INDUSTRIAL OUTPUT

HC Deb 29 April 1953 vol 514 cc2162-283

4.10 p.m.

Mr. Cledwyn Hughes (Anglesey)

I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof: this House notes with deep concern that industrial output in Great Britain, which rose substantially between 1945 and 1951, suffered a serious fall in 1952, and deplores the policies of Her Majesty's Government which are largely responsible for this fall and also for its failure to take effective remedial measures. The Amendment deals with a subject which is of fundamental importance to our country. There is no doubt that industrial production is the key to our national prosperity and to our prestige and standing in a world of increasing and perhaps ruthless competition, If we cannot produce a sufficiency of the right goods and sell them at the right prices and in the right places, then our days as a leading world nation are numbered. That would be a terrible blow, not only to this country, not only to our standard of living here, but a blow also to the prospects of world peace and of a return to sanity among the nations.

All this is common ground between us. In the recent Budget debates, Front Bench speakers on both sides of the House agreed that increased production was a vital necessity. Where we disagree is upon the methods a Government should adopt to gain the desired end. The Amendment refers to the Labour Government's work between 1945 and 1951, and I want to make a very brief reference to it because it forms a background to the problems which we are discussing today. In that period between 1945 and 1951, in spite of immense difficulties, which, incidentally, some elements are only too ready to minimise, our output increased from year to year. We had the problem of demobilisation to contend with, we had to convert industry from a war footing to a peace footing, and, perhaps most important of all, we had to rebuild the morale of our people which had been stricken by a great world war.

The Labour Party succeeded in doing all those things and in doing much more. They succeeded although leaders of the party opposite made speeches in this country and overseas belittling this people's efforts. I think it was the Prime Minister who referred to us as a nation of "Weary Willies and Tired Tims." I am proud and glad to be able to think today that since the last. Election no leader of this party has made speeches in foreign countries belittling this nation's efforts. At that time, even if the Conservative Party refused to recognise what this country achieved under the leadership of the Labour Party, generous tributes were paid in other countries, particularly in the United States of America, by such people as Mr. Paul Hoffman, M. Paul Reynaud and by other national leaders.

What are the facts? In 1951, the level of total industrial production was 34 per cent. higher than in 1946. Every year from 1945 to 1951 there was a substantial percentage increase over the previous year. Our successes can be measured in human terms as well, because we succeeded—I think this was a great work—in injecting new confidence and hope into our basic industries; and that was something very remarkable if we remember the plight into which our basic industries had fallen before the war.

Before the war, if we asked an agricultural worker in Anglesey or anywhere in the country, or a coal miner in South Wales, what work he would advise his son to enter, for example, he would say, "He should not follow me on the land or into the pit. He must find something with better prospects and with a better future." That was the situation in our basic industries, and one of the greatest things the Labour Government did was to remove the stigma from our basic industries of agriculture and coal. It is perhaps worth recording that the most important feature in the coal industry recently has been the success in increasing the labour force. By the middle of last year the total labour force was over 704,000, and there was an increasing flow of young recruits.

Again, in the same period of 1945 to 1951, productivity rose. In 1948, 1949 and 1950 it rose at an average rate of 7 per cent. per annum. It must not be overlooked that in very many places men were working—and in fact are still working—with obsolete machinery and in many places under unsatisfactory conditions of work. Increased production, rising productivity and full employment—those were the objectives which the Labour Government kept constantly in mind.

What is the position today after 18 months of Conservative administration? This is the crux of my Amendment; that in 1952, for the first time since the war, industrial production fell by nearly 3 per cent. The nation's total output fell by 1 per cent., which is equivalent to about £100 million at 1951 prices. If production had continued to rise after 1951 at the same rate as it rose between 1945 and 1951, the nation would today be £500 million better off, which is about £10 for every man, woman and child in the country.

What are the causes of the decline? There were, and there are, external influences which account in part for the decline—and here it is worth noting that the party opposite never gave us credit for any external influences when we were in power; but in large measure, I submit, the drop was due largely to this Government's policy. Exports fell partly because of import restrictions imposed by Commonwealth countries as a result of a lead given by this Conservative Government.

In volume of exports, there was a fall of 6 per cent. in 1952 compared with 1951. The immediate explanation of the decline is in stock changes. In 1951 the total volume of stocks and work in progress increased by about £450 million but in 1952, although some kinds of stocks, including some imported goods, continued to rise, there were serious falls, and over the whole year investments in stocks fell by about £550 million compared with the previous year.

Our stocks have been dissipated. It is not at all certain that stocks were used in the proper fashion in relation to our export drive. Certainly we cannot make good those stocks today without gravely worsening our balance of payments problem. What if war broke out? What good is an atom bomb, what good is the finest army and finest navy in the world, if this country has depleted its stocks?

The Economic Secretary to the Treasury (Mr. R. Maudling)

The difference in stocks does not represent a depletion of stocks. The difference is in the rate of accumulation. Over 1952 as a whole, stocks remained pretty well level.

Mr. Hughes

Certainly, but as far as work-in-progress stocks are concerned, there was considerable depletion.

The most serious drop in output occurred in textiles and clothing, printing and paper and in the metal-using industry; but it is significant that there was an increase in the production of coal, gas and electricity—nationalised industries. Is not it ironic—

Mr. Gerald Nabarro (Kidderminster) rose—

Mr. Hughes

The hon. Gentleman has the whole day before him. Perhaps he will be fortunate enough to be called to make a speech. It is ironic that the industries which were nationalised in the face of bitter opposition from the Conservative Party are today sustaining the overall production figures of the country.

The Chancellor of the Exchequer fully realises the perilous position. His eyes are open, and that makes his responsibility far greater. He calls his Budget an incentive Budget to industry. By his tax concessions, by the re-introduction of the initial allowance of 20 per cent. on capital expenditure, and by the Purchase Tax concessions and the abolition of the Excess Profits Levy in January, 1954, he hopes to stimulate production. Those are his hopes. Will those measures do the trick? Will they achieve the desired end? That is what we must face today. Will these measures stimulate the leaders of industry?

We hear enough about the workers and how they should work harder. One hon. Member opposite has been telling the Chancellor that he should stump the country exhorting the workers to work harder. I have not heard him exhorting the leaders of industry to think harder.

Mr. Cyril Osborne (Louth) rose—

Mr. Hughes

The hon. Member for Louth (Mr. Osborne) was in the Library all day yesterday preparing his speech. I hope that he will have an opportunity to make it later. I do not believe that the Budget will have the desired tonic effect. Will increased profits be ploughed back into industry? Will there be substantial re-equipment? It is worth recalling that in every year from 1945 to 1951 there was an increase in capital investment. In 1952 there was a decrease of 3 per cent. in investment, including housing. That means that if housing increased—and the Government say that it did—then investment in plant, machinery, and factories decreased by far more than 3 per cent.

There is no assurance that there will be a re-equipment of industry on the necessary scale. The most that the Government can do is to express a pious hope that there will be investment in the coming year. Many industrialists will do their best, and they will make the grade, but others will just plod along as they did between 1920 and 1939. The President of the Board of Trade, on 20th April, made a most important point when he said: … though some companies possess the cash they lack the willingness to re-equip."— [OFFICIAL REPORT, 20th April, 1953; Vol. 514. c. 669.] They lack the willingness to re-equip at a time when it is absolutely essential in the interests of the nation that they should re-equip.

Because they fail in their duty are the workers to be blamed? In any case, it is the workers who would suffer if there was a trade recession. The Government cannot blame the workers. Neither can they indict the Labour Party although they would like very much to do so. The Labour Party, when they were in power, showed the way by ensuring the investment of capital in those industries which it was vital to encourage. After all, capital investment should, to a certain point, be selective and should be related to the realities of our economic life. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell), in his speech on 15th April, made a most constructive suggestion to the Chancellor. He advised him to give higher initial allowances to industries which should be encouraged in the national interest. The industrial outlook for Britain is a bleak one. The Government boast that they have restored confidence in sterling, but they certainly have not given confidence in the future of this country.

I mention the agricultural industry because probably this is the most important basic industry in Britain. Again under the Labour Party, agricultural production was stimulated between 1945 and 1951. It increased progressively every year. Today the upward trend has stopped, the upward curve has flattened out. Milk production is down. There are ominous signs of decline and decay. In his Budget speech the Chancellor of the Exchequer said that he had started "the process of freeing agriculture." What did he mean? It would be interesting to know.

The party opposite freed agriculture between 1920 and 1939. That was a process of freeing agriculture and doing away with controls. We are more dependent upon agriculture than ever we were before, yet today, when there is a call for increased production, thousands of agricultural workers are leaving the land. What is the incentive to keep them on the land? There must be an incentive. What is it? Can the Economic Secretary to the Treasury tell us what the incentive is. We must keep the workers there. We must keep up the labour force on the land if food production is to increase. Is the Budget an incentive to a man earning £5 14s. a week? We know perfectly well there is no incentive at all.

On this question of agriculture we must get our priorities right. The Ministry of Agriculture is as important as the War Office or the Foreign Office. But the Minister of Agriculture is not in the Cabinet. My right hon. Friend the Member for Don Valley (Mr. T. Williams), who is highly esteemed by the farming community, had a seat in the Cabinet. Agriculture was placed high on the list by the Labour Government. Today not only has the Minister declined in status, the whole industry is declining. But this is an industry which even now produces more in value than the railways and the coal mines put together.

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

Is not it true to say that, although the numbers are somewhat down, the output per man is up owing to the re-equipment and mechanisation of agriculture?

Mr. Hughes

I am grateful to the hon. Gentleman for making that point. It enables me to make another, which is that the high rate of interest which the present Government have imposed makes it extremely difficult for farmers to re-equip. That is the problem. I speak of my own area. I do not know what the situation is in the hon. Gentleman's constituency.

Mr. I. Mikardo (Reading, South)

All the farmers in Hendon are doing very well.

Mr. Hughes

Farmers in North Wales, especially hill farmers, are not able to modernise their farms because of the high rate of interest imposed by the Chancellor, not only that, but the credit restrictions imposed make it difficult for the farmers to carry on.

Another factor which will have a most serious effect upon production is the parsimonious way in which the Government are treating industrial and scientific research. The administrators of the Department of Scientific and Industrial Research are complaining that work at research stations is suffering from lack of funds. Their annual report for 1951 to 1952 says that: Basic research is hardly worth considering if the effort that can be devoted to it is insufficient to secure steady progress. It goes on to say: Few, if any, of the research associations have incomes large enough to deal with all that needs doing. This really does disclose a very serious state of affairs, because one of the things that this country needs, and which it is the responsibility of the Department of Scientific and Industrial Research to compile, is a geological survey of Great Britain. We do not know what mineral deposits we have in this country. I know that in Anglesey there are deposits of copper and of coal, but I do not know the extent of the deposits. There is no geological survey to which to refer. When the Department of Scientific and Industrial Research prepared its plans after the end of the last war it estimated that 33,000 square miles of Great Britain had not been surveyed on a proper scale: a proper scale means six inches to the mile. At the present rate of progress it will take over 100 years for the survey to be completed.

That is not the case in the Soviet Union; it is not the case in the United States. There they proceed apace with geological surveys, and are spending vast sums on them, although surveys of that kind would be of greater value to us here than they are to those vast countries. I ask the Government to look at this matter as one of urgency, and to realise that many of the raw materials for which we are today paying dollars may well be under the rich soil of Britain.

I come to what I believe to be the most important consideration of all in this matter of production. Before we can have increased production we must have the full confidence and trust of the workers in all spheres of industry. We know that today competition in the world is getting fiercer, that Germany and Japan are now very much in the field again. However, in inventive genius, craftsmanship and hard work under the right leadership, there is no country that can beat this country of ours.

I indict this Government for their failure to lead the whole nation. They lead a section of the nation, but they have failed to lead the whole nation. I indict the Government for gradually undermining the Welfare State. The burden in this country today is once more being placed on the shoulders of those least able to bear it. Anyone who mixes with the ordinary working people of this country will realise that at once. There is no shadow of doubt about it at all. That is not the way to secure the maximum co-operation of the workers of this country, stricken by two world wars day, when a Labour Government are and a series of depressions for which the party opposite were largely responsible. Production in this country will go up one back in power, and the sooner that day dawns the better it will be, not only for Britain but for the world.

4.35 p.m.

Mr. George Thomas (Cardiff, West)

I beg to second the Amendment.

My hon. Friend the Member for Anglesey (Mr. C. Hughes) has earned the thanks of the House for bringing our attention to what is one of the major subjects that confront us as a people at the present time. It is perfectly clear that my hon. Friend has been at considerable pains to gather his facts and to present them to the House in proper fashion. We are suffering today from the hangover of the economic upset that inevitably follows in the trail of total war, and it is as well for both sides of the House to appreciate that there is still a long path for Britain to tread, and an uphill path at that, before we shall have recovered completely from all the cost and all the strain of protecting the freedom of the world as we did for those six years.

I like to think that there is not an hon. Member of this House who is not anxious to see the economic independence of this country. We can see it at Question time when hon. Members on either side of the House get hot under the collar because we are refused trade with America through the Chief Joseph Dam project and through the use of our Comet planes. We are tired of being pushed around. We are used to playing a proper part amongst the leading Powers of the world, and I refuse to accept the defeatist mentality that we must remain a second-rate world Power because the war exhausted us.

It may be unfortunate but it is undoubtedly true that the moral and political influence of nations today depends on their economic resources. My hon. Friend rightly paid tribute to the spirit of the British people in the years from 1945 to 1951, when by sheer self-sacrifice, by the bearing of heavy burdens and austerity conditions, we saw our production figures climb steadily year after year. We saw our export figures reach record heights at a time when hon. and right hon. Gentlemen opposite were sneering at "Austerity Cripps," and were using the expressions my hon. Friend referred to, the "Weary Willies and the Tired Tims." That was when our production figures were climbing.

What would the Prime Minister say today, if he were sitting on this side of the House, and not over there, when our production figures are down, when our industrial output is falling, when our exports are dwindling? One believes that the Prime Minister would be expressing much greater concern than he is doing in his speeches these days.

The party opposite have been in power for nearly two years, and the time has arrived when we can judge them by their results. The day is past when they could lay the blame for anything that went wrong upon our party by saying that we were in office at the time it started to go wrong. In two years, with two Budgets, the party opposite have had the opportunity to put their economic policy into operation. I notice that the United Nations' estimate, after two years of Tory government in this country, is that the United Kingdom's production dropped in 1952 more than that of any country in Europe except Denmark, compared with the previous two years. The industralised countries increased their production as a whole by 9.6 per cent.

Let us look at some of our industries where that decline has set in. Production in the metal using industries declined by 0.4 per cent., in the chemical and allied trades by 1.6 per cent., in textiles and clothing by 14.6 per cent., in paper and printing by 15.6 per cent. and in other manufacturing industries by 9.2 per cent.

Mr. Nabarro

I am sure that the hon. Gentleman wishes to present the picture in correct balance. He has cited us a number of industries which show a decline in production. Would he now give us the increases in production in 1952 compared with 1951 for, firstly, coal, secondly, steel, thirdly, agriculture and fourthly, building? They are the four major basic industries, and in all of them production increased.

Mr. Thomas

I am grateful to the hon. Gentleman for assisting me with my speech. If he had as much patience as he has wind he would have realised that I was about to come to the credit side.

As my hon. Friend has pointed out, it is indeed a notable feature that the basic industries, where there is real improvement to be registered, are the nationalised industries, with the—

Mr. Nabarro

What about agriculture?

Mr. Thomas

Do be patient—with the exception of agriculture.

Mr. Nabarro

What about building?

Mr. Thomas

If the hon. Gentleman had as much sense as he makes noise he would make a notable addition to our discussion this afternoon, but it is very difficult when he just keeps interrupting.

Even with agriculture—if I may take it out of the context in which I intended to deal with it—there was an increase last year, it is true—it was one-third of the increase of the previous year—but 22,000 farm workers fled from the English and Welsh countryside as from the plague last year. They uprooted their families. Why, in the centre of Wales we are worried by the movement away of our people; and the same applies in rural England.

The policy of the Government has led to farmers having to pay 6 per cent. on loans for the re-equipment of their farms. If we are to increase our agricultural output we must modernise our farms. With manpower declining, our only hope lies in a more efficient method of farming. We know where the trouble lies. The Chancellor of the Exchequer has damaged our national interest by the increased Bank rate, which lays exceptionally heavily upon the farming community. The Government have given up control over the lending of money. Perhaps "control" is a strong word to use, but the Government ought to make sure that the commercial banks help the farmers instead of being biased against them.

Mr. Nabarro

It depends what they do.

Mr. Thomas

Our friend is here again.

Mr. Deputy-Speaker (Sir Charles MacAndrew)

It is very disorderly for hon. Members to interrupt during a speech.

Mr. Thomas

The Government have followed faithfully the classical Tory policy which was pursued between the wars. Economic controls have been thrown away. The Welfare State has not been attacked: it is being destroyed. The Old Britain is being returned.

Let us examine some of the statistics which are available for us in the Library of the House. From 15th October, 1951, to February of this year the registered unemployed in this country increased by 64 per cent.—by 185,700. We are so grateful that the catastrophic figures of unemployment in the years between the wars have not come back that we tend to forget the significance of these figures. If a man is looking for a job, to him it is as much a catastrophe as if there were a million unemployed. There has been a 64 per cent. increase in registered unemployed since the Government have had the reins of power in their hands. Small wonder that our production has fallen.

In what industries is production falling? In 1952, in the china and earthenware industry, which is a vital part of our export trade, the number of employed fell by 8,000; in the glass industry, which also plays an important part in our export trade, the number fell by 16,000; in manufacturing industries as a whole the number fell by 123,000. There are increases. The number of employed in the distributive trades increased by 23,000. The non-productive trades are increasing, but the productive trades are decreasing. The red light of danger is over our industries when these figures are borne in mind. The chemical and allied trades industry suffered the loss of 10,000 workers in the course of the year.

Mr. H. A. Price (Lewisham, West)

I believe that the figures the hon. Gentleman has just quoted are accurate, but he has sought to present them as depicting a process which began in October, 1951. Would he not agree that this process in fact began in June, 1951, four months before this Government was elected to power?

Mr. Thomas

It is very hard to place the date and say that in June, 1951, the decline started. The hon. Gentleman's party has been in power for nearly two years.

Mr. Nabarro

Eighteen months.

Mr. Thomas

Very well, 18 months, if they are afraid to claim any longer.

Mr. Mikardo

It seems longer.

Mr. Thomas

Their economic policy is now taking effect. The decline has become much more serious. I hope that the hon. Member for Lewisham, West (Mr. H. A. Price) will succeed in catching Mr. Speaker's eye, and will be able to make his own contribution.

Not only have our overall figures fallen, but productivity per man has fallen, which is a serious aspect indeed. Natur- ally we look for reasons. If the Parliamentary Secretary to the Ministry of Food were here he might recall the halcyon days when he was in opposition, and used to say that people had not enough to eat so they could not produce. Before coming here I looked through the Digest of Statistics to see what had happened to the foodstuffs of our working people. I find that in 1952 the Government succeeded in reducing the total consumption of butter, cheese, milk and cooking fats. May be that has played its part, if we accept the dictum of the Parliamentary Secretary to the Ministry of Food.

I ask the Financial Secretary, when he replies to this debate, to deal with the question of productivity per man. This reflects hidden unemployment as well. It reflects the short-time working which is becoming a normal feature for thousands of our fellow workers in this country. The Welfare State principle of social security for the workers has been reversed, and social insecurity has once again become the spur for production which this Government is using. If we are to avoid disaster the present economic trends have to be reversed.

For the first time since 1945 we are losing the battle for economic recovery. It is a fortunate thing that production is not ultimately and absolutely dependent on the numbers employed in industry. We were recently reminded by one of my hon. Friends that America produces half the world's goods with 7 per cent. of the population of the world. Our hope, therefore, quite clearly lies partly in the redeployment of our labour and capital resources. It lies even more in a planned capital investment scheme for the modernisation of our industries.

Thirdly, it lies in a concentrated emphasis on industrial and scientific research. I submit that in these fields the Government have a squalid record. They have let the nation down with regard to planned capital investment, with regard to the proper use of our manpower in industry, allowing, without apparent concern, increases in the non-productive and non-vital industries without any effort to encourage people to go into the vital industries; and they have, at the same time, shown themselves indifferent to the question of scientific research.

Mr. Raymond Gower (Barry)

The hon. Gentleman had been extolling the virtues of careful planning and strict control. He then pointed out how the Americans, with a far smaller labour force were producing so much. Is not there a discrepancy in his argument, because they do not practice very strict controls?

Mr. Thomas

I have been trying to make the point so clear that even the hon. Gentleman could follow it. America has her industries modernised. Her industrial effort began nearly 100 years after ours. Our equipment in the greater part dates from the last century and it is clear that the Americans have, therefore, a tremendous advantage.

In his first Budget, the Chancellor of the Exchequer took a lunge at our capital investment. Last year, as a result of his first Budget, the capital outlay on plant and machinery fell by 2½ per cent. and on vehicles, ships and aircraft by 12½ per cent. This at a time when we can only hold our place in the world if we increase the output of our industries and, therefore, the capital that we invest.

As for scientific and industrial research, the Chancellor, answering my hon. Friend the Member for Newton (Mr. Lee) yesterday, smilingly told us that one in 2,500 of our people are so engaged. This old country cannot hope to compete with America and other Powers unless we concentrate on the development of new ideas, on experimentation in new technological methods, and we must have a higher proportion of our people engaged in industrial and scientific research.

Our people have the talent and they have the spirit—the spirit that built the Comet abounds among our young people in this country. I hope that the Government will, even at this stage, realise that it is national suicide not to be spending more on research in industry. My hon. Friend, talking about stocks, addressed to the House the question: "What will be the position if war comes?" I want to ask the House what, if real peace is established, will be the position—when trade will flow freely between East and West and when we shall compete not only with America, Germany and Japan but also with Russia and China in the markets of the world.

It is a painful commentary on our times that the talk of ending rearmament fills many people with a dread of unemployment. Our economy, in my opinion, has become top-heavy. We are too dependent on the armament industry, and the markets of the world are being lost to us. We shall not solve our problems of the peace, when it is established, by allowing every financier and speculator to have his head and put his money where he likes. Whether the Government like it or not, they will have to exercise control over the financiers and the speculators who dabble in industry if the national interest is to be forwarded.

Before I resume my seat, I should like to refer to what was said by the hon. Member for Louth (Mr. Osborne), who made an eloquent speech—his speeches are always eloquent—during the Budget debate, begging the Chancellor to stump the country appealing for more hard work. I am not here to pretend that the workers of this country must not work hard if we are to survive. I believe that every man ought to be going all out to help this nation, but exhortations, like patriotism, are not enough. Anybody can make that appeal. What is needed are incentives to the right people. Unfortunately, today the farther we go from the factory bench or the coal-face the greater is the incentive given by the Government. That is one of the indictments which, I believe, may fairly be laid against them.

We need new ideas and new methods, particularly in industrial research, and a firmer control over the allocation of raw materials. Given a national plan and given a sense of fair play towards the workers of this country, I am confident that, great as has been our past as a nation, our future can be even greater. Standing as we do, as a bridge between East and West, we have a key position in the world.

We can prove that with a planned economy, combined with the maximum political liberty, we can provide a standard of life for our people which will rival any in the world. But we cannot muddle our way through to that. We need controls; we need planning, and the Government, if they have not the courage to assume control and leadership, ought to get out—and quickly.

5.2 p.m.

Mr. William Shepherd (Cheadle)

We have listened with interest and attention to two speeches in rather contrasting styles from the hon. Member for Anglesey (Mr. C. Hughes) and the hon. Member for Cardiff, West (Mr. G. Thomas). They have given us much information, some of it accurate and some very inaccurate. Before I deal with the main points of my speech I want to deal with one or two points of inaccuracy which are important for the House to bear in mind.

The statement has been made by the hon. Member for Cardiff, West that with only 7 per cent. of the world's population the United States of America succeeds in producing over half the world's goods.

Mr. G. Thomas

That is a quotation.

Mr. Shepherd

That is an inaccurate statement. It is true to say that the United States produce half, or slightly over half, the world's goods if one excludes the vast territories of the Soviet Union, but if one includes them the figure is something like 34 per cent. As that inaccurate statement has been bandied about the House more than once I take leave to correct it now.

Both hon. Members talked about the need to spend more money on research. I doubt very much whether we are going to get much advantage from spending more money on research than we do at present. It is open to serious argument whether we are, in fact, spending too much money on research, because we have not got and cannot get the proper application of our present knowledge. I should be much happier to see part of the money which is now being devoted to research—fundamental or applied—being devoted to improving the means by which that research can be applied in industry. There is a very great danger in swallowing this idea of research and going ahead irrespective of its real technical value to industry.

Mr. Frederick Lee (Newton)

The results of (research are first-class and well worth paying for. Is it not a fact that it is the adaptation of that research to industry in Britain which lags far behind the present standard of research itself?

Mr. Shepherd

That is the point.

Another point of inaccuracy is the impression created by some hon. Members that the whole economy of the Western world is geared to the rearmament programme, and that as soon as that programme is cut down in some part we may be faced with a serious slump. It is true that there are dangers inherent in the immediate reduction of the amount of armament production, and I hope that this Government are studying the methods that will have to be adopted to produce a buffer between the present state of affairs and one which might arise if, as the hon. Member for Cardiff, West, says, peace breaks out.

But it is important to get this problem in its true perspective, and the easiest way to do that is to see what percentage of our total steel production goes into rearmament. It is about 5 per cent. It is not a tremendous amount and it should not be beyond the wit of an intelligent Government and a nation with a purpose to bridge the gap between 95 per cent and 100 per cent. I do not share the gloom which some people effect over this point.

Mr. Austen Albu (Edmonton)

Surely the danger lies not in a reduction of armament expenditure by this country but the reduction of economic activity in the United States, and its world-wide effects.

Mr. Shepherd

The same position applies there. We can turn to the fact that in 1944 and 1945 the economists said that there must be fearful unemployment in the United States. It did not arise. While I do not say that there is no danger, roughly the same proportion of steel consumption in the United States goes into rearmament as it does here. There is a great tendency to overestimate the danger.

Listening to the two hon. Members who initiated this debate it was very difficult to imagine that we have just emerged from a position of disaster into much calmer waters. One would have thought that the flood was just upon us, and that instead of the situation being immeasurably better than it was 18 months ago, in terms of economic security, we are really in a worse position. It is perfectly true—whatever hon. Members opposite may say—that the world has confidence in sterling. At the moment we are paying our way and we have the prospect of a more stable and healthy economy than we have had since the war ended.

I do not deny the achievements of the past, or what has happened under the Labour Government. For many years I have said that we ought to be proud of the achievements of the British people in the post-war years.

Mr. William Hamilton (Fife, West)

Tell that to the Prime Minister.

Mr. Shepherd

No nation has shouldered a greater burden or done more in the interests of a free society than we have. I say, without any reservation, that a great deal of the credit lies with the workers. In a society such as was arranged by the right hon. Member for Bishop Auckland (Mr. Dalton) both workers and employers are tempted to be less effective than they might be. In the circumstances, our people—the workers and the industrialists—have done a magnificent job of which we can be proud, whether it has been done under a Labour Government or the present Conservative Government.

I am not saying that because the situation has become a little easier we are by any means out of the wood. We do not want gloom or panic, but this country built up its industrial strength and population in conditions very different from those we know today, and since 1913 we have suffered a continuous deterioration in our economic circumstances. Only the greatest effort from all sections of the community can ensure our survival in years to come.

That is why I am glad to see that the trade union movement is realising that there are more important things than industrial strife and party warfare. I appeal to hon. Members opposite to take a little of the party bias out of their consideration of what has happened in the last year. I know that a reduction in production is an unfortunate thing, and I should have been very happy if I could have talked this afternoon about a wonderful increase in production under the Conservative Government. But I am fully satisfied that this reduction in production was not only essential to the British economy but vital to our ultimate stability.

I am convinced that what happened was inevitable; that it has, in the main, been desirable, and that this country is much better off economically and from the point of view of stability.

Mr. Hamilton

Let us have another decrease.

Mr. Shepherd

The hon. Member for Fife, West (Mr. Hamilton) has never yet made an intelligent contribution in this House, and if he were the sole occupant of those benches I should not proceed with my argument.

Mr. H. Rhodes (Ashton-under-Lyne)

After the hon. Gentleman has given us that little homily, may I ask him this question? If it were inevitable, would he not agree that it was expedited by the attitude of so many industrialists who, during the last 12 months, have evaded their responsibility by converting themselves into holding companies and, as a consequence, have not obtained the production which they might have obtained?

Mr. Shepherd

I know that the hon. Member feels very strongly about that and I agree with his view, but I would not pretend that that financial manoeuvre has had any significant effect upon the production capacity of this country.

I want to tell the House why I think this reduction in production has had not a harmful but a salutory effect upon the nation. We all praise what we did from 1945 but we cannot ignore certain facts which obtained during those years. First, there was an intense demand from all parts of the world for our manufactures. Countries like Japan and Germany were relatively out of production. During those years we had an immense increase in the demand for our exports, which went up to 175, taking 1937 as 100— and 175 was a figure which in 1946 and. 1947 I confess I never imagined they would reach.

A good deal of that increase in exports was unreal, and that is particularly true of the exports in 1950 and 1951. Let us face this fact quite firmly, because it is no good talking about increased production in this country and leaving out of account the export possibilities. One can talk about increasing production as an. automatic process in the United States if one wishes, but one cannot talk about increased production in the United Kingdom without bearing in mind the necessity and possibility of selling overseas.

What happened in those last years? There was panic buying in 1950 and 1951, particularly from the sterling area. Australia, earning unprecedented sums from the sales of wool, was importing almost twice as much as her current earnings for 1950 and 1951. It is my case, which we must face quite frankly, that some of those production increases were on the basis of what were obviously phoney exports. Even last year we reduced the sterling balances by £400 million—£400 million of sales which, but for the credits, we might not have had.

I therefore suggest that it is a good thing for the economy of this country that we have got down to a more realistic basis and that people are now buying from us what they can afford to buy.

Mr. Osborne

And what they can pay for.

Mr. Shepherd

We have no longer this phoney basis for our economy. Hon. Members opposite are making a lot of this decline in production—and in some ways I do not blame them—but I hope they will take this point about the need to get down to a realistic basis and to face the fact that this change—although in the textile industry it was much more vicious than I should have liked to see, and although the change was not as evenly spread as we should have liked to see—was essential economically to the ultimate welfare of the nation.

Before I come to certain other improvements, I want to answer one point which the hon. Member for Anglesey constantly made, which is that the British Government's import cuts were responsible for the fall in exports. That is not true at all. The main source of fall in our exports was the sterling area, and Her Majesty's Government made a special point of not cutting imports from the sterling area. It is, therefore, a very improper argument to say that we were responsible for the fall in exports by cutting imports from the sterling area.

May I ask the House to consider one or two of the advantages which arise from this new state of affairs in our industry? First, for the first time since the end of the war, many of our industries can concentrate on quality. This is a most important point to the United Kingdom. I do not say that there was a substantial fall in the last four or five years, but some of the out-turn of our industry—and I include the cotton textile-industry, with which I am concerned—has not been as good in the post-war years as it was before the war.

That is a matter of vital concern because if we are selling, as we are, to a large extent on quality, the maintenance of a high standard is of great importance. That is so even with the engineering industry. The chance for this country once more to re-establish itself as a quality producer is to my mind something of great value to the community.

Secondly, despite what has been said by the right hon. Member for Leeds, South (Mr. Gaitskell), we have brought about a redistribution of the labour force. It has not been as sweeping as some people would like, but we cannot turn cinema usherettes into skilled mechanics overnight. That is impossible. When I hear people say we should switch our industries from making textiles to making complicated machine tools, I realise that they do not know what they are talking about. We have to have a certain measure of skilled labour in order to do these things.

Despite that, we have effected a considerable change. We have lower employment figures in the textile industry—wool and cotton—and there have also been significant changes in the engineering industry, disguised, if I may say so, by the figures themselves, but significant changes nevertheless and changes which are to the benefit of the country. In the textile industry there have been reductions in labour. What is the effect of those reductions? On the whole, people cannot get back the staff they want and they will be more efficient as a consequence. We shall, therefore, get from those industries a higher level of productivity than we have had before.

We have improved the situation in the engineering industry very much more from the national point of view than the figures indicate.

Mr. Donald Chapman (Birmingham, Northfield)

Would the hon. Gentleman, explain that?

Mr. Shepherd

I would not make such a bald statement to the House without justifying it in some way, even though I may not entirely satisfy the hon. Member for Northfield (Mr. Chapman). Included in the figures for the engineering industry are those people who make a lot of light consumer goods. As the hon. Member for Northfield probably knows, in the last 12 months there has been a tendency to drain people from the light consumer side of the industry, where the demand has fallen away, to the heavy engineering industries, where we urgently need men for goods which are in special demand. Even in the engineering industry, therefore, although the broad figures do not convey the impression, there has been a substantial and I hope a beneficial change in the employment structure.

I would not for a moment suggest that all these changes have done other than improve our general situation. We are now upon a relatively—and I say relatively, because it can only be relative in the United Kingdom—sound foundation, and we can build up, in response to genuine demand overseas, the export trade and, indeed, our own home consumption. As one very big textile manufacturer said to me a little while ago, we have got our second wind now. I think it is true to say that the nation as a whole industrially has got its second wind, which is a better and more lasting wind than was the original one.

In conclusion, may I make a brief reference to the general position in the country? I do not share the gloom with which people want to surround us. If I did I would not be giving it much public utterance because I do not think that the general spreading of gloom is in the public interest. But I do not think the nation is in a deplorable position. There are certain fiscal and other changes I would make if I had the opportunity, but we cannot discuss those this afternoon. There are many real advantages this nation enjoys.

We have the access to colonial markets and a more realistic view in the Commonwealth markets of what our needs are. Despite what has been said, we have a very considerable income from invisible exports, and if we are able to cut down the vast amount of Government expenditure and military expenditure overseas those invisible earnings will make a very real contribution towards buying the foodstuffs and raw materials we need.

Without doubt, we have the most skilled working population in the world. If they are given the right lead I am sure they will do even better than they have done up to now. There are men slacking in the workshops and employers on the golf courses. We want to stop employers going on the golf courses on Wednesday afternoons and the man who slacks in the workshop and does not pull his weight. But only 10 per cent. at the very most of those in the industry do not pull their weight, and that probably is also true of employers. We have the right kind of people and, what is more, the trade union movement is recognising, I think for the first time in history, where its real purposes lie, and is measuring up to a noble extent to the responsibilities which face it.

Mr. Mikardo

They criticised the Chancellor.

Mr. Shepherd

I have no doubt that they criticised the Chancellor and I do not blame them for criticising him. We do not expect from the trade union movement, as do hon. Members opposite, an implicit obedience. We want them not only to have the semblance but the reality of independence. We do not mind if they criticise us.

Mr. Mikardo

It would not matter if the hon. Member did mind.

Mr. Shepherd

We, like most human beings, are much the better for criticism.

Above all, I think our chances today are better than we assess them because we do not realise how much more competitive British industry has become in the past 10 years.

Mr. George Darling (Sheffield, Hillsborough) indicated dissent.

Mr. Shepherd

The hon. Member shakes his head, but I am talking of British prices now compared with prices of other nations before the war. We see in most industries, although of course there are exceptions, that our position from the point of view of competition is much better than it has been for the last 15 years.

Mr. Albu

That is due to increased productivity under the Labour Government.

Mr. G. Darling

I probably gave the hon. Member a wrong impression by shaking my head. I was not thinking of the British position in relation to other countries but of competition within this country.

Mr. Shepherd

I was not saying that there was more competition in this country than there had been for the last 15 years. I am glad that the hon. Member wants to see more competition. I hope that that desire will extend to a desire to do away with State monopolies. Our capacity to produce economically and competitively is greater today than at any time, perhaps, since 1913. If we can improve our efficiency and apply the results of our research to our industries we have a great prospect in the future as an industrial nation, and there is no cause for gloom and despondency.

Certainly the Government are doing their part. We are setting up a new kind of society in which we believe that free enterprise, vigour and competition can go hand in hand with social equality and a fair deal for the people of this country. I believe that that is the kind of country we want to work for. I am very pleased with what has happened up to now, I am quite satisfied that we can build on this foundation, and I hope that hon. Members opposite will realise that the situation, so far as production is concerned, is not what it appears and will take out of the question before us the unfortunate suggestion of party bias.

5.25 p.m.

Mr. Maurice Edelman (Coventry, North)

The hon. Member for Cheadle (Mr. Shepherd), at the outset of his speech, referred to my hon. Friend the Member for Fife, West (Mr. Hamilton) in the most offensive terms. I do not propose to follow him in that method of debate. I merely wish to combat the smug complacency in which he developed the paradox that a reduction in output in this country during the last year was good for the country. That is really teaching the workers an economic lesson with a vengeance.

I wish the hon. Gentleman would come to Coventry to develop that argument to the motor workers who were declared redundant at the end of the year. I wish he had gone to Birmingham to tell that story to engineers. I wish he had gone to Middlesbrough to tell that story to the shipyard workers. Then he might have got an answer which would have been more complete and expressive than any answer I can offer him in this Chamber.

The hon. Member did his own Government rather less than justice because in the last month or so, as no doubt will be stated by one of the Parliamentary Secretaries when he replies to the debate, output actually increased. The level of production went up to something like 120. I mention that so that the House will not be misled by that apparent improvement because it has come about owing to seasonal causes and the stimulus to production given by the Coronation. It has come about for a variety of accidental reasons which are not likely to reproduce themselves in the course of the year.

Bearing in mind that much of the recent spurt in output is due to seasonal causes—for example, the increase in production of motor cars is due to the fact that after the Budget people started buying again and to the fact that the motor industry has resumed its pre-war seasonal pattern—we should not draw any wrong or false conclusion from the fact that the index of production has lately risen.

Mr. Shepherd

The hon. Member is quite in error in saying that the Budget had an effect on this, because the figures do not apply to the period after the Budget.

Mr. Edelman

I was arguing the point quite clearly. I am sorry that the hon. Member has not grasped it. Production has lately risen and is continuing to rise for seasonal reasons.

We have, however, to face the more serious fact that 1953 will be a year of very great economic danger for the country. It will be a year of economic danger not simply because, throughout the whole of Western Europe, there has been a pause in production. Indeed, there has been that pause though I do not wish to lay all the blame for it on the Government. There has been a pause simply because there is throughout the whole of Europe a moment of anxiety when manufacturers are uncertain of the future outlook. Consumers who have stocked up and bought in anticipation of the market continuing to rise have suddenly developed anxieties and stopped buying. The result is that throughout the Western world, economically speaking, we find that people are holding their breath and wondering what is to happen.

The most important factor we all have to take into account in assessing the future course of production in this country is what America will do. There, we see very ominous signs. There, we see the whole of the manufacturing community demonstrating a fear of what might be the consequences of peace. We see the whole of the industrial community recasting their plans in the expectation that there may be developments in the international situation. Because of that there is no little apprehension and anxiety through America and also a communicated feeling of apprehension and anxiety in the Western world.

Not long ago a French politician said that when America sneezes Europe gets pneumonia. He meant that if there is an economic malady in America it immediately communicates itself to the rest of the world, and that is demonstrably true. Let us look at American industry. At present, one out of every six is engaged, directly or indirectly, in the arms industry. Take the five leading motor manufacturers; not one of them has less than 14 per cent. of his business occupied in armament contracts, and in one significant case the proportion rises to 30 per cent. That is a very substantial quantity.

If we turn to the aircraft industry we find that the amount of American resources of men and materials devoted to arms production is even greater. It is over 90 per cent. It is clear that if, as a result of the recent developments in the international scene, the American arms programme is to be curtailed or, as Mr. Charles Wilson said, it is to be concentrated, there will be a very substantial diversion from the American arms industry in some other direction.

One might argue that that happened to some extent after the war, when there was a considerable consumer demand in America which took up the slack of the demobilisation of the American arms industry; and that the purchasing power of the American consumer was sufficient to maintain full employment and to provide prosperity in America. But the situation is now substantially different. Today, there is not the same availability of consumer credit to take up the resources of which the arms industry may divest itself. For example, it has been stated, regarding the electrical industry and domestic and household equipment, that of all the households in America wired up for the use of that equipment, over 80 per cent. are actually fully possessed of the equipment which this industry is capable of offering. To that fact may be added the fact that, as a result of American Governmental policy in the last year or so, there has been a wide extension of credit facilities; with the result that most American families today own something on the hire-purchase system for which they are still paying—

Mr. Frank Tomney (Hammersmith, North)

They own everything.

Mr. Edelman

They own a substantial quantity of their household goods under that procedure. If we consider that, we can see how difficult it is to imagine a diversion from the American armaments industry of substantial quantities of materials and resources into the American home. We have, therefore, to consider what will happen to that surplus capacity which will be turned away from defence work.

President Eisenhower recently suggested that if we entered into a peaceful world climate it would be possible to use this surplus productive power to wage a war against want and poverty. But the ordinary American manufacturer will not wait until that ideal condition is realised. He will get out of his difficulties as quickly as possible. The holder of stocks and commodities, when he sees the price of commodities is falling, will try to unload as quickly as possible. Those who have large credit arrangements outstanding will endeavour to call in their credit as quickly as they can.

Taking all in all, it is clear that America is today at a turning point, where she must decide in what way her domestic markets may be protected and. secondly, in what way she will enter the competitive markets of the world.

Mr. Osborne

The hon. Member is so reasonable in his statements that surely he is not suggesting that the American businessman will call in his credits suddenly, or get rid of his stocks suddenly, and bankrupt himself and the customers on which he depends. The American businessman is reasonable enough to do it carefully in order to preserve his own business.

Mr. Edelman

I hope I am not flattering the hon. Gentleman or myself, but because we are dealing with this problem and putting forward a reasonable method by which these things should be done, it does not necessarily follow that individual businessmen, whether American or British, will have the same general concern as we in our approach may have for the long-term prosperity of either America or this country.

After all, the hon. Member for Louth (Mr. Osborne) need only cast his mind back to the time of the great depression in America. He will recall that it was then a case not merely—or rather not at all—of reasonable planning for America as a whole. It was a condition of panic, in which stockholders got rid of their stock and businessmen did what they could to salvage what they could from a disastrous situation. It is precisely to guard against such a situation that we, who have some responsibility in this matter, ought to try to foretell what might happen and put forward our proposals for a way in which it might be dealt with.

First and foremost, I would say that if we are to maintain production in this country we must be absolutely sure that we have such an understanding with the United States that the traditional Republican policy of raising high tariffs against foreign competitors in times of difficulty will not be rashly applied. We have already seen some danger signals. No one knows the reality about the Chief Joseph Dam contract. We in this country are not fully appraised of the situation in which that tender was rejected. But it is significant that Mr. Charles Wilson, the United States Minister of Defence, is, at the best, in close association with General Motors and is, therefore, very much in the confidence—I do not say that in the pejorative sense—of the American business community. It is significant that it was on his ultimate advice that the American Cabinet decided to turn down the tender of the British Electrical Company.

Mr. Mikardo

It was all a carve up.

Mr. Edelman

That indicates what may possibly be the American policy. I hope we shall put our point of view as strongly and effectively as possible—not only for the sake of this country, but for the sake of the United States and the friendship which exists between us—to prevent that sort of thing from developing any further.

There is great danger that if this traditional form of defence against foreign competitors were applied to other industries, say, for example, to the motor industry, it would make it almost impossible for Great Britain to bridge the dollar gap. That is absolutely certain. We are able at present to congratulate the motor industry on the fact that in the last few months sales of cars to the United States have increased. That reflects great credit on all concerned. But if, suddenly, the United States decided to demobilize—if I may use the term—that part of the motor industry, or part of that part of the motor industry now engaged on defence work, it is clear it would prove extremely difficult for us to continue the sale of cars to America. If, of course, they were to raise their tariff barriers it might well be impossible. Consequently, it is at this moment that we must, above all, strive to co-ordinate our economic programme with that of the United States.

I do not want to take up too much time, but I will try briefly to put forward a few constructive suggestions for what we might do both in relation to the United States in this coming year and also in relation to our own resources and for our own economy in order to raise production and productivity. I am told that the other day, when Mr. Taft was asked what he thought of the slogan, "Trade, not aid," he said he was in favour of the second part of that slogan. It may well be that he is opposed to aid, but it is possible that he is equally opposed to trade. Therefore, we have an obligation, and perhaps the Economic Secretary will inform his right hon. Friend the Chancellor of the Exchequer of the view of some hon. Members on this side.

We have an obligation to bring to the attention of the United States Treasury the fact that we are, above all, concerned to trade with the United States and that we wish to arrive at a condition in which there will not be discrimination either by them against us or by us against them. If the Eisenhower Plan were to become a reality, and if part of the present arms investment were transferred and made an investment in the backward areas of the world, I hope that that investment would be so made that it would be non-discriminatory and that we would be able to benefit from the production of that investment—I speak now from the trade point of view—on the same terms as the United States.

I hope that in talking about the United States and the American programme I will not seem to have given the Chancellor of the Exchequer a clean bill of health or exculpated the Government from some responsibility for the general decline in production which took place at the beginning of this year. If there is one specific thing which the Chancellor could do, and do tomorrow, to give a real fillip to production and to make it easier for our industry to compete, it would be now, at this point, to end his deflationary policy and turn towards a policy of controlled reflation.

The party opposite have often claimed to be the friend of the little man, and looking at one or two of them opposite I can well believe that. At the same time, one of the most striking things in the year and a half of Conservative rule has been the hardship which the small business man has suffered as a result of the Government's deflationary policy.

Despite the various major factories and groupings of factories throughout the country, Britain's industrial strength rests to a great extent on the medium and small manufacturer. These people have been very hardly hit by the Chancellor's deflationary policy, the change in the Bank rate, his restriction of credit and his unwillingness to provide facilities. That is where the Chancellor could do something concrete to give a fillip to production, which would be felt not, perhaps, in a matter of days, but certainly within a matter of weeks.

Hon. Members opposite talk about the need for everyone to do a full day's work. Although I disagree with the hon. Member for Louth on many things, I should like to pay a qualified tribute to him. He has spoken very bravely and correctly about the industrial needs of the country and said that in the national interest everybody must work harder. I wish, however, that he had added, and had told his right hon. Friend the Chancellor, that if we want a worker to work harder, he must be guaranteed that as a result of his hard week's work he will, at the end of the week, get not only a living wage, but a wage which corresponds with the realities of the cost of living.

If the hon. Member for Louth casts his mind back to the labour troubles at the beginning of the 1920s, he will realise that they arose not from unemployment, but because the workers simply could not make ends meet; they arose because wages were inadequate to meet the high cost of living. Consequently, although today we may have relatively full employment, I predict that unless the Chancellor takes steps to reverse his wholly iniquitous policy of steadily cutting the food subsidies, we will have labour troubles, which, I am sure, all of us would deplore. None of us wants to see the consequences which I unhappily predict will flow from the policy which the Chancellor has undertaken.

Some of the solutions of the decline in productivity are beyond our control, and some are well within our control. Nevertheless the Government, and the Chancellor in particular, have upon themselves a high responsibility not to regard the present deterioration in our domestic and in the world situation with that smug self-satisfaction which appears to inflict some hon. Members opposite. I hope that that will not be so, and that the criticisms which have been levelled at the right hon. Gentleman from this side, and which, no doubt, will be levelled at him during the debate from the other side also, will have the effect which we all wish of increasing the nation's productivity.

5.46 p.m.

Mr. Arthur Holt (Bolton, West)

I listened with great interest to the lucid and vigorous speech of the hon. Member for Anglesey (Mr. C. Hughes) and was charmed, as usual, by the speech of the hon. Member for Cardiff, West (Mr. G. Thomas). Those two speeches, together with the speech which we have just heard from the hon. Member for Coventry, North (Mr. Edelman), have taken the usual orthodox planning line which now is a regular feature of Socialist Party speeches on any form of economics and trade. No doubt in the ensuing years, as they try to work out their new policy, they will find something better, and no doubt they will eventually turn, as, I believe, they are sincerely interested in obtaining the true, real and complete fruits of the labour of the workers for themselves, to a proper Liberal economy.

The hon. Member for Anglesey referred to the Socialist injection of new hope into basic industries. I shall not proceed in detail to show that there was, of course, a terrific pent-up demand for all kinds of goods after the war, and with an inflationary situation, which they allowed to continue, naturally there was a steady growth of production. I should not have thought that even in their heart of hearts they would have claimed that that was a result of their planning actions.

Mr. Mikardo

Productivity has nothing to do with demand.

Mr. Holt

I do not want to go into productivity now. I wish to refer to the question of a geological survey. It has been mentioned several times in the House by the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan). It was mentioned again by the hon. Member for Anglesey, who used words to the effect that Russia and America were spending huge sums of money on such a survey and that it would benefit the United Kingdom far more even than the other two countries, to spend a large sum of money in this country.

Members may say what they like about capitalist enterprise, but over the last 150 years it has not been entirely numb on this matter; surveys have been taken over many parts of the world. I do not know in detail the geological structure of these islands, but I have no doubt that there are very sound reasons why a lot of money has not been spent for this purpose. It may be that some money has been spent. I do not want to—

Mr. James Johnson (Rugby) rose—

Mr. Holt

I do not want to argue about it; let me continue for a moment. Before hon. Members suggest that this Government or anyone else should spend large sums of money, they should say what justification there is for doing so. If, in fact, nothing is found, and one has spent £10 or £100 million—thousands of millions, if the hon. Gentleman likes—such a survey never could be justified.

Mr. Johnson

In all fairness to my right hon. Friend the Member for Ebbw Vale (Mr. Bevan), may I say that he never asked for a geological survey, because we have the finest geological survey in the world. What he asked for was a geophysical survey, and there is a world of difference between the two.

Mr. Nabarro

If the hon. Gentleman will permit me, may I say that it is the fact that, in the last 200 years, there has been an almost continuous geological survey going on in this country, and the right hon. Gentleman who is sitting on the Front Opposition Bench will confirm that. I think that all the opencast coal mining surveys which are carried on in regard to boring and drilling are based on this geological survey which we have already in existence.

Mr. Holt

The hon. Gentleman would agree then, that there is no need for such a service?

Mr. Johnson

What about the geophysical survey?

Mr. Holt

I am not going into that. I understand that the purpose of it is to find out what resources we have.

A further point made by the hon. Member for Anglesey was that if we cannot produce and sell sufficiently the right goods in the right places and at the right prices our days were numbered, or some such phrase. I entirely agree with him, but I would say that this country, to a certain extent, was not doing that during the period when the Labour Government were in office. It is a natural result that we shall not get the right goods to the right places and at the right prices if we have inflation in our economy, and, anyhow, in my opinion, the amorous attachment which the Labour Party have for physical controls diverts goods from their normal channels.

Mr. Alfred Robens (Blyth)

Into the right places.

Mr. Holt

The hon. Member for Anglesey also remarked about the industrial outlook being bleak, and the hon. Member for Coventry, North also said that 1953 is a year of great danger. In one sense, I agree with him; in another sense, I do not.

Mr. Mikardo

A proper Liberal sentiment.

Mr. Holt

I am not one of those people who sees everything in black and white, and I think the Socialist Party have been making a great mistake in pretending that they can. So far as industry in this country is concerned, there is a great deal that is right with British industry, and I strongly deplore the action of those who are constantly crying stinking fish about British industry, whether it be the workers, the management or the entrepreneur.

To put it another way, I think that our situation can be described by looking at this country as a huge trading company, which is extremely productive, has a lot of customers, but is short of finance. It has a lot of debtors and creditors, things go just a little the wrong way, with a few bad debts, with the result that that company, although a huge one with a productive capacity which is very efficient, is in a very difficult situation. To that extent, I would agree with the hon. Gentleman. I think that next year, and for several years, our position will be dangerous, but, in all fairness, I do not think it is dangerous because of a lack of quality or a lack of competitive ability in Britain industry.

As for the policies referred to in this Motion, which have been pursued by the Government in the last 12 or 18 months, it is my view and the view of my party, that, in general, the Government's economic approach has been the correct one. We may have some disagreement about some of their other policies, and we may even disagree on some details of their economic policy, but, in general, we approve of it. I think that the tighter money policy has brought a greater sense of reality to a large section of British industry. There are, it is true, some people whose sense of reality is not yet apparent, but, when their order books come back to more normal proportions, and when they feel that they have to struggle for orders, they will get that extra keenness in their work.

In supporting this view, I should like to quote from the "Manchester Guardian Survey" which was published a few months ago. One of its articles says this: The main effect of the tougher monetary policy seems to have been a widespread trimming and redistribution of stocks. A more general effect (though not caused by financial stringency alone) is that managements have started to impose economy. Easy spending is being reduced in factories and stores, in administration and 'trimmings.' There is great scope for that. Some plans for the less than essential capital expenditure are being postponed. Later, it says: Whatever the reasons, a more competitive attitude is beginning to gain ground. Prices and profit margins are being challenged"— let the Socialist Party note that— at home as well as abroad. There are some signs that price rings are becoming ineffective. That is perfectly true. I can only speak of the industry that I know, but, undoubtedly, I have seen evidence of that. It goes on: Costs are coming under serious review and pressure. On the side of labour, a more serious attitude to work and better understanding of production problems are widely reported. Many managements expect productivity to rise quickly as soon as a recovery of demand justifies full capacity working. That last sentence is a qualifying phrase.

From the comparatively small section of British industry of which I have any knowledge, I can say that my own impressions are entirely those of the "Manchester Guardian Survey," and I think that the Government's economic policy has been well justified on those grounds. The hon. Member for Coventry, North made some comments about what the hon. Member for Cheadle (Mr. Shepherd) would get if he spoke to the Coventry motor car business or the shipbuilders of Middlesbrough. It often happens that, when one says things that are unpalatable and unpleasant, the people who are immediately affected adversely by certain conditions, though one tries to explain them and say that, in the long run, they will be for the general good, do not like it, and one "gets the bird." I do not think we should suggest that, because of that, the policy is necessarily wrong.

Mr. Edelman

The point I was making was that the principle enunciated by the hon. Member for Cheadle, namely, that a drop in production was good for the workers, was in itself a bad principle, and that, if he went to enunciate that bad principle to the workers in Coventry, he might get what the hon. Gentleman refers to as "the bird."

Mr. Holt

I must say that I did not understand the hon. Member for Cheadle to mean it in the narrow sense expressed by the hon. Member for Coventry, North. I took him to mean that as a result of these policies and of stopping inflation there was a reduction in production, but that the policies as a whole were good. Therefore, it could be said that the actual reduction of production is good, but I think that is taking the argument to an absurd length.

To take my point about this country being a huge trading concern, if it runs with too little finance and has bad debts and gets into difficulty, then it has to reduce its standard of activity to such an extent that it can carry on with the capital at its disposal. People who run down British industry and say that we in this country are not competitive should give more figures to prove their case. Just because particular goods sent to Africa, let us say, are not of the highest quality, are we to understand that the whole standard of British industry has dropped in quality?

What are the facts of the matter? The pithead price of British steam coal in February this year was 57s. 6d. a ton. The price of the same type of coal in France was 96s. a ton, in Belgium 100s. a ton, and in Germany 85s. a ton.

In a recent bulletin circulated to hon. Members by the Iron and Steel Federation, the price of steel angles in the United Kingdom is given as £28, in the U.S.A. as £36, in Germany as £41, in France as £36 and in Belgium as £31. I have no doubt that hon. Members also received the other day a copy of a pamphlet issued by the cement industry which shows that British cement is the cheapest in the world.

Mr. Robens

With great respect, the hon. Member is quoting two commodities of which there is a world shortage, and regarding which the question of competitive price does not arise. If he will return to the commodities to which my hon. Friend referred he will find that in various cases Britain is being outpriced.

Mr. Holt

I do not understand why just because there is a world shortage that is some peculiar reason for British products being the lowest priced.

Mr. Robens

The position I am trying to put to the hon. Gentleman is this. Although Durham coking coal is the lowest priced, we cannot sell more of it than is mined. The truth is that not sufficient is mined for our own use, let alone for export.

Mr. Holt

The right hon. Gentleman implies that because we are receiving the lowest price for commodities of which there is a world shortage we are not getting the best price which other countries are getting. That is a very serious state of affairs and one which should be put right as quickly as possible.

There is the case of the electrical equipment for America, and at the moment there is a lot of discussion on the Simpson Bill. Complaints have been made of British bicycles sweeping the American market and "stifling" it. It is also said that British shipping has sufficient business on its order book to keep it going until 1956. The chief complaints about British industries are not that they are not competitive, but that, on the whole, their prices are too low and their delivery dates too long. Germany is getting more ships to build because they cannot be built in British shipyards, and the same kind of thing applies to other industries.

The hon. Member for Kidderminster (Mr. Nabarro) commented recently about the National Coal Board buying engineering machinery from Germany. That action was defended on the grounds that they could get the machinery from Germany quicker than it could be obtained in this country where it would take something like 18 months to deliver. My argument is that British industry is competitive and that we have little to fear on those grounds. I am concerned that every inducement should be given to British industry to become even more competitive. Policies of this kind cannot force more production out of this country; they can only provide incentives and rewards, and, indeed, penalties. I would like to see the continuation of the policy whereby the screw is turned harder on inefficiency while efficiency is rewarded.

Mr. Nabarro

How?

Mr. Holt

I will come to that.

I consider that a natural developments this would be a gradual freeing of trade. I know that the hon. Member for Kidderminster is in favour of various protectionist fallacies, but there is no doubt that they induce inefficiency. They put up the cost of the goods made in this country. We want to get to the position where all British goods can stand on their own feet in the world market, and in the difficult circumstances of the moment we should not be producing anything which can only survive because of protective tariffs.

I can see no reason why the tariffs which we have imposed at the moment should not be examined with a view to their gradual reduction and removal, even though it may be necessary for the time being, owing to our financial difficulties, to keep on such things as licences and quotas. The point is that as we are able to increase quotas and lift licences the goods coming into this country should be priced as low as possible.

In this respect, I welcome the initiative of the President of the Board of Trade in setting up the committee under the chairmanship of Sir Henry Wilson Smith to look into the question of the tariffs on machinery imports into this country. I hope this will be the beginning of a number of other investigations of this kind. Where home produced goods are competitive, tariffs serve no useful purpose; they only tend to put up prices. On the other hand, where the home producer is uncompetitive, the nation's resources are diverted by tariffs from their most beneficial use.

If the Government will let their thoughts run on these lines there will be a real chance of increasing productivity in this country. We should work along the lines of the things that we can make best and most efficiently and that the world wants. The ultimate result entirely depends upon the people. Neither this Government nor any other Government can do much more than free the channels of trade and produce the right types of inducement.

It is argued that much of the initiative and vigour went out of this country from the early part of this century. There seems to be evidence that after a long period of prosperity we were taken aback by the industrial growth of other countries. I cannot see why we cannot recover from it. It finally depends upon the people. If the people decide that they want a high standard of living and are willing to work for it, then by vigour and enterprise—I am sure we have the brains—undoubtedly, in the next few years, we can put this country on a very firm foundation.

6.12 p.m.

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

I am glad to follow the hon. Member for Bolton, West (Mr. Holt). I hope he will excuse me if I refer rather more to the terms of the Amendment and to the manner in which it was moved. I had hoped that we were to have a constructive and non-political debate, but it was kicked off in a highly contentious manner.

It was claimed by the hon. Member for Anglesey (Mr. C. Hughes) that our industrial output had fallen because of a change of Government. If the majority of Members of this House try to be objective, and succeed, they will agree that the post-war years were totally artificial. There was an enormous pent-up demand, not only in this country but in the whole of Western Europe and the industrialised world. There was an additional factor that we had immense loans from America. There was the United States Loan, Marshall Aid, and E.R.P., amounting to an average of £300 million each year, more than double the present rate, so that we had not the same need to earn our raw materials as we have today. There was also a run-down of our sterling balances, which even today is continuing and is distorting the picture.

We are now realising that we have to stand on our own feet. I was recently in Switzerland, and it was alarming to observe the extent to which the Germans had pushed British cars out of that market. In the years immediately after the war one could claim that 80 per cent. of the cars were British. There was an immense amount of good feeling towards British cars and manufacturers, but I regret to say that we have almost lost that market. Now, about 80 per cent. of the cars are German. That change has been achieved by the most meticulous and thorough selling processes by the German nation. What has occurred in Switzerland must occur in other countries. We have to look to our future if we are to maintain a stable level of employment such as we all desire.

It is almost a bromide today to say that unless we export we die, but it does no harm to repeat it in this House. Sometimes we tend to be rather academic and unrealistic. The terms of the Amendment suggest that because our total industrial output has fallen that is entirely unhealthy. I agree with my hon. Friend who said that it is not totally unhealthy. What is important is not the total volume of our production but that we should produce things for which the world asks. I would like to have seen some export incentive given in the Budget. It is much more trouble to export a thing than to sell it in the home market, because overheads go up and we have to secure orders in the face of very severe competition.

Many of our markets today are rather feather-bedded. I should like to have seen some definite incentive offered to people who are prepared to go out for the more difficult export markets. I am sure that consideration must have been given to this point. If we are unable to find a foolproof method of introducing an export incentive then the overall method offered by the Budget is the next best. Industry will not only try to equip itself by the use of the initial allowances but about 16 million people will pay less Income Tax and will have added incentive to earn more.

With one point none of us disagrees. It is that if we are to maintain keen prices we cannot afford to have a large measure of unemployment. We must keep employment at a high and stable level. We must have a marginal measure of flexibility but I think hon. Members will agree that it is wholly good that some 32,000 extra people have joined the aircraft industry, and there have been increases in other important industries in the last year.

Mr. Robens

Would the hon. Member care to answer this question: what does he suggest should be the extent of this flexibility in terms of a percentage proportion of the working population?

Mr. Orr-Ewing

I am sorry, but I am not so wise as to be able to say at any one moment what that measure of flexibility should be. I do not accept the yardstick of the right hon. Member for Leeds, South (Mr. Gaitskell), who quoted a "full employment standard" when 3 per cent. were unemployed. That means 642,000 people unemployed. Some slow shift is desirable if we are to help our export markets.

Sir William Darling (Edinburgh, South)

Would my hon. Friend not agree that it would be more easy to arrive at a calculation if we analysed the industries of the country? It might be that 5 per cent. in the distributive trades would be adequate, whereas 3 per cent. in the engineering trades might be inadequate.

Mr. Orr-Ewing

That is an interesting suggestion, but I can hardly think that the statistics could be obtained without industry being overloaded with the need to compile extra forms.

We have been told that our stocks are lower and our work in progress is lower. We have been assured from the Treasury Bench that the country's overall stocks are about the same. If in an industrial country our stocks and work in progress are lower, in many cases that is wholly healthy. I believe it arises from the point that within the last year and a half our supplies of raw materials and semifinished products have become easier, and there is no longer the need to order 18 months or two years ahead, which placed a great financial burden upon industry. It took about two years to get delivery. It is very good that today work in progress and the cost of our stocks has moved to lower levels.

Mr. Mikardo

I am trying to follow the hon. Gentleman, but he has seemed to me in the last two or three minutes to be arguing two ways. One argument was that our work in progress has not fallen, and the other was that it was healthy that our work in progress had fallen. Would he tell the House which of those two arguments he prefers?

Mr. Orr-Ewing

I am sorry if I did not make myself clear, and I am grateful to the hon. Member for drawing me on this point. We have the assurance from the Government Front Bench that overall stocks have not fallen, but if one consults any industrial balance sheet today one will see that stocks held by different companies and the work in progress of those companies are in general less than they were a year ago. I think that that is a healthy sign.

In the last few years this country has had a bad name for the unpunctuality of its deliveries, and our greatest challenge is to make sure that we not only deliver to the standard of British quality, which has been always high, but that we can guarantee prompt delivery and beat our competitors anywhere in the world. This Amendment is almost wholly political and I am afraid that it was introduced in a highly contentious political speech. I sincerely hope that the House will reject it.

6.21 p.m.

Mr. A. G. Bottomley (Rochester and Chatham)

My hon. Friends the Member for Anglesey (Mr. C. Hughes) and the Member for Cardiff, West (Mr. G. Thomas) are to be congratulated upon initiating this debate today. It is to be regretted that the Government have not seen fit to find time to discuss his important matter. I do not want to follow the hon. Member for Hendon, North (Mr. C. I. Orr-Ewing) except to say that his whole argument is fallacious, for the reason that he himself would be the first to admit that during the period of office of the Labour Government coal stocks were lower than they are at present.

The reason for that is that there was full employment then, and that is not the case today. Therefore, it does not follow that if stocks are high or are low that state of affairs is a true indication of production effort. I cannot remember details at the moment, but I am sure that my right hon. Friend the Member for Blyth (Mr. Robens) will be able to show that the stocks are lower than before and will be able to give figures to support that contention.

Mr. C. I. Orr-Ewing

Surely the right hon. Gentleman is not arguing that there is unemployment today. I quoted the figure given by the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) to the United Nations Assembly, when he said that his full employment standard for this country was 3 per cent. unemployed, which works out at 640,000 unemployed. That figure is infinitely less today and to the joy of everybody the figures for both full-time unemployment and for short-time work has fallen materially in the last year.

Mr. Bottomley

I do not accept the hon. Member's contention. I think that there is a great deal of hidden unemployment, but I do not want to be led astray into a discussion on that subject. I want to show that there is a difference between the policy of the Government and the policy pursued by this side of the House.

The hon. Member for Bolton, West (Mr. Holt) said that Socialists always talk about a planned economy. It is right that we should do that. We believe in it. When the party opposite were in Opposition they constantly attacked us because we believed in that policy. They believe in unfettered private enterprise. They believe in a competition which says, "Let those who can make a profit in any way do so." The country generally now suffers in this matter of production mainly because we are not getting the lead that we had in the earlier years.

Public opinion does not yet understand this problem as it should do. The late Sit Stafford Cripps did his best to educate public opinion to the necessity for increased production. I have a high regard for the present Chancellor of the Exchequer, but he has set that education of public opinion into reverse because he has said in this House, by his Budget statement, that all is well, while everybody here knows that the situation facing the country is a difficult one. We leave things to the trained economists and financial jugglers and the country is profoundly ignorant of the bad situation that will face it as time goes on.

When I was in office I had an opportunity of looking at industry in general. Some sections of it were extremely good and in a planned economy they played their full part. But I remember one case, in 1945, of an industry which, before the war, co-operated with an American firm in producing machinery and exchanging "know-how" and by that means procured the best machinery possible for mutual use. That arrangement was interrupted during the war.

After the war the Americans, with some generosity, said that they would like to come over and talk to the responsible people in that firm because in the intervening years the Americans had achieved a higher standard and wished the British firm to benefit from sharing that knowledge. The American industrialist arrived in the North of England in the early evening but he was not received on arrival. He telephoned to ask whether he could see the people concerned. He was told, "Yes, come along but not before nine o'clock in the morning." Is that the way to increase production? We should do all we can to see that a British industrialist of that kind is spurred on to do better for himself and thereby for his country.

The nationalisation of the coal industry is now accepted by all. Nobody would dispute its necessity. No doubt many hon. Members have been down coal mines. I went down one before the war. The floor was uneven and the roof low and the face was one-and-a-half miles from the pit shaft. I was tired before I got to the face. I said, "It appears to me that you would get more coal if you provided transport to get the men to the face, because then they would be less tired, and if you had some coal cutting machinery." The manager who accompanied me said, "You are quite right and I have told the directors many times, but they said, 'We are making a profit.'" That is the trouble. We have concentrated on profit and not on service for the good of the country.

Nobody can dispute that after 1945 production increased because of a planned economy. I could give figures, but I am sure that nobody would dispute that production generally rose each year. It is only with the advent of the present Government that it is beginning to fall. The Prime Minister, who used to make many statements in the House condemning our country, spoke the truth in January, 1952, when, addressing the United States Congress within a month or two of the General Election, he said that production in Britain had risen continuously since the end of the war. He could not claim the credit for the present Government. The very fact that it is now beginning to fall indicates that the policy now followed is not the right one.

I suggest that unless the Government are prepared to take more and not less interest in production generally—which will mean interfering with industry by control and other means—our economy will suffer. I do not want to give the impression that I am attacking the employer side of the industry alone. I would be the last man not to admit that the workers' side is not perfect. But the fact is that the workers have not put their full weight into the effort at times because they have not been sufficiently educated to an appreciation of the position of the country and also because of the fear of unemployment. Is it likely that with the fear of unemployment facing them again they will make their best effort?

Mr. Shepherd

Does the right hon. Gentleman not regard the statement made by his right hon. Friend the Member for Blyth (Mr. Robens) as a considerable cause of the feeling to which the hon. Member objects?

Mr. Bottomley

No, I think not; but my right hon. Friend will no doubt speak later and answer for himself. However much one may try to improve their conditions, if one is to leave with the workers the impression that they are only wage slaves, they cannot be encouraged to increase production. I am reminded of a Japanese industrialist who, before the war, came to the Clyde to buy ships. About two o'clock the works hooter sounded. People were scampering and rushing to work. The industrialist from Japan said, "I do not want to buy any ships. How much is the hooter?"

It is an intolerable indignity that a free citizen—a worker—should have to depend for his livelihood upon some overseer or some person who is not really interested except to the extent that he gets a profit from industry. We have to give the workers an opportunity of joining in and having their say in production matters. I know that we have joint production committees, where the workers are allowed to talk about canteen facilities and such things, but that is not enough. The worker must be given an opportunity of talking about management generally. He has to be shown that upon the success of production in a given factory depends his very standard of life and the social conditions which he wants to enjoy. Unless we can put that over we shall fail in our objective.

The only proposition I have to make-is that we have far too many Ministries dealing with production and industry generally. We have the Ministry of Supply, the Board of Trade and the Ministry of Labour, all dealing with this subject—and the Ministry of Materials comes into it.

Mr. Nabarro

Scrap it.

Mr. Bottomley

That is what I was coming to. I believe it is the intention of the Government to scrap that Ministry, but I suggest not that it should be scrapped, but that there should be co-ordination of all these different Ministries which are connected with industry. They should be focused in one particular Department. It might be worth seeing whether a Ministry of Industry could serve a useful purpose.

I make that suggestion in the belief that it would be possible to focus attention and influence public opinion by that one Ministry stating what is required in industry. The managements and workers should be concentrating upon what is good for industry and not only what they will get out of it. It would result in a better economy and better conditions for the country generally.

6.32 p.m.

Captain Richard Pilkington (Poole)

Like my hon. Friend the Member for Hendon, North (Mr. C. I. Orr-Ewing), I very much regret that so much political partiality was introduced by the hon. Member for Anglesey (Mr. C. Hughes). I should have thought that the problem we are discussing was vital enough to have raised this subject above party considerations. To the extent that non-party considerations have been put forward by some hon. Members opposite, I am glad.

I want to say a word about the speech of the right hon. Member for Rochester and Chatham (Mr. Bottomley). Like some of his hon. Friends he made a great deal of what he claims, rightly in many respects, was the success we achieved, from 1946 to 1951, in production. But hon. Members opposite are very wrong when they arrogate the whole of the praise for that achievement to their own doings. I have heard most of the speeches made by hon. Members opposite in this debate, and I do not remember one of them mentioning anything about the tremendous advantage which their Government enjoyed in having to deal with a sellers' market. They know that that sellers' market has passed and that we are now dealing with the far more difficult circumstance of a buyers' market.

Mr. Bottomley

I would remind the hon. and gallant Member that we had import restrictions at that time, and in many cases they were much more severe than they are today.

Captain Pilkington

That may be so, but it does not alter the fundamental importance of the different kind of market with which we now have to deal.

The other point made by the right hon. Member for Rochester and Chatham was the importance of making employees realise the urgency of the problem with which we are dealing. I am in entire accord with that. It is absolutely vital that all those in responsible positions today should concentrate as much as they can in explaining to all concerned the "why" of the industrial crisis with which we are confronted, and suggesting the "how" of overcoming that crisis.

There is, however, a more deep-rooted and long-standing malaise with which we have to deal. It is an unfortunate fact that ever since the early years of this century production per man-year has been falling far behind that of the United States. The position now—in the middle of the century—is that production per man-year in the United States is about double what it is here. It is a curious fact—and one to which I do not attach undue importance, but which I think I am justified in mentioning in view of the phrasing used by the hon. Member for Anglesey in his Amendment—that that deterioration in our position as compared with that of the United States has been coincident with the rise of the party opposite and their teachings.

Since the hon. Member for Anglesey referred to the fall in production since this Government came into office, I am justified in referring to the fact that productivity has deteriorated, comparatively, as the party opposite have attained more power.

Mr. Mikardo

I am enjoying the non-partisan speech which the hon. and gallant Member is making. Would he be good enough to let me know in advance when he is next going to make a partisan speech? I should love to hear him.

Captain Pilkington

I am sorry if the hon. Member does not think that we should answer the attacks made upon us by hon. Members opposite.

Although, as I said, I do not attach too much significance to the fact which I have just mentioned, there is a very great need for a reversal of the general trend towards increased restrictive practices, which has grown up for a variety of reasons over the last few decades. I am glad that one or two hon. Members opposite have mentioned it. A scientific and technical approach to the problem, which can be shared by employer and employee in the industrial world today, will make an immense difference in the production per man-year. If only we can get rid of the old sense of the need for some sort of restriction the whole trend can speedily be reversed, provided that all concerned work together.

We have to take into account the fact that major happenings in this half century have hit us more hardly, in an economic sense, than any other Western nation. We are the only Western nation which, in both major wars which this world has undergone, has fought from the first week to the last day. Although we saved ourselves and our soul as a nation we paid and are paying a most grievous material price.

The situation with which we are confronted today is a challenge to every aspect of our industry—to the employer and the employee, to the office and the factory and to the people who try to sell our goods abroad. If there is a general co-operation, above and beyond our party sparring we can make a vital change in our economy. Reduced to its simplest terms, the situation is that every producer has to try to make that little more at home and sell that little more abroad. Surely that is common ground and something in which we can all of us co-operate.

6.40 p.m.

Mr. George Darling (Sheffield, Hillsborough)

The hon. and gallant Member for Poole (Captain Pilkington) and the hon. Member for Hendon, North (Mr. C. I. Orr-Ewing) complained of the partisan speech made by my hon. Friend the Member for Anglesey (Mr. C. Hughes) in opening the debate. The Tories complain of partisan speeches about the economic affairs of the nation coming from the Labour Party only when they are in power. It reminds me of an incident during the last General Election when two dear oldish Tory ladies were leaving one of my meetings and were heard by the stewards to say, "Wasn't it terrible? Just political all the way through. Not like Mr. Churchill, who is trying to keep politics out of this election." That is typical of the Tory approach to partisanship in these things.

I seriously ask hon. Members opposite who take that line whether they wish us completely to forget the speeches made by their hon. Friends, and sometimes by themselves, when they were on these benches and the Labour Party were in their place from 1945 to 1950.

Mr. Mikardo

"Weary Willies and Tired Tims."

Mr. Darling

If they looked up their speeches they would find that partisanship is not a crime that comes to our door alone. However, I am not going to make a partisan speech. I want to say one thing to the Liberal Party.

Mr. Mikardo

It has gone.

Mr. Darling

There was the fantastic idea of the hon. Member for Bolton, West (Mr. Holt) that we should stop boring in the ground in this country in order to find what is there, as there might be things which would be very useful to our economy, because, so the argument went on, if we continued boring into the ground and did not find anything we should be wasting our money. That kind of fantastic idea is largely responsible for what has happened in the past in this country when people have been afraid to spend money in order to develop our economy. If we had not gone on with the borings we should not have found the field of potash in North Yorkshire, which is going to be very important, and many of the new coal seams which can be developed.

Mr. Nabarro

Surely the Chancellor of the Exchequer has recognised the importance of the point which the hon. Gentleman is making in reintroducing initial allowances—10 per cent. for industrial buildings and 20 per cent. for plant and machinery, but 40 per cent. for mining explorations?

Mr. Darling

I was not criticising the right hon. Gentleman; I was having a word with the absent Liberal Party.

I do not want to follow my hon. Friends or hon. Gentlemen opposite in discussing the fiscal and other causes which may be said to be responsible for the decline in our industrial output since the Government came into office. My hon. Friends have covered those points very effectively. I want to ask the Government and their very competent spokesman, the Economic Secretary, what is to be done to raise our industrial output from this point onwards, not only to the level which was reached before the Government came into office to reduce it, but to much higher levels. Unless we can reach a much higher level of industrial production, all talk about improving our standards of living will be just nonsense.

I shall not quote figures, but I will merely state that our industrial production was far too low even before the present Government came into office, for it was not enough to make us self-supporting, to provide a national prosperity which was really sufficient to cover our welfare schemes and all the other desirable things that we either had or wanted, that is, without high taxation. Much of the complaint of the Tory Party about the present very high level of taxation is misdirected. It might well be argued that the level of taxation is not absolutely too high but that the taxation is too heavy a burden because our incomes are too low, and that we should be directing our attention to the improvement of our income, which means improving the efficiency of British industry; for there is far too much of British industry which is inefficient, backward, unprogressive and completely poverty-stricken in ideas.

The Chancellor has now decided, as the hon. Member for Kidderminster (Mr. Nabarro) has reminded us, to give industry some relief from taxation. With the proposals for initial allowances and the taxation reliefs, this is hoped to be an incentive Budget, an incentive to industry to be more forthcoming and more expanding. I trust that the Chancellor's hopes will be fulfilled, but what is the Government going to do with the firms who do not take advantage of the concessions and do nothing to get their industries moving?

Reading "Time" magazine in the Library a little while ago, I noticed a comment by a Midlands industrialist upon the so-called incentive Budget. He welcomed the Chancellor's concessions, and then went on: We have had life too easy… There has been a safety-first attitude… Every year I"— that is, the manager of the concern— send a manager to the United States or the Continent to look for the best machinery for the job we do … but many of us are in a rut and will not follow the lead. A new outlook is needed. I agree with those views. We have to separate the sheep from the goats, the inefficient firms from those which are efficient and strive for greater efficiency. We must separate the enterprising firms from the backward firms; we ought not to treat them all alike either in the matter of fiscal concessions or in any other way.

For some years now successive Governments and politicians, economists and the more intelligent industrial leaders have been trying to get the rest of industry interested in how to improve production, and they have been following a policy of persuasion. Selected teams have visited the United States under the auspices of the Anglo-American Council on Productivity. We have had excellent informative reports but, in spite of all the conferences, all the reports, all the discussions and the rest of it, we still have far too many backward firms who are not taking the slightest interest in all the work that is being done for them. If persuasion has failed to do the job—I think it has—what are the Government going to do with the firms which are not doing their proper job and are not making themselves efficient and progressive?

There are, of course, many very good firms in British industry which are efficient, which do install modern machines, which are willing to spend money on new equipment and which have excellent labour relations, but they are few and far between. In the general run of British industry, the majority of firms are not enterprising enough, and their labour relations are often lamentable. Backward management has somehow to be compelled to be efficient; I believe that persuasion in dealing with backward firms has failed.

If they are to face up to the real problems of our industrial backwardness, the Tory Party have a very tough problem to face, because the widespread inefficiency in British industry is clearly a denial of one of their basic principles, a denial of the idea that competition will drive firms to be progressive, to take risks and to be enterprising. The real reason why private industry is not as progressive as it ought to be and is not really expanding today is the absence of some compelling force, whether it is free competition or Government intervention of some kind.

I disagree with my right hon. Friend the Member for Rochester and Chatham (Mr. Bottomley) when he says that the party opposite believe in free competition. For far too many years the party opposite have allowed price rings and monopoly and restrictive practices, of all kinds, to grow up which are now bedevilling British industry. If they really believe in free competition this is the time when they ought to tell us how they propose to restore free competition to British industry.

In my view, the way to deal with this lack of efficiency in so much of British industry, with this lack of drive and enterprise, is to have more Government intervention. If we had time I could describe how that job could be done, but I do not expect the party opposite to agree. Therefore, I am entitled to ask them what they propose to do. I hope that the Economic Secretary to the Treasury will tell us, because he is a believer in free competition, how the Government propose to restore free competition to British industry, which has far too many trade agreements of a restrictive character, far too many price rings, quota schemes and monopolistic practices. I could give a number of examples—in fact I have jotted them down—of backwardness that I have seen in my visits to British industry, but that would be an abuse of the arrangements for this debate.

I want to continue with a reference to the trade union aspect which has been raised on this side of the House, and which is raised by hon. Gentlemen opposite, not in this House but when they are speaking outside and there are no people there to argue with them. Some hon. Members opposite frequently talk about trade union restrictions and try to put some, if not the whole, of the blame on the rise of the Labour movement, as did the hon. and gallant member for Poole. There may be trade union restrictions here and there—I do not know—but it must be remembered that the trade unions during the last few years have shown that they are far more willing to accept new ideas and methods, new equipment and machinery than many of the black sheep among the employers. It must also be borne in mind when we discuss this matter that the trade unions did not create our industrial system. They have had to adjust themselves to it.

In the past the main job of the trade unions was unfortunately to defend the very low standards and the very low incomes that the workers had. It may be that they might have paid more attention then to the positive job which I believe the trade unions have to do—to act as the spur, the driving force, to make management more efficient. But their defensive job was very difficult, especially in the inter-war years. In spite of all that dark history the unions and the workmen have shown a willingness in recent years to accept new ideas and new methods. The trouble is that they have had so little encouragement in so many of our industries from the management.

I could take examples from the motor industry, where some organisations have been progressive and go-ahead, not only putting in new machines and equipment at great cost but in making sure that they had the right kind of working arrangements with their men and the trade unions so that the equipment they installed would be properly used, and they would have the co-operation of all in the difficulties which are encountered. But there is a motor firm which is involved in a legal inquiry which I cannot talk about, though I do not think I should be out of order in suggesting that the Austin Motor Company has shown very little sign of that co-operation. Consequently, bad labour relations have led to great difficulties.

I am confident that every sensible and progressive employer who has fixed up the right kind of association and cooperation with his workers would agree with what I have said—that, given the right approach, the co-operation is there and can be properly used for the development of our industry. We must get the facts right, and I mention this in order to refer to the leading article in "The Times" this morning, which has got the facts of the engineering wages case wrong. In its conclusion, that leading article asks the engineering unions to revise their wages system.

The Minister of Labour and his Parliamentary Secretary know the history of this matter. The request for a new wages system came from the unions in 1946. It was a Ministry of Labour court of inquiry which asked the employers to go into consultation, to get on with this job of devising a new wages system, because the old systems of piece-work prices are an inhibition on progress and development. To blame the trade unions for not requesting a new system is at variance with the facts. The unions wanted a new wages system. It is a reactionary body, the Engineering and Allied Employers National Federation, which is standing in the way of progress in this matter. It is one of those monopolistic bodies—I use the term advisedly—which are doing so much damage to our industry in the sense that they stand in the way of development.

The Government must deal with the question of whether these employers' associations, if they work, as the Engineering and Allied Employers Association is working, to stop a new wages system coming into operation, should have action taken to deal with them. I ask again how the Government propose to make our industrial system more prosperous. I ask quite seriously what they propose to do to remove all these vestiges of monopoly and restrictive practices which exist, and to restore real competition in private industry.

Those are the crucial questions in this debate. Perhaps hon. Members can get a lot of satisfaction for themselves in discussing just what happened between 1945 and 1951 and what happened during the last 18 months; but we ought to be concentrating our attention on what will happen from now onwards. This is the crucial matter, but just as I am certain that night follows day I am absolutely sure that the Government have no answer to these questions.

6.58 p.m.

The Economic Secretary to the Treasury (Mr. R. Maudling)

The last time I rose at this Box with the remark that I hoped it would be convenient for the House if I rose at a comparatively early stage in the debate, certain unfortunate consequences followed; but I want to repeat that remark today to make it clear that I assume that the debate will continue and that many hon. Gentlemen on both sides intend to take part. I believe that it is a convention on these occasions for the Government point of view to be put by an intervention in the course of the debate.

Already, there have been a number of most interesting and serious speeches from both sides of the House. In the course of my main remarks I should like to deal with the general arguments. Perhaps I can start by dealing with one or two points. I wish to congratulate the hon. Member for Anglesey (Mr. C. Hughes) I had the good fortune, when he made his maiden speech, to congratulate him then on an excellent speech about some local problems affecting Anglesey. I congratulate him both on his fortune in having the luck of the Ballot and also on raising this very important question.

I cannot, however, accept the main tenor of his argument, which was that throughout the years of Labour Government until the General Election of 1951 production was steadily rising and that, with the change-over of Government, there was an almost dramatic change and there followed a fall in production. That just is not so. In fact, production was rising until the end of 1950. It started to flatten out at the beginning of 1951, and, broadly speaking, from the beginning of 1951 until now—with the exception of an abrupt dip in the summer of 1952—the general level of production was about stationary. It is true that the rise has not continued, but there has not been this dramatic change from rise to fall.

Many of the occurrences and many of the developments in production in 1952, as I hope to try to show later, largely originate from the developments in 1951. Developments in production very often follow at a considerable distance after changes in the level of demand which call for that production; but I should like to develop that point later.

The hon. Gentleman the Member for Anglesey referred again to this question of stocks. I should like to make clear what was the movement of stocks in 1952. Our calculations are that, contrasted with 1951, when there was a substantial increase in both the physical volume and in the value of stocks and work in progress, or inventories, to use the American phrase, in 1952 the level of stocks and work in progress, the level of inventories, remained about stable. That is the position. There was a definite change in the rate of accumulation, but there was not an absolute fall in the level of industry.

Mr. Hugh Gaitskell (Leeds, South)

But what about stocks?

Mr. Maudling

So far as stocks are concerned, the recorded stocks of imported commodities show a certain increase. I think the right hon. Gentleman knows that definite figures are not published, but stocks in the pipeline overseas fell by about £100 million. The increase in recorded stocks of imported commodities is equivalent to the major part of that £100 million; not the whole of it; but it shows that the general picture, taking stocks in the pipeline and recorded stocks at home, was one of very little reduction.

Mr. Gaitskell

Surely the hon. Gentleman will not question the fact that as the stocks and the purchases and sales, in calculating the balance of payments, are on the basis of figures struck as soon as stocks are in the possession of our own British citizens, there was, in fact, a decline in that sense of £100 million in 1952 against an increase of £450 million in 1951?

Mr. Maudling

What I was trying to point out was that the right hon. Gentleman must set against the decline of £100 million, with which I quite agree, an increase in the level of stocks held. The figures are never given, for reasons that I do not understand, but it comes to this: that not the whole of the £100 million but a substantial part of the £100 million was offset, and, taking the whole stock position, there was only a slight reduction over the year as a whole, counting in recorded stocks and work in progress—the inventories.

Mr. Gaitskell

Can we get this perfectly clear? Would the hon. Gentleman agree that there was a decline of £550 million of investment in stocks as compared with 1951?

Mr. Maudling

Yes. That is the point I was making. Any change in the rate of investment in stocks did not mean a decline in the level of stocks. I pointed out that we did not continue the 1951 process of buying stocks. I think we have argued that matter before. That was a contribution to the balance of payments.

The hon. Gentleman the Member for Cardiff, West (Mr. G. Thomas), to whom I listened with great interest, said that the gross fixed investment declined in 1952. There was a slight decline in gross fixed investment that year, it is quite true, but I must point out to him that one of the reasons for that undoubtedly was the abolition of initial allowances. When the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) abolished initial allowances in 1951 he made it quite clear that it was his plan to reduce the demand for investment at home in 1952. When the hon. Gentleman talks about fixed investment in 1952 it is only right to bring into relationship with it the policy of the Budget of 1951. I think that is a fair point.

My hon. Friend the Member for Cheadle (Mr. Shepherd) made a very serious and thoughtful speech, in which he dwelt upon what is an important point, the nature of production, and the way in which a high level of production does not of itself, irrespective of the nature of that production, necessarily produce a solution to our main economic problems. I want to say a little more about that later.

The hon. Gentleman the Member for Coventry, North (Mr. Edelman) raised a number of points, with some of which I disagree, but on two of them I think we are in agreement. He stressed the importance of making it clear to the American Government that we believe in trade, not aid, and that that trade must be a two-way process; that we can expand trade only if both parties to the bargain try to achieve an expansionist policy. He also said that we should make it quite clear that we are aiming at the development of non-discriminatory and multilateral trade. I do not think there is any disagreement between us about that.

The hon. Member mentioned our concern about the Chief Joseph Dam, but I cannot add to what was said about that by the President of the Board of Trade in the Budget debate, when my right hon. Friend clearly stated that we have made it plain to the American authorities on several occasions that we regard this whole matter as one of very great concern not only to ourselves but to other countries in Western Europe as well.

Another point the hon. Member made was that we should go in for a policy of controlled reflation. I must say I hate these words "inflation, deflation, disinflation, reflation." Whether disinflation means the same thing as deflation I am not quite sure. As I understood the hon. Gentleman, he meant, by controlled reflation, a deliberate policy of expanding purchasing power, whereas the policy hitherto, of disinflation has been to reduce purchasing power. He said that whereas that had been our policy, we should now set about an expansion of purchasing power. But that is the whole theory that underlies my right hon. Friend's Budget. The time has come, with a certain slack in the economy, deliberately to increase purchasing power. I think that we are to that extent in agreement on our objectives.

Mr. Edelman

Will the hon. Gentleman refer specifically to the Bank rate? I was referring to reducing it as one means of encouraging the economy.

Mr. Maudling

It is true that one way to enable people to spend more money is to enable them to borrow more money. Another way is to reduce the amount we take away from them in the form of taxation. My right hon. Friend has chosen the latter step, but, as he made clear in his Budget speech, the point about our monetary policy is that it is a flexible policy. I am sure he will always bear in mind the considerations the hon. Gentleman was putting forward.

The right hon. Gentleman the Member for Rochester and Chatham (Mr. Bottomley) and my hon. and gallant Friend the Member for Poole (Captain Pilkington) both dealt with the very important matter of maintaining good relations in industry and of impressing so far as we can on everyone in industry the importance both of an increase in production and of efficiency in industry. Upon increasing production and efficiency depends the standard of living of everyone engaged in industry and of everyone else in this country.

There was a contrast between their speeches and that of the hon. Gentleman the Member for Hillsborough (Mr. G. Darling), who cast a dreadful atmosphere of gloom, of almost inspissated gloom, over the debate, talking about our industry being backward, and about lamentable industrial relations over a wide range of industry. It is just not true to suggest that a wide range of British industry is so terribly backward. If it were we should not be able to maintain our position in a competitive world as we do, and we should not have such new things as our Comets and our new fabrics. Can it really be said of this country, with its great trade union movement, that over a wide range of industry industrial relations are lamentable? I really think that the hon. Gentleman went a little too far.

Mr. G. Darling

When I was talking about labour relations I was not talking about the wages and conditions of the workers but about the urgency of the workers playing a part in the management and development of industry generally throughout industry. As to that, very little has been done.

Mr. Maudling

That puts the hon. Gentleman's point of view in a rather different light. On the matter of general consultation in industry I do not think there is any disagreement between the two sides of the House. The hon. Gentleman seems to think that we should weed out inefficient firms by some form of Government control. How Government controls can be used to weed out inefficient firms I do not know.

Mr. Darling

I did not say that.

Mr. Maudling

That was the implication of what the hon. Gentleman said. I am sorry if I misunderstood him.

Our belief is that it is by competition that the efficient firms will expand and the less efficient firms will contract, and, if necessary, disappear altogether. If the hon. Gentleman asks me how we can contribute to the development of competition in this country I would say that under his right hon. Friend's regime there was a time of considerable inflation and the problem was that it was too easy to make profits. Under a policy of disinflation it is more difficult to make profits and industry is becoming all the time more competitive. I agree, the more competitive it can become, the better, but I do think he should not underrate the difference in the whole atmosphere and feeling in industry which has arisen from a different monetary policy and a different economic climate.

The Amendment refers to 1952 and the course of production in that year. Looking at the year 1952 as a whole throughout world economy, I think it was un- doubtedly a year of substantial change. The post-war boom, which continued for several years—and to which, surely we must attribute a very large measure of the demand for our products and the possibility of maintaining full employment which we enjoyed in the years 1945 to 1950—was given a final fillip by the outbreak of the Korean war. This was a final and, in some ways, more disarranging and disturbing effect than it had already had. The Korean war prolonged the post-war inflation. There followed after the Korean war a remarkable contraction in world economic activity. There was for the first time a real disinflationary development throughout the world, particularly, as the House is well aware, in the textile industries.

In 1952, we were facing quite new conditions. The ending of the post-war boom, the disappearance of the post-war sellers' market, the world trade recession in textiles and some other consumer trades, were all new developments. The main feature of 1952—and I think it is worth referring to this again, as did my hon. Friend the Member for Cheadle—was the change in our overseas payments and the revolution in the position of sterling. From a position—as was often pointed out in the House—where we were losing our reserves at a rapid rate at the end of 1951, when sterling was by no means as strong as it should have been, by the end of 1952 we had reached a position when our reserves were built up—not high enough yet, by a long way—and where confidence had been restored to a remarkable degree, as is evidenced by the day-to-day quotations of the £ sterling against the dollar in international markets. All that was the first problem we had to face in the guidance and direction of our economy in 1952.

It may be said by hon. Members opposite, "That is all very well, but there have been crises before. Reserves have run down before, the tide has turned and they have gone up again. But production has always continued to increase." An argument might be made, for example, from 1949 when the reserves were running down and were turned upwards again as a result of devaluation. A point I have made before is that devaluation is not a thing we can go on doing. Devaluation was the weapon used by the Labour Government in 1949 to meet a crisis of this kind. Having been used in 1949, it could not be used again in 1951–52.

In an economy like ours, which is so dependent on international trade and on our ability to pay for our essential imports, it is impossible, in deflationary conditions in the rest of the world, to maintain an inflationary demand in the home market, a fixed rate of exchange and the necessary level of reserves. One cannot simultaneously maintain all those three things—an inflationary level of home demand, a fixed rate of exchange and a necessary level of reserves. One must give. In 1949 what gave was the rate of exchange. In 1949, these difficulties were met by the Labour Government, and sensibly met, by devaluation. But on this occasion that particular device could not be used, so what had to be done was to cure the internal inflation. That is the main difference between the way in which we solved the crisis of 1951–52 and the crisis of 1949.

I turn again to a point I tried to make in my Budget speech, and which the hon. Member for Reading, South (Mr. Mikardo) found, I am afraid, rather obvious. I fear I must refer to it again. It is that we must not assume that the level of production in itself is the main indication of the health of our economy. If we make that assumption we are liable to run into very great dangers. If we go on producing the wrong things, as we may well do, with too high a level of home demand, our economy can be fully employed and our production index can continue to rise, and yet our international financial position can be deteriorating rapidly. That may be obvious, but I do want to stress it once again.

At present, for example, it would be true to say that a substantial increase in production not accompanied by an equivalent increase in exports might be very dangerous to our home position, because of the increased cost of imports which would be involved. Those are the sorts of considerations we must bear in mind. There can be no doubt, surely, in the light of recent experience, that an excessive home demand is a very considerable menace to the balance of payments. It may mean a diversion to the home market of goods which should go on the export market. These are constant difficulties, constant hamperings and constant obstacles placed in the way of our export trade.

It was necessary, therefore, in the conditions of 1952, in the changing state of world economy, with greater flexibility and greater adaptability, to reduce the load of inflation, to reduce the pressure of excessive demand which kept our economy too rigid, and which prevented a sufficiently quick change and switch of resources from one purpose to another. In an inflationary world one can maintain a high level of internal demand, perhaps, but in a world where conditions are changing and moving towards disinflation we must adapt ourselves and readjust our economy to meet those conditions.

One of the inevitable results of a change in the type of production is some immediate short-fall in the total level of production. When switching over from home production to exports, when trying to switch the emphasis from light consumer goods to heavy capital goods, those switches, those changes and developments, must necessarily mean a pause, perhaps a fall in the total level of production while the change over is taking place. I am sure that that is clear to the House, and I am sure that there would be general agreement with that proposition. That was one of the features of 1952. Inevitably, the need to adapt our economy meant that it was not so easy, not so possible, to maintain a rising level of production, which obviously we should all like to see.

On the question of the switch of resources in 1952, I should like to say a word or two about the movement of manpower, to which some reference has been made today, and to which the right hon. Member for Leeds, South (Mr. Gaitskell) referred in the course of his Budget speech, I thought with considerable effect. The changes in our total distribution of manpower are a little misleading if we look only at the movement between industry and industry and do not look, as my hon. Friend the Member for Cheadle pointed out, at the changes within particular industries.

In the engineering industry there was a very considerable switch over of employment between one part of that industry and another. For example, in 1952, aircraft manufacturing gained nearly 30,000 employees, iron and steel melting and rolling gained 7,300, the railways, which, in 1951, had lost over 6,000 people, gained 2,500. All these were definite changes within the engineering industry, which are somewhat masked by the total figures, which merely give the position of the industry as a whole.

Another comment—I thought a very effective point—made by the right hon. Gentleman was that one of the categories in our labour statistics which shows an increase was that of financial, professional and miscellaneous. I have inquired into this, and I am sure hon. Members will be delighted to know that the net increase is largely accounted for by the medical and teaching professions.

Turning to the actual movement of production in 1952, I think we should distinguish between the different types of industry, taking, first, the four basic industries of coal, steel, agriculture and building, all of which showed an increase.

Mr. G. Thomas

Agriculture?

Mr. Maudling

Agriculture showed an increase.

Mr. Thomas

In manpower?

Mr. Maudling

I am sorry not to have made myself clear. I have turned from manpower to the level of production.

The interesting thing about agriculture is that the level of manpower fell but the level of total output increased, which is a great tribute to the agricultural industry. That does suggest that the remarks of hon. Gentlemen about the difficulties of farmers in obtaining credit are not entirely valid. It is true that the interest rates have risen, but I should like to point out that, in spite of what the hon. Member for Cardiff, West (Mr. G. Thomas) said, the banks have been asked to pay special attention to the needs of agriculture in organising their advances, and our opinion is that no credit-worthy farmer who applies for credit to the banks fails to get it.

Concerning agriculture, we also believe that the changes in the Budget—the initial allowance and the standard rate changes—will be of considerable help to the farming industry. The fact remains that despite the fall of 22,000 people in the total number employed in the agricultural industry in 1952, there was an increase in production of quite a substantial amount. Incidentally, the agricultural industry is not included in the index of industrial production.

The same applies to coal, where there was an increase in production. There the increase in manpower was much greater than the increase in production. As I think hon. Members have said, while we had an entry of new entrants into the mining industry there has to be a period of training before there is any noticeable increase in production.

Steel was an industry which showed a substantial increase in production in 1952. We are told by hon. Members opposite that the frightening threat of being denationalised would demoralise the whole industry, but there has been a substantially increased output of steel, largely as a result of bringing in new furnace plant which started long before the industry was nationalised, under private enterprise, which we are so often told was unenterprising. There, we have the four major basic industries all showing an increase.

Mr. G. Thomas

When the hon. Gentleman refers to agriculture and to the increase, which is welcomed by all and to which I referred in my speech earlier today, would he not agree that there is a dangerous sign there that the increase curve has begun to flatten out? It is only one-third of the increase that we had last year. Is that not a dangerous sign?

Mr. Maudling

My impression is that the signs are encouraging for the agricultural industry. Recent signs are encouraging as a result of the way in which production is moving. I am told that there is definite evidence of growing efficient increased production which is coincidental with the substantial reduction in manpower.

There is a wide range of industry in which little change has taken place between 1951 and 1952. In engineering generally, I think that the hon. Member for Cardiff, West agrees that the fall in production was 0.4 per cent., which, over a year, is probably neither here nor there. The production of vehicles, despite what we have heard on some occasions, as between 1952 and 1951, shows practically no change at all. There is a wide range of industry in which there is no change.

I now come to the industries which show a major decline. These are the textile and consumer goods industries. I think it is generally agreed that the weight of decline in production in 1952 was in the consumer goods industry. These are the facts about production in 1952—that the basic industries showed an increase, in a wide range of industries the level remained about stable—and a certain range of industries, particularly textile and consumer goods, showed a substantial decrease. What were the direct causes of these movements in the level of production?

First, there was the shortage of steel in the first half of 1952. In many of these things the level of output in a given period is determined by the level of output of raw materials some months beforehand. In 1951, there was a substantial decrease in the level of steel output. The total tonnage of crude steel fell substantially in 1951. That was largely due to shipping difficulties in importing ore and in obtaining scrap from Germany. I am not attributing guilt or blame. I am only stating the facts.

In 1951, a substantial decline in steel production was clearly shown in the production figures of the engineering industry, particularly in the first part of that year. That was one of the reasons why in the first part of 1952 we were not able in the engineering industries to take up some of the slack in our exports created by the decline in textile exports. The shortage of steel production in 1951 has been countered by the very encouraging and satisfactory increase in steel production in the second part of 1952, but it still makes itself felt to some extent in capital goods output because of the long cycle of production and particularly because of the difficulty of ship plates which continues to remain one of very close concern to the Government. We recognise the importance of helping the shipbuilding industry in the growing competitive conditions which they have to face, and we are trying to help them in the supply of shipbuilding plates.

Mr. Frederick Willey (Sunderland, North)

Would the hon. Gentleman say rather more about this industry, because the position is deteriorating? Last quarter's figures, just received this morning, are not only substantially less than those of the preceding quarter but less than those of the corresponding quarter last year. Although we have the steel we have the disturbing situation that output is still falling.

Mr. Maudling

I should not like to enter into any further detail about that industry, which may be considered beyond my own province. I think that the position in the shipbuilding industry and the difficulty of obtaining orders is very closely associated with the steel plate situation because, if one has not the raw materials one cannot quote an early delivery date.

The next reason for the decline in production must, of course, be sought in the decline of demand. If demand declines production declines, and in the case of many industries, chiefly textiles, the effects are spread over a considerable area. In 1952, there was a substantial decline in the export demand for British products. This was a result of the general disinflationary movement throughout the world and the general reaction from the post Korean war boom which was felt by a number of countries throughout the world which reduced imports because of balance of payments difficulties.

The balance of payments difficulties were general and widespread in 1952, and this lead to a restriction on British exports and British production of the kind introduced in Australia, which has since to some extent been relaxed. The particular decline in export demand was in the textile industry. Here, I think, when hon. Members quote comparisons with other countries they should observe how much our economy, in comparison with others, depends on exports, and how much we depend on textile exports which felt more than any other commodities the decline in world markets.

I have here some figures which I think are of interest and which show the relative decline in the value of textile exports and of all exports. In 1952, by comparison with 1951, our exports fell in value by 1 per cent., while our textile exports fell by 29 per cent. In France, textile exports fell by 26 per cent. and all exports by 5 per cent. Japanese textile exports fell by 35 per cent. and all their exports by 7 per cent. Thus, other countries which, like ourselves, depend fairly heavily on textile exports, also suffered a very heavy decline in exports demand, in export trade and in consequent production for export in the course of 1952.

Mr. Mikardo

None of those European countries suffered an overall decline in production as we did. What the hon. Gentleman has to explain is this: he is making all sorts of elaborate excuses for the 1952 failure—the end of the postwar Korean boom and all the rest of it, and a recession in world demand—but all other manufacturing countries had the same problem and faced the same situation and all other manufacturing countries increased their overall output. Britain's overall output decreased. How does the hon. Gentleman explain that?

Mr. Maudling

I do not think that the hon. Member is entirely accurate in his statement that all other countries increased their production. He cannot have been listening to the point which I was making, in any case, for I was pointing out the considerable dependence of this country upon textile exports. Our dependence on textile exports means that the prospects of success or failure of our textile trade has a greater effect on the total volume of production than the export successes or failures of other countries who depend less heavily upon them. I am always in trouble with the hon. Member for Reading, South; according to him, I am either saying things which are obvious or saying things which are too obscure.

Mr. Mikardo

If they are not obscure they are wrong.

Mr. Maudling

The decline in the textile trade and production throughout the world meant that countries producing raw cotton—Pakistan, Brazil, Egypt and Turkey, for instance—all ran into very considerable difficulties and all reduced their purchases from this country. An example was the supply of textile machinery from Lancashire to Brazil. We all see the effect which this development in textile trade had on reducing production in Lancashire.

In analysing the reasons for the drop in production in 1952 I turn to the question of home demand—home demand for household goods, textile goods, consumer goods and so on, in which area of our economy the main fall in production occurred. Here, we can trace the decline in production from the decline in personal consumption. If we look at the figures in the Digest of Statistics, and if we compare personal consumption in 1952 with personal consumption in 1951, at constant prices, we find that there was a decline of about £90 million, practically wholly accounted for by a decline in personal consumption of household goods, textiles, clothing and footwear.

Mr. Mikardo

Why? They could not afford them.

Mr. Maudling

I am delighted that the hon. Member makes this point, because if there was a decline in 1952 there was a much greater decline comparing 1951 with 1950. That is my whole point and I am obliged to him for making it for me. In fact, the decline in production of textiles in 1952 is the result of a decline in the consumption of textiles and clothing which started in the middle or slightly before the middle of 1951. Hon. Members opposite try to throw the blame upon us for the decline in production of these articles. They should observe that the decline in consumption started when they were in power.

To sum up my comments on the movement of production during this period, the fact is that, so far from what hon. Members opposite try to make out in this Amendment and in other speeches, there has been no sudden change with the change of Government from a rising level of production to a falling level of production. At the beginning of 1951 production was tailing off. I have some figures here which show the level of production and the movement of the index of production, adjusted for seasonal variations. They show that at the beginning of 1951 it was 118; it remained at 118 for the next two quarters; and it has now gone back to 116 after a short decline in the middle of 1952.

Over the period as a whole there is no substantial decline, but a steady level with a dip in the middle of 1952. That dip in 1952 is largely attributable to a decline in the production of consumer goods, that decline in the production of consumer goods stemming directly from the decline in consumption which took place before the General Election.

Having dealt with that wholly unfounded suggestion and having shown figures in authoritative documents, I want to turn now to the question of what we ought to do. [HON. MEMBERS: "Oh."] The Amendment draws attention to the drop in industrial output and notes with deep concern that industrial output in Great Britain, which rose substantially between 1945 and 1951, suffered a serious fall in 1952. … I thought I was entitled to take some time in pointing out that that is wholly inaccurate—or, shall I say, misleading.

I turn to what we have to do now. Obviously, the object must be to stimulate and increase production but not, at the same time, to run into the danger of further inflation and a further undermining of our balance of payments position and of the confidence in sterling which we have achieved. We must steer a pretty narrow course between the danger of allowing too much slack in the economy and the danger of creating a balance of payments crisis through inflation.

I will take, first of all, the position abroad, to which the right hon. Member for Leeds, South has referred. I will deal with the question of making sterling scarce, but not too scarce, because I think that is a most important point. Our objective, in 1952, has been very largely to make sterling scarce, because only by making a currency adequately scarce can we maintain its exchange value. One of the reasons for the faltering or falling confidence in sterling under the previous administration on some occasions is, in our opinion, that they made sterling too widely and too readily available.

On the other hand, as the right hon. Gentleman said, it is perfectly true that we can proceed to make sterling too scarce, which is just the same process as over-reducing your purchasing power at home, whereby we merely waste resources without doing anything to help economic stability. That is why we have taken certain steps to relax, for example, the exchange control over the granting of credit by British exporters, in which sphere my right hon. Friend the Chancellor of the Exchequer recently announced considerable relaxation. We think that will help considerably to promote trade and to achieve our objective.

In the Organisation for European Economic Co-operation, we have taken a very bold step by increasing our imports from Europe, in order to contribute to the general development of trade, at a time when we have a very large outstanding debt with O.E.E.C. and at a time when we are still by no means in a very large and comfortable surplus with them. In the course of the Budget debate the right hon. Member for Leeds, South suggested that we were pursuing a restrictionist policy in world trade. I do not think that that is a fair comment. We are trying to do everything we can to extend international trade. That is one of the main reasons why we have relaxed our restrictions against O.E.E.C. countries. There is, however, a limit to the extent to which we can go.

Mr. Gaitskell

I am delighted to find that the hon. Gentleman agrees with my warning on this point. But in the case of O.E.E.C. the essential point is to get more credit into the system, and I was criticising the Government for not pressing for that more urgently in O.E.E.C. itself.

Mr. Maudling

I had not appreciated that that was the criticism and I should like to consider it. We are sometimes urged to extend credits to overseas countries who are short of sterling to enable our exporters to sell them goods, but there is a definite limit to the amount of credit which this country can afford to extend. There is a limit to the amount of money which we can invest abroad at present. After all, the granting of credit and investment abroad are the same thing.

At the Commonwealth Conference we agreed, as a cardinal principle of the Commonwealth communiqué, that investments should be concentrated as far as possible on projects designed to improve the balance of payments position of the sterling area as a whole. While I sympathise with the desire which is often expressed—"How advantageous it would be if we could have large credits extended to other countries to enable them to buy our goods"—there are limits to what we can do, particularly when the credit competes directly with British alternative investment policies in the Commonwealth.

I turn to what we can do at home to increase production. I am glad that the right hon. Member for Leeds, South is here, because I want to clear up a point with him which I did not quite understand in his attitude to the Budget proposals.

Mr. Rhodes

Never mind that. Let us see what the Government want to do.

Mr. Maudling

I should have thought that the Chancellor's Budget proposals made perfectly clear not only what we want to do, but what we are doing. First of all, I want to ask the right hon. Gentleman a question. Hon. Members opposite often imply that the Chancellor is being too optimistic, that the situation is much graver than is recognised on this side of the House and that the Budget, as a consequence, may be too optimistic and too soft. I presume that the right hon. Gentleman means that too much is being given to consumption. A passage in the speech of the right hon. Member seemed to say that. He said: I should have thought that with the state of the economy as a whole the prime need, apart from expanding exports, was an expansion in investment. I do not know and I want to know, does he think we can afford more consumption as well?"—[OFFICIAL REPORT, 15th April, 1953; Vol. 514, c. 228–9.] If he is doubtful whether it is right to afford more consumption at the moment why are he and his hon. Friends constantly urging the Chancellor to distribute more to those who have—I think the usual phrase is—the greatest "propensity to consume"? They cannot have it both ways and, while arguing that the Budget is too soft and that the Chancellor should not reduce his surplus too much, at the same time maintain that he should give more to people who would be enabled to consume more.

Mr. Gaitskell

I am glad that the hon. Gentleman has raised this matter. I was asking whether the Chancellor desired to increase consumption and, if so, by how much compared with any increase in investment. In so far as he does desire to increase consumption we believe that it should have been done by distributing benefits to people in a much fairer manner than in fact the Government have done it.

Mr. Maudling

I take it, then, that the right hon. Member does agree that it is right to aim at increased consumption. I hope he agrees on that, because I should like to know if we are at one on that point.

Mr. Gaitskell

Yes.

Mr. Maudling

So far as the amount going into consumption and the amount going into investment is concerned, here is where we differ from the right hon. Member and his Friends. We do not believe the Government can plan these things with exactitude and say that there shall be so much increase in investment and so much in consumption, or no increase in consumption. We cannot expect to increase investment without, at the same time, allowing an increase in consumption. I thought there was point in making that clear. We hope there will be some increase in consumption and, with the certain amount of slack which exists, it is possible to envisage greater expenditure on consumption without a return to inflation because there is the idle capacity which can be called in to match the spending power.

The way in which the Government tackle the problem of production is to reduce taxation in such a way as to stimulate investment and savings. We believe that by restoring the initial allowances, with which the right hon. Member agrees, in announcing the termination of the Excess Profits Levy and making an immediate reduction in the standard rate of Income Tax, we are reducing the total burden of taxation and giving financial facilities to people to invest. We believe this is a good way of stimulating savings.

My right hon. Friend the Chancellor has made it clear that he believes that our policy on personal incomes should be one of restraint and the Government continue to attach great importance to this. An hon. Member opposite asked what we intend to do about it, but his answer was to be found in the Budget. The Chancellor has deliberately budgeted for a surplus of about £150 million less than it would have been had he continued taxation at the present rate and that is a definite stimulus, on a scale which the right hon. Member thinks is the right scale, by which additional purchasing power can be released. Surely that is the way in which the Government can influence the level of production. It is industry which does the producing and in a private enterprise economy the Government have to encourage production at the highest possible level consonant with avoiding a return to the balance of payment difficulties which we inherited in 1951.

I have endeavoured, in the course of my remarks—I apologise for their length—to deal with the erroneous contention that there has been any dramatic change in the level of industrial production. The principle which the Government adopt in facing the situation is, where there is a certain slack, to afford the opportunity, by a reduction in taxation, for industry to invest in new plant and machinery and thus increase our efficiency and the possibilities of winning and holding further export markets.

7.44 p.m.

Mr. Alfred Robens (Blyth)

We have listened, as we always do, with great interest to the speech delivered by the Economic Secretary to the Treasury. He has been good enough to take us through the Digest of Statistics and explain them all to us in great detail. Most of us look at the Digest with great interest and we have generally reached our conclusions on the statistics which have been made available to us. Finally, when he was challenged to deal with the Amendment before us, which after all deplores the policies of Her Majesty's Government which are largely responsible for this fall and also for its failure to take effective remedial measures he blandly asserts that the Government are relying on the Budget to meet the criticism contained in the Amendment and that industry must do the rest on its own. There must be no interference with free enterprise, there must be no interference with the capitalist system, and everything will be all right if things are allowed to work out for themselves.

I am bound to remind the hon. Gentleman that when the Chancellor introduced his first Budget he described it as an incentive Budget which was going to boost production. It did nothing of the kind. It is not a bit of use going through the Digest of Statistics and explaining what they all mean. When all that has been done it still remains a fact that there has been an alarming fall in production, which must alarm the hon. Gentlemen as it does everyone else. There has been an alarming fall in production since the introduction of that Budget, which was designed as an incentive Budget. The only answer that the Government have to the problem which they have created for themselves is to introduce another Budget and say, "Well we are relying on this one."

The economic arguments which have taken place between my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) and the Chancellor and the Economic Secretary have shown a complete cleavage of view on this question of an inflationary or deflationary policy and the line which should be taken. I will not pursue the matter further because many other hon. Members wish to speak and I think that as this is really a Private Members' day those of us on the Front Benches ought to take as little time as possible. But I cannot help making this one remark. The Economic Secretary said that the Budget was designed to pump more spending power into the economy. I notice that "The Times" today says: the purpose of the reliefs was to stimulate effort, enterprise and efficiency, and the consequent increase in purchasing power was an undesirable and risky by-product. I do not know whether the Economic Secretary agrees with that or not; it is not the usual sort of leading article supporting a Socialist policy. Clearly "The Times" does not accept the view of the Economic Secretary as to the effects of the Budget. I was also a little alarmed—I hope I shall not misquote the hon. Gentleman—to hear him say that a little unemployment to get the right people in the right industries is not wholly undesirable. I am paraphrasing what he said in reference to the egnineering industry and the 30,000 switched over in the aircraft industry, which was because of the decline in certain other branches of the engineering industry. I gather he said that that was not wholly undesirable.

Mr. Maudling

To the best of my recollection I did not say anything of the kind. I was not talking of desirability but inevitability. I think the right hon. Member for Blyth (Mr. Robens) himself pointed out in a letter to "The Times," or in a speech, that when there is a change from defence to exports there must be a temporary reduction in the total level of production. I was pointing out not that it was desirable, but that it was inevitable.

Mr. Robens

Certainly, but the position about the engineering industry is a dangerous one, and figures given recently show that there has been a very big change in the industry. Quite frankly, I do not accept the view that in order to man up our aircraft industry we must necessarily run down some other part of the engineering industry, on which this nation will depend more and more in the future. It would be better to build it up and not merely make a switch within it and get no total overall increase in production.

I welcome this Amendment, so well introduced by my hon. Friend the Member for Anglesey (Mr. C. Hughes) and seconded by my hon. Friend the Member for Cardiff, West (Mr. G. Thomas). I was a little surprised that some hon. Members opposite who talked about the debate being non-partisan and the necessity for adopting a non-partisan attitude to this Amendment, should then proceed to be as partisan as they possibly could. None of us want to be partisan about what is a very important thing for this country, and a very grievous thing at the present time.

But we must not, in the guise of being non-partisan, stop criticising the Government. Surely it should not be taken that the Opposition's function is to say to the Government, "We do not want to be political on this matter. All you are doing is absolutely right." We do not agree that it is, and we put our views forward. I am bound to say that if hon. Members opposite will look through the columns of HANSARD from 1945 to 1951 they may find a few speeches which could be termed partisan.

I wish to deal with a matter referred to by the hon. Member for Hendon, North (Mr. C. I. Orr-Ewing), who also happens to be the Parliamentary Private Secretary to the Minister of Labour. We do not expect from him quite the kind of statement which he made today when he attributed to my right hon. Friend the Member for Leeds, South the fact that he had said that 3 per cent. of unemployment was about the right level for full employment in this country. If I am misquoting the hon. Gentleman I am prepared to give way. I am paraphrasing what he said.

This was said once before by his master, the Minister of Labour, and after a statement by my right hon. Friend the Member for Leeds, South he withdrew that imputation. I refer hon. Members to the statement of my right hon. Friend on 11th November, 1952, when he said: A full employment standard was called for in a Resolution of the Economic and Social Council, which we warmly supported, and it indicated the standard at which very energetic action should be taken by the Government. The part I wish to quote is— and my right hon. Friend then quoted the following statement made to the United Nations Organisation: It must be stressed that the choice of this standard does not mean that the Government would allow unemployment to reach 3 per cent. before taking vigorous counter action. It will be a continuing objective of the Government's policy to counter any unfavourable trend in employment and to take special measures to deal with those areas in which unemployment has persisted at a comparatively high level."—[OFFICIAL REPORT, 11th November, 1952; Vol. 507, c. 789.] For the purposes of the record I wish to ask hon. Members to note that if they will consult the OFFICIAL REPORT of 22nd March, 1951, they will find, in c. 319, the full and complete statement, which is too lengthy for me to read, that was sent to the Secretary-General of the United Nations. I hope, therefore, that after this we shall not hear hon. Members imputing to my right hon. Friend the suggestion that he has said that 3 per cent. unemployment is about the right level at which we can say we have full employment in this country.

Hon. Gentlemen have said many times in this House, and their friends have said outside, that we need the flexibility of a pool of unemployed persons. That has been said on more than one occasion—

Mr. C. I. Orr-Ewing indicated dissent.

Mr. Robens

It may not be so in the case of the hon. Member for Hendon, North but if he will read his speech in HANSARD tomorrow he will find he has come perilously near to it. This afternoon he said that we needed flexibility, and when I asked what percentage of the working population he was prepared to go up to he turned to something—

Mr. C. I. Orr-Ewing

I am sorry if I distorted the right hon. Gentleman's words, but I did use the term "full employment standard" and I quoted 3 per cent. I agree with everything the right hon. Gentleman said I quoted about his right hon. Friend the Member for Leeds South (Mr. Gaitskell), but I cannot agree that I in any way suggested a percentage of unemployment flexibility. I hope that the right hon. Gentleman will agree that some flexibility is necessary if people are to be able to go to better jobs and we are to obtain the export industries we all desire.

Mr. Robens

That is what I said time and again. We on this side of the House do not accept any figure of unemployment as being necessary for flexibility. We do not subscribe to the view that we must have some unemployment in order to obtain flexibility. We do not suggest that at all.

Mr. Nabarro

As a former Minister of Labour, the right hon. Gentleman must be reasonable about this. On whatever day the count is taken there must be some persons who are going from one job to another and that number of persons over the whole country is probably more than 100,000. What, in his view, is the figure?

Mr. Robens

Of course there is bound to be flexibility in the sense that on any given day everybody will not automatically be at work. But that is very different from saying that we need a pool of unemployed persons to create that flexibility.

Mr. C. I. Orr-Ewing

Who said that?

Mr. Robens

Hon. Gentlemen in speeches in this House, have said that.

I must say that during the whole of my period of office, and of that of my predecessors, our problem was not one of finding jobs for people, because the number of vacancies was nearly always twice as many as the number of persons unemployed. Today the problem of the Parliamentary Secretary and of the Minister of Labour is that the number of vacancies is half the number of people unemployed; and therefore we now have a hard core of persons who are unemployed and for whom there are no jobs at all, which is not a question of flexibility.

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

The last time that the right hon. Gentleman the Member for Blyth (Mr. Robens) and I spoke in a debate dealing with full employment I made it plain—and I had the maximum authority of the Government behind me—that Her Majesty's Government complied with the policy of full employment. They are carrying on the policy of full employment. Whatever may be said—and I am afraid that hon. Members and probably some right hon. Gentlemen sometimes say things in the country which are capable of being misrepresented—I wish to make it plain that it is the policy of Her Majesty's Government to carry on with a full employment policy. We believe that we can, and we shall do so, and we do not depart from that policy by one iota.

Mr. Robens

I accept what the hon. Gentleman says, but I am bound to say again that when speeches like this are made it causes some anxiety in the minds of workers—

Mr. C. I. Orr-Ewing

I think it important for the record to say that I have read through my speech and I did not mention unemployment. The right hon. Gentleman has tried to twist my words and asked what unemployment I wanted. I said some flexibility was needed for people going to new jobs. One does not need to be unemployed when going from one job to another. I never suggested that an unemployment pool was the answer.

Mr. Robens

I will allow the House to be the judge of that without pursuing the matter further.

This Amendment deplores the policy of the Government, and is asking, or drawing attention to the fact, that there has been a failure to take effective remedial measures to deal with the question of industrial production. This country is faced at the moment not only with great competition, but I believe that it is faced today, and in the years immediately ahead, with the greatest competitive struggle for markets which has ever faced us in our industrial history. It should be well known to all workers and employers that the economic survival of this country and of our standard of living depends on winning this great battle.

All the warnings of the late Sir Stafford Cripps are as true today as when he uttered them. It is a great pity that those warnings were jeered at by hon. Members opposite from time to time, and that they were not echoed when they were being made.

Mr. C. I. Orr-Ewing

That is not true.

Mr. Robens

I remember the present Prime Minister, pink with indignation, calling Sir Stafford Cripps from this very Box a Minister of misery and woe. In fact, Sir Stafford Cripps was years before the event saying precisely what we are saying in this debate today.

Why shall we have to face the most intense competition of all time? It is because we have reached a new stage, and the element that will make our task harder is the fact that in Japan and Germany we have two great industrial countries, with enormous industrial capacity, which have now emerged from the destruction and chaos of war and are beginning to go right ahead with their productivity.

Mr. Osborne

The right hon. Gentleman is saying such obviously wise words that I want to ask him this. Surely, the changing circumstances that are causing us to have to face this tremendous competition from abroad have nothing to do with the colour of the party which is in office in this country. The circumstances would have changed just the same had the right hon. Member and his colleagues still been on this side of the House.

Mr. Robens

I accept at once that these conditions would have arisen today irrespective of what party is in office. For six years when we were in office we said the same thing, but hon. Members opposite denied it and talked of Labour inefficiency, and so on. What we must not do is to minimise the enormous task with which the emergence of Japan and Germany as great industrial nations will confront us.

Just think of Japan, with a population of nearly 90 million. In 1934, she exported to Asia 54 per cent. of her total exports. The British Empire markets took 25 per cent. Take the case of textiles. The Economic Secretary said tonight how heavily dependent we were upon our textile exports. Comparing 1928–29 with 1937–38, the United Kingdom percentage of total world exports in textiles declined from 44 per cent. to 26 per cent.; and Japanese textile exports rose from 19 per cent. to 39 per cent. That is fairly well known, but for the purpose of the point I am making we ought to remember what happened before the war.

But that was not all. There was a whole range of goods in respect of which uneasiness was being caused in this country—wool, rayon, and certain iron and steel products, such as wire, cutlery, bicycles, electric fans and things of that kind. In the case of rayon, the Japanese increased their exports between 1930 and 1933 by 200 million yards, and with her low costs she ran away in this field with all the then new export trade. That is only a brief account, but it is a picture of what happened before the war when there was Japanese industrial competition.

What has happened since the war? If we take the industrial production in Japan in 1948 as being 100, at the end of 1950 it reached 165, at the end of 1951 it reached 243 and at the end of 1952 it reached 256. The point is that Japan is cut off from her traditional markets of Asia, and the 54 per cent. that formerly she was exporting in Asia must go to our markets—in the Middle East, Europe, India, Africa and even in this country itself.

Look at Germany. We need not worry about the pre-war picture, but let us consider her industrial production. Again taking 1948 as 100, by the end of 1950 her industrial production had reached 193; at the end of 1951, 238; and at the end of 1952 it was 264—going up in both cases while ours went down. Where did Germany have her traditional market? It was in Eastern Europe. Now that that market is closed to her, she will export her surplus goods into the markets which were known as the normal British traditional markets. So that we shall be faced in the next years with this enormous production, concentrated in the markets that are left of what is termed the free world, in the very markets in which we have established ourselves and upon which we rely for our normal export trade.

My hon. Friend the Member for Coventry, North (Mr. Edelman) made an interesting point when referring to American industry in noting that one in six of the workers in America are employed directly or indirectly on armaments. Therefore, whatever happens in that field will also have an enormous effect upon what happens here. Therefore, although I paint a grim picture, I believe it is a true picture, and the sooner we realise the enormous task with which we are faced the better it will be for all of us.

The sooner the Government face up to that and realise that we cannot meet it with the kind of system that ran quite happily at the end of the last century and the beginning of the present century; the sooner they realise that there must be the application of new ideas and methods, that the Government must come into this sphere much more than they are prepared to do, and that the free enterprise capitalist system cannot by itself solve the problem; and the sooner the Government produce a plan and create the atmosphere in which we can deal with this problem, the sooner they will meet the situation. I believe, however, that they neither want to choose any other method nor have the capacity to do so, even if they had the desire.

There are three major approaches to these problems. Two of them are long-term and one of them is immediate and is really the subject of this debate. The first approach is, of course, the settlement of international problems, which would then enable the free flow of world trade. Obviously, there would be great difficulties for a time if there was a quick international settlement. With the great change-over from defence and armaments, the opening up of world trade would take some time, but when we did get the free flow of trade there would be the opportunity for utilising all that the industrial nations could produce. That is a long-term approach.

Second, of course, there is the plan that was produced by the Labour Government and was put to the United Nations: that is, the development of the backward areas of the world. We did our own work in connection with that in relation to the Colombo Plan and with great schemes like the Volta Dam. If we can raise the standard of living of the natives of the backward areas of the world by as little as 1 per cent. per year, many of our problems about the disposal of our goods for export, together with the problems of other industrial nations, would be solved. We all live by taking in one another's washing, and as the backward areas developed and additional capital and consumer goods were required, it would, if done on a big enough scale, demand all the industrial production of which the industrial nations were capable. That, too, is long term.

The third approach, of course, is to put our own industrial house in order, be- cause we have this enormous competition to meet. We have to produce goods of high quality and they must be at the right price, because price is a factor that helps considerably in the question of sales. What is the Government's function in all that? The function of the Government of the day is to accept responsibility for creating the climate or the atmosphere in which this can be done, "this" being the putting of our own industrial house in order.

Last year, production dropped by 3 per cent. I remember when the Prime Minister was standing at this Box when in Opposition, and when, under a Labour Administration, production had risen year after year, he charged us with clogging and stultifying the country's production. I should like to hear the right hon. Gentleman explain or describe what he thinks of a 3 per cent. reduction in production now, after the words he used in talking about increases in production over six years.

One of the factors which I believe has had a good deal to do with pricing us out of markets is the incentive Budget of the Government that was produced last year. We warned the Government about this, and the T.U.C. warned them, but, because their masters outside this House insisted upon cuts in Government spending in order to get 6d. knocked off the Income Tax, they slashed the food subsidies. The amount involved was probably small when we look at the whole expenditure of the Government, but the result has been enormous. The reason for that is that as soon as we put up the prices of commodities artificially in that way, we get demands for wage advances, and demands for wage advances do two things. Before they are granted, they cause great unsettlement among the workers within industry, and, when they are granted, the cost of the wage advance must go on the price of the goods. Therefore, I say that cutting the food subsidies last year was a stupid and foolish thing to do, and that it has been a contributory cause of our decline in production, for the reasons I have explained.

The Economic Secretary said that, of course, exports in all other countries had declined. Well, of course, they did, but the United Nations' reports show that the total exports of all O.E.E.C. countries were 6 per cent. in volume above 1950, whereas, in the United Kingdom, the volume was 5 per cent. lower. In other words, the United Kingdom exports showed a disproportionate reduction among those of O.E.E.C. countries. What was the result of that? The result was a rise in unemployment. It started the hard core which I described earlier, and placed on short-time working over 100,000 operatives, to take a sample covering only one-fifth of our manufacturing industries; the latest figures are 112,000—concealed unemployment.

The hon. Member for Cheadle (Mr. Shepherd) this afternoon said that that was good for the workers. I could not follow or understand how the chap who goes to the Labour Exchange to sign on and is told that there is no job for him can conceivably feel that it is a good thing. Perhaps if the hon. Member for Cheadle had been here, he might have risen to explain exactly what he meant. The fact is that uncertainty in employment does not create the right conditions for any increase in productivity.

We are told that what we want to do is to get rid of all restrictive practices, but we will never get rid of them if the workers feel that, as a result of getting rid of restrictive practices on their side, they will only join the unemployment queue. It is a mistake for hon. Gentlemen to go on talking about flexibility, which means a pool of unemployment, and then expect increased production. I know that what is termed over-full employment creates a lot of troubles. I know that quite well, but it is better to deal with the problems created by what is known as over-full employment than to have to face these problems of underemployment, which result in lost production and places us, economically, in a very much worse position.

We require to have not only increased production overall, but increased productivity, because that is the only way in which we can get prices down without lowering the standards of the people engaged in industry, and the only way to get increased productivity is to have much more efficient management in many sectors of industry. I will admit immediately that there are many sectors of industry which have very efficient management, but, overall, the Anglo-American Produc- tivity Council reports show that in this country management is not as efficient as it is in America. All the evidence is there.

Therefore, to get efficient management, there must be new techniques and there must also be very much better relations within the factories between workers and management. That is absolutely essential. How can we get better co-operation? We shall get it between workers and management when management first make it quite clear that they regard the worker as a partner in the industry and take him fully into their confidence, and when they devise, in their own way, in every single factory and workshop in this country, the kind of machine that makes the man in the most humble job feel that he is really part of the firm.

The unions and the employers' federations have got everything done nicely on national and district levels. What is wanted is for them to get together in the factories to get this co-operation, but I believe that it also demands Government action. I plead with the Government, through the Ministry of Labour, to do all they can, because unless we get this close co-operation we shall never get the increase in productivity that is absolutely essential.

What else will give us increased productivity? The other factor that will do it is when the worker, after all his efforts in getting rid of restrictive practices, is really working hard and feels that he is being treated with fairness and justice and is getting a square deal. Once he feels that he is not getting a square deal, the co-operation ceases.

In his closing remarks, the Economic Secretary said he relied upon the Budget to do this job. Does he really say that the last Budget has given the impression to millions of workers that they have had a square deal? Does he, for example, accept the situation in which the Government, with great largesse, have been giving money out so that 270,000 people in this country receiving over £2,000 a year got between them, in total, tax reliefs amounting to £22 million—while nine million workers who get less than £10 a week also got £22 million? Does he think that the workers in the factories think that is a fair share of the national cake? I will tell him that they do not think that nine million people sharing £22 million make a fair comparison with 270,000 people, who are really well blessed with this world's goods, also getting £22 million in tax relief.

Therefore, I say, that the Budget has failed lamentably to produce the kind of result that I know the Economic Secretary wants. The T.U.C., whom the Prime Minister is now leaning over backwards to appease, have said this: It seems from the distribution of these concessions that the biggest increase in production is expected from people with large incomes—not from the millions of wage earners who pay little or no Income Tax. The Budget upon which the Government rely will not give a sense of justice and fair play to the millions of people who work very hard in all sorts of disagreeable jobs. Therefore, it will not lead to this increased co-operation which I feel is so vitally necessary.

I will go so far as to say that in all my experience as a trade union official, and. for a short period, as Minister of Labour, and of being engaged in industrial disputes of all kinds from the age of 24, I have never been associated with any industrial dispute which could not have been settled round a table before it began by intelligent people with common sense. There is no problem arising in industry that cannot be solved in a common sense way, but that does not mean that the employer is always right.

Mr. Osborne

Or the other side either.

Mr. Robens

Yes. But in these matters it is the employer who holds the economic power and who must be prepared to make the greatest gesture. Therefore, I suggest to the Economic Secretary that he cannot rely upon this Budget, because it does not meet the situation.

Mr. Nabarro

It goes a long way towards it.

Mr. Robens

The hon. Gentleman is entitled to his opinion, but it does not meet the situation. And later on more increases in the price of food will take place as a result of the further £30 million cut. Meat also must go up in price because £35 a ton more is toeing paid by the Government for Argentine meat than was paid by the Labour Government. I suppose that the £30 million which is being taken away from the farmers in respect of their feedingstuffs subsidies will have to go on the price of their commodities, too. Therefore, prices must inevitably go up again in the next few months.

I will tell the hon. Gentleman what will happen then. The trade unions will make applications for wage increases which will either be granted or we shall have industrial dislocation.

Mr. Watkinson indicated dissent.

Mr. Robens

The Parliamentary Secretary shakes his head. I say that there is always industrial dislocation when men put in wage claims and when months pass before those claims are settled. I know that is so because of my experience. The men are unsettled and uneasy and they do not work at their best under these conditions. Therefore, I accuse the hon. Gentleman and his colleagues of producing a further un-settlement in the industrial life of this country through the Budget they have produced, which cannot lead to increased production.

I have already spoken too long, and, therefore, I will not pursue many of the other things I wanted to say. However, there is one thing I must say because I think it is important, and again shows the fallacy of the Government's policy. The Economic Secretary said that what was important in production was to produce the right things. Nobody would disagree with that. We must produce the things that other people want to buy, and unless we do that we are heading for bankruptcy. But we must also produce the things that other countries cannot make as easily.

Although we depend so much on textiles we shall really have to face the fact that unless the purchasing power of the people abroad who buy textiles is increased they will make textiles for themselves much more cheaply, and will manage with less textiles. Textiles can be made in the cottage. It is easy. That being so, we must concentrate not only on the right things, but on the things in respect of which we have a lead and in which fields other countries would find it difficult to follow us. There is going to be a great switch and change in our whole pattern of employment.

Mr. Osborne

Flexibility.

Mr. Robens

Hon. Members opposite say that the capitalist system will do this. It will do nothing of the kind. If the capitalists found it was more profitable to make ice cream freezers than to construct power stations they would make ice cream freezers.

Mr. Holt

The right hon. Gentleman made the important point that we must make the things which people will buy. That being so, it does not matter whether we make ice cream freezers or machinery. If our customers want ice cream freezers, then we must make them.

Mr. Robens

We listened to a long speech by the hon. Gentleman without understanding anything he said. I think I had better leave his interjection to the House rather than pursue it.

What are the things we have to do? We must make things which people want, but we must also concentrate on the things in which we have a lead. In other words, we now have to sell brains rather than brawn. That is how the pattern is changing. We must develop the application of atomic energy research to industry. We are leaders in that, and it will have a very great export market. We must develop such things as the Comet, jet propulsion, and all sorts of new inventions and ideas which are now being developed by the scientific use of the brains of this country.

If we are to do that—and I believe it to be essential—the pattern will have to be changed over the next few years. That means that this country must have more scientists, technicians, research workers, laboratory assistants, etc. The Ministry of Education has dealt the greatest blow possible against producing those people by putting children of five years of age in primary school classes of 40, 50 and 60. This Government, through its educational policy, has dealt the worst possible blow to our econmic recovery over the next 25 years, because the people which this country needs cannot be produced by the educational policy pursued at the present time.

The whole distribution is wrong and will have to be changed. Under this Government there were 32,000 fewer people in basic industries at the end of February, 1953, and 112,000 fewer in the manufacturing industries, than at the end of 1951. Does that not worry hon. Gentlemen opposite? It would worry me if I were responsible. There is nothing in the Government's policy so far disclosed that meets these grave production policies with which the nation is faced. They have abandoned a planned economy, but it is only under a planned economy, with the careful use of the whole of our national resources, that we can win this battle.

The Government have abandoned a planned economy and have geared up the whole nation to the free enterprise system, with profit as the main motive of production. That is why we put down the Amendment. We do not believe that in view of the problems with which the nation is faced the policy of the Government as enunciated will meet the position. The problem that we shall have to face when we come into power is to clear up the mess that hon. and right hon. Gentlemen opposite are making.

8.29 p.m.

Mr. Cyril Osborne (Louth)

The right hon. Member for Blyth (Mr. Robens) said at the beginning of his speech that this was, in its way, a Back Benchers' day and he regretted that Front Benchers should take so much time. I wish he had remembered at the end of his speech what he said at the beginning because it took him 50 minutes to say what some of us on the back benches think he could have said in half the time.

Mr. Robens

I was subjected to an enormous amount of interruption.

Mr. Osborne

Even then the right hon. Gentleman did not get through all his notes. With one or two of the things he said I agree. The most important was that this country faces the greatest economic competition in our long history and that the gravity of the situation is greater than most hon. Members on either side of the House realise.

He also told us that on this side we did not accept the warnings of Sir Stafford Cripps when things were very difficult. I would remind the right hon. Gentleman about his own leaders. The right hon. Member for Lewisham, South (Mr. H. Morrison) talked about "recovery corner" and his right hon. Friend the Member for Bishop Auckland (Mr. Dalton) talked about things "with a song in his heart." They were preaching a totally different economic doctrine from the late Sir Stafford Cripps. If the warnings were not taken on this side of the House as they ought to have been—in parenthesis I think I can say that I am one of the few men on either side who did take them—there were leading Members on that side of the House who would not take notice of those warnings either.

The right hon. Gentleman alleged that the Budget taking 6d. off the Income Tax was stupid because it would cause-wage demands which would dislocate production again. I ask him to remember that between 1945 and 1950 there were wage increases almost every year, with Socialist Chancellors in charge of Budgets at the time.

Mr. Robens

The wage increases went with increases of production. Wage levels kept pace with the increases in the cost of living, which is not happening now.

Mr. Osborne

The right hon. Gentleman said that wage increases that he is fostering and encouraging by his speech would result from the taking off of 6d. from the Income Tax. The retort to the right hon. Gentleman is that there were increases in wages every year when the Socialist Government were in power.

I am sorry that the hon. Member for Coventry, North (Mr. Edelman) is not in his place. I liked his speech the best of the lot. He said that there had been a pause in production throughout Europe in the last two years and he did not blame the Government for it. He said—and this again brings back the memory of Sir Stafford Cripps's warning to us all—that America had now almost undue influence in the rest of the free world economy. Hon. Gentlemen opposite will remember that in 1949 the American economy had a setback of 5 per cent., which was sufficient to compel us to devalue the £ sterling and to cause an immense crisis in this country. The Socialist Government, with a 200 majority, could do nothing to stop it.

The Amendment says two things. The first is that industrial output fell last year, and it regrets it. That is obviously true. It is no use arguing against it. Of course industrial output fell, and it is a thing that we all regret. The second thing that the Amendment says is that that was largely the fault of Her Majesty's Gov- ernment. That is completely and utterly untrue, and I should like to demonstrate that to the House.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

Before the hon. Gentleman does that, may I ask, since he says that the statement in the Amendment is untrue, whether he is aware that the Chancellor of the Exchequer said that his credit policy last year had had effects that he had not foreseen?

Mr. Osborne

It is true that to some extent the Chancellor's deflationary policy is responsible, but it is not wholly responsible. I want to demonstrate that world factors caused that setback.

Before I do that, I want to make the clear point that increased production of itself will not get us out of our trouble. We have to produce better goods at lower prices. The one problem before us today is not merely to increase output but to secure the greater efficiency that will produce lower costs. It must be obvious to all hon. Members who are engaged in industry that it is useless to make goods which are so dear that one cannot sell them. Merely to increase production to such an extent that prices are so high that people cannot buy the goods produced will not get us out of the mess.

I should like to give three examples at home—and if we cannot buy things at home how much less they will be bought abroad. Before nationalisation of the coal industry the best Derby Brights cost 79s. per ton in Central London. Today they cost 126s. 5d. If that rate of increase continues poor people will not be able to buy coal. We on this side of the House are rejoicing that more and more houses are being built, but I can foresee that in 10 years' time there may be thousands of council houses standing empty because people cannot afford to pay the excessive rents. We want cheaper and better goods and services.

Lastly, there is the cost of transport. Train and bus fares have gone up so much that many workers cannot afford to take their children to the seaside for a holiday. I bring these three examples forward to show that the answer to our problems is not so much the increasing of output as the bringing of our prices down and the quality of our goods up.

Following a line taken by the right hon. Member for Blyth, I should like to remind hon. Members of the position which we should face if the Korean talks resulted in general peace. We should then face such a difficult time in world markets that to survive we should have to pull together in a way in which we have never before pulled together industrially. In the textile industry, in which I have some interest and take some part, we were faced with severe competition from Japan from time to time before the war. The Japanese textile industry has been re-equipped by American money. As the right hon. Member for Blyth said, their natural markets have gone for the time being. The American taxpayer will refuse to subsidise Japan any longer and Japan will have to earn her own living in competition with Lancashire and Yorkshire textile exports in the Far East.

It is not only the employers who ought to be told of these facts. We ought to tell the workers too. [An HON. MEMBER: "They know it."] The German mechanical industry is progressing to a point at which we shall find it very difficult to meet German competition, as we are finding it difficult to meet at the moment in South America. Markets which were ours in Chile, Peru, Brazil and the Argentine are being lost even today. The German people have been hardened in war and are prepared to work, and are working, in a way in which no other people in Western Europe are working. I feel in my bones that in the textile industry Italy and France will come into the international markets with their goods and we shall have the gravest difficulty in selling what we produce.

Another consideration which haunts me from the point of view of international competition is that during the last 12 years Russia has been building a new economy east of the Urals. We have no knowledge what that economy is. In a few years' time she may be in a position to flood world markets with consumer goods at subsidised prices that will make it impossible for us to live against her.

But the greatest competition will come from America. In the last 10 years American productive capacity has doubled. The new Administration are pledged to cut their taxes and, above all, they are determined that America shall never again have 17 million unemployed. The exports from the American economy are largely the cream off the milk they get from their huge domestic market. They could afford to sell more cheaply and to cut their prices. We are going to have a terrific time fighting against American competition in the future.

I think it was the hon. Member for Coventry, North who quoted Senator Taft, as reported in the "Economist" last week, when he was asked about "trade, not aid." He said, cryptically, that he believed in the second half of the phrase. He had no comment to make about trade. In my opinion it shows the toughness that may one day show itself in the international market, and with which it will be terrifically difficult for us to compete.

In "The Times" yesterday there was another straw which showed the way the wind is blowing in the American industrial mind. The Chairman of the Goodrich Company, who is going to Copenhagen as the United States delegate to the Rubber Conference, said that he had no sympathy for an international control of rubber. He wanted rubber to have open competition and to find its own level. What an immense contrast with the policy of his fellow-countrymen who are running the international wheat market.

I should like to give the House some figures which I found rather startling. Two years ago rubber was 4s. 3d. a 1b.; today it is 1s. 8d. Two years ago we were buying wheat from America at 1.80 dollars a bushel; today we are being asked 2.05 dollars for it. If the price of wheat had. through international competition, fallen in the same way that rubber has done it would be 85 cents a bushel today, but we are being asked to pay 2.05 dollars.

I am by no means anti-American; I am very much the other way, but we have to face the fact that when the Korean war is over and the American economy gets into full gear again, unless our goods are of the finest quality and are offered at the keenest prices, we shall have no hope of survival, and the whole Welfare State upon which hon. Members on both sides of the House pride themselves so much will disappear completely and utterly. No Government of any colour will be able to maintain it. Hon. Members must face the fact that it is out of the profits of industry that the Welfare State is maintained, and if industry ceases to make a profit the Welfare State must go. No party politics can restore it if the economic system ceases to function properly.

I want to deal with the political side of this Amendment, which I rather regret. The Amendment says that the fall in production in 1952 was due to the action of the Government. On page 39 of the Economic Survey—which we have all seen—the biggest fall was shown as being in clothing and textiles. The other large fall was in paper and printing. But for those two falls there would have been no fall in the total industrial production.

Is it true, as hon. Gentlemen opposite have said, that it was this Government's fault that the fall in textiles and clothing occurred in 1952? The right hon. Member for Blyth, who is an intelligent man and knows his work, knows that it is not true. He knows that his hon. Friends have been talking arrant nonsense. When the "Economic Survey of Europe in 1951" was issued by the United Nations it was sent out with a Press summary—it was issued on 3rd February, 1952—which said of this problem: The Survey"— it was for 1951— next discusses the textile raw materials situation in Western Europe, describing the sharp break in cotton and wool prices in March"— that is, March, 1951— as the outstanding event of 1951 in the textile field and the harbinger of the textile crisis which developed later in the year. That is before this Government came to power.

Before the General Election the United Nations said that the crisis was here. The summary goes on: Retail sales, which in most Western European countries started to decline in the spring, remained at a very low level during the summer. The opening of the autumn season did not change the picture and in the third quarter of 1951, the Survey says, the textile crisis had spread to the whole of Western Europe. If we are to accept this evidence from the United Nations, this was a world problem which had not only started when the last Administration was in power but had reached its height just as the Labour Party went from power. I do not blame them for it because, obviously, it was not their fault; it was a world movement. In the same way, the right hon. Gentleman knows full well that it is nonsense to blame this Government for that setback in textiles.

If I may produce more supporting evidence from the United Nations, in a Report of 25th May, 1952, they said: The main reason for the levelling off in total industrial output"— this is very much what we are now discussing— was the continuing slump in the textile and clothing industries and in other branches producing durable consumer goods. Then followed these figures: Bulletin tables show that within a year textile production fell from the previous quarterly peaks by about 20 per cent. in Belgium and Denmark, by 10 to 15 per cent. in Italy, the Netherlands, Norway and Sweden, by 7 per cent. in the United Kingdom and Finland, 4 per cent. in France and 2 per cent. in Western Germany.

Mr. Ivor Owen Thomas (The Wrekin)

So what?

Mr. Osborne

I should have thought that even the hon. Member would have understood that. It shows that it was a world-wide crisis which caused the fall in textile production, that it was not the fault of this Government because they were not in power, and that it was the fall in the textile production which was largely responsible for the 3 per cent. reduction in 1952.

Several Hon. Members rose—

Mr. Osborne

I cannot give way; I am trying to make my speech as short as possible. I am trying to make the point that what Governments can do about world economic affairs is strictly limited, no matter what party is in power, but there are some things that a Government ought to do, and there are two things which I believe this Government should try to do. They should try to get increased net productivity rather than increased gross industrial production.

The first thing that the Government ought to do—and I hope that the right hon. Gentleman the Member for Blyth will support this—is to get both sides of industry together to see that wherever possible we have the system of double-shift working in all our modern plants. It costs a lot of money these days to build a modern factory. It costs even more to fill it with up-to-date machinery. It is a shocking waste of our national capital to build these vast factories, fill them full of expensive machinery, and then see that machinery worked for only one shift per day five days per week for 50 weeks in the year.

The quickest and surest way of getting down our costs of production is, wherever possible—and I know full well it is not possible in every industry—to go on to the double-shift system. It is remarkable to see the difference in the overheads in a factory where for a period there is only single-shift working and then for a similar period double-shift working. Therefore, I urge upon the Government that the first thing to do is to get both sides of industry together to see if they will adopt the double-shift system.

Mr. I. O. Thomas

What about the night shift?

Mr. Dryden Brook (Halifax)

Many are doing it.

Mr. Osborne

I know. It is happening in one of my factories, but it is not the universal practice, and I am asking that wherever possible it should be done.

The second thing I think the Government ought to do, although the right hon. Member for Blyth may not be with me so much in this suggestion, is in regard to the deployment of our national labour force. I think that a good deal of it is wastefully employed. The total working population is 23,280,000 people. There are three industries that are really producing wealth. They are what I call the prime wealth producers. They do not between them employ one half of the total working population. Agriculture employs 1,047,000; mining 877,000; manufacturing 8,699,000. There are too few men and women in our industrial organisations who are producing what I call primary wealth.

Contrast those figures with these: transport employs 1,726,000, as against 877,000 in mining. In the distributive trades we employ no fewer than 2,627,000. I believe that our national distributive overheads are far too high, and that something ought to be done about it. In the last classification there are professional, financial and miscellaneous services employing 3,941,000—far too many. We have far too many people doing what I call fancy jobs. We have far too many hangers-on in our economic machine, and there are far too many people talking and too few people doing things—and that applies to both sides of the House.

Mr. Nabarro

And taking far too long as well.

Mr. Osborne

I believe that the overheads that the exporting industries have to carry are too high. If the Government can do something along the two lines I have suggested to get our industrial efficiency higher and to get our costs down, I feel sure that that will help us in the only way that the Government can help us.

Mr. I. O. Thomas

How can they?

Mr. Osborne

They will not do it in the way the hon. Gentleman's party tried to do it.

Mr. I. O. Thomas

Give us a clue.

Mr. Osborne

They will not do it in the way hon. and right hon. Gentlemen opposite tried to do it by growing groundnuts in East Africa.

My final word is this. We shall not cure our economic problems by playing party politics, from either one side of the House or the other. The influence of politics over economics is very strictly limited. If, for a while, we could only forget the questions of ins and outs and face the immense difficulties ahead of us, I think that within the next 12 months we could have a better position in the country, in the factories and in all the productive units. Only then, only under such circumstances, shall we have a hope of overcoming the great difficulties with which I believe we are faced.

8.56 p.m.

Mr. Frank Tomney (Hammersmith, North)

I shall not attempt to follow all the arguments of the hon. Member for Louth (Mr. Osborne), but there are three points on which I want to comment, because they concern the ordinary productive worker in industry, the ordinary housewife and the ordinary man in the street. He mentioned Derby Brights—coal produced by the coalminer costing 126s. a ton, and he gave the comparable figures before the war. But before the war the miner producing those Derby Brights was paid only 30s. to 35s. a week for a full working week. Today, his conditions are far different.

The hon. Gentleman also said he thought that in six, seven, eight or nine years' time there would be thousands of council houses standing empty. I hope there are, but I do not think so. I say that for one reason alone, that each year we need 300,000 new houses, without taking into consideration slum clearance and new building. He then said that because transport costs had increased so much people could not afford to take their children to the seaside for a holiday.

I would remind the hon. Gentleman that a great part of those increased transport costs is reflected in wages. That is as it should be, because before the war the transport and railway worker was one of the lowest paid workers in the country manning productive industry, and if he is getting his just reward today he is only getting what he is justly entitled to. I will not follow the hon. Gentleman in his arguments any further, because I want to leave as much time as I can for my hon. Friend the Member for Reading, South (Mr. Mikardo). I would only add that I have sat here all day trying to catch Mr. Speaker's eye.

This debate has been remarkable for certainly one thing. The answer to the production problem concerns the destiny of our nation and its economic life, yet the Government benches have been empty all day long. What conclusion can we draw from that? Throughout the day the Opposition benches have been occupied by many times the number of Members on the Government benches, and we are entitled to ask whether hon. and right hon. Members opposite have the real interests of our people at heart. Do they really care about the destiny of the nation? They had better make up their minds to care, because if they do not, within a few years we shall run into trouble.

We know that since the war, despite the efforts made by various Governments, management and industry have not succeeded in bringing the country back on to firm economic grounds. The economic factors which determine our productive effort and our standard of living are well known. The political considerations of world policies, which have determined that almost all civilised countries must devote a great part of their national resources to preparations for national defence, are regrettable but necessary. Indeed, it is true to say that, had it not been for the world economic climate the world could today have been approaching a productive E1 Dorado.

What we must look at, in this country particularly, are the basic problems. The question which concerns us most is what will be Britain's position in the future as an exporting nation, and how we are to harness our great industrial skills to our economic resources in order to provide full employment. The whole crux of this problem is that today our population is increasing faster than our food production and the manufacturing industries are increasing faster than the supplies of raw materials. These factors make this country extremely vulnerable, especially with the marked shift in price relations between primary products and secondary manufactured goods. Primary products, taken as a whole, tend to get relatively dearer.

We can understand that our foreign competitiors, especially Germany and Japan, mentioned by the right hon. Member for Blyth (Mr. Robens), depend less on foreign trade earnings than we do to the extent of 15 and 12 per cent. Both are countries with much the same size populations as we have and with the same problems of feeding and of raw materials. Great Britain is vulnerable to sudden changes in world trade by way of slumps and booms, and both are equally dangerous to us, slumps because they put up the demand for export goods and booms because they drive up the prices of raw materials and food. In times of slump, with world unemployment and falling incomes people can do without cars and radios and even without the new machinery we offer. In boom times with the rise in incomes people bid lavishly for food and raw materials and outbid us.

Where the House is divided on this matter is that the policy of the Government and the policy of the Labour Party conflict. We believe in planned economy. It is hard to determine, at least in regard to freeing the nationalised industries, where the Tory Party stand if they do not intend to denationalise coal, electricity, gas and one or two more of the nationalised industries.

During 1945–50, it is true to say that we had a sellers' market and we not only fixed our production targets but we exceeded them and those of almost every other nation. At the same time, we realised that if Great Britain was to survive in a 20th century economy she must now make radical changes in her processes of production, research and technology. To that end it was necessary to do certain things, some of which have been referred to by my right hon. Friend the Member for Blyth. But all of them were a long-term policy which would have given us results when we needed them and when world competition became more acute.

As a nation of 50 million people in a small island we have to export to live. Having no material resources within our own borders except coal we have to purchase from abroad. We have to purchase large quantities of our food. We are more severely up against it than any other nation in the world and we have to do something about it, particularly in regard to research and technical education.

We decided, for the first time, to capitalise the brains and ability of the people, to buy insurance for the future—which was wise Government and wise planning. We have not yet reaped the full fruit of those plans. We also realised that too many people were working on the wrong jobs. The world was changing; we needed a new deployment of our industry and manpower and we needed newer industries. The industries with which we started the industrial revolution, such as textiles, and the crafts which could be acquired in those industries, had been acquired overseas by Japan, by India, by France, by South Africa, by South America, where labour was so much cheaper that they could always outbid us for contracts.

The concentration therefore had to be upon those skills which we had inherited, chiefly engineering skills, in order to build up over the years an ever-increasing capacity to manufacture. Let it not be forgotten that we had had the lead in engineering since the beginning of this century and that the demand for engineering products and capital goods has been growing every year since then, sometimes as much as by 50 per cent. We dissipated that lead in the 1920's through unemployment. There was no capital investment in the big industries or the mines. We completely ran down in the years up to and including 1939.

We had to recover the position in which we could not only hold our own but manufacture and sell those goods in which our peculiar skills and crafts entitle us to expect a long lead in world markets. We did that in several directions. Perhaps the most outstanding was the development of supersonic aircraft, jet aircraft and the electronic industry, and those newer skills which have given us such a commanding lead. Not only have they given us a commanding lead in those products but they also give us more in cash value per £ per ton than other manufacturers. For instance, a jet aircraft will realise as much as £20,000 per ton of materials used and a motor car will realise about £600.

Those are the kind of industries which our background entitles us to develop and into which our developed skills can be poured. But that can be done only by a process of investing not only in the industries but in the children who later will supply them. Other countries, such as New Zealand, Australia, South Africa and South America, have all been developing in these years their secondary industries. They have begun to manufacture for themselves those goods which we formerly exported to them. That is why the textile industry in Lancashire has taken such a knock and why the outlook for textiles in the future is not very bright. I can never see the Lancashire textile industry recovering to the pre-1914 level.

That affects not only textiles but bleaching, finishing and printing; it affects the whole county, whose entire capital is sunk in one industry. We cannot suddenly transform these people into industrialists but the effort must be made. Some of these areas have been designated as development areas, which is all to the good.

We cannot get on with this job too quickly because Great Britain depends for more than 30 per cent. of her total national income upon foreign trade. The two industrial giants, the U.S.A. and the U.S.S.R., produce most of their raw materials within their own borders. The U.S.A. depends for only 5 per cent. of its income on foreign trade and perhaps the U.S.S.R. depends upon it for considerably less.

What has not been mentioned in the debate is something which concerns us more here than anywhere else. I will not say that our industries have been fully extended or that our people have been fully extended, but in regard to available sources of raw materials we are in a very bad state indeed. It is possible with the substitution of synthetic production that now the age of metal is passing we can turn over to an age of oxides, silicates, carbides and nitrates which will follow the metal age.

We can only do that by harnessing this scientific revolution and becoming the exporters of these raw materials. We are well equipped to do this and have started on the right lines. All this is part of the policy laid down by my party when they formed the Government and I am proud that it was carried on through those years and built the solid foundations which the present Government have inherited.

I should like to see added to the Treasury a raw materials department—

Lieut.-Colonel W. H. Bromley-Davenport (Knutsford)

On a point of order, must the hon. Member read every single word of what he has to say?

Mr. Tomney

When the hon. and gallant Member interrupted me—and it is the first time he has come into the Chamber—I was saying that I should like to see the Treasury institute a raw materials department to take care of the manufacture and synthetic production of new raw materials. I can only hope that in doing so they make a start with the hon. and gallant Member.

Mr. Frederick Messer (Tottenham)

He is synthetic himself.

Mr. Tomney

I do not want to speak much longer as my hon. Friend the Member for Reading, South is to wind up the debate for this side.

There is no doubt the trade unions are willing, as they have always been, to cooperate fully in helping forward production. Trade unions as such now have a vested interest in full employment. They have grown to huge proportions and there is nothing which dissipates the funds of trade unions more than out of work benefits and benefits which have to be paid when industry runs down. In the United States it is not unusual for some trade unions even to enlist and volunteer the help of technical experts to help industry and I want to see that sort of help given in Great Britain. Co-operation from the trade unions will be forthcoming, but only on the basis of the men employed in industry who do the actual producing having a full share of the new wealth created.

9.14 p.m.

Mr. I. Mikardo (Reading, South)

I have listened with intense and close interest to every word of this debate today and there have been many times during the course of it when I felt, as I am sure many other hon. Members must have felt, that the shadow of Sir Stafford Cripps was hovering over our deliberations. It seemed to me that in a large number of the serious and thoughtful speeches we have had there were many echoes of Sir Stafford Cripps. I could not help contrasting the tacit tributes paid today to his memory by hon. Gentlemen opposite with the way in which they derided him when he was responsible for handling the economic affairs of the nation at an extremely difficult time.

It was very significant that today there was very little criticism of the economic behaviour of the Labour Government between 1945 and 1951. Indeed, somewhat to the surprise of all of us, the hon. Member for Cheadle (Mr. Shepherd) said he wanted to pay a tribute to the economic work of the two Labour Governments. A number of hon. Gentlemen opposite must be suffering from severe bouts of indigestion engendered by their need to swallow many of the words they uttered in the six years between 1945 and 1951.

One or two of the more economically naive gentry on the other side of the House continued to trot out a few of the old fallacies, and indeed one or two syllogisms. There were certain differences of opinion between hon. Members opposite. The hon. Member for Cheadle and the hon. Member for Hendon, North (Mr. C. I. Orr-Ewing) spent a long time arguing, through some abstruse metaphysical lucubrations, which I could not quite follow, that in the end it is a good thing if production goes down and that the present Government could take great credit from that fact. The Economic Secretary to the Treasury succeeded in proving that the Government's own Economic Survey was wrong, and that production had not gone down, and, therefore, the Government could not take any credit on that account.

One or two hon. Members trotted out the hoary fallacy that high output and high productivity during the period of office of the Labour Government was due to external factors like a buoyant world demand; thus showing conclusively that they do not understand the relationship between production and productivity, because productivity, except marginally, is not connected with demand. Nothing they said about changes in demand between 1950, 1951 and 1952—and goodness knows they said a good deal and said it many times—can in the least begin to explain why production and productivity went up consistently year after year throughout the whole period of the Labour Government's term of office, and then fell, for the first time for 15 years, in the first year of a Conservative Government. That is the one overriding factor at the back of this debate from which hon. Gentlemen opposite simply cannot escape.

There is another fallacy of the same ilk which we have heard from one or two hon. Gentlemen opposite, that the enormous upsurge in both production and productivity between 1945 and 1951 was due to a number of general causes, including external aid—United States aid. One has only to look at 1951 and 1952. In 1952, with the present Government in power, as the Chancellor of the Exchequer told us in his Budget speech, we received 30 times as much United States aid as in 1951. In 1951, British production went up. In 1952, it went down. How, therefore, can they possibly say that any of the rise in production under a Labour Government was due to external aid when, in the first year of a Conservative Government, they multiply the external aid 30 times, and still succeed in getting the first fall in production for 15 years?

Then there was the Economic Secretary, with that wonderful sleight of hand performance which he did today. I thought he was very good to us today, much better than during the Budget debate, when he got up very didactically and read us a lecture. He must have forgotten which one it was and thought that he was addressing the day school of a branch of the Young Conservatives in between the tea dance in the afternoon and social soiree in the evening.

The hon. Gentleman was much better today. He started by setting out to explain why production had fallen under a Government of Conservative undoc-trinaire practical business men, but he was so carried away, so mesmerised by himself, one eye looking inwards and one eye looking outwards simultaneously, that he finished up by explaining that production had not fallen at all.

I would refer the hon. Member for Barnet (Mr. Maudling) to the Economic Secretary to the Treasury. He would learn a great deal from him, because, of course, the Economic Secretary to the Treasury must have some responsibility for the Economic Survey, which was published a few weeks ago; and in order to demesmerise the hon. Gentleman, I repeat what his Economic Survey said. It said that in 1952, by comparison with 1951, overall output was down 1 per cent., industrial output was down 3 per cent., manufacturing output was down 4 per cent. and overall productivity was down 1 per cent.

Let us start from that point. I take my figures from a great authority: the Economic Secretary to the Treasury. The hon. Member for Barnet, who mesmerised himself this afternoon into nearly believing, and certainly convincing his hon. Friend the Member for Louth (Mr. Osborne)—it is not difficult to convince him of anything—into nearly believing, that production had not fallen after all, must go back and read his Economic Survey—I am sure he wrote most of it, because it is rather well written—all over again.

Mr. Osborne rose—

Mr. Mikardo

I am sorry not to give way. The hon. Gentleman did not give way once in his long speech and I promised to finish in time for a second Front Bench speech from the Government in this Private Members' day. Therefore, I want to be economical in my time.

Hon. Members opposite can talk themselves black and blue in the face, but they will not talk themselves away from the short facts. The short facts are that from 1945 to 1951, both production and productivity rose each year over the previous year by a figure very much higher than we had ever been able to achieve at any previous time in our history. That is a fact, and hon. Members opposite know it, and they ought to rejoice in it.

For most of that period, British national output rose each year more than three times as fast as the average rise during periods when Conservative Governments were in office—5 per cent., 6 per cent., 7 per cent., or 8 per cent. each year—and all over the world people took note of this. I travelled a good deal in those days and had many proud moments—and one could have—when asked by people abroad, Socialists and anti-Socialists, business men, trade union leaders, Conservatives, Liberals and all sorts, "How are you chaps in Britain doing this? Why is it that you are managing so much better than other countries in recovering from the after effects of the war?"

One tried to tell those people, and one had many proud moments in acceding to the universal admiration and envy of the whole world at the productive achievement of the British people in those years. But the admiration was not quite universal. Everybody paid tribute to the British nation for its productive achievements in those years, except the Conservative Party of Great Britain, which was very busy in and out of the country in denigrating British achievements. It was, after all, in a year of very great rise of industrial output that the present Prime Minister said that the mainspring of British industry was broken.

Mr. Jack Jones (Rotherham)

"Weary Willies and Tired Tims."

Mr. Mikardo

It was in the year when British output and productivity increased more than in any other that he described the workers of this country as "Weary Willies and Tired Tims." Nobody took any notice of it, so it did not matter, and, in any case, they gave him the lie by producing more and more.

All this cannot just be coincidence. I ask hon. Gentlemen opposite, not for a reaction at this moment, because that is bound to be an automatic reaction, conditioned by the atmosphere of the House, but I ask them whether, in the still watches of tonight, just before they fall off to sleep, when they are perhaps nearer to the eternal, ineffable truth than at any other time, they think this is a coincidence?

Here we were, in 1946 and 1947, British industry ground down beneath the iron heel of "incompetent Socialist bureaucracy," and production went up; in 1948 and 1949, when British workers were "Weary Willies and Tired Tims," production went up; in 1950 and 1951, when "the mainspring of British industry was broken," production went up; and in 1952, at long last, with a Government of undoctrinaire, competent Conservative businessmen, production goes down. Anybody who believes that to be a coincidence will believe anything.

I wonder whether the House has re-called when, before 1952, was the last time when production in this country fell below that of the previous year? It was in 1938–15 years ago—and what is funny about 1938? Why, it was the last peacetime year in which we had a Conservative Government.

Mr. Jones

Munich.

Mr. Mikardo

From 1938 to 1952, the years in which we did not have any peace-time Conservative Governments, production went up, and, in the two years in which we had, it went down. There is something here which is much more than coincidence.

May I now say a few words about my view of the particular reasons why we got this stagnation in British industry—because that is what is was—in 1952? I do not pretend to cover all the causes, but I hope to say a word or two from the standpoint of one who is not an academic economist, like the Economic Secretary, but who gets what he knows from going round and doing a bit of work in one or two factories. The hon. Member for Bolton, West (Mr. Holt) who appears to be the President of the Board of Trade in the Liberal Party's "Shadow Cabinet"—and I do not want to be disrespectful but I should think that that would be sufficient grounds for ensuring that it stays a "Shadow Cabinet"—said that we had to look upon the nation as a single enterprise, and I quite agree with him, because the business of increasing production in the nation depends on exactly the same methods and factors as the business of increasing production in an individual factory.

We have to get together the three Ms—materials, machines and men with a high morale—and the reason why production went down in 1952, instead of, as was the case, going up between 1945 and 1951, is that this Government fell down on these three Ms. During the years of the Labour Government, broadly speaking, we managed to maintain a smooth flow of materials to the shops. Ther were one or two let-downs—coal in 1947 and sulphur in 1950—but, by and large, we made a job if it. There was a greater level of industrial investment than had ever been done before in the history of this nation, but the second m—the men—were the important factor.

In those years after the war we all went round saying to the workers, "You need not worry now. You do not have to worry that if you put your backs into it you will work yourselves out of a job." We all said that, Conservatives, Socialists, trade union and trade association leaders alike. Sir Stafford Cripps, above all, said it. We said, "In the old days you used to worry about working too hard because you knew that if you did you might work a colleague or even yourself out of a job. It is all right now. Here is a Labour Government and we have full employment. You do not have to worry."

For a couple of years they did not believe us. If one said that in a factory the men would say, "That is all very well, but I remember 1919 and 1920. We had a post-war boom then which collapsed and I was out of work for four years." But two or three years after the war—I would hestitate to put a time to it—at the end of 1947 and the beginning of 1948, one could detect a subtle change in the moral atmosphere in a great many of our factories. The men were beginning to say, "Maybe these people have got something. Perhaps this full employment has come to stay. Perhaps it is true that we can take off our coats and roll up our sleeves, and not be in danger of working ourselves out of a job."

Almost everybody I talked to who had the experience of going round factories during that period noticed this phenomenon. It was most marked, and it was that which was the main cause of the upsurge in output and productivity in 1948, 1949 and 1950. It was the nascent confidence of the workers in the permanence of full employment. Where are we now? In 1952 working progress shrunk.

I took no part in the delicate argument between the Economic Secretary and my hon. Friend the Member for Leeds, South (Mr. Gaitskell), but I went round factories and saw people paying 6 per cent. who were not too anxious to have too much stock on their shelves. This was especially so in the case of the small man whom hon. Members opposite are to protect. The big firms do not cut down their inventories. They have plenty of money and can borrow millions more in the City. But it is much harder for the small man to borrow £500 from his bank.

Sir W. Darling

No.

Mr. Mikardo

The hon. Gentleman ought really to have given us the benefit of his undoubted knowledge on this subject somewhat earlier today. It is the small firms who have been hit.

Mr. Watkinson indicated assent.

Mr. Mikardo

I see that the Parliamentary Secretary agrees that it is the small firms who have been the hardest hit by high interest rates and credit restrictions. The cut in capital investment last year was idiotic by all standards, especially at a time when we are asking for increased productivity. At a time when Germany and Japan, as has been said, are coming into competition, for us to invest in industrial equipment last year less than half what the West Germans invested in their industry was a piece of economic and industrial lunacy.

I am sorry that that nascent belief in the permanence of full employment has gone. The sleeves are being rolled down and the coats are being put on. Who will blame the workers when they see in their own towns more unemployment and fewer vacancies, not as a famous Conservative once said, 11 men queueing for 10 jobs, but 20 men queueing for 10 jobs, twice as many unemployed as vacancies. Above all, when they see in their own towns and factories the growth of short time, which is the greatest threat to the future employment of the country, how can we blame them for saying, "It is not right that we should take off our coats and roll up our sleeves." I do not approve of their attitude, but I understand it and if I depended upon working in a factory to earn £8 or £9 a week, I would share it as well. Hon. Gentlemen opposite have made this rod for their own backs by the policy of the Treasury during the last 18 months.

In addition to the general problem of the falling level of production and productivity there is the question of the direction. The Economic Secretary and others have said that it is no good making things unless they are the right things and are things which we want basically at home or for export. The one thing that the policy of the present Government does not do is any sort of qualitative selection. There is no item in the Government's policy which will ensure that money will be invested in this industry and not in that.

The other day, the Economic Secretary talked about "a flexible weapon." I listened to him saying that we had to create the right economic result with a flexible weapon. [An HON. MEMBER: "Not a cosh."] Why "weapon"? We usually use weapons to smash things and not to build them up. And "flexible." How can we ever be sure, even if we grant the Economic Secretary the word "tool" instead of "weapon," that it will do the job that we want to do, to make the cut where we want to make it and put the extra on where we want to put it, if our tools are not firm but are flexible?

I can imagine the hon. Gentleman going home and being told, "When you have finished your lunch hang up a picture of that lovely gentleman in his new robes in the front parlour," and of his saying, in reply, "Yes, I will do so as soon as I have found a flexible hammer and some indiarubber nails." The hon. Gentleman could not put the nails into the wall with that tool, or the nails into the place where he wanted them to go.

That is why we had 23,000 more workers in the distributive trades last year and 20,000 fewer in agriculture. In 1952 there were more bookies' runners and more stock jobbers' runners—which are roughly the same thing—and fewer people growing grain and vegetables on British farms, than there had been for many years. That is what happens when we use flexible weapons. They cut the wrong things. They cut agricultural labour instead of cutting spivs.

That is why my hon. Friends the Members for Anglesey (Mr. C. Hughes) and Cardiff, West (Mr. G. Thomas) did right to bring this subject to our notice. That is why it was right to draw attention not merely to the anxiety which we all feel—if hon. Gentlemen opposite do not feel anxiety they ought to—about this stagnation in British industry, after six wonderful years, but to the fact that there is nothing in Government policy which indicates the least hope of a reversal of that trend.

I hope that the House will record a strong vote in favour of the Amendment and give the Government something to think about.

9.39 p.m.

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

I am sure the House is grateful to the two hon. Gentlemen, as the hon. Member for Reading, South (Mr. Mikardo) has just said, for raising this matter. I do not disagree with the hon. Member, or with the right hon. Member for Blyth (Mr. Robens) when they say that this is the most important subject we could discuss in this House. All our future depends upon our success or failure to face this immense problem of earning our living in an increasingly competitive and difficult world.

But in this problem of productive efficiency and productivity there are really two problems. One is an economic problem and one is a human problem. As to the economic problem, I certainly would not presume to try to add or subtract anything from the very able review given to the House this afternoon by my hon. Friend the Economic Secretary to the Treasury. Therefore I am not proposing to deal with the economic side. As somebody who was not educated at the London School of Economics, I always listen with fascinated attention to these economic arguments, and I am always impressed by how badly I was brought up, because I very soon find myself out of my depth.

Mr. Messer

So do we.

Mr. Watkinson

I am also very fascinated when I listen to the hon. Member for Reading, South (Mr. Mikardo), because we all know his great interest in these economic matters. What he has said rather supports my contention that sometimes statistics can prove anything, because my hon. Friend the Member for Buckinghamshire, South (Mr. R. Bell) was kind enough to remind me of a debate on re-armament which took place on 23rd July, 1951, when we on this side of the House were in Opposition. On that occasion I addressed some remarks to the House on productivity. Here I think that it is only fair to say that in the last Paliament—which is the only one of which I can speak from practical knowledge—a great many of us, then on the Opposition side of the House, were constantly raising these matters of productivity in a reasonable, constructive way.

I should like to quote two things which the hon. Member for Reading, South said in that debate in which he followed me. He was talking, first of all, about short time and the danger of short time in factories. This was in July, 1951, when we on this side were not in office. He said: In cities like Coventry or Luton, as soon as one factory goes on short time, this chilliness in the factory climate spreads over the whole system and people begin to say, 'We had better not go all out in case we create short time.' That is still true and the hon. Member said it again today. But I would remind him that he also said it when his own Government were in command. He also said something else, which puts his remarks today about productivity in the correct perspective.

He talked about the figures of productivity. He gave the figures for 1950, showing a steady rise in productivity over that year. Then he came to 1951, and he said that: In 1951, the figure for the first four months, from January to April, is 143. That is the first drop. The curve is now going down. In 1950, quarter by quarter, the trend was up. up and up. In 1951, it is going down. We may not like that, but we have to deal with the facts as they are."—[OFFICIAL REPORT, 23rd July, 1951; Vol. 491, c. 80–81.] That entirely proves the point I myself made in the Budget debate of that year—that in the beginning of 1951 we had already passed the peak of productivity, and the years of high taxation, with their limiting effect on efficiency, had begun to show their inevitable results.

Mr. Mikardo

I do not complain of the passages which the hon. Gentleman has quoted, but he must agree that output in 1951 as a whole was 3 per cent. more than in 1950, and that in 1952 it fell.

Mr. Watkinson

I quite agree, but that was not at all the point which I was making. The point which I was making was that at that time in 1951 the curve of productivity had already started on its downward course, and I notice that the hon. Member does not deny it.

Having said my little piece on statistics and economics, I want to come to the human problem, because I hope that in this House we shall never forget that it is the men and women in industry who produce the economic life-blood on which our survival depends, and not the statisticians, valuable though they are. I agree entirely with the right hon. Member for Blyth (Mr. Robens) that our great problem today is to get these industrial facts on to the floor of the shop. If we do not do that all the hopes we are building in connection with the new British Productivity Council must fail.

Nobody today wants to try to convert either the trade union leaders or the leaders of industry; they know the facts much better than we do. The problem is to get these facts on to the floor of the shop. If what we say or do in this House results in people in industry getting the wrong impression about the economic facts of life, however hard the British Productivity Council or any other body tries we shall fail in our endeavours. I was, I believe, right, therefore, in saying that this is a human problem, and I want to deal with one or two of the points which I think are hampering the ideal of improving productivity and efficiency.

The Opposition here are in some difficulty because they are bound by their past statements and policy. I should like to congratulate the right hon. Member for Blyth on his speech. Nobody could put more clearly or more factually the exact problem facing us. Among other things, he said that one of the greatest barriers to greater production was the fear of working oneself out of a job. How right he was. But if hon. and right hon. Members belonging to the Socialist Party go about the country talking about one million unemployed and the great fear of unemployment which is coming upon us at any moment—at a time when the figures every month are showing the normal seasonal rate of decrease—what are they doing but encouraging a fear on the floor of the shop that people are working themselves out of their jobs?

There is a strange anomaly here. In this House hon. and right hon. Gentlemen press the Government to do all they can to increase productivity, but outside it, unwittingly—I do not say they do it deliberately—they say the very thing which makes it almost impossible for it to happen, or at any rate to happen at the rate we should like. I want to repeat with all the force at my command—because it is necessary that it should be said—that we believe in a policy of full employment. Our whole national policy is directed towards maintaining full employment, and we believe that if we had not carried out the remedial measures and economic changes which have been so brilliantly conceived by my right hon. Friend the Chancellor of the Exchequer we should have had well over one million unemployed now. We have avoided that by our direct policy and actions.

I want to define what full employment means in a competitive world.

Mr. Robens

Before the hon. Gentleman leaves the point about the one million unemployed, would he now give a categorical assurance that by reason of the policy pursued by this Government while they are in power the figure will never reach one million?

Mr. Watkinson

I was just coming to that very point. I was endeavouring to define the present Government's view of full employment, and I was going to say that full employment is not a political divine right that can be guaranteed by any political party. It is a privilege.

Mr. Mikardo

It is a right.

Mr. Watkinson

Perhaps I may be allowed to finish my definition. The Government's policy, in all its aspects, is aimed at maintaining full employment, but we must look at it not as something that comes like pennies from heaven but as something to be worked for, which we can have only if we earn it by our efficiency and our output.

I am trying to stress this fact not as a political argument but in order to carry out my purpose, in the few minutes which remain, of straightening out a few of the facts without creating too much division about them, in an endeavour to do some good in the place where this country is really going to stand or fall—on the floor of the shop in the factory. I repeat that, in our conception, full employment is something which has to be achieved by the efficiency, output and energy of management and men, and it is the Government's responsibility to create the conditions in which that effieciency may be most easily and most quickly achieved.

Mr. David J. Pryde (Midlothian and Peebles)

Are we to take it that the Conservative Party has altered its policy in regard to unemployment? Is it not a fact that on 3rd November, 1949, when we were debating the Profits Tax Bill, a Member of the present Government's Front Bench advocated unemployment? Is it not true that he was asked by Labour Party back-benchers how much, and that we were told: It cannot be helped … half a million if you like."—[OFFICIAL REPORT, 3rd November, 1949; Vol. 469, c. 730.]

Mr. Watkinson

I thank the hon. Member for his intervention, but I was not in the House at that time, and I have just enunciated as clearly and as plainly as I can the policy of Her Majesty's Government.

I now come to the next point made by the right hon. Gentleman. How true it was when he said that price is the great factor today in holding our export markets. So it is, but what is the easiest way in which we might price ourselves out of the world's export markets? It is by having continuing rounds of wage increases which are not related to efficiency and output. I am sure I carry the House with me on that. I am sorry if the hon. Member for Reading, South thinks that that is an elementary matter of economics, but perhaps it is better to be plain and simple about these things and make sure they are understood. The easiest way for us to destroy our competitive position today is to have successive rounds of wage increases which are entirely unrelated to output or efficiency.

The right hon. Gentleman the Member for Blyth went on to talk about last year's Budget and said that the cuts in food subsidies brought in their train an inevitable round of wage increases. That is true, but let me make it plain that that round of wage increases is now over. [HON. MEMBERS: "No."] The round of wage increases in 1952 was completed by the recent award for the coalmining industry. [HON. MEMBERS: "No."] Yes, indeed, and now we arc faced with another year and with another set of conferences in trade and industry. I am not saying for a moment that this matter will not come up again. I am only saying—any hon. Member can look it up for himself—that we finished the last financial year with wages just leading by a very short head over the increased cost of living. We have balanced up.

Now we start again. That is the normal process of our industrial bargaining system. All I want to point out is that we start again in this year in an entirely different situation. The interim index of the cost of living has risen by only two points since last June, and that has not happened before in the whole history of the index. This is a very different situation from that which has obtained in the last few years, when the index was generally rising all the time.

Mr. Robens

The hon. Gentleman and his hon. Friends came into power very largely because they told the country that they would reduce the cost of living. Now they are boasting that it has not gone up as much as it did before.

Mr. Watkinson

Yes, and we also said that before we could reduce it we had to stop the catastrophic rise in the cost of living, and that we have done. All I am pointing out in this context is that wages this year have to be viewed against the different background of far more competition abroad and against an index which has been more stable than ever in its history.

There is something else that I want to make plain. It is important that I should do so because the leading article in "The Times" today was rather misquoted by the hon. Member for Hillsborough (Mr. G. Darling). This may be called my second elementary point in economics. What I want to make plain is that the change that we must bring about in our industrial affairs is to relate earnings to output. That is what "The Times" said in its very interesting and able leading article today. I agree that it did discuss the wages structure in the engineering industry, but the point I am bringing to the notice of the House is the conclusion of "The Times" leading article, which said: However undesirable a general wage increase, there is generally a case for increased payments related strictly to increased output. It could not have put the Government's policy better.

We maintain that in these circumstances, with a Budget that puts on no new taxes for the first time since the war, wage increases should be related to increased output. I am not going to argue the economic side of the Budget, but, at least, it brought some benefit to 30 million people, which is quite a lot of people, and, at least, it imposed no new taxes. I have already discussed the interim index. I would point out as well that the Budget made no deliberate cuts in the food subsidies. All that makes up an entirely different background against which wage negotiations this year must be conducted.

Mr. G. Darling

I am sure the hon. Gentleman does not want to be unfair. My criticism of "The Times" article was that in referring to the wages structure of the engineering industry "The Times" got its facts wrong. It is the employers who stopped a new system being introduced.

Mr. Watkinson

I agree that the main portion of the leading article dealt with the wages structure in the engineering industry, and I do not comment on that. I apologise if I misunderstood the hon. Gentleman, but I rather thought he drew the conclusion that the whole of the leading article dealt with the wages structure of that industry, and I wanted to remind the House of the article's conclusion, and say that it is certainly the policy of the Government that we ask for reasonable basic wage restraint, and I think that my right hon. Friend the Chancellor has done his best to create the conditions in which we may ask for that reasonable restraint. But having done that, we say that as far as earnings are related to output and efficiency then the sky is the limit. And why not? That is in the national interest.

Mr. Robens

That was Sir Stafford Cripps's view.

Mr. Watkinson

I was always a great admirer of Sir Stafford Cripps. He was a brave man who said brave things in difficult times. Let us make that quite plain. If I enunciate some of his policy that does not make it wrong.

The great problem in front of us in industrial relations is to see how we can sensibly and fairly link earnings with output and efficiency. It is difficult in some industries such as the railways, that do not produce anything, but there there are systems of merit rating and so on which should be examined. However, these details are not for me. They are for bargaining in the normal process of industrial relations. I am only saying that our policy is that earnings should be related to output and efficiency.

Mr. Jack Jones

Will the hon. Gentleman answer this question as one who has always paid a wage which was definitely related to output? Would he tell the House how he expects a particular industry in which wages are definitely paid in relation to output to increase its productivity when the Government are taking away by Act of Parliament 3½ per cent. for the shareholders and handing the industry back to private enterprise?

Mr. Watkinson

The hon. Gentleman was not listening to the Economic Secretary when he quoted the fact that one of the four industries in which there has been increased productivity this year was the steel industry, to which the hon. Gentleman was referring.

Mr. Jack Jones

Now the Government are going to hand it back.

Mr. Watkinson

I sum up by saying that in the view of the Government there is an economic problem and a human problem relating to productivity, and, from the standpoint of my Ministry, I should say that perhaps the human problem is the most important. In the National Joint Advisory Council and other forms of joint consultation we shall try to take the steps that are necessary to get that human upsurge of efficiency and pro- ductivity which we believe can achieve the national targets which we have set for ourselves. We can get productivity rising again, but we can do it only if hon. Members on both sides of the House will try to see that the true facts are presented

in the country and to those working in industry.

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

The House divided: Ayes. 263: Noes, 242.

Division No. 162.]	AYES	[10.0 p.m.
Aitken, W. T.	Duncan, Capt. J. A. L.	Lock wood, Lt.-Col. J. C.
Allan, R. A. (Paddington, S.)	Eccles, Rt. Hon. D. M.	Longden, Gilbert
Alport, C. J. M.	Erroll, F. J.	Low, A. R. W.
Amery, Julian (Preston, N.)	Fell, A.	Lucas, Sir Jocelyn (Portsmouth, S.)
Amory, Heathcoat (Tiverton)	Finlay, Graeme	Lucas, P. B. (Brentford)
Anstruther-Gray, Major W. J.	Fisher, Nigel	Lucas-Tooth, Sir Hugh
Arbutnnot, John	Fleetwood-Hesketh, R. F.	McAdden, S. J.
Ashton, H. (Chelmsford)	Fletchor-Cooke, C.	McCallum, Major D.
Assheton, Rt. Hon. R. (Blackburn, W.)	Ford, Mrs. Patricia	McCorquodale, Rt. Hon. M. S.
Aster, Hon. J. J.	Fort, R.	Macdonald, Sir Peter
Baldock, Lt.-Cmdr. J. M.	Foster, John	Mackeson, Brig. H. R.
Banks, Col. C.	Fraser, Hon. Hugh (Stone)	McKibbin, A. J.
Barber, Anthony	Galbraith, T. G. D. (Hillhead)	Mackie, J. H. (Galloway)
Barlow, Sir John	Gammans, L. D.	Maclay, Rt. Hon. John
Beach, Maj. Hicks	Godber, J. B.	Maclean, Fitzroy
Beamish, Maj. Tufton	Gomme-Duncan, Col. A.	Macleod, Rt. Hon. Iain (Enfield, W.)
Bell, Philip (Bolton, E.)	Gough, C. F. H.	MacLeod, John (Ross and Cromarty)
Bell, Ronald (Bucks, S.)	Cower, H. R.	Macpherson, Niall (Dumfries)
Bennett, F. M. (Reading, N.)	Graham, Sir Fergus	Maitland, Cmdr. J. F. W. (Herncastle)
Bennett, Dr. Reginald (Gosport)	Gridley, Sir Arnold	Maitland, Patrick (Lanark)
Bennett, William (Woodside)	Grimston, Sir Robert (Westbury)	Markham, Major S. F.
Bevins, J. R. (Toxteth)	Hall, John (Wycombe)	Marlowe, A. A. H.
Birch, Nigel	Harden, J. R. E.	Marples, A. E.
Bishop, F. P.	Hare, Hon. J. H.	Marshall, Douglas (Bodmin)
Black, C. W	Harris, Reader (Heston)	Maude, Angus
Boothby, R. J. G.	Harrison, Col. J. H. (Eye)	Maudling, R.
Bossom, A. C.	Harvey, Air Cdre. A. V. (Macclesfield)	Maydon, Lt.-Comdr. S. L. C.
Bewen, E. R.	Harvey, Ian (Harrow, E.)	Mellor, Sir John
Boyd-Carpenter, J. A.	Hay, John	Molson, A. H. E.
Boyle, Sir Edward	Heald, Sir Lionel	Monckton, Rt. Hon. Sir Walter
Braine, B. R.	Heath, Edward	Moore, Lt.-Col. Sir Thomas
Braithwaite, Sir Albert (Harrow, W.)	Higgs, J. M. C.	Morrison, John (Salisbury)
Braithwaite, Lt.-Cdr. G. (Bristol, N. W.)	Hill, Dr. Charles (Luton)	Mott-Radclyffe, C. E.
Bromley-Davenport, Lt.-Col. W. H.	Hill, Mrs. E. (Wythenshawe)	Nabarro, G. D. N.
Brooke, Henry (Hampstead)	Hinchingbrooke, Viscount	Nicholls, Harmar
Brooman-White, R. C.	Hirst, Geoffrey	Nicholson, Godfrey (Farnham)
Browne, Jack (Govan)	Holland-Martin, C. J.	Nicolson, Nigel (Bournemouth, E.)
Buchan-Hepburn, Rt. Hon. P. G. T.	Hollis, M. C.	Nield, Basil (Chester)
Bullard, D. G.	Holmes, Sir Stanley (Harwich)	Noble, Cmdr. A. H. P.
Bullus, Wing Commander E. E.	Holt, A. F.	Nugent, G. R. H.
Burden, F. F. A.	Hope, Lord John	Nutting, Anthony
Butcher, Sir Herbert	Hornsby-Smith, Miss M. P.	O'Neill, Phelim (Co. Antrim, N.)
Campbell, Sir David	Horobin, I. M.	Ormsby-Gore, Hon. W. D.
Carr, Robert	Horsbrugh, Rt. Hon. Florence	Orr, Capt. L. P. S.
Cary, Sir Robert	Howard, Hon. Greville (St. Ives)	Orr-Ewing, Charles Ian (Hendon, N.)
Channon, H.	Hudson, Sir Austin (Lewisham, N.)	Orr-Ewing, Sir Ian (Weston-super-Mare)
Churchill, Rt. Hon. Sir Winston	Hudson, W. R. A. (Hull, N.)	Osborne, C.
Clarke, Col. Ralph (East Grinstead)	Hulbert, Wing Cdr. N. J.	Partridge, E.
Clarke, Brig. Terence (Portsmouth, W.)	Hurd, A. R.	Peake, Rt. Hon. O.
Clyde, Rt. Hon. J. L.	Hutchinson, Sir Geoffrey (Ilford, N.)	Perkins, W. R. D.
Cole, Norman	Hutchison, Lt.-Com. Clark (E'b'rgh W.)	Peto, Brig. C. H. M.
Colegate, W. A.	Hylton-Foster, H. B. H.	Pickthorn, K. W. M.
Conant, Maj. R. J. E.	Jenkins, Robert (Dulwich)	Pilkington, Capt R. A
Cooper, Sqn. Ldr. Albert	Jennings, R.	Pitman, I. J.
Craddock, Beresford (Spelthorne)	Johnson, Eric (Blackley)	Powell, J. Enoch
Crookshank, Capt. Rt. Hon. H. F. C.	Johnson, Howard (Kemptown)	Price, Henry (Lewisham, W.)
Crosthwaite-Eyre, Col. O. E.	Jones, A. (Hall Green)	Prior-Palmer, Brig. O. L.
Crouch, R. F.	Joynson-Hicks, Hon. L. W	Profumo, J. D.
Crowder, Sir John (Finchley)	Keeling, Sir Edward	Raikes, Sir Victor
Crowder, Petre (Ruislip—Northwood)	Kerr, H. W.	Rayner, Brig. R.
Darling, Sir William (Edinburgh, S.)	Lambert, Hon. G.	Redmayne, M.
Davidson, Viscountess	Lambton, Viscount	Rees-Davies, W. R.
Deedes, W. F.	Law, Rt. Hon. R. K.	Remnant, Hon. P.
Digby, S. Wingfield	Legge-Bourke, Maj. E. A. H.	Renton, D. L. M.
Dodds-Parker, A. D.	Legh, Hon. Peter (Petersfield)	Roberts, Peter (Heeley)
Donaldson, Cmdr. C. E. McA.	Lindsay, Martin	Robinson, Roland (Blackpool, S.)
Donner, P. W.	Linstead, H. N.	Rodgers, John (Sevenoaks)
Doughty, C. J. A.	Llewellyn, D. T.	Roper, Sir Harold
Drayson, G. B.	Lloyd, Rt. Hon. G. (King's Norton)	Ropner, Col. Sir Leonard
Drowe, C.	Lloyd, Maj. Sir Guy (Renfrew, E.)	Russell, R. S.
Dugdale, Rt. Hon. Sir T. (Richmond)	Lloyd, Rt. Hon. Selwyn (Wirral)	Ryder, Capt. R. E. D.
Salter, Rt. Hon. Sir Arthur	Teeling, W.	Ward, Hon. George (Worcester)
Sum, R. Donald	Thomas, Leslie (Canterbury)	Ward, Miss I. (Tynemouth)
Scott-Miller, Cmdr. R.	Thomas, P. J. M. (Conway)	Waterhouse, Capt. Rt. Hon. C.
Shepherd, William	Thompson, Kenneth (Walton)	Watkinson, H. A.
Simon, J. E. S. (Middlesbrough, W.)	Thompson, Lt.-Cdr. R. (Croydon, W.)	Webbe, Sir H. (London & Westminster)
Smithers, Peter (Winchester)	Thorneycroft, Rt. Hn. Peter (Monmouth)	Wellwood, W.
Smithers, Sir Waldron (Orpington)	Thornton-Kemsley, Col. C. N.	Williams, Rt. Hon. Charles (Torquay)
Smyth, Brig. J. G. (Norwood)	Tilney, John	Williams, Gerald (Tonbridge)
Soames, Capt. C.	Touche, Sir Gordon	Williams, Sir Herbert (Croydon, E.)
Speir, R. M.	Turner, H. F. L.	Williams, R. Dudley (Exeter)
Stanley, Capt. Hon. Richard	Tweedsmuir, Lady.	Wills, G.
Stevens, G. P.	Vane, W. M. F.	Wilson, Geoffrey (Truro)
Steward, W. A. (Woolwich, W.)	Vaughan-Morgan, J. K	Wood, Hon. R.
Stewart, Henderson (Fife, E.)	Vospor, D. F.	York, C.
Stoddart-Scott, Col. M.	Wade, D. W.
Strauss, Henry (Norwich, S.)	Wakefield, Edward (Derbyshire, W.)	TELLERS FOR THE AYES:
Sutcliffe, Sir Harold	Wakefield, Sir Wavell (St. Marylebone)	Mr. Studholme and Mr. Kaberry.
Taylor, William (Bradford, N.)	Walker-Smith, D. C.
NOES
Albu, A. H.	Freeman, John (Watford)	Manuel, A. C.
Allen, Scholefield (Crewe)	Gaitskell, Rt. Hon. H. T. N.	Marquand, Rt. Hon. H. A.
Awbery, S. S.	Gibson, C. W.	Mason, Roy
Bacon, Miss Alice	Glanville, James	Mayhew, C. P.
Barnes, Rt. Hon. A. J.	Gooch, E. G.	Mellish, J. R.
Bartley, P.	Gordon-Walker, Rt. Hon. P. C.	Messer, F.
Bellenger, Rt. Hon. F. J.	Greenwood, Anthony (Rossendale)	Mikardo, Ian
Benee, C. R.	Grenfell, Rt. Hon. D. R.	Mitchison, G. R.
Bern, Hon. Wedgwood	Griffiths, David (Rother Valley)	Monslow, W.
Benson, G.	Griffiths, Rt. Hon. James (Llanelly)	Moody, A. S.
Beswick, F.	Griffiths, William (Exchange)	Morgan, Dr. H. B. W.
Bevan, Rt. Hon. A. (Ebbw Vale)	Hale, Leslie	Morley, R.
Bing, G. H. C.	Hall, Rt. Hon. Glenvil (Colne Valley)	Morris, Percy (Swansea, W.)
Blackburn, F.	Hamilton, W. W.	Morrison, Rt. Hon. H. (Lewisham, S)
Blenkinsop, A.	Harman, W.	Mort, D. L.
Blyton, W. R.	Hargreaves, A.	Moyle, A.
Bottomley, Rt. Hon. A. G.	Harrison, J. (Nottingham, E.)	Mulley, F. W.
Bowden, H. W.	Hastings, S.	Murray, J. D.
Bowles, F. G.	Hayman, F. H.	Nally, W.
Braddock, Mrs. Elizabeth	Healey, Denis (Leeds, S.E.)	Neal, Harold (Bolsover)
Brockway, A. F.	Henderson, Rt. Hon. A. (Rowley Regis)	Noel-Baker, Rt. Hon. P. J
Brook, Dryden (Halifax)	Herbison, Miss M.	Oldfield, W. H.
Broughton, Dr. A. D. D.	Hobson, C. R.	Oliver, G. H.
Brown, Rt. Hon. George (Belper)	Holman, P.	Orbach, M.
Brown, Thomas (Ince)	Holmes, Horace (Hemsworth)	Oswald, T.
Burton, Miss F. E.	Houghton, Douglas	Padley, W. E.
Butler, Herbert (Hackney, S.)	Hudson, James (Ealing, N.)	Paget, R. T.
Callaghan, L. J.	Hughes, Cledwyn (Anglesey)	Paling, Rt. Hon. W. (Dearne Valley)
Carmichael, J.	Hughes, Emrys (S. Ayrshire)	Paling, Will T. (Dewsbury)
Castle, Mrs. B. A.	Hughes, Hector (Aberdeen, N.)	Palmer, A. M. F.
Champion, A. J.	Hynd, H. (Accrington)	Pannell, Charles
Chapman, W. D.	Hynd, J. B. (Attercliffe)	Pargiter, G. A.
Chetwynd, G. R	Irving, W. J. (Wood Green)	Parker, J.
Clunie, J.	Isaacs, Rt. Hon. G. A.	Paton, J.
Coldrick, W.	Janner, B.	Peart, T. F.
Collick, P. H.	Jay, Rt. Hon. D. P. T.	Plummet, Sir Leslie
Craddock, George (Bradford, S.)	Jeger, Dr. Santo (St. Pancras, S.)	Popplewell, E.
Crosland, C. A. R.	Johnson, James (Rugby)	Porter, G.
Cullen, Mrs. A.	Johnston, Douglas (Paisley)	Price, Joseph T. (Westhoughton)
Dalton, Rt. Hon. H.	Jones, David (Hartlepool)	Price, Philips (Gloucestershire, W.)
Darling, George (Hillsborough)	Jones, Jack (Rotherham)	Proctor, W. T.
Davies, Harold (Leek)	Jones, T. W. (Merioneth)	Pryde, D. J.
Davies, Stephen (Merthyr)	Keenan, W.	Rankin, John
de Freitas, Geoffrey	Kenyon, C.	Reeves, J.
Deer, G.	Key, Rt. Hon. C. W.	Reid, Thomas (Swindon)
Delargy, H. J.	King, Dr. H. M.	Reid, William (Camlachie)
Dodds, N. N.	Lee, Frederick (Newton)	Rhodes, H.
Donnelly, D. L.	Lee, Miss Jennie (Cannock)	Richards, R.
Driberg, T. E. N.	Lever, Harold (Cheetham)	Robens, Rt. Hon. A.
Ede, Rt. Hon. J. C	Lever, Leslie (Ardwick)	Roberts, Albert (Normanton)
Edelman, M.	Lewis, Arthur	Roberts, Goronwy (Caernarvon)
Edwards, John (Brighouse)	Lindgren, G. S.	Robinson, Kenneth (St. Pancras, N.)
Edwards, Rt. Hon. Ness (Caerphilly)	Lipton, Lt.-Col. M.	Rogers, George (Kensington, N.)
Edwards, W. J. (Stepney)	Logan, D. G.	Ross, William
Evans, Edward (Lowestoft)	MacColl, J. E.	Royle, C.
Evans, Stanley (Wednesbury)	McGhee, H. G.	Shackleton, E. A. A.
Fernyhough, E.	McGovern, J.	Shawcross, Rt. Hon. Sir Hartley
Fienburgh, W.	McInnes, J.	Shinwell, Rt. Hon. E.
Finch, H. J.	McLeavy, F.	Short, E. W.
Fletcher, Eric (Islington, E.)	MacMillan, M. K. (Western Isles)	Silverman, Julius (Erdington)
Follick, M.	MacPherson, Malcolm (Stirling)	Silverman, Sydney (Nelson)
Foot, M. M.	Mallalieu, E. L. (Brigg)	Simmons, C. J. (Brierley Hill)
Forman, J. C.	Mallalieu, J. P. W. (Huddersfield, E.)	Skeffington, A. M.
Fraser, Thomas (Hamilton)	Mann, Mrs. Jean	Slater, Mrs. H. (Stoke-on-Trent)

Smith, Norman (Nottingham, S.)	Thorneycroft, Harry (Clayton)	Wilcock, Group Capt. C. A. B.
Snow, J. W.	Thurtle, Ernest	Wilkins, W. A.
Sorensen, R. W	Timmons, J.	Willey, F. T.
Sparks, J. A.	Tomney, F.	Williams, David (Neath)
Stewart, Michael (Fulham, E.)	Turner-Samuels, M.	Williams, Rev. Llywelyn (Abertillery)
Stokes, Rt. Hon. R. R.	Ungoed-Thomas, Sir Lynn	Williams, Ronald (Wigan)
Strachey, Rt. Hon. J.	Usborne, H. C.	Williams, W. R. (Droylsden)
Stross, Dr. Barnett	Viant, S. P.	Williams, W. T. (Hammersmith, S.)
Summerskill, Rt. Hon. E.	Wallace, H. W.	Winterbottom, Ian (Nottingham, C.)
Swingler, S. T.	Weitzman, D.	Winterbottom, Richard (Brightside)
Sylvester, G. O.	Wells, Percy (Faversham)	Woodburn, R. Hon. A.
Taylor, Bernard (Mansfield)	Walls, William (Walsall)	Wyatt, W. L.
Taylor, John (West Lothian)	West, D. G.	Yates, V. F.
Thomas, David (Aberdare)	Wheatley, Rt. Hon. John	Younger, Rt. Hon. K.
Thomas, George (Cardiff)	Wheeldon, W. E.
Thomas, Iorwerth (Rhondda, W.)	White, Henry (Derbyshire, N. E.)	TELLERS FOR THE NOES:
Thomas, Ivor Owen (Wrekrn)	Whiteley, Rt. Hon. W.	Mr. Pearson and Mr. Arthur Allen.
Thomson, George (Dundee, E.)	Wigg, George

Resolution agreed to.

Main Question again proposed.

It being after Ten o'clock, the debate stood adjourned.

Committee Tomorrow.