ECONOMIC SITUATION

HC Deb 10 November 1952 vol 507 cc596-724

3.32 p.m.

Mr. Herbert Morrison (Lewisham, South)

I beg to move, at the end of the Question, to add: But humbly regret that while the Gracious Speech demonstrates the determination of the Government to introduce confusion into basic industries which were in process of being integrated and developed in the nation's interest, it discloses no positive and effective proposals for dealing with the serious economic position of the country which is evidenced by the decline in production and exports, growing unemployment and short-time working and increased cost of living; and this House has no confidence in Your Majesty's present advisers whose policies threaten a return to the social conditions of the inter-war years. The debate starting today and continuing tomorrow will deal largely with economic matters concerning the economic Ministers and, above all, the Chancellor of the Exchequer who, so to speak, is the co-ordinating Minister between the various economic Departmental Ministers. I am sure that the whole House understands the absence of the Chancellor of the Exchequer and we should all like to express our sympathy with him on the death of his very distinguished father. No doubt the Chancellor will be here tomorrow. We shall be pleased to see him.

Our primary anxiety and complaint about the Gracious Speech is that it shows no signs, as far as we can see and subject to what Ministers may say, of the Government having a coherent, progressive, economic policy. I think that there is one thing above all that the British people desire irrespective of party—I am talking about the masses of the people—and that is the desire to get a decent living with reasonable security and without the fear of slumps, mass unemployment and destitution.

But they want that not merely for today and tomorrow: they want to feel that that is a permanent condition of our social and economic life. I do not think that the people are too much concerned as to the particular fashion or means by which that is to be achieved. They have no preconceived doctrinal or dogmatic ideas in their mind, but they have an ambition to be able to get a decent living, in return for which they are willing to work. They want that to be a condition of affairs which has a reasonable stability and permanence about it.

I submit that it is certainly our business today to engage in the perfectly proper and legitimate clash of party opinions and political differences. That is what the House of Commons is for. If we were all to agree and merely to echo each other, this would be a dull place, and the nation and everybody else would be disappointed. So it is proper and right that the clashes of principle and opinion which exist between the two great parties in the State should find expression. Nevertheless, I venture to add that I think that there is an equal duty to seek to examine the facts as fairly as we can and for all of us in all parts of the House to try to urge constructive and objective policies which are calculated to help our country in achieving economic progress and security.

Therefore, my own speech will be, I hope, largely devoted to that, though it will have something to say—a fair amount to say—as it ought, about the shortcomings, as we see them, of the Government. But when the party battle is done—and the party battle must take place—it is nevertheless the duty of all of us to remember that the collective well-being of our country comes first, that it ought to be the first consideration in our minds.

Two things are expected by the nation from Her Majesty's Government. The first is that they should have a coherent policy to deal with the short-term situation, and the second is that they should have an ambitious and well-conceived plan to build up the economic resources of our country. Looking at the short-run problem, or problems, with which we are faced, let me say straight away that we welcome the improvement in the gold reserve position, though I am sure that everybody will agree that there is room for further improvement.

I always thought when we were in office that there was a tendency on the part of the Opposition at that time rather to get a kick out of the misfortunes of the country; that if there were troubles and if economic difficulties arose there was an inclination to cheer and to jeer and to laugh about it, probably on the basis, "Well, that will hurt the Labour Government and do the Tories a bit of good." I do not take that view, and my hon. Friends do not take that view. If the country is in trouble, we are sorry about it, and if the country is doing a bit better in some respects, we are glad about it. That, I think, is the duty of everybody irrespective of party.

Therefore, I am glad that there has been some improvement in the gold reserve position. It is, I think, due to five main influences. First, there is some change in the terms of trade which has benefited us to the tune of about £200 million this year; that is to say, the average level of import prices has fallen somewhat, and that has helped us, together with some increase in export prices. I do not think that the Government would claim particular direct executive credit for that, it is a change in world conditions, just as in earlier years we suffered from conditions the other way round, partly as a consequence of the outbreak of hostilities in Korea.

Secondly, there is some recovery in invisibles. Thirdly, United States aid is some help to us. Fourthly, our exports to the non-sterling area, and especially to the dollar area, have not fallen as much as they have in other areas; but there are falls in exports that ought to give us pause and must give us some cause for anxiety.

Fifthly, there have been import cuts made by administrative action, through economic controls by the Government. That has also assisted in this situation. And despite the fact that there was from time to time great denunciation of economic controls and planning as a philosophy and instrument of Government, I think that the present Ministers quickly learned when they came into office to say, "Thank goodness the Labour Government left us the power of economic control and some degree of economic planning."

All these import cuts are presumably the result of direct Government action. Nevertheless, there is a limit to the amount of that medicine which the nation can take. It has resulted in some diminution of the variety of food available to the people, despite promises at the election that there should be a greater variety of food. Imports cannot be cut beyond a certain point. It must not be assumed that the remedy of cutting imports by order is one which can be carried on without limit, partly because there is a limit and partly because it might have a bad effect on the health of the people and on the economy of the nation.

As to United States aid, this is always a matter of some uncertainty. It has been a matter of uncertainty under the existing United States Administration and it will be a matter of uncertainty under the new United States Administration. Therefore, no British Government can assume that the level of United States aid at any point is a certainty as to continuance in the future. We must keep that in mind.

Moreover, we cannot assume a continuance of the improvement of the terms of trade. Therefore, I would warn the House and would warn Ministers that it is never wise to engage in excessive rejoicing about short-period improvement. It is liable to be dangerous. We had some periods of improvement during our term of office and some periods when things were not so good. The tendency, of course, was for us to rejoice about the short periods of improvement and for the Opposition perhaps to rejoice a little about the other things.

The truth is that if we are talking serious economic business, we had better not rejoice unduly about short periods of improvement. We had better assume, for it is wise and sensible to do so, that it may not last, and therefore we should make every conceivable preparation for that possibility and build up against less fortunate times. A small change in world conditions could lead to a worsening in the terms of trade, or the conditions of our export trade could bring about a new balance of payment crisis quite easily, a crisis which might come out of the blue. I am sorry to say, and I think everybody will agree with me, that we are not free from these troubles yet. I wish we were, and I am sure that we all wish that we were.

There is a new difficulty about exports. We took the view, as a Labour Government, that if our economy was to be dealt with in the circumstances which were obtaining, we had to economise in imports. We had also to restrain the home demand so that more could go for export. This was not an easy operation. It meant that we had to say to the British public, "We are going to stop deliberately the import of things which you badly want. You cannot have them." We had to say further, "We are going to export things that you would very much like to have, but which we must export for economic reasons." And we explained those reasons.

This was not an easy thing to do. It was open to considerable political misrepresentation. In a way we had to hurt our own people for the sake of their general and ultimate good. That is the test of Government; it is the test of statesmanship. So long as it is explained, it is right to hurt people for the time being in order to protect and preserve their ultimate good.

This problem of exports and imports is really a very simple one. We have to export for the sake of employment and for other reasons—certainly in order to develop our standard of employment. [An HON. MEMBER: "To live."] An hon. Member interrupted to say that we must export to live. We must export to live, because we have to import. We have to import in part to fill our stomachs, because we are not yet growing enough food to feed ourselves. But we also need to import materials to go into the stomachs of our factories, as it were. Without those imports we cannot go on, and economically cannot stand up. But if we are to import we must pay for our imports by exports, because the foreigners need to be paid. Those really are the reasons why a prosperous and developing export trade is absolutely vital to our well-being.

There are some signs that it may be difficult to export. The non-dollar countries are tending, again by administrative action I think, to cut their own imports from us. We have had that experience with Australia and in other countries outside the Commonwealth. Moreover, we must contemplate increased competition in the export field—developing competition from countries that are improving their economic and productive efficiency. Certainly we must look forward to an increasingly competitive condition of affairs in the export trade.

Under the Labour Government we were on the whole increasing our exports, but it is the case today that, as a whole, exports are not increasing. They are tending at the best to stand still. Some exports are going down. Unless we fight very very hard for our export markets, which means an increasing efficiency and productivity in our home industrial production, we may well find our exports going down to disastrous levels.

So again it is not merely a matter of the exports diminishing. It is a matter that, without the exports, we cannot import, and without the imports we cannot live as adequately as we ought to do. There are no signs at the moment of a surplus essential to our safety and one which will enable us to play our part in the development of the backward regions of the world. We cannot play that part adequately unless we have a surplus in the balance of trade which enables us to make the necessary investments so as to carry through the necessary assistance.

I come now to production. Here again, there are signs which give us some cause for anxiety, if not for alarm. In 1949 production went up by 6 per cent. on 1948. In 1950 production went up by 7½ per cent. on 1949. In 1951—a politically mixed year—it was up by 3 per cent. on 1950, noticeably not so good. [Interruption.] I am only mentioning that it was a mixture politically in order to be fair, because we were in office during a material part of the year, though not the whole year. Hon. Members opposite should not be so niggling, because I am only mentioning the point in order to be fair to hon. Members opposite.

In 1952, however, we are 3 per cent. down on the first nine months of 1951, and that is a positive turn to the bad. We have a relative decline in exports. We have a fall in textile production, and a steel shortage which has contributed to this rather serious state of affairs. Therefore, it is the case that production was going up; the increase then diminished in rate, and this year it has reached a point of positive decrease. What will happen in the immediate months ahead, I do not know. Production may conceivably improve or it may go up and down, but at any rate in none of these figures is there any ground for complacency. Our production needs to go up by more dramatic figures than any of them, and certainly any positive decline in production is an exceedingly serious state of affairs.

I would point out that the Government's own Economic Survey, at page 45, paragraph 115, states: The Government hopes that the increase in production, which was halted early last year, will be resumed in 1952, and that as a result national output in the financial year 1952–53 will be about £250 million greater than in 1951–52 at the prices ruling in the latter year—not a very large increase to set against the additional claims on resources. There was what the Government describe as a relatively modest increase in production. But the fact for the first nine months is an actual and positive decrease in production. That is a serious state of affairs. It is a regrettable development, and moreover it must be remembered that it is a development which follows the Chancellor's Budget which he himself described as a Budget calculated with a main eye to improving production. It has not done it, and if anything, the figures indicate the reverse consequence.

We ourselves thought that it was really a most unwise policy to cut the food subsidies, which was bound to create a noticeable increase in the cost of food—an increase which people notice very much, especially the housewives, and which was bound to stimulate demands on the part of the trade unions for wages increases, for which they really could not be blamed. They had tried to be restrained. They had promised the Government that they would not treat them in any way worse than they had the Labour Government because they were a different Government, and I do not think they have.

But if the cost of food noticeably increases, and especially if it noticeably increases as a result of direct Government action, it is inevitable that there is pressure on the wives of working men, perhaps first of all, then from the working men on their trade union branches, and then on their trade union leaders. They cannot help it. The thing is bound to happen. When, as a consequence, we get disturbing wages movements we further upset the whole economic apple-cart.

We did not accept the view that the Budget was calculated to improve production. The Chancellor, the Government and their supporters said that it would. The facts have indicated that we were right and that the Chancellor was wrong. Whatever view is taken about present production prospects, it is not yet certain that we shall have the pick-up in production which the Government have counted on. Indeed, we have had the reverse in the first nine months. The Government plans are, to put it modestly, running seriously behind their schedule, and that is very bad and very serious for the general economic well-being of the country.

This, of course, is a Government which does not believe in economic planning as a matter of principle. I am sure they will admit this; if they do not, I hope they will say so. Let the Minister of Labour tell me if I am wrong. Of course, I admit that he is a little bit above the party battle. In fact, when he goes home at night he probably wonders why he is a Minister at all. I am sure we understand that and sympathise with him. But I wish he would tell us whether the Government believe in economic planning and controls or not.

My own assumption, in the absence of anything to the contrary, is that the Government do not believe in them, and that they are contrary to their philosophy. They do not like them, and in so far as they are using these things it is only because they cannot help it, and it is with a sense of regret and apology that they do so. Therefore, as soon as ever they can give up economic planning and controls, as soon as ever they can revert to a state of affairs where things are allowed to rip, they will do so. That is, in part, the justification of that part of our Amendment in which we say that there is cause for apprehension that we may go back to the chaotic conditions of the 1920's and 1930's.

The Government do not believe in planning, and in so far as they are engaging in it, it is a concession for the time being. There are rumours of the intention of the Government and the Bank of England to make the £ convertible. I wish the Minister or perhaps the Chancellor tomorrow could consider whether either of them could give us an assurance that it is not the intention of the Government to make the £ convertible, or, if they do intend to make the £ convertible, say why they propose to do so, and how.

Our view is that making the £ convertible would involve going back to the inter-war years, namely, balancing our trade at a lower level of economic activity than before, for then we could only balance our trade if the Government were to pursue deflationary policies at home. Indeed, the choice for the Government is between full employment, in which case it must accept economic planning and controls, or convertibility, in which case we must expect the consequences of the deflationary policies as in the interwar years. The choice is between the use of physical controls over imports and their replacement by a decrease in purchasing power.

The other proposition is that there should be cuts in expenditure, marching with convertibility—and the consequences of that are reaction and a return to the conditions of the inter-war years. It is interesting to note that at the Scarborough Conference of the Conservative Party a decision was reached which was officially supported by the platform and which meant that the wild men of the Conservative Party had thrown over what was said by the Chancellor of the Exchequer in his speech at that Conference. A resolution was passed which said: That in the opinion of this Conference public expenditure has increased, is increasing and ought to be drastically diminished, —language which, I have the impression, was borrowed from the Liberals of earlier years in another connection. This resolution was passed with acclamation and with the approval of the platform—[HON. MEMBERS: "Hear, hear."] Its mention its being received with acclamation here, and that confirms the view that there is great back-bench pressure on the Chancellor of the Exchequer to live up to that resolution. But before that resolution was passed the Chancellor, at the Scarborough Conference, said something else. He said: I am not in favour of a Geddes Axe … if you have got to have big economies you can only get them by big changes of policy. But the hon. Member for Solihull (Mr. M. Lindsay) said, at the Conference—

Mr. Martin Lindsay (Solihull)

; I was not at the Conference.

Mr. Morrison

If he did not say it at the Conference, he said it somewhere else. I am sorry he was not there. He said it according to my information, and he will tell me if I am wrong. I do not think that I am. What he said was: There is not the slightest doubt that we have got to have a new Geddes Axe. A new Geddes Axe is essential to Great Britain's ultimate survival. I intend to do everything I can when Parliament goes back to get the Government to accept this suggestion. Speeches in a similar vein were made by the hon. Member for Dover (Mr. Arbuthnot) and by the right hon. Gentleman—a former Conservative Minister—the Member for Haltemprice (Mr. Law).

Mr. Richard Law (Hull, Haltemprice)

I did not mention the Geddes Axe.

Mr. Morrison

I did not say that the right hon. Member did. I said he made a speech "in a similar vein." Here is a cleavage. Mention of an axe is always relevant to a cleavage. There is a cleavage between the Chancellor of the Exchequer, who says, "Gentlemen, go easy, I am not having any Geddes Axe," and those who say that a heavier line of economy and cuts is desirable, together with the severe-sounding resolution. We really ought to know from the Minister of Labour or the Chancellor of the Exchequer—I do not mind which—what is the Government's intention. Are they going to make aggressive cuts in public expenditure or are they going to make reasonable and proper economies in the ordinary way?

I am not against reasonable economies. There is a duty on all Governments to be careful and economical in public expenditure—as we were. It is necessary that Chancellors of the Exchequer, in framing their Budgets, should know upon what estimates they are framing the Budgets; but there is a distinction between proper economical administration and the prevention of waste, on the one hand, and major cuts which involve major changes in policy, calculated to make the ordinary people suffer extremely under those cuts, on the other hand.

If we take the economies of the Geddes Axe type—those of the 1920's and 1930's—they were economies which were calculated to damage the standard of life of the people. Remember that if the Government slaughter the social services, if they slaughter social security benefits—if they overdo that kind of thing—not only does that damage the benefits received from them by the people, but it can damage full employment itself by affecting purchasing power. That, in fact, is what was done in the inter-war period.

Sir Herbert Williams (Croydon, East)

Will the right hon. Gentleman give an example?

Mr. Morrison

I have given the relevant quotations from the Chancellor of the Exchequer, who spoke with moderation—we were glad that he said what he did—and I am contrasting that with what back-benchers said and with what the Conference said and, let it be remembered, that has been extensively cheered by the benches opposite this afternoon. Therefore we are entitled to assume that what is wanted by the general run of back-benchers opposite is a major assault upon public expenditure, involving material differences in social policy which will damage the standard of life and the well-being of the people.

Sir H. Williams

The right hon. Gentleman referred to what happened during the inter-war years. I asked him to give an example of what he meant.

Hon. Members

Jarrow.

Mr. Morrison

The hon. Member can look up a number of things. He can look up the Geddes Report and the action that followed it.

Mr. Ivor Owen Thomas (The Wrekin)

Public assistance.

Mr. Morrison

I am much obliged for my hon. Friend's help but I wish he would let me get on. The hon. Member can look up that Report and the action which preceded and followed the election in 1931—and he can look up the industrial policy which was based upon a so-called rationalisation, which meant a deliberate diminution of the field of employment. Surely no one needs to be educated about the misery of the interwar years.

Looking at our long-term problems, it is perfectly clear that we need a plan to increase exports. Sooner or later the terms of trade may start to move against us. Moreover, there may be a resumption of world raw material buying by America on an extensive scale, which may cause prices to go up. It must be remembered that the trend of world population is a problem in itself. World population is going up by 1.25 per cent. per annum, whereas world agricultural production is increasing only by 0.3 per cent. per annum, and that is calculated to increase world food prices.

I think the House will agree that an increase in home agricultural production is vital. It must go up, and we ought to know from the Government what positive action they are taking to give us a noticeable increase. We ourselves launched a programme which materially increased home agricultural production. Undoubtedly our position is better than it was before the war, but home agricultural production needs to go up still more.

We must import and we must pay for those imports by exports which are adequately competitive. We must also engage in a re-deployment of resources, both of equipment—physical, productive resources—and of manpower. We need a better and a more modern industry. We need a proper survey of import and export possibilities. We should concentrate on exporting goods with a high exportable content and discourage the export of goods the import content of which is very high.

All this may mean expanding certain industries and contracting others. I want to ask what plans the Government have in this direction. It appears to us that the plans are very few indeed and, moreover, some of their policies run counter to these needs, for Ministers are not encouraging new plant and new machinery. Great care is needed in all this, because we want re-deployment of our resources but we do not wish it to come about with a consequence of large-scale unemployment.

If we are to achieve this re-deployment, we require a high degree of co-operation by capital, management, and labour, and in this connection I urge that none of us must forget the need for the development of a high degree of social morale. It is not enough to pass Acts of Parliament or Regulations. We have to get the understanding and the willing co-operation of the people if these things are to be done well, and we have to achieve a willingness to give as well as to take. There is a great need for the Government to take into account the human factor.

Out of those considerations and upon that basis we can achieve a unity of the nation for social advance. But if we seek to get the right social morale, we shall not get it if the Government pursue their de-nationalisation policies which they outline in the Queen's Speech. They are not good and are calculated to create social upset and great controversy.

We ought to be building more factories, but we are not. For the first six months of 1952, we started only half the number of new factories by comparison with those started in the same period of 1951. The factory building programme should not have been cut. It is impairing our industrial and economic efficiency, and the factory building programme should not have been held up. We ought to know how quickly it will be restored and expanded.

It may be said that the building of factories has been cut in order that the houses may be built. I know the great need of houses; I have every reason to know it, representing such a constituency as I do. I would only say, in passing, that where the houses are built is also important, because they can have economic significance. They can help industry forward or they can have no effect at all. I submit this to the Government; they must take into account the relative importance of the building operations for houses, factories, schools, hospitals and so on, and if, being landed with that resolution about 300,000 houses at the earlier Conservative Conference, they have set aside these other considerations. I think they are wrong.

We want all the houses we can reasonably have, but it is no good artificially depressing, and in an economically damaging sense depressing, the factory building programme if that in turn will damage our economic prospects. After all, it is not enough for people to live in nice houses if they have not a job. I wonder whether the Government have carefully considered the priorities in this matter, or whether they are merely being actuated by political considerations in the allocation of resources to the building industry.

I come to the question of steel. We have not enough steel, and the shortage is damaging us in our economic activities, in our export trade and in our internal production. We should aim at producing more steel; but some people in the industry are undoubtedly conservative and are afraid of overdoing it. The more steel there is, obviously the stronger is the economy and the easier it is for the Government to influence the trend of economic events.

In the 20's and the 30's there was pessimism and defeatism in the steel industry—a persistent fear of producing too much. This expressed itself in various parts of the country, and I well remember the late J. H. Thomas, who was Lord Privy Seal, in charge of unemployment— poor man—and the advice which he persistently received, and I am afraid to some extent accepted, from the steel masters and others—that what was necessary was to diminish the units of production, to rationalise what remained, and then we should have a more efficient but a smaller steel industry.

We do not believe that is right. We think that philosophy is wrong. The consequence of that advice, when it was applied, was a closing down of quite a number of steel undertakings in various parts of the country, with consequent suffering to the human beings who depended for their well-being upon that industry either directly or indirectly. We think such a thing is wrong and we therefore say that steel is basic.

That is why we nationalised the industry—because it is basic and because the industry had been too cautious. We believed that under nationalisation we could be less cautious and that we should have more power of moving about and improving the physical efficiency of the industry than was possible under private industry, with its conflicting, separate ownerships. I ask hon. Members to judge the de-nationalisation of steel by one critical test: will it produce the extra steel we need? I do not think it will.

According to the Prime Minister, we are producing extra steel—an extra 500,000 tons this year; and he anticipated that it would increase still more. That is under nationalisation—but it is still not enough. In 1937 the United States produced 50.37 million tons of crude steel, and by 1951 that figure had risen to 93.87 million tons—nearly double. The Union of Soviet Socialist Republics in 1937 produced 17.54 million tons and by 1951 produced 30.8 million tons—getting on for double. West Germany in 1937 produced 15.37 million tons and in 1951, having had to start from scratch after the Second World War, produced 13.29 million tons.

I come to the United Kingdom, and I wish I could tell a better story. In the United Kingdom the increase was only from 12.98 million tons in 1937 to 15.64 million in 1951. It will be seen that that increase is noticeably less than that of the United States or the Union of Soviet Socialist Republics, and, as far as I can tell, it is noticeably less than that of Germany, though Germany started from scratch. And yet this industry is vital to our home needs and to exports, and I say, nationalisation or no nationalisation —and there is no evidence that nationalisation has injured the industry; on the contrary, such evidence as exists is that nationalisation has helped the steel industry—these figures are not good enough.

But now the Government contemplate a long-drawn-out, painful process of denationalisation, in which the British iron and steel industry will pass through a long period of uncertainty, of division, of splitting up—all because of pleasing the doctrinaire madness of the wild men of the Conservative Party. We need a plan for steel, and if the plan is to be real we must have common ownership of the industry of some sort. We cannot have private ownership because it cannot be trusted, and it cannot provide the capital, anyway—and that is going to be one of the troubles the Government will face with their Iron and Steel Bill. I am inclined to think we ought to aim at producing 25 million tons annually within the next 10 years; and even so we shall only be doubling our pre-war output.

Coal is no less important. It is vital to our economic well-being and security. It affects production at home. It affects our exports. The Government say that the stocks at home are satisfactory, and I think that that is broadly true, but it is partly the result of low productivity in industry and the good weather, so that the slackness of the industries catered for by the President of the Board of Trade, or their relative decline, has assisted the Minister of Fuel and Power in building up his fuel stocks.

We have got to take a broad view if we are to have a healthy economy, and again I think we have to aim high. In increasing our coal production, we must have proper technicians and proper administrators; the industry must be well organised; the miners must be properly treated—and here again is the element of social morale, which is absolutely vital to the progress of the mining industry.

Moreover, we really must try to have economy in the use of coal, whether crude coal or coal used as electricity or gas. We are not doing enough. If by economy in use, technical improvements, a large Increase of production we can get exports of coals, that will be a great blessing to our balance of payments and will involve a great improvement of our economic situation.

Consequently, I think the Government should say more about the Ridley Report and of what they are doing about it. It seems to me that they have passed the responsibility to the National Coal Board, but there is really a lot the Government themselves could do about economy in the use of fuel and power. Moreover, they ought to face the need in all these matters for priorities for machinery, plant, and so on, on which, I think, there is a tendency on the part of Ministers to diminish the field of investment to such an extent that the efficiency of British industry is not being taken care of in the proper way. I urge that there should be improvement in that respect.

We are a wasteful country in the use of coal. "The Observer" on 31st August asked this question—and it is a very relevant question: How is it that in Britain the annual consumption per head is 10 billion calories, when highly industrialised Belgium and Luxembourg can get along with eight billion"— this is dealing with the motive power consumed in various countries of Europe— Western Germany, Sweden and Norway with six billion; France, the Netherlands and Denmark with five billion; while the average for Europe as a whole, excluding the Soviet Union, is four billion? We must pay for improvements if we must. It would be worth our while and would be worth doing.

The Gracious Speech in respect of all these matters seems to me to be irrelevant. As against all these most serious economic problems that call for inspiring leadership and action, what do we get in the Gracious Speech from the Throne? We get a few generalisations; we get some promises of minor legislation, including a further standstill in leasehold reform—and I hope we are going to know presently what are the Government's proposals on that problem for some time; and we add to that two major Bills—two major Bills to undo something, two economically disturbing and important Bills—they are important—for the de-nationalisation of two industries.

These Bills are going to be the great Bills of the Session. There are no other great Bills for the Session. The two great Bills of the Session are going to be undoing Bills, negative Bills, destroying Bills, Bills calculated to cause chaos in two great industries, Bills which are calculated not to make any contribution to our economic recovery but rather to do the reverse. And these will be the great Bills of the Session.

Moreover, there is to be administrative action to stimulate competition against the Airways Corporations. The Airways Corporations have been doing very well, as have others of the nationalised industries, and why ever the Government want to stimulate competition against the Airways Corporations, beyond what already exists, I really do not know. I do hope that the Minister does not encourage the Corporations to conduct themselves—to put their charges or facilities up or down, as the case may be—in order to assist private competition, because that would be very, very bad, and moreover it would involve the production of more aircraft here for that purpose rather than for export.

These policies are not only irrelevant; they are positively mischievous. Ministers are saying that already the cost of living is going down. I am not sure. I do not meet many people who admit it. The figures are there. Food prices are certainly high. The argument is that other prices are down. But the seconder of the Motion for the Address in reply to the Gracious Speech, the hon. Member for Lewisham, West (Mr. H. A. Price), speaking at Eynsford on 29th October, was reported in our local paper as having said—and notice how this shows that the general opinion finds its way even into the mind of a Conservative Member of Parliament: There was, however, one fly in the ointment. The increased cost of food particularly hurt the housewives. They were poorer today, whereas the men were better off. Then, mentioning the latest Income Tax reliefs, he continued: Gentlemen, I ask you to play the game and give your wives a rise. After all, when you got married you agreed to share burdens. I have given my wife a rise of £3 a month. I congratulate "Mrs. hon. Member for Lewisham, West" on having a considerate husband. But this really does not sound like a decrease in the cost of living. And be it remembered, it comes from the seconder of the Motion for the Address in reply to the Gracious Speech.

There is a lack of economic drive and leadership on the part of the Government and there is a lack of recognition of public responsibility. There is this back-bench campaign for cuts which means something of a major threat to the people, with the consequences I indicated earlier on. There is unemployment and short-time working. There is serious unemployment in the docks, as my hon. Friends from those constituencies know.

Whilst it is tempting to the capitalist system and those who believe in it at home to have unemployment, it really would be a social disgrace if it should break out again on a large scale. [HON. MEMBERS: "Oh!"] I am not making any specific charges, but of course it is tempting to capitalism and the capitalists to feel that if they had a noticeable amount of unemployment they could keep labour down and keep the trade unions down more than they otherwise could. Of course that is so, and of course it is the case that in the inter-war years employers deliberately took advantage of the unemployment to keep workpeople down, and so on, and we cannot exclude that possible consideration from our minds.

Anyway, there is a possible slump, and there is a possible world slump. One does not know, but there is a new Government in the United States, with whom it is the duty of all of us to maintain good relations—all of us; but they may have different policies, and there might be economic difficulties there. I therefore want to know from the Government whether they have instructed their officers, economists, economic planners, and so on, to prepare against all these possibilities so that action could be rapidly taken. I see no signs at the moment, but I would hope that the Government would be capable of doing it.

These are the economic difficulties and parts of the economic situation as we see them. The problem will be dealt with further by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) tomorrow; but we ask the Government to tell us what they are doing, what their economic policy is, long-term and short-term, and what preparations they are making against slumps or unemployment of all sorts.

Our British people are a good lot of people; they will follow and they will help forward good policies that are properly explained. But they must feel that they know what the Government are up to, and they must feel and believe that the Government will deal justly by the masses of the people. They do not know where the Government are going; they do not know what Government economic policy is; they do not know what the Government preparations are, and I ask that in the course of these days the House of Commons shall be told and the country shall know.

4.34 p.m.

The Minister of Labour (Sir Walter Monckton)

In the course of his observations the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison), I think in a semi-jocular fashion, said that I must often ask myself why I am a Minister. I would only add that if I were at a moment's notice to proceed to answer on behalf of my right hon. Friend the Chancellor of the Exchequer some of the questions which the right hon. Gentleman put to me about convertibility, the difficulties of controls, and so forth, I think the question would be, "How soon shall I cease to be a Minister?" However, I have no intention of digressing from the Amendment which has been moved by dealing with that matter, even with that hope before me.

With a great deal of what the right hon. Gentleman said I have got no quarrel, but a great deal of it, in my respectful submission, did very little to substantiate the terms of the Amendment which was being moved. It is all very well to discuss the steel de-nationalisation Bill and the Transport Bill, but unless they are, in the view of this House, calculated to create greater efficiency and to work towards our economic recovery, they should be rejected when they are being dealt with. But, as it stands at present, I do not conceive it my duty on this Amendment to debate those Measures.

As to the question of factories, there is a word I shall want to say later, but I would just point out that it is by no means right to think that this Government, in dealing with housing policy, has omitted to take into account the importance of houses for workers near their work. One of the things we certainly have tried to do is to put houses for miners near their work in the mines, and to put houses near the worker's industry.

Mr. Charles Pannell (Leeds, West)

Following us.

Sir W. Monckton

A thing is no worse if someone else has done it before. But I am not complaining at that. It is suggested that we have not got this in mind, and I am pointing out that we have.

I think I should have very little quarrel with the right hon. Gentleman in his approach to this matter. I do not think anyone doubts now that the country was in a serious economic condition when we took office, because of the very difficulties which the right hon. Gentleman explained—the balance of payments, the shortage of gold and dollar reserves, and so forth. Well, the drain on our reserves has been stemmed. The negative part of our task has been done, largely, as the right hon. Gentleman himself said, by a reduction in imports. Everyone agrees that that cannot be carried beyond a certain stage, but I understood him to approve of the steps which we have so far undertaken.

The positive task is that which now lies before us, the stimulation of our production and of our export trade so that—again I think I am paraphrasing what the right hon. Gentleman said—by our sales abroad we can pay for the food and raw materials which we cannot fully produce at home. Nobody, on either side of the House, ought to be in any doubt about the difficulties of that task, or the necessity of facing up to it squarely.

Having in mind the terms of the Amendment, I say that we make no contribution whatever to a solution of this problem if we exaggerate the seriousness of the position or destroy confidence in our ability to overcome it. The Amendment speaks of the serious economic position of the country which is evidenced by the decline in production and exports, growing unemployment and short-time working and increased cost of living, and then goes on to speak of the policies of Her Majesty's present advisers as threatening a return to the social conditions of the interwar years. I venture to submit that there was very little which fell from the right hon. Gentleman to support so serious an allegation as that.

I should like to consider the matter a little more closely and examine the facts upon which these criticisms can be based, particularly in those spheres of Governmental work which fall within my own Department. I start with unemployment. That is a matter which I am sure hon. Members on both sides will do me the justice of thinking that I am anxious about and trying to do my best to meet. I would only say that anyone who examined the size and protion of unemployment which now exists and the order of the figures involved would not be inclined to exaggerate. They would see that there was a problem in different localities and in different trades which has got to be faced.

The total figure of unemployment in the middle of October was just under 400,000. That is, of course, an increase on the exceptionally low figure of 264,000 in October, 1951. But the figure of 398,000 in October is not so markedly different from the 304,000 in October, 1950, still less from the 333,000 odd in mid-January, 1951, so that it is not the case that we have had a sudden and serious increase in the figures of unemployment.

The House will know that the figures of unemployment generally go up in the second part of the year; but this year, between July and October, the increase is only 4,000 compared with 78,000 in 1951 and an average increase of 40,000 in the three previous years. The conclusion that it has not grown so fast as in other years is good in itself, but it must be realised that the reason for it is largely the improvement in September and October in employment in the textile industry. In September, employment in the textile trades went up by 11,000, and the improvement has been maintained in October. The recession in those trades earlier this year, due, as I think, to world events, was the substantial reason why we did not get the ordinary seasonal diminution in unemployment in the first part of the year.

I think it is very important, if I may submit this to the House, that we should keep a sense of balance and proportion in dealing with these facts and figures. I have said that the October figure is just under 400,000, and no doubt it would be very dangerous to try to forecast for months ahead. I shall be both disappointed and surprised if by the end of this year the figure reaches 500,000. That, I would point out to the House, would be only half the figure of one million which the right hon. Gentleman the Member for Blyth (Mr. Robens), on 3rd March this year, anticipated as the figure likely to be reached by that time. If my forecast should turn out to be nearer right than his, I know that the right hon. Gentleman will be the first to rejoice.

Mr. R. J. Mellish (Bermondsey)

The figure which the right hon. and learned Gentleman has given now and earlier of the actual number of unemployed and the estimate of unemployment which he thinks may exist at the end of the year will include, I think he will agree, a lot of unemployed in general, for example, dock-workers.

Sir W. Monckton

I am comparing like with like. I am dealing with the unemployment figure at the end of this year, and we are both, I think, taking the unemployment figures which are set out in the Ministry of Labour returns.

Mr. Mellish

Not seasonal.

Sir W. Monckton

Seasonal figures would not be shown in the right hon. Gentleman's figure of one million any more than in the 500,000 figure which I have given.

I want to point out that the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), in March, 1951, notified the Secretary-General of the United Nations that the Government had decided to express the full employment standard of the United Kingdom as a level of unemployment of 3 per cent. at the seasonal peak.

Mr. Hugh Gaitskell (Leeds, South)

I am sure that the right hon. and learned Gentleman would wish to go on to point out that that was in no sense an ideal but, on the contrary, was the maximum figure before which energetic action of all kinds, including Budget deficits, public works and everything else, should be undertaken, not only by this Government but by all sorts of other Governments as well.

Sir W. Monckton

The right hon. Gentleman is quite right. I was trying to give, I think fairly, what he expressed as the standard of full employment. What he said is quite true, and I think that he went further, and said: The figure of 3 per cent. represents the maximum number of persons registered as unemployed on a given day in any month of the year, expressed as a percentage of the total number of employees."—[OFFICIAL REPORT, 22nd March, 1951; Vol. 485, c. 320.] He will forgive me if I do not read on, but I acknowledge in this passage that there is an explanation that steps would be taken, if we got to those figures, to try to stem the tide.

What I am pointing out at the moment is not whether the right hon. Gentleman quite rightly or prudently hedged his definition about, but that he said that we were dealing with a figure of the order of 3 per cent., and, if I am right in the forecast I gave of the probable increase at the end of this year, we shall be well within the figure of 3 per cent., which in that connotation may be of some importance.

Mr. Gaitskell

I am sure that the right hon. and learned Gentleman would also wish to explain to the House exactly how the whole question of an unemployment standard came to arise. It was, of course, a proposal which came from the Economic and Social Council of the United Nations, and what really was involved was the possibility of a major depression and the point at which one began to take action. So far as I know—and I think that the House will agree with me—my right hon. Friend is not suggesting that there is a major depression, but that does not mean that it is at all satisfactory to have a figure as high as 3 per cent.

Sir W. Monckton

The first thing I would say is that if it is not suggested that we are facing a major depression, the Amendment seems even more difficult to justify.

There is a passage which I think in fairness—and the right hon. Gentleman knows that I wish to be that—I ought to have read. He said: The Government has therefore decided to make a small allowance for the factors mentioned in paragraph 2 above and to express the full employment standard of the United Kingdom as a level of unemployment of 3 per cent. at the seasonal peak."—[OFFICIAL REPORT, 22nd March, 1951; Vol. 485, c. 320.] I am not quarrelling as to whether it is 3 per cent., with a little give and take. I only want to get the order of figures in which I am dealing. If the figure reaches 500,000 by the end of this year, we shall still be within the figure of 3 per cent. It is interesting, therefore, to look, in the light of that figure, at what is the position in regard to some of the trades in difficulties. Textile unemployment in October was nearly 5 per cent., but outside textiles, even in other industries which were having trouble, no percentage as high as that has been reached. The percentage in the case of paper and board is 3.7; building and contracting, 2.8; china and earthenware, 2.5; furniture and upholstery, 2.0; wireless apparatus, 1.5; and motor vehicles, 1.0. I am not suggesting that we want to press this too far. All I say is that we must not exaggerate the figure of unemployment which is with us, or which faces us in the immediate future, so that we shall destroy that very morale for which the right hon. Gentleman pleaded.

Another point which, I think, an hon. Member had in mind, was about short-time. It may well be said that the unemployment picture is incomplete, and I should agree with that, if we did not refer to short-time working in the manufacturing industries. These figures began to rise in March, 1951, and they reached almost 70,000 by September, 1951, but by May of this year they reached the high level of 304,000 workers affected. That was mainly owing to the recession in textiles and clothing, but, here again, the House will be glad to know that there is an improvement. In August the figure of 304,000 workers had dropped to 182,000 workers affected by short-time, and there is every indication that when the next quarterly figures are available they will once again show a further substantial reduction.

There is another side of that picture at which one ought to look, because there is some sort of relationship. Over-time working has been on the whole steady. In September, 1951, 1,277,000 workers were working nearly 10 million hours over-time. In August of this year, 1,129,000 workers were working nearly 9 million hours over-time. That is the latest figure which I have. I have been trying to explain that I do not find in the figures when we examine them, so far as my Department is concerned, any justification for such strong terms as are included in the Amendment. There are trades and localities, like the textile trade in Lancashire and Yorkshire this year, where special difficulties are likely to be encountered.

At this stage, I should like to say something about the position in regard to those docks where the cuts in our imports and the corresponding reduction, of which the right hon. Gentleman spoke, in relation to our exports in certain directions, have reduced the work in loading and unloading ships. It is a matter which I know from hon. Members on both sides in causing anxiety to a number of them. Before I give the figures, I should like quite shortly to say that one ought to bear in mind both the objects and the working of the National Dock Labour Scheme in order to appreciate the significance of the figures.

The objects of the scheme are to ensure greater regularity of employment for dock workers and to secure that an adequate number of dock workers is available for the efficient performance of dock work. Under the scheme, the National Dock Labour Board is responsible, and it consults the local boards in the ports for determining and keeping under review the size of the register of dock workers. In doing this task, they are primarily guided by the need to have available, at such times as it may be required, an adequate dock labour force to ensure the rapid and economic turn-round of the vessels which are being handled in or out, and a speedy transit of goods through the ports.

As everyone knows, however, there are fluctuations in port work, and therefore there has to be a certain amount of surplus labour available to deal with peaks of employment. It is in this connection that we have some figures. During the six months from April to September, 1951, when there was a very high level of dock employment, as the right hon. Member for Blyth will remember, there was an average of nearly 5,000 dock workers, or 9.1 per cent., surplus to requirements. The corresponding figure over the same period this year was 12,000, representing 15.3, as against 9.1 per cent., of the register. In 1950, which was a less peculiar year than 1951, it was 12.5 per cent.

The position is that the cost of operating the scheme is borne by payments made by registered employers to the National Board by way of a levy based on percentage of gross wages. In 1950, the levy was 13½ per cent. Last year, it was 11 per cent. This year, in May, it went back to 13½ per cent. It was raised in August to 16½ per cent., and again in October to 22½ per cent. If it is a question of imposing a levy of over 25 per cent. of gross wages, the Board have to report to the Minister and must bear in mind his observations when they make their decision.

But there is some improvement in the position in the last month. If I may give the present numbers of registered dock workers surplus to requirements: in the period ended 7th October, 1952, it had reached the figure of 17,200 odd, which represented a percentage of the register of 22 per cent. By 1st November, it had dropped to 15,000, or a percentage of 19.4 of the register. In other words, it had fallen by 2,000 or 2.6 per cent.

Hon. Members may know that, under the scheme, continuous employment is available to all registered dock workers who prove attendance. The surplus workers are those who prove attendance but for whom, on the date in question, no work is available. They remain in the employment of the Dock Labour Board and are not, therefore, to be described as unemployed. They receive for each half day 5s., with a guaranteed minimum weekly wage of £4 8s.

I mention these facts because it is against that background of the scheme and its working that the problem which now faces the National Dock Labour Board has to be seen. It is for them to decide on the future size of the register, which is now running at 2,000 less than the average of the peak year of 1951 but 2,600 higher than in 1950. The Board recognise, as I do, that there is uneasiness on the subject of what should be the number of surplus workers in comparison with the number available. We are in consultation, and have been for some time, on the problem, but I cannot decide it for the Board. It is really their decision when the time comes.

Mr. Alfred Robens (Blyth)

To complete the statistical figures, is the right hon. and learned Gentleman in a position to say how many dockers have left the scheme in the last few months?

Sir W. Monckton

I think that the figure is ascertainable. I will give it to the right hon. Gentleman before I close or will send it to him.

I have said something about unemployment and short-time working and the particular problem of the docks, and if we are examining the position and the facts and figures we ought to look at these matters. There is also referred to in the Amendment the problem of the cost of living. It is true that the Interim Index of Retail Prices has risen during the year that we have been in office, but I should like to point out two things.

First, it has risen by different amounts in every year since 1947. Second, in spite of the serious cut in food subsidies, the rise has been less in our year of office than in the preceding 12 months. The figure from September, 1950, to September, 1951, was 14 points; and from September, 1951, to September, 1952, eight points. That case, therefore, is abundantly made.

I have been saying something about facts and figures on those subjects which are the present concern of the Department in which I serve, but I do not want to seem to overlook the factors of the drop in production and in exports, to which the right hon. Member for Lewisham, South has drawn attention. They were discussed in the House last week by my right hon. Friend the President of the Board of Trade, and they will, no doubt, be referred to again by my right hon. Friend the Chancellor of the Exchequer.

Since the war, during the six years of office of the previous Administration, we were in a sellers' market. Just as the right hon. Gentleman hoped we would not take credit for the advantage in the terms of trade, I trust that he will not want to take advantage of the fact that there was a sellers' market as a matter of credit to his Government. At any rate, in such a market, by and large, whatever we could produce for the export market, that market was ready and willing to absorb. But now we are in a world buyers' market and our industry now has to struggle to sell.

That change, the fact that we now have to meet fierce competition from Germany and Japan, to which the right hon. Gentleman drew attention, the shortage of materials and the difficulties of the textile trade, have all had their effect both upon our export trade and, indirectly, upon production. Apart from this, hon. Members will know that from time to time production is inevitably interfered with by scientific developments, which continuously take place. This means that there is an interference with production, both for export and for re-armament. There has to be change, and while that change is on trouble is caused. There has been a lot of this sort of development in the last two years.

I would say this about production and the export trade. Just as, in the case of unemployment, we said that our difficulties were likely to be found in particular trades and places, so the decline in production and exports, to which attention has been called, must not be exaggerated. It is selective rather than general.

From the viewpoint of output, for instance, there are encouraging signs, as no doubt my right hon. Friend the Chancellor of the Exchequer will say, in the steel industry, in engineering, in shipbuilding, in the electrical goods groups of trades, and in coal. Indeed, the picture varies in different industries, but nobody. I hope, would be so bold as to deny that in these directions we are facing a new challenge to our skill, our ingenuity and our salesmanship.

The way to meet that challenge lies in strengthening our competitive position by higher productivity and lower costs. I have found support for this doctrine on all sides of the House during our year of office, and not least from trade union leaders. What it means is that we must try to enable industry, as the right hon. Gentleman suggested, to modernise and expand its plant, machinery, and so forth. It means also that we must successfully tackle the problem of human relations in industry. That is not a matter for legislation.

What we need today is to encourage the mutual confidence which is being surely developed between work-people and employers. I have tried in this sphere constantly to do my best to stimulate joint consultation and the spread of works information. I am sure the more workpeople are kept fully informed by the management about the business and the prospects of the undertaking in which they are engaged, the more there will grow up a feeling of common purpose and of confidence.

In this sphere of the increase of productivity, I am delighted at the establishment last week of the British Productivity Council. The members represent the British Employers Confederation, the F.B.I., the Trades Union Congress, the Association of British Chambers of Commerce, the National Union of Manufacturers and the Nationalised Industries. My hon. Friend the Member for Edgbaston (Sir P. Bennett), whose wisdom and experience have throughout my term of office always been at my disposal, is the chairman. Mr. Lincoln Evans, the distinguished chairman of the T.U.C. Economic Committee, is vice-chairman. Under their guidance the Council will take over the remaining work of the Anglo-American Productivity Council, and its aim will be to encourage the active interest of industry in the pursuit of higher productivity, and give to it all the possible help in its independent activities.

It is the first time in this country that we have had a body of this kind tackling the real job of the future, the raising of productivity, and it is a subject surely in line with the policy described in the Gracious Speech, where it was said: My Ministers will encourage all engaged in agriculture, mining and industry to co-operate in increasing productive efficiency and thus to produce at lower cost the goods needed at home and by the export trades. I should like to conclude by saying that I do not believe that such evidence as has been produced here about the drop in production, the difficulties of the export trade, or the figures of unemployment and short-time, justify the terms of this Amendment. A return to the conditions of the inter-war years would be much more probable if we did not fairly and squarely tackle the problem of inflation. Then we might find imports increasing beyond what we could afford to buy and competition at home for goods which ought to be exported. It is only by failing in our resolution in this regard, and by failure to win the battle of the balance of payments, that we should have to face again not only a shortage of food but mass unemployment due to the shortage of raw materials which we should then no longer be able to buy.

I am not underestimating the toughness of the year that is coming. I am sure that it is going to be tough. I am confident that we shall pull through, and like the right hon. Gentleman in an important passage in his speech, I feel that we are all in this together. In the last analysis we shall overcome our troubles, not by measures but by men. During the last few anxious months hon. Members will have constantly seen, and not on one side of industry only, nor only on one side of this House, a readiness to subordinate sectional interests to the needs of the nation as a whole. I should like to pay my tribute to the leaders of industry and of the trade unions, to the broad mass of workpeople and employers throughout the country who have set us an example of readiness to sacrifice in the public service and to face difficulties with responsibility and restraint.

I am constantly buoyed up in what I can assure the House is always a heavy and burdensome task by the feeling that what we really have behind us when we speak in this way is the thrust and the urge of all men and women of good will throughout industry who long as earnestly as we do—and no one can long more earnestly—for victory over these economic troubles, not for this party or for that, but for us all. It is in that hope that I think we can go forward in a spirit, not of gloom, but of steady determination.

Mr. H. Morrison

Before the right hon. and learned Gentleman sits down, I do not want to be unduly aggressive about it, but has he got nothing to announce of positive Government action, except perhaps the composition of the Productivity Committee, which, as a matter of fact, we appointed and which was rather spurned at the time? Has he no announcement to make about Government action on these economic matters?

Sir W. Monckton

I am quite prepared to answer that question. I much prefer, however, that an announcement of that sort should be made with the authority of my right hon. Friend the Chancellor of the Exchequer, under whom I am a very humble Minister.

5.5 p.m.

Mr. G. M. Thomson (Dundee, East)

I feel keenly conscious of how much I shall require the traditional indulgence of this House for a new speaker, rising as I do after two Front Bench speakers. The by-election in Dundee that brought me here now seems a long distance away, because the Recess has intervened and our minds are very much more preoccupied with more recent elections, like that of Wycombe and in the United States of America.

If I may, I should like to discuss very shortly some of the economic implications for Her Majesty's Government of last week's Presidential Election in America. In passing, I should like to say that the wide reaction to the election in America showed the growth in this country of our consciousness of world citizenship. I was fascinated by the number of people who said how passionately interested they were in what was going on in these elections, and I think it was well summed up by a cartoon in one of the newspapers, which showed a couple of Americans standing among the skyscrapers of an American city, and one saying to the other, "Say, buddy, have you heard the result in High Wycombe?"

This consciousness that the election results in America are just as important to our economic welfare in many ways as elections are on this side of the Atlantic is very necessary, and I greatly regret that the Gracious Speech contains no signs in its economic proposals that it has taken any cognisance of the impact that the American elections are likely to make on our economy. Nobody can foretell what changes the results will have within the United States of America, but it is very necessary, as my right hon. Friend the Member for Lewisham, South (Mr. H. Morrison) said, that the Government economic adviser should be working very hard indeed looking to the future and laying plans for possible economic developments on the other side of the Atlantic.

From my observations in America during recent months, I should like to say it does not seem to me that the American vote is a vote against the economic policies associated with the New Deal and the Fair Deal in America. I found there were a very large number of people there who, like hon. and right hon. Gentlemen opposite, seemed very much under the influence of the myth of uncontrolled private enterprise, but whenever the Government showed any signs of interfering with agricultural planning and of putting the citizens of America at the mercy of the free play of the laws of supply and demand, in that particular sector of the economy, they showed signs of violent panic.

I think the vote for General Eisenhower was much more because of his offer to go to Korea. My general impression was that everywhere in America there was a very desperate desire for peace in Korea, and many millions of ordinary, decent peaceable American citizens felt throughout the Korean war that they did not fully understand the nature of the United Nations action, that they understood even less why their sons should continue to stay there, for the consciousness of world citizenship, which I have just been talking about, is only painfully breaking upon them.

These people lived for generations in the middle of a country which was immersed in its own affairs and which was fairly remote from the troubles of the rest of the world. In these circumstances they feel acutely that there ought somehow or other to be some sort of magic process to bring peace in Korea and their own soldiers back home. I found that some of them were inclined to think that a magic shortcut might be a military knockout blow against China. I did all I could at that time to emphasise to them that I thought many people in this country had different points of view and would feel that that short cut was much more likely to be a short cut to world war than to world peace.

In this Election, the American citizens have felt that perhaps General Eisenhower offers that sort of short cut. I hope sincerely—I say this without irony at all, though I think it is much more difficult than it was presented to be in the American Election—that General Eisenhower is successful in his expedition to Korea. I hope also that Her Majesty's Government are laying diplomatic plans in the event of his failure to produce immediate peace in Korea, and that they will bring their influence to bear to prevent any sort of drastic military extension of the war through feelings of frustration and disillusionment in America.

I hope, also, that Her Majesty's Government are looking to the future and are laying economic plans in case President Eisenhower, as he will then be, or the United Nations as a collective body, are able to bring peace in Korea. All over the world people want a settlement of the fighting there, and while a settlement would push further back the final horror of a third world war, it would also mean that the countries of the West would face the danger of a world slump unless economic steps were taken to prevent it.

When that happens, the big question that will face American citizens and the citizens of this country, linked, as we are so closely to America, will be whether the Fair Deal and New Deal policies of successive American Administrations have become sufficiently accepted as the ordinary techniques of American economic practice to be put into operation by a Republican Administration.

I do not think that the American vote was a vote against those economic techniques but, because of the complexities of the American political system, there is now an Administration in America which is very critical of New Deal economic policies. It is the important duty of Her Majesty's Government, of which no evidence is given in the course of the Gracious Speech, to take all possible steps to safeguard the economy of this country against that sort of development in the United States of America.

This means that we shall require within this country to seek as high a degree of economic independence as we can get. I do not believe that we can insulate ourselves from the American economy, but we should do the best we can. That means that a Government in this country must seek the highest degree of economic planning with the other countries of the Commonwealth. I trust that the coming Commonwealth conference will show that the present Government are more successful in that sphere of economic planning than was the case following their last Commonwealth Conference.

It also means that we must face major changes in this country in the pattern of our economic activities. We must face a really imaginative attempt to apply scientific methods of using resources and towards saving our scarce materials. All these things imply that we need a Government which will do more economic planning and not less, and that will engage in more public control and not less. It means that Britain today needs a Government, if we are to ensure her economic solvency, that will engage in more Socialism rather than less.

Now I would like to turn to the impact that the economic developments that we face today are making on the constituency which I now have the honour to represent. It would not be fitting if I were to deal with the economic problems of Dundee without mentioning my predecessor in this seat. He will always be associated in Dundee, particularly during his term of office in the Board of Trade, with the work of building up in the constituency one of the most successful industrial estates in the country. Dundee is a fairly good example of the kind of city and community for which the Distribution of Industry Act was designed.

This city has depended mainly upon the jute industry and was deplorably and tragically depressed in the years between the wars when up to one-third of Dundee's workers were unemployed. We had a large female labour force because women were cheaper, and we had the situation in Dundee of the menfolk staying at home, looking after the children, boiling the tea and preparing the meals while the women did the work. During the by-election in Dundee we found that these memories of unemployment were very easily stirred.

I noticed that the newspapers devoted a great deal of space, as they are entitled to do, to telling us the significance of the High Wycombe by-election because it showed a swing of 0.37 per cent. towards the party opposite. I did not notice that the newspapers devoted very much space to the Dundee by-election, which showed a swing of 7.39 per cent. to the party on this side of the House. One of the main reasons for the size of that swing was the fact that we had very severe local unemployment in Dundee. It rose to over 9,000 in the month of June, with as many more people on part-time work.

The Minister of Labour has been mentioning a definition of full employment, or, rather, the percentage of unemployment al which drastic action is necessary. I think that was the way he was putting it—but that was, I am sure the way in which my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) meant it to be implied—and he mentioned 3 per cent. At that period in Dundee we had 10 per cent. of unemployment. During the last eight months we have never dropped beneath 3 per cent. The situation in Dundee has improved since the peak in the summer, but it is still very serious indeed.

There is now very great anxiety in the city, and in many other areas in the country, at the recent announcement by the President of the Board of Trade that he would consider de-scheduling certain Development Areas. In Dundee, we welcome his announcement that other areas of the country are to receive the same sort of benefits as we have been receiving, but we feel very strongly that there is no case at the moment for de-scheduling our own area. I would certainly ask that the President of the Board of Trade, if he is to speak later in the debate, gives us an assurance that no such action in Dundee is intended in present circumstances.

There would be a catastrophic situation in the City of Dundee today if Development Area techniques were not working there. We have depended mainly on the jute industry, but the labour force in that industry has dropped from about 30,000 before the war to about 18,000 today. As far as I can foresee the level of employment in the jute industry is likely to settle finally at about 15,000. Development Area techniques have helped to fill that gap at the moment, and we have been working, in Dundee, to have the ban lifted that at present exists on the coming of new industries into the city. We feel, because of the present situation, that it is time that new industries came to the city.

But now the situation has worsened still further. We are having in the face of the economic policies of Her Majesty's Government the withdrawal of two of the factories on our industrial estate to their English headquarters. Now we are working urgently to try to find replacements for these factories. It should be astonishing that in those circumstances we are at the moment worried lest the development area facilities be withdrawn from this part of Scotland.

The real economic problems we are facing are those of unemployment and of falling production and exports. When a community faces these problems it is the Development Areas that are the hardest hit. I do not feel that at present any case can be made out for de-scheduling any of the Development Areas. The Gracious Speech mentioned economies in Government expenditure. I hope that Her Majesty's Government will not make those at the expense of the Development Areas. The money that is spent by the Government in creating employment under present circumstances is the most essential of national investments, and to stop spending that money now in the interests of saving Government expenditure would be a betrayal of all the hard-won achievements of the British people since the end of the war.

5.21 p.m.

Mr. Richard Law (Hull, Haltemprice)

I have had the honour of serving this House for more than 20 years and yet this is the first time I have had the privilege—and having experienced it I can say also the pleasure—of being able to follow an hon. Member making his maiden speech. Sometimes I have dreaded what I would say if, finding myself in that position by some chance I did not feel that the traditional compliments were merited.

Happily, on this occasion, any such qualm has entirely passed from my mind. I congratulate the hon. Member for Dundee, East (Mr. Thomson) most warmly on his speech. If I may say so, it was lucid, reflective, agreeably non-controversial and, when it verged on controversy, it was done so agreeably that one almost accepted what the hon. Member was saying. Indeed, when he said he thought that economic planning had been a good thing, I almost believed that it might be, which shows what a tremendous impression his speech made upon me.

I was particularly interested by the reflections of the hon. Member upon the growing political consciousness of people throughout the world. It so happened that I had an example of that in my post this morning in a letter from Prague, from Czechoslovakia. My correspondent asked his housemaid what she thought of the result of the American Presidential Election. She said she was very disappointed. She realised that General Eisenhower was a very good man, but that until the last moment—and I quote her exact words—"she had hoped that Mr. Churchill would be elected." So I think we may say that there is some political consciousness even on the other side of the Iron Curtain and I congratulate the hon. Member most warmly and I hope we shall hear from him often in the future.

I am in such a congratulatory mood that I almost feel like congratulating the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison) for the speech with which he opened the debate. Anything further removed from the incisive, condemnatory and almost vitriolic terms of the Amendment he was moving it would be difficult to imagine. The right hon. Gentleman had better watch out because he reminded me a little of the right hon. Gentleman the Member for what was then Hackney, South, who served in the great Coalition. His appeals for national unity may get him into trouble with some of the more violent sections of opinion behind him.

Mr. H. Morrison

Is the right hon. Gentleman aware that I resisted firmly the desires and the wishes of the Prime Minister to continue that Coalition beyond its allotted span?

Mr. Law

I think the right hon. Gentleman was very unwise. The Coalition did a great deal better than the Government which succeeded it.

There was one noticeable feature of the right hon. Gentleman's speech today—indeed, it has been characteristic of speeches of hon. and right hon. Members opposite in the main debate as well—and that was that any outside observer listening to the speech would not have suspected for a moment that the right hon. Gentleman and his hon. Friends had any shred of responsibility for the difficulties in which the country finds itself today. Of course, they have great responsibility. For six years they were the Government of this country. For five of those six years they had power absolute and untrammelled, so that they could apply any remedy they liked to the evils they inherited. What was the result?

The result was that when they abandoned office they had done nothing seriously to deal with the fundamental economic problems with which they were faced when they took office. [HON. MEMBERS: "Oh."] That is a plain fact which I have no hesitation in stating categorically, and it really is non-sense—

Mr. Emrys Hughes (South Ayrshire)

What about mining?

Mr. Law

—for right hon. and hon. Gentlemen opposite to come to the House now and pretend that if production was high and employment was high in the five or six years following the war that was due to the sagacity of the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) and his predecessors, and that if production is less high now and employment very slightly less high now, that is due to the mistaken policies of my right hon. Friend who is now Chancellor of the Exchequer.

The plain fact of the matter is that when right hon. Gentlemen opposite were in office, the tide was with them. Now that my right hon. Friends are sitting on the Treasury Bench, the tide is against them. It is no use hon. Gentlemen opposite coming to the House and standing up like a string of inverted Canutes and saying that they are responsible for the tide when it is flooding and we are responsible for the tide when it is on the ebb. That is absolute nonsense.

Mr. G. R. Mitchison (Kettering)

I wonder if the right hon. Gentleman would explain to us why the tide flowed so very differently after the 1914–18 war from its flow after the last war?

Mr. Law

A possible explanation is that the conditions were entirely different. Nobody would deny that the tide was favourable immediately after, and for four or five years after the war. The tide turned just before the General Election of last year. That was why right hon. Gentlemen opposite abandoned their task, they knew the tide had turned. We cannot influence the tide but we can make the best use of it, whether the tide is adverse or favourable.

I ask the House to consider for a moment just what this Government have done in unfavourable conditions. It is not unfair or an exaggeration to say that my right hon. Friend the Chancellor of the Exchequer with great patience and skill, and using such luck as came his way, as he was entitled to do, has wrought a change in our position compared with a year ago which is almost miraculous. Our external payments are in balance. A year ago nobody would have dared prophesy such a thing, and when, in his Budget speech, my right hon. Friend made that prophecy he was jeered and mocked by the Opposition. Sterling is rising on the exchanges instead of moving steadily downwards. We have been given what a year ago none of us would have thought possible—a breathing space. The Chancellor of the Exchequer has given us what we perhaps need more than anything else at this juncture in our affairs—time.

I am not sure that time is not the main thing that he has given us. He has conducted an emergency operation with great skill as a surgeon, and with comparatively little pain to the patient. The patient still breathes and lives, but as yet he has no guarantee of recovery. As the right hon. Gentleman the Member for Lewisham, South pointed out, exports are going down and markets are becoming more difficult, and if it were not for the fact that we have successfully got through the immediate crisis an impartial observer might be forgiven for thinking that recovery was as far away as ever.

There is no real indication yet that the British economic system has the spring and resilience which will enable it to survive the buffetings it will certainly encounter in the next few years of difficult markets and increasing competition. I do not believe that our national economy can have the necessary resilience and spring unless we do something to remove from the shoulders of the weary industrial giant something of the load of high taxation and heavy Government expenditure which is bearing down upon him now.

It seems to me that the attitude of the whole House—and, for reasons that I may develop, particularly that of the Government side of the House—towards Government expenditure is very extraordinary. I am now about to say something which may give the right hon. Gentleman the Member for Lewisham, South an opportunity of pointing out a cleavage in the Tory Party, to which he was referring in his speech. Let me assure him that, at any rate, there are no competitors for the deputy leadership. There is no cleavage in the Conservative Party, but there are legitimate differences of opinion on this and other matters. After all, if there was not room for differences of opinion on these economic problems they would have been solved years ago, because we should all have agreed on the right method.

What seems to be extraordinary about our attitude towards public expenditure is that hon. Members on both sides of the House, and certainly some right hon. Gentlemen opposite, will admit that when 40 to 45 per cent. of the national income is taken in taxation the proportion is far too high. On this side of the House, at any rate, we know that it is public expenditure at this rate and the burden of taxation of this weight which makes recovery impossible. I believe we all know that, and yet some of us seem to have agreed that there is really nothing much to be done about it; administrative economies may be all right, but apparently any real reduction in expenditure is quite unthinkable.

My right hon. Friend the Chancellor of the Exchequer may have been right when he said at the Scarborough Conference that, in his opinion, big economies were impossible. But if he is right, then I tell him that economic recovery is impossible. In my judgment, there is no future for this country and no future for the British people with taxation at the present level or anything like the present level, and unless we can lift a substantial part of this burden, and unless we can do it fairly quickly, it is very easy to see what will happen to our country. We shall drift from one balance of payments crisis to another, and each will be resolved, or apparently resolved, at a lower level of consumption and production, until we attain our final equilibrium with the standard of life, and, I dare say, the political institutions as well, of a People's Democracy, like the Soviet Union or the Chinese People's Republic. That is not really an exaggeration.

If hon. Members on both sides of the House examine our position today, wherever they see a weakness in it they will find that it is due to too much Government expenditure or to too heavy a load of taxation which is a result of that expenditure. I shall not traverse the whole field, for it would take too long, but I should like the House to look at two aspects of our affairs in illustration of what I am saying.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

The right hon. Gentleman, who is at a very interesting part of his speech, seems to think that the Chancellor of the Exchequer is wrong in what he has suggested. It might be interesting if the right hon. Gentleman would suggest the directions in which he would make great savings.

Mr. Law

It might be interesting, but what I am about to say is even more interesting.

The right hon. Gentleman the Member for Lewisham, South pointed out, perfectly fairly, that there were very great difficulties to come in the export markets. The post-war demand has dried up, we have competition from Germany and Japan which we did not have during the period of office of the Labour Government, and we may now very reasonably ask ourselves where we shall find the markets for our exports and what kind of exports we shall be able to persuade those markets to take. In the days of the export drive, for five or six years after the war, textiles and motor vehicles did very well. I think there is still a great future for textiles, but, clearly, the reemergence of Japan has made a great difference. I doubt very much whether there is the same great future for the export of motor vehicles.

I should say that a good hope in exports would be capital goods; that is still a good bet. This country is good at anything which is custom-made," as the Americans say. But I am not sure that the greatest opportunity does not lie in the field of new inventions. We have seen what we have done with jet engines, for example. I believe that this is a fair reflection to which I should like hon. Members to address their minds for a moment. If we look at the whole range of scientific achievement we find that on the peaks or in the stratosphere there is nearly always an Englishman, or more probably a Scotsman, but, at any rate, someone from Great Britain, and he is probably there alone.

But when we get down to the lower slopes where scientific discoveries are applied to commerce, production, raising the standard of life, and so on, we find that it is an American, a German or a Japanese who is there and the Britisher is no longer present. I think we would find case after case where an invention that has great commercial and industrial value is invented in this country but developed somewhere else.

I believe that to be a very significant fact of our post-war trading development and the reason for it is clear. The reason is that with taxation at its present level it is better to take a royalty without risk than to go into manufacture on a "Heads you win, tails I lose," basis which is what one has to do under the system of taxation that obtains in this country. I am not saying that taxation kills British ingenuity or British inventiveness. It does not, but it does destroy all opportunity of getting any advantage from British ingenuity and British inventiveness.

That is one aspect of taxation problems and here is another. Why is it that production per head is so much higher in the United States than it is here? It is not just British laziness; I think we are lazy people—[HON. MEMBERS: "Oh."]—but we are not as lazy as all that.

Mr. Emrys Hughes

The right hon. Gentleman should speak for himself.

Mr. Law

I am speaking for myself, if it is any satisfaction to the hon. Member.

It is not lack of effort, although I think that the destruction of personal incentives—which is part of the result of existing taxation—has done a great deal to destroy personal effort. The main reason is lack of horse power. The British worker has one-tenth of the horse power at his disposal compared with the American worker and that disparity is getting bigger. We are not catching up, but are falling still further behind.

When our survival depends on our getting more and more horse power, more and more up-to-date equipment and more and more factories, as the right hon. Member for Lewisham, South bewailed this afternoon, the present system of taxation in this country only ensures that we shall have less and less of horse power, of equipment, of machine tools and of new capital development and become less and less competitive and not more competitive.

Mr. A. Blenkinsop (Newcastle-upon-Tyne, East)

Do I understand that the right hon. Gentleman is attacking the policy of his own Government in cutting down investment in industry as against the very high rate of investment in the years of the Labour Government?

Mr. Law

I am not attacking any policy, but, if the hon. Member would like it, I will attack the policy of his Government which wasted so much capital on purely unproductive investment—[An HON. MEMBER: "Such as what?"]—that there is really no capital left to invest.

I am sure that whatever right hon. and hon. Members opposite may think of what I have said, hon. Members on this side of the House know that what I am saying is broadly true. But I think some of us are rather afraid to face up to it. We are afraid to face up to it because, if we do face up to it, we may call in question the Welfare State. And because we are all committed to the Welfare State and because we all had a hand in setting it up—[HON. MEMBERS: "Oh."]—yes, we all have a hand in it—we dare not bring it into the argument.

There is certainly a difference of emphasis between the two sides of the House on the question of the Welfare State. On this side of the House we would prefer to see as much money as possible in the pocket of the citizen. We would prefer to see him spend as much money as he can on what he wants himself. Hon. Members opposite would like to see as much money as possible in the coffers of the State and would like the State to act as purchasing agent on behalf of the citizen so that the State could be sure that the citizen got, not what he wanted, but what was good for him.

I think hon. Members opposite quite genuinely feel that the most important test by which any society could be judged is the value and extent of its social services. We do not; at least, I do not. We all support the principle of the Welfare State and we all hope that it can be maintained and that the social services, over a long future, may, so far from being curtailed, be developed. But there is something else which both sides of the House have in common. That is that we are inclined to forget that it is the function of the Welfare State to generate welfare and not to generate bankruptcy. And the Welfare State will not generate much welfare if it imposes such a burden upon our economy as to make recovery impossible. I do not say that that is happening now; I think it may be happening now. If it is happening it means the end of the Welfare State unless that process is checked.

Let us at least look the problem in the face and not run away from it, as I think the Chancellor of the Exchequer did run away from it in his declaration at Scarborough. The Welfare State, as it has been evolved here, is in many ways an example to the world. But there is one great danger. That danger is that the Welfare State is showing signs now of becoming a superstitution, a kind of graven image before which every man must bow the knee and which no man may criticise, or even examine, lest he bring on his head the vengeance of the gods. We have all, on both sides of the House, become involved in a kind of conspiracy of silence in this matter.

I do not believe that we serve our constituents by indulging this taboo and by pretending, as we do pretend, that the social services rank in some way above the laws of arithmetic. I think we will serve them better by making clear to them—and, indeed, to ourselves—that we can have the social services that we can afford, not those to which we conceive ourselves to be entitled.

5.49 p.m.

Mr. R. J. Mellish (Bermondsey)

The right hon. Member for Haltemprice (Mr. Law) has made a courageous speech. As a Conservative Member, he has declared that he does not approve of his Chancellor's policy. He has told us frankly and sincerely that there should be strict economies in the Welfare State, the social services should be cut, and Government expenditure should be cut far more than it has been cut up to date. But he never mentioned one specific item of Government expenditure, and I suggest that he lacked the courage to do so.

Mr. Law

rose—

Mr. Mellish

I will give way to the right hon. Gentleman in a moment. What sort of taxation did he mean—Income Tax? If this is what he meant, he should have said it. He knows precisely what sort of Government expenditure he wants cut, and I regret very much, and the country will regret, that a man of his integrity did not make these things perfectly clear. Previous speeches have been made—I do not know whether the right hon. Gentleman wishes to interrupt now?

Mr. Law

I think it would be much simpler if the hon. Member will read my speech in the morning.

Mr. Mellish

I hope that the country will read the speech. They will see that the right hon. Member never had the courage to say what type of Government expenditure should be cut to achieve the things he wants.

The Minister of Labour made a very persuasive speech. He is the sort of person with whom one finds it most difficult to quarrel; he puts his case so extremely well. He too, like his right hon. Friend the Member for Haltemprice, did not really tell us very much. He told us some of the problems of today, but he did not say a word of how they were to be cured tomorrow. He talked about industry and voiced surprise that my right hon. Friend the Member for Lewisham, South (Mr. H. Morrison) should move this Amendment, and he wanted to know how my right hon. Friend could talk about a return to the social conditions of the inter-war years. He also explained why he took the view that things today did not indicate that we were to go back to those times.

Speaking for myself and for my party, I say that that is precisely what we are worried about, not merely the problems of today but what these problems will mean tomorrow. Because of that, we want to know from the Government what they have to offer us to ensure that a return to the inter-war years will not happen. One of the charges consistently made—it was made by the right hon. Member for Haltemprice—is about the lack of efficiency of the Labour Government when it was in power, its lack of provision of the means to give to the people greater production facilities, etc. I wish to tell the right hon. Gentleman that, whatever faults the Labour Government may have had, they at least gave the ordinary people at the bottom rung of the ladder a standard of living that they never had before in their lives.

I was born in a slum, and I lived in a slum for most of my life. We took poverty for granted. We were born into it, we accepted it that our way of life then was due to economic conditions over which we had no control. We had not the power to alter the system under which we lived. I can assure the House that when the Labour Government came into power in 1945 the ordinary people in the borough I represent and those represented by many other hon. Members really had, for the first time in their lives, a square deal.

I should like to tell a simple story to illustrate that. It is of a person who came to me and said she was grateful for what I had done. I did not know her. I asked her what she meant. She said she was a widow, that she had been in hospital for 14 weeks and that her only visitor was from the Assistance Board. He told her that her rent was being paid and that she was not to worry and should try to become well. After 14 weeks in hospital she went away to convalesce. On arriving back at Victoria Station, she was met by a car—it was the first time in her life that she had ridden in a car—and taken back to her home. She found that her room had been cleaned and she was given a paid-up rent book. She cried, and said it was the first time in her life that anybody had troubled about her.

I make this challenge to the party opposite; they were in power for years and years and never showed that kindness. They talked about balance of payment problems; there was always a reason why they could not do things for people at the bottom end of the scale. There had to be a Labour Government in power for those people to receive such treatment as I have described.

Sir H. Williams

Could the hon. Member tell me under what Act this happened in 1946?

Mr. Mellish

I did not mention 1946. The hon. Member does not even listen to what is said. I spoke of the Labour Government being in power and what they had done.

Sir H. Williams

The hon. Gentleman is rather offensive. Perhaps he will give way again. He began this story by saying that it took place after a Labour Government came into power in 1945. I assumed that he was referring to events at about that period.

Mr. Mellish

I take that interruption for what it is worth. The type of people to whom I have been referring received from the Labour Government that which meant so much to them.

Those people have been given a better standard of living than ever before, and the problem is that they will not easily go back again to the old days. The Minister of Labour asked why they thought that they might go back to those days. The first reason is that there is a Tory Government in power. That is enough to make people think, having had the experience of having lived for years under Toryism, that they will revert again to the old conditions.

There has come, for the borough I represent, the fear of unemployment, that problem of waking up on a Monday morning and not knowing what is to happen when one presents oneself for work. The Ministry of Labour might have given many more figures relevant to dockland. He should have given the freight figures. The docks are surely the barometer of the nation. If the docks are busy, the nation is busy. The docks are not busy today. I will give some figures that will clearly prove that.

Taking 100 as the mean figure for 1948, the amount of freight coming into and going out of Great Britain from July, 1951, was 179 in that month, 149 in August, 166 in September, 190 in October, the month in which the Conservatives came into power, 172 in November, 168 in December, 163 in January, 153 in February and 137 in March. The following figures are very important—April, 109, May, 110, June, 99, July, 90, August, 79; those were the amounts of freight coming into and going out of the country.

What of the amount of shipping that has been laid up? The Minister did not mention that. Perhaps the Parliamentary Secretary will say a few words about the amount of shipping laid up and completely idle. A figure I have been given from an authoritative source is that there is more than 500,000 tons of laid-up shipping. That is the July figure, representing about 147 British ships.

Is that the only answer we can give to the balance of payments problem? Is that all that the great brains on the Government benches can say about the problem—that we should decrease imports and exports, with consequent effect upon the production figure mentioned by the Chancellor of the Exchequer in his Budget? He then said that a 3 per cent. increase in production was required. The figure before us is something like 3½ per cent. less than last year. Is this the answer of the Conservative Party? Surely, this is a lesson to all of us on these benches.

One does not have to go to a school of economics to know the answer. Surely international planning is needed. We must get agreement amongst the countries of the world. We must not do what followed from the last Commonwealth Conference. What a great failure that was. Immediately after it actions were taken which resulted in Dominions slashing imports, with a consequent slashing of our exports. International planning can be applied in that respect. What are to be the intentions and the line taken by Her Majesty's Government at the forthcoming Commonwealth Conference?

What guarantee is there that the people are not going back to the same sort of experience as they had for so many years? One thing is clear. We on these benches, knowing the problems of our own people and how they feel, should not say or do anything which will have the consequence of the party opposite remaining in power for one hour longer than necessary. Anyone who says or does anything which will have such a consequence is committing a crime against our own people.

We require the same progressive policy that we had when we were in power as a Government. We wish to make it perfectly clear that if the present Government carry on with their present deflationary tendencies it will mean further hardship to our own people; and I warn the Minister of Labour, who has had a pretty good time this year, that his Department will be busier ever than it has been in the past, and that the Government will learn that the people will never go back to the life they knew in the days between the wars.

6.0 p.m.

Mr. J. Grimond (Orkney and Shetland)

When the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison) opened this debate, I think he did well to draw our attention to the fact that there are problems beyond nationalisation or de-nationalisation, and it is to those problems that we have to look for the future of this country.

The Minister of Labour said that the Government were now passing to the positive part of their policy, but I wonder whether that is so. I should have thought they are still engaged on what is essentially negative work, although that may be necessary as a preliminary. We all know that the right hon. and learned Gentleman is one of the strongest runners in the Government stable, and we all welcome the comparatively good figures he was able to give about unemployment.

Mr. Ede (South Shields)

He had been doped.

Mr. Grimond

Doped or free, perhaps some of his colleagues had better take some of the same dope.

The trouble with unemployment, as the right hon. and learned Gentleman so well knows, and as so many of us know, is that it is a human problem. However good the figures over the country as a whole may be, if it strikes hard at particular districts, such as the district referred to by the hon. Member for Bermondsey (Mr. Mellish)—and we have had some examples of it—it can be a very serious matter indeed, although possibly statistics do not appear to show it.

In my own constituency, we have had an exceedingly high level of unemployment ever since the war. In terms of human unhappiness and human misery, it is probably the most serious problem that this country has had to face, and again I pray in aid the speech of the hon. Member for Bermondsey. But when we talk of unemployment and Government action, we should not mislead the people as to the amount which can be done to alleviate it. A great deal of the unemployment in a country like this depends so much on trends which may arise from causes outwith our control.

Again referring to my constituency, the previous Government during their term of office, try as they would, could not bring down the unemployment figures. It is a comparatively small district but it is a place where human beings live. I think it would be entirely wrong to suppose that any Government can guarantee full employment. If world trade falls off, shipping is inevitably laid up, and I am sure that the hon. Member for Bermondsey would agree with me.

Unless the Government are prepared to undertake a new form of public work in, so to speak, finding freight out of the pockets of the taxpayer generally—it is not the richer classes, but now the whole body of the nation who are taxpayers—unless the Government are prepared to embark on what in my opinion is that impossible task, we have to face the possibility that some unemployment would exist in this country, whatever might be the Government.

Mr. Mellish

What the hon. Member says may be true; but surely, with other countries such as America and Russia depending on trade with this country, it is possible to get a little international planning? Or have we to go through the whole of our lives in a slump?

Mr. Grimond

I entirely agree with the hon. Member. It is quite obvious that the greatest need of this country is to have a high level of international trade. I very much hope that the Government, both through the forthcoming Commonwealth Conference and in other ways, will take steps to make that matter one of the highest priority in what I describe as their positive policy.

Up to the present I have thought that one of the main accusations of the Labour Party against the present Government was that they were causing prices to rise, and that they were creating inflation. But now, from this Amendment, I understand that the accusation is that they are creating deflation. In those circumstances one would have thought that prices would have fallen. That seems to me to be another example of what is one of the most notable diseases of politicians, split personality.

From my brief career as an active politician, it does not surprise me at all to find that there are differences within parties. In fact, I have had some experience of it. In many ways I think it is healthy that that should be so. But what I consider less explicable is that some people in a party appear to support what would seem to be a contradictory proposition. We have some Members of the Labour Party who ask for gigantic expenditure in Asia and who yet say that the resources of this country are strained to the limit. Some want State Socialism but less concentration of power. Some welcome American capital throughout the world but want less American influence.

On the other side we have those who are in favour of the fullest of free enterprise but high protection. We have those—from whom I exclude the right hon. Member for Haltemprice (Mr. Law)—who are in favour of drastic cuts in Government expenditure, but who support the re-armament programme, a huge housing programme and a high level of social service.

Mr. Law

I hope that the hon. Gentleman does not acquit me of supporting re-armament?

Mr. Grimond

I only excluded the right hon. Gentleman from this particular charge of split personality. I myself suffer from this fashionable disease; I do not claim to be free from it. In fact, I was hit on a sore spot when the hon. Member for Dundee, East (Mr. G. M. Thomson) spoke about agriculture. But it seems to me to be necessary to decide whether the main danger facing this country is inflation or deflation; and also to decide whether we are going in for full-blooded Socialism or are going to try to improve private enterprise.

From what I would admit is a slight knowledge of the subject, it seems to me that, at this moment at any rate, the danger is still inflation, which arises principally from the country spending too much on non-productive investments; in particular, I would say, from the Government spending too much. It is common knowledge that while the Government have been making it very difficult for private industry to get capital, while they have been preaching and practising economy at the expense of private industry, they have not been taking their own medicine.

That situation, that danger of inflation, may conceivably soon change if we fail to compete in the export market and goods are pushed back on to the home market. But that would largely happen because the home price levels were too high, causing a failure to compete with other export countries in the world. This, as has been said, is one of the greatest problems with which we are faced.

We need more horsepower. Workers need the tools to do the job. The tools require capital and the proper distribution of capital. When they came into power, the Government had two fetishes round their neck; one was red meat and the other 300,000 houses. These may prove in the long run to be, so to speak, two charms to the electors; their housing programme is going very well; but in my view these two may also be albatrosses round the neck of the ultimate prosperity of this country.

No one can possibly doubt the need for better housing. One only need travel to the East End of London, or the Midlands or in Glasgow, or the Highlands, to be struck at once by the appalling backlog of housing which we have to replace. But it is no use giving people houses if they are unemployed, and no good building houses at rents they cannot pay. I do not say that the Government must stop their housing drive or even slow it up, but they should re-consider the methods they are employing, and they should ask themselves whether we can afford the capital resources to build these new semidetached houses at a vast expenditure of agricultural land and costing £2,000 each, with the large outlay of industry, coal, labour and our general resources which may well ultimately affect the production of exports and the paying of wages.

Is not it possible to build more flats, cheaper houses and terrace houses, and, above all, to repair existing houses; and thereby devote less of our valuable investments to the comparatively nonproductive, though I agree absolutely essential, matter of houses?

The other great need, in my view, is to improve the free economy of this country. I do not believe that in the near future we shall have the socialisation of all the means of production, distribution and exchange, in spite of what the right hon. Member for Lewisham, South may sometimes say. I feel it is time that we ceased to treat free economy as a dangerous beast which ought to be chained up or, as has been suggested in the "Economist" that we should have a kind of maison tolérée or half-way house to full Socialism. I do not blame the Government for not crowding more into the Gracious Speech; there is enough for one Session perhaps. But if 50 million people are to live in this island and if we are to raise the standard if living of the poorer of the people, that can be done only by a properly organised system of private enterprise running the greater part of our economy. We have to show that that system can serve these ordinary people. If the Government set about that task, I am sure that they will have some help from both sides of the House. I welcome the signs from this side of the House that some thought is being given to these problems. I should not take exception to some industries remaining nationalised. They may act as an additional test and spur of free enterprise.

On the Iron and Steel and the Transport Bills I find that I alone am in step. I seem to be the only person in the country who, if anything, prefers the Transport Bill to the Iron and Steel Bill. If we are to have a free economy, we must take the rough with the smooth, the losses with the profits, and face up to the realities of competition. Competition is the mainspring of private enterprise. It safeguards the consumer.

The Iron and Steel Bill may be the substitution of one monopoly for another, while I think that under the Transport Bill there is some chance that we may restore competition. I am not sure that today the word "co-ordination" and "planning" mean very much. We are all planners in certain senses, but there are many other senses in which there is a wide area of disagreement.

Mr. A. Edward Davies (Stoke-on-Trent, North)

The hon. Gentleman says that he has no objection to the Transport Bill in that it gives us competition, but in his particularly vulnerable constituency has he not asked for special consideration in terms of transport to these outposts of Scotland?

Mr. Grimond

No one has suggested that we cannot have assistance without nationalisation. Assistance has been given to agriculture—

Mr. Davies

But the hon. Gentleman does not want free competition.

Mr. Grimond

I am not standing in the way of free competition in transport in the least. If two services to Orkney and Shetland are proposed, then by all means let them run. If the result is better service, I shall welcome it.

The Prime Minister, on the occasion on which he unfortunately became somewhat confused among his figures, was, I think, pointing to a quite important point. That was that it is not altogther right that an industry should have very heavy prior charges levied upon it whether or not it makes a profit, and that that is one of the disadvantages of nationalisation—that instead of competition working and reducing the profits if the industry is inefficiently run, the prior charges are levied and the Exchequer or the industry has to pay them in any case.

I am certain that we must soon have a real law against monopolies. I give these examples of the sort of way in which I think that the free economy should develop. There should be a change in the company laws and the law of inheritance and we should encourage a wider sharing of profits. Above all, I think that the time has come to reinstitute a system of common law administered by judicial courts, because without that I do not believe that we shall have liberty, nor shall we get economy.

I do not believe that we shall get economy in Government Departments, necessary as it is, by an endless series of committees of inquiry and axes. I believe that the real root of the problem lies in the fact that the Government are asking Government Departments to do jobs for which they were never designed. Too much work has been thrown upon them. So long as that is done, excellent and hard-working as the Civil Service may be, they are nevertheless trying to do a job without any means of telling whether or not it is being done efficiently and economically. I should like to see the Government get rid of a whole lot of administrative law.

We all complain of the fact that we live in a siege economy. We all ask for more dollars. We all know the tendency of dollar spending to outrun dollar earning. I do not believe that the remedies are easy but, equally, I believe that they are comparatively simple. We all suffer from an incipient balance of payments crisis whenever we pass one of the expensive shops in the West End. We either have to make up our minds not to spend the money which we have not got or to earn more money or to deal at a different shop. Exactly the same considerations apply if we want to buy dollar goods. We must earn the money for them or we must get the goods from elsewhere.

We hope by the development of Europe and of the Commonwealth that we shall be able to do this. I am often reminded in these debates of those Russian plays in which people sit around wishing that they were in Moscow—and at the end of the play one is inclined to say that they should take a third-class ticket and go there. I am also reminded of the story of Naaman who suffered from leprosy and who was told that all he had to do to be cured was to go and bathe in Jordan. He was very disgusted because the remedy was not more spectacular.

I do not believe that the remedies are spectacular. I believe that by developing the free market, by trying to make it work better, by trying to give our workers the tools with which to do the job and by instituting a far more equal system of law, the people of this country will be given a fair field in which by their own efforts they can raise their own standards of life. Thus they can prove by the only test that I would accept—that is, the test of making the poorer people happier and better off—that our system of Government and our system of economy has in it the solution to our own problems.

6.18 p.m.

Mr. Godfrey Nicholson (Farnham)

I must say that I envy the hon. Member for Orkney and Shetland (Mr. Grimond) because, almost always, he can feel that he is in step. I envy the Liberal Party because they can criticise and air their views without any danger, or only a remote danger, of being held responsible for what happens.

I do not want to follow the hon. Gentleman in his interesting remarks. I want to follow the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison), who opened this debate in a spirit which I should describe as more diagnostic than polemic. I wish that he was here now because I wanted to ask him if he had studied a most interesting Stationery Office publication of about two months ago entitled "National Income and Expenditure, 1946–51." It gave me a severe shock in many ways, especially when I saw the details about our capital investment programme.

I am sure that everyone will agree that this country stands or falls, in the long run, by the degree of capital investment that it can indulge in. The Welfare State stands or falls by it. Our productive ability, our trading and exporting ability as a nation, stand or fall by it. The figures are indeed alarming. They are open to various interpretations, but the general trend is beyond question. In 1951 the total capital formation was put down, in round figures, at £3,350 million.

Adjustments have to be made for wear and tear allowances, which in themselves are admitted to be inadequate and which are at original and not at replacement prices. Adjustments have to be made on account of money put on one side to finance stocks at a time of rising prices. After making these adjustments, what it boils down to is that genuine capital investment in this country last year was between £1,400 million and £1,500 million. That includes houses, roads, factories, plant, ships, aircraft, and rail and road vehicles. I submit that the whole of our future depends upon whether our capital investment is made out of savings or otherwise. If it is made otherwise, it cannot go on. I am sure that the whole House will agree that our capital investment in this country is far too small even as it is.

These figures were analysed in the "Economist" of 13th September. There has been controversy over the precise details of the analysis, but the analysis made by the "Economist" was broadly speaking, as follows; Two-fifths of our capital investment was financed by loans or gifts from abroad, by increasing sterling balances or by increased dis-investment abroad, two-fifths were financed by anticipating future taxation—money set aside already for taxation accrued but not yet due; and only one-fifth, about £269 million, was found from genuine corporate and private savings.

The right hon. Gentleman the Member for Lewisham, South jeered at this side of the House for desiring economy, and said, "By all means let the Chancellor be a prudent housewife and snip off little bits of unnecessary extravagance." That was as far as he would go. But a large body of hon. Members on this side reluctantly take the view that with a burden of Government expenditure of such vast proportions, and with well under a half, or, as the "Economist" said only one-fifth, of capital investment being financed out of genuine savings, major economies are essential.

No politician likes suggesting economies, because they hurt someone. The right hon. Member for Lewisham, South boasted that his Government had taken steps which hurt the people for the people's ultimate good. I say that unless some Government, be they Tory, Labour or Liberal, take drastic steps, the future outlook for this country is very black indeed. I do not suppose that anybody will deny—and the right hon. Member for Lewisham, South did not deny—that our future recovery depends on how many factories and how good factories we build.

Future recovery depends equally on the equipment of our factories. It is no use wasting time on short-term problems of whether we are six inches or 300 inches further away from the balance of payments precipice than we were before. That is the small change of economic crises. The great and overwhelming questions that face this country are the long-term problems. All that the Chancellor and the Government have done, as my right hon. Friend the Member for Haltemprice (Mr. Law) said, has been to buy time. I think that we have nine months or a year of time in hand. That time must be devoted by both sides of this House and by all sections of opinion in this country to thinking out the long-term problems.

I submit that the first problem is whether it is possible for a nation to go on existing indefinitely when its capital investment programme is not financed from savings. I go further and say that if it is only financed out of savings to the tune of 20 per cent., then our doom is very near indeed. Therefore, the first thing that I ask of the Government is that steps should be taken to see that private individuals and companies can save. I hope to see in the Budget, if it is possible to give any relief in taxation, that taxation is relieved on undistributed profits.

The second long-term problem is that advanced by my right hon. Friend the Member for Haltemprice when he said that no economy can survive without inflation so long as 45 per cent. of the annual national product is taken by the State and spent by the State, and, after all, survival with inflation is only a borrowed lease of life.

Hon. and right hon. Gentlemen opposite genuinely feel that any major steps towards greater economy in public expenditure are vicious and bad because they all hurt. I say to them, and many of my hon. Friends say it, that the interests of the people they represent will suffer most if we have continued inflation, and if our exporting power as a nation is reduced by failure to keep our plant, equipment and factories up-to-date.

That is why we, on this side of the House, feel that we see in the present high rate of taxation the greatest enemy to our survival as a nation and that is why we support the campaign for economy. I say quite definitely that I am convinced that unless we can finance our capital investment programme out of our savings we shall fail. Unless we can bring down the inflationary pressure resulting from the high proportion of national wealth being taken by the State, we shall fail.

I believe, too, that we must get away from too much trust in the economists. I come like a new boy to school in this matter, but surely those who have studied the economic trends of the last five years must be aware of the disastrous shortfall of savings. Surely, ever since the end of the war it must have been obvious to those who studied and knew about these things that such a high burden of taxation was in itself inflationary.

Mr. A. Woodburn

If the hon. Member would allow me to say so, he is raising a very interesting point. I take it that there are two kinds of savings—private savings and public savings.

Mr. Nicholson

Corporate savings.

Mr. Woodburn

If the State collects savings publicly by taxation and uses them for capital expenditure, how is that not a saving compared with private saving which may not be used for capital expenditure but may be used for expenditure on other private purposes?

Mr. Nicholson

I am very glad that the right hon. Gentleman has raised that point to which I was just coming, because it fits very aptly into this part of my speech. Factories and plant are what the right hon. Gentleman calls private purposes, but they are in fact truly national purposes. One of the gravest heresies that economists have inflicted on the Socialist Government, and it still survives to some extent in Government Departments, is that a Budget surplus is as important as or better than a private surplus. But a Budget surplus tends to distortion of the economy.

For instance, in 1951 the State corporations were given capital investment money to the tune of about 80 per cent. of their annual turnover, while private industry was allowed only 11 per cent. What the economists and right hon. Gentlemen opposite have not seen, or rather have not pointed out, is that savings brought about by means of a Budget surplus arise from high taxation that is in itself inflationary.

We can take the Purchase Tax as an example. How anybody in his senses can deny that Purchase Tax is inflationary, I am blessed if I know. How anybody in his senses can say in a broad and sweeping manner that Purchase Tax is not only an admirable revenue raiser but an important help to the export market, I do not know. The argument is that the higher the Purchase Tax the more inducement there is to the manufacturer to divert his goods into the export market. In certain industries at certain times that is the case, but to make an over-all statement like that is economic lunacy.

The mistake that the economists make and that the last Government made is to think what the right hon. Gentleman the Member for East Stirlingshire thinks—that if one takes money from people that is not inflationary. It must be obvious that all taxation to some extent is inflationary. But when it comes to a point where the nation as a whole is working 45 per cent. for the Government and only 55 per cent. for themselves and are trying to keep up the same standard of living, it is manifestly impossible. We want to get back to a little more common sense in economics. We ought to treat economists as experts from whom we ask advice. We do not want to treat them as a sort of second eleven of the Treasury Bench.

All sections and all parties in this country can be brought to accept the incontrovertible argument that when taxation reaches such a pitch that savings, corporate and private, are almost extinguished, then that high taxation has got to stop in the interests of the poorest in the land as well as in the interests of everybody else. I hope that I shall hear that doctrine preached from my own Front Bench during the next 12 months.

6.31 p.m.

Mr. R. Ewart (Sunderland, South)

I hope that the hon. Member for Farnham (Mr. Nicholson) will forgive me if I deal with the mechanics of the Amendment, that is, the question of unemployment and short-time working coupled with the evil of the increase in the cost of living. It is perfectly obvious from what the hon. Gentleman said that none of these things exist in his constituency. His constituency is free from unemployment, sub-employment and suffering caused by an increasing cost of living and a depressed standard of life. Obviously it must be so, because he did not take the trouble to refer to these problems.

Mr. Nicholson

I did not refer to these problems because there are two threads in this debate. There is the thread that was woven by the right hon. Member for Lewisham, South (Mr. H. Morrison), and there is the other thread produced by the Minister of Labour, and I was confining myself to the broad economic line of argument and not to the unemployment problem. I do not think it is quite fair of the hon. Gentleman to imply that I and my constituents do not care deeply about unemployment. I am sorry to take so long in an interruption, but I would point out that we regard unemployment as a symptom of the economic disease which we wish to cure.

Mr. Speaker

May I express the hope, in the interests of other hon. Members who wish to speak, that every hon. Member will not feel it incumbent upon himself to refer to every aspect of all that is covered in this Amendment; otherwise we shall have very few speeches.

Mr. Ewart

Yes, Mr. Speaker. As I understood, the Minister of Labour did deal with the symptoms and he devoted quite a lot of his speech to the symptomatic problems of unemployment and short-time working. These are grievous problems and they exist in the north-east probably in a more acute form than they exist in some other parts of the country. The North-East area has an unemployment problem of twice the national average. It also has a very serious problem of short-time working, and it is these twin problems, coupled with the added problem created by the Government of an increased cost of living, which are bringing that area back to something like poverty conditions which have been unknown since 1945, and which are reminiscent of the period between the two wars.

I want to consider this matter from the point of view of the North-East area. The only industries in that area which are free from unemployment or short-time working are the nationalised industries of coal, steel, gas and electricity. These industries have shown a high record of full employment. The part of the steel industry with which I am most conversant is in the constituency of my hon. Friend the Member for Cleveland (Mr. Palmer), where underground production of iron-ore takes place under the Cleveland hills.

In that area they have reached the highest peak of production of the last 20 years or more. Since nationalisation, the new infusion of capital investment and the mechanisation of the industry, this industry which was given a 10 years' life in 1942 topped the million mark in output in the last year, which is the highest figure for 20 years or more. It is only in the nationalised sector of industry that there is any freedom from the evils which we are discussing this afternoon.

The North-East depends very largely on other basic industries for its livelihood and prosperity. One of them is the shipbuilding industry, the industry that showed up to 45 per cent. unemployment in the years between the wars, the industry that was rationalised, which made Jarrow bare and desolate with an unemployment figure rising up to about 80 per cent. of the insurable population. It is in the shipbuilding industry that the workers on the north-east coast are most concerned. One of the reasons for unemployment and short-time working arising in the industry now is that in the present 12 months—that is, from January until the end of the current year—the shipbuilding industry will have had less steel than in any other year since 1947. That is having a perfectly natural consequence upon employment.

The Government are not very concerned about the matter. The Government say, in answer to questions on the matter, that whilst they have had less steel in the first and second quarters of the year, in the third quarter they have been promised a slight increase. But that will be a short-fall on the 12 per cent. reduction in steel supplied to the shipbuilding industry in Sunderland that obtained in the second quarter of the year. The industry has 65 per cent. of its requirements. The industry is working with full order books, as was stated by the Civil Lord the other day. It has 65 per cent. of its steel requirement, and is in serious difficulties.

The shipbuilders in the industry say this about the Government, "Whilst we are to get a slight increase in allocation on paper, we shall be lucky if we make up the deficiency, never mind the extra allocation." They say, in effect, "Whilst the Government are allocating us about 65 per cent. of our requirements, we cannot be certain of delivery, and after the Government have made up their minds and have made an allocation to the Admiralty for merchant shipbuilding, we are left with the added problem of harassing the steel producers to get the necessary raw materials."

Surely there can be some economic co-ordination between the Departments in this matter. Surely the Minister of State for Economic Affairs could devise some method of a get-together between the steel producers and the shipbuilders, thus relieving the shipbuilders of the anxiety of hawking for steel, and ensuring that when allocations are made there will be a delivery time set, which should be adhered to as near as it is humanly possible, so that the industry should have a reasonable supply to keep its workers in employment.

Lieut.-Colonel Sir Walter Smiles (Down, North)

Is it not a fact that there are conferences at all the large shipbuilding ports—the Clyde, the Tyne, Birkenhead and Belfast—at which the allocation is agreed? Are not those conferences held under the supervision of the Government, and is it not intended to give a fair deal to every shipbuilding port?

Mr. Ewart

The hon. Member is wrong. He has it backside foremost. The allocation is made by the Government to the Admiralty and the conference that arises after that is between the shipbuilders and the steel firms, on the question of supply and delivery dates. If the hon. Member were correct in his statement, or if the Minister of State for Economic Affairs would endeavour to meet my complaint, there might be an easement of the problem.

What happens at the conferences to which the hon. Member has referred? The shipbuilders say about them, "Shipbuilding delays resulting from the steel shortage might be the reason why we are having new tonnage built on the Continent." One ship owner in Sunderland, who is certainly not a friend of my party but of the party opposite, says, "I hope that this is not an omen and that we are not going to lose work to the Continent in the same way as we did before the war."

Sir H. Williams

Shipbuilders at Sunderland are apparently short of steel. If more is to be given to Sunderland, what industries would the hon. Member wish to rob of their supplies?

Mr. Ewart

I answer the hon. Member by saying that the First Lord put the hon. Member's question in reverse. He said: The total amount of steel allocated for merchant shipbuilding in the Sunderland area for the third quarter of this year is about 12 per cent. less than the corresponding allocation in the second quarter and represents approximately 60 per cent. to 65 per cent. of the total demand for steel for merchant ships made by the shipbuilders in the area. If, however, account is taken of the separate allocation made in the third quarter for certain re-armament contracts on which work is about to begin, the allocation is approximately the same as for the second quarter and only slightly less than that for the first quarter."—[OFFICIAL REPORT, 9th July, 1952; Vol. 503, c. 92.] In effect, he says, "The Government have robbed the shipbuilding industry for the re-armament programme." They have done so in my area, to the tune of 12 per cent. At a time when merchant tonnage is being built abroad, the workers are a little afraid that, through competition and short supplies of the necessary raw materials, there might be an increase in the existing unemployment and short-time working.

A few months ago the Civil Lord visited the shipyards and the ship repairing yards in the North-East. When he arrived at one of the large yards in Sunderland, he was met with a stoppage of work—an immediate lightning strike. It was not because they wanted to give him a good old-fashioned North-East welcome. They said, "We have stopped work today because it makes no difference whether or not we work today. We are on short-time and what we do not do today we will do tomorrow, so that we might be on full-time tomorrow." They were doing this to prove the point made on several occasions in this House by my colleagues and myself—that unemployment and short-time working are appearing, to the serious detriment of the area.

This is happening at the time when the Government are planning to disrupt the steel industry and when they are prepared to tinker with a major industry in the interests of their doctrinaire policy. It is at a time when the steel workers in the area are protesting against the proposed Government action and the shipyards are afraid that the period of rationalisation which existed in the inter-war years might again appear in the offing.

As far as the industrial workers in the North-East are concerned, unemployment and short-time working, accentuated by the increased cost of living, means that their wages are reduced and that the most profitable part of their wages—overtime work, with its enhanced rates—is taken away from them. They cannot look forward week by week to a full pay packet. While the average earnings might be 160s. to 180s. a week, the majority of the workers in that industry are employed at £6 or just less a week. This minimum wage does not represent £6 every week to the earners in the industry. It represents very much less than £312 a year on the short-time working.

These are people who do not pay Income Tax. They are the people who got no relief from the Tory Chancellor's Budget and they are the people who are bearing, out of their meagre income, the full blast of the increased cost of living, coldly calculated and devised by the Chancellor of the Exchequer.

On the other sectors of industry on which the North-East depends very largely—electrical engineering and manufacturing—the position is that the employers are seeking the support of the trade unions. The trade unions are being asked to interest themselves in the particular problems of the employers. Their problems arise through the policy of Her Majesty's Government. One very large firm, in a letter to the Confederation of Shipbuilding and Engineering Unions, state that they have had to dispense with 300 men and to put 300 men on a four-day week. The reason given to the trade unions is an indictment of the present Government. The letter reads: The reasons advanced by the management as the causes of this redundancy are, (1) The economic state of the country which has meant the curtailment of capital expenditure and investments, resulting in the cancellation of plans to effect certain structural alterations and building of new shops. (2) The cancellation of orders of printing presses consequent upon the rise of the Bank rate. The reduction in capital investment imposed by the Government is a stricture on the extension of the industries in those areas and the policy of the increased Bank rate is cancelling orders made for certain capital equipment which was ordered prior to the Government's decision.

It is on these matters that we indict the Government in the Amendment which was moved this afternoon. It is these matters and these problems which are impinging on the well-being of the working people and resulting in poverty and semi-starvation. The full effect of the Government's policy is falling on the shoulders of those who are least able to bear it. The rising cost of living is producing this feature, that the meat allocation is not being taken up and that the butter and other rationed goods allocations are not being taken up by a vast section of the consumers. That is why the butcher can offer prime cuts and expensive joints to those people who can afford them. That is why there is extra butter, even though it may be "under the counter," for the friends and customers of the grocers. And the people who are suffering in the process are not only the industrial workers on small wages but the old age pensioners and others on low, fixed incomes, who are finding the draught through the policy of the Government.

I make my protest on behalf not only of the people in my constituency but of the workers on the North-East Coast who have bitter memories of Tory rule between the war years and who might be excused at this point of change in their economic and working circumstances if they brought pressure and certain demands on the industrial front.

The statesmanship of the great trade unions is responsible for keeping in check a rise and surge of discontent. That attitude of the trade unions, who feel that we have something very real at stake in this country, and who are not prepared to take action which would cause serious damage and disturbance to our economic and industrial affairs, is very praiseworthy. They are showing statesmanship and leadership, and if only the Government would learn from the lesson taught by the trade unions, some serious consideration might be given to the problems which we are discussing this afternoon.

6.52 p.m.

Sir Herbert Williams (Croydon, East)

I listened with considerable interest to the speech of the hon. Member for Sunderland, South (Mr. Ewart), but I could not quite understand his logic. He said there was no employment problem in coal mining, gas, electricity and steel, and then subsequently the main burden of his complaint was that there was not enough steel—and that was after he had said what a splendid thing was nationalisation of the steel industry.

Mr. Ewart

I said that there was no employment problem in the steel industry but that there was a problem in the steel consuming industry.

Sir H. Williams

That is exactly what I was saying. The hon. Gentleman started by praising the steel-producing industry, and the rest of his speech consisted of a denunciation of the fact that they were not supplying industry with the necessary raw materials. He should think of the logic of the speech he is making. Nor did I quite understand his explanation of why printing machinery orders had been cancelled because of the rise in the Bank rate. That argument does not make sense. I do not understand what orders were cancelled because of the action of the Capital Issues Committee, which, incidentally, has been in existence since about 1939. The hon. Gentleman should give us a little more information about his complaints.

He also devoted a great deal of time to the increase in the cost of living, with which I sympathise very much, but his deputy leader, the right hon. Member for Lewisham, South (Mr. H. Morrison), spent a large part of his speech saying we must not reduce the cost of living. The right hon. Gentleman said we must not have any deflation.

Mr. H. Morrison

The hon. Gentleman suggests that I said we must not have a decrease in the cost of living. I did not say that, and he has no right to say that I did. That is typical Tory propaganda.

Sir H. Williams

I quite appreciate that the right hon. Gentleman did not know what he meant, but when he denounces any measure of deflation he is really saying that it is a bad thing to reduce the cost of living. Other hon. Members have come to the same conclusion on this issue as the right hon. Gentleman; they are not even in step with themselves.

The right hon. Gentleman was grumbling because we have not built enough factories. I took the liberty of going into the Library and picking up a volume which I think was started under the right hon. Gentleman's auspices—and I call it the "Monthly Indigestion of Statistics," because there are too many of them. I found that we had not started as many new factories in the first six months of this year as we did in the first six months of last year, and for a very good reason. They were projects; they were not factories. But the completions in the first six months of this year were worth £43 million, whereas the completions in the first six months of last year were worth £33¼ million.

It is as though the Admission Order Office gave us books of tickets and we sent a couple to everybody who wrote to us. An hon. Member could then say, "During the Session I have issued 5,000 tickets to the Gallery," but of course those people would not get in, and that is the real issue. The very first step taken by our very successful Minister of Housing and Local Government was to stop new projects in the first three months of his period of office. By so doing he made a greater contribution to the progress of building than anything else, because he had all the blocked gutters cleaned up.

Mr. Mellish

Then why is there more unemployment among building trade workers—painters and decorators and so on—than there has been since 1945? Explain that.

Sir H. Williams

I have not all the details here, and I do not suppose the hon. Gentleman has them all in his hand. After the debate I shall go into the Library and look at the Ministry of Labour Gazette. In the case of painters, it may be a seasonal business which always affects the building trade, because external painting is not done to a maximum extent during the winter months. I have not gone into the issue, although the number of people engaged in building houses is roughly the same as it was two years ago, but they are employed much more efficiently and are producing 15 per cent. to 20 per cent. more houses.

Mr. H. Morrison

The hon. Gentleman said he had looked in the Library at the value of factories completed in the two respective half-years. He has again gone off the rails. What I said was that for the first six months of 1952 we had started only half the number of new factories started in the same period of 1951. He is not comparing the same things.

Sir H. Williams

That is exactly what I said.

Mr. Morrison

The hon. Gentleman is talking about the value of factories completed in the two periods. I am talking about the number of factories commenced. That is surely a different thing.

Sir H. Williams

It is exactly what I said at the beginning. The right hon. Gentleman obviously did not make his own speech; I think the backroom boys have been busy. Indeed, he did not seem at all happy about it when he was speaking. I must admit that I went to sleep during part of it. A short time ago I went into considerable detail to show that the number of factories started is a meaningless thing. What we have to consider is how many we finish. If we authorise a lot and there are very many in course of construction and very few which can be finished, we are achieving a very poor purpose. That is exactly what I said, and I repeat it in order that the right hon. Gentleman can understand it when I have said it twice.

Of course, we have had the usual complaints about Tory misrule, and I get rather tired of it all. They always leave out the critical years 1929–31, when unemployment reached its maximum.

Mr. Arthur Allen (Bosworth)

The maximum was in 1933.

Sir H. Williams

That is not so. I know the figures. It took about a year to reverse the trend. I know all those figures. I know they increased under the Labour Government between 1929 and 1931. When the Labour Party took office in June, 1929, they were about 1,100,000. When they left office—when they ran away, shall we say?—on 24th August, 1931, the figure had gone up to just under the 3 million mark. There was a period of not much change, and then about a year later the downward movement started. We cannot suddenly reverse a trend in five minutes.

But that was the worst period—1929 to 1931; and I am leaving out the fact that the Socialists ran away then from their responsibilities, on 24th August, 1931—in exactly the same way as they ran away from them in October last year—because they were frightened of what was coming to them.

I want to say a few words about G.A.T.T.—the General Agreement on Trade and Tariffs. [Laughter.] I do not know why there should be this hilarity, but there is always hilarity on the other side if anybody on this side does anything sensible. My hon. and gallant Friend the Member for Rochdale (Lieut.-Colonel Schofield) made a plea that we should liberate ourselves from the hampering effects of that agreement. I want to reinforce his views as strongly as I can.

We are face to face with conditions that have not existed since 1945. There is growing up real competition in the world—competition with our goods here and in overseas markets. We made ourselves defenceless to a large extent by tying our hands with this treaty. I was delighted to hear the opinion of a former President of the Board of Trade, the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), for he has realised that this is a disabling instrument.

I am glad that the President of the Board of Trade has come in at this moment because I hope that in a few weeks' time, at the Imperial Conference, he will be talking about this, and I hope talking the right kind of stuff—and I think he will, I can quite understand why the Government made no reference to this specifically in the Gracious Speech—because, of course, they felt it would be rather improper for them to make an announcement prior to the conference. That is not the view I hold. I think we ought to take the lead in these matters. For diplomatic reasons, because of the Presidential election in America and so on, they held their hands; but when they go to the conference I hope they will liberate us.

I hope they will also liberate us from what is known as the most-favoured-nation clause in our commercial treaties. These clauses have been in existence for many years. I think I can find one made by Oliver Cromwell in 1656 with the King of Sweden—I think it was. By a most-favoured-nation clause, when we make an agreement with one particular country, any concession we make to country A is extended automatically to every other country in the world, without any reciprocal advantage to us. That has always seemed to me perfectly absurd. I hope the Government are considering that also.

There has been a lot of talk about inflation. I think there is probably no subject on earth about which there is more confusion of thought than inflation. Inflation is the result of the artificial manufacture of purchasing power. and that is done today by the Bank of England in conjunction with the Treasury when the Chancellor of the Exchequer authorises an increase in the fiduciary issue. When the bank notes are increased by £10 million, automatically in a few weeks' time there is £100 million of purchasing power through the increase of bank credit. This was a device advocated by a former Member of the Socialist Party, Sir Oswald Mosley, during his period of transition from one form of Socialism to another.

Mr. Douglas Houghton (Sowerby)

The Conservatives made him.

Sir H. Williams

He left us sooner than he left anybody else. So if we want to stop inflation, we shall not do it by this device of taxation. I think every Chancellor of the Exchequer has been under a complete delusion, because they have all, in relation to the problem of inflation, favoured taxation. The right place to tax inflation is at its source, and that is the printing press controlled by the Bank of England.

I hope that the Budgets will go back to their old form. The object of a Budget should be to raise sufficient money to finance the normal expenses of the nation. My right hon. Friend the Member for Haltemprice (Mr. Law)—I think it was—earlier on said it was wrong to raise taxation in order to enable the Government to have capital to lend out at interest to other people. I am looking forward to the time when I shall be able to save a bit to lend out to somebody else. [Interruption.] Why not? It was on the basis of personal thrift that this country was built: not on its Government's lending—and very often lending unwisely. I want to wipe out all the under-the-line Budget entirely, and if we do that we can bring about large reductions in taxation.

Many hon. and right hon. Gentlemen have urged economies. I have heard a bleat from the other side of the House, "What would I economies on?" All right. I will ask any hon. Member who asks that perfectly unintelligent question to go into the Library or into the Vote Office and get a copy of the Estimates—the Civil Estimates or the Defence Estimates—and turn them over page by page; and there is hardly a single one on which there is not room for economy; and then add them all up—all those masses of economies. They will not involve any great changes of policy, but changes of methods of administration. Some of us have put down a few Questions in the last few days indicating economies which could be effected. We have not covered the whole field. Hon. Gentlemen should not ask, "On what would you economise?" Really the question is, "On what would you not economise?"—because that list is much shorter.

Mr. R. R. Stokes (Ipswich)

Wipe the lot out.

Sir H. Williams

The right hon. Gentleman the Member for Ipswich (Mr. Stokes) might be excluded.

Mr. Stokes

I think this is very interesting, but can the hon. Gentleman tell us which Ministers, if any, are capable of making any reductions?

Sir H. Williams

I do not know, but they can speak for themselves. I am speaking only for myself. I think some of them have already effected quite substantial economies—and are consequently naturally abused by right hon. and hon. Gentlemen opposite. That is the normal function of the Opposition.

Mr. Victor Yates (Birmingham, Ladywood)

But surely there is the Select Committee on Estimates? The hon. Gentleman really must realise that every Member of his party who is on the Committee can put forward views about economies, for those economies to be made; and if they have not done so, there must be a great neglect on the part of the party opposite.

Sir H. Williams

I am not personally a Member of the Select Committee on Estimates or the Public Accounts Committee, although during the war I was on the National Expenditure Committee, but I am told that there is a relatively small number—

Mr. Yates

There are 36.

Sir H. Williams

Well, a comparatively small number—and they examine Estimates of the Departments each year. That is the usual practice. This House as such never examines expenditure in detail—never. Year by year the bulk of the Departments' Estimates is never perused in detail.

Mr. Yates

The hon. Gentleman is quite incorrect, because as a matter of fact that Committee has six sub-committees which are considering various Departmental Estimates.

Sir H. Williams

I have never served on the Committee, and I am not aware of the details concerning it, but I am aware of this, that each year it presents a number of reports which always draw attention to ways in which economies may be effected, but I do not think that it examines more than a fraction of the number of the Departments or of their expenditure. That is my impression, without having been a Member of the Committee.

Let me move to another issue. I think there is a case for allowing the £ to find its own value. Most people like referring to the system of convertibility, but they usually only succeed in landing themselves in a certain amount of trouble. The right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), who is a former Chancellor of the Exchequer and an economist, ought to know better, but he said, "Look what happened in 1947." Well, he told us in advance that he had made all the arrangements, and people who owned sterling in London were allowed to use that sterling to buy dollars. But that was not letting the £ go free. It was keeping the £ fixed in relation to the dollar.

If, on the other hand, the position moves in the other direction the exchange value of the £ rises. There cannot be an adverse balance of payments if there is a free £; it is just impossible. If the right hon. Gentleman would like to study this a little more exhaustively and read a speech made on 18th August, 1919, by the then Prime Minister, Mr. Lloyd George, in the course of which he announced that from the following morning the artificial support of the £ against the dollar was to come to an end, he would find—

Mr. Stokes

The hon. Gentleman is making the point that the £ should be set free now, I take it.

Sir H. Williams

Certainly.

Mr. Stokes

Would he then say that if the £ were set free now it would have nothing but a stimulating effect on our gold and dollar reserves? Is that what he is trying to say?

Sir H. Williams

I did not say anything of the kind. All I say is that if the £ is free it will alter the situation so as automatically to ensure that we do not have an adverse balance of payments. That is all I am saying, and it is perfectly obvious to those who have studied it. The right hon. Gentleman should take the trouble to read that speech made by a Liberal, not by me, on 18th August, 1919. It is most interesting, and describes what we are now talking about. We then had full employment, and within six months it had cured the adverse balance of payments.

Mr. A. Allen

We had unemployment then.

Sir H. Williams

Not at that particular time, no. I am talking about 1919.

Mr. Allen

I am talking about 1920.

Sir H. Williams

All right. I am talking about 1919, and the unemployment in 1920 did not come till the end of that year. I remember all these things so well. The adverse balance of payments was cured. The next time was on 21st September, 1931, when the events of the mutiny at Invergordon made it impossible for us to hold the gold standard and the £ again had to find its own level. Within a not very long period of time—true with the assistance of certain protective duties as well—the adverse balance of payments was corrected.

That same method has been used twice, once during a period of full employment and once during a period of maximum unemployment, and a method like that is well worth while looking at. Many hon. Members talk about allowing the £ to find its own level as an objective to be achieved. To me it is a method, not an objective, and a method which we ought to use at the earliest possible moment.

I have taken up perhaps more than my fair share of time, and I know that a lot of other hon. Members want to speak. But as I did not get a chance on this occasion last year. I am glad that I have been able to spread myself a little tonight. As I and others have indicated, it is vital that we should reduce direct taxation, because unless we do large numbers of what are today called prosperous firms will become completely bankrupt in a measurable period of years through lack of working capital and lack of the ability to replace plant. If something which costs £100 is depreciated down to nothing, a firm has nominally got £100 on its book to buy new plant which costs £300; it is out of pocket to the extent of £200 because of the present system of taxation, and that cannot go on.

There are many examples of local waste, one of which I came across the other day when I was in Bolton on a business visit. I was handed a copy of the local paper describing a meeting of the local council on 5th November, at which they were considering the cost of maintaining children in a proposed residential nursery. I was told that these were mainly what could be called unwanted children. There are 30 of them to be looked after by a staff of 23, and the cost a week will be £9 5s. 6d.

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

Per child?

Sir H. Williams

Yes, per child. The hon. Member for Sunderland, South, who has now left, made a very interesting speech in which he referred to the fact that some of his constituents, those not on piece work, were at the present time getting a basic wage of about £6 a week in the engineering industry, not only because of short-time working but because of shortages of steel. I say that it is absolutely monstrous to spend £9 5s. 6d. a week to maintain a child in a residential school. They also gave comparisons with what happens elsewhere. In Birmingham the costs were £7 9s. 8d., in Liverpool £8 18s., Manchester £9 12s. 6d., London £9 14s. 3d., Sheffield £9 12s. 9d. and Croydon £6 10s. 7d. Those are the ones mentioned, not a selection which I have made. They are all too high. It is monstrous that one child should cost more to maintain than many whole families.

Mr. Frederick Peart (Workington)

Would the hon. Gentleman say that about the child at Eton or Harrow?

Sir H. Williams

That is a silly kind of prejudice.

Mr. Peart

It is not silly.

Sir H. Williams

Of course it is silly.

Mr. Peart

It is quite true.

Sir H. Williams

Why should it cost more to maintain one child under school age in a residential hostel in Bolton than to educate a boy at Eton? Put it that way. Eton is supposed to be posh, snobbish and expensive, and everything else, but they do not have 23 staff to look after 30 students at Eton—nothing like it. The thing is gross waste and extravagance. This is typical of what is happening, and that is why I have quoted it. I was given the local paper and asked by friends to give publicity to the matter. It is a good example of the waste and extravagance which must be eliminated from national and local expenditure if this country is to survive.

7.16 p.m.

Mr. Tom Brown (Ince)

I know the hon. Member for Croydon, East (Sir H. Williams) will forgive me if I do not follow him in his ramifications and meanderings into local administration, but I should like to reply to the point he made at the conclusion of his speech when he talked about the cost of nursery schools in Bolton and Sheffield. That matter is one for local administration, and the councils to which he referred are all Tory-controlled councils.

Sir H. Williams

Not Birmingham.

Mr. Brown

I am delighted that in the Gracious Speech reference is made to the fact that there is to be some improvement in the National Insurance (Industrial Injuries) Act. We have been waiting a long long time for improvement. I am profoundly disturbed about what is taking place in the mining industry at the moment, because within the last few weeks there have been signs of an upheaval. I hope that Government policy on the industrial side will prevent that upheaval from developing, because if there is a body of men in this country—and I am not speaking disparagingly of others—who is entitled to fair play and honest treatment it is the men in the mining industry, because they have responded to the call of the nation since 1947.

I hope that when this promised legislation comes before the House we shall not have the manifestation that we had when the Industrial Injuries Bill was being discussed in Standing Committee C, when we on this side attempted to bring about the improvements which we knew were essential in order, not only to give an injured workman something comparable with the wage he earned before his injury, but to give him something which would show him that he was being cared for by a Government who had praised him so often. I hope that there will not be that mean, parsimonious policy which hitherto has been pursued, and that when this Bill comes before the House it will contain within it generous treatment of the men who have played their part in the economic recovery of this nation.

I want to address myself to a section of the community which has not been mentioned except briefly. It would be idiocy on my part if I put forward a claim to understand high finance—restrictions on capital expenditure, and all that. But I do claim to know something of working-class conditions, and I claim this from a great deal of experience, that the conditions of a large section of the community are worse now than they were when the Tory Party came into power. I challenge hon. Members opposite to deny that.

I say that we have not played our part in looking after the chronic sick, the unemployed and the old-age pensioners. They are the people who are now bearing the full weight of the rising prices in the cost of living. The true test of the policy of any Government is to what extent that policy and its implications increase the human happiness of our people. That is the true test, and that is the test which I apply to it. When I examine what has been done and the effect that the increased cost of living has had upon the poorest sections of our nation, I say that they are infinitely worse off now than they were in 1950.

In the last Speech made by the late King, he concluded with these words: My Government will have regard to the special needs of the elderly. I take it that that was in reference to the old age pensioners. To some degree that was carried out by a small increase in the basic pension, to the extent of 2s. 6d. Furthermore, there was some improvement made in the National Assistance scales, and these improvements were welcomed by those who, due to their low economic position, had to seek assistance from the National Assistance Board, but, lo and behold, what do we find today? We find that despite the slight improvements to which I have referred, the sick. the unemployed and the old folks are in a worse economic position than they were 12 months ago.

These worsened economic conditions have been brought about, in the main, by the continuous rise in the cost of living, which is bearing hard upon the chronic sick, the unemployed and the old age pensioners. I am profoundly disturbed that there is no mention in the Speech from the Throne that the Government intend to give consideration to this very important human problem which affects so many of our old people in this country.

I know that from the benches opposite there will be arguments advanced and advice given that nobody in this country ought to stand in need of the ordinary necessities of life. Useful advice will be given that they can make application to the National Assistance Board. I grant that, but I want to say this: That there has been a change in many areas administered by the National Assistance Board officers within the last 12 months which has revealed itself in a parsimonious policy.

We had hoped that we should never see a return of the poor law system, but I am very much afraid that the old conception of the poor law is now coming back. Happily, this is so in only a very few areas. Even though it may be in only a few areas, the effect of the policy which the Government are now pursuing is intensifying the economic position of the poor people who have to seek assistance from that source. The hon. Member for Croydon, East was talking about hilarity at the beginning of his speech. This is too serious a matter not to be earnest about it.

Sir H. Williams

I was pointing out that the Chairman of the National Assistance Board was a former colleague of the hon. Gentleman.

Mr. Brown

The Chairman of the National Assistance Board is not administering in the local offices. It is the local offices to which I am referring. I want to give a startling case which shows the change of attitude and the change of policy which is now being pursued by the National Assistance Board officers in some areas. The "Manchester Guardian" carried a very big headline calling the attention of its readers to what National Assistance Board officers were doing. This is what it said:

"WIDOW GIVEN A SHILLING

SO STATE DEDUCT TWO

When told that a South Normanton, Derbyshire, widow, aged 82, had had her National Assistance Board pension reduced by 2s. because the Midland Miners Fatal Accident Relief Society had increased its benefit to her by 1s., representatives"—

and they were not our representatives— cried 'Shame'"— and well they might. Lieut.-Colonel Sir Robert E. Martin, presiding, said the society increased widows' allowances from 7s. 6d. a week to 8s. 6d. and in certain cases where widows received noncontributory pensions the National Assistance Board was reducing pensions by 2s. because of the Society's increase …. To my mind, and to the mind of any person who has a little humanity left in him, a policy such as that, which inflicts punishment on an old widow of 82 of 2s. when she is given 1s., is anti-social, anti-Christian and ought never to have been done. May I express—and I am serious about this, having dealt with a large number of cases—the hope that the publicity which has been given through the medium of the "Manchester Guardian"—and it is a reliable paper—will cause the area officer in this district and in other districts to hesitate before taking any similar action to the one I have quoted, which inflicts great economic hardship upon an old lady of 82.

Air Commodore A. V. Harvey (Macclesfield)

The hon. Gentleman said, I think, that it was Government policy. This policy applies to all areas. If it is not to be repeated again, it is not policy.

Mr. Brown

It is the policy pursued by the administrators now controlled or managed by the present Government.

Sir H. Williams

No.

Mr. Brown

The Government of the day is responsible to a very large degree for the administration of its Departments.

Sir H. Williams

No.

Mr. Brown

I say it is, and we will leave it at that. When the Government decided to slash the food subsidies we were told it would mean an increase of 1s. 6d. per week for every family in the country. Even if we agreed that the figure was right, and I challenge it, that increase bears very heavily upon the sick, the unemployed and the old age pensioners who were already at the rock bottom of economic standards.

What is the true position? The old age pensioners, the unemployed and the chronic sick do not understand when we talk to them about the cost of living having increased by one point or two points. They only understand what is happening when they go to the shop for their groceries and find that butter, sugar, cheese and bacon have all increased in price. What is the true position? This is of paramount importance, because it has a bearing upon the applications for wage increases which are so manifest today.

The Retail Prices Index, which measures changes in the cost of living, fell by one point between 15th July and 12th August, 1952, and a further point between 12th August and 16th September. The party opposite say that there has been a reduction in the cost of living. Is there anything in that statement? Let us look at the facts. All of us, no matter to which party we belong, welcomed the drop shown by the Retail Prices Index. It would be a good sign if it were borne out by the facts. What has caused that reduction? About August and September each year there tend to be seasonal falls in the prices of fruit and vegetables, when apples and potatoes, for example, go down sharply in price, and that is the reason for the fall in the index figure.

Mr. Angus Maude (Ealing, South)

That is true, but has the hon. Gentleman overlooked that between January and September this year the index rose four points, whereas between January and September last year it rose 11 points? The difference between four and 11 cannot be accounted for by seasonal changes.

Mr. Brown

The hon. Gentleman is dealing with a different period. I was trying to show the House that the reason for the fall in the cost of living was seasonal reductions. The "Daily Telegraph," which is by no means sympathetic to the Labour Party, reported on 21st October—that is not so very long ago: The Ministry of Labour announces on 20th October that the fall in the Retail Prices Index was due mainly to reductions in the prices of fruit and vegetables and other small charges. It is clear from that statement that the fall was only temporary, and that is what I am concerned about. It does not indicate any long-term reduction in the cost of living. That is where the hardship is being felt, and will be felt, for it will be further intensified in the next few months.

The cost-of-living index figure for 15th July, 1952, gives us a clearer idea of the long-term trend of prices. Here I am to a degree answering the interjection of the hon. Member for Ealing, South (Mr. Maude). Between 17th October, 1951, and 15th July, 1952, retail prices rose by 7 per cent., and food prices alone rose by 14 per cent. Thus, apart from the temporary seasonal fall in the prices of fruit and vegetables, the cost of living has continued to rise during the past 12 months. That is undeniable. From whatever angle we approach the question, the cost of living has increased during the last 12 months. Food prices have risen far more than any other prices—that is a significant feature—and these prices hit the chronic sick, the unemployed and the old age pensioners very hard.

In order to get them on the record, I propose to give the House the increases in price of various commodities since the subsidies were cut. Bread has risen by 1½d. a loaf, flour by 1¼d. a lb., milk by ½d. a pint, the average increase in the price of meat is 4d. a lb., tea has risen by 10d. a lb., and since 5th October butter has increased by 6d. per lb., cooking fats and lard by 2d. a lb., cheese by 10d. a lb., and sugar by 1d. a lb., and the average increase in the price of bacon has been 5d.

I challenge any hon. or right hon. Gentleman on either side of the House to say that he could maintain himself on the miserable pension, the miserable unemployment benefits or the miserable sickness benefits which now are paid under the National Insurance Scheme.

When he opened the debate, my right hon. Friend the Member for Lewisham, South (Mr. H. Morrison) said that he was concerned about lifting the morale of our people. The morale of our people in many industries is now degenerating because of the present Government's policy in relation to the economic conditions of the people. I urge the Ministry of National Insurance and the Treasury to give this matter very serious consideration, because the conditions of the old people, the chronic sick and the unemployed are worsening every day.

7.38 p.m.

Brigadier Ralph Rayner (Totnes)

The hon. Member for Ince (Mr. T. Brown) has warmly supported the Opposition Amendment which is meant, of course, to suggest that we are now worse off than we were when the Socialist Government were in power. My right hon. and hon. Friends have started to shoot it down, and I am sure that by tomorrow night the Amendment will be in fragments and we shall have the correct result. Unquestionably the Government have begun to put right a great many things since they have been in power.

However, I want to call attention to a weakness in our economic set-up which persists and grows. I am not an industrial or economic expert; I am merely a retired soldier, I do a bit of farming, I am connected with one or two small businesses, and I represent a large county division. I work very hard. Indeed, I imagine that when it comes to the point, most hon. Members do a 60-hour week. We are, therefore, entitled to speak about hard work, and I propose to speak about hard work this evening. When I was soldiering in India, I had a wonderful servant who, I remember, on one occasion I had to tick off. I asked him whether he had got any common sense and he replied gravely, "Sir, I am a good experienced servant, but common sense is the gift of God." Perhaps it is, and perhaps sometimes it is withheld from countries as well as from individuals, for nations are after all, only the sum of their nationals.

At the end of the Second World War, that exhausting war which translated us from a great creditor nation to a great debtor nation, common sense suggested that we should pull in our horns, economise vigorously, build up our reserves and restore our fortunes. Instead of that, we decided to complete the most luxurious Welfare State the world has seen.

Having done that, however, common sense suggested that to support it we should at least work harder than we had ever worked before; but no, we decided to introduce the five-day week. At one fell swoop we decided to write off 1,200 million working hours a year. A lot of us thought that that was a crazy thing to do, but if we accepted it, then the tenets of common sense suggested that our five-day week must be one of strong resolute effort by all sorts and conditions of men in industry. I am afraid that we have fallen down on that, too.

I suggest that we are working less hard than we worked before the war, and certainly less hard than some of those countries with whom we are competing. When I was in Berne the other day, I asked for an interview with a high executive. He said he was going to be out of town the next day but gave me an appointment at 7.30—in the morning, he added. I kept that appointment and I asked him whether he was always at his office at that hour. He said, "Oh, yes, most of us are, and it shocks us when we go over to London to find that the people we want to get hold of are not available for appointment until 10 o'clock, that is, if they have not gone off for a long weekend. You Britishers will never save yourselves at that rate. If the bosses do not work hard, neither will the men." It was not very nice to hear that home truth from a foreigner, but I am afraid there is a great deal of truth in it.

A great many of our bosses work extremely hard, no doubt, but a great number of them do not work hard enough. They do not make any more money for harder work at the present rate of taxation, and they do not do it. A good industry or a good firm is just like a good regiment or a good ship. If the chaps at the top do not set the example, then the rank and file do not "do their stuff" as they should.

We have heard a great deal about increase in production. For a long time now I have tried to work out what is the real increase in production in this country over a period of years. It is almost impossible to work it out, but I would suggest, as the Chancellor did during the last economic debate, that it is not enough. We have increased our production enormously since the war, of course, but we have spent astronomical sums on re-equipping our industry, and we have had full employment and a great increase in population. Our productivity should be very much higher than it is today.

"Productivity" is a high falutin' word, which is very popular nowadays, but I feel that our ancestors would have translated it into terms of hard work and would have put far less emphasis on the question of bigger and better machinery. I agree entirely with the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison) that in production we must have an increase by dramatic figures. And we are not going to have it unless we work a good deal harder. I am dealing now with the basic five-day week which is fairly general throughout British industry.

Mr. A. C. Manuel (Central Ayrshire)

I do not think the hon. and gallant Gentleman's picture is quite true. While there was an agreement for a five-day week, he will recognise that the trade unions and the workers in the key industries voluntarily worked Saturday shifts and long hours of overtime to push the productive figures to what we have had in recent years.

Brigadier Rayner

That is perfectly true, and I have got the Ministry of Labour Gazette figures here, but I am referring to the five-day week, because that is the main question of importance to this country. We have to be able to sell our exports, and when overtime is worked, then those overtime rates go on to our exports and make them more difficult to place in the markets of the world.

Mr. Manuel

In America?

Brigadier Rayner

I am dealing with other countries which have not adopted the five-day week.

Mr. Manuel

That is most interesting, but taking America, for instance, does not the hon. and gallant Gentleman agree that like for like wage rates there are higher than ours.

Brigadier Rayner

The last thing I would compare is our production with that of America. It is much too depressing an exercise, for they produce practically double per head per working hour that we do.

Mr. Arthur Palmer (Cleveland)

In a shorter working week.

Brigadier Rayner

Yes, but I must be allowed to deal with the five-day basic week. I repeat that I do not want to refer to overtime because that is a different proposition altogether. I am merely suggesting that we must work better during the five-day week than we are doing at the present time. The effectiveness of the five-day week has been definitely reduced by several unfortunate influences. The first one I should like to refer to is restrictive practices. In this House we know all about them, and most of us regret them, though we know that a lot of them were justified in the first place. Some of them perhaps may be justified today but in the aggregate they are having an enormous effect on our production and on the five-day week.

The hon. Member for Ince referred to the "Manchester Guardian" as being a dependable paper. I should like to refer to the "Manchester Guardian" myself. For two or three months at the beginning of this year that paper sent an observer to the docks to see how work was being carried out and how much time was being wasted. The "Guardian" published reports from their observer from time to time, and, as they were never challenged by Members of Parliament, trade union headquarters or anyone else, I take it, those reports were accurate. I will read from one report which was printed on 18th March last in the "Manchester Guardian": A small mobile crane is plying between the dock-side and a corner of a storage shed. At the dock-side a bale is hooked to the crane by two dockers, the crane driver then lifts his load clear of the quay and trundles it across to the storage shed. Here, however, the two men whose job it is to unhook the bale are missing; they have gone to the canteen for a cup of tea. The crane driver lowers his bale to the ground and then sits back at his ease. By paying out another yard of cable he could disengage his hook from the carrying sling and be free to return for another bale, but he does nothing except sit and wait for the return of the missing men. He waits five minutes, ten minutes, a quarter of an hour, and with him wait a whole gang of dockers and their mechanical appliances. Now that sort of thing is going on, different in detail but fundamentally the same, all over the country at the present time and their cumulative effect on the five-day week is anybody's business.

Mr. Joseph T. Price (Westhoughton)

Will the hon. and gallant Member allow me to intervene?

Brigadier Rayner

Let me finish what I am saying at the moment. All over the country at present the spirit of a great many men—there are thousands of exceptions—is to take advantage of these restrictive practices and in the present state of our economy and the present moment in our history we just cannot afford it.

Mr. J. T. Price

I am grateful to the hon. Member for giving way. I am following him as well as I can because, like him, I believe in the principle of an honest day's work for an honest day's pay and of not wasting our labour force where we can make the fullest use of it. But will the hon. and gallant Member explain to the House what contribution fox-hunting makes to the national economy, because I understand he is very interested in fox-hunting?

Brigadier Rayner

I certainly will not because I am trying to stick to my last and make a straightforward speech. Actually I have not had time to fox hunt in the last three years—[An HON. MEMBER: "What a sacrifice"]. Yes, a very considerable sacrifice.

Another factor which is eating away the value of our five-day week is the wasting of time on the job particularly over tea. Tea is a major blessing which brings comfort to chaps on the icy deck of a ship on the North Sea, which soothes the nerves of soldiers in the heat of battle and which refreshes most of us in the course of our morning's work. The last man we would deny it is the man working with his hands looking after a machine, laying a cable or building a house or anything of that sort; but tea should be taken round by a boy and drunk on the job, as it used to be before the war.

I have visited a great many factories in the last year. There was one large one near London which some hon. Members may have visited and there the managing director compared for me what he called his work graph as it is now with what it was before the war. He showed me that before the war when his men arrived in the morning the graph went right up and stayed level until it came down sharply to the dinner hour and so on. Now when they arrive, he said, they take very much longer to get to work and the graph goes up slowly. By the time it gets to its peak it begins to drop towards the first tea interval, and that goes on all day. The amount of time wasted on the job, he said, getting ready for the tea interval, having the tea interval and then getting busy again after it, was a very serious loss in the day's work.

The hon. Member for Ealing, North (Mr. J. Hudson), who inveighs so eloquently against the evils of drink, might also turn his attention to tea, because there is no doubt that it is causing a very serious loss to our national effort all over our country. It is a symptom of our approach to hard work. I think we are crazy if we think that in the hard world of today we can carry a massive Welfare State plus a five-day week plus holidays with pay and yet have all these interferences with the job in hand.

The Germans who are working desperately hard do not have tea breaks—[An HON. MEMBER: "Coffee."]—oh, yes, but they have coffee on the job. The Belgians do not have tea breaks or coffee breaks. The Americans do not have tea breaks or coffee breaks. Yet all these countries are beginning to shoulder our efforts out of the markets of the world. We just cannot afford these things and it is just as well to face the fact.

Mr. E. G. Gooch (Norfolk, North)

The hon. and gallant Member has talked quite a lot about the five-day week. Will he agree that there is one industry in this country which is not working a five-day week and will he give them credit?

Brigadier Rayner

Yes, I will give credit to the industry not working a basic five-day week to which my hon. Friend refers of course, I will give credit. When it comes to the point, our British workers are the best fellows in the world as long as they are well led. I should know better than most because I am fairly old and have served in two wars with them. I am merely saying that we have to make a better effort as regards the amount of work we do when on the job.

Mr. Gooch

Farm workers do not work a five-day week.

Brigadier Rayner

The other day the Ministry of National Insurance referred to the fact that from the year after next the National Insurance Fund will run into enormous debt. That surely is the writing on the wall. We cannot support this simply enormous edifice we have erected. We shall expect, of course, a sound lead from the present Government, but we back-benchers could also give a lead. After all, we are leaders in our own constituencies, or should be, and we should tell our rank and file that we simply cannot continue to do less work than other countries yet live better than they do, that we are now to get the standard of living we deserve and no more and that as we are 50 million people on a little island with very few natural resources we are in the greatest danger if we do not put our best foot forward. That, I hope, will gradually get home.

There is a lot of talk about the new Elizabethan age but whether it will be implemented will depend on all ranks in industry. The British industrialist and merchant, if given half a chance, will wipe the floor with any other industrialist in the world. The British working man, if given a good lead, will certainly beat any other working man in the world, and we have to give him that lead.

7.59 p.m.

Mr. Percy Daines (East Ham, North)

I propose to talk about one section of the King's Speech last year, where reference was made about the intention of His late Majesty's Government to deal with the question of monopolies. The wording in the King's Speech was: A Measure will be laid before you for strengthening and widening the activities of the Monopolies Commission."—[OFFICIAL REPORT, 6th November, 1951; Vol. 493, c. 53.] The right hon. Gentleman the President of the Board of Trade, replying to the Leader of the Opposition and also to my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), used these words: The right hon. Gentleman mentioned the omission of the Monopolies Bill. I share very much his regret that it was impossible to accommodate the Bill in the programme for this year. Then comes this rather significant passage: It was, after all, my child, and I did not like to be parted from it."—[OFFICIAL REPORT. 5th November, 1952; Vol. 507. c. 167.] I suppose that when we come to the end of the story of this Parliament the right hon. Gentleman will be rather like the hero we read about in the Victorian novel who pathetically pleads, "To think that my child died and never even called me father."

I propose to re-state some of the essential facts that we face in relation to the economy of this country. There is an awful lot of politically dishonest nonsense talked by many Members on the other side of the House, particularly at election times, about free enterprise and competition. The plain fact is, of course, that competition in many industries is finished and will not return. We have need, of course, for efficient production, but it is quite misleading to try and imagine that as a result of legislative action, or even by action by the Monopolies Commission, we can make an industry compete when it has lost the desire to do so and shows no intention of going into competition.

I remember speeches made from the benches on the other side of the House by Ministers of my own party who talked about getting the free winds of competition to blow again in the private enterprise sector. It is a form of illusion for which there is no basis in the hard economic facts that we face. I go further. I very much doubt whether, if we did break up some of the large industries in which monopoly is a fact, the result would be that the final commodity produced would be cheaper and more efficiently produced. We are in an era of economic production in which large-scale operation is necessary and in which we can only get an efficient research organisation behind an industry if operation is on the largest possible scale.

I shall try to state my next arguments with the greatest care, even if I do not succeed. A distinct danger which we face today is that—particularly where an industry becomes vital for a period to the whole economy of the country—we reach a point where the normal resistance to wage demands do not operate—a period in which, because of the monopoly position of the industry, the employing side can afford to gang up with the trade union side at the expense of the whole community.

It is not merely a question that an industry may become financially successful. We have to consider the whole of the implications which we face if one industry takes more than its share of the national product, which in turn will be reflected in a commitment for wage increases that will be levied on the whole field of production so that the whole economy is affected. However much hon. Members opposite may believe in private enterprise, and however much they may wish to get back to it, the simple fact is that in the modern world the State is the economic unit, and if one section of our industry is inefficient, then the whole is affected. These, indeed, are hard facts which we have to face. In industry, many branches in the private sector do not wish to compete and do not intend to organise themselves so that they can compete. The valuable debate on the Adjournment last Friday—at which I was not present, but which I read with great care—is an illustration of what I wish to say. Let us take the actual case which was then raised.

The Minister of Works is apparently prepared to put into operation a stipulation that a pledge must be given by a contractor that he has not entered into a price arrangement and that he has not passed on information about his tender. The debate disclosed what is obvious in many similar cases, namely that behind these organisations are professional people whose function it is to organise restrictive rings. They are positive powers; it is their profession. There are, indeed, hon. Members in this House who follow the profession of deliberately organising restrictive-practice rings as a means of earning their own income.

Suppose the Minister of Works makes the stipulation operative; suppose that he even goes to the Monopolies Commission and they take action. Is there anyone in this Chamber who has really had experience with local government, or a business where contracts are put out to tender, who would not immediately say that, whatever pledge one tried to operate, whatever piece of legislation we tried to put into operation, the grape vine would work and exactly the same kind of thing would again operate?

The inadequacy of our approach to the whole question of monopolies and restrictive practices lies in the fact that we have never been quite sure about the size of the problem or of what we should do about the problem itself, and we have rather put ourselves in the position—I think the previous debate shows it—of thinking that by the use of the stick of legislation and by use of the stick of publicity we can compel the return of competition. In fact, it is perfectly clear that it cannot come back again in that way.

I believe it to be the function of the President of the Board of Trade and of his Department to aim at the maximum economic health for the nation. The nation is the unit. I do not believe that aim can be attained solely by publicity and restrictive legislation. So on the one side we have this tendency, which I hold as inevitable in the development of our economy, of the creation of restrictive practices by professional men who organise in order to make them effective; and on the other side we have, apart from this House and the brief opportunities it has of discussing the matter, the Co-operative movement, which is the only organised force against the danger to which I have referred.

I believe that we have now arrived at the time, nearly four years after the passing of the Monopolies Act, when we can seriously consider just where that Measure has taken us. Any reasonable study shows that that Act is grossly inadequate, as indeed was indicated in the late King's Speech to which I have alluded. It is inadequate for a number of reasons. Piecemeal action is quite inadequate. Nevertheless, greatly as I appreciate the work that has been done, much as I contend that the inadequacy of legislation makes it impossible for the Monopolies Commission to do muck work, we do nevertheless find in the Commission's reports distinctive tendencies in industry or, to be more explicit, definite practices in industry that can be legislated against.

First of all, the Commissions' reports show that it was common to three trades to indulge in exclusive dealing and the practice of trade boycott. Another one, which is perfectly clear in three cases out of the six on which we have had reports, was the bad practice of collective enforcement of resale price maintenance. This is clearly put by the Commission, and I say definitely it is time that the President of the Board of Trade indicated to us what action he intends to take. It seems to me that the essentials of monopoly control is (a) to know the form and extent of monopoly and restrictive practices; (b) to determine which practices result in effects harmful to the public interest; (c) to remedy these defects and to prevent their re-emergence in the future.

Another fundamental weakness of the 1948 Act is that the power to initiate an inquiry lies solely with the President of the Board of Trade, and not with the Commission. I think the House will appreciate how inadequate are our weapons for combating monopolistic practices and restrictive practices when we look at the total expenditure we have budgeted for in 1951–52. The total expenditure budgeted for for the Monopolies Commission was £66,300. I ask the House to compare this with the vast amount of business that should be surveyed. The whole thing is obviously totally inadequate and cannot possibly put the Commission in a position where it can do its job.

Mr. Charles Fletcher-Cooke (Darwen)

I understood from the opening remarks of the hon. Member that he was of the impression that no amount of legislation or administration would alter this inevitable tendency in private industry to become monopolistic; that there was nothing we can do about it—

Mr. Daines

No.

Mr. Fletcher-Cooke

I beg the hon. Member's pardon. I say that proper legislation can create conditions of competition in the private sector.

Mr. Daines

No. If the hon. Member will wait, I shall come to that. The hon. Member will find, when he has my speech complete, that it is a much more rounded job than the conclusion to which he has already jumped.

The point I make is, first of all, the necessity to get an adequate survey of what is actually happening. I shall come to what I think are the proper solutions, but let me clear the point made by the hon. Member. The point I was making was that once industry has got into a monopoly form and a restrictive practice organisation operates, I believe, and I repeat, that legislation cannot compel it again to compete if it does not wish to. I say no more than that.

Looking back over the four years' experience which we have had, I seriously question whether publicity of restrictive practices has all the advantages that were claimed for it by my right hon. Friend the Member for Huyton (Mr. Wilson), who was then President of the Board of Trade. There may be exceptions, but I stand to be convinced. I believe that the 1948 Act suffers from three main defects. It does not provide for the speedy appraisal of the general form—I repeat the general form—of monopolistic and restrictive practices; (b) its remedial action is limited to one trade at a time; (c) its resources and power are quite incapable of comprehending the full task. and its judgments are bound to be limited to its experiences.

That, of course, is quite clearly shown if we study the report on dental goods. There we find—and I had some sympathy at the time with the minority report—that the minority report calls attention to the fact that this House was invited to pass a resolution, which it eventually did, condemning two forms of restrictive practices in the dental goods profession which were quite common in other industries. I hold that there is an immediate need for a Bill to deal with practices which are general and shown to be harmful. The first is exclusive dealing and trade boycott; (b) collective enforcement of resale price maintenance and (c)—and I do not put this as a minor matter—the pernicious practice by trade organisations of withholding supplies from Co-operative societies on the ground of dividend payment.

On the general approach to the practice of monopolies which are operating in this country, we should then move on a much wider front. I think it absolutely imperative, if we are really to create a proper state of health in our economy, that we should first have—as they have in Sweden, where it is working extremely effectively—a registration of all cartels and similar agreements. I have more than a sneaking feeling that what is causing the trouble, what is making so inadequate our efforts to tackle this problem, is the inner workings of the Board of Trade itself.

May I say, in passing, that I am not making a particularly party speech tonight, because there are some right hon. and hon. Members on the other side of the House who feel just as sincerely and as deeply as do I and many of my hon. Friends on this question. What is holding us back, I believe, are sections of the Board of Trade who think they are technically competent to have a complete survey of the whole economy of the country. I believe they are fooling themselves. In previous debates on this subject, I used the phrase that behind the facade we know there is an economic underworld which operates without regard to the law, or with very little appreciation of it. I do not know whether I am overstating the case, but if ever the Communist Party of this country wanted a really good model for an underground organisation, they could turn to the type of practices I am dealing with.

I believe the Swedish experiment has shown its value. I believe that the Commission, if it is to tackle this job, has to be reconstructed. After all, we have had four year's experience. I do not want to repeat what has been said in previous debates, but we should consider the statements made by my hon. Friend the hon. Member for Gloucestershire, South (Mr. Crosland) and one or two other hon. Members. Up to the moment we have about six reports from the Commission. At the present rate of progress, with the best will in the world it would be almost impossible to foresee a time when we can get anything like adequate coverage to survey the monopoly practices that undoubtedly occur.

Therefore, I suggest that the Commission should be reconstituted and split in its actual function, but first of all we must know what is actually the size of the problem and what it is. The first necessity is a Commission properly equipped for the purpose of fact finding. Second, that that should be supplemented by an advisory council—I use that word for want of a better—which would be quasi-judicial in character and could make immediate recommendations to this House through the President of the Board of Trade.

I suppose it is rather unusual to make a purely detailed speech in this type of debate. I would ask hon. Members to recall from their own experiences how much easier it is to hit all round the wicket and indulge in a good piece of political slanging

I put my views to the House tonight because I am deeply convinced that if we are to get our economy on a sound basis we must depart from generalisations and worrying about the workers' cups of tea, as the previous speaker did. We must get down to the essential facts of our economic structure. We are all in this together. I am as strongly opposed to the policy of hon. Gentlemen opposite as is anybody on this side of the House; but let this be perfectly plain. We shall all sink together or swim together.

I repeat what I said at the start. However much we may fool ourselves, the fact remains that the State is the economic unit today. If one section gets too much, then another section will get too little. I want to see an efficient and expanding economy. I believe that we can only ignore the monopolies and restrictive practices which operate in this country at our peril, and ultimately at our great loss.

8.21 p.m.

Air Commodore A. V. Harvey (Macclesfield)

We have listened to the hon. Member for East Ham, North (Mr. Daines) with some interest. I agree with much of what he said about the Monopolies Commission. I hope that that Commission will be kept active and will apply its energies to the nationalised industries as well as to those of free enterprise. I was especially pleased by the hon. Member's closing remarks to the effect that we are all in this economic crisis together. That is true. It has been the theme of most of the speeches made today.

The right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison) opened the debate without very much conviction. He had not got the old fire that he had in him four or five years ago when he used to twit us from the Treasury Bench that if the Opposition wanted any help he would be very pleased to give it to them. I well remember how pleased he was to twit the Opposition in those days, but today the right hon. Gentleman was definitely lame in his support of this Amendment. One can well imagine what went on behind the scenes when this Amendment was framed, though of course we do not know.

The Leader of the Opposition complained last week that there was not very much in the Gracious Speech. What would have been said if there had been a great deal of legislation in the Gracious Speech? It would have been said that far too much legislation was being introduced at a time when the country was going through serious difficulties. That is exactly what has been wrong during the last six years. The country has had far too much legislation. If we had had less of it and if what we had had had been good legislation, then the country might have digested it and put the Measures into effect.

There is no short cut to prosperity by means of Acts of Parliament and the introduction of Bills into this House. Such Measures are meaningless, except that they create hindrance to trade as a whole. The fact is that we want a breather from legislation so that we can get on with the things that are really important in the country.

What the Conservative Party have done during their 12 months in office is to save the country from bankruptcy. I do not put it any higher than that. The country was almost bankrupt when we came into power. The situation has improved. We are still alive, but only just. There is a tremendous amount to be done. I wonder what would have happened if the Labour Party had continued in power and continued the policy which they were pursuing. I wonder where their policy would have landed us by now. I fear that the worst would have happened, unless there had been a radical change in their outlook and methods.

They had no real policy to deal with our economic difficulties. Their policy during the five previous years was to pass steam-roller legislation mainly dealing with the nationalisation of industries. The right hon. Gentleman the Member for Lewisham, South said something today to the effect that we were interfering with one of the air Corporations. We are not interfering very much with B.E.A.C. or B.O.A.C. We might have done much more. Today the morning papers say that B.E.A.C. will show a loss of £1,500,000 in the current year. I fully understand the difficulties, but this Government are doing very little to interfere with the Corporation. All we are doing is to try to give the smaller operators a chance to show themselves, to earn currency and to bring trade to this country.

My view is that the Labour Government ran away from their obligations a year ago. I often wonder why they did not stay in power through the winter to see the country through the difficulties which were obvious at that time. Even though they had a very small majority, they claimed they had the support of the workers and the trade unions—

Mr. Palmer

Surely the hon. and gallant Gentleman must agree that at that time the Opposition were harrying the Government night and day?

Air Commodore Harvey

My hon. Friend the Member for Aberdeenshire, East (Mr. Boothby), in his television role, talked about harrying the Government. Hon. Gentlemen opposite must not be too sensitive. They could quite well have continued in office for another six months if they had wanted to.

The fact is that the right hon. Gentleman the Leader of the Opposition saw what was happening, and so did most of his hon. Friends. It was obvious that a rapid deterioration was taking place. There were signs of unemployment last autumn, and at the time of the General Election it had arrived. I am sure that the right hon. Gentleman the Member for Blyth (Mr. Robens) will admit that it had arrived—certainly in some parts of the textile industry.

I am sure that all hon. Members are gravely concerned that unemployment and short-time should be kept to the absolute minimum. We all want to put forward constructive ideas to minimise any growth of the figure. The latest figure for October was 397,900, which is equal to 1.9 per cent. of the working population. The right hon. Gentleman the Member for Blyth, an ex-Cabinet Minister, said in this House on 3rd March: In themselves, those figures are not alarming when they are compared with the 23½ million people employed in this country. The point which is alarming—and I should be glad if the right hon. and learned Gentleman would confirm or deny this, because I am not in the position of having the advice of his experts—is that, in my view, before the end of the year the unemployment figure will reach one million. There will have to be very vigorous action on the part of the Government to prevent it, and events will show whether my view about that is right."—[OFFICIAL REPORT, 3rd March, 1952; Vol. 497, c. 43.] I look upon the right hon. Gentleman as a friend. We travel together to our adjacent constituencies. I have regard for his ability, but I thought at the time that that was a most alarming statement to make, even if he thought it to be true.

Nothing could be more demoralising to the workers than if half a million people in excess of those at present unemployed thought that they would be out of work. Even allowing for the seasonal variation in unemployment, we shall be most unfortunate if the figure reaches half that suggested by the right hon. Gentleman in March. I hope that the right hon. Gentleman is pleased that his estimate is so far wrong. The estimate of unemployed in the 1948 Economic Survey, Command 7344, page 44, was 450,000. This prediction, like many others, was proved to be false. It is quite impossible to measure what unemployment there will be in this country to 50,000 or 100,000. I do not think any Government, of whatever party, can measure it as near as that.

But I am concerned with the Opposition's Amendment. It goes back to something which happened in the years between the wars. Only a very small percentage of hon. Members on both sides of the House were in the House of Commons during those years. I believe that today there is appreciation among everyone that we must try to adjust our industries and our methods to present world conditions. If we do not do that we shall fail very badly.

As my hon. Friend the Member for Croydon, East (Sir H. Williams) has asked, What about those years, 1929–31? It is all very well to be castigated by hon. Members opposite for what happened in those miserable years when this party was not in power during that period, and certainly not during the worst part of it. It was only during the period that followed, when the British Empire, or the Commonwealth as it is now called, got together that we began to regain our hold by means of Imperial Preference.

The textiles and the clothing industries are the industries that have suffered most from unemployment this year. In fact, unemployment, this year if we exclude textiles and clothing, though higher than in 1951, was actually 4,000 less than in 1950. The right hon. Gentleman the Member for Lewisham, South said today that lower production followed the Chancellor's Budget this year. That is really not true at all. Lower production took place last autumn and in the first three months of this year, certainly in the textile industry. Before the election last year, in my own constituency we had an average of 50 unemployed in the borough of Macclesfield. During the election we had 450 unemployed and there were queues outside the Employment Exchanges, both in Macclesfield and in Congleton. In fact, on 23rd November, within a few days of Parliament being opened, I raised the matter on the Adjournment, when I dealt with textiles and the difficulties of that industry. The hon. Member for Leek (Mr. Harold Davies) supported me.

Nobody can say that in a fortnight of power this Government brought about unemployment in the textile industry. It is quite wrong for the right hon. Gentleman the Member for Lewisham, South to give the impression that all these troubles started after the Chancellor's speech. It is not true. A recession was taking place last year, and it got gradually worse. No Government could have done more to stem it than this Government has done in the intervening period.

Fortunately, conditions are rapidly improving in the textile trade. Part of the improvement is due to the printing of fabrics for scarves and so on for the Coronation. The hon. Member for Bolton, West (Mr. Holt) seems amused. Is he amused that there is an improvement?

Mr. Arthur Holt (Bolton, West)

I am amused at the suggestion that it is due to the Coronation. That is not my experience in Manchester.

Air Commodore Harvey

I speak only of conditions in the rayon and silk industries, where there has been a definite improvement. Export orders are coming in, though not in great numbers yet, and we hope for a further improvement. The bulk of the improvement is due to Coronation orders. They will take us along for six months, and we hope that other orders will follow, preferably from overseas.

At present the mills are short of operators. That is mainly because those who have been out of work have drifted into other industries, largely to the armament industry. I do not think that the textile industry as a whole could continue to maintain the output of the last three or four years, and if unemployed workers find employment in other industries that is all to the good.

Grave difficulties are facing our exporters as a whole, quite apart from those in the textile industry, but this situation has little to do with Government policy. The Government have to provide conditions in which the competitive power of industry can come to the fore. There is no black magic on any Front Bench that can put these things right. It must be done by the men and the trade unions, in the works and factories. We should be encouraging them and not looking at the worst side and creating a great wave of depression among the workers of Britain.

There are encouraging features, and we should give all the praise that is due. There are encouraging features in the coal industry, and even in the shipping industry. There is a shortage of steel, but nevertheless orders in the shipping industry are plentiful. Even the steel trade is expanding, and in the aircraft industry, of which I have some knowledge, there are vast opportunities. If the Government encouraged this industry and gave the right priorities, there is no reason at all why exports should not go up to £120 million a year in the next four or five years.

The right hon. Member for Lewisham, South referred to the content of the exports. There is a case in point. If we make an aircraft and sell it abroad, 10 times the amount of labour goes into the same kind of material as opposed to the motor-car industry.

Mr. F. Beswick (Uxbridge)

With that in mind—and I agree absolutely with what the hon. and gallant Gentleman says—does he think his own Government are pursuing the right policy in allowing designers and engineers to make motor cars for the home market?

Air Commodore Harvey

There is obviously a cleavage on the other side of the House, because the hon. Lady the Member for Coventry, South (Miss Burton) said—

Mr. Beswick

I asked the hon. and gallant Gentleman whether he thought his Government were pursuing the right policy.

Air Commodore Harvey

I will answer that in a moment. A great industry like the motor car industry cannot be turned upside down in a matter of months. If there is to be an alteration or a reduction, it has to be gradual, and if motor car factories are to turn over to making aircraft or components for export, that is the way it ought to be done.

I believe this Government is doing something in that direction. We heard the other day of a large order coming from Brazil for Meteor aircraft. What could be better for this country than to export aircraft to Brazil—provided they pay for them, and in this case we are going to be paid £5½ million. There are fine opportunities all over the world for such sales to take place, provided we can make the goods. We must give the factories all the raw materials required and every facility to enable them to expand their factories.

It goes much further than that. Britain can only live, provided we make goods which are competitive and which the world requires. We have lived in this country for 50 years by our brains and our knowledge. We have got to maintain the position of being four or five years ahead of any other nation, including the United States—and in many industries we are four or five years ahead of the United States. The reason is that we give a better technical education than the United States. They have many more students going in for technology and receiving technical education than in this country, but the results are far better in Britain, and the Americans know it. I am often asked how we achieve it.

I say to the Government: encourage a greater section of industry by giving reliefs from taxation, and get busy in giving this higher technical education, the results of which will show themselves in a few years right through industry as a whole. By doing that, in a few years' time we may well be selling goods which are comparatively easy to make and which will take the place of textiles and other industries.

It is my view that it was unfortunate that all the initial allowances given to industry disappeared overnight. I agree that when the country is in a financial crisis, for perhaps a year or 18 months we have to live on our fat for the time being. But to carry that process too far is highly dangerous. Industry has got to be constantly improved. Its equipment has got to be continually replaced. By doing that, we hand on orders to machine tool factories and we produce goods at cheaper prices which are competitive in the rest of the world. If we have not got the money to buy the machine tools, it cannot be done. But I hope the Chancellor will at the earliest opportunity try to give relief to industry, whether in the form of initial allowances or reduced taxation. Something has got to be done.

Do let us remember that the great bulk of industry—engineering, at any rate—consists of very small businesses employing 20, 30, 40, 50, or under 100 men. In Britain the small businesses, given a chance to grow, will make a valuable contribution. At the moment they have no chance. What chance have they to grow and improve their conditions? None whatsoever. Taxation is steadily killing industry and will continue to do so.

Mr. Beswick

Could the hon and gallant Gentleman say what is the effect of the 4 per cent. Bank rate?

Air Commodore Harvey

Of course that is a difficulty, but, given reliefs in other ways, by initial allowances and so on, they will be enabled to achieve what they want—that is; better equipment in the works. There is no doubt that the buyers' market is going to continue. It will be with us for some time, unless there is another extension of the Korean war, which we all pray will not happen.

Industry has to face up to the fact that it is going to need every ounce of energy on the part of managements, trade unions and workers to pull through. Do not let us forget that countries with which the Labour Government did not have to concern themselves—Japan and Germany—are now just beginning to get into their stride. I believe that some German engineering firms are even being subsidised in connection with their exports to South America. That shows what we are up against. I hope that definite steps will be taken to help our own trade.

There has been a decline in exports to the sterling area. During the high inflationary period Australia had a spending spree and spent twice as much money as she earned. During the same period Malaya was selling rubber at 5s. a lb. Today the price is under 2s. Tin was £1,400 a ton; today it is £900 a ton. Those countries, like ourselves, now have to live within their means. I pin my hopes on the Conference of Commonwealth Prime Ministers which is to take place in the immediate future. I want to see the economy of Britain knitted into the economy of the Commonwealth and the Empire. If the Americans, with their 48 States, can trade among themselves, why cannot we? We can fly in a matter of hours to any part of the British Empire in order to trade among ourselves.

I am concerned about the General Agreement on Tariffs and Trade. It was pushed through at a time when there was a sellers' market and when any disadvantages which the scheme might have were not apparent. But they are quite apparent today, and I should like to see a revision of the "no new preference" clause. I should like us to throw our whole weight into Imperial Preference, unless the United States are prepared to reduce all their tariffs by 33⅓ per cent. If they are prepared to come out with a new document, rendering greater assistance to the world, and to say, "We will take your goods"—I know that the Liberals might not like this point of view—

Mr. Holt

Does the hon. and gallant Member think that any part of the Empire is anything like as keen on his policy as he is?

Air Commodore Harvey

The hon. Gentleman would be surprised, if he travelled round the Empire, to find out how keen some countries are. I admit that Socialist interests might be against it, but quite recently I have negotiated with a New Zealand company and they are more British than we are. They have said they would not buy anything that was not British if they could possibly avoid it. These negotiations are in respect of an order amounting to between £1 million and £2 million, and we shall get that order. Do not let us forget that without an Empire this Government or House of Commons would mean precious little. Let us get together and trade among ourselves and build up our prosperity.

The Government should bring about economies. I do not mean the sort of economies in Government Departments which will turn upside down the whole policy of this Government, or even the previous one, but there is plenty of room for economy in any Government Department.

Mr. C. R. Hobson (Keighley)

What about local government?

Air Commodore Harvey

Yes, even in local government. If the hon. Gentleman would come to Macclesfield we could show him how economies have been made in the past 12 months, and if his constituency would like some advice my town clerk would no doubt like to tell them what to do.

There should be economies, not only in Government Departments, but in industry. Most businesses, if they overhauled their methods, could bring about considerable economies. I know of one highly successful firm where no first-class travel is allowed. Not a man is allowed to travel first-class. Eighty-five per cent. of the products of that firm are selling in North America, and the managing director occasionally puts on overalls and goes on to the line himself. He knows his business from A to Z. It is a highly efficient business. I wonder how many large businesses have checked up on the number of black-coated workers they have. I wonder how many could be dispensed with to go into something more productive. Better time-keeping is needed, too.

I am sure it is up to industry, as well as to the Government, to look into these questions. It is only more efficiency all round which will enable British goods to be sold successfully abroad. It is no use kidding ourselves that, because we are British or for some other reason, our goods will sell. Many of the young salesmen in business today, aged 30, have never had to sell goods in competition. That is an extraordinary thought—that at the age of 30 they never had to compete until the recent arrival of the buyers' market.

I believe the electors appreciate what the Government are up against. They certainly did not in the first six or eight months of this year, as well I know from my own political meetings, but I feel that in the last two months there has been a definite realisation of what we are up against. The figures at Wycombe show that, quite apart from the quarrel on the other side of the House, which hon. Members opposite like to think was reflected in the result at Wycombe. I do not think that was so at all.

Mr. Houghton

When the hon. and gallant Gentleman's party were in opposition, they did their best to disguise the difficulties which the Labour Government were up against.

Air Commodore Harvey

I have listened to and read speeches by hon. Members opposite about unemployment, as I have tried to explain in my speech, in which they have suggested that it has all happened in the last six months. They knew perfectly well that unemployment was taking place before they went out of power, and that was why they went out of power. Had there been full employment last winter, Parliament would never have been dissolved.

Mr. Manuel

That is small minded.

Air Commodore Harvey

It is not small minded; it happens to be true, and I know hon. Members opposite do not like hearing the truth, for it always hurts.

As I see it, and I have listened to all the speeches today, hon. Gentlemen opposite have put forward nothing constructive. It has simply been pin-pricking. They feel that in order to overcome the division in their own party they have to put down this very strongly worded Amendment, which will be handsomely defeated in the Lobbies tomorrow. I ask the Conservative Government to be consistent with their policy. If unpleasant things have to be done, for heaven's sake let us do them. I am quite certain that the Government will stick to their policy of being honest, of telling the people what has to be done and of doing that which they think is in the best interests of the country.

8.48 p.m.

Mr. William Blyton (Houghton-le-Spring)

I have listened to the debate all day, and the general theme of hon. Members opposite seems to be that there is an opposition within the Government bringing pressure upon the Chancellor of the Exchequer to reduce taxation, including Profits Tax, so that in the next Budget they can do what they have always done—take away from the social services and reduce the working-class standard of life. The hon. and gallant Member for Macclesfield (Air Commodore Harvey) has adopted the same theme. They intend to try to force the resolution of the Scarborough Conference upon the Chancellor of the Exchequer, who said that such a policy could not be followed unless money was taken away from the social services.

I want to deal mainly with an act of great significance which is taking place on the Continent. A High Authority has been established in Luxembourg to form a single integrated market for coal and steel in Europe. I want to ask the Government what are their ideas on this matter and what is to be our relationship with this Authority, because many of our traditional markets are in Europe.

I listened last week to the speech of the hon. Gentleman the Member for East Aberdeenshire (Mr. Boothby). I have a great respect for his sincerity, because he believes in the High Authority and membership of the Community. He twitted us last week and criticised us for not entering into the discussions on this Community in their initial stages, and believed we could have got our own terms. It is well known that when this plan was launched, it was laid down as a prerequisite of entry into the plan that a participant had to accept the High Authority's decision, with no Government interference. Second, it was stated quite publicly that this plan was the first step to a federalist Europe.

Faced with that attitude, we made out position quite clear. We said that while we agreed with its economic aims, we could not agree with its political approach. We said quite definitely that we were not prepared to hand over the control of our internal economy to a High Authority on the Continent; nor were we prepared to hand over our sovereignty to a federalist Europe. Even as trade unionists we could not accept the High Authority in Europe as controlling the nationalised coal and steel industries of our country.

During this period the Tories were always arguing that we should have gone into this plan. I heard the Minister of Works, the Minister of Supply, the Minister of Housing and Local Government all plead this line. There was no doubt that on the Continent it was thought that when the Tories came into the Government, we in this country would become full members of the Community. The hon. Member for East Aberdeenshire is open and frank about where he stood, and I admire him for it.

Why, then, in the face of all this, have the Tories now accepted Labour's position in the matter? It was tragic that the Home Secretary, whose reputation was very high because of the work he had done on the Convention on Human Rights, should have been the chosen instrument to pour the cold douche on the Continent, when the Continent had been led by others of his party to expect much more when the Conservatives came into power. I believe it was because of this that M. Spaak made his vitriolic speech and resigned a few months ago.

The Labour Party always informed them that we could not become full members of the Coal and Steel Community. We said we would not oppose it if the Continent wanted it and that we would work in close association, whenever it was set up. We said that we would at Government level consider agreements in relation to prices and wages so as to prevent the scramble that resulted in bringing the wages of those in the coal and steel industries down to a low level in the inter-war years.

We said that we would consider agreement on capital expenditure so as not to waste European resources. We said that we would consider agreements on marketing, because it is essential that this country should get agreements on marketing with this new set-up, because many of our traditional markets are on the Continent. We also said that we would prepare to make an agreement about discriminatory practices so that we should not be at a disadvantage in the European market.

Therefore, it is quite plain that, during those years, we never took up an isolationist position. We knew, as anyone knows who also knows of the shambles of the inter-war years in these two industries—that if the Community were set up, it would be better to work with it in close association than to be its competitor—if we were to prevent a return to the cut-throat competition of the interwar years.

At the present time we have not got sufficient quantities of coal for export, due to internal consumption, and the Continent is importing over 20 million tons of American coal at a high dollar cost. But it will not always be like this, because European coal production is increasing, and so is its steel production. There is no doubt that as a single integrated market develops in Europe, together with their increased production, we shall find ourselves, if we are not in association with them, pushed out of our markets, maybe with a discriminatory tariff against us.

In the light of this, I welcome the permanent delegation to the Community. I believe that, while still maintaining the two basic principles, agreements can be reached at Government level on the lines I have indicated, to the mutual benefit of all.

It is also pleasing to note that the miners and metal workers of the Continent are desirous of having the closest relationship with their nominees on the Consultative Committee of this Community, and that the miners and the metal workers are now setting up a secretariat at the Luxembourg headquarters which will be governed by a trade union committee, to work in close liaison with their representatives in the Community. The British miners are connected with this.

What is to be our position now? We cannot become full members, for the reasons I have stated, and I cannot see us getting an observer on the High Authority or on the Committee of Ministers under the Plan. That would be asking too much when we are only entering into agreements with them. But it is essential that when these agreements are reached we should have observers in the Assembly of the Community, without a vote, so that we can make our voice heard before decisions are taken which may be derogatory to this country. A decision of the High Authority may affect our economy and our delegation may not be able to get the matter rectified at Luxembourg. There may be arguments about agreements we have made, and it is reasonable that at least our voice should be heard in the Assembly on matters affecting our country.

I believe, in our future economic situation, we can influence but not control the policies of our European neighbours. A possible long-term danger in respect of coal is that a future slump in European demand may be met by the High Authority excluding all imports from non-participating countries. We must, therefore. maintain a close relationship and use our influence with this Community. There will always be a market for our special coal, anthracite or hard-coking coal, but for the other classes the dangers I have illustrated are very real.

The decisions of this High Authority may have great repercussions on our economy. They are to organise a permanent study of market evolution and price trends; to establish a programme forecast with regard to production, consumption, imports and exports; to define the objectives of modernisation and the expansion of production capacity, and to study the possibility of the re-employment of available manpower, and create new undertakings to this end. They also, in a time of crisis, can institute a scheme of production quotas, which has to be abided by under penalties of sanctions. Therefore, to remain aloof, in my opinion, would endanger our own position. The delegation have a great task in front of them, and I have every faith that the National Union of Mineworkers, the Steel Workers' Union and the National Coal Board will look after our interests, and I wish them well.

My only point—and I believe that it is an important one—is that we should maintain the closest association with the Community, that we should not sacrifice the control of either our coal or steel industry to the High Authority, but should control our own economy, and that we should seek a voice, after making agreements, in the Coal and Steel Assembly to protect ourselves or to influence them on matters of great importance to us.

In the light of the Government's decision now to accept what the Labour Party have been advocating for the last two years, I hope that we shall have with this great set-up which is now operating upon the Continent a close liaison which will not make us a competitor, as we were in the past, but will afford us some close association that will safeguard the economic interests of all the European countries, to the mutual benefit of all.

9.2 p.m.

Mr. Alfred Robens (Blyth)

My hon. Friend the Member for Houghton-le-Spring (Mr. Blyton) did well to remind us of what is taking place on the Continent of Europe in the setting up of the Coal and Steel Community, because that is a matter which is going to affect us very considerably in this country in the years that lie ahead. It is perfectly clear that the competition in both these industries will be strengthened by reason of what is taking place now in Europe and the federalising of European production in the basic industries. Much as I should like to develop that theme myself tonight, I am afraid that there are other things which I must touch upon, and I hope that my hon. Friend will forgive me if I do not follow his argument more closely.

We have now entered into and almost completed the fifth day's debate on the Queen's Speech, and so far there has not emerged any sign of a concrete and positive policy from the Government to deal with the most important matter that faces this country—its economic stability. I can understand that because, unfortunately, we have Ministers incapable of doing the tasks which are theirs, who have a sytem of overlordship which must narrow their own line of action, and who are led by a man who did not know the difference in weight between a millstone costing £300 million and a millstone costing £900 million. Then we had a few days ago the fatuous complacency of the right hon. Gentleman the President of the Board of Trade. What did he say? He said: If the economic policy of Her Majesty's Government is to be judged by the simple test of whether it works … I suggest that policy has hitherto proved a remarkably successful one."—[OFFICIAL REPORT, 5th November, 1952; Vol. 507, c. 169.] We shall see.

Before I develop that argument, I should like to remedy an omission at the beginning of my speech, I wish to congratulate my hon. Friend the Member for Dundee, East (Mr. G. M. Thomson) on delivering an excellent maiden speech this afternoon. It was one to which we listened with great interest, and he has whetted our appetite to listen to more of his speeches in the future.

The President of the Board of Trade says that the policy has hitherto proved a remarkably successful one. What has happened? All that has really happened is that the drain-away of reserves has been stopped and there has been a small increase in the gold and dollar reserve. That is not new. It has happened before. We have had this kind of crisis before and we have had to meet it, but the Labour Government did not meet it with the weapons that the present Government have used to meet it and with the disastrous results which are following the action, or the lack of action, of the present Government.

What has emerged beyond any shadow of doubt is that the back-benchers on the Government side of the House have taken off the sheep's clothing which they donned during the General Election and they now stand as the wolves with their teeth bared and with the axe in their hands ready to cry out—[Interruption.] I should have thought it was possible for them to have their teeth bared and to carry an axe at the same time. The teeth are bared in order to snarl at the Opposition and the axe is to be used to slash Government expenditure.

Scarcely a back-bencher who has spoken today has not made it his theme that there must be a slashing of Government expenditure. One hon. Gentleman was challenged as to where the Government should make the cuts. What has been the reply to that?—nothing; that is to be left to be developed later on. We know perfectly well where the cuts will come. They will come, as we said during the General Election, on the social services and by way of a lowering of the standards of millions of ordinary men and women in this country.

Why have we been able to stop the drain on our reserves and to have an increase in the gold and dollar reserves, which we all welcome? Surely the President of the Board of Trade does not claim that that is the result of policy. There was no policy to do that. It has happened because the price of imports has fallen and the price of exports has kept up fairly well. That single factor alone makes a difference of about £200 million.

What has happened to stocks? While we were in power we carried out an enormous task in building up stocks. It was vital for many reasons that we should do so. What has happened to those stocks now? Have we been living on the fat which was stored up by the Labour Government? Are stocks increasing? Are stocks diminishing? Perhaps we may be told when the hon. Gentleman replies or, if not, perhaps we shall get the answer from the Chancellor of the Exchequer tomorrow.

There has been a substantial reduction in the volume of imports. That was a policy of the Government; it was directly the Government's work. The Government's monetary policy has also had the effect of slowing down capital development in industry and agriculture. When the President of the Board of Trade says that his policy has proved remarkably successful, that is only because of the heavy price that our people are paying today and will pay even more so in the future.

In an excellent speech the other day, my hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Short) showed that, so far from the cupboard being bare when the Labour Party left office, the Government inherited a nicely stocked pantry. He said that when they took office the Government inherited 5,489 more factories than there were in this country in 1945 and 630,000 more school places than existed in 1945.

Those two things are vitally important in this country. Unless we have new factories well equipped, we shall not be able to meet the industrial demands of the future, which will be for good quality articles of the right price. When old traditional markets go, new ones have to be sought—the hon. and gallant Gentleman the Member for Macclesfield (Air Commodore Harvey) referred to the ex- port or jet-engined aircraft and things of that kind—which means that we shall have need of more highly skilled people in this country. We shall not get highly skilled people if we put the boys and girls of this country into classes of 40, 50 and 60 in their younger years.

What have the Government done? They have slashed factory building by half. In the first half of 1951 the Labour Government had approved £54 million worth of factory building; in the first half of 1952 the present Government had approved only £29 million worth. In the first half of 1951 we had approved £28 million worth of building for schools; in the first half of 1952, this Government had so slashed school building that there is only approval for £13 million worth. They have cut hospital maintenance and repair by 25 per cent. I say that they are gambling away Britain's future for the political need of building a few more houses.

Air Commodore Harvey

The right hon. Gentleman has given the figures of factories approved. He ought to give the figure for factories completed, which shows an improvement.

Mr. Robens

There were more building operatives employed in the building of factories during the period when the Labour Government were in office than there are now with this Government in power. The fact is that, because this target of 300,000 houses was pushed upon an unwilling platform at a Conservative Party conference, the Government have had to slash the building of factories and schools and the maintenance and repair work in hospitals in order to produce those extra houses.

I will tell the Government something else. As a result of their policy, there will be a lowering of the standard of living of the ordinary people of this country. The Government will find that the houses they are building will not be taken up. Before the war hundreds of thousands of families lived together, not because they wanted to live with their in-laws, but because there was so much unemployment that that was the only way they could pay the rent. If the Government are not careful, that is the kind of thing we shall be going back to again.

My hon. Friend the Member for Newton (Mr. Lee) put a question to the Chancellor of the Exchequer recently; he asked from which industries the Chancellor hoped to get the production necessary to secure the 3 per cent. extra on which he based his Budget. The Minister of State for Economic Affairs replied that his right hon. Friend the Chancellor of the Exchequer said: That if we did not succeed in expanding our exports we would be faced with lower production and more unemployment than any of us would wish to see. As it turns out our export prospects have worsened since March and it now appears unlikely that production will rise as had been hoped. If we take the last three months for which the figures are available and compare them with the three months in 1951, what do we see? In June, 1951, the index of production was 122; in June, 1952, it was 111—or down 11 points. In July, 1951, it was 111; in July, 1952, it was 102—or down nine points.

In August, 1951, it was 104 and in August, 1952, 99—down a further five points. The September figures are not yet published. The Financial Secretary to the Treasury will probably know what those figures are. Would I be right in saying that they will probably turn out at about 115 or 116, and will that not be against 121 for September the previous year? Does that not mean a further diminution in production? If that is so, does it not, in the words of the Chancellor himself, show that we are going to be faced with more unemployment than any of us would wish to see."—[OFFICIAL REPORT, 30th October. 1952 Vol. 505, c. 216.] I made a speech in March of this year to which reference has been made today. I said that, in my view, before the end of the year the unemployment figure would reach one million. I am not sure that that is not going to be right. The number of unemployed persons today is 397,900. Short-time working, with which the House is now very familiar, leaped up from September, 1951, when it was 350,000 hours a week, to 5 million hours in May and then went down, with the seasonal trend, to 3 million in August. Those are the last figures I have; I have not got the September figures.

Three million hours with a 40 to 44 hours week represents unemployment to the tune of 75,000 persons. If we look at the figure for the Armed Forces, we see that it is 33,000 greater today, in September, 1952, compared with September, 1951.—[Interruption.]—This is very important. If we have half a million people unemployed and put them into the Armed Forces, they disappear from the unemployed total and we show no unemployment, but 500,000 in the Forces. Hon. Members opposite need not snigger at that statement.

Today there are 33,000 more people in the Armed Forces than in September, 1951. But what about the working population? In September, 1951, the working population was 23,482,000. In September, 1952, the working population was down to 23,390,000, a diminution of 92,000 people. Those people represent persons who, under the Labour Government, had a job. It will be found that in those 92,000 people many of the older people over 60 years of age and many women who went to work are no longer signing on at the employment exchange. So we have in fact, as compared with the time when Labour was in power, unemployment of more than 592,000 people already. [Interruption.] Oh, yes. It does not pay for the hon. Member to say that if I believe that, I shall believe anything.

The fact is that it is possible to get rid of unemployment figures by reducing the working population. Make no mistake about that. We can go on reducing the working population and reduce the unemployment figures, but the fact remains that when Labour was in power the working population was at the height I have just described, but under the Tory Government there are 92,000 people no longer in the working population and the real unemployment figure is nearer 600,000 than the published figure of 397,900, which is the latest figure I have. The peak of unemployment will be about January—I think the right hon. and learned Gentleman will agree with me there—and we shall see by the time January comes just how near that figure is to what I said, as long ago as last March, it could easily be.

I wish the House to understand also that the 16,000 dockers for whom there is now no work are not included in the unemployment figures. The right hon. and learned Gentleman will later have a great problem in connection with the docks, which I shall describe. He will probably have to add about 10,000 dockers to this total. Hon. Gentlemen have not looked at these figures closely enough and have not looked at the implications either.

Air Commodore Harvey

Will the right hon. Gentleman give way?

Mr. Robens

There are 16,000 dockers unemployed at present about whom something has to be done.

I am bound to say that the Minister of Labour has a very difficult task facing him. He is one of the few Ministers who has the whole respect of this side of the House. He has earned the high regard of the trade union movement and has carried with him their best wishes, and I believe their co-operation. I am sorry that he should find himself with the problem that is to face him with regard to the docks.

In 1951, dock employment was higher than in any of the 10 years since the dock labour scheme was set up; that was under a Labour Administration. Never had dock labour been so high. What was to the great advantage of the country was that in fact—I do not know whether the hon. Member opposite is talking to me or to the Parliamentary Secretary. I said that the figure was the highest since the dock labour scheme was set up.

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

The right hon. Gentleman said "under a Labour Administration."

Mr. Robens

I was making the point that in the 10 years since the scheme was started dock employment was higher in 1951 than in any of those 10 years. What was better was that the average age of the docker was going down. The average age in 1951 was down from 46½ to 45½ years.

On Liverpool and Merseyside there are 3,500 dockers for whom there is no work. At Manchester docks for the last six months there has been on an average only half the dock force needed. Six hundred dockers have left Manchester docks since January. Overall there are now 15,000 or 16,000 dockers unemployed.

The worst feature about the unemployment in dockland is what lies behind it. Dockers are only out of work when ships are not there to be discharged or loaded, and the ships are not there to be discharged. The men in the factories will know that when their stocks have run out and there are no new supplies coming along in the quantity they need. Behind every unemployed docker today there are three or five industrial workers who will be affected in a few months' time. What happens in dockland today will happen in industry tomorrow.

Already the dock labour scheme is in great danger. The levy is now 22½ per cent., that is £120,000 per week which the employers have to find. That must necessarily be added to the cost of freights. If the levy goes up to 25 per cent., the right hon. and learned Gentleman has the task of looking at that scheme afresh. There is something else. These 15,000 dockers who do not appear on the unemployment total are living or existing on their fallback wage of £4 8s. a week. [An HON. MEMBER: "Less insurance."] When they have paid their dues, insurance and trade union contributions and things of that kind, they are probably taking home about £4 1s. 9d., or £4 2s. 0d. It is quite impossible to live on that; and the cost of living, which has been forced up by deliberate Government policy is reflected to the working classes, not in the index, but in how much they can get for every £ in their purse.

Mr. C. I. Orr-Ewing

How much they take home in the wage packet.

Mr. Robens

No, not how much they take home in the wage packet; that is where the hon. Gentleman is wrong. It is how much a housewife can get when she goes into the shop with a £ note. That is what counts. The size of the wage packet is not important it is the amount it is possible to get with it.

Although prices may have come down in textiles, if it comes to a question of clothes and curtains and carpets they will do without; they will patch and darn and make do. But the housewife cannot make do with food. She has to buy that and pay for it. She has to feed her family. So the index of the cost of living is not the true criterion when we are talking in terms of the ordinary wage 'earners of this country.

The fact is that it was a piece of Government policy—I accept that—deliberately to cut the food subsidies. The result is that the bulk of the wages are going on rent, fuel and food, with the consequence that there is a complete lack of consumer buying of all the other commodities; and again, as stocks run out, this will begin a vicious circle of putting other people out of work.

As we have indicated in the Amendment, it is quite clear that, because of the policy, or rather the lack of policy, of the Government, there is a threat of a return to the social conditions of the inter-war years. That threat has been more than emphasised today by many speeches from hon. Gentlemen opposite. None of us, I believe, wishes to return to the social conditions of the inter-war years. I thought it was summed up very well by Lord Woolton in 1944—and all of us on this side of the House, indeed I believe the whole House, would wish Lord Woolton a very speedy return to his usual good health. He said: In a world of plenty, and in a period when England was amazingly wealthy, no less than one-third of our children were suffering from malnutrition. … I think of those 2½ million people we could not employ in times of peace but whom we needed so badly in war. A generation has grown up that knows very little of these conditions or of those days, but everyone in this House is well aware of them, and there is a fear in the minds and in the homes of hundreds of thousands of people today that full employment has gone and that unemployment is coming. If there is one thing that will pull down production, it is the feeling of insecurity in the hearts and minds of those people who work for a living.

It is not a bit of use the hon. and gallant Member for Totnes (Brigadier Rayner), who had to sacrifice his fox-hunting three years ago, coming to this House and lecturing people on hard work. The miners, the steel workers and the railwaymen have known nothing but hard work in their lives. Hard work will not do the trick at all, hard work which means, as my hon. Friend the Member for Sunderland, South (Mr. Ewart) indicated today, that a man worked himself out of a job by Thursday lunch-time instead of Friday night. It is no use coming and lecturing about hard work. What is wanted is a Government with a policy that will create an atmosphere in which business can live and in which the workers feel they will get a square deal.

Unemployment, which averaged over 1½ million during the years from 1919 to 1939, is something which at least we on these benches will never forget. Hon. Friends of mine suffered during those days. Others sat on means test committees and courts of referees and they saw all the misery and the social evils which went with this position. I tell hon. Gentlemen opposite that this country will not go back to those times—the times when farmers, shopkeepers and business men went bankrupt at the rate of 6,000 a year. That was the result—

Brigadier Rayner

Does the hon. Member suggest that we do not need hard work in the world as it is today?

Mr. Robens

We could all work very hard digging a great big hole, and then we could all work very hard filling it up again, but that would not help us. It is not hard work but intelligent work that we need. What is required is a Government which will not slash factory building and school building but a Government that will see that factories are well equipped so that we can use some intelligence in our work. The hon. and gallant Gentleman has got everything wrong.

I say, therefore, that the memories of those days are not likely to be forgotten. They will not be forgotten. I warn the Government that they may dismiss this Amendment and feel that it is just a part of political propaganda and that it has no relation to the times. But the fact from which they cannot escape is that under a Labour Government production in this country reached a peak higher than anything in its history, and that when a Tory Government comes that peak falls, production goes down and unemployment rises.

Mr. Orr-Ewing

American aid.

Mr. Robens

It is true that we had, American aid. The hon. Gentleman's Government are now getting defence aid, and there will be other things, too.

We are perfectly serious about this Amendment which says quite plainly that the policies which the Government are pursuing … threaten a return to the social conditions of the inter-war years. If the Government are wise, they will get down to a constructive policy to remove that threat. If the Government are prepared to put into effect a really sound constructive policy, they will not find opposition from these benches. Instead they will find constructive thought, help and assistance. But I have seen or heard nothing in the speeches made during this debate that makes me feel that there is the least likelihood from a Tory Government of anything but a policy to reduce the standard of living once again for the hundreds of thousands of ordinary men and women in order to enrich those who are already very well off.

9.34 p.m.

The Parliamentary Secretary to the Ministry of Labour (Mr. Harold Watkinson)

We have listened to a debate which was notable in that the speeches from the back benches on both sides of the House were sincere and factual. No doubt many points will be dealt with by my right honourable Friend the Chancellor of the Exchequer tomorrow, and I do not propose to deal with those speeches tonight. That remark applies especially to the most able and persuasive argument advanced by my right hon. Friend the Member for Haltemprice (Mr. Law) and my hon. Friend the Member for Farnham (Mr. Nicholson).

I am sure that the whole House listened with great pleasure to the maiden speech of the hon. Member for Dundee, East (Mr. G. M. Thomson). It was very interesting to hear his up to the moment personal views on the American election. I should like to say that, when I was in Dundee myself recently, it was quite a special day, because it was the day on which the last man who had been temporarily stopped went back to full work. Perhaps the hon. Member might have given a little credit to my noble Friend the Minister of Materials for getting the jute industry out of the fix which it was in.

I want to mention the speech of the hon. Member for Houghton-le-Spring (Mr. Blyton), because I thought he dealt with what was rather a separate subject. It again does not lie entirely in the province of the Minister of Labour to deal with, but it represents—and I think the hon. Member put it in very powerful terms—an example of the fact that we face an entirely new set of economic circumstances. It is a set of circumstances that cannot be met under any conditions by either the remedies of the past, or even by the distorted versions of the remedies of the past with which the right hon. Gentleman the Member for Blyth (Mr. Robens) has been entertaining us.

Mr. Manuel

Explain them away.

Mr. Watkinson

I will not try to explain them away, because that is not in the interests of anybody.

Mr. Hobson

Prove the case.

Mr. Watkinson

The charge against the right hon. Gentleman the Member for Blyth is that, above all at this time, every man and woman in this country should know quite clearly the hard facts of the situation that we face. Above all, it should be the job of this House to try to present those facts to the country. The fact is that the right hon. Gentleman has a bit of a guilty conscience, because he was responsible for an article in "Reynolds News," which I read with great interest. I will not go through the whole article, which I think was misleading in almost every line, but I should like to quote his conclusion. It is a very good example of how people can be misled, both in this House and outside, about the true facts of the case.

The right hon. Gentleman concluded by saying, Unemployment is doubled. In fact, he was in agreement with other right hon. Members who have spoken today, and of course it is not true. My right hon. and learned Friend the Minister of Labour gave the figures. The unemployment figures have nothing like doubled. If the right hon. Gentleman the Member for Blyth wants to get the thing in proper perspective, which might be as well, I might tell him that I took the trouble to work out the monthly average of unemployment during the whole life of the two Labour Governments and during the life of our own Administration.

The average level during Socialism was 336,000, and the average level during the first months of our Government has been 396,000, so there is not as much in it as all that if we are to argue about figures. The right hon. Gentleman said that short-time is six times what it was, and he devoted some time to that subject in his speech. The figure is nothing like that, unless one takes the peak of short-time working in Lancashire textiles this year. In current figures, short-time is decreasing and not increasing at all.

The right hon. Gentleman said that overtime is down by 20 per cent. It is not on the figures which my right hon. and learned Friend gave. He said that earnings were down and that prices were up. I will not bother with any more. I do not think that this House or the country as a whole will be much impressed by the attempt of the right hon. Gentleman or anybody else to put forward misleading distortions of present or past facts in an attempt to disguise the fact that they have no constructive proposals themselves. The time for that is gone, and the country is not prepared to have that kind of leadership, if it is leadership.

What has been said, the points which I have raised and the article which I have discussed, and what the right hon. Gentleman the Member for Blyth has said, would not be very important if it were not for a fact which, I think, is the crux of this matter. That fact is this. There are still some people who may be deluded into the belief that there is some easy way out of our difficulties, some political trick by which we can maintain full employment. I hope hon. Members opposite will not disagree with me when I say that there is no easy way out. There is no easy way out, and if we want today a level of full and profitable employment, we have got to earn it by our own enterprise and efficiency.

That cannot be said too often, and I hoped it would have been said a little more often by hon. Members opposite. We all know that unless we can meet our overseas customers' demands by lower prices and quicker deliveries we shall not succeed in maintaining full employment.

Let me give the House one figure which, I think, sums up the sort of proposition, the sort of difficulty that we are up against in overseas markets. Today, in Japan, the average earnings of the textile workers are 11d. an hour. In Lancashire the average earnings of textile workers are 2s. 8½d. an hour. That is the measure of the kind of problem that we have got to face and overcome if we are to maintain full employment, and it is not a bit of use trying to argue that away, in just the same way as it is no use going to the Japanese and saying, "Will you raise your cost of living or your wage levels to suit our particular convenience?" That sort of figure could be repeated.

Mrs. Jean Mann (Coatbridge and Airdrie)

That being the case, will the hon. Gentleman explain why food prices have been so steeply increased by this Government?

Mr. Watkinson

I cannot see what the hon. Lady's intervention has got to do with this subject. I will come to food prices in due course.

Mr. Gooch

Your wife will.

Mr. Watkinson

I do not know that hon. Members opposite do themselves very much credit by greeting that sort of figure with laughter. I do not think the Lancashire textile workers think that that sort of competition is anything to laugh about, nor do the Government.

The hon. Member for Bermondsey (Mr. Mellish)—and I doubt whether the dockers have had a more powerful advocate than the hon. Member—made a very sincere speech, to which I listened with very great pleasure. He talked—and I agree with him—about the bad old times and the struggle for better conditions, but I would say this to him. That battle has been largely won. It has been won by the enterprise of the trade unions. It has been won by many men over many years of fighting for the things they thought were right. They have got those rights, but they are all at hazard today because, if we fail in this essential task, the social services and all our rights, whatever we may think they are, will all go down together.

Mr. Hobson

Not only the dockers.

Mr. Watkinson

The hon. Gentleman went on to speak about the problems of the docks. I thought he put the matter in a very factual way. I thought that when the right hon. Member for Blyth (Mr. Robens) came to speak about it he did not get his facts quite so correct. I will not bother the House again with the figures which my right hon. and learned Friend gave, but I will remind hon. Members of one, and that is that if we compare the present situation with 1950—and I think that more and more we are coming to realise that 1951 was a year of unique circumstances, and 1950 is a fair comparison—the figure was 12.5 per cent. on the register today the figure is 19 per cent.

Mr. Robens

A lower register.

Mr. Watkinson

Yes.

Mr. William Keenan (Liverpool, Kirkdale)

Will the hon. Gentleman say how long the figure which he just quoted for 1950 existed, because I think he will find that the present figure for 1952 existed for six months.

Mr. Watkinson

Yes, I quite agree. I am not in any way trying to minimise the seriousness of the situation in the docks. My right hon. and learned Friend is seeing the Dock Labour Board tomorrow. It is not for me to indicate what may be discussed at that meeting. All I would say is this: Let us try to face this problem in the docks as we have faced other problems—on a factual basis. Do not let us try to twist it into party political ammunition. Let us see if we cannot solve it together. [HON. MEMBERS: "Hear, hear."] I am glad that we are agreed on that, whatever else we may disagree upon.

My hon. friend the Member for Totnes (Brigadier Rayner) was laughed at when he talked of German competition. I want to refer to this matter again, because it cannot be made too plain to the people of this country that full employment today means meeting and overcoming what we might well consider to be unfair competition. It is nothing to find a 60-hour week in German industry today. I do not argue whether that is good or bad, but that is what is happening in Germany and it increases her competitive position to that extent. I think the House did my hon. and learned Friend a good deal less than justice when they laughed at him. People in the motor car industry do not laugh when they lose orders because of German competition.

Mr. Philip Noel-Baker (Derby, South)

Will the hon. Gentleman say whether or not he thinks that we should try, through the International Labour Organisation, to get Germany to observe the 8-hour convention?

Mr. Watkinson

I hope that we shall. All I say is that until something is done we have to face up to this competition, and if we lead the country to believe that there is some political trick by which we can get round that problem we are doing it a great disservice. A great responsibility hangs on every hon. and right hon. Member of this House who tries to delude our people as to the facts of the case at the present time, and to ignore the hard fact that full employment depends on a quite new conception.

I want to devote the rest of my speech to that new conception, to meet what I believe is very largely a new set of circumstances. First—and this is really only reinforcing what my right hon. and learned Friend said much better than I can say it—the Government working alone cannot do this job, just as employers working alone cannot meet their customers' much more pressing demands for better delivery and lower prices, and just as workpeople alone cannot have full employment and a decent standard of living if the orders are not there to keep the production lines going. We all have to play our part in this, but unless we can play it together in these critical years we shall fail, and any arguments which are adduced from any part of the House which tend to divide us on this matter are doing nothing more or less than a national disservice.

Whatever else we may disagree about, I suppose we are all agreed that full employment today is vital to the success of our whole economy; but I think that we should go further and say that in the past six years—and I am not adducing any party political considerations from this—[Interruption.] Perhaps I may be allowed to make a start before hon. Members judge what I have to say. In the last six years we have had full employment, whether we liked it or not. Everybody wanted the things our industry made. That is the hard fact which we are coming to realise today, and yet even two years ago it was quite obvious that the level of productivity was beginning to flatten off. Two years ago, in this House, my hon. and right hon. Friends and myself were raising questions about the shadow of German competition which was already beginning to come into the markets of the world.

I remember having a very interesting discussion at about 8.30 in the morning with the right hon. Member for Leeds. South (Mr. Gaitskell), who was at that time Chancellor of the Exchequer, in connection with the level of productivity in July, 1951. I said that I was sure that we had passed the peak and that we were on a declining phase of productivity. He gave me a very courteous and pleasant answer. It is not much use other right hon. Gentlemen saying: "This has happened since the Conservative Government came to power."

The signs were quite obvious two years ago, and if some remedial action had been taken at that time, then the fall now might not be as great as it is. One cannot produce results in this sort of thing in five minutes, and one certainly cannot alter productivity figures over a matter of two or three months. The figures themselves are about three months out of date.

Mr. H. Morrison

What did you say two years ago?

Mr. Watkinson

I thought I had explained that, but perhaps the right hon. Gentleman did not catch it. I was saying that his right hon. Friend, then Chancellor of the Exchequer, answered an intervention of mine in a debate on the Committee stage of the Finance Bill, in July, 1951, when we discussed this matter and when it was agreed that we had already levelled off the rise in productivity. I was saying that if we had done something about it then, our task now might perhaps not be so difficult.

I want to come to the speech of the hon. Member for Sunderland, South (Mr. Ewart), who was very worried about the position in the shipbuilding industry. I think the outlook for that industry, as for many others which are steel users, is considerably brighter. There will be more steel. I will not go into the arguments he raised about the nationalised steel industry, but I think it fair to point out to him that if the shipbuilding industry today is short of steel, it is because a nationalised industry has not produced enough steel. Perhaps he might have given some slight credit to the Prime Minister for producing one million tons of steel when he went to America at a very critical time. [An HON. MEMBER: "Imported steel."] It was very useful steel.

Mr. Hobson

Could the hon. Gentleman tell us any one year in British industrial history since 1903 when we had to import steel?

Mr. Watkinson

I quite agree, but we happened to be fortunate in having the kind of Prime Minister at that time who could get an extra one million tons of steel when we very badly needed it.

Perhaps I may be allowed to come to the terms of the Amendment. While I like argument across the Floor of the House as much as anybody else, and perhaps a little more, I hope hon. Members will acquit me of trying to do other than present the facts of this case as I see them. I know hon. Members opposite have done that, too. But let me come to the terms of the Amendment, because it claims that unemployment and short-time working is growing and that the cost of living is increasing.

Surely I need not go into the unemployment figures again. Surely I need not explain the almost negligible amount by which they have increased this month—only 8,000 in a month which is normally one of very heavy increases. Surely I need not explain, and surely we are all delighted, that short-time working has decreased very much since the peak in May this year. And as to the cost of living, nobody knows what it will do next month, but in the past two months, certainly, it has gone down by a point each month. One other encouraging thing is that employment in the manufacturing industries shows an increase, in the current figure, of 30,000, with 17,000 in textile and clothing and a steady increase in almost every industry except food, drink and tobacco.

The Amendment went on to regret that the Government were taking no positive or effective steps to deal with the economic position. Let us look at what happened in Lancashire. Suddenly, without any warning, textile orders dried up and, from being short of people, the industry passed to a position in which it had about 150,000 unemployed. What happened? First, the Government placed emergency orders to the tune of over £20 million—perhaps not a very large amount, but it kept the mills going as a temporary measure, and for long enough. Then the Government consulted both sides of industry to see what could be done to tide the industry over until we could see whether this was a long-term recession or a short-term dip.

At this stage I should like to pay tribute to the employment exchanges of my Ministry for the way in which they handled a difficult problem. One day there was no unemployment, and in a few months, there were 150,000 unemployed—and yet there were no queues at the exchanges, many people were paid at their place of work because it suited them and their employers better, and everybody felt that human interest had been taken into account in their problems and that they had been well treated and looked after as well as possible. I should like to pay a tribute to our regional officers and local managers of employment exchanges, who, I think, did a very difficult job supremely well.

If hon. Members remember that there were something like 40,000 people who went out of cotton in Lancashire over that period, they will get some idea of the work of placing that was done by the employment exchanges, and done supremely well. A great many other people went into other jobs to find alternative employment. I had the pleasure of being in Lancashire at that time and of meeting trade unionists and employers, and, having met them, I knew they were tough and resolute enough to cope with this thing and to get orders back—and they did. It was disappointing that Nelson and Colne did not come back as quickly as others, but again we took special action, and the President of the Board of Trade made an announcement only the other day about Development Areas and giving greater help with factories.

I believe there is here a new example of a new kind of unemployment that hits us before we know it is coming. We have to meet it by the technique of starting other work. My hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey) made a factual and brilliant speech, and I was very glad to hear from him, as an expert, that there is an improvement in that part of the world. There will be many other problems that we shall have to face, but I believe we can overcome them by employing this new kind of technique.

To sum up, the Government have a plan to achieve a new and more stable basis for productivity and full employment. We are determined to achieve a measure of efficiency, I hope, that will enable us to meet the toughest foreign competition in future on equal terms. We are determined also to hold down the cost of living while giving greater incentives to encourage hard work and new ideas, and to make the taking of commercial and industrial risks worth while. We are determined, above all, to approach our industrial problems in the spirit of a national team, getting all to play their part, the Government, the employers, the trade unions, the professions, all working loyally with one another. I believe that success in this task is of far more importance than party political divisions.

The Opposition, in this, may take their own way. We have chosen ours. It is the one which we believe is the right road, and we invite all men and women of goodwill to come along that road with us in the belief that in the next few critical years there is a greater loyalty than narrow political partisanship. Of course, the right hon. Gentleman would not understand that.

Mr. Robens

The right hon. Gentleman does understand it, because speeches like that were made from that very Box for six years. I was amused by the right hon. Gentleman the Member for Gains-borough (Mr. Crookshank), who used to sit here jeering when men like Sir Stafford Cripps were making precisely that kind of speech.

Mr. Watkinson

Well, I am sorry—

Mr. Robens

It is too bad sometimes.

Mr. Watkinson

All right. I say again what I was saying, that there is a greater loyalty today than narrow political partisanship. I said what I said to the right hon. Gentleman because I thought he was laughing at what I said, but if he was not I willingly withdraw.

Mr. Hobson

The hon. Gentleman will have to.

Mr. Watkinson

Let me sum up by saying this. There is, I hope, a loyalty to the ideal of saving ourselves by our own united exertions. The Government can play their part, and we shall, and we shall be content to be judged by events.

Debate adjourned.—[Mr. Kaberry.]

Debate to be resumed Tomorrow.