labour.

It is the continuity of what we were committed to that I am drawing to the attention of the House. Therefore, although we are varying the programme, for the reasons which I have explained, it is still essentially the programme shaped and put forward by the late Government at a time when the right hon. Member for Ebbw Vale (Mr. Bevan) was one of its leading Members. Indeed, had he remained responsible, he, and others associated with him, would have had to make some of the changes which we are now making. But in view of the programme on which he helped to launch us, and the great mass of contracts already placed before he left office, he has every right to share the credit, as he shares the responsibility, for what was in the main a timely and patriotic decision.

So far I have been dwelling on finance. Money, however, is not the only limiting factor in re-armament. Steel and its companion products impose absolute limits, alike on our solvency and on our security. We are importing more than a million tons of steel and pig iron this year, and prospects of an improvement in our outlook next year are not unfavourable. Perhaps that is an under-statement. I hope so. If so, the under-statement may be set against any errors in the opposite direction which I may be considered to make.

The problem is how exactly the steel available after domestic needs are met should be allocated between defence services and exports, for without a sufficiency of exports, as the House knows and as I have so often said, a collapse of our economic and financial life would overwhelm us. It cannot be dogmatically stated that defence should have absolute priority over exports, or vice versa. Our supply of steel and various other metals is limited, and it would be equally foolish for the Government to lay it down that either armaments or exports should have an unlimited call on them at the expense of the other. Demands on these materials by those engaged in manufacturing goods for exports have to be carefully weighed one at a time—weighed carefully against our individual defence requirements—and we hope and believe that we can, with patience strike a balance which will build up our defences without endangering our solvency.

What applies to steel applies also to the transfer of industrial capacity throughout the metal-using and engineering industries. This diversion of resources from defence to the export drive is just as necessary for our military strength as for our daily lives. Not to make it would be to plunge into bankruptcy. It seems, therefore, and it is true to say, that priority is given to exports over defence, but the sphere in which such transfers will be fruitful is a limited one, and there will still be left a very heavy quantity of steel for the defence programme.

This process is going on now. Every case is being considered on its merits. I am not going to publish exact figures on these matters; we have no parallel information from Soviet sources. But I may say that, broadly speaking, the decisions we have reached after months of intensive labour will alter the pattern of defence production in a way which will limit its demands on the engineering industry, and in the coming years set free a valuable part of its capacity for the expansion of our civil exports.

Mr. Aneurin Bevan (Ebbw Vale)

How much?

The Prime Minister

I cannot possibly estimate how much.

Mr. Bevan rose—

The Prime Minister

The right hon. Gentleman is going to have an opportunity, I believe, of speaking later in the debate, so I hope he will allow me to complete my argument.

Mr. Bevan

Perhaps the right hon. Gentleman would give way.

The Prime Minister

Very well.

Mr. Bevan

I asked the Chancellor yesterday whether he would give us the figure of the reduction, if any, in the arms programme, and the right hon. Gentleman said he was leaving it to the Prime Minister to tell the House what he wanted to tell the House about defence today. Has the right hon. Gentleman no figure in his mind at which priorities are to become exercisable? If the priorities for exports run ahead too far, at what figure will they be arrested for the defence programme?

The Prime Minister

Well, I have no intention whatever of trying to anticipate the study which will be given to these matters in their final form in the November examination.

Mr. Harold Davies (Leek)

Have the Government not done anything? Nothing has been done.

The Prime Minister

After all, I am in possession of the House, and I am perfectly entitled to take that course.

Mr. Davies

We have had two speeches from the Government with nothing in them.

The Prime Minister

No doubt the hon. Gentleman will later try to catch Mr. Speaker's eye.

Mr. Davies

There was nothing in them about what we have been waiting for.

The Prime Minister

I have been endeavouring to show the general tendencies which are modifying and affecting our policy in re-armament, but I am certainly not in a position to say how these will affect the estimates of expenditure for next year, or even for the course of this year.

There is, however, one section of steel to be transferred from armaments to exports which will I am sure, interest the House, if only from its paradoxical character. I mean the export of armaments to friendly and allied countries. It may indeed seem odd, when we are straining to re-arm that we should be willing to sell armaments to others. It was suggested yesterday that it would be better to starve the armements plants and turn instead for all exports to civil production. I think the right hon. Gentleman was one of those who raised that point. This would indeed be imprudent. Moreover, armaments are, in these uneasy days, best sellers; they find 3 ready and profitable market.

But the savings and efficiency that come from mass production, and the advantage of having the plants kept at their full compass, with all that that means for reserve power in the plants and in the pipeline should war come, is so great that in this time of stringency we feel fully justified in making contracts with Canada, with the United States, or with other countries for the supply of tanks and aeroplanes which will thus form a valuable addition to our high-grade exports, and at the same time enable our parent plants to develop their full strength.

Mr. Percy Shurmer (Birmingham, Sparkbrook)

They are obsolete.

The Prime Minister

The price we pay is, of course, that some weapons that we make in this time of need will go abroad, though care will be taken not to deprive our front line of its essential requirements. I feel keenly the responsibility of this decision, but I find myself in the fullest agreement with the Minister of Defence, the Foreign Secretary and the Chancellor, with whom I have so long pondered upon these and similar matters. I feel myself in full agreement in believing that the export of a certain proportion of our munitions will be a feature in the growth of our munition plants, as well as an aid to our trade balance. Moreover, it will strengthen our friends and Allies throughout the Commonwealth and N.A.T.O.

We are now, as I have explained, approaching the third year where expansion of our armament programme is beginning to come into full swing, and when, if the process is not to get out of control, effectual limits must be assigned to its demands. It will be necessary for all three Fighting Services to divide their budgets between the maintenance of existing forces and new and improved equipment. At the Admiralty we have always considered maintenance and new construction as separate features. But this is less easy in the Army, where manpower has been in former times the outstanding factor. In the Air Force, which is a newcomer to the first place in our defence, the pressure of new types and superior inventions is intense.

The worst thing that happened to the Air Force since re-armament began was the failure to take the steps needed to accelerate the arrival of the newest and finest types of aircraft. This is now being remedied under, what I venture to call, super-priorities. For the sake of this, it will be necessary to reduce the maintenance charge in the existing Air Force by ceaseless economies in the overheads, or what perhaps may be called in this connection "the under-foots." The key figure of all Air Force administration is the number of men required to keep a fighting aeroplane and its pilot and crew in the air. In the late war this rose to 112. At present it is, according to Air Force figures, 113 but with the expansion of the Air Force it is planned to reduce it to 95.

Of course, the new types of aircraft which are coming into service, and more so those that await us in the future, require many refinements of care both in the training of the crews and the maintenance of the machines. The rule must, however, be that every man on the strength of the Air Force must be judged by his contribution to our flying, fighting strength. The provision and skilled use of the latest types must, above all things, remain at the head of the list. It might well be that the number of air personnel could be reduced without detriment by a system of what I have called in the past "immediate Reserves."

In the Navy before the First World War we created an "immediate reserve" several thousand strong of highly-skilled men, sailors and mechanics, who were held ready to come up if called upon in a precautionary period, without, or in advance of, any general calling out of the Reserves. This system still exists in the Navy and has been applied in the Army. It may prove a great help to the Royal Air Force at present juncture.

In the Army the obvious way of reducing maintenance is to reduce numbers, and the question always arises where to strike the balance between a smaller number of men, fully trained and highly equipped, and a larger number at a lower level of training and equipment. The intake of men into the Army next year will be about 30,000 fewer than this year. The explanation of this is that a decrease is taking place in the number of Regular non-commissioned officers who train the new entry. These non-commissioned officers are departing to civil life, as they have a right to do, and the War Office do not feel that they can handle the full intake without some loss of efficiency. This misfortune will incidentally reduce the cost of maintenance. It will, however, have very little effect on the need for new equipment which is required for the existing trained formations.

Mr. F. J. Bellenger (Bassetlaw)

Are we to understand that the Regular Army content is to be reduced, or the National Service intake?

The Prime Minister

No the National Service intake will be reduced.

Lieut.-Colonel Lipton

How?

The Prime Minister

I am assured that there is no difficulty about that. I do not desire to go too much into detail on these matters.

Mr. Alfred Robens (Blyth)

As the National Service intake is to be reduced, does that mean that there is now to be a study of the deferment of call-up?

The Prime Minister

That question ought to be put to the Secretary of State for War. I have answered five questions and I will answer no more questions at this juncture. [HON. MEMBERS: "Oh."] Five is quite a lot. Even if the right hon. Gentleman holds up his hand like a boy at school, I will not defer to his wishes.

Mr. Robens

May I pursue my point?

The Prime Minister

In the third year of re-armament, namely, 1953, a very heavy fertile crop of new equipment will be coming along. At this point may I say that I was astonished at the suggestion made by the late Minister of Defence, the right hon. Member for Easington (Mr. Shinwell), in a speech at Rugby on 12th July, that the period of compulsory National Service should be reduced from two years to 18 months. It would hardly be possible to adopt a more improvident course. The fighting units of our Army today are almost all overseas at least one-half are in the far-off foreign stations of the Middle East, Malaya and Korea, and in all of these there are rather more National Service men than Regulars.

The final six months of their two years' service is of the utmost value, since their efficiency as soldiers will by then have reached its peak. It is during these last six months that a man really begins to gain that degree of training and morale on which so much depends. Indeed, we are today relying on many of those fine young men to play their part in junior leadership, and many National Service junior officers and non-commissioned officers are to be found in our fighting units abroad. To reduce the period of service would aggravate in the most wasteful manner our movements problem. A very large number of men, over 30,000, would be permanently and completely out of action travelling to and fro in the pipeline.

In the Middle East, for instance, the rate of reinforcement would rise from 24,000 a year, on the two years' system, to 35,000 a year on the 18 months' system. In Korea it would rise from 5,500 a year to over 12,000. The saving in cash of about £17 million by the reduction of service would bring a loss of 58,000 men, which would grievously injure the Army structure built up at such heavy cost. Moreover, from the saving of £17 million on Estimates which are over £450 million, there would have to be deducted the cost of extra transport.

There is one further argument which should not be overlooked, and which the right hon. Gentleman I think should not overlook.

Mr. E. Shinwell (Easington)

Is the right hon. Gentleman arguing with me?

The Prime Minister

We have been pressing our friends on the Continent, in France and the Benelux countries, to raise their service to two years. Belgium has already adopted it. Such a step is absolutely necessary to the recreation of the French Army, with its heavy burden of foreign service. If we were to step back now and reduce our service, it is certain that the hopes of N.A.T.O. would fail.

How, then, should we without casting doubts upon our sincerity reduce our two years' period of service at this present critical juncture in the build-up of a Western defence organisation? It is not long since the right hon. Gentleman was himself pressing this view on the House. It was as recently as 30th May in the present year.

Mr. Shinwell

Will the right hon. Gentleman give way?

The Prime Minister

I will certainly give the right hon. Gentleman time to get up when I have finished this point. I am taking a lot of trouble with him because I am most anxious that some of the good things that he has done shall not be entirely swept away from his credit account. As recently as 30th May, speaking in this House, he said: … there is not a high military authority in this country or associated with N.A.T.O. or elsewhere who does not agree that, even if all the equipment were provided in the build-up of the Western defence organisation, it will not serve our purpose in the event of aggression unless the period of National Service which we have imposed upon ourselves is accepted by the other countries."—[OFFICIAL REPORT, 30th May, 1952; Vol. 501, c. 1814.] That is what the right hon. Gentleman said on 30th May. Yet on 12th July—not six weeks later—he urged that our period of National Service should be reduced to 18 months. What an example to set.

Mr. Shinwell

I cannot do it just now for obvious reasons, but one of these days I will take trouble with the right hon. Gentleman and explain to him exactly the reasons we decided upon a two years' period of National Service. Might I remind him that at the time we did so we said that this was a temporary measure? That is the first point.

The second point is this. When he talks about the difficulty that would present itself in our cutting down the period of National Service, he should have regard to the fact that there are many existing commitments which will in due course be reduced. Let me give him one example and then I will sit down, because I do not want to argue with him at this stage. Just now we have nearly three divisions in the Middle East, far more than ever we had in peace-time before. One of these days we shall be able to reduce the number of divisions in the Middle East and then, as we have a vast number of trained reserves, we shall be able to reduce the period of National Service. Let the right hon. Gentleman argue against that.

The Prime Minister

I am sorry that the right hon. Gentleman should deprive himself of the consistency of his policy, because, as I have shown, up to 30th May he was strongly in favour of the maintenance of the two-year system—and the credit of introducing it is due to him— but now he turns to this new proposal—which I consider to be alike dangerous and unthrifty—for, I suppose, highly complicated reasons connected with the movement of opinion in the party opposite.

Mr. Shinwell

Will the right hon. Gentleman give way for one moment?

The Prime Minister

I cannot give way again.

Mr. Shinwell

That is a shocking and disgraceful thing to say. The right hon. Gentleman should be ashamed of himself.

Mr. Deputy-Speaker (Sir Charles MacAndrew)

Order.

Mr. Shinwell

The right hon. Gentleman has given way.

Mr. Deputy-Speaker

Order. The Prime Minister is sitting down because I am standing up. If the Prime Minister does not give way, right hon. Gentlemen must remain in their seats.

Mr. Shinwell

The right hon. Gentleman ought not to have said that. It is disgraceful. He should be ashamed of himself.

The Prime Minister

The French have a saying that it is the truth that wounds.

Mr. Shinwell

It was a disgraceful thing to say. The Prime Minister does not give anybody any credit. I will deal with him next Monday.

The Prime Minister

Why not on Sunday evening?

Yesterday, I was surprised to see the right hon. Gentleman the Member for Leeds, South standing so smiling and carefree at the Despatch Box as if he had no responsibility for the shocking and shameful state to which our finances were reduced during his tenure of the Exchequer. When a Minister has in a single year brought his country from the best position it had held since the war to the verge of bankruptcy, and when he has left to his successors heart-tearing problems to face and solve, I wonder indeed that he should find nothing to do but mock and jeer at the efforts that others make to clear up the confusion and disorder that he left behind him. Indeed, I almost think it is a pity that he ever escaped from Winchester.

Let me also say in answer to him and to that shining star of television, my hon. Friend the Member for Aberdeenshire, East (Mr. Boothby), whose rays were turned upon me last night—I very much regret not having heard his speech—that I do not take back a word I said in describing, not the immediate crisis, for that we are dealing with, but the general financial economic position of our country. My resolve is that the people should realise how different is their position from that of all other Western communities; 50 million of us here standing at a level of civilisation not surpassed in the world, and yet barely able to earn our living and pay our way, and dependent for the food of two-fifths of our people on how we can do this in this vast swirling world.

Tragic it is indeed. [Laughter.] Why is there laughter? Surely it is not a party matter. [Interruption.] Hon. Gentlemen opposite cannot get much by shouting me down. Tragic indeed is the spectacle of the might, majesty, dominion and power of the once magnificent and still considerable British Empire having to worry and wonder how we can pay our monthly bills. I fully admit I am tortured by this thought and by the processes which I see around me, and I shall do everything in my power—[Hon. MEMBERS: "Resign!"]—to bring home to the mass of our race and nation the sense of peril and the need for grave and far-reaching exertions.

4.49 p.m.

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

I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof: while resolved to support any appropriate measures to promote the economic security of the country, regrets that the speech of the Chancellor of the Exchequer, while at variance with the alarmist statements of the Prime Minister, failed to put forward any adequate policy on the part of Her Majesty's Government to achieve this end. I think it is unfortunate that the Prime Minister did not open this debate. If there is something to announce to the House and the country, it ought to be announced at the beginning of the debate and not on the second day. The tactics of the right hon. Gentleman are unfair to the House and very unfair to the Chancellor of the Exchequer. He was not allowed to say anything. The only important announcement at all was the announcement of the Prime Minister about the changes in the defence programme. I shall have something to say about that later. The Chancellor of the Exchequer was not even allowed to say a word about it or to give a figure—he just had to sit mum.

The Prime Minister

Neither did I.

Mr. Attlee

I am much obliged to the Prime Minister for making the point, rather prematurely, that I was going to make. I am sure it is the belief of the whole House that the Prime Minister, in fact, told us very little. After all, the Estimates have been laid before us, and we have had debates on the Air Force, the Navy and the Army. We could not gather from the right hon. Gentleman, because of a lot of vague verbiage, what was actually happening or what actual changes were to take place.

The unfortunate Chancellor of the Exchequer gave an amiable recital of certain changes in our present position, and in so far as there are favourable changes we welcome them, as I am sure everyone does. The right hon. Gentleman realises, of course, quite well that a good many of these were not dependent on actions that he had taken. In these matters, every Chancellor of the Exchequer, whatever party he belongs to, is always necessarily influenced by world events of one kind and another.

The right hon. Gentleman also announced certain actions that had been taken such as restricting imports, but surely those have already been announced. Perhaps he can tell us, because the Prime Minister clearly did not know, whether what he was announcing were those that had already been announced or something new. Perhaps he will tell us now.

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

I made it clear yesterday that in view of the export position—and I used that expression yesterday—we have decided to make further cuts in our forward programmes of buying, and that is precisely what we have done.

Mr. Attlee

I am glad that the Prime Minister will now know what the position is as well as the rest of us. But the Chancellor of the Exchequer had no long-term policy to announce, and his speech merely broadened down platitude to platitude. "The Times" summed up the position very well this morning when it said: All this is humdrum fare and it will be scanned in vain by those who are looking for something more inspiring than the spasmodic doses of restriction and prohibition … I am sorry for the Chancellor of the Exchequer. He was not allowed to say anything, but, also, apparently, he had no long-term proposal to put forward. All we got was that we are to have a meeting of Commonwealth Prime Ministers. We all welcome that, but I should like to know what has happened about the meeting of the Commonwealth Finance Ministers that was announced in January. Two committees were set up, one to deal with development and the other with convertibility. Six months is a considerable time, and one would have thought that there would be some results by now, even though one of them is presided over by the Minister of State far Economic Affairs and, naturally, it would walk rather slowly.

We have made no progress on this and yet these are the matters which are a concern to us all. There has been much discussion in the House on the subject of convertibility and on production and development. We should like to have heard something about that, but the Chancellor of the Exchequer had nothing to report. So we all waited with eagerness for the Prime Minister's statement. I must say I was surprised that we did not have from him any review of the world strategic situation. I should like to know what has become of the hideous gap in Europe, of which we have often heard. What has become of his insistence that we ought to have 80 divisions to hold the West? He even gave particulars of them. Ten were to come from the United States, there were to be 10 or eight from ourselves, two from Canada, and France, her old spirit revived, was to provide 20 or perhaps 15. There are not even 10.

The fact is that that hideous gap is there and nothing that the right hon. Gentleman has said has altered that fact. I should like to know what are the facts that enable him to come to the House today and put aside his pressing fear, the danger of aggression in Europe from the East. He has switched over to something entirely new, and the present dan- ger is the economic position. But we have always been face to face with both those dangers.

I should like to know now what has happened since we had the discussions on the Estimates. The Prime Minister always makes a great deal of play by saying that the Labour Government were always changing their mind, that there was one estimate and then later on an expansion. But what has happened now since the Estimates were laid before this House for this year? The detailed programme for the Services was presented not very long ago. Judging by the speech of the Chancellor of the Exchequer things have become, if not exactly rosy, at least far less black. He gave us the picture that everything was steadily improving. Now we have this sudden change and reversal. I wonder if the Prime Minister agrees with the Chancellor of the Exchequer for their public statements seldom agree. The Prime Minister is full of trapdoors and all those kind of things, the Chancellor of the Exchequer has everlastingly to follow them up and try to cover them up by saying that things are not so bad after all.

But what is the evidence that relieves us of the dangers which the Prime Minister used to lay before this House with such great eloquence? The Prime Minister suggested that my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) had said that we should not make any change unless we discussed that with our allies in N.A.T.O. He said nothing of the sort. It would be right, however, that there should be discussions with N.A.T.O. After all, what was the origin of our re-armament proposals? The origin was in collaboration with the other Powers of Western Europe, the United States and Canada to build up a certain force with a definite plan.

It is quite true that the plan has lagged behind. We have been very, very disappointed in the building up of continental Forces. It is very dangerous. I can glance for a moment at the debate that we are to have during the rest of the week because this is profoundly significant on the question of German rearmament. When we engage to provide a certain amount of armaments and other countries engage to provide certain armaments, obviously it is right that if there is to be a change that change should be discussed. I do not know whether the right hon. Gentleman has thrown over that conception, on which he used to be so eloquent, of a great Atlantic West European Force.

Our position in these matters has always been perfectly clear. We recognise the need for armed strength in the West. There has been no difference in our ranks on that. We also recognise the need for having regard to our economic stability, and no one has suggested that the position should not be reviewed from time to time. Indeed, it is quite obvious that we had to review it. It is quite obvious, too, that the amounts that can be spent at any given time depend upon the availability of machine tools and raw materials price levels and our general economic situation. Hence we accepted the delay when the defence Estimates were introduced.

It is obvious we had to review these things from time to time. That does not alter the principle that in considering these matters we have to consider both defence and economic security. But I entirely deny the suggestion of the Prime Minister that our plan was that after three years we should go on piling up armaments higher and higher. We never took that line at all. The line was that while we were making up the basic needs we were bound to have high expenditure, but that this would tail off after three years had elapsed. That has always been the position which we have taken up.

I am rather interested by the Prime Minister's defence of selling arms abroad. It is surprising how difficult he finds it to shake off the old Adam, because in the same breath as he was imploring us to sell arms abroad he was saying how wasteful it was of us to get rid of arms after the last war. At the same time as he says we must not go on with obsolescent arms he deplores the fact that we sold off obsolescent arms at the end of the war.

What amuses me is that he used precisely the same argument on the export of arms as I used. I said we had to get rid of obsolescent arms. I said that it was useful to arm our allies and useful to build up industrial potential for the production of arms. And how heartily I was denounced by the right hon. Gentleman. He said it is a shocking thing to think of selling arms, for base commercial considerations of payment, to people abroad.

The Prime Minister

The right hon. Gentleman is not quoting me.

Mr. Attlee

I would not dare to quote the right hon. Gentleman's language, but I remember very well the course of his actions. That is the line he took. I am glad that the right hon. Gentleman has come back into the Chamber because earlier I was asking him why the House should not learn something of why, in his speech, there was no mention of Western defence, of the hideous gap, of the great danger and of the need for building up strength in the West. That has all gone by, and at the present moment we do not know what really are the right hon. Gentleman's conceptions with regard to Western defence.

We do not know in the least what is the meaning of these various changes. We all know of this progress in weapons. We all know that we have to change from time to time. That would occur whether there was pressure from without or not. We also know that there always has to be a balance between the provision of new weapons and the adequate maintaining of the Forces in the field.

But I can remember the right hon. Gentleman attacking us bitterly because we did not equip all our air squadrons with obsolescent aircraft. There was a pause while new ones were coming along, and we were perfectly right. The right hon. Gentleman is following that same course; but no one could gather from the right hon. Gentleman's speech what effect this act will have in setting free steel for our export trade.

The right hon. Gentleman complained of being interrupted. He treats the House with very scant courtesy in refusing to answer a question. The fact is that the right hon. Gentleman did not know the answer. When an important speech is made and when a question is asked for elucidation it is very rare, in my experience, for a Minister to stand on his dignity and say, "I will not argue. Do not ask me. I am a great man and you must not interrupt my speech." It is usual for a Minister and others to answer courteously questions put with a genuine desire to elucidate the matter. The right hon. Gentleman clearly did not know about the call-up and my right hon. Friend the Member for Blyth (Mr. Robens) will deal with that tonight.

When I recall the Prime Minister's attack on the Labour Government I must say that I see a curious contrast. Throughout our period of office the right hon. Gentleman was everlastingly attacking us for, as he alleged, not dealing with these grave economic matters but introducing mere partisan matters like coal nationalisation and steel nationalisation. I was pleased to note that in the rather static or even declining state of industrial activity the Chancellor of the Exchequer was able to point to coal and steel as outstanding examples of improved production. How right we were to deal with those fundamentals of our economic position.

I contrast that with the work of the present Government. They have been in office for nine months and they have spent that period frittering away the time, handing out sops to sectional interests—people interested in sponsoring television, the brewers, the road hauliers—or in little, mean economies like cuts in the museum staffs and the imposition of Health Service charges.

When I look at the nine months of this Government I must say that I think it is rather sad, because the Prime Minister has done very great things in his time. He has had very great successes and he has also made very great mistakes. As a rule he does things in the grand manner, whether they are right or wrong, but the doings of his Government during these nine months can only be described by one word—squalid.

5.10 p.m.

Lady Tweedsmuir (Aberdeen, South)

I listened to the right hon. Gentleman the Leader of the Opposition with great interest and care but, if I may say so with respect, I thought that his reference to the activities of the Prime Minister and of the Government as being squalid was entirely unworthy of the office which he himself once held. Indeed, it is one of the greatest qualities of our present Prime Minister that he did not criticise the Leader of the Opposition and the Government when he first took office. He did not make clear to the country the simply appalling muddle which was left by the right hon. Gentleman.

During the speech to which we have just listened, which was supposed to be the main speech from the other side of the House in what is an important debate, I heard no suggestions of a constructive nature that could help us in solving our difficulties. I heard only two main points put forward: first, a complaint that there had not been sufficient information; secondly, a complaint that the Government were not doing enough.

As regards information, the Chancellor of the Exchequer yesterday gave a clear exposition of our financial problems—[An HON. MEMBER: "Tell us about it."]—and today the Prime Minister made it perfectly clear that in carrying out the defence programme, with the readjustment he has in mind, we shall get more value for money spent and have greater war power.

When the right hon. Gentleman said that we have not done enough, he has perhaps forgotten at this midsummer time that it is not within the power of the Chancellor of the Exchequer to take any fiscal measures now. Therefore, the review which we are discussing has instead shown a change of emphasis. That change of emphasis is in the expansion of our trade both at home and abroad. This House should not under-rate the effect of the measures taken already in the way of import cuts or the effect on the country of the cessation of some of our forward buying as announced by the Chancellor yesterday. When those measures have had time to work through the economy of this country, it may well be that hon. Members opposite will go round the country saying that the Government are being too tough.

The Government, in a debate such as this, can only carry out the function of Government, which is to lay down the general design for our pattern of trade. After that, it is for the people of this country, every man and woman, to get on with it and show what they can do with their skill and ideas and energy.

Mr. A. C. Manuel (Central Ayrshire)

Say that to the unemployed.

Lady Tweedsmuir

As an example of this endeavour to change the emphasis of our production, the changes in credit facilities to help our exporters are most important. Hon. Members opposite may perhaps say that it is rather a gamble that the Government, at this time, have not announced much more severe measures which are within their power other than those of taxation. But I would say that it is a great act of faith in the people of this country. It is really asking the people of this country, "Are you prepared really to work? Are you prepared really to get down to it and show your traditional skills and your efforts in order to boost the export trade—

Mrs. E. M. Braddock (Liverpool, Exchange)

You will not let them work.

Lady Tweedsmuir

—under the general slogan 'Trade not Aid'?"

I think one can only take a fair view of the situation as it is now, not only against the background of that vivid Treasury phrase—the "treacherous trapdoor"—not only against that phrase, but also against the long-term aim of Government policy. One of the most encouraging things that happened yesterday was the conviction shown by the Chancellor of the Exchequer when he said that we were to concentrate all out on Commonwealth development.

There is just one thing which I question—I do so with great temerity—and that is whether it is wise to pursue this all-out endeavour for our export trade in the dollar market primarily in America at the expense, perhaps, of what we could do with enormous advantage in the markets of Canada. I say this for various reasons which everybody in this House knows well. When our merchants have with some difficulty established markets in America, so often they have found tariffs raised against them.

Although it is true that whether Mr. Eisenhower or Mr. Stevenson is returned to power in November our foreign policy as regards Europe will he clear and courageous, nevertheless on any Administration in the United States there will be pressure to protect the home producer. I agreed very much with the right hon. Gentleman the Member for Leeds, South-East (Mr. Gaitskell) when he said yesterday that he thought there ought to be consultations with the American Government on this issue. We have to remember that there will be a considerable time-lag.

It is not just a question of the presidential elections at this time. Whoever comes to power there will be a change in the regime. Even if Mr. Stevenson becomes the next President of the United States it means that there will be a new Democratic regime, and, therefore, no decision can be taken by Congress for a considerable time. I feel that consultations with America ought to grow out of the Commonwealth Conference because that is much the most important as regards British trade and effort.

I feel that we ought to concentrate much more on the Canadian trade than on the American trade, because I doubt whether the United States want many of our goods. They are a creditor nation and what they want desperately are raw materials. They have done very little under the Point Four programme, which gave them a great deal of encouragement on this issue. A common policy between the members of the Commonwealth in the autumn, matched by another consultation with America afterwards, ought to be devoted to the idea of the development of overseas resources if we are to prevent an American recession with appalling consequences to Europe as a whole.

Surely common sense warns us against the fetish of trying to probe what is a really tricky market in the United States at the expense of Canada as a dollar earner. The Conference of Finance Ministers in January of this year set up two study groups, referred to by the Leader of the Opposition, one to study convertibility and the other to study the development of the Commonwealth. I agree very much with the right hon. Gentleman that it would be most helpful if, perhaps, later in this debate, we could hear a little of the progress of those vital study groups.

Any question of convertibility rests on the necessity for a sound economy here. While we accept the present temporary restrictions as necessary to get ourselves in balance, nevertheless the several policies of the Dominions should be examined in the context of a positive programme of mutual trade and expansion. If, in this country, we believe seriously in Commonwealth development, we must face the fact that it will be a much tougher proposition for us at home because it is a long-term view. Therefore one is bound to ask—again I do so with great temerity—whether the Chancellor has gone far enough in what he could have done at home?

I do not believe that the people mind hard living if it is accompanied by an adventurous approach to overseas development that will ensure steady work at home, great scope for our products, and an understanding of all the treasures that this country and the Commonwealth will reap. What the country certainly cannot stand is this dreary round of crises that we had under the late Government. With due respect to the keen intellect of the late Sir Stafford Cripps, I am always reminded of the man who introduced him to a public meeting and said, "Here is a Chancellor who has led us with such success from crisis to crisis."

The justification for our policy comes in the recently published O.E.E.C. report on the financial problems of Britain which was undertaken by experts of the various countries with no political ties. Not only was it an indictment of the last Government's policy, but it is a tribute to the present policy. [Interruption.] I think I heard the right hon. Gentleman opposite protesting because I had referred, in what, I hoped, was a fairly humorous comment, to the late Sir Stafford Cripps.

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

The hon. Lady would not say it when he was alive.

Lady Tweedsmuir

I did not consider it bad taste because I prefaced my remarks with due tribute to the keen intellect of the late Sir Stafford Cripps. I shall be glad, therefore, if I can continue these remarks with, at any rate, some hearing.

The report of O.E.E.C. on Britain's financial problems was a complete indictment of the previous Government's financial policy in the last six years. It was also a tribute to the policy of the present Government since they came into office. It expressed, however, "great apprehension for any tendency in Britain to greater ease." For example, while it welcomed the reduction in food subsidies, because, it said, they were an artificial factor in the situation, the report goes on to regret that it was thought necessary at such a time to give away so much of the saving obtained by the reduction of food subsidies by compensating reductions in taxation and increased housing subsidies.

While we note that report with great interest, we on this side of the House do not agree with the last remark because we believe that the Chancellor's Budget did everything that was possible to cushion those who were worst hit by that reduction and, on the other hand, to encourage greater earnings. [HON. MEMBERS: "Oh."] Furthermore, I trust that by the time of the next Budget the Chancellor of the Exchequer will have done everything he can to reduce the colossal burden of taxation upon industry if it is ever to produce at competitive costs.

All that is long-term planning. What of the immediate short-term view? It is of the utmost importance that British manufacturers should study the type of goods that are needed in each area. I wonder whether we are entirely guiltless of flooding markets overseas with goods that can be better produced in those countries themselves. Britain has a great responsibility in this matter.

Although we know that many of our goods are of superb workmanship, nevertheless very disturbing stories filter back. We are told that exports are not designed for a particular market. From New Zealand, for example, we hear that a whole range of goods is alleged to be of inferior quality and workmanship. We know that at a time of a sellers' market, it is very easy to sell goods at any price but now that we have the fierce competition of Japan and Germany, I hope we will do everything in our power, both on the floor of the workshops and in management and design, to get the very best quality workmanship in everything that we send abroad.

Management, while, at the same time, hoping that there will be reasonable wage restraint, which is such a large factor in production, must show much more "nous" in capturing foreign markets. Take, for instance, Canada. There are some extraordinary examples of what I could only call misjudgment of the situation, particularly in the advertising of British goods.

One finds, for instance, that a large advertising campaign was undertaken throughout Canada, but that when the orders began to roll in it was said, "We only hold stocks in two or three cities," or "There are stocks only of one size"; or else, because of the higher cost which ought to be identified with a brand name, the brand name is left out and, therefore, people think, "Look at British goods. How costly they are in comparison with ours."

Dr. Barnett Stross (Stoke-on-Trent, Central)

Is it not fair to admit that when there is a buyer's market, there is a temptation—in fact, it is a favourite trick of buyers—to denigrate goods that they wish to obtain, in order to get them cheaper, to try to bring down the price?

Lady Tweedsmuir

That is true. We should not accept any allegations about our workmanship without some examination, but these criticisms have been fairly widespread and those who have had the opportunity to travel abroad have heard them.

I am talking particularly of what, I think, is a misjudgment in advertising. The most elementary facts seem to be forgotten. I mentioned Canada because it was so obvious an example. In a country which is 3,500 miles in extent and has a population of 13 million, concentrated in about 65 or 68 primary centres, surely it would be wiser to undertake an advertising campaign in one area of the dollar market and to be able to say that all the goods advertised were available in all the big stores in that area. Stocks and production should be tied up with the advertising campaign in a given area; and if it was successful, one could move on to the next area.

This is where the Government can help to give guidance to manufacturers. From an economic viewpoint, there are at least four distinct Canadas—the Maritime Provinces, the Far West, Quebec, and the Prairie Provinces. Because of these elementary facts, people have different buying habits and tastes, and these must be studied. If we do this, we should be able to capture the market and hold it, because it is entirely dependent upon the goodwill for British products. What is true of Canada applies to all our partners in the Commonwealth.

As this is an interim review of our economic situation, and because we have about six or eight months before the next Budget, this is the time to try to create throughout the country the right climate of keen inquiry into all our production and into all our marketing and advertising arrangements. When we have done this, and when the next Budget comes, with the fiscal measures which are so necessary, I believe that we can with confidence go all out to capture these overseas markets and win the treasures that, I am quite certain, it is within our wit and skill to do.

5.28 p.m.

Mr. Aneurin Bevan (Ebbw Vale)

I am not quite certain whether I caught the opening sentences of the speech of the noble Lady the Member for Aberdeen, South (Lady Tweedsmuir). I thought she said that my right hon. Friend the Leader of the Opposition did not requite the Prime Minister in quite the same way as the Prime Minister had treated my right hon. Friend, because when my right hon. Friend was made Prime Minister the right hon. Gentleman gave him a good chance.

My recollection, which is a very lively one, is that we had not been in office for a few months before the right hon. Gentleman moved a vote of censure upon us. [An HON. MEMBER: "Six months."] No, we had not been in office for six months—it was a few weeks. The fact is that no sooner had we taken office in 1945, in circumstances of unprecedented difficulty, than we began to be harassed by the Opposition in the most irresponsible fashion.

Not only that, but for the whole five years during which we were grappling with these difficulties we had a sustained and a vitriolic attack by the Members of the Conservative Party in the House of Commons and in the country and abroad of the most mischievous kind—[An HON. MEMBER: "In Canada."]—especially in Canada—giving the impression that we could not deliver the goods, that we were a nation of "Weary Willies" and "Tired Tims" debauched by American dollars and living on the boodle piled up by the Conservative Party when in office—

Mr. S. Silverman

Paralysing the springs of industry.

Mr. Bevan

Yes, paralysing the springs of industry. The hon. Member for Aberdeen, South is too disingenuous now, just a few years afterwards, in imagining that we have forgotten what was said on that occasion.

Perhaps I may be permitted to go back over the history of the defence programme because the right hon. Gentleman was good enough to refer to me in the course of his speech and to refer to what I said. I do not do so, I assure hon. Members in all parts of the House, merely to say, "I told you so," because that is a very easy thing to say, but because I think I am entitled to defend hon. Members and myself against certain charges that have been made on this matter both inside and outside the House.

The right hon. Gentleman referred to the speech I made when the defence programme was launched on 15th February, 1951, and I want to read a paragraph from the speech to show that, as early as that, I had begun to develop deep misgivings about the economic effect of the re-armament programme on the British economy. I said: The fact of the matter is, as everybody knows, that the extent to which stockpiling has already taken place, the extent to which the civil economy is being turned over to defence purposes in other parts of the world, is dragging prices up everywhere. Furthermore, may I remind the right hon. Gentleman"— the present Prime Minister— that if we turn over the complicated machinery of modern industry to war preparation too quickly, or try to do it too quickly, we shall do so in a campaign of hate, in a campaign of hysteria, which may make it very difficult to control that machine when it has been created."—[OFFICIAL REPORT, 15th February, 1951; Vol. 484, c. 736.] This was in the defence debate in the course of a speech which hon. Members opposite and hon. Members on this side of the House have quoted on many occasions to try to show that on that occasion I, with some hon. Friends, had accepted full responsibility for the re-armament programme—as indeed we had, but it was necessary also, as we emphasised then, for the British people and the world to recognise the consequences of trying to do it too quickly.

Further, when the debate took place certain precautionary words were put into the Prime Minister's speech. Those precautionary words to which the Leader of the Opposition has referred on many occasions and which have become the sheet anchor of some of my hon. Friends, were actually inserted in the Prime Minister's speech at my instance. That was because when we had reached the defence debate it was perfectly apparent from the rising prices and by the quick expansion of the American war machine that it might not be possible for us to get the machine tools either in sufficient quantity or of the right kind, or the raw materials.

Therefore, I insisted that we should put in our statements at that time cautionary words that the carrying out of the defence programme on the scale suggested would be dependent upon the necessary supplies of machine tools and raw materials. I could have wished also that at that time we had stated that it was also dependent upon the viability of the British economy.

So this is not, as the right hon. Gentleman has said, an accident—he said the other day, in a most ungenerous fashion, that we had been proved right by accident—because we particularised, with infinitely more circumstantiality than he has done in his speech today, exactly the reasons why it could not be done. We said it, first, because we knew very well at that time that the Americans had begun to roam the world for machine tools and could not get them anywhere—one of the reasons why the right hon. Gentleman is complaining today—and that we would have to spend a much larger sum to get the same weapons as were contained in the original programme because there was a spate of quite undisciplined stockpiling.

That sent up prices everywhere and they have remained up, not at the same level, but at a very much higher level than before the defence programme and ever since. We also said, and I want my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) to remember this, that the estimate of increased production was wrong. The right hon. Member for Leeds, South said yesterday: I hope the Chancellor realises that if one chooses one's economist carefully one can be fairly sure of what he will say."—[OFFICIAL REPORT, 29th July, 1952; Vol. 504, c. 1315.) The right hon. Gentleman is an economist. I am not an economist; I would never say such naughty things as that about economists. The right hon. Gentleman had apparently chosen his economists and his economists gave him the wrong advice.

Mr. Gaitskell

I am not quite sure to what estimate of production my right hon. Friend is referring. If it is to the estimate of production I gave in my Budget speech in 1951, it only fell short, so far as I can remember, in the outcome by some £50 million from the original estimate.

Mr. Bevan

We are speaking of the estimate on which the defence programme was based. My right hon. Friend the Member for Huyton (Mr. H. Wilson) and we said this. My hon. Friend the Parliamentary Secretary to the Ministry of Supply, in his letter of resignation, specially said: Moreover, apart from the question of budgetary estimating, I am bound to tell you that I do not believe that a re-armament programme on anything like the present scale can be carried out in prevailing conditions. He went on to say that all the production Ministers had told the Chancellor of the Exchequer at the time that the production figures would not be realised and, we have been proven in that matter to be correct.

In the next place, we also said that in our judgment the American share of the arms programme was unreasonably small. We believed that in the apportionment of the figures the American economy could carry a very much larger proportion of the total arms programme. Does any hon. Member in any part of the House deny that today? At present the American economy is expanding enormously. In 1950 the Americans spent 17.8 billion dollars on plant and machinery and in the following year 23.3 billion. In 1952 they are to spend 26 billion.

That is to say that at a moment when our economy is practically stagnant, when we have had to invade our own new investment in order to maintain ourselves at the present level, the American economy is enormously expanding. President Truman said the other day, "We can, in fact, quite easily carry the present re-armament programme." Is that not complete evidence that the apportionment of the re-armament programme is unfair as against this country?

Mr. Gaitskell

I do not know if the right hon. Gentleman is aware that the level of American production at the moment is running slightly below the corresponding level last year.

Mr. Bevan

That is not the issue; that is really a false point. The issue is that at the moment, on the existing American production, the Americans can set aside for new investment as much as their expenditure on increased armaments.

Mr. Ellis Smith

And the consumption is increasing.

Mr. Bevan

Furthermore, my right hon. Friend the Member for Leeds, South said yesterday, in precise terms, that every nation thinks it is carrying too heavy a share of the re-armament programme, but when the British Prime Minister is compelled to come to the House of Commons and tell us the hard facts that he had to state today, and when the President of the United States is able to say in so many words, "We can carry our re-armament programme with one hand tied behind our back," is not that complete evidence that the original apportionment was unfair? And even that programme has been cut. The Americans, without consulting anybody, cut the programme by 25 per cent. They did not consult us.

My right hon. Friend the Leader of the Opposition said today that we should have consultations with N.A.T.O. Powers. I agree with that. When? Last March, my right hon. Friend the Member for Leeds, South was still defending the arms programme. Last March we were being berated by almost every newspaper in Great Britain, being subjected to a campaign of calumny, because we said that the Defence White Paper was unsound. We were told even last March that it was all right. At what point, therefore, should the consultations have been started? At what point did my right hon. Friend come to the conclusion that the British economy was being over-strained by the arms programme?

I am sorry to have to thrust home these painful facts, but it is necessary because, even now, we must try to recognise that our calculations went wrong. They went wrong for reasons that were apparent a long time ago, and it is necessary for us to try to find out why they went wrong in order to try and put the situation right. The fact is—[Interruption.] If my right hon. Friend is interrupting, all I can re-join is that there is no personal rancour on my part about what I am saying. After all, I can assure my hon. Friends that if they disagree with me I shall not try to get them expelled from the party. I shall just hammer the point out properly. We must, however, recognise it, and unless we recognise it we shall not get our own policy in this country right.

Why did we go wrong? The right hon. Gentleman was quite right when he said today that we started the re-armament programme in the atmosphere created by the Korean incident; therefore, we were too precipitate. We also said that at the time of resignation. We did not believe the estimate formed of the international situation. We did not believe that 1952 and 1953 would be years of mounting international tension. We did not believe that the advice given to us by the war chiefs was sound advice. The right hon. Gentleman has confirmed our view because now, in July, 1952, the re-armament programme has been cut back, to what extent we do not know.

Here, if I may be permitted, I wish to leave the immediate domestic pre-occupation and turn my attention to the right hon. Gentleman.

The Prime Minister

At any rate, the right hon. Gentleman will find me here.

Mr. Bevan

I am much obliged for the courtesy of the right hon. Gentleman, I think that he has really been treated quite unfairly. I have always regarded him more as an artist than anything else. I have never had very much respect for some of his other qualities, but as an artist he is supreme—[An HON. MEMBER: "He is like the right hon. Gentleman in that respect."]—and when he catches a glimpse of a truth he cannot help expressing that truth in vivid language.

Mr. W. Nally (Bilston)

On a point of order. A second or two ago, Mr. Deputy-Speaker, I ventured a quite mild and I thought good tempered comment, and was addressed by an hon. Gentleman present, who has done the same thing on a previous occasion, by the title of "You rat." As this is the second occasion on which this has happened, and as on the first occasion I ventured to write a courteous note of remonstrance, to which I have had no reply, I should be glad now if I could have a withdrawal and apology from the hon. Gentleman.

Mr. Deputy-Speaker

I did not hear the remark made. Had I done so, I should certainly have deprecated it. It is not a word which we use about each other in this House.

Hon. Members

Withdraw.

Mr. Bevan

I was saying, in a perfectly friendly and admiring way, that the right hon. Gentleman has a gift for vivid phrases which on this occasion has precipitated a premature debate, because it is quite obvious that the Chancellor of the Exchequer was not ready for it. The right hon. Gentleman talked about trap doors—a vivid, concrete metaphor. I think the reason why is because he has really been seized at this late hour with the seriousness of Britain's economic situation, and being seized of it is extremely anxious that everything within his own compass should be done to put it right.

His difficulty is that he is trying to ignite a lot of wet flannel all around him. The right hon. Gentleman, in the closing sentences of his speech today, impressed me at least with the earnestness and seriousness of his apprehension of the difficulties of our situation, but can anybody say that his own apprehension is shared by his Ministers or by the back benchers opposite?

Mr. Robert Boothby (Aberdeenshire, East)

Yes.

Mr. Bevan

There are one or two of them who are beginning to bleat, but all we have had in the course of the last few weeks from the rest of the hon. Members opposite is an attempt to hurry up the freeing of the "pubs" in the new towns and a few things like that. We have had nothing at all from them about the seriousness of the international situation, which is indeed serious.

I should like to tell the House one of the first things that I should do. It has always seemed to me—and I have not said it because I have animus against the occupant of the office—that it is a very great mistake for our economic affairs to be managed by the Chancellor of the Exchequer. I come to it again, and I will try to give my reasons. I have said it before, and surely the fact that we are having these recurrent fiscal crises—in which every time we have them we have a cut in imports here and a pressing of exports there—shows that the intervention of economic guidance in our national economic affairs is too intermittent, too nervous, and tends to be hysterical. It is all the time under the influence of the budgetary situation; under the influence of the balance of payments situation.

As a matter of fact, the chief causes of our fiscal anxiety lie in the physical unbalance of the British economy in its relation with the economy of the world. It is, therefore, direct physical action which is necessary. I do not deny the necessity for fiscal action when there is an emergency, of course; but it is in the direction of physical action directly impinging upon production that the solution of our problem lies. Is it not noteworthy that the only two optimistic items in the speech of the Chancellor yesterday and in the speech of the Prime Minister today were where we have actually taken physical action to deal with them—in the coal mines, and in regard to steel? How much healthier our economy would be today if we had taken that action over steel a long time ago.

Hon. Members opposite have to face these facts. It is very disquieting, but they have to face them. One of the chief causes of our present difficulties is the fact that we have not been able to obtain from the agricultural industry as a whole the sustained effort we have had from steel and coal. And there is another fact which is equally disquieting; that it is from the agricultural areas that the Conservative Party recruits most of its strength.

Mr. Charles Ian Orr-Ewing (Hendon, North)

I am following the right hon. Gentleman's argument with interest. But surely our coal production is now considerably less than it was before the war—[HON. MEMBERS: "No."]—oh, yes—269 million tons before the war and 230 million this year—while our agricultural production is very much higher. How does that support his argument?

Mr. Bevan

This has been discussed so frequently that the knowledge is now elementary. We know very well that there was an absolute decline in the production of coal, because the Conservative policy had poisoned the pits. We could not get people into the pits. No one denies that.

But I do not want to be deflected from this point; this anxiety is universal, and if Great Britain is to pull herself out of this series of prolonged crises, accompanied by unwholesome debates of this sort, we can only do it by pursuing a sustained drive to correct the physical facts.

It is part of my case—and it is not because I have a King Charles' head about it—that that sustained drive must be provided by a Minister who is not necessarily occupied all the time with short-term money accounts. Therefore, I am pleading that there shall be established in Great Britain a Minister for economic expansion, and that that Minister should be made responsible for raw materials.

When I was in the Government I implored my right hon. Friend who is now the Leader of the Opposition to pay attention to the increasing shortage of raw materials, and particularly of non-ferrous metals, particularly of sulphur. Once more people are becoming complacent because stocks are up. Why are they up? Because production is down. As soon as we start producing in greater quantities, stocks once more will be exhausted. We have just heard from the United States, following talks about the shortage of raw materials, a very interesting and impressive report about the effect on the American economy of raw materials outside, in which we are told that within a measurable distance, 20 years or so. America will have to import 50 per cent. of her needs in raw materials.

Hon. Members must realise that this is a most ominous situation for a manufacturing country like ourselves. My right hon. Friend, when Prime Minister, did recognise the seriousness of the issue sufficiently to appoint a Minister of raw materials. I thought that was a mistake—not because I disagreed with the calibre of the right hon. Gentleman who was put into that office; I have great admiration, affection and respect for him; but that was not the right way to do it, because all he could do would be to run around nervously probing other Departments. And although I know that he could easily make his voice heard, echoes do not reverberate very long in Whitehall.

Therefore, what I am pleading for is that we should have a Minister for British economic expansion who would be responsible for keeping a vigilant eye upon the future—not only tomorrow, not only to talk about what we are to do with a balance of payments crisis in 1952–53, but how Great Britain is to face the economic crises of the next 25 years or more. And we can do that only by having the right machine.

I made other suggestions. I suggested that the Ministry of Health should be divided, and it was. The Health Department was hived off, and the Ministry of Local Government and Planning was begun. I will make some further suggestions. The difficulty is that we are looking at the Governmental machine only from the point of view of dismissing a few civil servants. That is too shortsighted. We ought to see whether the governmental machine today has been adjusted to the changes that have taken place in governmental functions.

Obviously, very many important changes have taken place. Industries have been nationalised and transferred, as to their detailed day-to-day administration, to boards. I therefore suggest it is no use merely having the same Minister for Civil Aviation and Transport. There has been no amalgamation of the Departments. The departments are still there. They still have separate addresses. They still have the same permanent secretaries. There is no amalgamation. It is merely a change of nomenclature. It is not an organic change in the structure of the Departments. I suggest, therefore, that those two Departments be immediately organically amalgamated.

Furthermore, I suggest that the Ministry of Pensions be divided; that the cash paying and appeals machinery be handed over to the Ministry of Labour, that Ministry having plenty of experience of this work and plenty of skilled officers. In the next place, the therapeutical side of the Ministry of Pensions, the hospitals, should be handed over to the Ministry of Health, where it belongs, because a sick soldier is merely a sick individual, and should be passed over to the civil Department until he has recovered and then, if it is required, pass him back to the military. This would save another Department by changes which are administratively desirable.

Then I should hand over the Ministry of National Insurance. I am not suggesting that this will be universally popular. I am sure that my suggestions will not be popular in Whitehall. Nevertheless, let us have a look at them. It seems to me that we should look at the Ministry of National Insurance at once, because that Ministry has done its main job. It is now a collecting and paying-out concern, with machinery for appeal. There is not the slightest reason why that should not be handed over to the Ministry of Labour which has offices all over the country. Often economies of space could easily be found in the provinces by the use of the same premises. Why not?

In the next place, I suggest that steel should be handed over to the Ministry of Fuel and Power, because the Minister of Supply is too busy. He has been too mischievous as well as too busy recently. Nevertheless, here we have a huge Department with great administrative difficulties, whereas the Ministry of Fuel and Power have to administer only a Department whose main functions are discharged by statutory boards. Therefore, I would take that away from the Ministry of Supply and hand it over to the Ministry of Fuel and Power.

Then I would take Works and put it into the Ministry of Housing and Local Government. Do not let us be kidded, if I may use a colloquialism, by the speeches made by the Parliamentary Secretary to the Ministry of Housing and Local Government, who says that he has carried his palliasse into the Ministry of Health—sleeping night and day, getting up and working now and again, giving such vigilant attention to the housing drive.

I know enough about the old Ministry of Health to know that the fact is that once one has assembled building materials and building labour the housing programme is an administrative job. The housing programme is a function of the capital investment programme. One can increase the number of houses or reduce the number of houses just as one declares them to be in priority with the rest of the capital investment programme. The fact is that they are both of them half-idle Ministers. Do not let us be kidded by the fact that this crusading spirit occupies no more than a few perorations.

Therefore, I suggest to the right hon. Gentleman, because he has had great experience in many Departments, that he transfers Works to the Ministry of Housing and Local Government and that he reduces it to its old position with a First Commissioner for Works.

The Prime Minister

I have been listening with great interest to the rearrangement of Departments which the right hon. Gentleman has been explaining to the House. I venture humbly to suggest to him that he would add to the interest of his statement if he indicated to the Gentlemen on the benches on his side of the House whom he is going to place in these different Departments.

Mr. Bevan

I am bound to say that not only should I be delighted to indicate the round holes, but I should also like to furnish the pegs as well. No doubt my right hon. Friends will probably be able to do that later. All I say is that the Prime Minister must not allow advancing years to interfere with his natural fertility. There is in fact plenty to be done, not merely from the point of view of the saving of public expenditure, which is desirable in itself where it may be done with equal efficiency, but because these organic changes in the structure of Government are already overdue.

I hope that the right hon. Gentleman will not resent them merely because they come from me. I hope that he will give them proper consideration and not be deterred by the resistance that he will encounter from the Departments, because, of course, they will tell him that this would cause complete chaos. There is nothing so irate as a disturbed sleeping civil servant.

Mr. Ellis Smith

Especially the permanent secretaries.

Mr. Bevan

I should like also to point out that a further change should be made which would save a great deal of clerical work. Once a spending Department has achieved its Estimate from the House after proper vetting by the Treasury, it should be allowed to spend within its ceiling without constant interference by the Treasury. That really does mean an enormous amount of unnecessary work. It means that not only has the Estimate been pruned beforehand, but each time the spending Department has got to send officials to interview some obscure clerk in the Treasury, who knows little or nothing about it but nevertheless spends as much time as possible on the project in order to prove that it is really useful.

It would be very much better if we brought our methods in this matter up to date and did not waste all this money in the Treasury. It would also be desirable that the Treasury should not have the influence which it has at present on appointments in the Civil Service. It is wholly bad. These are practical suggestions put in a non-party spirit and arising out of my own experience and reflections on these matters.

I would add one explosive item to the whole. I would ask the right hon. Gentleman to look very carefully at the home medical establishments of the Armed Forces. For the life of me I can see no reason why the civil authority should not accept complete responsibility for all the medical institutions of the Services at home. We always make arrangements for medical cadres abroad, but a great deal of money could be saved by getting rid of the establishment fetish in military medical establishments.

Mr. Bellenger

This matter has been considered by the Service Departments. Is my right hon. Friend saying that the medical services of the three Services both at home and overseas—

Hon. Members

No.

Mr. Bevan

I said precisely "at home." In fact, all the medical supplies to the Armed Services are now carried out by the Supply Department of the Ministry of Health. It was transferred when I was there. I got a great deal of resistance from some of the military people who, of course, said that they could do it better. But they always say that they can do it better. The right hon. Gentleman will find the most obstinate resistance from them.

What could be better than to have a much greater fluidity of medical personnel between the Armed Services and the civil organisation? That would be much better than what we have at present. It would certainly be much better if we have a war or if we have to expand our medical services. Then a first-class specialist is taken from Harley Street and put under the orders of a medical adjutant because that chap has been there all the time and has got tabs on.

I deeply apologise to the House for taking so long, but I believe that these are considerations which are strictly relevant to a debate on the economic situation. I do not pretend to know anything technically about the agricultural industry, but it is deeply disquieting to a layman to go about the British countryside at present and to see the neglect that takes place. It is deeply disquieting, but, as I say, I know nothing about it technically. It does seem to me that this is our most precious treasure, and that to neglect some of the best land in the world at a time of crisis like this is a crime against Great Britain and against the British people.

No one can say that the agricultural industry has not received attention. The fact is that we go into an engineering shop and we stand over the engineer with a stop watch, we clock him in and clock him out, we have time and motion studies in order to see how much more use of his manpower we can make and how much machinery we can get out of him in the shortest possible time, and yet we subsidise the man in the agricultural industry who is idle half his time.

Lieut.-Colonel Walter Elliot (Glasgow, Kelvingrove)

The right hon. Gentleman has referred for the second time to agriculture. Surely it will be within his knowledge that a very great expansion has taken place, far greater than the expansion which he mentioned in the coal industry. I had some responsibility for this, and I only say that a great expansion has been taking place under existing conditions.

Mr. Bevan

I am not denying it. What I am saying is that, however much that expansion has taken place, there is no justification for wasting land in Great Britain—none at all.

As far as we can look ahead—and the Chancellor himself said this—all other prices may fall, but food prices will not. That is a grim statement to make but it is correct. So there is unlimited room for expansion here, and that is the reason we shall have to look at our system of land tenure and find out whether our farms are properly adjusted for the efficient use of the machinery which we are subsidising.

Furthermore, we shall have to see whether we cannot get a more radical approach in order to get a better arrangement with Ireland, where there is a great neglect of grassland. I fail to understand why it is that, although grass-drying has been universally accepted as one of the most efficient ways of using our grass, grass-drying is so slow, and much too slow for the best use of our land.

All these things require the drive of central machinery and long-term planning. They require to be taken away from the nervous excitement of the balance of payments difficulties. They require a long period of quiet, and that is why I come to my conclusion in this way.

The Government, unfortunately, are unable to tackle them, not only because of a doctrinaire preoccupation with free enterprise, but because their political situation hamstrings them. They are conscious of no majority in the country. They are conscious of dwindling popularity. They do not know how much time they have in which these plans can be laid and carried out, and it is necessary to have that done by a Government with a majority behind them in the country and with at least five years of uninterrupted Parliamentary time. This Government, therefore, cannot do it. The highest act of patriotism would be for them to resign and give way so that a Government may come in that can do it.

6.14 p.m.

Mr. A. C. M. Spearman (Scarborough and Whitby)

I listened with enjoyment and interest to considerable portions of the speech of the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan). I always enjoy listening to the right hon. Gentleman, but I thought that a considerable part of his speech today has been made in self-defence. His speech was eloquent, because he has a power of words which few possess, but I feel I must sympathise with him, as his effort was largely wasted, because the leader of his own party did not happen to be in the Chamber.

Neither the right hon. Gentleman nor any other Member speaking on that side of the House chose to recognise the great change in the position during the last few months. In March, we were losing our reserves at an enormous rate, and, if that had continued, we should hardly have had any reserves left. If any hon. Member opposite doubts whether that matters, I would remind him of what the late Sir Stafford Cripps said, and let me here assure hon. Members opposite that Sir Stafford Cripps was held in great respect by many people on this side of the House. Sir Stafford Cripps said: All that stands between us and disaster is our gold reserve. If we allow this to be completely exhausted, we shall not be able to buy enough food to live on, enough raw material to keep our production going. But we must recognise that the position is still very unstable indeed. Our reserves today are less than they have ever been, except for the few weeks before devaluation, and they are only the equivalent of eight weeks' imports.

On E.P.U., we have a huge overdraft at the present time. The Chancellor told us yesterday that our exports during the second quarter of this year were considerably down in volume. I fear that there will be a great falling off in the orders for exports. We must always remember that we not only have to make goods for export, but we also have to sell them, and we now have to sell them against competitors who were not competing against us before. We have to recognise that, with reserves at this level, we are very dependent indeed upon opinion overseas. That is a very unhappy position for us to be in, but I do not think we improve it by shutting our eyes to it.

There has been a great deal of play on what the Prime Minister said in regard to the economic position. Those people who can sell sterling at the present time or who can delay paying their debts are not people who are ignorant of economic forces and unduly sensitive to optimistic or pessimistic speeches. They probably know just about as much as most of us about the present situation, and they are really not so interested in what we say as in what we do. On the whole, I should say that they are more encouraged by a frank recognition of the difficulties we are in than they are by optimistic speeches.

The Chancellor has said that he must make further cuts in imports, and I believe that may be necessary, but we have to remember that that can help only in the very short run. If we import less, and if we do not produce more at home and if we do not curtail demand, then it is quite clear that prices must rise heavily through the ordinary laws of supply and demand. Not only will prices rise heavily, but activity will be diverted away from the export industries to supplies for the home demand.

I believe the real cause of this persistent trouble with the balance of payments position is that for years we have been living beyond our means. I carefully choose the words "beyond our means" because I do not think that we have been living beyond what we are capable of producing, but living beyond what we actually have produced. During the six years of Socialist Government, for two years we had a credit balance of £250 million in our balance of payments, and for four years an adverse balance of £1,400 million. We were then living beyond our means and financing the deficit by huge gifts and loans from the United States, by running into debt with our Colonies up to the extent of £1,000 million and by running down our reserves.

These resources are not now available; what, then, can we do? I think that all hon. Members on this side of the House would agree that we can do nothing by further taxation. I think that would be endorsed very largely throughout the country. I am quite sure that we cannot cut re-armament below what is considered vital for defence, because if there is one thing that everyone in the country is agreed upon it is that even unemployment, even hunger, is better than another war. We must not starve industrial development, because there is no possible way of holding our own in this country unless we can produce the goods at competitive prices with other countries.

Therefore, I believe that we have just got to cut Government expenditure drastically. I have never been one of those who thought that we could do that effectively just by cutting out waste. I am sure there is a lot of waste in Government Departments, but I have always thought the honest approach to it was that to make really drastic cuts meant a change of policy; meant stopping doing things, even though they were highly desirable because at that particular moment we could not afford them.

I do not believe that we can afford to pay between £80 million and £90 million to subsidise house-building at the present time. A very distinguished Member of this House once said of the speech of another Member that some of what he said was true and some was trite; that what was true was trite and what was not trite was not true. If I said that the tremendous need to supply our people with more houses was agreed by every- one, I think I should be saying what was not only true but was trite, in the sense that it was obvious. It is particularly obvious to all of us who go to our constituencies and find the suffering, ill-health and family trouble that come from inadequate housing conditions. If I said that my right hon. Friend the Minister of Housing and Local Government, by his vigour and his efficiency, had built far more houses than the previous Government with an economy of the use of materials. I think that is equally obvious and equally true.

Mr. Bevan

I am sorry, but it is quite untrue. The number of new units of accommodation—I think that term is now accepted—provided in this country in 1948 was 274,000, and out of that the number of new permanent houses was 227,460. That was when we were building up the programme three years after the end of the war. If they build 230,000 today by stopping all other forms of building, they will not go anywhere near the same effort.

Mr. Spearman

I was merely quoting last year's figure. If I might come to the point I am trying to make, I would say that the efficiency shown by my right hon. Friend was very true.

Here I come to the rather difficult part of what I want to say, because it will be in conflict with what the Chancellor said yesterday, and with the majority of what my party believe, but to be of any use at all in this place one must sometimes say what one thinks, whether it is liked by one's own colleagues or not. I am speaking entirely for myself in this, but I say quite frankly that I do not believe that at this present time we can afford to build as many houses as we are building and to give the present degree of priority to it. I believe that the raw materials that we are having to import for the purpose and the priority we are having to give to that is having a most serious effect on the export industry; on engineering particularly, but on the export industry as a whole. If steel and timber for housing are given a great preference, if urgent priorities are given for one activity of the Government, there is always a dislocation of other activities.

Mr. S. Silverman

The most spectacular fall in our export trade in the last 12 months has occurred in the export of cotton textiles. Would the hon. Gentleman explain how building fewer houses would enable us to export more textiles?

Mr. Spearman

I do not think there was really any connection between what I said and what the hon. Gentleman now says. It is rather like the old saying that all admirals are sailors but all sailors are not admirals. I am saying that the job we have to do is to produce the goods, not that we would like people to buy but that they actually will buy. At the present time, although orders are falling off, the best demand is probably to be had in engineering goods, and I am afraid I have to say—and I say it with obvious reluctance against the feeling of my own party—that the priority given to housebuilding is preventing us from producing as much goods as it is possible to produce. The difficulty about which the hon. Gentleman intervened has nothing to do with how much we can produce; it concerns how much we can sell, which is another matter altogether.

Mr. Silverman rose—

Mr. Spearman

I do not want to have a long argument about it. I have answered the question, and I will leave it at that.

Mr. Silverman rose—

Mr. Godfrey Nicholson (Farnham)

Let my hon. Friend make his speech. It is his speech.

Mr. Spearman

I have answered the hon. Gentleman, and I will leave it at that.

We all realise the desperate need for houses, and we must remember how much could be done by repairing existing houses. The hon. Member for East Ham, North (Mr. Daines), in a courageous speech on 12th March, said: We have to face the fact that in this country we have hundreds of thousands of houses which are rapidly becoming dilapidated for financial reasons."—[OFFICIAL REPORT, 12th March, 1952; Vol. 497, c. 1447.] The truth of the matter is that a very large number of small houses in this country are owned by very impoverished people, who have bought perhaps one house with their savings, and at present rents they are quite unable to repair those houses. I believe that, if the Government could take some measures to deal with the present rent control position—I am not advocating abolishing it, but asking whether they could take some measures—which would enable those houses to be kept in repair, and encourage those with small families to leave big houses and go into smaller ones, we could do a great deal to alleviate the housing difficulty.

If I have shown that I feel a deeper anxiety about the economic position than perhaps do some hon. Members opposite, I should like to make this point. I am not an alarmist, in the sense that I think that we are likely to fail in maintaining the value of the pound, with all that that means. I am anxious because the consequences of failure would be so absolutely devastating, leading to mass unemployment and probably a great deal of hunger. It is because of the extent of that disaster that I am pressing this point today.

I think that the margin of safety is much too narrow. It is not that I think failure probable, but we are in a very dangerous position. I should like to add this: while the margin is narrow, the magnitude of the problem is not very great as yet. If we could increase our production by about 5 per cent, as I believe we could, then we should have gone a long way towards being out of our trouble. If we cannot do that quickly, then we have only to reduce consumption by a comparatively small amount. I know that is a hard thing to do. I believe, however, that it is vital that we should do it in a planned way, so as to avoid the risk of those who can bear it least suffering the greatest burden. I would press on the Government all I can that they should not be too much concerned with maintaining the present consumption, but they should be altogether concerned in increasing tomorrow's production.

6.32 p.m.

Mr. Clement Davies (Montgomery)

The hon. Member for Scarborough and Whitby (Mr. Spearman) need not apologise for expressing his deep and sincere understanding of our economic position. It is a serious position. We are vulnerable; in fact, we are more vulnerable than any other nation, largely because of our position, the size of our population, the small area which we occupy in these islands and our commitments, heavy both at home and abroad. He is quite right in calling attention to the fact that our reserves are nearly the lowest they have ever been. On that, I think, he and the Prime Minister are absolutely agreed.

I agree with the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) in what he said about the Prime Minister—that he realises to the full the vulnerability and the danger. We are in this country in a period of dangerous inflation. At the same time there has not been an increase in the rate of our production over the last 18 months. At the same time, also, our rate of exports has not increased; in fact, there is at the present moment, I think, a slight recession. It is very right, therefore, that we should have had this debate before we adjourn at the end of July. But I have to say this at once. Having now taken part in so many of these debates, which seem to have recurred every July from 1946 to 1951—and here we are in 1952—I do not remember one in which we have had less information than we have had in this debate from the Chancellor of the Exchequer.

Apparently there has been some change, at any rate of direction and of emphasis, with regard to the use of our raw materials. Now, apparently, when our export position may be improved, raw materials which hitherto have been directed towards our armament production will be directed towards making consumption goods for sale. That is a new policy. I can well understand the Government's reluctance to give any information publicly with regard to the affect that will have upon our armament position, but I cannot understand why we could not have had some information as to the estimate which the Government must have made, before this change of policy was agreed upon, with regard to what should be, as a result of the change of policy, the increase in our exports or in the goods available for export.

I agree that it is not enough to increase the quantity of goods; they have also to be sold; but at any rate some indication should be given with regard to that. All we know with certainty is the result of two steps that have been taken by the Chancellor of the Exchequer—his action with regard to the Bank rate and the restrictive action which he has taken with regard to imports.

There has certainly been an improvement in our balance of payments position during the last six months, but the position is still perilous. We are still in a state when the least little thing could put us wrong, and it must have been for that reason that the Prime Minister used the words that he did. I am inclined to think that, instead of criticising the Prime Minister, I would agree with the emphasis that he placed, in his picturesque language, upon the seriousness of our position which has led to a change. What we should have liked to have is the information which the Government ought to have had, and which I hope they had, as to the effect of their change of policy on our export position.

Mr. Nicholson

Surely it is largely a matter of speculation? It is no good the Prime Minister saying that it will make £50 million or £100 million difference if it is largely guesswork. It is a question of emphasis. It is very difficult to evaluate in pounds, shillings and pence. It must be flexible both in theory and in practice.

Mr. Davies

It should not be very difficult to estimate. It must have been present to the minds of the Government, otherwise they would not have made this change. What the exact amount will be, and whether their estimate will be proved right by the course of events, one does not know, but at least they must have had some information which they ought to have been able to give to the House. So what our position is, and what it is going to be, in regard to this very serious matter, I do not know.

The Prime Minister very rightly goes on emphasising the need we are in because of our lack of raw materials and food Time and again he has pointed out what others of us have time and again pointed out: that food for three out of every five persons has to be purchased, and it can be purchased only by increasing the quantity and sale of our exports. We should like to know what information the Government have had which would make them feel a little happier and industry in this country feel a little safer as a result of the new change of policy. So far we have not had one word on that from the President of the Board of Trade.

All that we get from everyone in turn is what we have heard in this House in every economic debate, quite rightly, that cuts in imports may have to be made, because they are rather like an operation which has to be conducted in order to save the life of the patient. These cuts have undoubtedly staunched the rapid flow of the blood of our reserves which has been flowing out of this country ever since last July. That cannot be the true remedy. Everyone says that the right remedy is to have more production. We cannot have more production if we are going to make cuts in our imports. The one and only way would be to extend our imports, if we possibly can.

There is another matter which has been mentioned time and again in relation to getting more production, and that is the removal of restrictions. Very little has been said about it in this debate, but I wish to refer to the continuance, without a doubt, of restrictions in trade associations and trade unions, which were brought in by such organisations at a time when they were, without doubt, passing through a very serious and difficult period but which ought not to have any place today in our economic system. If they cannot be removed, then it is time that the Government took some action about them.

It is very rightly suggested—it is apparently agreed on all sides—that all of us without exception should work harder, and it is apparently also agreed that there has to be a cut in expenditure. Very well. Such steps will lead to the greater preparation of goods for export if the goods can only be sold, but undoubtedly our difficulties in selling are on the increase. There is no longer a sellers' market.

What is more, competition is getting keener. The backlog which grew up during the war when people had to go without has now been filled up to a very large extent, and there are also new competitors in the market. Germany and Japan are now coming in, and quite rightly so, for those people are entitled just as much as we are to produce as much as they can. We have to meet that new competition, but there is even greater competition to meet, and that is the competition coming from the overspill from the United States of America. That is far bigger than anything we have ever been able to do or are ever likely to be able to do.

That brings me to the main point of what I want to say tonight. Certainly since 1945 we have had crisis after crisis, and, as I have already said, the crisis always seems to come up in July. I have seen the Leader of the Opposition and his Chancellors of the Exchequer come to the Despatch Box July after July saying, "Again we are in trouble. Again there has to be a cut in expenditure at home"—which was never fully carried out—"and there must be a cut in imports." That is not going to solve the situation.

I cannot quite understand what the position is today. As I once pointed out to this House, we did not learn a lesson from the attack made upon our liberties by the Kaiser and his myrmidons. The most that we did was to form the League of Nations. We do not really seem to have learnt our full lesson from Hitler. But we are learning our lesson today from the attack that is being made from Moscow. There is a realisation throughout the world that freedom is threatened in every free country.

The result is that every free country—even the United States of America—has said, "We are not strong enough to stand alone." We have therefore come to pooling our armies, and we have made arrangements to that end. We are to have one general staff and we are to have one generalissimo, at present General Ridgway. There will also be a pooling of the navies and the air forces. That is all to the good.

There was one thing in the Prime Minister's speech that I did not understand. In dealing with this very matter, he said that it was not right that those who were agreed with us in pooling resources for defence should be consulting with one another before any change was made. I should have thought that it was absolutely necessary that we should be completely frank with one another and say exactly what we could do and then carry out that agreement, unless some change made it impossible, and that before any such change was carried out we should consult our Allies and say, "We cannot do this; it may throw a further burden upon you." There ought to be that consultation. The right hon. Gentleman the Member for Ebbw Vale was right about it.

So far, so good; but that is not all. There does not seem to have been any agreement whatsoever about a common foreign policy. That is bad enough, but what is much worse is that there is no agreement whatsoever about a common economic policy to uphold the common armaments. Therein has lain the danger throughout. We saw it immediately after Korea. We saw how each one went rushing about to grab as much raw materials and machinery as he possibly could in order to build himself safe but leaving his allies with less. Up went all the prices, making the economic position of every country in the world difficult.

Surely we all realise now that we cannot have social security unless we also have military security and we cannot have military security unless it is based upon economic soundness, and at the moment every one of the free countries is in economic difficulties. Even America is not as well off or its position is not as strong economically as it was a little while ago.

The Prime Minister announced yesterday that we are now to have a new conference of the Commonwealth Prime Ministers. That is excellent in its way, but why limit it to them? The great potential Power is the United States of America. Why do we not ask for a full conference of the free nations who have joined together in saying, "We must defend freedom," or the conference might be limited to those who have joined together and said, "We must defend freedom in Korea."

Mr. S. Silverman

Why not bring them all in?

Mr. Davies

Bring them all in, by all means. Time and again attention has been drawn to the immense strength of the United States of America. Why? Because of its immense area from the Atlantic to the Pacific, from Canada to Mexico, with its enormous potentiality. That is why it is so strong. That being so, surely we should be all the stronger if we could all combine to see what we could do in strengthening the economic position of all of us, fighting as we are to maintain our liberty and, at the same time, our standard of living. I should have thought that that should be the long-term policy to rescue the free world from its present economic difficulties.

6.48 p.m.

Mr. F. J. Bellenger (Bassetlaw)

I trust that the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) will forgive me if I do not attempt to follow his argument. I rise for only a very few moments to try to get some elucidation of a remark made by the Prime Minister in the course of his speech which seemed to me, to use modern jargon, to be "off the cuff."

The Prime Minister told us that economies would be made in manpower in the Army. I think he said that there would be a reduction in manpower of 30,000. I rose and asked the right hon. Gentleman whether he could tell us how that could be achieved. In the course of his remarks, he said that, owing to the lack of trainers, which I took to mean Regular Army personnel—I think he said noncommissioned officers—it would not be so easy for the Army to train the National Service men who were being called up. I took that to mean that there would therefore be a reduction not only in the Regular Army content but also in the numbers of young men in the National Service intake. Indeed, the right hon. Gentleman, in answer to my question, said that the economy would be met in the National Service intake.

The Secretary of State for War (Mr. Antony Head)

I think it was not entirely clear in the exact wording. It is true that there is a reduction of 30,000 in the National Service intake of the Army next year, but that is not a planned intake except in so far as there are total allocations between the three Services. The reason for that reduction of 30,000 is that the current year is an exceptional year and we have five intakes instead of four in the year. Therefore, the total National Service intake is above the normal, and the drop is caused by this extra intake bringing the four to five. That is the cause of the reduction, and it is not consequential on a shortage of N.C.Os. That is always a consideration which we have to take into account, but I can assure the right hon. Gentleman that it is not the reason for this reduction. I hope that this intervention will be helpful to the House.

Mr. Bellenger

That to a certain extent meets my point. If I understood the right hon. Gentleman aright, there has been an exceptional call-up because there is a larger number of men eligible to be called up and waiting to be called up, whereas next year there will be a lesser number of men eligible for call-up. That is a fortuitous economy and I do not know whether it will be repeated as the years go on. I hope that the Minister of Labour at some time will be able to tell us what the arrangements are for future call-ups, so that we may know quite accurately and precisely whether we are to effect long-term economies or whether it is to be a fortuitous economy, which is what I gather from the intervention of the right hon. Gentleman.

I only want to add this. When I was Secretary of State for War I had some part in introducing the Bill concerned with post-war conscription. I have never been enamoured of National Service, because I do not think that National Service is being operated on a fair basis. If we must have National Service, it should be universal and not synonymous with military National Service. Therefore, I only say by way of a footnote that I very much hope this whole subject can be reviewed.

I should add that I do not fully agree with my right hon. Friend the Member for Easington (Mr. Shinwell) when he suggests that we should reduce the period of service. I do not think it is possible to do it at the present moment. However, I think this whole question of the call-up of our young, able manpower, which for two years may serve a military purpose but which detracts from the strengthening of our economic resources should be reviewed, just as we review defence and economic matters. We must remember that while there will be a reduction of 30,000 next year, we are still calling up something like 200,000 of our best young men who could contribute to the strengthening of our economic resources.

6.54 p.m.

Mr. I. J. Pitman (Bath)

I wish to raise three points, and the first is the question of the sterling balances and the vast load of debt under which this country has been left staggering as a result of the contribu- tion which we made to saving the freedom of the world. It will be remembered by hon. Members in all parts of the House that at the time of the American Loan there was an understanding that those debts should be scaled down. But it was not done. Now, it was a mistake to leave the onus on us to call such a conference to scale down our debts. Accordingly, one of the first jobs of our present Government ought to be to ask the Americans, when their new President takes office, to take the lead in this respect, and call a conference with a view to removing these appalling shackles upon our recovery. I would regard that as a major factor in the maintenance of the value of the £.

The next point I want to make is that foreign exchange control is, in practice, lowering the value of our £. Both those who disagree with me and those who agree with me will accept the assurance that we are all desirous that the value of the £ should remain and be maintained as high as possible. Where we differ is that whereas some people think that exchange control keeps up the £'s value, there are others, of whom I am one, who think it is dragging the value of the £ down. We all know only too well that at a time when our dollar balance is against us, any fall in the value of the £ must aggravate our plight and be disastrous, and it would be idiotic for me or anybody to suggest any proposal which would lead to a diminution in the value of the £. My point then is that foreign exchange control is not working, is not maintaining the £ as was intended but is slowly and silently undermining it.

I have refreshed my memory on what I said in this House when the Foreign Exchange Control Act was under discussion. We in the Conservative Party approached the subject on the basis that foreign exchange should not be permanent, and secondly, we doubted whether it was going to work. The intervening years have shown clearly that foreign exchange control does not work in practice and acts as a one way valve. People from outside do not send their balances, which would help save the £, into the sterling area, because they know quite well that once they have placed their good money in the net they cannot ever take it out again. Similarly, since foreign exchange control has to operate on a subjective basis, it is fairly obvious that it is not stopping and can never wholly stop the leakage out of all that which seeks to find its way out of the sterling area. There is thus a steady leakage with no balancing income.

We have only to look at the answer to a Question which I put to Sir Stafford Cripps when he was Chancellor of the Exchequer to confirm that foreign exchange control cannot protect the £ as it was hoped that it might. His answer shows that the vast leakages at that time were not due to any fault in foreign exchange control, but were due to forces over which foreign exchange control had no powers, forces which were and are inherent in the situation.

It seems to me that foreign exchange control is moreover like a Leyden jar or a condenser. The value of the £ is slowly but constantly going down in reality, but that valve being artificially maintained by foreign exchange control until it reaches breaking point, there is inevitably in time a heavy shock and the goes down to a lower level in one big jump to a level even lower than it would otherwise have gone.

No one in man's history has yet been able to demonstrate that foreign exchange control itself supports the currency it is designed to support, but, on the contrary, we have only to ask those who are experienced in this field to be told that it has failed and that it is acting in the way the very opposite to that of its underlying purpose and is dragging down the £.

My third point is that I would urge the Government, as did my right hon. Friend the Member for Blackburn, West (Mr. Assheton), to adopt a more correct and therefore better nomenclature about the "balance of payments difficulties" or "crises," "the dollar and gold shortage" and the "dollar gap." Such purely financial terms clearly disguise the reality and divert attention from the true facts, which are that this is a problem of a deficiency in national production.

There has been a tendency, in support of Socialist planning, to seek to denigrate finance and to talk as if difficulties of this kind were financial. This tendency is to be deprecated because it diverts attention from the fundamental point, which is that it is not finance which is dictating and causing the real situation but the real situation dictating to finance. Finance inevitably follows pro- duction and consumption which are the realities. Finance is thus only of secondary importance. Therefore, I urge the Chancellor to talk about our production deficiencies and not to talk about our balance of payments difficulties.

I think that all this arises from a wrong attitude in this nation towards production. I have a friend just down from Oxford on his long vacation. He wants to obtain industrial experience. He goes into a factory and he is not allowed to do any productive work at all. He is not allowed to produce anything. He can stand and ask questions, but if it comes to production the whole place goes out on strike.

Mr. Austen Albu (Edmonton)

The hon. Member has made a rather extraordinary statement. My own son did exactly the same thing and worked for the whole summer vacation in a factory.

Mr. Pitman

All I can say is that the hon. Member's son chose a rather better industry than the printing industry, which was the one in question. If anyone doubts that he has only to ask various hon. Members who know that it is true. Nevertheless, the point is valid however the industry concerned may vary. There is generally an attitude of mind against production. One has only to read the Anglo-American productivity teams' reports to see that this is so.

There are restrictive trade practices, a general movement for shorter hours and longer holidays, and when there is unemployment it is met by still shorter time, all working against production. And, of course, it is perfectly obvious that the production per man year in this country is low. It is running at about 50 per cent. of what it runs in America wherever a clear comparison may be made because of the use of identical machines.

That, incidentally, is the answer to the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) and the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) who, I think, asked why it was that in this country we were spending insufficient upon industrial development whereas in America they were spending most generously. The answer is that if a machine can be worked not only at an output of twice more per hour in America than it can be worked here but for longer hours per year and with less restriction it pays the Americans to have that machine operating where it does not pay us here.

Production is also better than ours on the same machines in Germany. We have only to look at such places as the docks here to appreciate the extent to which the better workman in this country carries on his back the bad workman and the slacker, all of whom have been deceived into this wrong attitude to production. Our real trouble arises from the fact that all our people work in an atmosphere in which production is regarded as something bad.

Mr. Jack Jones (Rotherham)

And he carries those who do not work.

Mr. Pitman

Our dilemma is crash or reform. What about reform? We must first put right our attitude of mind to production. For this we must begin by putting the terminology right. We must talk about our production deficiencies and only about production, and we must become cost-conscious. We must realise that it is costs that enter into and make prices, not profits, dividends or taxes or anything else. I believe, also, that we must have a great national gesture—whether it is one smokeless day, or not smoking in public, or something of the kind—to bring home to the man in the street that we are deficient in production and must keep down consumption until we have raised our production to justify it. We also want leadership from this side of the House, and particularly leadership in regard to production from hon. Members opposite.

What practical steps then can we take? We might have something in the nature of a poll tax per employee upon employers if they do not increase the number of hours of work in their factories and offices. We might consider the possibility of a reduction in benefits for such employees as were not working those longer hours.

Above all, we must face the fact that we must be more generous in our arrangements for re-deployment, because where a factory is faced with inability to market its goods any working of longer hours will only create unemployment in that factory. Our present instinctive remedy of working shorter hours is disguised unemployment, is wrong and does not help as a nation. The only thing that will help us is re-deployment so that people can be employed in many of the outlets of employment which are wanted and so production be increased.

Finally, let hon. Members on railway journeys with their vouchers have a look at the great cuttings and embankments on the railways of this country and remember that they were made by our ancestors with a pick and shovel. If those ancestors had only had the horsepower and mechanical devices which we have what a magnificent standard of living they would have reached—even more magnificent than they did.

If we, with our horsepower and machinery, only had some of their great spirit of work we would be living as a people in affluence and would hear nothing whatever of balance of payments difficulties or high prices. Our remedy is perfectly clear; we are capable of applying it. It was not only the pilots in the Battle of Britain who worked with that same spirit of our Victorian ancestors; it was also the ground crews who saw the machines into the air. If only production were regarded as vitally necessary and gloriously worthwhile we would be out of our troubles and into higher standards of living.

It is a wrong attitude for hon. Members opposite to complain about the terms of trade. Terms of trade really mean that the backward races have now for their raw materials a rather fairer deal than they had in the past. Do not let us alibi, as I have heard it done in this House, on that issue. Let us get down to the fact that it is our own efforts and our efforts alone that will solve what is really our own problem.

7.7 p.m.

Mr. Harold Davies (Leek)

For the benefit of hon. Members who may want to follow, I shall try to give a lead in a short speech and take no longer than 11 minutes. I do not intend, therefore, to take up all the points of the hon. Member for Bath (Mr. Pitman); but I would point out one thing that is axiomatic.

If everybody were a saint and everybody were a perfectly honest workman and a perfectly honest investor in this country at the present moment, with the shortage of raw materials and the fact that we have only our skill and a small amount of land on which to live, there would be still a crisis which people today are not prepared to face. Historically this country has lost its traditional position, which it had when old Jamie Watt gave it 289 steam engines before the rest of the world had one. Therefore, no speeches and no terminology can solve that problem at the moment.

I apologise that I broke out in an interruption when the Prime Minister was speaking. He is a gentleman for whom we all have a great regard. But it is tragic to see in—to use his own words—this climacteric in British history that old gentleman coming to that Box and talking in picturesque language with nothing physical or concrete to handle Britain's problem. I apologise for bursting out in complaint, but being a Celt I could not resist.

Despite the efforts of the party opposite, the cost of our imports at present is £46 million higher than it was in the comparable six months of 1951. I remember asking a question and interrupting the Chancellor of the Exchequer, during the Budget debate, about the European Payments Union. Within that Union we find that this is responsible for two-thirds of the trade deficit of Britain at the moment.

I have not heard one word from the Front Bench opposite about the problem of East-West trade and the Chinese market. I shall not bore the House with figures. In fact, if I am to honour my pledge to be brief I shall not be able to put those figures before hon. Members. But I took the trouble to analyse Pacific trade and our exports. I take as an example out of a mass of statistics German exports and American exports to Latin America. Here we see a jump of German exports from 32 million dollars of exports in 1949 to 142 million in 1950 into Latin America—

Mr. Malcolm McCorquodale (Epsom)

From Germany?

Mr. Davies

Yes. We see Singapore taking about £13 million of Japanese trade. Never mind the euphemisms of cutting back armaments, and so on. If the House feels now placed in a position where we can steady the armament programme, we ought to feel in a position where we can get international economic talks with a view to opening Chinese trade and East-West trade so far as Russia and Eastern Europe are concerned.

I say categorically that a sack of wheat is as strategic as a sack of rubber. This country bought £60 million worth of timber and wheat from the U.S.S.R. and if, because of the myopic hatred that can be inflamed in the world, Western Europe refuses to sell its wares to China and Eastern Europe, refuses to move rubber and engineering products into Eastern Europe, it will be no solution for the Treasury to write figures on paper or for the Prime Minister to make speeches at that Box. Now, more than ever before, Britain should give a lead to the world by demanding a world economic conference to which the U.S.S.R. and the Mao Tse-Tung Government should be invited in order to discuss international trading.

Finally, I have noticed that a book has just been written called "Untaken Harvest." I gather that in this country alone we lose the output of 33,000 farms a year as a result of a half-hearted pest control. That is the estimate given. The point I make is that food production is not keeping pace with the growth in population. Therefore, at this juncture it is much more important to us to create a colossal plan for the development of Ireland and those parts of Great Britain which can make a useful contribution in meat and dairy products and also economically. That would be a physical project worth much more than the speeches any of us can make on food production.

So far as South-East Asia is concerned, at this moment much more important than the Colombo Plan and Mr. Truman's Point Four plan is for us to tell the United States of America today that a fair price for rubber and tin is the best fillip that could be given to the Western European and dollar areas and to cement friendship in the world.

7.14 p.m.

Mr. Anthony Barber (Doncaster)

The hon. Member for Leek (Mr. Harold Davies) will forgive me if I adhere to his example and do not follow him, because I wish to elaborate only one small point and then to allow other hon. Members who desire to speak to have their say in this debate.

I have no doubt that most hon. Members on both sides of the House—and I assume the Chancellor himself—were disappointed that he had to come to the House of Commons yesterday and announce further reductions in our import programme for the second half of this year. By that I mean reductions which were greater than those which were contemplated originally by the Government. However, I am equally certain that all sections of our community, people from all political parties, are prepared to accept those cuts so long as it is made quite clear by the Government of the day that they are part of a short-term policy.

Because I believe that, I was delighted that the Chancellor of the Exchequer once again yesterday stressed the fact that the solution of the economic and financial ills of this country lies not in restriction but in an expansion of our production. One does not need to be an erudite economist or, to put it even higher, a Chancellor of the Exchequer, to appreciate the fundamental economic truth that ultimately the physical well-being of any community depends upon the output of the goods and services of that community.

It has been said by people on both sides of the House, with great truth, that this country today is economically inextricably involved with the United States of America, and that whatever happens economically in the United States must inevitably have a great effect here in Britain. That cannot be denied. Nevertheless it remains true that we shall only improve our standard of living in Great Britain if we are able to increase production.

Here I say with great respect that I do not believe that ministerial exhortations are enough. I would pray in aid of this view the fact that even the late Sir Stafford Cripps, with all the sincerity and logic which he employed and with all the respect which he commanded amongst all sections of the community, was unable to call forth that degree of production which in his day was necessary to stabilise and to improve our standard of living.

The reason is perfectly clear. It is because the average man and woman in this country, however patriotic he or she may be, works to earn a living. Most people do not have particularly interesting jobs, many of them have particularly humdrum ones, and they work to earn a living and so to improve the conditions of themselves or of their family. So we must ask ourselves, how best can we secure the extra effort which all sides of the House agree is necessary if we are to pull through?

In the Soviet Union, as we know, it is achieved, at any rate in part, by the threat of the labour camp, and nobody in this country, I hope, wants to see that done here. The only true and effective answer is to provide the necessary economic incentives. Although I know that there will be those on the other side of the House who will disagree, I venture to say, representing as I do an industrial constituency, that the tax concessions which were introduced by the Chancellor in his last Budget have already begun to have good effect, however slight, at the present time.

Mr. Roy Jenkins (Birmingham, Stechford)

How does the hon. Gentleman reconcile that statement with the fact that this summer is, of all years, by far the most disappointing from the production point of view?

Mr. Barber

I am not denying the figures. I have that point well in mind because it was raised earlier in the debate. What I am trying to make clear, although I do not want to elaborate it, is the fact that from what I have learned from my own constituents, and excluding those who are biassed towards one party or another, I believe that people are beginning to say to themselves, "It is worth while doing just a little more."

That is the attitude of mind which we have to get throughout the country. I am not, as I say, trying to exaggerate what has taken place so far. However, I hope that the Chancellor will see fit to go even further in the same direction. I am fully aware, as we all are, of the many difficulties of providing effective incentives. Outside the House, one frequently hears it said that it would be a good thing if taxation were completely taken off payment for overtime work. Obviously, that is quite impracticable, but I hope that my right hon. Friend the Chancellor, with all the fiscal and other means at his disposal, will aim at creating what I can best describe as a personal economic atmosphere for each individual, whereby it becomes far more obvious than it is at present that that individual's own effort is related directly to the well-being of himself and of his family. If that is the aim of the Chancel- lor—and from he has said, I believe it to be so—we can look forward with confidence to a solution during the lifetime of this Parliament to the main economic difficulties which beset us at the present time.

7.21 p.m.

Mr. David Griffiths (Rother Valley)

I am amused and even amazed at the attitude displayed by right hon. and hon. Members opposite in this debate on what we call the financial crisis. From 1945 to 1951, whatever difficulties arose, we were told that they were due to the maladministration, and so forth, of the wicked Socialists. But unfortunately, the party opposite had to wait until they were elected by a minority vote to take office before they realised the realities of life. Now, they tell us that the reasons why we are in this dilemma are, first, the war in Korea, and second, world events and stockpiling. Not until they were elected to office did hon. Members opposite realise that these difficulties confronted the nation.

The hon. Member for Doncaster (Mr. Barber) has said that we need incentives. I suggest that the Budget presented this year by the Chancellor of the Exchequer has been an incentive more for the "spivs" than for the industrial worker. What were the suggestions that the hon. Member for Scarborough and Whitby (Mr. Spearman) had to propose? First, it was that if the Government want to save and to make economies, we must have a lower standard of housing. But for whom? It would be for the working man and woman.

The hon. Member's second suggestion was that we must also cut off the housing subsidies. Many people would suffer if such an illogical step was taken. Throughout my experience in local authority matters, I have learned that housing must be let at economic rents. Obviously, if subsidies were withdrawn, the particularly low paid workers would not be able to be tenants of the council houses. If those are the kind of incentives about which hon. Members on the Government benches are talking, I fail to see how they will achieve the desired results.

The first and foremost product for the salvation not only of this country, but of the world, is coal.

Mr. Cyril Osborne (Louth)

Food.

Mr. Griffiths

No, coal. We have better opportunities as regards food than we have for coal. There are human factors to be dealt with.

Mr. Osborne indicated dissent.

Mr. Griffiths

It is no good the hon. Member shaking his head. He does not know what mining is. The biggest difficulty in the House is that the Members who talk most about mining know least about it.

Mr. Osborne

I was brought up in a miner's home. My father worked 40 years at the coal face, and I know more about it than most of the Members sitting on the Front Bench opposite.

Mr. Griffiths

The hon. Member's father may have worked at a coal mine, but he did not work 40 years at the coal face.

Mr. Osborne

Yes, at the coal face.

Mr. Griffiths

I happen to have worked longer at the coal face than any other Member of the House, and I want to point out how and where the incentives can begin.

First, there is the question of manpower. An hon. Member has said that we got much greater output before the war, but in those days we had twice the men in the mines. [HON. MEMBERS: "No."] We had 1¼ million men in the mines before the war. Some of the hon. Members opposite who try to contradict were then still in the infant schools and they have only learnt about it by reading. At that time, when the record was broken, 1¼ million men and boys were in and about the mines. Today, the manpower total is 717,000, whereas it is accepted that the minimum required is 736,000. What we have to do, therefore, is to give more incentives to attract people to this arduous and dangerous occupation.

Mr. Pitman

Is it not a fact that the output per man year, with very much less mining machinery, was greater before the war than it is now?

Mr. Griffiths

No, I do not accept that. It is true that the policy of those days was to work the good, healthy, rich seams. Now, we are having to work decadent pits and much more difficult seams. Before the war, therefore, everything was in favour of greater output and the comparison is a very unfair one. Manpower, however, is a difficult problem and I hope that the Chancellor of the Exchequer will use his endeavours to enable us to get the 20,000 men of whom the industry is short.

The output has increased, and it has increased considerably, much more since nationalisation than could ever have been anticipated. I recall that in my maiden speech, before vesting day, I told the right hon. Gentleman who is now the Minister of Fuel and Power, together with hon. Members on my own side of the House, that it would be a physical impossibility to achieve any material increase of tonnage within five years. But what have our men and boys done? They have increased output by 30 million tons, with very little additional manpower, and not because of the advantage of machinery.

There is one important factor that is not acknowledged, even by some of my hon. Friends, let alone Members on the Government side. In the last three months of 1951, the reason for the increased output—much more than could have been anticipated or hoped for—was that in October 13.4 per cent. was overtime. If the miners had worked only their normal shifts, the output would have been much worse. In November, the figure was 13.9 per cent. In December when they are getting ready for Christmas and New Year, and which we call "bull weeks," it was 17 per cent. In January it was 13.6 per cent., and in February, 13.7 per cent.

It is a physical impossibility to maintain that. These men and boys cannot continue working overtime at the speed at which they are now working and are expected to work. We have to supplement by more manpower and better machinery and we have to give all power to the elbow of the National Coal Board.

In passing, I may remark that this afternoon I heard the noble Lord making his maiden speech in another place, and a very good contribution I thought it. He eulogised the efforts of the miners since he became Chairman of the Coal Board, but he has invariably had nothing but slander from hon. and right hon. Members on the Government benches. If we are to survive we have to export more coal. We are as anxious to get that coal as is any hon. or right hon. Member opposite. Anything we can do to revive, increase and stimulate that effort we shall be only too willing to do, whether as trade union leaders or politicians. That is our ambition in life and always has been. I am satisfied it always will be, particularly so far as I am concerned. I want the well-being, not only of the miners, but of the nation and all the working class of the world.

Coal was mentioned by the Chancellor as the primary need for the benefit and well-being of the State. It is very 'readily said that a lot of our men are making £12, £14, £16 and £20 a week, but much of it is due to overtime. There are a very small minority getting such large wages. What about the by-workmen and surfacemen getting £7 0s. 6d. and £6 1s. 6d. per week, gross'? There is a large percentage and if we put it in the region of 70 per cent. we would not be far wrong.

Mr. Osborne

The Ministry of Labour figures?

Mr. Griffiths

In the Ministry of Labour figures the minimum wage is £7 0s. 6d.

Mr. Pitman

What about earnings?

Mr. Griffiths

Does not the hon. Member understand that the miner is paid a fixed Irate per day; is not that earnings? He is not on contract and approximately 70 per cent. of the personnel are on a fixed day wage—

Mr. Pitman

Surely the Ministry of Labour figures show that the average earnings for the underground man is more than £10 a week. If that is so, I do not see how 70 per cent. can be down to the very low figure.

Mr. Griffiths

Again, the hon. Member is not following the argument and does not understand.

The reason for this big wage is, first, the considerable amount of overtime that is being worked. Surely if men are doing a shift and a half a day that should not be called a shift, but it is counted as gross wages. That is the reason why wages appear so high. With statutory deductions, Income Tax and National Health contributions—and in collieries there are many more subsidiary stoppages than in any other industry—the net wage which a considerable number of people take home is £6 6s. or £5 5s. if they work on the surface.

I ask any hon. Member here if he can live a decent, reasonable life on five or six guineas a week? If, as the hon. Member for Doncaster says, we want to give them an incentive, I suggest to the Prime Minister and the Chancellor that they should immediately tell the Ministry of Labour to cancel the wage freeze policy, particularly for the lower paid workers. They are not involved in Income Tax, so I ask the Chancellor what he is doing to stimulate production in order to increase manpower for the benefit, not only of the mining industry, but of the nation as a whole?

7.35 p.m.

Sir John Barlow (Middleton and Prestwich)

I do not propose to follow the hon. Member for Rother Valley (Mr. D. Griffiths) because he has spoken about a subject, coalmining, about which I know little or nothing. We have this in common, that we are both most anxious to see increased production in this country.

Yesterday, the Chancellor of the Exchequer laid great emphasis on the expansion of exports and the diminution of imports. One of the contributions to the reduction of imports undoubtedly can be increased agricultural production in this country. I do not propose to spend any appreciable time on this subject, but we all know that since the war the increase in the production of food in this country has been most disappointing. I believe that the present output is only about 7½ per cent. above that in the war and, when one considers the advances which have been made both technically and mechanically, and the labour available since the war, it is amazing that the increase has not been greater than about 7½ per cent. I urge the Government most strongly to follow that up because it can be a tremendous indirect producer of dollars.

I wish to speak more particularly about the textile industry, for two reasons. One is because I represent a division which is vitally interested in textiles, but I should not dare to do it for that reason alone. The other reason is because textiles are of such vital interest to Lancashire as a whole and to the possible exports of this country. Before the First World War about 75 per cent. of the production of cotton textiles went for export and 25 per cent. for home use. In 1938, just before the last war, it was about 50–50. Recently, it has been about 75 per cent. for home use and 25 per cent. for export. That is a very serious change round for a country such as ours, dependent so largely on exports in order to buy food and raw materials.

I emphasise that this is not a party question but a national question. It only hit the country vitally in the last few months. The first signs of a recession or a slump came last August—I am making no party point on that: it was bound to come at some time. One of the difficulties of the textile trade has been the tremendous changes in the last 12 years. It will be remembered that at the beginning of the war it was vital to increase exports as much as possible in order to pay for munitions of war. Suddenly, overnight, we had enormous financial help from America which immediately changed the position. After the war there was a sellers' market and practically anything that was made could be sold at a large profit, perhaps at too large a profit. Now, again, almost overnight, we are suddenly faced with a lack of orders which is most serious for Lancashire and for the country as a whole.

It is possible that because of these very rapid changes some manufacturers or merchants may have got out of touch with the particular requirements of their markets. The noble Lady the hon. Member for Aberdeen, South (Lady Tweedsmuir) drew attention to that when she spoke about the wrong kind of advertising in Canada and other places. Not only are all the difficulties of production and price with which we were familiar in prewar days very much alive today, but there are many other questions over which the merchant or manufacturer has no control whatever. I refer, in particular, to exchange controls, to G.A.T.T. to quotas, subsidies of various sorts, bulk purchase and penal taxation. These are all matters which have arisen since the war over which the export merchant has no control.

It is suggested that we are going through a temporary slump and that orders will be coming forward normally in the autumn. I wish I could think that that were true. It may be true, but I doubt it. In any case, it is only prudent to take the pessimistic view and do everything we can to secure orders whether they ate coming along naturally or not. I should like to see the Government take a more active part in helping merchants to get orders from abroad. Owing to the difficulties, some of which I am trying to point out, I think that the Government could and should help more than they did in pre-war days.

I should like to see a small commission appointed to consider the various foreign markets because though orders are difficult to get we know perfectly well that by help in some directions, may be price or may be by some sort of outside bargains, we can get more business. The state of the industry is so desperate that we must leave no stone unturned. We must do everything we can to get more business. I should like to see such a commission appointed, to work very quickly and to consider the different markets of the world.

We know that some South American markets, the Argentine, Paraguay, Uruguay and Chile, all want textiles, but for certain reasons they cannot or do not take them. It may be possible, with closer Government co-operation and help, for us in some way to get our goods into those markets. Have inquiries been made? Do we know that it is impossible under all the circumstances? That may be known to the Government, but that knowledge is not known to us.

There are many other markets, and colonial markets in particular, which were comparatively small before the war but which are infinitely more important now. Colonial merchants, naturally, try to sell their produce in the best market and buy in the cheapest market. That is all very well up to a point, but we give very valuable help to the Colonies and make certain concessions to them. They want our help and capital for development, and we are anxious to do the right thing by them. In the same way, I think we have a right to assume that they will take a reasonable amount of their textile requirements from this country. That cannot be settled by merchants in London and Manchester, but only at a high level, by the Government. Are these things being investigated, because I am sure that is worth while?

To give another instance, Pakistan has more cotton than she can consume and in the past she has been subsidising her cotton textiles. Can we buy her cotton, which will be useful to Lancashire, at a reasonable price, and in return get some concession for our textiles? That is a suggestion in the trade that might be a possibility. That sort of thing should be investigated. I feel sure that some good would come somewhere.

It may well be that in the case of the more hopeful markets it would be advisable to send missions to investigate the matter on the spot. If and when that is done, I should like to see those missions composed of workpeople or trade unionists and other people interested in the cotton textile trade. But they must contain one man who is familiar with the market, probably a merchant who has been selling goods to that market; otherwise they will not really get to the bottom of the matter.

I have promised to be brief, but I hope the House will have seen, from some of the questions I have put, that I have a feeling that owing to the sudden change from a sellers' market to a buyers' market, perhaps we—the Government and the merchants—have lost the grip on the situation which we used to have. I feel that in some ways we are drifting, and it is of vital importance that we should again get a grip of the matter.

If we wait and do nothing business will probably return in time, but we want it quickly. I would say, in conclusion, that world conditions are partially responsible for our difficulties in the textile trade, but I believe that those difficulties are capable of solution if the Government tackle them with the urgency which the situation demands. We have in Lancashire a greater accumulated knowledge and experience of textiles than any other nation; we have some of the finest textile workers in the world, and a vast amount of machinery and equipment.

These are great national assets which we cannot afford to fritter away. The industry is ready and indeed anxious to fight for its existence, but owing to the complication of world conditions it must have the energetic help and guidance of the Government. I believe that only along those lines can Lancashire find a solution to her difficulties and continue to provide her share of exports, which are so vital today.

7.46 p.m.

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

I welcome the opportunity of speaking in favour of the Amendment, but I wish it had contained more constructive proposals. I propose to make some critical observations that need to be made in this House and which ought to have been made before now, and then make some constructive proposals on the lines on which I have been speaking for about six years.

I welcome the increasing realisation in this country that we are now on the edge of an economic abyss. Because I am so pleased to belong to the class from which I come, knowing that it is they who in the main have made our country great, and that so much is at stake in that respect, I wish to make constructive proposals, and I hope that they will be carried into effect before I make my final contribution.

We are faced in this country with three wide gaps. The first is in our balance of payments; the second is in our output and productivity compared with the United States; and the third is between the rich and the ordinary people in this country. These wide gaps are due, first, to generations of neglect in the past and to 10 years of world war, a fact which is not appreciated by some other people in some parts of the world. It used to be said that the House of Commons is the graveyard of courage; if we are to deal with the problems which now face our fellow countrymen, that will not have to be said with truth in the future.

I believe that we all ought to be big enough to admit that my right hon. Friends the Members for Ebbw Vale (Mr. Bevan) and Huyton (Mr. H. Wilson) and my hon. and real Friends the Members for Stoke-on-Trent, North (Mr. Edward Davies) and Stoke-on-Trent, Central (Dr. Stross) have been proved right in respect of the problems which we are considering.

A lesson dearly bought should be a lesson well taught. We should have told the United States that we could not afford the economic strain of gigantic armaments. We should have reminded the United States that we lost 700,000 men before they came into the First World War. We should have reminded them that we strained ourselves and stood alone for 12 months before they came into the Second World War. We should have reminded them that we sold our assets to buy arms and that they made large profits as a result. We should have told the United States that we paid large compensation for British shares sold in the United States so that we could buy the arms urgently required to enable our men to hold their own during the 12 months when we stood alone. Well might Mr. Stettinius say that the United States bought time with British blood.

We should have reminded the United States of how they treated that great public-spirited man Lord Keynes, when he was negotiating on behalf of our country. We should have reminded them how soon they cut off lend-lease when the people of this country voted in the way they did after the termination of hostilities. The recent policy of the United States of ruthlessly grabbing scarce materials upset the economic equilibrium of the Western countries and resulted in the rocketing up of prices, which has had a serious effect upon our balance of payments, and upon the export trade, in which some of us have been brought up and about which we know what has gone on for so long.

In my view, we are trying to do too much with limited resources, and we shall pay a terrible price for the refusal of Conservatives in all walks of life and in all kinds of organisations to plan this country. We urgently need increased production, yet we cut down our capital expenditure on production equipment. Last week I put down two Questions in order to obtain replies to what I am about to mention, but up to now I have not received the replies.

If my analysis of Command Papers 8203 and 8486 is right, we are not only cutting down on capital expenditure, but also we are not meeting our current depreciation. If my analysis of the figures is correct, those responsible should be charged with criminality and with the ruining of this country in the way that they are.

In the United States they have three times our population, but ten times our national income, and that is increasing each year. I could quote the figures if I had more time. I want to plead that it is time that we in this country adopted a constructive economic policy which we could all support. I am pleading for a wealth production policy and a programme of action on condition—and let me emphasise this with all the strength I can—that there is a fair distribution of the fruits of industry; and that any increase in output is used in the national interest and not to benefit any small group of people.

We should fix targets and increase output for certain periods to be decided on by industry, so serious is the situation in which we find ourselves. Our people need increased horsepower per head in industry; modern productivity equipment; more manpower in productive industry. There are far too many in this country watching too few do the real production work. We need the modernisation of our organisation, less expenditure on nonessentials and more on world production equipment. We need double-shift working where required. We need incentives and priorities for those engaged in productive industry.

We realise the need for and will readily agree to a critical examination, provided action is taken, of all restrictions in our country, no matter who may be responsible for them. But in my view the most urgent need is for action to be taken against the trade associations which have obtained such a terrible grip upon the raw materials required in the productive industry of this country.

We also need a real shake-up in the Ministry of Education. It is well known among engineering students, whether they be management or workpeople, that we urgently need technological centres at Manchester, Glasgow and Newcastle especially.

Mr. M. Follick (Loughborough)

What about Loughborough?

Mr. Ellis Smith

I readily agree with my hon. Friend, and I do not blame him for making that point. If all hon. Members watched their constituency interests in the same way as he does, no one would be more pleased than I should be.

All overhead charges in industry need urgent examination. During the past 30 years overhead charges on productive industry have grown to a mountainous height. Productive industry in this country is carrying overheads, of a parasitical nature to a greater extent than any industry in any part of the world. In addition, we cannot afford the overheads caused by our over-heavy military commitments, and we also need the men in productive industry. I have so much confidence in my fellow countrymen that I believe there would be a great response to a programme and a policy of this kind, and that we should get the great drive which we require.

Coal is now modern gold, and yet in some cases we are burning it unnecessarily and in others we could be burning inferior coal and exporting the better coal to enable us to improve our economic position. We urgently require a national fuel and power policy and the scientific utilisation of this modern gold. I give all credit to hon. Members on both sides of the House who a few weeks ago made their contributions to this subject. When will the Minister act? When will he be shaken out of his complacency? During the war this country was dynamic. Democracy was dynamic, and Ministers responded to it. The present serious situation demands the same kind of dynamic drive from Ministers.

The Chancellor gave credit to the coal industry, but he also might have given credit to my right hon. Friend the Leader of the Opposition who enjoys the enormous good will of the miners. When my right hon. Friend sent out that letter—which too many have forgotten—the response he received was due to the loyalty of the miners. They worked Saturday mornings and over-time, and have done so up to the present time.

We need an increased output of steel by the concentration and modernisation of our steel plant. Instead of an increased output of steel, the Government are now taking steps to discourage the men employed in the steel industry. Nationalisation receives our support not merely as a political issue, but because we need it for technical reasons if we are to keep pace with the output throughout the world, and especially in the United States. Millions and millions of pounds need to be spent on capital equipment to enable the steel workers to do justice to themselves. All our resources should be concentrated on securing the maximum output of those products which will serve the national interest best, with minimum delivery dates.

When I heard the Prime Minister and the Chancellor say that we are to export arms, a shudder went down my back. This means that a section of the engineering industry will be risking their future markets and letting them go to some other country which will deal with us ruthlessly when the time arrives. Then, again, there will be talk about reducing our standard of living because of the neglect and the policy pursued now.

In addition, we need a drive for maximum efficiency and output in agriculture. There must be better use of our land. We need a land reclamation drive. It is admitted by all students of economic affairs that civil engineering has done a good job for opencast mining. We now need civil engineering on the job of reclaiming our land along the shores at places like Southport, and along the Wash. There are miles of derelict land alongside the railways running through Stoke-on-Trent, Wigan, Glasgow and other places, which could be utilised to increase our food supply. What the people of Holland and Israel can do, our people can do if they can have a Government which will provide them with the necessary tools. I plead for this type of policy to be applied.

I welcome the proposed Commonwealth Conference to be held in London in November. I hope that we shall go there with concrete proposals. I hope that we shall be in a position to make proposals which will enable a plan to be prepared so that we can work with those countries which have proved to be such great friends of ours, namely, Australia, New Zealand, Canada. Australia can enormously increase its food production if only it can be mechanised on the same level as we have mechanised our own farming.

Also, we ought to be taking the initiative in asking the United Nations to call a world economic conference so that not only can we plan for the Commonwealth but the whole world can be called upon to save mankind by dealing with mankind's urgent economic problems instead of quibbling among ourselves and snarling at one another as so many are constantly doing.

I started my speech by being critical of the United States in the belief that I speak for millions of my fellow countrymen. We do not want another war. If we are to avoid another war it is now that we must fight war so as to prevent it. We have to ask mankind throughout the world to prepare plans to deal with our economic problems rather than to prepare plans to slaughter mankind, as we have done twice in my lifetime.

The people of our country have nothing against other people. Whether their skins be black, white or yellow, our people think well of them. They want to take them by the hand and become their friends. They want to work with them. They want to trade with them. They want to live in one world together. I believe that millions of Americans have the same wish. It is time that our country took the initiative in adopting a policy to save ourselves and to make a greater contribution towards saving mankind at the same time.

8.5 p.m.

Mr. Julian Amery (Preston, North)

I cannot say that I agree with everything which fell from the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), but he used one vivid phrase when he called for a wealth production policy. It would be difficult to express more aptly what this country needs. I hope that I carry him with me in some, if not in all, of what I say.

It is important that we should get this debate into proportion. We on this side of the House are entitled to say that we inherited a difficult situation and a heavy burden from the late administration.

Mr. Follick

Did not we, also?

Mr. Amery

Of a different kind. I do not propose to discuss the situation in 1945.

I do not think that hon. Gentlemen opposite would grudge me my claim. I would also say that all of us ought to pay a special tribute to the Chancellor of the Exchequer for his achievement in halting the drain on our reserves. He has staved off the collapse—the break-up—of the sterling area which threatened us in the early part of the year. He has averted a catastrophe.

For all that, our position remains extremely precarious. Our reserves have shrunken to danger point. It may be, if all goes well, that the Chancellor's optimism will be justified, but any serious worsening in the economic weather might easily sink us altogether. But for American aid and some drawing on stocks in the early part of the year it is difficult to see how we could have avoided a devaluation in the last few months. We may not avoid it even now.

What has been the policy of the Government for solving our payments crisis? It has been, on the one hand, to reduce consumption by cutting imports and raising the interest rate and, on the other, to encourage exports to the non-sterling area and the dollar world. Now the Chancellor has called for a further increase in those exports. How is it to be done? As consumer goods already face a shrinking market, the burden, as he said, will fall, on the engineering and metal using industries. They are to be helped by a change in the pattern of the re-armament programme. What does this amount to? We are really being asked to continue what I might call the Cripps-Gaitskell policy in another form. It is "the mixture as before" with a flavour of deflation and a dose of Bevanism thrown in.

Is there any prospect, even with these new ingredients, that such a policy will enable us to attain, and what is still harder, to maintain the necessary increase in our exports? We were told at the end of the war that we had to increase exports by 75 per cent. over the pre-war volume. Despite a sellers' market and American aid that target has never been effectively maintained.

Can we hope now for any further substantial increase in exports, now when we are confronted with a buyers' market, with reviving German and Japanese competition, not to speak of the heavy new burdens which we shall have to shoulder next year in Germany for the maintenance of our defence Forces over there? It is hard enough to believe that we could come in sight of the new export targets even in good times: with a recession in the United States it would be out of the question.

The Government have a short-term policy. It seems to be doubtful whether it will work. It is perfectly clear that they have not yet got a long-term policy of any kind. There is a danger, moreover, that, by over-emphasising the im- portance of dollar exports in the interest of maintaining the present import programme, they may sacrifice our only hope of getting back to an expanding economy.

I must confess that I was somewhat alarmed yesterday to hear the Chancellor of the Exchequer blaming the greater part of our difficulties on the last war. Of course, they were aggravated by the last war, but if we believe that they are only due to that war we still do not know what has hit us. Our difficulties result from a deep-rooted and continuing crisis which has been with us for close on half a century. It is a crisis caused by our failure to adapt ourselves to the changes which have transformed our trading position in the world.

In the old days—the days of Cobden and Bright—food and raw materials were cheap. That is why Cobden, with his friends, went all out for a policy of free imports. The wanted cheap raw materials in order to make cheap production possible. They wanted cheap food in order to be able to pay low wages. In those days, industry carried very small overheads. When the grandfather of the present hon. Member for Cheltenham, Sir Michael Hicks Beach, raised the Income Tax to 1s. 2d. in the £, the "Daily Mail" came out with a headline "Is it the end of us?" There was no Welfare State then; as for re-armament, we just thanked God that there was a British Navy, and left it at that.

Those days have gone, and they are not coming back. Food and raw materials are dear, and they are likely to stay dear and may become even dearer. Nor is there any substantial hope of a reduction in our overheads for many years to come. We are - all, in both parties, determined to keep up the main structure of the Welfare State, and it is quite clear, in the world as we know it, that we have to devote a substantial part of our income to defence. These things are the political realities of the times. But the cost of them, if you add it up, means that we can never again be the cheapest producers in the world.

This fundamental change in our position has been aggravated by the dollar problem. The refusal of the Americans to import or invest as much as they export has brought about a complete and lasting breakdown in the machinery of world payments. We can no longer hope to buy in the cheapest market and sell in the dearest. We have to buy in markets in which our currency will be accepted, and we have to sell to purchasers who have currency with which to pay us.

Ever since the war, we have been indulging in a romantic illusion—I mean the American attempt to recreate a system of multilateral world trade such as existed, not before the last war, but before the First World War. There is nothing more tragic in life than the murder of a beautiful theory by a gang of brutal facts. Twentieth century America is not and cannot be 19th century Britain. She does not need the imports, as we did; she has unparalleled opportunities for investment within her own boundaries or next door. Nor will she follow our example and ruin her agriculture in the interests of an economic theory.

In these conditions, the Bretton Woods Agreement, the Washington Loan Agreement, the Geneva Convention, the Havana Charter and the General Agreement on Tariffs and Trade have all been milestones on the road not to recovery, but to disaster. We may as well recognise that the day of the Manchester school of economic theory, glorious as it may have been, has gone. Hon. Members will remember the old saying, "What Lancashire says today, England will say tomorrow." As a representative of Lancashire in this House, I hope that that may come true again, but the first step towards making it come true is to make up our minds that what Manchester said yesterday England must never say again.

The alternative, as I see it, to a return to a multilateral system which the Americans have been urging upon us, is to make ourselves a great producing country and, as far as we can, a great producing Commonwealth; not self-sufficient, but more self reliant and better balanced both in regard to industrial and primary products than we are today.

What does this policy imply? We must cut our dollar imports to the level of our dollar earnings. We must maintain a high level of export. These are already agreed aims between us. But, important as they are, there is one thing which is more important. That is to develop new supplies of food and raw materials, first and foremost in this country, and then throughout the sterling commonwealth. This should be our first aim, and we should seek our future economic expansion, not in what the economists call the neutral markets of the world, but in the new markets created by our own development policy for ourselves.

The opportunities for such development are very great. Here, at home, I believe we could produce 25 per cent. more food than we do now. I thought it discouraging to see from the Economic Survey that capital investment in agriculture last year was only 4.5 per cent. of the whole, and even this figure has been cut by 15 per cent. of that amount this year. We are all encouraged to know that coal production is improving, and we hope it will continue, and I agree with the Chancellor that much could be done to increase the production of building materials here in this country.

Beyond this, there is the whole range of synthetic products. Should we really go on paying dollars for cotton from which to make shirts to sell in this country and in the sterling area but on which we never get back a single dollar? Ought we not rather to be encouraging the Lancashire mills to change over, not entirely, but as much as they can, to rayon or synthetic fibres which have a much lower dollar content?

There are even greater opportunities for development in the Commonwealth. There is very little that we need which cannot be produced in some quantities in the Commonwealth. In a comparatively short time, the Commonwealth countries could supply all our needs in copper, sugar, and tobacco, which are among the main items on our dollar import list today.

Unconsciously, and in a typically British way, we have been moving towards the creation of a sterling trading area, under the impact of the war and also of the post-war difficulties. Our trade with the Commonwealth was formerly about 30 per cent. of our total trade. It now stands at nearly 50 per cent. Some of this has taken place through the Colonial Development Corporation. Some has been the result of Socialist policy.

However mistaken that policy was at home, it had at least one result. It literally drove capital and skill, through excessive taxation, to seek refuge in the Commonwealth. Every cloud has its silver lining. A good deal has actually been done in the last seven years. The trouble is that it has not been done as a deliberate policy of Commonwealth expansion, but as a makeshift policy intermittently imposed upon us by balance of payments difficulties. As a result, the investors have had no confidence that it would continue.

Last summer, in Southern Rhodesia, I asked a tobacco farmer why he did not increase his production. I said that he would help us with our dollar problem. He replied, "No doubt, you will buy my crop while balance of payments difficulties remain, but what assurance have I that you will not go back to dollar tobacco the moment that you are in balance with the dollar countries?"

To develop new supplies of food and raw materials in the sterling area will call for relatively heavy investment. It is essential, therefore, to create the conditions which will attract that investment. Capital is naturally timid; it will not come forward unless there is an assurance that what it produces will find a market. To create this confidence, we shall have to discriminate in favour of the Commonwealth producer as a matter of deliberate, declared and permanent policy.

There are many ways in which this can be done. We, on this side of the House, have always been in favour of tariff preferences, which we regard as the most liberal, the most free trade way of regulating trade. Hon. Members opposite may prefer quotas or bulk purchase measures. There is no doubt that some of the primary producers in the Commonwealth have a deep-rooted preference for long-term contracts. But whether we go for preference or for quotas or for long-term contracts, we must first denounce those sections of the G.A.T.T. Agreement which limit our right to discriminate in favour of our partners in the Commonwealth.

The Japanese have now applied to join G.A.T.T. If Japan is to become a normal and healthy member of the free world, I really do not see how we can refuse to let them in. On the other hand, if we do let them in, we commit ourselves to giving most favoured nation treatment to Japan, and we jettison our last hope of protecting the colonial market. It may be that this new danger will prove to be a blessing in disguise.

It may be that it will finally convince the Government that they must now denounce those sections of G.A.T.T. which seek to extend the most-favoured-nation clause to inter-Commonwealth trade. We on this side of the House were pledged at the Election to denounce those sections of G.A.T.T. Many of us have waited very patiently while Ministers are trying to make up their minds on this admittedly very difficult subject. I beg the Government not to mistake our patience for indifference, nor to underestimate the strength of feeling which exists on this question of G.A.T.T., at any rate on this side of the House.

Trade measures must, of course, be backed by financial measures. A new investment programme for the sterling area will require new credit facilities. I wonder whether our present financial machinery is adequate for that task. How long can we continue holding the sterling area together with a bank which serves all its Governments and is controlled by only one of them? Has not the time come when steps should be taken to bring the management of sterling under joint Commonwealth control?

So much for the conditions which will attract investment from within the Commonwealth or from outside. What about the investment itself? Where are we to find the machinery, the capital equipment, which development requires? Others may help us in due course, but the main burden is bound to fall upon us. To shoulder it we shall have both to reduce consumption at home and to increase production.

What room is there for cuts? There are to be changes in the defence programme. But these, we are told, are intended to facilitate exports rather than investment. I confess that I should be very loath to take any further steps in that direction. The dangers that confront us are still very grave. Our friendship with the United States and our influence in Western Europe depend more than anything else upon playing our full part in the North Atlantic Treaty Organi- sation. World confidence in sterling, moreover, depends, among other things, upon our ability to maintain ourselves as an imperial Power. Any further reduction in our present overseas commitments, any further Abadan, would damage our credit, perhaps irreparably. To that extent, any further cuts in the defence programme might easily prove to be false economy.

Of course, cuts could no doubt be made in the social services, more particularly in the building programme. I know that there is a limit to what public opinion will endure; the British people have been through a lot in the last few years, and they will not stand for much more in the way of cuts or pin-pricks which lead nowhere; but that does not mean they have lost their sense of national discipline or self-control. On the contrary, if the British people are once convinced that a policy is right, if they are convinced that the Government believe in it and are resolved to carry it through, if they can be shown the light at the end of the tunnel, they will be ready to pay the price for recovery, whatever it may be.

There certainly is not much room left for cuts in general consumption, but something might still be done to guide resources and labour from less to more essential occupations. The Chancellor's disinflationary policy has had some success, although of a rather limited kind, in this direction. The trouble about this policy is that it is not sufficiently selective. I have often wondered whether we could not find a middle way between deflation and clumsy physical controls. Perhaps some form of differential interest rates might supply the answer.

There will have to be some cuts to achieve the necessary level of investments. But more important than cuts would be an increase in production. There are still several things that could be done in that direction. The elimination of restrictive practices, mentioned by the hon. Member for Stoke-on-Trent, South, is one of them; the working of more frequent shifts is another. Then there is the question of retirement. The Chancellor in the late Government urged the importance of postponing retirement. Certainly, an increase in the working life of the people of this country by two and a half to three years would make a very considerable contribution to increasing the national production.

No less important is the psychological factor. If the Government are to overcome the present crisis they must inspire all sections of the community with a sense of national and social purpose, with a vision of what they are working for—a vision of a free, expanding Commonwealth. They ought to try to make every employer and every worker in the country feel that he or she is a shareholder in a great concern; that he is saving money today so as to have more tomorrow.

Mr. Douglas Houghton (Sowerby)

How does he feel that he is a shareholder tomorrow?

Mr. Amery

I am urging the Government that they should move in that direction. If we produce, both in this country and in overseas countries, new supplies of food and raw materials which in a certain number of years will come back on to the markets here, we shall have the satisfaction which a shareholder gets when he gets a dividend. That was the point I was trying to make.

We have to go beyond self-interest, too. We must also make every man and woman in the country feel that they are doing something to consolidate Britain and the influence of the British Commonwealth as an independent factor in world politics. I am not one of those who believe that the task is beyond us. I believe we could solve this problem, if necessary, by ourselves alone. But, of course, it will be much easier if we can get others to come in and help us. The biggest source of capital investment today is the United States, and I will say a word about that in a moment. But there is another one on our doorstep, and it may prove even more important.

Western Europe—the great industrial complex of the Rhine Valley, Belgium, Luxembourg, the Ruhr, the Saar, Lorraine—has today idle factories and unemployed workers. These idle factories and unemployed workers are, in a certain sense, capital. It should not be beyond the wit of British statesmanship to devise means whereby they can be harnessed to the great development of the backward territories and more particularly of those in the sterling area.

It certainly would not be difficult to create the machinery. European currencies linked to sterling through a strength- ened E.P.U. would be one step. A European preferential area interlocking with our own might be another. All this would be in harmony with our often proclaimed policy of working in as closely as we can with Europe, short of federation. It would also be a guarantee against the not insignificant danger that the Schuman Plan countries might line up against us. Adding deficits together does not, of course, produce a surplus, but a combination of the resources of the sterling area with those of Europe should enable us in a comparatively short time to bring our trade with the dollar world into balance. Convertibility would then be in sight.

But the moment one speaks of an association between the Commonwealth and Europe, someone comes along and says, "Oh, but you're ganging up against the United States." I yield to no one in my admiration of the great republic across the ocean. We all know that the cause of freedom depends upon an enduring partnership between us. But it must be a partnership between equals. We want to be America's allies, not her satellites, and we do a disservice to the cause of Anglo-American friendship if we hesitate to take the steps which would make us economically strong.

The United States, powerful and generous as they have been, and as they are, need a strong British Commonwealth, just as much as we need a strong United States. In the search for economic strength we have given more than a fair trial to their ideas of multilateral nondiscriminatory world free trade. The experiment has cost them billions of dollars in foreign aid. It has brought our reserves to danger point. The time has now come for a new deal, and I cannot believe the Americans would try to prevent it.

Our partnership rests on much more solid foundations than the fads of economic theorists. We have got to build up a trading area of the sterling countries associated perhaps with Western Europe which will not be autarchic but sufficiently self-contained to enable us to face convertibility with the dollar. Once we get back to convertibility then, and only then, will the way be open for securing the American investment which the Commonwealth so badly needs. A return to that convertibility would be particularly helpful in our relations with Canada. Canada likes to buy from the United States and to sell to Britain. Nothing, therefore, could do more to promote cooperation between us than a return to convertibility.

The essential condition—and this is my last point in what I fear has been too long a speech—of any successful scheme of sterling area co-operation is to carry with us other sterling area Governments. We have to recognise that the primary producers are in a much stronger position today than they were at the time of the Ottawa Agreements. Preferences in the British market are attractive to them, but nothing like as attractive as they were back in 1932.

On the other hand, the sterling area countries are all vitally interested in securing a high level of investment and maintaining the strength of the sterling balances which they hold. How far will they co-operate with us in the policy I have sought to outline? We cannot generalise about the different countries of the Commonwealth. Some will move faster than others. We had an interesting indication, however, of Australian views when Mr. Menzies spoke in the Central Hall at Westminster recently.

As I understood that speech, its meaning was this. If Britain was prepared to take the lead in building up a strong sterling system, with all that this implies, Australia would co-operate to the full. If, on the other hand, Britain was undecided, then Australia would certainly do nothing which might involve her in any friction, however remote, with the United States. This view may well be shared by other Commonwealth Governments, and it points to the fact that responsibility for taking the lead rests here.

It is clear from the Chancellor's speech that the Government have not yet at any rate made up their minds which course they are going to take. Are they going to continue in the sterile paths of cutting consumption to push exports, a policy which seeks to 'redistribute a static limited volume of business? Or will they turn to the Empire and set out on a policy of economic development which will build up new markets for Britain and furnish her with new supplies of food and raw materials?

There is not much time left to make a decision. Before the year is up, Minis- ters are to meet the Governments of the Commonwealth, then the Governments of Western Europe and the new American Government. No good will come of these meetings unless we in Britain have a plan of our own to advocate. There must be a clear British point of view. In this, if we are to save ourselves as an independent unit in the world, Britain has not to follow but to lead.

8.32 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

Some hon. Members opposite are very fond of pointing to differences within the Opposition, but having listened to most of the two days of this debate, I have been extremely impressed by differences not merely on immediate issues but of outlook and philosophy between hon. Members on the Government side. The hon. Member for Preston, North (Mr. J. Amery) followed much the same line as the hon. Member for Aberdeenshire, East (Mr. Boothby) in his speech yesterday. Both of them believe that the world of the 19th Century is gone and finished, and something which we cannot put back.

The hon. Member for Preston, North is the biographer of Joseph Chamberlain, and in many respects he is true to the policy of the person about whom he wrote. He wants the sterling area, united with Western Europe, to move more and more into a self-contained position. If we contrast that with the speech of the right hon. Member for Blackburn, West (Mr. Assheton) yesterday, there is no point of agreement whatsoever. The right hon. Member for Blackburn, West believes that we have merely to cut 2s. off the Income Tax, get rid of Socialist inefficiency, and have a convertible pound and be back to the world of the 19th Century tomorrow.

We are not clear where the Chancellor of the Exchequer stands between these two schools of thought. He has not been kindly treated in this debate by either school of thought, and, although I am sorry to say it, because I have admired many of his speeches, he has not deserved very kind treatment. I think he has floated about rather uncertainly between the two schools of thought.

We all wish the Government well in the struggle against our economic difficulties, and we all recognise how intractable those difficulties are. But I think that, first of all, we must clear away a piece of self-righteousness with which the Government are surrounding themselves at the present time. More and more, Ministers are inclined to say that the fact that things have got a little better in the last six months is a great tribute to their measures and to themselves. They look at the fact that the drain on our gold reserves is not as heavy as it was some time ago. They look at the fact that our trading position is a little better in this half of the year, although I think that the Chancellor made his calculations there take into account dollar aid in a way not usually done in order to arrive at his favourable figures yesterday.

Ministers are inclined to say, "Look at all these improvements. How right it proves our monetary and fiscal policy to be, what a triumph it all is for the Budget." One cannot sustain that point of view at all. One is bound to say our recovery from the crisis of last autumn has been a good deal less sharp than our recovery from the crises either of 1947 or 1949.

I am not going to argue that in all respects circumstances were similar, but I will say that at this point, after both those autumn crises, as regards both our basic trading position and as regards confidence in sterling, the position was much better than it is this year. Therefore, the Government certainly cannot say that it has been proved that its fiscal and monetary policy is right. This is no moment for the Government to be in any way arrogant in their approach to the problems. They can ask for good will but they cannot say, "Look at the skill and the virtue that we have shown in clearing up the mess with which we were faced."

I want to look back from the perspective of four months to the Chancellor's Budget. I must first admit that Budgets never look very good when regarded in perspective from the end of July, but this Budget looks particularly bad. It may be that in his overall estimate that consumption should be kept steady, neither decreasing nor being allowed to increase, the Chancellor was about right, but he has not been steadily giving effect to that policy. One sees this if one looks at the recent Exchequer returns.

The food subsidy cuts are not to come into effect to their full extent until the autumn, but the Income Tax concessions have already been given. Partly as a result of that and partly as a result of certain other factors, we see that during the first quarter of the financial year there has been the very big deficit of £355 million as opposed to one of £109 million in the same quarter last year and to a budgeted one of £80 million for the whole of this year. It may be that this deficit will be made up over the whole of the financial year, but that is not the complete answer to the position.

If it is necessary to have a Budget of a given degree of disinflation for the year as a whole, it is equally necessary to have that during the part of the year through which we are now passing. Perhaps it is more than ever necessary to have it in the summer months, which are very critical from a balance of payments point of view, and when in any case, owing to seasonal factors, unemployment is always lower than it is at any other time. What we are going to have this year is the disinflationary effect of the Budget, such as it is, coming along, not now but in the winter when unemployment may be going up in any case. If one needs to cut subsidies in the autumn, why should we not cut them in the summer months? What has happened makes nonsense of the whole policy.

I am sure that at present the Chancellor of the Exchequer regrets his food subsidy cut almost as much as he regrets his Excess Profits Tax. It has brought him nothing but trouble. It has certainly had an absolutely disastrous effect on the wages situation. The Chancellor, in a speech at Exeter a few weeks ago, said that, provided that there were not too sharp wage increases, the general price level might be settling down at present. That may be so, but if so, it is a far more damning criticism of the Chancellor's food subsidy policy than has ever come from this side of the House.

To choose the moment when prices might otherwise have been settling down to cut the food subsidies was economic lunacy. At a time when prices were going up so fast that one would not notice another increase in the spiral, or at a time when prices were falling, there might have been sanity, if not justice, in cutting food subsidies, but to do it at the moment when things were showing a prospect of settling down and when we can afford a cost inflation from the point of view of our competitive position in export markets less than at any time in the last three years was nothing more nor less than economic lunacy.

There is one other point about food subsidies. It was widely rumoured that the main reason for cutting the subsidies was a sort of price to the international bankers to give them a little more confidence in sterling. If that were the main reason, things have not worked out successfully. We had two or three months of favour on the international exchanges, but in June and probably in July, too, the thing has been slipping back and running in the other direction. I would say to the Chancellor of the Exchequer, if he were here, that he cannot go on paying that sort of price, because if he does, within a year or two he is going to have to dismantle the whole structure of the social services, which I know he does not want to do, in order to keep the thing going.

I want to turn for a moment to this notorious O.E.E.C. report, which came out a week or so ago and which has some very harsh things to say about the late Government and some comparatively kind things to say about this Government. It is a most deplorable document in every way. It is difficult to get a copy of it, and the Treasury, perhaps wisely, do not seem to have made many copies available in this country. I understand that the Minister of State for Economic Affairs has some responsibility for it. If that is the best that he can get people working under him to do, he would have done less harm helping the Government on the Finance Bill.

This document is supposed to be produced by a group of experts, which means that one might expect to have some fairly detailed economic analysis and some views on what are likely to be the consequences of particular policies. We do not get anything of the sort. We get generalisations and preconceived ideas. It reads rather like the Secretary of State for the Colonies intervening in an economic debate in this House at rather short notice and quite unprepared. In addition to that, the whole thing reeks of deflation. There is praise for Belgium, a great deal of criticism of this country and there is a suggestion that we only need a tight monetary policy in order to solve almost all our difficulties.

Mr. Spearman

Is the hon. Gentleman not a little biased in the views he is expressing just now in that this document blames the last Government and praises this one?

Mr. Jenkins

I would certainly have disagreed with the document, but I would not necessarily for that reason think it was as turgid and ill-argued as this document. I should like to ask the President of the Board of Trade whether, when he winds up, he can give us an assurance that this document, reeking with deflation and giving priority to a tight credit policy, above almost anything else, does not represent the policy of Her Majesty's Government.

I should like to turn to the position as we face it now and the prospects for the future. I think the first task—I agree it is more easily mentioned than solved—is to try to get the short-term capital position better with confidence in sterling greater than at the present time. It is very worrying when we get the position running in our direction for only two or three months, and then we have the position moving against us again. It is probably moving a bit against us at the present time.

I hope the Government will look very carefully at the exchange control mechanism and try to make it more effective. I hope the President of the Board of Trade will deal with this point when he replies, a point mentioned by the Chancellor of the Exchequer, whereby, in effect, we are going to give hire purchase to the foreigner to make our exports more attractive. That, I take it, is what is meant by extending export credits in a certain way. That may be good from a long-term point of view, but I should like the right hon. Gentleman to tell us whether the disadvantageous effect of such a policy from the short-term point of view has been taken into account, and to reassure us, if he can, on that point.

The first thing, therefore, is to try to get the short-term capital position a little better by looking carefully at our exchange control mechanism. Then I agree with a number of hon. and right hon. Members who have said that we must look at this situation, not as a short- term crisis, but as a long, difficult struggle which is not desperate, but which is certainly likely to be difficult for a long time to come. That being so, it would help a great deal if the Government could turn their backs on this will o' the wisp of convertibility in the near future. I am sure that it does nothing but harm to chase that kind of objective, which there is really no chance in the world of our attaining for a couple of decades. I should like the Government also to look at the E.P.U. position and to try and tell the House what they conceive to be the future of E.P.U.

My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) said in his speech that the Labour Government always thought of E.P.U. as a club in which all members, debtors and creditors, must make an effort to be in balance for as much of the time as possible. Is that the Government's view? The Chancellor of the Exchequer was very touchy about any criticism of Belgium. But Belgium obviously is not pursuing that policy.

But I was worried, too, about what the Chancellor went on to say about his hope that when we had turned the position we might begin to win back gold from E.P.U. That policy has certain attractions, but it is really hoping to put other people in the position in which we now are if one is hoping that, as soon as one gets out of a position of having to pay gold to E.P.U., one can begin to get it back. Is it the policy of the Government that all members of E.P.U. should pursue a course of keeping themselves in balance as far as that is possible?

Now we have the prospect of another Commonwealth conference. Certainly we are all hoping very much that the Government will approach that conference in the spirit of expanding our exports. There can be no doubt at all that the rather disappointing results of the last Commonwealth conference which dealt with this matter have had a lot to do with the fall in our exports that has taken place recently.

I thought my right hon. Friend the Member for Huyton (Mr. H. Wilson) did not give enough weight to this in his speech. He did not give enough account of the extent to which our exports, even of metal goods, were falling off, not only because of competing demands on the industries which could produce these goods, but also because the policy of this Government had closed markets to them. One sees from the figures that engineering exports to non-sterling countries have been going extremely well. It is only to the sterling area countries that the falloff has occurred.

Another point is that we must try to reverse this extremely disturbing production trend. Here again, it would be a pity to exaggerate the extent to which this is now a question of shortage of materials rather than a shortage of demand. I really do not see that the Government can hope to reverse this trend by a policy of tighter and tighter credit. I have never heard any reputable economist urge that higher interest rates, whatever else they might do, would be a factor leading to increased production. I ask the Chancellor to think very carefully about his policy of tightening credit when he is worried, as he is bound to be, that for the first time for six years we are in an extremely difficult position from the point of view of increasing production.

The last point is the re-deployment of industry. Obviously we are in a position in which we greatly need to expand certain parts of British industry and British agriculture. That is a difficult thing. If one had to look back and make a criticism of the planning policy of the late Government, I would say that they were extremely good at corrective planning and less good at purposive planning. I do not share all the criticisms of the Treasury planners which are sometimes made. I think they were good at steering a course between unemployment and inflation and at correcting things which were going wrong. What the Government were perhaps less good at was at saying, "If we are to overcome these difficulties we want a substantially different shape to the British economy in 10 or 15 or 20 years' time." I think we should make a new approach from that point of view.

I am bound to say two things in that connection. I agree that we must look at the defence programme in view of new circumstances, but it would be a pity if any of my hon. Friends fell into what I think would be the error of saying that, if we cut back the defence programme as far as anyone has suggested, we should have solved our balance of payments position. I think there is a danger of not looking sufficiently at the long-term measures which have to be taken if one believes one can solve it completely by any one measure at this time. I point to that as being a danger.

Secondly, I cannot see how we are to bring about these big changes in the shape of the British economy which are absolutely essential if we are not to go on from crisis to crisis unless the Government maintain a great deal of control over that economy and a great deal of power to shape it in the way it needs to be shaped.

Finally, I turn to a point which I mentioned earlier. This is no moment for the Government to be arrogant or particularly proud of their work. The measures which are associated with this new Conservative Government—monetary policy and the rest of it—are as yet completely unproved. They may help a bit, they may not. Certainly nothing has happened so far to indicate that these measures will bring about any degree of success. On the contrary, it may be the case that, by provoking a difficult wage situation, they may do great harm to the country. Therefore, one certainly cannot feel any confidence that the past record of the Government indicates it is within their power to cope with the situation in the future.

8.54 p.m.

Mr. Alfred Robens (Blyth)

The debate which is now concluding has certainly not added to the sum of our knowledge of what Government policies exist to deal with the economic situation. However, it has certainly revealed to all of us the complete muddle into which the Government have got and that they have no sound policy. When questions were asked of the Chancellor of the Exchequer, on the first day, he referred us to the Prime Minister, but the Prime Minister has been unable to answer today the questions which we asked the Chancellor yesterday.

For example, this afternoon we had what was, in some respects, an important statement from the Prime Minister. He referred to a reduction of 30,000 in the call-up for next year. I tried to find out from the right hon. Gentleman why there was to be this reduction, but he was reluctant to answer and I hope that in the meantime the President of the Board of Trade has found out the answer to that question. It was this: if the intake into the Forces is to be reduced by 30,000, is that as a result of the decline in the birth-rate 18 years ago, and, therefore, an actual occurrence; or is it that the length of service is to be reduced; or is it that there are to be exemptions? It must be one of those three things.

I gathered from what the Prime Minister said that it was not to be reduced service. It may be a natural reduction because of a decline in the population 18 years ago—I have not looked up the birth-rate of that year—but if so, what is the point of the Prime Minister' making it? Surely, he is not claiming any credit for a declining birth-rate, 18 years ago, as part of cutting the cost of defence now.

We are led to believe, therefore, that there is some question of exemption, and I should like to know whether that is so. If it is not a question of exemption, not a question of reduced service and not because of a reduced birth-rate, what does it all mean? If it is a question of exemption, I should like to know whether this matter has been seriously discussed by the Minister of Labour with the National Joint Advisory Council.

This is a very serious matter. The question of exemption is far-reaching. There are many claims for exemption, and it cannot be got on with unless there has been the closest consultation with the T.U.C. and the employers' associations through the Joint Advisory Council, of which the Minister of Labour is Chairman. It seems to us that we might have that point, with which, evidently, the Prime Minister is not acquainted, cleared up.

The other thing which my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) tried yesterday to elicit from the Chancellor, although not successfully—and there has been an endeavour again today—was the question of the import cuts. On 11th March, the Chancellor announced cuts at a level of about £300 million. Are these cuts that he has now spoken about, new cuts? Are they additional to that previous announcement, or is it because the cuts that he announced on 11th March have not become operative?

If it is a question of new cuts, how much is it to be? If it is a question of restriction of imports, is it to be on the present list of goods which the right hon. Gentleman has announced, or is there a new range of goods for which the import quotas are to be restricted? It is a pity that we did not have this information at the beginning of the debate, because very many of us on this side of the House would have liked to deal with it.

The debate also has been something of a damp squib, because the country had been led to expect that there were to be some very grave financial pronouncements. In reply to many supplementary questions in the House recently, the Prime Minister and others have referred to the statements that would be made when we had this debate. But what pronouncements were there? We have had nothing at all. We had the Prime Minister, using those fine phrases of which he is the master, talking about the economic position of the country and saying that the country was standing on a trapdoor.

Mr. Jack Jones

Clap trap.

Mr. Robens

At that stage the Prime Minister got slightly mixed up. It was not the country that was standing on the trap door—it was the Conservative Party. Indeed, all that the public are waiting for is the opportunity to draw the bolt and hang the lot.

There are only two things that can get the country out of the economic difficulties in which it now finds itself. It can either have a very strong policy, which means planning and rigorous controls, and which will be very unpleasant—a straightforward policy; or it can adopt a laissez-faire policy of the kind enunciated by the right hon. Member for Blackburn, West (Mr. Assheton), in which case it is decided to allow deflation and unemployment to solve the problem for the Government. Those are the only two ways in which it can be done.

We make no bones at all about our views. We stand for a constructive economic policy, a planned economy with rigorous controls to see that that policy is carried out. That is why the Amendment, moved this afternoon by my right hon. Friend the Leader of the Opposition, was put down.

Obviously, the debate has ranged over a very wide field—[An HON. MEMBER: "Not wide enough."]—and it is, clearly, impossible to deal with all the aspects that have been mentioned. But it is plain to all that the keynote of our future prosperity must be increased production. It is a strange thing, but industrial production has fallen for the first time since the war. I do not believe that it is merely a coincidence that there was a fall in production when a Tory Government came into power; I believe it was a contributory cause.

I will give my reason for so saying. Every industrialist in this House knows perfectly well that we get our best production when in the factory we have happy and contented workers. "Music while you work" and all the amenities and facilities—[An HON. MEMBER: "Cups of tea."]—yes, they are important at the right time—are designed to make workers happy and contented so that they can get on with production in the right frame of mind.

What the Tories have done since they came into power has keenly disappointed the nation, very largely because of the wild and extravagant promises of easier and better living—[An HON. MEMBER: "Red meat."] I think the Prime Minister threatened to ram that down someone's throat the other day. All these wild, extravagant, promises were given to a nation of weary workers who had worked extremely hard from the end of the war. They had no credit at all from hon. Members opposite; in fact, they had much the reverse. As a consequence, when they found that there was no hope whatever of better living under the Tories, the natural reaction, the psychological reaction, has been reflected in the lack of production we have had since the Tories have been in office.

There is another big reason. It is that production comes from workers who have a feeling of security. It was no mere doctrinaire policy that made the Labour Government put full employment as the main plank in their programme and policy. It was because we realised that without full employment there was no hope of ever getting Britain on her feet again. What has happened? The security we have built up during those years has gone; the security is no longer there. Rising unemployment has some very black patches in it.

It must be remembered that when we get black patches of unemployment it has a great effect on people working on full employment in the same area. In the Midlands area, in January, there were 13,000 people unemployed; in May, there were 19,400 unemployed. In the East and West Ridings of Yorkshire there were 33,200 unemployed in January and 46,600 unemployed in May. In the North-Western area—an area which has an enormous amount of engineering and other work—there were 59,700 unemployed in January and 150,700 unemployed in May.

All that has a very bad psychological effect on the chap who is just clinging to his job. But that is not the worst feature. Unemployment is not the worst feature in so far as production is concerned. The worst feature is short-time working or under-employment for the people not signing on as unemployed, who are, in fact, working and receiving some wages. Some figures I have here are very illuminating. They shocked me when I got them last night and I think they will shock the House. These figures are taken for a week-end. The Treasury, or the Ministry of Labour, one of the Departments, covers four-fifths of the manufacturing industries and asks the employers to give a return of certain week endings each month as to the number of hours lost through short-time working.

During the week ended 22nd September, 1951, there were 850,100 hours lost in short-time working. The next date is 26th January; with a Tory Government in power, the figures had risen to 2,803,900 hours. At 29th March this year they had risen to 4,477,600 hours. The last figures, at 24th May, 1952, showed that short-time working had risen to 5,195,900 hours.

That is insecurity, and we get lack of production. It is no use saying, as several hon. Members have said, that what is wanted is more hard work. Do they really think that people who are likely to be working short-time next week will work all out so that they start short-time on Wednesday night instead of on Thursday night? The fact is that these are features which are very disturbing, and they will cause the Minister of Labour a good deal of trouble before many months have passed.

There is nothing, in my view, more pernicious and wasteful than short-time working. The result is that we have had a fall in production of about 2 per cent. since this Government came into power. The fall in production is very alarming, but there is an even bigger cloud appearing on the horizon. That is the fresh wave of wage demands. Who is responsible for that wave? There is the guilty man—the Chancellor of the Exchequer.

My hon. Friend the Member for Stechford (Mr. Roy Jenkins) referred to the question of food subsidies. The Chancellor of the Exchequer has been busily preaching, since he has been in office, the need for restraint in applications for and the effects of wage increases upon our ability to export goods at the right prices. I listened to his speech yesterday, and he really ought to have been warned by the fact that for three-quarters of it he was cheered much more by Members of this side of the House than by his own supporters.

Indeed, I thought that what had happened—because he is an extremely busy man—was that the right hon. Gentleman had rushed from Treasury Chambers, picked up his brief and come to that Box and begun to read one of Sir Stafford Cripps's old briefs that had been lying about. He was telling us precisely what Sir Stafford Cripps and other Labour Chancellors have been saying for years.

The right hon. Gentleman appeared in a new role some time ago, as a television star. He opened a new feature. He was televised being interviewed by Press representatives, and it was a very good show; I enjoyed it. He told the Press representatives who were asking him questions of the difficulties there would be in exporting if our prices were not right, and said that our prices could probably become quite wrong if we had great wage demands. He said, for example, that if the engineers had a 10 per cent. rise a car costing £500 would cost £520. During the whole of that television programme it was made clear to the general public that wage demands were frowned upon by the Chancellor of the Exchequer.

Who is it presses for wage increases? Do hon. Members think it is the wage earner? It is not. The person who presses for wage increases is the little lady at home, the woman who has to be a chancellor of the exchequer, and who has a much more difficult job than the right hon. Gentleman because she has to balance her budget every week and has to pay her way. If the wife, when the husband goes home on a Friday and puts his wage packet on the table—[HON. MEMBERS: "He should do."] Well, he may have slipped a bob or two out first. But there is nevertheless the time-honoured custom of putting the wage packet on the table. It may not be the original wage packet, of course, but, nevertheless, it is a wage packet.

His wife then attempts to parcel it out, and she says to her husband, "John, this is not enough. You see I cannot pay for such-and-such a thing this week. "Or alternatively, "We cannot go to the pictures." Or alternatively, "We need some new shoes for the kiddies, and we just cannot afford it." Then they go through things and say, "What had we better go without? Shall we give up the wireless, or what shall we give up? It is very difficult to make ends meet on the money that is coming in." Week after week the wife is saying, "Look at the price of things." She is the one who is pressing for a wage increase.

Then there is the publication issued by the right hon. Gentleman's own Department which says: The 'value' figures … show that in the first quarter of this year food was taking a larger share of the family budget than it did last year. And consumers have, it appears, reduced their purchases of textiles, clothing, and household goods rather than their other expenditure. So the right hon. Gentleman artificially pushes up the price of food, and causes a recession in the textile trade, and we have unemployment. And I say that he is responsible.

Mr. R. A. Butler

Does the right hon. Gentleman say that I am responsible for the textile depression?

Mr. Robens

Yes, I do. I say that the right hon. Gentleman is a contributory cause, on the evidence of his own "Bulletin for Industry," which is a monthly review of the economic situation prepared by the Information Division of the Treasury. He will see that his own advisers—

Mr. Butler

The right hon. Gentleman has stated that I am responsible for the textile depression. If that is the level of his argument then all I can say is that the country will judge.

Mr. Robens

I am quite sure that the country would judge. And if the right hon. Gentleman the Prime Minister will sound the alarm, will give the signal, we are all ready to go to the country. I say again to the Chancellor of the Exchequer—

Mr. Bernard Braine (Billericay) rose—

Mr. Robens

No, I cannot give way, I have a very short time left.

I say again that the Chancellor of the Exchequer must take a very large share of the blame for the textile depression, because 75 per cent. of the textile industries' products are consumed in this country. His own document says that because people have to spend more on food, a position which he has created, they have less money to spend on textiles, clothing and household goods.

The housewife will make do and mend. She will do all sorts of things with her sewing needle and her machine. She will keep the clothes patched and her family reasonably attired. What she cannot do is cut down their food. Her family must eat—although I am sure that some hon. Gentlemen opposite are wondering even if they must do that—

Mr. Butler

The right hon. Gentleman has no business to use that argument.

Mr. Robens

Whatever is the matter?

Mr. Butler

I have suffered a good deal from the hon. Gentlemen opposite after I treated them with great courtesy throughout this Session. On a number of Bills I have always tried to listen to their views and I have tried to maintain a standard of fairness and courtesy throughout this long Session. At the end of this Session I am being treated in a manner by the right hon. Gentleman and his hon. Friends which is quite—[Interruption.]

Mr. Robens

Now the Prime Minister wants to have a go. [Interruption.] I do not need the advertisement. I can manage without that. Here we have an irate Prime Minister and a very touchy, sensitive and obviously guilty Chancellor of the Exchequer. He is guilty, and he knows that he is guilty.

Mr. Butler

I know as much about the textile industry as the right hon. Gentleman. To say that I am responsible for the textile depression is an untruth which is not worthy of the right hon. Gentleman.

Mr. Robens

In that case, the Chancellor had better get his officials to rewrite this Bulletin and to re-publish it. All these copies should be called in.

I will show the right hon. Gentleman why this cloud that I said was appearing on the horizon is his responsibility. It is due to the bad policy of the Government which the right hon. Gentleman has had to carry out. What has happened? His colleague the Parliamentary Secretary to the Ministry of Food came to the House about 11th June and said, in answer to a Question, that during the six months to the middle of May 27 items of food rose in price from between 4 per cent. and 33 per cent.

What were they? They were the very staple foods which this woman whom I have described must supply to her family. Flour went up by 33 per cent., bread by 25 per cent., and canned meat by 10 per cent. Since then—

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

Mr. Robens

I will not give way—[HON. MEMBERS: "He cannot take it."]—Yes, I can.

Mr. Speaker

Order. This is a most controversial subject, but I ask hon. Members on both sides of the House to conduct the debate with decorum.

Mr. Robens

I am prepared to make a bargain. I offered to sit down at 9.25 p.m. to allow the President of the Board of Trade to speak. If he is prepared to allow me to continue until 9.40 I will give way now and take all the interruptions that are coming. But, of course, the President of the Board of Trade wants to start his speech at 9.25.

The staple foods have gone up by those great percentages. Since then milk has gone up by ½d. a pint, meat by 4d. a lb. and tea by 10d. a 1b. The main cause of the food increases was the blundering stupidity of the Chancellor in withdrawing £160 million from the food subsidies. To do what? To balance our overseas trade? Not a bit, but merely to hand it back in Income Tax reliefs.

There are millions of wage earners who do not get £6 a week. A married man with one child who earns £6 a week did not pay Income Tax even before the right hon. Gentleman's Budget. Yet the Chancellor is making these people pay for all that he has handed back to the well-to-do. The consequence is that the wage demands that flow from the grim economic pressures will go on. The Chancellor will have great difficulty in restraining them. He has been responsible for throwing away the only real chance of stability that we had.

The Prime Minister

No.

Mr. Robens

He himself has said—not that the Prime Minister bothers to read what the Chancellor says—that, over 60 per cent. of other goods, prices are either falling or are stabilising. Therefore, if he had not given away this Income Tax and if he had, by keeping food subsidies, stabilised food prices, we should have had a fairly stable cost of living today.

Mr. Alport

Why did not right hon. and hon. Gentlemen opposite do it?

Mr. Robens

Let us see why. In the last six months of the Labour Government retail prices went up by five points, and food prices by eight points. Wage rates went up by eight points, so that wages were keeping level with the cost of living. In the first six months of the Tory Government retail prices have gone up by six points, food prices by 12.7 points and wages have gone up by three points. The Chancellor has put up food prices four times more quickly than he is prepared to put up wages.

He was warned. Before the Budget the T.U.C. saw the right hon. Gentleman. If they did not see him personally they made representations. What did they say to him? Two of the things they said were that, first, the food subsidies should be moderately increased, and, secondly, that Income Tax and Surtax should be increased on the larger incomes. The right hon. Gentleman did neither; in fact, he did the reverse on both. He reduced the food subsidies and he reduced taxation. It had nothing whatever to do with the balance of payments; it was a mere redistribution of wealth within the country. [HON. MEMBERS: "Nonsense."] He was merely appeasing the truculent back benchers who have been pushing him and the rest of the Cabinet ever since they came into power.

No wonder there are some gloomy views expressed. I was interested to read a newspaper report of a speech made by the hon. Member for Louth (Mr. Osborne) when addressing the annual conference of the Incorporated Sales Managers' Association recently. The hon. Gentleman said: The country must be prepared for a slump greater than those of either 1921 or 1931. The hon. Gentleman sits on those benches. He also said that there will be more bankruptcies in the next year than there have been in the last six, and he still sits on those benches.

The Government set the T.U.C. a very hard task. There is no question whatever that the lower paid workers will have to have increased wages. The Chancellor has made that essential, but it is still true that there must be restraint exercised by those in the higher income groups. This does not just apply to wage earners; it applies to all those people in the higher income groups, and the Chancellor might turn his attention to these things.

I am satisfied that this vacillating policy of the Government—after all, what has been attempted are only just expedients—will never solve the real problem, which is not one that will be solved in a year or two, anyway, but one which will take many years to solve.

Undoubtedly, we have to do all we can to push out our export trade, and I do not at all share the view that has been expressed in this debate that it is virtually impossible to sell more to the United States and Canada. I do not accept that for a moment. I believe there are great opportunities there, but they mean that the Government will have to give rather special aid. There are many manufacturers who have neither the resources nor the market knowledge to get into these markets, where, in fact, their goods could be sold. There is this great venture of the St. Lawrence Seaway, which we should not ignore. It presents an opportunity, but it means very special arrangements for capital goods and every- thing else, but we should not miss the opportunity.

If I gave the President of the Board of Trade one piece of advice, it would be this: Get the commercial attachés in the embassies away from the Foreign Office and under the Board of Trade; get them from industry, and not from career diplomats. If he will do that, there would be a real chance that we should have commercial attachés with real knowledge, not merely people looking to the diplomatic service for their careers, but people with an understanding of business and of the problems of manufacturers in this country.

Secondly, there is no doubt that a long-term production programme must be proceeded with immediately. After all, throughout the whole world, we live by taking in one another's washing, and half the population of the world lives below the poverty standard. We really have got to go into the backward countries, but we have special responsibilities in our own Colonies. They want capital, knowledge, skilful guidance, and we cannot go on just talking about this. We really have to do something about it.

To prepare the way, there will be some risks to be taken, and there may be some failures, but we shall not quarrel if some of the adventures in this field fail, as hon. Gentlemen opposite continually quarrelled with us when some most gallant adventures in this field failed in the past. [HON. MEMBERS: "Groundnuts."] If the complaint of hon. Gentlemen opposite is that State enterprise or Government enterprise cannot be enterprising, it must mean that private enterprise only can be enterprising. Certainly, it was enterprising, and had it been successful there would have been a very marked difference. Indeed, it was private enterprise to begin with.

I say very clearly that the Government must get on with that task. They cannot leave it entirely to private enterprise. They will have to take risks and to have courage; they will have to be determined, and they will fail sometimes. Never mind if they do fail sometimes. The attempt has to be made, because without it there is no hope at all for this country.

We have put down an Amendment, which hon. Members will have read. On the benches opposite there are a good many hon. Members whose speeches have been most interesting to us on this side of the House. There are many industrialists who understand these problems, and who say privately how much they dislike the vacillating policy of the Government. I say to those hon. Members opposite who really understand the economic problems of this country, and who really want to do something to solve them: Vote for this Amendment tonight; let the Government go to the country, and let the people choose who shall be their future leaders.

Mr. Speaker

Mr. Peter Thorneycroft.

Mr. Jack Jones

On a point of order. May I seek your guidance and help, Mr. Speaker? What course can be adopted, what rules can be invoked, what can be done through the usual channels, to prevent a repetition of this debate, wherein some hon. Members have spoken for as long as 60 minutes while other hon. Members, representing great industrial centres, have not been able to speak for one minute?

Mr. Speaker

That is the old problem. I have no control over the length of hon. Member's speeches.

9.27 p.m.

The President of the Board of Trade (Mr. Peter Thorneycroft)

I rise to reply to the debate, to summarise the arguments, and to answer in a short space of time some, at any rate, of the questions that have been asked.

The right hon. Member for Blyth (Mr. Robens) asked me one factual question at the outset of his speech with regard to the running down of the call-up for next year. The answer was given by my right hon. Friend the Secretary of State for War in answer to the right hon. Member for Bassetlaw (Mr. Bellenger), but I think the right hon. Member for Blyth was out of the Chamber at the time. The fact is that an extra batch has been called up this year which will not be called up next year, so it is a natural running down of the number, and my right hon. Friend the Prime Minister was quite right in saying that in those circumstances there would be a problem with the noncommissioned officers next year if the same number had been called up. That is the answer to the question.

What I wish to do in my speech is to say something of what we have achieved, something of the problems we face, some- thing of the policy issues involved and something of our exports and imports, about which the right hon. Gentleman made comment. I feel that anyone who speaks in this debate on either side of the House is faced with something of a dilemma. If he expresses the confidence he has in his mind he can be accused of complacency, and frequently is. If, on the other hand, he strikes a note of warning and a call to action, he is liable to be accused of weakening our sterling position and painting the situation too black. For my part, I think that the dilemma is a false one, because I believe that in the situation which confronts us there is much which is a cause for satisfaction and much which gives a challenge for the future.

No doubt there will be plenty of controversial things later, but I want to say first what I think we have achieved as a nation, so that people from outside may look at us, not as divided parties, but as a United Kingdom—and that is worth while remembering. We have had two wars in a generation, and if at the end of those two wars, both of which we have won, we are poorer than we were before, that may present us with a problem but it is no cause for an apology. In a hard post-war world we have done much to make good the damage of the war years. Production is 40 per cent. up on what it was pre-war. Several hon. Members have paid tribute to the progress of our agricultural industry.

Nevertheless, the fact is that, despite those efforts, the situation which confronted us in October of 1951 was one of deadly seriousness. There was a huge net deficit with the non-sterling world and the gold reserves were draining away. I am not talking about the rights or wrongs of the economic techniques which preceded that period. I am dealing with this as a factual situation as it existed at that time. Failure to stem this desperate loss would have threatened the whole fabric of the nation, economically, socially and politically, and, if it had been allowed to continue, would have led to a pattern of society intolerable to either party in this country and intolerable to a free people.

All I want to say about the action which has been taken is this. Firstly, it could not have been taken without the Commonwealth; secondly, the measures which were taken were unpopular; and thirdly, these measures, unpopular though they were, happen to have worked. The right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) and several other hon. Members have spoken of what they almost described as the failure of the Finance Ministers' Conference. It was not a failure; it was a success. Unlike some successes, it was a demonstrable success, because without that conference—and I think that the right hon. Gentleman knows it—the drain on the gold and dollar reserves would have gone on, and we would have found ourselves in a worse position at the present time.

If I may, therefore, summarise what I would call the brighter side of this, I do not say that the battle has been won, but I do say that we have stemmed the outflow of reserves, and the world has seen and has been influenced by the efforts we have made and by our obvious determination to put matters right. It is not complacency to express the view that, in the desperate struggle which confronts us, we have secured a foothold from which we can at least carry on the fight.

I want to say a word about the policy issues which are involved. Many of the speeches in this debate, particularly those of my hon. Friend the Member for Aberdeenshire, East (Mr. Boothby) and my hon. Friend the Member for Preston, North (Mr. J. Amery), dealt with that aspect of the matter. I do not think that there is any need to praise or blame anybody for the assumptions which were made in 1945 and upon which our postwar commercial policy was based. The right hon. Member for Leeds, South thought that they were probably wrong. They were, of course. I am not blaming him. They were the assumptions on which the commercial policy of the previous Government had been based for six years, and it is not possible to come along and say, "All that policy can be changed in a short space of time."

If things went wrong, it will not be for the first time in human history that man's forecast of the future went awry. The basic assumption, as I believe it, was that world economic stability was round the corner; that, after a short period of instability, in which U.N.R.R.A. would do a repair job, there would be a period of lowering of trade barriers on a re- ciprocal basis, and, thereafter, institutions like the International Monetary Fund and the International Trade Organisation would work smoothly and profitably in an expanding world economy. Those were, broadly, the assumptions that were made, and in the event many of them proved false. The disequilibrium was on a vaster scale than anyone had contemplated or perhaps could contemplate.

This transitional period is still with us, interwoven in the very fabric of the problems that confront us every day. As the right hon. Gentleman rightly said, there is not a short transitional period or a hump which we can surmount, with a smooth shining valley lying beyond it. It is all a hard uphill road and is likely to remain so.

In reply to the speeches which were made, this is clearly not an occasion upon which to make a final pronouncement on the General Agreement on Tariffs and Trade. That will obviously be one of the subjects which will be discussed by the Government with our partners in the Commonwealth at the forthcoming conference in November. I should like to say this about it. There is, first of all, the bearing of the General Agreement in its existing rigid form on the whole question of preference within the Commonwealth, and that is clearly a matter which we shall raise then. Equally, I must say that the Agreement is linked with a large number of tariff agreements, particularly with the United States, many beneficial to us and beneficial to the United States, the unilateral denunciation of which would mean that we should lose their benefits and our competitors would probably keep them.

Against that background Her Majesty's Government have no doubt whatever as to the right course to adopt. The case for the re-examination of the whole basis of our commercial policy with the Commonwealth is as strong as the case for the unilateral denunciation of G.A.T.T. is weak. We therefore propose to adopt the former course and to reject the latter. We do not intend to take any unilateral decision about G.A.T.T. between now and the Commonwealth Economic Conference, and when that time comes we shall discuss those problems with our partners in the Commonwealth.

I want now to take the discussion, as did a number of hon. and right hon. Gentlemen opposite during the debate, rather wider than the narrow issue of a particular trade agreement. When we meet our partners in the Commonwealth in November, we must, of course, discuss the whole basis of our trade policy, not only the structure of the existing organisations but also how we may build a policy more stable and enduring for the future. I believe—these are matters which will be open for discussion—that we are more likely to succeed by grappling with practical issues than by having some academic discussion. In my belief, there is no simple, short economic theory which will get us out of our present economic difficulties. There is no easy panacea which somebody can administer, saying, "This is the answer to the problem."

Mr. Follick

Why not tell the people that?

Mr. Thorneycroft

In my judgment, the solution lies in taking a very large number of steps, none of which in itself is perhaps finally decisive. For example, it is clear that we must buy less of the things which we lack the means to buy in gold and dollars.

It is equally true that we must seek to extend the amount of trade within the Commonwealth, and to that end we must develop our resources, not, if I may say it to my hon. Friend the Member for Preston, North, by the academic idea of complete self-sufficiency within a narrow field, but in an endeavour to be less helplessly dependent for many of our needs upon the dollar world. Equally, at the same time we must endeavour to persuade the Americans to give us some reduction in the tariff barriers which now surround them. We must not only sell to them more manufactured goods from the sterling area as a whole, but we must encourage the flow of investment from the dollar world into the sterling area.

I mention these things because I do not believe that they are mutually exclusive. I believe we shall have to use them all if, in fact, we are to surmount the very considerable problems that at present confront us, and it is against that background that I want to elaborate for a few moments the way that that policy would affect this country, with particular regard to our import policy and to the export policy which has been touched on in the debate.

May I say this about imports? Import cutting is a dreary way of trying to solve one's economic problems. If the United Kingdom or the Commonwealth sought to solve this problem simply by cutting imports, we might strike a balance, but it would be a brutish kind of existence which would be ahead of us. If the Commonwealth sought to balance on those lines, even the great resources which lie within that area would not be enough to provide for all the populations within it. Compared with our population in the Commonwealth, we lack many things—forests, cattle, agricultural land suitable for cereals, and many important minerals. Equally, there are other things we produce of which we could produce more in the Commonwealth, and indeed should. We should bend our efforts to do so in order that we might be less dependent upon other people.

The right hon. Gentleman the Member for Leeds, South said that our own import cuts were not very successful, and he read an article from the "Financial Times." I thought that the article was a little morbid. It seemed to touch on the gloomier aspect. It was accurate in its figures, but I do not think it presented the full picture, and I think I can say that the import cuts have been effective in what they set out to do. The probable effect of the cuts will be that they will result in a net decrease of 10 per cent. in our imports for 1952 over 1951, which is a reduction of some £400 million.

Mr. Gaitskell

In volume?

Mr. Thorneycroft

In value.

The right hon. Gentleman asked me about the soft fruit position, which he cited as a terrifying example. The right hon. Gentleman is usually so accurate in his figures that I was distressed to see he was concerned only with two types in the quota for the whole range of fruit, which made the figures rather inaccurate. The result was, if I may give him the right details, that in 1952 we reduced our imports of fresh fruit to between one-third and one-half of what we imported in 1951.

It is, of course, true that there is a delayed effect in import cuts. I admit that frankly. If we had not licensed the perishable goods or dealt with hard cases or, in March, honoured the contracts there would have been a much more rapid effect from these cuts. In fact, I guarantee, as President of the Board of Trade, complete success over the control of imports if I could dishonour all contracts, ignore all cases of hardship and could cover 100 per cent. of trade moving into this country. But the net effect would be disastrous upon our economic position. Within the limits of what one can do in a reasonably free economy our cuts are working and working in the right direction.

The right hon. Gentleman the Member for Leeds, South asked me a number of specific questions with which I think I could deal appropriately at this point. He mentioned particularly the position of the European Payments Union and I might summarise his arguments rather briefly. He thought it ought to be rather more on a credit basis and less on a cash.

Mr. Gaitskell

Before the right hon. Gentleman leaves import cuts would he tell us whether the statement made by the Chancellor yesterday does or does not indicate an increase over the £300 million cut which he announced in the Budget?

Mr. Thorneycroft

The Chancellor himself answered that again. It does.

Mr. Gaitskell

Could the right hon. Gentleman tell us how much extra is to be cut?

Mr. Thorneycroft

I do not propose to give the figure. The right hon. Gentleman appreciates the reason as well as I do. I do not intend to forecast import cuts, because unless they are made and orders issued at the same time it would merely mean that contracts would be entered into and it would be impossible to achieve the necessary savings. The right hon. Gentleman raised the question of the European Payments Union which he wished to have placed more on a credit and less on a gold basis. There are arguments for that, but he himself recognised that one has to reach a kind of compromise with those who hold a different view in the European Payments Union, and this is the best compromise we have been able to reach.

He said that creditor countries ought to be more responsive to their special obligations. I agree with him entirely. I would never say that we were fully satisfied with the attitudes or actions of creditor countries, but I am bound to say that some of them have been rather more responsive to the situation than he himself set out in his remarks.

The right hon. Gentleman also asked me about the Katz-Gaitskell agreement. The total amount that will be received under that agreement will be 96 million dollars. We have received 50 million dollars on account, and a further 37 million dollars was paid in today. I hope that that last answer will be satisfactory to the right hon. Gentleman.

I should like to turn for a few moments from imports to our export position. May I summarise the exports situation like this? The daily rate of our exports has been falling. As has been pointed out, it is much better to face that as a fact. There are reasons for it, but that is the situation. In the main that can be attributed to a decline in imports in the sterling area, resulting from cuts imposed by countries such as Australia. At the same time—and this is an encouraging feature—there has been a rise in our exports to the non-sterling area. Clearly, a positive contribution that can be made towards a solution of our difficulties lies in an expansion of our exports.

The difficulty with our consumer goods is, in the main, the difficulty of markets. I make no apology for repeating what I have said before: I wish there was less talk about shoddy goods. I dare say that any country can find examples of goods that are not up to standard, but many of the complaints come from our competitors, not from our customers, and still in textiles and in other goods we make some of the finest goods in all the world.

Mrs. Jean Mann (Coatbridge and Airdrie) rose—

Hon. Members

Sit down.

Mrs. Mann

No shoddy goods under Utility scheme.

Mr. Thorneycroft

We are as anxious as industry itself to see removed the quotas which are put against United Kingdom goods. We bargain with such weapons as are at our disposal. We are in close consultation with industry upon the matter, and to ensure that the best advice possible on those matters should be given to me I have set up a special committee composed of the Federation of British Industries, the National Union of Manufacturers, the Associated British Chambers of Commerce, under the Chairmanship of the Secretary for Overseas Trade, to see that in every way possible the Government shall be kept informed of the most up to date position for the benefit of British exporters seeking to find markets.

The difficulty with engineering goods is the shortage of steel and the availability of skill and capacity, The steps we have taken, which were dealt with in detail by my right hon. Friend, are calculated to release steel for export. The allocation to the export industries during this fourth quarter of the year is being significantly and substantially increased.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

Including shipping?

Mr. Thorneycroft

All the engineering industries—the civilian supply of steel under the Ministry of Supply.

Mr. Bevan

At what point can the priorities given to engineering exports be regarded as having invaded the defence programme? What figure?

Mr. Thorneycroft

The right hon. Gentleman asked, in the course of the debate, for two figures. The first figure he wanted to know was for defence. He was not given that because neither the Soviet Union, nor anybody else, gives the figure for defence. Somebody else, I think it was the right hon. and learned Member for Montgomery (Mr. C. Davies), asked if it were possible for us to say what the result would be when translated into exports. I am afraid that the answer is, not without a crystal. It is not possible to forecast precisely what will be the turnover in steel for the export industry in 1953. This, however, can be clearly stated: the more steel we give the exporting industries, the more capacity we make available to them, the greater the amount of exports we shall get. That is exactly what we propose to do.

Mr. R. R. Stokes (Ipswich) rose—

Hon. Members

Sit down.

Mr. Stokes

No, this is most important. What diversion of tonnage of steel is expected from the armament industry to engineering.

Mr. Thorneycroft

I have said specifically that I shall not enter into figures. In that matter I do not think I differ at all from the previous Government. We have been talking a great deal in this debate about exports and defence. They are not the only important things. The social services are involved in these matters, too. Hospitals and schools are in competition with factories for building steel, and when any hon. and right hon. Gentlemen opposite criticise my right hon. Friend the Minister of Education for not building more schools, they must remember that the necessary steel is made available for building factories—

Mr. Manuel

Where?

Mr. Thorneycroft

Our aim and object in this is to give the engineering exports the opportunity they need and, may I add, with particular emphasis upon the new forms of export, the new types of aircraft, electronics and the rest.

The hon. Member for Stechford (Mr. Roy Jenkins) asked about our credit policy. In our balance of payments position there is, clearly, a limit on the amount of credit which we can extend to other countries, but Her Majesty's Government administer the exchange control over credit with the fullest regard for the competitiveness of our exports. Each case can be, and is, considered on its merits, and I promise exporters of capital goods that their applications in this matter will be considered as quickly and as sympathetically as possible.

A number of speeches in the debate have touched on the question of the direction of our exports. The Government do not direct exports, but dollar exports, as the Commonwealth fully understand, are still of first importance. I do not accept the view that the effort to achieve them is a waste of time. If one considers for a moment the great developments that are going on in Canada—a young, new, growing country, with all sorts of new opportunities opening out ahead of us—I know that British industry and British industrialists intend to seize those opportunities and to enter those markets; and we should wish them well.

Equally, with the United States of America, my right hon. Friend the Chancellor of the Exchequer summed it up quite well in saying that what we wanted was trade, not aid. I do not wish to elaborate a theme upon which I have spoken before, but anything that they can do to lower their tariff barriers, to remove the Buy American Act, to ease their Customs procedure or to be less protectionist in outlook, so much the better. There are many far-seeing men in the United States of America who are seeking to persuade public opinion of the same course.

The debate has turned, and I have spoken, upon problems of external policy. But this crisis is not primarily a crisis just of external policy. It is something here at home. It concerns the standard of living of the British people. Any solution, propounded by any party, must make and demand contributions from them, either contributions of taking less or of working more and giving more. If we import less, there is less for people to buy here. If we export more, we have to do without or we must work harder and longer to produce those things.

If we build factories, we must do with fewer schools. If we develop our Commonwealth—as the right hon. Member for Ipswich (Mr. Stokes), quite properly, urged the other night, let us by all means urge the development of the Commonwealth—let us realise that we do not develop the Commonwealth or anything else unless we are prepared to do with less consumption during the time that we are doing the development.

This, then, is the challenge of our time. We are the focal point in these events, the centre of a great Commonwealth, and playing the crucial role in Western European trade. In the last resort, no one owes us a living, nor do we ask for aid from anyone. We are left with small reserves, and we are holding them. We need to make a supreme effort to increase those reserves, to develop our resources and to expand our strength. We can do it only by sacrifice and effort. If we fail, much else will fail, too. If we succeed, we shall build a new prosperity upon the foundations of the old.

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

The House divided: Ayes, 302 Noes, 277.

Division No. 226.]	AYES	[10.0 p.m.
Aitken, W. T.	Bromley-Davenport, Lt.-Col. W. H.	Dugdale, Maj. Rt. Hn. Sir T. (Richm'nd)
Allan, R. A. (Paddington, S.)	Brooke, Henry (Hampstead)	Duncan, Capt. J. A. L.
Alport, C. J. M.	Brooman-White, R. C.	Eccles, Rt. Hon. D. M.
Amery, Julian (Preston, N.)	Browne, Jack (Govan)	Eden, Rt. Hon. A.
Amory, Heathcoat (Tiverton)	Bullard, D. G.	Elliot, Rt. Hon. W. E.
Anstruther-Gray, Major W. J.	Bullock, Capt. M.	Erroll, F. J.
Arbuthnot, John	Bullus, Wing Commander E. E.	Finlay, Graeme
Ashton, H. (Chelmsford)	Butler, Rt. Hon. R. A. (Saffron Walden)	Fisher, Nigel
Assheton, Rt. Hon. R. (Blackburn, W.)	Carr, Robert (Mitcham)	Fleetwood-Hesketh, R. F.
Astor, Hon. J. J. (Plymouth, Sutton)	Cary, Sir Robert	Fletcher-Cooke, C.
Astor, Hon. W. W. (Bucks, Wycombe)	Channon, H.	Fort, R.
Baker, P. A. D.	Churchill, Rt. Hon. W. S.	Foster, John
Baldock, Lt.-Cmdr J. M.	Clarke, Col. Ralph (East Grinstead)	Fraser, Hon. Hugh (Stone)
Baldwin, A. E.	Clarke, Brig. Terence (Portsmouth, W.)	Fraser, Sir Ian (Morecambe & Lonsdale)
Banks, Col. C.	Cole, Norman	Fyfe, Rt. Hon. Sir David Maxwell
Barber, A. P. L.	Colegate, W. A.	Gage, C. H.
Barlow, Sir John	Conant, Maj. R. J. E.	Galbraith, Cmdr. T. D. (Pollok)
Baxter, A. B.	Cooper, Sqn. Ldr. Albert	Galbraith, T. G. D. (Hillhead)
Beach, Maj. Hicks	Cooper-Key, E. M.	Gammans, L. D.
Beamish, Maj. Tufton	Craddock, Beresford (Spelthorne)	Garner-Evans, E. H.
Bell, Philip (Bolton, E.)	Cranborne, Viscount	George, Rt. Hon. Maj. G. Lloyd
Bell, Ronald (Bucks, S.)	Crookshank, Capt. Rt. Hon. H. F. C.	Glyn, Sir Ralph
Bennett, F. M. (Reading, N.)	Crouch, R. F.	Godber, J. B.
Bennett, Sir Peter (Edgbaston)	Crowder, Sir John (Finchley)	Gomme-Duncan, Col. A.
Bennett, Dr. Reginald (Gosport)	Crowder, Petre (Ruislip—Northwood)	Gough, C. F. H.
Bennett, William (Woodside)	Cuthbert, W. N.	Gower, H. R.
Bevins, J. R. (Toxteth)	Darling, Sir William (Edinburgh, S.)	Graham, Sir Fergus
Birch, Nigel	Davidson, Viscountess	Gridley, Sir Arnold
Bishop, F. P.	Davies, Rt. Hn. Clement (Montgomery)	Grimond, J.
Black, C. W.	Deedes, W. F.	Grimston, Hon. John (St. Albans)
Boothby, R. J. G.	Digby, S. Wingfield	Grimston, Sir Robert (Westbury)
Bossom, A. C.	Dodds-Parker, A. D.	Hare, Hon. J. H.
Boyd-Carpenter, J. A.	Donaldson, Cmdr. C. E. McA.	Harris, Frederic (Croydon, N.)
Boyle, Sir Edward	Donner, P. W.	Harris, Reader (Heston)
Braine, B. R.	Doughty, C. J. A	Harrison, Col. J. H. (Eye)
Braithwaite, Sir Albert (Harrow, W.)	Drayson, G. B.	Harvey, Air Cdre. A. V. (Macclesfield)
Braithwaite, Lt.-Cdr. G. (Bristol, N. W.)	Drewe, C.	Harvey, Ian (Harrow, E.)
Harvie-Watt, Sir George	McKibbin, A. J.	Russell, R. S.
Hay, John	McKie, J. H. (Galloway)	Ryder, Capt. R. E. D.
Head, Rt. Hon. A. H.	Maclay, Rt. Hon. John	Salter, Rt. Hon. Sir Arthur
Heald, Sir Lionel	Maclean, Fitzroy	Sandys, Rt. Hon. D.
Heath, Edward	MacLeod, Iain (Enfield, W.)	Schofield, Lt.-Col. W. (Rochdale)
Henderson, John (Cathcart)	MacLeod, John (Ross and Cromarty)	Scott, R. Donald
Higgs, J. M. C.	Macmillan, Rt. Hon. Harold (Bromley)	Scott-Miller, Cmdr. R.
Hill, Dr. Charles (Luton)	Macpherson, Maj. Niall (Dumfries)	Shepherd, William
Hill, Mrs. E. (Wythenshawe)	Maitland, Comdr. J. F. W. (Horncastle)	Simon, J. E. S. (Middlesbrough, W.)
Hinchingbrooke, Viscount	Maitland, Patrick (Lanark)	Smiles, Lt.-Col. Sir Walter
Hirst, Geoffrey	Manningham-Buller, Sir R. E.	Smithers, Sir Waldron (Orpington)
Holland-Martin, C. J.	Markham, Major S. F.	Smyth, Brig. J. G. (Norwood)
Hollis, M. C.	Marlowe, A. A. H.	Snadden, W. McN.
Holmes, Sir Stanley (Harwich)	Marples, A. E.	Soames, Capt. C.
Holt, A. F.	Marshall, Douglas (Bodmin)	Spearman, A. C. M.
Hope, Lord John	Marshall, Sir Sidney (Sutton)	Speir, R. M.
Hornsby-Smith, Miss M. P.	Maude, Angus	Spence, H. R. (Aberdeenshire, W.)
Horobin, I. M.	Maudling, R.	Spens, Sir Patrick (Kensington, S.)
Horsbrugh, Rt. Hon. Florence	Maydon, Lt.-Comdr. S. L. C.	Stanley, Capt. Hon. Richard
Howard, Gerald (Cambridgeshire)	Medlicott, Brig. F.	Stevens, G.
Howard, Greville, (St. Ives)	Mellor, Sir John	Steward, W. A. (Woolwich, W.)
Hudson, Sir Austin (Lewisham, N.)	Molson, A. H. E.	Stewart, Henderson (Fife, E.)
Hudson, W. R. A. (Hull, N.)	Monckton, Rt. Hon. Sir Walter	Stoddart-Scott, Col, M.
Hulbert, Wing Cmdr. N. J.	Moore, Lt.-Col. Sir Thomas	Strauss, Henry (Norwich, S.)
Hurd, A. R.	Morrison, John (Salisbury)	Stuart, Rt. Hon. James (Moray)
Hutchinson, Sir Geoffrey (Ilford, N.)	Mott-Radclyffe, C. E.	Studholme, H. G.
Hutchison, Lt.-Com. Clark (E'b'rgh W.)	Nabarro, G. D. N.	Summers, G. S.
Hutchison, James (Scotstoun)	Nicholls, Harmar	Sutcliffe, H.
Hyde, Lt.-Col. H. M.	Nicholson, Godfrey (Farnham)	Taylor, Charles (Eastbourne)
Hylton-Fester, H. B. H.	Nicolson, Nigel (Bournemouth, E.)	Taylor, William (Bradford, N.)
Jenkins, Robert (Dulwich)	Nield, Basil (Chester)	Teeling, W.
Jennings, R.	Noble, Cmdr. A. H. P.	Thomas, Rt. Hon. J. P. L. (Hereford)
Johnson, Eric (Blackley)	Nugent, G. R. H.	Thomas, P. J. M. (Conway)
Johnson, Howard (Kemptown)	Nutting, Anthony	Thompson, Kenneth (Walton)
Jones, A. (Hall Green)	Oakshott, H. D.	Thompson, Lt.-Cdr. R. (Croydon, W.)
Kaberry, D.	Odey, G. W.	Thorneycroft, Rt. Hn. Peter (Monmouth)
Keeling, Sir Edward	O'Neill, Rt. Hon. Sir H. (Antrim, N.)	Thornton-Kemsley, Col. C. N.
Kerr, H. W. (Cambridge)	Ormsby-Gore, Hon. W. D.	Tilney, John
Lambert, Hon. G.	Orr, Capt. L. P. S.	Touche, Sir Gordon
Lambton, Viscount	Orr-Ewing, Charles Ian (Hendon, N.)	Turner, H. F. L.
Lancaster, Col. C. G.	Orr-Ewing, Ian L. (Weston-super-Mare)	Turton, R. H.
Langford-Holt, J. A.	Osborne, C.	Tweedsmuir, Lady
Law, Rt. Hon. R. K.	Partridge, E.	Vane, W. M. F.
Leather, E. H. C.	Peake, Rt. Hon. O.	Vaughan-Morgan, J. K.
Legge-Bourke, Maj. E. A. H.	Perkins, W. R. D.	Vosper, D. F.
Legh, P. R. (Petersfield)	Peto, Brig. C. H. M.	Wade, D. W.
Lennox-Boyd, Rt. Hon. A. T.	Peyton, J. W. W.	Wakefield, Edward (Derbyshire, W.)
Lindsay, Martin	Pickthorn, K. W. M.	Walker-Smith, D. C.
Linstead, H. N.	Pilkington, Capt. R. A.	Ward, Hon. George (Worcester)
Lloyd, Rt. Hon. G. (King's Norton)	Pitman, I. J.	Ward, Miss I. (Tynemouth)
Lloyd, Maj. Guy (Renfrew, E.)	Powell, J. Enoch	Waterhouse, Capt. Rt. Hon. C.
		Watkinson, H. A.
Lloyd, Rt. Hon. Selwyn (Wirral)	Price, Henry (Lewisham, W.)	Webbe, Sir H. (London & Westminster)
Lockwood, Lt.-Col. J. C.	Prior-Palmer, Brig. O. L.	Wellwood, W.
Longden, Gilbert (Herts, S. W.)	Profumo, J. D.	White, Baker (Canterbury)
Low, A. R. W.	Raikes, H. V.	Williams, Rt. Hon. Charles (Torquay)
Lucas, Sir Jocelyn (Portsmouth, S.)	Rayner, Brig. R.	Williams, Gerald (Tonbridge)
Lucas, P. B. (Brentford)	Redmayne, E.	Williams, Sir Herbert (Croydon, E.)
Lucas-Tooth, Sir Hugh	Remnant, Hon. P.	Williams, R. Dudley (Exeter)
Lyttelton, Rt. Hon. O.	Renton, D. L. M.	Wills, G.
McAdden, S. J.	Roberts, Peter (Heeley)	Wilson, Geoffrey (Truro)
McCallum, Major D.	Robson-Brown, W.	Wood, Hon. R.
McCorquodale, Rt. Hon. M. S.	Rodgers, John (Sevenoaks)
Macdonald, Sir Peter (I. of Wight)	Roper, Sir Harold	TELLERS FOR THE AYES:
Mackeson, Brig. H. R.	Ropner, Col, Sir Leonard	Mr. Buchan-Hepburn and
		Mr. Butcher
NOES
Acland, Sir Richard	Beswick, F.	Callaghan, L. J.
Adams, Richard	Bevan, Rt. Hon. A. (Ebbw Vale)	Carmichael, J.
Albu, A. H.	Bing, G. H. C.	Castle, Mrs. B. A.
Allen, Arthur (Bosworth)	Blackburn, F.	Champion, A. J.
Allen, Scholefield (Crewe)	Blenkinsop, A.	Chapman, W. D.
Anderson, Alexander (Motherwell)	Blyton, W. R.	Chetwynd, G. R.
Anderson, Frank (Whitehaven)	Boardman, H.	Clunie, J.
Attlee, Rt. Hon. C. R.	Bottomley, Rt. Hon. A. G.	Cocks, F. S.
Awbery, S. S.	Bowden, H. W.	Collick, P. H.
Bacon, Miss Alice	Braddock, Mrs. Elizabeth	Corbet, Mrs. Freda
Baird, J.	Brockway, A. F.	Cove, W. G.
Balfour, A.	Brook, Dryden (Halifax)	Craddock, George (Bradford, S.)
Barnes, Rt. Hon. A. J.	Broughton, Dr. A. D. D.	Crosland, C. A. R.
Bartley, P.	Brown, Rt. Hon. George (Belper)	Crossman, R. H. S.
Beattie, J.	Brown, Thomas (Ince)	Cullen, Mrs. A.
Bellenger, Rt. Hon. F. J.	Burke, W. A.	Daines, P.
Bence, C. R.	Burton, Miss. F. E.	Dalton, Rt. Hon. H.
Benson, G.	Butler, Herbert (Hackney, S.)	Darling, George (Hillsborough)

Davies, A. Edward (Stoke, N.)	Johnston, Douglas (Paisley)	Roberts, Goronwy (Caernarvonshire)
Davies, Ernest (Enfield, E.)	Jones, David (Hartlepool)	Robinson, Kenneth (St. Pancras, N.)
Davies, Harold (Leek)	Jones, Frederick Elwyn (West Ham, S.)	Rogers, George (Kensington, N.)
Davies, Stephen (Merthyr)	Jones, Jack (Rotherham)	Ross, William
de Freitas, Geoffrey	Jones, T. W. (Merioneth)	Royle, C.
Deer, G.	Keenan, W.	Schofield, S. (Barnsley)
Delargy, H. J.	Kenyon, C.	Shackleton, E. A. A.
Dodds, N. N.	Key, Rt. Hon. C. W.	Shawcross, Rt. Hon. Sir Hartley
Donnelly, D. L.	King, Dr. H. M.	Shinwell, Rt. Hon. E.
Driberg, T. E. N.	Kinley, J.	Short, E. W.
Dugdale, Rt. Hon. John (W. Bromwich)	Lee, Frederick (Newton)	Shurmer, P. L. E.
Ede, Rt. Hon. J. C.	Lee, Miss Jennie (Cannock)	Silverman, Julius (Erdington)
Edelman, M.	Lever, Harold (Cheetham)	Silverman, Sydney (Nelson)
Edwards, John (Brighouse)	Lever, Leslie (Ardwick)	Simmons, C. J. (Brierley Hill)
Edwards, Rt. Hon. Ness (Caerphilly)	Lewis, Arthur	Slater, J.
Edwards, W. J. (Stepney)	Lindgren, G. S.	Smith, Ellis (Stoke, S.)
Evans, Albert (Islington, S.W.)	Lipton, Lt.-Col. M.	Smith, Norman (Nottingham, S.)
Evans, Edward (Lowestoft)	Logan, D. G.	Snow, J. W.
Evans, Stanley (Wednesbury)	MacColl, J. E.	Sorenson, R. W.
Ewart, R.	McInnes, J	Soskice, Rt. Hon Sir Frank
Fernyhough, E	McKay, John (Wallsend)	Sparks, J. A.
Field, W. J.	McLeavy, F.	Steele, T.
Fienburgh, W.	MacMillan, M. K. (Western Isles)	Stewart, Michael (Fulham, E.)
Finch, H. J.	MacPherson, Malcolm (Stirling)	Stokes, Rt. Hon. R. R.
Fletcher, Eric (Islington, E.)	Mallalieu, J. P. W. (Huddersfield, E.)	Strachey, Rt. Hon. J.
Follick, M.	Mann, Mrs. Jean	Strauss, Rt. Hon. George (Vauxhall)
Foot, M. M.	Manuel, A. C.	Stross, Dr. Barnett
Forman, J. C.	Marquand, Rt. Hon. H. A.	Summerskill, Rt. Hon. E.
Fraser, Thomas (Hamilton)	Mayhew, C. P.	Swingler, S. T.
Freeman, John (Watford)	Mellish, R. J.	Sylvester, G. O.
Freeman, Peter (Newport)	Messer, F.	Taylor, Bernard (Mansfield)
Gaitskell, Rt. Hon. H. T. N.	Mikardo, Ian	Taylor, John (West Lothian)
Gibson, C. W.	Mitchison, G. R.	Taylor, Rt. Hon. Robert (Morpeth)
Glanville, James	Monslow, W.	Thomas, David (Aberdare)
Gooch, E. G.	Moody, A. S.	Thomas, George (Cardiff)
Gordon Walker, Rt. Hon. P. C.	Morgan, Dr. H. B. W.	Thomas, Iorwerth (Rhondda, W.)
Greenwood, Anthony (Rossendale)	Morley, R.	Thomas, Ivor Owen (Wrekin)
Greenwood, Rt. Hn. Arthur (Wakefield)	Morris, Percy (Swansea, W.)	Thomson, George (Dundee, E.)
Grenfell, Rt. Hon. D. R.	Morrison, Rt. Hon. H. (Lewisham, S.)	Thorneyeroft, Harry (Clayton)
Grey, C. F.	Mort, D. L.	Thurtle, Ernest
Griffiths, David (Rother Valley)	Moyle, A.	Timmons, J.
Griffiths, Rt. Hon. James (Llanelly)	Murray, J. D.	Tomney, F.
Griffiths, William (Exchange)	Nally, W.	Turner-Samuels, M.
Hale, Leslie (Oldham, W.)	Neal, Harold (Bolsover)	Ungoed-Thomas, Sir Lynn
Hall, Rt. Hon. Glenvil (Colne Valley)	O'Brien, T.	Usborne, H. C.
Hall, John (Gateshead, W.)	Oldfield, W. H.	Viant, S. P.
Hamilton, W. W.	Oliver, G. H.	Wallace, H. W.
Hannan, W.	Orbach, M.	Watkins, T. E.
Hardy, E. A.	Oswald, T.	Webb, Rt. Hon. M (Bradford, C.)
Hargreaves, A.	Padley, W. E.	Weitzman, D.
Harrison, J. (Nottingham, E.)	Paget, R. T.	Wells, Percy (Faversham)
		Wells, William (Walsall)
Hastings, S.	Paling, Rt. Hon. W. (Dearne Valley)	West, D. G.
Hayman, F. H.	Paling, Will T. (Dewsbury)	Wheatley, Rt. Hon. John
Healey, Denis (Leeds, S.E.)	Pannell, Charles	White, Mrs. Eirene (E. Flint)
Henderson, Rt. Hon. A. (Rowley Regis)	Pargiter, G. A.	White, Henry (Derbyshire, N.E.)
Herbison, Miss M.	Parker, J.	Whiteley, Rt. Hon. W.
Hewitson, Capt. M.	Paton, J.	Wigg, George
Hobson, C. R.	Peart, T. F.	Wilcock, Group Capt. C. A. B.
Holman, P.	Plummer, Sir Leslie	Wilkins, W. A.
Houghton, Douglas	Poole, C. C.	Willey, Frederick (Sunderland, N.)
Hoy, J. H.	Popplewell, E.	Williams, David (Neath)
Hudson, James (Ealing, N.)	Porter, G.	Williams, Rev. Llywelyn (Abertillery)
Hughes, Cledwyn (Anglesey)	Price, Joseph T. (Westhoughton)	Williams, Ronald (Wigan)
Hughes, Emrys (S. Ayrshire)	Price, Philips (Gloucestershire, W.)	Williams, W. R. (Droylsden)
Hughes, Hector (Aberdeen, N.)	Proctor, W. T	Williams, W. T. (Hammersmith, S.)
Hynd, H. (Accrington)	Pryde, D. J.	Wilson, Rt. Hon. Harold (Huyton)
Hynd, J. B. (Attercliffe)	Pursey, Cmdr. H.	Winterbottom, Ian (Nottingham, C.)
Irvine, A. J. (Edge Hill)	Rankin, John	Winterbottom, Richard (Brightside)
Irving, W. J. (Wood Green)	Reeves, J.	Woodburn, Rt. Hon. A.
Isaacs, Rt. Hon. G. A.	Reid, Thomas (Swindon)	Wyatt, W. L.
Janner, B.	Reid, William (Camlachie)	Yates, V. F.
Jay, Rt. Hon. D. P. T.	Rhodes, H.	Younger, Rt. Hon. K.
Jeger, George (Goole)	Richards, R.
Jenkins, R. H. (Stechford)	Robens, Rt. Hon. A.	TELLERS FOR THE NOES:
Johnson, James (Rugby)	Roberts, Albert (Normanton)	Mr. Pearson and Mr. Holmes

Main Question put.

The House divided: Ayes, 299; Noes, 277.

Division No. 227.]	AYES	[10.11 p.m.
Aitken, W. T.	Anstruther-Gray, Maj. W. J.	Astor, Hon. W. W. (Bucks, Wycombe)
Allan, R. A. (Paddington, S.)	Arbuthnot, John	Baker, P. A. D.
Alport, C. J. M.	Ashton, H. (Chelmsford)	Baldock, Lt.-Cmdr. J. M.
Amery, Julian (Preston, N.)	Assheton, Rt. Hon. R. (Blackburn, W.)	Baldwin, A. E.
Amory, Heathcoat (Tiverton)	Astor, Hon. J. J. (Plymouth, Sutton)	Banks, Col. C.
Barber, A. P. L.	Gridley, Sir Arnold	Marples A. E.
Barlow, Sir John	Grimond, J.	Marshall, Douglas (Bodmin)
Baxter, A. B.	Grimston, Hon. John (St. Albans)	Marshall, Sir Sidney (Sutton)
Beach, Maj. Hicks	Grimston, Sir Robert (Westbury)	Maude, Angus
Beamish, Maj. Tufton	Hare, Hon. J. H.	Maudling, R.
Bell, Philip (Bolton, E.)	Harris, Frederic (Croydon, N.)	Maydon, Lt.-Comdr. S. L. C.
Bell, Ronald (Bucks, S.)	Harris, Reader (Helton)	Medlicott, Brig. F.
Bennett, F. M. (Reading, N.)	Harrison, Col. J. H. (Eye)	Mellor, Sir John
Bennett, Sir Peter (Edgbaston)	Harvey, Air Cdre. A. V. (Macclesfield)	Molson, A. H. E.
Bennett, Dr. Reginald (Gosport)	Harvey, Ian (Harrow, E.)	Monckton, Rt. Hon. Sir Walter
Bennett, Wiliam (Woodside)	Harvie-Watt, Sir George	Moore, Lt.-Col. Sir Thomas
Bevins, J. R. (Toxteth)	Hay, John	Morrison, John (Salisbury)
Birch, Nigel	Head, Rt. Hon. A. H.	Mott-Radclyffe, C. E.
Bishop, F. P.	Heald, Sir Lionel	Nabarro, G. D. N.
Black, C. W.	Henderson, John (Cathcart)	Nicholls, Harmar
Boothby, R. J. G.	Higgs, J. M. C.	Nicholson, Godfrey (Farnham)
Bossom, A. C.	Hill, Dr. Charles (Luton)	Nicolson, Nigel (Bournemouth, E.)
Boyd-Carpenter, J. A.	Hill, Mrs. E. (Wythenshawe)	Nield, Basil (Chester)
Boyle, Sir Edward	Hinchingbrooke, Viscount	Noble, Cmdr. A. H. P.
Braine, B. R.	Hirst, Geoffrey	Nugent, G. R. H.
Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)	Holland-Martin, C. J.	Nutting, Anthony
Bromley-Davenport, Lt.-Col. W. H.	Hollis, M. C.	Oakshott, H. D.
Brooke, Henry (Hampstead)	Holmes, Sir Stanley (Harwich)	Odey, G. W.
Brooman-White, R. C.	Holt, A. F.	O'Neill, Rt. Hon. Sir H. (Antrim, N.)
Browne, Jack (Govan)	Hope, Lord John	Ormsby-Gore, Hon. W. D.
Bullard, D. G.	Hornsby-Smith, Miss M. P.	Orr, Capt. L. P. S.
Bullock, Capt. M.	Horobin, I. M.	Orr-Ewing, Charles Ian (Hendon, N.)
Bullus, Wing Commander E. E.	Horsbrugh, Rt. Hon. Florence	Orr-Ewing, Ian L. (Weston-super-Mare)
Butcher, H. W,	Howard, Gerald (Cambridgeshire)	Osborne, C.
Butler, Rt. Hon. R. A. (Saffron Walden)	Howard, Greville (St. Ives)	Partridge, E.
Carr, Robert (Mitcham)	Hudson, Sir Austin (Lewisham, N.)	Peake, Rt. Hon. O.
Cary, Sir Robert	Hudson, W. R. A. (Hull, N.)	Perkins, W. R. D.
Channon, H.	Hulbert, Wing Cmdr. N. J.	Peto, Brig. C. H. M.
Churchill, Rt. Hon. W. S.	Hurd, A. R.	Peyton, J. W. W.
Clarke, Col. Ralph (East Grinstead)	Hutchinson, Sir Geoffrey (Ilford, N.)	Pickthorn, K. W. M.
Clarke, Brig. Terence (Portsmouth, W.)	Hutchison, Lt.-Com. Clark (E'b'rgh W.)	Pilkington, Capt. R. A.
Cole, Norman	Hutchison, James (Scotstoun)	Pitman, I. J.
Colegate, W. A.	Hyde, Lt.-Col. H. M.	Powell, J. Enoch
Conant, Maj. R. J. E.	Hylton-Foster, H. B. H.	Price, Henry (Lewisham, W.)
Cooper, Sqn. Ldr. Albert	Jenkins, Robert (Dulwich)	Prior-Palmer, Brig O. L.
Cooper-Key, E. M.	Jennings, R.	Profumo, J. D.
Craddock, Beresford (Spelthorne)	Johnson, Eric (Blackley)	Raikes, H. V.
Cranborne, Viscount	Johnson, Howard (Kemplown)	Rayner, Brig. R.
Crookshank, Capt. Rt. Hon. H. F. C.	Jones, A. (Hall Green)	Redmayne, E.
Crouch, R. F.	Kaberry, D.	Remnant, Hon. P.
Crowder, Sir John (Finchley)	Keeling, Sir Edward	Renton, D. L. M.
Crowder, Petre (Ruislip—Northwood)	Kerr, H. W. (Cambridge)	Roberts, Peter (Heeley)
Cuthbert, W. N.	Lambert, Hon. G.	Robson-Brown, W.
Darling, Sir William (Edinburgh, S.)	Lambton, Viscount	Rodgers, John (Sevenoaks)
Davidson, Viscountess	Lancaster, Col. C. G.	Roper, Sir Harold
Davies, Rt. Hn. Clement (Montgomery)	Langford-Holt, J. A.	Ropner, Col. Sir Leonard
De la Bère, Sir Rupert	Law, Rt. Hon. R. K.	Russell, R. S.
Digby, S. Wingfield	Leather, E. H. C.	Ryder, Capt. R. E. D.
Dodds-Parker, A. D.	Legge-Bourke, Maj. E. A. H.	Salter, Rt. Hon. Sir Arthur
Donaldson, Cmdr. C. E. McA.	Legh, P. R. (Petersfield)	Sandys, Rt. Hon. D.
Donner, P. W.	Lennox-Boyd, Rt. Hon. A. T.	Schofield, Lt.-Col. W. (Rochdale)
Doughty, C. J. A.	Lindsay, Martin	Scott, R. Donald
Drayson, G. B.	Linstead, H. M.	Scott-Miller, Cmdr. R.
Drewe, C.	Lloyd, Rt. Hon. G. (King's Norton)	Shepherd, William
Dugdale, Maj. Rt. Hn. Sir T (Richmond)	Lloyd, Maj. Guy (Renfrew, E.)	Simon, J. E S. (Middlesbrough, W.)
Duncan, Capt. J. A. L.	Lloyd, Rt. Hon. Selwyn (Wirral)	Smiles, Lt.-Col. Sir Walter
Eccles, Rt. Hon. D. M.	Lockwood, Lt.-Col. J. C.	Smithers, Sir Waldron (Orpington)
Eden, Rt Hon. A.	Longden, Gilbert (Herts, S.W.)	Smyth, Brig. J. G. (Norwood)
Elliot, Rt. Hon. W. E.	Low, A. R. W.	Snadden, W. McN.
Errol, F. J.	Lucas, Sir Jocelyn (Portsmouth, S.)	Soames, Capt. C.
Finlay, Graeme	Lucas, P. B. (Brentford)	Spearman, A. C. M.
Fisher, Nigel	Lucas-Tooth, Sir Hugh	Speir, R. M.
Fleetwood-Hesketh, R. F.	Lyttellon, Rt. Hon. O.	Spence, H. R. (Aberdeenshire, W.)
Fletcher-Cooke, C.	McAdden, S. J.	Spens, Sir Patrick (Kensington, S.)
Fort, R.	McCallum, Major R.	Stanley, Capt. Hon. Richard
Foster, John	McCorquodale, Rt. Hon. M. S.	Stevens, G. P.
Fraser, Hon. Hugh (Stone)	Macdonald, Sir Peter (I. of Wight)	Steward, W. A. (Woolwich, W.)
Fraser, Sir Ian (Morecambe & Lonsdale)	Mackeson, Brig. H. R.	Stewart, Henderson (Fife, E.)
Fyfe, Rt. Hon. Sir David Maxwell	McKibbin, A. J.	Stoddart-Scott, Col. M.
Gage, C. H.	McKie, J. H. (Galloway)	Strauss, Henry (Norwich, S.)
Galbraith, Cmdr. T. D. (Pollok)	Maclay, Rt. Hon. John	Stuart, Rt. Hon. James (Moray)
Galbraith, T. G. D. (Hillhead)	Maclean, Fitzroy	Studholme, H. G.
Gammans, L. D.	MacLeod, Iain (Enfield, W.)	Summers, G. S.
Garner-Evans, E. H.	MacLeod, John (Ross and Cromarty)	Sutcliffe, H.
George, Rt. Hon. Maj. G. Lloyd	Macmillan, Rt. Hon. Harold (Bromley)	Taylor, Charles (Eastbourne)
Glyn, Sir Ralph	Macpherson, Maj. Niall (Dumfries)	Taylor, William (Bradford, N.)
Godber, J. B.	Maitland, Comdr. J. F. W. (Horncastle)	Teeling, W.
Gomme-Duncan, Col. A.	Maitland, Patrick (Lanark)	Thomas, Rt. Hon J. P. L. (Hereford)
Gough, C. F. H.	Manningham-Buller, Sir R. E.	Thomas, P. J. M. (Conway)
Gower, H. R.	Markham, Major S. F.	Thompson, Kenneth (Walton)
Graham, Sir Fergus	Marlowe, A. A. H.	Thompson, Lt.-Cdr. R. (Croydon, W.)

Thorneycroft, Rt. Hn. Peter (Monmouth)	Wakefield, Edward (Derbyshire, W)	Williams, Gerald (Tonbridge)
Thornton-Kemsley, Col. C. N.	Walker-Smith, D. C.	Williams, Sir Herbert (Croydon, E.)
Tilney, John	Ward, Hon. George (Worcester)	Williams, R. Dudley (Exeter)
Touche, Sir Gordon	Ward, Miss I. (Tynemouth)	Wills, G.
Turner, H. F. L.	Waterhouse, Capt. Rt. Hon. C.	Wilson, Geoffrey (Truro)
Turton, R. H.	Watkinson, H. A.	Wood, Hon. R.
Tweedsmuir, Lady	Webbe, Sir H. (London & Westminster)
Vane, W. M. F.	Wellwood, W.	TELLERS FOR THE AYES
Vaughan-Morgan, J. K.	White, Baker (Canterbury)	Mr. Buchan-Hepburn and
Vosper, D. F.	Williams, Rt. Hon. Charles (Torquay)	Mr. Heath.
NOES
Acland, Sir Richard	Evans, Stanley (Wednesbury)	Lindgren, G. S.
Adams, Richard	Ewart, R.	Lipton, Lt.-Col. M.
Albu, A. H.	Fernyhough, E.	Logan, D. G.
Allen, Arthur (Bosworth)	Field, W. J.	MacColl, J. E.
Allen, Scholefield (Crewe)	Fienburgh, W.	McInnes, J.
Anderson, Alexander (Motherwell)	Finch, H. J.	McKay, John (Wallsend)
Anderson, Frank (Whitehaven)	Fletcher, Eric (Islington, E.)	McLeavy, F.
Attlee, Rt. Hon. C. R.	Follick, M.	MacMillan, M. K. (Western Isles)
Awbery, S. S.	Foot, M. M.	MacPherson, Malcolm (Stirling)
Bacon, Miss Alice	Forman, J. C.	Mallalieu, J. P. W. (Hudderefield, E.)
Baird, J.	Fraser, Thomas (Hamilton)	Mann, Mrs. Jean
Balfour, A.	Freeman, John (Watford)	Manuel, A. C.
Barnes, Rt. Hon. A. J.	Freeman, Peter (Newport)	Marquand, Rt. Hon. H. A.
Bartley, P.	Gaitskell, Rt. Hon. H. T. N.	Mayhew, C. P.
Beattie, J.	Gibson, C. W.	Mellish, R. J.
Bellenger, Rt. Hon. F. J.	Glanville, James	Messer, F.
Bence, C. R.	Gooch, E. G.	Mikardo, Ian
Benson, G.	Gordon Walker, Rt. Hon. P. C.	Mitchison, G. R.
Beswick, F.	Greenwood, Anthony (Rossendale)	Monslow, W.
Bevan, Rt. Hon. A. (Ebbw Vale)	Greenwood, Rt. Hn. Arthur (Wakefield)	Moody, A. S.
Bing, G. H. C.	Grenfell, Rt. Hon. D. R.	Morgan, Dr. H. B. W.
Blackburn, F.	Grey, C. F.	Morley, R.
Blenkinsop, A.	Griffiths, David (Rother Valley)	Morris, Percy (Swansea, W.)
Blyton, W. R.	Griffiths, Rt. Hon James (Llanelly)	Morrison, Rt. Hon H. (Lewisham, S.)
Boardman, H.	Griffiths, William (Exchange)	Mort, D. L.
Bottomley, Rt. Hon. A. G.	Hale, Leslie (Oldham, W.)	Moyle, A.
Bowden, H. W.	Hall, Rt. Hon. Glenvil (Colne Valley)	Murray, J. D.
Braddock, Mrs. Elizabeth	Hall, John (Gateshead, W.)	Nally, W.
Brockway, A. F.	Hamilton, W. W.	Neal, Harold (Bolsover)
Brook, Dryden (Halifax)	Hannan, W.	O'Brien, T.
Broughton, Dr. A. D. D.	Hardy, E. A.	Oldfield, W. H.
Brown, Rt. Hon. George (Belper)	Hargreaves, A.	Oliver, G. H.
Brown, Thomas (Ince)	Harrison, J. (Nottingham, E.)	Orbach, M.
Burke, W. A.	Hastings, S.	Oswald, T.
Burton, Miss F. E.	Hayman, F. H.	Padley, W. E.
Butler, Herbert (Hackney, S.)	Healey, Denis (Leeds, S.E.)	Paget, R. T.
Callaghan, L. J.	Henderson, Rt. Hon. A (Rowley Regis)	Paling, Rt. Hon. W. (Dearne Valley)
Carmichael, J.	Herbison, Miss M.	Paling, Will T. (Dewsbury)
Castle, Mrs. B. A.	Hewitson, Capt. M.	Pannell, Charles
Champion, A. J.	Hobson, C. R.	Pargiter, G. A.
Chapman, W. D.	Holman, P.	Parker, J.
Chetwynd, G. R	Houghton, Douglas	Paton, J.
Clunie, J.	Hoy, J. H.	Peart, T. F.
Cocks, F. S.	Hudson, James (Ealing, N.)	Plummer, Sir Leslie
Collick, P. H.	Hughes, Cledwyn (Anglesey)	Poole, C. C.
Corbet, Mrs. Freda	Hughes, Emrys (S. Ayrshire)	Popplewell, E.
Cove, W. G.	Hughes, Hector (Aberdeen, N.)	Porter, G.
Craddock, George (Bradford, S.)	Hynd, H. (Accrington)	Price, Joseph T. (Westhoughton)
Crosland, C. A. R.	Hynd, J. B. (Attercliffe)	Price, Philips (Gloucestershire, W.)
Crossman, R. H. S.	Irvine, A. J. (Edge Hill)	Proctor, W. T.
Cullen, Mrs. A.	Irving, W. J. (Wood Green)	Pryde, D. J.
Daines, P.	Isaacs, Rt. Hon. G. A.	Pursey, Cmdr. H.
Dalton, Rt. Hon. H.	Janner, B.	Rankin, John
Darling, George (Hillsborough)	Jay, Rt. Hon. D. P. T.	Reeves, J.
Davies, A. Edward (Stoke, N.)	Jeger, George (Goole)	Reid, Thomas (Swindon)
Davies, Ernest (Enfield, E.)	Jenkins, R. H. (Stechford)	Reid, William (Camlachie)
Davies, Harold (Leek)	Johnson, James (Rugby)	Rhodes, H.
Davies, Stephen (Merthyr)	Johnston, Douglas (Paisley)	Richards, R.
de Freitas, Geoffrey	Jones, David (Hartlepool)	Robens, Rt. Hon. A.
Deer, G.	Jones, Frederick Elwyn (West Ham, S.)	Roberts, Albert (Normanton)
Delargy, H. J.	Jones, Jack (Rotherham)	Roberts, Goronwy (Caernarvonshire)
Dodds, N. N.	Jones, T. W (Merioneth)	Robinson, Kenneth (St. Pancras, N.)
Donnelly, D. L.	Keenan, W.	Rogers, George (Kensington, N.)
Driberg, T. E. N.	Kenyon, C.	Ross, William
Dugdale, Rt. Hon John (W. Bromwich)	Key, Rt. Hon. C. W.	Royle, C.
Ede, Rt. Hon. J. C.	King, Dr. H. M.	Schofield. S (Barnsley)
Edelman, M.	Kinley, J.	Shackleton, E. A. A.
Edwards, John (Brighouse)	Lee, Frederick (Newton)	Shawcross, Rt. Hon. Sir Hartley
Edwards, Rt. Hon. Ness (Caerphilly)	Lee, Miss Jennie (Cannock)	Shinwell, Rt. Hon. E.
Edwards, W. J. (Stepney)	Lever, Harold (Cheetham)	Short, E. W.
Evans, Albert (Islington, S.W.)	Lever, Leslie (Ardwick)	Shurmer, P. L. E.
Evans, Edward (Lowestoft)	Lewis, Arthur	Silverman, Julius (Erdington)

Silverman, Sydney (Nelson)	Thomas, George (Cardiff)	Whiteley, Rt. Hon. W.
Simmons, C. J. (Brierley Hill)	Thomas, Iorwerth (Rhondda, W.)	Wigg, George
Slater, J.	Thomas, Ivor Owen (Wrekin)	Wilcock, Group Capt, C. A. B.
Smith, Ellis (Stoke, S.)	Thorneycroft, Harry (Clayton)	Wilkins, W. A.
Smith, Norman (Nottingham, S.)	Thurtle, Ernest	Willey, Frederick (Sunderland, N.)
Snow, J. W.	Timmons, J.	Williams, David (Neath)
Sorensen, R. W.	Tomney, F.	Williams, Rev. Llywelyn (Abertillery)
Soskice, Rt. Hon. Sir Frank	Turner-Samuels, M.	Williams, Ronald (Wigan)
Sparks, J. A.	Thomson, George (Dundee, E.)	Williams, W. R. (Droylsden)
Steele, T.	Ungoed-Thomas, Sir Lynn	Williams, W. T. (Hammersmith, S.)
Stewart, Michael (Fulham, E.)	Usborne, H. C.	Wilson, Rt. Hon. Harold (Huyton)
Stokes, Rt. Hon. R. R.	Viant, S. P.	Winterbottom, Ian (Nottingham, C.)
Strachey, Rt. Hon. J.	Wallace, H. W.	Winterbottom, Richard (Brightside)
Strauss, Rt. Hon. George (Vauxhall)	Watkins, T. E.	Woodburn, Rt. Hon. A.
Stross, Dr. Barnett	Webb, Rt. Hon. M. (Bradford, C.)	Wyatt, W. L.
Summerskill, Rt. Hon. E.	Weitzman, D.	Yates, V. F.
Swingler, S T.	Wells, Percy (Faversham)	Younger, Rt. Hon. K.
Sylvester, G. O.	Wells, William (Walsall)
Taylor, Bernard (Mansfield)	West, D. G.	TELLERS FOR THE NOES:
Taylor, John (West Lothian)	Wheatley, Rt. Hon John	Mr. Pearson and Mr. Holmes.
Taylor, Rt. Hon. Robert (Morpeth)	White, Mrs. Eirene (E. Flint.)
Thomas, David (Aberdare)	White, Henry (Derbyshire, N.E.)

Resolved, That this House welcomes the determination of Her Majesty's Government to maintain the progress so far made towards improving the balance of overseas payments and to take such further measures as may be necessary for the economic security of the country.