HC Deb 11 June 1956 vol 554 cc31-200

Considered in Committee [Progress, 7th June].



3.33 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

I beg to move, in page 12, line 30, at the end to insert: incurred by any one person in excess of five thousand pounds in respect of any one year of assessment and so". The Amendment fits in with a series of Amendments moved by the Opposition to recent Finance Bills. It is designed to improve the position of small businesses, and relates to the investment allowances, the suspension of which we are now about to discuss. In previous years we have moved similar Amendments to deal with Profits Tax, initial allowances, and investment allowances in a slightly different content.

The Amendment is in line with previous Amendments of this sort not only in that it is designed to help small business, but in that it attempts to do it in a roughly similar way. In other words, it does not attempt the extremely difficult and complicated task of putting into the Finance Bill a definiton of "small business", "family business" or "small family business". It merely lays down a concession which would apply to all businesses, but which, because of its smallness, would be of negligible importance to businesses of any size but would be of very considerable importance to small, new, growing businesses.

We suggest in the Amendment that capital expenditure up to £5,000 in any one year should continue to rank for the investment allowances. This is in line with the methods by which we have tried to help small businesses in previous Finance Acts. I very much regret to say that in recent years our appeals on behalf of small businesses in this way have not met with a very happy response from successive Chancellors of the Exchequer or very much support from the Government benches. When hon. Gentlemen opposite were in Opposition they were perhaps rather more inclined to pay at any rate lip-service to the difficulties of small businesses.

I well remember our discussing the suspension of the initial allowances in the Finance Bill of 1951, at a time when I should have said there was a far stronger case, for various reasons, for suspending special incentives to investments than there is at present, a point which I hope we shall discuss in some detail when we come to the wider debate on the Question, "That the Clause stand part of the Bill."

In 1951 the Lord Privy Seal, whom we are glad to see back in our Finance Bill debates, was very eloquent indeed about the adverse effect which suspension would have particularly on small businesses. I think that very much the same point applies to investment allowances at the present time. Before the present Chancellor took office, we did not have the benefit of so many speeches on economic affairs from him as from the Lord Privy Seal. I am not sure that even now that he has become Chancellor we have as many speeches here from the right hon. Gentleman on detailed points on the Finance Bill as we should like.

I am not sure that it would not be better if we had more speeches on the Finance Bill in the House and fewer speeches in the country on the general economic position. I hope that the Chancellor will apply himself to the very serious considerations which lie behind the Amendment.

There is, as I am sure the Chancellor will readily appreciate, a special reason, applying more strongly at present than in the generality of years, for giving a little extra help to small businesses. It arises directly out of the operation of the credit squeeze. There can be no doubt, even if one were to accept the general i case for the credit squeeze, that it bears very hardly indeed on small businesses, much more hardly than on businesses generally. I remember my hon. Friend the Member for Wednesbury (Mr. S. N. Evans), in particular, raising the issue in an Adjournment debate, and bringing forward some very powerful arguments to show just how badly the credit squeeze affects small businesses.

It will easily be seen by the Committee that there are three reasons why the credit squeeze affects small businesses to a larger extent than businesses which are larger and better established. First, small businesses, particularly growing ones—the ones about which we are more concerned—are, by their very nature, a good deal more short of liquid reserves than larger, longer-established businesses. Secondly, it is a well-known feature of the British financial system—perhaps it applies to a little less extent than it did 20 years ago, but it certainly does apply —that it is easier for large businesses to obtain all sorts of outside finances than for small businesses.

Thirdly, there is no doubt that bank managers, perhaps behaving naturally in the light of the difficult task set them by the Chancellor, are inclined to apply the credit squeeze rather more sharply to their smaller customers than to their larger ones.

For those three reasons, the monetary policy upon which the Government are placing their faith in our present economic difficulties is bearing very hardly on small businesses and making it very difficult for them to expand. At this juncture in our affairs there is a stronger case than usual for giving them some fiscal concession to compensate them, to some extent, for the difficulty in which the Government's monetary policy is placing them. I hope that the Chancellor will seriously consider this modest proposal.

None of us on either side of the Committee wants to become particularly starry-eyed about small businesses and to attribute to them all sorts of virtues which they do not possess. Some small businesses are badly run and some small businesses are well run. It is not a particular duty of the Government, by their fiscal policy, to ensure that badly run small businesses continue in existence, particularly under the same family ownership. Nevertheless, it is undoubtedly the case that small businesses sometimes grow into big ones and may contribute something very valuable to our economic development.

There is a danger that unless something along the lines of the Amendment is done they will not be able to expand as they should. We have spent much time discussing the Restrictive Trade Practices Bill. Increasing and encouraging the growth of efficient small businesses is a method, just as legislation is another, of helping to make British industry a little less monopolised and restricted. I hope that the Chancellor will bear that in mind in considering this point.

This is an Amendment in a very long stream of Amendments with roughly similar purposes which have come from this side of the Committee on previous Finance Bills, but I appeal to the Chancellor to study it in the light of the circumstances of this Finance Bill. It is designed to allow investment allowances to continue to apply to the first £5,000 worth of expenditure. It would apply to all companies. It would be of negligible value to medium sized and big ones, but of considerable value to small businesses.

3.45 p.m.

Mr. Austen Albu (Edmonton)

I should like to support the Amendment. As my hon. Friend the Member for Stechford (Mr. Roy Jenkins) has said, it is in line with similar Amendments which we have moved on previous Finance Bills. We think that this has certain advantages over previous Amendments in that it is directly related to investment. To some extent, therefore, it distinguishes between the progressive and non-progressive firms to which my hon. Friend referred. Like him, I have no particular love for small businesses as small businesses and, like him, I certainly have no particular love for family businesses as family businesses.

However, there is a very important aspect of the development of our economy in modern conditions to which we have to pay attention. It is not only restrictive practices which are prevalent in British industry—and I do not know whether they are more prevalent in large businesses than in small businesses—but it is a fact that for a good deal of modern manufacturing industry it is not possible on a fairly large scale to invest in plant, machinery and, very often today, in research and development as well.

It therefore becomes more and more difficult in our economic system to provide for new ideas which are not taken up by large organisations and to find a way of developing them. All of us on both sides of the Committee have for many years paid attention to that problem. There are, of course, various ways in which one can do that. In the Labour Party we have put forward methods of our own and have used methods in the Development Areas, and so on, by which we have provided plant and sometimes machinery on a rental basis.

When the small business is established, the great problem is how it will get over the stage when its production is just coming up and when it wants to get into a new scale of production. It is frequently said that it is impossible in modern economic conditions for small businesses to start at all in any really worthwhile projects, but the extraordinary thing is that there are many modern scientific and technical developments which show exactly the opposite.

It is true that if one wants to transfer machines in a motor car factory a lot of capital is needed, but that is not true about many electronic devices which are suitable for small businesses. Many electronic devices are developed by small businesses where only a few engineers, scientists, technicians and craftsmen are needed to start a business of that type which do not involve a great deal of machinery, and where a great deal of money is not often tied up in stocks and work in progress. Many of the components can be purchased as standard and much of the work is designing, brain power, and assembly, and very often specialised application to a particular problem.

Nevertheless, such businesses want capital to expand. They reach a certain stage and then very often they need special types of machinery, sometimes for manufacture and sometimes for test purposes. A great deal of modern equipment, such as test instruments, is expensive today. There is a special case for giving assistance to businesses of that sort. It is extremely difficult to distinguish between the modern progressive business and another. We have a number of Amendments which will attempt to give the Treasury the power to do that.

In this case we are dealing with only one particular aspect of business, and that is the question of the second stage of growth, if I may call it that, when the business has been established, has developed a product which is obviously worth while and then comes to the point when it cannot, from its own resources, find enough money to take things a stage forward. As my hon. Friend said, those are exactly the businesses on whom the credit squeeze comes hardest.

I was talking today to someone who is very much concerned with financing a number of those types of businesses, and who said that a number of projects have been put off by the credit squeeze, which was the Government's intention. When one hears of some of those projects, one wonders whether it was the Government's intention, because some of them were obviously worth while. Those are the businesses which cannot find the resources, and which are more seriously affected than are the large businesses. They are being affected by the increase in the number of their debtors, the lengthening credit being taken by their customers.

That is spreading down the scale from the large businesses and having the effect of passing the credit squeeze to the next man, very often going down the scale in size, so that the small businesses find themselves in extreme difficulty, because they not only find their bank manager tougher, but find their liquid assets disappearing. It is not always easy for them to pass on the credit squeeze which is exerted on them by their debtors.

I hope that the Economic Secretary to the Treasury will treat this very seriously. It is one of the methods of ensuring that we do not have a rigid economy. We are always being told that the economy is becoming inflexible because of restrictive practices and things of that sort. One of the methods of keeping it flexible is to ensure that there are new entries into business. Although, by law, one can remove, or try to remove, restrictive practices which appear in a formal way to restrict entry into an industry, it is no use if, when a man gets his foot into the door, he has no economic force with which to force the door open.

That is the situation today. It is not the case, as hon. Members opposite frequently argued when we were in office, and as they have sometimes done since, that small businesses are not being started. Today, as many small businesses as before the war are being started in a number of interesting projects, but they are finding it very difficult to get over that sort of hump from being a small business to becoming a medium or large business. If they are doing something which is useful and obviously in the country's economic interests, we should encourage them.

On this occasion, therefore, I hope that we shall have a rather more encouraging reply than we have had in the past, especially as this is not the same sort of concession as we have pleaded for formerly. We have sometimes pleaded for a reduction in Profits Tax or Income Tax, or for other concessions, but this is merely a plea that the investment allowance should be continued. The concession is directly related to increased productivity, or the production of a new and valuable commodity or article.

I therefore prefer it to any other Amendment which we have moved in the past to help these businesses, and it ties up very closely with the needs of the economy. If we must have a credit squeeze for the sake of our economy, let us provide a way out for those who are doing really valuable work. I realise that this argument runs counter to everything which the Government, so far have said they stand for—

The Economic Secretary to the Treasury (Sir Edward Boyle)

indicated dissent.

Mr. Albu

With a very few exceptions—and we shall be discussing those upon a further Amendment—the Government's attitude has been a case of, "One down, all down". They have made the rule that the credit squeeze must operate equally upon everybody. But it does not operate equally upon everybody, because everybody's economic circumstances are different.

I am hoping that the force of economic circumstances and the conditions which we are now getting into, combined with the arguments which are now being used by businessmen as well as hon. Members on this side of the Committee, will make the Government change their mind about being selective in the way they clamp down upon investment. This is one way in which they can be selective.

Sir Edward Boyle

We have had two most interesting speeches from the hon. Member for Stechford (Mr. Roy Jenkins) and the hon. Member for Edmonton (Mr. Albu). Naturally, they drew attention to the rather similar debates that we have had upon earlier Finance Bills, as I remember very well, in 1951 and 1952, but there is one big difference between those debates and this one. During the next few hours I have no doubt that I shall be calling attention to this difference quite often.

It is true that by this Clause we propose to suspend the investment allowance, but we have quite deliberately re stored the initial allowance. In other words, the position of small firms is more favourable than it was in 1951, when the right hon. Gentleman who is now Leader of the Opposition gave a year's notice of the suspension of the initial allowance. It has always been our view that that delayed action suspension of that allowance in 1951 had rather severe effects upon the level of productive investment, probably right down to the end of 1953.

The other point I would make is that, in a later Amendment we shall have a chance of discussing the whole question of selectivity. I shook my head when the hon. Member for Edmonton made his remarks about the Government's attitude in this matter, because one body in respect of which I have had the experience of defending selectivity in these debates is the Capital Issues Committee, which represents a control which we are now using in a more or less selective manner.

It is important to realise that the Amendment is not limited to small businesses as such. It would enable the first £5,000 worth of any expenditure of a qualifying character incurred in any one year, to rank for the allowance, however large the business. Therefore, it would act as a general though limited stimulus to industrial investment. Assuming the level of investment indicated for the year 1956 by a recent private inquiry, the Amendment would probably give the allowance for almost half industry's total expenditure. It would have a rather wide impact.

Quite apart from that consideration, there is an even wider reason why my right hon. Friend cannot accept the Amendment. It is that one of the principal reasons for suspending the investment allowance was precisely that the order books for plant and machinery were extremely full and we therefore felt it necessary to take some action to reduce the tempo of orders upon investment account. The object of the Clause is not to cut the level of investment on the contrary, the level of productive industrial investment this year will be substantially higher than it was last year.

The figures recently published by what I might call the 72 wise men of the Royal Statistical Society will probably turn out to be about right. The Treasury has no quarrel with their estimate.

Mr. Harold Wilson (Huyton)

The hon. Gentleman has referred to the 72 wise men, and has said that their figures are likely to turn out to be right. I presume that he is also referring to their estimate that the cost of living this year will rise even faster than it did last year.

Sir E. Boyle

I was referring to their estimate in regard to fixed investment. One or two of their other estimates were out, particularly that about stocks, which was probably based upon a misunderstanding. But their estimate about fixed investment will probably turn out about right.

The one absolutely certain thing is that if my right hon. Friend's decision was justified in February, it is no less justified today, because all the indications are that the order books for machine tools, and so on, are just about as clogged up today as they were a few months ago, and it is precisely there that the claims of home investment compete most seriously with the claims of our export trade. It is there that the competition for resources is greatest. If my right hon. Friend were to make the concession proposed in the Amendment it might very well be interpreted as meaning that the need to keep some curb upon the tempo of these orders was less cogent than when the general suspension of investment allowances was announced in February. That is the chief reason why my right hon. Friend could not advise the Committee to accept the Amendment.

We shall keep a very careful watch upon the position of small businesses. It is rather disconcerting to know that such a high proportion of our total fixed investment is done by such a small number of firms. I have heard it estimated-although I cannot vouch for the truth of the figures-that about 80 per cent. of our total fixed investment is done by not more than 3,000 firms. It is quite obvious that this is an important subject, and we shall consider very carefully how the credit squeeze affects small businesses.

This afternoon, however, I cannot say more than what I have already said, namely, that we believe that the tempo of orders on investment account must be curbed to some extent. We are pleased that there will be a substantial increase in fixed investment this year, but we feel that if we were to accept the Amendment it would make too big a dent in the general principle of the Clause. That is why I must ask the Committee to reject it.

Mr. Douglas Houghton (Sowerby)

It is clear that we shall not get any concession from the Economic Secretary, but there may still be some value in expressing a point of view. My constituency is full of small businesses. The terrain and the history of that part of the West Riding of Yorkshire is against the establishment of industry on a big scale, and so we have many small businesses, carrying on a great variety of manufacturing enterprises of one sort or another.

I have been hearing from them lately that the proposed withdrawal of the investment allowance, following upon the credit squeeze, will be a considerable financial embarrassment to them. It does not help to say that small businesses are better off today, with the restoration of the initial allowance. than in 1951, when it was withdrawn. The pace of investment today should be much stronger than it ever could have been in 1951. In my Second Reading speech, I said that I regarded this Clause as the tragic Clause of the Bill, because it was going to do something which we should not be doing today; in fact, it was the very opposite of what we should be doing.

It is a confession of the failure of the Government's economic policy that we are having to curb investment at a time when the Prime Minister himself is warning us that greater difficulties confront us in forging ahead in world trade. We are losing our share of it. We want to regain our position, and this is, in fact. the foundation of our economic and social prosperity.

4.0 p.m.

I should like to support what my hon. Friend the Member for Edmonton (Mr. Albu) has said about the effects of the credit squeeze on a number of manufacturers who, although perhaps not themselves victims of the credit squeeze, find that their customers are. I have been told that one noticeable thing is the increase in the amount of money which is owing to them by their customers right down the line. Their problem is not so much to finance the expansion of their businesses and to find the money for capital investment, although that does exist in some cases. It is to find the additional capital to finance the indebtedness of their customers to them. That is adding to their difficulties. Therefore, if they are indirect victims of the credit squeeze and are confronted with the withdrawal of the tax concession on further investment, they are doubly hit.

The Minister, of course, can argue that the concession which we seek is indiscriminate. It is, up to a point, although it has a refinement which the withdrawal of the investment allowance has not got. All these indirect methods of restricting investment are blunt in operation. They hit the just and the unjust. They hit the businesses which want to go into the export market just as hard as they hit businesses which may be seeking to expand to meet home consumption. I do not think that it can be said of them that they are discriminatory.

The withdrawal of the allowance itself is quite indiscriminatory. The Minister has argued, however, that this concession would represent a very large volume of investment which the Chancellor of the Exchequer is anxious to curb. That may be true, but more permanent harm is likely to be done by the suspension of the investment allowance in this field than among the larger businesses.

Therefore, although the Economic Secretary feels that he must, up to this point at any rate, stand by his right hon. Friend's proposals in the Bill, I think that some of the difficulties arising, some of the harm which will be done to small businesses, must be noted. If one cannot do more, one can at least voice the protest of those who are feeling the rough edge of the Chancellor's policy and who, if they had an opportunity to vote for the Government, might very well abstain.

Air Commodore A. V. Harvey (Macclesfield)

I must say that to some extent I am in sympathy with the Amendment, although my hon. Friend the Economic Secretary has given fairly good reasons for not accepting it. I should have thought that even if the larger firms participated to the extent of £5,000 a year it is still not a vast sum compared with the benefits accruing. Every big business has had to start somewhere, and there is no doubt that, man for man, the small business which is a good business produces per sq. ft. of floor space, for instance, as much as does the big firm.

I know of several small firms which have acquired really good patents in Switzerland, Germany or America, have brought them here and have made a great success in improving machinery, as subcontractors, say, and made a real contribution to the bigger firms. They are the people who are really hit. Many of them buy their machinery on the hire-purchase system, and I am informed that, whereas order books for machine tools were full a year ago, that is not the case today. I hope that my hon. Friend will check that, because whereas previously it took 18 months or two years to deliver a piece of equipment it now takes about six months —and sometimes it is off the peg. The last thing we want to do is to ignore the smaller firms.

Referring to what was said by the hon. Member for Edmonton (Mr. Albu) about the credit squeeze, while we all see the necessity for it, it is very difficult, with great respect to the banking profession, to apply it fairly. So much is left in the hands of the managers or regional managers, and in many cases the result depends on the personal relations of the individual to the manager. It is frequently the small man who, terrified, goes into the "sweat chamber" of the local bank and cannot make a really good case. He is then really up against it. I hope that my hon. Friend will take all these facts into account.

In many cases engineering businesses have had to meet two wage awards and increased costs for lighting and heating. We do not want to see these small firms go out for the want of paltry sums. If the larger firms are to get away with a £5,000 capital investment allowance, I would say, let them do so; not much harm will be done. But, once we have lost the impetus, I am afraid that it will take a long time to restore it. I hope that my hon. Friend will consider this on the broader issue that we cannot afford to see the small firms drop out, as they will unless they have the capital. This tax concession is a real help to them in running their businesses.

Mr. John Cronin (Loughborough)

We do not usually get very strong support from the other side in our attempts to help small business and I should like to associate myself with the remarks of the hon. and gallant Member for Macclesfield (Air Commodore Harvey).

The Economic Secretary rejected this Amendment in his extremely agreeable manner and with his usual dialectical skill, but I do not find myself in full agreement with some of his points. I understood him to say that one of the reasons for this Clause is that the order books of the plant and machinery industry are rather full. We on this side would suggest to him that that is not really an adequate reason. What we want to do is to stimulate that industry and to get it to produce more plant and machinery. It is well known, I think, that our machine tool industry has rather been falling down on its job. We want to stimulate it to increase its capacity, and not to decrease demand so that it can continue at its present rather mediocre rate. I am surprised that the hon. Gentleman should give that as a valid argument.

He also said that suspending the initial allowance, in 1951, had fairly severe effects upon investment. That is not borne out by the figures. If he looks at the Economic Survey for this year he will see, in page 21, that the figure for fixed investment in 1951 was £610 million. It dropped in 1952 to £602 million, which, the Committee will agree, is a very small drop. But in 1953 it rose to £647 million. That is not consistent with his statement that the suspension of the initial allowances had such a catastrophical effect on fixed investments.

I think that the Committee will agree that there is a real need for the modernisation of the whole of British industry. There is no doubt that in that respect we are falling behind some very powerful competitors. If any hon. Member feels a doubt about that, I should like to quote the very words used by the Lord Privy Seal in his Budget speech, on 6th April, 1954. He then said: Our rate of industrial modernisation is strikingly less than that of America, and it seems probable that the Germans are now moving ahead of us. We shall not long continue to compete successfully in the export field with these, our principal rivals, unless our plant and equipment is completely up-todate." —[OFFICIAL. REPORT, 6th April, 1954; Vol. 526, c. 224.] I am sure that no hon. Member will suggest that the position has materially changed and that we are now so much more modernised. The need for modernisation is probably greater than ever. At present, the small businesses which we are trying to help form a comparatively minor part of industry as such. The greater part of the labour force is employed in large industries. Nevertheless, small industries tend to be rather less efficient and for that reason require more help than big industries.

Let me give an example to show how we are falling behind the United States where, I am told, 4 horse-power is the unit for every worker whereas in this country it is only 1.4 horse-power. That is an indication of how we are falling behind in efficiency of production.

Small industries, as my hon. Friend the Member for Stechford (Mr. Roy Jenkins) pointed out, have very severe difficulties in building up capital equipment. They have difficulties in building up reserves because of the smallness of their funds, and they also have difficulty in obtaining capital in the money market. I appreciate that there are institutions which have the specific purpose of helping small businesses, such as the commercial and industrial finance corporations. There is a genuine fear among small businesses that if they sink too much of their capital funds they will lose control of their businesses to larger concerns. That fear has been well justified by events.

Taxation bears hardly on small businesses, and much more so than on large ones. Taxation on industry has been comparatively heavy in the last few years and small businesses have no resilience to meet it. My hon. Friend the Member for Stechford referred to the effect of the credit squeeze. We ought to refer to the impact of inflation on small businesses. It is hitting them much more than it hits big businesses, because the small businesses have to replace their plant at very much higher cost than the others, and they have not the reserves to cope with the costs.

We are concerned that private industry should be competitive, because that is the part which is suffering, and that is why we are moving the Amendment. Parliament is considering legislation to put a stop to monopoly and one of the effects will be a great increase in combination to avoid the effects of the legislation. For that reason, small businesses will be in more desperate straits than ever. They ought to be helped. That is the purpose of the Amendment.

Apart from direct help to small businesses, the Amendment will have secondary effects. If there is a great increase in the demand for industrial plant it will stimulate scientific and industrial research, which is particularly needed. No one will contest the truth of that statement. It will also give an impetus to our machinery and plant manufacturing industry. That is also something that we need.

4.15 p.m.

I would refer to page 25 of the Economic Survey for 1956, where it is stated that a large part of our imports of finished manufactures in iron and steel products consist of machinery and plant. Those imports add a very severe burden to our balance of payments problem. I suggest to the Economic Secretary that the Government might reconsider this position and give a real stimulus to the production of more plant and machinery in this country, and so rid ourselves of that heavy drain on our balance of payments, particularly since it affects dollar balances more than any other.

I will not press these points any further. Although the Economic Secretary has rejected this Amendment, I hope that he will have second thoughts, if not in the next few weeks, then at a later time.

Mr. Leslie Hale (Oldham, West)

My hon. Friend the Member for Loughborough (Mr. Cronin) has, in his very able and lucid speech, covered some of the ground that I intended to cover. The Amendment does not raise a purely economic question, but a moral question. Let me refer to observations made by the Chancellor of the Exchequer in 1954, when he introduced this proposal. I propose to make further references to these observations.

When the Chancellor dealt with this matter, he said: I now wish to end, as I began, with our primary need: that is, to improve our competitive power. In my survey of last year I have already commented on the inadequate level of investment by private industry. Our rate of industrial modernisation is strikingly less than that of America, and it seems probable that the Germans are now moving ahead of us. I pause in the quotation to intervene and say that no one will feel, if he has seen recent figures, that the Germans are not still moving ahead.

The Chancellor went on to say: We shall not long continue to compete successfully in the export field with these, our principal rivals, unless our plant and equipment is completely up-to-date."-[OFFICIAL REPORT, 6th April, 1954; Vol. 526, c. 224.] The Chancellor then proceeded to detail the import of the proposals that he was then making. It was fundamental that the investment allowance would be a progressively increasing allowance and that it would be available in addition to the ordinary depreciation allowance and be regarded as a bonus given by the Government to them for adopting his then policy and increasing their investment. The Chancellor of the Exchequer concluded these observations with a very important statement. He said: The cost of changing from initial allowances to investment allowances will be negligible in 1954-55, and about £4 million in 1955-56. Thereafter, the cost will increase year by year, and although the actual amount will, of course, depend upon the level of new investment I expect it to reach a considerable figure in the future. But in so far as this new allowance succeeds in its object of creating additional assets, those assets will, of course, he yielding additional revenue for the country, for their owners and for me."-[OFFICIAL REPORT, 6th April, 1954; Vol. 526, c. 226.] The use of the personal pronoun in this instance was no doubt intended to apply to the position collectively, not to refer to events which were to take place. There could be no clearer words by any Chancellor of the Exchequer than to say, "This is the policy of the Tory Government." Everyone knows that, constitutionally speaking, no Parliament can bind any future Parliament, or so we used to think before we passed the Statute of Westminster and the Central African Federation Act. The Chancellor said, "I am introducing this Measure to assist investment, It will cost me virtually nothing up to the next Budget because it will not come into force, and it will cost me only £4 million in the year ending April, 1956. After that, the cost will be rapidly increasing and will be of permanent benefit to industry."

I think I can say with due moderation that if any business man or financier had acted in the way the Government have acted he would be up at the Old Bailey charged, rightly, with obtaining money by false pretences. The clearest intimation was given to the private sector of our economy that it should go ahead on the basis of this allowance and engage in substantial commitments, with the backing of Her Majesty's Government.

The most amazing part of the story is that the new Chancellor of the Exchequer, on 17th February this year, completely reversed the whole direction of that policy as it affected the private sector of our economy.

We were given, as the primary task of the Tory Budget in 1954, the proposal to increase investment. In 1955, we were told that measures were being taken to reduce investment. Now we are told that the whole concession is to be abolished with the intention of reducing investment still further, although they admit that the investment has, in fact, not yet taken place.

The only point in my hon. Friend's observations with which I was not in complete agreement was when he said that it is not necessary to say any more about the credit squeeze. This is a vicious weapon and an immoral weapon. In this connection, the Committee should consider the position of the small private business, because we are limited to dealing with the small private business at the moment, although obviously the arguments apply to almost every form of business which followed the Chancellor's advice in 1954.

Let us consider the case of the small businessman. On the strength of the Chancellor's promise in 1954, he decides to re-equip. He goes to the bank and says, "I intend to indulge in a policy of re-equipment." After all, confidence between firms and the banks is part of the fabric of our trade and industry, and, generally speaking, we have found it possible to rely on the word of the bank manager. I know we have been told that the banks provide a financial umbrella in fine weather and take it away the moment it begins to rain. That may have had substance in the past, but they are now having to do these things under the force of Government pressure.

The businessman goes to them and says, "I want a loan, and I recommend you to give this loan because the Chancellor has promised great concessions which will enable me to bear it. It will lead to future prosperity. I have enough Government securities which perhaps I can deposit as security for the loan, so you will not be taking a very serious risk. I shall be able to continue by charging the new investment allowance against the proceeds from the new equipment, and in that way I shall be able to improve my business and place it on a sound footing To that proposition the bank agrees.

The next thing that happens is that the Chancellor increases interest rates, which depreciates the value of the Government securities, whereupon the wretched man receives a letter from the bank pointing out that what was good security in 1954 is no longer so good in 1955,and will he therefore please reduce his overdraft forthwith by 20 per cent.? If he was lucky, he went out and sold the whole lot of his securities at once at a loss, but it may well be that he forced out of his exchequer enough money to make a temporary reduction of the loan. Unfortunately for him, the diminution in the value of Government securities continued, as a result of Government measures.

We had the fantastic spectacle in 1955 of the Chancellor continuing with measures to reduce the value of Government securities and, at the same time, sending the Government buyer into the market to keep the value up. What is more, everyone in the market knew the figure at which he had to keep these securities. He had to keep War Loan at 70, and when the Chancellor's methods reduced the value of War Loan below 70, the Government buyer had to go in and, at Government expense, keep the value up so that everyone in the City could make a substantial profit out of these transactions to the detriment of industry.

That was the position in 1955. Then we had the credit squeeze. Of course, both Governments have adopted the credit squeeze; it is not a new device. Nevertheless, by whatever Government it was introduced, I suggest that it is a highly immoral device which means that a man can make a formal arrangement with his bank manager in one month but may have the whole thing destroyed in the next month by Government measures. He is compelled to sell his securities for what they will fetch and he is compelled to reduce his commitments. He is perhaps placed in a position in which he cannot keep up his instalments.

That was the position on 17th February, 1956. The private sector of industry, acting on the Chancellor's promises, had made these commitments with their bank managers and had then had to face three major tragedies in two years—a diminution in the value of its securities, the credit squeeze, and an increase in the Bank Rate—all of which reacted on its situation and left it in very great difficulties.

On 17th February, 1956, the Chancellor came to the House and said, "We were all wrong. What my predecessor said in 1954 was wrong. We do not believe in investment. In fact, we are against investment. In our view, the primary need now is to reduce consumption of all kinds, both personal and private consumption and investment consumption."

I have never posed in the House as an economic expert. I have simply listened to the economic experts and have seen how frequently wrong they are, as events have shown. Nevertheless, I must say that this reversal of policy seems to me quite wrong, and I doubt whether anyone in the Committee does not think it wrong. We shall later be discussing the situation of the cotton industry, which is very relevant to this matter. It may be that I shall be happy to hear my hon. Friends deal with it, or it may be that I shall be tempted to intervene. I therefore need not continue at the moment on the subject, but it is an appalling situation and one which raises constitutional issues.

On a previous occasion my right hon. Friend the Member for South Shields (Mr. Ede) made an extremely important speech in which he dealt with the whole implication of reversals of policy by successive Governments of different parties. We nationalise road transport, then we denationalise road transport, then we renationalise it. We establish co-operative cotton buying, then we abolish it, then we re-create it.

The Chairman

I think that the hon. Member is going a little wide of the Amendment.

Mr. Hale

I am at the moment dealing with the constitutional issue and trying to put the matter in perspective. I was trying, by the tone of my voice, to make it clear that those few words of my speech were virtually in parenthesis, but the primary point, which is relevant—

The Chairman

I think that that question arises on the Question, "That the Clause stand part of the Bill."

Mr. Hale

I am obliged, Sir Charles. I may seek to catch your eye on that Question.

This Amendment arises from a major reversal of policy, not by a Government of a different party but by a Chancellor of the Exchequer of a different shade of colour. The Government's demand is that the House shall repudiate the Chancellor of the Exchequer of 1954 in what he then described as the primary part of his Budget and the most important part of his policy. In 1954 he told the House, "This is our major need. Looking at industry today, the vital thing, on which I will frame my financial Measures, is the need for investment."

I am not sure whether the Economic Secretary was in office at that time, but I do not think he was. I am quite sure that he would have expressed support of such a policy, and it is a singularly unhappy situation for him to have to defend the policy of 1956. I have tried this morning to read the whole of our debate on the subject to find out what reasons have been given for this major reversal of policy, and I have failed to find any. It seems to me just the whim of the Chancellor of the Exchequer.

The whim of the Chancellor of the Exchequer should not be to repudiate contracts made on an assurance given by the Government or to repudiate the policy which was so firmly stated in 1954 to be a policy intended to last for years, upon which people could act with all the security of a formal promise given by Her Majesty's Government and all the assurance that the Government regarded investment as a matter of prime importance.

Mr. H. Wilson

The short debate which we have had so far has brought out quite clearly what are the issues in the Amendment, and by implication has shown some of the general problems raised by the Government's disastrous decision to suspend, as they call it, or to put an end to, as we see it, the investment allowances.

The debate initiates the series of debates which we shall be having, certainly for the greater part of today and perhaps for the whole of tomorrow's Sitting, on Clause 12. The Opposition have been extremely co-operative in enabling the debate to reach Clause 12 so quickly, but it is a serious matter that even now, on this all-important Clause, we are denied the advice and help of the Chancellor of the Exchequer in our debate. He has played a very small part indeed in the proceedings on the first eleven Clauses. I do not intend to press the point; I should be out of order if I did. Nevertheless, the Chancellor having played so small a part in our proceedings on the earlier Clauses, I think we might have expected his attendance during the debate on this Clause, which is central and fundamental to the Bill and to the Government's present economic policy, or lack of an economic policy.

4.30 p.m.

To feel that we are debating, as we have been for an hour, the position of the small businesses of this country, the small firms in every range of industry, without the presence, not only of the Chancellor of the Exchequer, but of Ministers representing the main production Departments, is an intolerable state of affairs. I can only begin to wonder what would have happened if, in the period of the Labour Government, we had reached an important Clause of this kind at this stage of the Finance Bill and Sir Stafford Cripps had scarcely shown up during the whole of the proceedings.

Viscount Hinchingbrooke (Dorset. South)

Move to report Progress.

Mr. Wilson

I am grateful for the noble Lord suggesting that that is the right technique in this matter, and I was thinking of it myself. I was hoping that, having raised the matter for the first time, we might see a little more of the Chancellor before it becomes necessary to proceed to adopt such methods.

I well recall the eloquence of the right hon. Member for Woodford (Sir W. Churchill), when Leader of the Opposition, about this question, and certainly I think it will be found that Labour Chancellors of the Exchequer were far more attentive to the debates on Finance Bills than has been the case with the present Chancellor. Of course, we all know that the present Chancellor is bored with this Bill, and that he never thought much of it when he introduced it. Indeed, he did not even speak on it on Second Reading, and did not think much of the ideas in the Budget. It is a sad reflection that when we are debating the position of the small businessman—and we have always been told that the Tory Party was the party of the small man—the Chancellor and his senior colleagues are absent from our debate on this question.

My hon. Friend the Member for Oldham, West (Mr. Hale), who I hope will be successful in catching your eye, Sir Charles, in the debate on a subsequent Amendment—if I may say so, he referred also to a prospective debate on the cotton industry, in which he hopes to catch your eye or that of your successor—spent some little time in reminding the Committee of the circumstances in which the investment allowances came to be suspended, or, at any rate, of the speech made on that chill Friday, just after the Taunton by-election, by the Chancellor of the Exchequer, when he announced that the investment allowances were to be suspended in the Budget.

This is practically the only idea that we have in the Budget. Under this Government, we are always a Budget and a half and a Finance Bill and a quarter behind events, because this Finance Bill relates to the speech of the Chancellor, not on Budget day, but on 17th February. As my hon. Friend so cogently reminded the Committee, with valuable quotations from the Budget speech of 1954, this is a complete reversal of the decision of the Lord Privy Seal in the Budget of 1954. It is a very great pity, and I am surprised that we have not heard more about it from hon. Gentlemen opposite.

We had the Lord Privy Seal as Chancellor for four years, with five Budgets, and this was the only idea he ever had in that whole period—investment allowances. It was the only new thing which he produced in four years. As soon as he handed over his responsibilities to his successor, the present Chancellor decided that they should be ended. They are regarded by the present Chancellor of the Exchequer as a relic of the "Invest in success" period, when, we remember, the present Lord Privy Seal, in a speech at the Conservative Party Conference in 1954, mentioned "Invest in success" and the standard of living being doubled in a generation. The new Chancellor comes along, deletes "standard" and substitutes "costs" and proceeds as far as he can.

Small businessmen, many of them until recently members and supporters of the Conservative Party, took the former Chancellor at his word. They did invest in what they thought was going to be success. They did embark on what were, for them, ambitious little programmes of capital investment, mechanisation and modernisation, and what has happened? We have a new Chancellor, and now we turn our backs on the "Invest in success" era of the Lord Privy Seal.

There may be another reason for that. It was not merely that the former Chancellor was replaced by the present one. I may be wrong, but I do not think I am. I think that the "Invest in success period ante-dated the arrival at the Treasury of the Economic Secretary. I do not think the hon. Gentleman was Economic Secretary at the time of the 1954 Budget, and, of course, that was when the former Chancellor, in his happy,care-free days, did not have to listen to the advice of the hon. Gentleman at present Economic Secretary. There was no Rasputin at the Treasury in those days, and he was able to look forward hopefully and confidently to a period of expansion, modernisation and investment in British industry. Along came the hon. Gentleman, and, from that moment forward, the Lord Privy Seal's economic career entered upon a period of disaster.

So we get this suspension of the investment allowances. If the Chancellor is not to return. I hope we shall have a fuller explanation from the Economic Secretary, who told us that the general reason for the suspension of investment allowances—and here he was speaking not merely about this Amendment, but, as he said, was anticipating what he expects to be saying several times this evening—was that the order books of firms, particularly of those in the machine tool industry and the capital goods industries, were so very full that it was essential in some ways to restrain the demand for their products. I do not think that that is universally true. The hon. and gallant Member for Macclesfield (Air Commodore Harvey), in a short but very cogent speech, which I hope he will back up by joining us in the Division Lobby later this evening, gave us reason for thinking that there was not that change in the order books, at all events in the case of some of the firms which the Economic Secretary had in mind.

I am very glad to see the Chancellor back, because we were just pointing out that this Clause and the point that we are now debating on this Amendment are fundamental to his Finance Bill, representing the only new idea we have had from the Chancellor in his speech of 17th February wiping out the only new idea his predecessor ever had. Yes, we are still only on the first Amendment, I must tell the Chancellor. When the right hon. Gentleman came into the Chamber, I was pointing out that the Economic Secretary had been saying that the order books of these firms were overloaded.

We have been suggesting for some time to the Government, and I am glad to feel that the Chancellor of the Exchequer is rapidly moving in this direction himself, with the support of the Economic Secretary, that if certain controls had been placed on inessential building and capital equipment, there would have been less overloading of the industries to which he made reference. It is a good thing to feel that, if rumour be true, the Chancellor is, on this point, receiving good advice from the Economic Secretary, who is doing his best to push the Chancellor in the direction of physical controls. If the Chancellor is successful in his fight with his predecessor and the others on this matter, it may become unnecessary for him to proceed with this plan for the suspension of the investment allowances.

Another point made by the Economic Secretary was that it was the machine tool industry which was overloaded. I am sure that it will not have escaped his notice that there is an Amendment on the Notice Paper which will be reached in an hour or two, if all goes well, proposing that the investment allowances be not suspended in respect of any expenditure necessary to extend the machine tool industry. In other words, we are saying in that Amendment that one of the problems is that the machine tool industry is too small. Therefore, I hope that the Economic Secretary, having in effect admitted that it is too small, will be on our side when we want to take measures necessary to expand it. I should be out of order, however, in anticipating that Amendment.

My hon. Friends, and the hon. and gallant Member for Macclesfield, have successfully outlined the difficulties facing small firms. I do not think it an exaggeration to say that, not only in Ton-bridge but all over the country, small businessmen are becoming more and more hostile to the Government which they helped to elect only twelve months ago.

My hon. Friends have mentioned the credit squeeze, and that is one of the biggest difficulties, despite the denial of the Chancellor that it is affecting businesses. Small businessmen suffer much more harshly than big businessmen. The oil companies are not suffering. Big industrial firms are not suffering, because they have no difficulty in raising money, and many have substantial reserves. Big monopolies can establish substantial reserves by their monopoly position and by fixing high prices. But the small businessman cannot do that. The new post-war firm which is struggling to establish itself, and perhaps ploughing back into the company any profits made over the past three or four years, cannot do so. Above all, it is those firms which have been hit by the credit squeeze.

My hon. Friend the Member for Oldham, West gave a graphic example of a typical case of a small businessman, who, moved by the appeal of the late Chancellor to "Invest in success", decided to install the latest and most up-to-date machinery or to mechanise some process previously done by hand. That man had offered securities against an overdraft. He then found the value of his securities diminished by the Bank Rate policy of the Chancellor of the Exchequer and his predecessor. He finds himself having somehow to raise more security for the loan, if he can. If he tries to realise his securities he gets less and less on the gilt-edged market. In the end, as the credit squeeze develops, and he is told to cut down on his overdraft, that man finds it impossible to pursue the kind of development policy which the previous Chancellor of the Exchequer said was essential for our industrial future.

I should be out of order were I to argue the relative merits of the credit squeeze policy and the policy of selective controls which we have advocated—building licences, etc. But if the Chancellor fails in his demand to be allowed to introduce some physical controls; if that powerful combination, the President of the Board of Trade, the Lord Privy Seal and the Lord President of the Council—on whom, we are told, the Prime Minister relies to know what the ordinary man is thinking—succeed in preventing the Chancellor from introducing physical controls, and if the right hon. Gentleman continues with the credit squeeze, he must recognise that it is all the more essential to exempt the small businessman from the serious consequences of his action.

I wish to mention another matter which has hardly been touched upon this afternoon, though a brief reference was made to it by my hon. Friend the Member for Edmonton (Mr. Albu). My hon. Friend pointed out that much was done in the years following the war, when the pressure on national resources, was far greater than today, in restoring war damage, building Development Area factories and expanding the basic industries of the country. In those years we were not afraid to provide help in the Development Areas, for small businessmen establishing themselves there, by building Government factories, and in many cases by helping in respect of the plant and machinery required for those factories. But only last week we had to drag information from Ministers —there was no voluntary admission on their part: we heard from the Parliamentary Secretary to the Board of Trade, whom we should have liked to see here today—that the Government are cutting down, in fact they are virtually stopping, the building of new factories in the Development Areas.

That is happening at the time when there are no controls on inessential factory building by private enterprise, and it will have a severe effect on the small businessmen whose welfare we are now debating. It means that, even in a Development Area, the small firm cannot go to the local office of the Board of Trade or the local branch of the Industrial Estates Company and ask for assistance for capital development. It is in those circumstances that we have put down this Amendment. Admittedly, it goes only a small way towards bridging the gap which the Government have created by their policies; but now we hear from the Economic Secretary that he cannot accept the Amendment, or indeed give any hope that the principle will be accepted.

4.45 p.m.

There is another point affecting small businessmen about which not much has been said this afternoon. The Committee will recall that, following the statement of the Chancellor on 17th February, that Friday morning to which I have referred, other changes were made, quite apart from Bank Rate, which had gone up the previous day, and the decision to suspend investment allowances. One was the further tightening of hire-purchase restrictions. That tightening was not merely in terms of more severe conditions on the consumer; a whole new range of capital equipment was added for the first time to the category of controlled hire-purchase goods.

I am sure the Chancellor will know that it is just that class of goods which is bought by small businessmen, industrialists and engineers. In these post-war years many of them have been buying such items of machinery, plant and equipment on hire purchase. Now the Chancellor finds a "yawning gap" in his controls. He says "We have stopped them borrowing from the banks. They cannot borrow from the Government in the Development Area—though we will not tell the House of Commons about that. But these small businessmen can still borrow from the hire-purchase companies, and we must stop that as well. We will do so by suspending their investment allowances." So here we have three very severe blows which the small industrialist has suffered at the hands of the Chancellor of the Exchequer, and which we on this side of the Committee seek to mitigate to a small extent by this Amendment; and we have received a very chilly reply from the Economic Secretary.

Hon. Members on both sides of the Committee have outlined the important functions which small businessmen fulfil in a number of directions. I am sure that all hon. Members are sorry that, owing to illness, my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) is not present this afternoon. He is one classic example of a small private industrialist who made a successful venture. He made use of his wound gratuity after the First World War, and started a business in a small shed with four dilapidated and neglected looms. He has built up his business into practically the most modern weaving mill in the Yorkshire woollen industry.

I am sorry that my hon. Friend is not present this afternoon to deploy this argument, which he could have done with great skill. He could have pointed out to the Chancellor what I am sure the right hon. Gentleman has forgotten—though he used to know a great deal about the importance of the small industrialist—that it would be wrong to underestimate the importance of the small industrialist and the small businessman in the invention and bringing to the point of commercial exploitation of new inventions, developments and techniques in industry.

I know that many of the really big developments, especially in chemicals—and the same is true in some of the big engineering establishments, including electrical engineering—require great expenditure of capital and vast research laboratories, etc. It will, however, not have escaped the attention of the Committee that even I.C.I. will gain from this Amendment, because the first £5,000 would be exempted whether the business is big or small, although the Amendment is designed especially to assist the small firm.

It is true that there have been a number of developments by small firms. Some ingenious inventor with a small engineering shop may employ five, ten, twenty, or thirty or forty people, and play a vital part in sub-contracting. In his spare time he may develop some new invention which may play a revolutionary part in the future industrial equipment of the country. Some of these men can play a big part in the export trade. However, I do not wish to over-emphasise that, because one of the tragedies in British industry since the war has been the occasional case of a small man who has ventured into the export markets without proper advice or without going through the proper channels.

There are firms today, however, which play a substantial part in our export trade and which, four, five, six, eight or ten years ago were housed in small backyard sheds and factories, or small factories, perhaps in Development Areas. They have produced some new line which has become popular in the export markets. One of the great boasts of this country's industrial history has been the welcome which we have given, over the years, to refugees from abroad, who have very often set up new industries or new establishments in this country. We could go back to the time of the Huguenot weavers, or we can remember what happened in regard to refugees from Hitler.

In the Cumberland Development Area, for example, there are firms—the Chancellor will know the names of some of them—playing a major part today in our export trade, most successful firms with some millions of pounds capital, which. under the Labour Government, were given help to the tune of three, four, five or ten thousand pounds. They were struggling to exist, and they have become great successes as a result of our help. The success stories of tomorrow are being inhibited now because the only thing left to help, the investment allowance, has been suspended by this hard-hearted Chancellor.

We shall be moving today a succession of Amendments, if, as we hope, they are called, to exempt from the rigours of the Chancellor's policy a number of worthwhile types of industry—textile industries, machine-tool industries, export industries, and so on. But I think it is fitting that, at the beginning of this debate on Clause 12, we should emphasise the problems of small industrialists and small business men, in every type of industry, who are suffering more than any other group as a result of the Government's economic policy.

I should be out of order to suggest this afternoon, though I hope to have another opportunity of doing so, the changes in his broad economic policy which would enable the Chancellor to dispense with these distasteful and wrecking expedients such as the credit squeeze, the high interest-rate policy, and the suspension of investment allowances. I should be out of order if I were to indicate to him what those changes should be, but until he does accept those changes in policy which experience shows to be necessary, and which I think he is slowly coming to appreciate as case follows case and we see his general policy disintegrating, it is essential that this Committee as a whole, this being not necessarily a party matter. should do what it can to protect the small business man against the effects of the Chancellor's policy.

I hope that the Economic Secretary or the Chancellor will reply to the points which have been raised. It is now about an hour since the Economic Secretary gave his first rather perfunctory reply, and I hope that we shall now have a more specific and more warm-hearted reply to the points raised than the one which we had an hour ago.

The Chairman


Mr. H. Wilson

Are we not to have a reply from the Government Front Bench on the points which have been raised?

Sir E. Boyle

I listened with attention to the remarks of the right hon. Member for Huyton (Mr. H. Wilson), some of which, as he himself implied, raised rather wider issues than those actually covered by the Amendment. I must admit that the more I have listened to this debate during the last hour, the more I have felt that it would perhaps be a good thing if we were to examine some of these issues of general importance on the Question, "That the Clause stand part of the Bill".

I will only repeat what I said before, first, that my right hon. Friend will certainly pay careful attention to the whole impact of our policy on small businesses, as I said when replying to the hon. Member for Edmonton (Mr. Albu). Secondly, I can only repeat that, in our view, to accept this Amendment would make too big a breach in the decision of 17th February by my right hon. Friend to suspend the investment allowance.

I must again invite the Committee to reject the Amendment.

Mr. H. Wilson

In view of that very disappointing reply, I can but inform the hon. Gentleman that we on this side of the Committee, and all hon. Gentlemen opposite who meant what they said in past Elections about being the party of the small man, will vote in the Division Lobby against the Amendment.

Question put, That those words be there inserted: —

The Committee divided: Ayes 199,Noes 257.

Division No. 205.] AYES [4.55 p.m
Ainsley, J. W. Hall, Rt. Hn. Glenvil (Colne Valley) Oswald, T.
Albu, A. H. Hamilton, W. W. Owen, W. J.
Allaun, Frank (Salford, E.) Hannan, W. Paget, R. T.
Allen, Arthur (Bosworth) Hastings, S. Paling, Rt. Hon. W. (Dearne Valley)
Allen, Scholefield (Crewe) Hayman, F. H. Palmer, A. M. F.
Bacon, Miss Alice Healey, Denis Pargiter, G. A.
Bence, C. R. (Dunbartonshire, E.) Henderson, Rt. Hn. A. (Rwly Regis) Parkin, B. T.
Benn, Hn. Wedgwood (Bristol, S.E.) Hobson, C. R. Paton, John
Benson, G. Holman, P. Pearson, A.
Beswick, F. Holmes, Horace Peart, T. F.
Blackburn, F. Houghton, Douglas Plummer, Sir Leslie
Blyton, W. R. Howell, Charles (Perry Barr) Price, J. T. (Westhoughton)
Boardman, H. Howell, Denis (All Saints) Price, Philips (Gloucestershire, W.)
Bottomley, Rt. Hon. A. G. Hubbard, T. F. Probert, A. R.
Bowden, H. W. (Leicester, S.W.) Hughes, Cledwyn (Anglesey) Proctor, W. T.
Bowles, F. G. Hughes, Emrys (S. Ayrshire) Pryde, D. J.
Boyd, T. C. Hughes, Hector (Aberdeen, N.) Randall, H. E.
Braddock, Mrs. Elizabeth Hunter, A. E. Rankin, John Redhead, E. C.
Brockway, A. F. Hynd, H. (Accrington) Reid, William
Brown, Rt. Hon. George (Belper) Irving, S. (Dartford) Robens, Rt. Hon. A.
Burton, Miss F. E. Isaacs, Rt. Hon. G. A. Roberts, Albert (Normanton)
Butler, Herbert (Hackney, C.) Janner, B. Robinson, Kenneth (St. Pancras, N.)
Butler, Mrs. Joyce (Wood Green) Jay, Rt. Hon. D. P. T. Ross, William
Callaghan, L. J. Jeger, George (Goole) Royle, C.
Castle, Mrs. B. A. Jeger,Mrs.Lena(Holbn & St.Pncs,S.) Shinwell, Rt. Hon. E.
Champion, A. J. Jenkins, Roy (Stechford) Short, E. W.
Chetwynd, G. R. Johnson, James (Rugby) Shurmer, P. L. E.
Clunie, J. Johnston, Douglas (Paisley) Silverman, Julius (Aston)
Coldrick, W. Jones, David (The Hartlepools) Skeffington, A. M.
Collick, P. H. (Birkenhead) Jones, J. Idwal (Wrexham) Slater, Mrs. H. (Stoke, N.)
Collins, V. J. (Shoreditch & Finsbury) Jones, T. W. (Merioneth) Slater, J. (Sedgefield)
Corbet, Mrs. Freda Kenyon, C. Smith, Ellis (Stoke, S.)
Cove, W. G. Key, Rt. Hon. C. W. Snow, J. W.
Craddock, George (Bradford, S.) King, Dr. H. M. Sorensen, R. W.
Cronin, J. D. Lawson, G. M. Sparks, J. A.
Crossman, R. H. S. Ledger, R. J. Steele, T.
Cullen, Mrs. A. Lee, Miss Jennie (Cannock) Stewart, Michael (Fulham)
Dalton, Rt. Hon. H. Lewis, Arthur Stones, W. (Consett)
Darling, George (Hillsborough) Lindgren, G. S. Strachey, Rt. Hon.J.
Davies, Ernest (Enfield, E.) Lipton, Lt.-Col. M. Strauss, Rt. Hon. George (Vauxhall)
Davies, Harold (Leek) Logan, D. G. Summerskill, Rt. Hon. E.
Deer, G. Mabon, Dr. J. Dickson Sylvester, G. o.
de Freitas, Geoffrey MacColl, J. E. Taylor, Bernard (Mansfield)
Delargy, H. J. McGhee, H. G. Thomson, George (Dundee, E.)
Dodds, N. N. McGovern, J. Thornton, E.
Dugdale, Rt. Hn. John (W. Brmwch) McInnes, J. Turner-Samuels, M.
Dye, S. McKay, John (Wallsend) Viant, S. P.
Ede, Rt. Hon. J. C. McLeavy, Frank Warbey, W. N.
Edwards, Rt. Hon. John (Brighouse) Mahon, Simon Weitzman, D.
Edwards, Rt. Hon. Ness (Caerphilly) Mallalieu, E. L. (Brigg) Wells, Percy (Faversham)
Edwards, Robert (Bilston) Mallalieu, J. P. W. (Huddersfd, E.) Wheeldon, W. E.
Edwards, W. J. (Stepney) Mann, Mrs. Jean White, Mrs. Eirene (E. Flint)
Evans, Albert (Islington, S.W.) Marquand, Rt. Hon. H. A. White, Henry (Derbyshire, N.E.)
Evans, Edward (Lowestoft) Mason, Roy Wilkins, W. A.
Fienburgh, W. Mayhew, C. P. Willey, Frederick
Forman, J. C. Messer, Sir F. Williams, W. R. (Openshaw)
Fraser, Thomas (Hamilton) Mitchison, G. R. Williams, W. T. (Barons Court)
Gibson, C. W. Monslow, W. Willis, Eustace (Edinburgh, E.)
Gordon Walker, Rt. Hon. P. C. Moody, A. S. Wilson, Rt. Hon. Harold (Huyton)
Greenwood, Anthony Morrison,RCHn.Herbert(Lewis'm,S.) Winterbottom, Richard
Grenfell, Rt. Hon. D. R. Moss, R. Woof, R. E.
Grey, C. F. Moyle, A. Yates, V. (Ladywood)
Griffiths, David (Rother Valley) Mulley, F. W. Younger, Rt. Hon. K.
Griffiths, Rt. Hon. James (Llanelly) Neal, Harold (Bolsover) Zilliacus, K.
Griffiths, William (Exchange) Oliver, G. H.
Grimond,J. Oram, A. E. TELLERS FOR THE AYES:
Orbach, M. Mr. John Taylor and
Mr. G. H. R. Rogers.
Agnew, Cmdr. P. G. Arbuthnot, John Banks, Col. C.
Aitken, W. T. Armstrong, C. W. Barber, Anthony
Allan, R. A. (Paddington, S.) Ashton, H. Barlow, Sir John
Alport, C. J. M. Astor, Hon. J. J. Barter, John
Amery, Julian (Preston, N.) Atkins, H. E. Baxter, Sir Beverley
Amory, Rt. Hn. Heathcoat (Tiverton) Baldock, Lt.Cmdr. J. M. Bell, Philip (Bolton, E.)
Anstruther-Gray, Major Sir William Balniel, Lord Bell, Ronald (Bucks, S.)
Bevins, J. R. (Toxteth) Hay, John Nicolson, N. (B'n'm'th, E. & amp; Chr'ch)
Bidgood, J. C. Head, Rt. Hon. A. H. Nield, Basil (Chester)
Biggs-Davison, J. A. Heath, Rt. Hon. E. R. G. Noble, Comdr, A. H. P.
Birch, Rt. Hon. Nigel Henderson, John (Cathcart) Nugent, G. R. H.
Bishop, F. P. Hicks-Beach, Maj. W. W. Nutting, Rt. Hon. Anthony
Black, C. W. Hill, Rt. Hon. Charles (Luton) Ormsby-Gore, Hon. W. D.
Bossom, Sir A. C. Hill, Mrs. E. (Wythenshawe) Osborne, C.
Boyd-Carpenter, Rt. Hon. J. A. Hill, John (S. Norfolk) Page, R. G.
Boyle, Sir Edward Hinchingbrooke, Viscount Pannell, N. A. (Kirkdale)
Braine, B. R. Hirst, Geoffrey Partridge, E.
Braithwaite, Sir Albert (Harrow, W.) Holland-Martin, C. J. Peyton, J. W. W.
Bromley-Davenport, Lt.-Col. W. H. Hope, Lord John Pickthorn, K. W. M.
Brooke, Rt. Hon. Henry Hornby, R. P. Pilkington, Capt. R. A.
Brooman-White, R. C. Hornsby-Smith, Miss M. P. Pitt, Miss E. M.
Browne, J. Nixon (Craigton) Horobin, Sir Ian Pott, H. P.
Bryan, P. Horsbrugh, Rt. Hon. Dame Florence Powell, J. Enoch
Bullus, Wing Commander E. E. Howard, Hon. Greville (St. Ives) Price, Henry (Lewisham, W.)
Burden, F. F. A. Howard, John (Test) Prior-Palmer, Brig. o. L.
Butcher, Sir Herbert Hudson, Sir Austin (Lewisham, N.) Profumo, J. D.
Butler, Rt. Hn. R. A.(SaffronWalden) Hughes Hallett, Vice-Admiral J. Raikes, Sir Victor
Campbell, Sir David Hutchison, Sir Ian Clark (E'b'gh,W.) Ramsden, J. E.
Cary, Sir Robert Hylton-Foster, Sir H. B. H. Rawlinson, Peter
Channon, H. Iremonger, T. L. Redmayne, M.
Chichester-Clark, R. Irvine, Bryant Godman (Rye) Rees-Davies, W. R.
Clarke, Brig. Terence (Portsmth, W.) Jenkins, Robert (Dulwich) Remnant, Hon. P.
Cole, Norman Jennings, J. C. (Burton) Renton, D. L. M.
Conant, Maj. Sir Roger Johnson, Dr. Donald (Carlisle) Ridsdale, J. E.
Cooper, Sqn. Ldr. Albert Johnson, Eric (Blackley) Rippon, A. G. F.
Cooper-Key, E. M. Jones, Rt. Hon. Aubrey (Hall Green) Roberts, Sir Peter (Healey)
Cordeaux, Lt.-Col. J. K. Joseph, Sir Keith Robertson, Sir David
Corfield, Capt. F. V. Joynson-Hicks, Hon. Sir Lancelot Robinson, Sir Roland (Blackpool, S.)
Craddock, Beresford (Spelthorne) Keegan, D. Rodgers, John (Sevenoaks)
Crouch, R. F. Kerby, Capt. H. B. Roper, Sir Harold
Crowder, Sir John (Finchley) Kerr, H. W. Russell, R. S.
Cunningham, Knox Kershaw, J. A. Schofield, Lt.-Col. W.
Currie, G. B. H. Kirk, P. M. Scott-Miller, Cmdr. R.
Dance, J. C. G. Lagden, G. W. Sharples R. C.
Davidson, Viscountess Lambert, Hon. G. Simon, J. E. S. (Middlesbrough, W.)
D'Avigdor Goldsmid, Sir Henry Lambton, Viscount Smithers, Peter (Winchester)
Deedes, W. F. Leavey, J. A. Smyth, Brig. Sir John (Norwood)
Digby, Simon Wingfield Leburn, W. G. Spearman, Sir Alexander
Donaldson, Cmdr. C. E. McA. Legge-Bourke, Maj. E. A. H. Speir, R. M.
Doughty, C. J. A. Legh, Hon. Peter (Petersfield) Spence, H R. (Aberdeenshire, W)
du Cann, E. D. L. Lennox-Boyd, Rt. Hon. A. T. Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Duncan, Capt. J. A. L. Lindsay, Hon. James (Devon, N.) Stanley, Capt. Hon. Richard
Duthie, W. S. Lindsay, Martin (Solihull) Stevens, Geoffrey
Eccles, Rt. Hon. Sir David Linstead, Sir H. N. Stewart, Henderson (Fife, E.)
Eden,Rt.Hn.SirA.(Warwick & L'm'n) Lloyd, Maj. Sir Guy (Renfrew, E.) Stoddart-Scott, Col. M.
Eden, J. B. (Bournemouth, West) Lloyd, Rt. Hon. Selwyn (Wirral) Studholme, Sir Henry
Elliot, Rt. Hon. W. E. Lloyd-George, Maj. Rt. Hon. G. Summers, Sir Spencer
Emmet, Hon. Mrs. Evelyn Longden, Gilbert Sumner, W. D. M. (Orpington)
Farey-Jones, F. W. Lucas, Sir Jocelyn (Portsmouth, S.) Taylor, Sir Charles (Eastbourne)
Fell, A. Lucas, P. B. (Brentford & Chiswick) Taylor, William (Bradford, N.)
Finlay, Graeme Lucas-Tooth, Sir Hugh Thomas, Leslie (Canterbury)
Fisher, Nigel McAdden, S. J. Thompson, Kenneth (Walton)
Forrest, G. Macdonald, Sir Peter Thompson, Lt.-Cdr.R.(Croydon, S.)
Foster, John McKibbin, A. J. Thornton-Kemsley, C. N.
Fraser, Sir Ian (M'cmbe & Lonsdale) Mackie, J. H. (Galloway) Tilney, John (Wavertree)
Freeth, D. K. McLaughlin, Mrs. P. Touche, Sir Gordon
Galbraith, Hon. T. G. D. Maclay, Rt. Hon. John Turner, H. F. L.
George, J. C. (Pollok) Maclean, Fitzroy (Lancaster) Turton, Rt. Hon. R. H.
Gibson-Watt, D. Macmillan,Rt.Hn.Harold(Bromley) Tweedsmuir, Lady
Glover, D. Macpherson, Niall (Dumfries) Vane, W. M. F. Vaughan-Morgan, J. K.
Godber, J. B. Marlowe, A. A. H. Vickers, Miss J. H.
Gower, H. R. Marples, A. E. Vosper, D. F.
Graham, Sir Fergus Marshall, Douglas Wakefield, Edward (Derbyshire, W.)
Grant-Ferris, Wg Cdr. R. (Nantwich) Mathew, R. Wall, Major Patrick
Green, A. Maude, Angus Ward, Hon. George (Worcester)
Gresham Cooke, R. Maydon, Lt.-Comdr, S. L. C. Ward, Dame Irene (Tynemouth)
Grimston, Hon. John (St. Albans) Medlicott, Sir Frank Waterhouse, Capt. Rt. Hon. C.
Grimston, Sir Robert (Westbury) Milligan, Rt. Hon. W. R. Watkinson, Rt. Hon. Harold
Hall, John (Wycombe) Molson, Rt. Hon. Hugh Whitelaw, W.S.I.(Penrith & Border)
Harris, Frederic (Croydon, N.W.) Monckton, Rt. Hon. Sir Walter Williams, Paul (Sunderland, S.)
Harris, Reader (Heston) Mott-Radclyffe, C. E. Williams, R. Dudley (Exeter)
Harrison, A. B. C. (Maydon) Nabarro, G. D. N. Wilson, Geoffrey (Truro)
Harrison, Col. J. H. (Eye) Nairn, D. L. S. Wood, Hon. R.
Harvey, Air Cdre. A. V. (Macclesfd) Neave, Airey Yates, William (The Wrekin)
Harvey, Ian (Harrow, E.) Nicholls, Harmar
Harvey, John (Walthamstow, E.) Nicholson, Godfrey (Farnham) TELLERS FOR THE NOES:
Mr. Wills and Mr. Hughes-Young.
Mr. Geoffrey Stevens (Portsmouth. Langstone)

I beg to move, in page 12, line 35, to leave out "Chapter" and to insert "Chapters I and".

I suggest, that it might be for the convenience of the Committee to discuss at the same time the following Amendment, in the names of several of my hon. Friends and myself, in page 12, line 38, at the end to insert: and on the construction, extension or modification of dry docks in the United Kingdom and on the provision of plant or machinery necessary for the operation of the said dry docks as so constructed, extended or modified.

The Temporary Chairman (Sir Norman Hulbert)


Mr. Stevens

We all regret that the investment allowances have been temporarily suspended. At the same time, I accept the necessity for their temporary suspension. There is at present undue pressure on the existing resources of men and materials, and this pressure must be reduced. In the Bill, however, my right hon. Friend the Chancellor of the Exchequer has made two specific exceptions: he has excepted ships and he has excepted fuel economy devices. I suggest that these Amendments, which would make an exception also of dry docks and their ancillary plant and machinery, are worthy of my right hon. Friend's consideration.

With shipping, as with practically no other industry, the whole strategy of the industry has changed in the last twenty years. In 1938, there were on the United Kingdom Register of Shipping only twenty ships with a beam of 80 ft. or more. Last year, the figure had risen to over sixty, and by 1960 there will be over one hundred ships of a breadth of 80 ft. or more. It is also the fact that as compared with pre-war days, this country has only three more dry docks which are capable of accommodating these much larger ships which are now the fashion.

Tankers of today are commonly of 30,000 and 35,000 tons. Indeed, there is one in existence of 45,000 tons, and more are building or contemplated. The result of our acute shortage of dry dock accommodation is that these ships are repaired in Holland, France and other countries on the Continent, which not only possess the dry dock accommodation, but have taxation allowances con- siderably more generous than those of this country. There is also the strategic aspect to consider. We are more and more dependent upon oil, all of which, whether United Kingdom or American-owned, must be brought here in tankers. Consequently, facilities for repairing the tankers and keeping our maritime oil pipeline open are of the first importance.

For these strategical and industrial reasons, I suggest that ship repairing is in a special category and that the investment allowance should be retained for dry dock construction and for the plant and machinery which is ancillary to the dry docks themselves.

Dame Irene Ward (Tynemouth)

I support the Amendment, which has been moved in great detail and comprehensively by my hon. Friend the Member for Langstone (Mr. Stevens). I well remember in 1950, when we first tried to get tunnelling and excavating included for taxation relief, sitting all night until 6.30 in the morning, when I was called to move the Amendment, which then had the support of those who today comprise the Front Bench on this side of the Committee. Indeed, we voted in support of the Amendment. It has taken five years before we have moved at all in respect of excavating and tunnelling, and I hope it will not be another five years before we get this additional provision which the Amendments are designed to secure.

It seems to me very sad that ship repairing and dry dock accommodation, which are so vital for all our shipping needs, must fight such a battle with all Front Benches to obtain consideration. This is a moment when my right hon. Friend the Chancellor of the Exchequer can let it be known to the country and to the world how we regard the accommodation which must be provided if we are to maintain our ship repairing which is of great importance to the country. I very much hope we shall get this concession today.

It took us so long to get excavation and tunnelling acknowledged in the Budget that Smith's Docks, in my constituency, a leading firm in ship repairing and in providing up to date, modern plant and dry dock accommodation, has not had any benefit at all from the Budget. That is an added reason for our having this concession today.

Mr. Gordon Walker (Smethwick)

We on this side of the Committee did not like, and do not like, the removal of investment allowances in general. On the other hand, we do not see that it would be very sensible to bring them back in the rather haphazard way involved in the Amendment. To bring them back for some things people happen to think of, although they may be things for which it would be reasonable to have the allowances, would make the whole system even more odd than it is now. We ourselves have Amendments down to give powers to use investment allowances selectively, which we would much prefer.

The Royal Commission on the taxation of Profits and Income did not really recommend this, but that industrial machinery and plant allowances should be given to dry docks. I am wondering how far this will be carried out by Clause 13. If dry docks come under that Clause, that will make the Amendment much less important. According to paragraphs 400 and 401 of the Royal Commission's Report the allowances for tunnelling and so on should apply to dry docks; they should all qualify for industrial allowance and for plant and machinery allowances. On the whole, I hope the answer is in the affirmative, and if it is, it seems to us that the Amendment is not really necessary, and that it would be wrong to bring back the allowance in this haphazard way. I repeat that we are sorry that investment allowances have been taken off.

Sir E. Boyle

The answer to the question the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) has asked me is that it is Clause 13 which gives effect to paragraph 400 of the Final Report of the Royal Commission.

My hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) and my hon. Friend the Member for Tyne-mouth (Dame Irene Ward) have raised an important point. I certainly have vivid memories of my hon. Friend the Member for Tynemouth speaking on a similar subject at 6.30 in the morning some years ago. I hope she will not come back at me too hard with one of her hammers if I am not able today to give her the reply she would like.

Dame Irene Ward

I will.

Sir E. Boyle

I think that, perhaps, it may be helpful if I briefly explain to the Committee how the law stands on dry docks. At the present time, as the law now stands, capital expenditure on the construction of the dry dock itself, but not excavation, qualifies for allowance given to industrial buildings or structures, and such expenditure has, therefore, been given an investment allowance of 10 per cent. and an annual allowance of 2 per cent.

Under the provisions of this Bill that position will be altered in two ways. First, new constructional work on dry docks will lose investment allowance but will be given initial allowance of 10 per cent. instead. Secondly, under Clause 13, new expenditure on the excavation of land in connection with construction of docks will qualify for capital allowance to the same extent as the cost of the structural work on the dry dock itself. So altogether I think it is fair to say that this industry has been treated reasonably favourably by the present Bill.

5.15 p.m.

The question of giving dry docks special treatment in the matter of capital allowance, as my hon. Friend said, has been given special consideration on previous occasions, but, of course, there is a great difficulty with which one is faced in a Clause like this, as to exactly what exceptions one can admit. I must say I rather agree with the right hon. Gentleman the Member for Smethwick that there is an arguable case—we shall argue it, in due time, and it will be an interesting debate, I am sure—for making investment allowance very much more selective than we have so far made it. I am sure we shall enjoy discussing it.

However, if one does not admit that, because one has to be very careful indeed about not making the Clause too complicated and not making it selective in a way which it is hard to defend, it is difficult to single out dry docks from other assets of the ship repairing and shipbuilding industry because the same assets are often used in both the building and repair work. If dry docks, where ships' hulls undergo repairs, were given special treatment it would be a little difficult at first sight to see, for example, why the fitting out basins, where other repair work is done, should be treated differently. One could put the same sort of case for the stocks of the shipyards or the plant and buildings of the boiler and engine shops, and it would not be easy in principle to stop short of the plant and buildings used in the wide variety of trades ancillary to the building and repair of ships.

My right hon. Friend has given careful consideration to this matter because he appreciates the force of the points which my hon. Friends have made on the Amendment, but, while he sees the importance of this industry, he thinks it would be really very difficult to justify giving a special exception here. Having given this explanation, and assuring my hon. Friend the Member for Langstone that my right hon. Friend has considered this matter most carefully, I ask my hon. Friend if he will consider asking leave to withdraw the Amendment.

Mr. Stevens

Having listened to my hon. Friend's explanation I can only, though with much regret, accept what he says, and I beg to ask leave to withdraw the Amendment.

Mr. Ede (South Shields)

No. Amendment negatived.

Mr. Ernest Thornton (Farnworth)

I beg to move, in page 12, line 38, at the end, to insert: (3) (a) Notwithstanding subsection (1) of this section, investment allowances shall also continue to he made under the said Chapter II in respect of expenditure incurred after the said seventeenth day of February on the provision of new machinery or plant for the purpose of spinning, doubling or weaving cotton or for any purpose preparatory or ancillary to such spinning, doubling or weaving; (b) in this subsection "new" has the same meaning as in the said section sixteen of the Finance Act, 1954, and the words "spinning", "doubling" and "weaving" have the same meanings as in the Cotton Industry Development Council Order, 1948, as amended by the Cotton Industry Development Council (Amendment) Order, 1951, and by the Cotton Industry Development Council (Amendment No. 2) Order, 1953. The purpose of this Amendment is to make the cotton textile industry one of the exceptions from the suspension of investment allowances. There are two good and valid reasons why the cotton textile industry should be excepted from these suspensions. First, there has been in recent years a very steep and disturbing fall in the exports of the cotton textile industry. Secondly, our cotton textile industry has been called upon to make very great sacrifices in the national interest.

Mr. H. Wilson

I hope my hon. Friend the Member for Farnworth (Mr. Thornton) will permit me to interrupt.

I beg to move, That the Chairman do report Progress, and ask leave to sit again.

I do so on the ground that it is quite unprecedented to have a major debate on the cotton industry in the absence of the President of the Board of Trade. We are all aware that he has scant regard for this industry and cares very little about it, but I do suggest that we cannot debate the cotton industry unless we have an assurance from the Government that the President of the Board of Trade will be here for it.

The Temporary Chairman

I am not prepared to accept that Motion.

Mr. Thornton

I, too, regret the absence of the President of the Board of Trade, because many of the remarks I have to make on this Amendment have reference to his attitude on the problems relating to the cotton textile industry.

Prior to my right hon. Friend's intervention, I was enumerating the reasons why the Amendment should be carried and I am not unhopeful that the Government will accept it. Those two reasons are the steep fall in exports of cotton textiles in the last two years and the sacrifices which Her Majesty's present Administration have imposed upon the cotton textile industry in the national interest. I will return in a few moments to those two valid reasons.

These investment allowances are in effect Exchequer subsidies to industry. There is a tax allowance of 120 per cent. on money spent on new equipment, machinery and plant. The Finance Act, 1954, gave this subsidy indiscriminately to almost all industry and, according to the Chancellor, the result has been too much investment, certainly too much investment in the wrong places and not enough in the right places. Apparently, the Chancellor now thinks that investment has been excessive and is an important cause of our current financial and economic difficulties.

It is some reflection on the Government's overall policy that when capital investment in industry is stepped up, a crisis emerges in the country's economy. This would not be so bad if in the last few years our rate of capital investment in the United Kingdom had risen from an average to an above-the-average position. The reverse is true. All the statistics confirm that the capital investment programme of the United Kingdom, against the background of the increase in our national output, is falling seriously behind those of our chief competitors in world trade.

Britain's strength in the last resort will depend upon the rate of increase in production which in turn will depend upon the rate of capital investment. It is well known that the annual rate of capital investment in the Soviet Union today exceeds that of the United States, and the rate of investment in the United States exceeds that in the United Kingdom. We are already a second-class Power in relation to those great industrial giants and we are in grave danger of becoming a third-class Power, with Germany and China, having regard to their rates of capital investment, becoming the second-class industrial Powers in the world in the near future.

The financial editor of the Manchester Guardian refers today to certain forecasts by experts of the O.E.E.C. Secretariat. Their estimates make it clear that during the next five years we shall continue to lag behind in the totality of our production, in productivity, and in the rate of capital investment. This is a very sad reflection upon the Government's overall policy. The Government's stubborn refusal in the past to discriminate between essential and inessential industries has been a major factor in the United Kingdom's failure to make a better showing in recent years. The Amendment aims at retaining these investment allowances for what I consider to be an essential industry, that is, the cotton textile industry, which in recent years has laboured under quite exceptional difficulties and handicaps. A special case can be made out for the industry today.

The cotton industry is facing a very serious crisis. Exports are falling steeply and imports are rising. More than one hundred mills have been closed in the last two years and those which are running today are running at probably not more than an average of 70 per cent. of their capacity. Many more mills will inevitably close down in the next year or two. The industry is bewildered and demoralised. I hope that the Chancellor will see fit to do something by means of the Finance Bill to give the industry some assistance. It is not many years since the cotton textile industry was Britain's largest exporting industry, but we are now facing the danger of the United Kingdom's cotton industry becoming a net importer of cotton textiles. It is not many years since the cotton textile industry made probably the biggest contribution to the favourable balance of payments of the country. We are now faced with a situation in which the Industry will be a liability on the nation's balance sheet.

The biggest single factor in the decline of the industry since 1951 has been the loss of exports, and surprisingly enough, the loss of exports to Western European competitors and to the United States—and those countries have relatively high-wage economies. Whilst there are many minor reasons, I think that the overall fact emerges that the reason for that loss of exports has been a relative decline in the efficiency of our industry. That is not surprising, because the cotton textile industry, over a period of forty years, has been a declining industry.

During the inter-war period little or no profit was made and re-equipment was not and often could not be undertaken. In the post-war period, considerable re-equipment has taken place. Notwithstanding the fact that during most of the post-war period the contraction in the size of the industry has continued, the cotton textile industry makes a favourable show in the proportion of its resources which has been put back in capital investment and re-equipment. It compares favourably with the average performance of the rest of British manufacturing industry, notwithstanding the fact that most other industries have been on an expanding basis in the post-war period and not on a contracting, basis as has been the case with cotton.

As I see it, the essence of this problem of ensuring increased efficiency, when all the minor considerations have been taken into account, is the rate of capital investment. In the demoralising conditions to which I have referred, there is a great danger that capital investment in this once very great industry will dry up completely. I can think of nothing better at this moment of time to restore some semblance of confidence than for the Government to decide that a special case can be made out here and to continue the investment allowances for cotton spinning, doubling and weaving.

5.30 p.m.

Our record in the post-war period is not bad. It compares very favourably with the average for British manufacturing industry. Notwithstanding the idle spindles which a certain gentleman sent right hon. and hon. Gentlemen on both sides of the Committee, in 1954 more new spindles were installed in Lancashire cotton textile mills than in any year during the last forty years. I say that to indicate that at least until recently there has been some hope in the future of our industry based on increased efficiency.

Mr. G. B. Drayson (Skipton)

Will not the hon. Gentleman agree that the spindles which were sent to hon. Members were probably mule spindles which had been replaced during the re-equipment which has been taking place and had not been put out of commission by Japanese competition?

Mr. Thornton

I do not want to be drawn into that controversy. The hon. Member for Skipton (Mr. Drayson) has some expert knowledge of these problems, and it does not need me to tell him what type of spindles they were.

Even in the difficult post-war conditions before the growth of the threat of imports, to which I shall refer in a moment, there was still confidence that Lancashire had a future based on technical efficiency, re-equipment, the latest machines and the most modern methods.

I come now to the second point, the severe difficulties under which our industry has laboured in recent years. These have arisen from the great flood of duty-free and quota-free imports from India and Hong Kong. I will not waste the time of the Committee by giving a detailed explanation of all that is involved, but I must say that no British industry of a substantial size has faced such unfair competition in the home market as our cotton textile industry has done.

The President of the Board of Trade has repeatedly told the House that he cannot take steps to limit and control the imports because of the adverse effect that such steps might have upon other exporting British industries. He admits that Lancashire has a good case, but he and the Government refused to take action because of the consequences it might have on the rest of our Commonwealth trade. It may be that the Government will be obliged to take action arising out of the recent pronouncement by the Prime Minister of Australia. In the meantime, our industry is faced with a very grave threat to the home market. At present 25 per cent. of our production goes to export, and we are faced with a continual decline in that sphere.

Seventy-five per cent. of our production is sold on the home market, and the demoralisation is caused because, as things stand at present, there is no limit to the amount of imports which can be brought here from India and Hong Kong. It must be remembered that the Indian textile industry has now a productive capacity in terms of quantity two or three times that of our own industry. Therefore, it is possible for the Indian industry completely to swamp our home market and destroy our cotton textile industry.

For these reasons, I believe that our industry is entitled to special consideration. I know that the President of the Board of Trade has said that Lancashire's case is a strong one. I hope that hon. and right hon. Gentlemen have read the excellent case sent to them by the Cotton Board. All who have read the document will agree that it is a sober, factual and well-stated case. It is also an unanswerable case if we are at all concerned with equity as between one industry and another.

I believe the President of the Board of Trade takes an exaggerated view—[HON. MEMBERS "Where is he?"]—of the dangers of attempting to control these imports, but so long as our industry is having, in the so-called national interest, to make sacrifices for the rest of our exporting industries, it has a very good case indeed for discriminatory treatment.

The Government now have an opportunity to give discriminatory treatment in favour of the cotton textile industry without harming any other British industry. I appeal to them to let us have discriminatory treatment in the interests of this once very great industry which in the immediate post-war years made a tremendous contribution towards the rehabilitation of our economy. Let us have discrimination in favour of it, and not a continuation of the discriminatory measures which have added to the difficulties and the impasse in which the industry now finds itself.

Mr. H. Wilson

I had not intended to intervene in the debate at this point because there are other hon. Members on both sides of the Committee who wish to speak, but I think it ought to be put fairly and squarely to the Government Front Bench that we ought to have the President of the Board of Trade here for this important debate. We know that the Chancellor is busy, but he has honoured the Committee with his presence for quite a time. There cannot have been a cotton debate for very many years at which the President of the Board of Trade was not present. I leave to the imagination of the Chancellor and his colleagues what they would have said in the days of the Labour Government if we had had a debate on cotton and I or one of my colleagues had not been present. I do not think there was such an occasion, because we always made it a point of honour to be present when the cotton industry was being debated. I do not know what —

The Chancellor of the Exchequer (Mr. Harold Macmillan)

You usually resigned.

Mr. Wilson

I do not know the point of that rather silly interjection by the Chancellor of the Exchequer. However, he may know that when we were in charge of the cotton industry we were not facing the kind of problems about which my hon. Friend the Member for Farnworth (Mr. Thornton) has been speaking. It was only when his Government came into power that we faced them. After years of pressure on this Government, and on the President of the Board of Trade, we have had no action, only a disregard of the problems of the industry. Therefore, I submit to you, Sir Norman, that the Government should send for the President of the Board of Trade. The right hon. Gentleman might at least honour the industry with his presence when we are debating the serious position it is in, even if he cannot do anything to help it.

Mr. H. Hynd (Accrington)

I support the protests of my right hon. Friend—

The Temporary Chairman

Does the hon. Gentleman rise to a point of order?

Mr. Hynd

No, Sir Norman, I have not risen to a point of order. I was starting my few remarks by saying that I heartily support the protest of my right hon. Friend the Member for Huyton (Mr. H. Wilson) that none of the Ministers of the Board of Trade is here, not even a junior one. This is unfair when we are discussing a most important industry, an industry which has been so badly attacked by the Government. I use the word "attacked" advisedly rather than the word "neglected", because the industry has been more than neglected, it has been actually attacked by the Government and put into its present unsatisfactory state.

Like my hon. Friend the Member for Farnworth (Mr. Thornton), I am unashamedly asking for special treatment for the cotton industry because I believe that there is special justification for doing so. The industry employs half a million people directly and its exports amount to £150 million worth of textiles. It is much more important in the export market than are the industries making aircraft, scientific instruments, chemicals and other things which seem to be encouraged all the time by the Government.

The people of Lancashire and the people connected with this industry have been experiencing a gamut of emotions about it in the last few years. In the first place, when the recession started they were indignant that the Government refused to recognise that there was anything which needed attention. Time after time Questions were asked in the House, debates were conducted, and the Ministers assured us that our fears were without foundation and that we were exaggerating the position. Yet the position has gone from bad to worse. So Lancashire began to be surprised and puzzled about why it was that the Government were so obviously failing to do anything for the cotton textile industry. Now it has gone even worse, and Lancashire is in a state of despair about the matter. We cannot understand why it is that the Government seem to have picked out this industry for neglect or inattention.

I wonder whether the President of the Board of Trade has got ambitions to go to the other place. [HON. MEMBERS: "Where is he?"] Does he want to join the procession of unsuccessful Ministers along the corridor to join his ex-colleague "Lord Cyprus", and the others who have already reached there because they failed on the Government Front Bench? Whatever the reason, something has to be done about it. I suggest that if the President of the Board of Trade will not do anything, the Chancellor of the Exchequer might reasonably take this opportunity of doing at least something.

I call the attention of the right hon. Gentleman to a pamphlet issued recently by John Murray for the Fabian Society which contains valuable information and suggestions for the future of the industry. We have heard references to the efforts of Mr. Cyril Lord, very commendable efforts. to stir up some interest in the House of Commons on the matter. In fact, his efforts have been successful, as the Order Paper bears witness. Hon. Members who have never put down Questions before about cotton have been putting them down since they received communications from Mr. Lord. Perhaps I may also call the attention of the Government to an interesting and well-written article in yesterday's Sunday Pictorial which makes the point that 54,000 workers have already lost their jobs in the textile industry. Those are serious matters and they are giving great concern to the workers in the industry.

5.45 p.m.

This afternoon, as the Secretary of the Lancashire Labour Group in the House, I received a telegram. I understand that a similar telegram has gone to the Secretary of the Lancashire Conservative Group. This reads: The rapidly deteriorating position of the cotton industry was fully discussed at a meeting of delegates representing over 60,000 operatives on Saturday, 9th June at the Nelson Weavers' Institute. It was decided to send a telegram to both groups of M.P.s representing Lancashire urging upon them the need to support any measure which will bring about an easing of the burden now being felt by all concerned. The meeting pledged its full support to any move of such a character. The Textile Trades Federation of Nelson Brierfield and District. When the operatives talk like that, they are not talking lightly; they are seeing their jobs disappearing, and if they have not been quite as vocal as the motor industry workers and others, it is not because the problem is not more serious in their case. The local authorities in Lancashire also are very much concerned. They see the depopulation of towns and the emptying of shops and buildings, with the consequent rating problems caused thereby.

We appeal to the Government to lend a helping hand in some way. By making this small concession to the cotton industry the Chancellor could at least enable the firms who want to modernise to do so. If they modernise, they will be able to work extra shifts and thereby cut down their overhead costs of production. That might be of great help to the industry, and might save many jobs and help us in our competition in the world markets. If the Chancellor can only see his way to make this concession in the Budget. he will bring a ray of hope to Lancashire and I appeal to him to do so.

Sir E. Boyle

It might perhaps be for the convenience of the Committee if I rose fairly early in this debate, because I am aware that this is a subject to which many hon. Members on both sides of the Committee attach importance. Therefore, it is only fair that I should state the view of my right hon. Friend on this Amendment as soon as possible.

Mr. H. Wilson

Which one?

Sir E. Boyle

My right hon. Friend the Chancellor of the Exchequer. He is in charge of the Bill, as the right hon. Gentleman himself is well aware.

The question of Lancashire has often been discussed in this House. This is the first time that I have had the privilege of taking part in a Lancashire debate, but it is a subject which we have discussed on many occasions, both in this and other Parliaments, and it is one on which hon. Members have made a large number of points. However, I think it is open to question from the very first whether, even if we wished to take some special step to help Lancashire, this would be the right way to do it; in other words, whether it could be right to continue the investment allowance for new machinery and plant used in the cotton industry but not to make that concession in the case of other industries.

The case has been put very fairly by the hon. Member for Farnworth (Mr. Thornton), to whose speech I listened with close attention. Indeed, even those of us who are not regular habitués of Lancashire debates will know how fairly and reasonably the hon. Gentleman always states his case. The case he has put is that the cotton industry has not shared in the general run of post-war prosperity, that it has been in a difficult position in financing the improvement and modernisation of its plant from its own resources, and that it would therefore be right to continue the investment allowance as a means of providing financial help for such re-equipment and modernisation.

I am sure that hon. Members will be aware of the difficulty which faces any Government on these occasions. Cotton may very well be the largest of the comparatively less prosperous industries of this country, but I do not think that any hon. Member will dispute that cotton is the most vocal of those industries. The hon. Member for Accrington (Mr. H. Hynd) this afternoon quoted a number of communications which hon. Members have had the chance of seeing during the last few weeks. However, that does not mean that other industries would happily acquiesce in concessions being made to the cotton industry and not to themselves. For example, other sections of the textile industry—one might mention especially carpets—have suffered some degree of recession and might feel that they were entitled to share in favours bestowed on cotton.

Mr. H. Hynd

Carpets and other such industries have not had to suffer, as cotton has, from free imports.

Sir E. Boyle

My hon. Friend the Member for Kidderminster (Mr. Nabarro) is not in the Chamber, but if he were, he would be the first to complain about a concession made to the cotton industry and not to the carpet industry. The hon. Member for Accrington says that carpets have not had to suffer free imports. On the other hand, carpets, among other industies, were somewhat affected at the end of 1951, when the right hon. Member for Bishop Auckland (Mr. Dalton) advised people not to buy at that time.

It would be impossible to grant any general concession in favour of less prosperous industries, because, apart from the really insoluble problem of definition, such a concession would clearly make a serious breach in the decision to put a curb on the tempo of industrial investment and, furthermore, would establish a system of a discriminatory investment allowance of a kind very difficult to defend.

I said in reply to previous Amendments, and I say again now, that when the time comes, we can fully discuss whether we should have a very selective system. That is a perfectly fair point, which we shall discuss in due course, but the making of a general concession in favour of less prosperous industries would be very difficult to defend, and my right hon. Friend does not think that it would be possible to make such a discrimination in favour of the cotton industry. I ask the Committee, for those reasons, to reject the Amendment. I can assure the Committee that we shall continue to show very close concern in the problems of the cotton industry, but we do not believe that this is the right way to give assistance.

Mr. Hale

I never like to say a word that appears discourteous to the Economic Secretary, because he is always courteous to the Committee, and he always tries to speak as informatively as his present position, with the necessity of concealing some Government policies, allows. However, I am bound to say at the outset that the tactics which he has adopted today are singularly unfortunate. In the debate on a previous Amendment he rose when other hon. Members were rising to speak, including a speaker from his own side of the Committee, and even after the very able speech of my right hon. Friend the Member for Huyton (Mr. H. Wilson), he showed a disposition not to reply again until the Committee insisted upon it. He then rose and said that some of these matters were general and could be more conveniently discussed on the Question "That the Clause stand part of the Bill."

The difficulty about that is that the Committee will have come to a decision on all relevant factors, and whatever may be said on that Question can have nothing whatsoever to do with cotton. The hon. Gentleman has again risen when a number of hon. Members were rising and wanting to speak on an important matter. There was the added point that, with a little reticence on his part, he admitted that it was the first time he had spoken on Lancashire industry, and that therefore he spoke with the diffidence which he normally shows. At least, he always speaks with reticence, and it seemed to me unfortunate that he should rise again and say that he has made his reply and if there is any other reply, he will make it when the decision has been taken.

Usually, when I have time, I turn up HANSARD to find out, with a feeling of doubt and uncertainty, what I may have said on such occasions previously. I have had the unhappy—others might say happy—experience, on a number of matters, in these last few months, of having said the same thing, but not in the same atmosphere. When I made my observations in 1951 I was regarded as a dangerous Left-wing extremist. When I repeated them in 1953 I was regarded as orthodox, and in 1955 I am complimented on my moderation, and regarded in some circles as mildly reactionary. On this issue I have been in strict accordance with party policy from start to finish, and it has been strictly in accordance with me.

Mr. Ede

That is more like it.

Mr. Hale

I am greatly obliged to my right hon. Friend the Member for South Shields (Mr. Ede) for saying something which I, with my modesty, would not have wished to emphasise.

The situation about the re-equipment of the cotton industry occupied the attention of the Labour Government in 1948, and encouraged them to introduce the Cotton Spinning (Re-equipment Subsidy) Act, 1948, which was designed to meet the many reports in the past which had said that one of the major difficulties of the cotton industry was the inadequacy of machinery and the fact that the industry was still working with looms of 1890 and 1895, and that the time had come for re-equipment.

Everyone recognised that there was a very special problem, which was that the modernisation of textile machinery had not of itself produced any revolutionary effects, no new spinning jenny or something sensational which would make it incumbent on people with uncertainties and fears for the future to spend very large sums of money on re-equipment. My right hon. Friends very properly produced a scheme of paying a Government subsidy. When I hear the Economic Secretary now talking about the difficulty of taking one industry separately and the necessity of treating all industries alike, I am bound to say that that is a singularly inapt observation when in this very Clause he is treating the shipping industry separately. To talk in that way ignores the history of the re-equipment subsidy, which was virtually an agreed Measure.

Members on both sides of the Committee suggested some extension of that work, but I cannot recall anyone who was opposed to the principle, or to the subsidy, or to the necessity of trying to see that in cotton spinning at any rate the mills had some incentive to re-equipment. The figures were not insubstantial. The figures of payments under that scheme were stated by my right hon. Friend the Member for Huyton, in answer to a Parliamentary Question on 19th October, 1950, when he said that schemes submitted by 27 groups had been approved under the Cotton Spinning Re-equipment Subsidy Act and that those covered the modernisation of 145 mills containing 12 million mule equivalent spindles, and that the cost of carrying out this work was £13 million.

That scheme was for a limited period. The Labour Government were from start to finish completely honest in this matter, and did not adopt the wretched swindle of the present Chancellor of coming along in 1954, and saying, "We want to encourage re-equipment", and in 1956 saying, "We want to stop it". The Labour Government said that the scheme was for a limited period, gave the date in advance, and said that schemes should be submitted for that date. My right hon. Friends extended the period for a further twelve months, because there had been some difficulties.

The result was that we paid in subsidies for re-equipment sums rising from £233,000 in 1949-50 to £800,000 in 1952-53, falling to the final payment of £28,000 only in 1954-55, by which time the Chancellor had introduced his new proposals, the time when the Chancellor said that, as a major part of Government policy, the Government were to encourage investment in private industry and would give exceptional investment allowances in addition to the ordinary depreciation allowances.

In the course of some remarks that I made previously this afternoon, speaking for myself I expressed some difficulty in understanding what was in the Chancellor's mind when he made his statement of 17th February, and what was the economic difficulty which made it desirable, after the previous Chancellor had said that we must compete with the United States and Germany on even terms and have the maximum re-equipment, for the present Chancellor to say that we wanted the minimum re-equipment and for him to not merely to stop incentives, but to apply actual disincentives to the re-equipment of the cotton industry.

6.0 p.m.

The only answer given in this debate was that which was mentioned by the hon. Member for Langstone (Mr. Stevens), who said that he quite understood the reason for the Chancellor's policy—and we can well understand the desirability of hon. Members opposite saying such things whenever possible—namely, that the pressure upon existing resources of men and materials made it necessary to apply disincentives to investment.

What are the existing pressures upon men and materials in the cotton industry? Where are they? We are employing fewer men and women and using less cotton. So far from there being a pressure upon men and materials, ever since this Government came into power we have had unemployment in the industry. When cotton workers have gone to sign on at the employment exchanges and have been asked when was the last time they had to do so, they have replied that it was when there was last a Tory Government. That has been the situation.

The magnitude of the disaster which has occurred in the cotton industry has never been shown in Government figures. Sample figures with regard to short-time working have been taken on the wrong day. The real facts are shown if one examines the number of spindle and loom hours worked. They show a terrible diminution.

Mr. H. Wilson

My hon. Friend represents a mainly spinning constituency, and there is some danger of him misleading the Committee, because, although it is true of spinning that if we had the full figures we should see that fewer hours have been worked, that would still not represent the full extent of unemployment in the weaving industry, because of the historic practice of working with four looms per weaver.

Mr. Hale

I entirely agree, but I have given the only figures which give even a reasonable approximation to the seriousness of the position. There was a grave depression in 1952, which was a temporary one, and was recovered from, to some extent. That could be taken as something quite exceptional, but there has been a greater fall from 1954 to 1955 than in any other year since the tragedy commenced.

If one reads the debate upon the Cotton Spinning (Re-equipment Subsidy) Bill, one is staggered at the change of atmosphere which has occurred since 1948. At that time, both sides of the House were agreed. I remember the very able and informative speech made by the present Viscount Chandos, who had had experience of these matters at the Board of Trade. We all took the view that this was an industry which had to be built up; it was a vital export industry, and we had to get more people into it and stimulate increased employment and production. Indeed, we were all told to try to put pressure upon the workers to work longer hours, if necessary, and agree to work overtime because of the absolute necessity of attaining the maximum production in this vital export industry.

In looking through the report of that debate, I came across a characteristic speech by the hon. Member for Louth (Mr. Osborne), in which he said: I also want to state that I have a personal interest through marriage in the Oldham cotton industry. If the House will forgive me saying it, in the 1920s I went to Oldham to find a wife and I found a very good one. When I first saw Oldham I thought I had never seen such a depressing place in all my life. There was under-employment and unemployment. The mills were half derelict and there was despair in the hearts of both the owners and of the workers. I have never seen such a dismal place. It was only made tolerable by the decency and kindness of the folks who lived there. It was not only the workers who were suffering. There was also the system which allowed the cotton industry to be run on what I should call a partly-paid share finance basis. Men who had put money into the cotton industry at the end of the First World War found themselves saddled with large unpaid capital amounts which had to be met month in and month out."-[OFFICIAL REPORT, 12th March, 1948 Vol. 448, c. 1613-4.] In his opening words in that speech the hon. Member suggested that far too many people were employed in pools in Lancashire, and that if we could get a few out of pools and put them into the cotton industry we might be able to increase production. I would only say that the Government are now starting their own "pools" and employing people in them, while discouraging employment in the cotton industry. It is a fantastic and "Alice in Wonderland" change of policy.

There are some very good employers in the cotton industry who, in periods of prosperity, have shown that they can introduce new schemes for the benefit of the workers, but there are also some very bad employers. I pay tribute to the industry and the workers in it, but at the moment, the situation is such that if I were a director of a cotton mill I should have to apply my mind almost entirely and exclusively to the one aspect of these proposals which is related to the problem of survival.

It is inevitable that in the present situation such a director cannot consider some of the wider aspects, such as the question of re-equipment, which should be considered. It is therefore necessary that we should emphasise, as a very important aspect, the possibility of increasing employment and production, and also the possibility of increased competition.

A few moments ago I said that there had been no revolutionary change in cotton machinery. That is true, but I should not like that to be over-emphasised. Anyone who has read the various reports of the Cotton Board, and particularly the report of the Buxton Conference of 1947, at which my hon. Friend the Member for Farnworth (Mr. Thornton) was present, will know that there are now many machines which are very much more productive, and that some very beneficial designs in carding machinery have recently been introduced, which may mean a very substantial saving in production if they are installed.

There are four major reasons why one should want to apply the question of a subsidy or taxation incentive to the re-equipment of this industry. First, there is the one stated by the Chancellor in 1954, namely, to enable us to face competition more easily and increase production effectively. Secondly, there is the question of the textile machine-making industry. I do not want to cry "wolf" in this matter, but I think that my hon. Friends will agree that the situation in the textile machine-making industry now is very different from what it was a few years ago. My hon. Friend the Member for Accrington may already be facing, in his constituency, some of the effects of the recession which, I am told, people in my constituency may have to face. Certainly, employment in the industry has diminished.

Thirdly, there is the question of the comfort of the workers. Anyone who goes round a cotton mill in Lancashire and who has also gone round cotton mills in, say, Australia, will appreciate what I mean. The situation in the two places is entirely different. My right hon. Friend the Member for Huyton knows the situation of the workers in the older mills in Oldham, working with old mules, in great heat and in circumstances of great difficulty, which call for a great deal of industrial and technical knowledge.

It is not merely a question of putting in better machines, although machines might be designed a little more for the comfort of workers. It would be quite possible for anyone employing a shorthand typist to put up a shelf, five feet high, and place a typewriter upon it, so that the typist typed standing up. She could probably type just as well. But I cannot imagine any business man doing that. Typists sit down when it is possible for them to do so.

It is curious that when we advance this argument in general, we are told that this is a highly complicated industry. But when the redeployment people come to this industry, they are full of announcements of the number of seconds wasted by people walking from one place to another, or the half-minutes in which a worker could rest, were some reference made to his comfort.

The fourth and by no means least important aspect of re-equipment is in reference to industrial disease. If one went today into a modern card room, equipped with modern machinery, one would find that there is no necessity for byssinosis to occur at all. In other parts of a mill in which there is a first-class air conditioning plant, the risk of byssinosis is reduced from a grave one to a tiny one. Unhappily the figures of byssinosis claims over the last few years have shown a substantial increase.

In 1951, with diminished employment in the industry, there were 79 new cases presented. In 1955, the figure had risen to 148. A week or two ago I attended a cotton conference of the staff side of the industry at Southport and I found that there was greater anxiety about the figures for byssinosis, on the part of people most likely to know about it, than for a considerable time. Yet we are saying that we cannot buy machinery which would help to cure this disease.

Anyone who knows the state of the textile making industry today—I have criticised it from time to time as a monopoly—would say that it is an efficient monopoly so far as the sales organisation is concerned, particularly abroad. I wish that the cotton spinning and weaving side had a sales organisation as effective as that possessed by Textile Machine Makers Ltd., one of the first organisations to go behind the Iron Curtain; to send employees out there and to face the difficult problem concerned with transacting business in that situation. A year or two ago an order was placed. It was partly due—I do not wish to take away from Textile Machine Makers Ltd. the credit which is theirs—but at least it was partly due to the efforts of my right hon. Friend; and some part of it to myself, and I have letters in my possession also to say Quorum pars parum fui. Two or three months ago I met a delegation from Czechoslovakia which had come to this country hoping to buy textile machines. The delegation complained about the reception it had received, and the limited information available from the Board of Trade, and asked to be put in touch with Textile Machine Makers Ltd. I made that contact. I hope that something will come of it. The fact is that when we were talking of these matters in 1948, delivery dates were three years ahead. Delivery dates in the textile machine making business can never be weeks ahead, because it takes a long time to make the heavy and complicated machines. But delivery dates are now virtually at a minimum. Textile Machine Makers Ltd. is in a position to accept orders to supply the requirements of such sections of industry in this country.

Now I come to a general question which is serious. In mule spinning, for the last four or five years a very large number of people are working on short time—men of ability and knowledge, with long service in the industry. I have recently received most moving letters from men who have struggled and waited and read Government pronouncements—some of them even read HANSARD—to try to find out what is the position. They are saying, "We cannot stick it any longer. We are going out and we are not coming back." They are technicians and otherwise skilled men. The other day I was asked to advise the staff side, where people are saying, "We see bigger opportunities opening up for us in developing industries in Rhodesia or Uganda than in this country, and we are going."

I do not say that the tragedies of the 1920s and 1930s will be repeated. We have a much bigger industry today. We supply a large percentage of cotton spinning and weaving production today to the home market. But it is rather sad, as my hon. Friends have said, that we are now fighting to retain the home market. A short time ago I submitted figures to the Board of Trade which had been sent to me by a man in Oldham who makes rayon. The price of rayon delivered in West Africa was lower than the price paid for the spun yarn per lb.

It would be nonsense to suggest that re-equipment can bridge the gap in prices between the cotton industry of the United Kingdom and the cotton industry of Japan or India. But it is an astonishing situation that we, with our great Colonial Empire, are finding that trade in cotton is disappearing throughout the Colonies, and has been for four years, and that that trade, particularly from Japan, has multiplied two or three times. On all the figures our production has gone down while theirs has gone up. On all the figures this industry has been the Cinderella of all British industries.

6.15 p.m.

The Economic Secretary said that Lancashire industry has been very vocal about this. When we get one reduction in the Coventry motor car industry, there is a riot in this House. I think that we who represent the cotton industry have erred very much on the side of moderation. Time after time we have been with private delegations to see the President of the Board of Trade, or one of his assistants. Time after time the right hon. Gentleman has expressed his concern and anxiety to do something.

In 1955, we fought an Election on this subject. Many hon. Members representing Lancashire constituencies said that a Conservative Government would save the industry. Many hon. Gentlemen opposite made exaggerated claims. I exempt from them the hon. Member for Oldham, East (Sir I. Horobin) and the hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield), who have always spoken on this issue with knowledge and sincerity. Both have called attention to the grave situation. Let me say at once that I am not suggesting that anything which happens today will have a serious impression upon the production industry. The situation is much bigger than that. If I try to outline the needs of the industry, I should be out of order. I do not intend to do that, because it always gives me a feeling of inferiority and promotes a lack of self-confidence when I get beyond the bounds of the discussion.

I do not wish to waste the time of the Committee, but in a few sentences I will try to put to the Economic Secretary the point which I put when I dealt with the question of investment allowances. It is an important point, to which the Economic Secretary did not reply. Speaking, as it were, on that occasion to people in all industries, most particularly the cotton industry, the Chancellor said that this was a primary statement of Government policy. He said that the Government were to give them these incentive allowances. In 1954, it would cost nothing. In 1955, it would cost about £4 million, and there would be greatly increased allowances over the years. Having got people attracted by that, the right hon. Gentleman has now discontinued the allowances.

The Economic Secretary did not make the point which I expected him to make. I will, therefore, call his attention to it. The Chancellor of the Exchequer, when he made his statement on 17th February, said: There will be two classes of exception. In the first place, where a definite contract has already been placed for the purchase or construction of capital assets the investment allowance will still be given in respect of the relevant expenditure when it becomes payable." —[OFFICIAL REPORT, 17th February, 1956; Vol. 548, c. 2678.] I would like to know from the Economic Secretary just what that means. If I have entered into a contract, given a firm order and not received the machinery, will I still qualify over the whole period for the investment allowance?

Does it mean that if I have entered, as many people in the cotton industry will unfortunately have to enter, into hire-purchase arrangements, I shall qualify over the whole period for the investment allowance? There is great uncertainty about this, and so far as I know no elucidation has been given of that statement. It is important and is relevant to the question of the honesty of the statements made in 1955 and 1956.

My right hon. Friend the Member for Huyton dealt with his usual lucidity with the situation in relation to interest payments. The credit squeeze and the increase in the Bank Rate have added to the difficulties of mill-owners and made it virtually impossible to carry on the arrangements made in 1954. I understand that a new feature arises. My hon. Friend the Member for Farnworth spoke about 100 mills closing in the last two years. The sad thing is that they are not closing for a period to reopen again as cotton mills or even to reopen as something else. They are becoming stores or non-productive buildings, tax-free capital assets and are carried on largely at the public expense.

This is a grave matter for a town like Oldham. Two or three years ago my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) secured from the Government, not without a little jealousy on our part, an undertaking that his area would be dealt with as a Development Area. We felt that as Nelson and Colne was affected by the then recession my hon. Friend had a good case. Now we are told that that scheduling as a Development Area, secured by my hon. Friend, has resulted in virtually nothing being done and is now to cease. That is plain dishonesty with the House of Commons and even more dishonesty with the people employed in the industry.

There is a black market in capital already. The Chancellor of the Exchequer knows about it. We can borrow money from the bank at 51 per cent., but we can borrow it in the black market at from 10 to 15 per cent. and people are being driven into the black market today. The Chancellor knows it, but what is his dilemma? He is confronted through all these transactions with the wild oats that he sowed in his political youth. There was a time when he was regarded as a middle-of-the-road man, a dangerous position to occupy. I believe he produced a book with that name. He always said that enterprise must be free, that competition must be allowed freedom and that Tory freedom works.

Now, day by day, he is confronted with a situation in which he must impose controls, and no other remedy but the Socialist remedy can save him from disaster. Every day that he puts it off—

The Deputy-Chairman (Sir Rhys Hopkin Morris)


Mr. Hale

I have finished that point, Sir Rhys. Whether we have to refer to these matters again will depend upon whether we get a full and complete answer to the points which have been put.

Sir Ian Horobin (Oldham, East)

The hon. Member for Oldham, West (Mr. Hale) has managed to speak on a cotton question in a way which makes it almost impossible for anybody who knows the industry not to agree with him. When he speaks on these matters he tends to exaggerate in such a measured way that a great deal of what he says is common to both sides of the Committee. Nobody can hold it against him, or against those who have spoken, that they have taken the opportunity to have a small general cotton debate upon an Amendment. We are discussing an Amendment, and I shall confine my remarks exclusively to it.

The Economic Secretary said that he did not propose to accept the Amendment and he turned it down on general economic grounds. As he said, he is perhaps not such an expert in cotton matters as he is in so many other things, so perhaps the Committee will allow a cotton Member from this side to suggest one or two reasons which. from the purely cotton aspect of the matter, would not justify this side of the Committee in voting against the Government. Hon. Gentlemen opposite will do some of us the justice of agreeing that we have on more than one occasion not only spoken against, but have voted against, the Government when we have felt sufficiently strongly. On this matter, Lancashire Members on this side of the Committee would be well advised not to press the Government.

I would address myself more particularly to some of the observations which came from the less progressive part of Oldham, from the hon. Member for Oldham, West. A good deal of what he said was linked to the spindles scheme which, looked at carefully, has been regarded as an argument against the Amendment and not for it. I think I shall carry all cotton Members with me in saying that if there is one thing on which anyone knowing anything about the industry will agree it is that we want to produce as much cotton as possible, whether in the spinning or in the weaving sections. I speak mainly for the spinning industry. It is obvious that, however much we produce, it must be done with fewer and not more spindles, and the same with looms, although I do not pretend to expert knowledge in that direction.

Therefore, it must, prima facie, be wrong for the Government to subsidise out of the taxpayer new machinery instead of less machinery. The whole essence of the cotton spindles scheme was that the two were tied together. It assisted in producing more machinery, but only in so far as we made a net reduction. The Amendment proposes to subsidise more spindles and more looms. I should have thought that an extremely doubtful proposition, even if that were the only objection.

Mr. Hale

Surely the proposition is for replacements, and not for additions.

6.30 p.m.

Sir I. Horobin

With respect, the whole point of the spindle scheme was not a replacement, but a reduction in the number of spindles. What Sir Stafford Cripps and his colleagues set out to do, rightly or wrongly—and, by and large, I think rightly—was to have an orderly reduction in the industry instead of a disorderly reduction.

Mr. Hale

indicated dissent.

Sir I. Horobin

I will not pursue the matter in great detail but merely put the point: the essence of the scheme was that it was necessary on balance to have fewer spindles—indeed, fewer spindles year by year.

I think that every hon. Member who speaks with knowledge of the spinning side of the industry will agree that whatever happens there will be, and ought to be, fewer spindles in this country. There may be differences about how many there should be and about a number of other matters, but I cannot believe that there should be more spindles-and I am glad to have the support of the right hon. Member for Huyton (Mr. H. Wilson) here; it is one of the few things on which it is possible to get Lancashire to agree, and it is usually very difficult to get Lancashire to agree on anything.

Mr. J. T. Price (Westhoughton)

The hon. Gentleman is pursuing his argument logically from the premises he set out, but they are faulty premises. If we substituted rings for spindles we should need no spindles at all. I should have thought that at the time of Sir Stafford Cripps' administration the policy was directed primarily towards building up a labour force in the industry—a labour force which had been broken down under wartime conditions.

Sir I. Horobin

That is possibly a part of what Sir Stafford Cripps was trying to do, but I do not think that there can be any dispute that there will and should be a reduction in the number of spindles in Lancashire even if—which we all hope—more cotton is spun on them. That being so, it seems to me a very doubtful proposition that we ought, by a general subsidy in a Finance Bill, to encourage an increase in the number of spindles without tying it to some assurance that the net result will be not an increase but a reduction in the number of spindles.

The Amendment goes even further, because it proposes to give the subsidy to anything "ancillary." I am not certain how far that goes, but it seems to go extraordinarily far, even in the cotton industry. Is there a case for a tax subsidy to the dyeing part and to the calico printing part of the industry? I do not know, but it seems an exceedingly doubtful proposition and it has certainly not been argued so far. The Amendment seems to me to be very ill-drafted if it is directed to the special problems of the cotton industry. I am bound to say that in present circumstances it would be largely inoperative.

I should like to say a word or two about matters to which the hon. Member for Oldham, West referred and about which we feel equally strongly. The anti-byssinosis work which is being done, as he knows, is being done in a mill in our town, but I put it to him —and I think he will not disagree—that it is quite unnecessary for that purpose to make this very difficult and doubtful extension of tax relief. One of the great virtues of the new method which is being worked out, as he knows so well, first, by the Shirley Institute and now by one of the most progressive firms in the industry, is that it is exceedingly inexpensive compared with the cost of a card room; it is almost negligible.

I believe that I shall carry a good deal of informed opinion in the cotton industry with me when I say that if compulsion or pressure is needed for these improvements in connection with antibyssinosis to be introduced into the card rooms, it can be far more easily applied by the Ministry of Labour under the Factories Acts, although I do not think that even that is necessary. In this complicated industry there is a shortage of labour, and I do not believe we shall get people into the card room very much longer, unless these improvements are put in hand, when they can see for themselves what a decent card room can be like today. Frankly, I think it would be taking a sledgehammer—and a rather ill-directed sledgehammer—to crack a nut if this Amendment were to be recommended to the Committee on the basis that it is necessary if those improvements are to be carried out in card room machinery.

On the wider issues, the Amendment is irrelevant to our cotton problems, which are indeed grave, because I think that at the moment it would be mainly inoperative. I believe that I shall carry with me a good many people on both sides of the Committee, at any rate part of the way—and certainly this is my own opinion—when I say that there will be no solution to our problems in the cotton industry while two main difficulties remain with us. One of them has been referred to by hon. Members opposite and it concerns a whole series of questions which group around the Ottawa Agreement—the whole problem of trade within the Empire, which raises vast issues which could not conceivably be touched or affected materially in any way by the Amendment.

Secondly, I can see no solution to our problems while the present policy, or lack of policy, of the American Government in regard to raw cotton persists. Again, nothing which can be done under the Amendment will touch that overriding difficulty one way or the other.

If the Government have said that for wider reasons they do not feel that they can accept the Amendment, then for reasons such as those which I have given —specially and narrowly connected with the technical problems of the cotton industry—I do not feel called upon by the interests which we all have at heart in the cotton industry to oppose the Government's view in the matter.

Mr. J. T. Price

I do not wish to detain the Committee for more than a few minutes, but I want to deal very briefly, and, I hope, fairly, with the remarks of the hon. Member for Oldham, East (Sir I. Horobin). He has submitted that this Amendment is irrelevant to the problems facing the Lancashire cotton industry.

I have been long enough on these benches to remember the time when Lancashire hon. Members kept the House sitting all night pressing the Government, then in office, in 1952, when a very large section of Lancashire workers were unemployed, to take some remedial action on behalf of the Lancashire industry. Since that time the employment situation has slightly improved. After some temporary circumstances which existed in 1952, the industry is in operation again, but at a reduced tempo compared with that before 1952.

The hon. Member for Oldham, East says that the suggestion to give investment allowances to assist in re-equipping much of the obsolete and out-of-date machinery now operating, bringing it up to a higher standard, is irrelevant, but I disagree with him profoundly, because I submit, particularly to the Chancellor—and I hope he will take proper note of this point—that a deep-seated feeling exists in Lancashire that this Administration have ignored every request made to them for any kind of action which would in any way mitigate the evils of which we complain.

Like some of my hon. Friends, I have on a number of occasions been with deputations to the President of the Board of Trade to seek some encouragement from learning that the Government were not only watching the situation but were prepared, in view of the grave threat to one of our oldest industries, to take action. I have always admitted—and I will admit it again now—that we have always been most courteously received by the President of the Board of Trade. His manners have been impeccable, but the result of all those interviews has been entirely negative. We have never been given any kind of concession. We Lancashire Members, therefore, make no apology to the Committee for staging on this Clause what might be regarded in some quarters as a small debate on the disabilities of the cotton industry.

There was a time in the history of this country, not very long ago, when it could be truthfully said that "England's bread hangs on Lancashire's thread." Our commercial supremacy, let us not forget, which gave us a long lead in the industrial development of international trade, was based largely on the products of the textile industry. The old axiom "Trade follows the flag," I would remind the Committee, apart from its political significance, was also true in the respect that it was invariably a cotton flag, made in Lancashire, which trade followed.

We protest this evening, in supporting the Amendment now before the Committee, that in face of all the disabilities that have presented themselves to the Lancashire industry, there has not been forthcoming a single move of a positive character in the last four years. I will agree with the hon. Gentleman who so ably represents Oldham, East to the extent that the Ottawa Agreement has a great deal to do with that, but I should be out of order tonight if I attempted to argue that Agreement.

If I restrict myself to the narrow point of these investment allowances, the small contribution which they would make, the psychological encouragement which they would give to people who are losing confidence in the industry, and to the employees in it who are drifting away and causing a breakdown in our native population, I would at least be entitled to draw the Chancellor's attention not only to the spinning side, but to the revolutionary developments that are imminent on the weaving side of the industry.

Some months ago I visited Italy, where a tremendous development in textile machinery is being promoted, not in separate factories, but alongside the plants in which textiles are being produced. I have been assured that the new shuttleless loom, which I know has not yet reached a stage of perfection, will be able to produce in 2½hours a piece of cloth which it would take a whole day to produce on a Lancashire loom.

If these developments, which will revolutionise textile production not only in this country, but also in those countries in the rest of the world—with which we are in competition and against which, let us not forget, we are losing this race—are not encouraged, if we are not able to give special encouragement to those producers who still maintain sufficient faith and courage in the industry to carry on in face of great discouragement, we shall not be doing the right thing in helping these new developments to come along.

I am often reminded, when I am sitting on these benches, listening to my colleagues speaking, that this is the age of atomic developments and of the development of automation. I have sometimes been sceptical, when listening to references to revolutionary discoveries now being applied to industry—

The Deputy-Chairman

I doubt whether that arises on this Amendment.

Mr. Price

With great respect, Sir Rhys, I am relating my remarks to the Amendment and the need to place at the disposal of industries which have urgently to re-equip themselves some inducement in the form of these allowances. However, in view of what you have said, I will restrict myself to this. The textile industry, particularly on the weaving side —and other hon. Members have dealt with the spinning side most adequately—is faced with revolutionary new developments in the shape of the shuttleless loom, which it ought to be encouraged to adopt as soon as it is available in a form in which it will greatly help production.

We have heard a good deal about the need to redeploy labour, and about the demands of the undermanned industries for skilled labour to assist them in their task of increasing the tempo of British industrial production and productivity. It will be an evil day for this country, if I may be allowed such a modest prophecy, when any action or inaction of the House of Commons allows Lancashire's basic industry to decay and result in the breaking up of the population on whose skill for generations past the county's fame has rested.

I plead with the Chancellor not to dismiss these matters perfunctorily. Lancashire is not only one of our most famous counties historically, but, economically, has lain at the basis of our industrial prosperity in the past and deserves better treatment from Parliament than it has received up to now.

6.45 p.m.

Lieut.-Colonel Wentworth Schofield (Rochdale)

I do not intend to speak for more than a minute or two on this Amendment. Personally, I should very much like to see this special concession for the cotton industry, but I can, on the other hand, see how difficult it is for my right hon. Friend to make a special exception, in view of the existing situation.

The hon. Member for Oldham, West (Mr. Hale) has said that the question here is much bigger than merely that of the investment allowances. For my own part, I am far more interested in help being given to the cotton industry in other directions rather than in this question of investment allowances. I wish the industry could feel that there was some chance of a limitation of the volume of imports, some of them very near to being subsidised, which are flowing into this country at present, and as a result of which the industry is beginning to lose confidence in its own future. So long as there is this uncertainty and loss of confidence, there is no incentive at all to invest money in machinery.

I quite agree with some of the remarks which have been made from both sides of the Committee about machinery, and particularly those of my hon. Friend the Member for Oldham, East (Sir I. Horobin). My hon. Friend referred to the question of investment in fewer spindles, and I suppose that by that he probably means ring spindles, because, although that would mean that there would be fewer spindles, we have to remember that the ring spindle has a productive capacity of 50 per cent. more than the mule spindle.

It is very important that the industry should have a chance to know where it is going so that it may invest with some assurance and know that, when the new machinery is installed, it will have a chance to keep running. If that could be done, I am quite certain that there would be no lack of investment in the cotton industry. There are many firms quite ready to do this, but they are not at all certain that, if they invest this money and install the new machinery, they will be able to keep that machinery running. I submit that it is extremely important that an assurance should be given to the industry that we here are concerned about it, and that we intend as far as possible to see that a fair deal is given to the industry.

If action could be taken to restore that confidence by making it known that a ceiling will be placed on the imports now coming in, I am quite sure that the industry itself would prefer help of that kind, and that there would be no appeal for any special treatment on such questions as investment allowances. The industry is far more concerned with the knowledge that it will get the relief which will make it worth while to buy machinery and install it, and I should like to see an assurance that this will be worth its while if it did it.

Mr. F. Blackburn (Stalybridge and Hyde)

I am sure that all on this side of the Committee will agree with the hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield) when he says he would like to see something more being done for the textile industry. Unfortunately, on this particular Amendment, all we can do is to try to alter the investment allowance.

The fact that the President of the Board of Trade is not here this afternoon is indicative of the attitude of the Government towards the cotton industry. If the right hon. Gentleman is very busy, he has two other Ministers in that Department, and neither of them is here. Having said that, I am not sure that we should complain about their absence because, whenever they have been present, we have never been able to extract any concession from them, and, unfortunately, I did not find the Economic Secretary a more helpful substitute this afternoon.

The hon. Gentleman said that the cotton industry was the most vocal of the less prosperous industries. Of course, the Government could quite easily alter that; if only they would grant a concession in one way or another, then perhaps the industry would be less vocal. The trouble up to the present has been, I think, that the industry has not been sufficiently vocal—at least, not sufficiently vocal to persuade a Conservative Government to take any action.

The Economic Secretary said that if the Government wanted to help, he nevertheless wondered whether this would be the right way to do it. We do not mind. If he is willing to find a better way of helping the industry, and has some other suggestions to put forward, we shall welcome them. We are not limiting the help to the cotton industry by what is contained in this Amendment.

Finally, the Economic Secretary said —and I tried to write down his words, though I do not know that I have them down correctly—that if this Amendment were granted it would put a breach in the tempo of the restriction of capital investment. I am not quite clear how one can put a breach in a tempo, but I think we understand what he means. Personally, I believe that the restriction of capital investment is the very last action which any Government should take, even in the event of an economic crisis, because we thereby jeopardise the whole of our future. We are well behind in capital investment compared with our competitors, compared with the United States of America, with Russia, and, now, compared with Western Germany. We cannot afford to fall behind in this matter of capital investment.

In the Economic Surveys for 1953 and 1954, the then Chancellor of the Exchequer complained that there was not sufficient capital investment being put in private industry. He had no complaints about the nationalised industries, but there was not sufficient capital investment in private industry. In 1955, there had been some improvement. Immediately there is some improvement, the Government say that they must stop it. The argument which the Lord Privy Seal used was that his policy had been too successful. In fact, it had been so successful that we were still behind our competitors in the matter of capital industry

The criticism has frequently been made that the cotton industry has not, in the past, ploughed back sufficiently. I was glad that my hon. Friend the Member for Farnworth (Mr. Thornton) answered that criticism to some extent. We admit that there is a number of firms which certainly have not reinvested sufficient capital, and I think the criticism was true in the inter-war years that not sufficient money was being ploughed back into the industry. But what happened? When the war came, there was the contraction of the industry. Then, in 1945, there was re-equipment. We tried to draw people into the industry. The cotton industry was then very important for the export trade.

When we had got people back into the industry, we had a Conservative Government, and, though I do not blame the Conservative Government for the recession which took place, I do blame them for not having taken any action to help to meet it. We are still suffering from that situation, and the encouragement to re-equip so that we can face our competitors on a more nearly equal footing being withdrawn.

My hon. Friend the Member for Westhoughton (Mr. J. T. Price) spoke about shuttleless loom, which was something which was to come. It is, in fact, something which has come already in Western Germany, and is being used in factories there. We in this country are falling behind. We are facing severe competition, as everyone knows, from India, from Hong Kong, and from Japan. It is, therefore, vitally important we should be re-equipping and keeping up to date. using the latest possible machinery in our mills.

I would not be in order, Sir Rhys, if I were to recount all the difficulties which cotton industry faces today and I am quite certain that, if I were to try to do you would call me to order. All I cotton will say is that the Government will not help the industry-though we have been trying to persuade them to do so for several years-and that their policy now is to prevent the industry from helping itself.

The criticism has been made of the cotton industry that the workers were not prepared to work a shift system as is done in other countries. Those who know anything about the cotton industry will remember that, some time ago, the unions in the weaving section agreed to go on to the three-shift system. There was already a two-shift system being worked by a good many firms in the industry.

Sir Rhys, you are looking at me rather severely, but I do not think I shall prove to be out of order. There was one stipulation about the three-shift system, namely, that it should be in re-equipped mills. The point I am trying to make is that if this incentive to re-equip is removed, and the mills are not given the newest machinery, then the willingness of the unions to go on to the three-shift system will no longer be there. As has been said, this Amendment will not, by any means, solve the problems of the cotton industry. No one expected that it would; but it would be a little help, and it would have a certain psychological effect, as has been said. It might, I think, be helpful if the Chancellor of the Exchequer were now to take part in our debate and make a somewhat more encouraging speech than the one we had from the Economic Secretary.

Mrs. Barbara Castle (Blackburn)

This afternoon we have had only two speeches from the Opposition benches by anybody who knew anything about the cotton industry.

Sir I. Horobin

Is the hon. Lady sure that there have been even two?

Mrs. Castle

I am sorry; I should have said, from the benches opposite. That is what comes from sitting here for so long and listening to the rather confusing remarks of hon. Members opposite.

What was interesting was that those two speeches were literally contradictory. The hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield) told us that he would be very glad to have an investment allowance but thought that the cotton industry should be helped in other ways. Earlier, the hon. Member for Oldham, East (Sir I. Horobin) enunciated a most strange doctrine to the effect, apparently, that the purpose of re-equipment is to produce more machines. I have always regarded the hon. Member for Oldham, East as an intelligent and rather expert industrialist, but that really was a most staggering statement to make. I should think that it is obvious, even to an elementary schoolchild, that the purpose of capital equipment is not to produce more machines but to produce better machines. There is nothing in the Amendment to suggest that what the Lancashire cotton industry needs is an increase in the number of spindles or of anything else. It is, of course, a question of quality production rather than a greater quantity of machinery.

7.0 p.m.

The hon. Member for Oldham, East completely failed to deal with the points made in the speech of my hon. Friend the Member for Oldham, West (Mr. Hale), who made an unanswerable case. It seems that we are to have no answer to it today. That much was clear from the speech of the Economic Secretary, and I am afraid that will be our experience also when the Chancellor of the Exchequer winds up the debate on this Amendment. I do not say that offensively, but, clearly, those two hon. Gentlemen do not know anything about the cotton industry. We have no right to expect them to know anything about it. We cannot blame them for being ignorant about the purpose of the Amendment and, therefore, totally irrelevant in their replies.

When the Economic Secretary intervened earlier to let us know the obscurity of the Government's policy and the fact that nothing would be done, he told us in a lordly fashion that this was not the right way to help the cotton industry. What we say is that if this is not the right way, what is the right way to help the industry? It simply is not good enough for the Economic Secretary, the Chancellor, or anybody else, to come here today and say that we cannot single out the cotton industry for special treatment and leave it at that. Why cannot we do so? The whole process of good economic and financial administration is to do some singling out and give help where it is most needed. We are always singling out people for special treatment because of their special needs.

The Government are treating the Committee and the cotton industry with contempt in merely objecting to the principle to single out the cotton industry when not one representative of the Board of Trade is present to give the economic and individual reasons. Our reply is that the cotton industry has been singled out for hard knocks for the last 15 years. We all know its history and its specially hard treatment. During the war it was concentrated, and after the war it was artificially inflated as quickly as possible to meet the country's export and home needs. Now we are leaving the cotton industry exposed as no other industry is to competition of an unfair and savage nature from outside.

Whenever we say that something must be done, we are told "This is not the way to do it." What is the Government's policy for the cotton industry? The hon. Member for Oldham, East is not helping the Government in saying that to give the investment allowances would be irrelevant to the main problem of the industry; and the hon. and gallant Member for Rochdale said that there will not be any more capital investment in cotton until the main problem is solved.

What is the main problem? The two Conservative spokesmen this afternoon have said that the main problem is the flood of imports, but that is not what the Government have been saying. The President of the Board of Trade went to Harrogate last autumn and lectured the cotton industry. Its problem was not one of imports, he said, but of exports.

Sir I. Horobin

The hon. Lady has misrepresented what I said. I said that one of the two things was the complex of matters dealing with Ottawa. I thought that anybody who knew anything about the cotton industry, for which I apologise to the hon. Lady—I thought I might include her—knows that when referring to the problems of Ottawa one was referring primarily as far as cotton was concerned to the problems of bringing other parts of the Empire into colonial markets. That was why we in Lancashire have lost our export trade to the Colonies.

The Deputy-Chairman

This seems to me to be fairly remote from the Amendment.

Sir I. Horobin

I accept that at once, Sir Rhys, but it was not remote from what the hon. Lady was saying about me. I was drawn, perhaps wrongly, into defending myself from what was quite irrelevant to the debate.

Mrs. Castle

If my interpretation of the hon. Member is correct, he is once again contradicting his hon. and gallant Friend the Member for Rochdale. We were lectured about the flood of cheap imports—

Mr. C. R. Hobson (Keighley)

On a point of order. Would it not be of advantage to the debate and to the Committee if a representative of the Board of Trade were present? It is impossible for lay Members like myself to follow the debate when we have these disagreements. A further complication is that no Law Officer is present.

The Deputy-Chairman

That is not a point of order.

Mrs. Castle

It may not be a point of order, Sir Rhys, but it is a point of substance. We have been asking these things for the last 21 years. Of course, the Chancellor will not be able to participate in this controversy, and it is a tragedy that the Committee should have to decide this important problem without these technical points being answered.

The Government are not only treating the industry with contempt, but they cannot decide what is the problem of the cotton industry and how it should be treated. Until they do make up their minds, they should not say that this is not the answer to the industry's problems. The Government do not even know what the industry is asking. Last Tuesday, I asked a supplementary question of the Minister of State, Board of Trade, about imports, and about Mr. Cyril Lord's proposal. The Minister of State said that that was not what Mr. Cyril Lord was saying. I now have a letter from Mr. Cyril Lord thanking me for raising the matter in the House.

The Deputy-Chairman

Whatever may be the general remedies for the position of the cotton trade, the only remedies which can be discussed at the moment are those in the Amendment.

Mrs. Castle

I think I am as much in order, Sir Rhys, as anybody else has been. If the Government say that our proposal is not the answer—

Mr. Hobson

We want a Law Officer here.

Mrs. Castle

—surely I am entitled to ask what is the answer, and that is what I am saying.

What I said to the Minister of State, Board of Trade, concerning the action of certain cotton leaders and their proposals has proved to be correct, because the man who made the suggestion has written to say that the Minister of State was completely "off the beam". The Government have not even studied the proposals from the industry. I do not suppose they have studied that remarkable article in the Sunday Pictorial yesterday, in which Mr. Cyril Lord pin-pointed the plight to which the cotton industry has been brought by Government policy. I am right "on the beam" in attributing to Mr. Cyril Lord the remark that some system under which we get solid Government backing is our only hope. What solid backing are the Government prepared to give to the industry, or will they tell us today that it will get no backing because they do not want a cotton industry? It cannot be allowed simply to die away while we stand by and watch.

Mr. Cyril Lord is then quoted as having made the remarkable suggestion that so dire is the cotton industry's position now, with over 90 mills closed and 54,000 operatives thrown out of work in the last 15 months, that its only hope might be some form of integration with the Government. I should have thought that integration with this Government would be tragic.

The Deputy-Chairman

If Mr. Cyril Lord were suggesting integration on the lines of the Amendment, it might be in order.

Mrs. Castle

The kind of integration he meant, I suggest, was some financial help through, for example, investment allowances, which is what we are asking for today. It may be that that was what Mr. Cyril Lord had in mind. I am sure that if he were here today, he would be supporting the Amendment.

There is complete inter-party unity in the industry in condemning the Government. In fact, Mr. Cyril Lord described the President of the Board of Trade as the "hangman of Lancashire". [Laughter.] I do not know what the hon. Member's paroxysm of mirth is about, but that is the quotation which he can find in the newspaper. I think that Mr. Cyril Lord would add, if the speech of the Economic Secretary today is a sample of the sort of thing we are to get from the Chancellor of the Exchequer, that the Chancellor of the Exchequer will be the chaplain at the execution, to perform the last rites when the hangman does his job.

We protest against the frivolous way in which Lancashire's problems have once again been treated by the Government, against the contemptuously empty remarks of the Economic Secretary, against the absence of every representative of the Board of Trade. If the Labour Government had shown this attitude to a private industry they would have been pillorised by every Member on the opposite side of the Committee. They would have been told, as we on this side of the Committee have been told by hon. and right hon. Gentlemen opposite, that they did not care about the problems of the manufacturers and the industrialists. I hope that the manufacturers and industrialists in Lancashire are noting what is happening and will remember the contemptuous treatment that they have had from this Government.

Mr. H. Wilson

As my hon. Friend the Member for Blackburn (Mrs. Castle) has suggested, Lancashire will draw its own conclusions from the cavalier way in which the President of the Board of Trade has treated this industry today. When I intervened today to draw attention to the absence of the President of the Board of Trade, I pointed out that in the lifetime of the Labour Government there was not a debate here on the cotton industry when there was not full representation from the Board of Trade, whether the debate was taking place on a general Motion dealing with the cotton industry or on a Finance Bill or on any of the items of legislation referred to by my hon. Friends.

I was well aware that the President of the Board of Trade had been called the "hangman of Lancashire." Whether it was by Mr. Cyril Lord, of whom we have heard much in the last few minutes, or by—

Sir I. Horobin

I must claim the title. It was I whom Mr. Cyril Lord called the "hangman of Lancashire".

Mr. Wilson

I think that was rather flattering the hon. Member.

In the debate on 9th March, 1955, on cotton, I defended the President of the Board of Trade from being described as the "hangman of Lancashire," because I said that to be a hangman one had to do something positive and the President of the Board of Trade had never done anything so positive in his life as even hanging Lancashire's industry. All he has done is this: he has stood silently aside, wringing his hands, while the industry has been slowly bleeding to death.

I do not intend to speak on the general cotton position, but to address myself very narrowly to this Amendment. It is. however, fair to say that we on this side of the Committee have time and time again warned the Government of the consequences of their policy or lack of policy for the cotton industry. We have done so ever since 1952. There were the debates on the sharp recession of 1952. One went on all through the night, as my hon. Friends will remember. There was the debate on the Second Reading of the Cotton Bill to abolish the Raw Cotton Commission. I think that took place on 18th November, 1953, when we warned the Government of the risks which they were taking, and later we fought that Measure Clause by Clause and line by line in Committee.

We warned them again in the debate, which, I think, was on 10th February, 1954, on the Japanese Trade Agreement of the almost certainly disastrous consequences of that Agreement. All those warnings have proved to have been only too well founded. Last year, on 9th March, my hon. Friends and I warned the Government about the difficult problem of cheap imports. We proposed a remedy for dealing with it. I need not remind the Committee that in debates on successive Finance Bills we have warned the Government about the consequences of their long delay in doing anything about Purchase Tax.

I want to deal narrowly with the question of re-equipment, dealt with by this Amendment. In the debate on 9th March last year on the general problems of the cotton industry, a number of us appealed to the Government to give Lancashire a chance to modernise. We all said that any short-term means of dealing with the problem of cheap imports would not of itself solve the problem of Lancashire. On both sides of the Chamber, we all agreed about that. What we did say was that long-term measures that were needed might not take effect unless there was some short-term relief in respect of the problem of imports. I think that we all concluded that what was needed was the creation by the Government of conditions in which both sides of the industry—Istress the phrase, both sides of the industry—would have confidence to undertake those measures which are essential and, indeed, long overdue if the cotton industry is to survive.

Of course, the tragedy since the war has been that we have not had the equipment we needed because of the succession of crises. Five or six years after the war the Government were trying to get the industry to turn its back on the pre-war slump. Both sides of industry were so slump conscious, so afraid that we should return to the conditions of unemployment and short-time working which marked the 'twenties and 'thirties. It was very difficult for the Government in those days to persuade either side of the industry to take the measures needed, the employers' side to put money into new investment, the trade union side to cooperate in the measures of redeployment that were required.

7.15 p.m.

We said in the debate in March last year that it was essential that the Government should create the conditions in which both sides could undertake the programme. The Government have not created the conditions, and the position of Lancashire, as my hon. Friends have said, has got worse. Now, with the withdrawal of investment allowances, the Chancellor of the Exchequer is withdrawing one of the, few aids to re-equipment that were left—the investment that is needed in the industry.

My hon. Friend the Member for Oldham, West (Mr. Hale) referred to the debates which we had many years ago now on the Cotton Spinning (Re-equipment Subsidy) Bill, a Bill which I had the honour to introduce, although the inspiration behind the Bill, of course, was that of Sir Stafford Cripps. My hon. Friend referred to the atmosphere of those days, the shortage of labour, the appeals which we made to men and women to go into the industry when the shortage of labour was the chief problem in the industry. Even in those days we felt that the first priority was to assist the re-equipment of the industry although, as my hon. Friend pointed out, that re-equipment subsidy was limited to the spinning side, where we felt the greatest need obtained.

That was a new attitude to re-equipment. I think it was unprecedented in the history of the industry, almost unprecedented in the history of any industry, except, perhaps, shipping, that a special subsidy should be given to an industry that had fallen on evil days. We were all conscious then of the fact that Lancashire had been left a long way behind by the cotton industry in the rest of the world. In the late eighteenth century and in the nineteenth century Lancashire was far ahead of the rest of the world, so much so that there was nothing to fear from exporting our skill, our machinery, our methods, to the rest of the world.

The sterile years of the 'twenties and 'thirties created a situation in which Lancashire was being left far behind. My hon. Friend referred to the number of mills mentioned in those other debates—and the position is the same today to a considerable extent—where the machinery bore such dates as 1899, 1895, 1904. He was referring then to a problem that, practically speaking, is found only in this country.

Two years ago I happened to be in the Soviet Union, and I asked to see one or two of their factories. They asked me what kind of factories I wanted to see, and I replied, "I should like to see a cotton mill, to compare it with those we have at home". They took me to one. It was not one of their show places, not a new mill; it was a pre-Revolutionary factory, but it had been largely re-equipped. They said to me, "Come here and you will see something which will interest you". Then they showed me the name and date on the machine," Platt Bros. 1911". It made me feel almost as though I were at home. There it was again, "Platt Bros. 1896". There were other dates, even further back, and I began to feel almost as though I was in Lancashire.

They said, "We are glad that you have seen them. We are taking these out and we are going to re-equip with the latest and most modern products of the Leningrad and Tashkent machinery industry". Even in the Soviet Union we had evidence of old machinery, but they were replacing it in 1954, and it is the fact that more substantial orders have been placed by the Soviet Union for up-to-date products with Platt Bros., the textile machinery makers of Oldham. Indeed, I may claim to have played some small part in the talks with the Soviet Union in connection with products of that kind in the last two or three years. I was glad to hear, when I was there in January this year, that the Soviet Union is placing more substantial orders with the Lancashire textile machinery industry.

My right hon. Friend the Member for Dundee, West (Mr. Strachey) has been in India, and has had an opportunity of seeing what we are facing in terms of technical competition in India. We all know what we are facing in terms of cheap Indian imports. I do not think that in any part of the Committee there will be a disposition to deny the need for the re-equipment of the Lancashire cotton industry. This has been admitted and universally agreed now for ten years. Indeed, it was in 1943 that the Legislative Council of the United Textile Factory Workers' Association, of which my hon. Friend the Member for Farnworth (Mr. Thornton) was and is a member, produced a Report on the physical reconstitution of the industry, and said, Inefficient machinery should be scrapped and replaced by modern machinery. There should be re-planning and re-spacing of machinery in many spinning mills and weaving sheds. It was in 1944 that the famous technical mission to the United States, led by Sir Frank Platt, said that the chief lesson to be learned was the need for re-equipment and modernisation of machinery. In 1946 we had a Cotton Working Party, appointed by Sir Stafford Cripps under the chairmanship of the then Sir George Schuster. Its main conclusion was the need for more re-equipment and modernisation. At the end of that year and indeed before we had the Working Party's Report, Sir Stafford Cripps announced his five-point plan for the re-equipment of the industry. He called for joint consultation, for reform of distribution arrangements, for the extension of double-shift working whenever modern machinery demanded it, for the re-equipment of mills with more modern machinery, and for more amalgamation of the spinning section. In December, 1946, he announced a plan which received legislative form in the Cotton Spinning (Re-equipment Subsidy) Act, 1948.

As the Committee knows, 25 per cent. of the cost of approved re-equipment in the industry was provided by the Government on condition that the mills concerned were grouped in advance. I believe that that Measure was without precedent in the history of this or any other industry. It shows the practical interest of the Labour Government in the re-equipment of the industry. My hon. Friend the Member for Oldham, West quoted some figures which I gave in the House of Commons in 1950 when, as President of the Board of Trade, I made an interim report on what had been done under that Measure. I gave those figures at the Cotton Board Conference at Harrogate in October, 1950.

Up to that date, 27 groups controlling 279 spinning mills, containing 21 million mule equivalent spindles, or about 54 per cent. of the spindles in the industry, had submitted plans for modernising their mills. These plans covered 145 mills, containing 12 million mule equivalent spindles, or over 30 per cent. of those in the industry, the total cost involved being £13 million. The present President of the Board of Trade—

Mr. H. Hynd

He is not present.

Mr. Wilson

The present, absent President of the Board of Trade, in reply to a Question which I put to him on 13th July, 1953, gave final figures for the operation of that Act of Parliament. One of the 27 groups withdrew its application. The plans submitted by the 26 remaining groups—representing 51 per cent. of the mule equivalent spindles in the industry —covered 145 mills and 12 million mule equivalent spindles, representing 30 per cent. of the mule equivalent spindles in the industry, and 59 per cent. of those controlled by these groups. The total cost of the modernisation involved was estimated to be £11-6 million, with £2.9 million subsidy at that time spent or waiting to be spent. A sum of £14½ million had been spent on re-equipment and modernisation of the industry.

That is only part of the story. That concerns only spinning, and the now absent President of the Board of Trade, when I asked him for figures for other sections of the industry, said he could not give any details in respect of weaving. But when one looks at the figures that he was able to scrape together—and those refer only to home-produced machinery—one finds that new equipment delivered to the cotton and staple rayon spinning and weaving industries, for the spinning and other processes preparatory to weaving, rose from £3 million in 1947 to £6.3 million in 1952, and made a total of £28 million in the years 1947-52. For weaving there was an increase from £1.5 million in 1947 to £2.8 million in 1952, a total of £14-4 million over that period.

I will not weary the Committee with more details of the figures, though I think that they are essential. I am sure that they are very much in the Chancellor's mind and that he is thinking about them before he decides on the terms of his reply. It is important to draw attention to the fact that, despite all that was achieved in those years, the industry as a whole is very much behind other industries.

There are great and honourable exceptions. A great deal has been done by some firms in face of great difficulties, especially by some of the integrated firms. I read of a case in the Manchester Guardian last March—I rely on my memory—in which a board was changed by a specially convened meeting of the shareholders because it had been spending money on re-equipment. The whole future of Lancashire depends upon that kind of re-equipment, but some shareholders were so much more concerned with quick profits, dividends and share-outs, that they changed a board that was going in for a long-term economic policy.

In 1936 there were 15,224 automatic looms in the industry. On 1st September, 1948, there were 25,719 and on 31st July, 1952, 34,282 but, if one takes the percentages, the 1936 figure represents 3 per cent. of the total looms erected in running mills, the 1948 figure 7 per cent., and the 1952 figure still only 10 per cent. of all the looms in the industry. Indeed, the proportion has been artificially increased by the fact that many other looms have been closed down, so that although the number has not gone up very fast the proportion has increased rather quickly.

I have mentioned that all who have studied the industry, the most progressively-minded people on both sides of industry, agree that the great need is to re-equip. That process has been going on too slowly. I have pointed out that the number of automatic looms increased by 8,500 between 1948 and 1952 and that at the latter date they accounted for only 10 per cent. of the total number of looms in the industry.

7.30 p.m.

Two or three years ago there was an important Report produced on the Lancashire cotton industry which hon. Members opposite will have seen. I do not know whether the Chancellor has seen it. but I have no doubt that a copy was sent to the President of the Board of Trade. It was a Report made by United States experts who were invited to visit Lancashire under the aegis of the Anglo-American Productivity Council. I do not propose to quote at any length, but I want to draw attention to one or two of their conclusions. For instance, they reported that While there were a few mills in Lancashire carrying out re-equipment programmes which will put their productive capacity on a par with mills anywhere, it was reported that many of the firms had no re-equipment programme worth mentioning. That was in 1953.

The Report stated also that: Old-timers regarded the future with head-shaking and recalled the days of excess capacity and boom and slump periods. Others were content to keep to the old well-kept machinery because it was fully depreciated. In other words, they preferred to keep spindles, standing at perhaps a penny in the firm's books, in operation rather than to put in new and up-to-date equipment. This is how the Report concluded, having said that the first need of Lancashire was for re-equipment: Considering the importance to the future of Britain of a healthy and efficient textile industry, our Team was sorry to see that the least forward-looking elements of management in Lancashire were armed with such iron-clad arguments against re-equipment "— And here comes the most damning indictment of the industry I have ever read: In good times they seemed to be saying they did not need to change, and if poor times came they were already preparing themselves with the argument that they could not afford it. It seemed clear to us that the net result of this attitude was bound to be disastrous. Today, we have heard from the hon. and gallant Gentleman the Member for Rochdale (Lieut.-Colonel Schofield) the argument, "We cannot do much about investment and re-equipment because the industry is going through bad times." No doubt that is the excuse of the Government. The Government, who have stood aside for three years, and have seen the industry getting into this serious position, are now saying that nobody in the industry wants to re-equip any way, so why provide a tax concession to enable them to do so?

That is the argument of utter defeatism, of utter despair and of utter cynicism. We have had nothing but cynicism from the Government in relation to the cotton industry for the last three years—always cynicism, always a washing of the hands, never any action to help to solve the problems. There lies what is generally admitted to be the curse of Lancashire, the attitude in good times of "We do not need it, all is well, we can make good profits, we do not need to re-equip, let us take no thought for the morrow", and then in bad times—and Lancashire has had more than her share of the bad times—" We cannot afford to re-equip."

It is a blessing that there are still some firms in Lancashire who, during the worst period of the slump in the last few years, have been willing to re-equip. My hon. Friend the Member for Blackburn referred at some length to Mr. Cyril Lord, who has been one of the most progressive. However, he is not alone, though he may be the most vocal. A number of others have done a great deal about re-equipment. There are some who took seriously the call of the Lord Privy Seal to "Invest in success." They were not sure that the Lancashire cotton industry was the industry that the Lord Privy Seal had in mind when he talked about success. Nevertheless, they took a chance on it. They believed the then Chancellor when he promised them investment allowances.

As I have said earlier today, we had the present Lord Privy Seal with us as Chancellor for four years and for five Budgets. In all that period the only bright idea that the hon. Gentleman had was investment allowances. I do not think that they meant very much. When we heard about them we did not get very excited. Now, however, we have the present Chancellor, because of his failure to control the economic situation, because of his attitude to the economic situation —in which he feels that all he has to do is to go round the country making speeches and talking about being an alarm clock and so on—because he refuses to deal with the inessential investment going on in the country, taking this wild, swinging, blind blow at the whole of investment.

We have asked tonight that the Chancellor will make an exception in the case of the cotton industry, which is falling on evil times because of, as much as anything, Government neglect and the callous attitude of the President of the Board of Trade. I hope that the answer of the Economic Secretary is not the final one. I hope that the Chancellor, who has listened with great patience and tolerance to a number of speeches from both sides of the Committee, will announce in the next few minutes, when he winds up the debate, that he accepts our arguments, that just as he makes an exception in the case of shipping, so also will he make an exception in the case of the cotton industry.

It may be, as the hon. Member for Oldham, East (Sir I. Horobin) suggested, that this Amendment is not quite so carefully worded as it might be. It may be that there is a case for taking out of the Amendment the reference to the finishing trade, the need of which—I say this with respect to the hon. Baronet the Member for Middleton and Prestwich (Sir J. Barlow) —is certainly less than that of the spinning and weaving sections of the industry. However, that is not the point.

If the Chancellor will say that he accepts the principle of the Amendment, the purpose of what we are trying to propose in it, that he will ask his ingenious draftsmen to think out the form in which it should be, we shall be satisfied. I hope that the Chancellor will now tell us that he accepts the principle of the Amendment at least, and that at long last, after four years of appeal, this Government will do something, however small, for Lancashire.

Mr. H. Macmillan

The debate on this Amendment has covered rather a wide field. Indeed, I felt for the cri de Coeur of the hon. Lady the Member for Blackburn (Mrs. Castle) who, in the course of her remarks, said, "Well, I am as much in order as anybody else." I am bound to say that I think she was. The debate has covered the whole field from the philosophic theory of laissez faire to idealism. I was asked my views upon controls. There was some reference to the question of the Ottawa Agreement, and the debate was also related to the wide problem of carrying on the textile industry in present conditions and in different situations.

That may be my excuse for two confessions which I have to make. First, I hope it will not be thought discourteous if I keep in order and, therefore, do not deal with some of the points that have been raised. It is not because I would not like a good discussion about my views on controls and on the organisation of industry, but because it would not be in order on this Amendment.

Mr. Hale

It would also be difficult.

Mr. Macmillan

We had one debate in February, we shall have more, and I enjoy them very much. I cannot be accused of being afraid to take part in them.

The other thing I want to say is that on both sides of the Committee, whether we are in Opposition or in Government, we all make heavy weather occasionally about the presence of Ministers. There was a lot of heavy weather about the absence of the President of the Board of Trade and I thought that there was rather synthetic indignation, because there was no particular reason why he should be here from the point of view of the Amendment—not what it was widened into, which was a broader discussion. It is sufficiently hard work to carry one's own Bills, but if we have to be present to carry everybody else's Bills, it becomes an intolerable burden.

The right hon. Gentleman the Member for Huyton (Mr. H. Wilson) said in an airy way that during the Labour Administration there was no Finance Bill where the Minister of any Department which was connected with it did not attend to help the Chancellor of the day. It is all right to say that but it would take me a long time to verify it. All I can say is that my relations with the President of the Board of Trade are friendly, and that we have, of course, been in close contact over this question. What the relations of the right hon. Gentlemen were with the then Chancellor of the Exchequer in April, 1951, I do not know but, as I remember, he resigned about that time. So I think that this was just the ordinary chat which is meant to make a good Press and perhaps to make a little impression in the constituencies.

The right hon. Gentleman comforted me at the beginning of his speech when he said, thereby excusing altogether the absence of the President of the Board of Trade, "I do not intend to speak on the general cotton question." He added, "I will deal with the narrow question on the Amendment." He did not do anything of the kind later on; so that was all right. However, he made that promise even though he did not keep it. I propose to follow what he said he was going to do, which seems to me to be the proper duty of the Chancellor in a Finance Bill debate.

Mr. H. Wilson

If the right hon. Gentleman really thinks that I made a speech on the cotton problem generally, I should be delighted, when he sits down, to tell him what I really think about the whole question of Indian imports and all the other cotton questions. I kept myself narrowly to the question of re-equipment

Mr. Macmillan

We had a lot of history, about what the right hon. Gentleman had done, what a splendid party his is, and so on. It was very far from the Amendment. I have no objection to listening to a still wider speech from him, but I do not see why he should attack my right hon. Friend for not being here, because he admits that this is a comparatively narrow point.

What is the point at issue? It may or may not be the right proposal to withdraw these allowances. That is the broad issue that we shall reach on the Question, "That the Clause stand part of the Bill." It may or may not have been right to withdraw the initial allowances in 1951, when the Labour Government did it.

I was amused to hear the hon. Member for Stalybridge and Hyde (Mr. Blackburn) say, "You must never withdraw any form of support to investment. Investment is the great thing, at any cost and in any amount." I do not know how the hon. Gentleman voted in 1951 during the long debates when the initial allowances were withdrawn and whether he approved of that.

Mr. Blackburn

I am sure the right hon. Gentleman does not wish to misrepresent me. If he will read in the OFFICIAL REPORT what I said he will find that I said that, in the case of capital investment, it was the last thing we ought to do if we could possibly avoid it and that we ought to take a risk with capital investment even in the event of an economic crisis.

Mr. Macmillan

Let me put it this way. Perhaps the Labour Party thought it was less frightfully disastrous in 1951 and that was why they abolished the initial allowances. I admit that the hon. Gentleman's exception might have missed me.

Mr. Blackburn

I was not here in 1951.

Mr. Macmillan

Other hon. Gentlemen opposite were, and the next step they took when the disaster approached was the usual one of running away from it, which we certainly do not intend to do.

Later, we shall be discussing the whole Clause, which withdraws the allowances. The present issue is what exceptions ought to be made. Whenever one makes exceptions, one runs into trouble. Somebody says that something else ought to be excepted and that there is discrimination. The right hon. Gentleman said he wanted me to treat Lancashire as a special case, like shipping. He has put his name to other Amendments in which other things are to be put in a special category. That will not do.

Under all the Amendments which we are approaching it is suggested that something should be made an exception, until we come to the crowning Amendment of all in which everything of importance is to be made special. That is what I call an "Uncle Tom Cobley and all" Amendment. That wipes out the right hon. Gentleman's other arguments. He cannot ask for certain things to be made special when he has put his name to an Amendment which asks that everything shall be special.

Mr. H. Wilson

The right hon. Gentleman is being too clever by half. He knows perfectly well that we are opposed to the decision to remove the investment allowances. We cannot record that view until we come to the Question, "That the Clause stand part of the Bill." Meanwhile, we can, on a series of Amendments, seek to limit the effect of his disastrous decision.

Mr. Macmillan

That may be an argument on the Question, "That the Clause stand part of the Bill," but it is not an argument to say, "You ought to do as we did in the case of shipping." In 1951, shipping was a special case. I may be too clever by half, but the right hon. Gentleman is a difficult man to pin down. I intend to pin him down. We have had plenty of this sort of stuff during our debates, and we shall no doubt have more. He tries to get out of things. When one point falls, he tries to slide to the next. He said, "I want you to make a special exception in this case, to treat is as something quite different from all other industry", and then he has put his name to an Amendment which asks that everything else shall be treated as special. That is not an honest form of argument.

7.45 p.m.

We have decided on the broad principle, rightly or wrongly—perhaps we are wrong—that in the present state of the investment situation we ought to withdraw the allowances. It is, of course, tempting—Lancashire's case is certainly very tempting to make special exceptions. There is always a case for doing that when one makes a broad decision. I was particularly moved by what was said by the hon. Member for Oldham, West (Mr. Hale), who always speaks in a convincing way because he is so patently sincere in what he says. I was really moved by him because he knows what he is speaking about, and it was tempting to make a special concession in this case.

What concessions have I chosen? I have chosen shipping, on the ground that in 1951 it was the special exception when the Labour Chancellor withdrew the rest of the initial allowances. Incidentally, I am leaving the initial allowances. There are very special circumstances about the problem of financing the rebuilding of our ships. These considerations weighed with the Labour Government and I think that they were right.

I have chosen the other two for very important reasons. I have chosen to leave the allowances in respect of the only two things which seem to me to be basic because they apply to all industry. The first is scientific research. That is not exactly "an industry." It is something which I feel is the essential root from which all increase over the whole field of industry will grow.

Then there is the fuel-saving point. If one reads carefully accounts of the future of fuel and energy throughout Europe and the world one finds that there is almost sure to be a shortage. Therefore, anything which effects a saving in the use of coal or other energy is basic to every industry. I have tried not to discriminate between industries. I have chosen as my exceptions scientific research, which everybody uses, and energy, which is the basis of all industry. If one gets drawn further than that, one is in danger of failing to make any effective exceptions.

My hon. Friend the Member for Oldham, East (Sir I. Horobin) rather alarmed me at the beginning of his speech. I know him well. He is a very old friend of mine. There is no one for whom I have greater respect. I know quite well that if he had thought this was a good Amendment he would have argued for it and voted for it. Knowing my duty, the opening sentences of his speeches always fill me with a certain amount of concern. On the other hand, there is no one whose intellectual and moral support I should prefer to have. I thought that his very carefully argued reasons were absolutely overwhelming.

Mr. Hale

If I might revert to the right hon. Gentleman's reference not to his hon. Friend the Member for Oldham, East (Sir I. Horobin) but to me, which I thought he was going to pursue a little, is he going to say something about the Chancellor's speech in 1954? I would emphasise that, while we are urging discrimination here, we should be glad if the investment allowance remained for every industry.

Mr. Macmillan

Points about differences and whether calculations are to be on a project or contract basis come under subsequent Amendments. The whole principle of the thing arises on the Question, "That the Clause stand part of the Bill." I was saying that, assuming we are right in taking off the burden by the temporary suspension of these allowances, I honestly think that the three exceptions which I have made are different from the others. Once one goes beyond that, one is getting into a complete tangle. It was interesting that the hon. Member for Oldham, West, who argued his case so well, did himself go beyond that, because he spent a great part of his time saying that the manufacturers of textile machinery needed the same sort of support and were likely to have short order books, and so on.

Mr. Hale

I appreciate the right hon. Gentleman's references, because Approbation from Sir Hubert Stanley is praise indeed". What I said was that the Amendment would help manufacturers of textile machinery by providing them with home sales which they badly need. I did not suggest the investment allowance for them.

Mr. Macmillan

I beg the hon. Member's pardon. I thought that he was arguing a case for initial allowances for textile machinery manufacturers as well.

The Amendment more than covers the case which he and his hon. Friends made and it would have included ancillary purposes like calico printing. The basis upon which we must rest is that if it is right to withdraw allowances over the whole range, ideally there should be no exceptions. However, I think that the exceptions which I have chosen, after very great care and thought, belong to a special category. It is not right to go beyond them, because we would then get to the point where everybody had some kind of case for something and in the end we would reach the position which we now have.

Deep as is my sympathy with the feelings expressed today, and realising much of the case which has been argued, I urge the Committee not to support the Amendment which, if carried, seems likely to produce an impossible situation and to be a breach of the purpose which we have in mind in approving this Clause.

Mr. H. Wilson

I do not want to detain the Committee for very long, but I should put the Chancellor right about what I am sure was a genuine misunderstanding of our attitude to the Amendment and to the Clause. I am sure that it was a sincere misunderstanding and that he did not adopt that attitude for debating purposes. I am sure that he would never do such a thing. However, it may save the Committee time if I answer the Chancellor's point, because we might waste a lot of time with it on subsequent Amendments.

The first point is that we are opposed to removing investment allowances in general. By a rather old custom of the House of Commons, one cannot accept a Clause and then move Amendments to it and, therefore, we could not have had a general discussion on the removal of investment allowances until we had finished with all the Amendments. That is why it is essential to attempt to save particular industries from the evil effects of the Chancellor's actions and we have had to do that before debating the general proposition of whether he should remove investment allowances.

The second point is that the Chancellor said that I had my name down to a large number of Amendments all calling for special exemptions. He is wrong, as he will find if he looks at the Notice Paper. Apart from the Amendment on small businesses, which we have discussed, and from that on cotton, which we are now debating, the Chancellor will find that, with one exception, the Amendments in page 3143 of the Notice Paper, which seems to interest him, and in page 3144 are all consequential or drafting Amendments. I understood that it was the intention of the Chair to call them altogether. The exception is that it is proposed, if the Chancellor intends to get rid of investment allowances generally, that he should be prepared to make an exception in the case of industries or firms which are vital to the national interest. That is only the second of such proposals.

I do not intend to repeat the arguments about this Amendment. Apparently, in the Chancellor's view, I was no more successful in sticking to the narrow point of the Amendment than he was, despite his promise. He got all over the shop. He was in 1951 and all over the place. He addressed himself to the question at

greater length than did the Economic Secretary, even though we got the same dusty answer to our proposals. He objected to our suggestion that there should be special exemption.

I was trying to explain that there should be special exemption for cotton not merely because it is a depressed industry. There is always a weakness in saying that an exception should be made for a depressed industry, strong though the case may be. I tried to make the case that the cotton industry is one which, above all others, has lagged behind, because of the sterile 20 years when the right hon. Gentleman was at odds with his own party and writing some books in which he savagely attacked the Chancellor of the Exchequer of his own party of that time—if we must go back into the past for the delectation of the right hon. Gentleman.

Nevertheless, here is a chance for the right hon. Gentleman and a Conservative Government to make good the neglect of the industry of those long years before the war. They could make a small contribution, a little atonement for what their colleagues did in the 'twenties and the 'thirties, and for the damage which they have done in the last three years. The Amendment will not solve the problems of the industry by itself, but it will avoid doing further damage. There is a special case for this industry—if the Chancellor must continue with the plan to drop investment allowances—partly because of depression, partly because it has suffered so much more than other industries and partly because everyone who has studied the problems of the industry agrees that its prime need, if it is to survive in this world, is re-equipment. Since the Chancellor, however courteously, has maintained the refusal of the Economic Secretary on this matter, we have no option but to press the matter to a Division.

Question put, That those words be there inserted: —

The Committee divided: Ayes 177, Noes 245.

Champion, A. J. Hughes, Emrys (S. Ayrshire) Parkin, B. T.
Chetwynd, G. R. Hughes, Hector (Aberdeen, N.) Paton, John
Clunie, J. Hunter, A. E. Pearson, A.
Coldrick, W. Hynd, H. (Accrington) Pearl, T. F.
Collick, P. H. (Birkenhead) Irvine, A. J. (Edge Hill) Plummer, Sir Leslie
Collins, V.J.(Shoreditch & Finsbury) Irving, S. (Dartford) Price, Philips (Gloucestershire,W.)
Corbet, Mrs. Freda Isaacs, Rt. Hon. G. A. Probert, A. R.
Cove, W. G. Janner, B. Proctor, W. T.
Craddock, George (Bradford, S.) Jay, Rt. Hon. D. P. T. Pryde, D. J.
Crossman, R. H. S. Jeger,Mrs.Lena(Holbn & St.Pnes, S.) Randall, H. E.
Cullen, Mrs. A. Johnston, Douglas (Paisley) Rankin, John
Dalton, Rt. Hon. H. Jones, David (The Hartlepools) Redhead, E. C.
Darling, George (Hillsborough) Jones, J. Idwal (Wrexham) Rogers, George (Kensington, N.)
Davies, Ernest (Enfield, E.) Jones, T. W. (Merioneth) Ross, William
Davies, Stephen (Merthyr) Kenyon, C. Royle, C.
Deer, G. Key, Rt. Hon. C. W. Shinwell, Rt. Hon. E.
de Freitas, Geoffrey King, Dr. H. M. Short, E. W.
Delargy, H. J. Lawson, G. M. Shurmer, P. L. E.
Donnelly, D. L. Ledger, R. J. Slater, Mrs. H. (Stoke, N.)
Dugdale, Rt. Hn. John (W. Brmwch) Lee, Miss Jennie (Cannock) Slater, J. (Sedgefield)
Dye, S. Lever, Leslie (Ardwick) Smith, Ellis (Stoke, S.)
Ede, Rt. Hon. J. C. Lindgren, G. S. Snow, J. W.
Edwards, Rt. Hon. John (Brighouse) Lipton, Lt.-Col. M. Sorensen, R. W.
Edwards, Rt. Hon. Ness (Caerphilly) Logan, D. G. Sparks, J. A.
Edwards, Robert (Bilston) Mabon, Dr. J. Dickson Steele, T.
Edwards, W. J. (Stepney) MacColl, J. E. Stewart, Michael (Fulham)
Evans, Albert (Islington, S.W.) McGhee, H. G. Strachey, Rt. Hon. J.
Evans, Edward (Lowestoft) McGovern, J. Summerskill, Rt. Hon. E.
Fernyhough, E. McInnes, J. Sylvester, G. o.
Fletcher, Eric McKay, John (Wallsend) Taylor, Bernard (Mansfield)
Forman,J.C. McLeavy, Frank Taylor, John (West Lothian)
Fraser, Thomas (Hamilton) Mahon, Simon Thomas, Iorwerth (Rhondda, W.)
Gibson, C. W. Mallalieu, E. L. (Brigg) Thomson, George (Dundee, E.)
Gordon Walker, Rt. Hon. P. C. Mallalieu, J. P. W. (Huddersfd, E.) Thornton, E.
Greenwood, Anthony Mann, Mrs. Jean Turner-Samuels, M.
Grenfell, Rt. Hon. D. R. Mason, Roy Viant, S. P.
Grey, C. F. Messer, Sir F. Wells, Percy (Faversham)
Griffiths, Rt. Hon. James (Llanelly) Mitchison, G. R. Wells, William (Walsall, N.)
Hale, Leslie Monslow, W. Wheeldon, W. E.
Hall, Rt. Hn. Glenvil (Colne Valley) Moody, A. S. White, Mrs. Eirene (E. Flint)
Hamilton, W. W. Morrison,RtHn.Herbert(Lewis'm,S.) White, Henry (Derbyshire, N.E.)
Hannan, W. Mort, D. L. Wigg, George
Hastings, S. Moss, R. Wilkins, W. A.
Hayman, F. H. Moyle, A. Willey, Frederick
Healey, Denis Mulley, F. W. Williams, David (Neath)
Hobson, C. R. Neal, Harold (Bolsover) Williams, W. R. (Openshaw)
Holman, P. Oliver, G. H. Williams, W. T. (Barons Court)
Houghton, Douglas Oram, A. E. Willis, Eustace (Edinburgh, E.)
Howell, Charles (Perry Barr) Oswald, T. Wilson, Rt. Hon. Harold (Huyton)
Howell, Denis (All Saints) Paling, Rt. Hon. W. (Dearne Valley) Winterbottom, Richard
Hubbard, T. F. Paling, Will T. (Dewsbury) Yates, V. (Ladywood)
Hughes, Cledwyn (Anglesey) Palmer, A. M. F.
Mr.J. T. Price and Mr. Ho'mes
Division No. 206. AYES [7.57 p.m.
Ainsley, J. W. Benn, Hn. Wedgwood (Bristol, S.E.) Bowden, H. W. (Leicester, S.W.)
Albu, A. H. Benson, G. Bowles, F. G.
Allaun, Frank (Salford, E.) Beswick, F. Braddock, Mrs. Elizabeth
Allen, Arthur (Bosworth) Blackburn, F. Brockway, A. F.
Awbery, S. S. Blyton, W. R. Butler, Mrs. Joyce (Wood Green)
Bacon, Miss Alice Boardman, H. Callaghan, L. J.
Bence, C. R. (Dunbartonshire. E.) Bottomley, Rt. Hon. A. G. Castle, Mrs. B. A.
Agnew, Cmdr. P. G. Boyle, Sir Edward D'Avigdor-Goldsmid, Sir Henry
Aitken, W. T. Braine, B. R. Deedes, W. F,
Allan, R. A. (Paddington, S.) Braithwaite, Sir Albert (Harrow, W.) Digby, Simon Wingfield
Alport, C. J. M. Brooke, Rt. Hon. Henry Donaldson, Cmdr, C. E. McA.
Amery, Julian (Preston, N.) Brooman-White, R. C. Doughty, C. J. A.
Amory, Rt. Hn. Heathcoat (Tiverton) Browne, J. Nixon (Craigton) du Cann, E. D. L.
Anstruther-Gray, Major Sir William Bryan, P. Duncan, Capt. J. A. L.
Arbuthnot, John Bullus, Wing Commander E. E. Duthie, W. S.
Armstrong, C. W. Burden, F. F. A. Eccles, Rt. Hon. Sir David
Ashton, H. Butcher, Sir Herbert Eden,Rt.Hn.SirA.(Warwick & L'm'tn)
Atkins, H. E. Butler,Rt.Hn.R.A.(Saffron Walden) Eden, J. B. (Bournemouth, West)
Baldock, Lt.-Cmdr. J. M. Campbell, Sir David Elliot, Rt. Hon. W. E.
Balniel, Lord Carr, Robert Errington, Sir Eric
Banks, Col. C. Channon, H. Erroll, F. J.
Barber, Anthony Chichester-Clark, R. Fell, A.
Barlow, Sir John Cole, Norman Finlay, Graeme
Barter, John Conant, Maj. Sir Roger Fisher, Nigel
Bell, Philip (Bolton, E.) Cooper, Sqn. Ldr. Albert Fleetwood-Hesketh, R. F.
Bell, Ronald (Bucks, S.) Cooper-Key, E. M. Forrest, G.
Bevins, J. R. (Toxteth) Cordeaux, Lt.-Col. J. K. Foster, John
Bidgood, J. C. Corfield, Capt. F. V. Fraser, Sir Ian (M'cmbe & Lonsdale)
Biggs-Davison, J. A. Craddock, Beresford (Spelthorne) Galbraith, Hon. T. G. D.
Birch, Rt. Hon. Nigel Crowder, Sir John (Finchley) George, J. C. (Pollok)
Bishop, F. P. Cunningham, Knox Gibson-Watt, D.
Black, C. W. Currie, G. B. H. Glover, D.
Body, R. F. Dance, J. C. G. Godber, J. B.
Bossom, Sir A. C. Davidson, Viscountess Gough, C. F. H.
Boyd-Carpenter, Rt. Hon. J. A. Davies,Rt.Hon.Clement(Montgomery) Gower,H.R.
Graham, Sir Fergus Lindsay, Martin (Solihull) Rees-Davies, W. R.
Grant-Ferris, Wg Cdr. R. (Nantwich) Linstead, Sir H. N. Remnant, Hon. P.
Green, A. Lloyd, Maj. Sir Guy (Renfrew, E.) Renton, D. L. M.
Gresham Cooke, R. Lloyd, Rt. Hon. Selwyn (Wirral) Ridsdale, J. E.
Grimond, Longden, Gilbert Rippon, A. G. F.
Grimston, Hon. John (St. Albans) Lucas, Sir Jocelyn (Portsmouth, S.) Roberts, Sir Peter (Heeley)
Grimston, Sir Robert (Westbury) Lucas, P. B. (Brantford & Chiswick) Robinson, Sir Roland (Blackpool, S.)
Grosvenor, Lt.-Col. R. C. Lucas-Tooth, Sir Hugh Rodgers, John (Sevenoaks)
Gurden, Harold McAdden, S. J. Roper, Sir Harold
Hall, John (Wycombe) Macdonald, Sir Peter Russell, R. S.
Harris, Frederic (Croydon, N.W.) McKibbin, A. J. Schofield, Lt.-Col. W.
Harris, Reader (Heston) Mackie, J. H. (Galloway) Scott-Miller, Cmdr. R.
Harrison, A. B. C. (Maldon) McLaughin, Mrs. P. Sharples, R. C.
Harrison, Col. J. H. (Eye) Maclean, Fitzroy (Lancaster) Simon, J. E. S. (Middlesbrough, W.)
Hay, John McLean, Neil (Inverness) Smithers, Peter (Winchester)
Head, Rt. Hon. A. H. Macleod, Rt. Hn. Iain (Enfield, W.) Smyth, Brig. Sir John (Norwood)
Heald, Rt. Hon. Sir Lionel Macmillan,RtHn.Harold(Bromley) Spearman, Sir Alexander
Heath, Rt. Hon. E. R. G. Macpherson, Niall (Dumfries) Speir, R. M.
Henderson, John (Cathcart) Manningham-Buller, Rt. Hn. Sir R. Spence, H. R. (Aberdeenshire, W.)
Hicks-Beach, Maj. W. W. Markham, Major Sir Frank Spens, R. Hn. Sir P. (Kens'gt'n, S.)
Hill, Rt. Hon. Charles (Luton) Marlowe, A. A. H. Stanley, Capt. Hon. Richard
Hill, Mrs. E. (Wythenshawe) Marples, A. E. Stevens, Geoffrey
Hill, John (S. Norfolk) Marshall, Douglas Stewart, Henderson (Fife, E.)
Hinchingbrooke, Viscount Mathew, R. Studholme, Sir Henry
Hint, Geoffrey Maude, Angus Summers, Sir Spencer
Holland-Martin, C. J. Maydon, Lt.-Comdr. S. L. C. Sumner, W. D. M. (Orpington)
Hope, Lord John Medlicott, Sir Frank Taylor, William (Bradford, N.)
Hornby, R. P. Milligan, Rt. Hon. W. R. Teeling, W.
Hornsby-Smith, Miss M. P. Mott-Radclyffe, C. E. Thompson, Kenneth (Walton)
Horobin, Sir Ian Nabarro, G. D. N. Thompson, Lt.-Cdr.R.(Croydon, S.)
Horsbrugh, Rt. Hon. Dame Florence Nairn, D. L. S. Thornton-Kemsley, C. N.
Howard, Hon. Greville (St. Ives) Neave, Airey Tiley, A. (Bradford, W.)
Hudson, Sir Austin (Lewisham, N.) Nicholls, Harmar Touche, Sir Gordon
Hughes Hallett, Vice-Admiral J. Nicholson, Godfrey (Farnham) Turner, H. F. L.
Hutchison, Sir Ian Clark (E'b'gh,W.) Nicolson, N. (B'n'm'th, E. & Chr'ch) Turton, Rt. Hon. R. H.
Hylton-Foster, Sir H. B. H. Nield, Basil (Chester) Tweedsmuir, Lady
Irvine, Bryant Godman (Rye) Noble, Comdr. A. H. P. Vane, W. M. F.
Jenkins, Robert (Dulwich) Nugent, G. R. H. Vaughan-Morgan, J. K.
Jennings, J. C. (Burton) Oakshott, H. D. Vickers, Miss J. H.
Johnson, Dr. Donald (Carlisle) O'Neill, Hn. Phelim (Co. Antrim, N.) Vosper, D. F.
Johnson, Eric (Blackley) Ormsby-Gore, Hon. W. D. Wakefield, Edward (Derbyshire, W.)
Jones, Rt. Hon. Aubrey (Hall Green) Orr-Ewing, Sir Ian (Weston-S-Mare) Walker-Smith, D. C.
Joynson-Hicks, Hen. Sir Lancelot Osborne, C. Wall, Major Patrick
Kaberry, D. Page, R. G. Ward, Hon. George (Worcester)
Keegan, D. Pannell, N. A. (Kirkdale) Ward, Dame Irene (Tynemouth)
Kerr, H. W. Partridge, E. Waterhouse, Capt. Rt. Hon. C.
Lagden, G. W. Peyton, J. W. W. Whitelaw, W.S.I.(Penrith & Border)
Lambert, Hon. G. Pickthorn, K. W. M. Williams, R. Dudley (Exeter)
Lambton, Viscount Pilkington, Capt. R. A. Wills, G. (Bridgwater)
Leavey, J. A. Pott, H. P. Wilson, Geoffrey (Truro)
Leburn, W. G. Powell, J. Enoch Wood, Hon. R.
Legge-Bourke, Maj. E. A. H. Price, Henry (Lewisham, W.) Woollam, John Victor
Lennox-Boyd, Rt. Hon. A. T. Raikes, Sir Victor
Lindsay, Hon. James (Devon, N.) Ramsden, J. E. TELLERS FOR THE NOES:
Mr. Legh and Mr. Hughes-Young.
Mr. Hobson

I beg to move, in page 12, line 38, at the end to insert: (3) Notwithstanding subsection (1) of this section, investment allowances under Chapters I and II of the said Part X shall continue to be made in respect of expenditure incurred after the said seventeenth day of February on industrial buildings or structures, or on machinery or plant, constructed or provided for the purpose of manufacturing machine tools. This Amendment is on similar lines to the previous one, in that it deals with the continuation of the investment allowance. It provides that such allowances under Chapters I and II of Part X of the Income Tax Act, 1952, shall continue to be in operation. The machine-tool industry is vital to our economy. It is, practically speaking, the prime mover in the engineering industry. It continues to suffer from keen competition, not only from the United States of America, but from Switzerland and Western Germany. Although several large firms are engaged in it, there are also many small and family concerns. Those firms need to be modernised in order to meet this form of competition, and it would seem appropriate that the investment allowance should be continued in the case of this industry.

Further, industry has to import many machine tools, a large proportion of which we could make ourselves, and which we should encourage manufacturers to make. It is amazing to see how many American machines there are in our engineering works which could be made in Britain if encouragement were given to the industry. It is not making a party point to say that if there is one indictment which should be made against British capitalism it is that in many cases it has not ploughed back its surplus revenue into industry, thereby bringing it up to date. Industries such as this should be encouraged so to do, and the Amendment would be a valuable means of accomplishing this end.

Also, since the engineering industry is a rapidly expanding one and is responsible for a large proportion of our exports, why should we have to use hard currency to pay for importing machine tools from the United States and Switzerland? That scarcely seems to be sound housekeeping. I should have thought that the Government would have seen fit to allow the investment allowance to continue for that industry.

I am sorry that there is no one on the Treasury Bench to represent the Board of Trade. Indeed, the Board of Trade has not been represented during this debate, and that is something of an insult to the Committee. Considering the importance of this industry, I should have thought that consultations must have taken place between the Treasury and the Board of Trade on this point. If such consultations have taken place, what is the outcome? What case can be made against the continuance of the investment allowance for such an important industry?

I represent a constituency which contains a large number of small firms manufacturing machine tools. They have done a unique service to the country in the past, but because many of them started during the Victorian era, their premises are sited in the centre of the town, and consequently it is difficult for them to expand. They are surrounded by houses and other small businesses. But were the proper incentives provided, those firms would be rehoused in modern factories. The Government continually talk about their interest in the small industrialist and the need for British industry to expand, but we require action rather than lip service. I suggest that this Amendment would enable a modest contribution to be made to helping this very important sector of British economic life.

The argument may be advanced that this industry is not hard up, and that may be true. Thank goodness it is not in the same position as the Lancashire cotton industry, about which we have heard so much today. It is, however, an industry which needs help because of the important part which it plays in the economic life of the country. It has a future, and were it encouraged to develop, it would be the means of saving hard currency for this country. I hope, therefore, that we shall not have the usual clichés from the Treasury Bench in reply to this Amendment, but that if it is opposed we shall be given a sound reason why the concession asked for cannot be granted.

People interested in the engineering industry wish to know the arguments which may be deployed against the request contained in the Amendment. I have considered this matter with colleagues interested in the industry, and we have been unable to discover any reason why this help should not be given to such an essential part of the British economy.

Mr. Albu

I agree with my hon. Friend the Member for Keighley (Mr. Hobson) that the case for this industry is not the same as for the cotton industry which, my right hon. and hon. Friends said, was facing severe competition and was declining. That cannot be said of the machine tool industry. My hon. Friend has a constituency interest. I have no such interest, and I support this Amendment from the point of view of the national interest. My view is that this industry needs a substantial stimulus, if it is to do the job which it ought to be doing for the country's economy.

If we examine this industry from the point of view of the general economic interests of the country, we see that it satisfies certain conditions for an expanding industry in the present era. It is an industry which is extremely suitable as a basis for exports and it is an essential basis for our home manufacture. It satisfies the requirements for an export industry because it requires a large degree of skill and a fairly large degree of engineering design; and it has a high conversion ratio from the raw material to the finished product. It is a basic industry for practically every other manufacturing industry in the country.

Some expansion has been made since the war. Its present output and level of production is substantially higher. But anyone who knows anything at all of the industry would agree with my view that its expansion has been inadequate. We are now discussing the investment allowance. We are discussing the question of the extent to which the industry has been ploughing back its own resources or raising sufficient capital for expansion or investing in new plant and buildings.

8.15 p.m.

Unfortunately, we have no separate figures for the investment in this industry over the past years. We cannot compare it with the figures for the motor car industry, which were recently published by the Board of Trade. But we can examine its performance and its deliveries and orders. If we compare the first quarter of this year with the first quarter of last year, it is true that deliveries rose from £18-1 million to £20.2 million, an increase of 10 per cent., which is fairly reasonable, if one does not consider the basis on which it started. But we must compare deliveries with new orders which the industry received and which went up in the same period from £24.4 million to £25.5 million. The industry's order book figures which include the backlog of undelivered orders, went up from £84.8 million to £103.7 million. That is, in fact, an order book sufficient to cover its production for 11 years, which accounts for the period of delivery of British machine tools.

That is exactly the position which the Anglo-American Council on Productivity referred to in a Report issued in 1953. Incidentally, this Report was drawn up by a number of people in the industry itself, employers, workers and technicians. The Report drew particular attention to the failure of the industry to meet the requirements of the market at that time and perhaps I may be allowed to quote from it, because the Report is still relevant. The Council was discussing the lack of initiative of the industry in providing the types of economic machine tools, cheap special machine tools, required in the engineering industry at that time and which are still required.

The Report states: The customer, usually with no thought of any practical alternatives, must buy machine tools, but his reaction to the bad economics is to purchase only as few machine tools as are absolutely essential to his needs, and often to run the machine tools he has to an uneconomic old age. The effect, therefore, of a lack of expansion of the machine tool industry is to be seen in obsolescent machine tools in use in British industry, and it must have a direct effect on productivity and the export competitive position.

The Report drew attention to the fact that many British machine tools were too expensive and there was a lack of specialisation in their design. In view of this, it is perhaps not surprising that the exports of the industry are only 30 per cent. of its total production, and the figures for imports in the last two or three years have been rising very rapidly. I am not at all sure that we are not approaching the position which we reached in 1951 when, with the sudden expansion of the defence programme, we had to spend a great deal of money on imported machine tools. The matter was referred to by the Select Committee on Estimates which examined defence expenditure.

In the first two months of this year, while exports rose from the 1955 figure of £3,389,000 to £3,730,000, imports rose from £2,506,000 to £4,423,000. So our imports are now very considerably in excess of our exports. As my hon. Friend the Member for Keighley said a very large part, in fact about half, comes from the United States and has to be paid for in dollars, and the rest of them come very largely from Germany or Switzerland.

There was a report in one of the more popular newspapers—which I do not normally read—which I have no reason to doubt, saying that the new machinery put in by Standard's which created such excitement, transfer machines used for machining the parts of motor-cars and tractors, and so on, had largely been imported from Germany. When I went to see the Austin motor works last year I found that they were unable to obtain from the English machine tool industry the transfer machines which they needed for their motor car production, and they had to make them themselves.

During the last year we have been importing capital goods, and importing steel as well to make consumer goods. If that is not the height of lunacy for this country I do not know what is. It is no good the Government clamping down on everything; they are clamping down on consumer goods and also on increase in the output of capital goods. Anybody who examines our economy knows that we have to increase the export of capital goods. Although I have the greatest sympathy with my hon. Friends who have been arguing to the contrary, we all know that the future of the country does not lie with the export of consumer goods, in view of the industrialisation of the rest of the world.

I was recently in Germany and saw the Opel motor works. None of the machines there was from Britain and a lot were American, but I also saw a lot of German machine tools. I noticed that the automation plant was made up of American machine tools with German transfer machines. Anyone who reads the engineering journals will be aware that the Germans are very advanced in this type of transfer machine. They have some very interesting machines such as, for example, the automatic crankshaft balancing machines, which are extremely ingenious. I believe that they are being made under licence in this country. The German machine tool industry is able to do these things not only because it is much more adventurous than our own and is advancing very fast, but because it spends much more money on research and co-operates with the universities.

The depressing thing is to go round British engineering works and see German and American machine tools in them. In a very substantial British engineering firm with a very substantial export business I was very depressed on going round the machine shop. The managing director told me that they were buying practically all the machine tools from Germany because they were so much better than any that could be obtained in this country. Everybody has his taste, and it may be that that gentleman was exaggerating. No doubt there have been very substantial improvements in British machine-tool manufacture. At the Machine Tool Exhibition, which takes place this or next month, we shall have an opportunity of comparing British and foreign machine tools.

Irrespective of design, there is no doubt that the British industry is not expanding fast enough. The recent Report by the Department of Scientific and Industrial Research upon Automation drew attention to the matter. We can hardly speak to anyone in the engineering industry without hearing criticism of the machine tool industry.

What we propose in this simple Amendment is not enough by itself. To restore to an industry investment allowances when the industry has shown so little initiative and expansion will not be enough. My hon. Friend drew attention to the fact that the industry as a whole is in small units, often family units. It lacks research and development, and at the moment there is little recruitment from outside itself, and no recruitment from university graduates or outside industries which would bring new blood and ideas into it. It lacks productivity-mindedness. There is no doubt that when the time comes we on this side of the Committee will have to take other steps to deal with this industry.

The engineering industry cannot afford a machine tool industry as backward as ours. We cannot expect to get much more out of this Government in the way of direct action to expand the industry, but, on the other hand, the Government can show that they realise the seriousness of the problem by accepting the Amendment. The industry is easily defined. I do not see much difference, in spite of what the Minister said on the other Amendment, between the proposal in this Amendment and what the Chancellor has done in the way of fuel-saving devices. Machine tools are labour-saving devices and will help to expand the productivity of British industry.

If the Government accepted the Amendment it would show the real importance which they attach to the machine tool industry and we might get some of the expansion that we need. I feel that further steps will have to be taken. At any rate, the Government, if they accept the arguments put forward by my hon. Friend and myself, might accept the Amendment.

Mr. Cyril Bence (Dunbartonshire, East)

I support this important Amendment. I am sure that the hon. Member for Handsworth (Sir E. Boyle) must have a great deal of sympathy for the proposition that is being put forward.

The day has gone when any production unit of any sort can hope to expect increased productivity from the simple installation of a new machine. That is difficult with modern technology. More often a battery of machines is required.

My hon. Friend the Member for Edmonton (Mr. Albu) spoke of transfer devices in the motor industry, and he cited the case of the British Motor Corporation at Longbridge. There it was a matter of getting agreement with the British machine tool industry to manufacture to Austin's specification a whole series of standard-base units. The Austin motor company had to use thousands of skilled men working for thousands of man-hours in order to put those transfer devices on to their production line.

The British machine tool industry has not the resources to get down to the problem of producing complex, multiple-linked machinery for production. Machine tool production is, or ought to be, if it had developed as effectively as has the German industry, beyond the stage of designing just one particular machine tool to work as a unit. Very often the machine has to be designed to function in a series of manufacturing processes connected together by transfer devices.

I am convinced that the British machine tool industry will go downhill very fast unless we make some move to get the idea firmly rooted that we have to make machine tools as the Americans and the Germans do. They can produce machine tools of very high quality that can be handled together. I can think of several machines that can be used as isolated units, but which, by simple devices, can be easily linked up into a chain of production processes. We have all had experience of the semi-automatic machinery produced in America and in this country, but it is clear when one sees an American machine tool that the research that has gone into its design and potentiality are far in advance of any machine tool of the type manufactured in this country.

8.30 p.m.

I know we have firms like Conomatic, New Britain-Gridley, Brown and Sharp, and Oërlikon. Their machines are made in this country under licence from American companies. The reason for that is that our machine tool manufacturers have treated the production of machine tools as the production of capital goods. In a sense they are, but they are also the consumer goods of the engineering industry in general. The machine tool industry should function as the producer of a consumer product for the world market. After all, motor cars can be capital goods to the men using them in business, but their production is not treated as the production of an individual unit but as that of a mass-produced unit for mass consumption.

The position in the machine tool industry is the same. The production of machine tools is done as much by semiskilled labour, using machinery, as is the production of a motor car or a typewriter. If the British machine tool industry thinks that it is merely manufacturing to satisfy the home market, then it is so limited in its market that it becomes limited in its capacity and is unable to take advantage of a world demand for industrialisation and for machine tools.

My hon. Friend the Member for Edmonton raised a very important point, and, like him, I am surprised that any Government should withhold investment allowances from an industry which is so vital and so important, and which has such a great future if it tries to increase the conversion value from the raw material to the finished product. I have said this before in the House, and my hon. Friends who know these machines know that what I am saying is the truth: it used to break my heart to see an Asquith radial driller, costing at one time about £800 and weighing two or three tons, alongside a Swiss Genevoise jig borer of about the same weight but costing £2,000. The Germans are putting these things in as standard equipment today.

The same was true between the wars. I remember German automatic processes being put into factories in the Midlands. I helped to put them in. They were automatic processes of a high cost made in Germany. They could have been made here. We could manufacture them here, but our machine tool industry has become quite out of date, in view of modern technology.

The Economic Secretary, who represents a Birmingham constituency, must be aware of the position and of the fact that between the wars and after the last war we were continually importing American and even Italian machine tools. We have imported Swedish and Swiss tools, the Swiss Genevoise, the Giddings and Lewis and the Hydro Plane. All these machines have been imported into the country. We can make these tools if the machine tool industry of this country is encouraged to manufacture, not only for the British engineering industry, but for the world.

Investment allowances are given for the building of ships, and I am in favour of that. I am convinced that there is a greater capacity within the machine tool industry of today, especially with the increase in mechanical handling, for earning more for our labour and raw materials than from any other industry in the country, with the possible exception of high-class jewellery.

The Economic Secretary represents a jewellery constituency, and it may well be that the jewellers of Birmingham can convert a cheap product into a very expensive finished product. Taking a large world market with a big potential, however, I am convinced that the machine tool industry of Great Britain, given sufficient encouragement and not this sort of frustration, can create for itself a world market in high-class precision tools which will give a higher return for imported raw material and for labour applied in manufacture than any other industry. Surely that is one of the things for which we should look as an industrial community.

Sir E. Boyle

We have had three most interesting speeches, and I particularly enjoyed that of the hon. Member for Edmonton (Mr. Albu), who on these occasions always addresses himself very much to the realities of the situation, and I am only sorry that, owing to the time at which the debate began, there has been a comparatively thin attendance to listen to it.

I do not think there is any dispute between us on the importance of the engineering industry. After all, our export markets are now to a considerable extent markets for capital goods. The whole situation was transformed when the sellers' market for consumer goods came to an end some years ago. There is also the point that today our exports, home investment, the defence programme and a considerable part of home consumption are all pressing for the same materials. I quite agree with the hon. Member for Edmonton that it was a very serious situation last year when, at one and the same time, there was a £70 million increase in imports of steel, and, as the hon. Gentleman rightly says—and this is a rather interesting and disturbing statistic —a total of £4 million imports of machine tools in the first two months of this year.

I give him this crumb of comfort that, at any rate, we can see that investment in the steel industry is planned to rise by £63 million, and it is fair to say that our dollar imports of machine tools are still pretty rigidly controlled; that is to say, nobody can import them unless they can put up a really good case for them. I have always understood that a high proportion of the civil servants concerned with import licences are concerned with this particular work, and that it is expensive in manpower and that the applications are pretty rigorously scrutinised.

I think the hon. Gentleman was a little unfair when he implied that our policy was to clamp down on consumer goods and capital goods equally, because I do not think that the figures for this year would bear out his view. I would say to those hon. Members who attribute to those on this side of the Committee an attitude of doctrinaire anti-planning that that is exaggerated. The whole point of our policy in the autumn Budget and the curb on hire purchase was precisely to curb consumption at the particular point, principally, where it was competing with investment and exports for the same resources. We have the position in the first few months of this year where consumption is pretty stationary and where it looks as if stock building is actually declining, and where, at the same time, we are seeing a considerable increase in fixed investment.

I am not going to deploy the whole case on this Clause, because I thought our policy had worked out rather better than hon. Gentlemen seemed to think when I was listening to the hon. Member for Edmonton and to others who have spoken from the other side of the Committee. Beyond any question, a much stronger case could be made out for this Amendment than for the previous one, but it is fair to say that this Amendment has been considered very carefully by my right hon. Friend. I must honestly admit that, of all the Amendments taken so far, certainly the strongest case can be made out for this one, precisely because the machine tool industry is obviously one of national importance from the point of view of our economy.

We have considered very carefully whether any exceptions at all should have been made from the general suspension of the investment allowances, but my right hon. Friend came to the conclusion that there was a very special case for giving exceptional treatment to three classes; that is to say, shipping, which has been treated specially in the past, scientific research, and fuel saving, and these are all classes which I know have the support of the hon. Member for Edmonton. My right hon. Friend decided that he could not this year go beyond these three categories. No doubt, some other industries or types of plant could very plausibly claim to be making a special contribution to the national economy. After all, the decision to suspend the investment allowances at all was a serious step, and it would be very difficult to make further important concessions which would operate in the opposite way.

I should say to the Committee, in conclusion, in replying to the debate on this Amendment, that I think it is of the essence of the investment allowance and initial allowances that the position should be reconsidered each year; and, in replying to these Amendments, quite deliberately my right hon. Friend and myself have used the word "suspending" rather than "abolishing," just as the right hon. Gentleman the Leader of the Opposition spoke of suspending the initial allowances in 1951. We shall certainly consider the position very carefully, as it were, all the time, in order to see how, investment is going, and what are the needs of our economy; and I certainly assure the hon. Gentleman that the position of the machine tool industry, and of the engineering industry generally, is one that we shall keep very carefully under review.

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

I do not want to prolong the debate unnecessarily, but my hon. Friend the Member for Keighley (Mr. Hobson) drew attention to the fact that the President of the Board of Trade was not present, and I should like to comment on it. This point has been mentioned earlier. I am not complaining. We do not expect that when there is one Minister in charge of a Bill all the others should attend, but we expect that one Minister representing the Board of Trade should be present for some of the time when we are discussing these subjects.

If there is one Amendment during the discussion of which the representative of the Board of Trade should be present, it is this one, but we still have not seen one of the Board of Trade Ministers. I should have thought that, in view of the number of times we have drawn attention to the absence of Ministers representing the Board of Trade, someone would have given one of them the tip that he ought to be present.

My hon. Friends have spoken with great authority, because all of them have been in the engineering profession. One displayed great knowledge about a constituency matter, and another widened the debate considerably. I agree with the Economic Secretary that my hon. Friend the Member for Edmonton (Mr. Albu) always presents his case in a way which must be convincing to anybody who wants to study the subject factually and to take a decision on a considered opinion. I was disappointed that the Economic Secretary, in recognising that, did not go further and say that he had been convinced and that the Amendment would be accepted.

My hon. Friend the Member for Dunbartonshire, East (Mr. Bence) always talks with knowledge on this subject, because it is his work. When he followed his normal avocation he was in this trade, and he will be the first to acknowledge that British skill and technique has always been recognised to be of the highest quality. That is why we have been able to keep our world markets though, as my hon. Friend the Member for Edmonton said, there is a tendency for us to lose way at the moment. My hon. Friend commented that the Germans are said to be slightly ahead. If they are, it is because there has been greater investment, greater expansion, in their machine tool industry to the disadvantage of our own.

The Amendment would enable us at least to expand and equip our industry to compete better. I know that the managing director of the firm of Asquith's, to which reference has been made, has just returned from Moscow. I have not seen him since his return, but I saw him before and he was most optimistic about the development of the machine tool trade.

In the past, Russia was our greatest customer. She has indicated again that she wants to buy machine tools. I have asked Russians about this and they say that there is only one reason they want them —because they are the best in the world. We provided them initially, they got used to them, we have kept the market and it is still there for us; but it will not be if other countries push us out.

This industry offers us a better opportunity for the future than most other industries. The greater part of the world, the underdeveloped part of the world, will in time require this kind of equipment. It is that which we can best produce and surely we ought to be investing as fully as possible to make sure that in future we can get into those markets and keep them.

The Economic Secretary talked about rigid control of imports of machine tools from dollar countries. I will not go into the merits of that, but I suggest that it is a pity that other goods have not been just as rigidly controlled. That might not have put us into the difficulty in which we find ourselves vis-a-vis the the dollar markets today. I therefore suggest that the Economic Secretary has replied to the debate in a far from satisfactory way and I am sure that my hon. Friends will either pursue the matter further or take the Amendment to a Division now.

Mr. Hobson

The Economic Secretary stated in reply to the debate that he had been impressed. He appreciates that not mere animadversions but serious criticisms have been made. I realise that he is the Economic Secretary and not the Chancellor of the Exchequer and I do not want to be thought condescending when I say that it is a pity that the Chancellor is not present. because if he had heard the speeches which have been made, especially the speech of my hon. Friend the Member for Edmonton (Mr. Albu), he would have been able to say that he was willing to consider this most important Amendment between now and the Report stage.

8.45 p.m.

In view of the case which has been made, related not only to constituencies but also to the importance of this matter in the national economy, I feel, quite frankly, that he could give an undertaking to consider the Amendment between now and the next stage of the Bill. If he could give that assurance, we would be only too pleased not to divide the Committee. He would not be running a risk. Not only by word of mouth can he convey to the Chancellor what has been said, but the Amendment, at a first reading, shows a prima fade proven case. There can be no doubt whatever that if the machine tool industry is given this concession in precisely the same way as the shipbuilding industry has been given it, the value to Britain would be immense.

On both sides of the Committee, our concern is for the well-being of the country. We may fight about the division of the cake, but there will be no cake left unless British industry modernises itself. Nobody recognises that more readily than the Economic Secretary. I am speaking not from the purely constituency point of view, representing those who make the machines which make the machine tools. I am speaking from the national point of view, in support of the unanswerable case which has been advanced by my hon. Friend the Member for Edmonton and supported by my hon. Friend the Member for Dunbartonshire, East (Mr. Bence).

We know the Economic Secretary to be a very reasonable man. Indeed, recently, on the Adjournment of the House, he met the views expressed by an hon. Member on a matter which affected this country's economy. I feel that he would be on perfectly safe ground. There is absolutely no answer to the case which has been made, and he could readily give an assurance that he will consider it between now and the Report stage. I hope he will give the assurance. If he does, the Committee can pass on, and pass on in a very good frame of mind, which will, I am sure, lead to great progress being made between now and half-past eleven.

Sir E. Boyle

I should be misleading the Committee were I to give the assurance for which the hon. Member for Keighley (Mr. Hobson) asks. Indeed, it is precisely because of the importance of this industry that my right hon. Friend did consider this matter very thoroughly and very carefully before the debate.

I will certainly undertake to see that my right hon. Friend's attention is drawn to the excellent speeches which we have had, but I think I really should only be misleading the Committee if I said any more than that. Perhaps the Committee would now feel able to come to a decision.

Question put, That those words be there inserted: —

Division No. 207. AYES [8.48p.m.
Ainsley, d. W. Hamilton, W. W. Owen, W. J.
Albu, A. H. Hannan, W. Paget, R. T.
Allaun, Frank (Salford, E.) Hastings, S. Paling, Rt. Hon. W. (Dearne Valley)
Allen, Arthur (Bosworth) Hayman, F. H, Paling, Will T. (Dewsbury)
Allen, Scholefield (Crewe) Healey, Denis Palmer, A. M. F.
Awbery, S. S. Henderson, Rt. Hn. A. (Rwly Regis) Parker, J.
Bacon, Miss Alice Hewitson, Capt. M. Parkin, B. T.
Bence, C. R. (Dunbartonshire, E.) Hobson, C. R. Paton, John
Benn, Hn. Wedgwood (Bristol, S.E.) Holman, P. Peart, T. F.
Benson, G. Houghton, Douglas Plummer, Sir Leslie
Beswick, F. Howell, Charles (Perry Barr) Price, J. T. (Westhoughton)
Blackburn, F. Howell, Denis (All Saints) Price, Philips (Gloucestershire, W.)
Blyton, W. R. Hubbard, T. F. Probert, A. R.
Boardman, H. Hughes, Cledwyn (Anglesey) Proctor, W. T.
Bottomley, Rt. Hon. A. G. Hughes, Emrys (s. Ayrshire) Pryde, D. J.
Bowden, H. W. (Leicester, S.W.) Hughes, Hector (Aberdeen, N.) Randall, H. E.
Bowles, F. G. Hunter, A. E. Rankin, John
Boyd, T. C. Hynd, H. (Accrington) Redhead, E. C.
Braddock, Mrs. Elizabeth Irvine, A. J. (Edge Hill) Roberts, Albert (Normanton)
Brockway, A. F. Irving, S. (Dartford) Robinson, Kenneth (St. Pancras, N.)
Burton, Miss F. E. Isaacs, Rt. Hon. G. A. Rogers, George (Kensington, N.)
Butler, Mrs. Joyce (Wood Green) Janner, B. Ross, William
Callaghan, L. J. Jay, Rt. Hon. D. P. T. Royle, C.
Castle, Mrs. B. A. Jeger, George (Goole) Shinwell, Rt. Hon. E.
Champion, A. J. Jeger, Mrs. Lena(Holbn & St.Pncs,S.) Short, E. W. Shurmer, P. L. E.
Chetwynd, G. R. Jenkins, Roy (Stechford) Skeffington, A. M.
Clunie, J. Johnson, James (Rugby) Slater, Mrs. H. (Stoke, N.)
Coldrick, W. Johnston, Douglas (Paisley) Slater, J. (Sedgefield)
Collick, P. H. (Birkenhead) Jones, David (The Hartlepools) Smith, Ellis (Stoke, S.)
Collins, V. J. (Shoreditch & Finsbury) Jones, Jack (Rotherham) Snow, J. W.
Corbet, Mrs. Freda Jones, J. Idwal (Wrexham) Sorensen, R. W.
Cove, W. G. Jones, T. W. (Merioneth) Sparks, J. A.
Craddock, George (Bradford, s.) Kenyon, C. Steele, T.
Crossman, R. H. S. Key, Rt. Hon. C. W. Stewart, Michael (Fulham)
Cullen, Mrs. A. King, Dr. H. M. Stones, W. (Consett)
Dalton, Rt. Hon. H. Lawson, G. M. Strachey, Rt. Hon. J.
Darling, George (Hillsborough) Ledger, R. J. Summerskill, Rt. Hon. E.
Davies,Rt.Hon.Clement(Montgomery) Lee, Miss Jennie (Cannock) Sylvester, G. o.
Davies, Ernest (Enfield, E.) Lever, Leslie (Ardwick) Taylor, Bernard (Mansfield)
Davies, Stephen (Merthyr) Lipton, Lt.-Col. M. Taylor, John (West Lothian)
Deer, G. Logan, D. G. Thomas, Iorwerth (Rhondda, W.)
de Freitas, Geoffrey Mabon, Dr. J. Dickson Thomson, George (Dundee, E.)
Delargy, H. J. MacColl, J. E. Thornton, E.
Dodds, N. N. McGhee, H. G. Turner-Samuels, M.
Donnelly, D. L. McGovern, J. Viant, S. P.
Dugdale, Rt. Hn. John (W. Brmwch) McInnes, J. Wade, D. W.
Dye, S. McKay, John (Wallsend) Weitzman, D.
Ede, Rt. Hon. J. C. McLeavy, Frank Wells, Percy (Faversham)
Edwards, Rt. Hon. John (Brighouse) Mahon, Simon Wells, William (Walsall, N.)
Edwards, Rt. Hon. Ness (Caerphilly) Mallalieu, E. L. (Brigg) Wheeldon, W. E.
Edwards, Robert (Bilston) Mallalieu, J. P. W. (Huddersfield,E.) White, Mrs. Eirene (E. Flint)
Edwards, W. J. (Stepney) Mann, Mrs. Jean White, Henry (Derbyshire, N.E.)
Evans, Albert (Islington, S.W.) Mason, Roy Wilkins, W. A.
Evans, Edward (Lowestoft) Messer, Sir F. Willey, Frederick
Fernyhough, E. Mikardo, Ian Williams, David (Neath)
Fienburgh, W. Mitchison, G. R. Williams, W. R. (Openshaw)
Fletcher, Eric Monslow, W. Williams, W. T. (Barons Court)
Forman, J. C. Moody, A. S. Willis, Eustace (Edinburgh, E.)
Fraser, Thomas (Hamilton) Morrison,Rt.Hn.Herbert(Lewis'm,S.) Wilson, Rt. Hon. Harold (Huyton)
Gibson, C. W. Mort, D. L. Winterbottom, Richard
Gordon Walker, Rt. Hon. P. C. Moss, R. Woof, R. E.
Greenwood, Anthony Moyle, A. Yates, V. (Ladywood)
Grenfell, Rt. Hon. D. R. Mulley, F. W. Zilliacus, K.
Grey, C. F. Neal, Harold (Bolsover)
Griffiths, Rt. Hon. James (Llanelly) Oliver, G. H. TELLERS FOR THE AYES:
Grimond, J. Oram, A. E. Mr. Pearson and Mr. Holmes.
Hale, Leslie Orbach, M.
Hall, Rt. Hn. Glenvil (Colne Valley) Oswald, T.
Agnew, Cmdr. P. G. Arbuthnot, John Balniel, Lord
Aitken, W. T. Armstrong, C. W. Banks, Col. C.
Allan, R. A. (Paddington, s.) Ashton, H. Barber, Anthony
Alport, C. J. M. Astor, Hon. J. J. Barlow, Sir John
Amery, Julian (Preston, N.) Atkins, H. E. Barter, John
Anstruther-Gray, Major Sir William Baldock, Lt.-Cmdr. J. M. Bell, Philip (Bolton, E.)

The Committee divided: Ayes 200,Noes 250.

Bell, Ronald (Bucks, S.) Hay, John Nicholson, Godfrey (Farnham)
Bering, J. R. (Toxteth) Head, Rt. Hon. A. H. Nicolson, N. (B'n'm'th, E. & Chr'eh)
Bidgood, J. C. Heald, Rt. Hon. Sir Lionel Nield, Basil (Chester)
Biggs-Davison, J. A. Heath, Rt. Hon. E. R. G. Noble, Comdr. A. H. P.
Birch, Rt. Hon. Nigel Henderson, John (Cathcart) Nugent, G. R. H.
Bishop, F. P. Hicks-Beach, Maj. W. W. Oakshott, H. D.
Black, C. W. Hill, Rt. Hon. Charles (Luton) O'Neill, Hn. Phelim (Co. Antrim, N.)
Body, R. F. Hill, Mrs. E. (Wythenshawe) Ormsby-Gore, Hon. W. D.
Bossom, Sir A. C. Hill, John (S. Norfolk) Orr-Ewing, Sir Ian (Weston-S-Mare)
Boyd-Carpenter, Rt. Hon. J. A. Hinchingbrooke, Viscount Osborne, C.
Boyle, Sir Edward Hirst, Geoffrey Page, R. G.
Brains, B. R. Holland-Martin, C. J. Pannell, N. A. (Kirkdale)
Braithwaite, Sir Albert (Harrow, W.) Hope, Lord John Partridge, E.
Bromley-Davenport, Lt.-Col. W. H. Hornby, R. P. Peyton, J. W. W.
Brooke, Rt. Hon. Henry Hornsby-Smith, Miss M. P. Pickthorn, K. W. M.
Browne, J. Nixon (Craigton) Horobin, Sir Ian Pilkington, Capt. R. A.
Bullus, Wing Commander E. E. Horsbrugh, Rt. Hon. Dame Florence Pott, H. P.
Burden, F. F. A. Howard, Hon. Greville (St. Ives) Powell, J. Enoch
Butcher, Sir Herbert Hudson, Sir Austin (Lewisham, N.) Price, Henry (Lewisham, W.)
Butler, Rt. Hn. R. A. (Saffron Walden) Hughes Hallett, Vice-Admiral J. Raikes, Sir Victor
Campbell, Sir David Hughes-Young, M. H. C. Ramsden, J. E.
Carr, Robert Hutchison, Sir Ian Clark (E'b'gh, W.) Rawlinson, Peter
Channon, H. Hylton-Foster, Sir H. B. H. Redmayne, M.
Chichester-Clark, R. Iremonger, T. L. Rees-Davies, W. R.
Cole, Norman Irvine, Bryant Godman (Rye) Remnant, Hon. P.
Conant, Maj. Sir Roger Jenkins, Robert (Dulwich) Renton, D. L. M.
Cooper, Sqn. Ldr. Albert Jennings, J. C. (Burton) Ridsdale, J. E.
Cooper-Key, E. M. Johnson, Dr. Donald (Carlisle) Rippon, A. G. F.
Cordeaux, Lt.-Col. J. K. Johnson, Eric (Blackley) Roberts, Sir Peter (Healey)
Corfield, Capt. F. V. Jones, Rt. Hon. Aubrey (Hall Green) Robinson, Sir Roland (Blackpool, S.)
Craddock, Beresford (Spelthorne) Joseph, Sir Keith Rodgers, John (Sevenoaks)
Crouch, R. F. Joynson-Hicks, Hon. Sir Lancelot Roper, Sir Harold
Crowder, Sir John (Finchley) Kaberry, D. Russell, R. S.
Cunningham, Knox Keegan, D. Schofield, Lt.-Col. W.
Currie, G. B. H. Kerr, H. W. Scott-Miller, Cmdr. R.
Dance, J. C. G. Kershaw, J. A. Sharples, R. C.
Davidson, Viscountess Kirk, P. M. Simon, J. E. S. (Middlesbrough, W.)
D'Avigdor-Goldsmid, Sir Henry Lagden, G. W. Smithers, Peter (Winchester)
Deedes, W. F. Lambert, Hon. G. Smyth, Brig. Sir John (Norwood)
Digby, Simon, Wingfield Lambton, Viscount Spearman, Sir Alexander
Donaldson, Cmdr. C. E. McA. Leavey, J. A. Speir, R. M.
Doughty, C. J. A. Leburn, W. G. Spence, H. R. (Aberdeen, W.)
Drayson, G. B. Legge-Bourke, Maj. E. A. H. Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
du Cann, E. D. L. Legh, Hon. Peter (Petersfield) Stanley, Capt. Hon. Richard
Duncan, Capt. J. A. L. Lennox-Boyd, Rt. A. T. Stevens, Geoffrey
Duthie, W. S. Lindsay, Hon. James (Devon, N.) Stoddart-Soott, Col. M.
Eccles, Rt. Hon. Sir David Lindsay, Martin (Solihull) Studholme, Sir Henry
Eden, John (Bournemouth, W.) Linstead, Sir H. N. Summers, Sir Spencer
Elliot, Rt. Hon. W. E. Lloyd, Maj. Sir Guy (Renfrew, E.) Sumner, W. D. M. (Orpington)
Errington, Sir Eric Longden, Gilbert Taylor, William (Bradford, N.)
Erroll, F. J. Lucas, Sir Joycelyn (Portsmouth, S.) Teeling, W.
Farey-Jones, F. W. Lucas, P. B. (Brentford & Chiswick) Thomas, Leslie (Canterbury)
Fell, A. Lucas-Tooth, Sir Hugh Thompson, Kenneth (Walton)
Finlay, Graeme McAdden, S. J. Thornton-Kemsley, C. N.
Fisher, Nigel Macdonald, Sir Peter Tiley, A. (Bradford, W.)
Fleetwood-Hesketh, R. F. McKibbin, A. J. Touche, Sir Gordon
Forrest, G. Mackie, J. H. (Galloway) Turner, H. F. L.
Foster, John McLaughlin, Mrs. P. Turton, Rt. Hon. R. H.
Fraser, Sir Ian (M'cmbe & Lonsdale) Maclay, Rt. Hon. John Tweedsmuir, Lady
Galbraith, Hon. T. G. D. Maclean, Fitzroy (Lancaster) Vane, W. M. F.
George, J. C. (Pollok) McLean, Niel (Inverness) Vaughan-Morgan, J. K.
Gibson-Watt, D. Macleod, Rt. Hn. Iain (Enfield, W.) Vickers, Miss J. H.
Glover, D. Macmillan,Rt.Hn.Harold(Bromley) Vosper, D. F.
Godber, J. B. Macpherson, Niall (Dumfries) Wakefield, Edward (Derbyshire, W.)
Gough, C. F. H. Manningham-Buller, Rt. Hn. Sir R. Walker-Smith, D. C.
Graham, Sir Fergus Markham, Major Sir Frank Wall, Major Patrick
Grant-Ferris, Wg. Cdr. R. (Nantwich) Marlowe, A. A. H. Ward, Hon. George (Worcester)
Green, A. Marples, A. E. Ward, Dame Irene (Tynemouth)
Gresham Cooke, R. Marshall, Douglas Waterhouse, Capt. Rt. Hon. C.
Grimston, Hon. John (St. Albans) Mathew, R. Whitelaw,W.S.I.(Penrith & Border)
Grimston, Sir Robert (Westbury) Maude, Angus Williams, Paul (Sunderland, S.)
Grosvenor, Lt.-Col. R. G. Maydon, Lt.-Comdr. S. L. C. Williams, R. Dudley (Exeter)
Gurden, Harold Medlioott, Sir Frank Wills, G. (Bridgwater)
Hall, John (Wycombe) Milligan, Rt. Hon. W. R. Wilson, Geoffrey (Truro)
Harris, Frederic (Croydon, N.W.) Mott-Radclyffe, C. E. Wood, Hon. R.
Harris, Reader (Heston) Nabarro, G. D. N. Woollam, John Victor
Harrison, A. B. C. (Maldon) Nairn, D. L. S.
Harrison, Col. J. H. (Eye) Neave, Airey TELLERS FOR THE NOES:
Mr. Bryan and
Mr. Richard Thompson.
Mr. H. Wilson

On a point of order. I think very many hon. and right hon. Members who were attempting to go into the Division Lobby to vote just now were appalled by the congestion in the Lobby outside. I heard a number of senior Members of the Committee say that in their experience they had never seen such congestion here, or such delay in getting into the Division Lobby to vote. In my eleven years I certainly have not. I wonder if it would be possible to have inquiries made, to see whether such occurrences can be obviated in future. I do not know whether there was any special cause for the congestion. So far as we are aware, no one in particular was to blame. However, whatever the reason was there were hon. Members who were kept waiting for two or three minutes before they could get into the Division Lobby.

The Chairman

As I was sitting here I noticed the circumstances which the right hon. Gentleman has described. There was a crowd. Of course, the trouble is that hon. and right hon. Members stand talking in the doorway, and they block the passage. I do not know what we can do about it. Perhaps now that the matter has been mentioned hon. and right hon. Members will take notice, and in future will move out of the way more quickly.

Mr. M. Turner-Samuels (Gloucester)

The congestion was so bad that the Tellers had physically to remove some hon. Members who were standing there, so that other hon. Members could get out of the Division Lobby.

The Chairman

That was what I said. Hon. and right hon. Members stand there and talk, instead of going back to dinner, or to whatever they were doing when the Division began.

9.0 p.m.

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

I beg to move, in page 12, line 38, at the end to insert: (3) Notwithstanding subsection (1) of this section, allowances shall also continue to be made under the said Chapter II in respect of expenditure incurred after the said seventeenth day of February on the replacement by continuous tunnel kilns and dryers of intermittent bottle-shaped kilns. On the face of it this Amendment appears to be a rather specialsied one, but its purport is quite narrow, and I have some hope and real expectation that, if I can give the Economic Secretary as much understanding of its point as I am sure that his hon. Friend next to him, the Parliamentary Secretary to the Ministry of Fuel and Power, already has. it will not only receive a sympathetic hearing but will be accepted in full.

The operative words in the Amendment are: … the replacement by continuous tunnel kilns and dryers of intermittent bottle-shaped kilns.

Hon. Members

Hear hear.

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

Explain it to them.

Dr. Stross

Before I explain, I should apologise by saying that I might have used better and more technical words if I had asked for the replacement of these old-fashioned bottle-shaped kilns, which I am sure everybody has seen used in the firing of pottery, by process kilns and dryers. It may be that the Economic Secretary to the Treasury has considered my Amendment in application to such words rather than to the simpler words I have used.

A little while ago, on an earlier Amendment, the Chancellor completely gave my case for this Amendment when he declared quite frankly that Europe's essential problem from now on would be the saving of energy and heat and, therefore, of fuel. I know that if the right hon. Gentleman were in his place, whatever he may have thought in the past about the Amendment, I should easily have persuaded him, as I hope to persuade the Economic Secretary, that this is a proper Amendment and one in the best interest of our economy. It may be that I am speaking almost to no purpose because the minds of the right hon. Gentleman and his hon. Friend have been made up and they have given way in this matter.

Clause 12 (3, b) states that this allowance shall be made for … plant of any description prescribed for this purpose in the interest of fuel economy. On 16th May, the Chancellor of the Exchequer gave a Written Answer to a Question in which he was asked whether he would list the fuel-saving plant which he proposed should qualify for investment allowance. The plant was listed in the Answer under the following six heads: mechanical firing equipment for solid fuel; oil firing equipment; back pressure engines and turbines; waste heat recovery equipment; feedwater treatment plant; and control equipment. It might be possible that the Government, the Chancellor and his advisers, have not noted the special requirements of the pottery industry in saving fuel, in modernising their equipment and in rationalising the industry as a whole.

Conversions of existing kilns are probably covered in the Bill, and the replacement of old kilns by new kilns of a similar pattern. If that is the case, I plead that the Government should be very careful. We do not want the pottery industry, which is undertaking a technical revolution, to replace old bottle-shaped kilns by new. We want to have them replaced, as they have been since 1937, by tunnel kilns which fire continuously and do not use coal. Since 1937, 750,000 tons of raw coal has been saved every year and now, instead of using 1,150,000 tons every year, as we did before the war, we are using only 340,000 tons.

This process of rationalisation and of saving solid fuel and using gas and electricity for firing is something for which we should have every sympathy from the Government. If the words of the Chancellor an hour ago meant anything, they must have some application here.

Mr. Ellis Smith

He spoke in favour of it.

Dr. Stross

Of course the right hon. Gentleman spoke in favour of it, but perhaps he did not know that I would move the Amendment in this way.

In the pottery industry we want to go through to the end of this process. In so doing we are deeply aware of the fact that recent legislation has been enacted in the Clean Air Act. As a result of that Act, the industry will come before public inquiry, and everybody in North Staffordshire knows that there will be tremendous pressure by our citizens and by our industry to ensure that the industry should come under the umbrella of that Measure, so that all firing of pottery shall be such that the air will no longer be polluted, coal will be saved, and all firing will be by gas and electricity.

If that be the case, I am asking that the investment allowance must not be confined to conversions of existing kilns, for this would prevent us at some future time from achieving our heart's desire of rationalising the industry, saving the fuel which we have in mind to save, and of seeing that the atmosphere is no longer grossly polluted. We have been a long way, but we want to go the whole way. For that reason, I think I am putting a reasonable case in saying that conversions alone are not enough. We ask that the conversions shall be modern in type and not merely replacements of a newly built bad thing for an old-fashioned bad thing.

Mrs. Harriet Slater (Stoke-on-Trent, North)

A short time ago the Chancellor said that anything which could save solid fuel was vital, and the terms of this Amendment merely carry out that statement. It seeks to save solid fuel in an industry which, by using it in the past in old-fashioned bottle-shaped kilns, has caused in the City of Stoke-on-Trent a vast amount of smoke and grime and a great deal of hard labour for the men working in the industry. It is becoming extremely important in this age, when coal costs so much to buy and is becoming so vital to this country, that we should seek in every possible way to save the quantity of it used by any industry.

My hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross), has already told the Committee of the great saving in solid fuel which has taken place in the industry since 1937. A great deal of time and money and energy has been expended in the City of Stoke-on-Trent, in seeking new ways of modernising and introducing new tunnel ovens.

A great deal of research has been done. In the old days our local gas works spent a tremendous amount of money upon improvements so that it could serve the pottery industry's tunnel kilns, and when the Stoke-on-Trent gas undertaking was handed over to the nationalised gas industry, it was one of the best in Europe. A great deal of that research was done because it was felt to be extremely important that the pottery industry should change from the use of the old-fashioned bottle kilns to the new tunnel ovens.

My father was a fireman, and I used to spend a lot of time with him when he was working at the oven—for thirty hours at a time—seeking to get the best from the placing of the ware and the coal available to him. He took great pride in not turning out smoke from the oven in firing. That will be absolutely impossible if we continue to use the old bottle kilns.

During the last ten years the industry has done a great deal in this respect. I remember visiting the factory which makes the pottery that we use in the House of Commons Dining Room. I think it has two bottle kilns left. The development of the last few years must be expanded if our industry is to be efficient in terms of modern technical development. If we desire to help the industry and the people working in it, the miners of north Staffordshire, who get the coal for the industry, and the country as a whole, in the great struggle which is now taking place, we should do everything possible to encourage and facilitate this development, which is necessary from the point of view not only of technical development but of the health of the people living in the district.

Whether or not the Chancellor had first looked at the Amendment, he has recognised the need to save solid fuel. In its pottery industry, Stoke-on-Trent has shown how that can be done. We hope that the Chancellor will see fit to include development of this kind in the list which my hon. Friend the Member for Stoke-on-Trent, Central quoted.

Sir E. Boyle

I think that this might, not unfairly, be described as one of the more recherché Amendments to the Clause that we shall be discussing in the course of the evening. I hope the Committee will forgive me if, in replying to it, I consult a somewhat full note, because I do not pretend to have all the technical terms of the pottery industry at my fingers' ends.

The hon. Member for Stoke-on-Trent, Central (Dr. Stross) moved the Amendment very ably. I listened with close attention to what he and his hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) had to say. The Amendment raises the whole question of the continuation of the investment allowances for certain efficient fuel-using plant as opposed to fuel-saving plant. The Clause and the list of qualifying plant of which the hon. Gentleman read an outline have been prepared on the assumption that the allowances are to be given for expenditure on things that are particularly useful in saving fuel. For example, the allowances are to be given for insulation and for plant that is, by its very nature, fuel-saving.

9.15 p.m.

It is perfectly true that the replacement of fuel-using plant by more efficient fuel-using plant does result in a saving of fuel, but the difficulty is that if we admit kilns or any other kind of fuel-using plant to the list of exceptions for the purposes of this Clause there is no end to the list of items for whose inclusion a plausible claim might be made.

Mr. Ellis Smith

Give an example.

Sir E. Boyle

I promise the hon. Member that I will do so.

If continuous tunnel kilns used in the pottery industry were given the continuing benefit of the allowance, it would be extremely difficult to refuse a similar allowance to the kilns used in the brick making industry and the much more expensive rotary kilns now used in the cement industry. In fact it would be very difficult to stop there, because the paper-making and chemicals industries are fuel users in a big way and could make a plausible case to show that they, too. save fuel by the replacement of plant.

It seems very difficult in principle, once one includes fuel-using plant, to stop short of an investment allowance for any replacement which saves fuel or power. whether the plant concerned is motive power plant or process plant. That is the difficulty which my right hon. Friend sees about this Amendment. We have tried to consider very carefully where the line could be drawn, but it is our view that if we include fuel-using plant of this kind it would be very difficult to make this concession for the pottery industry and not to include it for a number of other industries as well. That is why, after very careful consideration, my right hon. Friend feels that he cannot accept the Amendment.

Mr. Douglas Jay (Battersea, North)

We particularly welcome the presence of the Parliamentary Secretary to the Ministry of Fuel and Power. We have been told all the afternoon that no other Ministers need be here, because the Treasury Ministers know all about the matters under discussion, but now we have some reinforcement, which only makes us wonder the more why no representative of the Board of Trade was present throughout our prolonged discussion on cotton earlier this evening.

The Economic Secretary said that this was a recherchè Amendment. That is perhaps true, but at the same time it seems to us to be a good Amendment. There is no question but that pottery is an extremely important industry and has a large export trade. The installation of these tunnel kilns will improve the efficiency and the productivity of the industry and in addition will have a fuel saving effect. I do not think that the Economic Secretary denied that they would have a fuel-saving effect, as my hon. Friends the Member for Stoke-on-Trent, Central (Dr. Stross) and the Member for Stoke-on-Trent, North (Mrs. Slater) said. The Chancellor of the

Exchequer has told us earlier this afternoon that that was extremely important and one of the main objectives which he had at heart.

In face of all those considerations, all the Economic Secretary was able to say was that although there was a good case for the Amendment there might be an equally good case for other Amendments of a similar kind. That is not a very effective answer to the Amendment. There is certainly a good case for continuing investment allowances in a number of other instances, but we are compelled by the rules of the Committee to take each instance in turn. A sound case has been made out for these tunnel kilns and I hope that my hon. Friends will press the issue to a Division.

Question put, That those words be there inserted: —

The Committee divided: Ayes 195, Noes 253.

Proctor, W. T. Smith, Ellis (Stoke, S.) Wells, Percy (Faversham)
Pryde, D. J. Snow, J. W. Wells, William (Walsall, N.)
Randall, H. E. Sorensen, R. W. Wheeldon, W. E.
Rankin, John Sparks, J. A. White, Henry (Derbyshire, N.E.)
Redhead, E. C. Steele, T. Wilkins, W. A.
Robens, Rt. Hon. A. Stewart, Michael (Fulham) Willey, Frederick
Roberts, Albert (Normanton) Stones, W. (Consett) Williams, David (Neath)
Robinson, Kenneth (St. Pancras, N.) Strachey, Rt. Hon. J. Williams, W. R. (Openshaw)
Rogers, George (Kensington, N.) Summerskill, Rt. Hon. E. Willis, Eustace (Edinburgh, E.)
Ross, William Sylvester, G. O. Wilson, Rt. Hon. Harold (Huyton)
Royle, C. Taylor, Bernard (Mansfield) Winterbottom, Richard
Shinwell, Rt. Hon. E. Taylor, John, (West Lothian) Woof, R. E.
Short, E. W. Thomas, Iowerth (Rhondda, W.) Yates, V. (Ladywood)
Shurmer, P. L. E. Thomson, George (Dundee, E.) Zilliacus, K.
Skeffington, A. M. Thornton, E.
Slater, Mrs. H. (Stoke, N.) Turner-Samuels, M. TELLERS FOR THE AYES:
Slater, J. (Sedgefield) Weitzman, D. Mr. Pearson and Mr. Holmes.
Agnew, Cmdr. P. C. Duthie, W. S. Keegan, D.
Aitken, W. T. Eccles, Rt. Hon. Sir David Kerr, H. W.
Allan, R. A. (Paddington, S.) Eden, J. B. (Bournemouth, West) Kershaw, J. A.
Alport, C. J. M. Elliot, Rt. Hon. W. E. Kirk, P. M.
Amery, Julian (Preston, N.) Errington, Sir Eric Lagden, G. W.
Amory, Rt. Hn. Heathcoat (Tiverton) Erroll, F. J. Lambert, Hon. G.
Anstruther-Gray, Major Sir William Farey-Jones, F. W. Lambton, Viscount
Arbuthnot, John Fell, A. Leavey, J. A.
Armstrong, C. W. Finlay, Graeme Leburn, W. G.
Ashton, H. Fisher, Nigel Legge-Bourke, Maj. E. A. H.
Astor, Hon. J. J. Fleetwood-Hesketh, R. F. Legh, Hon. Peter (Petersfield)
Atkins, H. E. Forrest, George Lennox-Boyd, Rt. Hon. A. T.
Baldock, Lt.-Cmdr. J. M. Foster, John Lindsay, Hon. James (Devon, N.)
Balniel, Lord Fraser, Sir Ian (M'cmbe & Lonsdale) Lindsay, Martin (Solihull)
Banks, Col. C. Galbraith, Hon. T. G. D. Linstead, Sir H. N.
Barber, Anthony George, J. C. (Pollok) Lloyd, Maj. Sir Guy (Renfrew, E.)
Barlow, Sir John Gibson-Watt, D. Longden, Gilbert
Barter, John Glover, D. Lucas, Sir Jocelyn (Portsmouth, S.)
Bell, Philip (Bolton, E.) Gough, C. F. H. Lucas, P. B. (Brentford & Chiswick)
Bell, Ronald (Bucks, S.) Graham, Sir Fergus Lucas-Tooth, Sir Hugh
Bevins, J. R. (Toxteth) Grant-Ferris, Wg Cdr. R. (Nantwich) McAdden, S. J.
Bidgood, J. C. Green, A. Macdonald, Sir Peter
Biggs-Davison, J. A. Gresham Cooke, R. McKibbin, A. J.
Birch, Rt. Hon. Nigel Grimond,J. Mackie, J. H. (Galloway)
Bishop, F. P. Grimston, Hon. John (St. Albans) McLaughlin, Mrs. P.
Black, C, W. Grimston, Sir Robert (Westbury) Maclay, Rt. Hon. John
Body, R. F. Grosvenor, Lt.-Col. R. G. Maclean, Fitzroy (Lancaster)
Bossom, Sir A. C. Gurden, Harold McLean, Neil (Inverness)
Boyd-Carpenter, Rt. Hon. J. A. Hall, John (Wycombe) Macleod, Rt. Hn. Iain (Enfield, W.)
Boyle, Sir Edward Harris, Frederic (Croydon, N.W.) Macmillan,Rt. Hn.Harold (Bromley)
Braine, B. R. Harrison, A. B. C. (Maidon) Macpherson, Niall (Dumfries)
Braithwaite, Sir Albert (Harrow, W.) Harrison, Col. J. H. (Eye) Manningham-Buller, Rt. Hn. Sir R.
Bromley-Davenport, Lt.-Col. W. H. Harvey, John (Walthamstow, E.) Markham, Major Sir Frank
Brooke, Rt. Hon. Henry Hay, John Marlowe, A. A. H.
Browne, J. Nixon (Craigton) Head, Rt. Hon. A. H. Marples, A. E.
Bryan, P. Heald, Rt. Hon. Sir Lionel Marshall, Douglas
Bullus, Wing Commander E. E. Heath, Rt. Hon. E. R. G. Mathew, R.
Burden, F. F. A. Henderson, John (Cathcart) Maude, Angus
Butcher, Sir Herbert Hill, Rt. Hon. Charles (Luton) Maydon, Lt.-Comdr. S. L. C.
Butler,Rt.Hn.R.A.(Saffron Walden) Hill, Mrs. E. (Wythenshawe) Medlicott, Sir Frank
Campbell, Sir David Hill, John (S. Norfolk) Milligan, Rt. Hon. W. R.
Carr, Robert Hinchingbrooke, Viscount Mott-Radclyffe, C. E.
Channon, H. Hirst, Geoffrey Nabarro, G. D. N,
Chichester-Clark, R. Holland-Martin, C. J. Nairn, D. L. S.
Cole, Norman Hope, Lord John Neave, Airey
Conant, Major Sir Roger Hornby, R. P. Nicholson, Godfrey (Farnham)
Cooper, Sqn. Ldr. Albert Hornsby-Smith, Miss M. P. Nicolson, N. (B'n'm'th, E. & Chr'ch)
Cooper-Key, E. M. Horobin, Sir Ian Nield, Basil (Chester)
Cordeaux, Lt.-Col. J. K. Horsbrugh, Rt. Hon. Dame Florence Nugent, G. R. H.
Corfield, Capt. F. V. Howard, Hon. Greville (St. Ives) Oakshott, H. D.
Craddock, Beresford (Spelthorne) Hudson, Sir Austin (Lewisham, N.) O'Neill, Hn. Phelim (Co. Antrim, N.)
Crouch, R. F. Hughes Hallett, Vice-Admiral J. Ormsby-Gore, Hon. W. D.
Crowder, Sir John (Finchley) Hughes-Young, M. H. C. Orr-Ewing, Sir Ian (Weston-S-Mare)
Cunningham, Knox Hutchison, Sir Ian Clark (E'b'gh,W.) Osborne, C.
Currie, G. B. H. Hylton-Foster, Sir H. B. H. Page, R. G.
Dance, J. C. G. Iremonger, T. L. Pannell, N. A. (Kirkdale)
Davidson, Viscountess Irvine, Bryant Godman (Rye) Partridge, E.
D'Avigdor-Goldsmid, Sir Henry Jenkins, Robert (Dulwich) Peyton, J. W. W.
Deedes, W. F. Jennings, J. C. (Burton) Pickthorn, K. W. M.
Digby, Simon Wingfield Johnson, Dr. Donald (Carlisle) Pilkington, Capt. R. A.
Donaldson, Cmdr. C. E. McA. Johnson, Eric (Blackley) Pitt, Miss E. M.
Doughty, C. J. A. Jones, Rt. Hon. Aubrey (Hall Green) Pott, H. P.
Drayson, G. B. Joseph, Sir Keith Powell, J. Enoch
du Cann, E. D. L. Joynson-Hicks, Hon. Sir Lancelot Price, Henry (Lewisham, W.)
Duncan, Capt. J. A. L. Kaberry, D.
Raikes, Sir Victor Speir, R. M. Vane, W. M. F.
Ramsden, J. E. Spence, H. R. (Aberdeen, W.) Vaughan-Morgan, J. K.
Rawlinson, Peter Spens, Rt. Hn. Sir P. (Kens'gt'n, S.) Vickers, Miss J. H.
Redmayne, M. Stanley, Capt. Hon. Richard Vosper, D. F.
Rees-Davies, W. R. Stevens, Geoffrey Wade, D. W.
Remnant, Hon. P. Stoddart-Scott, Col. M. Wall, Major Patrick
Renton, D. L. M. Studholme, Sir Henry Ward, Hon. George (Worcester)
Ridsdale, J. E. summers, Sir Spencer Ward, Dame Irene (Tynemouth)
Rippon, A. G. F. Sumner, W. D. M. (Orpington) Waterhouse, Capt. Rt. Hon. C.
Roberts, Sir Peter (Heeley) Taylor, William (Bradford, N.) Whitelaw, W.S.I.(Penrith & Border)
Robinson, Sir Roland (Blackpool, S.) Teeling, W. Williams, Paul (Sunderland, S.)
Rodgers, John (Sevenoaks) Thomas, Leslie (Canterbury) Williams, R. Dudley (Exeter)
Roper, Sir Harold Thompson, Kenneth (Walton) Wills, G. (Bridgwater)
Russell, R. S. Thompson, Lt.-Cdr. R. (Croydon, S.) Wilson, Geoffrey (Truro)
Schofield, Lt.-Col, W. Thornton-Kemsley, C. N. Wood, Hon. R.
Scott-Miller, Cmdr. R. Tiley, A. (Bradford W.) Woollam, John Victor
Sharples, R. C. Tilney, John (Wavertree) Yates, William (The Wrekin)
Simon, J. E. S. (Middlesbrough, W.) Touche, Sir Gordon
Smithers, Peter (Winchester) Turner, H. F. L. TELLERS FOR THE NOES:
Smyth, Brig. Sir John (Norwood) Turton, Rt. Hon. R. H. Mr. Edward Wakefield and
Spearman, Sir Alexander Tweedsmuir, Lady Mr. Godber.

9.30 p.m.

Sir John Barlow (Middleton and Prestwich)

I beg to move, in page 12, line 38, at the end to insert: (3) Notwithstanding subsection (1) of this section, investment allowances shall also continue to be made under Chapters I, II and III of the said Part X in respect of capital expenditure incurred after the said seventeenth day of February for the purposes of a trade which consists of or includes the working of a mine, oil well or other source of mineral deposits of a wasting nature outside the United Kingdom. The Committee has spend a long time in discussing possible exceptions. There have been exceptions, special exceptions and what the Chancellor referred to as "Uncle Tom Cobley and all exceptions". They all related to industries in this country. This Amendment refers to something different. In particular it refers to mines and oil wells and other similar mineral sources overseas. It will be known by hon. Members that companies registered in this country and operating overseas have to pay British taxation in a similar manner as companies operating in this country. It is well known that many Colonies and Dominions offer to a new industry in their territories attractive taxation conditions for the first few years. If a company is taxed by normal British standards it cannot properly take advantage of those local conditions. That is over-abbreviating the matter.

I am sure that hon. Members are alive to the necessity of developing the Colonies and Dominions with British enterprise, capital and know-how in every way, and in particular mines and oil wells. For that reason I regard the Amendment as different from all the other Amendments. It is most important that these oversea developments should continue and prosper, because we shall rely more and more on them as years go by. I therefore ask the Chancellor of the Exchequer to consider this matter most urgently.

It is well-known that in the last few days a substantial offer has been made for an oil company domiciled in this country. I have little doubt that one of the benefits which are expected if ownership of the property goes overseas is that it will attract very much less taxation than it does today. That is an example typical of many oil companies in other parts of the world, and we could not have a better illustration. I am sure that the Chancellor and many other hon. Members will therefore recognise the importance of the Amendment.

If we are to develop the Colonies, as we shall, and as is our responsibility, we must give them taxation conditions no worse than companies registered in other countries which have lower taxation than we have. I regard this as a most important Amendment, and I hope that the Chancellor will look upon it favourably.

Mr. Stevens

I would add one point to what my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) has said. Later, the Chancellor is proposing a special exception in respect of plant and machinery used in the interests of fuel economy. I think it is better to start at the beginning of things, with the production of the fuel. That point should be borne in mind.

The Amendment includes other wasting assets beyond oil wells, but oil is more important to us now than at any time in our history, and is likely to be more important still in the years that lie ahead. It seems almost a corollary of the retention of the investment allowance for plant and machinery used for fuel economy to retain it for the production of the fuel itself.

Mr. Mitchison

I am bound to say that although personally I may have some indirect interest affected by the Amendment, I can see no good reason for the Amendment. The hon. Member for Middleton and Prestwich (Sir J. Barlow), who moved it, made special reference to British Colonies and Dominions, but the Amendment is not so limited; it covers "outside the United Kingdom" in these matters.

The hon. Member thought that the recent developments in connection with the Trinidad Oil Company were a good argument for the Amendment. I am bound to say that I should have thought they were an unfortunate argument against it, because no doubt the offer to which he referred was made with knowledge of taxation in this country as it is and perhaps without complete confidence that the Amendment would be accepted tonight. If it were accepted it seems to me that one result would be that the persons who made the offer would be a little better off, for they would still have a company domiciled in this country mining—I think that is the right word, but let us say "working "—for oil in Trinidad, and they would be advantaged by this concession. I cannot resist the feeling that I have no great wish to benefit them in that case.

If the Chancellor of the Exchequer were to pay full attention to the circumstances of that deal to see whether there was any taxable matter there, or any matters such as unexpected capital gains to the shareholders which could be brought within the scope of tax, he would be doing something far more useful than what is now proposed in the Amendment.

Sir J. Barlow

I have seen it suggested in the Press, although I have no other knowledge of it, that one of the conditions of this offer is that the registration of the company shall be moved abroad, which I think supports my contention.

Mr. Mitchison

In that case the contention appears to me somewhat irrelevant to the argument, but it may be a question of residence and control rather than of registration. I have not seen the Press reports on the subject, and as regards a distinction of that sort I should prefer to see the original document in question.

There is a subsequent Amendment on the Order Paper, to which it would be out of order to refer now in any detail, which gives a far wider power to select enterprises of national importance. If these matters are of the national importance which the hon. Member suggests, I shall look forward with confidence to meeting him in the Division Lobby in support of that later Amendment, whatever happens to this Amendment. On the whole, that seems to me a far better method of dealing with questions of this sort than picking out a particular category of enterprises operating abroad and giving them a particular benefit.

As a matter of fact, they have done pretty well. I happened to look at the Finance Act, 1952, and I picked out there four special concessions in favour of oil miners and other miners, two relating to oil miners and other miners operating abroad. I do not think that this is a moment to ask for a special and particular benefit in this case. I therefore trust that the Economic Secretary, in his reply, will give us his reasons for rejecting the Amendment.

Sir E. Boyle

It might be convenient to the Committee if I attempted at this stage to reply to the Amendment so lucidly moved by my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow). I have already explained to the Committee, on a number of earlier Amendments, why my right hon. Friend felt bound to limit his exceptions to the three cases which he has chosen.

I fully appreciate all that my hon. Friends have said about the importance of mining works outside the United Kingdom. Indeed, it fell to me on more than one occasion, as a back bench Member, to raise the question of the initial allowances, and I can well remember some years ago moving a new Clause on this subject to which Sir Frank Soskice, who was then Attorney-General, gave me a courteous reply.

I make this reply to my hon. Friends. Mining works did enjoy an exceptional rate of initial allowance of 40 per cent. when the initial allowances were restored in 1953, and when my right hon. Friend the Lord Privy Seal introduced his investment allowances in 1954, mining works had the option of taking either the 40 per cent. initial allowance or the investment allowance at the highest rate of 20 per cent. I do not think anybody can say that this Government have ignored the importance of mining works. Indeed, exceptionally favourable treatment of mining works was based on the unique nature of some expenditure, in view of the high degree of risk involved.

My right hon. Friend does not think that this year he can make an exception for mining companies in retaining for them this highest rate of 20 per cent. of the investment allowance. My right hon. Friend fully realises that mining works are no less important to the national economy than they have been hitherto, and I can therefore only say to my hon. Friends what I have already said in the case of the machine tool industry. We recognise that there is something here which is of importance to the national economy and, therefore, although my right hon. Friend cannot go any further in this Finance Bill, we shall keep this type of work very carefully in mind and consider it when planning policy for future years. I hope that, with that assurance, my hon. Friends may agree to ask leave to withdraw the Amendment.

Mr. Jack Jones (Rotherham)

I rise to say a word or two, not so much about the Amendment, as literally printed on the Notice Paper, but on the general principles behind it.

The Government should pay some attention to this question of mining and oil production, and I want to put a case to the Economic Secretary in language which he will easily understand. There are many millions of shareholders in this country who are interested in oil and mining production other than the people who are interested in the Trinidad Company, the Shell Company, etc. They are the working-class people of this country, because practically the whole of our steel production at the moment depends on oil.

I could give the names of many works where I spent some time—I was in one this morning—in which not one ton of steel is produced other than by oil. The steel industry is busily engaged in exploring abroad for suitable mining deposits. because our own deposits and indigenous ore are of very poor quality and have to be blended with ores from abroad. Therefore. this Government. or even a Socialist Government, should pay the strictest attention to this matter.

I had the experience of looking at the position at Abadan before the trouble began when there were 91.000 strikers. There is also the position in our own Colonies, and I want to say, not so much in support of the proposal contained in this Amendment, because there is a later Amendment dealing with the same question, that it should be appreciated by the Government that they ought to pay the strictest possible attention all the time to this question of finding fresh sources and supplies of oil and ore, because the steel industry of this country will be in a very parlous position if we do not get the oil, and our engineering industries will be in a desperate position. The Economic Secretary should advise his right hon. Friend that this matter requires his most serious and immediate attention.

Sir J. Barlow

In view of the explanation given by the Economic Secretary, and in anticipation of something on these lines being considered at a later date—next year—I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

9.45 p.m.

Mr. Sidney Dye (Norfolk. South-West)

I beg to move, in page 12, line 41, after "Part X", to insert: and under subsection (5) of the said section sixteen".

The Deputy-Chairman

Perhaps it would be convenient to consider, at the same time, the two following Amendments, in line 1 and line 3.

Mr. Dye

I agree, Sir Rhys. This Amendment deals not with a big point, but an important one in some respects. In the Clause the Government have sought to preserve the system of investment allowances where the matter of fuel saving is concerned. We in the agricultural industry are concerned that the Clause falls short of what it might do to assist agriculture. I am sure that it is the desire of the Government and of the Committee to enable greater production to take place at less cost, and the Amendment would enable that to be done.

If a farmer installs heating apparatus and also makes provision to insulate the building as well, then that expense is covered by the Clause, but if he insulates a particular building without installing improved or additional heating equipment that does not qualify for the allowance. The purpose of the Amendment is to extend the allowance to cover those cases, which are important now, where farmers are adapting existing buildings to meet the modern requirements in food production.

Many existing farm buildings have pantile roofs, which let out the heat easily. It is essential for the rearing of young stock in winter to retain as much heat as possible. For such a project as the insulating of a roof of an open-tiled building or an asbestos roof, a farmer would not be able to claim any allowance; but it is now considered most essential, in the rearing of pigs during the winter months, that they should have as much warmth as possible, that draughts should be excluded and roofs insulated.

Indeed, one of the modern developments in the rearing of pigs is the installation of infra-red lamps, which have been proved to be of great benefit. It is such a benefit on some farms that one hon. Gentleman opposite has told me that when he no longer requires the infra-red lamp in his piggery he removes it to his bathroom, so that after taking a bath he can get the advantages of infra-red rays. That is sustaining him in his Parliamentary duties now that he has found that the rearing of pigs is not so profitable as it used to be.

The same applies to the rearing of poultry. Here again, it is of the utmost importance that all draughts should be excluded from the place where the young birds are kept and that the heat should be concentrated and held there through the winter. In the rearing of pigs and of poultry, and in adapting or improving existing buildings, it is possible to install this insulating material, to the great advantage of the industries concerned.

In horticulture, one of the principal costs in cultivation under glass is the cost of fuel in heating the glasshouses. As the purpose of glasshouses is to enable the producer to rear plants, such as tomato plants, during the winter months, there has been introduced a new method whereby a recently discovered material called Polythene is used to insulate the glasshouses. It is fitted as a form of inner lining, which helps to retain the heat and exclude the cold. I am sure that the Economic Secretary will understand the importance of this matter. If one can, by attaching Polythene to one's glasshouses, help to conserve heat, less fuel is used and there is a considerable saving.

Farmers who have considered this matter feel that there has been an oversight by the Treasury in not drawing up this Clause in terms sufficiently wide to cover insulation against draughts and outside cold. I am quite sure that the Leader of the House, who is not here this evening, but who has a special interest and concern for the well-being of agriculture and horticulture, would wholeheartedly support this Amendment. He has given his pledge to the farming industry that it would not be let down. One of the increasing worries of horticulturists and of some farmers is the rising cost of the fuels used in heating buildings. I am, therefore, quite sure that if the Economic Secretary has considered this matter he will find this an easy Amendment to accept.

There is one other matter which is of great importance, particularly in the Fen districts. There is a new development in chitting houses for potatoes. The old method was to use a glasshouse, and a certain amount of heat. The new idea is to use solid buildings, with solid walls and roofs, with modern lighting, and this new method involves the insulation of the buildings. The growing of potatoes is a national concern now—or it was a few weeks ago when the cost rose tremendously. It is a national concern that producers should be able to produce potatoes more cheaply and with greater certainty. Surely this must appeal to Her Majesty's Government now.

In all these developments in modern agriculture, where there is the need for every new device to be applied, where there is restriction on capital development and hardship in many cases because of the lack of capital development, I am sure that the Economic Secretary will give first consideration to these important arguments. Realising that so many of his hon. and right hon. Friends are dependent on agricultural constituencies, he will appreciate the importance which the National Farmers' Union and the small producers in agriculture will attach to this Amendment. I feel, therefore, that, having considered the Amendment, he will accept it.

Mr. Victor Collins (Shoreditch and Finsbury)

I should like to support the remarks of my hon. Friend the Member for Norfolk, South-West (Mr. Dye). Since the whole Committee is agreed on the importance of retaining investment allowances in connection with capital expenditure for fuel economy or the installation of machinery to prevent loss of heat, it seems extraordinary that the Government should insert "industrial" before "building" in the subsection and thereby, apparently, expressly exclude farm buildings. According to my reading of the subsection, farmers who incur capital expenditure in insulating buildings against loss of heat would be excluded from the benefit of the allowance because their buildings were not industrial buildings.

I am not altogether sure that my hon. Friend was correct in assuming that horticulturists would not benefit under the Clause in its present form. It seems to me that if a tomato grower or horticulturist were to replace existing heating equipment by new plant designed for a similar purpose, or who added to existing plant to ensure insulation against loss of heating, he might well benefit. Perhaps the Economic Secretary will clarify this. If a horticulturist benefits under the Clause as it stands but the ordinary farmer does not, this underlines the need for the Amendment. The Clause fails to help the very people most needing assistance and encouragement in meeting capital expenditure of this nature.

My hon. Friend pointed out that in pig keeping, in preventing losses when sows farrow, in poultry rearing and, indeed, in many other ways, warmth and comfort is needed to prevent losses among young stock in rearing. Many farm buildings are totally unsuitable for the conservation of heat and need substantial insulation, although it may be of a simple nature.

Mr. J. T. Price

How many domestic dwellinghouses need it, also?

Mr. Collins

We are dealing with the fact that the subsection provides allowances only for industrial buildings and we want an extension to farm buildings.

If a farmer wishes to upgrade his buildings to ensure the maximum conservation of heat by the lining of buildings or in any other way, as the Clause stands he cannot possibly get the initial allowances. I read last month in one well-known farming paper, the Dairy Farmer, a new slogan for farmers—" To hell with subsidies". I cannot pursue that now. The only way that that paper said subsidies could be dispensed with was by the maximum expenditure on machinery and capital equipment to promote full efficiency, which would then enable subsidies to be dispensed with. It is sufficiently discouraging for a farmer to engage on new capital expenditure, on which, if he borrows the money, he has to pay 6 per cent., when he knows full well that he cannot possibly get an adequate return and pay that money; but if, in addition, he has to lose the initial allowance, it is even more discouraging.

10.0 p.m.

It is a truism that in no way could we better assist to improve our balance of payments than by an increase in food production at home. Since the Government, by their policies, have done so much to discourage farming and the production of food I hope that they will say that here there was an omission, and that they will accept the Amendment, which will give the farming community a provision food production warrants.

Sir E. Boyle

I think it would be convenient if I were now to answer the questions which have been put to me by the hon. Member for Norfolk, South-West (Mr. Dye) and the hon. Member for Shoreditch and Finsbury (Mr. Collins). It is quite true that as the Clause is drafted the buildings qualifying for the allowance in respect of insulation are limited to industrial buildings or structures. The reason for the exclusion of agricultural buildings is that the list of fuel-saving plant which is to be prescribed by Order—and hon. Members know of that list, given in answer to a Written Question by my right hon. Friend to my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) —has been intentionally restricted to expenditure on what can be expected to achieve worthwhile fuel savings and, of course, it is in factories and other industrial buildings that there is certainly the largest scope for economy in the use of fuel by way of insulation.

My right hon. Friend thought that in agriculture the main heat-using items were, for example, grass drying plant and glasshouses, which, at first sight, do not seem very likely subjects for effective insulation. We thought that, in so far as buildings such as cowsheds and poultry-houses could be insulated, the benefit would more likely be in increased productivity than in fuel saving.

The hon. Member for Shoreditch and Finsbury devoted almost the whole of his speech to the question of how acceptance of the Amendment would help increased productivity, and he showed signs of wishing that he had the opportunity of discussing the Government's agricultural policy in general. I was very glad to hear the hon. Member for Norfolk, South-West say, towards the end of his speech, that in his view worth-while savings of fuel could be achieved by the insulation of specified classes of agricultural buildings. That, of course, is quite a different matter, and in view of the claim which the hon. Gentleman has made we are certainly prepared to look into that.

My right hon. Friend has authorised me to say that if it is the view of the Committee that worth-while savings of fuel could be achieved by insulating specified classes of agricultural buildings, he will be prepared to consider the matter further before the Report stage. In those circumstances, I hope that the hon. Member will ask leave to withdraw his Amendment.

Mr. Dye

I am very pleased indeed to hear what the Economic Secretary has said, and I thank him for giving consideration to the argument. In view of the promise that consideration will be given to amending the Clause so as to include the buildings that I have mentioned, I beg to ask leave to withdraw the Amendment. Amendment, by leave, withdrawn.

Mr. Stevens

I beg to move, in page 13, line 5, at the end to insert "heat or".

This is a brief Amendment, but it is not an unimportant one. My right hon. Friend, in his wisdom, has preserved investment allowance for plant and machinery designed to insulate buildings to preserve the heat in such buildings and thus achieve fuel economy. I wonder whether it is conceivably an oversight that he has not considered the opposite of that. I have in mind not only the sort of buildings which require temperatures about or below freezing point, not only Wall's ice-cream factories, and also refrigerating buildings for the preservation of meat, but also those processes, chemical processes and those in connection with certain types of fibres, which require to be maintained in an even temperature whatever the season of the year.

Even in this country, from time to time, we have very warm weather and, to keep buildings at a moderate temperature during such weather, plant and machinery is necessary to cool the buildings and fuel is necessary to drive that plant and machinery. I suggest, therefore, that the insertion of these words would make a whole of what is at the moment only a part. Quite a substantial amount of fuel is concerned in keeping buildings cool, in other words insulating them against heat, and I hope that my hon. Friend will be willing to accept the Amendment.

Sir E. Boyle

A rather technical point is involved here. The object of the Amendment is to enable the investment allowance to be given for the cost of insulating industrial buildings or plant against the entry of heat. It may be true that there are cases in which the advantage of insulation of existing premises or plant against the entry of heat might achieve some saving of fuel, but it is the Chancellor's view that such saving would not be very significant in comparison with the very much greater saving which could be achieved by the insulation of industrial buildings or plant against the loss of heat. Subsection (3) and the list of fuel saving plant which is prescribed by order quite frankly do not purport to embrace every possible type of expenditure that might produce some saving of fuel, and we have in this list deliberately restricted ourselves to the equipment which might achieve worthwhile saving.

There is a further objection to the Amendment which I must frankly put to the Committee. There are many processes which require the maintenance of temperature at refrigeration level and the use of power for this purpose. The provision of insulating material is a normal feature of the construction of plant or buildings used in those processes, and therefore there is no very obvious merit in conceding that expenditure on insulation in that type of case should have the allowance. We have considered the point put forward, but my right hon. Friend does not think that the saving would be great enough to justify conceding it.

Mr. Mitchison

May I suggest to the Economic Secretary that there seem to be some cases in which parallel provision of this kind would be appropriate and right? There are other cases in which, on the grounds which the hon. Gentleman has just given, such provision would not commend itself to me at least. But the hon. Gentleman has power to make orders and vary them, and surely the right course is to keep the general power and deal with the distinction between the right and wrong cases by order.

Sir E. Boyle

At first sight the suggestion seems a perfectly reasonable one. Indeed, there are exceptional cases where the insulation might be installed as a separate operation, and, in the words of subsection (3), added to the plant already in use, and in such cases qualify for the allowance, but in view of what I have said I hope that my hon. Friend the Member for Langstone (Mr. Stevens) will not press the Amendment.

Mr. Albu

In view of the Economic Secretary's kindly remarks to me earlier, I should like in return to support some of his arguments. I cannot understand how the hon. Member for Langstone (Mr. Stevens) really thought it worth while wasting the time of the Committee. [HON. MEMBERS: "The hon. Gentleman is wasting time."] It is not our business on this side of the Committee to get the Government's business. We are discussing whether or not there should be tax relief to a particular industry.

On this side of the Committee, we are in favour of certain forms of tax relief when we think they will assist the national economy. The argument used by the Economic Secretary was that there was no such example of which he could think, and the hon. Gentleman, in moving the Amendment, gave no example where insulation of this type would not be applied in the process even were no tax relief given. I can think of none myself.

Everyone knows that the purpose of giving tax relief for fuel saving appliances is because industry is so laggard in saving fuel because of the history of cheap fuel in this country. Even the present price of coal does not seem to make it do so. The sort of processes mentioned by the hon. Gentleman are all those which at present it pays to install. Indeed, the industry cannot be carried on at all without undertaking the insulation to which the hon. Gentleman referred. I support the Economic Secretary because I can think of no case where the Amendment would be of any value.

Mr. Stevens

Tempted, as I am, to talk about hon. Gentlemen who waste the time of the Committee, Sir Rhys, I will restrain myself and say that I had not fully appreciated the matter of the reasons given by my hon. Friend the Economic Secretary. I do so now and, therefore, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mrs. Slater

I beg to move, in page 13, line 11, at the end to insert: or for the prevention of atmospheric pollution". In a previous Amendment mention was made of the pollution of the atmosphere, in particular in North Staffordshire, but this applies wherever there is atmospheric pollution. There is now a Clean Air Act on the Statute Book which imposes serious obligations on industrialists to modernise their factories and to install new machinery which will ensure clean air.

Some of those obligations are not only fairly heavy, but are also rather costly. Many industrialists who have the concern and well-being of industry and of people at heart will desire to proceed at once with the improvements necessitated by the Clean Air Act. Therefore, they should not be denied the investment allowance which this Amendment proposes should be extended in that respect.

Every winter we hear a great deal about the number of deaths from smog. Yet rarely do we realise how heavy in industrial areas is the existence of bronchitis. There are about 30,000 deaths a year in this country from chronic bronchitis. Those of us who represent Stoke-on-Trent live in an area where it is particularly severe, and we get many doctors' certificates submitted to us claiming rehousing for people in the outlying districts of Stoke-on-Trent due to the fact that they are suffering from this illness. In addition, the atmosphere affects the general health of the people.

During the last few months we have had raised repeatedly at Question Time and in other ways the question of deaths from cancer of the lung. It is now established that there are more deaths in this country from that disease than there are from tuberculosis, which was a dreaded disease in pre-war days.

Besides general health there is the question of dirt and grime spread by polluted atmosphere. Housewives living in industrial areas fight a constant battle against the dirt created by surrounding industry. In industrial areas curtains have to be washed much more often than in the countryside.

10.15 p.m.

The Deputy-Chairman

I would remind the hon. Lady that the proposal before the Committee is the exemption of plant from taxation.

Mrs. Slater

I am trying. Sir Rhys, to give reasons why that should be done.

The squalor, grime and dirt constitute a very real reason. To housewives living in the middle of an industrial area, this is as important as the health aspect. The results of atmospheric pollution seriously affect housewives. In some areas washing cannot be hung out without risk of smuts and other dirt falling on it from surrounding industry. Today, soap powders have gone up in price by another 1d. This is another reason why investment allowances should be conceded in this instance.

There is also the problem of erosion of buildings resulting from atmospheric pollution. We are in a building which is affected by London atmospheric pollution. For all these reasons, I hope that the Amendent will be accepted.

Mr. Ellis Smith

Having read the Clause very carefully in conjunction with the Amendment. I think we may be pushing at an open door. If not, I am sure that the whole Committee will be pleased that the hon. Member for Kidderminster (Mr. Nabarro) has arrived. Our Amendment ought to have his whole-hearted support. The hon. Gentleman is one of the best-informed Members on the subject.

We are at last getting some life into the Committee, and we ought to have more if the Economic Secretary is not prepared to accept the Amendment. I am sure the hon. Member for Kidderminster will support me when I say that the Amendment would result in a great saving of fuel. The hon. Member played a very prominent part when the Clean Air Bill was being considered in this House.

If my interpretation of the Clause is correct, there is no need for the Amendment. If my interpretation is wrong, we shall certainly have to press the Amendment. If the Clause is agreed to, it will provide that the Treasury shall prescribe by order. What arises in the question of interpretation is whether those orders will include dealing with atmospheric pollution.

In this country we are now all dependent on manufacturing industry. If it were not for our export trade, none of us would have much chance of living for very long. In spite of that, the cost of production continues to increase. Overhead charges are mounting, and productive industry is in a very difficult position. Industries such as pottery are subject to great foreign competition. particularly from Germany and Japan. Nobody seems to be doing much about that, except those who are engaged in the industry, those who are informed about it, those who are signing on at Employment Exchanges and the manufacturers who for months have been building up stocks.

The Deputy-Chairman

The hon. Member is getting rather far from the Amendment.

Mr. Ellis Smith

I have got far from the Amendment, but questions of pollution will become questions of increasing the cost of production. The industry is already in a difficult position, and without an Amendment of this kind to the Clause its position will be even more difficult. It is for those reasons that we have been asked to put forward the Amendment, and I hope that the Economic Secretary will accept it.

Mr. Gerald Nabarro (Kidderminster)

I am grateful to the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) for his kindly and general generous references to the humble part which I played in connection with proposals for clean air legislation.

This Amendment includes the words: or for the prevention of atmospheric pollution. It is, of course, very apposite to those forms of industrial fuel economising equipment which the Chancellor of the Exchequer has already proposed to rank for investment allowance. In fact, on 16th May in column 176 of the Written Answers in HANSARD, the Chancellor of the Exchequer used these words: I have in mind that when the Finance Bill becomes law, the following plant should be prescribed:".—[OFFICIAL REPORT. 16th May, 1956; Vol. 552, c. 176.] By "prescribed" he meant as qualifying under the subsection for inclusion for investment allowance on grounds of fuel economising equipment

When the Clean Air Bill was passing through the House, the point was rightly made from both sides on many occasions that legislation for the abatement of atmospheric pollution was inseparable from provisions for improving and increasing the efficiency with which fuel is used in industry. On studying those classes of equipment which the Chancellor has already given notice he proposes to include under the Clause as ranking for investment allowance in this context, it is quite evident that the majority of them will be conducive directly or indirectly to the abatement of atmospheric pollution.

When my hon. Friend is replying, after reference to my right hon. Friend's Written Answer, I hope he will say whether it is necessary to include these words in the Finance Bill, having regard to the obvious qualities of those classes of equipment for abating atmospheric pollution. For instance, the first class of the equipment to which the Chancellor of the Exchequer referred was mechanical firing equipment for solid fuel. He delineated, in particular, sprinkler, spreader, coking, underfeed, chain-grate, travelling grate and ram type mechanical stokers.

Hand firing of boilers is not only wasteful of solid fuel, coal in particular, but also causes a very large part of the atmospheric pollution of the black areas of the country, notably Stoke-on-Trent, such areas as were admirably referred to in the Beaver Report and many of which were themselves the precursors of clean air legislation.

I hope that the Economic Secretary, in reply to this very important Amendment, will make it quite clear that in future the Chancellor of the Exchequer will specify, under the Clause and the orders which he brings in attendant to and in pursuance of it, such classes of equipment as are demonstrably conducive to the abatement of atmospheric pollution, for in that respect he will not only be serving the admirable purposes of clean air over the black areas of the country, but also making a direct contribution by industrial fuel efficiency to the abatement of those disastrous imports of North American coal.

Sir E. Boyle

Perhaps at this stage I can make an appeal to the Committee. I shall do my very best to reply to the points which have been raised upon the Amendment by hon. Members on both sides of the Committee. I have no doubt that, without straining the rules of order too far, it would be possible to have almost a Second Reading debate upon clean air in discussing this Amendment. I understand that it is the hope of the Committee to get to bed at a reasonable hour, and as the next Amendment raises a rather wide topic, very directly related to the subject of suspending the investment allowance, I hope that after I have answered the questions which have been put to me the Committee may feel able to come to a decision upon the Amendment within a reasonably short time.

The Amendment brackets clean air plant with fuel-saving plant. The decision to except fuel-saving plant from the general suspension of investment allowance was based upon what we conceived to be a matter of vital importance to the national economy, namely, the need to save coal. This provision would have been particularly welcome to my hon. Friend the Member for Kidderminster (Mr. Nabarro).

Mr. Nabarro

Just what I was saying.

Sir E. Boyle

The case for clean air, however, rests upon quite distinct grounds. A concession in favour of clean air plant, as such, would introduce a new class of excepted assets, prescribed in the interests not of fuel saving but of health and amenity. There would be no grounds for making a concession in respect of clean air plant rather than for certain other classes of assets designed in the interests of health and amenities, such as sewage plant and plant for the treatment of trade effluents.

Mr. Collins

The Minister has said that the introduction of an exception in respect of clean air plant would be regarded as an action taken in the interests of health and amenity. Is he aware that about 26 million working days are lost every year through bronchial complaints, and that if we had an arrangement such as the Amendment suggests a vast army of additional workers would, in effect, be provided?

Sir E. Boyle

That may well be. I am not arguing against the importance of clean air, but merely pointing out that it would not be in accordance with my right hon. Friend's proposals to bracket clean air plant with fuel-saving plant, because the decision to except fuel-saving plant from the general suspension of the investment allowance was taken on its own merits.

In answer to my hon. Friend the Member for Kidderminster, I must tell him that I cannot go beyond what he will find in columns 176 and 177 of the OFFICIAL REPORT of 16th May.

Mr. Nabarro

I do not wish my hon. Friend to think for one moment that I am in any way censorious about the Chancellor of the Exchequer's admirable statement upon that, occasion. I have studied with the greatest care, the list of plant he gave, and have consulted informed opinion throughout the country upon it. I wish to assure the Chancellor that his statement upon that occasion was comprehensive in every respect.

Sir E. Boyle

I am glad to hear that. I regret that I cannot go further than that this evening.

Mr. J. T. Price

l do not think that the Economic Secretary has done himself his usual justice in the short reply that he has made. Even from an economic point of view it is quite fallacious for a junior Minister to say that the product of dirt which smoke pollution causes upon a vast scale, requiring vast expenditure of fuel to remove it, and the bad stoking which causes a vast wastage of coal, are not direct economic factors associated with the conservation of fuel. I am surprised that he has missed those points. They are valid ones and should be taken into account.

10.30 p.m.

Mr. Charles A. Howell (Birmingham, Perry Barr)

The reply of the Economic Secretary is shocking. [An HON. MEMBER: "Rubbish."] It goes back upon a promise to which the hon. Member for Kidderminster (Mr. Nabarro) referred. In that respect it might be "Rubbish." We are not unused to the Government's breaking their promises, but this one is rather unfortunate for them, because the hon. Member for Kidderminster has reminded them of the promise that was made that this kind of machinery would rank for tax relief.

I can visualise the position in which we get bureaucracy gone mad. A firm has installed huge machinery for saving fuel, and incorporating, as it must, plant to arrest smoke and grit. Bureaucracy says, "X per cent. of this plant will rank for tax relief and the remainder, being merely for smoke pollution arrestment and grit arrestment, will, therefore, not rank."

The Economic Secretary says that this is analogous to the case he mentioned, but he was not present at the meeting of the Standing Committee which considered the question of air pollution. The Government hurried the Clean Air Bill through and led the country to believe that they were determined to get it on the Statute Book as quickly as possible and make it work. Now the Chancellor sabotages that work. It would be wrong if we did not press this Amendment to a Division.

Mr. John Dugdale (West Bromwich)

I am as anxious as the hon. Member for Kidderminster (Mr. Nabarro) is to save fuel, but I am also concerned about the effects of atmospheric pollution not only on people outside factories, but on people who work inside. It is important to see that they, too, are protected from fumes if the saving of fuel is brought about.

An investigation was made into atmospheric conditions in four foundries in my constituency. About 349 workmen were examined and 54 of them were recognised as eligible for benefit because of pneumoconiosis brought about by lack of care in abstracting noxious fumes. That state of affairs is entirely wrong. We must see, in the interests of the workers, that there is adequate fume extraction.

We have to see that machinery is introduced adequately to control the input of fuel to pressure furnaces. There in be such a great input as to result n a definite, harmful effect on the workers in foundries and factories, and steps should be taken to regulate the input not only for the benefit of the workers, but for the saving of fuel. A factory in my constituency was emitting fumes from a plant making sulphur. A man told me that he hung up a dark blue coat at night, and that in the morning the coat was pale green from the effects of the fumes that came out of the factory opposite.

It does not seem a satisfactory state of affairs to me that we should allow such things to continue, and every encouragement should be given to factory owners who want to install machinery to ensure that fumes are properly consumed and that the emissions which I have described no longer occur. If we do that, we may not necessarily have saved a great deal of valuable machinery but we shall have saved a great deal of valuable human beings for, in spite of automation, human beings still have some value.

Mr. Bottomley

The Economic Secretary rightly said that we want to reach the main discussion which is to follow this, but it is a pity that he did not address those remarks earlier to his hon. Friends the Members for Langstone (Mr. Stevens) and Kidderminster (Mr. Nabarro).

We are discussing the Amendment at about the most inopportune time. Had the discussion taken place in November, when we were discussing the Clean Air Bill, instead of in June, the Chamber would have been full, because the pressure of public opinion would have been such that hon. Members would have been aware of the need for an Amendment such as this. The Beaver Committee presented the facts which showed the evils of polluted air, and the arguments which influenced the presentation of the Clean Air Bill would certainly have swayed every hon. Member in favour of the Amendment.

I do not want to repeat all that was said by my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater), who deployed her arguments in a very clear and concise way. I do not think the Economic Secretary answered the points of substance which she made, nor do I

think he did the Committee the honour it deserves.

I have a particular interest in this matter which I share with the Government Chief Whip in that my constituency is in the most air-polluted area in the whole country—north-west Kent. In that area we have the largest concentration of cement works in the world. Not only do we get the smoke fumes which pollute the air, and all that goes with them, but we also have the evil of cement dust. To give some idea of the problems which confront my constituents of Rochester and Chatham, as well as the other residents of north-west Kent, I can say that, following a calculation, it was estimated that 105 tons of dust fell on an area of one square mile. That is equivalent to all the dust which falls in the City of Westminster and central London.

The Economic Secretary should look at this matter again. If the Government are serious in their intention to abolish the evils arising from atmospheric pollution, they ought to accept the Amendment in the spirit in which my hon. Friend moved it. If the Economic Secretary cannot do that, I ask him at least to consider taking the matter back and making some further comment on it on Report.

Sir E. Boyle

I cannot add to the substance of what I have already said, and it would be misleading the Committee if I left hon. Members with the expectation of any Government Amendment being put down on Report; but my right hon. Friend will take note of the continuing great importance which the House attaches to the whole subject of clean air.

Mr. J. T. Price

Before you put the Question, Sir Charles, may I suggest to the Treasury Bench Ministers that they should look seriously at the undertakings given to the Standing Committee on the Clean Air Bill on behalf of the Government by the Minister of Housing and Local Government? This is a matter of constitutional importance which I thought ought to be mentioned at this stage.

Question put, That those words be there inserted: —

The Committee divided: Ayes 167, Noes 223.

Division No. 209.] AYES [10.40 p.m.
Ainsley, J. W. Griffiths, Rt. Hon. James (Llanelly) Oswald, T.
Albu, A. H. Hall, Rt. Hn. Glenvil (Colne Valley) Owen, W. J.
Allaun, Frank (Salford, E.) Hamilton, W. W. Paget, R. T.
Allen, Scholefield (Crewe) Hannan, W. Paling, Rt. Hon. w. (Dearne Valley)
Awbery, S. S. Hayman, F. H. Paling, Will T. (Dewsbury)
Bacon, Miss Alice Healey, Denis Palmer, A. M. F.
Baird, J. Henderson, Rt. Hn. A. (Rwly Regis) Pargiter, G. A.
Bence, C. R. (Dunbartonshire, E.) Hobson, C. R. Parker, J.
Benn, Hn. Wedgwood (Bristol, S.E.) Holman, P. Parkin, B. T.
Benson, G. Houghton, Douglas Pearson, A.
Beswick, F. Howell, Charles (Perry Barr) Peart, T. F.
Blackburn, F. Howell, Denis (All Saints) Plummer, Sir Leslie
Blyton, W. R. Hubbard, T. F. Price, J. T. (Westhoughton)
Boardman, H. Hughes, Cledwyn (Anglesey) Price, Philips (Gloucestershire, W.)
Bottomley, Rt. Hon. A. G. Hughes, Emrys (S. Ayrshire) Probert, A. R.
Bowden, H. W. (Leicester, S.W.) Hughes, Hector (Aberdeen, N.) Proctor, W. T.
Bowles, F. G. Hunter, A. E. Randall, H. E.
Boyd, T. C. Hynd, H. (Accrington) Rankin, John
Braddock, Mrs. Elizabeth Irvine, A. J. (Edge Hill) Redhead, E. C.
Brockway, A. F. Irving, S. (Dartford) Robens, Rt. Hon. A.
Burton, Miss F. E. Isaacs, Rt. Hon. G. A. Roberts, Albert (Normanton)
Butler, Mrs. Joyce (Wood Green) Janner, B. Robinson, Kenneth (St. Pancras, N.)
Callaghan, L. J. Jay, Rt. Hon. D. P. T. Rogers, George (Kensington, N.)
Castle, Mrs. B. A. Jeger, George (Goole) Ross, William
Champion, A. J. Jeger, Mrs. Lena(Holbn & St.Pncs, S.) Short, E. W.
Chetwynd, G. R. Jenkins, Roy (Stechford) Shurmer, P. L. E.
Coldrick, W. Johnson, James (Rugby) Skeffington, A. M.
Collick, P. H. (Birkenhead) Jones, David (The Hartlepools) Slater, Mrs. H. (Stoke, N.)
Collins, V. J. (Shoreditch & Finsbury) Jones, Jack (Rotherham) Slater, J. (Sedgefield)
Corbet, Mrs. Freda Jones, J. Idwal (Wrexham) Smith, Ellis (Stoke, S.)
Craddock, George (Bradford, S.) Jones, T. W. (Merioneth) Sorensen, R. W.
Crossman, R. H. S. Kenyon, C. Steele, T.
Cullen, Mrs. A. Lawson, G. M. Stewart, Michael (Fulham)
Dalton, Rt. Hon. H. Ledger, R. J. Stones, W. (Consett)
Deer, G. Lee, Miss Jennie (Cannock) Summerskill, Rt. Hon. E.
de Freitas, Geoffrey Lever, Leslie (Ardwick) Sylvester, G. O.
Delargy, H. J. Logan, D. G. Taylor, Bernard (Mansfield)
Dodds, N. N. Mabon, Dr. J. Dickson Taylor, John (West Lothian)
Donnelly, D. L. MacColl, J. E. Thomas, Iorwerth (Rhondda, W.)
Dugdale, Rt. Hn. John (W. Brmwch) McGhee, H. G. Thornton, E.
Dye, S. McInnes, J. Weitzman, D.
Ede, Rt. Hon. J. C. McKay, John (Wallsend) Wells, William (Walsall, N.)
Edwards, Rt. Hon. John (Brighouse) Mahon, Simon Wheeldon, W. E.
Edwards, Rt. Hon. Ness (Caerphilly) Mallalieu, E. L. (Brigg) White, Henry (Derbyshire, N.E.)
Edwards, Robert (Bilston) Mann, Mrs. Jean Wigg, George
Edwards, W. J. (Stepney) Mason, Roy Wilcock, Group Capt. C. A. B.
Evans, Albert (Islington, S. W.) Mikardo, Ian Willey, Frederick
Fernyhough, E. Mitchison, G. R. Williams, David (Neath)
Fientburgh, W. Monslow, W. Wilson, Rt. Hon. Harold (Huyton)
Fletcher, Eric Moody, A. S. Winterbottom, Richard
Forman, J. C. Moss, R, Woof, R. E.
Fraser, Thomas (Hamilton) Moyle, A. Yates, V. (Ladywood)
Gibson, C. W. Mulley, F. W. Zilliacus, K.
Gordon Walker, Rt. Hon. P. C. Neal, Harold (Bolsolver)
Greenwood, Anthony Oliver, G. H. TELLERS FOR THE AYES:
Grenfell, Rt. Hon. D. R. Oram, A. E. Mr. Holmes and Mr. Wilkins.
Grey, C. F. Orbach, M.
Agnew, Cmdr. P. G. Bishop, F. P. Cordeaux, Lt.-Col. J. K.
Aitken, W. T. Black, C. W. Corfield, Capt. F. V.
Allan, R. A. (Paddington, S.) Body, R. F. Craddock, Beresford (Spelthorne)
Alport, C. J. M. Bossom, Sir A. C. Crouch, R. F.
Amery, Julian (Preston, N.) Boyd-Carpenter, Rt. Hon. J. A. Cunningham, Knox
Amory, Rt. Hn. Heathcoat (Tiverton) Boyle, Sir Edward Currie, G. B. H.
Anstruther-Gray, Major Sir William Braine, B. R. Dance, J. C. G.
Arbuthnot, John Braithwaite, Sir Albert (Harrow, W.) Davidson, Viscountess
Armstrong, C. W. Brooke, Rt. Hon. Henry D'Avigdor-Goldsmid, Sir Henry
Ashton, H. Brooman-White, R. C. Deedes, W. F.
Astor, Hon. J. J. Browne, J. Nixon (Craigton) Digby, Simon Wingfield
Atkins, H. E. Bryan, P. Donaldson, Cmdr. C. E. MCA.
Baldock, Lt.-Cmdr. J. M. Buchan-Hepburn, Rt. Hon. P. G. T. Doughty, C. J. A
Balniel, Lord Bullus, Wing Commander E. E. Drayson, G. B.
Banks, Col. C. Burden, F. F. A. du Cann, E. D. L.
Barlow, Sir John Butcher, Sir Herbert Duncan, Capt. J. A. L.
Barter, John Carr, Robert Duthie, W. S.
Bell, Philip (Bolton, E.) Channon, H. Elliot, Rt. Hon. W. E.
Bevins, J. R. (Toxteth) Chichester-Clark, R. Errington, Sir Eric
Bidgood, J. C. Conant, Maj. Sir Roger Erroll, F. J.
Biggs-Davison, J. A. Cooper, Sqn. Ldr. Albert Farey-Jones, F. W.
Birch, Rt. Hon. Nigel Cooper-Key, E. M. Fell, A.
Finlay, Graeme Leavey, J. A. Ramsden, J. E.
Fisher, Nigel Leburn, W. G. Rawlinson, Peter
Fleetwood-Hesketh, R. F. Legge-Bourke, Maj. E. A. H. Redmayne, M.
Foster, John Legh, Hon. Peter (Petersfield) Rees-Davies, W. R.
Fraser, Sir Ian (M'cmbe & Lonsdale) Lennox-Boyd, Rt. Hon. A. T. Renton, D. L. M.
Galbraith, Hon. T. G. D. Lindsay, Hon. James (Devon, N.) Ridsdale, J. E.
George, J. C. (Pollok) Linstead, Sir H. N. Rippon, A. G. F.
Gibson-Watt, D. Lloyd, Maj. Sir Guy (Renfrew, E.) Roberts, Sir Peter (Heeley)
Gower, H. R. Longden, Gilbert Robinson Sir Roland (Blackpool, S.)
Graham, Sir Fergus Lucas, Sir Jocelyn (Portsmouth, S.) Rodgers, John (Sevenoaks)
Grant-Ferris, Wg Cdr. R. (Nantwich) Lucas, P. B. (Brentford & Chiswick) Roper, Sir Harold
Green, A. Lucas-Tooth, Sir Hugh Schofield, Lt.-Col, W.
Grimond, J. McAdden, S. J. Scott-Miller, Cmdr. R.
Grimston, Hon. John (St. Albans) Macdonald, Sir Peter Sharples, R. C.
Grimston, Sir Robert (Westbury) McKibbin, A. J. Simon, J. E. S. (Middlesbrough, W.)
Grosvenor, Lt.-Col. R. G. Mackie, J. H. (Galloway) Smithers, Peter (Winchester)
Gurden, Harold McLaughlin, Mrs. P. Spearman, Sir Alexander
Harris, Frederic (Croydon, N.W.) Maclay, Rt. Hon. John Spens, Rt. Hn. Sir P. (Kens'gt'n,S)
Harrison, A. B. C. (Maldon) Maclean, Fitzroy (Lancaster) Stanley, Capt. Hon. Richard
Harrison, Col. J. H. (Eye) Macleod, Rt. Hn. lain (Enfield, W.) Stevens, Geoffrey
Harvey, John (Walthamstow, E.) Macmillan, Rt.Hn.Harold(Bromley) Studholme, Sir Henry
Heald, Rt. Hon. Sir Lionel Macpherson, Niall (Dumfries) Summers, Sir Spencer
Heath, Rt. Hon. E. R. G. Manningham-Buller, Rt. Hn. Sir R. Sumner, W. D. M. (Orpington)
Henderson, John (Cathcart) Marlowe, A. A. H. Taylor, William (Bradford, N.)
Hill, Rt. Hon. Charles (Luton) Marples, A. E. Teeling, W.
Hill, Mrs. E. (Wythenshawe) Mathew, R. Thomas, Leslie (Canterbury)
Hill, John (S. Norfolk) Maude, Angus Thompson, Kenneth (Walton)
Hinchingbrooke, viscount Maydon, Lt..Comdr. S. L. C. Thompson,Lt.-Cdr.R.(Croydon,S.)
Hirst, Geoffrey Medlicott, Sir Frank Thornton-Kemsley, C. N.
Holland-Martin, C. J. Milligan, Rt. Hon. W. R. Tiley, A. (Bradford, W.)
Hope, Lord John Mott-Radclyffe, C. E. Tilney, John (Wavertree)
Hornby, R. P. Nabarro, G. D. N. Touche, Sir Gordon
Hornsby-Smith, Miss M. P. Nairn, D. L. S. Turner, H. F. L.
Horobin, Sir Ian Neave, Airey Turton, Rt. Hon. R. H.
Horsbrugh, Rt. Hon. Dame Florence Nicholson, Godfrey (Farnham) Tweedsmuir, Lady
Hudson, Sir Austin (Lewisham, N.) Nicolson, N. (B'n'm'th, E. & Chr'ch) Vane, W. M. F.
Hughes Hallett, Vice-Admiral J. Nield, Basil (Chester) Vaughan-Morgan, J. K.
Hughes-Young, M. H. C. Nugent, G. R. H. Vickers, Miss J. H.
Hylton-Foster, Sir H. B. H. Oakshott, H. D. Vosper, D. F.
Iremonger, T. L. Ormsby-Gore, Hon. W. D. Wakefield, Edward (Derbyshire, W.)
Irvine, Bryant Godman (Rye) Orr-Ewing, Sir tan (Weston-S-Mare) Wall, Major Patrick
Jenkins, Robert (Dulwich) Osborne, C. Ward, Hon. George (Worcester)
Jennings, J. C. (Burton) Page, R. C. Ward, Dame Irene (Tynemouth)
Johnson, Dr. Donald (Carlisle) Pannell, N. A. (Kirkdale) Waterhouse, Capt. Rt. Hon. C.
Johnson, Eric (Blackley) Partridge, E. Whitelaw,W.S.I.(Penrith & Border)
Joseph, Sir Keith Peyton, J. W. W. Williams, Paul (Sunderland, S.)
Joynson-Hicks, Hon. Sir Lancelot Pickthorn, K. W. M. Williams, R. Dudley (Exeter)
Keegan, D. Pilkington, Capt. R. A. Wills, G. (Bridgwater)
Kerr, H. W. Pitt, Miss E. M. Wood, Hon. R.
Kershaw, J. A. Pott, H. P. Woollam, John Victor
Kirk, P. M. Powell, J. Enoch Yates, William (The Wrekin)
Lagden, G. W. Price, Henry (Lewisham, W.)
Lambert, Hon. G. Raikes, Sir Victor TELLERS FOR THE NOES:
Lambton, Viscount Mr. Godber and Mr. Barber.
Mr. Albu

I beg to move, in page 13, line 11, at the end, to insert: (4) Notwithstanding subsection (1) of this section, investment allowances shall also continue to be made under the said Chapters I and II in respect of expenditure incurred after the said seventeenth day of February, in so far as the expenditure is incurred— (a) on industrial buildings or structures, or on machinery or plant, in any industry prescribed as of special national importance; or (b) on machinery or plant of any description prescribed as of special national importance: (5) For the purposes of the last foregoing subsection an industry or a description of machinery or plant shall be prescribed as of special national importance, if, and only if, the product of that industry or the use of machinery or plant of that description is of special value in increasing exports, saving imports or promoting technical development or the better use of national resources,

The Chairman

This Amendment, I think, goes with the following six Amendments.

Mr. Albu

Yes, Sir Charles. The consequential Amendments are those in lines 12, 14, two in line 15, and lines 18 and 21.

As the Economic Secretary said on the last Amendment, when asking us to make progress, this is the major Amendment in this series. One might almost say that, had this been accepted by the Treasury at the beginning of the day, the Committee need not have had any of the other Amendments under discussion at all. If the Government had these powers it would not be necessary for us to hold a sort of auction on investment allowances, such as we have had today.

The Government are in a far better position, with the resources of the Treasury behind them—or so one would have thought until recent economic developments—to judge what industries should, or should not, be encouraged, and where the investment allowances could be most usefully applied. But so long as the Government do not have that power, we must try to deal with the matter ourselves.

The purpose of the Amendment is to give the power to retain the investment allowances in all those cases where it is thought that this will help the balance of payments problem, the better use of national resources, technical development, or help the national economy in any way. Once the power was taken, changes could be made by Treasury order, so that individual items could always be discussed in this House.

The Amendment conflicts with what appears to be Government policy, although the Economic Secretary has said that the Government do not dislike selective measures of control of the economy. Some of us on this side of the Committee are encouraged by what we know of the past of the Chancellor. and by rumours which sometimes get about as to what he intends to do to deal with the economic situation.

For instance, he gave an encouraging nod in his Budget speech to the hon. Member for Aberdeenshire, East (Sir R. Boothby) who, we remember, played some part in the ideas which the Chancellor had before the war. Had he been here today we might have received some strong support from him. The hon. Member had a powerful letter in the News Chronicle last Tuesday in which he asked for some purposeful direction of investment, and called on the Chancellor to neglect no means of controlling the economy.

The hon. Gentleman, in fact, demanded far more direct means for achieving his end than investment allowances; he wanted dollar control, control of building, and so on, and investment allowances, by the side of his list, seem a pale way of encouraging the economy in a "purposeful direction." The fact is, however, that the Government do not entirely keep within the terms of their non-selective policy. They are retaining the investment allowance for the purpose of fuel saving; that is a form of import saving. They are keeping it for buildings and plant used for research and development, and that will partly help to save imports as well as increase productivity.

The Government might as well go the whole hog and extend their activities to any field in which they think that the national economy might be assisted. It will be remembered that the investment allowance was introduced in 1954 at a time when industrial investment had been falling. In 1955, the party opposite went to the country with a great programme of industrial expansion, which included not only provision for investment allowance but many specific projects, some for the nationalised industries, as, for instance, more nuclear power, transformation of our railway system, and the expansion of road building, and more schools and hospitals. They were offered as glittering baubles to the electorate.

There were many of us on this side of the Committee who, at that time, were sceptical of the Government's intentions. It was not that we did not want expansion of industrial investment. Goodness knows, the level of industrial investment at that time was far too low. What we wanted to be certain of was that the plans the Government were putting forward, first, in this Chamber and, finally, to the electorate, were based on real estimates of what it was possible for the country to achieve. Many of us felt then that the Government must have had some means of making the choice between different forms of investment, some of which might have been valuable at the time, and some of which might easily have been postponed.

We asked the Government, I remember, for estimates of the investment that was likely to take place in different sectors of the economy, in private industry as well as in public industry and in Government Departments, and the then Chancellor, who is now the Lord Privy Seal, said that he was unable to give such estimates. He could give only some figures and statements submitted by various Ministers; he was unable to give a total estimate of the investment that was likely to take place over the next few years in the different sectors of the economy.

That gave the programme an extremely unreal look, and unreal, of course, it has turned out to be. There has been completely indiscriminate expansion, on of which the Government have now had to clamp down. We warned the Government last year of What was likely to occur if the expansion took place without any control or any direction at all, and, in particular, warned them what would be the effect of the vast expansion plans of the motor industry.

I made considerable reference to this matter in the Budget debate in April last year, and on 26th July, in the debate on the economic situation, referring to the motor industry's substantial expansion plans, I said: … and if we take these together with the component and raw materials industries which go with the motor industry, it would mean a very heavy investment indeed. … I think it is probably in the region of £100 million per year at present. … The Government might also call the leaders of the motor industry together and discuss their plans with them, because the industry is not only absorbing capital equipment on a very large scale, including machine tools … but the motor industry is also large responsible for the increase in steel imports, which is very serious indeed."-[OFFICIAL REPORT, 26th July, 1955; Vol. 544, c. 1074–5.] As to what are desirable and undesirable forms of investment, we warned the Government a long time ago, and they took no notice whatsoever of what we had to say. The result has been exactly as we foretold. The motor industry sucked the resources out of the rest of the economy to the extent now given in official figures in the Board of Trade Journal for 5th May this year. Investment by the motor industry nearly doubled last year and reached about £60 million. If we add to that components, and the raw materials which go into motor cars, the total must be £100 million. To that has to be added investment in steel which, as the Economic Secretary said, has had to go up and is still quite inadequate. The hon. Gentleman said that about £60 million investment was planned, and part of that was instigated by the expansion plans of the motor industry.

11.0 p.m.

Investment in motor cars and components alone represented nearly one-seventh of all investment last year in manufacturing and in the fourth quarter of last year, investment in motor car manufacture went up by 150 per cent. over its investment in the previous year, compared with investment in all manufacturing industry, which went up by only about 45 per cent. This has brought about a severe distortion of the economy, and a severe increase in steel and other imports. It has brought complete chaos to Coventry, because the Government have had to clamp down on the production of the motor industry in the home market, which has been its major market in recent years. The result is that a very large number of workers, sucked into the industry by high earnings, find themselves thrown out of the industry again.

This investment must be compared with investment in other sectors of the economy, particularly in the machine tool industry, which we discussed earlier today. In our view, there must be some selectivity in investment plans in British industry at present. We all know that the country is strained to the utmost and that the capital goods industries and machine-making industries are working full out. Therefore, if the products of the capital goods industries are to be used to the best advantage of our economy, we need an incentive in some parts and a restriction in others.

I do not deny that it is necessary to restrict investment in some industries at present, particularly in those making consumer goods, and in office buildings, cinemas and projects of that type, but it is not necessary that because these industries must be restricted in investment all industries should be restricted. There is a case for saying that a number of the industries which we have discussed today should continue to be stimulated.

I know that we are to have a debate in the course of the Committee stage on investment in the nationalised industries. This is not the place to discuss that now, but the point is that the Government must decide which industries it is necessary to expand. They do not need investment allowances for the nationalised industries, because they have control over their investment, and the industries will carry out to their best ability the investment plans which the Government think necessary. This has taken place and no doubt will continue.

I do not know who controls the steel industry. In what position is it today?

Will the Government tell it to expand and will it then expand? Will the Government have to carry out expansion in the part of the industry which is still in public hands—as I suspect—or will an investment plan be of some value in getting the industries to carry out the expansion needed? The shortage of steel since the war has been a serious handicap. It still is and is likely to continue to be—

Mr. Nabarro

One might assume from the tenor of the hon. Member's remarks that the nationalised industries are not assessed under Income Tax and do not receive the investment allowance provided for in Clause 12. That is quite wrong. They receive investment allowances in exactly the same way as does private industry.

Mr. Albu

I said that they did not need them because the Government had control over them. I am not arguing for investment allowances for nationalised industries. I am talking about the steel industry, and I do not know whether or not it is nationalised at present. I suspect that the expansion will take place in those sections of the industry over which the Government still have control, because they are the only ones which can raise the capital on the scale necessary. But if that is not the case, it might be advisable to give the private parts of the industry an investment allowance in order to get the necessary expansion.

What is certain is that the industry's expansion plans at the moment are not sufficient for the rate of growth of the engineering needs of this country over the next few years, and it is necessary for investment in the industry to be stimulated. There are other branches of industry which it might be advisable to stimulate, for example, the manufacture of electrical generating plant, for which, in the future, there will obviously be an increasing export potential.

It might even be the case that in some forms of consumer goods it would be possible to relate the investment allowance in some way to their export performance. I would not have objected to an investment allowance in the motor industry if it were related to its export performance. In fact, of course, the export performance is in almost inverse ratio to the investment allowance which it received last year. Obviously, there are some industries which it would be valuable to encourage because they will have direct effects on the saving of imports, and in my opinion the saving of imports is just as important as the encouragement of exports.

I do not believe for a moment that the investment allowance by itself is an adequate method of controlling the investment plans of the economy. We need much more positive action, more direct controls, as the hon. Gentleman the Member for Aberdeenshire, East said, much to the annoyance of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke). I see the noble Lord sitting opposite getting more and more agitated at this plea for more dirigisme.

Nevertheless, I am certain that the Government will be forced to it in the end, and it may well split the party opposite when they are; but forced to it they will be, and they might as well take the easy way in by giving themselves the power to vary the investment allowance before they have to take much more positive action of the kind recommended by the hon. Gentleman the Member for Aberdeenshire, East.

Personally, I do not believe that some of these things will be possible without further extension of public ownership in some industries, particularly the steel industry, and other forms of control over the investment policy of private industry. We cannot expect the present Government to accept those views, though I think they will be forced to accept much stronger controls in the near future. But they have the chance, at any rate, to open the door to those controls by accepting this Amendment, which would give them the power to provide those incentives to those sections of British industry which they think should be encouraged to expand at present, instead of removing the allowance almost entirely from all industry without any distinction as to whether the industry is or is not contributing to our balance of payments, and, whether it is or is not contributing to increased productivity.

Mr. Jay

Although this is an important Amendment the hour makes it almost inevitable, if the Committee agrees, that some of the arguments which hon. Members wish to put forward should be expressed on the Question, "That the Clause stand part of the Bill," rather than on this Amendment. If that is agreeable to the Committee, I shall at this stage make only a few brief remarks.

I think we are all agreed that this country ought to be undertaking more investment. We know that our record at present is extremely poor in relation to the rest of Europe, that the United States is undertaking a great deal more investment than we are, and Russia even more. What has happened in the last 12 months is that the credit squeeze has been, not actually reducing, but slowing down investment indiscriminately. The policy of the Government over the last two years has meant that when things are going moderately well consumption has been allowed to expand, and when they are going badly investment has been cut down, with the result that over the period as a whole investment has proved to be extremely disappointing.

So far, the main weapon in cutting it down has been the credit squeeze. The credit squeeze, whatever else we may think about it, has proved extremely indiscriminating. The trouble about that method is that to check anything one has to check everything and as, naturally, it proves almost impossible to check everything, the Government hesitate and do not carry out their policy resolutely. That is why I believe that this policy has not worked in reaching its main objective of putting right our balance of payments position. We are now in a situation where, after more than a year of the credit squeeze, our gold reserves are lower and the £ weaker than before it started.

There is every sign that the Chancellor has not got a grip on the difficulties and, indeed, that the country is losing confidence in the Government generally.

Mr. Nabarro

Nothing of the sort.

Mr. Jay

Now we find, on top of the indiscriminate credit squeeze, that we are to have an indiscriminate cut in investment allowances. It is that which we are here tonight mainly to resist. It is reported that the Government, after many months of persuasion from this side of the Committee, are toying with the idea of introducing some sort of building licensing. Of course, if we had building licensing, we should be able to return to some sort of selective control over a very large phase of investment. However, we do not know whether the Government are to do that, nor, if so, how soon.

It is relevant to point out that if we are not to stop inessential building, and inessential investment in building, the case for having some sort of discrimination in the investment allowance is all the stronger. We believe that it is a mistake in these circumstances to take refuge yet again in cutting down investment as our main weapon in correcting the balance of payments. However, if it is to be cut, and, additionally, because the Government have absolutely no other selective weapon in their hands, there is an overwhelming case for some selectivity and priority in this application of the termination of the investment allowances.

Viscount Hinchingbrooke

This is the most absurd Amendment which has appeared on the Notice Paper today. I am not at all surprised that the right hon. Member for Huyton (Mr. H. Wilson) has deserted the Chamber, because he is at heart basically a good Liberal philosopher. Although his name was at the head of the Amendment, he has allowed his hon. Friend the Member for Edmonton (Mr. Albu) to move it, and his associate on the Front Bench to wind up in a short debate which has completely revealed the opinions of the Socialist Party on this subject.

The view of the hon. Member for Edmonton is fantastic. He is now in honour bound to go to his constituents next weekend and to say that he has given carte blanche to the Tory Government to say what is in the national interest and to prescribe certain investment allowances for those industries which they deem to be in the national interest. How can he square that with his general party political opposition to the things that we do in this Chamber every day? It is complete self-abnegation on the part of the Socialist Party, and a handing over to the Tory Executive of the day the judgment of what is to be done and the prescribing of special concessions to certain parts of industry.

I do not understand how hon. Members opposite, as good Europeans and members of the Council of Europe, trading on a basis of equality with Europe, can produce the Schachtian conception which they have produced tonight. They said that there should be special concessions for manufacturers who increase exports. Dr. Schacht increased the export of sewing machines and aspirins to the Balkans by giving special concessions to those industries in Germany, and in due course those countries were swallowed up. Does the hon. Member for Edmonton want to send that message out to Europe, that what would be done by a Socialist Chancellor in future would result in the swallowing up of those countries?

He talked of a special concession to those who save imports. That means discrimination against the honest British trader who trades at ports where foodstuffs are brought in with other raw materials and who makes a profit from it, while satisfying the people of this country. I do not know how many importers there are in Edmonton, but they had better look out, because they will be discriminated against by this taxation Amendment in which the hon. Gentleman is interested.

11.15 p.m.

It would not only be giving a Tory Government that power, but would be laying the foundation of what would happen when he became Chancellor of the Exchequer in the next Socialist Government. [Interruption.] We shall have discriminatory taxes against the owners of businesses selected by the Socialist Party of the day. I trust that the Economic Secretary will dispose of the Amendment.

Mr. Jay

Does the noble Lord recall that he voted for a similar Amendment in 1951?

Viscount Hinchingbrooke

I do not accept that statement unless the right hon. Gentleman can produce chapter and verse for it. Never in my political life have I been a discriminatory politician in the sense of producing schemes of taxation for one section of the community. If the right hon. Gentleman produces evidence of what he says occurred I shall be glad to explain it when another opportunity offers itself. It seems to me that the Economic Secretary can, at this late hour, in a few short words dispose of this Amendment.

Sir E. Boyle

I cannot, I am afraid, claim to be as eloquent as the noble Lord the hon. Member for Dorset, South (Viscount Hinchingbrooke), and I apologise to the Committee for the fact that, after the times I have spoken today on this Clause, my voice is scarcely as good as it was at the beginning. First, I would say to the right hon. Member for Battersea, North (Mr. Jay) that it is really rather ridiculous to talk about investment slowing down, as we shall have a substantial increase in productive investment over last year. Perhaps I can put the position in this way. If one thinks of the investment boom of the last year and-a-half as a powerful modern aircraft gaining speed and height, we are trying to moderate to some extent the rate of climb, but it is far from our intention that the aircraft shall dive and crash.

The effect of the credit squeeze last year was very much more marked on consumption than on fixed investment. There can be no doubt that the credit squeeze was considerably responsible for the fact that consumption rose very much less than many had expected. The whole aim of our policy has been to ensure that consumption should bear a good share of the corrective action needed. Although hon. Members have been criticising us all day for trying to moderate the investment boom, they were the first to complain when we took measures to restrict consumption as well.

The hon. Member for Edmonton (Mr. Albu) asked where was the responsibility for steel. I would say this to him. Certain kites have been flown about the expansion plans of the steel industry. Most people have thought that some of those kites were not such bad ones. I think the hon. Member will find that when certain committees have met, and certain facts are announced to the public, fairly soon, pretty good expansion plans will be presented by the industry. I have little doubt that six months from now, that last argument for the nationalisation of steel—that the steel industry left to itself will not invest enough—will be worthless and out of date.

This Amendment raises the fairly wide issue of the extent to which the taxation system should be used as a means, not of selective control, but of selective encouragement, of investment.

It is absurd to suggest that there is any absolutely sharp distinction between the two sides of the Committee on this question of the direction of the economy. That is so for the simple reason that we have at the moment a distinctive selective control of investment, namely, the Capital Issues Committee, which we discussed at some length some weeks ago, when it fell to me to defend that Committee in the House.

I do not believe that the Committee would be well-advised to adopt this idea of a discriminatory subsidy to industry for this purpose. It would be quite wrong to use the tax system as a means of encouraging one type of investment rather than another. We have always maintained the principle that we should not have privileged classes of taxpayers, and the Committee would be very ill-advised to depart from that principle in the way here suggested.

The hour is late, and the Committee is well acquainted with the issues. It is worth noting that when right hon. Gentlemen opposite suspended initial allowances in 1951 they did not introduce a Clause such as they now suggest to try to retain them for certain selected industries. They would have discovered that the practical difficulties of doing so

Division No. 210.] AYES [11.23 p.m.
Ainsley, J. W. Evans, Albert (Islington, S.W.) Jones, T. W. (Merioneth)
Albu, A. H. Fernyhough, E. Kenyon, C.
Allaun, Frank (Salford, E.) Forman, J. C. King, Dr. H. M.
Awbery, S. S. Fraser, Thomas (Hamilton) Lawson, G. M.
Bacon, Miss Alice Gibson, C. W. Ledger, R. J.
Bence, C. R. (Dunbartonshire, E.) Gordon Walker, Rt, Hon. P. C. Lever, Leslie (Ardwick)
Benson, G. Greenwood, Anthony Mabon, Dr. J. Dickson
Beswick, F. Grenfell, Rt. Hon. D. R. MacColl, J. E.
Blackburn, F. Grey, C. F. McGhee, H. G.
Blyton, W. R. Griffiths, Rt. Hon. dames (Llanelly) McInnes, J.
Boardman, H. Hall, Rt. Hn. Glenvil (Colne Valley) Mahon, Simon
Bottomley, Rt. Hon. A. G. Hannan, W. Mallalieu, E. L. (Brigg)
Bowden, H. W. (Leicester, S.W.) Hayman, F. H. Mann, Mrs. Jean
Bowles, F. G. Healey, Denis Mason, Roy
Boyd, T. C. Henderson, Rt. Hn. A. (Rwly Regis) Mikardo, Ian
Braddock, Mrs. Elizabeth Hobson, C. R. Mitchison, G. R.
Brockway, A. F. Holman, P. Monslow, W.
Burton, Miss F. E. Holmes, Horace Moody, A. S.
Butler, Mrs. Joyce (Wood Green) Houghton, Douglas Moss, R.
Castle, Mrs. B. A. Howell, Charles (Perry Barr) Moyle, A.
Champion, A. J. Howell, Denis (All Saints) Mulley, F. W.
Chetwynd, G. R. Hubbard, T. F. Neal, Harold (Bolsover)
Coldrick, W. Hughes, Cledwyn (Anglesey) Oliver, G. H.
Collick, P. H. (Birkenhead) Hughes, Emrys (S. Ayrshire) Oram, A. E.
Corbet, Mrs. Freda Hughes, Hector (Aberdeen, N.) Orbach, M.
Craddock, George (Bradford, S.) Hynd, H. (Accrington) Oswald, T.
Crossman, R. H. S. Irvine, A. J. (Edge Hill) Paget, R. T.
Cullen, Mrs. A. Irving, S. (Dartford) Palmer, A. M. F.
Dalton, Rt. Hon. H. Isaacs, Rt. Hon. G. A. Pargiter, G. A.
Deer, G. Janner, B. Parker, J.
de Freitas, Geoffrey Jay, Rt. Hon. D. P. T. Parkin, B. T.
Delargy, H. J. Jeger, George (Goole) Pearson, A.
Dodds, N. N. Jeger, Mrs. Lena (Holbn & St.Pncs.S.) Pearl, T. F.
Dugdale, Rt. Hn. John (W. Brmwch) Jenkins, Roy (Stechford) Plummer, Sir Leslie
Dye, S. Johnson, James (Rugby) Price, J. T. (Westhoughton)
Ede, Rt. Hon. J. C. Jones, David (The Hartlepools) Price, Philips (Gloucestershire, W.)
Edwards, Robert (Bilston) Jones, Jack (Rotherham) Probert, A. R.
Edwards, W. J. (Stepney) Jones, J. Idwal (Wrexham) Proctor, W, T.

were very great, quite apart from the theoretical arguments against it.

Any form of selective control or encouragement is always more difficult in practice than in theory. I was very interested in what the hon. Member for Edmonton said about the expansion of the motor industry. If one looks back to 1954, we were still dissatisfied with the rate of productive investment in this country, and no party would have discouraged the motor industry in its plans. All schemes of the kind suggested and particularly any discriminatory tax scheme, face very great practical difficulties. My right hon. Friend has asked me to say that he cannot believe that this can be the right way to manage the question of investment.

We will consider the arguments. The Amendment raises an important point. Whatever the right solution is for managing investment, we do not believe that in a country such as ours the way of selective encouragement by taxation inducements of this kind is the right one.

Question put, That those words be there inserted:—

The Committee divided: Ayes 146, Noes 210.

Randall, H. E. Smith, Ellis (Stoke, S.) White, Henry (Derbyshire, N.E.)
Rankin, John Sorensen, R. W. Wigg, George
Redhead, E. C. Steele, T. Willey, Frederick
Robens, Rt. Hon. A. Stewart, Michael (Fulham) Wilson, Rt. Hon. Harold (Huyton)
Roberts, Albert (Normanton) Stones, W. (Consett) Winterbottom, Richard
Robinson, Kenneth (St. Pancras, N.) Summerskill, Rt. Hon. E. Woof, R. E.
Ross, William Sylvester, G. O. Yates, V. (Ladywood)
Short, E. W. Taylor, Bernard (Mansfield) Zilliacus, K.
Shurmer, P. L. E. Thomas, Iorwerth (Rhondda, W.)
Skeffington, A. M. Thornton, E. TELLERS FOR THE AYES:
Slater, Mrs. H. (Stoke, N.) Weitzman, D. Mr. Wilkins and Mr. Rogers.
Slater, J. (Sedgefield) Wheeldon, W. E.
Agnew, Cmdr, P. G. Gower, H. R. Nairn, D. L. S.
Aitken, W. T. Graham, Sir Fergus Neave, Airey
Allan, R. A. (Paddington, S.) Grant-Ferris, W g Cdr. R. (Nantwich) Nicholson, Godfrey (Farnham)
Alport, C. J. M. Green, A. Nicolson, N. (B'n'm'th, E. & Chr'ch)
Amery, Julian (Preston, N.) Grimond, J. Nugent, G. R. H.
Amory, Rt. Hn. Heathcoat (Tiverton) Grimston, Hon. John (St. Albans) Oakshott, H. D.
Anstruther-Gray, Major Sir William Grimston, Sir Robert (Westbury) Ormsby-Gore, Hon. W. D.
Arbuthnot, John Grosvenor, Lt.-Col. R. G. Orr-Ewing, Sir Ian (Weston-S-Mare)
Armstrong, C. W. Gurden, Harold Osborne, C.
Ashton, H. Harris, Frederic (Croydon, N.W.) Page, R. G.
Astor, Hon. J. J. Harrison, A. B. C. (Maldon) Pannell, N. A. (Kirkdale)
Atkins, H. E. Harvey, John (Walthamstow, E.) Partridge, E.
Baldock, Lt-Cmdr. J. M. Heald, Rt. Hon. Sir Lionel Pickthorn, K. W. M.
Balniel, Lord Heath, Rt. Hon. E. R. G. Pilkington, Capt. R. A.
Banks, Col. C. Henderson, John (Cathcart) Pitt, Miss E. M.
Barber, Anthony Hill, Rt. Hon. Charles (Luton) Pott, H. P.
Barlow, Sir John Hill, Mrs. E. (Wythenshaw) Powell, J. Enoch
Barter, John Hill, John (S. Norfolk) Price, Henry (Lewisham, W.)
Bell, Philip (Bolton, E.) Hinchingbrooke, Viscount Raikes, Sir Victor
Bevins, J. R. (Toxteth) Hirst, Geoffrey Ramsden, J. E.
Bidgood, J. C. Holland-Martin, C. J. Rawlinson, Peter
Biggs-Davison, J. A. Hope, Lord John Redmayne, M.
Birch, Rt. Hon. Nigel Hornby, R. P. Rees-Davies, W. R.
Bishop, F. P. Horobin, Sir Ian Renton, D. L. M.
Black, C. W. Hudson, Sir Austin (Lewisham, N.) Ridsdale, J, E.
Body, R. F. Hughes, Hallett, Vice-Admiral J. Rippon, A. G. F.
Bossom, Sir Alfred Hughes-Young, M. H. C. Roberts, Sir Peter (Heeley)
Boyd-Carpenter, Rt. Hon. J. A. Hylton-Foster, Sir H. B. H. Robinson, Sir Roland (Blackpool, S.)
Boyle, Sir Edward Iremonger, T. L. Rodgers, John (Sevenoaks)
Braine, B. R. Irvine, Bryant Godman (Rye) Schofield, Lt.-Col. W.
Braithwaite, Sir Albert (Harrow, W.) Jenkins, Robert (Dulwich) Scott-Miller, Cmdr. R.
Brooke, Rt. Hon. Henry Jennings, J. C. (Burton) Sharples, R. C.
Brooman-White, R. C. Johnson, Eric (Blackley) Simon, J. E. S. (Middlesbrough, W.)
Browne, J. Nixon (Craigton) Joseph, Sir Keith Smithers, Peter (Winchester)
Bryan, P. Joynson-Hicks, Hon. Sir Lancelot Spearman, Sir A. C. M.
Buchan-Hepburn, Rt. Hon. P. G. T. Keegan, D. Spens, Rt. Hn. Sir P. (Kens'gt'n S.)
Burden, F. F. A. Kerr, H. W. Stanley, Capt. Hon. Richard
Butler,Rt.Hn.R.A.(Saffron Walden) Kershaw, J. A. Stevens, Geoffrey
Carr, Robert Kirk, P. M. Studholme, Sir Henry
Channon, H. Lagden, G. W. Summers, Sir Spencer
Chichester-Clark, R. Lambert, Hon. G. Sumner, W. D. M. (Orpington)
Conant, Maj. Sir Roger Lambton, Viscount Taylor, William (Bradford, N.)
Cooper-Key, E. M. Leavey, J. A. Teeling, W.
Cordeaux, Lt.-Col. J. K. Legge-Bourke, Maj. E. A. H. Thomas, Leslie (Canterbury)
Corfield, Capt. F. V. Legh, Hon. Peter (Petersfield) Thompson, Lt.-Cdr.R.(Croydon, S.)
Crouch, R. F. Lennox-Boyd, Rt. Hon. A. T. Thornton-Kemsley, C. N.
Cunningham, Knox Lindsay, Hon. James (Devon, N.) Tiley, A. (Bradford, W.)
Currie, G. B. H. Linstead, Sir H. N. Tilney, John (Wavertree)
Dance, J. C. G. Lloyd, Maj. Sir Guy (Renfrew, E.) Touche, Sir Gordon
Davidson, Viscountess Longden, Gilbert Turner, H. F. L.
D'Avigdor-Goldsmid, Sir Henry Lucas, Sir Jocelyn (Portsmouth, S.) Turton, Rt. Hon. R. H.
Deedes, W. F. Lucas-Tooth, Sir Hugh Tweedsmuir, Lady
Digby, Simon Wingfield McAdden, S. J. Vane, W. M. F.
Donaldson, Cmdr. C. E. McA. Macdonald, Sir Peter Vaughan-Morgan, J. K.
Doughty, C. J. A. McKibbin, A. J. Vickers, Miss J. H.
Drayson, G. B. Mackie, J. H. (Galloway) Vosper, D. F.
du Cann, E. D. L. McLaughlin, Mrs. P. Wakefield, Edward (Derbyshire, W.)
Duncan, Capt. J. A. L. Maclean, Fitzroy (Lancaster) Wall, Major Patrick
Duthie, W. S. Macleod, Rt. Hn. Iain (Enfield, W.) Ward, Hon. George (Worcester)
Elliot, Rt. Hon. W. E. Macmillan, Rt. Hn. Harold (Bromley) Ward, Dame Irene (Tynemouth)
Errington, Sir Eric Macpherson, Niall (Dumfries) Waterhouse, Capt. Rt. Hon. C.
Farey-Jones, F. W. Maddan, Martin Whitelaw, W.S.I.(Penrith & Border)
Fell, A. Manningham-Buller, Rt. Hn. Sir R. Williams, Paul (Sunderland, S.)
Finlay, Graeme Marlowe, A. A. H. Williams, R. Dudley (Exeter)
Fisher, Nigel Marples, A. E. Wills, G. (Bridgwater)
Fleetwood-Hesketh, R. F. Mathew, R. Wood, Hon. R.
Foster, John Maude, Angus Woollam, John Victor
Fraser, Sir Ian (M'cmbe & Lonsdale) Maydon, Lt.-Comdr. S. L. C. Yates, William (The Wrekin)
Galbraith, Hon. T. G. D. Medlicott, Sir Frank TELLERS FOR THE NOES:
George, J. C. (Pollok) Milligan, Rt. Hon. W. R. Colonel J. H. Harrison and
Gibson-Watt, D. Nabarro, G. D. N. Mr. Godber.
Mr. Stevens

I beg to move, in page 13, line 39, at the end to insert: or of sums payable in respect of the completion of expenditure to which those subsections relate where any part of the expenditure is payable under such a contract and the expenditure is necessary to make the asset capable of use within the trade or business". It is perfectly true that, wherever one draws a line, there is always bound to be somebody who is just the wrong side of it. It is all the more important, therefore, that that line should be as accurately and clearly drawn as possible. The line in subsection (6) is the qualification that a contract must have been entered into for the supply of plant and machinery at a date not later than 17th February, 1956.

The point I would bring to the attention of my right hon. Friend is that whereas certain manufacturing companies are in the habit of placing contracts for plant installed, other manufacturers normally contract for plant to be delivered at works and install it themselves. In the case of the first category the gross cost of the plant installed and ready to operate, provided that the contract had been placed by 17th February, 1956, will qualify for the investment allowance. In the case of those companies who, on the other hand, install their own plant, the not insubstantial cost of installing that plant, which may be similar plant to that in the first instance, is excluded. It seems to me that the line there is a little wavy and a little indistinct.

I have in mind another type of case of the same kind. Coach operators are in the habit of placing contracts, one contract for the chassis of the coaches concerned and another for the bodies. I know of examples where contracts for the supply of the chassis had been entered into by 17th February, but the contracts for the supply of the bodies were not yet complete at that date. One cannot possibly use a coach which consists of a chassis and no body. It seems to me that, here again, the line has been indistinctly drawn.

I could weary the Committee, but I do not propose to do so at this late hour, with many other examples of the same kind. I suggest that the words of the Amendment tend to draw the line more distinctly and more fairly and yet keep within the spirit of the Clause. I very much hope that my right hon. Friend will be able to indicate that he is willing at least to consider the Amendment.

The Financial Secretary to the Treasury (Mr. Henry Brooke)

I feel almost an intruder in rising to speak on an Amendment to Clause 12 when my hon. Friend the Economic Secretary has already dealt with ten Amendments and taken all ten wickets.

Although the intentions of my hon. Friend the Member for Langstone (Mr. Stevens), in moving the Amendment are excellent, it is difficult to accept his argument that the line would be more distinctly drawn if his Amendment were accepted. This is the background of the matter. When my right hon. Friend the Chancellor of the Exchequer reached the unpleasant conclusion that the investment allowance generally must be suspended from 17th February, he considered carefully whether there should be any let-out in favour of expenditure incurred after that date. He decided—and, I think the whole Committee would say, rightly decided—that exemption should be made for existing commitments and for firm contracts entered into by that date. Having decided that the commitment must already have been entered into, how can we best define the test? As I have just, said, it is practically impossible to find any other practicable test except that the contract has been made by that date.

My hon. Friend suggests that anomalies may arise when, for example, one firm has contracted for both the purchase and the installation of plant whereas its competitor happens to have contracted only for the plant and not for the installation. He might argue that it would be fairer to go further in the manner suggested in the Amendment and seek to bring within the scope of the investment allowance the completion of the expenditure involved.

I must, however, ask the Committee to envisage how far that would lead. My hon. Friend instanced the case of the machine tool or of the chassis which is only part of a vehicle. If, however, his Amendment were written into the Clause, the result would surely be that a contract might have been entered into for laying the foundations of an enormous installation such as an oil refinery. Under the provisions of the Amendment it would then be necessary to extend the entitlement to investment allowance to the whole of the remaining expenditure on the construction of the refinery, an undertaking which would cost millions of pounds and extend probably over a number of years. That is entirely contrary to my right hon. Friend's intention, for, as I have made clear, his intention was to bring the investment allowances generally to an end as closely as possible to 17th February and to give the let-out only for contracts already entered into. As I have explained, his decision to suspend the investment allowances was taken only on grounds to economic necessity.

I fully realise that firms and businessmen will be, and have been, put to inconvenience by it. Nevertheless, with the Clause as drafted, a businessman cannot suffer in respect of any expenditure to which he is not yet legally committed. It must be that legal commitment that has to be made the test. The businessman has to form his own judgment—a business judgment—on whether he should defer completion of the work on which he has embarked, and presumably, if it is not urgent, he will decide to go slowly or to suspend it. Alternatively, the businessman has the option to go on, and, I remind my hon. Friend, get the benefit, in the normal case, of an initial allowance, although he will not be entitled to the investment allowance.

The main point which I have to put to the Committee is that the line, as drawn in the Clause, is the only one which will really create a clear distinction. If either the Amendment, or any other of the alterations suggested to this Clause were adopted, it would not save us from any of the anomalies, and it would lead us into the difficulty of having investment allowances running for a considerable period of time on an appreciable scale. Those are the grounds on which I advise my hon. Friend to withdraw his Amendment.

Mr. Stevens

I do not think that it is quite so easy for a businessman to withdraw from a capital commitment if he has contracted in part; but the contractual date is probably the only one which will make a clear distinction possible, and, on that ground, I accept the Financial Secretary's advice and beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. H. Macmillan

I beg to move, That the Chairman do report Progress and ask leave to sit again.

We can start our proceedings tomorrow with consideration of the Question which is now before the Committee.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.