Commons Sitting of 19 April 1955

Preamble
The House—after the Adjournment on 7th April, 1955, for the Easter Recess—met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  CHESHUNT URBAN DISTRICT COUNCIL BILL
    NUNEATON CORPORATION BILL
    As amended, considered; to be read the Third time.
    SAINT STEPHEN COLEMAN STREET BILL [Lords]
    Read a Second time, and committed.
ORAL ANSWERS TO QUESTIONS
  TRADE AND COMMERCE

    Soviet Government Contracts (Cancellations)
    Mr. Oliverasked the President of the Board of Trade what representations he has received from British firms concerning the cancellation of, or variations in, contracts placed in this country as a result of the discussions between these firms and the Soviet Trade Delegation.
    The President of the Board of Trade (Mr. Peter Thorneycroft): I would refer the hon. and learned Gentleman to the answer which I gave the right hon. Member for Belper (Mr. G. Brown) on 7th April.
    Mr. Oliver: As I do not know what that answer was, would the right hon. Gentleman be good enough to read it out?
    Mr. Thorneycroft: It was simply that I had been notified of these matters but asked to take no action on them.

    Monopolies Commission
    Mr. Jannerasked the President of the Board of Trade when the report of the Monopolies Commission on various restrictive practices under Section 15 of the Monopolies Act will be available.
    Mr. P. Thorneycroft: I would refer the hon. Member to the answer which I gave to the hon. Member for Dartford (Mr. Dodds) on 24th March.
    Mr. Janner: As there is considerable distress in the country because the cost of living is so high, why has the President of the Board of Trade not endeavoured to reduce that cost of living by getting the Monopolies Commission to work on these restrictive practices so that prices might be reduced?
    Mr. Thorneycroft: I think that the hon. Member is anticipating a rather wider issue.
    Lieut.-Colonel Liptonasked the President of the Board of Trade what further subjects for inquiry he has decided to refer to the Monopolies Commission.
    Mr. P. Thorneycroft: I propose to follow the usual course of announcing the subjects for inquiry at the time the reference is made.
    Lieut.-Colonel Lipton: Is the President of the Board of Trade aware that his half-hearted, timorous approach towards monopolies is creating a most unfavourable impression? When is he going to get a move on in dealing with this very serious problem?
    Mr. Thorneycroft: The Question merely asks when I shall announce the references, which will be at the time I make them.

    Newsprint (Rationing)
    Lieut.-Colonel Liptonasked the President of the Board of Trade whether, in view of improved stocks, he will now end the rationing of newsprint.
    Mr. P. Thorneycroft: No, Sir. Newsprint stocks still stand at a low level.
    Lieut-Colonel Lipton: Has not the President of the Board of Trade heard that there has been a newspaper strike in London, as a result of which very large quantities of newsprint are piling up? Is it not a fact that the last argument in favour of newsprint rationing has now disappeared?
    Mr. Thorneycroft: The stocks which have accumulated are still at a low level.
    Sir T. Moore: Has my right hon. Friend any ideas how this increase could be used, were it granted?
    Mr. Thorneycroft: No, Sir. The amount that has accumulated is only 30,000 tons.

    Cotton (Merchandise Marks)
    Mr. Burdenasked the President of the Board of Trade whether he is aware that certain textile manufacturers are using a mixture of Egyptian and Sudanese cotton and are marking the cloth as Egyptian cotton; and, in view of the fact that this is a contravention of the Merchandise Marks Act, whether he will take steps to prosecute.
    Mr. P. Thorneycroft: If my hon. Friend will let me have details, I will look into the matter.

    G.A.T.T. Revision (White Paper)
    Mr. Philip Bellasked the President of the Board of Trade to make a statement about the result of the recent negotiations in Geneva for the review of the General Agreement on Tariffs and Trade and the accession of Japan to the General Agreement on Tariffs and Trade.
    Mr. P. Thorneycroft: Her Majesty's Government have now given consideration to the results of the recent Review of the General Agreement on Tariffs and Trade. We have, of course, been in close touch with other Commonwealth Governments throughout the discussions. For the convenience of the House, a White Paper, containing a full statement of the Government's policy together with a complete text of the Agreement as revised, will be available in the Vote Office later today.
    The Government are satisfied that it is in the interests of the United Kingdom to reaffirm their adherence to the principles and objectives of the General Agreement, and they propose accordingly to signify their support for the revised Agreement in due course by signing the protocols of amendments and the agreement on the Organisation for Trade Co-operation. It is the view of the Government that legislation should be introduced to permit the imposition of countervailing and antidumping duties.
    A White Paper, embodying a statement of the Government's policy in regard to the possible accession of Japan to the General Agreement, will also be available in the Vote Office. The Government have decided that for the time being they would not be able to accept the obligations of the General Agreement towards Japan, and they desire that trade relations with Japan should continue to be dealt with by mutually negotiated arrangements. But the Government are anxious to put our commercial relations with Japan on a more permanent footing, and they are inviting the Government of Japan to enter into negotiations for a long-term commercial treaty.
    Mr. Bottomley: The President of the Board of Trade said that Commonwealth Governments were consulted. Can he give an assurance that no difficulties have

    5
    arisen from those consultations, particularly in relation to Japan?
    Mr. Thorneycroft: It would be hard to say, on anything as complicated and complex as the General Agreement on Tariffs and Trade, that there were no difficulties whatever. One of the objects of this consultation was to resolve any difficulties, and it was very successful.
    Mr. Woodbum: Would the right hon. Gentleman try to bring about the cessation of some of these trade practices adopted by the Japanese, whereby they obtain sample designs in this country and crash into the markets before the British manufacturer can get going with his own designs?
    Mr. Thorneycroft: Those practices have given rise to some concern. Whether they are appropriate for a trade treaty or not is a matter to be decided, but all these matters will be taken into account.
    Captain Duncan: Can my right hon. Friend say whether there is anything in the White Paper relating to the safeguarding of horticulture, and whether there will be an opportunity for the horticultural industry to make representations about increased tariffs if necessary?
    Mr. Thorneycroft: No, Sir, there is nothing about horticulture specifically, though included in the White Paper is a waiver extending the provisions which allowed rather more flexibility before on the unbound items to the bound items. With regard to further applications, I have, on behalf of the Government, increased a fairly wide range of horticultural tariffs only recently, but in other cases it would be a matter for application and inquiry.
    Mr. Bottomley: Can the President of the Board of Trade say whether there were difficulties between the Commonwealth countries as such, and although they were resolved within the General Agreement on Tariffs and Trade, can he give an assurance that they were resolved before the general meeting?
    Mr. Thorneycroft: I think I can say that perhaps seldom has there been greater unanimity in a general approach to trading matters throughout the Commonwealth.

    Waste Paper (Salvage)
    Mr. Shepherdasked the President of the Board of Trade what annual saving in foreign currency he estimates is made by the work of the Waste Paper Recovery Association Limited; and to what extent the existing collections are adequate for the needs of the trade.
    Mr. P. Thorneycroft: I am unable to make any reliable estimate of the saving in foreign currency due to waste paper salvage, but I have no doubt that it is substantial. During recent months collections have been running some 5 to 10 per cent. below the requirements of the mills, which have been drawing on stocks.
    Major Anstruther-Gray: Will my right hon. Friend encourage local authorities to press on with their salvage schemes?
    Mr. Thorneycroft: I think that all these schemes serve a useful purpose.

    Bismuth (Imports)
    Mr. Russellasked the President of the Board of Trade what restrictions are imposed on the imports of bismuth metal.
    Mr. P. Thorneycroft: Imports of bismuth from the dollar area are limited for balance of payments reasons to a value of £500,000 a year. Imports from all countries outside the dollar area are freely admitted under the open general licence.
    Mr. Russell: Can my right hon. Friend say how the restrictions on the imports of bismuth compare with those on other metals such as copper, bearing in mind the difference in value of the quantities imported?
    Mr. Thorneycroft: Not without notice.

  NATIONAL FINANCE

    Post-War Credits
    Mr. Palmerasked the Chancellor of the Exchequer if he will take steps to authorise the repayment of post-war credits to all those who have been in receipt of National Insurance benefits for a period of not less than 13 weeks, those entitled to disablement benefit and to next-of-kin on death by virtue of bequest, assignment or other legal right.
    The Financial Secretary to the Treasury (Mr. Henry Brooke): I cannot anticipate the statement which my right hon. Friend will be rising this afternoon to make.
    Mr. Palmer: While appreciating the difficulty of the hon. Gentleman's right hon. Friend, may I ask whether he would not agree that action of this kind would be a tremendous step forward after nearly 4½ years of opportunity?
    Mr. Brooke: I think I had better express no opinions, but ask the hon. Gentleman to wait a few more minutes.

    £ Sterling (Purchasing Power)
    Mr. Doddsasked the Chancellor of the Exchequer the purchasing value of the £ sterling at the latest convenient date compared with 20s. in October, 1951.
    The Economic Secretary to the Treasury (Sir Edward Boyle): Taking the internal purchasing power of the £ sterling as 20s. in October, 1951, it is estimated that the corresponding figure for March, 1955, was 18s. 6d. The calculation is based on the price index for all consumer goods and services from 1951 to 1954 and the Interim Index of Retail Prices thereafter.
    Mr. Dodds: What a shocking revelation for a party that is shortly going to the country. Does the Minister appreciate that in October, 1953, the £ was worth 19s. 2d.? Is this not a terrible position to get into?
    Sir E. Boyle: That is exactly what the hon. Gentleman said when he asked this question of my predecessor, the present Minister of Supply.

    Expenditure (Food)
    Mr. Doddsasked the Chancellor of the Exchequer how much of the increase in national expenditure on food from the beginning of 1952 to the latest convenient date was due to higher prices, and how much to greater volume of consumption.
    Sir E. Boyle: Of the increase of 16 per cent. in consumers' expenditure on food between 1952 and 1954, nearly half-representing a rise of 7 per cent.—was an increase in volume and the rest a rise in prices. Figures for the early part of 1955 are not yet available, and comparisons between periods of less than a full year
    8
    would be misleading because of the considerable seasonal variations.
    Mr. Dodds: Is this not an even worse revelation than the previous one, in that seven-eighths of this increase is due to an increase in prices? Is not the hon. Gentleman aware that, according to the last statement on this matter, £600 million was the increase in expenditure, of which only £75 million represented an increase in actual food consumption?
    Sir E. Boyle: What I will admit is that between 1951 and now the standard of living of the average weekly wage-earner in this country has risen considerably, whereas it fell between 1947 and 1951.
    Mr. Osborne: Is it not true that a large proportion of the increase in price is due to an increase in quality?
    Mr. Shinwell: With regard to the hon. Gentleman's reference to wages having risen, does he think that because his wages have risen the wages of everybody else have risen too?
    Sir E. Boyle: What I said wa5 that the standard of living in this country has risen.
    Mr. Nicolson: Is there not something rather pathetic about the efforts of the hon. Member for Dartford (Mr. Dodds) to tell the people of this country that they are worse off under Conservatism?
    Mr. Woodburn: Will the hon Gentleman say whether his answer to my right hon. Friend's question means that it is the Government's view that the cost of living in this country has been coming down?
    Sir E. Boyle: What I said was that the standard of living has been going up.

    Public Works Loans (Interest Rates)
    Mr. H. Hyndasked the Chancellor of the Exchequer whether, having regard to the recent increase in the Bank Rate, with its resultant effect on the borrowing rates charged by the Public Works Loan Board, he will afford more favourable terms to local authorities for the purpose of carrying out essential types of services.
    Mr. H. Brooke: No, Sir.
    Mr. Hynd: Does the hon. Gentleman appreciate that many local authorities

    9
    entered into quite considerable financial commitments for essential public works before the Chancellor suddenly decided to give higher rates of interest to the moneylenders'? Does the hon. Gentleman appreciate that those local authorities are in real difficulties and expect some help?
    Mr. Brooke: This Government is following precisely the course that was laid down by the late Sir Stafford Cripps some five years ago, when he said that the rates of interest charged to local authorities must correspond broadly to the Government's borrowing rates for comparable periods.

  LOCAL GOVERNMENT

    County Council Expenditure (Increase)
    Mr. Langford-Holtasked the Minister of Housing and Local Government by what percentage over the last four years total expenditure, including expenditure on education, by county councils has increased.
    The Minister of Housing and Local Government (Mr. Duncan Sandys): About 30 per cent.
    Mr. Langford-Holt: Is my right hon. Friend aware that it is an extremely good thing that Her Majesty's Government's expenditure has not gone up by the same percentage?
    Mr. Lindgren: Can the Minister say what percentage of that increase is due to the increased cost of work performed and what percentage to additional works carried out?
    Mr. Sandys: Some of each.

    Interest Rates
    Mr. Oliverasked the Minister of Housing and Local Government whether he will make a statement in respect of representations made to him by local authorities concerning the high rate of interest charged to local authorities on their borrowings.
    Mr. Slaterasked the Minister of Housing and Local Government how many representations he has now received from local authorities concerning the effect of Circular No. 23/55, relating to new borrowing rates, on their finances,
    10
    and consequently on their duty to carry out essential services; and what proposals he has for dealing with this problem.
    Mr. Sandys: Up to the end of last week, letters on this subject had been received from 18 local authorities. No special action is contemplated.
    Mr. Oliver: Is the right hon. Gentleman aware of the great financial burden which the increase has placed on the borrowing of local authorities? Is he aware that the increase on a loan for 15 years and over, for housing purposes, represents over 1s. a week on a £1,500 house? In view of that great increase, if the Government do not intend to alter the Bank Rate, would the right hon. Gentleman make recommendations to his right hon. Friend the Chancellor of the Exchequer about an increase in the subsidy?
    Mr. Sandys: The increase in the cost of loan charges on the average council house will be about £3 a year.
    Mr. Oliver: That is what I said.
    Mr. Slater: Is the right hon. Gentleman aware that even if he has received only 18 letters about this matter, hon. Members in all parts of the House are receiving correspondence from various local authorities in their constituencies who are very concerned about it and about the effect which it will have on the social services for which they are responsible? Does not the right hon. Gentleman think that some incentive should be given to these authorities to improve and extend their social services instead of action being taken which will cut the services down?
    Mr. Sandys: If hon. Members are receiving a lot of correspondence on this subject they will no doubt be passing it on to me in due course.

    Beaches (Oil Pollution)
    18 and 19. Mr. Haymanasked the Minister of Housing and Local Government (1) whether he will appoint a committee to investigate and report on the problem of clearing oily deposits from beaches, in view of the fact that it may be many years before all countries agree to the total prohibition of the depositing of oil waste and sludge in the high seas;
    (2) the duties of local authorities under his regulations in regard to the clearance

    11
    of oily deposits on beaches; and what Government grant is payable towards expenses incurred on such clearance.
    Mr. Sandys: In view of the measures being taken, it is reasonable to hope that the pollution of beaches by oil will diminish. While they have no statutory duties in regard to this matter, local authorities possess the necessary powers to get oil deposits cleared from their beaches. There is no specific Government subsidy for this purpose.
    The nature of the problem is pretty well known. I do not, therefore, believe that the appointment of a further committee of inquiry would be of any help.
    Mr. Hayman: Will the Minister bear in mind that there are two problems? One is that of the fouling of the seas by the deposit of oil and oil sludge, which the new Bill seeks to deal with, and the second is the problem of dealing with persistent oils which foul the beaches. It will be some years before the position is improved, so far as the fouling of the beaches is concerned. Will not the right hon. Gentleman reconsider his decision to appoint a committee to deal with the problem of clearing the beaches—a problem which is costing hoteliers and the public millions of pounds a year?
    Mr. Sandys: I understand the problem but I do not feel that a committee will make the beaches any cleaner.
    Mr. G. R. Howard: Is my right hon. Friend aware that anything the Government can do to help, especially in respect of small local authorities in the coastal areas, such as West Cornwall, will be much appreciated, in view of the approaching holiday season?
    Mr. Sandys: I am very well aware of the problem and of the nuisance, and if there is any constructive action which my hon. Friend can suggest we shall be very glad to consider it.
    Mr. Hector Hughes: If the Minister means, by the measures now being taken, the Oil in Navigable Waters Bill, which is before a Committee, does he realise that the Bill will not solve the problem because it leaves in the North Sea a large excluded area into which oil may be put, and that the oil reaches the beaches of Britain? Is he aware that in the meantime local authorities are being put to great expenditure? Will he deal with that?

    Piped-water Scheme, Ripon and Pateley Bridge
    Colonel Stoddart-Scottasked the Minister of Housing and Local Government why there has been delay in carrying out the piped-water schemes in the Ripon and Pateley Bridge Rural District Council's area; and what is preventing the carrying out of these schemes.
    Mr. Sandys: The council and the owner of the land concerned failed to agree. The council had, therefore, to apply for powers to acquire the land and to take water from it. This necessitated a local inquiry, which was held last month; and I am now considering its findings.

    Water Supply, Ilkley
    Colonel Stoddart-Scottasked the Minister of Housing and Local Government if he is aware of the shortage of water in the Ilkley Urban District Council's area owing to increased housing and improved sanitation; and whether he will authorise the scheme for the abstraction of water from the River Wharfe, as no other supply is available at the moment.
    Mr. Sandys: The shortage is a potential and not an actual one, and I am advised that it might be avoided by further measures to reduce waste. However, if it is found impossible to deal with the problem in this way, I will certainly consider authorising the scheme.
    Mr. H. Hynd: Can the Minister say whether Tory councils are responsible for this bad state of affairs?

    Mining Subsidence
    Mr. Swinglerasked the Minister of Housing and Local Government when he will visit mining subsidence areas to examine the problems of local authorities on the spot.
    Mr. Sandys: As soon as possible.
    Mr. Swingler: Is the Minister aware that victims of mining subsidence have been waiting for four years for the carrying out of a further instalment of the Turner recommendations, and that he had better hurry up if he intends to do something to redeem the Government's pledge to help the victims of mining subsidence; or are we to conclude that this procrastination means that the only

    13
    way in which the victims of mining subsidence can get anything done is to throw this Government out?
    Mr. Sandys: I will try to fit in a visit before that eventuality occurs.
    Mr. Ellis Smith: In view of the urgency of the problem arising out of mining subsidence, is the Minister prepared to receive a deputation of a representative character, representing the big municipalities which are suffering from mining subsidence, before the end of this Parliament?
    Mr. Sandys: Perhaps the hon. Member will get in touch with me.

  EMPLOYMENT

    Remploy Scheme
    The Rev. LI. Williamsasked the Minister of Labour the financial loss or profit made by Remploy in 1951, 1952, 1953, and 1954, respectively; and the financial loss or profit by Remploy, Abertillery, in the same years.
    The Minister of Labour and National Service (Sir Walter Monckton): In reply to the first part of the Question, I will circulate a table in the OFFICIAL REPORT.
    With regard to the second part of the Question, it would not be in the best interests of the company or of its disabled employees to publish information of this kind about individual factories. The profit or loss on any factory varies according to the trading position.
    The Rev. LI. Williams: In view of their wonderful work in the rehabilitation of the morale and self-respect of these disabled workmen, does not the Minister agree that no true assessment of the work of these factories can be made in financial terms of profit and loss?
    Sir W. Monckton: Yes, Sir. I think it will be known to all of us that their work cannot be measured in that way, and I should like to pay a tribute to the people in the Abertillery and other Remploy factories; but I do not think it would be in the interests of individual factories if I gave the figures.
    Following is the table:

    REMPLOY LIMITED

    STATEMENT OF EXCESS OF EXPENDITURE OVER INCOME

    Year ended 31 st March

    Excess of expenditure over income

    £

    1951

    …

    …

    …

    1,732,891

    1952

    …

    …

    …

    2,443,013

    1953

    …

    …

    …

    2,380,400

    1954

    …

    …

    …

    2,521,013

    1955

    …

    …

    …

    *2,430,000

    *Estimate for period ended 1st March, 1955.

    Newspaper Industry Dispute (Report of Inquiry)
    Mr. Albuasked the Minister of Labour to make a statement on the Report of the Committee of Inquiry into the dispute between members of the Amalgamated Engineering Union and the Electrical Trades Union and the Newspaper Proprietors' Association.
    Sir W. Monckton: I announced in my last statement to the House that I had set up a Court of Inquiry to examine the causes and circumstances of this dispute and, as hon. Members are aware, the Court has since concluded its inquiries and issued its Report, which was laid before the House last Wednesday, 13th April.
    A meeting of all the interested parties with officers of my Department took place the next day. At this meeting the representatives of the Newspaper Proprietors' Association stated that they accepted the conclusions of the Court of Inquiry, but the representatives of the Amalgamated Engineering Union and the Electrical Trades Union were not prepared to recommend a resumption of work on the basis of the employers' present offer, as suggested by the Court. The talks with the parties to the dispute went on throughout the day and the representatives of the unions affiliated to the Printing and Kindred Trades Federation, many of whose members are now unemployed in consequence of the strike, took part in the discussions at various stages.
    The position that was eventally reached was that an offer had been made by the Newspaper Proprietors' Association that, if the members of the Amalgamated Engineering Union and the Electrical Trades Union would return to work without prejudice on the basis of the employers' present offer, the employers

    15
    were prepared to enter into fresh negotiations on wages with all the unions concerned as soon as they were able to complete re-examination of all the factors involved. The Association undertook that it would start fresh negotiations not later than 30th June.
    This offer was, however, rejected by the Amalgamated Engineering Union and the Electrical Trades Union, whose representatives insisted on an immediate resumption of negotiations on the current claim, with an indication that there would be an increase on the employers' last offer. In these circumstances, no agreement could be reached.
    I discussed the situation with members of the General Purposes Committee of the T.U.C. General Council and, as the House will be aware, a meeting was held yesterday between the Amalgamated Engineering Union and the Electrical Trades Union and the printing trade unions, presided over by the Chairman of the General Council. As a result of this meeting discussions between the unions and the Newspaper Proprietors' Association were arranged for this morning.
    As these talks are still in progress, I feel sure that the House will appreciate that it would be preferable for me to refrain at this stage from further comment on the issues involved.
    Mr. Albu: Whilst I entirely agree with the Minister—as I am sure the House will—that it would be quite wrong to pursue the matter further whilst discussions are continuing, may I ask the right hon. and learned Gentleman to use his influence to see that provocative statements and actions are not made or taken outside this House—actions of a character which would be provocative to the whole trade union movement?
    Sir W. Monckton: I think it is most desirable that, while these discussions are in progress, inside and outside the House everyone should refrain from provocation.

  SCOTLAND

    Magnetite Deposit, Tiree (Research)
    Mr. Willisasked the Secretary of State for Scotland what research has been conducted into the problem of removing
    16
    the high phosphorous content of the magnetite deposit in Tiree, with a view to enabling it to be worked commercially.
    The Secretary of State for Scotland (Mr. James Stuart): Specific research of this kind would be a matter for the industry concerned.
    Mr. Willis: Will the right hon. Gentleman consider trying to get somebody interested in this matter, or try to promote some research by the Glasgow Technical College on this matter?
    Mr. Stuart: From his previous experience, the hon. Member may know that some research was carried out during the war by the Ministry of Supply, which is prepared to make the information which it possesses available to any serious inquirer.
    Major McCallum: Is my right hon. Friend aware that the commercial development of any mineral on the island of Tiree would be quite impossible while the present conditions exist at the pier?
    Mr. Stuart: That would be taken into account.

    Mathematics and Science Teachers (Committee's Report)
    28 and 29. Mr. Malcolm MacPhersonasked the Secretary of State for Scotland (1) what reply he made to the letter sent to him on 8th May, 1954, by Sir Edward Appleton on the subject of deferment of National Service for intending specialist teachers of mathematics and science;
    (2) to make a statement on the Report of the Appleton Committee.
    Mr. J. Stuart: First, I would take this opportunity to express my warm appreciation of the work done by Sir Edward Appleton and the other members of the Committee. Their Report makes an exhaustive and illuminating examination of the problem of the supply of mathematics and science teachers in Scotland; and their recommendations, some of which raise important questions of policy, are receiving careful consideration.
    I have been in consultation with my colleagues on the question of the deferment of specialist teachers from National Service, but I am not yet in a position to announce a decision on this matter. I have referred to the National Joint Council on Teachers' Salaries in Scotland the

    17
    recommendations relating to salary. I have asked the two associations of local authorities, the Educational Institute of Scotland, and a number of other bodies who are normally consulted on matters of educational policy, as well as the Scottish Council (Development and Industry) and the Scottish Council of the Federation of British Industries to give me comments on the recommendations. The attention of the principals of the four Scottish universities has been drawn to the observations contained in Chapter VI.
    The recommendations in the Report include a wide variety of proposals, some of which, if approved, could be put into force in the fairly near future, while others would require more time. My aim will be to reach decisions on the several recommendations as soon as possible.
    Mr. MacPherson: Is the right hon. Gentleman aware that this Report is one of the most lucid and—within the terms of its remit—thorough examinations we have had of this problem? Does he agree that the solution, in view of the economic importance of the personnel involved, lies in a broader field than that of purely educational policy?
    Mr. Stuart: I agree that it is of very great importance to the whole of industry, in addition to education. As I endeavoured to say, I am most grateful to Sir Edward Appleton and his Committee for their very able Report.
    Miss Herbison: Is the right hon. Gentleman aware that Sir Edward Appleton and his Committee thought the matter of deferment to be of such importance that they communicated with the Minister long before the Report could be ready, and that it is now almost a year since that communication was made? Surely, on such an important matter, the Government should have taken a decision one way or the other?
    Mr. Stuart: The hon. Lady is quite correct; Sir Edward Appleton wrote to me on the question of deferment on 8th May, 1954. I replied on 17th May, but, as the hon. Lady knows from her experience of Government, it is a matter that affects other Departments and many other professions.

    Secondary Schoolchildren (Leaving Age)
    Mr. G. M. Thomsonasked the Secretary of State for Scotland if he will request the Advisory Council on Secondary Education to investigate the reasons why children leave secondary schools which provide courses beyond the minimum school-leaving age, and to recommend steps to increase the proportion completing a full senior secondary course.
    Mr. J. Stuart: The reasons why children leave senior secondary schools prematurely are well known, and I do not think that it would serve any useful purpose to reconstitute the Advisory Council with a view to its undertaking a further investigation into this matter. Steps are already being taken to try to increase the number of pupils who complete senior secondary courses.
    Mr. Thomson: Is the right hon. Gentleman aware that the wastage of ability in Scottish secondary schools is one of our major social problems, and that the English Advisory Committee recently furnished a most excellent Report, in which there was a great deal of fresh material? Does not the right hon. Gentleman think this matter requires the kind of expert investigation to which we have been accustomed from our own Advisory Committee in the past?
    Mr. Stuart: I think that the English Report was very illuminating, but we received precisely similar information about a year before the English Report after asking the headmasters of secondary schools to give us their personal advice from knowledge of the subject.
    Mr. Woodburn: Are we to take it from the statement of the right hon. Gentleman that, because the reasons are well-known, he is quite satisfied that nothing more can be done? Is he aware that certain headmasters have attempted to find other methods of inducing these children to carry on with their studies, and have been successful? Is he prepared to investigate whether scientific and technical ability cannot be drawn upon to a greater extent by the adoption of some new methods of persuading these children to stay at school?
    Mr. Stuart: I am not dealing only with scientific advancement at present. On

    19
    the general question of non-completion of school terms, the reasons are perfectly clear, and we are doing what we can to take steps to counteract that. A pamphlet is being issued to parents to advise them on this subject. We are also considering circularising education authorities further on this subject, and will do our best to achieve the desired result.

  BRITISH ARMY

    Soldiers (Medical Treatment)
    Mr. Hastingsasked the Secretary of State for War whether he is aware that on occasions non-commissioned officers refuse to allow men in their charge to apply to a medical officer for examination or treatment; and what right of appeal the men have against such refusals.
    The Under-Secretary of State for War (Mr. Fitzroy Maclean): I am satisfied that, in general, no obstacle is put in the way of men wishing to report sick. If the hon. Member will let me have details of any case where permission was refused, I will gladly look into it. As to the second part of his Question, every soldier has a statutory right by Section 43 of the Army Act to make a complaint to his platoon or company commander in such a case.
    Mr. Hastings: Is the hon. Gentleman aware of how difficult it is to get authenticated information from private soldiers on matters such as this? Will he agree that it is most important that the decision whether a man should receive medical advice or not should not be left in the control of an N.C.O.?
    Mr. Maclean: I agree that it is very important that a man should be able to get advice, but as I have explained, every possible step is taken to ensure that he should be able to get advice. As I have said, if the hon. Member will let me have details of any case where it is not so, I will certainly look into it.

    Anti-Aircraft Command (Technical Officials)
    Mr. Burdenasked the Secretary of State for War what steps have been taken to ensure the continued employment of the technical officials lately employed in Anti-Aircraft Command.
    Mr. F. Maclean: About a third will continue to be employed on work connected with anti-aircraft equipment. Of the remainder, as many as possible will be transferred to other War Department establishments or to suitable vacancies offered by other Government Departments. A number will have to be discharged as redundant. These will all be temporary officials.
    Mr. Burden: I thank my hon. Friend for that reply, but will he undertake to see that those men who are to be discharged will be given a reasonable period in which to try to place themselves in employment elsewhere?
    Mr. Maclean: For the moment there is sufficient work to keep all these officials employed. They will certainly be given time to find other work before being finally discharged.

    Royal Signals (Agricultural Shows)
    Sir F. Medlicottasked the Secretary of State for War what representations have been made to his Department during the past two years by the Electrical Trades Union or any other trades union concerning the use of Royal Corps of Signals units of the Territorial Army at agricultural and similar shows.
    Mr. F. Maclean: As my right hon. Friend explained on 5th April, our policy is that troops and equipment should only be used for this kind of work if it has real training value. The kind of work referred to by my hon. Friend has practically no training value and is, therefore, not normally carried out by Royal Signals units. There have, however, been one or two cases in which help has been given by units because of a misunderstanding of the rules. These have led to one complaint by a trade union during the last two years.

    Boys' Units (Committee's Report)
    Mr. Dugdaleasked the Secretary of State for War which of the recommendations of the Report of the Committee on the Organisation and Administration of Boys' Units in the Army he proposes to adopt.
    Mr. F. Maclean: As my right hon. Friend explained in his Prefatory Note to the Committee's Report, he has

    21
    accepted in principle the Committee's recommendations. These concern selection, staffing, curriculum, location, accommodation and higher control. A standing committee under the chairmanship of the Director-General of Military Training has been set up to supervise their implementation in detail.
    Mr. Dugdale: In view of the concern which must be felt by the parents of boys in establishments of this character after the recent happenings in one of them, will the hon. Gentleman see that this question is gone into as a matter of urgency, so that satisfactory alterations may be made where necessary?
    Mr. Maclean: My right hon. Friend and myself have both explained in the House that this matter has been treated as one of great urgency from the first, and, as I have explained, a special branch is being set up in the War Office to supervise boys' units. In addition, a standing committee has been set up to supervise the detailed implementation of the Committee's recommendations.

  FOUR-POWER TALKS
  Mr. Doddsasked the Prime Minister if he will make a statement indicating the present position with regard to top-level talks designed to reduce international tension; and what progress has been made since 1st March last.
  Mr. Swinglerasked the Prime Minister if he will now propose to the United States and Soviet Governments a meeting of heads of Governments to discuss the causes of international tension and the necessity of disarmament.
  Mr. G. M. Thomsonasked the Prime Minister what progress is being made towards bringing about top-level talks with the Union of Soviet Socialist Republics on outstanding world problems, including Germany.
  The Prime Minister (Sir Anthony Eden): As has so often been made clear, Her Majesty's Government are anxious for negotiations with the Soviet Government as soon as possible after the ratification of the London and Paris Agreements. We are already discussing method and procedure with the Governments of France, the United States of America, the
  22
  German Federal Republic and other interested countries. The House may rest assured that we shall do everything in our power to speed these consultations. I hope that it will be possible for my right hon. Friend the Foreign Secretary to make a further announcement on this subject in the course of the next few days. As I have previously stated in this House, nothing is excluded from our minds in the way of machinery to bring about the results we all require.
  It may be—indeed I devoutly hope—that we can now look forward with greater confidence to the prospect of fruitful talks with the Soviet Union. This is not due to any accident but because the unity of the West has been established by the London and Paris Agreements, and it has always been on the basis of that unity that successful negotiations could be conducted with the East.
  Mr. Dodds: Does the right hon. Gentleman appreciate that a vast number of people in this country have great hopes that top-level talks will take place, and that some good will come from them? Can the new Prime Minister make a personal declaration that he is very anxious that top-level talks should take place at the earliest possible moment, and that he will do his best to implement them?
  The Prime Minister: As I have reminded the House, I said some time ago that nothing in the way of machinery is excluded from our purpose to bring about the results we want. We are, as the House knows, at present bound by an agreement which was put out in the White Paper last November, I think with the approval of the House, giving the order in which the subjects would be taken. I think the order has already been justified, because Austria was first on the list. We shall do all we can to make progress in the way I have indicated.
  Mr. Swingler: Quite apart from the question of Germany and the Paris Agreements, does not the Prime Minister recall that it is now exactly 12 months since this House, without dissent, passed a Resolution calling for an immediate initiative for top-level talks upon the menace of the hydrogen bomb? It is upon the menace of the hydrogen bomb, and the general causes of international

  23
  tension—which are far wider questions than the specific question of Germany—that the people of this and other countries have been waiting for the heads of Governments to act.
  The Prime Minister: I should hope that the whole House would feel that if we can make progress upon subjects such as Austria, and conclude a treaty, and also make progress upon the subject of Germany, we are moving upon those issues which are causing the most acute anxiety in the world at the present time.
  Mr. Thomson: Is the Prime Minister aware that since 1950 his party has already fought two General Elections upon this issue of top-level talks and has so far failed to fulfil its pledges? Is he aware that there will be strong public objection to further delays in bringing about these talks by holding a third General Election in which, no doubt, the same sort of pledges will be made?
  The Prime Minister: I see no particular reason why a third General Election should retard matters. On the contrary, I should hope that it would encourage us greatly in the work which we are doing.
  Mr. H. Morrison: May the House take it that besides the question of a united Germany, and so on, obviously being discussed at these talks, the general question of disarmament will not be excluded? In the meantime, will it be possible for the Government, with a view to preparing for these talks on Germany, to try to discover, through diplomatic channels, what the Soviet Union means by free and democratic elections?
  The Prime Minister: The right hon. Gentleman has put his finger upon the point at issue. I think that it is inconceivable that there should be international talks with Russia which did not include the question of Germany, though we hope that they would also include other matters. If the right hon. Gentleman will refer to the Command Paper of last November, which he has almost quoted, by accident—probably because he remembers it—he will see that we said that after Austria, the next matter which we wanted to discuss was the question of truly free elections in Germany, in order to see if we could reach agreement about them. I think that the answer to the
  24
  right hon. Gentleman's question is, in all respects, "Yes"; but he will understand that these are matters on which we have to reach agreement with our Allies, and it depends whether they take the same view as us of the course to follow. We cannot impose our will upon our Allies. We shall try to reach agreement with them.
  Mr. Shinwell: Can we be assured that the Government can undertake top-level talks now, in view of the fact that they have been deprived of the only top level which the Government have ever had?
  The Prime Minister: I do not know what the right hon. Gentleman means. During the six years in which he was in office there were no top-level talks of any kind.
  Hon. Members: Hear, hear.
  Mr. Shinwell: I am grateful for that applause. Now that the giant killer has gone, surely the dwarfs are quite incapable of undertaking the task.

  NUCLEAR WEAPONS (EXPERIMENTAL EXPLOSIONS)
  Mr. Hector Hughesasked the Secretary of State for Foreign Affairs what steps he has taken during the last month, and is now taking, to stop experimental explosions of atomic hydrogen and thermo-nuclear bombs.
  The Secretary of State for Foreign Affairs (Mr. Harold Macmillan): Her Majesty's Government have continued during the past month to work in the Disarmament Commission of the United Nations for agreement on a comprehensive disarmament programme; such an agreement would render test explosions unnecessary. This conference is still sitting.
  Mr. Hughes: Does the Minister realise that that answer contains nothing of a concrete character, and that in a matter of this mortal urgency to the human race the Government should have taken urgent steps long ago? Will he do something about it?
  Mr. Macmillan: As the hon. and learned Member knows, with regard to the more technical aspects of the question, we have already referred the

  25
  matter to the Medical Research Council and we are waiting its report.
  Mr. Hughes: Why delay?
  Mr. A. Henderson: Has any action been taken to have the proposal of the Government of India for a truce in atomic experiments considered either by the Disarmament Sub-Committee now sitting, or by the Commission in New-York?
  Mr. Macmillan: All these matters can and will arise in the Disarmament Commission if we get the kind of co-operation which I hope will be possible within the next few months.
  Mr. Hughes: In view of the unsatisfactory nature of the reply on this vital matter, I beg to give notice that I shall raise it on the Adjournment at the earliest possible opportunity.

  INDIAN AIRCRAFT LOSS (CHINESE NOTE)
  Mr. Edelmanasked the Secretary of State for Foreign Affairs what communication Her Majesty's Government have received from the Peking Government concerning the loss of an Indian aircraft bound from Hong Kong on 11th April; and what reply he has sent.
  Mr. H. Macmillan: On 13th April, Her Majesty's Chargé d'Affaires at Peking was handed a Note by the Chinese Vice-Minister for Foreign Affairs which contained grave allegations that the Indian aircraft which left Hong Kong on 11th April had been sabotaged, and that the British authorities in Hong Kong were in part responsible for this disaster. On 17th April, in the absence of Her Majesty's Chargé d'Affaires at Shanghai, the Counsellor at Peking was instructed to deliver a reply. Her Majesty's Government, while deploring the incident and the loss of life involved, made it clear that they did not accept any responsibility for the accident or the consequences thereof. Her Majesty's Government also protested strongly against the Chinese accusations against the British authorities, which had been made before time had been allowed for any investigation.
  The reply went on to refute the Chinese claims that Her Majesty's Embassy in Peking had been warned in advance of arrangements to sabotage the aircraft, and
  26
  recited in detail the extensive precautions which had been taken by the authorities at Hong Kong to safeguard the aircraft. The Note concluded by stating that Her Majesty's Government could not accept any suggestions by the Chinese Government that the British authorities in Hong Kong or elsewhere had failed in their duties. Her Majesty's Government offered their full co-operation in any investigation—which I understand is to be conducted by the Indonesian Government—and naturally a full inquiry will be conducted in Hong Kong.
  I will, with permission, make arrangements for full summaries of the Chinese Note and of our reply to be published in the OFFICIAL REPORT.
  Mr. Edelman: Whilst welcoming Her Majesty's Government's repudiation of these unworthy charges, may I ask the right hon. Gentleman whether the inquiry will be held in public, and, if so, whether all those interested will have the opportunity of giving evidence?
  Mr. Macmillan: I am grateful to the hon. Member for his suggestion, but I understand that under the rules of international law the Indonesian Government have the duty of holding the inquiry. We have no responsibility but we shall offer to give any assistance that we can.
  Mr. S. Silverman: Can the right hon. Gentleman say whether the Note from the Peking Government specifies in any detail any grounds for thinking that there was any sabotage in fact, no matter who was responsible? If so, will those parts be included in the summary of the Note which he proposes to publish in the OFFICIAL REPORT?
  Mr. Macmillan: I think that the hon. Gentleman can be assured that we shall publish as full a summary as possible and that, if necessary, the whole of the text on both sides will be published in the OFFICIAL REPORT. An official inquiry into the accident will be held by the Indonesian Government but we intend, on our own part, to make perfectly sure, to hold an inquiry into exactly what happened to the aircraft while it was in Hong Kong.
  The following are the full summaries of the Chinese Note and Her Majesty's Government's reply:
  The Chinese Note of 13th April stated that the aircraft left Hong Kong at 12.15 hours (Peking time) on 11th April for Djakarta. The

  27
  aircraft had been chartered by the Chinese delegation to the Afro-Asian Conference. There were 11 passengers on board, eight of them Chinese. While flying over the sea near Sarawak, North Borneo, the passenger aircraft burst into flames and fell into the sea. It was stated that the whereabouts of the passengers was not then known.
  The Note continued by alleging that this was
  "a case of completely inhuman, premeditated murder, solely engineered by the Special Service Organisation of the United States and the traitor Chiang Kai-shek."
  The Note added that, long before the departure of the passengers the Government of the People's Republic of China had learned that the Special Service Organisation of the United States and Chiang Kai-shek were actively making arrangements to sabotage the aircraft to be used by the Chinese delegation in order to carry out their plot to assassinate the Chinese delegation led by Premier Chou En-lai.
  Therefore, the Note continued, at 19.30 hours (Peking time) on 10th April the Ministry of Foreign Affairs of the People's Republic of China informed Her Majesty's Embassy at Peking about this matter, and requested them to bring it to the attention of the British authorities in Hong Kong and to ask them to take measures to safeguard the members of the delegation and Press correspondents aboard the aircraft. The Note stated that the members of the staff of Her Majesty's Embassy at Peking, to whom this warning was conveyed, promised to notify the British authorities in Hong Kong by telegram. Nevertheless
  "the plot of the Special Service agents still succeeded."
  It was alleged that the British Government and British authorities in Hong Kong bore a grave responsibility for this unfortunate incident which could not be evaded. The Chinese Note went on to demand that
  "the British Government should immediately inform the British authorities in Hong Kong in order that they may take urgent measures to place under strict supervision the staff of the airport concerned in the incident and all other persons concerned, conduct a thorough investigation and arrest and punish, according to the evidence, the Special Service Agents taking part in this case of conspiracy and murder in order that responsibility may be determined, and instruct the appropriate authorities to ascertain the whereabouts of the aircraft which met with this accident and the persons on board."
  The Chinese Government's Note ended by requesting a speedy reply.
  The reply of 17th April stated that Her Majesty's Government had been informed of the Chinese Ministry of Foreign Affairs communication of 13th April. While Her Majesty's Government deplored this incident and the loss of life involved, they were bound, in view of the serious allegations which had been made by the Chinese Government, to make it clear at once that they did not accept any responsibility for the accident or for the consequences thereof. Her Majesty's Government protested strongly against the
  28
  Chinese Government's accusations against the British authorities which had been made before time had been allowed for any investigation.
  The Chinese Government's Note of 13th April had seemed to suggest that the Chinese Ministry of Foreign Affairs had informed Her Majesty's Embassy in Peking in advance of arrangements to sabotage the aircraft in order to carry out a plot to assassinate members of the Chinese delegation to the Bandung Conference, led by the Chinese Foreign Minister. This was not the case. The facts were that the Acting Head of the European Department informed the Counsellor on 10th April that the Chinese Government had received information that the Nationalists might make trouble for the party of Chinese journalists, when they left Hong Kong the following day for the Bandung Conference. The Ministry of Foreign Affairs had requested that appropriate precautions might be taken.
  This information had not been amplified in any way. There had been no suggestion of sabotage. The Counsellor had undertaken to inform the Governor of Hong Kong at once and had asked for supplementary information to assist the Hong Kong police; the number of the party, where they were staying, the name of the airline concerned and the route to be taken. The Acting Head of the Department had been unable to answer any of these questions at the time.
  It was agreed that a telegram would be sent at once to Hong Kong, and that any supplementary information which the Ministry could supply would be telegraphed later. Shortly afterwards the Ministry had telephoned to say that the aircraft was Indian and that the New China News Agency representative in Hong Kong would know where the party were staying. This information had been immediately telegraphed to the Governor of Hong Kong with a request that appropriate precautions should be taken.
  The Note continued by stating that at about 11.20 hours on 11th April the representative of the New China News Agency had telephoned to the Director of the Special Branch of the Hong Kong police to inform him that 11 journalists and a Viet Minh delegate would be travelling by an Air India aircraft which was due to leave Hong Kong early in the afternoon of the same day. No mention had been made by the representative either then or later of any suspicion of trouble, and the communication was made in a routine manner to which the Hong Kong authorities had become accustomed. But in the light of a message from Peking, steps had been taken to ascertain the time of arrival and departure of the aircraft.
  It had been learned about 12.00 hours that the aircraft was then due and would be leaving about 13,00 hours. The aircraft in fact had arrived at 12.15 hours. Additional police precautions had been taken to ensure that the party were not molested at the airport. During the time that the aircraft was in Hong Kong it had been under police guard under the command of an inspector and no unauthorised person had been allowed or attempted to approach or board the aircraft. The local manager and other officials of Air India and members of the crew of the aircraft had been present, and had supervised every aspect of

  29
  refuelling and servicing. A member of the crew had remained on board throughout.
  The actual handling of the luggage and the passengers had been done under the supervision of China Travel Service and senior officials of Air India. The only articles placed on board the aircraft were baggage belonging to the party and normal refreshments for passengers. The latter had been supplied by a local firm but were checked on loading by the steward of the aircraft.
  The passengers had been brought to the airport by airline motorbus and, though this was an exception to normal practice, had been taken straight to the airport without having to go through Customs or immigration formalities. Similarly, without passing through Customs, the baggage had been loaded straight into the aircraft under the supervision of Air India. The aircraft had taken off about 13, 26 hours without incident. Police watch at the time and subsequent detailed inquiries have revealed nothing suspicious.
  The Note also contains details of the steps taken by the British authorities after news of the crash had been received. As soon as this was known the British authorities in the area had taken energetic steps to assist in the search and rescue operations. Two Sunderland aircraft, belonging to the R.A.F. and a high-speed launch had immediately been despatched to the scene of the incident and these had been closely followed by H.M.S. "Dampier" of the Royal Navy. H.M.S. "Dampier" had carried out a search of the area, and had cared for three survivors who had been able to make their way to a small island.
  The Sunderlands carried out an all-night search for the crashed aircraft centred on Great Natuna Island. Later two Sunderlands, two Lincoln aircraft and four Valetta aircraft, all belonging to the R.A.F., had continued the search, assisted by two aircraft of the Indonesian Air Force until the wreckage was located. H.M.S. "Dampier" had remained in the area in search of further survivors and had assisted in salvage operations.
  The Note pointed out that it was clear that the British authorities in Hong Kong had taken all steps to ensure the safety of the passengers and of the aircraft while it was in Hong Kong. Her Majesty's Government could not, therefore, accept any suggestion by the Chinese Government that the British authorities in Hong Kong or elsewhere had failed in their duties. Pending a full investigation it was premature to assign a cause for the crash.
  It was also pointed out that since the aircraft belonged to an Indian airline and the crash did not occur within British territory or territorial waters, it was not for Her Majesty's Government to conduct a formal investigation into the causes of the incident. Her Majesty's Government would, however, offer their full co-operation in any investigation which was to be carried out by the competent authorities concerned, and investigations would be carried out in Hong Kong by the Hong Kong police.
  Our Note concluded that if these investigations were to succeed in establishing the real cause of the crash which had occasioned the death, not only of Chinese, but of other
  30
  nationals, it would be necessary for the interested parties to furnish all the information available to them about the circumstances of this crash. Her Majesty's Government assumed that the Chinese Government would be prepared to co-operate in doing so: the information they had so far provided was clearly inadequate for this purpose.

  COLLEGE OF AERONAUTICS (PRINCIPAL)
  Mr. Albuasked the Minister of Education who has been appointed to the post of Principal of the College of Aeronautics.
  The Parliamentary Secretary to the Ministry of Education (Mr. Dennis Vosper): The College is at present under an Acting Principal, and no permanent appointment has yet been made.
  Mr. Albu: Can the Parliamentary Secretary say when the appointment might be made, and explain why there has been this extraordinary delay, which is having a very serious effect on the work of the College?
  Mr. Vosper: The College is, of course, an independent body, but I have every reason to believe that the appointment will be made very shortly, and this Question will be brought to the notice of the Governors.

  FIRTH OF FORTH (TUBE)
  Mr. G. M. Thomsonasked the Minister of Transport and Civil Aviation if he will invite Dundee Corporation to send observers to the official discussions on the proposed tube across the Firth of Forth.
  The Minister of Transport and Civil Aviation (Mr. John Boyd-Carpenter): No, Sir.
  Mr. Thomson: Is the Minister aware that there is a very widespread feeling in Scotland that a Tay crossing is an essential complement to a Forth crossing, and that the technical question of a tube across the Forth is of vital interest to Dundee? Is he aware that, if a tube is practicable across the Forth, enough money will be saved to provide a tube across the Tay?
  Mr. Boyd-Carpenter: I think that the hon. Member misunderstands the nature

  31
  of the discussions. They are to obtain the agreement of the local authorities directly concerned over the membership and terms of reference of the expert committee which is going to examine the two crossings.
  Lieut.-Colonel Lipton: Is this not a case where it will be a welcome change to have more low-level talks?
  Mr. Boyd-Carpenter: I will give the hon. and gallant Gentleman's proposal the consideration which it merits.

AUSTRIAN STATE TREATY
Mr. H. Morrison Mr. H. Morrison (by Private Notice) asked the Prime Minister whether he will make a statement as to the attitude of Her Majesty's Government towards the agreement reached between the Soviet Union and Austria.
The Prune Minister: Her Majesty's Government certainly welcome the statement in the communiqué issued in Moscow on 15th April in which the Austrian and Soviet Governments place on record their desire for the early conclusion of a State Treaty. For many years we and our Allies have wanted to conclude a Treaty with Austria which would restore her full freedom and independence. The House will recall that we offered at Berlin to sign the text with all the Soviet amendments. We earnestly hope that a Treaty can now at last be concluded.
We note in particular that the Soviet Government have now agreed that the occupation forces of the four Powers shall be withdrawn from Austria after entry into force of the Treaty, and in any event not later than 31st December this year. The Soviet Government have thus removed one of the main obstacles to the conclusion of a Treaty.
The next step will be for representatives of the four responsible Governments to examine, with Austrian participation, the proposals put forward by the Soviet Government. I hope that this examination will start very soon and that, as a result, it will be possible to proceed to
32
the conclusion and signature of this long-delayed Treaty with our Austrian friends.
Mr. Bellenger: Is the right hon. Gentleman aware whether, as a result of these negotiations in Moscow, anything new has emerged from what was agreed with Russia on the Treaty itself, which can automatically be put into force if Russia so desires?
The Prime Minister: So far as I have information, the text of the Treaty itself is entirely the same as it was at Berlin and could have been signed at that time, but there is a question about international guarantee. That is a matter which the four Powers will want to discuss but, so far as we can judge the document, we see no reason for further serious delay.
Mr. S. Silverman: May I ask the right hon. Gentleman whether the Government know of, and approve, an understanding which appears to have been reported in connection with these negotiations, that Austria would undertake not to take part in or become a party to any military alliances of any kind without all the signatories to the Treaty consenting to it? Does the right hon. Gentleman regard that as a useful precedent for the consideration of the German question?
The Prime Minister: As regards the Austrian position, the hon. Member knows that there is nothing new in this. At Berlin that was accepted by all the Powers. The words were,
"Austria does not intend to join any military alliance or allow any military bases on its territory."
There is, therefore, nothing whatever new since 18 months ago, when we discussed this matter in Berlin. As regards Germany, the hon. Member will not require me to tell him that the two countries are not in exactly the same position.
Mr. Paget: Would it be fair to describe this Austrian agreement as the first fruits of ratification, and does it tend to indicate that as a result of the ratification of the Paris Agreements it is now much easier to negotiate with the Russians?
The Prime Minister The Prime Minister indicated assent.

BUSINESS OF THE HOUSE
The Lord Privy Seal (Mr. Harry Crookshank): It may be convenient if I inform the House that the Budget debate will be continued tomorrow and on Thursday. I apologise for my lack of voice, and assure the House that I do not intend to take any part in the Budget debates.
Instead of concluding the Budget debate on Monday next, as previously announced, we shall now ask the House to conclude the general debate on Friday of this week and immediately thereafter take the Report stages of the Budget Resolutions, so that the Finance Bill can be brought in and made available before the week end.
A Motion will be moved tomorrow to give precedence to Government business on Fridays, 22nd, 29th April and 6th May. I regret that we find it necessary to ask private Members to give up their remaining facilities.
These arrangements are proposed in order to give the House the customary four days general debate on budgetary matters and will, I trust, commend themselves to the House in the changed circumstances in which we meet.
Discussions are now taking place through the usual channels about the essential financial and other business to be dealt with before Dissolution, and I
34
hope to be in a position to make a statement to the House on Thursday.
Mr. H. Morrison: It is perfectly clear that the Leader of the House, and we sympathise with him—
Mr. Crookshank: Thank you.
Mr. Morrison:—;is in a very, very bad condition to start a General Election. However, although the Tories can sometimes answer for themselves without saying anything at all, on the question of a constructive policy they have got nothing to say.
Is the Leader of the House aware that his announcement is rather quick business? It means that the Government, of their own volition, have interfered with the rights of Parliament, that there has been no advance consultation whatever about the decision of the Government to revise the business of the House before the announcement of a General Election. This is a diktat on the part of the new Prime Minister as to how the House of Commons is to do its business. We must, of course, regret that private Members are to lose their opportunities. It is no defence for the Leader of the House to say that the present Government restored the rights of private Members and then to announce that they are being taken away. The Motion to be moved tomorrow is debatable, and no doubt we shall take the opportunity of expressing our opinions about it.

ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee.
  [Sir CHARLES MACANDREW in the Chair]

  BUDGET PROPOSALS
  3.35 p.m.
  The Chancellor of the Exchequer (Mr. R. A. Butler): A Budget speech must, of necessity, contain an array of figures upon which the judgment of the Chancellor of the day is based. I have often marvelled, both as a member of the Opposition and now in my present position, at the composure with which hon. Members gradually assimilate the mass of calculations and ultimately realise the fate which is likely to overtake them.
  This year the Budget comes at a particularly tantalising time, both from the political and the economic point of view. It is, therefore, more than ever necessary that the Committee should exercise its soul in patience, and should analyse with me the facts and features of the economic situation in as objective a manner as our various temperaments permit. I am fortified by the fact that the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) has recently referred to me, in the most amicable terms, as having an "unprepossessing personality." This seems to me the one attribute vital to the post which I hold. I shall, at any rate, attempt to be neither too desiccated nor overcalculating.
  During this last year we have learned much about the problems which we must solve if we are to succeed in combining expansion and stability, particularly when competition is becoming fiercer and the terms of trade are less favourable. But the expansion of the economy has brought with it many improvements in living standards for our people.
  Let us look for a moment on the sunny side of things. In each of the past two years the average person has been able to buy for his own use 4 per cent. more goods and services than in the previous year. Since October, 1951, real wage rates, which make full allowance for changes in the cost of living, have risen by 6 per cent. in contrast to the period between mid-1947 and 1951 when they were falling. Over the same period, to
  36
  October, 1954—the latest date for which figures are available—earnings in industry, again in real terms allowing for changes in the cost of living, rose by 9 per cent.
  There have also been very substantial increases in social service payments, some by more than a half again in value, none by less than a quarter. For example, the weekly rate of sickness benefit, which was 26s. in October, 1951, will be 40s.; and the corresponding figures for industrial injuries benefit are 45s. and 67s. 6d. When our new scales are fully effective, the increase in retirement pensions, sickness and unemployment benefit, and family allowances since October, 1951, will be much greater than the increase in the cost of living—in some cases more than twice as much, in some nearly four times as much. The Government have deliberately helped old age pensioners and those who rely on the social services. We have also reduced the burdens on every taxpayer. Rising real wages, rising benefits, falling taxes, all these are clear signs of improving standards.
  In introducing this, my fourth Budget, I have to take account of all these improvements. Can we have them and more, too? How does this Budget fit into a series designed from the beginning to keep up the momentum of our progress? My aim in 1952 was to rescue and fortify sterling. The following year I deliberately gave the incentives needed to encourage effort and the expansion of production. New spirit was infused into industry.
  Last year, some people thought that I might have been a little more expansive and a little more expensive. But I am satisfied that what happened justified my decision and my judgment. The expansion of the economy continued throughout 1954. Employment kept at a record level. Industrial production rose by more than 6 per cent. The increase in exports, which began late in 1953, was well sustained. Home demand for manufactured goods expanded. Stocks and work in progress increased, and the rise in investment continued.
  The Committee is aware of our substantial investment in our basic industries of coal, steel, gas and electricity; of our massive designs for modernising road and rail transport; of the increase in factory

  37
  building; and of other encouraging signs that the demand for investment in private manufacturing industry is rising in response to the incentives of my last two Budgets. In fact, our experience over 1954 has shown us how rich an opportunity we have of increasing the future standard of living of our people. Now we must decide how we can best maintain our progress and, at the same time, keep in balance with the rest of the world.

  BALANCE OF PAYMENTS
  I now come to consider the balance of payments situation against which we must look at all I have just been saying. The past year has shown that, while it is right to run our island economy in a free and expanding mood, problems can spring from the very success which it has been our happy lot to achieve. The increase in our production, which is so important both for our export trade and for the maintenance of employment, necessitates a rising level of imports of raw materials for our factories. We are also eating more and importing more food. And we are importing more, unfortunately—and exporting less—coal. Before the war we always had a substantial surplus of coal to export to our friends and customers overseas. But by 1954 lack of coal cost us many millions in foreign exchange for imports, and still more if we take account of lost opportunities to expand our overseas earnings. More coal, more efficiently used, would be one of the most substantial reinforcements to our balance of payments which our own efforts could contribute.
  The United Kingdom's balance of payments has also been affected by the alteration in the terms of trade. In my last two Budget speeches, I reported that we were profiting by the terms of trade, which had been moving in our favour. During the past year that movement was reversed. The index of import prices began to rise in April, 1954, and for February, 1955, was 7 per cent. higher than in the first quarter of 1954. At the same time, export prices did not increase until February of this year, when a rise of 1 per cent. was recorded.
  The result to date has been that on the provisional estimates for the six months from October, 1954, to March, 1955, our imports c.i.f. at about £1,875 million were some £225 million higher than in the corresponding period 12 months
  38
  earlier; but our exports at £1,460 million rose by only £40 million. The tables in the Balance of Payments White Paper—to which I draw the attention of hon. Members—show in detail the effect of these changes, and I feel sure that hon. Members will recognise that we have attempted to put before them the same documentation as we have tried to do very fully each year, and that with all these facts available it is not necessary for me to go into all of them in my speech.
  For 1954 the United Kingdom's surplus is provisionally estimated at £160 million; but we earned the whole of this surplus in the first half of the year. The Committee should note that, although there was a welcome increase in receipts from offshore contracts, American defence aid was halved as compared with the year before—the total for 1954 being only £50 million. We are grateful for this aid, especially for the programmes designed to help our expanding Air Force; but we are proud—and I think I can speak for hon. Members on all sides of the Committee—that our own efforts, reflected in full employment and rising production, are making us increasingly independent. Those efforts have had and will have a profound effect on our economy, our morale and our influence in world affairs.
  The balance of payments of the whole sterling area in 1954 shows much the same pattern of change. The provisional estimate for the calendar year as a whole shows the sterling area roughly in balance with the rest of the world; but a surplus in the first half year was followed by a deficit in the second. All this was reflected in the level of the gold and dollar reserves. During 1954 these rose by £87 million to a figure of £986 million; but the record reads differently for the two half-years. In the first six months the reserves rose by £179 million, but in the second half year they fell by £92 million. This tiecline must be seen in perspective. In this last period hon. Members must remember that we not only had to meet the normal annual payments on the American and Canadian Loans, but we also repaid in gold or dollars £40 million to the International Monetary Fund, and £39 million in part discharge of our debt to the European Payments Union. That is, in all, £79 million of

  39
  debt repaid. Thus we fortified our capital account by repaying debt.
  Moreover, the sterling area's reserves exist to be drawn upon in case of need. Indeed, in Sydney, Australia, over 15 months ago the Finance Ministers of the Commonwealth accepted the fact that, important as programmes of internal development are as an investment for the future—and we have all been going in for them in the sterling area—they inevitably result in some immediate strain on the sterling area's balance of payments. This impression and outlook we confirmed when we met in Washington in September of last year. The relatively small decline in the reserves must, therefore, be seen in due proportion.
  I can sum it up like this, that apart from the special repayments which I have mentioned, the loss in the whole of the nine months from mid-1954 to the end of the first quarter of 1955 has been no more than £46 million—only about half the average monthly loss in the corresponding nine months of 1951–52. Therefore, at £953 million, the end-March figure, the reserves are more than £350 million above their lowest point, which they reached in April, 1952, just after I introduced my first Budget.

  THE MEASURES OF 24TH FEBRUARY
  Nevertheless, it became clear by February that we needed to take action to moderate the growth of imports and to encourage exports. And from the result, all I can say is, thank goodness that we took action in time. To take such action the Government of the day has, broadly speaking, one of two choices. The first is to limit and control the supply of goods which the consumer at home can buy. But there is an alternative, namely, to check spending at home by more flexible methods. The former course would involve a return to curtailment of trade, both at home and abroad, a return to controls on consumer choice, even perhaps a return to rationing. We do not believe in a policy of this kind.
  It is only by looking forward and outward, by expansion, by liberating the human spirit to give and do of its best, that our island people can survive. This is the road we prefer—an adjustment of fiscal and monetary policy which, without cramping or distorting the natural vigour
  40
  of the economy, maintains the disciplines which are essential to an expanding community. It was in this faith that in February credit control was applied; the Bank Rate was raised, hire-purchase transactions were restricted and finance for such business was limited. At the same time, I authorised the Exchange Equalisation Account to operate with wider discretion in overseas exchange markets. This was certainly a case of putting in the troops to save sterling from being sold at too great a discount, thus losing business for Britain as well as dollars for our reserves.
  I see that it has been suggested that we have departed from our policy of a collective approach with the Commonwealth, Europe and the U.S.A. to the solution of the world's trade and currency problems. This is not so. We still seek to find with our partners the best method of freeing our payments to match the widening of our trade and the opening of markets.
  I am glad to say that already, in the field of the exchanges our action has produced distinct results, which have taken the shape which I had hoped for.
  For example, the Committee may be glad to hear—and I hope hon. Members will smile—that the sterling dollar rate has risen from about 2· 78½ dollars in the third week of February to just over 2· 79⅝ dollars, and the rate for transferable sterling from under 2· 72 dollars to just over 2· 77⅛ dollars. That is a very considerable rise. This shows that the action which we have taken to meet the needs of our balance of payments has strengthened international confidence in our policies and our determination to carry them out. We have thereby fortified sterling.
  It will, naturally, take some time for the effects of the Bank Rate and of the tightening of credit to make themselves fully felt on our balance of payments. Our import bill, as the March import figures show, will inevitably continue for a time to be affected by decisions taken and orders placed before the measures of 24th February—at any rate for a time.
  But the situation has been brought under control, as, for example, is shown by the movement of the reserves since then and the latest rates for sterling. Of course, we cannot be satisfied yet, and we shall remain ever watchful.

  OUT-TURN FOR 1954–55
  Now we must see how the Budget fits into the picture of economic policy as a whole. Hon. Members may relax for a few minutes and enjoy the usual, or I might say unusual, but essential figures summarising the out-turn for 1954–55 and the prospects for 1955–56. The full details will, of course, appear in the Financial Statement.
  I should, incidentally, call the Committee's attention to a small change which I have made in this year's Financial Statement. I am sure that hon. Members will approve of anything done to reduce the volume of Government accounts without stinting the supply of useful information. My predecessor, the late Sir Stafford Cripps, introduced the alternative classification in 1948 as an experiment and with the object of stimulating discussion on the presentation of Government accounts. Since then, other and better methods of economic analysis have been developed in the annual publications of National Income and Expenditure. I have, therefore, decided that it will simplify our accounting and avoid confusion if the alternative classification is eliminated altogether from this year's Financial Statement.

  REVENUE IN 1954–55
  Now, for the figures. Total revenue in 1954–55 amounted to £4,738 million, which is £205 million more than my Budget estimate. Inland Revenue duties were £2,541 million, or £157 million more than the estimate of £2,384 million. About half of this excess came from Income Tax, which yielded £1,893 million against the estimate of £1,800 million. The yield from profits assessed under Schedule D was about £40 million above the estimate, and P.A.Y.E. on wages and salaries brought in £50 million more than was expected—which reflects, among other things, the rapid increase in employment and industrial activity which we have achieved this year.
  The other main contributors to the higher yield were death duties, stamp duties and Excess Profits Levy, which showed increases of £24 million, £20 million and £16 million, respectively, over the estimates. The first two, death duties and stamps, are due mainly to the rise in Stock Exchange prices over the year; the last, Excess Profits Levy, is due to
  42
  the clearing up of difficulties which had delayed assessments. Profits Tax and Surtax were very close to their estimates.
  These high yields of Inland Revenue are matched by the performance of the Customs and Excise duties. These amounted to £1,872 million, £90 million above the estimate. About half of this increase is accounted for by Purchase Tax, which produced £342 million, or £47 million more than I estimated, a striking indication of the rising level of demand, particularly for cars and durable consumer goods of all kinds.
  Tobacco produced a revenue of no less than £650 million, or £17 million above the estimate. Beer, wines and spirits yielded a total of £390 million, £9 million more than the estimate, though the Committee should note that within this satisfactory total beer was down by £4 million. Receipts from the duties under the Import Duties Act, 1932, were above expectations, yielding a total of £62 million, or £6 million over the estimate.
  Non-tax revenue was lower than my estimate—£246 million, compared with £290 million. Smaller receipts from sales of the Ministry of Food's stocks are the main reason for this change.

  EXPENDITURE, 1954–55
  Now for expenditure. While revenue exceeded expectations, expenditure fell short of them. Consolidated Fund Services amounted to £665 million, or £2 million less than the Budget estimate. Supply services cost £3,640 million, or £216 million less than my forecast. This shortfall was shared by both defence and civil supply. The estimate for defence was £1,555 million; actual expenditure was £1,436 million, a shortfall of £119 million, in spite of the fact that appropriations-in-aid from the sterling counterpart of economic aid and other receipts from the United States amounted to £61 million, or £24 million less than my original estimate. The reasons for the shortfall in expenditure on defence have already been described broadly in the Defence White Paper and during our debates on it.
  Now for civil expenditure. This, at £2,204 million, was £97 million less than my estimate, in spite of Supplementary Estimates during the year amounting to £42 million. The savings here are spread over a large number of items, but are

  43
  shared mainly by the Ministries of Food, Materials and Supply. In total, expenditure under all heads amounted to £4,305 million, a saving of £218 million.

  OUT-TURN IN 1954–55
  The Committee will remember that I budgeted last year for a small surplus of £10 million. In fact, we have realised a surplus of £433 million. Of the difference of £423 million, increased revenue accounts for £205 million and lower expenditure for £218 million. Below the line receipts for the year were the same as the estimate of £191 million; but expenditure, at £692 million, was £94 million bigger. Three items account for practically the whole of this excess. The first is a larger volume of advances to local authorities by the Public Works Loan Board which involved the Exchequer in issues of £353 million, or £53 million more than the estimate.
  The second item is a new one, £45 million advanced to the Post Office for capital expenditure. This follows from the Post Office and Telegraph (Money) Act, 1953, under which the Exchequer took powers to make advances to the Post Office which had previously been made by the Savings Banks funds. The third item is an increase in Exchequer advances to the National Coal Board for capital purposes which at £75 million were £16 million more than the estimate.
  As a result, total net payments below the line amounted to £501 million, or £94 million more than the Budget forecast. But owing to the surplus of £433 million above the line, all but £68 million was met from revenue. Most of these payments below the line are made to finance capital expenditure by local authorities. Housing is, of course, the main item. This expenditure and the money spent by the National Coal Board and by the Post Office, are matched by an increase in the useful physical assets of the country.

  NATIONAL DEBT
  If the Committee will bear with me, I will now very briefly summarise the position about the National Debt. The National Debt outstanding at 31st March, 1955, was £26,933 million, an increase of £350 million over the year. Apart from the £68 million borrowed to cover the deficit below the line—which, as I pointed
  44
  out, was nearly covered by revenue—this increase was primarily due to the provision of an additional £300 million for the sterling capital of the Exchange Equalisation Account to enable it to finance the increase in the gold and dollar reserves early in the financial year. The Exchequer also issued £35 million of Government stock for coal compensation. These increases were offset by £36 million of debt redeemed by application of sinking funds and by the cancellation of £13 million of stock tendered for steel shares, together with £4 million for other adjustments.
  The principal changes in the composition of the Debt are as follows: Floating Debt rose by £427 million, largely as a result of the issue to the Exchange Equalisation Account. During the year £292 million of 3 per cent. National Defence Loan, 1954–58, £413 million of 1¾ per cent. Serial Funding Stock, 1954, and £650 million of 2¼ per cent. Exchequer Stock, 1955, were converted into securities maturing in later years. As a result of these operations the amount of the three loans remaining to be paid off on maturity during the year was reduced to £234 million—that is a notable achievement. A new cash issue of £300 million of 2 per cent. Conversion Stock, 1958–59, was made in conjunction with the first of the conversion operations just mentioned. These represent, quite shortly, the principal changes in the composition of the Debt; others will be seen in the Financial Statement.

  NATIONAL SAVINGS
  One success story of the past year of which we can all be proud is the record of the National Savings Movement. After passing through a difficult phase the Movement had begun to show signs early in 1954 of a change for the better. As the Committee will remember, I was able to report in my last Budget speech that in the first quarter of 1954 new savings had exceeded withdrawals by about £40 million, and that this was £30 million more than a year before. But in the same period this year new savings have exceeded withdrawals by £80 million—twice as good as a year ago. And over the financial year as a whole there is a net gain in savings of £120 million, compared with a net loss in 1953–54 of £12 million—an improvement of over £130 million.
  I am sure that the Committee will greet this as a remarkable and heartening achievement in which we can take proper pride in this year's appraisal of our affairs. I am sure that hon. Members will wish me to congratulate the Movement on its success and thank all who work in it for the benefits their activity has brought to their country. Many of us on all sides of the Committee have taken part in the New Savers Campaign in the last six months. I am sure that hon. Members of all parties have been impressed by the hard work and enthusiasm shown by the voluntary savings workers all over the country. I have nothing but praise for their work, and I trust that the momentum of their campaign will carry them forward to still better results in the year before us.

  REVENUE FOR 1955–56
  I turn now to look forward to the year 1955–56 and propose first to look at the Budget accounts, starting above the line.
  On the basis of existing taxation I estimate total revenue to be £4,844 million, an increase of £106 million over the actual yield in 1954–55. I know hon. Members' interest, but I hope they will excuse me if I go faster than dictation speed.
  Inland Revenue duties in 1955–56 are expected to provide £2,610 million, an increase of £69 million on the out-turn for 1954–55. From Income Tax I expect to receive £2,009 million, or £116 million more than last year. This increase will come partly from the higher profits of the past year, and partly from the effect over a full year of recent increases in wages and salaries. The yield of Profits Tax is expected to rise by £7 million to £180 million, but the yield of the Excess Profits Levy will naturally fall, to about £25 million. I look for a further small increase in Surtax, which will bring the yield up to £136 million. Death duties at £185 million, stamp duties at £74 million and miscellaneous Inland Revenue duties at £1 million, are expected to bring in approximately the same amounts as last year.
  Now for Customs and Excise; I estimate the revenue from Customs and Excise duties at £1,930 million in 1955–56, compared with £1,872 million last year. The principal items in this total which I forecast are: tobacco, £660 million; beer
  46
  and other alcoholic drinks, £388½ million, Purchase Tax, £370 million; oil, £320 million; duties under the Import Duties Act, 1932, £70 million; Entertainments Duty, £41 million; and betting, £28½ million.
  After taking motor duties of £80 million into account, I estimate total tax revenue in 1955–56 at £4,620 million, an increase of £128 million over the yield in 1954–55. From non-tax revenue I expect £224 million, or £22 million less than the actual yield in 1954–55.

  EXPENDITURE FOR 1955–56
  Now for expenditure. I estimate total expenditure above the line in 1955–56 at £4,562 million—an increase of £39 million over the Budget estimate for 1954–55.
  Practically the whole of this increase is accounted for by the Consolidated Fund services which, at £699 million, are £32 million more than last year's estimate. This increase arises on the provision for debt interest, which reflects recent developments in the money market, and is, of course, particularly influenced by the increase in the rates for Floating Debt.
  Expenditure on Supply in 1955–56 is estimated at £3,863 million and is only £7 million more than the original estimate of a year ago—only £7 million more. Within this total, net expenditure on defence at £1,494 million is £61 million less than the original estimate of last year, despite a reduction of £42 million in the estimated receipts from American aid. Civil expenditure, at £2,369 million, is £68 million more than last year's original estimates.
  I will comment in more detail on these expenditure figures in a moment. Meanwhile, I must mention that they do not include the additional cost arising from the Special and General Agricultural Price Reviews recently concluded. This cost, as has already been announced, will amount to £14 million in all during 1955–56, and will be provided, along with other changes likely to be necessary in the existing provision for food and agriculture, by further Estimates in due course.
  To round off the main outlines of the picture, I must mention that below the line I expect a further increase in net payments, from £501 million last year to £584

  47
  million in 1955–56. The main factors are smaller receipts from Housing Votes and from the Raw Cotton Commission; a whole year's advances to the Post Office instead of only part of a year; larger advances to the National Coal Board and heavy payments to clear up the large arrears of compensation which accumulated while we recast the scheme of the Town and Country Planning Acts. All these much more than offset the reduction of £33 million in loans to local authorities which we can reasonably look for after their spurt in the past few months. I am estimating these loans at no less than £320 million this year.

  SUPPLY EXPENDITURE
  Now to return to the Supply figure. I spoke at some length last year about the urgent need to control expenditure, and to achieve savings wherever possible, in order that the economy may carry, without undue strain, the heavy burdens which both external circumstances and our domestic policies impose upon it. The major strains are due, of course, to the continuing high level of defence costs and to the inevitable growth of the cost of the social services.
  Moreover, we have had to make provision for unavoidable increases in salaries; and, although additional expenditure is involved, nobody is more glad than I that the cautious hopes which I expressed last year on the subject of equal pay have already been realised, and have been embodied in a firm agreement with the staff associations. This is now in operation. The wishes of Parliament have been carried out by this Government.
  It is true that on both the defence and civil sides last year's expenditure was appreciably less than the figures I had budgeted for, so that this year's estimates represent a corresponding increase over last year's actual outgoings. Nevertheless, the fact that on a total of well over £3,800 million of Supply expenditure this year's Estimates are only £7 million higher than those of a year ago shows, I think, that during the last 12 months we have been making a special and sustained effort to curb non-essential expenditure. That effort has contributed not a little to enabling us to accommodate the inevitable growth in the cost of some of our essential policies.
  Let me say for a moment or two what these are. First, defence. I said last year that we must see to it that we obtain some definite relief from the defence burden. The plans which were then in existence would have meant a considerable increase in expenditure in 1955–56. But as a result of a full review of our strategic needs and a careful scrutiny of the estimates over the whole field, provision for defence has been kept at a level which, broadly speaking, is not very different from the actual expenditure of last year. This is welcome so far as it goes; but the development of new arms, the changes which will follow the end of the occupation in Germany and the continuing reduction of American aid, all emphasise to the Committee the importance of maintaining our efforts to secure, within the new strategic framework, all possible economies in this field.

  CIVIL EXPENDITURE
  Coming to civil expenditure, I will just mention agriculture and food. There are always a good many questions about what the agricultural policy costs us, so I have analysed it as follows: the total cost of the production grants and subsidies paid by the Government is estimated at £323 million. Of this sum production grants, which go direct to farmers to help meet their bills for fertilisers, lime, and so on, account for £54 million. The agricultural price guarantees, together with a small amount for the related trading services, amount to £163 million. To this, £29 million must be added for the net cost of the price guarantee on milk for the ordinary consumer. The last three figures I have given add up to £246 million, and this—for the Committee's interest—is the measure of the cost of supporting our home agriculture. The rest of the £323 million is made up by the bread subsidy of no less than £41 million and the welfare subsidies, which include children's milk, and so forth, at £36 million.
  Last year, in discussing this field of expenditure, I said that our task was to reconcile two needs—the need to secure a greater measure of financial control, and the need to preserve the stability of the farming industry, in the interests of farmers and workers, and of national security. Both needs were very much in my mind during the recent Annual Review.
  The stability of the industry, and, in particular, its ability to finance improvements and adjustments in methods of production, were threatened for two reasons. First, there had been a marked increase in the costs of farming. Secondly, the farmers and farm workers have been struggling manfully under the stress of exceptionally severe and difficult weather over the last 12 months. I think that the Committee would wish me to give a special word of praise to the spirit in which the farm workers apply themselves to their varied tasks all the year round. It was not in vain, therefore, that my right hon. Friend the Minister of Agriculture made his case for increased Exchequer assistance.
  Moreover, I wanted to adjust the price guarantees to help our balance of payments. Thus, we increased the ploughing and fertiliser grants, and the guaranteed prices for barley and oats, so as to reduce our imports of feedingstuffs by encouraging the growth of more of these crops at home. Together with coal, to which I referred earlier, the cost of imported feedingstuffs has been a major factor weighing down our balance of payments. We were also obliged to avoid the danger of a Gadarene herd of expensive pigs rushing us into bankruptcy, so we reduced pig prices.
  The other large bloc of civil expenditure to which I want to refer is concerned with the social services. At the beginning of 1954–55, quite apart from the Exchequer contributions to the National Insurance Funds, these were expected to cost £1,260 million. They have, in fact, cost £1,278 million; and for 1955–56 it is expected that they will cost £1,315 million. Let us examine some of the other details. Comparing the original Budget estimate for last year with my present estimates for 1955–56, the Health Service shows an increase of £32 million; education, including grants to universities, an increase of £25 million; and war pensions, following the recent rise in the rates, an increase of £8 million.
  The Exchequer contributions to the National Insurance Funds are also, as the Committee well knows, a growing and inescapable commitment, and in the coming year, as a result of the action taken by Parliament last December, they will demand £100 million compared with £78 million for last year. The increased cost of the items I have just mentioned
  50
  amounts to no less than £87 million. This is more than the whole of this year's increase in Civil Supply, and is striking evidence of the fact that, in this field of social services a growing burden on the Exchequer is to be reckoned with.
  Much of the increase in expenditure is contractual, while the remainder represents what I am convinced is a worthwhile investment in the future well-being of the country. Investment in human health, wider opportunity and increased technical skill means something more than "investing in success." It means the assurance of a happily working and socially responsible democracy.
  But if we are to carry this burden, which I have specially mentioned to the Committee today, we must not only maintain the increase in the national income, but also be constantly watchful that all our existing services are administered as economically as possible. We must, at the same time, examine with a critical eye all the many additional claims which are constantly being made on the Exchequer for new services, so that the basic social needs of our people come first.

  EXCHEQUER PROSPECTS ON EXISTING BASIS OF TAXATION
  Now I will try to sum up Exchequer prospects on the existing basis of taxation. During the past year we have maintained a vigilant watch on both the totality of Government expenditure and its detailed distribution. Had we not done so I should not now be able to lay before the Committee the prospect of so favourable an Exchequer out-turn for 1955–56 on the existing basis of taxation. Expenditure of £4,562 million; revenue of £4,844 million; a surplus of £282 million.
  This last is a very considerable sum. Before I can say how much of it—if any—should be given back to the hard-pressed taxpayer, I must look ahead and analyse briefly the likely demands to be made upon us abroad and at home in the coming months. Then I can give the Committee my judgment. Economists rejoice in this exercise—the analysis of demand. No one, I am sure, is more capable at it than the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell). But, for once, the language of the economists is intelligible, because it means exactly what it says—what, in

  51
  fact, are the probable calls upon our resources, and what are our chances of meeting these calls, while combining a vigorous expansion of production at home with the maintenance of a healthy balance in our overseas account? I have given the Committee the picture of both.

  EXTERNAL PROSPECTS
  It is not enough for us to earn abroad sufficient merely to meet the cost of our imports. We have also to repay our debts; and we have to resume our traditional position as the main supplier of capital for the development of the Commonwealth and Colonial Empire, which offer such inspiring opportunities. We have taken on heavy liabilities to the Colonies under the Colonial Development and Welfare Acts and our participation in the Colombo Plan. We are also making increasing facilities available to Commonwealth Governments in the London market.
  All these external liabilities add up to a formidable call on our resources. We shall succeed in meeting this call only if we play our full part in establishing two prior conditions. First, we must seek to ensure an expanding volume of world trade in conditions which give our industry every chance to share in it. Secondly, we must be sure that British industry is equipped to take full advantage of this chance by its efficiency and initiative.
  What are the prospects for an expanding and freer world trade? It may be said that we have been trying to recreate the ideal conditions envisaged by Adam Smith and Cobden; and that to attempt this in a world of selfish and protectionist lobbies is no more than ineffectual idealism. But, in fact, our policies have been open-eyed in their realism. They spring from our conviction that without a system of trade rules and open trade behaviour, applied to our competitors no less than to ourselves, our exports would be exposed to every kind of restriction and retaliation, and our island interests would be submerged.. That is why we have got together with our colleagues in the Commonwealth and our friends in Europe, in the Organisation for European Economic Co-operation, and the U.S.A. in a fresh effort to remove barriers to the free flow of trade and payments.
  Last year we were concerned about the possible effects of a recession in America.
  But I am glad to say that the Government and people of the U.S.A. did much to stem the threatened decline in their output; and now there is an upsurge of renewed confidence and re-invigorated production in that country. This general revival of industrial activity in the U.S.A. should benefit not only America herself but also the rest of the free world—the more so if President Eisenhower's fresh initiative in developing more liberal trade policies commands the support of all men of good will.
  In Western Europe trade and production are still rising, and it was largely due to that recovery that we got through last year so well. It has been a great satisfaction to me, as Chairman of the Organisation for European Economic Co-operation, to watch, applaud and encourage this expansion in Europe—an expansion which is reflected in the current plans for further removal of restrictions on trade this year.
  The Committee will wish to study the White Paper which will be published this evening outlining the Government's policy towards the changes in the G.A.T.T.—the General Agreement on Tariffs and Trade—recently negotiated in Geneva; but I can say now that the G.A.T.T. emerges from this review as an instrument better adapted to reinforce our efforts to liberate trade. The instrument is there to our hand; it is for the member countries to use it.
  Looking outwards, some of our export markets may be difficult—in Australia, for example, where our friends have recently announced reductions in their imports in the interests of the sterling area's balance of payments and of their own. But, in general, there are good prospects that world markets will offer us substantial opportunities to increase our exports this year. But we shall not achieve this essential increase unless our goods stand up to competition, particularly from the U.S.A., Germany and Japan.
  If we are to be competitive, above all in price, we must combine a policy of incentive and expansion with continued restraint in the demands which we make on that expansion for our own personal satisfaction. I must warn the Committee that between 1953 and 1954 output per man, over the economy as a whole, rose by about 2½ per cent.; but the increase in wage rates was over 4 per cent.
  Clearly, if this tendency continues, prices will be subject to constant upward pressure, and the effects both at home and in export markets will be adverse.
  We must certainly watch other personal incomes also—for example, dividends. [HON. MEMBERS: "Hear hear."] It would be as well if, before cheering, hon. Members would keep matters in their true perspective. The Committee will have observed from the Economic Survey that personal incomes from rent, interest and dividends rose last year by £60 million or about 4 per cent., while wages and salaries rose by £645 million, or about 7½ per cent.
  Nevertheless, it remains true that, whatever source of income we consider, any tendency for money incomes to increase faster than productivity must lever up prices, or tilt the balance of payments against us, or both. The country should realise that there is a limit to the additions to our costs and prices which we can afford, if we are to remain competitive with our keen rivals in export markets. So much for looking outwards.

  HOME PROSPECTS
  Now I come to the analysis of likely home demand. If we consider the whole range of the economy, will there be room for an increase in exports? It is in the light of this fundamental question that I must assess the claims which home demand seems likely to make on our productive capacity in 1955. I will do it under four heads, very shortly in a few sentences. How much will be taken by Government expenditure; by investment; by stockbuilding and by personal consumption, that is, by people spending on themselves?
  Taking, first, expenditure, I calculate that, in real terms, Government expenditure on goods and services in the coming year is likely to be about the same as in 1954–55. Now, investment. The upward trend in fixed investment is continuing. Housing is not likely to show so great an increase this year; but investment in the nationalised industries should continue to rise at about the same rate as in the past two years, the largest increases being in coal and electricity. I have already referred to the encouraging indications that, in private manufacturing industry, demand for factories, plant and machinery
  54
  is rising as the Committee wanted it to do so ardently last year.
  There is no reason why the recent increase in interest rates should discourage sound long-term investment. Indeed, the need for the type of investment which will raise productivity and expand our productive capacity is as great as ever; and the conditions of orderly economic growth, which our monetary policy is designed to foster, are precisely those conditions in which long-term investment can be undertaken with the surest hope of success. We are looking, then, for a real increase in investment in manufacturing industry this year.
  Summing up investments, therefore, I would say that over the whole field, public and private, I expect investment in 1955 to increase by at least the same amount as last year; but productive industry is likely to take a larger, and housing a smaller, share of this increase.
  Next we come to stocks. The movement of investment in stocks and work in progress is, as always, very difficult to foresee. There was a marked increase during 1954, which as I have already pointed out, was one of the factors in our expansion. Our present rate of stock-building should be at least enough to meet the needs of expanding production. The recent change in the Bank Rate was designed partly to emphasise the need for caution in the accumulation of stocks. Thus I estimate that stockbuilding will not take more of our resources than it did last year.
  Finally, I must consider the prospects for personal spending and consumption. There have been substantial increases in wages. But prices have also risen to some extent, and the restraint which we have reimposed on hire-purchase transactions should also help to prevent an excessive growth of personal consumption. Moreover, the rise in personal savings which has occurred during the last few years should be well maintained. I do not, therefore, expect personal spending and consumption to rise as rapidly this year as last.
  Taking all these considerations into account, I estimate that the increase in home demand should be appreciably less than it has been in the last two years. On the other hand, the scope for increased production is at least as great as it has been in the past, if not greater. In each

  55
  of the last two years output per man in industry has risen very encouragingly. Throughout the same period, new projects of investment have been put in hand, while industry has been showing itself increasingly aware of the need to raise productivity, and increasingly eager to explore the possibilities of new techniques and methods of production.
  In these circumstances, and taking into account the resources of a flexible monetary policy, I judge that the claims which domestic demand is likely to make on our production will leave a margin for an increase in exports. Any incentive I can give should clearly be directed towards increasing production and, therefore, this margin.

  BUDGET JUDGMENT
  What, then, should be my final Budget judgment? This year there are clear limits to the possibilities of large remissions of taxation, especially of indirect taxes which would encourage spending at home and so risk diminishing our export effort. With very full employment, higher social benefits, increased old-age pensions, generous support prices for agriculture, and better pay packets, our people must realise that all the good things of life are not, and cannot be, confined to Budget day. Indeed, some might urge that no tax concessions at all should be made this year. But I judge that this would be a timid policy which might prevent us from achieving the full increase in production of which we are capable.
  In conditions of stricter monetary discipline, industry will have to scrutinise its plans with a shrewder and more selective eye. The plans should be all the better for that. They should, therefore, be all the more likely to show the maximum return to the whole economy from any encouragement I can give them. We do not want to smother the new spirit in British industry which many observers believe is transforming our approach to production problems. I believe that, given a continuing incentive, both management and men will accept the challenge to redouble the efforts which they are now making and so increase production and improve exports.
  Since I became Chancellor of the Exchequer, three-and-a-half years ago, I
  56
  have continually called for investment and expansion, and I have adopted whatever measures were within my power with this in view. There are risks in everything that is worth doing, and, on the analysis which I have made, I feel no hesitation in deciding where my duty lies between policies of expansion or of restriction. If we are to achieve the full increase in production of which the economy is capable, we must continue to provide encouragement to the whole productive effort of the country. We must seek fresh incentives to the forces of growth by the stimulation of output and productivity.

  BUDGET PROPOSALS
  I come now to my Budget proposals. The advice which I have received this year has been almost unlimited. The representatives of industry, commerce and organised labour have sent me their annual suggestions; my hon. Friends and I have received many deputations from various interests affected by taxation, particularly by the duties of Customs and Excise. We have had before us the Second Report of the Royal Commission on Taxation.
  The most obvious conclusion which my hon. Friends and myself draw from all these representations is that the sheer burden of taxation is far too great. Both from the personal angle and from that of industry, we remain one of the most heavily taxed nations in the world. I am convinced that some further lightening of the load is needed to give industry the spur to be more competitive. The question is how to choose a method of relieving the burden which is likely to increase rather than to diminish confidence in our financial policy at home and overseas.
  I do not feel justified this year in making any general reductions in indirect taxation. I have considered carefully the representations that Purchase Tax is bearing heavily on some sections of the textile trade. Their difficulties are due to a variety of causes, not least to the loss of export markets. Today, I am dealing only with the Purchase Tax aspect of these difficulties.
  No adjustment of Purchase Tax can be a panacea for the complex problems of any industry. But the Government have great sympathy with the difficulties which are being experienced at present in

  57
  Lancashire, and also in Northern Ireland. As evidence of our desire to help, I am proposing forthwith to reduce the rate of Purchase Tax by half from 50 per cent. to 25 per cent. on piece goods and sheets, towels and other household textile articles of cotton, linen, rayon and other non-wool materials.
  An important result will be to halve the tax on quality furnishing fabrics and household textiles, and so to provide a better market for these goods, thus encouraging production and aiding exports. The D allowances which may be made from the value before calculating the tax will not be affected. These changes will take effect from midnight, and they will cost me about £2¼ million this year and £3 million in a full year.
  The Committee will perhaps forgive a brief digression at this point about our procedure this year. The General Election will clearly involve a change in the normal practice, since there are only a few days left in the life of the present Parliament.
  The Purchase Tax change which I have just mentioned will be effected by Treasury Order, which will be laid this evening. For the rest, there will clearly be no time for the House to consider a comprehensive Finance Bill on the usual lines—that is, a Bill covering not only the Budget changes but also any adjustments and amendments of the law for which provision can usefully be made by Parliament to maintain the structure and efficiency of the taxation system.
  The Finance Bill that I shall propose to the House for enactment before the dissolution will be confined to such Clauses as are needed to give effect to my Budget proposals and to carry on the finances of the nation. The Budget Resolutions that I am moving today will have the same restricted scope as the Bill. In particular, we do not intend to move the general Resolution for the Amendment of the Law, on which the Budget debate normally takes place. But we shall welcome a comprehensive discussion of the Budget proposals and the financial and economic situation; and, if the Chair will permit, the usual wide debate of this nature will be founded on the last of the Resolutions.
  The scope of the debate on the Finance Bill will, naturally, be for consideration by the Chair in due course; but, given
  58
  the restricted scope of the Resolutions and the Bill, I think it right to tell hon Members that there will be a corresponding restriction in the opportunities for moving Amendments and New Clauses.
  This procedure follows the practice adopted on previous exceptional occasions of this kind. In order to help hon. Members who may find it useful to have as soon as possible the text of the Finance Bill, which would be introduced on the Budget Resolutions I am moving, I intend to lay a draft of its Clauses before the House today as a White Paper, and this will be available to hon. Members at the same time as the text of the Budget Resolutions. It will be for the next Government to consider whether any further fiscal legislation is necessary later in the year.
  I now come to my final Budget decisions. This year I have had to bear three considerations in mind. First, if we are to continue to preserve the balance of the economy, I can afford to give away only a limited amount of my surplus. Secondly, the Budget proposals must constitute, before all else, a fresh incentive to the forces of growth and expansion. Thirdly, anything I suggest this year must, of necessity, be of a classical purity and simplicity.
  I have considered carefully the recommendations in the Second Report of the Royal Commission on Taxation. I am very glad to be able to pay public tribute to the valuable and stimulating document which Lord Radcliffe and his colleagues have produced. In the light of their study of the graduation of the personal Income Tax, I should very much like to give some help to the family man. I should also like so to adjust the tax scales as to liberate as many people as possible from the complications of P.A.Y.E., especially where the amount of tax which it collects is very small.
  Some of these proposals would, on margin, make no vital difference to consumer demand, but would give much needed and much deserved encouragement to individual households. So, if my first task is to lighten the sheer burden on the economy, I can think of one measure only which would enable me to combine with these objectives the type of direct incentive which I am seeking—one measure only which would be regarded as the

  59
  most positive and heartening encouragement to all, employers and workers alike, who can contribute energy and enterprise to the development of the economy. This is a simple orthodox reduction of 6d. in the standard rate of Income Tax, together with appropriate reductions in the lower rates.
  No other proposal would so simply and effectively suit the needs of the moment. It has several substantial advantages. To industry, it offers the prospect of a tax relief—and I attach great importance to this—of rather more than £40 million—a relief which should give fresh encouragement to expansion and a keener edge to our competitive power. To the individual, it offers relief on existing income at all levels of tax liability; and it lightens the burden of tax on any extra income which he or she may earn by greater personal effort. I trust those who benefit to save, rather than to spend, as large a proportion as possible of what they gain. The heavier the present burden of tax, the greater the relief, and, therefore, the greater the opportunity to save.
  The reduction of 6d. in the standard rate will be accompanied by 3d. off each of the reduced rates. In 1953, I took 6d. off all the rates, but then I was withdrawing the increase of 6d. all round which had been imposed by the previous Government in 1951. This time, I return to the tradition that reductions in the general rates of Income Tax should be broadly proportionate to the rates already borne.
  This reduction in the rates of tax will bring relief to the individual taxpayer at all levels of income. But it will do nothing, of itself, to improve the points at which tax starts to be payable. I want, therefore, to supplement the 3d. remission in the reduced rates by an improvement on the lines suggested by the Royal Commission. I have been impressed by the principles which lie behind its proposals for relief for the smaller incomes, and I therefore propose, in addition, to exempt many of such incomes from all liability to tax by increasing the personal allowance—from £120 to £140 for a single person and from £210 to £240 for a married couple—while reducing the band of income taxable at the lowest rate from £100 to £60. By this means, I shall achieve, though in a simpler way, the
  60
  object the Royal Commission had in mind in proposing its scheme for a minimum earned income relief. Indeed, when hon. Members come to examine my scheme, they will find that, in most cases, the new starting points of liability will be appreciably higher than in the less far-reaching of the two schemes put forward by the Royal Commission.
  Moreover, I shall apply the principle of this relief to small investment incomes—a class very deserving of help—by increasing the limit for the small income relief, under which small investment incomes are treated as earned, from £250 to £300.
  Finally, I have made room, within this scheme of relief, for the family man. For him, I propose an increase in the child allowance from £85 to £100. At the same time, I propose to remove the special earnings limit applying to apprenticed children so that the same income limit will apply to all children. I am grateful to hon. Members who proposed these sorts of reform last year.
  Here again, the relief which I am offering is a step along the road marked out by the Royal Commission, and is, moreover, free from the practical and administrative difficulties of its own scheme. I put this proposal forward as further evidence of my firm intention to do all I can to help parents of families, on whom the present load of taxation falls with especially discouraging severity, especially when they have several children to educate.
  For the reasons which I have given throughout my speech I cannot go further, for the time being, either in reducing the total burden of taxation or in adopting the other improvements in graduation which the Royal Commission recommended. But the effect of the changes which I am proposing will be that in terms of earned income, the starting point of liability to tax will be raised for the single person, from £155 to £180; for a married man with no children, from £270 to £309; for a married man with two children, from £489 to £566; and for the married man with four children, from £707 to £823. No fewer than 2,400,000 taxpayers will be removed from liability altogether—to the considerable relief not only of themselves but also of the Board of Inland Revenue—and the load will be lightened on all those who remain liable.
  Full details can be studied by hon. Members in the Financial Statement.
  Alterations will have to be made to code numbers, to take account of the increased personal allowances and also of revised National Insurance contributions. This will be done as rapidly as possible, and for the purpose of P.A.Y.E. deductions the tax changes will become effective on the first pay day after 5th July.
  In total, my proposals are estimated to cost £134 million in 1955–56, and £155 million in a full year. These are substantial and valuable remissions of taxation. Yet they leave me budgeting for a surplus of no less than £148 million. Rather more than half the surplus with which I began should survive at the end. This fact is, in itself, evidence of my conviction that, this year, we must set clear limits to the distribution of tax reliefs, if the continuing growth of the economy is to be nourished from firm and healthy roots.
  Nevertheless, the reliefs which I have proposed are not, I think, wholly inconsiderable. They carry one stage further a process of liberation which, in the course of four Budgets, has reduced the standard rate of Income Tax by 1s., has improved the earned income relief and the age relief, has twice increased the personal allowances and the child allowance, and has provided successive measures of practical incentive to productive investment. By this Budget the Government are leading the Committee and the people of this country further along the road of confident expansion.
  I am satisfied that the world at large will applaud our continuing climb back to the uplands of prosperity, and I rely on our people to respond to the trust which I have placed in their sure and steady steps.
  1. Income Tax (Charge and Rates for 1955–56)
  Motion made,
  That income tax for the year 1955–56 shall be charged at the standard rate of eight shillings and sixpence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1953–54;
  But the amounts of tax deductible or repayable under section one hundred and fifty-seven (pay-as-you-earn) of the Income Tax Act, 1952, shall, until the sixth day of July, nineteen hundred and fifty-five, be the same as if the
  62
  standard rate were nine shillings in the pound (any necessary correction being made on or after that day by adjusting subsequent deductions or repayments under that section, or, if need be, by an assessment);
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913—[Mr. R. A. Butler.]
  The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions).
  Question agreed to.
  The CHAIRMAN then proceeded succes-sively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.
  2. Income Tax (Personal Reliefs)
  Resolved,
  That, as regards personal reliefs for individuals, the Income Tax Act, 1952 (referred to below as "the main Act") and the Acts amending it shall be amended as shown in the Schedule to this Resolution;
  But the amounts of tax deductible or repayable under section one hundred and fifty-seven (pay-as-you-earn) of the main Act shall, until the sixth day of July, nineteen hundred and fifty-five, be the same as if those amendments had not been made (any necessary correction being made on or after that day by adjusting subsequent deductions or repayments under that section, or, if need be, by an assessment).

  SCHEDULE
  A. Small income relief
  In section fifteen of the Finance Act, 1952, £300 shall be substituted in all places for £250 (the income limit for the full relief), £400 for £350 (the income limit for the marginal relief) and nine-twentieths for two-fifths (the fraction governing the marginal relief).
  B.Personal allowances and reduced rate reliefs
  Sections two hundred and ten and two hundred and twenty of the main Act shall be amended so that—

  (a) there shall be an increase of £30 in the sum of £210, and of £20 in each of the sums of £120, referred to in section two hundred and ten (as amended by the Finance Act. 1952), but accompanied by the following reductions in the sums referred to in section two hundred and twenty (as so amended), that is to say, a reduction of £40 in any sum of £100, £250 or 1400, and a reduction of £80 in any sum of £200; and

  (b) the fractions of thirteen-eighteenths, eight-eighteenths and four-eighteenths referred to in section two hundred and twenty (as amended by the Finance Act, 1953), shall be altered so that the reduced rates given by those fractions shall in each case be 3d. less than the present rates of 2s. 6d., 5s. and 7s.

  C. Child relief
  Sections two hundred and twelve and two hundred and thirteen of the main Act shall be amended so that—

  (a) there shall be an increase of £15 in the sum of £85 referred to in subsection (1) of section two hundred and twelve (as amended by the Finance Act, 1952), and in subsections (2) and (3) of section two hundred and thirteen (as so amended); and

  (b) paragraph (b) of subsection (3) of section two hundred and twelve (emoluments payable to or in respect of a child undergoing training) and the provisions supplementary to it shall be omitted.

  D. Old age relief
  In subsection (3) of section two hundred and eleven of the main Act three-fifths shall be substituted for five-eighths (the fraction governing the marginal relief for incomes over six hundred pounds).
  E.Dependent relative relief
  Section two hundred and sixteen of the main Act shall be amended so that there shall be an increase of £20 in the sums of £85 and £145 referred to in subsection (1) of the section (as amended by the Finance Act, 1952. and the Finance Act, 1953).—[Mr. R. A. Butler.]
  3. Income Tax (Surtax Rates for 1954–55)
  Motion made, and Question proposed,
  That income tax for the year 1954–55 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1953–54;
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913—[Mr. R. A. Butler.]
  4.55 p.m.
  Mr. Herbert Morrison: The Committee has listened with its customary interest to the Budget speech of the Chancellor of the Exchequer. He has established something of a record in the brevity of his speech, which is, I suppose, understandable in the circumstances. This is a half-way Budget; it is not a complete Budget. That being so, it is natural that the time taken to explain it should be shorter than usual.
  Mr. Gerald Nabarro: It is a very good Budget.
  Mr. Morrison: The Chancellor has said that he has no intention of reducing indirect taxation. That will cause considerable disappointment in the country, and it is regrettable.
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  It was anticipated that something would be done about the Lancashire textile industry. It was announced by the Government a little while ago that a full statement of their intentions in this matter would be made before Easter, but it had subsequently to be admitted that they could not make a statement—presumably because they did not know what to do about the matter. Now all that is being said is that there will be a 50 per cent. reduction in the Purchase Tax range of textile goods which, I think the Chancellor said, will cost the Government between £2½ million and £3 million. That does not seem to be doing much for the Lancashire textile industry, and the news will be received with considerable disappointment by that great county.
  It is clear that the Chancellor is not too comfortable about the balance of payments situation. It is pretty clear that he thinks the outlook gives cause for anxiety. We are sorry that that should be so, because it is always a matter of grave concern to the economic well-being of the country. I have no doubt that the pessimism of the Government about the balance of payments situation and the balance of trade is one of the factors which has caused them to propose a General Election.
  There are disappointing features about the Budget. Those which the Opposition have cynically cheered—[HON. MEMBERS: "The Government."]—I am sorry, I mean the Government; that was a legitimate confusion with an anticipated future. The features of the statement which have been cheered by Government supporters were cheered in a tone of voice and in a manner which was perfectly cynical in its outlook. They thought that some of the proposals of the Chancellor would help to get them votes. No doubt they considered that it was not so much good the Chancellor of the Exchequer having an eve-of-the-Election Budget unless it was for the purpose of getting votes. Indeed, the Chancellor of the Exchequer himself in some of his observations has exhibited a frankness and a cynicism which has been almost charming.
  One of the things I like about the Chancellor of the Exchequer is that when he is saying something which is cynical or which, if I may say so, borders on the untruthful, he does it with a smile at us which says. "I know what I am doing.

  65
  I know that I am bordering on the untruthful. I know that I am cynical. I know that I do not believe what I am saying. So please forgive me and let us be as cheerful as we can." That is one of the characteristics of the Chancellor of the Exchequer.
  Mr. Cyril Osborne: The right hon. Gentleman knows that that is not true.
  Mr. Morrison: I had the advantage of sitting on this side and looking at the Chancellor of the Exchequer. The hon. Member only had the advantage of looking at the back of his head. I know, and the hon. Member does not know.
  Having made these few observations—and it is right on these occasions that they should be only a few observations—nevertheless I congratulate the Chancellor on the clarity of his statement. It was clear, it was understandable, and we know exactly what he is getting at. Of course, it will be necessary that the Parliamentary Opposition shall do its duty and that there shall be proper, reasonable and adequate discussion of the proposals the Chancellor has put forward.
  5.2 p.m.
  Mr. Eric Johnson: It is not easy to take in the whole content of a Budget speech, even if it is delivered with the clarity and lucidity which we associate with speeches made by my right hon. Friend the Chancellor of the Exchequer. I am quite sure, however, that all fairminded people will agree that it is a good Budget, an honest Budget and one calculated to meet the needs of the situation as set out in the Economic Survey.
  I am especially pleased with the action my right hon. Friend has taken for the relief of Income Tax on smaller incomes. Like all Budgets, as the right hon. Member for Lewisham, South (Mr. H. Morrison) indicated, the present Budget contains certain disappointments. There were one or two things that we had hoped might have been included, but I recognise the special circumstances which faced my right hon. Friend and I venture to hope that perhaps some of these matters will be put right by administrative action when Her Majesty's present Government in due course resume their duties fortified by the result of the General Election.
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  To turn from my right hon. Friend's Budget proposals to the Economic Survey, I do not think anyone would quarrel with the sentence with which the section on "Developments at Home" begins. It states:
  "At home 1954 was a prosperous year."
  As my right hon. Friend indicated at the beginning of his speech, that is undoubtedly true. It seems to be a very modest way of describing a situation when we enjoyed a higher standard of living and when we earned more, spent more and ate more, and when, on top of all that, we saved more than ever before.
  But, as hon. Members are well aware, prosperity at home often seems to lead to difficulties in connection with our balance of payments, and we cannot help feeling a little anxious about the deterioration in the position in the last half of 1954 and in the first quarter of this year. As my right hon. Friend indicated, however, it is probably too early yet to judge the effects of the measures he took at the end of February to meet the situation. While it is right to acknowledge the danger, I do not think there is any need to be despondent.
  I do not want to weary hon. Members with a lot of figures, with which, no doubt, they are already familiar, by reading the Economic Survey and the other documents which have been made available, but there is one aspect to which I should like to draw attention. Although exports increased by £144 million in 1954 over 1953, more than five-sixths of this amount went to the sterling area; and exports to the dollar area fell by £24 million, whereas imports increased by £46 million. It is, however, extremely satisfactory to learn that there has been a marked improvement during the first quarter of this year, especially in the case of the United States, to which our exports have risen considerably, and also in Canada, where the position recovered in March to a marked degree but is still slightly below the position in the corresponding first quarter of last year.
  There can be no argument that something has to be done to reduce the trade gap. The question which must be answered and which we must all face is whether we can export more or must import less. That seems to be the only choice. To say that we must reduce our imports is surely to advocate a counsel

  67
  of despair. That could only be done in two ways. One is by restricting the volume of imports by such methods as controls, tariffs, quotas and so on. As my right hon. Friend has already indicated, that would be contrary to our policy—which, I am sure, is the policy accepted on both sides of the Committee—of doing all that we can to stimulate the flow of trade all over the world. Furthermore, it would defeat its own object by prompting other nations to take retaliatory measures against us.
  The second method of reducing imports would be to cut down the amount of money available for spending at home. As we have seen from my right hon. Friend's proposals, he has very rightly rejected both those courses; but a situation of that nature might well have arisen if we could not do anything to increase our exports. I believe that we can do something to increase our exports, and it is in that connection that I venture to address to the Committee a few remarks about the policy of increased trade with Canada in general, and with the Province of British Columbia in particular.
  I wish to speak about trade with the Province of British Columbia because I had the opportunity of revisiting it—I lived there for seven years—last summer. I went there to examine the prospects for one type of merchandise, but when I was there I had the opportunity of seeing a little of the quite extraordinary development which is taking place and of learning something about the opportunities of trade with that province.
  It so happens that there is at present in this country a trade buyers' mission from the Vancouver Board of Trade, which corresponds to a chamber of commerce; it is not a Government Department. The mission is accompanied by the Minister of Trade and Finance for the Province of British Columbia. But before I say anything about British Columbia, I should like to say a brief word about trade with Canada in general. It may well be that because of the total absence of London newspapers the first Budget speech made by the new Canadian Finance Minister, Mr. Walter Harris, did not attract the attention it deserved. It was referred to in a leading article in the "Manchester Guardian," and it was referred to in another article in the
  68
  "Economist" last week. Perhaps the most significant part of that speech—at any rate from our point of view—was that the Canadian Government had rejected the request of the Canadian woollen manufacturers for protection against imports of British cloth.
  That seems a very bold step to take, the more so in view of the fact that there has been something of a trade recession in Canada, where it is said that unemployment has been rising. According to the report in the "Manchester Guardian," the Minister said:
  "As the world's fifth trading nation, it is clearly in our interest to encourage overseas countries to earn dollars in order that they may be able to buy our exports."
  There may be a message in Mr. Harris's speech for one or two other countries besides Canada.
  Be that as it may, the speech shows that Canada is willing to buy goods from other countries, and there is no doubt that British Columbia has a very real desire to buy as many British goods as it can. That is shown by the visit of the trade mission to which I have referred, which consists of 50 or more leading businessmen from Vancouver. They have come to buy and not to sell. It is an epoch-making visit, because they came over in the first passenger flight on the new trans-Polar route from Vancouver in the almost incredible flying time of 16½ hours.
  Advice given by politicians to businessmen is rarely welcome. But I know what I am talking about when I say that the only way to do business with British Columbia is for heads of businesses and other concerns to go out and to see the market for themselves. They cannot do that by staying here, and it is not much good thinking about going out to get orders unless they can talk about reasonably quick delivery. In times like the present, when the income and expenditure of consumers have both risen by some £2,000 million since 1951, it is only natural for businessmen to want to sell all they can in the more easy home market and in the sterling area before they turn their attention to a highly competitive market like British Columbia where they will have to face American competition right on its own doorstep. I have no doubt that it will pay them in the long run to get into that great and

  69
  rapidly growing market, and there is no doubt that it will be very much in the national interest.
  The potentialities of the British Columbia market are not realised here. I will not give a lot of figures to the Committee but a few facts to illustrate the opportunities to be found in British Columbia. One can only describe these opportunities as phenomenal. British Columbia was well described in an issue of the "Financial Post"—which is not a Vancouver but a Toronto newspaper—last March as "a new El Dorado for Western Europe. That is an accurate description when it is realised that British Columbia leads Canada today in per capita wealth, purchasing power, and production. The population has increased by 55 per cent.—a very remarkable figure—since the war.
  Even more astonishing is the fact that the industrial output of the province has grown from 250 million dollars before the war to no less than 5,500 million dollars in 1954. It would be quite possible to give a very long list of some remarkable enterprises in varying stages of completion but I do not want to do that. I want to mention only one or two, of which the most striking is the development of hydro-electric power. British Columbia is estimated to have a total potential of 11,200,000 horse-power, of which only 2,100,000 has yet been developed.
  The largest single unit, development of which was started last year, was the first stage of the 420,000 horse-power plant for the Aluminum Co. of Canada. It is located in and around the Kemano Mountain, and will provide power for the smelter at Kitimat. The story of the Kitimat project is now well known. It involved reversing the flow of a large river, and driving a 10-mile long tunnel through the mountain to supply a great power-house built right inside the mountain itself. Even this scheme is dwarfed by the 700-million-dollar Frobisher project, which is now being started in the northern wilds of the Province. These things are really extraordinary.
  The Frobisher project will reverse the natural northward flow of a 60,000-square-mile watershed, which is larger than England and Wales, and will direct the water through turbine-filled caves to
  70
  the Pacific Ocean, where it will form an artificial deep-water port. Another result will be the formation of a water storage system which, next to the Great Lakes, will be larger than anything in either North or South America. It will-produce 4,300,000 horse-power, which is twice the final output of the St. Lawrence Seaway power project. This immense amount of electricity will be used for smelters in processing cobalt, nickel, iron, manganese, and so on, brought from mines as far apart as Alaska, South-West Africa, New Caledonia, the Philippines, and other places.
  The final example I want to give of large-scale development in British Columbia is especially interesting, because it is being done by British capital. I refer to Anacis Island which lies in the Fraser River near New Westminster and which is being developed into an industrial estate. It is estimated that 225 million dollars will be expended eventually to put up 250 factories which will employ about 40,000 people.
  In addition to these more spectacular enterprises, there are older firms who have been established a long time and who are very anxious to buy British goods. The British Columbia Electric Co., for example, has planned to spend about 40 million dollars this year to buy a lot of things over here that they need. The Committee will be aware that the fishing industry is a very large buyer of supplies in Britain; it wants to get still more supplies from us. A large number of smaller enterprises such as grow up in any new country have also come into existence and give great opportunities for the sale of British goods.
  British Columbia wants not only capital but people. That is not surprising when it is realised that the province is about the size of Great Britain, plus the whole of Ireland, France and Portugal put together, but it has only 1,300,000 people, of whom only 60,000 live in the northern part. British Columbia wants people of British stock more than anything else. The country is not called "British Columbia" for nothing. I am a great believer in Empire settlement but I am not going to talk about it except to say that some redistribution of our population within the Commonwealth might be a good thing. I am not suggesting that

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  the right way to solve our balance of payments difficulty is to transfer a large part of our population to British Columbia. But, quite apart from other considerations, it is worth bearing in mind that people who go out from these islands and settle in any part of Canada or the Commonwealth are not only potential customers for our goods but potential salesmen, because they demand the sort of goods to which they have been accustomed when in this country.
  I said earlier in my speech that if we did not export more we would eventually have to import less, and I have ventured to indicate some of the ways in which we might export more. I have said something about the vast potentialities of the market in the Province of British Columbia. But the development of the resources of the Commonwealth, and the free movement of its people, has an importance transcending such other important matters of our standard of living, because it is on a strong and prosperous Commonwealth that the peace of the world so largely depends.
  5.20 p.m.
  Mr. Norman Smith: Before returning to the Chancellor's Budget statement, I wish to congratulate the hon. Member for Blackley (Mr. E. Johnson) on putting over a prepared speech which will probably prove to have been the last he will make in this Chamber, his majority on the last occasion having been exiguous. There are other hon. Gentlemen opposite, such as the hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield), on whose chances of being returned I should not like to wager sixpence. Even the majority of the hon. and gallant Member for Ilford, South (Squadron Leader Cooper), whom we all like, is very small.
  Squadron Leader A. E. Cooper: It is 5,600. I do not know how much more the hon. Member wants.
  Mr. Norman Smith: Hon. Members opposite had better make the most of the time remaining to them.
  The Budget statement is quite obviously an electioneering one. We were treated to a long homily about the necessity for keeping down personal spending and personal consumption at home in the interests of exports and investment, but at the
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  end of the homily we got a Budget concession which puts additional spending power into the hands of very nearly everybody.
  I have calculated that by his previous Budgets the Chancellor gave a millionaire with three children £49 a week in hard cash to spend. This afternoon he has given to that same millionaire an additional £48 a week hard cash to spend, making £97 a week extra as a result of the right hon. Gentleman's Budgets. There is no guarantee whatever that the millionaire will invest either the £48 a week he was handed this afternoon or the £49 a week he had previously received since the present Government took office. The sum of £97 a week is quite a lot of money. In all my life I have never spent that amount in a week.
  What is the use of talking about encouraging exports and reducing personal expenditure at home when money is being given on that scale to the people who need it least? I have said that it is an electioneering Budget. It is a class Budget. It is not only that millionaire who gets a heavy hand-out. The Chancellor was at pains to point out that he was giving the biggest hand-outs to those who bore the greatest burden of taxation, and so he arrived at the expediency of reducing from 6d. to 3d. the reduction on the lower rates of tax. The right hon. Gentleman seemed to pride himself on that.
  From our point of view it is a class Budget. It is also a moneylenders' Budget, because so far as I can see its whole structure—though happily the Chancellor gave away an appalling secret in an unguarded moment—appears to have been designed so as to conceal the effects, which the right hon. Gentleman admitted would be delayed, of the February increase in the Bank Rate. That increase, of course, was calculated to benefit moneylenders. What else was it for? I would suggest that the Chancellor's statement, if not the Budget itself, was rather fraudulent. I withdraw that adjective; it is not very nice—though I have no doubt that stronger adjectives will soon be heard in plenty from the hustings.
  The Chancellor's speech was a little disingenuous. It was not so frank as it might have been. I am not sure that it was not intended to make the House believe something had happened which

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  had not in fact happened. The right hon. Gentleman said that in February the Bank Rate had been raised, and invoked the Almighty in thanks for that. I do not like that because, as something else in his speech showed, it was not only the increase in the Bank Rate that sent up the £ about five cents in the exchange markets of the world.
  The Chancellor wants us to believe that that was due to his having raised the Bank Rate in time, but he then made a little slip of the tongue such as all Chancellors seem prone to make. I heard the late Lord Snowden make slips; the right hon. Gentleman the Member for Woodford (Sir W. Churchill) made slips and so, this afternoon, did the present Chancellor of the Exchequer. He happened to remark that the increase of £430 million in the Floating Debt was due to a payment to the Exchange Equalisation Fund. There is a pretty kettle of fish; £430 million was borrowed in Treasury Bills from the banks—which, incidentally, created the money out of nothing—to go to the Exchange Equalisation Fund. They then bolster up sterling in the exchange markets of the world, and that accounts for the nickel which has been added to the price of sterling.
  That is gaining a temporary present advantage at the expense of the future. It is no light matter to add £430 million to the Floating Debt. I could run my house beautifully were I allowed to print bank notes or coin money out of nothing for purposes of fraud without fear of punishment. Page 8 of the Financial Statement shows that Treasury Bills have increased by £430 million, and the Chancellor himself let slip this afternoon, in parenthesis—thinking, I suppose, that a lot of hon. and right hon. Gentlemen were not listening—that he had used it for that purpose.
  The Budget speech was very disingenuous, and when the Chancellor tried to maintain that the Bank Rate had had the effect of fortifying sterling he was being less than frank with the Committee and with the country. The country should know that not only does this Tory Budget—which probably, almost certainly, will be the last Tory Budget for many years—hand out to the millionaire I instanced £48 a week additional to the £49 a week he has already had, but increases the
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  National Debt by £430 million of bank-created currency for the purpose of dealing in exchanges; of fortifying sterling by making purchases and pushing up the price. The country should know that the future is being penalised by adding to the National Debt £430 million which will eventually have to be repaid.
  The real fact about the Bank Rate increase is that it was intended for purposes quite different from that of fortifying sterling. The increase was simply a class instrument used by a Conservative Government to benefit a class—the professional dealers in money, the money market in the City of London, and the commercial banks whose business it is, in the case of the latter to create and lend money, and in the case of the former to lend money at a rather higher rate of interest than that at which it is borrowed.
  That is the real class for which the Conservative Party exists. The Conservative Party is still the political reflection of the financial interests of the City of London, and we have never seen that shown better than today in this Bank Rate by which, as the Chancellor admits—and again this is shown in the estimates for 1955–56 in the Financial Statement—debt interest will cost the country £30 million a year more in 1955–56. As he had the candour to admit, that is because of the increased rate of interest.
  Moneylenders benefit from these things. They benefit from this increase in the Bank Rate, and it is quite easy to demonstrate that the people who do not benefit and who are penalised are ratepayers and suchlike. After all, local authorities run a large part of their business with borrowed money. In my constituency one-eighth of the rates, or 2s. 6d. in the £, is accounted for by debt interest. The rates must increase as the years go on, because we have this penal Bank Rate which benefits a class who receive higher interest at the expense of everybody else, including ratepayers, people who mortgage their houses and so on.
  But that effect is deferred. It will not become very painfully obvious until long after the General Election—that General Election which has been hurried in this way because Conservative freedom, so far from working, is able to function only so long as the terms of trade are in favour of this country, as the Chancellor was at great pains to make abundantly clear. We

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  have had this afternoon the first admission by an important Government spokesman that all that has happened by way of the balance of payments in the last few years since this Government took office has been a matter of pure and simple luck for them, a lovely piece of cake for the Tories which the Labour Government did not have, namely, the fact that the terms of trade were in their favour. Now that the balance has gone the other way, Conservative freedom begins to topple and it becomes necessary to do the sort of thing which the Government did when they raised the Bank Rate.
  I want to criticise another thing that the Chancellor said. He seemed to take pleasure in telling the Committee that there was more confidence in the United States of America, that trade was on the upgrade there. I am glad it is, for the sake of the Americans. Goodness knows, we on this side of the Committee do not wish them any harm. But why does the Chancellor want the Committee to believe that this is something about which we may rejoice? If American trade goes up and business becomes more buoyant over there, then the American demand for raw materials also goes up and the terms of trade turn against us. The simple fact is that the Government look forward to the day when there will be as few as possible impediments to trade—they do not say so, but I suppose they mean when there will be no impediments to the movement of labour and capital, as well as goods, across frontiers. They want to go back to convertibility.
  They must know that so long as America, relative to the rest of the world, is dimensionally in the position of an elephant in a chicken-run, the rest of the world will be penalised by whatever happens in America. If America is buoyant then the terms of trade turn against us. If America has a slump, we lose markets. The chicken loses both ways, whatever happens to the elephant. It is time we made it our set purpose to create a sterling area insulated as far as humanly possible from the rest of the world.
  I want to refer to one or two other things that the Chancellor said. I think I ought to refer to the tribute that he paid to the workers in the National Savings Movement. He said that National Savings had shown a net gain of £120 million
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  this year. It is perfectly true that they have. We can all endorse his praise for the workers in the National Savings Movement. They are devoted, unselfish people who do an unpleasant job. But really it is time we ceased to pretend that the National Savings Movement was something worthy of support by well-informed people whose intentions are objectively and genuinely honourable.
  I have always refused to take any part in the National Savings campaign in my constituency. I have always made clear to my constituents precisely why. I will not go to poor people, less well off than I am, and ask them to do something that I would not dream of doing, namely, investing in gilt-edged securities. No hon. Members opposite would invest in gilt-edged securities. They invest in industrials. It is not fair to ask poor people to put aside £100 which they have laboriously saved, and buy Government bonds when one knows for certain that within a few years, when they go to draw their money out, it will be worth less in purchasing power than when they put it in.
  I should feel dishonest if I went on to a National Savings campaign platform. I do not think that the people in the movement are dishonest. On the contrary, I endorse the Chancellor's praise of them. I think they are self-sacrificing, devoted, patriotic people; but they are not acquainted with the facts. They do not understand that capitalism must inevitably entail in the long run a steady erosion of the value of the currency. It happens in all countries in the world. It has been happening since the reign of Queen Elizabeth, and it will go on happening unless and until we socialise credit. However, I do not propose to pursue that topic this afternoon.
  I repeat, this is an electioneering Budget. But I do not believe the people's votes will be influenced by it. I would not like to be in the position of a Conservative candidate addressing a works gate meeting. Addressing a chamber of commerce meeting is very different. I am going to address works gate meetings. I shall have a large programme of them. I shall not be afraid to deal with these Budget concessions. An easy Budget-as many people will regard this—at the same time as a tough Bank Rate does not make sense. The Chancellor is not

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  dealing openly with the House. This Budget stands condemned for what it is—a device sacrificing the future to get a pre-election advantage, a class device to enrich moneylenders, and an electioneering instrument which I believe will fail in its purpose.
  5.37 p.m.
  Lieut-Colonel Wentworth Schofield: As my hon. Friend the Member for Blackley (Mr. E. Johnson) has said, and in spite of what has been said by the hon. Member for Nottingham, South (Mr. Norman Smith), there is not the slightest doubt that this Budget will be received with satisfaction by the great majority of the people in this country.
  I want to say a few words about Purchase Tax and the way in which it contributes at present to the difficulties of the textile industry. In view of the fact that my right hon. Friend the Chancellor was present at the meeting held by the former Prime Minister and attended by representatives from the cotton textile industry of Lancashire, Lancashire has been expecting confidently that the Chancellor would have something to say this afternoon which would help the cotton industry in its struggle to keep its spindles and looms running.
  The optimists in Lancashire were quite confident that Purchase Tax would be completely removed from cotton textiles. Even the pessimists thought that it would be reduced by at least one-half. I am afraid that Lancashire will be rather disappointed that the pessimists were right.
  Mr. Percy Collick: They have been let down by the Tory Government.
  Lieut-Colonel Schofield: They may be a little disappointed that the pessimists were right, because the textile industry is one which is least suited to a tax of this kind.
  We have been told this afternoon by the Chancellor that if the people of this country are to enjoy a rising standard of living we must export more. But I respectfully suggest to the Chancellor that one of the things which has militated against the export trade in cotton textiles is the incidence of Purchase Tax, and especially so because of the form in which
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  it is levied on textiles. I refer to the D scheme.
  With the flooding of our traditional markets in the world by cheap Japanese and cheap State-aided Indian cotton goods, Britain's best chance of increasing her exports lies in the production of cotton textiles of the very highest quality and in being in a position to offer a wide range of those textiles to foreign buyers from which they can make their choice, together with an assurance that Britain will be able to deliver from stock to satisfy the buyers' demands.
  But we cannot deliver from stock unless the industry is fully engaged in making those higher quality textiles. Overseas the industry has to face very keen competition, and it can meet that competition only by the production of the finest types of cotton goods made from superior types with fast colours and other special finishes. Those are the sort of goods which in the past have been a feature of Lancashire's textile production and one of the features on which Lancashire's reputation as cotton textile producers has been built.
  Before the days of Purchase Tax, Lancashire was able to adjust its production for export according to the dictates of fashion and design throughout the world in the full confidence that if those goods could not be sold abroad, they could at least be sold in the home market. Nowadays, because of the Purchase Tax which these high quality goods attract, no manufacturer, converter or dealer can be certain that he could sell his goods in the home market.
  The position is further aggravated by the fact that it is almost impossible to develop export lines of high quality cotton unless there is a healthy home market in which to test the taste and the fancy of the public. The trouble is that it is quite impossible today to test the taste and fancy of the public for these high quality goods because of the Purchase Tax which makes the finer quality goods so dear compared with those qualities which fall below the D line. Because of the operation of the D scheme, which imposes a graduated tax on the better quality textiles, home demand has been diverted to tax-free quality goods, and in that way the production of the higher quality goods in a volume sufficient for a successful export drive has been prevented.

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  Another point which should be considered is that Lancashire possesses both the skilled craftsmen and the machinery to make these high quality textile goods, but if these skilled craftsmen are underemployed, they will drift away from the cotton industry, and if the specialised machinery is allowed to stand idle it will be impossible to train new entrants to replace them. If that condition is allowed to continue, Lancashire's ability to compete in the export markets will be even more seriously impaired.
  Before the Easter Recess, my right hon. Friend the President of the Board of Trade said that a great deal of Lancashire's troubles are due to the falling off of her exports. I am glad that this afternoon the Chancellor has recognised that fact and, in his forthright manner of dealing with a situation as it arises, has done something in a practical way to help the cotton industry to regain its exports. I only wish personally that he had gone the whole hog and taken the tax off altogether, but for what he has done I personally am thankful, and I am quite sure that Lancashire as a whole will be grateful for the assistance which he has given especially to textiles as against any other leading industry of the country.
  5.45 p.m.
  Mr. Edward Shackleton: The hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield) is, of course, greatly respected on this side of the Committee, and I think our only major difference of opinion with him at the moment over the future of the textile industry is that he still believes that this Government can do something for Lancashire, whereas we on this side of the Committee know that they have no intention of doing anything at all.
  Indeed, it is obvious that the high-flown phrases with which the meeting between the late Prime Minister and the textile leaders of Lancashire was announced were largely a build-up, a smoke-screen, to obscure the fact that very little would be done, or indeed could be done, by a Conservative Government. I appreciate the difficulties which a Conservative Government have in these matters. They are, of course, debarred from any planning approach to the problems of industry in this country.
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  It is a very great disappointment that all we heard from the Chancellor—and I think it is a pity that he made such a short speech—was a general exhortation to Lancashire and an announcement of a reduction in the Purchase Tax rate. It is also rather interesting that he proposes to make this reduction by regulation and not, as in the ordinary way, through the Budget machinery. So essential is it for this Government to have an Election at the earliest possible date, before world economic events catch up with them, that at the very time of the year when we should properly be discussing alterations in Purchase Tax, they propose to use this device which confines the argument simply to a single debate on the regulation. At other times of the year the position is quite different. Why, in that case, did they not do it before? Why did they wait until today, when they could have done it before the Easter Recess?
  Squadron Leader Cooper: The hon. Member is not correct in asserting that this is the first time that this procedure has been adopted. A few weeks ago the House approved an affirmative Resolution dealing with rates of Purchase Tax in precisely the same way as will be done in this case.
  Mr. Shackleton: The hon. and gallant Gentleman always seems to miss the point. I said it was the first time that this procedure had been adopted about this time of the year when normally we deal with these matters through the Budget machinery. Of course it is done constantly at other times of the year, and in this case it could have been done a month ago, but the Government have waited until Budget day in order to do it. Then, instead of opening the whole field of Purchase Tax to debate, as well as the question of indirect taxation, they have preferred to deal with the matter by Treasury regulations.
  The hon. and gallant Member for Rochdale made the points which have repeatedly been made by him and others about the effect of the D Scheme, and we are wholly in agreement with him about the dangerous effect which it has had on quality production in Lancashire. But when the Chancellor dismissed Lancashire's troubles as being due to a decline in the export markets—although he said there were many other causes—

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  I wondered how closely he was listening when the delegation came from Lancashire.
  It is disappointing that the Chancellor said nothing to show that he personally is aware of some of these problems which confront Lancashire—the problems of Indian imports, for example. He said nothing about the effects of the present uncertainty in American prices of raw cotton or about the stock position in Lancashire, and I urge both the Ministers to take very seriously the position of the holding of raw cotton stocks in Lancashire. There was a brief debate on the subject the other day.
  All this is taking place at a time when the Bank Rate has been raised and that, on the whole, will be to the disadvantage of Lancashire in re-equipment or in carrying forward her difficulties. On the very day on which the Chancellor in effect refuses to do more for Lancashire, he has announced these tax concessions in the Budget—not in words which could be understood by the whole country, because he is very careful not to draw attention to the real effects of the tax concessions which he has made.
  The right hon. Gentleman said that he wanted an expansionist Budget. Whether an expansionist Budget is one which gives an increase of over £200 a year to someone who is possibly not working at all and who has an income of £10,000 a year, or which gives a substantial increase to the hypothetical person with £50,000 a year, I do not know.
  If hon. Members do not think there are people with £50,000 a year, they should look at the recent Report of the Commissioners of Inland Revenue, in which they will find that there are some people with £50,000 a year from unearned income. For them the gain is about £1,200 a year. The Lancashire textile worker on short time, or possibly without a job, gets nothing from this Budget. If hon. Members opposite look at the Financial Statement, they will find that a man with a wife and three children, earning £9 a week, will not benefit from the Budget. It has been called an expansionist Budget; yet the Chancellor thought it a good thing to ease the position of those with small investment incomes. That may be, but it is equally desirable to ease the lot of those who have to bring
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  np their families on low wages. We have seen no concession of any kind to meet their problem.
  The Chancellor has tried to do two things. Obviously he has been given advice by the Bank of England, the Treasury and his advisers generally that no tax concessions of any kind should be made this year at a time when we are faced by—I will not use the word "crisis"—an impending increase in the balance of payments problem. At the same time, knowing that trouble will come to a head in the course of this summer, the autumn, or is coming to a head already, it was absolutely essential for him to produce an electioneering Budget. But if the Chancellor and hon. Members opposite believe this is going to be an electioneering Budget they will be mistaken. It does what Conservative Governments have done time and again—it eases the lot of those who have a considerable amount of wealth and does nothing for those living at the lowest level. It is another example of the return to the regressive type of taxation which was so marked a feature before the war.
  I regard it as a sad and, in some ways, a tragic Budget at a time when the country is faced with very grave situations. At a time when we need to increase productivity the incentives are being given to a very few and will not help the country but will only, in the eyes of the Chancellor, lead to a possible Conservative victory. I hope that when they return to this side—as they will in the next few weeks—the Chancellor and other hon. Members opposite will realise that the penalty of folly is sometimes failure and that the penalty of a dishonest Budget is going out of office.
  5.54 p.m.
  Squadron Leader A. E. Cooper: We have had two speeches from hon. Members opposite, both of which have been contradictory. Both claimed that this was an electioneering Budget and then went out of their way to prove that it was the direct reverse and that, in consequence, we shall lose the General Election on 26th May. Hon. Members opposite must really make up their minds about the Budget. Either it is a class Budget and an electioneering Budget, or a Budget which will help the country; it cannot be both. My view of the Budget

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  is that it is a very good and honest Budget. It certainly disappoints hon. Members on both sides of the Committee by some of its omissions, but I suppose that there never has been a Budget which has satisfied everybody.
  I do not profess to be able to deal expertly with the Lancashire textile industry, but I would mention to the hon. Member for Preston, South (Mr. Shackle-ton) that in his speech today the Chancellor was very careful to point out that he was dealing purely and simply with the fiscal side of the problem. It has already been stated that Government's policy on the future of the industry will be announced very shortly. It is, of course, good electioneering on the part of hon. Members opposite to cite the case of the man with a high income who derives considerable benefit from tax concessions. That is true, but, at the same time, it is surely fair to point out, as the Chancellor did this afternoon, that the proposals will relieve no fewer than an additional 2,400,000 people from paying any Income Tax whatever.
  Mr. Shackleton: How much money?
  Squadron Leader Cooper: That is a very considerable number of people who will be relieved in that way. Why has that been done in that form? Surely the reason is very simple. We must get more productivity in every branch of industry in order that we can get costs down and make available a greater volume of goods for the export market.
  Mr. Shackleton: Would the hon. and gallant Member not agree that in that case it would have been better to have given an increase in earned income relief?
  Squadron Leader Cooper: I was going to follow the argument and I think I shall answer that point in the next few sentences. At present, we find it difficult in industry to get men to work overtime—
  Mr. Ellis Smith: It is just the opposite.
  Squadron Leader Cooper: That may be so in certain cases, but in other parts of the country it is difficult to get people to work longer hours of overtime when they know that they have to pay a considerable amount in tax. The result of
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  the concessions made today will encourage people to work longer hours, knowing that they will not have to give away so much—indeed, any—of that increment by way of tax.
  Mr. Smith: How much longer have they to work? Already, on an average, in manufacturing industry men are working one day a week longer than is worked in the United States.
  Squadron Leader Cooper: Here again we come up against a contradiction. The hon. Member for Stoke on Trent, South (Mr. Ellis Smith), whose knowledge of industrial matters I respect, tells us that men are already working more overtime in industry, yet other hon. Members tell us that there is an economic crisis in the country because men are not working overtime. Hon. Members cannot have it both ways.
  Mr. William Keenan: Who said that?
  Squadron Leader Cooper: The hon. Member for Preston, South pointed out that one of the reasons there was to be a General Election was that he thought there would be a crisis by the end of the year. If he looks in HANSARD tomorrow, he will find that those were almost exactly his words.
  Mr. J. A. Sparks: It is probably true, anyway.
  Squadron Leader Cooper: The hon. Member admits what he said earlier.
  Mr. Shackleton: Not I.
  Squadron Leader Cooper: Apart from tax concession which the private individual gets by way of reductions, industry gets a very large share of the concession. That was the prime purpose of the concession, to give greater incentive to industry to go out into the world and sell more goods.
  What I have to say now may be considered by hon. Members opposite as something with which they can go about the country to attack the Conservative Party if they desire. Unfortunately, at present in some industries there is an unwillingness to go about the world to seek new markets. The reason is very simple: the weight of taxes is so great that there is no return whatever to industry for the great effort which has to be made

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  to get those markets. In other words, the incentive is destroyed. Our approach to industry must be that, while there may not be so much return coming to this country as a result of new markets being developed, by reason of the severe competition which exists in other countries—prices being so much lower, and so on—nevertheless, it is essential for the nation to have that business because it is an insurance for future prosperity. That is the only means whereby we can continue to buy the food and the raw materials necessary to sustain a high and ever-expanding standard of living.
  One of the things which we here must do in the months ahead, and after the General Election, is to drive home the point that it is not simply a question of selling goods in foreign markets and of getting a profit from their sale. We have got to sell the goods to ensure a continuity of our supplies of raw materials.
  That means that our export technique must undergo a radical change. I travel the world quite a lot trying to sell goods for the chemical industry, and I know from experience in foreign countries that in many cases representatives from British companies are not empowered to take decisions on the spot. They may get an offer, but they have to refer to London or to somewhere else in this country in order to get a decision whether or not the price can be accepted.
  It is a fact that, when travelling abroad in search of business, in the great majority of cases one is interviewed by the directors or presidents of companies. One is very rarely interviewed by anyone below those levels. Therefore, it is necessary that the men whom we send abroad in search of business should be of the same level and capable of taking decisions on the spot.
  In past years we have received a lot of help from the Board of Trade and the Foreign Office in countries abroad, but I believe that, somehow, we have to improve that set-up. Within the British Commonwealth, the Board of Trade controls these commercial counsellors, but in countries outside the Commonwealth these officers come under the control of the Foreign Office. They are not necessarily very good business men, although in some cases they are. At times, I have found that the information which indus-
  86
  try really needs in some of these countries is not readily available. Although I know that there are difficulties in the way, I suggest that wherever possible these commercial counsellors should come under the control of the Board of Trade and should have no connection whatsoever with the Foreign Office.
  I now wish to say something about the travelling allowance which business men receive when they go abroad. This is a sore point. I know that some hon. Gentlemen opposite might try to make political capital out of this, and say that an allowance of £10 a day when travelling abroad is a lot of money to spend on the business. But I can assure them that if, for instance, one goes to America, Canada or Switzerland, an allowance of £10 a day is a very small sum of money indeed. I believe that the Treasury must look at this matter again to see whether it is possible substantially to raise the present limit so as to enable British business men to entertain at a proper level in foreign countries.
  I believe that the development of our export markets transcends all the other problems with which we, in this country, are faced, with, of course, the exception of how we are going to deal with the hydrogen and the atomic bomb. I am sure that the markets are there to be won not only for the present but for long years to come, but I am equally sure that, unless we can build up a substantial export business, there is no possibility whatever of maintaining even the present standard of living which we enjoy at present.
  I beg hon. Members opposite, who have considerable influence in the coalmining areas, to impress upon their constituents the difficulties with which we are now faced. I am not trying to make any party point here, and I think that hon. Members opposite will admit that I have tried to make a constructive speech. But our coal problem is something which we as a nation must seriously tackle in the years to come.
  We are faced with the situation that in an industry which has been nationalised for a number of years, which has an enormous capital investment programme in hand and a degree of mechanisation far greater than ever before and a manpower almost approximating to what it was before the war, the output of coal is about 30 million tons a year less than

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  it was in pre-war days. There may be—and, indeed, are—very good reasons why that should be so. I am not attempting to allocate the blame, but merely to point out the fact that we are producing 30 to 35 million tons of coal less today than before the war.
  To make up this deficit we are having to spend substantial sums in dollars to keep our industries going. We ought surely to be able to tackle this problem objectively, because, as the Chancellor said this afternoon, if only we could settle that problem then we should be going a long way towards solving the economic problems of the country.
  Finally, I wish to express my disappointment at one omission from the Budget. I fully understand why this Budget has had to be framed in the way it has. That has been done to provide incentives for people to work harder to produce more and to encourage industry to go out and search for extra markets so that we may provide ourselves with the necessary raw materials. All that I clearly understand. But if the cost of living continues to rise—even though wages have risen faster—that cannot be a good thing for the country. So long as wages increase faster than the rate of productivity we shall always be in trouble.
  It seems to me that steps should have been taken in the Budget to bring about a situation which would have helped to reduce the cost of living. I should have thought that 6d. off petrol, with a consequent abolition of the duty on white oils, would have been a way in which that could have been done. Many people may say that 6d. off a gallon of petrol would benefit only the private motorist, the £100,000 a year man of whom the hon. Member for Preston, South is always talking. But the amount of money spent on private motoring is only a small proportion of the whole. The great bulk of the petrol is used for the public transport of goods and people.
  Mr. Shackleton: What does the hon. Member mean by "white oils"?
  Squadron Leader Cooper: When I use that term I refer to white spirits and to all those hydro-carbon oils which are used in the manufacture of paint, varnish and lacquer. Surely the hon. Gentleman reads his post.
  Mr. Shackleton: The hon. Gentleman talks about the petrol duty. I am asking whether he means diesel oil as far as it affects public transport.
  Squadron Leader Cooper: I am talking about the duty on petrol and that type of oil.
  I should have thought that 6d. off petrol would have been a great help. It would certainly help to keep down distribution costs. I doubt very much whether it could be argued that such a reduction would be inflationary in any way. Indeed, I should have thought that the reaction would be the reverse and would help to remove the constant demand for wage increases. It may well be that during the debates which are to take place we may be able to wring a concession from the Chancellor on this point, or that it may be done subsequently. Having said that, I should like to congratulate my right hon. Friend on a very clear, concise and constructive Budget which will be of very great help to the country.
  6.10 p.m.
  Mr. Thomas Hubbard: The hon. and gallant Member for Ilford, South (Squadron Leader Cooper) complained that hon. Members on this side of the Committee could not make up their minds whether this was a General Election Budget or not. I cannot claim to know the intentions of the Chancellor and the Government about the Budget any more than I can claim to know what was in their minds when they decided to have a General Election, but I can claim that a week ago I attended a huge gathering, representing a very large section of the community, who will get nothing at all from the Budget. That gathering was the old-age pensioners' annual conference. Far from having any benefit from the Budget, these people, who are the poorest section of the community, will suffer even more.
  If it was the intention of the Government and the Chancellor to put forward a popular Budget, these proposals are a complete misfit. We are always told, for example, that single men suffer most from the incidence of Income Tax. Many of them work hard and do a good deal of overtime, but a single man earning £8 a week will have a concession of only 6d. in the £ on the standard rate of Income Tax, which is a little over £2 a year whereas, as a result of increased National

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  Insurance contributions, he will be paying £2 12s. more. Therefore, he will be 10s. worse off than he was before.
  A single man may have an income of £600 a year, or roughly £16 a week, but all the concession that he will receive as a result of this reduction in Income Tax will not meet the increased contribution which he will have to pay in respect of National Insurance. The incentive—if this concession was intended to be one—will miss the mark altogether.
  One should consider side by side with this so-called concession the recent increase in the Bank Rate, which will be reflected in increased rates made by local authorities, because, obviously, the dearer money will be the more local authorities will have to pay for their borrowings for house building, making streets and preparing sites for factories. The increased Bank Rate will make life more expensive for those who are supposed to be receiving a concession, intended as an incentive, by way of reduction of Income Tax. The increased cost of living will far outweigh any concession granted to them in the Budget. When one adds to that the increased contributions in respect of National Insurance one finds that a great number of people will be very much worse off.
  The hon. and gallant Member for Ilford, South spoke of the need to increase coal production, whereby we should be able to increase our exports and, therefore, pay for our imports, and he said that that was essential for the proper balance of trade. I agree wholeheartedly with that, but when the hon. and gallant Member talks about the miners' output being less now than hitherto —
  Squadron Leader Cooper: I did not say that output per man was less, but that with manpower approximately the same as before we were getting less coal from the mines, which is not the same thing.
  Mr. Hubbard: Of course it is the same thing.
  Squadron Leader Cooper: The factors involved could be disposed in different ways.
  Mr. Hubbard: When a man talks about coal production he should know
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  that what must be taken into account is the number of men who are actually working at the coal face. It must be obvious that, as time goes on, the coal face is further and further away and that there must be new developments in coalmining. There are new developments. The production of coal is important for our export-import trade and a target has been set for the future, 1965, but the kind of loose talk in which the hon. and gallant Member for Ilford, South indulges will not help in reaching that target.
  Miners today are working voluntary shifts and have been doing so ever since nationalisation of the coal mines. Although they fought for many years, and made many sacrifices, to obtain a five-day week they have been working 12 shifts a fortnight and doing a great deal of overtime. Many of them are on piece-work rates. If a real incentive is to be given to the miners it should be given to them as a whole. An attempt has been made to grade the types of workers in the pits and the hon. and gallant Member for Ilford, South should leave these things to people who understand them rather than be critical of miners who do a job which the hon. and gallant Member and his friends would not care to do.
  Many miners today are themselves producing 15 tons of coal. If the hon. and gallant Member thought of that in terms of moving that weight of coal, taking it from the bowels of the earth and handling it in all kinds of bad conditions underground, he might be a little more restrained in his criticism of this section of the community.
  If more incentives are needed, the workers, who are the producers of the wealth of the country, should be able to feel that if the Government have any surplus to distribute they will at least benefit, but a reduction of 6d. in the standard rate of Income Tax obviously benefits the individual more in proportion to the size of his income. As I have shown, the ordinary and even the extraordinary wage earner is receiving nothing whatever from the Budget by way of incentive. Already the Chancellor is taking care to ensure that he takes more from the wage earners than he gives to them.
  To return to the old people, many of them have been expecting to be a little

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  better off at the end of this month. They have believed the reports, which appeared in the newspapers up to the time when they ceased to publish, that they were to to have an increase in old-age pension, but many of them are now finding out that the poorest of them are much worse off than they were at this time last year. The very poorest of old-age pensioners are those who receive supplementary pensions and payments from the National Assistance Board. Whereas a single old-age pensioner is receiving a 7s. 6d. basic increase, there is a reduction of 5s. in National Assistance payment, leaving a maximum increase of 2s. 6d.
  One should bear in mind, in this connection, that this same section of the community has to pay increased costs caused by the increase in the Bank Rate and by the removal of subsidies and controls, which have led to an all-round demand for increased wages which, in turn, have increased the cost of transport and coal. All these costs have to be met in equal measure by this poor section of the community, which receives no concession from the flat-rate decrease in Income Tax.
  We find that these old-age pensioners, many of whom were themselves miners during the greater part of their lives, find that the increased cost of coal, which was announced almost at the same time as the increase in pension rates, means that they are not one bit better off. If there is an additional 6d. on the bag of coal, that means that their cost of living will be increased.
  Vegetables have gone up in price, the cost of tea is increased and butter has gone up. It seems to me that the policy of the party opposite is to increase the cost of food by 1s. one day and bring it down 4d. the next and then claim that the cost of living is coming down. That has always been their system. I remember that during the war, when rationing was in force, people would be told one week they could not have any jam at all, and then, later, would be given 1 lb. of jam, whereupon the Government would claim they were giving something extra to the people.
  That is what is happening to the old-age pensioners. The cost of butter, margarine, tea, cheese and practically every commodity that the old people buy rises to a figure beyond their purchasing power.
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  Then it is reduced a little and the Government immediately try to convince us that the cost of living is coming down. That is the sort of confidence trick that can be put across once, but once it has been played the people begin to understand it.
  If it were the intention to make this an election Budget, a popular Budget, then the plan has badly misfired, because the large bulk of the people of this country will not get any concession from it. They will find, indeed, that their standard of life will be reduced as compared with last year. Notwithstanding the Income Tax concession, the people who can save this country from an economic crash if one is coming will not benefit. I hope hon. Members opposite will not say that I said that there would be such a crash, but there were some indications in the carefully guarded words of the Chancellor about the possibility of economic difficulties in the future.
  Many people are asking, why this hurried Budget, why this hurried General Election if everything in the garden is lovely? There was no constitutional need for the Government to appeal to the country at this time, and if there was no constitutional need there must be something else driving them to do it. Perhaps hon. Gentlemen opposite are not so naive as they pretend to be; and no doubt these things will emerge in due time.
  At the end of the day all Governments are judged by results, and the fine-sounding phraseology of the Chancellor of the Exchequer today will in no way assist anyone to enjoy an increased standard of life. Many of the institutions which the working people support are in difficulties, and it is to these that the working people look for enjoyment after working hard and doing overtime. For example, they may want to go to a football match. What is happening generally to football clubs? Almost everyone of them in Scotland, at any rate, is approaching bankruptcy. The only alternative to a reduction in the crippling Entertainments Duty is to increase the cost of admission to the matches. Will that increase the standard of living of the people?
  Are we not entitled to think that these people deserve some amenities? The same thing applies to the cinema and to the live theatre, where this duty is also crippling. There are some things, such

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  as cricket, which are exempt, and I do not condemn cricket. I do not think, however, that the Government are playing cricket with the ordinary people. They are playing ball with them by hitting them over the head with it time and time again, and often with the bat as well.
  If it was the Government's intention to present an election Budget, then they have failed and I am quite satisfied that before the end of this debate and, most positively, before the election takes place they will find that the people are not so naive as the hon. and gallant Gentleman the Member for Ilford, South would have us believe.
  6.25 p.m.
  Mr. Robert Crouch: I should like, first, to congratulate my right hon. Friend the Chancellor of the Exchequer on his excellent speech to the Committee this afternoon. He put forward in a very lucid way, which most people will be able to follow, the present financial position of this country. We can feel proud of the way in which he has fulfilled his various and very difficult duties during the last three and a half years. Indeed, one of the proofs of his stewardship is the fact that savings have increased by such a very large amount during the last 12 months, because, unless the people had had more money in their pockets, there would not have been this rise in saving which, if I heard the Chancellor aright this afternoon, amounts to no less than £130 million.
  My right hon. Friend also mentioned that during the last year there had been a rise of no less than 9 per cent. in personal incomes. Now hon. Members opposite are suggesting that the Income Tax concessions will not have the effect that the Chancellor desires. I think they will, and I also think, in spite of what has been said by the hon. Member for Preston, South (Mr. Shackleton), that the cutting of Purchase Tax by 25 per cent. on a large range of textiles can do no other than have a very good effect on the textile industry, not forgetting the linen industry in Northern Ireland.
  My hon. and gallant Friend the Member for Ilford, South (Squadron Leader Cooper) mentioned overtime, and one hon. Member opposite said something about British workers working a day longer than in the United States. But I have not heard anything said about the
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  farm worker, who has to look after livestock throughout the whole week and works seven days every week. I was hoping that the Chancellor might have found it possible to give some concession to those men who, on Saturday afternoons and Sundays, tend sheep, cows, pigs and poultry, because those are livestock which have to be fed. They cannot be shut down as factories can; they have to be cared for throughout the whole week.
  One disturbing part of the Chancellor's Budget speech—and I was sorry to hear it—concerned the drop of no less than £4 million which had occurred in the amount of duty recovered on beer. This has been going down year by year by the hundred thousand pounds. It is a problem which he will have to face up to next year, because I feel certain that he will present the Budget which has to be submitted to the Committee in a year from now. There is nothing unusual about a Chancellor presenting a Budget, facing a General Election, and presenting another Budget after he has returned to office. [HON. MEMBERS: "If he returns."] He will return.
  Another point upon which I should like to touch is the question of output. The Chancellor told us that the output per man had increased by 2½ per cent. during the last 12 months, and I think that that is very encouraging. But he also said that there had been an increase in wages of 4 per cent. With modern machinery and the aids from science that we have today, if wages go up by 4 per cent. we should not have a drop of 1½ per cent. in output per man, because high wages, as has been proved all over the world, are sustained only when there is high output.
  The hon. Member for Kirkcaldy Burghs (Mr. Hubbard) spoke about the price of tea, butter, cheese and other commodities having gone up and then having dropped in price. He suggested that this was deliberately done so that the Government could say that prices had fallen. May I remind him that when hon. Gentlemen opposite were sitting on these benches his right hon. Friend the Member for Bradford, Central (Mr. Webb) used to give a Christmas bonus. The right hon. Gentleman gave one in 1950. The right hon. Gentleman appeared to be giving the people something, but if the hon. Gentleman will look at the rations received in

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  January, 1951, he will find that over the two months the increase levelled itself out, so perhaps it would not be wise to proceed with that argument too far.
  I appreciated the Chancellor dealing with the various subsidies given to agriculture, distinguishing them from food subsidies. It is generally assumed that the cost of supporting the agricultural industry is £250 million, but the Chancellor said it was only £163 million.
  Lieut-Colonel Marcus Lipton Lieut-Colonel Marcus Lipton (Brixton) indicated dissent.
  Mr. Crouch: Yes, the Chancellor said that the cost of supporting agricultural prices was £163 million and that there was a subsidy of £41 million on bread, and that the various welfare schemes cost £36 million.
  I was also pleased to hear my right hon. Friend re-emphasise the necessity during the coming year for us to grow more of our feedingstuffs. He explained that it was for this reason he had increased the ploughing grant, and the fertiliser grant and had increased the guaranteed price for both oats and barley. If, by growing more feedingstuffs, we can save foreign currency, it can be used for other goods which we are not able to produce. I feel sure that the agricultural community will make full use of the ploughing and fertiliser grants during the coming 12 months and that, therefore, the industry will be able to show a much better balance sheet at the end of next year.
  The Government are to be congratulated upon the way they have treated the industry since they have been in office, and all sections of it have responded, so that the production from our farms today is greater than it was when this Government came into office. I conclude as I began, by congratulating my right hon. Friend on putting such a frank and clear picture of our finances before the nation.
  6.34 p.m.
  Mr. William Keenan: I shall follow the hon. Gentleman the Member for Dorset, North (Mr. Crouch) only to the extent of saying that most of the subsidies provided by the Government are given to agriculture. It is true that subsidies are given for milk
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  and bread, but the industry about which the hon. Gentleman speaks so much is obviously benefiting a great deal.
  I want to complain about the failure of the Chancellor to do anything for the people who do not pay Income Tax. Instead, the right hon. Gentleman has done what he did two years ago; that is, he is benefiting only those who pay Income Tax. There are about 7 million out of the total of 23 million workers who do not pay Income Tax, and the Chancellor said that he would release 2¼ million more from its incidence. The reduction of 6d. means that some people will benefit to the extent of only 1s. a week, whereas those with the largest incomes will get the most relief.
  My hon. Friend the Member for Nottingham, South (Mr. Norman Smith) pointed out that a millionaire with three children would benefit to the extent of £48 a week. It appears to me that this Income Tax rebate will reduce the amount of Surtax, though I have not heard that point mentioned. I say this because two years ago, when 6d. came off Income Tax, the Surtax rate fell from 19s. 6d. to 19s., so the present rebate will probably reduce it to 18s. 6d.
  After all the justifiable expectations, we have been given only this remission of 6d. This could have been used to offset indirect taxation, thus benefiting the seven million or nine million people in the low income ranges. There are about four million old-age pensioners who will not benefit one halfpenny from this Budget, and here I want to supplement a point made by the hon. Member for Kirkcaldy Burghs (Mr. Hubbard). On 25th April the new National Insurance scales will come into operation and a single person will receive 7s. and a married couple only 4s. more. Yet the Government made a great song and dance about this at the end of last year, saying how greatly the old people would benefit by the increased rates. I said at the time we were discussing the amending Bill that the increases would merely compensate the old-age pensioners for the increased cost of living. I repeat that one million of the four million pensioners will benefit only slightly, because instead of the couples getting 11s. they are getting only 4s.
  It is disgraceful that the Chancellor has not done more than he has done. He

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  had an opportunity as he had two years ago to do something for those on small fixed incomes. Surely it would have been more humane, a better gesture and a better General Election move if he had done something for the others instead of confining the easement in taxation to those who are the best off in the community, because the greater a man's income the more he will benefit from the Budget.
  My hon. Friend the Member for Nottingham, South mentioned the National Debt. This is something about which I have always been concerned, thougn it is not because the country owes me any of it. A few weeks ago I put a Question to the Chancellor and he said that during the last two and a half years, while Chancellor, he had increased the National Debt by more than £600 million. My hon. Friend pointed out that this Budget increases the amount by £400 million. I took down the figure given by the Chancellor of what we owe under the National Debt; it is £26,930 million. A year ago we were paying about £600 million per year in interest on that sum. I would remind the Committee that this means that £1 of every £8 that the Government collect in revenue is paid in interest to National Debt stockholders. It is surely nearly time the nation woke up and realised that we are still paying for the Napoleonic wars and all the other wars that we have since had.
  Today, the Chancellor is increasing the National Debt to give an easement in taxation to his friends, people who are in no need of it. I understood that in the orthodox financing of the country a Budget surplus should be devoted to the reduction of debt, but I have not seen much of that being done. Instead, the Chancellor is increasing the National Debt. It is not fair to say that what the Chancellor has done is dishonest, but it is not the way in which the masses of the people of the country are entitled to have their financial affairs arranged.
  In view of other legislation and other actions by the Chancellor, such as with the Bank Rate, it seems to me that all that the Government have done in the last year or so and are doing now is to protect big business and finance. The bankers were never as well entrenched as they are today.
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  There have been expressions of opinion as to whether or not the Budget is a good one. I believe that the Chancellor and the Conservative Party are of the opinion that it is a good Budget from an electioneering point of view, and I think they believe that they will cash in on it, I have no doubt that those who benefit from it—and two-thirds of the workers who pay taxation in one form or another will get a shilling or two from it—will think that they are doing well. They do not appreciate, and will not, the numbers who are getting no benefit. It is a Budget which is likely to appeal to many. It will certainly appeal to people who have good positions in which they command decent salaries, for they are the only ones who will benefit from it.
  I hope that the mass of the people will realise that no Government should ever legislate, as this Government have done in the past, simply for those who are better off. What has been happening during the last few years has been the undoing of what the Labour Government did in their six years in office, when they tried to build up the social wage and so arrange the country's finance that even though the individual did not see the benefit in his wage packet he certainly got the benefit of the legislation which was enacted in the interests of the people of the country as a whole. This is a deplorable Budget. It is as bad as the one two years ago, and I hope that people will recognise that and treat the party responsible for it deservedly at the General Election.
  6.46 p.m.
  Mr. J. A. Sparks: I am very glad to have an opportunity today to make some comments upon the Chancellor's statement. It struck me that, in the first part of it, he was painting a very rosy future prospect for our country but that, in the second part, he was contradicting his prophecy by saying that a good many people would have come to the conclusion that this was no time for making any concessions. It was probably that remark which caused my hon. Friends to believe that therein lies the reason for the decision of the Government to go to the country on 26th May. Apparently, the Government anticipate a recession in trade in the autumn or later which would redound to their disadvantage, but they feel that if, in the

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  meantime, they can get the General Election over they may ride the storm successfully.
  I feel that the Chancellor is placing too much reliance upon the effect of the concession. He said it was designed to provide an incentive in industry. As my hon. Friend the Member for Kirkdale (Mr. Keenan) said, there are nearly 7 million workers—I think he said 7 million—
  Mr. Keenan: I said 7 million to 9 million. I was speaking from memory.
  Mr. Sparks:—who pay no tax at all. On the assumption that those who pay Income Tax will thereby receive an incentive because of the reduction of 3d. in the £ at the lower rate, and will work much harder than they ever did before, surely those who receive no advantage whatever will have a disincentive to do more work than they did previously.
  I think that, on balance, there is nothing at all in the argument, because, as my hon. Friend has said, those who will benefit most are the rich. Ordinary working-class people will benefit very little indeed from the so-called concession. The income of many of them is so low that they do not come within the tax range, and there are millions of others whose Income Tax payments are so small that the reduction will make very little, if any, difference to them. The little difference it does make is quite inadequate to compensate them for the way food prices and the cost of living have risen during the time the present Government has been in office. What will create an incentive is to improve the health, the housing and the social conditions of our people. That is precisely what the Chancellor has not attempted to do in deciding to grant the relief which he proposes.
  I could suggest to the right hon. Gentleman a wide range of ways in which, if he had any money to spare, he could have used the money more usefully, and in which he would have created a greater incentive. Why did the Chancellor not use some of this surplus to improve the National Health Service? Why did he not agree to use some of the surplus to reduce the charges being made for dental treatment and for optical treatment, for instance? If one consults any dental surgeon, one will be told that
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  since the introduction of charges dental surgeons have found that attendance for treatment under the National Health Service has dropped.
  Today, there are many people who are in need of dental treatment. Many of them, when they belonged to approved societies before the National Health Service came into existence, were getting free treatment. Many millions more were paying only 25 per cent. of the cost, but the right hon. Gentleman's Government seems to think that it is a good thing that those people should pay 50 per cent. of the cost of dental treatment. There is a whole range of other examples. Surgical boots have been mentioned. There are many appliances needed by disabled persons who, by virtue of their disability, are unable to earn incomes which other people can earn. When their existing appliances need replacement, in most cases the disabled people have to pay the complete cost.
  Then there is the subject of the 1s. charge for prescriptions for medicine. This aspect of the National Health Service should have been taken into consideration by the Chancellor when he was thinking of dealing with any surplus. I am not suggesting that he should have wiped out all the charges in one fell swoop, but he might have reduced the charges for dental and optical treatment from 50 to 25 per cent. He might have waived completely the charge for appliances for disabled people and considered whether it would not have been a good thing to reduce the 1s. charge for prescriptions to 6d. At least, that would have been an indication that the Chancellor was anxious to improve the standard of health and provide facilities for people, especially those in the lower income groups, to make the fullest use of the National Health Service.
  There is very little in the proposals to assist local government and the ratepayers. All too often we forget that the ratepayers provide a considerable amount of money to help maintain services many of which are really national in character. Our local authorities provide a wide range of services which are really the responsibility of the Government and the State. To some extent the State has recognised that this is so, because the State does make a contribution to the expenses of local authorities, but in these days that contribution is absolutely inadequate.

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  Every one of us is aware of the way rates have increased throughout the country. The burden of the rates has grown very heavy in recent years, and is likely to grow much heavier in the next few years.
  That is due to a variety of reasons, including the generally increased costs of providing the services which the Government acknowledge to be national rather than local in character. The Chancellor's proposals hold out no hope that the ratepayers will be relieved from any of that additional burden. The Financial Statement gives some indication of the financial burden which ratepayers now have to carry. For instance, in 1954–55 no less than about £440 million were raised in rates. That compares with the year 1950–51, when the late Government was in office, when the figure was £322 million. So, in the last five or six years, there has been an increase in the demand upon local ratepayers from £322 million to about £440 million. The burden has considerably increased, and, moreover, has increased out of all just proportion.
  The contribution which the Exchequer makes towards local services in some cases is increased to some extent. I want to refer especially to the Exchequer Equalisation Grant—a grant of money which the Exchequer gives to some local authorities on a basis which is most unfair. That grant has remained very much at the same level during the last few years, and the right hon. Gentleman proposes to increase it in the coming year by only £900,000 over the whole country. I should like to draw the Chancellor's attention to one thing which he could have done to ease the rate burden on local authorities.
  Sooner or later something will have to be done, because the burden of the rates is growing so acute that some services may have to be closed down completely, if the ratepayers are not able to find increasing sums of money to continue them. If the Chancellor had a surplus, and was wondering what to do with it, why did he not consider repealing the derating provisions of the Local Government Act, 1929, and permit local authorities to recoup to themselves the full value of the rates levied upon industry?
  I do not desire to go into the pros and cons of derating, but it has an effect on local authorities because, as the Committee is well aware, a whole range of industries, most of them very prosperous,
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  pay only 25 per cent. of their rates, whereas the ordinary householder and the shopkeeper pay 100 per cent. Why should not the Chancellor, if his policy is creating a condition of industrial prosperity, as hon. Members opposite claim, repeal the derating provisions of the 1929 Act, and call upon the prosperous industries in future to contribute 100 per cent. rates, as the householder and the shopkeeper have to do? If he had done that, he would have placed an income of about £80 million a year in the coffers of the local authorities.
  I know that to some extent the Chancellor would lose by doing that, but that is one way in which he could have effected a distribution of the surplus. It is true that industry would then return a lower surplus to the Treasury, and would pay less in taxation to the Treasury, but it would have been a means of easing the burden on local authorities, and particularly upon the ratepayers.
  I should like also to draw the attention of the Committee to page 13 of the Financial Statement which shows a very significant decrease in the Exchequer contribution to local services. For instance, the grants to Development Areas are being reduced by approximately £200,000. I know that does not sound very much, but when we consider the immense amount of redevelopment that is awaiting action throughout the country, it is vitally important that these grants to Development Areas should be considerably increased.
  The amount which the Government contributed towards child care last year was £9· 9 million. They propose to contribute £9· 7 million in 1955–56, again a reduction of £200,000. What actually does this figure mean, and what is meant by child care? We know that there are many children in the country in need of care for various reasons. Some people blame the parents for that, but in many cases the parents are not to blame because of physical disabilities and other factors.
  Many thousands of children need care in day nurseries. The right hon. Gentleman has been calling for increased production in industry. There are parts of the country where there is a great shortage of women labour, particularly in light engineering, where there are many routine jobs which are not, in a sense, men's jobs, and which the women folk can do on

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  half-days or on one, two or three days a week. In my area in particular, which is heavily industrialised, there is a great shortage of manpower and many industries there would welcome particularly young women, whether single or married, to do those jobs which are so necessary in the public interest. Many of these industries are engaged in the export trade.
  During the war period, it was possible to provide a fair range of day nurseries to which young mothers could bring their children and leave them there, knowing that they were being attended to properly while they themselves were at work. Without those day nursery facilities, the young women would not have been able to do that work, and industry, to that extent, would have been starved of labour.
  During the last two or three years, the policy of the Government has been to reduce the number of day nurseries throughout the country, squeezing out these children and depriving industry of the labour of able and capable young women, just because they have children. The Government and their friends outside, particularly those who control the Middlesex County Council, seem to think that young married women should make their own arrangements to have their children looked after. That is all right if it can be arranged—but few people are willing to look after young children. Do we want to go back to the old days of so-called foster mothers, who looked after young children but were really not fitted to do so? Consequently, in my area industry has lost the services of a number of young women, because they have been driven away from the use of day nurseries by the ridiculously high charges which are being imposed.
  I had a letter this morning from a disabled man who is not able to follow regular employment, and whose wife has to go out to work to help maintain him. He had been accustomed to leaving his child in a day nursery for 5s. a day. He has now obtained another job which brings him in £1 or 25s. a week more, if he does a full week's work. He advised the authorities to that effect, and they stepped up the charge from 5s. to 9s. a day. He says that this completely washes out the little extra money he was hoping to earn to help pay off his debts, and has
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  put an additional burden upon him because he can no longer afford to leave his child in the day nursery.
  To meet his weekly budget and to keep going—and from the information which he supplied to me the poor fellow is in debt—he says that he will no longer be able to keep his child at the day nursery because he cannot afford 9s. a day charge. That means that either he or his wife will have to stay at home. In either case, his condition of life is worsened. He has appealed to the Middlesex County Council to reduce this assessment, but it has refused to do so. That sort of thing is happening throughout the country. That is why the Government can show a falling off in assistance to local authorities for maintaining child care services.
  The Financial Secretary to the Treasury (Mr. Henry Brooke): I know that the hon. Member is very familiar with local government, but he has slipped up here. In page 13 of the Financial Statement, the cost of day nurseries does not fall under the heading of "Child Care" but under that of "Health Services."
  Mr. Sparks: I am glad that the hon. Gentleman has put me right, but that does not invalidate my argument. The case I put is absolutely sound and it can be inquired into. Does the hon. Gentleman refer to Table VII (b), in page 13?
  Mr. Brooke: No, Table VII (a).
  Mr. Sparks: The provision for day nurseries may well come under general health services. Nevertheless, it will be found that the actual amount devoted to day nurseries has fallen considerably during the last few years because of the reduction of day nurseries and the squeezing out of people unable to pay the higher charges.
  My argument is that if the Government had any money to spare they could have increased their assistance to local authorities and enabled a reduction to be made in the high charges. This would have encouraged women to go into industries which are hungry for additional labour and where often the main source of supply is from young married women.
  In the same table there is an item "Miscellaneous," which shows a reduction of £3· 9 million, from £11· 3 million to £7· 4 million. It is difficult to discover precisely what miscellaneous services are,

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  but I want to draw attention to one of them. I refer to the power which county councils have to provide homes, hostels or residences for old people. There is nothing more distressing than the conditions in which some old people have to live when perhaps a man has lost his wife and he is pushed away on his own in a room, or he may live as a lodger or perhaps with relatives who do not really want him. One of the greatest services that we are providing to help old people in these circumstances is the provision of decent homes or hostels where they can live together, discuss their own problems and where they have private rooms of their own. In these places they are provided with proper food and medical attention.
  Hon. Members who have visited the homes run by some of the county councils will have appreciated the comfort given to the elderly people, and will know how they are grateful for what is being done to care for them in the evening of their lives. I am sure that the gratitude of the old people is sufficient reward for any contribution that we can make to their comfort in their declining years.
  It is well known that this costs money. It is true that those who draw a pension make a contribution, and it is right that they should, but over and above that there is an additional cost. The local authorities are quite unable to extend this service, first, because of the rate burden and, secondly, because the Exchequer contribution is so small, and presumably the Exchequer is not willing to increase it. I wonder whether expenditure of this kind is included under the heading "Miscellaneous," where a considerable reduction is shown. If it is, that again will prevent the local authorities from carrying out more work of this kind.
  The same item may also contain provision for home helps. There are some elderly married couples who do not want to live in hostels with other elderly people. They would rather stay in their own homes. We all know how physical infirmities develop. Perhaps the wife may not be able to keep the place clean or do the cooking, or perhaps the husband becomes an invalid. There comes a time when outside assistance must be provided. Somebody must come in and help to tidy the home and to do a bit of charing or cooking. The local authorities have what
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  is called a home help service, mainly designed to help old people, though help is also provided to others who may be in distress by reason of physical incapacity.
  This service to elderly people is totally and absolutely inadequate, because local authorities are not able to spend as much as they would like. Here again, if the right hon. Gentleman had had any surplus to dispose of, he could not have spent it more wisely than by helping local authorities to provide a more adequate home help service for the aged.
  Finally, I wish to discuss housing. Why should not the Chancellor have done a little more for housing? I know that he will reply, "We have done very well; we have built 300,000 houses," but the problem is that of rents. The White Paper shows that Government grants and payments to new towns are falling. They fell last year also. I suggest that the difficulty in getting people to go to the new towns from the congested areas arises because the rents are too high. People moving from London have to pay a higher rent in a new town, though their wages are lower than they were in London. Although many people would like to go to a new town and would be prepared to make a sacrifice to go there, sometimes the sacrifice is too great.
  Apart from the new towns, we are finding, especially in Greater London—and the same probably applies to all our great cities and towns—that the problem of rents for new accommodation is very serious. The Government have made it much more difficult by increasing the interest charges on loans to local authorities for housing purposes. In fact, the amount to be provided next year for loans to local authorities for housing purposes will be many millions less than last year. In many cases rents are so high that people cannot afford them.
  If the right hon. Gentleman had money to dispose of, why did he not reduce the interest rate from 4¼ per cent. to 3¼ per cent.? Or, better still, why not grant interest-free loans for housing purposes? After all, housing is a great social service and it has been demonstrated that private enterprise is not in a position to provide housing accommodation for the people, by which I mean the ordinary people and not those who have money to buy then-own homes. The ordinary workers, who we are told are to receive an incentive

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  by the reduction in Income Tax, cannot expect their housing needs to be supplied by private enterprise. Therefore they look to local authorities and the State to improve them, and I cannot understand why the right hon. Gentleman increases the interest rates on housing loans when the rents are already very high, in spite of the subsidies.
  It is revealed that the estimate for providing housing accommodation for the Armed Forces was £10 million and the out-turn was £1 million, which means that last year the Government allocated £10 million for that purpose but spent only £1 million. It is true that next year the Government are estimating to spend £7 million, but we may find, instead of £1 million, that the amount actually spent may be only £500,000. I am not satisfied with the present rate of progress in the provision of decent accommodation for Service men and their families.
  As a member of the Sub-committee of the Select Committee on Estimates, which examined the cost of building construction for the Armed Forces, I was privileged recently to visit a base ordnance depot and to see some of the new work being carried out. I was surprised at the condition of some of the old accommodation in which Service men and their families are living. Some of that accommodation is an absolute disgrace. What the Army would do without Nissen huts I cannot imagine, but that accommodation should have been condemned long ago.
  In one hut it was not possible to have electric lamps stronger than 40-watt, and one can imagine the strain imposed on the eyesight of the men using the huts. The place was badly furnished and presented a most unattractive, dreary and dismal appearance. It was used by 15 to 20 men as their sleeping quarters. There was no sanitary accommodation and at any time in the day or night the men had to walk about 200 yards to find sanitary accommodation. One can imagine the inconvenience caused in the dead of winter.
  It is true that the authorities are providing new accommodation and some of the new sleeping quarters and barracks accommodation is excellent. But the work is not being done quickly enough. How can it be, when the Government
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  allocate £10 million, but authorise the expenditure of only £1 million to cover the housing requirements of the Air Force and the Navy as well as the Army? If we expect to attract to the Armed Forces young men who will have a real interest in their job, we must make better provision for married quarters. Although some provision is being made for the wives and children of Service personnel, far too many families are living in old Nissen huts which are a disgrace.
  I know that the Army authorities do their best to furnish this accommodation properly, but the actual huts are dreary places and we cannot expect Service men and their families to be happy and contented unless we improve their housing standards. I should have thought that the right hon. Gentleman would have devoted much more money to accelerating the rate at which new buildings are being provided to house Service men and their families.
  I have spoken much longer than I anticipated, but I had a great deal that I wished to say and I consider this the time when it should be said. I feel sure that in Committee on the Finance Bill a much better case will be deployed against the right hon. Gentleman. He will be told that his methods of disposing of the surplus are ill-considered. He could have used the surplus in far better ways to improve the health, homes and social conditions of the people and so created the incentive needed to increase production.
  7.30 p.m.
  Mr. G. R. Howard (St. Ives): I will not detain the Committee very long, as the point I wish to make is a local one. While adding my congratulations to my right hon. Friend the Chancellor for the excellent, and, if I may say so, honest Budget, I am sorry that there is no time, perhaps in view of forthcoming events, to mention specifically a vexed question concerning the Isles of Scilly.
  I know that this is not a question which is very popular in the House or one which receives very much support, but I feel very strongly about it and should like to put forward to my hon. Friend the Financial Secretary one or two points which, perhaps when we are returned again—
  Mr. John Rankin: When will that be? This century?
  Mr. Howard:—may be considered, because of the great power of approval or disapproval of the Treasury in this matter.
  Before the present incidence of taxation affected the people of the Islands, I think few would have complained about the fact that they had to provide for themselves a medical fund to cover additional emergency health expenditure. They have done this, I understand, for many years, but now when they are brought under our taxation and are paying their full National Health contribution, it is grossly unfair that they should have to meet the demands of this emergency health fund. Anybody who had letters such as I have recently received would find that they provide full support for the case I am making, and I would suggest that any Member of Parliament who refers to the Isles of Scilly in an offhand way should be given these letters to read.
  One letter from a lady relates how she had to cancel an appointment for medical treatment on the mainland because she could not afford the expense of going over to the mainland.
  Mr. Rankin: Under a Tory Government?
  Mr. Howard: The question here is this. Surely this is a case where, if they are faced with this extra expense, the cost should be borne by the Ministry of Health, with Treasury approval, because it is not just a question of going over for one day. In bad weather people may be held up and have to spend two or three days in Penzance. When they cannot get back to the islands, these people must bear the expenses of staying away from home, and I have a number of bills as well as other data here to prove the point.
  There are other ways in which the Treasury can help. Here is another suggestion which could be considered. Surely it would be possible to do what is done in certain instances in Scotland, and that is to make special grants towards the provision of water and sewerage schemes and also to provide a remote area housing subsidy, both of which are very expensive items, in the islands.
  Of course, the biggest question of all which ought to be considered is that of
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  the steamer which serves the Scilly Isles, and the cost of a new one. We can only hope that the proposals in a future Budget will do something to help this small company in the financing of their new steamer, which is going to be very costly. Any help the Government may be able to give in that respect will be very acceptable indeed. I was very disappointed recently when I was unable to get any help on the subject of an agricultural grant, as in the case of Northern Ireland, because it was felt that the main exports from the islands were flowers, whereas, in fact, there is a certain amount of agricultural exports, such as potatoes and pigs, as well as the necessary agricultural imports, such as feedingstuffs and so on, which should also rank for grant.
  I beg of my right hon. Friend not to consider these islands as fortunate places where people go in summer, but as places where people are living all the year round and trying to build up a first-class T.T. attested herd, as well as growing flowers and doing what they can to improve the agricultural output of the country. Therefore, anything the Government can do to help will be very much appreciated in view of the increased burden now being suffered by the islanders because of the heavy incidence of taxation that has come to them.
  7.35 p.m.
  Mr. Frederick Lee: I welcome the concession the Chancellor has given to the parents of apprentices, who will now be able to claim the same remission of taxation available to those parents whose sons and daughters are continuing their education. On two previous occasions I have moved Amendments designed to have this effect, and two years ago we were successful in halving the amount then obtaining. Therefore I very much welcome the fact that this year the Chancellor has equalled things up a little.
  I am afraid that that is about the only thing upon which I can congratulate the Chancellor on this Budget. Speaking as one who comes from Lancashire, I agree at once that there was a period when the concession on the Purchase Tax which he has now announced would have been very welcome. I think, however, that the time when it might have done a lot of

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  good for Lancashire has long since gone. The great problem which has been presented to the Chancellor and the President of the Board of Trade is the question of Indian imports, which are continuing to increase and are so very much cheaper than anything Lancashire can produce. Indeed, if the operatives in the Lancashire textile industry were working for nothing we should still not be able to compete with the prices at which Indian cloth can be brought into this country.
  If the whole story has now been told, and if the Government have nothing further to say to Lancashire on this subject, I think they must have come to the conclusion to write off the Lancashire textile industry. It would appear that this is sheer political prejudice, because there is and has been a suggestion put to the Government in the last few weeks that the Government themselves should handle the purchase of cotton cloth, but, because of their dislike of bulk purchase from an ideological point of view, they have refused to accept the suggestion. It is now absolutely clear that they have nothing whatever to put in its place, and I would have thought that if these are the last words of the Government to Lancashire, it is pretty obvious that the Lancashire textile industry is doomed and that, as far as this Government are concerned, we have nothing more to hope for.
  At a time when our balance of payments is in a precarious state, I believe that the Chancellor's speech today was a complete and utter tragedy. I have never heard such complacency in my life in the presentation of a Budget to the House, and at a time when, according to the returns for last month, we are getting further into debt on our visible trade to the tune of some £3 million per day, which I think works out at about £1,000 million a year. I know that there is a different story about invisible exports, and therefore I do not say that our total deficit is running at about £1,000 million, but I do say that the whole picture which is presented to us, even if we take the invisibles into account, is calamitous. When we listened to the Chancellor presenting a Budget in which the balance of payments position is mentioned in such a cursory or by-the-way fashion, while he was concentrating on issues which he
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  hopes will bring him extra votes in a few weeks' time, I considered that it was not only hypocritical but completely irresponsible.
  I hope that during the remaining days of this debate the Committee will show that, irrespective of the result of the election in a few weeks' time, there is a sense of responsibility in this House which will condemn an attitude of the sort which we have seen on the part of the Chancellor today. Indeed, since last month's figures cannot be affected by the statement of the Australian Government in which they declared that they felt it necessary to curtail their imports, the position is even worse than last month's figures would seem to indicate.
  We know that during 1954, for instance, exports to Australia and New Zealand rose by more than the total increase in our exports in that year. Therefore, the very markets upon which we have been relying so heavily and which have played such a great part in enabling us to increase exports are now closing against us. Yet, while that position obtains, we hear the sort of complacency from the Chancellor this afternoon about which I have already complained.
  The principal proposal made by the Chancellor was to reduce the standard rate of Income Tax by 6d. in the £. I am not complaining about reduced taxation, and none of us will, but how he could, in February, increase the Bank Rate to the highest level at which it has been for 24 years—and tell the House that he did so because he was afraid of inflationary pressures and wanted to warn industry of the condition of our trade—and then come to the conclusion that the obvious corollary is to increase inflationary pressures, defies all logic. He must certainly not complain if people come to the conclusion that the central feature of his Budget has been more in line with the views of those who are looking for votes in a few weeks' time than those who take a responsible attitude towards the future Government of this country.
  It would be nice to know whether we could have an answer to this question: will the Government pledge that, in the event of their being returned, this is the only Budget that we shall have in the next 12 months?—or can we take it that once they have got over this election period

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  we may have an interim Budget of a very different calibre from that which has been described this afternoon? I fully appreciate that the question will never be put to the test, but it would be interesting to know just what would be the answer of the Government.
  The Chancellor read us a homily about the dangers of increased wages. I appreciate that when wages are rising faster than production there is very great danger. The Chancellor dodged that issue by telling us that there had been an increase in production over the last two years. What he failed to tell us was that in 1952—the first full year of his Government—there was a catastrophic fall in our production, at a time when our competitors were vastly increasing theirs, and that any slight increase in production now must be regarded in relation to the low level of production in 1952, and not as comparable in any way with the advances made during the five years when the Labour Government were in power.
  Mr. H. Brooke: If the hon. Member will look at the Economic Survey he will find that the increase in production since the Labour Government went out of office is 10 per cent.
  Mr. Lee: That bears out precisely what I have said. This is the fourth year of office of this Government, and the increase in production is 10 per cent. We averaged a 6 per cent. increase in each year, over a five-year period. Work out the difference. The levels of increase that we have had in the last two years do not represent a continuous flow from the increased production which we had between 1946 and 1951; they are merely an increase to be regarded in relation to the reduction we had in 1952. Therefore, we must not deceive ourselves into thinking that there is the same impetus in industry today as there was during the period of the Labour Government.
  It is even more important to contrast this increase with the increases in the percentage of world trade in which our principal competitors are now participating. I appreciate that, no matter which Government had been in power, we should still have had to face competition from Western Germany and Japan. I suppose that we all agree that they had to be allowed to live in the world and get
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  into the export markets, because unless they did so we might again witness the kind of warlike activities in which those two nations indulged previously. We must look at these matters in their right perspective. On the other hand, it is extremely dangerous that at this period our exports are falling as a percentage of world trade as a whole. In the last analysis this nation cannot live and keep a decent standard of life for its people unless it can maintain and increase the percentage of world trade which flows through its ports.
  For a considerable period I have been putting Questions to the Chancellor as to his policies in relation to the economic weaknesses which have been revealed. In reply to a Question which I put to him some weeks ago, he told me that he had no intention of reducing imports; his policy was to increase exports. That is very good, but I should like to ask him whether, taking account of the bloated level of our imports at the present time, and his inability to control them—because he has thrown away import controls—he is still of the opinion that, with Australia reducing her imports; with the vastly increased exports of Japan, Western Germany and the United States, and with competition in the principal lines which we are trying to export, he believes that over a comparatively short period of time he can increase our exports to such a level that the gap which is now revealed in our balance of payments position can be bridged. Unless he is able to do that, we shall return to a situation where we have the old import-export gap, which has widened upon two or three occasions since the war.
  On 7th December last year we had an economic debate, and the questions of the import-export gap and the terms of trade were debated quite extensively. We made the point that there had not been any basic strengthening of the British economy, but that we owed practically everything to the favourable terms of trade which we have enjoyed during the lifetime of this Government. Even on 7th December last the right hon. Gentleman who is now the Minister of Supply, and was then the Economic Secretary to the Treasury, replying to my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), claimed that the policies of

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  Her Majesty's Government had done much to lower import prices. He said:
  "these policies"—
  of Her Majesty's Government—
  "contributed to the change in terms of trade, from which, I agree, we have largely benefited."—[OFFICIAL REPORT, 7th December, 1954; Vol. 535, c. 804.]
  In that case, why are we in difficulties today? Why does not the right hon. Gentleman wave his wand again? If the policies of the last three years have played an enormous part in bringing down import prices, why cannot the right hon. Gentleman continue them? His refusal to implement the policies which he followed then is an act of treachery to the British people. And yet the right hon. Gentleman, who was then Economic Secretary to the Treasury, because of his ability to show us these things has now been made a full Minister. At the very moment when he was saying these things he must have known that the terms of trade had turned by something like 6 per cent. That is the principal reason we are now in such grave difficulties in our trading position.
  When the Chancellor of the Exchequer treats the trade unions to a homily about the disgraceful tendency of asking for higher wages, I suggest that when that comes from one whose policies have resulted in vast increases in share values, dividend distribution and profit-raising, it is nothing less than confounded cheek for the right hon. Gentleman to say how bad it is to ask for increased wages.
  When my party occupied the benches opposite and when I had some responsibility for giving answers from the Dispatch Box, I remember the sneers from the party opposite about the Government's action in suggesting restriction of wage advances. We were trying to be fair to the unions and to increase the social wage which we were giving through the Health Service and so on. We were asking the unions to take a responsible attitude towards wages, and we got a response from them. They behaved in a perfectly statesmanlike way in consequence. But the party which accused us then is hardly the one which should treat us now to a homily about the awful consequences of asking for increased wages.
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  There can be no doubt that the policies embarked upon by the present Government from the time of the 1952 Budget were designed to recreate the distribution of wealth which we had in the pre-war years. Because of those policies, the party opposite shouted, "Away with controls of every type." The Chancellor today has failed to show to the nation the dangerous situation that we face. He has failed to show that the only way he could control it was by the use of the very instruments which we left him and which he has now thrown away. Therefore, he has had to go back to the old financial mechanism of the use of the Bank Rate, and neither the Chancellor of the Exchequer nor any man can say where that policy will end. Instead of giving the Chancellor the chance to select the things upon which to damp down, this will have the effect of damping down some of the industries whose products we need most.
  It is a great tragedy that after all our work of economic expansion in bringing the nation from the position which we inherited in 1945, and which was described by the former Prime Minister, the right hon. Member for Woodford (Sir W. Churchill), as the position of a bankrupt nation, we now see that in order to pursue what is tantamount to a class policy all the great things which we did are to be sacrificed.
  The people should have been made aware of the extent of our economic unbalance. Can any hon. Member on either side imagine Sir Stafford Cripps coming to the Dispatch Box and making the kind of speech that we heard from the Chancellor today, with our adverse trade balance running the way that it is? Of course not.
  Mr. H. Hynd: He was too honest.
  Mr. Lee: Sir Stafford Cripps was sneered at as "Austerity" Cripps, but he created the policy which brought the nation from bankruptcy. There are no men of that calibre on the Government Front Bench now who are prepared to tell the people, irrespective of elections, that the nation's position is dangerous and that it is necessary to take certain steps to obviate the dangers.
  Throughout the world great manufacturing industries are growing up in nations

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  which previously were our customers, and we know that the production of the raw materials of industry is not keeping pace with the increased development and expansion of the manufacturing industries. When winding up a debate on science and industry, I complained some time ago that the Government had economised on the Department of Scientific and Industrial Research and that the geological survey which we had asked that Department to undertake was being retarded because of the economies that were being forced upon the D.S.I.R. In fact, that Department's report in 1953 showed that because of those economies the rate of progress was such that the geological survey could not be finished for 100 years. Because of our exposure of the Government's policies they have since been forced to give the D.S.I.R. more money, but I should like to know at what pace the geological survey is proceeding.
  How soon can we know what raw materials and minerals are below even our own soil? What a paradox it is that here, in the home of the Industrial Revolution, no one yet knows what raw materials lie beneath our own soil. There has been a great deal of talk about Commonwealth expansion. Have the Government agreed to find capital to assist the Commonwealth Governments to undertake similar research?
  These are the vital issues which the Chancellor should have tackled today. He did not get anywhere beneath the surface. He merely hoped that by holding out the carrot of 6d. off Income Tax, he would preserve his party's majority. As one of my hon. Friends has pointed out, the increase in rents which must flow from the increase in the Bank Rate, and the increased interest which local authorities must now pay for their borrowing, will more than offset the benefits which can be obtained by the average working man from 6d. in the £ off Income Tax. And so we see the same old game from the Tories: when something is given with one hand, more is taken away with the other hand.
  The majority of old-age pensioners are grateful for the advance in pensions, not realising that there is no reason why they should not have had it two years ago. And yet almost in the same week as the Chancellor at last concedes the advance in pensions the rents of the very
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  same people probably will rise and thereby the advance in old age pensions will disappear. But that will not be the case with the higher income groups; theirs is a positive gain. That is why they say, "Thank God we have a Tory Government. We are in a privileged position."
  The trade unions have advised the Chancellor of the Exchequer every year on his Budget proposals, but on almost every occasion he has ignored them. Despite this damping down of the unions' enthusiasm to assist in national survival, I am convinced that they will continue to play the rô le they have played for so many years and will do their best to maintain the liaison and partnership between Government and the unions which existed in the days after 1945 and which saved the nation from bankruptcy.
  I hope that the result of this political electioneering Budget will be that the vast majority of people realise that a Government which engages in this kind of irresponsibility, when the nation is fighting for its existence, is no Government to be maintained here for another five years.
  8.0 p.m.
  Mr. John Rankin: We have listened to the introduction of a Budget which may go down in history as a classical example of anticlimax in financial manipulation. The Chancellor painted a picture in the rosiest of colours: production is going up, productivity is increasing, wages, social services and everything like that are doing well and, above all, taxes are falling. Hon. Members on all sides of the Committee will agree that it is a long while since we have had such a rosy picture.
  There was a strange anticlimax. The Chancellor declared that he had a surplus of £433 million for this year in the Treasury coffers and that in the coming year he expected to find another surplus of £282 million; yet he had to convey that surplus was entirely non-existent in our trading relations with foreign countries. In the first three months of this year the balance of payments was in deficit to the extent of practically £80 million. The Chancellor well knew that that was a serious position, because in the corresponding period of last year the deficit was £40 million. The position has considerably worsened.

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  There was the Chancellor of the Exchequer this afternoon, with all the money that he needed to bestow largesse all around, but he was unable to touch all of it. He was like Tantalus, chained to a pillar, while the refreshing water that would have brought new spirit to the people of this country was just outside his reach. He could not touch it because of the balance of payments debt that he carries on his shoulders. If that deficit continues to rise at its present rate, as it well may—the danger of a trade recession was certainly present in the mind of the Chancellor—it is possible that the right hon. Gentleman may be faced in the next three months, as well as in the next two quarters of the year, with deficits not far different from the one that faces him now, and that at the end of the year, while having a surplus in the home account of £282 million, he may have a deficit in the external account of nearly £300 million.
  That is the position that stayed his hand this afternoon. That was the anticlimax to the speech that he delivered. If it were possible to use the home surplus to meet the debts that may face us abroad, instead of having something to distribute we should actually be in deficit by a sum varying from £20 to £40 million. That is the real position of the country. It does not justify the rosy picture that the Chancellor painted, and that he would not have painted, if he had been facing that position honestly.
  Some people are very pleased with the Budget. The hon. Member for Dorset, North (Mr. Crouch) said he thought it was very successful; no wonder. He represents a farming division. His division is part of that section of the community who will be subsidised productively in the Budget to the extent of £323 million. The farmers will support the Budget because "Rab's in his heaven. All's well with the farming community"; so the hon. Member for Dorset, North was pleased.
  The hon. Member should not forget that when the Government came into power subsidies were being given to the people who have to eat farm produce, and that they amounted to £410 million. They helped to keep down the cost of living to ordinary working people. When seeking the suffrages of the people of Great Britain, the Tory Party was asked,
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  "Will you cut the subsidies that are given on the food of the people?" The reply given to millions of electors—who were diddled by it into voting for the Tories—by Lord Woolton, if I am able to mention such an august name in this place, was, "Whatever we may do if returned to power, we shall not cut food subsidies."
  What did the Tory Party do when it was returned to power? It cut the food subsidies from £400 million to £250 million, and the cost of living of the people, who were thus set free, has been one of the problems of the Government ever since. The people have not been able to benefit from the surplus which the Chancellor had available because his hand was stayed by the fact that he faces this position, as the hon. Member for Handsworth (Sir E. Boyle), whom we congratulate upon his new appointment as Economic Secretary to the Treasury, will learn to his cost before he is very much older.
  Mr. Paul Williams: The hon. Gentleman is talking about the cost of living. I have the great privilege of representing a part of Sunderland, where the majority of the people, in fact 80 per cent. of the male population, are engaged in shipbuilding and allied trades. In 1951, there were practically no television licences operating in Sunderland, but at the end of last month there were 17,000. That represents one licence for every three houses in a very industrialised section of the community. Does not the hon. Member agree that that is an indication of increased prosperity?
  Mr. Rankin: I, too, have the pleasure and privilege of representing a great shipbuilding area, and I probably do so with a greater sense of my security in the future than does the hon. Gentleman. I cannot, from my division, echo the words that he has just used. They may apply to Sunderland, but not to the Govan division, which I hope to represent in the next Parliament in place of the division which I represent at present.
  I am willing to enter into verbal combat with the hon. Member on the question of television. I ask him whether it is not strange that while the number of licences issued in 1951 was a little over 1 million, by the end of 1954 4,400,000 licences had been issued yet one has only to go among working-class homes to find that as far as the aerial is evidence—and, of course, it is not complete evidence—it

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  does not seem that the working classes have been participating very largely in the issue of new television sets.
  Mr. Williams: I issue, across the Floor, an invitation to the hon. Member to accompany me anywhere he likes in County Durham, where he will find his statement disproved.
  Mr. Rankin: Let the hon. Member come back to the House of Commons first, after the General Election. I do not mind going anywhere with him. He is a very pleasant and agreeable young man.
  Mr. A. C. Manuel: The hon. Member for Sunderland, South (Mr. P. Williams) is only a very young Tory yet.
  Mr. Rankin: I am sure that the hon. Member for Sunderland, South will forgive me if I do not pursue the matter too far.
  I have been trying to show that, whatever his desires might have been, the Chancellor's hand was stayed because of the gravity of our position internationally. Because of that, the old folks have been left out, and I agree with every word my hon. Friend the Member for Kirkcaldy Burghs (Mr. Hubbard) said on that point. Entertainment, which is a necessary aspect of people's lives today, has been neglected for that same reason. We who live in Scotland know the difficulties which the entertainments industry faces there.
  In my own division, where cinemas charge very low prices indeed of 8d., 9d. or 1s., with few going beyond 2s. 3d. a seat, the cinema industry is facing difficulties because of the tremendous demand which the Treasury makes upon it. Every year £37 million is extracted from the cinemas and, at the same time, £3 million is given willingly by them to the productive side. The cinemas have to find £40 million while receipts are falling from quarter to quarter and from year to year.
  Although the cinemas are faced with that situation, and with the competition of television and of evening football matches, the Chancellor, hoping to reap the taxation, has refused to give any help because he has to face a great and growing problem. I said that the hon. Member for Dorset, North, however, was satisfied. The subsidies are all right for the farmer. The subsidies were cut for
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  the community, despite a pledge made over the wireless to millions of people that they would not be cut. When the Tories go back to the people on 6th May they will have to answer for that sin whenever they appear on their platforms.
  I do not use the word "petty" in any unkind spirit, but the excuse that has been made for the somewhat petty alleviations which the Chancellor has granted is that they will probably help production. The right hon. Gentleman has reduced Purchase Tax on cotton and linen by 50 per cent. When he made that statement I felt quite thrilled, but he then said that in a full year it would cost us £3¼ million. It seemed to me a piece of bathos that such a tiny sum of money should have been worked up earlier in his speech as a great gesture towards the reviving of an industry which was suffering.
  The Chancellor might have done something for the industry in another way. On 29th March, 1952, one of the great firms in that industry, Morton Sundour Fabrics, issued 14 shares for every share that was held—a capital appreciation of 1,400 per cent. in an industry which has today got from the Chancellor £3 million to keep it breathing. This capital appreciation is the one thing which has distinguished the run of the Tory Government since 1951. There have been bonuses, free bonus shares and high dividends and, of course, the people have been set free.
  The same thing is true of almost any industry in the engineering or commercial life of the country. Cerebos which produces a salt that is used on almost every table in the country, issued £3 for every £1 share held during the period with which I am dealing. No wonder that we are told that the salt has not yet lost its savour. The same thing has happened in the case of Tootal ties and, as to "Milky Way," the farmers who, through their distributive agencies, have been distributing the milk which is subsidised by this Parliament were able to issue one £1 share for every share held by their shareholders. We are subsidising today an industry which can do that.
  The Chancellor might have approached that problem in a somewhat different way. He could have thought of applying a capital gains tax, which is used in America, and from the product—which

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  would not have increased total consumption, which he wants to keep down—he could have alleviated a little more the lot of the old-age pensioners. It has been claimed that this reduction of 6d. in the standard rate of Income Tax will help industry. That is not a new argument. We heard it last year and we are hearing it again.
  Two years ago the standard rate of Income Tax was reduced and the Excess Profits Levy was abolished. Private companies whose incomes had increased by nearly £200 million in 1954 found themselves relieved of tax payments to the extent of £80 million by those two actions on the part of the Chancellor. Where did the £80 million go? Was it ploughed back into industry to help production, as the Chancellor wanted? It is curious, but in that year dividends increased by almost the amount that the companies were saved in paying to the Chancellor of the Exchequer. In other words, dividends increased by almost £80 million.
  Let us look at another angle of this question. Let us take the motor car industry. In 1950 the cars produced for the home market were valued, at factory prices, at £65 million. In 1954, this figure had risen to £205 million. That is quite a welcome sign, but the metal-using industries as a whole increased production by 8 per cent. above the 1953 figure. Those figures are taken from the Economic Survey. The number of cars produced rose by 25 per cent. This, again, was very welcome, but while the value of motor car exports rose by 13 per cent. the value of sales on the home market rose by 33⅓ per cent. Since 1951 the value of the private car sales on the home market has increased from £70 million to £135 million in 1954. In a way, that would not be an unwelcome sign if, at the same time, the exports of the metal-using industries had not fallen by £30 million.
  We do not live by selling motor cars on the home market. We live by our exports. That is what the Chancellor wants to maintain. That is what he hopes will be the result of the financial policy he is pursuing, but that is what is failing because he has refused to operate the physical controls that Labour operated. He has refused to say to the
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  producers of motor cars, "You will get steel for that purpose if you are going to export your cars." He has set them free to sell the cars wherever they like, and the natural result is that the cars are being sold on the home market, because it is easier there and the roads of Great Britain are today a testimony to the foolish policy that is being pursued by the Tory Government. All he is doing is removing from his own shoulders to the shoulders of the Minister of Transport and Civil Aviation the problems which he ought to be facing.
  I suggest that the policy that is being followed is failing, and we ought not to be following the policy of depending on financial controls to sustain and encourage our exports. It has been failing for the last four years, and this will have to be reviewed. If Labour returns to power, as I am sure it will, then that is one of the first things which a Labour Government will have to tackle.
  Not only do we depend on our exports, but we also depend on our agriculture. The hon. Member for Dorset, North who sits for an agricultural division—I am sorry he is not here—would not have been as happy about the position of agriculture if he had read the Economic Survey produced by his Government. There, we are told that in 1954 there was a reduction of 500,000 acres in our tillage area and in our yield per acre, compared with 1953. This is serious.
  The total crop production in 1954–55 will be down by 2,580,000 tons, compared with 1953. While it is true that livestock production will be up by 162,000 tons, the milk decrease will be 7 million gallons for the year just finished. The net agricultural output as a whole will be down by two points. I cannot say that that is a happy position where exports are declining and agriculture is not thriving as it ought.
  These are the things which place the Chancellor of the Exchequer today in that position of anti-climax where he has had plenty of money at home yet is unable to use it because of the precarious situation in which we are placed on the balance of payments' front. I know, of course, that the excuse is that last summer was a bad summer. But that is only an excuse. The fact is that it only emphasised the position that we must husband the resources

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  of this little island more carefully than the Tories are doing if we are to feed our people as they ought to be fed.
  I say in all sincerity to the Chancellor that he ought to think again about the road along which he is going. He should remember the lady who took the wrong turning. If he does not re-think his policies then, if he continues on the road along which he is going today, he may see a very red glow before he reaches the end. There was a famous character in our history who, when leaving the town of London, paused for a moment and turned again. I suggest that, while the Chancellor still has time, he should follow the example of Dick Whittington and turn again.
  8.29 p.m.
  Lieut-Colonel Marcus Lipton: The Budget statement which we have heard this afternoon will come as a great disappointment to large numbers of people, and the speeches we have heard already will be but the forerunner of a widespread expression of public dissatisfaction and indignation with the financial programme outlined by the Chancellor of the Exchequer.
  We hear that the prosperity of the country has increased, but I would direct the attention of the Committee to Table 11 in page 22 of the Economic Survey for 1955, which shows the consumption of food in the United Kingdom during the past few years. The significant thing about that table is that in 1954, as compared with 1950, the consumption of dairy products, eggs and fresh vegetables has gone down.
  It is a strange state of affairs when, as a result of the alleged prosperity introduced by the present Administration, the consumption of such essential articles of food has gone down in the past four years. No one would suggest that those articles can be regarded as luxuries, yet their consumption has decreased. Why? Because large numbers of humble people are not able to afford to buy those articles of food at their present prices.
  The Chancellor of the Exchequer pulled out the only plum he could pull out—6d. off the Income Tax. At the same time as he announced this concession he suggested, more or less, "Although I am giving you 6d. off Income Tax, do not spend it." What guarantee, what plan,
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  what control has the right hon. Gentleman in mind to ensure that this is not spent on unnecessary goods? What guarantee can he give us that this Income Tax concession will not increase the excess of demand about which the Government have been concerned for a considerable time?
  It is because of that excess of demand that the Bank Rate has had to be increased. Various restrictions have had to be imposed on hire purchase because the demand was too great. Yet here we have millions of pounds being thrown into the pockets of people who can do without it. The net effect must be to increase demand and thus create a situation which will be much worse than it has been hitherto. An indiscriminate tax concession of this kind, which benefits those who have to a far greater extent than those who have not, must be a stimulus to spending and will by no means tend to increase our exports. If that is the object of the Income Tax concession, we are entitled to ask the Government to indicate what guarantees they can give or what provision has been made to ensure that this potential spending power, which is being added to the spending power of people who already have too much, will really be diverted into the export trade.
  It will not help to keep the economy on an even keel and—although we all hope that this will not happen—it will certainly increase the possibility of an economic recession, signs of which, unfortunately, have appeared already in our textile areas. The Government know the danger there, but they have announced what even the most ardent supporters of the Government in Lancashire must admit is an absolutely paltry concession in a hopeless attempt to solve a very serious economic problem.
  I said just now that large numbers of people will be profoundly disappointed by the Budget. The Chancellor seems to suffer from the curious idea that indirect taxation is not a matter which needs to be given any priority when considering the rising cost of living. He has done nothing to reduce the petrol duty. Many responsible organisations have produced figures which show conclusively that the petrol duty has an important effect, increasing distribution costs and in that way increasing the cost of living for every section of the community. We have been

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  asking the Government to make a concession with regard to light hydrocarbon oils for industrial purposes, which would cost very little, but that very reasonable demand has been completely ignored.
  The cogent arguments put forward by the entertainments industry have been dismissed without any real consideration. What is the use of giving a concession of 6d. off Income Tax to actors and actresses who are unable to earn a livelihood at all? Would it not be better, from the Government's point of view, to encourage actors and actresses to earn some money on which they would be glad to pay Income Tax? In South London, the theatres and music halls have been closing down. The only theatre left in South London is at Streatham. It produces good plays, but it has been losing money for some years and will find it impossible to carry on. The only music hall left in South London is in my constituency. This means that because the Government ignore the legitimate demands of the entertainments industry an increasing number of people will be denied the opportunity of making a living and earning an income upon which to pay tax. Also, the tax revenue from greyhound racing has been falling steadily for some time past.
  Many of us hoped that the Government would be a little more generous about the repayment of post-war credits, a concession which would have been of direct benefit to people in very humble circumstances. Nothing has been done. Large numbers of people have to seek National Assistance while possessing the entitlement at some time or other to the repayment of post-war credits. Something ought to have been done in that direction.
  If the Chancellor had really wanted to make a concession which would be of some value to wage earners and, in particular, low wage earners, why has he not given them a concession by allowing them to set off against their Income Tax liability the cost of travelling to their work? As a result of the tax on petrol among other things, the cost of travel is increasing and so we have a vicious circle in which the Chancellor of the Exchequer, by his economic policies, raises the cost of living, raises the cost of travel, and then denies to wage earners the right to deduct from their taxable income the cost of travelling to and from work.
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  The Chancellor of the Exchequer may think that he has made a very widespread concession by taking 6d. off Income Tax. But I remember that not very long ago the Chancellor gave figures in the House to show that 8,600,000 workers earned less than £5 a week after tax and National Insurance contributions had been paid. I remember that on the same occasion he said that approximately another 10 million people earned less than £10 a week, yet the Tory propagandists and Ministers say that the prosperity of the people is increasing and that the average income of all the adult working population is about £10 a week. The Chancellor of the Exchequer's own figures indicate that out of a total population of more than 23 million more than 18 million workers earn less than the average of £9 17s. 3d. a week. That will give some idea of the value of the Income Tax concession which was announced by the Chancellor of the Exchequer this afternoon.
  When we talk about tax concessions which will enable industry to compete in the export markets, let us not forget that industry is already deriving very considerable advantage from derating. That should enable industry to compete in the export markets. I repeat that the Income Tax concession to wealthy commercial and industrial undertakings is not likely to reduce the cost of the product, nor to increase exports. I should like to think that the immediate effect of the 6d. reduction in Income Tax will be an increase in the export of motor cars, or a reduction in the price of motor cars to the home purchaser.
  Another subject which should engage the Chancellor's attention, and to which I have referred on previous occasions, is the extent to which the Exchequer already subsidises industry. It can be gauged from the amount of money which is spent by commercial firms on advertising. The great beauty of advertising is that its whole cost can be charged against profits. In other words, almost half the cost of the advertising in this country by manufacturers of soap powders and other people is, in effect, borne by the Exchequer. When will the Chancellor of the Exchequer make up his mind that at least a proportion of this expenditure on advertising shall not be a deductible expense in the computation of profits?
  Very large sums of money are involved, as will be seen from a statistical review

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  of Press advertising which was published recently. That indicated that in 1954 there was a 20 per cent. increase in Press advertising over that for 1953. In 1954, about £71 million was spent in the various papers in London and the provinces and in magazines and trade papers compared with less than £59 million in 1953.
  It is, of course, worth while for these large companies to spend large sums on advertising when, in effect, almost half the cost of it is borne by the Treasury. For example, figures which I have show that the amount spent by Cadburys on advertising its chocolate and cocoa products last year was £578,000. Persil, the soap powder firm, spent £576,000. Kellogg, the cereal food manufacturers, spent £563,000, and the Shell Oil Company, £452,000. I think that the figures would seem to establish that 25 per cent. of the selling price of every packet of detergent sold in this country is spent on advertising. Here is a rich field which, I would suggest, the Chancellor ought to examine if he really wants to improve the public funds and find new sources of revenue which would not add to the cost of living of an already overburdened population.
  Reference has already been made to the difficulties of the old-age pensioners, and I have quoted figures which show that to millions of people 6d. off the Income Tax does not mean a thing. When hon. Members opposite go to their constituencies in the forthcoming General Election, I should like them to take note of the answers when they tell old-age pensioners who are drawing National Assistance, and who are now to be 2s. 6d. a week better off as a result of the changes in the pension and National Assistance scales, that one of the things which the Government have done is to take 6d. off the Income Tax.
  In any event, what the Government are doing, as has been mentioned by previous speakers, is to give with one hand and to take away far more with the other. When the Government talk about taking 6d. off the Income Tax, they should in all honesty remind people that the £1 of October, 1951, is now worth only 18s. 6d., so, in fact, there has been a cut of 1s. 6d. in the £ in the standard of living of everyone, compared with 1951. There has been a cut in the purchasing power of the £ to the extent of 1s. 6d., that is to say,
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  7½ per cent. If the Government can persuade the ordinary people that by announcing this concession of 6d. off Income Tax they are restoring to them the 7½ per cent. cut in the internal purchasing value of the £, I hope that they will get a better response than I think they will receive in the most backward Conservative areas.
  For all these reasons, I think that the Budget will be regarded merely as an electioneering manoeuvre on the part of the Chancellor, to retain those marginal seats at present held by Conservative Members by a very tiny majority, and possibly to win one or two marginal seats which are held by a narrow majority by Opposition Members. There is no other justification whatsoever for the Budget which we have heard this afternoon.
  8.50 p.m.
  Mr. Thomas Oswald: I do not want to burden the Committee by speaking at great length, but it is apparent from the numbers present on both sides that hon. Members are somewhat disturbed by the Budget introduced by the Chancellor today. Many of us were keenly disappointed, primarily because some of the local newspapers, especially those in Scotland, indulged in a tremendous amount of wishful thinking in the past three weeks, suggesting that the Chancellor was about to give back to the taxpayer millions of pounds.
  Today we find ourselves in the invidious, fantastic and ridiculous position that the Chancellor once again has given what little concession he has to those who can best do without it and do not really require it. There was nothing at all in his speech about any cut in the petrol tax which might have brought about cheaper fares and lower road haulage costs which, by and large, might have brought down the price of many commodities. There was no suggestion of any reduction in the duty on industrial oils, although almost every hon. Member has had a continuous flow of correspondence from the industrial undertakings which use such oils asking for relief from the burden.
  There was not one word about any cut in Entertainments Duty, especially in cinemas, although reams of paper have been sent to all hon. Members asking them to do something to keep our

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  cinemas going and to give the people the opportunity of enjoying a cheap form of entertainment. There was not one word about a remission of tax for the live theatre although, again, over the past five or six weeks we have been receiving in almost every mail requests not only from local theatres but from national theatres—from the managements, Equity, the Variety Artistes' Federation and others who make their living from the live theatre.
  There was not one word about any concession to the hundreds of thousands of poor souls who are on fixed incomes. We talk glibly in this Chamber about giving a concession to the old-age pensioners. We have asked them to go through a hard winter and to wait until 25th April before any concession is given to them. What is the situation? We have reached a stage where those old people are not only feeling the pinch but are very much disturbed at the attitude of the Government to whom they looked for a further concession today.
  As my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton) said, if hon. Members opposite think that they can go to their constituencies during the General Election campaign and convince the old-age pensioners that, because 6d. in the £ has been given as a concession in Income Tax, they should well into the polling booths to record their votes for Government supporters, they are mistaken. The artist who prepared the Government slogans which are on the hoardings painted them on boomerangs. Assuredly those boomerangs will come back upon the Government and their spokesmen for all they promised to do and failed to carry out.
  I make a special plea for the pensioners. I hold in my hand correspondence about one of my constituents. I have permission to publicise it. The details refer to an old couple who live in Central Edinburgh. Both are old-age pensioners. The man is incapable of working. In 1941 their only son, a flight sergeant in the Royal Air Force, was shot down and never returned to his home. They received a message from Buckingham Palace which read:
  "The Queen and I offer you our heartfelt sympathy in your great sorrow. We pray that your country's gratitude for a life so nobly given in its service may bring you some measure of consolation."
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  That was signed by His late Majesty King George VI.
  This old couple received a pension for the loss of their son valued at 13s. Two years ago, because they were in receipt of a small pension from the Post Office, the 13s. was cut to 5s. 6d. I raised the matter with the Minister of Pensions and National Insurance. I have in my hand correspondence from the right hon. Gentleman stating that, after due consideration and a special plea having been made on their behalf, he was restoring the pension to 13s. I have another letter with a different date, which states:
  "With reference to the war pension of 13s. a week payment to you arising from the death of James Flannagan, I have to remind you that the award is based upon your financial circumstances"—
  a means test—
  "and it is necessary to take into account your total income from whatever source it is derived. In view of the increase in your retirement pension, it is necessary to reduce your dependant's pension to 5s. a week."
  What a noble sacrifice was made. Yet it was valued at 13s.
  Not so many weeks ago the Minister of Pensions and National Insurance claimed that it was because of the increase in the cost of living that there was to be an increase in retirement pensions. This couple will receive the increase of 11s. in the retirement pension on 25th April. But the dependant's pension of 13s. has been cut to 5s., and so their total increase will not be 11s. but 3s.—1s. 6d. each for the loss of their son who went out as one of the few in an endeavour to save this nation.
  I say to hon. Members opposite, "Do not be smug about this, because I am quoting only one such case." My hon. Friend the Member for Edinburgh, East (Mr. Willis) showed me a similar letter which he has dispatched today to the Minister. I am dispatching this letter to the Minister this evening and asking him to restore the pension in the same way as he did two years ago because of special circumstances. It is all very well to tell people that they can still go to the National Assistance Board and make a special plea, but in every instance where a supplementary pension is paid it is taken into account as a consequence of the so-called increase in retirement pensions.

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  I wish to make a special plea to the Chancellor of the Exchequer that before his Finance Bill reaches finality he should pay some regard to those people who will suffer as a result of increased rents and rates and transportation costs and the still continuing rise in the cost of living.
  If as the Government claim we have reached the stage of being on the verge of prosperity, why cannot some of that prosperity be paid back to the taxpayers who created it? Surely those who have built up this prosperity are entitled to a greater share of it? Instead of that, all the concessions that have been given today are being passed on to those in the higher income groups. It is all very well for an hon. Gentleman opposite to shake his head, but he knows that this is a factual statement.
  I have raised this matter as a special plea on behalf of those who at the moment are finding themselves in difficulty, and I sincerely hope and trust that, before we reach the end of this shortened debate on the Budget and the Finance Bill, more concessions will be squeezed from this recalcitrant Government.
  Whereupon, Motion made, and Question, That the Chairman do report Progress and ask leave to sit again—[Mr. E. Wakefield]—put and agreed to.
  Resolutions to be reported Tomorrow. Committee also report Progress; to sit again Tomorrow.

BRITISH INFORMATION SERVICES
Motion made, and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]
9.2 p.m.
Dr. Horace King: Recently, on behalf of the Foreign Office, I made a nine weeks' lecture tour in the United States, Canada, and Iceland, and I wish tonight to make a few observations on my American visit. At some other time, I hope to have the opportunity of speaking of my experiences with the friendly Icelandic nation, and, particularly, to speak about the unhappy dispute that exists between us and whether we can bring it to an end.
Tonight, I wish to confine my remarks to the New World, but, first, I should like to thank Parliament for the honour it
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did me in selecting me as a spokesman on behalf of Britain in America. I should also like to pay tribute to the unsung but magnificent work of the Foreign Service and of British Information Services. It was my privilege to meet the representatives of this service in Washington, Ottawa, Reykjavik, Chicago, St. Louis, Cincinnati, New Orleans, Atlanta, Norfolk, Virginia, Pittsburgh and New York, and I spent many busy hours with members of the Foreign Service in these American cities and towns.
I saw at first hand men and women giving devoted service to Britain, often under quite serious handicaps, and I noted with regret that these people had been hurt, not so much by the Report of the Select Committee on the Foreign Service, but by the way in which the British Press handled that Report, pulling out details of high expenses, often necessarily incurred because of the disadvantageous rates of exchange, and very often because of the foreign policy of the Government to which they were accredited. These Press reports gave a false impression of Foreign Service men as living extravagantly. I found that they were living ordinarily and were working hard, and I am glad to have the opportunity of saying so.
Criticisms have been made recently in this House of proposals to rebuild and expand the Washington Embassy. I saw the present crowded and unsatisfactory Embassy buildings at Washington and I hope that the Government will push on with the reconstruction project.
I urge the Government to give serious and detailed consideration to the problem of the education of the children of our men in the Foreign Service. For both the military man and the civilian who serve their country abroad, the question of their children's education is a grave and serious matter. These men, naturally, want their children to be educated in the British way and, equally naturally, their mothers want to see their children occasionally. For those sent back to England to go to school the problem sometimes arises of where children should go during the vacations when their fathers and mothers are thousands of miles away. Men who serve Britain abroad should be assured that their children will not suffer for it. I should like to see a committee set up to examine this problem in detail.

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In the meantime, I suggest that the Foreign Office itself can help in a small way by remembering that a man may have children when it is indulging in the complicated and sometimes seemingly fantastic task of posting and re-posting its servants abroad. I may be alone in my opinion that one of the faults of the Civil Service—I believe it has very few, and I was very glad to see the movement in America towards a civil service of our own type—is the habit of moving a man from a job the moment he gets to know something about it. It seems that we are so afraid of a man getting into a groove that once a young civil servant shows some ability in the labour relations department he is moved, probably to the agricultural department—or if someone spends two years in, say, Sierra Leone, and is really getting the feel of the post and beginning to do useful work, he is moved to Tokio.
I admit that we want general practitioners in the Foreign Service—men who can be consuls anywhere—but we also need specialists. When a man is really beginning to get down to all that is involved in occupying an important post, it seems to me that we should leave him there for some time. I know the arguments for moving people, and I can imagine that consuls would not want to be fixed for ever in one of the stickier posts, but I believe that we overdo the moving about of the officers of State.
I was glad to find the British Information Services and the Foreign Service abroad beginning to make contact not only with the old exclusive circles but with the ordinary people of America and Canada. I thought it right that arrangements should be made for me to meet the people whom one might call "important people," but to me it was much more important—not merely because I am a Labour man—that I should meet ordinary folk like myself. Certainly, I thought it right that arrangements were made for me to meet the diplomats, statesmen, and members of the English-Speaking Union, but also to meet as I did members of Rotary Clubs, Kiwanis "Lions," "Elks," "Moose" and all the array of American "animals," the trade unionists in their labour clubs, pickets out on strike, and elementary school teachers and children, as well as university professors and students.
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Incidentally, I suggest that the British Information Services can do their most useful work in any country in the world by making contacts with the young folk of that country. If friendship between free peoples is to flourish and develop the contacts must be made at all levels. Friendship cannot be imposed upon peoples by Governments; it must take place at the ground roots. I suggest to the British Information Services and the Foreign Service that the contacts we make in small towns in America and Canada matter. Our contacts should not be confined to the cities, but should reach out to the farms, villages and factories.
I urge the Foreign Secretary and the Joint Under-Secretary of State not to regard their labour attaches as frills or the curious invention of the Labour Government, but as a vital piece of the work of the Foreign Service and of the British Information Services. I saw the labour attaches at work in America and was impressed by the importance of the contacts they are making with trade unionists in America. I was glad to see that the policy of the late Ernest Bevin—one of the country's greatest Foreign Secretaries—was beginning to bear fruit, and I was pleased to meet among the consuls men who had begun their education in British elementary schools. Democracy means all kinds of people, and if America can teach us one thing above any other in the contacts that we seek to make across the water, it is the folly of snobbery.
But we want more British people to go abroad. At present, apart from official visitors, about the only ones who can go are businessmen on business; and I would not decry the importance of businessmen making contacts in America and Canada. In an earlier debate today, we have had stressed the importance of businessmen going to Canada and to the New World—that enormous world—in search of markets for British products. But while businessmen can play their part, they do not by any means represent all the community.
There are mothers who cannot visit their sons in the New World. There are mothers-in-law of G.I.s, and there are groups of British citizens who would be glad to send representatives across the water if the Government took certain steps. One of these steps would be to ease dollar restrictions. I read in a Press

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article that it is estimated that the cost of completely wiping out dollar restrictions would be 3 million dollars. I think it would probably be much more than that—I am not an economist; but if it were only 3 million dollars the reward in the interlinkings between this country and America and Canada would be infinitely more than the cost of those 3 million dollars.
If one would not go as far as completely abolishing dollar restrictions, at any rate in the case of bona fide visits and exchanges, once they were satisfied about their good faith, the Government might make some easement of the dollar position. We should encourage the interchange of clergy, of teachers, of professors, of trade unionists and of Press men. American and British Press men could learn quite a lot from each other, and it would not only be the Americans who would learn from the British. We should encourage the interchange of radio producers. My experiences of commercial radio in America have made me tremendously more enthusiastic in my admiration of the B.B.C., but even the B.B.C. has something to learn from the informal technique of American radio. One American university which I visited regularly sends a student on exchange each year with the University of Exeter, and this kind of exchange could be multiplied if the Government were sympathetic in their financial policy.
There would have to be financial help. I talked to teachers who were over there on exchange, and at present any British teacher going to America or Canada on exchange does so at considerable financial sacrifice to himself. Governments on both sides of the Atlantic ought to be interested in getting down the cost of trans-Atlantic travel and, if that is impossible, of subsidising bona fide exchanges of the kind I have described.
Generous friendliness was offered to me as a British Member of Parliament wherever I went in the United States and Canada. I would not weary the House in expatiating on the hundreds of kindnesses shown to me, but from a host of courtesies I would mention two Parliamentary ones. In Ottawa I was graciously received by Mr. Speaker Baudoin and by the leaders of all parties in the Canadian Parliament, and in Washington by Congressman Yates of the House of
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Representatives and by Senator Know-land and, through his kindness, by the United States Senate. It will interest hon. Members to know that this latter body received both the hon. Member for Bridlington (Mr. Wood) and myself on the Floor of the House. Afterwards I attempted to thrash out with Senator Knowland the differences between British and American policies. Apparently from my behaviour and his behaviour since neither of us converted the other, but we argued fearlessly and as friends.
The important thing in what I am attempting to say tonight is that friendship with America and Canada does not mean our seeing eye to eye with either country. The unity of the free world does not mean the uniformity of the free world. We have differences of opinion with America, and it is not good friendship to conceal them. I did not find Americans regarding my different point of view as unfriendly. Incidentally, I differed less from some Americans than they appeared to differ from each other. I was a little surprised at the asperities of American politics, but I differed less from some Americans than from hon. Members of the party opposite.
Mr. Osborne: And from the hon. Member's own party.
Dr. King: I argued with Republicans and Democrats of every shade and stated firmly the British point of view. While nobody ever expects to convert an opponent, no two intelligent opponents ever leave an argument exactly as they came into it. I found American opinion to be no more monolithic than British opinion. I found no American who wanted war, and I found everywhere in America the same realisation as is possessed by every sane man here—and indeed on either side of the Iron Curtain—that a third World War would mean all vanquished and no victors and world disaster whoever technically won the war.
I found plenty of Americans who would take the risk over Quemoy and the Tachen Islands. It is the duty of our Foreign Service in America to point out the risk involved and our unwillingness that America should take that risk. I found that all Americans regard Formosa somewhat in the way in which we regard Gibraltar and Russia regards Poland and the States of Eastern Europe, namely as

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territory which must not be in the hands of enemies and so threaten their own safety.
There may be people in America who still think of the possibility of rolling back Communism by armed intervention in the totalitarian States, but I did not meet such people, and I think that that belief is perishing in the United States. I believe that most Americans think that such an armed crusade would only rally the invaded countries around their totalitarian rulers. Most—indeed I believe all—Americans I met believe that the job of the free world is to resist further aggression but not to make aggression.
It is important that on our attitude on the things about which we differ—the Chinese Islands, whether Chiang Kai-shek ought to be pinned down, the recognition of Communist China, the fact that we seek some sort of settlement with the Communist world and that a peaceful settlement does not mean that we condone or like Communism—the British Information Service should speak boldly and clearly. On some of these things, where peace is at stake one false move may bring world calamity and the collective wisdom of the free nations alone can save peace. I attempted, in my way as a back Bencher in this Parliament, to state the British view firmly, and I found no resentment in any corner of America when I did so.
Again, from both sides of the Atlantic, it seems to me that we seem to export our worst features. The American cinema does America a bad service sometimes in the picture it presents to the world of American life. Newspapers on both sides of the Atlantic seem to regard only the seamy side of life as news, and up to now many English people have had their view of America only from American crime comics. Hon. Members may have read in the "New York Times" the plaintive if ironic letter of a juvenile who said he was not a delinquent, had not cut his sister's throat and did not feed on narcotics and, because he was a normal child like most American and English children, he did not get into the newspapers.
I must speak as I find and say that American reporting of British affairs was more accurate on the whole than some British reporting of American affairs. In defence of our newspapers I would only
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say that the Americans had more space in which to do it. It hardly seems necessary at this late hour to say that McCarthy, for example, is by no means America. One of the pleasant experiences which I had there was becoming aware of the undoubted receding of interference with personal liberty in an exaggerated search for subversiveness, and a new upsurge of the traditional, historical American demand for freedom.
In passing, one might say that one of the greatest political satires in world history is a radio programme called "The Investigator." It has now been recorded on a gramophone record. It tells the story of a committee chairman who dies and goes to Heaven and attempts to clear out subversives like Abraham Lincoln, Socrates and the rest. The fact that this is one of the most popular gramophone records in the United States at the moment is some measure of the reaction of America against excessive interference with freedom.
I believe that Britain has a tremendous contribution to make to world peace and that that contribution is not only in our military strength and our military alliance with N.A.T.O. I believe that with the advent of the H-bomb and even before it—and this wants saying to some Americans—it is sanity and not timidity or cowardice that always makes us in every danger spot of the world press for easement of tension and for peaceful solutions rather than for more active solutions. I believe that we can make that contribution by making, wherever and whenever we have the opportunity, a firm statement of our policy—certainly not by yielding to our mighty American ally because we think that that would be the friendly thing to do. The real friend speaks out straight, and the deep unity of the free way of life, for which so many American, Canadian and British boys died, can stand plain statement of differences of opinion.
No American is going to be patronised by Britain any more. Any assumption of British superiority is either laughed at or resented in America and Canada, and in this both nations are right. By the same token any kowtowing to America is equally disastrous. I wish I had the time and felt that it was fair to speak now of the might, economic power, vitality, and, above all, the wholehearted hospitality of the American people and of how much

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they appreciate similar hospitality shown by British families to their boys in our country. But I want to say a few words about Canada which is part of America, as the Canadians will tell one, and a separate part as they will also tell one.
Foreign Office lecturers have been sent to Canada from this country almost always as a tail-piece to an American visit. I spent a fortnight in Canada and seven weeks in the United States. I would urge the Government, and I would urge the Joint Under-Secretary of State for Foreign Affairs to impress upon his colleague the Under-Secretary of State for Commonwealth Relations, that British information work in Canada is vitally important for its own sake It is beyond my power to describe the warm-blooded friendship of Canada. I mention only one example of a Canadian who came over after my meeting to greet me and proudly said that he was a Scot. I asked him when he left Scotland and he said that his father had left Glasgow when he was four. He still had a deep regard for his allegiance to Scotland.
Canada is a young, dynamic, mighty nation, and everywhere I went I saw the upsurge of this young giant, conscious of its destiny. Canada is one of our best friends. We take our best friends for granted and neglect to cultivate their friendship.
I would therefore urge that the British Information Services should extend its work in Canada and send its speakers right across Canada, not imagining that Canada ends in the Eastern Provinces, as Western Members of the Canadian Parliament very bluntly told me. I should like to see Canadian Members of Parliament, American Congressmen and people of all walks of life coming over here to do in our country the kind of thing that the British Information Services lecturers are doing over there. I think it would be good for an American Congressman to address the kind of political meetings we have in our country. I learned a lot from my meetings in America, but not half as much as American politicians would learn from meeting the free British people in political debate.
The best defence of the free way of life and of peace lies in the free interchange of opinion between the ordinary people of the world. Compared with what we spend on armaments, we do not spend
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enough on this kind of weapon. I asked the Minister to give me the figure, and he was kind enough to tell me that a sum of under £400,000 a year was what we spent on our information services in Canada and in America.
I hope that some day a free passage of men and women without swords or guns in their hands will take place across the Iron Curtain into the countries on the other side, but in the meantime I believe that the best way of avoiding, among free people, divergencies of policy becoming so dangerous as to endanger both peace and freedom and the best way of knitting together those who believe in political freedom is to extend the work which the Foreign Office is doing under the organisation known as British Information.
I wish I had time to refer in detail to the excellent recommendations of the Drogheda Committee, but I will only end by quoting something which sums up all I have been trying to say:
"First.—;The Overseas Information Services play an important and indeed essential rô le in support of our Foreign, Commonwealth and Colonial policies. Second.—;The work should be done well, continuously and on an adequate scale."
Then elsewhere in the Report, the Committee says:
"To exert influence … Information Services must have three characteristics:—Quality—to attract—they must be good Continuity—to hold attention—they must be regular. Reliability—to inspire confidence—they must be honest."
From my experience in the New World I found the British Information Services and the gallant gentlemen of the Consular Service trying to act in the spirit of the Drogheda Report, and I am happy that I have had the privilege of reporting to this House what I saw over there. I would urge the Government to realise that what is spent on this is money well worth spending, and to increase it.
9.30 p.m.
Mr. Peter Smithers: It was a happy thought to invite the hon. Gentleman the Member for Southampton, Test (Dr. King) to go to America on this tour. I knew before he went that the hon. Gentleman would be impressed with the massive generosity and the virility and vigour of the American people, and my private sources of information in the United States tell me that he was particularly thorough in his investigations. For

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example, I am told that the hon. Gentleman played the piano in an old folks' home in St. Louis. I am not sure that he did not sing to the old folk as well. That is the way to find out about the United States. It is really getting down to the grass roots.
The hon. Gentleman will have served two particularly useful purposes if what he has said in the House tonight will help to dispel some ideas in this country and some in the United States: the idea in this country that everybody in the Labour Party is necessarily critical of the Foreign Service, and the idea in the United States that everybody in the Labour Party is necessarily anti-American.
The hon. Gentleman suffers to some extent from the disability of the adolescent whom he mentioned in his speech. He is not, so to speak, a political drug addict or a political mentally deficient. If he had got up and made a slashing attack on the Foreign Service, he would be prominently reported in this country. If he had got up and made a slashing attack on the United States, he might have found space in the American Press. As he has said a lot of useful and sensible and levelheaded things about both, it is ten to one that the Press in either place will not report him—and a great pity it is—even when we get our own Press back the day after tomorrow.
I was glad to hear the hon. Gentleman agree with my opinion that the Foreign Service had been considerably hurt by the Press campaign resulting from the Report of the Select Committee on Estimates about the Foreign Service itself, which gave rise to a wholly false impression of its nature. Having lived with the Foreign Service for many years, though not being a member of it—I was a Service attache—I have no hesitation in saying to the House that diplomacy in the modern age is a hard life. It is hard on the men who carry tremendous burdens of responsibility on very slender pay. It is hard on the wives who have heavy duties, are far from home, and have to compete with foreign colleagues who are much better off. Yet often, on quite slender budgets, they put up a brave show. The entire volume of Press comment on the Report of the Select Committee gave none of that picture, but gave an erroneous and damaging picture of a Foreign Service wallowing in luxury.
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While I am on that point, may I say that I agree with the remarks of the hon. Gentleman about the Washington Embassy and the desirability of improving it. I served there for a number of years and it is a most uncomfortable building to work in. I do not know what it was designed for. It is nice to look at from the outside, but I should think that the inside was designed for a funeral parlour. I worked in a room with one other man, and whenever either of us got up from the desk the other had to get up also. When a certain noble Lord was Ambassador there and we flew the Union Jack every day—because we flew it particularly vigorously in those times—the butler had to go through the Ambassador's bedroom early every morning to run up the flag from the balcony. To my view that is not a good piece of functional design, and if anything can be done to improve the major and minor details in that Embassy it will be a good thing.
The hon. Gentleman had something to say about the exchange of teachers, and I want to say a word about that also because this is an extraordinarily valuable field. Recently, near Basingstoke, I was attending a dinner given by the local community and there was present an American lady teacher who was in this country on an exchange visit. I could tell from the way in which she spoke, and the way in which people spoke to her at that dinner, that she had won the confidence and admiration of the local community at a level quite different from the political and diplomatic level at which it is much easier for those who are able to do so to move. I am sure that such a teacher would make a tremendous and lasting impression on her pupils.
There is at the moment a very distinguished Winchester College master, Mr. Mallett, in the United States studying the methods of teaching in American schools and particularly studying the teaching of American history. That is a subject which is hardly taught in English schools, or, at any rate, when it is taught it is often done in a manner which is almost as peculiar as the teaching of English history in American schools. I believe that he will come back and see what Winchester can do about it. I hope he will. That is a very valuable sort of exchange.

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I hope that the Foreign Office will continue to help in every way possible that kind of exchange, although I believe that in this case it is the English-Speaking Union which is carrying it out.
As we are discussing the matter of exchanges, I think it is right to take the opportunity to record the gratitude of this country for the help made available under the American Smith Mundt Act. Every year a very large number of people from all walks of life are sent to the United States at the expense of the American taxpayers and given a completely free hand in going where they like and seeing what they want to see, and they return to this country with a very much greater understanding of affairs. I am sure that the Smith Mundt Act is a most valuable political contribution in the modern world.
The hon. Gentleman talked about the Information Services. It is often thought of as an organisation which puts out news. However, the fact is that the American Press is not interested in news unless it is hot news. I know from my own bitter experience in a minor capacity of trying to get news across to the Press there than the American Press likes to take its news not from a hand-out from an office, but from being there at the event. The way to get news and views across in the United States is not through the handouts of a Press service but by means of lecture tours such as that carried out by the hon. Member.
From that kind of activity news and views can be picked up on the spot by reporters, incidents and contacts are created, and occasionally the sparks fly, and so forth. That is the way in which it can be done. We must not make the mistake of blaming the Press service in the United States if the newspapers there will not print in toto the hand-outs which are produced, because that is simply not the way in which the American newspapers work.
I quarrel with one thing that the hon. Gentleman said. I thought his speech rather gave the impression that the Diplomatic Service had been democratised by the late Mr. Bevin, for whom I had a great admiration. We ought to pay tribute to the present Prime Minister, who introduced radical reforms which amalgamated the Diplomatic and Consular Services. At the time I had my doubts about this, but it has turned out to be a
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most salutary reform which has resulted in a far wider range of selection of members for the two Services, enabled able men to be promoted and given the Services a means of drawing upon a much wider social field, which is a very valuable thing to be able to do.
I have every confidence in the future of the relationships between our two countries. Since the early days of the war they have undergone a most extraordinary revolution. In the dark days of 1940 we were regarded very often with much suspicion. We were trying to get the United States into the war. We were suspected of being defeated, defeatist, decadent, and all sorts of things. The relationship between us has undergone a radical change. Now that we have gone so far together I am sure that we cannot ever diverge again.
I am sure that the more our politicians can confer and commune with one another and with our peoples the more we shall accelerate the process of fusion of our two civilisations, if I may so call them. I do not know whether the United States is absorbing the British Commonwealth, if the British Commonwealth is absorbing the United States, or whether the two are assimilating one another, but of this I am sure, that today we are becoming one.
9.40 p.m.
Mr. Cyril Osborne: I should like to congratulate the hon. Member for Southampton, Test (Dr. King) on the plea he has made to the Foreign Office and I must compliment the Foreign Office on having chosen such an excellent ambassador to represent us in the United States. Since the war I have been privileged to go to the United States five times and to see the work of the British Information Services. On three occasions when I have returned I have made a plea in the House for more money and better facilities for the work of the B.I.S.
It is of the utmost importance that the Americans should understand our point of view and that we should understand theirs. If the hon. Member for Southampton, Test will allow me to say so, so often from the benches opposite we hear bitter, anti-American sentiments, frequently, I believe, founded on lack of knowledge. I would not use the term total ignorance. It is good to hear the hon. Member make such a fair report on what he found in the

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United States. There is obviously no hope for the free world if the English-speaking peoples fall apart. The very basis of all we hope to attain for ourselves and for our children is in Anglo-American understanding. The greatest enemy of our freedom and our prosperity is that we should not understand the Americans' point of view and that they should not understand ours.
I want to support the plea which the hon. Member has made to the Foreign Office to send more hon. Members like him to the United States. I should especially like to see them going from the other side of the House, although from that point of view I should like to sit there myself while the list was being chosen. It is important, because the hon. Member has not only put the British point of view to the Americans while he has been there but he has come back here to interpret to his own colleagues some of the things he learned while he was in America. The lessons have to be learned both ways.
So many times I have heard hon. Members quite sincerely talk about the "trigger happy" Americans. I have heard them talk about Americans as though they were desperately anxious to start a third world war. Nobody who has been to America could fail to know that there is no nation that desires peace more than the Americans, who are paying more for it.
Dr. King: I am sure that the hon. Member wants to do a service to the cause of Anglo-American relations, but he must be fair to my hon. Friends who have made criticisms of the policies of some Americans. The hon. Member should not forget that there have been Americans who have advocated a pre-ventitive war; that there have been Americans of whom it may be charged that they were "trigger happy." The hon. Member should not accuse my hon. Friends of being anti-American when they have called attention to that.
Mr. Osborne: It is true that in any free nation there are men who take extreme views. There are such men in this country and on both sides of the House. However, the American people as a whole desire peace most ardently. Since the end of the war no nation in the
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history of the world has ever given so much towards the cause of peace in U.N.R.RA. and Marshall Aid. Through the United Nations Special Agencies the Americans subscribe 30s. to every 20s. put up by the rest of the world. Under their own Four Point Programme they spend twenty times more than the rest of the world put together. No nation would give more.
The plea of the hon. Member for Southampton, Test was so good that I should like to support it, and not only because of the good he has done by putting the British point of view to the Americans but because of what I hope he will do with some of his colleagues in putting to them some of the things he learned while in America.
May I plead with my hon. Friends who represent the Foreign Office that, in so far as they can influence the Treasury to loosen the purse strings, they will make it possible not only for hon. Members of this House to go to America but also for an exchange, which I think is very necessary, of responsible trade union leaders.
Mr. John Baird: Who are the responsible trade union leaders?
Mr. Osborne: Those who are properly and democratically elected on both sides of the Atlantic.
I am merely asking that we should understand their working of the industrial machine and that they may understand our working of it, because, ultimately, it is upon the prosperity of our joint industries that the prosperity of our peoples depend. I appeal to my hon. Friend to pass on to his right hon. Friend the Chancellor of the Exchequer the plea made by the hon. Member for Southampton, Test, whom I congratulate on raising this matter.
9.46 p.m.
Mr. John Baird: I had not intended to take part in the debate, but after listening to the hon. Members who have spoken I thought that I should say a word or two. The reason why I interrupted the hon. Member for Louth (Mr. Osborne) to ask what he meant by responsible trade union leaders was because I thought that he might be distinguishing between some trade union leaders and others.

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I think that one of the chief dangers to Anglo-American relations is that it is very difficult for anyone on this side of the House, especially with a "Bevanite" label to his name, to meet any responsible Americans. I have received invitations to visit all the Iron Curtain embassies and neutral country embassies, but I have never had an invitation to meet any responsible Americans. I think that is true of almost all of us on this side of the House who have that label attached to their names.
Mr. Osborne: The next time I get representatives of the American Congress over here, I will invite the hon. Member to have dinner with them in the House.
Mr. Baird: I shall be delighted to accept. I wanted to make that point, because I think that it is important. So far as visits to America are concerned, I hope that those of us who have been critical of America will be invited there, also.
I have recently been on a visit to Russia and China, and I think that the Americans will think twice before they will give me a visa. I hope that I am wrong, but there are difficulties for those of us who have been friendly with countries behind the Iron Curtain to get these visas.
I was once going to America on a lecture tour, but I have never been there, so I cannot speak with the same authority as some other hon. Members, and to that extent I apologise for intervening in the debate. On one occassion I received an invitation from American dentists, but I made a speech in this House which attacked English dentists, and the invitation fell through. I missed a wonderful opportunity.
I agree that the British Information Services do not do any harm. I would also say that there are very few hon. Members in this House who have what is considered to be bitter anti-American feeling. I can say of my hon. Friends on this side that I am quite sure that not one of them would wish to be labelled anti-American. Indeed, many of us feel that the only way to build up Anglo-American friendship is to be quite forthright in our criticism of America when we think that she is in the wrong.
To a certain extent, I think that one of the greatest barriers between Us is that we for a considerable time stood
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alone fighting Hitler. We were bled white in that stand. We have now to accept economic assistance from our friends across the Atlantic, and we are also tied by a military alliance with America in order to retain what we consider to be our own security. In that way, we feel beholden to America, and that is one of the things which is keeping us from getting together on an equal basis.
Mr. Smithers: I am tied by an alliance to my wife, but that does not make me in any way get on badly with her.
Mr. Baird: The hon. Gentleman is tied by an alliance to his wife, but he might be much better off if he were not.
Mr. Smithers: No. I do not think so.
Mr. Baird: However, I am sure that in this country there are many people who may express anti-American sentiments simply because we feel that we are so beholden to America. One of the major difficulties which is keeping us apart is that there are certain political strings, perhaps not clearly defined, tied to far too much American economic assistance. If some of that assistance were granted more freely without political strings being attached to it, then friendship would be built up. I know that I am introducing a new element into the debate, but it is necessary.
As I said, I have just come back from China. I know the feeling there is in Russia, and especially in China, about restriction of trade. British businessmen want to do far more trade with China than they do today, but because of the political strings of economic aid we are not able to carry on that trade. I have a constituent, a businessman, who has just come back from China. I had a letter from him this morning. He wants to sell generators, but he cannot because of the political strings. If we could remove that difficulty we should do a great deal of good.
On the question of information services, I would say that some American senators have a queer idea of England. When I was going to Russia I flew by K.L.M. to Prague. We were waiting on Prague airport for the Russian plane to take us to Moscow. We noticed two other visitors at the airport. Obviously,

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they were Americans. They were wearing big Stetsons and chewing gum. After we had boarded the plane my hon. Friend the Member for West Ham, North (Mr. Lewis) got into conversation with them. He said to me, "Meet my American friend, Mr. Battle," and the American said, "I am not Mr. Battle, I am Congressman Battle."
He had come to Europe for a holiday and, as he said, he thought that he would call the bluff of the Russians by applying for a Russian visa. He had the shock of his life when he got one within 10 days. He had to go to Moscow—
Mr. Osborne: He had not to go to Moscow. Surely the Russians had the shock of their lives that he had the good sense to want to go there.
Mr. Baird: We had a wonderful discussion in the plane. When he got to Moscow the Russians were quite suspicious, but he stayed in our hotel and I think that he enjoyed himself very well.
Having said that, I want to point out that this is also a political problem. We are doing Anglo-American friendship a great disservice when we argue that there is no serious war feeling in the United States today. I have been on an air base in Shanghai and I have seen American planes come over piloted by Chiang Kai-shek's men. I believe that the Chinese have shown a tremendous restraint in not trying to take the offshore islands long ago. But for American assistance, these islands could have been taken easily by the People's Government of China. They belong to China, and the Chinese have shown great restraint. I think we must admit that.
There are some people in America who talk about American interests and say that we cannot give any more away to Communism—this is the free world against the Communist world. We must not sloganise politics if we are to build up friendship. What is the free world? Franco no more represents a free world than Mao Tse-Tung, Syngman Rhee or Chiang Kai-shek. We will never build up a really true foundation for friendship between America and ourselves until the Americans realise that in this world we must live and let live. There are some in America who have not yet realised
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that, and I believe that the more money we spend on telling the Americans why we take a different point of view from them, especially over China, the nearer we shall be to building up the friendship which I think so essential to world peace.
9.55 p.m.
The Joint Under-Secretary of State for Foreign Affairs (Lord John Hope): As sometimes happens on occasions such as this, the debate has been one of the most interesting to which I have listened for a long time. It has gone to what I might call the heart of the matter. The hon. Member for Southampton, Test (Dr. King) has done a great service in raising the question of the British Information Services, and I should like to add my thanks to those already expressed to him by my hon. Friends for the service he did in his journey to the United States. I think that the hon. Member would like me to couple with his name that of my hon. Friend the Member for Bridlington (Mr. Wood) who, unfortunately, could not be present tonight, much as he wished to be. Although not working together, both hon. Gentlemen were in America at the same time and both did valiant service.
Some years ago I did my humble best to do the same thing when I went over to the United States to speak. Then there was a Labour Government in power, and now a Conservative Government is in office. The hon. Member for Test is a member of the Labour Party and spoke for Britain, just as I did my best to do in other circumstances. There is not the slightest doubt that the American people appreciate it when they see someone from this country speaking for his own country and taking deliberate care not to attack his country's Government just because it happens to be different from the party which he supports.
If the feeling of friendship between our two countries falls, everything falls. I cannot help feeling sometimes—and this is why I am so grateful to the hon. Member for raising the subject—that our people need to be reminded about the vital nature of and the necessity for this bond between the two peoples. I believe it is natural that as the years pass since the war there should be a gradual fading of the stimulus of self survival which kept us together during the war years. For reasons, some of which are understandable and others which are less so, there is

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no doubt that the spontaneous affection for Americans felt by people in our own country is not so strong now as it has been in the past. It is no use blinding oneself to that fact. I am not a pessimist about it, and I am sure that it is a temporary phase, but it must be faced.
Before I deal in some detail, as I wish to do, with the questions asked of me by the hon. Member for Test and other questions which have been posed, may I say a word about the speech of the hon. Member for Wolverhampton, North-East (Mr. Baird). I think his was a most interesting speech because—and here I beg the hon. Member to believe that I am measuring my words—it was the first occasion on which—he used the word "Bevanite"—I have heard a "Bevanite Member" speaking—
It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Mr. R. Thompson.]
Lord John Hope: It was the first occasion I heard a "Bevanite Member" speaking of the Americans in a restrained way. [Interruption.] Oh, yes. The hon. Member may say it has been done before in the House, and I accept it, but I have not myself heard it from his friends or heard the Americans discussed in such a quiet and responsible way as he has done tonight, and I am saying that—
Mr. Baird: May I say that the right hon. Gentleman has not been in the House very much recently, because my hon. Friends, and especially my right hon. Friend the Member for Ebbw Vale (Mr. Bevan), have been very restrained in their language about America, and I believe that he is a sincere and good friend of America.
Lord John Hope: That last remark is a valuable one, which I hope will not go unheard beyond these shores. I really mean that.
The hon. Member also said that he had never been invited to meet responsible Americans here. I am not feeling in a mood to be sarcastic in the least I assure him. If he and his hon. Friends feel that they have not met in this country Americans whom the rest of us on both sides of the House have met, because of
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their apparent dislike of Americans, which may be over-stated by the rest of us, I will do all that I can, and I think that I can promise success in my mission, to put that right. I assure the hon. Member that nobody will welcome an opportunity of meeting and talking with them more than our American friends in this country.
I do not think I shall go into the points he raised about political strings. I do not agree with what the hon. Member said, and if I go too deeply into that, I shall get involved, as the hon. Member himself almost did, in questions about trade with China and foreign policy in a big way. I think we might beneficially keep the debate rather narrow, although I agree that such questions are not entirely irrelevant.
May I now deal with some of the specific points raised by the hon. Member for Test, and may I first say how grateful I am to him for giving me such detailed notice of what he proposed to say. It always helps very much in an Adjournment debate, and I assure him I am most grateful. He said something about Canada, but perhaps I should confine myself to the United States, because my hon. Friend the Under-Secretary for Commonwealth Relations is here and has heard all that the hon. Gentleman said and will, I am sure, take note of it. I think he agrees with it.
One of the earliest points the hon. Gentleman made in his most helpful and constructive speech, with almost all of which I fully agree, was concerned with what in an eloquent phrase he called "the folly of snobbery." How right he was, and how good it will be for anybody in the least inclined to be a snob to go to the United States and see how remarkably free are the people there from that most unattractive and hideous quality. Of course, he was right when he postulated the function of visiting speakers from this country as being that of meeting all sorts of Americans, and that is exactly what everyone who goes from here has tried to do and something from which everyone has derived the greatest possible advantage.
Then, the hon. Gentleman made the point that while in America he saw the same realisation that a third world war will mean that all are vanquished and none is victor. I think that was the

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phrase he used, and I am certain that, in saying that as a member of the Labour Party, he has done yet another service. It is a point which was echoed by my hon. Friend behind me. Of course, there are expressions of extreme opinion; naturally, in a country of 150 million, there are bound to be.
The hon. Member was undoubtedly right when he said that, by and large, the great heart of that country beats as soundly as any English heart does here, and it really is not helping if anybody seizes upon extremist opinion and tries to put that across to the people of this country as being typical of America, because it is not. Indeed, it is not irrelevant to say that the feeling which the hon. Member himself sensed so strongly is in striking contrast with what, unfortunately, is now coming in profusion from Russia in that very connection. Russia is telling her people that it is not true that there will be no victor if there should be a third world war, but that it is only capitalism that will be destroyed.
The hon. Member mentioned the export problem. I use the word "problem" advisedly. He said that we seem to export to each other our worst features, and I am inclined to agree with him about that. What can be done about it is another matter. It might be suggested that the remedy lies very much in the hands of our friends the Americans and, speaking purely from the point of view upon which we are concentrating tonight, it would be very nice if, in the films they send us, they were able to combine the commercial success which one wishes for them with an attractive portrayal of people and manners. They could do a great deal if they were prepared to do it, but it must be appreciated that internal demand in the United States wants this kind of film. The film producers know what their own people like. They do not want to see themselves as they are, but as something much more unattractive.
The hon. Member asked whether something could be done about the families of Foreign Service officers. I thank him for the tributes which he has paid to the Foreign Service as he came across it in the United States. I know that the Service will be especially grateful for what he has said about it. Certainly we, in the Foreign Office, thank him for his words. The
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problem of the education of the children of members of the Foreign Service serving abroad is one of constant concern to us.
I have two things to tell the House about this. First, authority has recently been obtained to pay the return passage of a child at boarding school in the United Kingdom once in a tour of duty. It is not everything, but it is a great step. Secondly, the question of improvements in allowances for children of Foreign Service officers serving abroad, when those children are at boarding schools in the United Kingdom, is under active consideration at the moment.
Dr. King: I am delighted to hear the first thing the hon. Member mentioned. He will know that many a consul saves whatever he can out of his salary merely in order to pay for his child to cross the Atlantic.
Lord John Hope: I am obliged to the hon. Member for making that clear.
He asked whether we could steady the rate of moving about of Foreign Service personnel. It is true that the rate of posting in recent years has been faster than is desirable, but it is also true that the rate is now slowing down. The speed-up was largely due to the dislocation resulting from the war. During the war there was no recruitment and, as a consequence, in the immediate post-war period there was a great deal too much chopping and changing. That is now under control, and the situation is becoming very much better.
A more thorny problem which he went into concerned the freeing of dollars, which is what it would amount to, for more ordinary citizens to go to the United States. How one wishes that that could be done. Perhaps as we succeed in liberalising trade generally, which is what we want to do, so it will be easier for this exchange to gather in momentum and in size. Certainly, as the hon. Member knows, the Government do all that they can to encourage the exchange of teachers and students; and although this is entirely a matter for the churches concerned, great good has been done by the exchange of ministers of religion. I have seen home of it and I think it is a wonderful work.
The hon. Member thought that we should have more labour attaches and he asked us not to regard them as a frill. We do not regard them as a mere frill,

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but as a most important part of the service. We are very conscious of the good work which they are doing. It is the policy that all Foreign Service officers should be equipped and able to make and maintain friendly contacts themselves in all cross-sections of foreign populations.
I heartily agree with what the hon. Member said regarding invitations to Congressmen to come over here: the more the better. I think that with any luck, we shall see a group of Congressment visiting the United Kingdom this year under the auspices of the Inter-Parliamentary Union.
Mr. Smithers: Would my hon. Friend take the point that if Congressmen coming to this country could give us a little more notice of their coming, sometimes we in Parliament would very much like to do things for them and would be much better able to help them when they arrive? They are apt simply to blow in, and then it is too late.
Lord John Hope: I agree. But notice of coming is not exactly an American characteristic; it is one of the attractive things about Americans. As my hon. Friend says, they blow in and away they go. They go a thousand or two miles
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in what seems like a matter of minutes and are surprised when one is a little put off by the speed and secrecy of their arrival. I am glad that my hon. Friend has mentioned that, and I hope that his words will fall upon receptive ears in Congress. It would certainly be a great help, not only to us, but also to them when they come here, if notice of their arrival was given.
I think I have covered the points that the hon. Member and my hon. Friends have made. In conclusion, I repeat that this debate has been of great value. It has dealt with probably the most important single factor in the maintenance of peace: that is, the maintenance of friendly relations between the English-speaking peoples of the world. Anybody in this country who for his own political or other reasons deliberately damages those relations is doing no service to the cause which all of us, whatever our feelings and whichever side of the House we occupy, have at heart: that is the cause of world peace.
Question put and agreed to.
Adjourned accordingly at fourteen minutes past Ten o'clock.