HC Deb 26 January 1953 vol 510 cc703-14

Motion made, and Question proposed, That a Supplementary sum, not exceeding £23,299,900, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1953, for expenditure of the Ministry of Supply on the supply of munitions, aircraft, electronics equipment, common-user and other articles for the Government service, and on miscellaneous supply.

5.0 p.m.

Mr. Sandys

This is the first year that this Vote has been shown separately. It constitutes the account out of which the Ministry of Supply pays for all the purchases it makes from industry and from the Royal Ordnance Factories on behalf of the Services and other customers. This is also the account into which we pay money received by way of repayment from our customers. Since we charge our customers the same price as we pay to the manufacturers, without adding anything for administrative costs, the outgoings and the receipts in this account must, over a period, cancel each other out.

But the account cannot be expected to balance exactly in any one financial year. The reason is that we have to make substantial progress payments to the manufacturers, particularly on orders which take a long time to execute, such as aircraft and tanks. On the other hand, we ourselves are not reimbursed until we have delivered the finished product. It must, therefore, be accepted that this account will usually show a discrepancy one way or the other in any single year.

For the purposes of our original Estimate we made an assumption—and it was no more than an assumption—that expenditure and receipts would each amount to about £528 million. In fact, expenditure is likely to be about 2.3 per cent. above that figure and receipts are likely to be about 2.1 per cent. below it. If hon. Members will look at page 12 of the Supplementary Estimate they will see that the largest single increase in expenditure, which amounts to about 7 per cent., is in respect of aircraft and ancillary equipment. This is due largely to the acceleration of the work on the super-priority types, which has resulted in the manufacturers asking for progress payments earlier than would otherwise have been the case.

The increased progress payments which, owing to the acceleration of the programme, we are making this year instead of next year—I would draw the attention of my right hon. Friend the Member for Blackburn, West (Mr. Assheton) to this point—involve a Supplementary Estimate this year; but they will to that extent reduce the amount to be paid to manufacturers in subsequent years. The whole of this Supplementary Estimate should not, therefore, be regarded as an additon to the defence bill.

The other item on which there has been a substantial increase in expenditure —and particulars of this will also be found on page 12—is clothing and textiles. Here our revised estimate is about £12½ million above the original estimate. Ten million pounds of this will be recovered during the present financial year from the Services and other customer Departments; this sum is included lower down on the same page, under the heading "Repayments by customers, &c." This increased expenditure on clothing and textiles is due to the extensive relief orders which the Government decided to place, and which were fully debated many months ago, in order to assist the areas which were hardest hit by the recession in the textile industry. Nearly £21 million worth of additional textile orders have been placed under this relief scheme. Nearly £19 million of this was placed by the Ministry of Supply and the balance by the Admiralty.

I should explain to the Committee why only £12½ million and not the full £19 million appears as an excess expenditure in this Supplementary Estimate. There are two reasons. The first is that a proportion of these relief orders—though not a very large proportion—will not be, delivered until after the end of the present financial year and is therefore not shown in this account. The second reason is that our normal programme of textile purchases cost us less this year than we had estimated, because of the general decline in prices of textiles.

I should also point out, in another connection, that the short-fall in receipts on page 12 includes refunds—and I would again draw the attention of my right hon. Friend the Member for Blackburn, West to this—amounting in all to £9 million—which we have paid back to the Service Departments in respect of under-deliveries during the financial year 1951–52 for which, on the best information that was then available, payment had been allowed in the usual bulk settlement last January. Corresponding sums are credited to the customer Departments. Therefore, nearly half this Supplementary Estimate involves no charge on the Exchequer. I hope that this information will be sufficient to enable the Committee to approve this Supplementary Estimate.

Mr. Strachey

The Minister has given us an explanation of what, at first sight, I am bound to say is the rather odd little sum which is to be found upon page 11 of the Supplementary Estimate. I would draw the attention of the Committee to that sum. They will see that the purchases of the Ministry of Supply are shown as £540 million and it has been paid £516,700.000. Then it says that the net excess of payments over receipts amounts to £23,300,000 and there is a deduction of £100 in respect of the provision in the original Estimate. This gives a net deficit of £23,299,900, which we are asked to meet.

That little sum is explained, no doubt, as the Minister has just told us, by the fact that it has increased its ordering of stuff from the industry, while its customers, above all the War Office and the Air Ministry, have apparently not accelerated their purchases from the Ministry of Supply. The rate of delivery to the Services has not gone up in proportion to the rise of orders to industry. That is a quite understandable thing to have happened and it is reflected in the Estimate for my old Department, the War Office, which we shall be considering later. Looking at that, I note that at one point the delivery of warlike stores has run some £13 million below the Estimate. I imagine the two sums are connected.

Mr. Low

May I draw the right hon. Gentleman's attention to the fact that under repayment under (2,b) the War Office revised Estimate is £11 million up?

Mr. Strachey

I suppose that is because non-warlike stores, textiles and the rest, are up, and that the actual warlike stores are down. However, I do not think, Mr. Hopkin Morris, you will allow us to go very far on that. We shall come to it later on, no doubt.

All this is quite explicable and understandable, but what I think we on this side of the Committee are concerned with is, how does that kind of situation square with the Prime Minister's repeated statements that re-armament was being drawn over a large number of years? This stocking up, as it were, which is apparent from these figures, is an increase of stuff in the pipeline—and the Ministry of Supply is in this connection a pipeline—and would surely be consistent with an increase in the programme itself—what one would expect to see if the re-armament programme were being increased. That would mean a sudden freshet of new orders to industry which would not be reflected for a time in deliveries to the Services, but it certainly seems directly inconsistent with the stretching out of the programme over more years.

It is, therefore, very difficult to see how this quite heavy increase in investment in working capital—because that is what it is, surely—is consistent with a stretching out of the programme—it may be right or wrong; I have considerable sympathy with it myself—over a greater number of years. Perhaps, whoever is to reply to the debate would tell us how that has come about, because this Estimate here is, surely, in itself substantial—£23 million. Although I quite agree myself that it will not mean in the end any increase in itself in public money actually expended, it does give every indication of an increase and acceleration of the re-armament programme instead of the reverse. I think that is the main thing which must concern us today.

Mr. Lee

I was interested in the points made by the Minister on the question of the bringing forward of orders from the textile industries, and the effect upon the industries of that operation. The right hon. Gentleman the Member for Blackburn, West (Mr. Assheton) and I had an interesting discussion on it a few weeks ago, and I have no doubt he is as interested in it as I am now. The £19 million of orders that the Minister of Supply placed at that time undoubtedly had a very good effect upon the levels of employment in the textile industry, and I applaud the action. I should like to know, if possible, a bit more about this, and I hope I shall have better luck this time than I had on the last occasion when I asked some questions.

I wonder whether the right hon. Gentleman could tell us what percentages, roughly, of these orders have now been fulfilled, and if he could tell us also, perhaps, it would be of interest if he could say what amount of orders still remains to be placed with the textile industry. It is extremely important to us that we should know about the progress of those orders which have been placed, because if we can know that there is still a substantial amount of this £19 million worth still to be placed we can feel more comfortable than some of us are feeling at the moment as to the possibility of a continuation of a high standard of employment in the textile industry.

5.15 p.m.

I recall some months ago an announcement by certainly one of the Ministers, I think by the President of the Board of Trade, that there were still pretty substantial orders which the Government had in mind for textiles, for uniforms and so on, which had not as yet been placed. I am wondering how that position now stands in view of the Prime Minister's announcement as to the lengthening out of the process of rearmament.

It would be of great interest to Lancashire if we could know whether it was considered by the Government as being necessary for them now either to reduce the global figure they themselves had in mind or to lengthen out the process of placing those orders because of the Government action on the general question of the re-armament programme. If the Parliamentary Secretary could tell us of the progress that has been made with the present orders, whether there is still a substantial amount to be done, and, second, what is the amount which the Minister of Supply still has to place with the textile industries, I am sure that, so far as we are concerned in Lancashire, we should have a better picture of what the future offers to us.

Mr. Assheton

Like the hon. Gentleman the Member for Newton (Mr. Lee), I naturally take a great interest in the subject which he has raised. Lancashire is, of course, most grateful for the help it has received from the Service Departments in the difficult year through which we have just passed. I have the greatest possible respect for the Minister of Supply, and I admire very much the ingenuity of his answers to questions on these Supplementary Estimates.

I must, however, draw the attention of the Committee to this salient fact, that although it may well be that the total of the Supplementary Estimate for purchases is only £12 million higher and that of repayment by customers is considerably lower, the consequences which one would expect to follow from that are not quite so simple as one would expect. One would expect the consequence of that to be that the expenditure by the War Office, for example, this year would have been considerably less, but we have a Supplementary Estimate by the War Office for £35 million, and so we have to watch these things very carefully indeed.

In the old days, when the War Office and the Ministry of Supply were combined in one organisation, it was not so easy to pass the buck in dealing with Supplementary Estimates as it has become under the new system. None the less, I do appreciate the answers which the Minister has given, and certainly I have no further criticisms to offer of the Estimates at the present juncture.

Mr. Wyatt

I wonder if the Minister who replies would explain to us the real significance of this variation between the Estimate and the Supplementary Estimate. Whereas guns and small arms exceed the Estimate by £2 million, ammunition and explosives are down by £3 million below the original Estimate; engineers' equipment is down by £4,400,000; and mechanical transport is down by £14 million. "Mechanical transport," in particular, I imagine includes the new programme for the Army for the type of four-by-four vehicles throughout the Army of a standard type—all that kind of thing, the orders for which, I hear, are being cancelled at the moment. It would seem from that that there is a move away from the more conventional types of weapons in the re-armament programme, and from the sort of provisions we have been accustomed to in the past, and an emphasis on the creation of new types of weapons. On page 12 we see some increases in the Estimates for aircraft—for airframes and aero-engines—an increased sum of £10,500,000.

Does it mean that in general the rearmament programme should, in the minds of the Government, be directed towards trying to produce new weapons of a kind we have so far not used; rather postponing the creation of the divisions we have been anticipating—giving them up-to-date equipment, and so on—in favour of trying to develop new weapons for some years ahead and not for immediate use?

Mr. A. J. Champion (Derbyshire, South-East)

I wish to ask a question arising out of the figure of £19 million for textiles. In addition to the information asked for by my hon. Friend in connection with the amount spent on textiles, I should like to know how much of the amount will be spent in buying the products of the rayon industry. There may be some difficulty about specifications, but I should be very grateful if the Parliamentary Secretary could tell us whether they are now satisfied with the specifications put in by the industry, and how much of the amount to be spent in the current year will be spent with the rayon section of the textile industry.

Mr. M. Stewart

I do not believe that this Supplementary Estimate is a financial matter in the strict sense of the term. That is to say, we are not really discussing a sum of £23 million which will fall on the taxpayer in addition to what was previously expected. If what is happening here does at any time mean more expenditure by the taxpayer, it would not necessarily be the figure of £23 million. These figures are interesting because they are a sort of mirror of how certain parts of the defence programme are going.

The Minister, introducing the Supplementary Estimate, said by way of explanation that the increase of £12 million in the sum spent on purchases represented, in many cases, progress payments on pieces of work that were being done, whereas on the other hand the sums coming in are what are paid by the customer departments, presumably when the job is completed and the articles, whatever they are, are in the hands of the Ministry absorbing them.

If we notice then, as we do, that the payment out for purchases is up about £12 million and the receipts from customers are down, does it mean, at any rate as far as some of these items are concerned, that we are expanding the demand made on industry to produce more of certain things—more clothing and textiles, for example—but that the actual amount of stuff completed and delivered, and therefore paid for by the customer Departments, has been less than was anticipated earlier in the financial year? If that is so, it would mean that we are casting rather more bread on the waters and it is taking a rather longer number of days to return to us. Does it mean that in some instances orders have not been completed as speedily as was expected?

In the carrying through of a great rearmament programme it is extremely difficult to be anything like certain that this, that or the other article of war-like stores will be completed at the date originally anticipated. Even if the greatest care and forethought is exercised difficulties are always likely to crop up which cause production of the article, whatever it may be, to take longer than was originally expected. Sometimes it is found necessary to make alterations in design on the way. That sort of thing would, I think, lead to larger progress payments at the time, and to a delaying of the time when the customer Department would pay for the article. That seems to be the result we have got in this Supplementary Estimate.

Are we correct in supposing, as would appear reasonable at first sight, that this Supplementary Estimate means that, at any rate on some items, there has been a short-fall on deliveries? Does that indicate any serious check to such progress in the defence programme as the Government had hoped to make some months ago when the original Estimate was put before us? I hope that in that connection the Parliamentary Secretary will be able to reply to the very interesting point made by my hon. Friend the Member for Aston (Mr. Wyatt) who drew our attention to the way in which the Estimate has altered on the certain items in subparagraph (1) on page 12, and suggested that that indicated a general trend of policy on defence.

I hope he will also reply to the interesting point raised earlier, which was reiterated on this Supplementary Estimate by my right hon. Friend the Member for Dundee (Mr. Strachey), namely: How do we fit in what is happening in these Supplementary Estimates, these additional sums of money which we are asked to vote, with the general statement by the Prime Minister of a slowing down of the defence programme? I give the Parliamentary Secretary at once that the two statements are not necessarily contradictory, but I think he will agree that they do need some degree of explanation, which I hope he will give to us. There is a small point, which I admit I ought to understand but which I am afraid I do not understand, namely, the item of £500,100 for "Exchequer Extra Receipts" at the end of sub-paragraph (2) on page 12. Perhaps the hon. Gentleman will tell us what that item means.

Mr. Low

The right hon. Member for Dundee (Mr. Strachey) raised the general question to which his hon. Friend the Member for Fulham, East (Mr. M. Stewart) has just referred, asking us to explain, first, why there was this inaccuracy, and secondly, how this fits in with the statements that have been made about the defence programme. Perhaps I ought to explain at once for the benefit of the right hon. Gentleman that the increase in the payments for purchases does not indicate, as it were, a stocking up. As my right hon. Friend showed, it is due in the main to the increase in progress payments, which is a different thing.

I am sure the right hon. Gentleman will realise that it is very difficult to be accurate to the nearest £ on expenditure amounting in all to £528 million over 12 months. The hon. Member for Fulham, East, who was Under-Secretary of State for War and later Parliamentary Secretary to the Ministry of Supply, quite rightly reminded the Committee that estimates on programmes such as this are rarely, if ever, accurately made. Indeed, I think I remember the hon. Gentleman making that plain in a debate in July, 1951. It is true that until a programme such as this defence programme reaches its peak payments for purchases and progress payments are bound to exceed over the year the repayments by customers for the very reason that they include these progress payments.

On the point about how these figures fit in with the general defence policy I ought to sound a note of warning, at any rate for the benefit of the hon. Member for Aston (Mr. Wyatt). Too much should not be read into these figures. I think I ought also to remind the House that my right hon. Friend the Prime Minister, in his statement about the defence programme, said that there would be acceleration in the super-priority types. There has been a hastening in the super-priority types, and that shows its mark in the expenditure on progress payments under the purchases in sub-paragraph (1).

5.30 p.m.

Mr. Wyatt

The hon. Gentleman did not say that there was going to be a slowing down in the non-super priority types. That seems to have taken place.

Mr. Low

I think that the best way of getting some idea of what is happening from these figures is to take the repayments by customers, and to have in mind the point made by my right hon. Friend, that the figure of £516,700,000 which is the total repayment by customers under the revised Estimate, would have been £9 million extra but for certain refunds that we had to make to Service Departments in respect of over-payments for previous years. If the hon. Gentleman compares that figure with the £528 million, I do not think that he will be unduly alarmed.

Mr. Lee

The hon. Gentleman has pointed out that the programme has become a little distorted by super priorities and so on. His right hon. Friend spoke a minute or two ago about rockets. Is the rocket in the super priority class?

Mr. Low

Guided rockets were in the super priority class from the very start.

The other general heading under which questions have been put to me was textiles. Here I can answer one question absolutely precisely. There are no more orders to be placed under the textile relief scheme; they have all been placed. They were placed as soon as we possibly could place them, because the object of the scheme was to help Lancashire and other textile areas which were affected for reasons of which the Committee are well aware. The last substantial order was in fact placed several months ago.

The hon. Member for Derbyshire, South-East (Mr. Champion) asked me a question about rayon. As, I think, he knows, I take a special interest in that matter, but I am afraid that I have not the exact figures at my finger tips. I will gladly send them to him.

In general, the main part of the rayon orders that we hope to be able to place, were placed. There was, however, a difficulty over sheets, which did not stand up to the tests, but we have not given up hope about them. There are other tests going on and further attempts to find a better specification, and we will see if we cannot solve that difficulty later. As I say, I will send the hon. Gentleman the exact figures at a later date. I think that covers all the points which have been made, and I hope that the Committee will approve the Supplementary Estimate.

Mr. Lee

I am grateful to the hon. Gentleman, although I do not like the information he has given me, for explaining the position. Can he give me an answer to the other question which I asked? To what degree do we now stand so far as the fulfilment of the orders which have been placed is concerned? That is a most important issue to us. If he can during this discussion give me the answer, I shall be most grateful.

Mr. Low

I am afraid that I cannot give the hon. Gentleman a definite answer on that last point. There are still two months to go in the financial year, and, of course, the money provided for in the Supplementary Estimate covers not only the textile relief scheme but the normal textile orders, and we have had for this purpose to group them together. I think that I should be misleading the Committee if I tried to make a guess as to the value of the orders under the textile relief scheme that will be completed. The majority of them will be completed. I do not want to depress the hon. Gentleman too much. When I said that no further orders were to be placed, I was referring to the textile relief scheme.

Mr. M. Stewart

I do not think that the hon. Gentleman answered the point about the extra Exchequer receipts.

Question put, and agreed to.

Resolved,

That a Supplementary sum, not exceeding £23,299,900, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1953, for expenditure of the Ministry of Supply on the supply of munitions, aircraft, electronics equipment, common-user and other articles for the Government service, and on miscellaneous supply.