EMPLOYMENT

HC Deb 20 March 1956 vol 550 cc1001-195

3.35 p.m.

Mr. G. Brown (Belper)

I want to raise a subject of considerable importance to the country at large and of rather more than considerable importance to a certain section of the public. In recent weeks there has been a great deal of discussion about the apparent emergence and growth, for the first time for a long period, of unemployment, or underemployment, which looks more serious than anything we have had since the end of the war.

Whatever the Government may try to do with it, the purpose of the debate for us on this side of the House is not to try to act like Jonahs and pretend that something exists which does not exist, or to try to enter into competition in gloomy forecasts. Our purpose is to ask the Government, as far as is in their power, to give us more information than we seem to have easily available at the moment, to offer the Government a warning, and to suggest how to avoid what otherwise might be a serious situation. More than anything, our purpose is to challenge one basic assumption which comes out most clearly perhaps in a leading article in today's issue of The Times.

After stating that it is well that we should be discussing this subject because, as it says, I think a little unctuously, it shows that we preserve a warm humanity in the matter, The Times adds: There must be an appreciable movement of workers from production for the home market to production for export. I do not quarrel with that. It adds: The movement will not take place unless prompted by loss of overtime and bonuses, by short time, or by actual unemployment. I do not accept the basic assumption that we cannot get a man into another job unless we first make him unemployed.

It is that basic assumption, which so many people seem to have picked up in recent weeks, that is the most frighten ing feature of what is now happening. No doubt during the debate some party points will be scored. After all, we on this side of the House believe that it is the Government's policy in recent months, and particularly in the three—or is it four?—Budgets which we have had in the last year or so, that has produced the country's worsening economic position. Because we think it, we are bound to say so.

I must also say to the President of the Board of Trade that it is obvious that even now he has not a grip on the situation, judging by the way in which he dealt with Questions from this side of the House last Thursday and the way he answered quite serious queries about the radio and motor industry and thought that he was really scoring a great point by repeating that he was not in favour of rationing steel and asking whether we were in favour of it.

Therefore, that kind of party point will be made; but I want to make it clear that it is not the major purpose of the operation, so I hope it will not seem so. The real point is that although a large part of the population is still employed, and although the proportion of people completely out of work or on short time, when measured as a percentage of the complete employed population, is not too bad on the face of it, nevertheless, in our view, there is something very worrying behind that, the moment we look at the details. What we are asking the House and the Government to do today is to get down to the details in order to see whether the situation is, as we think, more worrying than it appears at first sight.

There is an additional point which, I hope, will be regarded as a fair one. One of the problems of the workers in the factories and elsewhere is that Conservative thought varies so much on this subject. It varies particularly between Election times and others. There is bound to be much lingering suspicion about the intentions of the Government, whilst their policies are as they are, in the light of their past declarations.

There was Lord Woolton on over-full employment. It is true that there was the industrial charter which advocated jobs for all who are willing to work. However, the line of over-full employment is the one that is plugged by all sorts of Conservative supporters. Bank chairmen and the like have joined in, and our people are frightened of the frequent reiteration by Conservative circulars of the over-full employment line.

Then there were the recent speeches of the Chancellor and the Prime Minister, in which there were again references to overloading the economy and to blowing the froth off the top. All these seem to line up much more with the view that there is a state of over-full employment and with the view that we ought to have jobs for everybody who is willing to work. Of course, there may be discussions—does the noble Lord want to say something?

Viscount Hinchingbrooke (Dorset, South)

I was remarking that the right hon. Gentleman should look beside him to get further authenticity for these views.

Mr. Brown

If the noble Lord will contain himself I was just about to do so.

There will be discussions from time to time about what percentage of unemployment there should be before being too upset. There is the question: at what stage we should have to put into operation the last word in drastic remedial action? If the noble Lord will trouble to read the reference made by my right hon. Friend the Leader of the Opposition to this in 1951, he will find that it was not at all on the same lines as the statement of Lord Woolton and the statements made by the Chancellor of the Exchequer and the Prime Minister recently.

Lord Woolton spoke about a state of over-full employment as though that was undesirable. My right hon. Friend was being asked at what stages, short of full employment, he would put remedial action into operation. I have that statement here and can read it if the House wishes. The figure of 3 per cent. in that statement was a definition of the degree of unemployment which would still enable us to call the situation full employment.

What my right hon. Friend said was: It must be stressed that the choice of this standard does not mean that the Government would allow unemployment to reach 3 per cent. before taking vigorous counter action. It will be a continuing objective of the Government's policy to counter any unfavourable trend in employment and to take special measures to deal with those areas in which unemployment has persisted at a comparatively high leveil."—[OFFICIAL REPORT, 22nd March, 1951; Vol. 485, c. 320.] In other words, the declaration made by my right hon. Friend was the opposite of the statement made by Lord Woolton. My right hon. Friend said that it would be our policy, as a Labour Government, to counter any unfavourable trend. What worries our people is that from time to time the Government seem to slip into the view that an unfavourable trend may be a good thing as long as it does not go too far, which is the opposite approach to the problem. That is one reason why this is a serious matter today, and why I hope the Government will tell us something much more positive about their view on this subject.

Just how serious is the present situation? One of the handicaps, about which I make no complaint because I know the reason, is that we have not yet had the March Ministry of Labour Gazette. Even if we had it, however, we would still only be reporting the figures from 13th or 16th February which were bad before this situation began to take what we believe to be a worsening dip. In any case, the Ministry of Labour Gazette figures, for a number of reasons, do not really reflect what is going on. For example, married women, who are insured through their husbands, do not register when they are unemployed and so do not appear in the figures. In the same way, people working a short week, who may happen to be off during the second part of the week, when the count is taken on a Monday will not be caught up by the figures and will never be caught up.

Those things are bound to happen, but one of the problems in assessing this situation is that the figures are neither fair nor reliable. I make this point not to emphasise a platitude, but to warn hon. Members opposite against making too much of the point that the figures do not seem so serious and that one has to make inquiries beyond those figures that are officially published.

As far as I understand, there are today about 276,000 people totally unemployed. Many people have pointed out that this is not a high percentage of the total employed population, but the figure is 12,000 up on last month and it has been going up steadily in recent months. What worries me very much more is that 96,000 of those people, which is about one-third of the total, have been totally unemployed for more than eight weeks, also, the figure of totally unemployed for more than eight weeks is the more rapidly rising figure, being 4,000 up on a month ago.

Apart from any temporary changes, caused by people moving from one job to the other on the day the count is taken, and so on, it begins to look as though we are getting a rather bigger hard core. It looks as though the problem of persistent unemployment somewhere is showing itself. That is the worrying feature of the figure of the totally unemployed.

In addition, so far as can be gathered, there are about 60,000 people now on short time. If we take those two figures together, making allowance for the people who are not picked up in these figures, and remembering that since last August the vacancy list has been falling steadily, it means that a rather frightening pattern is evolving.

Even allowing for the fact that vacancies are often most misleading because employers put in demands for more than they expect to employ in the hope of getting a bigger choice, the ratio is one for one. At the rate at which unemployment is increasing, and at which the vacancy list is shrinking, it will not be long before there are fewer vacancies than we have workers available to take full-time jobs elsewhere, and then the situation will again become serious.

Although one can argue that the situation is not too bad in terms of percentages, once one gets beyond the percentages the situation does appear really rather frightening. It is no use, in that case, saying that the position is not yet catastrophic; for the people who are being pushed out and for some of the people, at any rate, who are pushed on to short time, it is serious. It is not much use talking about redeployment to exports, saying they can go to other jobs, unless the Government are, in fact, taking some active steps to bring it about. The mere fact that there is a narrowing gap between the number of jobs and the degree of unemployment will not bring about redeployment. A number of other very deliberate things have to be done, which, as far as I can see at the moment, are not being done.

Nor is it any use taking refuge behind the list of unfilled vacancies. There is good reason to think a number of them do not exist in the sense of being jobs into which a man or woman can go next Monday. The list of unfilled vacancies is of no help unless the vacancies are relevant to the men and women who are seeking work.

The point can be driven very much too far. It may be said that a man pushed out of a motor car factory can get another job. I suppose that that is true up to a point; but there is not much point if he just does not like to do it. There is not much point in a job unless the man can go there and can maintain himself there, can take his family there and look forward to moving to a house and living there. The jobs have to be relevant, and the workers have to be able to get at them. For the reasons to which I shall come, I am not sure that any of those conditions exist in regard to these unfilled vacancies.

Furthermore, it is simply of no help to say that this problem applies merely to car workers. It is said that car workers earn more money than others, that they can earn in four days more than some other people can earn in five, and that there is no need to worry. After all, they thought they were doing a job which was assured; they thought they were earning their corn. It is, therefore, no easier for them suddenly to have one-fifth of their income chopped off and be instructed to put up with it because they have higher wages. We certainly cannot ignore them.

No doubt the Minister has looked at the Press cuttings, as I have; there have been piles of them. This matter is not limited to the motor car industry by any means. It may be that the total number there is larger than anywhere else because it is a large industry, but this situation can be found in many other industries, as I will show. Since the February announcement of the Chancellor—his rather ill-starred third Budget—the situation has deteriorated in a variety of industries which are quite important to us. We said then that the credit squeeze and the dearer money policy were blunt instruments that would hit blindly, would catch industries quite regardless of whether we wanted to catch them, would catch areas quite regardless of whether it was sensible to do so, and would, in fact, do nothing to help us move the weight of the country's economic attack on to the industries which really matter. That is what the evidence shows.

It is true that most of these industries affected are consumer goods industries. Many people seem to take the view that we have only to label an industry as manufacturing for consumption in order thereby, by definition, to make it an unimportant industry. I do not know what people who take that view think others go to work for. I do not know what they think work people in the other industries are working for if it be not to earn money in order to buy goods for consumption. I have never taken the view that we really can expect an all-out effort by the workers of this country unless they have something other than necessities upon which to spend their earnings.

The fact that some of these consumer goods industries are suffering is extremely serious. There may, at some stage, have to be a choice between these industries and others; there may, for instance, come a point at which it will be necessary to prevent further motor cars being on the roads unless those roads are made wider and better. I am not saying that all consumption goods must always be freely available so that people may have something to spend money on; but I do not myself take the view, just because most of these industries are consumer goods industries, that, therefore, one can look at their situation without concern.

My first instance is the hosiery industry, which is now on a 36-hour week, which the manufacturers say they have instituted, first, to keep in being the smaller manufacturers, and, secondly, to cover themselves against the effect of the credit squeeze.

Mr. Cyril Osborne (Louth)

I am sure that the right hon. Member does not wish to mislead the House, but, since I am concerned with the hosiery industry, may I say that that applies to one section only and is not widespread.

Mr. Brown

It is a quite substantial section. I also am in the hosiery industry in the sense of representing some of its workers in this House. In my own constituency—where it is a different section of the hosiery industry—we have short-time working, so I do not think I am being unfair. This industry was once regarded as an export industry. I do not myself know why it is not still so regarded, quite apart from its consumer goods application here at home.

In the furniture industry, the trade union concerned, N.U.F.T.O., has one-fifth of all its members now on short time. The situation is becoming very serious. After all, whatever may be said about consumer goods, there are many people who must have furniture if family life in this country is to be allowed to develop at all.

The light castings industry has something between 3,000 and 5,000 workers all over the country—400 of them in my own constituency—now on short time. There is practically no part of the light castings industry which is not on short time. The radio industry, according to the Manchester Guardian, has about 6,000 workers now affected by redundancy and the number is growing daily. Again, according to the Manchester Guardian, in the electrical industry in London alone there are between 3,000 and 4,000 affected by redundancy.

The building industry is perhaps in many ways the most worrying of them all. There are many people who are prepared to say that a slump in this country traditionally starts in the building industry. The position is extremely worrying. In the middle of February there were 37,500 totally unemployed in the building industry. No doubt there was in that figure some reflection of the weather conditions, but in addition every single sign ahead for them points to less activity. There are the Government cuts in public buildings. There is the dearer money policy which is going to damp down private building. The position of the building industry looking ahead is an extremely bleak one, indeed.

I am not surprised to read that the president of the National Federation of Building Trade Employers spoke a little while ago about the very difficult times that lie ahead. He spoke of contracting firms forced out of business, saying that they were unlikely to restart when better times returned, and that operatives lost to the industry would never resume their original trade. In all those industries there is a very serious situation. It is a problem which cannot just be brushed aside on the ground that the total numbers involved are not particularly large. One of my hon. Friends has mentioned the locomotive industry. One can go on mentioning many others; I just took a few to illustrate the extent of the problem.

There is, however, a more worrying aspect, and that is the effect which this situation is having on areas. I will select one, Lancashire, where conditions already bad are being intensified. We have had a slump, a depression, in the cotton industry for some time which the Government appear to have met by adopting exactly the same attitude as they are now adopting to developing short-time working in the motor car and radio industries. They say that the situation will right itself and that we must not expect to have all these people there. We are told there is no need to worry, that matters will sort themselves out, that there are vacancies available and that jobs will be found.

Since January, 1955–15 months ago—30,000 operatives have left the industry and 80 to 100 mills have closed. The Minister of Labour told the House in November that he was proud of the fact that his Department had found a job for everybody who had been pushed out of the cotton industry by this development.

Mr. Sydney Silverman (Nelson and Colne)

Nonsense.

Mr. Brown

Never mind about it being nonsense. I can afford to accept that, for it leads on to my argument. Accepting this to be so, and accepting it to be the reason why 30,000 people have now left the industry, I should like to ask where they have gone and where the Minister found the jobs. The answer is that, in so far as he found them jobs, he found them jobs in the very industries now being squeezed out again. I suspect that the same sort of thing applies to other Development Areas. If a factory is to be shut down, it is nearly always one in a Development Area because it will be a branch factory. Consequently, I suspect that what is happening in Lancashire is happening elsewhere.

The people of Lancashire have seen their major traditional industry go through the slump and have been told by the Government, "Do not worry. There will be other industries and other jobs for you." The people have got the other jobs and then within a year or so those jobs have gone too. They begin to see themselves in a position where a depression of any order is bound to affect them. That is an extremely frightening situation.

The situation in the Development Area part of Lancashire seems to have been worst at Padiham. Mullard is there operating what I gather is a State factory.

Mr. Silverman

It is not operating it.

Mr. Brown

Then it was operating it. I hope that my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) will not help me too much. He will find that I am very much in line with his thoughts on the matter. Mullard had a factory built by the State—I think it was the only one we managed to build in that Development Area—but it is so heavily hit that hundreds of workers are being forced out of it.

Mr. Silverman

I hope that my right hon. Friend the Member for Belper (Mr. G. Brown) will forgive me if I am disturbing his argument. There are two Mullard factories. There is one in Blackburn, which is fairly long-established, and that is the one that is now putting people off or on part-time. The factory in Padiham which is being built by the Government as an attraction for the purpose of the Development Area, has not yet opened its doors.

Mr. Brown

As I understand the position—perhaps my hon. Friend will correct me later if I am wrong—about 280 people at Blackburn have been put off. Also, a very much larger number have started work at Padiham, but have now been put off there. I obtained this information from Lancashire this morning. I am not sure that the number of people put off at Padiham is not about 1,500.

Whatever has happened, the fact remains that there was in the Development Area a Mullard radio factory which was intended to bring relief to the area. Yet it is hit right out by the developing slump in the radio industry just as a year or so earlier the slump had hit mills out of the cotton industry.

That is not the worst thing. Another factory was being built at Padiham, the Messrs. Grover's gas appliance factory. It was to be a £500,000 project to bring additional help to the Development Area after it had weathered the cotton slump by letting it just die away and letting people go into other industries. I have this information from The Times. In that newspaper we are told that the gas appliance factory of Messrs. Grover at Padiham has now been stopped, and that the bays which are nearly completed are to be finished and used for storage, but the rest of the factory is not to be completed, and no manufacturing work is to be carried on there.

That is what is happening in that Development Area despite the fact that a number of mills are shut, that 3,000 people have emigrated from the area, and that 158 of the remaining 239 mills have been on short-time working. The area is again being hit. Whether or not the number involved is a large percentage of the total 'employed population, I would tell the Minister that such a thing is a dreadful blow for an area which has already been very hard hit.

Having said that, I now return to the car industry. It still remains true that, in regard to the total number of people affected, this is the worst hit industry. It is badly hit in the sense that both the car manufacturing firms and the accessory firms are being hit harder and harder. There is an ever-widening circle, like when one throws a stone into a pond. In the industry there are about 30,000 men on short-time. My union, the Transport and General Workers' Union, has 10,000 of its members on short-time. It is a serious matter.

The immediate cause can be claimed to be the credit squeeze and the froth-blowing activities of the Chancellor. It is possible to take the view that one can just wait and everything will pick up in a short time, that one does not need to become unduly worried about it because there must be little dips from time to time. That is not a very attractive view. One of the problems of the industry before the war was the seasonal fluctuation, there being work at one part of the year and then not so much work at another part.

As a trade union official, I would say to anybody who is inclined to that view that there is nothing more inimical to greater productivity and greater efficiency than a seasonal work mentality. It would be frightful if even that view were true, but I do not believe it is true. The problem of the car industry is much deeper seated, and the Government ought to be invited to pay attention to it.

In the first place, over the past few years we have had an expansion in the industry which has been unplanned and undirected, and it seems to me to have gone on without the Government taking any interest in it at all. We have increased the potential production rate by 100,000 to 200,000 cars a year, and still the plans for expansion go on. The Government really must state their attitude to the Ford and Vauxhall expansion intentions. The Government must face the fact that the problem will not just work itself off. There is a problem here which will become worse. We are entitled to ask the Government for their views. The first deep-seated problem is unplanned expansion without anybody considering how much we can afford.

The second problem is the industry's export failure. It was on this subject that the President of the Board of Trade recently made his remarks about the rationing of steel. There are many things which can be done in relation to the allocation of steel. Exports are not the only factor, as the right hon. Gentleman so gaily appeared to believe. If one does nothing, as he has done nothing, then one's exports as a percentage of production drop from about 70 per cent., as it was with us in 1950, to under 40 per cent. as it is now.

It is no use the Government simply saying, "Do you really want to ration steel?" It would be nice if the Government would tell me that they do, and I could then say that the Government are in favour of rationing. If they do not, then it does not get the industry anywhere. The failure to export more cars, a higher percentage of our production, is one of the deep-seated causes of the trouble. No matter what anybody says, there will be a limit to the number of cars which can go on the home market. The limit will be imposed by the capacity of people to buy cars, by the capacity of roads to carry them, or by something else.

Therefore, if the industry is to be built up, more cars have to be sold overseas and if more are not sold overseas, the industry is bound to get into these troubles out of which it can get at the best by this seasonal mentality outlook.

Mr. R. Gresham Cooke (Twickenham)

I am interested in this subject, about which there has been a lot of loose thinking. Car exports have not gone down. I am not talking about percentages, but in point of fact last year we exported more cars and commercial vehicles than in any other year.

Mr. Brown

It is no use saying that we exported more if the number now being exported is a very much lower percentage of what is being produced. Since more are being produced, the problem when a smaller percentage is exported is even worse.

The problem which I beg the Government, the industry and the hon. Member for Twickenham (Mr. Gresham Cooke) to face—and I am not for the moment getting at the hon. Member, although I may have something to say later with which he will disagree—is that there is no stable future for the motor car industry, unless this essential weakness is put right. It is no use just tossing it aside. One reads about it in every newspaper, which brings it home as a personal responsibility of the industry in part and of the Government in part.

I repeat that we cannot just sit back, and I therefore want to ask the Government to consider four questions which they really must answer—unless they are to adopt a laissez-faire attitude; if the Minister of Labour wants to take that attitude he must say so, because a lot of things will follow from that. The Government must tell the industry and the country what expansion if any of the car industry is wanted. Can we afford the expansion in the industry which is now taking place? If we cannot, we ought to stand up to the car manufacturers and talk bluntly to them about the size of the industry. There is no point in allowing men to believe that they will be able to leave their old industry and enter the car industry, where they will have a job for life, when we cannot afford to have them there. Do we need the expansion? Can we afford it, even though the American companies and the B.M.C. are undertaking an expansion programme?

Secondly, what sort of size and what kind of industry are wanted, in terms of the number of men employed and the resources used? What is the size of the car industry that the Government believe the country ought to have today?

Thirdly, how do the Government view the position in which the expansion continues? We are finding that the problem gets worse and worse as the pressure on the market gets greater, because the market is not big enough. The American companies, because of their vast resources, may have begun to push the other companies altogether out of the picture. How do the Government view that? If nothing is done about that, it will constitute a problem.

That is one of the things which will happen and there will be a terrible squeal when it comes. It should be the business of the Government to look ahead and see this arising—unless they are prepared to swear that in their view it will not arise, in which case we must press them for figures. The Government must decide how they will feel when this happens and, therefore, try to decide what to do about it at this stage.

Fourthly, I ask the President of the Board of Trade really to try to give us a clearer indication of what he feels he can do about the export position. Is he prepared to take a different line with the companies? It is not necessary to start on the assumption that we will have to give them orders, but one weakens one's position if one starts on the assumption that one will not give them orders. If one wants to persuade a chap to do something, one does not start by saying, "I shall not try to force you to do this, so if you are not willing to do anything about it, that is O.K., old boy." One considerably weakens one's position by doing that, but we might get a better result if the Government bluntly talked to car manufacturers to let them know that if they did not do something, the Government would take steps. There should be discussions between the car companies and the Government so the Government could see what could be done to help the companies.

If the result cannot be achieved by discussion and pressure, the Government will have to look at some kind of physical control. Steel allocation tied to exports is a possible. It is one of the things that might have to be considered. The Government will not get over that by saying that I am saying something in some words and that one of my right hon. Friends used different words the other day. It is clearly a possible if all else fails. There are other possibilities, such as limiting the number of cars coming on to the home market in any one year. There is a variety of means by which pressure could be brought, if it were thought necessary.

I am not saying that that is necessarily what has to be done to bring about an improvement in the export position, or to get the industry out of an impossible jam, but I do ask the Government to say what their view about it is. After all, the late Sir Stafford Cripps had very considerable success in 1948 and afterwards with this method. The wiseacres said it could not be done and so did the industry and Conservative politicians., Nevertheless, Sir Stafford Cripps went one way about it and had a very considerable success. It is precisely that success which we now need in precisely that sort of way.

There is a lot to be said for looking at what he did and considering it. I am not telling the Government how to do the job. There is a difference of view between us. They are the Government for the moment and we are not. What we are demanding is that if they reject this, they should tell the industry and us what the answer is. We cannot have the percentage of exports dropping every year. The percentage is now below 40 and may be below 30 in a year from now and the position is getting very serious.

There are things which can be done and one of those which we must face is the lost opportunities for increased overseas trade in lack of trade with China. Nobody will accuse me of being unduly soft towards the countries behind the Iron Curtain. That is a challenge which I am not likely to have thrown at me. On the other hand, it is said that up to 1 million tractors might have gone to China if the embargo list for China were the same as that for Russia and the other countries behind the Iron Curtain.

Whatever may be thought about the Iron Curtain, it is ridiculous that we should be refusing to China things which she can get through any of the other Iron Curtain countries—after all, they, too, build roads—and, in turn, export back to Hong Kong; and that is what is happening. There is room for an increase in our trade and, as was said at Question Time, the Chairman of the Hong Kong and Shanghai Banking Corporation has said that unless we do something about this quickly, we will not only be shutting ourselves off from a market that would help the industry now, but be losing valuable trade which we shall never get back again.

I ask the Government to say to our friends who are concerned in this matter that they must realise that soon we shall have to do something about it. When we talk to friends, we need not always have to talk as though we were so friendly that we would never say a word in anger. We have got to say to them, "We have gone on for a long while and the position is becoming less and less defensible, and we shall have to do something about it. Would it not be better if you agreed to do something about it with us pretty soon?"

I want now to refer to trade fairs. I have read, as no doubt the Minister has, a whole host of Press cuttings referring to trade fairs at Delhi, Paloma and Strasbourg and complaining bitterly of the lack of interest which the Government have taken in these overseas shop windows which help manufacturers to build up exports. In October last year, the Daily Telegraph, quoting the Board of Trade Journal, said that the Government had no intention of organising information pavilions, nor even of giving support to any firm making an attempt to organise one. They will not do it themselves and they will not support any firm attempting to organise one.

That was quoted from the Board of Trade Journal and published last October. Now, in the Observer of 18th March this year—here there is no direct quote—it is said that, instead, the Government are considering changing this line, and may buy space at Damascus, and that there will be a general policy change. Is this so? Can we now look to the Government, from hereon, to take an active part in supporting British manufacturers who are trying to export their goods?

I do not believe that the manufacturers are doing half as much as they might. I have been to other countries, including South America, where I was horrified at the stories I was told by their agents about the laziness and unwillingness of British manufacturers to try to get into the markets there, particularly the market for large electrical machinery. I am quite certain, however, that where manufacturers are trying they are not getting the help that it is within the power of the Government to gave. I cite this as one way in which the Government can do something.

I now turn back to the Minister of Labour. I am not one who takes a view that we have to have a separate compartment in which the Minister of Labour may sit. The right hon. Gentleman's predecessor took the view that it was necessary to put a screen round the Minister of Labour, to put him in purdah while his rougher political colleagues are in full view further along the Bench. Upon reflection, perhaps the term "rougher" is not one which should be applied to some of the right hon. Gentleman's colleagues.

The Minister of Labour is a political Minister. He has not merely the job of telling Parliament about how employment exchanges work and how many clerks there will be in the exchanges to deal with people who come looking for a job. He is there to tell us about the political policies of the Government and take responsibility for them when they overload his employment exchanges with work. I hope, therefore, that the right hon. Gentleman will not take the view that he is separated from the political responsibility of the Government as a whole.

Does the right hon. Gentleman realise the urgency of this whole problem of short-time working? It seems to me—again, I speak as a trade unionist—that continuing short-time work would prove an absolute disaster to industry. In some industries it existed before the war and there were some instances where it lasted until 1940 and beyond. Even where the workers accommodated themselves to it in terms of money; even where arrangements were made for signing on at the employment exchanges, and so on, despite that, the legacy which it left in the shape of the outlook on the job took a long time to get rid of. If we permit that sort of thing to happen again, even if it does not assume large proportions—even if, by working short-time in one place and another, men manage to get together a not unreasonable pay packet—the attitude which will be engendered, and their outlook to the work, will prove an absolute disaster for the country.

There are industries—I know of them through my union and the Minister will guess to what I am referring—where we know that greater efficiency and a greater willingness to work with labour-saving machines is much needed. There may be industries which are not affected by short-time working. But I can assure the Minister that a trade union official cannot go to the men in those industries and ask them to drop their restrictive practices and customs in the interests of productivity and efficiency, if, in some other industries, men are deliberately encouraged to work short-time. The men in the industries not affected will point to what has happened to their fellow workers who have adopted automatic—in the motor car factories it was adopted more widely than in other industries—and who have ended by working only three or four days and are out for the rest of the week.

I hope that the Minister will realise, also, that there is a temptation to employers to go in for short-time to let their employees work for four days instead of five to spread out the work in order to keep the team together as long as possible and that the whole thing is a weakening influence right through industry and right through any factory in which it occurs. It is impossible to run a productivity campaign alongside a short-time working campaign. That will not work in any industry and those of us who have tried hard over these things will merely be running our heads against a brick wall if we attempt to run a productivity campaign side by side with fairly widespread short-time working.

I hope that today the Minister will not say that things are not too bad; that the number is only this or that; that there are not many people who will have to move from here to there. That may be politically attractive, but from the point of view of industry it is a bad way to deal with the problem, and support is being lent to a process which will result in short-time working over a long period.

The Government must decide on one of two things. If they are seeking to unload the economy, certain things will follow, because in that case something rather less is required than the flat-out effort which, in effect, the Chancellor, the Lord Privy Seal, and the Prime Minister have been asking for in recent weeks. Unloading the economy means making the load lighter, and people will think that they may work four days instead of five and not turn out so much in a day.

If that is not the intention of the Government, are they seeking redeployment? On their answer to these questions must depend a whole range of policies and the attitude of a lot of people. If the Government are seeking to unload the economy, they must say so frankly. Then—let us face it—we shall have fewer exports, less production, and higher costs, and end up with more unemployment. There can be no other way. But if that is not the aim of the Government, if it is redeployment which the Government are after, and they want people to move from one industry to another and from one area to another, they must talk positively about it. Government action and decision is required.

First, the Government must decide on what are industrial priorities and to which industries they desire to move people. They must ensure that the selected industries get the materials and resources which they need in order that the priorities may be effective. It is no use saying that one or other industry will get this or that priority unless the steel and other necessary materials are forthcoming. Supplies to unselected industries must be held back, instead of using the blunt weapon of the credit squeeze.

At present, the President of the Board of Trade has a terrible bias about playing party politics, which is an extremely dangerous thing. In any case, the right hon. Gentleman does not do it very well. If he listened to what I am saying, and took it as the view of an important and responsible section of the trade union movement he could decide whether it was a wrong view and say so. Instead, he is preoccupying himself with telling his right hon. Friend the Minister of State, Board of Trade—who cannot be trusted to do it himself—what part of my remarks to write down quickly so that he may score off me later. That is a silly outlook for the right hon. Gentleman to adopt. I ask the President of the Board of Trade to show that he is worthy to occupy what is today perhaps the most important Ministry in the Government.

Having decided which industries are to be selected, and having allowed them to get their materials, the Government must decide how, in a selective way, to hold back the others. The objection to the dearer money policy and to the credit squeeze is not that they are physical controls. They are just that. The objection is that they are not selective controls. They operate on good and bad alike and may well operate on the good rather more heavily than on the bad. So, having decided these matters, the Government have to get the workers to move to these industries.

All this requires action, which I hope the Minister has thought about, and about which he will tell us something today. Many of the present unfilled vacancy lists are just as unimportant as are the jobs from which people are being expected to move, and it is no good saying to a man that he will have to move into one of these jobs. The Government have to make a decision about it. Many of these jobs, frankly, are unattractive in terms of the present wage structure and wage standards, like those in the non-profitable public services.

It is no use, in these days of the rising cost of food, telling a man who may have had £15 per week, to move and become a busman somewhere at about half as much per week, or an agricultural worker at £6 15s. per week. Unattractiveness in terms of wages has to be faced, and these industries themselves are losing men. Agriculture lost over 30,000 last year, and we have brought the wages of these men up to £6 15s. That is not enough to attract the people who are in the industry, so how will it attract people into it who are working in some other industries?

This matter requires consultation between the Government and us, between the Government and both sides of industry. I have never taken the view that a wages policy could be imposed in times when things are going well, but, when we have a changing pattern of industry, it is just then that, unobtrusively, we change the wage policy relationships in these industries. That is just the moment when it is possible for the unattractive ones to come up without necessarily moving the whole lot, because they happen to be the very ones to which the move is taking place, and, therefore, all the pressure is upon them. It is just the moment to do something, not only to make a decision about it, because nobody can be very sure that that is the line that ought to be taken.

It is no good reiterating the talk about wage restraint. It is no use trying to restrain a man with £6 15s. or £7 10s. a week at the moment when the Government are pushing up his costs, or of trying to move out a man who has built up hire-purchase commitments on a wage of £12 or £15 a week to a lower-paid job. Restraint is not only meaningless in those circumstances, but also irritates enormously, and I ask the Government to look in a rather wider and deeper way at this particular problem.

Even if the Government feel that they can continue with this policy, there are three practical problems about which I will ask the Minister some questions. If we are to get redeployment, if the Government want to get people out of some industries and into others, there are three things which they will have to face. One is that if they involve people in leaving home, lodging allowances must be made available. A scheme of redeployment which does not face that fact will not secure anything at all. A man cannot leave home and go to work somewhere else, live there and keep his home going at the same time, without some help towards his increased costs.

The next thing is travelling time. A man will spend time in the bus going from one Midland city to another, from Coventry to Birmingham, for example, and he will not readily spend more time and money on that without extra recompense for doing so, unless, of course, we are able to get him into a place where his work is, and that involves the question of housing policy. The Government, with their present housing policy could not be more at odds with the needs of industrial redeployment if they tried. It cannot possibly encourage people to move from their homes into other areas, but has put a complete ban on many of the areas which would be receiving people, and which are rather harder hit than some of the areas from which we are asking people to go. Therefore, lodging allowances, travelling time and housing policy in these areas are all involved in this problem.

Mr. Osborne

rose—

Mr. Brown

I think I had better get on, because I have been a long time.

Mr. Osborne

I am obliged to the right hon. Gentleman for giving way. If these extra allowances for which the right hon. Gentleman is pleading are to be given—and I understand that—will they not put up the costs of production, and will not that increase the cost of each article for sale abroad and make it more difficult for us to increase our exports?

Mr. Brown

We cannot get cheapness merely on the basis of denying to the workers the things they have to have. We can get cheapness by reducing overheads and by reducing the proportion of overheads chargeable to each item that is produced, and by greater productivity. Of course, if we produce no more as a result, each item will be increased in price. If this is the policy of the Government, we should run an intelligent productivity campaign with it. We could get the workers into industries, so that industry can expand and export, and thereby should not get these increased costs.

I hope I have made it clear that I do not say that the present pattern of employment must be frozen. That is not the responsible point of view of the Labour Party. Changes there will always have to be, and full employment never did mean a frozen pattern of employment at any particular time. Equally, it does not mean that we are entitled to put men out of work to bring about a forced change. We believe in maintaining full employment and in organising the change from industry to industry and from area to area so that the men can do it without undue hardship and that all the arrangements are made before they leave their factories and before the week's work falls off.

The Government have to be ready to deal with the decisions that are required about exports, imports and allocations of materials, and they must also be ready with a social policy which backs up all this. All this is a question of deliberate priorities, and, although the Government might like to avoid having to make a deliberate choice about the priorities, I do not believe that they can, unless they are prepared to let the country drift into a worse and worse economic situation.

I do not want to be too gloomy about the present position. That has been done in the past, and it is no good shouting "Wolf." I have tried not to exaggerate the situation and the figures, and I do not want to make a gloomy forecast about the future, because that does not help either. I only say that there is one thing which the Government cannot expect, and that is that this problem of unemployment and under-employment will sort itself out. All the signs are that it will continue, and that, at best, it will be seasonal, and, at worst, it will be a continuing process. We press on the Government that our margins are much too slight and our needs much too great for them to be able to play about with this problem in a laissez-faire way. We ask the Government to take our suggestions and criticisms quite seriously, to tell us where they think we are wrong, and to give us a pledge that they will take action on some of them.

4.38 p.m.

The Minister of Labour and National Service (Mr. Iain Macleod)

The right hon. Member for Belper (Mr. G. Brown) is, of course, a robust and skilful debater, and, given such a promising text as unemployment under the Tories, can always be relied upon to make a formidable case. I think that if, here and there, he slipped into what was for him as near to a minor key as he ever gets, it is probably due to his recognition, first, that his case was not very formidable, or, second, that this is a particularly interesting and difficult situation in which it is very advisable to tread warily, or perhaps both.

I very much welcome the spirit in which the right hon. Gentleman spoke, and although I dare say I shall have a few party points to make, that will not be the main burden of my speech. One thing to be said at the beginning concerns the great point made by the right hon. Gentleman about certain words used by my right hon. Friend the Prime Minister and my noble Friend Lord Woolton about over-full employment, but I think the right hon. Gentleman forgets the origin of that phrase and who it was who used it first. Although I knew it, I have had the time, while the right hon. Gentleman was speaking, to check it, and I should like to tell him that it was first said, so far as my research goes, on the 20th August, 1947, at a Press conference, and that these were the words that were used: This country is in a state which might properly be described as over-full employment. The speaker was the right hon. Member for Lewisham, South (Mr. H. Morrison). We on this side of the House are the authors neither of that phrase nor of that thought, and the right hon. Gentleman does us too much honour in attributing them to us.

This is the first general debate on employment that we have had for a long time, and we welcome the opportunity of discharging the duty that we have in this field, particularly towards the men and women who form our working population. I understand the difficulty which the right hon. Gentleman had, and indeed all hon. Members must have, in getting absolutely up-to-date figures, so I have tried, by means of a special return from my regions, to get the fullest and latest reports on unemployment and under-employment in all the regions, and not only in industries like the motor industry and radio, in which there is a great deal of under-employment. I should like, in a few moments, to give these figures in more statistical detail.

I do not want to spend too much time in dealing with the background. The diagnosis is fairly well agreed between the two sides of the House. What is in dispute is the prescription, the methods by which we are to deal with the situation. It is common ground that we need a satisfactory surplus in our balance of payments, and that inflation at home is preventing us from achieving it. On the other hand, it is common ground that prices have been rising fast, and that our stability at home and our position in the world are thereby imperilled. It follows almost as a platitude that to correct the balance of payments we have either to export more or to import less, or perhaps to do both. Any measures that we take will only be successful—whatever they are—if they achieve this result.

Our exports did increase substantially in 1955, but they did not increase quite enough in relation to our imports. Secondly, most of our competitors increased their exports by a greater proportion than we did, and our share of the world trade in manufactured goods fell. This was not because there was any lack of opportunity for very greatly increased trade but because the world trade in manufactures as a whole expanded at almost twice the rate at which our exports expanded. World markets for exports of manufactured goods are expected to continue to expand in 1956, but probably more slowly. Again, it would be common ground that there are plenty of opportunities for increased trade within and outside the Commonwealth.

The export trade is conducted by private firms. Whatever we may do, and whatever allocations we have to give, we can only get increased exports if our goods are competitive in price, in attractiveness and in delivery date. It follows from that that individual firms have to be imbued with greater determination to go out and get the business, especially in the markets of the world. Increased opportunities for worthwhile trade exist. I shall naturally talk about the impact upon employment of the Government's economic policy. I am coming to the latest information that I have been able to get from my regional controllers, but I want, first, to distinguish between unemployment and under-employment, because the two have been sadly confused at Question Time. In a debate we can to some extent expand on this subject. There is one general comment to be made. When one gives figures, one takes averages and one talks about figures over the whole country. The position is very different in different parts of the country. In much of our detailed talk we concentrate, for example, on the Midland and London regions, where the motor car and radio and television industries respectively are centred.

If we take the position in Scotland, we find that it is not true that there are more vacancies than there are unemployed. The figure is about three to one the other way round. Although the proportion is not as high as that in Wales, the number of unemployed is also higher than the number of vacancies. It is only fair to say that when we talk about there being more jobs available than men we are talking essentially about England.

It also follows that even if the balance in Scotland and Wales is not as attractive as it may seem to be in England, the position is very much better than it has ever been before. The unemployment percentage in Scotland at 2.7 per cent. in February—slightly less than that in March—is the lowest February figure that there has ever been. Unemployment in Wales has never been lower except during the summers of last year and the year before. Therefore it is true to say that there are men chasing jobs in those countries, but it is equally true to say—we can only balance the figures if I do so—that the position in those countries is better than it has ever been in any peacetime year.

Mr. George Lawson (Motherwell)

I would ask the right hon. Gentleman to remember always that there is a regular net loss of population in Scotland of about 22,000 or 25,000 young people a year. That must always be kept in mind when talking of the employment position in Scotland.

Mr. Macleod

Yes, indeed. If we break the position down we see that there are particularly bad areas, like Buckie and Peterhead and places in the coastal Development Area. When all is said and done, the position in Scotland is better than it has ever been before in a peace-time year.

With that reservation, let us look at the position in 1955. We know that labour has been scarce ever since the war, and that it has never been scarcer than it was in 1955, not because unemployment was low but because there was an increase of nearly 1 million in civil employment in the last three years. It brought us to a record level of about 23 million. Even so, the unsatisfied demand for labour continued to grow; and then the scissors of demand and supply in the labour field began to open. By the summer of 1955 the level of unfilled vacancies had risen to nearly 500,000, and even at the end of the year it was at the figure of 382,000. Against that, we had an unemployment figure in July last year of 185,000, the lowest figure reached in peace time, and, in December of last year, of 216,000, again a record figure.

Therefore, the background against which we have to study the present figures is one of great labour stringency and of unemployment at levels that have never before been reached in peace time. That is the background against which we have to study the detailed effects of the Government's measures in the last few months.

I will now give the latest figures for unemployment. The January total was 264,000 and the February total was 276,000. That again was the lowest for any February since the war. Of course, it does not include the workers on short time in the motor car industry, but most of those are on a guaranteed week and therefore did not register at the employment exchanges. Moreover the February count was taken before the Government's latest measures were announced.

I have now preliminary figures for March, although the final result of the March count, which was taken on 12th March, is not available. The indications seem to be that there will be in March a slight decrease of unemployment of about 7,500 people to a figure of 268,000. That includes nearly 6,000 who are unemployed, one hopes temporarily, as a result of the printing dispute. [An HON. MEMBER: "Does that include Northern Ireland?"] The figures are for Great Britain.

The number of vacancies remaining unfilled at the employment exchanges went down from 382,000 in December to 368,000 on 9th February. I realise that the right hon. Gentleman could not know, but the most recent reports from the Employment Exchanges seem to show that the seasonal rise in vacancies has started again, although he is quite right in saying that it looks as though it will be at a more moderate rate this year than in the past.

Mr. Frederick Lee (Newton)

Would the Minister agree that the February issue of the Bulletin for Industry points out that in the second half of the year the ratio of vacancies to unemployed dropped markedly from the high point reached last August?

Mr. Macleod

Yes.

There is one point which perhaps I can make about the validity of the figures in relation to vacancies. The right hon. Gentleman said—and I think it is a fair point—that people may tend to overestimate their labour requirements and that, therefore, the vacancy figure is unreal, but he must remember that there is a pull the other way. In times of very full employment many people, knowing that little labour is available, do not bother to register vacancies at the Employment Exchange at all. I am quite certain that if it is thought that there may be more labour available, the figures that we shall have from now on will be a good deal more realistic than they have been in the past.

Perhaps I can turn now to the comprehensive statistics of short-time working in the manufacturing industries—statistics which we collect at quarterly intervals. I do not think that it is right to say—as the right hon. Gentleman said—that the hard core of unemployed is increasing. I have had to look rather quickly at the figures, and what may well have been true in the period which he, no doubt, checked carefully. For example, at the February count there was 39 per cent. of wholly unemployed who had been unemployed for more than eight weeks. The right hon. Gentleman said that that position seemed to be getting worse, but the position five years ago, for example, was that the percentage then was 42. I would not say that there is any deterioration in that, nor has there been any deterioration between January and February, because the long-term unemployed figures, are, in fact, not rising more rapidly.

Mr. G. Brown

Five years is a long way to go back for comparison. I was, in fact, basing my statement on February, which looks worse than for several months back. I did go back to last August, and it looks as though in that period it has got steadily worse.

Mr. Macleod

I will check back to last August, but certainly the figures for January and February would not bear out what the right hon. Gentleman said.

I turn now to short-time working. The latest figure I can get as a round-up of short-time working is that 80,000 workers are affected in the manufacturing industries, but we have to take into account the seasonal effects on employment, and at this time last year some 40,000 were affected by short time. Therefore, the scale of the figure that we are talking about is a deterioration—between the two years anyway—of about 40,000. The figure of 22,000 discharged as redundant since the beginning of the year compares with 10,000 in the same period a year ago.

It is also true, of course, that if we take the vast amount of overtime working—although we have not the latest figure available for February this year—and compare the short-time figures for February this year with the last figures we have for overtime, the ratio of those working overtime to those working short time is something like 20 to 1. In other words, twenty people are working overtime to each one working short time.

A good deal of the attention which has been devoted to this subject centres, of course, around the motor car industry—

Mr. W. R. Williams (Manchester, Openshaw)

Is the Minister contending that the same amount of overtime is being worked now as has been worked in the past year or two? Is that what he is saying?

Mr. Macleod

No, I did not say that.

Mr. Williams

Then I should like the right hon. Gentleman to make it clear.

Mr. Macleod

Perhaps I can expand a little what I have said. We know of 80,000 people now working short time. A year ago last February 1,614,000 were working overtime. Last November that figure was 1,816,000. I do not yet know what the February figure is. I say that taking even the high figure of 80,000 that we have at the moment it is still only one in twenty of the people who, in previous counts, have been working overtime.

Short-time working in the motor car industry began in the second week in January, and in the last week in February the number on short time began to increase. At present, about 34,500 are losing on the average one day each per week, and that, of course, is concentrated in Birmingham and Coventry. The effect on the country as a whole is under 7 per cent., but it is 13 per cent. of the labour force in those industries in that region. The problems of the radio and television industry have been met more by discharging workers than by short-time working. About 3,000 were discharged in December and January, and a further 6,000 have been discharged since then. Most of these redundancies have occurred in the Eastern and London and South-Eastern regions. In a number of cases, of course, part-time workers have been affected.

As the right hon. Gentleman has said, there has been a falling off in the pottery industry. That started in the autumn, and is, I think, only partially attributable to the increased Purchase Tax, because the pottery firms have been meeting particularly severe competition from abroad.

It is equally true that there is a good deal of slackness in the furniture industry—[An HON. MEMBER: "Slackness?"] Yes, slackness is the right word, because there is always a seasonal slackness in the furniture industry, and indeed in each of the last two years about 4,000 people have been working short time. So far as we can tell, this year about 2,600 were working short time in January and a further 4,000 since.

Mr. Victor Collins (Shoreditch and Finsbury)

Is the right hon. Gentleman aware that according to the list compiled by the National Union of Furniture Trade Operatives on 16th March, about 12,000 out of 45,000 workers in the industry were on short time? The list was a very fair selection. It means that on the latest figures rather more than 25 per cent. of all workers employed in the industry are on short time.

Mr. Macleod

I do not want to dispute the hon. Member's figures. All I can say is that they differ utterly from mine, and I am giving the latest information I have from my regions, which is only, indeed, a few hours old.

Mr. G. Brown

The union is pretty sure to know.

Mr. Macleod

Well, I should have thought that the information we have from the regional controllers was accurate too, but I shall try to get that point checked during the debate.

Mr. Julian Snow (Lichfield and Tamworth)

Would the right hon. Gentleman define short time? There is some uncertainty as to how it is defined.

Mr. Macleod

I am not certain that there is one overall definition of short time.

Mr. C. R. Hobson (Keighley)

Oh, yes, there is.

Mr. Macleod

Oh, yes, there are those who are not working the full week—but I do not think that there is a statutory definition of short-time working.

I have mentioned the figures for the furniture industry; and perhaps, very quickly, I can mention two more. In the domestic appliances industry there are 3,500 on short time and 1,700 have been made redundant. In the carpet industry there are 5,000 on short time, and there is some evidence that the lull that is experienced by that industry each year is this year considerably more marked.

Short-time working affects 1,500 in iron foundries, most of whom are in Scotland. Apart from that the only other industry in which considerable short time is being worked is cotton, which has always been a great problem to us, but the figures for short-time working, after varying between 30,000 and 40,000 last summer, showed a substantial improvement, as revealed in the position in the autumn, and since Christmas the numbers affected have been about 13,000.

That is as full an account as I can give of the displacement of labour which has taken place. It is essential to keep the displacement, serious though it is, in proportion, and if we take the outside figure of all those which I have given for workers affected either by short-time working or by redundancy, it amounts to a little more than 1 per cent. of the numbers working in the manufacturing industries. I apologise for the detailed figures, which I thought the House would like to have, and I should like now to turn to some of the things which I feel should be said about full employment and especially about the mobility of labour.

Mr. S. Silverman

Are we to assume that the Minister has given us all the information which he has to give about unemployment and under-employment in Lancashire?

Mr. Macleod

If the hon. Member would like a little more information about Lancashire I can more or less improvise for him.

Mr. Silverman

I think that the House would like to have the information.

Mr. Macleod

One could very well make an entire speech about any one of the industries particularly affected in this way. The main figures for Lancashire are these: there was a fall during 1955 of rather more than 30,000 in the numbers employed in the industry—that is, in cotton spinning and in weaving. That fall occurred mostly in the first eight months of the year and then continued at a very much lower rate until the end of 1955. I am dealing with employment. In January, 1956, that trend was reversed and the strength of the labour force increased by 1,500.

We have not yet obtained the figures for the weaving side of the industry for February, but statistics maintained by the Cotton Board show that in the spinning section the level remained steady during February. The number wholly unemployed in December, 1954, in cotton was 1,267, whereas the comparable figure for December, 1955, was 1,752. The summarised position is a drop of 30,000 of those in the industry, an increase of only 500 in those wholly unemployed and some rather more satisfactory trends in recent months about recruitment to the industry.

Mr. Silverman

The right hon. Gentleman has given some figures for 1955 and the beginning of this year and has given them in the context of the figures which he gave for the motor car industry, which was his other main example, but the difference between the two industries is fundamental. He is dealing, in the motor car industry, with a trend which has just developed, whereas in the case of the Lancashire cotton industry his figures come at the end of a four years' continuous process. Surely it is not right to leave the matter there and to say that, because we have a few more hundred in the spinning industry, we can be complacent about Lancashire and the cotton trade.

Mr. Macleod

I have never said for one second that one should be or could be complacent. What I did, out of courtesy to the hon. Member, was immediately to put into my speech a great deal of detail about the cotton industry, and I also showed that there were some favourable trends. I put it no higher than that, and the position anyway is a good deal more satisfactory than it was a year ago.

On the question of full employment and mobility of labour, which is a key issue between the two sides of the House, I think here, as in the heroic days, there are two rocks between which we have to steer. First, it is easy to talk rather too glibly about the possibility of the mobility of labour. It is a good deal too easy to talk about figures when what we mean are men and women, and to assume that just because there are a number of holes somewhere, the pegs will necessarily fit into them.

I acknowledge that there are many things which count against mobility of labour, and I want to take up one which was mentioned in an interjection by the hon. Member for Dunbartonshire, East (Mr. Bence); that is the effect of occupational pension schemes on the mobility of labour. The Phillips Committee estimated that 1 million persons had earned pension rights and 7 million more were in the process of acquiring them. I wish I were one. The Committee added that although arrangements for preservation of rights on the change of employment would be in the national interest, it was not right that that should be made compulsory.

I think the majority of pension schemes in the motor car industry—there are exceptions—make no provision for employees to leave the firm before retiring age, but I think that that would be a very small factor in influencing the decision of a worker. I should have thought that the two reasons for staying in the industry were, first, the calculation that the recession might be temporary, and, secondly, the very high wages which are paid in that industry.

But if that is one rock which one must avoid, equally one has to avoid the other rock, which is a failure to recognise that an industrial society can go forward only if it is flexible. If there were regidity here, it would end up as rigor mortis. It is not a question simply of making a reference to Sir Stafford Cripps. Almost every document concerned with employment since the war and during the war has emphasised this point, and I take it that there is not much difference between the two sides of the House on this need for flexibility.

When we talk about full employment, what we mean is that workers cannot necessarily always expect to remain in the same job no matter what changes in circumstances may occur. If our economy is to be healthy, a movement of workers must take place from one firm to another or from one industry to another, to match changes in demand for the products of the different firms and different industries.

Many people fail to realise how much mobility there is in industry at present. It is very well illustrated by the fact that last year it is estimated that the number of movements from job to job within manufacturing industries alone was 2½ million. There is, therefore, already a very large element of mobility.

What a state of full employment means is that the state of the labour market should be such that if a worker has to change his employment there Should generally be good opportunities available to him to get another job within his capacity, and he should be able to do so without a long intervening period of unemployment.

Mr. S. Silverman

What about Lancashire?

Mr. Macleod

Of course I take the point that there might be a loss of wages. I appreciate that it might not be easy for someone who has been earning high wages to change his job, but if it happens that there is no demand for his particular qualifications or his experience where he wants to stay, then changing his job is something which he and everyone else must be ready to accept. I think one should state that quite frankly as I do.

In some cases it may be necessary for a worker to take a job which involves changing his occupation; and that leads me to the question of what consideration should weigh most strongly in the minds of employers when they take decisions about short-time working. I know that the right hon. Member for Belper will call this a laissez-faire attitude, and he would equally call it a laissez-faire attitude if I rejected straight away, as I do, his proposals about the mobility of labour. But let me emphasise that the Government believe that it is essential for employers to decide themselves upon their future labour requirements. I do not believe that that is a task of Government.

In doing that there are three main considerations which I am sure that employers will have in mind. The first is the prospect, in their judgment, that an early recovery in demand for their products may come which will enable them to provide full employment for some or all of those on short time. That, no doubt, is the first consideration. The second is their responsibility for giving proper consideration to the interests of their workers. The third is how far they are justified in holding on to workers who could do other work of importance to the economy.

Perhaps I could say a few words about the prospect of redundant workers getting other jobs. We know—

Mr. R. H. S. Crossman (Coventry, East)

I do not wish to disturb the even tenor of the Minister's way, but can he tell us how he is to apply these platitudinous generalisations to industry? How does he apply them to the motor car industry? That is what we have come to hear, not generalisations.

Mr. Macleod

There are many hon. Members in this House interested in subjects other than the motor car industry.

The three propositions that I have mentioned are those which, in my view, should weigh with the leaders of the motor car industry when they take those particular decisions. It is perfectly true that if we consider the motor car industry—I am speaking on the question of redundancies—there are many in highly specialised jobs for whom it would be difficult to find similar occupations. If we take the body builder and the sheet metal worker in the vehicle industry, or the cabinet maker and french polisher making television sets, or whatever it may be—

Mr. S. Silverman

Or the weaver?

Mr. Macleod

The figures that I have given did not show that particular difficulty in Lancashire.

Mr. Silverman

A lot of tommy rot.

Mr. Macleod

One is quite interested in the lack of courtesy of the hon. Member, but if he wants to make that sort of interjection perhaps he would rise to make it. Perhaps he could also listen to me for a moment. I gave the hon. Member facts and figures as a matter of courtesy showing that of the 30,000 who left the industry only 500 were now wholly unemployed. That shows beyond a shadow of doubt that there has been no particular difficulty in Lancashire in finding alternative employment.

Mr. Silverman

I hope the right hon. Gentleman will accept my personal apology to him for any seeming discourtesy in my interruption. Will he allow me to say in extenuation that in Lancashire, which has been suffering from slump conditions for four years, courtesy is not what they are looking for? They are looking for work. For the right hon. Gentleman this afternoon to talk about some particular movement of figures in a particular number of weeks or months at the end of a continuous period of gradual and rapidly accelerating collapse, is really too bad.

Mr. Macleod

Nothing has shown better the complete ignorance of the hon. Member of the situation of the cotton industry in Lancashire—I will quote out of his own mouth what he said this afternoon—than when he interrupted his right hon. Friend the Member for Belper to talk about the factory at Simonstown and said it had not yet been opened. I find that my hon. Friend the Parliamentary Secretary to the Board of Trade has been round that factory, which has been opened for a very long time, yet the hon. Member knows nothing at all about that factory.

Mr. W. R. Williams

The right hon. Gentleman may have his quarrel with my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) if he likes, but I should not like the issue about the cotton industry to be clouded by these interchanges. Will the right hon. Gentleman take it from me that as recently as last Saturday those concerned were discussing this matter, and were very worried? At a conference in Manchester workers and trade union leaders in the cotton industry were very worried indeed over the deteriorating situation in the industry.

Mr. Macleod

Of course the cotton industry has been of great concern for a long time, but I cannot accept the word "deteriorating." I thought that the figures I gave were conclusive proof of that.

I have mentioned certain trades—in the motor car industry and the radio industry particularly—in which I say there would be difficulty in finding other work, but, taking the point made by the hon. Member for Coventry, East (Mr. Crossman) about the motor car industry, one finds that 860 workers were discharged by employers in the vehicle industry in the Midlands up to 10th March and only 100 of those are now registered as unemployed. Most of those have been unemployed for a few days only. On those figures it is clear—I agree there will be exceptions—that we are doing all we can to find vacancies and, beyond doubt, for most people the vacancies are there.

Mr. Crossman

The right hon. Gentleman is only repeating what was said by my right hon. Friend the Member for Belper. We are not trying to blow up the unemployment position, which is not a major factor. What we are asking for is guidance to the men who are doubtful about the future. They are working on short time. My right hon. Friend put this point to the Minister absolutely clearly. We want to know from the Government if the men in the motor car industry are to assume that the Government regard their numbers as too many for that industry, and if the Government say to them, "We warn you; get out." Is that the view of the Government? If so, let them tell us that. Is it the view of the Government that the industry is not too big and that the men should stay in it, and in due course there will be employment for them again? Can we have a clear answer? The Government have a duty to tell us. These men are anxious because they have lost employment and it is no use saying that this is their employers' responsibility; it is the job of the Government.

Mr. Macleod

The hon. Member has put his finger on one of the essential differences between this side of the House and the Opposition.

Mr. Crossman

Now we know; go and tell the workers that—that you take no responsibility for them.

Mr. Macleod

did not say that.

Mr. Crossman

That is what the right hon. Gentleman said.

Mr. S. Silverman

The Government think of them as factory fodder.

Mr. Macleod

I am saying that in the light of the three considerations I gave earlier these are essentially matters for industry itself.

Mr. Crossman

No, it is the responsibility of the Government.

Mr. Macleod

It is not the responsibility of the Government, but the responsibility of industry. I am being quite frank about it. The alternative is, of course, a form of detailed, central control and in that we do not believe. It would beyond doubt include the direction of labour.

Mr. Donald Chapman (Birmingham, Northfield)

That is absolute nonsense, and the right hon. Gentleman knows it.

Mr. Crossman

The Government should have told them that before the General Election.

Mr. Macleod

In response to the hon. Member for Nelson and Colne, I have stated some of the difficulties about particular jobs. There are also certain areas, apart from jobs, in which one finds very considerable difficulty in placing people in work. The Midlands, as the figures I have given show, is not one of those areas.

There have been considerable difficulties in Great Yarmouth, where the opportunities for alternative work are limited, and there are substantial difficulties also in Aberdare. Generally, the same sort of picture emerges from the reports for which I have called from all my employment exchanges. That is to say, most areas report that all, or nearly all, the redundant workers can be swiftly employed, but there are bad patches—which I acknowledge—both in trades and places. In those areas very substantial difficulties have been found and. I think. probably will be found.

Mr. Denis Howell (Birmingham, All Saints)

The right hon. Gentleman has made the point that workers in the Midlands have been able to secure other vacancies. It so happens that I have today received from the Midlands, from the National Union of Vehicle Builders, the union which is hardest hit in this matter, a letter on this specific point, stating: We seriously challenge the accuracy of the Ministry of Labour vacancies in this area. Vacancies notified to us have been found to be already filled when we desire to submit any of our members. It is vitally important that Ministry of Labour records should be kept up to date. That bears out what we were told by responsible trade union officials who came to see us last week. It appears that when the figures which have been given are put to the test by the trade unions, which are also employment agencies, they do not bear the comparison that the right hon. Gentleman is making.

Mr. Macleod

What the hon. Member says, and which, no doubt, he will develop in the debate, clearly cannot tie up very well with the figures I gave of 860 workers discharged in the vehicle industries in the Midlands, of whom only 100 were still registered as unemployed, and those only for a few days.

If there is any means that the hon. Member, the union to which he refers, or any Member of the House, can suggest by which we can get more efficient and up-to-date service in the employment exchanges, party exchanges apart, nothing would give me greater pleasure than to bring the service that we try to offer to firms more closely up to date.

That brings me to a point that I should like to make about the services of my Ministry. We can probably help more if we are given more help. This is of general application, and does not refer only to the present situation in the Midlands or anywhere else. If a firm can foresee a large-scale drift of labour, if it is making people redundant, whether for seasonal or other reasons or, equally, if it anticipates a considerable extra demand for labour, the earlier we know about it in our local offices the better and the more we can do for the firm and those affected.

In particular, any intervening period of unemployment between jobs could often be shortened a good deal, or sometimes avoided altogether, if employers would give us as long notice as possible and if they would allow redundant workers an opportunity to register at once, so that the exchanges can begin to try to find alternative employment. Furthermore, it is often possible for interviews to take place at the factories between people who may conceivably be made redundant and the officers of employment exchanges.

Mr. R. J. Mellish (Bermondsey)

On the question of redundancy and what happens to those who become redundant in industry, while I recognise the good work done by the Ministry of Labour in that sense, if the Government do not believe in economic planning or controls of any kind, surely it all adds up to the fact that full employment seems to be a matter of sheer luck.

Mr. Macleod

That leads into what I wanted to say about the record of full employment since 1945.

Mr. Crossman

It has nothing to do with the right hon. Gentleman. He is not responsible for it.

Mr. Macleod

We on this side of the House have been in power since 1951, and I am quite prepared to divide the post-war period into two and make a comparison between 1945–51 and 1951–55, but the hon. Member would not find it very comforting.

The original White Paper of May, 1944, which talked about a "high and stable level" of employment, mentioned in an Appendix, though it was given only as an example, a figure of 8 per cent. unemployment. We started our National Insurance scheme with an assumption by the Government Actuary of about the same level, although now, as a result of instructions by the former Socialist Government, a much lower level is assumed, and even the new level is one that both sides of the House acknowledge to be arbitrary and are fairly confident is pessimistic also.

Mr. Arthur Skeffington (Hayes and Harlington)

Surely, the figure of 8 per cent. was based on inter-war years and experience of mass unemployment, when the right hon. Gentleman's party was in office.

Mr. Macleod

The figure of 8 per cent. was given first purely as an example in the Appendix to the White Paper; and, secondly, a similar figure was assumed on instructions given, presumably, to the Government Actuary.

A most important comment on the level of full employment was made, and it was referred to today by the right hon. Member for Belper. It was given originally in response to a resolution by the Economic and Social Council in August, 1950. The present Leader of the Opposition stated the policy on full employment, which is of the first importance, in March, 1951. I would merely like to make two points about it.

The right hon. Gentleman said: It is the firm policy of His Majesty's Government to keep unemployment at the lowest level compatible with the avoidance of inflation. He said that there were certainly factors that were outside our control. He said, thirdly, that The Government has therefore decided…to express the full employment standard of the United Kingdom as a level of unemployment of 3 per cent. at the seasonal peak. The right hon. Gentleman went on to say—I recognise it as a most important part of the definition: It must be stressed that the choice of this standard does not mean that the Government would allow unemployment to reach 3 per cent. before taking vigorous counter action."—[OFFICIAL REPORT. 22nd March, 1951; Vol. 485, c. 319–320.] That is a fair description of what was said, and I recognise that the qualification at the end is of very great importance. Let us, however, see what we have achieved—

Mr. Harold Wilson (Huyton)

This is very important. The short summary of my right hon. Friend's Answer which the Minister has given is certainly a much clearer summary than that circulated by his party's Central Office and the one used by the Chancellor of the Exchequer at Gainsborough in February. So that the right hon. Gentleman does not mislead the House, however, will he not make it quite clear that when my right hon. Friend was dealing with the part which referred to the 3 per cent., it immediately followed his reference to external factors, and that the figure of 3 per cent. was specifically related to, for instance, a collapse in raw material supplies to this country, which we then very much feared, or, alternatively, to a sudden collapse in the demand for our exports, but that any recession resulting from a decline in internal demand would, as my right hon. Friend said, be met by immediate reflationary methods, even below the figure of 3 per cent.?

Mr. Macleod

I do not deny that, and I tried to give a fair account of the most important definition of full employment that has been given. It is also true that the 3 per cent. would now represent a figure of about 800,000 people. But it does not matter so much what people have said would happen. What is much more important is what, in fact, has happened.

The position since the war is that, except for only a few weeks in 1947, and then, of course, for special reasons, unemployment has never been above 3 per cent. For nearly all of that decade it has been between 1 and 2 per cent. and at the moment it is only a fraction over 1 per cent. If the hon. Member for Coventry, East wants us to divide it into two halves, the average under Socialism was an average of 340,000 unemployed a year, and under the Conservative Government of 318,000 a year.

I do not quote those figures, although one could make the point, to show that the record of this side of the House it is better than that of the party opposite. What I am concerned to show is that the record of the two parties is so close together on this issue that both of us can be very proud of what has been achieved in relation to full employment since the end of the war. So far as promises are concerned, there can surely be little between us, because the phrases that we each use in our election manifestoes are very nearly interchangeable. In performance, as I have shown by the figures, there is even less between a Socialist and a Conservative Government.

It is perfectly true, of course, that full employment brings with it a great number of problems. All I can say about that is that they are much pleasanter to deal with than the problems of unemployment. I believe—and I have made this the theme of a number of speeches of mine recently—that what we need is a long and sustained campaign of education of the people in these problems, and in this the trade unions, Members of this House and the employers can all join.

I believe that if we can get a better understanding of these problems, if they are understood equally on the shop floor and in the board room, we shall be able to feel a better sense of partnership in industry. That is one of the main reasons why the Prime Minister, with some of his colleagues most particularly concerned, has been having a number of talks recently with both sides of industry. As a part of our contribution to this campaign, which, I think, is of great importance, we propose to publish, within the next few days, a White Paper on the economic implications of full employment. We hope that it will help to focus attention on the problems.

Mr. G. Brown

A few moments ago the right hon. Gentleman, in answer to my hon. Friend the Member for Coventry, East (Mr. Crossman), said the Government did not consider it their business but that it was a matter for the employers as to how many men they wanted to work. That remark will do tremendous damage to this campaign for partnership in industry. All Ministers, past and present, occasionally make slips of the tongue, and it may be that the Minister, dealing as he was with a sudden interjection, spoke inadvertently. I thought I would give him this chance to withdraw that remark, if he wants to do so.

Mr. Macleod

Not at all. All the Economic Surveys of the party opposite set year by year targets for the labour forces in all the industries, and forecast the residual figure for unemployment. We have not done that since we became the Government. From the first Economic Survey which we produced, that of 1952, our Economic Surveys have been economic surveys instead of editions of Old Moore's Almanack prophecying in these matters. Ever since we came into the Government we have held, as we hold now, the view that the size of the labour force is essentially a matter which should not be determined by the Government.

Mr. Mellish

The Minister must deal with the one all-important factor, which is production. Production is the key to the problem. Production is what we all want. The nation needs greater production. What has happened in the motor car industry is a disincentive to all the rest of the workers, for it encourages them to think. "By producing more we shall put ourselves out of jobs" What does the Minister propose to do about that?

Mr. Macleod

I do not accept that. What has happened in the motor car industry shows clearly the very fierce pull that there has been from the home market. It has been shown in that instance in dramatic form. That was one of the reasons why we introduced the measures we did.

These are early days to see as a whole the effects of the special measures which the Chancellor of the Exchequer introduced a month or so ago, but so far as the employment situation is concerned, I think that the story I have tried to tell for the country as a whole should serve to allay some disquiet, and that it is one in which we can even take some satisfaction. The Government believe that the measures taken a month ago, with the earlier ones introduced by the present Lord Privy Seal, are proving and will prove adequate to meet a very dangerous economic situation. We are absolutely determined that they should succeed. I have, therefore, no relaxation or modification of them to announce today. The time for relaxation will, of course, be the time when, and only when, in the judgment of the Government, our country is in a sounder economic position.

Of course, we shall watch with the greatest care and anxiety—and I have a special responsibility in this—the effect of these measures upon employment, but I say frankly to the House that, in our view, they are the best means of combating inflation and of reducing the balance of payments difficulties. We believe that they are the essential conditions for the maintenance of economic prosperity. More than that, we believe that these sorts of measures are also an essential protection of full employment itself.

5.35 p.m.

Mr. Frank Bowles (Nuneaton)

I think we were all interested in the Minister's argument in which he divided up the period between 1945 and 1956, in replying to my hon. Friend the Member for Coventry, East (Mr. Crossman), but, perhaps, the right hon. Gentleman will remember that the first six years were years when we had a Labour Government. Then there were three or four years of a Conservative Government with a very small majority, a majority so small that they were prevented from showing their real colours. Now, however, the Tories, having obtained a sufficiently large majority, are showing themselves to be what they really are; and they started within nine months of obtaining their effective majority.

I have been a Member of this House for more than fourteen years, and this is the first time in that period that we have had to protest about the very serious possible rises in employment. When capitalism was working properly, between 1919 and 1939, there were in this country, on the average, 2 million unemployed. That number was never less than 1 million, and sometimes it was as great as 3 million. I cannot remember, in those years, ever hearing a single word about a balance of payments problem. I put it to the Minister of Labour that there was not one.

There were a million or 2 million or 3 million unemployed, receiving miserable unemployment insurance benefit, 15s. 6d. for a man, 10s. for a woman, and 2s. or 3s. for a child—about which there were tremendous arguments in those days—and people living on such low expenditure as that bought very little food. There was unemployment in Lancashire industry, and very little raw cotton was imported for an industry that was suffering so badly from unemployment. So I think I am right in saying that the balance of payments problem between the wars was carried on the backs of the unemployed. I suspect that the present Government's policy now is to bring about exactly the same result. I believe it is, because they cannot help it, because of the nature of their system. They like to solve the problem by creating unemployment.

The Prime Minister made a speech a little while ago in which he talked about mass unemployment and said that we should never tolerate such a thing again. The Chancellor of the Exchequer, on 20th February last, said: There is a great deal of talk about the need artificially to create unemployment. I for one will never he a party to that."—[OFFICIAL REPORT, 20th February, 1956; Vol. 549, c. 42.] I advise right hon. Gentlemen opposite not to talk with twisted tongues. We shall see what happens.

Already, within a few weeks of the Government's announcement of 17th February, there are short-time working, unemployment and redundancy in industries in which many of my constituents work, in Coventry. My hon. Friends and I, representing constituencies in the West Midlands, have met on two occasions during the last two weeks deputations of anxious people who are very much concerned, first, as to what we can do in the House of Commons to bring pressure on the Government to reverse what is a dangerous policy from the point of view of these people's livelihood, and, secondly, as to what the Government's policy will be.

In going back over the years, I find that the economic crises of 1925 and 1926 arose from the fact that the right hon. Member for Woodford (Sir W. Churchill) went back on the Gold Standard. That had a deflationary effect and increased the value of our money by 10 per cent., with the immediate result that by the end of July, 1925, there was about to be a lock-out in the coal industry.

In 1925–26, it was deflation that priced us out of our export markets. Now, we are told that it is inflation that is pricing us out of the market. I should like to know whether the Government have any explanation of this to offer or any possible way of reconciling what seems to me to be two irreconcilables.

I asked a question very innocently of the Economic Secretary to the Treasury about two or three weeks ago in the debate of 20th and 21st February. The hon. Gentleman, having mentioned that we have too much imports and too little exports. I asked, if we had so much in the way of extra goods in the country through a surfeit of imports and a deficit of exports, with the result that we had this tremendous inflation problem, what would happen if the Government settled the balance of payments problem. In other words, when we are exporting more goods and importing fewer, surely there will be fewer goods available in the country and if the purchasing power of the people is to remain the same, will not that make the inflationary situation very much worse?

If we solve a balance of payments problem to the tune of £74 million, that will obviously mean that there will be £74 million worth less of goods to buy with the same purchasing power. It may be elementary idiocy on my part, but I should have thought that that would make inflation all the worse. Where there is an unbalance of payment there is something towards a solution of the problem, but if we solve the balance of payments problem I cannot see how the inflation problem will not get worse unless deflation is brought about by the creation of unemployment, which, I suspect, the Government will bring about.

Unemployment disappeared in 1938, 1939 and 1940. In 1942, there was a Coalition Government and, therefore, Tory policy did not prevail. The Tories were then behaving like patriots and were not looking after the interests of their friends. Then we had a Labour Government and again the Tories had to behave themselves, as they did when they had their small majority in 1951–55, but now they are back to their usual behaviour. Northern Ireland never had a Labour Government between 1945 and 1951 as we did here. After the war, Northern Ireland went straight back to Tory capitalist Government and it had between 6 million and 10 million unemployed the whole time.

Mr. Osborne

Million?

Mr. Bowles

I am sorry. I meant to say that 6 per cent. to 10 per cent. of the insured population were unemployed.

Mr. R. Chichester-Clark (Londonderry)

Ten per cent. is the figure which was reached in 1951 and I think that the hon. Member will agree that that was a rather special year, when there happened to be a slump in the textile trade. We in Northern Ireland had considerable help from the Government in the United Kingdom at the time and the figure was reduced more or less at once to 7.8 per cent. I agree that that is a very high figure indeed, but we hope that with the setting, up of the Northern Ireland Development Council that figure will be reduced very quickly.

Mr. Iain Macleod

I am not quite certain that I gave the right impression earlier when I mentioned the Northern Ireland figures, in passing. The figures of unemployment which I have been giving do not include Northern Ireland, where, of course, there is a very large percentage of unemployment in relation to the rest of the country. I thought I should make that clear, because I may not have made myself completely clear when I answered an interjection.

Mr. Bowles

I do not think that the Minister mentioned Northern Ireland figures, but I obtained my figures from one of the right hon. Gentleman's hon. Friends who represents a Northern Ireland constituency.

As I was saying, Northern Ireland never had those years of Labour Government. I am trying to make the point, I hope fairly logically, that in Great Britain after a war, shared with Northern Ireland, we had a Labour Government but that Northern Ireland had a Conservative Government and Northern Ireland went back to a position in which 6 per cent. to 10 per cent. of its insured population were unemployed. We in this country never had that. We have had no more than 1 per cent. or 1.2 per cent. unemployed, but the position is getting worse because Toryism is prevailing here. That is my great suspicion.

My hon. Friends and I and my constituents are particularly concerned at the moment about the motor industry. We have seen in this industry complete Toryism at work. The Minister of Labour said today quite frankly that it was for the employers in the motor industry to judge their future needs of labour and it was not something with which the Government had to concern themselves at all. That, of course, is exactly what we feel about the Government. I do not want to use a rude word, but I think that the right hon. Gentleman spoke about the tremendous "suck" of the home market. Perhaps that was not the word he used, but he meant that there was a tremendous draw on motor cars in this country. Exports have dropped from 73 per cent. to 38 per cent. because the Government have allowed the motor manufacturers to obtain all the steel they want without any conditions as to whether they should export a certain percentage of the cars they manufacture. The manufacturers, therefore, have gone on the home market with the result that we have had a glut in this country. Now the Government are trying to solve the situation by means of a credit squeeze and the tightening of hire-purchase agreements.

I was not there at the time but, judging from reports, it was a shocking performance on the part of the motor manufacturers when the late Sir Stafford Cripps appealed to them in the early days of the Labour Government to increase their export of cars to 50 per cent., 60 per cent. or 70 per cent.—I am not quite sure of the figure. He was the guest of the motor manufacturers at a dinner and he was most shamefully treated by the people whom the Tory Government have now let loose again. The fact is that Sir Stafford Cripps's policy was quite right. It put the motor industry on its feet and made the balance of payments problem less serious than it is now when Toryism prevails.

It may not be the complete, immediate answer, but we on this side of the House believe that the Government should try to take steps to reopen East-West trade. I understand that the Chinese Government would be willing to import about 1 million tractors. Standard Motors and perhaps other manufacturers could make them in this country. It would be a godsend if the Government tried to open East-West trade. I do not see how any American Government could argue that tractors could be used in war. Judging by what he indicated yesterday, President Eisenhower appears to think that the Russians are receding from the idea of the possibility of war.

Mr. William Ross (Kilmarnock)

My hon. Friend's remarks about East-West trade are very relevant to the developing situation in Scotland, too.

Mr. Bowles

Perhaps the Government will have something to say on the question whether they will bring pressure to bear to be released from the agreement with the Americans which they entered into some time ago.

We believe that there has been bad salesmanship of our cars abroad and some of my hon. Friends have more evidence of this than I have. I know from experience what is essential to a busy businessman in buying a car which is used day after day in business life. I am told on good authority that the British manufacturers have been casual about servicing and spares. In other words, there has been delay over repairing English cars in Canada and America. This has been such a deterrent that people have almost given up buying English cars and have turned to Volkswagen, Renaults and others. Incidentally, these are nationalised cars.

Some of my hon. Friends advocate the establishment of a development council for industry. I would go the whole hog, because I see no reason why the motor industry should riot be nationalised. Again, many of my constituents are anxious that the machine tool industry should be nationalised. They are appalled at the number of German and other foreign machine tools installed in the factories in Coventry because we do not bother to make on any large scale the kind of machine tools essential for our own car industry.

As a Socialist, I feel that the only way in which automation will benefit the nation and the workers is by its beneficent results belonging to the nation instead of being adopted in order to increase capital investment for the benefit of shareholders. In this connection, I heard an interesting story about automa tion which is a very telling one. Mr. Walter Reuther, head of the United Automobile Workers and Vice-President of the C.I.O. in America was being shown round an automation plant in one of the Ford works by one of the chief executives. The Ford executive said, "None of these machines pays any dues to the U.A.W." Like a flash, Mr. Reuther said, "And these machines do not buy Ford cars, either."

I seem to be the only person concerned about the 10 per cent. increase in the Atlantic freight rates which commences on 1st April. I think the Minister of Labour knows about this, and certainly the President of the Board of Trade does because I have asked Questions. Right hon. Gentlement opposite say that they are leaving it to the shipping industry, which knows its own business best. But is there not a time when even the Minister of Labour might butt in and say, "Frankly, we do not think that this is in the interests of the export trade, particularly with the North American market." It must be realised that this increase in freight will amount to between £7 and £10 on each car which, in fierce competition, will further price us out of the market.

I would like the view of the Government about these freight charges. It may be too late to stop them coming into force, but the Government should not sit back and do nothing. It is my guess that the Atlantic Convention is composed not only of the ship owners of this country, but of other parts of Europe, also, which probably have dollar problems as we do.

I have always felt that the Tory party, which is, naturally, in favour of capitalism, is the political end of a conspiracy to keep people poor. [HON. MEMBERS: "Nonsense."] Well, we will see what happens in two or three years' time.

Mr. Raymond Gower (Barry)

if that is so, how can the hon. Gentleman explain that the highest standard of living for the ordinary man has occurred in capitalist countries?

Mr. Bowles

That may be so, but does not the hon. Gentleman realise that the standard of life of the people in this country is now coming down?

Mr. Gower

It is higher today than it has ever been before.

Mr. Bowles

And because people are too prosperous the Government are doing their best to see that the standard of life goes down.

Mr. Osborne

Utter nonsense.

Mr. Bowles

We have seen all this before. The Tories had a completely free hand for twenty years between the wars. What did they do? Nothing. They may be very nice to their wives and to their children, and they may be pleasant people so far as sport is concerned, but they are the political representatives of an organised capitalist society which is designed to make profits out of exploiting the workers. [HON. MEMBERS: "Nonsense."] I do not see how the hon. Gentleman the Member for Louth (Mr. Osborne) can be a Tory if he does not know the argument against his opinion.

Mr. Osborne

As manufacturers, cannot the hon. Gentleman appreciate that we do not want to manufacture goods and keep people poor so that they cannot buy the goods we manufacture? We want the workers to have a high standard of living so that they can buy the goods we make. What is the good of making goods which people cannot afford to buy?

Mr. Bowles

I know all that, but it is impossible for hon. Gentlemen opposite to do it and I will tell the hon. Gentleman why. Is it not clear that he pays nobody in his factory a higher wage than the value of the work performed deserves? He would not employ a man at £12 a week if he felt that the value of the work done was only £10 a week. Indeed, the hon. Gentleman employs a person to do as much work as possible for as little as possible.

Mr. Osborne

Oh, no.

Mr. Bowles

Yes, hon. Gentlemen opposite always pay less—

Mr. Osborne

Wages are negotiated by the trade unions.

Mr. Bowles

The hon. Gentleman does not employ a person who is not producing the value of his wage. That is elementary. The reason why the capitalist system can never give people a decent standard of living for long is because the total it pays in wages is always less than the total of the value of the product which is made. Therefore, the workers can never have the total value of their production. In the old days, we had to export the surplus and this started imperialism and the Colonies. We had to get rid of the surplus wealth which our people were too poor to buy. I am sorry to have to explain this to businessmen.

After sixteen years, and within nine months of the Tories getting power again they are starting their old tricks. They represent a conspiracy to keep the people poor and also to have some unemployed. We are a political conspiracy to set the people free. We believe in Socialism for this country because, under that system, people will be able to lead decent lives with steady prosperity.

5.55 p.m.

Mr. R. Chichester-Clark (Londonderry)

The debate so far has ranged widely and the picture painted has been a general one. I felt almost apologetic at the thought of intervening until the hon. Member for Nuneaton (Mr. Bowles) spoke, because I intended to discuss what is almost a parochial problem. However, I need not feel apologetic for, although it is a local problem, it is none the less a grim one. I am grateful to the hon. Member for Nuneaton for his interest in Northern Ireland. Indeed, we from Northern Ireland are always grateful to hon. Members on both sides of the House for their interest in a problem which is exceptionally difficult.

However, I must tell the hon. Member that the Tory Government, as he calls it, of Ulster, of which he is so contemptuous, is one which, since the war, has provided 26,000 new jobs in Northern Ireland. In a place the size of Northern Ireland, that is a very remarkable achievement. I would also tell him that this same so-called Tory Government enjoys, with industrialists, the reputation of bending over backwards to meet their requirements in order to bring employment to Northern Ireland. It also offers more in the way of inducements to industrialists, financial and otherwise, than are available in any other place in the United Kingdom, and indeed, I believe, further afield than that.

I have some right to speak on unemployment. In my constituency I have Londonderry. I do not propose to go into detail about Londonderry today, because the subject has been discussed in this House in debate on previous occasions; but I would like to mention two other towns in my constituency. The first is Coleraine, where there is a male unemployment figure of 16 per cent. There, an Industrial Development Council has been set up by local initiative, and it is trying as best it can to cope with the situation. In Limavady, further to the north, there is a male unemployment figure of 31.4 per cent.; there was a serious female unemployment problem also until a new factory was established there recently, which has done something to mitigate the problem.

The Ministry of Labour has lately issued its statistics on unemployment in a different form. We now have the position in Northern Ireland shown separately from the rest, whereas in the past it was necessary to take the figures for Great Britain and subtract them from the United Kingdom overall figures in order to arrive at the residual Northern Ireland figure. I am grateful for this change, which, I believe, comes about as the result of representation from the advisory Development Council; it does enable industrialists who might think of going to Northern Ireland to see at a glance where a considerable pool of labour is available and upon which they might very well draw.

If I may turn for a moment to the overall position in Northern Ireland as regards unemployment, it might be easier to see the whole picture in better focus. For Northern Ireland, the figure is 7.8 per cent. unemployment. That figure must be studied against a figure of 2.7 per cent. for Scotland, 2 per cent. for the North of England, and 1.3 per cent. for Great Britain as a whole. That comparison shows the magnitude of the problem.

Since last year's debate on unemployment in Ulster an advisory Development Council has been set up, and we all welcome that. Under the chairmanship of Lord Chandos, it has gone energetically about its work of publicising Northern Ireland's unemployment position and the many various attractions which the Northern Ireland Government still afford to industrialists who are prepared to go there. At present, it is understandable that firms do show some reluctance in making a definite decision to settle units in Northern Ireland.

That is why the importance of publicity given to the Advisory Development Council is paramount, because we must make it plain that even in the present situation firms which go over there can still expect capital grants to help their establishment and, where the employment to be absorbed is mainly male, they may also expect the possibility of Government-built factories for their units.

On the setting up of the Council, my right hon. and learned Friend the Home Secretary said: Her Majesty's Government have promised the Government of Northern Ireland that we shall be ready to support this new venture in whichever way seems most appropriate in the light of the recommendations adopted by Northern Ireland, not excluding, of course, the provision of such supplementary finance as is needed to give effect to these recommendations."—[OFFICIAL REPORT, 5th May. 1955; Vol. 540, c. 2019.] In view of the present economic situation, I believe that the time has come for some clarification of the promise implied in that statement. I would ask that we might now know what the support is going to be and what form it is to take. My right hon. Friend the Chancellor of the Exchequer, on 17th February, when he brought in his recent stringent measures, said, referring to the Capital Issues Committee, that he looked to it only to recommend consent to expansion of investment "when it is satisfied that the purpose has a definite urgency under current requirements." He also appealed, at the same time, to business men who might be able to finance investments from their own resources to apply the same test.

It seems to me there is some danger here, because it could be difficult for the advisory Development Council—or, indeed, for any of those who wish to encourage employment in Northern Ireland—to answer criticisms which might be made by the very industrialists whom they wish to attract. We are apt to get thrown in our face the objection that it is the policy of Her Majesty's Government to discourage investment at the present time.

That is a valid objection we must meet, and I do ask the Government to realise that the situation will remain difficult, unless they, the Government, make it absolutely crystal clear in a statement that those stringent measures announced on 17th February do not apply in their most severe and urgent sense to Northern Ireland, where it surely must be the policy of the Government to encourage expansion and to foster industry to the best of their ability, thus helping to solve this distressing problem which has been with us for far too long.

6.7 p.m.

Mr. Frederick Lee (Newton)

We are all, I am sure, interested in the speech which the hon. Member for Londonderry (Mr. Chichester-Clark) has just made, and certainly, on this side of the House, we have the utmost sympathy with the people of Northern Ireland who, for so long, have suffered rather heavy unemployment. None the less, I do not think he has answered the criticisms of my right hon. Friend the Member for Nuneaton (Mr. Bowles), who placed the onus and responsibility for the present state of affairs fairly and squarely where it belongs.

The hon. Gentleman substantiated my hon. Friend's accusations in his concluding remarks when he sought to contract out, as it were, of the central pillar of Tory policy, namely, the credit squeeze itself. He was saying that he supports the general policies of both the Government at Westminster and the Government in Northern Ireland provided he can contract out of the main basis of their economic policy.

Mr. Chichester-Clark

I am not under any general responsibility to support Tory policy. If I happen to believe in it, I support it; but I do not think I was deviating from it at the moment in any case. If the hon. Gentleman would cast his mind back, he will remember that the Chancellor, on previous occasions, said, when introducing other Measures, "We will, of course, bear in mind the particular position of Northern Ireland". I see no difficulty about that.

Mr. Lee

I am not disputing that. Even for those people who agree with credit squeezes, and so on—and I do not—I believe that there is a case for differentiation between industries. On the other hand, the hon. Gentleman himself agrees that no differentiation of any kind has, in fact, been shown in regard to the industries to which he has referred. Indeed, I submit there has been nothing but unemployment and instability in Northern Ireland as a result of the policies which are being pursued by the Tory Governments both here and over there.

Mr. Chichester-Clark

Nonsense.

Mr. Lee

It is no good saying "Nonsense." As a matter of fact, all the figures the hon. Gentleman gave in his appeal to the House support the contention that there should be a cancelling for Northern Ireland of the very policies which he as an individual supports.

Mr. Chichester-Clark

That is still nonsense.

Mr. Lee

The speech made by the Minister of Labour was very disappointing. In the conditions which now obtain, which were outlined by my right hon. Friend the Member for Belper (Mr. G. Brown), in opening the debate, we are surely entitled to expect from the Government at least some appreciation of the size and nature of an industry, of whether it is purported to be an industry necessary for the expansion of our exports. Those considerations, it seems, are not borne in mind at all.

Reference has been made to the motor car industry. That industry still has an expansion programme of some £250 million. Whether one looks at it from the point of view of the employers or of the employees, they are entitled to ask the Government whether there is a future for the industry which justifies such colossal expenditure. The Minister sat down without giving the slightest indication whether there is a future to justify such expenditure and he has not told the men who are unemployed or on short-time whether it is a temporary recession and whether, within a few weeks, the difficulties will have passed. I should have thought that in the prevailing conditions there was a duty on the Minister to give far more detail about the future of these industries than he has attempted.

Mr. Gower

Is it not impossible to answer any of those questions? Do not the answers depend entirely upon the future performance of industry, its efficiency and its ability to compete overseas?

Mr. Lee

I shall come to that.

The Minister stated that it is a platitude to say that we have either to increase our exports or reduce our imports. He is right. Let us apply that to what has happened in the motor car industry. I call in aid a speech made by the Parliamentary Secretary to the Board of Trade, on 12th March. The hon. Gentleman said: In the case of the motor vehicle and cycle and accessories industries, between 1950 and 1953 there was an average of 429,000 people employed. By 1955, the number had increased to 502,000—that is, an increase of at least 17 per cent. about the 1950–1953 average. I agree with what was said just now; that must be justified. The future of the industry depends upon its capacity to export and help in our balance of payments problem. However, the Parliamentary Secretary went on: In the years 1953 to 1955, production of passenger cars expanded by 303,000, and 80 per cent. of that expansion went on to the home market. I should have thought that that was a complete indictment of everything that had happened since the Government removed the quotas for steel imposed by the Labour Government. The Parliamentary Secretary himself showed that as a result of the Government's policies there has been a vast increase in the numbers engaged in the industry and, alongside that, 80 per cent. of the resulting increased production has gone into the home market. That is a complete indictment of the Government's policy in relation to the motor oar industry.

My hon. Friend the Member for Nuneaton questioned whether all this is an effort to produce unemployment. In the course of the speech which I have quoted, the Parliamentary Secretary, in reply to an intervention by my right hon. Friend the Member for Rochester and Chatham (Mr. Bottomley) rather glibly said: In the profession in which I used to practise there is a principle that people are presumed to intend the natural consequences of their acts."—[OFFICIAL REPORT, 12th March, 1956; Vol. 550, c. 174–8.] Let us apply that, also. If we can assume that the Government intend the natural consequences of their acts, the maladies referred to this afternoon are those consequences, because they certainly did not flow from the acts of the Labour Government. There is ground for suspicion that, in any event, the policies which the Government are now pursuing are having the effects of creating a slackening of the economy and bringing about some unemployment and a larger degree at the moment of part-time working.

I am sorry that the President of the Board of Trade and the Prime Minister have had to leave the Chamber. I put it to the Minister of Labour that the statement made by the President of the Board of Trade, in his speech on the Second Reading of the Restrictive Trade Practices Bill the other day, was a red herring which was completely unworthy of him and crass irresponsibility, or else it marks a phase which cannot fail to end in massive unrest throughout British industry. The President of the Board of Trade said: This Bill does not cover restrictive practices by workers, and I would only say that such practices seem to me to be inappropriate to it. I do not say that nothing could or should be done about them. I do say that the passing of an effective Measure in the field which we are here considering is an essential prerequisite to any advance upon the other front."—[OFFICIAL REPORT, 6th March, 1956; Vol. 549, c. 1943.] What does that mean? I tried to get the Prime Minister to answer a Question. The right hon. Gentleman refused to answer it and passed it to the Minister of Labour. I intend no disrespect to the Minister of Labour when I say that it was not from him that I wanted an answer, for it is a matter of overall Government policy. Either the President of the Board of Trade was trying to appease his back benches, or he meant what he said. In any event, we are entitled to ask the Government specifically to tell us what it was that the President of the Board of Trade meant when he used those words in introducing the Restrictive Trade Practices Bill on Second Reading.

As I said, I failed to get an answer from the Prime Minister, but the Minister of Labour replied to my Question: My Department does not collect evidence of restrictive practices by trade unions. As I stated on 16th February, I intend to discuss the general question with the National Joint Advisory COUnCil."—[OFFICIAL REPORT, 14th March. 1956; Vol. 550, c. 51.] That means anything or nothing. We know that the right hon. Gentleman is to discuss these matters with the N.J.A.C., but the House, the trade union movement and the country are entitled to know whether the Government are now dabbling about with any idea of resuscitating the Trade Disputes and Trade Unions Act, 1927. If they are, all the progress that has been made in getting co-operation in industry is at stake.

Mr. Iain Macleod

Might I intervene, for this is a most important point? When I said both in the House and outside that what I intended to do was to refer the matter to the N.J.A.C., I had, of course, consulted in particular among my colleagues the President of the Board of Trade. He and I are exactly in sympathy on the subject of our approach to the matter. We do not believe that legislation in this field has any part to play. In relation to the specific point made by the hon. Member for Newton (Mr. Lee), I have stated, and am prepared to repeat, that my right hon. Friend agrees with me that the right action for us to take is to go, first, to the N.J.A.C., which may decide on an industry-by-industry approach to ascertain whether we can achieve anything there.

Mr. Lee

I thank the right hon. Gentleman for that intervention, but it still does not answer my question about the words used by the President of the Board of Trade: I do say that the passing of an effective Measure in the field that we are here considering is an essential prerequisite to any advance upon the other front. Until we can have a categorical assurance that that does not mean that, having got the Restrictive Trade Practices Bill upon the Statute Book, the Government are going to use that as an excuse for imposing restrictions on the trade union movement, we are entitled to be suspicious about language of that kind used by the President of the Board of Trade.

Mr. William Shepherd (Cheadle)

Why does the hon. Member try to import into those words a sinister meaning? Is it not perfectly clear that my right hon. Friend has said that we should look upon the Restrictive Trade Practices Bill to give a lead which is compulsory for trade and industry, but which we hope trade unions will follow as a voluntary practice? That was clearly what was intended by the President of the Board of Trade, and no other explanation is compatible with the facts.

Mr. Lee

I hope that the hon. Member is right about that. The President of the Board of Trade used those words when introducing legislation. He said that it was an essential prerequisite to the introduction of other things. Nothing that has been said by the right hon. Gentleman, or by the hon. Member has given a categorical answer to what I am saying could be the explanation. Before the debate ends, a member of the Government should answer the point which I have tried to make.

Mr. Macleod

This is very important. No one can give a more categorical assurance than I have just given on behalf of the Government. I said quite flatly that the Government have no intention at all of introducing legislation in that field. and other members of the Government have said that over and over again, and I say it again now. What the President of the Board of Trade meant—and he and I are in exact sympathy—was that there is room for a legislative approach to the problems of employers, but no similar approach to that of trade unions. I will, therefore, take the matter to the N.J.A.C. and see where we can get from there. The Government have no intention of introducing legislation in this field.

Mr. Lee

I am greatly obliged to the right hon. Gentleman for that and I accept it wholeheartedly, but I suggest—and I would far rather say this in the presence of the President of the Board of Trade; it is not my fault that he is not here—that he should not try to fly kites of that sort. I think I understand why he said it. It was because of the things which have been said by the lunatic fringe behind him. He was trying to appease that. I am not saying that all hon. Members opposite are lunatics. I accept that some are not, but I will not go into that in detail. That was probably the reason, but a member of the Cabinet has no right to say that type of thing merely to appease back benchers when the consequences outside the House can be so disastrous.

My right hon. Friend the Member for Belper mentioned that the Ministry of Labour has of late seemed to try to contract out of all sorts of policies of the Government. That is a useful act to put on occasionally. It gets over all sorts of rough spots. I know from experience at the Ministry of Labour that there is no such thing as an employment policy. The Ministry of Labour itself is like an ambulance squad which sits on the touchline of a rugby match. When somebody gets a broken head, as the result of the economic policies of others, the Ministry does a splendid job of rushing in and patching up the heads and then going back to the touchline to wait for the next victim.

In these days, it is necessary for the Ministry of Labour to have a far more vital function in the making of major economic policy than it has ever had before. I know that the right hon. Gentleman will say that he is a member of the Cabinet and has his say in these matters; but I do not think that he will argue that on major economic and financial policies the Ministry of Labour has anything like the weight to prevent policies beginning which can end in industrial disputes. The time has arrived when the Ministry should have a far greater power and influence in determining economic and financial policies than it ever had before in my time, or at the present time.

I agree that the figures for unemployment would not justify any of us in trying to create alarm in the country. On the other hand, the expression used by the Chancellor himself on the occasion of the debate on economic affairs would probably cover the case. He said that the position was serious and could become dangerous and that is probably the position as it is today. Indeed, a close examination of the trends of redundancies and short-time working would justify taking that view. The ratio of underemployed to unemployed is very high indeed. There are two reasons for that: first, the strength of the trade unions in being able to negotiate short-time instead of actual dismissal; and, secondly, that employers as yet believe, or hope, that the present trends are merely temporary.

The right hon. Gentleman was good enough to give us the latest figures of unemployment and we are grateful to him for that, but they show that underemployment has reached 80,000. If once we reach the point where employers are satisfied that the recession is not purely temporary, there could be a complete alteration overnight, because there would then be not a dribble of unemployment but a complete cut, which would mean that the majority of people on short-time would become unemployed. I hope that the right hon. Gentleman realises that that is a very dangerous position, indeed.

Of course, the end-product, as it were of all the exercises which we are attempting is to increase our production and increase our exports. Production as a whole in 1955 is estimated to have risen by between 4 and 5 per cent. compared with 7 per cent, in 1954; while comparing the December, 1955 figure with the December, 1954, figure, the increase has trailed off to 3 per cent. If we now take cuts in overtime and further short-time working which the right hon. Gentleman has announced, it is probably true to say that in production we are now back to where we were at the end of 1954, and that at a time when our competitors in many of the manufacturing countries are vastly increasing their production and, incidentally, increasing their share of world markets.

Not only have we lost in the percentage of world trade which we normally get, but last year was the fifth consecutive year in which our share of world trade fell. That is an extremely dangerous position and one which justifies the anxiety which many of my right hon. Friends and hon. Friends feel on this matter. The Treasury Bulletin for Industry, in February. pointed out that world conditions were as favourable for trade last year as this country could reasonably expect and yet Britain's trade gap was nearly half as wide again as in 1954.

I submit that that is the background against which the debate should take place. It is no good for the Government merely to quote figures and to say that the position is not as bad now as it was twelve months ago. The economic factors are disconcerting in the extreme. I hope that as a result of the debate we can get far more activity from the Government. The industries which are chiefly affected by redundancy and part-time work appear to be motor cars, cycles and accessories, radio and television equipment, pottery, furniture, hosiery and domestic appliances.

The main labour shortages are in the heavy capital goods industries, in the coal mines, railways, bus services, agriculture and distribution. It is hard to imagine two more different sets of indus tries than those two. Therefore, it is so hard for one set of people to adapt themselves to the needs of the other. Yet the only policy we have heard, as was demonstrated in the reply to a Question by the Minister on 5th March, is that employment exchanges are available to help them to find other work. That is not good enough.

The Parliamentary Secretary to the Ministry of Pensions and National Insurance went one better. The hon. Lady suggested that the car workers are to blame for being unwilling to go into other industries for less money. Even were that true, I should not blame people for not wanting to work for less money. Having been a shop steward myself, I have never been particularly fond of having to work for less money. But I contend that the hon. Lady and the right hon. Gentleman are failing to understand the nature of the problem. If we take as an example the car industry where, at present, there is great anxiety, the vast majority of workers in that industry are specialists for single-purpose types of line production. We cannot hope to take a specialist who has been trained for a single type of job and believe that he can become as mobile as a fitter or a turner trained for general engineering work.

I think it fair to say that the price we are now paying for the genius of Henry Ford and his perfection of line production is the almost complete immobility of labour which has resulted from that policy. That is a point which the Government must examine, rather than to say that there are X number of vacancies and, therefore, everyone can get a job. My hon. Friend the Member for Dunbartonshire, East (Mr. Bence) in an intervention, said something about superannuation schemes and the Minister took it up. I hope that the right hon. Gentleman will not dismiss that matter lightly. Those who have investigated the question of moving the older workers, know that this is a very real problem.

As was said by the Minister, these people in industry have superannuation schemes. Those schemes help—or perhaps "hinder" would be the right word—in the general process of mobility. I should have thought that in an industry such as the car industry, where I think there are probably too many firms at the moment, there is a need, which should be assisted by the Government, to get the employers together and obtain a general agreement that when it is necessary for a worker to move, he may count his previous period of service for superannuation purposes when he arrives at his new employment. That would help to get mobility into the motor industry.

Incidentally, a great number of the vacancies which we see are in the coal and railway industries. There was an occasion when I was accused of losing my temper while speaking from the Dispatch Box about the British Employers' Confederation. The Confederation said that the nationalised industries were paying too much money and that was causing all sorts of trouble. But that statement is proved not to have been borne out by the facts, when we see such a large number of vacancies in the railway industry and the mining industry. As a matter of fact, it is almost impossible to believe—and some of my hon. Friends could enlarge on this—that we can take a specialist in car production and expect that he can step out of that job into the production of coal in a mine. Such a belief is fantastic, and my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton) could confirm that.

Once we have taken the trouble to train these people to be specialists in certain industries, it is a loss to the wealth of the nation if they cannot be provided with the sort of jobs they have been trained to do. Some of the industries in which there are vacancies were safe industries in pre-war days. By that, I mean that in pre-war days, when there was unemployment, certain industries were paying well below the average but they almost guaranteed 51 pay packets a year. Because of the continuity of employment in such industries, men were prepared to stay in them despite the low wages. But since the war all industries, except, perhaps, the textile industries, have been safe industries.

Therefore, those are the industries which are now paying well below the average wages for the whole of the country. We are asking that people, who, by their own efforts and by agreeing to increase production, have stepped up their wage levels to well above the average, should go out of the industry in which they are employed to work where they will receive well below the average rate of wage. People who believe that can be done are adopting a "Santa Claus" outlook. Such an outlook will not produce results in this day and age.

I submit that instead of merely saying that there are X number of vacancies for the taking, the Government must produce a positive employment policy. They must tell us which industries they believe will yield the maximum returns from the point of view of economic solvency and whose products have the best chance in the world markets; and that higher conversion rates and that kind of thing is the determining factor. I do not wish to take this argument too far, but perhaps we might ponder the question whether we should base wage rates on profits in particular industries, if we are to get a proper distribution of labour.

We cannot do that by allowing Vernon's Pools, and industries of that sort, to be able to pay the highest possible rates—because they cannot lose anyway—while British Railways, or industries which yield only a small profit, are denied labour. Perhaps hon. Members on this side of the House may feel obliged to determine whether we are agreeable to continuing a policy which means that if a man can get into a "spiv" industry which is not necessary to the national economy, but yields high profits, he can expect to earn a far higher wage than people doing a good job of work in one of the heavy industries.

Hon. Members opposite may have gathered that I do not like their policy of a credit squeeze which makes a blind hit at all industry whether desirable or not. That cannot solve the economic problems of this country. Unfortunately, we shall have to put up with the present Administration for another few months at least, but I should have thought that in the present situation it would have been better, even from the Government point of view, to lift the credit squeeze in a selected way. I believe that if the Government propose to channel labour into essential industries that is one of the few ways open to them to do it. There is a Budget coming on in a few weeks, and if there is a piece of advice the Chancellor would be agreeable to taking and which is worth having, that would be the advice I should offer. In that way we get something to ensure that we man-up the sort of industries which it is essential that we should man-up.

We are now in the dilemma that all industries suffer in ratio in consequence of the credit squeeze. While that position obtains, it is impossible to give priorities to any, because all remain static at the same level, no matter what happens. It is that sort of dilemma which causes some Tories to believe in ideas designed to produce a pool of unemployment in order to weaken the bargaining power of trade unions. Reference has often been made by the party opposite to the fact that full employment cannot mean the guaranteeing of the same job for the same man, and we accept that it may be so. But employers also have a great responsibility.

I think it essential that some of the older industries in Britain should begin to look for new products to which to devote their energies rather than believing that, because 50 years ago a certain product was a good paying proposition and helped appreciably in the export market, they can continue to produce it. They have a great responsibility to switch their production to things which are of far greater importance to us than the ones they are now making.

Above all, the workers are now confused by the need for more horse-power per head in their industries being accompanied by Government action to damp down on new capital investments, even in industries which are considered essential to the national prosperity. It is a complete contradiction, and nothing has caused more confusion as far as very many of the workers are concerned. Over the years, we have tried to educate them to believe that they are part of the scheme of things within the industry in which their work has been done, but how is it possible for them to believe that when they see that, within the industry which they have served for years, they are suddenly thrown into the street without any regard at all. We cannot hope to obtain a vastly improving level of production while that sort of thing goes on.

We are now reaching the point at which it is quite impossible to divorce from the present Government the desire to reinstitute the basic sanction of pre-war days by which industrial discipline was maintained—the sack or the fear of the sack—and that means a complete departure from what has previously been the bipartisan policy of full employment, which both parties have presented to the nation. I believe that the present Government, despite the words of the Chancellor of the Exchequer in the economic debate, have departed from any attempt to maintain full employment in this country, for full employment means what it says and includes action that is necessary to avoid short time working.

Financial rectitude, the credit squeeze, call it what we will, is now seen to be an article of faith with Toryism, and the very centre column of the whole of their economic thinking. The fact that we have full employment is purely incidental to that. If we had 2 million unemployed and a balance of payments problem, they would still use it, because they have no other economic policy to put in its place.

In conclusion—[HON. MEMBERS: "Hear. hear."] I consider it as a compliment to a speaker on this side of the House when hon. and right hon. Gentlemen opposite do not like what he says. It reinforces my belief in what I have been saying. I ask them to remember that we are in a period which will probably go down in history as the second Industrial Revolution, in which it is essential to get the workers to understand that the security of their jobs is the objective of both sides of this House.

How is it possible, taking the motor car industry again as an example—the one industry which, from its very line production methods is most applicable to automation—to get the people in that industry now to believe that it is correct policy to accept methods which can vastly increase the production of motor cars? Once we begin to shake their confidence in all this, we get a reaction which is expressed in the phrase, "Safety first." I believe that perhaps the greatest tragedy of the presence of a Tory Government in these years is that the thinking of the trade union movement has been made defensive and has been conditioned by the fear of what such a Government will do.

This is a great tragedy for Britain at a time when our competitors, whether Germany, the United States or anyone else, are going rapidly ahead with the production of new automatic processes, and so on. I believe that it is one of the reasons why the return of a Labour Government in Britain is the only possible way out of the economic problems which now beset us, and that only by getting back the confidence of the workers in industry can we hope to live in this world on the decent standard which the British people are entitled to expect.

6.45 p.m.

Mr. A. C. M. Spearman (Scarborough and Whitby)

The hon. Member for Newton (Mr. Lee) will not expect me to agree with his concluding sentence, but, at any rate, I do agree with a few of the things he said. First, I agree that it is the Government's job to create those conditions which will stimulate manufacturers to go out into new industries rather than leisurely continue making the things which they have made in the past. Secondly, I agree with him that to create a pool of unemployment is not the sort of way to create confidence in the workers today.

I suppose that no single factor other than war has caused so much suffering and so much national waste as the mass unemployment between the wars, and, therefore, I can well understand the anxiety of hon. Members on all sides of the House, when there is any increase, however small, in unemployment, because it might appear that we were slipping again into the pre-war conditions.

I believe, however, that there is no chance at all of falling back into the mass unemployment that we had before the war, for the reasons that we had it then; namely, that there was a glut of goods and insufficient purchasing power to take them up. I think that Maynard Keynes has taught us what neither Conservative nor Socialist Governments knew before—how to deal with this problem. [Interruption.] If hon. Gentlemen say they knew, why did they have larger unemployment than was ever known in this country? [HON. MEMBERS: "No."] In 1931, there was colossal unemployment.

Mr. J. T. Price (Westhoughton)

The hon. Gentleman has made reference to John Maynard Keynes, and some of us on this side are not entirely ignorant of his teaching, whether we accept it or not. May I remind the hon. Gentleman, since he has brought in that distinguished name in support of what he is arguing, that as long ago as 1925, John Maynard Keynes wrote a celebrated monograph entitled "The End of Laissez-Faire," and this Government in 1956 have resurrected it as a policy?

Mr. Spearman

That is a point of view which I would entirely repudiate, and I will come to it later in my speech.

I am trying to allay, in a humble way and as far as I can, any fears that unemployment will return on the same scale as before the war by saying that there is no danger of that sort of unemployment today. In view of what the hon. Gentleman has said about Keynes, perhaps he will agree that what Keynes said amounted to this, that at a time of unemployment, an increase in savings, so far from increasing the national income, actually brings it down, while an increase in money incomes generates a demand, and that raises employment.

Today, I should say that the only fear of mass unemployment lies in one thing alone, and that is whether we can get the raw materials. The late Sir Stafford Cripps put this very clearly, when he wrote on one occasion The great threat to employment is not economic depression, but inability to earn enough through exports to pay for the materials to keep the factories going. If we are to make sure of being able to get our raw materials, three conditions are necessary. First, our prices must be reasonably stable, so that we can compete with the foreigner; secondly, home demand must not absorb so much that there is not enough available for export; and, thirdly, there must be a sufficient movement of labour to make sure that, as the hon. Member for Newton said, we are always prepared to change and make those things which we can make better than the foreigner. Again, to quote Sir Stafford Cripps, on 26th October, 1949, he said: To insist upon the rigid maintenance of the present pattern of employment would be to destroy all hope of full employment."—[OFFICIAL REPORT, 26th October, 1949; Vol. 468, c. 1341.] I want to discuss what degree of full employment we should aim at. I think that even the most enthusiastic hon. Gentleman opposite would agree that 100 per cent. employment is impossible.

Mr. Lee

Would not the hon. Gentleman agree that because of the policy followed in the Distribution of Industry Acts it was possible to get unemployment down to 200,000 and that the pattern of industrial building, since the ending of control, shows that we are building too much industrial building in places where the Ministry of Labour has vacancies which it cannot dispose of?

Mr. Spearman

I am trying to discuss what measure of full employment we can safely have, and I am assuming general agreement that we cannot have 100 per cent. employment. Today we have about 99 per cent., but under conditions which I believe make the three requirements to which I have referred impossible to achieve. The demand for goods is so high that employers can pay increased wages over and above increased productivity because they know that they can pass the increased wages on to the consumer in higher prices.

The Leader of the Opposition put this point very clearly in an article he wrote last November in Encounter. He said: When wages rise faster than productivity, manufacturers tend to pass on higher costs in higher prices, and are able to do so because of the increased demand generated by the rise in wages. Secondly, it is so easy for manufacturers to sell in the home market that they are not striving enough to sell abroad. Thirdly, there is not labour available for industries which need it urgently. I know a man who opened a factory to make machine tools for export, and he is unable to get labour. We can see that sort of thing happening time and time again. I agree with the hon. Member for Newton that we must have a continuous shift from making one sort of thing to making another, in accordance with changes in demand. Nothing could be worse than to freeze the economy in obsolete directions. That means that men must go out of one job into another. There may be difficulties of transport and accommodation, but painful as that may be it is less painful than by making things that people abroad do not want and failing to get imports of the raw materials to keep our factories going.

I am suggesting that as much as 99 per cent. full employment can be achieved only in artificial conditions of inflation. I define inflation as a condition in which the increase in money incomes is greater than the increase in national resources. Only in one year since the war under either Government have we had a real balance between the resources and the money income, and that was 1953–54, and then we had stable prices.

Coming back to the interruption of the hon. Member for West Houghton (Mr. J. T. Price), I do not admit that the present Government believe in laissez faire. We believe that we must plan the balance between resources and demand. I profoundly believe that it is the first duty of the Government so to plan that balance between demand and supply—[Interruption.] Hon. Gentlemen opposite did not succeed in getting a balance at all in the six years that they were in power.

Mr. James Griffiths (Llanelly)

Did the hon. Gentleman say "plan"?

Mr. Spearman

The fundamental difference between hon. Gentlemen opposite and ourselves is that we believe in that sort of planning while they believe in the detailed planning of production.

Mr. Crossman

There is another difference between us, and it is that the hon. Member for Scarborough and Whitby (Mr. Spearman) did not hear the Minister's speech.

Mr. Spearman

I did not hear the Minister—

The Minister of State, Board of Trade (Mr. A. R. W. Low)

I can reassure my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman) by telling him that nothing which he has said is in the slightest bit inconsistent with what my right hon. Friend the Minister of Labour said today.

Mr. Spearman

Hon. Gentlemen opposite believe it is possible to plan production all over the country in detail, but they have not shown themselves in the past—as a Government—capable of foreseeing demands so clearly as to justify making such plans, at any rate without using complete physical control, including direction of labour. In Germany and America during the last two years the price level has remained almost constant while the standard of living has, of course, gone up a great deal. Employment in those countries is about 97 per cent.

We have, I think, two alternatives. One is to aim at employment of about 98 per cent. and know that we have a reasonable assurance of being able to maintain it, of having stable prices and getting our vital imports of raw materials. The other is of trying to continue at 99 per cent., which I believe will put us in jeopardy of not getting those raw materials and so bring about mass unemployment. Let us remember that prosperity is not just full employment, which is easy enough to get by itself. They probably had it in the Stone Age. What we want is a high level of employment, with the assurance that we can maintain it and maintain a high standard of living with it.

6.58 p.m.

Mr. Cyril Bence (Dunbartonshire, East)

The Minister of Labour spoke about the mobility of labour in the motor car industry. I had the fortune, or misfortune, of being employed in that industry for a number of years and I want to drive home a point with Government supporters.

When a production engineer puts down a line for the production of a commodity he estimates the personnel required to operate it, whether it is by conveyor belt or by bench. If he wants 1,000 men he must have them. If the demand is sufficient to employ them for six days a week then he wants to work the production line for six days a week. If the demand is sufficient to work the line for only three days a week the engineer cannot put only 500 men on the line. There must be 1,000 men.

That is the reason why the motor car industry may have thousands of men on short time. When a production line is working it must be fully manned. The industry cannot discharge thousands of workers, because that would underman the production line. Despite comprehensive superannuation schemes and the specialisation of labour that have been referred to, the fact remains that the production line in any commodity, whether for cars or television sets, whether it requires 100, 500 or 1,000 men, must be fully manned. That is the problem.

I want to deal with this subject from another angle, because it affects us in Scotland. I have here the annual review of the Clydesdale and North Scotland Bank. It is an excellent publication, and surveys the industrial activity and resources of Scotland. It shows that, in Scotland, capital investment is falling—and falling rapidly. One of the reasons for the fall is that Scotland is losing her skilled men and technologists to the South. It is impossible to go in for industrial capital investment if it does not attract the skilled labour.

Until recently, the Capital Issues Committee had to sanction all capital investment above £50,000, although that figure has now been reduced to £10,000. But what happens in the motor car industry? Capital investment there is going on from day to day, and 2,000 or 3,000 highly-skilled machine tool makers are engaged in the plant partly on capital investment by making new machine tools. The industry does not buy machine tools; it makes them within its own factories. Austin's make most of their machine tools today as they did before the war. There is, therefore, capital investment in the industry resulting from that concentration of skilled labour—and one cannot get that skilled labour out of the motor car industry.

I was getting good wages as a skilled man in 1951, when I left the motor industry. I moved from Birmingham to Scotland because I had been selected as a Labour candidate. I went to several places in Scotland for a job, but for a 47-hour week in Scotland I could not get a job at more than half what I had been getting as a skilled man in the motor industry, yet the skill needed for the job in Scotland was as great as that needed in the motor industry. In fact, greater skill was needed in Scotland. I happened to be a toolmaker and toolmaking motor car components is not so difficult as toolmaking clocks and watches, yet the wages were only half those offered in the motor car industry.

Mr. Osborne

Is the hon. Member arguing that for similar skilled work he was paid twice as much in Coventry as in Scotland? Does he not think that that is one reason why British motor cars are so high priced that they are not selling so well abroad?

Mr. Bence

No, the hon. Member did not get my point. In Scotland, my skill was used to make tools to produce clocks, watches and other things from the presses. In the motor trade I should say that 30 per cent. of my time was employed not merely in making tools to produce motor cars, but to make tools to produce machine tools to increase the production rate of the motor cars. I was, in fact, in part producing permanent capital in the form of transfer machineries. I could be employed in doing that in the motor car industry because of its higher technology.

As I say, one just cannot get that skilled labour out of that industry. There are advertisements in the newspapers all over the country for machine tool makers of all sorts, but the motor industry will not let the men go. The machine tool fitters at Austin's, at Ford's, of Dagenham, at General Motors, will be engaged, during a slack-off, in producing permanent capital in the industry. While that is going on, industrialists in Scotland claim that they cannot invest in new production processes because of a lack of skilled men. There is no need for General Motors, of Luton, to get permission to invest millions of pounds. They have 2,000 skilled men who can operate on the steel and themselves manufacture the capital.

It is nonsense to say that any Government can ignore this position. With modern technology, to employ 100 men two or three skilled men are needed to put down the plant and machinery, if one huge industry is to be in a position to bottle up the country's skilled men to develop its own technology while starving the rest of British industry of skilled men where are we to end? Are the Government going to abdicate from their responsibility? They accept responsibility for the Capital Issues Committee. They tell an industrialist that if he wishes to invest more than £10,000 he must get that Committee's sanction, but the great firms I have mentioned can invest millions of capital in the way I have shown and do it without permission of that Committee.

Mr. Alan Green (Preston, South)

The hon. Member has said that he experienced this difficulty personally in 1951. What I do not understand is why, if detailed planning up to 1951 could not solve the difficulty, it should be solved now.

Mr. Bence

Let the hon. Member understand that from 1945 to 1951 we were short of a good many things. A great deal of planning was done in difficult circumstances and the war had been over for only six years. It has now been over for 11 years. I hope that when the war has been over for 40 years hon. Members opposite will not keep on talking about the six-year period after the Second World War. If they do no one will swallow it. If a father told his children that they had to suffer poverty 15 years after there had been a fire in the kitchen his children would think him mad.

Mr. J. Griffiths

My hon. Friend will remember, too, that the six years following the Second World War were in striking contrast to the six years after 1918.

Mr. Bence

Yes, but I did not want to go back to 1918.

Mr. Griffiths

But hon. Members opposite forget that.

Mr. Bence

We have heard from hon. Gentlemen opposite about planning. One would imagine that there is no planning going on in this economy. Of course there is planning—and plenty of it. Can this little island, with a population of 50 million and the need to import so much of our raw materials afford to allow big companies to draw up their own plans within their own structure, to use labour and raw materials and to denude every other industry of skilled labour? Of course it cannot. That time has gone. That is a luxury we can no longer afford.

We can no longer afford to have four companies competing with each other to provide a motor car for a gentleman. We cannot afford to have these huge high-cost plants competing with each other.

Mr. Charles Fletcher-Cooke (Darwen)

Does the hon. Gentleman advocate only one motor company?

Mr. Bence

The hon. Gentleman is forestalling me. I assure him that he and I will live to see the time when there will not be more than two.

Mr. Green

Which two?

Mr. Bence

I will not say which two.

Mr. Hobson

Ford will win the battle.

Mr. Bence

I served my apprenticeship from 16 to 21 and the firm was producing two or three commodities. At that time those commodities were being produced by 37 large companies. When I left in 1936, only one company was left—that for which I had worked. It was a complete monopoly and still is a monopoly.

Mr. Fletcher-Cooke

That is what the hon. Member wants.

Mr. Bence

That is what happened. When it happens I want it to be publicly accountable as to how it fixes its prices and how it is a monopoly.

Commander Agnew (Worcestershire, South)

Is the hon. Gentleman advocating the nationalisation of the motor car industry?

Mr. R. J. Mellish (Bermondsey)

Why not?

Several Hon. Members

rose—

Mr. Speaker

The last two speeches have been very much interrupted. I must remind hon. Members that this is a debate and should be conducted as such and not as an argument. It is not an argument it is a debate.

Mr. Bence

I do not mind hon. Members opposite interrupting. I am merely pointing out to them, when they object, that this is happening before their eyes, has been happening for a long time and will continue to happen. The strongest will drive out the weak. That is the purpose of becoming strong. What is the good of becoming strong if they cannot knock out the weaker man?

In the last 11 years we have heard a lot from hon. Members opposite to the effect that what we need in this country is not nationalisation but a partnership between Government and industry. We have heard that hundreds of times. About 5.30 p.m. on 20th March, 1956, the Minister said, "We want a partnership, but the Government must be a sleeping partner and must have nothing to do with it. The employers must decide how much labour they want and how many they employ." I have satisfied myself, as an engineer, that in modern conditions many employers are not entitled to the labour they say they want. They can sidetrack the Government's fiscal policy, and that is what they are doing to the present Government. If I were in industry no doubt I should "play ball" with them.

We have been struggling to attract industry to Scotland, but hon. Members do not seem to realise that what I might call the industrial activity train is travelling so fast, because of technology, that nobody else can get on it. If a dozen skilled production engineers and toolmakers had plenty of money behind them, it is doubtful whether they could put down a modern light engineering plant in competition with the modern light engineering plants in this country. It does not need restrictive practices to prevent a new man from entering industry. Technology, cost and the Capital Issues Committee are almost enough to prevent the new entrants.

I.C.I. used to do it by all sorts of means 20 years ago and the oil industry does the same thing, but it is not necessary now. Even Ferguson cannot put a plant down, and he has plenty of money. It is difficult for new enterprises to be started in the Development Areas. If we analyse the figures for Scotland and Wales, which enterprises have been started? They are not new enterprises; they are subsidiaries of existing companies and parts of a world chain of production—International Traction, International Harvester Co., General Motors, Singer sewing machines, Fords, a world chain of the production of light commodities.

Hon. Members opposite are directors of light engineering companies, but the production engineers and technicians in the factories have them in their pockets. Make no mistake about that. They are in the hands of the experts. The Government must challenge this new technological autocracy in this country, and they can do so only by being a live partner in British industry. We must stop the drift of skilled men from Scotland. They are moving like lightning. My hon. Friend the Member for Motherwell (Mr. Lawson) gave the figures of the annual drift of skilled men from Scotland.

Scotland has technological colleges and heavy industry producing skilled men, but they drift away and are sucked into industry in the South and the Midlands. We get an over-weighting of population in the South and a bad distribution of population and industry. We must not merely take action to stop the drift from Scotland, but must see that industry is created in Scotland where those skilled men can be used at wages as good as those paid in the South.

It may have been true thirty years ago that the cost of living was lower in Scotland, but it is not so today. If we go into a grocer's shop we find proprietary products at controlled prices, from Cadbury's to tea and fruit and vegetables. The same price is maintained all over the country and there is no great divergence in the cost of living.

It is inevitable that any Government must take a positive hand in directing industry to areas where it is required. We have a new town at Cumbernauld. Does anyone imagine that the Secretary of State for Scotland, even with his great interest and enthusiasm for Scotland, will get new factories in Cumber-naiad? He can go round doing all the pleading he likes for industry to build new factories there, but more will be needed.

Hon. Members opposite will give financial incentives to industrialists. My hon. Friend the Member for Newton (Mr. Lee) and my right hon. Friend the Member for Belper (Mr. G. Brown) asked for incentives for workers to move from one area to another. Why will not the Government give them? If it is good enough to offer incentives to industrialists to take industry to new areas, why is it not good enough to give incentives to the workers to move? At present there is a disincentive, because the wages in these areas are invariably lower than those paid in the more prosperous areas. The employer gets an incentive but the worker gets a disincentive.

I feel very deeply about this matter, because I have witnessed it over 30 years and have lived in it. I know what it means to be displaced as a highly-skilled man from a highly-skilled industry which is paying good wages. I know what it is to be thrown out, to lose superannuation and to move into a new town without the residential qualification for a council house and unable to rent another house. These are human problems facing these men for which the Government must take responsibility. They must take some action to handle what is a difficult situation for human beings.

7.20 p.m.

Mr. Martin Lindsay (Solihull)

I thought that the right hon. Member for Belper (Mr. G. Brown), who opened the debate, did so in a speech of studied moderation, and I readily concede that I agreed with a great deal of what he said. I was pleased that he did not exaggerate the difficulties in the motor industry because, with only 30,000 men now on short time out of a labour force of nearly 500,000, it would be wrong to assume that there is a serious slump in the industry, or anything like that at present.

One must not, however, overlook the human factors, the anxiety in the minds of men who find themselves on short time or redundant. People establish a certain standard of living and make new commitments. It certainly is not easy—it is far from painless—to have to reduce one's standard of living because of a lower income. As everyone knows, this industry provides very high earnings—for example, more than £14 a week on an assembly line. If there is redundancy in the industry, we hope that with 47,000 unfilled vacancies in the Midlands, these men will not be out of work for more than a very short time, but I do not underestimate the difficulty. I think that the hon. Member for Newton (Mr. Lee) was quite right to draw attention to the great difficulty of trying to switch men with a particular individual skill into another trade which may be parallel but in which a different degree of skill is necessary.

Apart from the experience of the hon. Member for Dunbartonshire, East (Mr. Bence), who made a very agreeable speech, we all know that if men in the motor trade have to move to other jobs they are not going to be able to get anything like comparable earnings, at any rate at first. Moreover, quite apart from the question of wage rates, no one likes being forced out of a particular occupation and having to go somewhere else, with new workmates and perhaps at a considerable distance from home.

Having said that, hon. Members will appreciate that I have a great deal of sympathy with the spirit behind the representations of the trade unionists. The shop stewards in the Rover Company in my constituency are a very decent body of men and women, quite properly anxious, as they have been for some time, about the long-term prospects in their industry and the effects on it of automation and so on.

One of the difficulties is that that industry has not always had exactly exemplary labour relations. Some of the big companies in it used to treat their labour forces with scant consideration in the old days, and these things are remembered today. Even now one wonders whether they do all they can to improve labour relations. How many companies, for example, take their workpeople into their confidence about the position of their companies, their production targets and so on? How many of them follow the example of the more progressive companies which show what a large part of each pound on the revenue account goes on labour and raw materials and how few pence at the other end cover the dividend?

The right hon. Member for Belper (Mr. G. Brown) and other hon. Members have spoken about East-West trade. There is a feeling in the labour and the trade union movement that it is only prejudice on the part of the Government and in the motor car industry which prevents a great volume of trade with the Communist countries. The right hon. Member mentioned the possibility of sending 1 million tractors to China. I say at once that I think that figure is quite outrageously inaccurate. I do not believe that if the stop list were lifted China would be in a position to import one-hundredth part of such an immense number. I do not believe she is in a position to finance large imports of tractors, motor vehicles or anything else.

What is the position in the rest of the Communist bloc? I know that market, and here I declare an interest, because I have recently visited five Communist countries to explore the possibilities of extending the motor export trade to them. Russia has a very fine industry of her own. So has Czechoslovakia, at any rate for commercial vehicles. Czechoslovakia exports commercial vehicles as far afield as Egypt and Iceland. Poland has taken a few hundred British motor cars and so has Roumania—Land Rovers—but Poland is extremely short of sterling, as is Czechoslovakia, Hungary, Bulgaria and, to a lesser extent, Roumania. The one barrier to East-West trade is not any kind of British prejudice, but a shortage of sterling in those countries.

Mr. Chapman

I am interested in the argument of the hon. Member, and to some extent I agree with him, but he will recall that one of the difficulties with Czechoslovakia is simply that there has been no general agreement on outstanding claims and debts, etc. For example, a deal has been offered for a thousand motor cars and has been turned down by the British Government on those grounds.

Mr. Lindsay

I happen to know all about that because I was concerned in the negotiations which went on. It is quite true that there have been difficulties about a trade agreement owing to the fact that the Czechoslovak Government would not face the debts which Czechoslovakia owes this country. That has been the stumbling block. One barter deal has in fact taken place. That was not for British motor cars, but for herrings, which Her Majesty's Government thought should have priority in that case for, I think, quite good reasons, having had the matter explained to me. I am in general agreement with the hon. Member.

The real barrier is shortage of currency in those countries; and only Land Rovers—being four-wheel-drive vehicles—are on the restricted list. Only sales of that one type of vehicle to the one country which is able to afford to buy them have been restricted by Government action. It would also be an illusion to think that there is a great potential market for British consumer goods of any kind in the Communist bloc. In all those countries those whom I saw were perfectly frank in stating that it is their intention to make the Communist bloc a self-supporting economic unit at the earliest possible moment.

Mr. R. Moss (Meriden)

Would the hon. Member say the same of South-East Asia as he says of the Communist bloc?

Mr. Lindsay

I cannot speak of South-East Asia, but of the five countries, with Russia as the biggest, in Eastern Europe. I have no experience beyond that on this subject.

As to the rest of the world, where there is a free market in motor vehicles, think British motor car manufacturers are to some extent to blame. We have all read reports of shoddy workmanship. I am bound to say that I have tried to follow some of them up, and I am afraid I am convinced that they are true.

I took up the case of one of the "big six" motor car manufacturers, which, for obvious reasons, must remain anonymous, and I checked up with its distributors in different parts of the country. They told me that one simply would not believe the time that they have to spend in their garages in putting the vehicles right before passing them on to the purchasers. If manufacturers cannot get their cars twenty or thirty miles from the factory in a proper condition, I do not believe that they can get them several hundred miles overseas without complaints. I would, however, say that this criticism does not apply to the Rover Company in my constituency, which carefully tests every vehicle before it leaves the works.

I think the criticism is valid that the motor car companies are trying to do their export business with too many models, many of which are not well designed for overseas markets. That is the fault of the motor car companies, but the blame for the fact that many vehicles are shoddily assembled must be shared between managements and workers.

Now that sales on the home market are not so easy, there is no doubt that these companies will make great efforts to extend their business overseas. It is not only a matter of design and of workmanship and salesmanship, but there is also the very important factor of price. My information, I am sorry to say, is that we have already gone quite some way to price ourselves out of overseas markets. I represent a constituency where I am in close touch with several of the motor manufacturers, and I do not know one of them who thinks that he can absorb the present round of wage increases and the increased costs that flow there from. The present anxiety is whether they will be able to hold their present volume of exports with the increased prices which they consider are inevitable this year.

I am not one of those who takes the view that there has been no restraint in wage demands. When one considers the stranglehold on our economy that the three biggest unions have got, one is bound to concede that they might have asked for very much more. One must agree that the continual spiral in the cost of living over the past few years has made many claims inevitable. What we must now do—there is nothing more important on the home front for the Government to do—is to stabilise the cost of living so that increased earnings which are not related to increased production will be irrelevant.

Mr. Crossman

Would the hon. Member agree that in the case of motor cars there has not been a single instance since the war when increased earnings have not been accompanied by increased productivity? Surely, ours is the one industry in which we can claim that we have achieved far greater increases of productivity than the increases in earnings actually show.

Mr. Lindsay

That is quite fair. I was speaking generally on wages and earnings in relation to increased productivity.

One must consider the credit squeeze in the perspective of the economic position. There is not the slightest doubt that the credit squeeze has operated greatly to the detriment of the motor trade, of the cycle manufacturers and of the producers of many items of domestic electrical equipment. But that has been the object of the credit squeeze, and one must consider the overall economic position of the country as being more important than sectional interests, however important they may be.

The Government were absolutely right to limit home sales, and I believe that this action will have two very beneficial results on our economy. First, by relieving pressure on the home market, it will have a disinflationary effect which will check the rise in prices. Secondly, by reducing the demand for imports it will benefit our balance of payments. The more one considers the long-term need for expansion, the more one is bound to take the view that it is essential to restrain consumer expansion in order to expand capital equipment.

I do not know how many hon. Members have had time or opportunity to read the last edition of the Economic Survey for Europe—it is not even in the Library yet. If hon. Members have read it, they will have noticed one significant thing. Four years ago, the proportional investment in capital and in consumer goods was running level in West Germany and in the United Kingdom. During the last four years, however, there has been a steady widening in the gap. Investment in capital equipment in West Germany has been increasing all the time whereas, in comparison, the United Kingdom's proportion for capital investment has gone down while the proportion for consumer goods has risen. Quite obviously, the effect of this will be steadily to weaken our competitive position as compared with Western Germany.

We can derive no satisfaction whatever from the fact that of our increased production in 1955 three-quarters went on consumption and only one-quarter on capital investment. The Government were absolutely right to have taken the steps they did to check this trend. We have got to harden our hearts and not let up on the credit squeeze although we know perfectly well that it is a very unpopular measure.

I suggest to hon. Members opposite, who have approached this debate very fairly and sensibly, that they are not doing any good service to the country when trade unionists from the motor trade come to see them and they pledge themselves to all-out efforts to get the credit squeeze lifted. [HON. MEMBERS: "No."] If I am wrong, of course I withdraw, but I read a statement issued to a newspaper about ten days ago, after the shop stewards made one of their visits to the House, which made that very statement. [HON. MEMBERS: "No."] If I am wrong, I withdraw, but that was my impression. The wording of the paragraph—it may be complete nonsense—was that hon. Members opposite pledged themselves to use all Parliamentary means to get the credit squeeze lifted. Surely, that was the purpose of the Prayer against the hire-purchase restrictions only a week ago.

Hon. Members opposite must know, as we do on this side of the House, that frozen employment is destructive to the economy. We must be flexible and from time to time have adjustments in labour and materials between one company and another in the same trade and between one trade and another. The Government would have neglected their duty had they not taken the economic action which they did to secure those adjustments. If we fail in stabilising prices and holding the balance of payments, all of us, whether politicians, employers or workpeople, will go down together.

7.40 p.m.

Miss Elaine Burton (Coventry, South)

I am glad to follow the hon. Member for Solihull (Mr. M. Lindsay), because with a good deal of what he said at the beginning of his speech I found myself in complete agreement. I, for one, have no desire to exaggerate the difficulties of the motor car industry, and I know my colleagues do not. Unfortunately, I did not find myself in the same agreement with what the hon. Member for Solihull said at the end of his speech, nor do I agree—and I shall try to show why—with the steps the Government have taken.

I am sorry that I did not hear all the Minister's speech. I was in the Chair in a Committee upstairs. I have been told by my hon. Friends that he made no reference at all to exports. I hope that the President of the Board of Trade, when he replies to the debate, will refer to them. Naturally, representing a constituency which is much concerned with the motor car industry, I want to speak particularly about exports.

Reduction of overtime working, and short-time working, significantly affected the motor car industry in January. Manufacturers were finding it as hard to sell abroad as they were finding it at home. In January this year the industry produced 71,671 cars, 4 per cent. more than in January last year, but 9 per cent. less than the average car output during the last quarter of 1955. And exports at roughly the same level as in recent months, were more than a fifth below the level of January, 1955.

The Minister of Labour will know that one cannot attribute that decrease in exports to the import restrictions imposed in Australia and New Zealand because shipments to those countries were about 1,600 cars fewer than in January, 1955, but the total decline of nearly 8,000 cars exported was spread fairly evenly. European markets, I am told, took about 4,500 fewer cars. There was a further sharp decline in sales in North America. It is obvious from that, as we in Coventry well know, that cars left at home were much larger in numbers than in January, 1955, but, as we also know to our cost, it would be quite wrong to suggest that the cars which were left at home were sold on the home market.

In spite of the actions of the Government—and I do blame them, and I hope to show why—we are still the greatest motor car exporting country in the world. When we cease to be, the motor industry is in for a time of permanent recession; or at least will be much smaller in size.

I have had some talks with people who were over here recently from Sweden, and I am told that in Sweden, in January this year, we sold 802 cars, compared with 3,325 in January, 1955; that in Denmark we sold 66 cars, compared with 1,327. In India we sold 11, compared with 372. Those are facts, whatever the reasons may be for them.

Last month, in the City of Coventry, the District Secretary of the Confederation of Shipbuilding and Engineering Unions, Mr. Urwin, said he believed that this short-time working was only the start of what was to come, because the short-time working was confined in the main to the assembly units. He visualised the time when firms which supplied accessories and component parts, the body builders, the electrical manufacturers, and so on, would be affected, also. This is a matter which obviously should interest the Minister of Labour. We have seen that prediction being fulfilled already.

The hon. Member for Solihull will know that we in Coventry are particularly concerned about this, because practically 60 per cent. of the industrial population of Coventry is concerned directly or indirectly with the manufacture of motor cars. My hon. Friends from the Midlands will correct me if I am wrong, but I believe that in the Midlands as a whole 25 per cent. of the population is concerned with that industry.

The workers in Coventry believe that the country's output is being cut back deliberately as a policy. We know that two big firms, Ford and Vauxhall, are expected to expand rapidly in the next three or four years, but smaller firms will be squeezed out by the increase in the Bank Rate. We wonder whether the Government have taken any notice of that. Workers and trade union leaders in the City of Coventry are not of the opinion that this recession will be brief or even only temporary.

Mr. Iain Macleod

It may help the hon. Lady if I give some figures. I said that there were 34,500 people losing on the average one day each. I am told that the breakdown of that figure is this, 22,000 of those, or, roughly, two-thirds, are engaged in the manufacture of cars, and the remainder in making accessories.

Miss Burton

I am grateful to the right hon. Gentleman for those figures.

What I was about to say was that we in Coventry believe, and the trade union leaders believe out of their past experience, that even if there is some improvement in the position it will be only temporary, and that because the Government are taking this attitude we shall be back in exactly the same position next winter. I believe that the short-time working and the redundancy are definitely the fault of the party opposite, that they are the effects of what they would call Tory freedom.

The hon. Member for Scarborough and Whitby (Mr. Spearman) said that there was freedom from planning. That is becoming increasingly obvious. The Government do not believe in it. As a result of that freedom and the refusal to put on any controls, there has been a drift by some manufacturers to prefer to sell on the home market. Those are the two main points.

Before 1951, the car industry exported more than two-thirds of its main output. I wonder whether the Minister of Labour accepts that figure—that under the Labour Government the car industry exported two-thirds of its output. Under this Government it exports less than half.

I heard what the Minister of Labour said about the responsibility of the Government, but I believe that the Government should state their intentions to the motor car industry. What do they want the workers to do? I do not know what advice to give the workers who come here to ask for it. Do the Government want to maintain Britain's position as the biggest car exporting country in the world? Or do they want to see the industry a dwindling one? Do they advise the workers to go to other jobs?

In the face of considerable opposition from the party opposite, the Labour Government worked the exports of the car industry up to a record level. They worked them up quite simply by allocating steel to the car industry on the basis of its exports. It is quite obvious to us that the Government are trying to promote exports to a much higher level by a devious route, by what I think is a dubious route, the dubious route of stockpiling and redundancy.

They do not appear to realise that the cut in car production which we are now facing with the stockpiling of cars will put up the cost of unit production on the car assembly lines and make exports more difficult still. Again, if workers are to be encouraged to leave the industry, how do the Government expect the industry to develop its export trade when it has lost its workers?

I should like to stress the human element, which the hon. Member for Solihull did not touch. There is a double problem here for workers in the car industry. The attitude of the rest of the country to car workers is not as sympathetic as it might be, because most people assume that these workers are earning good money. They think that they have had a good run. They notice that some of these workers take home for four days' work a week a bigger wage packet than do workers in some other industries. That is all very well, but these workers have had these wages because they have earned them and for no other reason.

Mr. S. Silverman

Despite the discrepancy in the wages, I can assure my hon. Friend that whoever's sympathy the motor car workers in the Midlands do not receive, they have the fullest sympathy of workers in the Lancashire cotton industry, because the workers in Lancashire have for years been asking the Government exactly the questions which workers in the motor car industry are now asking.

Miss Burton

I was not casting any aspersions on textile workers, and I am glad to have that point made by my hon. Friend.

What are the workers to do? Those in Coventry who are affected by short time and redundancy argue that it is better for them to hang on to their jobs than to go to the thousands of more poorly paid jobs in the area, but if they wait and then get the sack what is to happen to them? Are they to make their move now? The Minister of Labour has told us repeatedly at Question Time that there are more vacancies in Coventry than there are workers there to fill them. We fully realise that, but we have pointed out to him that the vacancies are not in the same kind of job.

My hon. Friend the Member for Newton (Mr. Lee) has referred to the Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance, the hon. Lady the Member for Edgbaston (Miss Pitt). I do not know whether there are many motor car workers in her constituency, but she has criticised motor car workers for refusing to give up their jobs and go into other industries for less money. I do not think that it would be reasonable for them to do that, but the Government should make clear to workers the line which they wish them to follow. Do they want them to remain in this industry which is now subject to short time, or do they want them to get out?

The hon. Member for Solihull mentioned 30,000 on short time. Many of these workers are convinced that we are now about to enter a time of unemployment similar to that experienced before the war. Many of the older workers in Coventry came from the distressed areas, where they knew the bad times, and that fear of the bad times is constantly with them. Why should we have this crisis and why, having produced the crisis, do the Government think that it can be met by tossing workers out into the queues at the employment exchanges? I want to ask the Government two main questions. First, do they agree that the building up of exports should be the main task of the motor industry? If so, should greater emphasis be placed on the export of commercial vehicles? Should it not also include a genuine effort to develop East-West trade?

If the Government accept the need to develop exports, what are they prepared to do to persuade manufacturers to this end other than make workers redundant? Up to date that is all that the Government have done. My second question is would it be of any use if we were to have an inquiry into the costing of the motor car industry? I have talked to various people in this and other countries during the past twelve months and I have been told that a great deal of money is spent in our motor car industry on the very large numbers of models that we produce. I am told that at the last Motor Show we had many more different models on show than the Americans have in their markets.

Mr. Crossman

And they have a 5 million production.

Miss Burton

Also I was told that we waste a great deal of money on design. What comfort is it to the men in the industry to be told that the increased efficiency which they have put into the industry over the past three or four years has now landed them at the employment exchanges? The men in Coventry are not earning their present wages because the employers love them, but because they produce the goods. I am glad that the Minister appears to be nodding his agreement.

Now, as to profits. It has been the constant claim of workers in the industry that when they ask for more wages the profits can well take care of that claim. Whether that is true or not, an inquiry would settle the matter. Increased productivity will not make sense unless prices are reduced, and I believe that I am right in assuming that prices in the motor car industry are now going up.

Mr. J. T. Price

I think that this point is germane to my hon. Friend's argument. Not only should the profits of the industry be taken into account, but surely the distributed expenses of the industry are a serious factor when 17½ per cent. commission is paid regularly on the sale of a new motor car. That is a fantastic figure.

Miss Burton

My hon. Friend should know that on the question of distributive costs of goods I would be at one with him.

I should now like to put one question to the manufacturers. Unfortunately, I do not own a motor car and, therefore, I have to go for my information to those who do. I gather that new thinking about design is essential. I am told that the overseas customer wants a car that is different in appearance and is not merely an old model which has had a face lift. Too many British manufacturers are too orthodox in changing the lines of their cars only a little instead of going in for something that is quite different. It seems to be true that manufacturers who are too orthodox have lost the race in the modern markets of the world.

I am told that customers overseas will not choose our popular models for various reasons. First, there is the matter of appearance. I was surprised to find that they put price and delivery date second to appearance. The third factor is after-sales service. My friends and acquaintances must be correct, judging by an article in this week's Economist headed, "British Cars at the Swiss Salon".

The article states: Switzerland offers one of the few really competitive markets, free from exchange and import controls and discriminatory tariffs, in which new British, American and Continental cars are dispassionately dissected with the scalpels of style, quality, price and after sales service. With a few welcome exceptions, the makers of British cars represented at Geneva this year show little sign that they have grasped these considerations. There are exceptions, I am glad to say. In Coventry we have a good example of what can happen when manufacturers do not cling to the orthodox. As the Minister will know, the Jaguar Company, in Coventry, has expanded phenomenally for several years. I want to underline the fact to the Government that the exports of this company have been running at between 75 per cent. and 80 per cent. of output. Last autumn the company unveiled their new 2.4 litre, of outstanding design, and now has a waiting list for it of anything up to two years.

Now I want to pay tribute to those workers who came to see us here the other week. I do so because, although they raised with us the possibility of lifting hire-purchase restriction or of reducing Purchase Tax, every one of those men to whom I spoke agreed that if this could be done it would help the flow of productivity at present, but that any such help would be purely temporary and would not be going to the heart of the problem. I assure the Minister that this is true, because I remember my hon. Friend the Member for Coventry, East (Mr. Cross-man) raising that point and the men agreed with us about it.

The Government must tell the industry and the country what they have in mind. I end with a quotation from the hon. Member for Aberdeenshire, East (Sir R. Boothby): The choice confronting Mr. Macmillan is between a self-induced slump in a booming world and the planned, strategic direction of our national economy and trading which is now essential for our survival. I ask the right hon. Gentleman, why create a slump rather than plan prosperity?

8.2 p.m.

Mr. William Shepherd (Cheadle)

I do not want to take up a lot of the time of the House in discussing the motor car industry, but I would say to the hon. Lady the Member for Coventry, South (Miss Burton) that we who have had experience of the textile industry are not unsympathetic to the present difficulties of the motor trade, and we should be happy to do anything we could to assist that industry. However, the hon. Lady is under a delusion if she believes that even the lifting of hire-purchase restrictions would have a material effect upon the industry—

Miss Burton

The hon. Gentleman must have misheard what I said because I said that that would not have a material effect.

Mr. Shepherd

The point I am coming to is that hon. Members opposite have all complained about the situation in the industry but have all backed away from any suggestion as to what should be the remedy for the present difficulties.

I do not join in some of the rather unfair strictures on this industry. Since the war it has done a magnificent job, and in view of the cost of introducing a new model there was a great disincentive to spend £1 million when such a strong demand for cars existed. Moreover, when factories were going all out on deliveries there was little justification, in the interest of the companies themselves or in the interest of the country, to stop the production lines in order to establish something entirely different.

There has been a tendency today to be a little too critical of the industry, which has faced considerable difficulties and has shown great enterprise in some export markets. What the industry suffers from is what the country is suffering from, although perhaps to an exceptional degree, namely, that there has been an unfortunate excess of demand.

If in 1950 there had been much less demand than there was, motor car manufacturers would have turned their attention to different kinds of cars. We all know that in Central Europe a car with four-wheel independent suspension and with better traction qualities is what sells. If, in 1950, therefore, the demand had been smaller, the motor manufacturers would have turned their attention to producing another model. However, in face of the great demand they were not inclined to do so, and they now find difficulty in selling the cars which they are producing.

One could criticise the industry for not being sufficiently far-sighted, but I say in its defence that there are few industries so competitive as this one. At a time when we are rightly criticising restrictive practices, we ought to pay the motor car manufacturers the tribute that they went ahead with their development programmes in a competitive spirit. As an opponent of restriction, I might say that this was done in perhaps too competitive a spirit, but I must praise them for what was done in that connection. One may ask, what is the solution?

Mr. Chapman

There is another question to ask. If it is not the responsibility of the manufacturers that this development is ending in relative fiasco, is it not time we asked who led them to go along this path of unplanned development?

Mr. Shepherd

Until a relatively short time ago there was an indication that the industry would be able to expand further without running into serious difficulties.

We must appreciate how far production has been expanding in the last few years, with over 300,000 vehicles more per annum produced. That is a tremendous increase. We have to face the fact that the industry must produce new models to meet export demand in competition with the type of car that sells overseas or else it must contract the size of its production. Certainly it cannot be in the national interest that people should work for four days a week in the industry for an indefinite period. In the long run that would be contrary to the interests of the industry as well as of the nation.

Now I leave the motor car industry to say something about the general matter under discussion. I resent bitterly what was said by the hon. Member for Nuneaton (Mr. Bowles), who ascribed to us the most sinister and discreditable motives in relation to unemployment. The hon. Gentleman has not, as I have had to do, worked for a living all his life. It may well be that he has to ingratiate himself with the party opposite by making such statements. However, it is disgraceful and discreditable for an hon. Member of this House to speak as he did.

If I had a choice between the present difficulties presented by full employment and the difficulties in the inter-war years, I would unhesitatingly accept the present inflationary situation. Some people speak disparagingly about the Welfare State and talk about the damage done to the fibre of our citizens by its effects. Nothing was more damaging than the rotting of the fibre of our people during those years of unemployment. I do not think that any hon. Member of this House would contemplate for a moment a return to those dreadful conditions.

Happily the choice is not between a grossly inflated economy and one in which there is mass unemployment. The figures quoted today show that there is by no means that choice before us. The right hon. Gentleman the Member for Belper (Mr. G. Brown) quoted Lord Woolton's statement about over-full employment. When a similar statement was made some years before by the right hon. Member for Lewisham, South (Mr. H. Morrison) the unemployment figure was nearly twice as high as when Lord Woolton made his statement. Then there were over 500,000 unemployed. Moreover, there were then approximately two million fewer employed.

I do not complain in general about the debate today, but there were times when it seemed to me we had lost all sense of reality and were discussing affairs as if they were reflected in the inter-war years instead of in an unemployment rate of 1 per cent.

I have no hesitation in defending the policy of the Government in trying to restrict demand, because excess of demand is at the root of all our present troubles. I wonder whether many hon. Gentlemen opposite really appreciate how substantial are the damaging effects on our economy of even a marginal degree of excess; how wasteful of labour, for example, are these excesses of demand. When an employer has an excess of demand he uses labour wastefully; he does not seek the best methods of utilising that labour; he hangs on to it when it is not strictly necessary; he has a larger administrative staff than he really needs to do the job.

Excess of demand is extremely damaging to our society, and is particularly damaging to a society such as ours which needs flexibility. Today we have a choice between having excess of demand with rigidity or less demand with the flexibility that we need. I have no hesitation in saying that we must choose the path of flexibility. We must not choose the path which some right hon. and hon. Gentlemen have tried to map out for us today. It is not possible to say in advance what the future of a given industry is going to be: the expansion of society cannot be planned as some hon. Members think is possible. Two years ago one would have thought that the motor car industry was facing a further period of great prosperity. Now we find a rather disconcerting state of affairs.

It is quite impossible to arrange society, at any rate a free society, in a completely competitive world—a society which needs such a high level of exports in order to live—according to the pattern suggested by some hon. Gentlemen.

Therefore, if we cannot pattern our economy as some hon. Gentlemen think, the alternative is that we must of necessity aim at the highest degree of flexibility. Flexibility is the quality upon which this nation must depend. The great enemy of flexibility is excess of demand. I do not blame the workers; it is just as much the fault of the employers. If there is an excess of demand and workers ask for an increase in wages, the employer says "Yes," and he puts it on the bill, adding a little more on for himself as well; and so the process goes on.

That state of affairs in which there is an excess of demand resulting in extreme rigidity is one of the most dangerous phases for our society. I hope that hon. Gentlemen opposite realise that. Flexibility is essential; even though it may involve some slight social disadvantages, in the long run it will be for the benefit of our society, because even small changes in the level of demand can have almost miraculous effects in the flexibility of industry.

There is a great and urgent need for us to do something dramatic about exports. I am not satisfied with the Government's export policy or the Government's export drive. I think we require to do something which will bring home to the workers and employers of this country the absolutely vital need to improve exports.

Mr. S. Silverman

What about a plan?

Mr. Shepherd

The hon. Gentleman asks about a plan. Perhaps he will hear me out.

We are not making our maximum contribution towards exports. I am quite certain of that. I think that with greater drive and with the right sort of ideas we might well increase our export sales in general by about 10 per cent. What we have been doing in the past five or six years is to rely upon the soft markets of the Commonwealth. Those markets are very questionable; we see what is happening in Australia. Again, because of excess of demand and easy access to these relatively soft markets, and some protection, we have neglected markets like those of Central Europe, and we have seen Germany spring up and fill that market with her products while we have a substantially decreasing share in the trade of the area.

We must face the fact that no longer can we rely upon the soft Commonwealth markets: we must tackle some of the harder but more open markets in various parts of the world—America, Canada, some of the South American States, and particularly Europe. It is in the European market that we as a nation have failed very materially in the past few years.

I do not think exhortation is enough. I do not for one moment decry the value of giving a lead to the industrial community. I believe that when industry realises the urgent need for exports, it will endeavour to respond, but I wonder whether we could not give some inducement to our exports. I know that this is a difficult matter, and I would not for one moment suggest that we ought to propose a course which would result in a subsidy for exports. Everybody must be against that at once. None the less I feel we might try to get international arrangements which would enable us to give an inducement, through the medium of taxation, to our exporters in the same way as nations are permitted, under international agreements, to put restrictions on imports if they are in difficulties in relation to their balance of payments.

I see no reason why the British Government could not try to negotiate with other partners in the various international trading organisations for an arrangement whereby an inducement to exporters might be possible for balance of payments reasons in the same way as one might have restrictions against imports for that purpose.

Mr. J. T. Price

The hon. Gentleman is raising a very interesting point. No doubt he recognises that in raising it in that manner he is asking for a concealed subsidy, which is completely against the policy announced by the Government for the liberalisation of international trade. I should have thought that that raised a very dangerous conflict which cannot be resolved in the terms of the Minister's speech today.

Mr. Shepherd

I am not entirely satisfied that the path we have pursued in relation to trade policy is entirely correct in present circumstances, but if we could get international agreement to limit tariff concessions to nations in balance of payments difficulties and set a limit on how much could be given in the form of inducement, it might stimulate our exporters and at any rate might prevent this situation where many of our customers find we cannot afford to pay them for what we buy. On the whole, it might facilitate rather than reduce the total volume of international trade.

I am not at all sure that the policy that we have pursued these last four or five years is entirely the right one. I am not satisfied that the present arrangements arising out of the Ottawa Agreements really suit our purpose. I feel we must review these arrangements whereby we let in so many goods from Commonwealth and other territories without duty, and yet, on the other hand, Australia receives very little benefit in terms of Imperial Preference in respect of goods which she sends to this country.

The time may well be here now when we should review the whole of these trading arrangements to see if some other arrangement could be made which would safeguard British industry more successfully. After all, one does not want high tariffs; but when in Lancashire one finds Indian goods coming in without any restriction at all, the arrangement must surely be a bad one. When Australia cannot get any substantial advantage from Imperial Preference, that is a bad thing for her. The time has now come, I feel, to review these arrangements because in the final analysis full employment here depends upon maintaining our export trade and the maintaining of our balance of payments.

On the whole, I think that restriction of demand is essential to our survival, and we should not shrink from some unpleasantness, realising all the time that we have a common aim in a policy of full employment. Also, we must have an export drive to sustain the imports of foodstuffs and other commodities that we need, and it may well be that we should look at some of the trading policies, because they may not entirely suit our present needs.

8.20 p.m.

Mr. Sydney Silverman (Nelson and Colne)

The hon. Member for Cheadle (Mr. Shepherd) has made what is in many ways a fascinating speech. If there were more time, and if there were not so many other hon. Members who are anxious to make their contributions, it would be a fascinating exercise to try to follow him, if only for the purpose of finding out exactly what he means. I hope he will forgive me if I do not do that, because I want to make a short contribution of my own.

I would, however, say that if the hon. Member considers it, he will find that his speech divides into two parts. In the first part he was the doctrinaire Conservative politician. He wanted to be sure that things were kept flexible and that there was the minimum of Government interference. He made it clear that things which he would otherwise welcome are not welcome to him because they are not possible in what he calls a free society. He did not actually say that, but I do not think he would quarrel with me if I said that his definition of a free society was a society without a centralised, organised plan.

In other words, the hon. Member's doctrinaire approach lands him, in the end, in sheer meaninglessness because he finishes his argument on his definition. He says, "You cannot have a plan because you cannot have a plan." All he is really saying is, "You cannot have a plan in a free society; you cannot have a plan in a society which does not have a plan." It does not mean anything.

When the hon. Member has got that off his chest and begins to approach the question not as the doctrinaire politician but as the hard-headed businessman with a knowledge of the world, he begins to realise that, after all, one does need a plan. It may be that my hon. Friends would not agree exactly with his plan, or if they did agree with it, would not like it extended to a great many of the things to which the hon. Member would extend it. Nevertheless, in the second part of his speech the hon. Member was saying that the Government must do something to safeguard industry.

Mr. Shepherd

Might I interrupt the hon. Gentleman?

Mr. Silverman

The hon. Member may, provided that he does not take too long. I do not want my speech to take too, long.

Mr. Shepherd

Why do hon. Gentlemen opposite persistently misrepresent the Tory philosophy? We have never believed that the Government have no duty in respect of industry or the welfare of the State.

Mr. Silverman

I will come in a moment to what the Minister has said. If I misrepresent him, the hon. Gentleman can intervene to correct me, although I am sure that the right hon. Gentleman will himself be able to do that when the time comes and does not need his hon. Friend's help in advance. If the hon. Gentleman intends to say that I have misrepresented anything he said I shall be glad to listen to him, but I gathered that his purpose in rising was to protest in advance against misrepresentation of the Minister that I should make later.

When the hon. Gentleman came to look at the realities of the situation he found himself in conflict with himself. Having devoted half his speech to saying, "You must be flexible," by which he meant, "You must not have a plan at all," when he came to the hard practical realities of the situation he was saying to the Government, "You must do two things. You must do something to safeguard industry against competition from imports, and you must do something by means of some kind of inducement to assist the exports of our industries." The hon. Gentleman did not define the inducements.

Even if the hon. Gentleman is right in both points, one cannot do it without some sort of plan which defines for each industry what its desirable scope is to be. The hon. Gentleman must face the logic of his own argument. If one is to have an import protection, not in order to have, as he himself said, a high tariff wall but to have just that measure of legitimate protection which the trade requires, one must begin by knowing what it is that the trade requires.

If one is to arrange with some international authority an inducement which will enable one, because one is in currency difficulties, to export more than one can export without such assistance, the hon. Gentleman must concede, if he really means what he says, that even then the Government must have some idea of how much it is fair to ask other countries to help us to export. Otherwise, the hon. Gentleman's plan would not work. Therefore, as soon as one embarks upon that, one is in a situation in which one must do exactly what my right hon. and hon. Friends did between 1945 and 1950, what we are recommending the Government to do now, and what the hon. Gentleman said in the first half of his speech he did not want the Government to do.

Perhaps this is the misrepresentation for which the hon. Gentleman was waiting. It also is what the Minister said in his speech that he was not going to do at any price. The right hon. Gentleman said that it must be left to the employers to decide, as though labour were, as it probably was at the beginning of the industrial revolution, a mere commodity. I interjected "Factory fodder." We cannot do it that way, and the right hon. Gentleman knows it. To do him justice, I believe that he would be horrified at the notion that his policy really meant treating men and women like that.

The right hon. Gentleman does not want to do that, and the Government do not want to do it, but if we say that we have a situation in which the labour force must be reduced and that the extent to which it is reduced is to be left to the employers alone, then we are really treating labour as though it were merely one of the raw materials of industry.

I have devoted longer to the speech of the hon. Member than I had intended. I hope that I may be forgiven, for I found his speech provocative in the best and not the worst sense of the word. It advanced propositions which were interesting in themselves and which led one to follow an argument. I am afraid that my criticism of his speech is that he never did follow the logic of his own argument to its inevitable conclusion. If he ever does that, he will find himself on these benches.

It has been the aim of all speakers in the debate to a void an alarmist atmosphere and one concedes at once that no one would be rendering a service to the country or industry in its present or in any condition by adopting scaremongering tactics. The Minister's speech was almost entirely devoted to a discussion of the present condition of the motor trade. He made one passing reference to the Lancashire figures, which he was good enough to expand a little in giving figures for the past few months when I challenged him about whether that was all he had to say about the Lancashire position.

One understands why. There has been a great deal of pressure from Midland workers, during the last two or three weeks, on Members on both sides of the House. I am not complaining of that. The more fuss people kick up when their livelihoods are at stake, the better it is for them immediately and the better for the country in the long run. My criticism of our own Lancashire workers is that they are altogether too quiet and too patient. [Interruption.] That is only another way of putting the same point.

What was being said about the motor industry? May I try to summarise it? I hope that I shall not misrepresent anybody. It was said that here we had an industry which for years after the war had been fully employed. Here we had an industry that was prosperous for all those concerned with it and to the highly skilled workers engaged in it. It is very easy glibly to talk of trained skilled craftsmen in the middle of their lives changing their jobs and doing something else, as though we could take the underemployed car workers and employ them in the mills of Nelson, at the same time as we sent unemployed weavers to make cars in Coventry.

Here we have an industry with a labour force that was second to none in the world. There have been many criticisms about the organisation of the industry by the employers and manufacturers. I am not competent to express any opinion about that and I do not intend to express any opinion about that. What we all know is that in the years between 1945 and the early 1950s—even right up to 1954 and 1955—it was one of the two industries on which the country's export trade depended.

We cannot live except by foreign trade. Our foreign trade in the years following the war had a wide variety, and one must say a word for the potteries, which had such a large contribution to make, and for coal, although the time came when we were using more coal than we could produce. In 1945, we found ourselves a country that could not live, except by the export trade, with no export markets. The motor trade, with the textile industry, were the two industries on which the country relied in those years to rescue us from the virtual bankruptcy in which twenty years of Tory Government and six years of world war had left us.

Mr. Anthony Fell (Yarmouth)

I am glad that the hon. Member brought in the war.

Mr. Silverman

The hon. Member for Yarmouth (Mr. Fell) was not a Member of the House during the war. I was.

Mr. Fell

So what?

Mr. Silverman

If the hon. Member had remembered that fact, he would have recognised that his interjection was as senseless as it was impertinent.

Mr. Fell

rose—

Mr. Silverman

I will give way to an argument, but not to insult.

Mr. Fell

rose—

Mr. Silverman

The hon. Member must be content to await his turn.

For a number of years the motor car industry remained prosperous. It is not being said even today that it is in anything like a state of collapse or slump. Nobody says that. What is being said is that we have the beginning, or what looks like being the beginning, of a dangerous trend which could be controlled, which could be prevented, but which, if left untreated, would ultimately result in the collapse of the industry.

What my right hon. and hon. Friends have been saying is, deal with it in time; or, as my hon. Friend the Member for Coventry, South (Miss Burton) said to the Government, "Tell us what you want the workers to do. How much of this world trade—because it is world trade that counts—do you think we can expect to keep, if we behave ourselves, organise ourselves, and if we correct such faults as we have? What is the future?"

It is not so much the partial unemployment now that matters. It is not so much the under-employment now. It is not even the cutting down of what has been a substantial wage. The real thing I have heard from hon. Member after hon. Member who has spoken about the motor car industry has been, "What are you going to do to take out of the minds of these men the haunting fear of coming unemployment, the fear of a coming collapse, the feeling of insecurity which makes a man wonder, ' Dare I ask my son to train himself in the job I am doing, and, if I do, and he invests his life in this trade, will there be a livelihood for him in it?'"

I have been asking all these questions for four years, not with regard to the motor car industry, but the textile industry of Lancashire. No doubt provoked by irritability on my part, the right hon. Gentleman became irritable himself and was good enough to accuse me of ignorance of the Lancashire cotton industry. Well, he is quite right. I am not a cotton worker, I never have been. I am not a merchant or a manufacturer, i never have been. I am not a financier, I never have been. But I have represented constituents whose livelihood has depended almost entirely on the cotton industry always. I have represented my constituents now for more than 20 years, and I have done my best in that time to understand their problems. While I agree with the right hon. Gentleman and I regard myself as very ignorant of the cotton industry at the end of that time, I did not find in the right hon. Gentleman's speech any signs that he could fill the gap in my knowledge; or that he really knew much more about it than I did. But he is the Minister of Labour, and I am not. It is his business to know.

The textile industry from 1951 onwards has raised every one of the questions asked by my hon. Friends today about the motor car industry. In the years immediately following the war it was the cotton trade which first came to the rescue. The cotton trade had had a rather miserable immediate past. That is not quite so true of the Midlands, which did not suffer so badly in the years between the wars as Lancashire suffered. The Lancashire cotton textile workers are, however, a body of highly skilled workers with a highly specialised skill, as are the workers in the motor car industry, and they had these long and bitter memories.

It is all very well to say to people, "Never mind the past", but people's fears and hopes for the future are largely conditioned by their memories of the past. We had been saying—all of us in Lancashire—in the years when I was here before the war, that the Lancashire cotton industry could not remain in the condition in which it now is. It was built up to meet or to satisfy a virtual monopoly in world trade in textile goods which it no longer enjoys, and which it will never enjoy again. We begged of the Government in those days to give us some alternative industry, or to tell us on what new scale the cotton industry should be organised to meet what new scale of world trade. We asked them not to expect us again to devote the whole of our hopes to this single industry, with its ups and downs and its fears.

If, in those days, Lancashire had been selfish, we could have had all the alternative light industries that we wanted. There was a shortage then. There was a shortage of labour and a sellers' market, and if we had said, "No, we will not devote ourselves 100 per cent. ever again to the textile industry, but we want alternative industries now," we could have had them. But the Government of the day, and they were perfectly right, appealed to the cotton workers of those days and said, "Never mind the past; it will be all right now. Set yourselves to increase production, to encourage young men and women, boys and girls, to go into this industry. They will be all right; the bad old days of slumps in the cotton trade will not come back. This is a different world, and, in any case, it is your patriotic duty to do it, because we want to rebuild our trade quickly and you are the only people who can do it quickly for us."

We had organised campaigns, joint committees of local authorities, employers and trade unions, all bent on increasing the labour force in the textile industry, bent on persuading the people to commit themselves again and forever, or for the rest of their lives, to this industry, because once embarked on it they could not leave it. They did that, and, when things began to look bad, what did the Government tell us, and what have they been telling us for four years?

They have been telling us, "There is nothing we can do about it. There is nothing that the Government can do to help. The cotton industry must look after itself. It must learn to compete in a more difficult world. It must re-equip itself." We said, "All right; we will try to do that, but we need some help in the meantime—some alternative industry in case we cannot employ all these people in the cotton industry again. How much shall we retain for cotton? How big a labour force can we keep stable?" Have there been any answers? There have been no answers from the Government all that time, and the situation has been going from bad to worse ever since.

It is to no purpose that the right hon. Gentleman quotes a few figures out of the spinning section of the industry, covering a few weeks or a month or two of this year. Let him go to Lancashire Let him see what the feeling is there. Let him consult the Cotton Board, or his right hon. Friend the President of the Board of Trade, because he knows all about it. Does the right hon. Gentleman really think that, in a debate devoted to unemployment—and unemployment arising out of unorganised and unplanned trade—what he had to say about the Lancashire cotton trade is really likely to satisfy anybody in Lancashire?

I tell him that his speech, or that aspect of it, will be read tomorrow by employers, manufacturers, trade unions and humble workers alike with a new, cold shiver of despair. He had no comfort to offer, any more than the Government have had anything to offer all through the past four or five years.

I see my hon. and right hon. Friends now beginning on the same path on which the cotton industry embarked five years ago, of appeals to the Government to "Tell us this, tell us that, do this for us, what policy have you got? Everything is all right just now, but it will only get worse if nothing happens." I hear the Government, through their spokesman on the Front Bench, giving my hon. and right hon. Friends the same dusty answers that the textile industry has had ever since 1950 or 1951.

This is what frightens me. If we are to have an increasing paralysis, first in the textile trade and then in the motor trade, how are we to maintain ourselves, a country that can live only by foreign trade? It is really terrifying to hear the Government in that situation, with that history and with that immediate past, abdicating all authority and saying, "Leave it to the employers."

Something has been said about East-West trade. It is nothing to the purpose to say that this, that, or the other country is trying to be self-supporting and will never be a market for our consumer goods because it has no Sterling. How can it ever have Sterling if we never buy its goods or if we have no trading relations with it? What common sense is there that a country that can live only by foreign trade subscribes and maintains political embargoes on foreign trade? One half of the world can only blockade the other half at the cost of blockading itself. Those countries will be self-supporting if we force them to be so; and what satisfaction will that be to us, who can live only by the goods we sell and by the raw materials and the food that we buy?

A Government that abdicate all responsibility are a Government that abdicate all authority. What the right hon. Gentleman himself said is true, that that is the difference between the two sides of the House. Government supporters believe that, if we leave things to run their own course, somehow or other they will turn out all right; if we leave people to pursue their own selfish advantage the community's interest will somehow be protected, as an incidental by-product. The Socialist view is now what it has always been, that we shall never have a really free country, entitled to call itself free, until the community itself endeavours to control its resources in the interests of the community and to plan and direct them in order to get the best out of them for the advantage of the community.

That is the difference between the two sides. I believe that that difference exists and I am grateful to the Minister for making the difference between us so clear as he did.

8.49 p.m.

Mr. Cyril Osborne (Louth)

The hon. Member for Nelson and Colne (Mr. S. Silverman) said two things on which I should like to comment. First he said that hon. Members who had spoken had avoided alarmist language and then he went on to talk about "the haunting fear of unemployment." We should do our country and the House a disservice to play down too much the problem facing us instead of stating it in all its stark reality, as I believe we ought to do.

I believe that the shadow of unemployment is slowly creeping across the country. It is an ugly and a frightening shadow, and only those who have been unemployed can really know what it means. On a number of occasions I was out of work and I hope, therefore, that hon. Members opposite will believe that what I have to say comes from a very deep knowledge and feeling on the subject.

I believe that our economic position is as difficult, and in some respects as desperate, as is our position in foreign affairs in the Middle East and the world. It is so difficult that the worst thing we can do at this moment is to try to score party points. Perhaps I may be allowed to remind the House of our physical position. This island of 50 million people has no raw materials. It can grow for itself only four days' food per week and can only possibly live if it can export. It can only export if its goods are as good as or better than those of its competitors, both in quality and in price.

Everything hangs, therefore, on whether or not we can export, and what we tend to forget is this. This great country—and indeed this great city of London—was built on the concept of one world. Our banking, our insurance, our shipping, all those great earnings of our great commerce, depended on the Wendell Wilkie concept of one world. In the last four or five years the world has been cut in two—the Iron Curtain has dropped, and there are two worlds. I believe that to us the damage has been greater economically than politically. Our world as we knew it and as our fathers knew it, could only survive with the entire world working and trading with us, and if that world is to be cut permanently in two we cannot maintain our present standard of life.

Therefore, I say that our first danger lies in the other half of the world—the Communist half—developing its own entity and ignoring and cutting out London and Britain. We have a greater interest than any other country in the Western world in the re-opening of East-West trade, for no one in the Western world depends so much on that as do we. My first point is that we should allow nothing that has happened in the past to prevent us opening trade between East and West as soon as possible.

That brings me to my second point, which relates to the strategic list. I think I can fairly claim that no one in this House is more pro-American than I am, but it is time that we said one or two things bluntly to our American friends. The United States exports 4.3 per cent. of its gross domestic products, the United Kingdom exports 17.7 per cent. From that it will be seen that the exports which to America are a kind of luxury are to us our absolute life-blood. The Americans can adopt an attitude towards East-West trade without hurting themselves to the same extent as we are hurt. It is time that we said that to them.

Mr. Snow

Who are "we"?

Mr. Osborne

The Government.

It is time that we said to our American friends, "This shoe is pinching us proportionately at least five times as hard as it is pinching you. We have got the resources at our command that you have." I am pleading that the Government should do all they possibly can to get the list revised. [HON. MEMBERS: "Come over to this side of the House."] Hon. Members have been listened to in silence—

Mr. S. Silverman

rose—

Mr. Osborne

I cannot give way.

Hon. Members opposite talk as if countries on the other side of the Iron curtain have not the money with which to buy our goods, but that is arrant nonsense. Last year Russia sold to this country £62 million of goods and bought only £31 million. I know that she bought raw materials from other parts of the Commonwealth, but there is still a large balance in her favour. When I was in Moscow last September I asked at the Ministry of Foreign Trade why they did not use this money. They replied, "These are the things we want to buy and here you see a list of what you want us to buy." We must sell these people what they want and what we want them to buy. [Interruption.] The right hon. Member for South Shields (Mr. Ede) is an old enough Member of the House to know what courtesy should be extended.

Mr. Ede (South Shields)

I did not interrupt.

Mr. Silverman

The hon. Member should not be so touchy, and should get on with his speech.

Mr. Osborne

When I was in Poland I was told, on inquiry at the Ministry of Foreign Trade, that they wanted to buy lots of things from this country. Last year they sold to us £29 million worth and we sold to them £7 million worth, leaving a balance of £22 million in their favour.

Mr. Chapman

What did they want to buy?

Mr. Osborne

One thing they wanted to buy was Leyland buses.

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

The best in the world.

Mr. Osborne

We can no longer say to these people, "These are the things you must buy with your sterling". We must open our shopping list and ask what they want to take.

Hon. Members have referred to what China can do, and even China last year sold to us £12 million worth of goods and bought from this country only £7 million worth. I have a Question on the Order Paper to ask the President of the Board of Trade if he will not extend the list to heavy agricultural machinery and especially heavy tractors. Possibly they could not buy a million of them, but if they bought only 50,000 or 100,000 it would help Coventry and Birmingham immensely.

I therefore plead with the Government that the strategic list should be widened, and that there should be greater liberality. If there is not, the present position will get infinitely worse.

I now wish to say one or two things with which hon. Members opposite may not agree so much. Even if the strategic list were widened, I believe that our prices are too high compared with those of the rest of the world, and in many cases our quality is not nearly good enough.

Much of the debate has been concerned with the position of the motor industry in Coventry and Birmingham. I had the privilege of going round the Stalin motor works in Moscow—I do not know what they call them today—and later I flew to Stalingrad and went round the motor tractor works. Both employed about 40,000 men. I saw there first-class machinery from America, Germany and this country. At the moment the Russians are not quite up to our standard, but hon. Members must bear in mind that they are working a six-day week, eight hours a day. When they reach our standard, how can we, working a five-day week, hope to compete with them, working a six-day week? That is a fact which we have to bear in mind.

What has surprised me about the debate so far today is that we have been discussing the trade position and no one has mentioned the Trade and Navigation Accounts which came out this afternoon, giving the latest February figures. Hon. Members from Coventry will get no comfort from those figures; they are much worse. The total number of motor vehicles exported in the first two months of this year was 47,824 as against 60,645 in the first two months of last year. The February figure was 7,000 worse this year than last February. If I were a Birmingham manufacturer or worker I should be terrified about the position. It would be useless for us to soft pedal it.

There is another point about the motor trade which I want to put to the House and to the Government, and which I hope my right hon. Friend will pass on to the Chancellor. In the two great plants which I saw in Russia I found that the average wage was about 900 roubles a month, but a skilled man received 1,700 and a top steel worker 3,500 roubles. The administrator, the man who had technical responsibility, got between 7,000 and 8,000 roubles. Their taxes are infinitely smaller than ours. The people who do the work and carry the responsibility and those who have the skill not only earn the money, but they keep it. I should like to pass that on to my own Front Bench. We might take a leaf out of the book of the Russians.

Mr. S. Silverman

They have central planning.

Mr. Osborne

I wish to turn to my fourth point, and to the industry in which I declare an interest, as I am a director of three textile concerns. The loss of foreign markets is affecting many small industries as well as the great motor industry. Hon. Members may like to hear these figures, which to me in the trade, are depressing beyond words. The export of fully-fashioned nylon stockings for January this year amounted to only £46,000. For the same month in the previous year the amount was £105,000 and in the year before it was £171,000. Those figures are alarming. They are alarming for the workers as well as for the manufacturers.

I should like to give hon. Members my idea of why our exports have fallen. The product is roughly the same, but the British price is miles out. A friend of mine whose agent came back from Norway only last weekend had sent his man over to Norway to sell nylon stockings there, and his price was 60s. a dozen. He found that the Yugoslays were making them on the same American-built machines for 36s. a dozen. The Czechs were offering them at 32s. a dozen. Hon. Members may ask how the 60s. was made up. It was made up of direct labour about 20s., raw materials about 20s., and overheads about another 20s., roughly a third in each case. There are no small economies we can make inside the industry which will allow us to compete with the same class of goods coming from Yugoslavia and Czechoslovakia.

Last weekend, as I was going home to Leicester, I met another traveller who had just come back from Brussels. He had been on the same errand, and his price, he told me, was 75s. a dozen. He discovered that Belgian manufacturers were putting them on the market for 36s. a dozen.

Mr. Ellis Smith

The same quality?

Mr. Osborne

The same quality and the same denier.

We ought to face facts in this House, and not merely throw political brickbats at one another. Whoever is in power will have these very awkward facts to face.

I discovered—this is the tragic side of it—that the knitters in Holland, working the same type of machine, have been earning between £10 and £11 a week. In this country, £25 has been a common wage and men have been earning up to £30 a week making these nylon stockings. Not only will profits come down, but they will come down with a wallop. [HON. MEMBERS: "Twenty pounds a week?"] Even £30. I am giving the -House the facts.

These extravagant wages will come down—nothing can prevent it. We have got to face it. No Government, of any political persuasion—

Mr. W. R. Williams

Is the hon. Member seriously saying that for a normal week's work, knitters are getting between £25 and £30 a week?

Mr. Osborne

I am saying that the knitters of nylon stockings have been earning £25 a week, and others have earned more.

Mr. S. Silverman

What do they get?

Mr. Osborne

They are getting £25 a week. Those high wages, as well as the high profits earned by the companies who paid them, will come down, and nothing will prevent it.

Mr. James Johnson (Rugby)

Will the hon. Member specify the town in Leicestershire where knitters are getting between £25 and £30 a week?

Mr. Osborne

If Mr. Speaker wants to see details, I am prepared to give them.

Mr. Williams

Were those the figures for a normal week?

Mr. Osborne

They have earned £25 in a normal week. I have given the figure and I stand by it. At least, when I talk about trade I know what I am talking about, which is a change for this House occasionally.

What I am trying to put to hon. Members opposite is that this is only one industry in which the export market appears to have gone. If we are not careful it will have gone for good, and it will not be won back easily. No central planning can get it back. No one can make those countries pay our figure of 60s. for stockings when they can buy them from Czechoslovakia at 32s. No central planning, not even a plan evolved by a clever Member like the hon. Member for Nelson and Colne, could get the market back.

No Government, of any political complexion, in a free society, with an island economy such as ours, can guarantee full employment and a high standard of life. That is what we must face. Nobody can guarantee it, and the sooner we face that and are realistic about it, the better. I am terrified by the figures in the Accounts, and I recommend hon. Members to study them. Sentiment is no substitute for hard, cold facts. We must get over to our people, both the manufacturing and the trade union sides, how tragically difficult our export position is. We must then get home the fact that unless we can export, our welfare society and our way of life will go.

Mr. George Wigg (Dudley)

Before the hon. Member bursts into tears, can he tell the House whether he shed similar tears when his right hon. Friend the Chancellor of the Exchequer took 6d. off the Income Tax to win a "phoney" General Election?

Mr. Osborne

It is unworthy of the hon. Member that when I am trying to show the House how difficult the export position is, he should try to make a cheap, nasty party point.

I believe that Coventry and Birmingham will face much worse times than they have done so far, and that all the exporting trades will have a terribly rough time. We ought to tell our people so, and not fool them.

9.10 p.m.

Mr. Donald Chapman (Birmingham, Northfield)

Although much of what the hon. Member for Louth (Mr. Osborne) said was very interesting I shall not follow him in all he said, but I would take him up on his last argument about the coming times, for I am concerned about the coming times in Birmingham. We on this side of the House may not always like what the hon. Member says, but I would applaud his sense of realism and acknowledge that he has some courage.

The speech of the Minister of Labour today has been called disappointing. I would not call it merely disappointing. In the five years I have been a Member of this House I have not heard a speech so barren and so empty. I have not known a Minister so obviously uncomfortable by his brief. It was a lame and a halting speech, interspersed with asides, having no theme. It made no attempt to deal with all the problems which the right hon. Gentleman must have known were concerning us on this side of the House. I think it discourteous to the House that one in his position should come from the Cabinet to make that sort of speech here, in view of the anxiety he knew was felt and would be expressed today by hon. Members.

The Minister of Labour is still living in the world of 1943. He supposes the 1943 White Paper to be the last word on this subject of full employment. That White Paper talked about maintaining a high and stable level of employment. That was fourteen years ago, and times have changed, and if the Government believe there should be a high and stable level of employment, as they say they do, they must move with the times and accept the fact that the times have changed.

The right hon. Gentleman is stuck with the White Paper of 1943, but he cannot now expect that in this year of 1956 the average worker is stuck with that simple guarantee of overall full employment. The average worker is interested today in much more than that. He fought for full employment, and believes that he has won it, and he is looking ahead. In the new situation of today he does not expect to be treated as he was in years past. As my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) said, the worker expects to be treated as an individual, as a human being.

The workers are not factory fodder, and they do not expect to be treated, as the right hon. Gentleman told us today they must be. He said that they must do as the employers say; that they must move at the whim of the employers—I should say, as the result of their miscalculations. The Minister says that they must be prepared to take lower-paid jobs, jobs involving more travel, at the whim of the manufacturers. The day for that has gone.

The 1943 White Paper is agreed between the two sides of the House. While the Government are stuck with it, we are in a situation in which the average worker expects, and rightly, to be told the whys and the wherefores of any moves that are planned, of the great decisions involving labour movement, of great production and export drives, and so on. The average worker in my constituency has a standard of living better than he had in the 'thirties, and often a wage of £14 or £15 a week. Is it seriously proposed that he must move on to another job for which he will be paid only £5 or £10 a week? Is that the sort of thing we are to expect from the Government in this year of 1956? If so, they are living in the past. They are not moving with the times.

In my constituency, we are feeling the effects of the Government's outmoded fashions of thought. What should Government action be in the circumstance facing the motor industry in my constituency? First, the Government should not descend to the rubbish paraded by the Minister of Labour today. He says that the only alternative is rationing and direction of labour, and all that. He uses words which are an affront to the House and to everybody who is trying hard to solve the problems in the industry and meet with a sense of statesmanship the more extreme statements of those who feel that their future is in jeopardy.

I hope, also, that we shall not descend to what was done by the Minister of State, Board of Trade. Some weeks ago the right hon. Gentleman met a deputation of A.E.U. men from Birmingham and he was asked what was his policy for helping the industry out of its difficulties. The right hon. Gentleman had not the courage to say what the Minister of Labour has said today, "Sorry, boys, we have no policy; you have to work it out." The right hon. Gentleman took refuge in something that I had said in the House. Instead of sticking up for his own position he told these motor car workers, who are very worried, "Look what your chaps say. If they carry out the sort of policy that Chapman is talking about in the House of Commons it will not give you any comfort." That is not the kind of thing to say when hon. Members on this side of the House decide to face the situation with statesmanship, but that is the refuge which the Minister took when he had to face the industry.

Mr. Low

I am sorry to interrupt the hon. Gentleman, but I am sure that he does not want to mislead the House. He has already heard from me that the account he has given to the House is not a truthful account of what happened at the meeting. He knows perfectly well that I stated to the body of trade unionists and some of his hon. Friends who were present at the meeting what the Government's policy was, and I added a reference to questions asked by him and the right hon. Member for Vauxhall (Mr. G. R. Strauss). The hon. Member should treat the House candidly and tell the House that his account is not correct.

Hon. Members

Withdraw!

Mr. Chapman

I do not withdraw anything. There are two versions of the meeting and I prefer to repeat the version which is used against me in my constituency by people who were present at that meeting. In any case, the right hon. Gentleman had no reason at all to bring hon. Members on this side of the House into the matter in substitution for his own lack of policy and lack of ability to say anything to the men in the motor car industry.

Thirdly, the Government must not ride off the situation in the industry on the ground that there is a drop in production, as there was in 1951–52, from which the industry will recover. It cannot be said now, as I read the portents, that the industry will come out of its present situation as it did out of the situation in 1951–52. It solved its problems in the years after 1951–52 by huge sales in the home market. I hope that, with some sense of courage, it will be clearly understood between the two sides that that is out of the question today. I cannot then see that we can say that all this has happened before in the motor car industry and that we expect the same kind of recovery to happen again.

What, then, do I believe the Government should do, if they do not do those three things? The first thing they must do this year—and it links with what I have said about the sense of need of the individual in the industry—is to take the responsibility for making a broad assessment of the future of the industry. Our motor car industry is now producing about 1¼ million cars, including commercial vehicles.

It was expected that by 1960 we would produce probably a little more than 1½ million cars, but the investment process which has gone on in the industry in the last few years means that by 1958 or 1959 the industry will be capable of producing half a million cars a year more. We do not think it unfair to ask, that the motor car workers should be told whether the Government think there is any future for the sale of cars on such a scale.

I have the gravest doubts about this situation. I am not sure that we can sell half a million more cars in 1958 or 1959 than we are selling today. In the first place, we cannot allow such a huge number to be put on to the home market. It would involve a huge drain on our balance of payments for imports of sheet steel. Therefore, it is out of the question on that ground alone.

Secondly, it is out of the question on the ground that the number of cars in this country would become so enormous as to make our road traffic conditions chaotic. It would mean that instead of about 3 million cars on our roads, which is the figure today, there would be 5 million. In turn, that would entail a vast investment in roads which the country cannot afford within the foreseeable future.

Thus, we are faced with half a million more cars coming forward each year within a short time and being unable to sell them on the home market. I think it is the duty now of the Government to get the motor car manufacturers together, examine the situation, and then tell the House of Commons and the workers involved in short time, redundancy and unemployment what they have found in consultation with the manufacturers.

Or is it the case that the Government are waiting for the death of Coventry? This question must be asked, because the situation is that Vauxhall, Ford and the British Motor Corporation are the three giants and the two smaller companies are in Coventry. Is it that the Government are standing aside, watching this play to the death, in which Rootes and Standards are swallowed by the others, or are finally closed down? Is it that they are standing aside to watch what happened in other industries in pre-war days, with no plan, no sense of the needs, the feelings and the susceptibilities of the workers involved? Is this death for Coventry, and that we are all waiting for the funeral rites? Because that is how the situation will develop if there is no plan. In one sense it would be a disaster, because at least one of the Coventry firms has a good export record and I would be sorry to see it go under if only for that reason.

When the Government examine the future of the extra half million every year and what to do with them, they must make a realistic assessment of our export prospects. After all, the Minister of State knows perfectly well that within the last few weeks Sir Leonard Lord has opened a factory in Australia which in eighteen months will produce 50,000 B.M.C. cars made in that country. What are we going to do with the British cars, 20 per cent. or 30 per cent. of the production of which we now send to Australia? There will be no future for them as far as one can see. It is the deliberate policy of the Australian Government to foster Australian-made cars. These things must be taken into account and the Minister of State has a national duty to do so.

Mr. Osborne

What can this country do to prevent the Australian Government encouraging cars to be made in that country?

Mr. Chapman

I am not saying that the right hon. Gentleman has any duty to stop these things being made in Australia. What I am saying he must do is to look at the industry in consultation with the employers, make a realistic assessment of its future, and then make a statement by which men and women in this country can be guided as to what their livelihoods are likely to be in the coming years.

Secondly, the Government have got to knock the motor car manufacturers' heads together on the subject of their investment programmes. I know what has happened: the Minister is frightened to death of the motor car manufacturers because they are such powerful men. I do not think it takes very much to frighten him, as a matter of fact, but I do admit that they are powerful people. The Minister takes their word as gospel; he thinks they must know best.

But all of us who watch the industry know perfectly well what is going on. There are three or four very powerful men who know that one of them is going to be swallowed up. What we must do is to prevent them all expanding at this rapid rate, wasting valuable resources in over investment, producing cars they will not sell in order to ensure that when the death of one of them comes it is somebody else who did not happen to be powerful enough to stand the battering which was in store.

There is no need for such things as special councils. It is a job for the Board of Trade to speak to the manufacturers and tell them that we must have some sense in their future investment programme. If they are planning to produce another half million cars a year they must say either that they are going to sell them, or that they are going to start being more sensible in the coming years in the matter of expansion.

Thirdly, the industry must be told in no uncertain terms about export markets. What happens is that the Minister attends a nice friendly meeting with all the big men of the industry round a lunch table at some expensive restaurant; they tell him they think they are going to be all right in the coming years, and then the Minister conies to the House and tells the House that everything is going to be all right because these men have assured him so and, of course, they are in the know.

But what is happening? In the United States of America, as my hon. Friend the Member for Coventry, East (Mr. Crossman) interjected not long ago, they produce about 8 million cars a year. We have the miserable record of selling some 20,000 or 30,000 cars in the American market. It is despicable. It is laziness. Time and time again in quite impartial reports blame has been attached to the industry for its failure to get ahead in this market. If we could only enter the tiniest corner of the American market, we would very largely solve our export problems.

If this course involves doing some hard work and not receiving quite so much profit—which I know is the real hard nub—then the Government must tell the in dustry it is in the national interests to do so. When the British Motor Corporation makes £26 million a year profit, it can afford to accept a cut in that profit in order to develop its markets in the United States of America. Profits generally are far too high. These are three things the Government can do.

Fourthly, the Government should tell the industry what to expect in the home market. In the last twelve months the Government have fiddled with Purchase Tax and hire-purchase restrictions. We have had the industry producing for a market which it has had for two or three years only, finding the Government stage by stage not making up its mind what the extent of that market shall be.

The result is that there can be no stability in models and no real knowledge of what kind of car the industry can produce until the Government say clearly that they envisage a difficult balance of payments situation for two or three years and the industry cannot calculate on any reduction in Purchase Tax or any real easement of hire purchase restrictions. If that be the case, then let it be said, so that the industry will know how to conduct its affairs and what sort of models to produce.

The fifth thing which the Minister must do, instead of having lazy consultations with the motor car manufacturers, is really to put some drive into the opening up of East-West trade. I put down a Question on that subject relating to commercial vehicles for China and the answer I received was that, of course, the Prime Minister had said as long ago as the Washington talks that this had to be discussed in the Paris Consultative Committee.

Nothing else has been done, or if it has, nothing else has come out. No one has given any indication that the Government have a strong line on the matter. No one has said that he believes that the ban on the export of commercial vehicles to China should be lifted. There has been no sense of energy, and no hint that we should take the strong line that the hon. Member for Louth wants us to take and open up this trade. I do not believe, however, that East-West trade will solve all our problems. Half a million cars every year will be more than even East-West trade will swallow. It is about time we faced this.

The last thing the Government can do, having made a general assessment, is to come clean with the country and tell industry and the workers that those engaged in the industry cannot expect the easy time that they have had so far. The Government must tell industry frankly that any switch to capture the export markets will mean a considerable changeover to commercial vehicles and tractors. It will mean new models and new ideas in the production lines, and that may well mean dislocation and temporary unemployment while factories are retooled on a considerable scale. Men must be told that there will be risks in relation to their job.

Is it not time the Government had courage to say this sort of thing? Our people are adults, and they want to know what their industrial future will be. They will not be content simply to be the tools of private industrialists in a war to the death among the great motor car magnates.

Mr. Ellis Smith

I hope my hon. Friend will remember that that has been our lot throughout the whole of our lives.

Mr. Chapman

I agree, but we had come to hope that in 1956 we might have brought the Government further along the road to meeting us on an issue like this. I suppose we are disillusioned once more. The fate of this industry may be that of all the other industries that the Conservatives have had under their care throughout the years.

I am sorry that the Minister of Labour is not here. I have attacked him, and I would have preferred that he should have been here to listen. He has said that the Government cannot take any responsibility, cannot take decisions and cannot have a policy and that we must leave the men and the jobs in the motor car industry to the requirements and whims of the motor car manufacturers.

I challenge the Minister of Labour. A great new motor car engine factory is being erected in my constituency, at the cost of millions of pounds, to provide jobs for many thousands of workers. Men stand there looking at it and asking, "What is all this about? We are told today that we are redundant or on short time, and tomorrow we may be unemployed, yet this great new factory is being built, before our very eyes, to provide us with jobs during the next few years."

I challenge the Minister of Labour to come to Birmingham to a hall standing in the shadow of this great factory and tell the workers, or even just the shop stewards, at the Austin motor works, "We do not know anything at all about this great expansion that is going on. We do not know what your jobs will be. We do not know why these factories are being built. We have no policy for your future. You must take a cut in your standard of living and be willing to move miles away to another job even though this factory is being built." I challenge the Minister to come to my constituency and tell that story to the people of Northfield and Birmingham generally.

9.34 p.m.

Mr. R. Gresham Cooke (Twickenham)

We have had an exceedingly interesting debate which has centred very largely round the motor industry. We do not all share the pessimistic and alarmist views which have been expressed by the hon. Member for Northfield (Mr. Chapman). I should declare at once that I am a director of one of the Coventry firms which is said to be going to be steamrollered by B.M.C., Ford and Vauxhall, but we in the cornpany—Rootes—do not believe that we are going to be steamrollered. We believe that we are going forward and are going to expand.

I have been a Member of the House for rather more than a year, but I have not yet taken part in a debate on the motor industry, because I have not wished in any way to press the case. However, I think that the House will excuse me if today I put forward a few facts and a few opinions about its future. Before the war the motor industry was of course a very small exporter, indeed. It exported only about 19 per cent. of its production. However, it made tremendous efforts after the war, and by 1951 had raised the export of cars and commercial vehicles to 69 per cent.

Mr. Osborne

Of production?

Mr. Gresham Cooke

Of production.

Before the war there were exported 84,000 out of 444,000 vehicles produced and in 1951, 505,000 out of 735,000. Today the industry has fallen back, so that at the end of last year the percentage was 43, although it must be recognised that the overall figure of exports increased to 531,000 vehicles a year.

Mr. Snow

While what the hon. Member has said is perfectly true—and I heard an interjection on the same lines which he made earlier today—is it not the fact that there is a very great expanding world market and that these figures are illusory if that is not recognised?

Mr. Gresham Cooke

I agree that there has been an expanding world market, but competition has been very severe indeed in all export markets.

I was as keen as anybody on exports, and I was intimately connected with the export drive for many years, as hon. Members will know. However, I did not think, in 1950, 1951, and 1952, that the same percentage of exports could be continued. I felt that we had reached an artificial figure. We were denying the home market; we had a covenant scheme which prevented people from selling cars less than two years after buying them, and the artificial position was such that on the black market a new car would bring about double its price. A Cheap car listed at £500 could be sold for £1,000.

That could not continue, and we always expected that the curve would flatten out and that more cars would go on to the home market, and we knew that the percentage of exports would decrease. It is not always realised that the export of motor cars and commercial vehicles is not the whole story. Since the war we have sold overseas about 4 million vehicles, and that means that there must be a tremendous flow of components, spare parts, replacement engines and so on, which are going out all the time.

That trade of itself has become very big. The export trade in spare parts last year was worth £106 million, which was almost as large as the export of motor cars, which amounted to £122 million, and was larger than the figure for the export of commercial vehicles. The total monetary value of the figures for cars, commercial vehicles, spares and tractors has risen year by year to £370 million.

In addition to that, it is worth noting that the percentage of the national figure of exports of the motor industry has also been slowly rising until it has reached about 13 or 14 per cent. I always wonder why the motor industry is under so much fire and is so criticised for its very great effort, because it has made a tremendous effort in these markets. I wonder why other industries are not sometimes picked on, perhaps furniture, electricity or generators and so on.

Mr. Ellis Smith

No comparison.

Mr. Gresham Cooke

My researches go to show that in order to pay for its own materials and also to pay for the oil which we want, British industry would have to export about 20 per cent. of its output per annum. But the motor industry has done more, while some industries like the building industry can do only very much less. We might in the future direct our attention to the efforts of some other industries and not only pick on one. If this criticism goes on and if my right hon. Friend the President of the Board of Trade is asked to summon motor manufacturers and demand that they do more and more, I shall feel tempted to ask why he should not do something about the Co-operative Wholesale Society and see how much its imports amount to.

Mr. Maurice Edelman (Coventry, North)

In order to complete the very interesting picture which he is giving of the motor industry, would not the hon. Gentleman add that most of the materials for the motor industry are imported for hard currency? Is it not further the case that last year, while the output of the industry increased to 125,000, only 7,000 extra cars were exported, and is not that a sinister figure?

Mr. Gresham Cooke

Of course, many things have to be imported. Our food has to be imported, and other industries use imported materials, including the radio and television industry, which uses a lot of aluminium. It is true that the motor industry uses a lot of imported materials, but so do other industries. I am suggesting that the spot light might be thrown on some of the other industries.

I do not take the pessimistic view of the future which is taken by so many hon. Members opposite. I think that we shall hold our exports of motor cars and commercial vehicles in 1956. We may even expand the figure a little. There are expanding markets in the world, including Africa, and particularly West Africa. At the present time there is a waiting list for British commercial vehicles in Nigeria and the Gold Coast. I think that we could expand in the Middle East, and there are markets in South America which are opening up, notably in the Argentine. There are also markets in Europe—in Finland—opening up, and therefore I think that we shall hold our export figure during the coming year. We should be able to export 375,000 cars and 160,000 commercial vehicles next year, and I have every confidence that we shall remain the biggest exporter of motor cars in the world during 1956.

I should like to answer one or two criticisms—

Mr. Chapman

Will the hon. Gentleman apply his mind to the simple fact that even if we hold our export figure—which is still below that of 1950—it is no contribution to the solution of the problem of the industry, because every year it will be producing 200,000 and eventually, in two or three years' time, 500,000 extra cars every year? What is the use of merely holding our exports at their present figure in those circumstances?

Mr. Gresham Cooke

When we add in the figure of commercial vehicles, I would not agree that the total is below 1950.

Mr. Chapman

Yes, it is.

Mr. Gresham Cooke

That is a matter of fact. I am saying that I do not expect our exports to go down during the coming year. I am not visualising an enormous increase in production, but I think we shall do well if we stabilise production at the present figure.

I wish to say a word about criticisms made by the hon. Member for Northfield and also, in a previous debate, by the right hon. Member for Battersea, North (Mr. Jay) about the efforts of our manufacturers in America. There was a time two or three years ago when we sold about 30,000 cars in America but now we have gone back to about 20,000, and we have been reaching that figure regularly for some years. A number of manufacturers have lost a lot of money in America, and they cannot go on losing money. They have to withdraw some facilities and concentrate on those areas where we can sell cars and at any rate cover costs.

We have been told—indeed, it has been held up as an example to us—about the German Volkswagen. I do not know whether that company has been doing the same as we did a few years ago and has really been making money by sales in America. I made some inquiries the other day and I heard that the Volkswagen sold at 1,530 dollars in New York, against the Hillman Minx at 1,710 dollars. I understand that one American dealer says he has gone over to the Volkswagen company, and makes a much better livelihood out of it. I am wondering whether the Volkswagen company gives a very big discount, and a much bigger margin than we could possibly afford to give, or whether in any way its output is being subsidised.

In any event, I think that company is likely to run into trouble in America in the near future, because in its efforts to oust British manufacturers, it is trying to force dealers in America to become 100 per cent. Volkswagen dealers, and trying to push other European manufacturers out. Hon. Members will be glad to hear that it is already running up against the difficulty of the restrictive practices legislation in America, and that it is likely to be against the Chase Act.

I turn to the European situation, which obviously is giving everybody on both sides of the House a great deal of concern. Germany is an extremely hot competitor in Europe, and one reason for that is that she has inner lines of communication. That country's network of railways serves Switzerland, Denmark, Holland and Belgium, and German manufacturers can get their cars extremely cheaply into those countries, whereas we have to transport our cars from Birmingham or Coventry to the ports and then carry them overseas, all of which increases the landing cost, on which tariffs are assessed. Germany has been increasing her share of the European market, and is a very severe competitor.

The British manufacturers hope to combat some of this competition by three methods: first, by new models. The hon. Lady the Member for Coventry, South (Miss Burton) criticised the industry for having too many models, though one of the difficulties of the industry arises from the fact that buyers in Europe want very small cars, while Commonwealth buyers want a rather big car, and in addition manufacturers must have a range of luxury and sports cars for certain parts of the world market. Her criticism that the models are too orthodox was, I thought, rather a false one, because the British public are very orthodox in their ideas about what they want in motor cars.

I can assure my right hon. Friend the Minister of Labour and the Minister of State, Board of Trade, that all the manufacturers whom I know are fully alive to this matter and are already making an effort, as they did in the Swedish market the other day, to try to increase their propaganda and improve the spares position in Europe. Unfortunately, we have no control in this House or in this country over German wages, and, of course, German wages are considerably below wages paid in this country. We cannot and would not want to reduce our wages to match, but equally I would plead that we should not have the annual run of wage increases that we have been having in the last few years, which have the effect of keeping up our prices.

With regard to redundancy, I feel that the hon. Member for Northfield and others rather overstated the position. After all, the number of unemployed which I take to be strictly redundant is under 1,000 in the motor industry in the Midlands, and it is rather stretching the imagination to talk about serious redundancy and unemployment in that area.

I admit that the exports for January, and probably for February, are down and are not good. Unfortunately about half our market is in very cold countries. This country can be cold. Europe can be very cold, and so can Canada. During January and February the Baltic ports were actually frozen up, so that we could not get our cars to the Baltic countries.

Mr. Chapman

Were not the exports down in January and February to places like Australia and New Zealand, to which we normally export during the winter months?

Mr. Gresham Cooke

Some hon. Members have pointed to the decline of exports to Sweden and Norway, and I am trying to give reasons, one of which was that some of the ports were literally frozen up during February so that we were not able to get cars to them.

To keep production going in this industry we shall have to sell about 500,000 cars a year in the home market. I do not regard that as impossible, particularly as one and a half million prewar cars still exist.

The Government have three weapons in their hands with which to deal with the situation: hire-purchase restrictions, the Purchase Tax and the Bank Rate and credit squeeze. The United States and Canada have been very much more flexible in putting up rates of hire-purchase deposit than we have been. We ought to make much more flexible use of hire purchase, and indeed of Purchase Tax. There is no need to wait until industries are seriously in trouble. Surely we can alter Purchase Tax in respect of one industry which is in trouble without altering it for a great number of industries.

In my constituency the television and radio industries are in trouble. If they get into very serious difficulties there would be a case for altering the rate of Purchase Tax for them. I am glad to know that some television firms which dispensed with labour are now taking that labour back again because of the increase in electronic work. We cannot allow great industries to contract so that the unit costs go up and production falls. The hon. Lady the Member for Coventry, South asked what would happen if our production decreased badly. The position might become much more serious and the Government would then have to act quickly.

I fully support everything that has been done by the Government up to date. The position is not yet serious in the Midlands by any means, but we obviously cannot allow the television, radio, motor or any other industry to get into the doldrums. In that event, I would ask the Government if they could not consider altering the rates of hire purchase or of Purchase Tax or dealing with the situation by loosening the credit squeeze.

9.54 p.m.

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

I do not propose to follow immediately the line taken by the hon. Member for Twickenham (Mr. Gresham Cooke), but to bring together some of the comments that have been made during the debate. I should, first, like to recall that my right hon. Friend the Member for Belper (Mr. G. Brown), who opened the debate with a most thoughtful speech, put proposals to the Government which, I hope they have had time during the day to consider, and that answers will be given to those proposals.

My right hon. Friend did make the suggestion to the Minister of Labour that he should not follow the example of his predecessor and keep himself in a watertight compartment. He said something else about the other Members of the Government but I do not think it is necessary for me to repeat that. I would say, however, that the Minister of Labour has gone much further than that. He has shown that there is now no need for a Minister of Labour. He says, "Leave it to the employers."

He also offered a challenge which I am prepared to accept. He said, "Let us compare the work of the Labour Government from 1945 to 1951 with that of the Conservative Government from 1951 to 1956." He certainly did not tell us anything positive that the Conservative Government have done, but let me put on record the policy of the Labour Party which made it possible for the Labour Government to do such a good job.

I do not think that anyone can deny that we inherited an economy that was bankrupt. For that I have the authority of the right hon. Gentleman the Member for Woodford (Sir W. Churchill), who mentioned this to some of the Americans. We are of course, facing a continually deteriorating economic position, but that goes back to a much earlier time than today. We had balance of payments difficulties in 1913. We were able to pay our way because we had investment income from overseas, but in 1938—the year before the war—we were not balancing our payments, even taking into account our investment earnings from overseas. We then went into a war in which, as the House knows, and as the country should know, we lost 25 per cent. of our national wealth. That, I think, indicates the perilous state of our economy in 1945.

In 1945, all there was in the "kitty" was about £600 million of gold and dollar reserves. Against that there was a liability of £3,500 million of short-term foreign loans and sterling balances. If I might bring it home to the person in the country—particularly the housewife—it might be as well to say that if, at that time, one wanted domestic utensils or articles of furniture for the home they just were not in the shops. Everything had been spent in the war effort. Bananas, oranges and other fruit were not there to buy. For cereals, biscuits or tinned fruits there was a points system, and in a particular month one had to choose what one would have. In other words, in 1945 the country really was in a desperate situation, but we did not mind about that; we had a job to do and we got on with it. Besides facing those difficulties we had to change from a war to a peace economy.

By 1950 we had for the first time a surplus of exports over imports of £300 million—a remarkable achievement in a short five years. Of course, the other side will always say, "What about 1951?" Well, the economist and the impartial person will recognise that the Korean war violently upset our economy. But that war ended, and the result of a fall in world prices has been estimated at about £500 million a year additional income. What did the Government that inherited that do with it. They squandered it—independent television, denationalisation of services, giving gifts to their well-to-do friends—[An HON. MEMBER: "Nonsense."] Yes, indeed. I am not alone in that impression. Two bank chairmen have made similar comments, indicating that the Government have not done what they should have done. One of them, Sir Oliver Franks, Chairman of Lloyds Bank, has said: Conditions in recent years could scarcely have been more favourable to the building up of a strong reserve had our policies been directed primarily towards this end. That confirms my comment. It was not done.

If we are to maintain full employment we have to pay for the raw materials and the food we import. There is no difference between us there. It is sometimes not realised just how dependent we are on overseas supplies, and it might be as well if I were to give some figures. We have to import all the cotton we need, most of the metals, 90 per cent. of the wood, 30 per cent. if the hides, 90 per cent, of our timber, all our tea, 93 per cent. of the butter, 74 per cent. of the cheese, 78 per cent. of our sugar and 48 per cent. of our meat. Either because of climatic reasons or because the material is not in the ground, we have to bring these things into the country and they have to be paid for by exports.

What have the Government been doing about this? They say, "It is not our responsibility. It is for industry and business to push exports. They are best fitted to do it." But the Government cannot escape their responsibilities, for they misled industry, particularly the car industry. For the last three years they have told the car industry to double its production. If that had resulted in increased exports, it would have been a good thing, but it has not, and the Government therefore cannot escape their responsibility for the dislocation of that industry, for the short time and, I believe, for possible growing unemployment.

If the car industry had been given all the help which the Government should have given it, I refuse to believe that it could not have done better in the export market. In 1950, by value, this country exported 66 per cent, of its cars to other countries. That percentage has been falling each year, until last year it was 38 per cent. As we have heard from the hon. Member for Louth (Mr. Osborne) and from Press reports, car exports are still falling. We cannot afford to let that continue. It must be stopped.

Mr. Osborne

rose—

Mr. Bottomley

If the hon. Gentleman will let me make my speech I will give way later.

Whereas the Government deserve their full measure of criticism, the industry cannot escape criticism altogether. I have said in the House before, and I repeat it now, that I think British cars are, basically, the best in the world, but we do not meet the customers' requirements, and we ought to do that. When I have made these comments before there have been allegations that they were partly tainted with political views. I can assure hon. Members that that has not been the intent. The intent has been to urge the car industry to do more.

I have had letters from people in the country, as a result of questions and discussions, and I want to quote one from a salesman who lives at Solihull, Warwickshire, who has been selling cars for 25 years. He writes: Until 1951 we had the world to ourselves, with virtually no competition. In this time we could have provided service and spares facilities second to none, and, backed with a good product, could have made our position unassailable. Instead, we sold short, sending a poorly finished product, doing little about spares and even less about service. He says that the purchaser was told to take it or leave it, and in one case, where a radio was in a car, even though it was not short wave and would not do for the territory, and in another case, where a heater was in a car sent to the tropics, the purchasers were told they had to take it or leave it. That kind of thing does not help.

I think that the industry itself has to take that responsibility, because these things result from its own lack of action. I believe that if we go about it energetically we can sell more cars in the United States and Canada, for I refuse to believe that a car population of 60 million people can take only the small number mentioned today. I was in Canada last year and although I did not have a go at selling cars, I talked to people who want to buy British cars. Certainly, some farmers would like small British cars. We are not doing enough to encourage them to buy. They are willing to buy as long as we give the service required.

What about the Americans, who have what they call the marooned suburban housewife, who wants a small car after her husband has gone to the city in the big car? She needs a small car in which she can drive about. Sometimes it works in reverse, because the businessman finds that he cannot park his big car in the city because of the enormous amount of traffic, and he takes the small car and places the big car at the disposal of his wife. I think there is an opportunity to sell more cars and we ought to try to do so.

In the Scandinavian markets our economies are complementary. If they are to sell ore, butter and bacon to us they have to buy our goods. They are willing buyers, but we are losing those markets to the Germans and even to the Russians. It is not very satisfactory to know that since 1951, while car production in this country has gone up at the rate of 420,000 annually, the increase in exports has been only 24,000 a year. No one can be complacent about this; we really ought to be doing more.

I keep asking the Government what they are going to do. Apparently their policy is deliberately to cause unemployment and short-time working in the car industry and to drive the workers away—

Mr. Gerald Nabarro (Kidderminster)

The right hon. Member said earlier, and recently repeated, that the Government have failed to give the car industry help. Would he tell the House exactly what form of help he suggests the Government should give motor car manufacturers?

Mr. Bottomley

I suggest the kind of thing the hon. Member often gives to his Government—prodding. If the Government policy is not what I suggest, what plan have the Government for settling redundant workers from the car industry in other industries? Are they to give lodging allowances to men who have to go from their place of employment to another job? Are the Government to meet removal costs? Are they to provide new homes in the area to which workers have to go? Those are questions to which we want answers. Are the Government going to take another step which was suggested by my right hon. Friend this afternoon—to impose penalties on the industry, or to use moral persuasion, or are they to let things drift? I can assure them that if things are allowed to drift that is the way to further unemployment.

I can give other illustrations to show how the Government, not only in the case of the car industry but in other industries, are failing to help the export drive. The Lord Privy Seal, when he was Chancellor of the Exchequer, took Purchase Tax off cashmere woollen goods. The Minister of State, Board of Trade, will be aware that that was a good dollar earner and nearly all our cashmere woollen goods were sent overseas. By taking off the tax, home demand has been created. The retailer has had to press the wholesaler so that, instead of exporting, the wholesaler cannot afford to neglect customers here. Those are ways in which the Government are deliberately doing other than help the export drive.

There are unemployment problems and short-time working not only in these industries, but in many others. The Minister of Labour acknowledged that in the months of January and February the increase in unemployment was 60,000. Most of that, he said, was in the London and Eastern regions—not in the motor car industry, but in television, radio, furniture and textile industries, and also among building trade workers, which is a very dangerous sign. While the Government are neglecting to provide the kind of work which would help the export drive, they are increasing imports—imports we can ill afford.

That is done deliberately by Government action in removing dollar restrictions on goods coming in which could be kept out if Labour Party policy had been followed. Token imports are a necessity—the Labour Government recognised that—if we want multilateral trade and to keep in the market, but the President of the Board of Trade has increased those imports threefold, thus again adding to our difficulties.

The Government show a complete lack of interest on the question of facing our economic difficulties. I thought the Minister of Labour produced a very strange doctrine this afternoon. I should like to know whether the Government support him in it. He said that it was for employers to decide if they wanted labour and where they wanted labour. I should have thought that the days were long past when we could treat labour as a commodity. If the Government support that policy, does it mean that they have thrown overboard the policy of the Coalition Government in their White Paper on Full Employment? Does it mean that we are to fall far behind American standards? America is the supreme capitalist country and that Government recognised their responsibility for full employment. Apparently, the present Government have turned all that down. If that is so, it is a serious matter and trade unionists will have to consider it in the light of the Minister's statement.

My own opinion is that even leading industrialists do not support the Minister of Labour in that view. Many industrialists want the support of the Government. They realise that there is an obligation upon the Government. They recognise that other Governments not only buy but impose restrictions, and that private employers or industry cannot take the necessary action. They want the Government to help and to assist. Therefore, although the Minister may be speaking for the Government, I do not think he carries with him a lot of support in the country.

The present difficulties arise from excessive reliance on monetary policy. I do not think that we can leave the solution of the problem to the bankers in the City. Indeed, I am reminded of a saying by Mark Twain, that a banker is a fellow who lends his umbrella when the sun is shining and wants it back the moment it begins to rain. An economist friend of mine estimated the other day that merchant bankers and commodity merchants in the City earn between them from about £10 to £15 million a year in foreign currency. He also calculated that because we leave trade in their hands, they could lose up to £300 million a year for the country.

I know that all this means long-term trading agreements and bulk purchase, but the Government should take note of international reports. During the period of the Labour Government, the United Nations Economic Commission for Europe reported that our trading methods represented an advantage of between 5 and 6 per cent. to the country. In my judgment, we cannot afford to leave the solution of the problem to financial matters alone. To do so could mean a return to unemployment.

I should like to make some suggestion to the Government. The problem of unemployment is far too serious for party banter. Some of my suggestions are not altogether altruistic, for I recognise that we are coming back as the Government and we do not want to inherit an unholy mess. I am reminded of a leading article in the Daily Mail of 29th August, 1929, which said: In the unsuccessful attempt to bribe its way back to office, the Conservative Government squandered the scanty reserves of our national exchequer. The Treasury that it handed over to its successors was one of bare cupboards, plundered shelves and empty boxes. At the 1955 General Election, to judge by the April Budget, there is no telling what the Labour Party would have had to face had it won the Election.

We on this side believe in economic planning, the control of investment, the distribution of industry, the proper use and distribution of raw materials and long-term trading agreements. I suppose it is popular for me to add price control, because the Prime Minister supports it. He has told the Federation of British Industries that he wants price control, and it is to be done without rationing. We now have support from the Government for the very thing that we have urged upon them before.

It has been suggested today that we might develop East-West trade still more. I did a lot of trade with the Soviet Union, so I am as well informed about this as anyone. We must all recognise that we cannot put too much hope in this means of solving our problem, although something can be done.

The aim of the Soviet Union, as the Russians themselves say, is to become self-sufficient. They did only 1 per cent. of world trade before the war. With the German and Japanese reparations and the taking in of the Eastern European countries, they have gone further towards their aim of self-sufficiency. But one of the Russian Ministers has said that they want footwear, clocks and watches, china, knitted goods, typewriters, fire-fighting equipment, calculating machines, and engineering products. It is not likely that we shall be able to sell them cars, because within the next year or two they will themselves be producing 650,000 a year; but those other things they do want.

The President of the Board of Trade will say that there is nothing to stop them buying. It is the outlook denoted by such a remark which is responsible for our failure to do business with them. The President of the Board of Trade ought to see M. Mikoyan, personally, with a view to considering how they can build up trade between the two countries. I urge the right hon. Gentleman to consider doing that.

What about China? China is a developing country. It is a fruitful country. The economies of China and the United Kingdom are complementary. I saw the Chinese Trade Mission last year. The members of that Mission said that they wanted to buy goods. I smiled and asked with what they would pay. They said, "We have got gold and dollars." I did not ask them where they got their gold and dollars, but I made a shrewd guess. What I said was, "That would be only short term." They replied," We recognise that, but we are undertaking geological research and we think that we have in China raw materials the world requires. We have more than your country has." The trade between the two countries ought to be developed, and the President of the Board of Trade ought to be considering that a good deal more than he is at the moment.

Our best hope, however, lies in developing trade in the Commonwealth and with the Colonies. The Government ought to be ashamed of their actions. I do not think it is an exaggeration to say that the trading relations with the Commonwealth have never been so bad as they are today. That is in spite of the very encouraging words uttered after the Commonwealth Economic Conference, in 1952. It was stated afterwards, on 11th December, 1952 that the aim was to concert measures for increasing the economic strength of the Commonwealth.

It was also said that a group of important financial, industrial and commercial concerns in the United Kingdom would form a company to further development in other countries of the Commonwealth and the Colonial Empire. Brave words. What has been done? Private industry and interests have not been able to do the job alone. That is obvious. Otherwise, we should not be in such bad odour with Commonwealth trading companies as a whole.

I suggest to the President of the Board of Trade that he ought to consider the establishment of a Commonwealth development corporation to act as an intermediary between the Commonwealth countries and British industry. That would be a more effective way of bringing about co-operation and the building up of trade between this country and the Commonwealth countries. I suggest, too, that he forms an exports promotional organisation.

My right hon. Friend the Member for Huyton (Mr. H. Wilson) will remember that when we were together at the Board of Trade it was suggested that to have two departments, an exports promotion department and a commercial relations and treaties department, with business men going from one to the other, involving waste of time, and sometimes not getting the same information, was not helpful to developing the export trade, and we fused the two departments. Now there is just one department, the Commercial Relations and Export Department.

What I suggest is that the right hon. Gentleman should consider taking that section away from the Board of Trade in Whitehall and amalgamating it with the Export Credits Guarantee Department, which is in the City, which has had close and rich associations with business as a whole, which is primarily an insurance organisation, and to which both sides of the House have paid tribute for the excellent work it has done. If we were to fuse those two departments it ought to be possible not only to give insurance but to forecast foreign trade demands, to study foreign sales techniques, to assist British firms in developing their sales in foreign countries. I think it might be entrusted, too, with looking after trade fairs. Here, I would thank the Minister of State, Board of Trade for taking the energetic action we had urged upon him and in at last taking a more active part in trade fairs.

Our immediate problem is that we are importing too much. I believe that licensing control is the way to overcome that. The Government are not likely to accept it, but they could at this time impose restrictions by quota. I know that that would result in difficulties, and that foreign countries would make representations about it, but if, as the Government lead us to believe, we are in a serious economic difficulty, exceptional measures are required. Even under international agreements this is a possibility.

I have not the advice and assistance Ministers have, but I would suggest that they consider, when the imported goods come in, themselves being responsible for their sale. They should put them up to the highest bidder. In that way not only would they be promoting an improvement in our balance of payments position but they would also be mopping up surplus purchasing power. The Government would also be making profits which would help to ease the taxation situation.

The Government are in a jam and, unlike the hon. Member for Kidderminster (Mr. Nabarro), I am trying to help them out. The Government should also consider introducing building licences. They should give greater attention than they have done to this subject. They should concentrate upon the provision of schools, hospitals, houses and new factories, and cut out much of the luxury building which we cannot afford now. If they did that, it would be easier to make labour transferable.

I was pleased to read in the Press that the Chancellor of the Exchequer had decided to tighten up the control of capital issues. There is to be a debate on that subject and, therefore, I will not deliberate on it at length. But what about the control of foreign exchange? Why not hand that control back to the Bank of England and let the Bank be the sole purchaser? That is another way in which we could help meet balance of payments difficulties.

Like my right hon. Friend the Member for Belper, I speak as a trade unionist. We accept our responsibilities. We want to play our part in getting the nation out of its economic difficulties. Many of the proposals which I have put forward and which the T.U.C. have put forward are matters which the Government should seriously consider. The Government must exercise greater control over the country's economy if we are to get out of this jam.

The Leader of the House has said that that the economic position of the country has been deteriorating over the last 50 years, but the policy which the Government are pursuing is the very one that caused that to happen. Surely we are not going to allow it to happen again. The right hon. Gentleman also said that the new Chancellor of the Exchequer would follow the policy which he had laid down. Heaven help us. I hope that the Chancellor will not do that, though I fear that he may, since it is the policy of his party.

Whatever our party views may be, none of us wants unemployment as we have experienced it before, if only because it is an electoral necessity that we should not experience it again. Apart from that, we have closer contact with our constituents today than ever before and we are human enough to know and appreciate that the suffering unemployment may now bring is nothing compared with the horrors which it would bring if it were allowed to develop. I have had experience of unemployment. It is the one thing that poisons industrial relations. Let us hope that we shall never experience large-scale unemployment again.

Unemployment, however, is occurring. I saw men lining up for jobs in Northern Ireland last year. They had been doing so not just that week but for months in the constituency of the hon. Member for Londonderry (Mr. Chichester-Clark). I know that Lord Chandos is doing all he can to help but, nevertheless, the railways there are to be closed down and 2,000 or 3,000 people will be put out of work. I hope that the Government will listen effectively to what the railway trade unionists will have to say on this matter. I gather that they are making representations.

I have a personal interest in Northern Ireland. Short Bros., the aircraft manufacturers, closed down in my constituency and went to Belfast. Thousands were thrown out of work in my constituency. If the Labour Government had followed the policy pursued by the present Government we should have had unemployment and, chaos, but because we followed a distribution of industry policy, whereby employers were told where they should go to carry on their industries, we sent industry to the Medway towns and to this day full employment prevails there.

The Government do not want large-scale unemployment but, because of their hide-bound views, because they are loath to interfere with private enterprise and because of their failure to take measures to protect the economy, they may allow the country to drift into unemployment. A White Paper on the economic consequences of full employment is to be published and the Prime Minister has spoken of the need to increase public understanding of our economic difficulties, but the House and the country want to know what the Government themselves are going to do to ensure full employment.

10.25 p.m.

The Minister of State, Board of Trade (Mr. A. R. W. Low)

This debate has covered a wide range—

Mr. C. W. Gibson (Clapham)

Not wide enough.

Mr. Low

—and many industries. I am well aware, Sir, that there are some hon. Gentlemen who have not caught your eye but I think that the House would like me to reply in the main to the general points made from the Front Bench opposite and from the back benches, including my hon. Friends. I shall mention one or two of the particular points raised but I shall confine most of what I have to say to the general issues. I do not quarrel with the way in which they were raised by the right hon. Member for Rochester and Chatham (Mr. Bottomley) or by the right hon. Member for Belper (Mr. G. Brown).

I might touch upon some of the omissions from the history quoted by the right hon. Member for Rochester and Chatham when he was talking about the period between 1945 and 1951, of which there were a number. Instead, I beseech the right hon. Gentleman and his hon. Friends to remember, when comparing that period with this period, that from the point of view of exports during the former period, broadly speaking, we could sell overseas anything we could make whereas at the present time that is not so.

The debate has disclosed the sharp disagreement between the two sides of the House on what a Government ought to do in the economic realm. That is not a surprise. It has also shown a measure of agreement on many important matters, and we should not underestimate the measure of agreement that exists, particularly on the great importance of employment to all the people of this country.

We are agreed that we have to correct our balance of payments and we share the aim of full employment. We all recognise, as has been shown in this debate, that the pattern of our production and of our exports and of our employment cannot be frozen. The right hon. Member for Belper used that phrase. My hon. Friend the Member for Scarborough and Whitby (Mr. Spearman) made the point very well, as did both hon. Friends of mine and other hon. Members opposite, including the hon. Member for Nelson and Colne (Mr. S. Silverman).

Common agreement has been expressed on the importance of close consultation between both sides of industry and between industry and the Government on these matters. That was somewhat overlooked by some of the fierce questionings across the Floor of the hon. Member for Coventry, East (Mr. Grossman) and others.

I was distressed to hear the hon. Member for Nuneaton (Mr. Bowles) disclosing what I thought was a painful inability to understand that, although we on this side of the House may differ from him as to method, we share his concern for his fellow men. That has been the thread running through all our speeches—that of my right hon. Friend the Minister of Labour and the speeches of all my hon. Friends, as well as of hon. Gentlemen opposite, and I hope that the hon. Member will find it in my speech also.

In the course of the debate there has been little tendency to be alarmist and little tendency to exaggerate the position. The position was clearly and fully stated to the House by my right hon. Friend the Minister of Labour, and I shall not go into it again. I recollect that in his opening remarks the right hon. Member for Belper told us that he did not wish to be a Jonah in this matter. I think he was referring to the wrong Biblical character. I think that what he really meant to tell us was that he did not wish to be a Jeremiah. My hon. Friend the Member for Louth (Mr. Osborne), on the other hand, in a courageous and frank speech, did, I think, take the part of Jeremiah, and we note what he said. But there were few other Members on either side of the House who took that line.

There were one or two points about industries that I should like to refer to at this point, and then I should like to tackle the main problem, including the problem of the motor car industry, in the course of my general observations. First, I take the cotton industry. The hon. Member for Nelson and Colne, my right hon. Friend the President of the Board of Trade and I have debated that in dustry many times. He knows the Government's case about it; he knows well the figures that my right hon. Friend the Minister of Labour gave to him, and he knows the steps that have been taken to help in diversifying industry in that area.

Mr. S. Silverman

Absolutely none whatever.

Mr. Low

The hon. Gentleman did make it palpably clear to all of us, if I may say so, that he did not know what was going on in that area.

Mr. Silverman

The right hon. Gentleman is perfectly entitled to make as much capital as he thinks he can out of the fact that I inadvertently mixed up the two factories in Padiham, and quoted the wrong one as not having opened its doors. If he thinks that means that I do not know what is going on, he is entitled to his view.

Mr. Low

I am grateful to the hon. Gentleman for explaining the position; but, of course, that factory is a very big one, and it does employ a lot of people from his area. It is, as he knows, the largest factory that has ever been put up in a Development Area. I understand that the employment situation in that factory is not one of decreasing employment, but rather one of maintaining the level of employment, or even of increasing it in that particular factory.

The motor car industry—

Mr. Silverman

Is that the only thing the right hon. Gentleman has to say about the cotton industry?

Mr. Low

If I try to deal at length with every industry in this reply it will take a very long time.

Mr. Silverman

There is plenty of time.

Mr. Low

I will now pass, if I may, to the motor car industry.

Mr. Crossman

Hear, hear.

Mr. Low

I am glad to hear the applause of the hon. Members for Coventry.

Mr. Crossman

Only this one.

Mr. Low

Let me answer directly the question put to me directly by the hon. Member for Northfield (Mr. Chapman). It was put in somewhat coarse language. He asked me whether the Government were waiting for the death of Coventry. I think he used that phrase. Of course we are not. What nonsense even to imagine such a proposition.

Mr. Silverman

The Government will have to treat them differently from the cotton industry then.

Mr. Low

The present contribution of the motor car industry to our national production, to our exports, was well put in its proper perspective by my hon. Friend the Member for Twickenham (Mr. Gresham Cooke), who pointed out the large figure of exports contributed by the whole of the motor car industry.

Mr. Crossman

Hear, hear.

Mr. Low

Again I have the applause of the hon. Member for Coventry, East, and I am glad to acknowledge it.

It is a fact that, though exports last year earned the highest amount ever for the motor car industry, in the first two months of this year exports of motor cars are seriously down. That is a fact. It is also a fact that in the first two months of this year exports of commercial vehicles are slightly up. I understand that exports of agricultural tractors are about the same, but, if anything, slightly down on last year. To say that what is happening now in any way spells the death of Coventry or of the motor car industry really is to over-exaggerate the position. I should also like to underline what my hon. Friend the Member for Twickenham said about the efforts being made by the motor car industry to try to improve its position in some of the open markets of the world, in particular in Sweden, about which I saw a report recently.

Mr. Crossman

Before the right hon. Gentleman passes from motor cars, can he tell us one thing about capital investment? Has the Minister decided to take any action on the subject of the £100 million which is to be devoted to Vauxhall's and Ford's in the coming year, at a time when the industry is fairly large already? This is a question which affects the future of Coventry. I hope he will deal with the cuts in capital investment and why they have not been applied to what we think is an unnecessarily large development in an unplanned form in the motor car industry.

Mr. Low

Perhaps I can deal with the question of planned investment later. I promise the hon. Gentleman that I will deal with the question of Government planning of investment in its proper place in my speech.

I said that I would deal with one more industry. The right hon. Gentleman the Member for Belper mentioned short-time working in the hosiery industry. It so happens that during the debate I have been given an extract from the tape this afternoon which said—and I welcome this—that one hundred women hosiery workers in his constituency were back on full-time working today. That is a sign that some of this short-time working is seasonal at this time of year. We well know that, as my right hon. Friend pointed out in his speech.

There is one more special case, and that concerns Northern Ireland. My hon. Friend the Member for Londonderry (Mr. Chichester-Clark) made what I thought was an excellent speech which will certainly help industry and employment in Northern Ireland. He asked me a question about the Capital Issues Committee. I am told—and he may know this—that borrowings in Northern Ireland itself are matters for the Government of Northern Ireland. The Borrowing (Control and Guarantees) Act, 1946, under which we conduct our capital issues control, does not extend to Northern Ireland, which runs its own capital issues control. As regards borrowing in the United Kingdom the purpose of which is to raise money for investment in Northern Ireland, the Capital Issues Committee would no doubt take note of this in reaching its decision. I hope that answers my hon. Friend's question.

Mr. Bence

What about Scotland?

Mr. Low

If I had had a question about Scotland I might have been able to find an answer to it, but as I have not I will continue.

Mr. Bence

rose—

Mr. Low

The hon. Gentleman's speech was allowed to pass without interruption; I think it would be better if I were allowed to make my own speech in my own way.

There has been much reference to short-time working. All of us, including the right hon. Gentleman the Member for Belper, know that short-time working is not an efficient use of the labour force. Of course it is not, but there are grounds to justify it, as the right hon. Gentleman knows well. It is for the employer in consultation with the workers—as always happens—to decide whether the short-time working should continue. My right hon. Friend outlined the considerations which the employer would have in mind.

The Government would like to see the industries where home demand has fallen meeting the gap in demand by increased exports; but if they cannot get sufficient overseas orders to fill the gap there are other industries which have orders and who want the resources of materials and labour—much the same kind of labour too.

I will give some examples: heavy electrical plant—firms connected with that industry are in the neighbourhood of Coventry; internal combustion engines; re-rollers in the steel industry—where there is a labour shortage; the machine tool industry; the makers of various types of machinery, such as printing and paper making machinery; compressors and gears; and the makers of ball-bearings and roller bearings. All these industries are short of labour and materials.

Mr. Snow

Will the right hon. Gentleman give way?

Mr. Low

I wish to get on—

Mr. Snow

There is plenty of time.

Mr. Low

I am sure that employers will have in mind all the points about seasonal factors, of which they will be aware. I would stress that the House and the employers would be quite wrong to underestimate the determination of the Government to get our economic situation right. That is the main problem—the economic situation—which we ought to be debating tonight and not the problem, which some people have in mind, of unemployment of a pre-war type caused by pre-war reasons. Unless we set right our balance of payments, we shall face a much greater but different risk of unemployment, because we shall not be able to import the raw materials we require. That is the problem which many hon. Members—but not all—have been debating tonight.

Mr. G. Brown

That is so; that is the problem. But the Minister is repeating the declaration of his right hon. Friend, that it is for employers—in consultation with workers—to decide whether to stay on short time or whether to bring about redeployment. The right hon. Gentleman says it is the determination of the Government to get the economic situation right. How can they do so if they abdicate the responsibility for manning-up industries to groups of employers?

Mr. Low

It has been rather difficult for me to get on with my argument, but I am going to deal with the responsibility of the Government. We recognise that the Government have a responsibility—and we do not abdicate in any way our responsibility—for getting the economic situation right, correcting our balance of payments and thereby helping our exports. For that we have a responsibility, and to do that we intend to reduce home demand so that there may be some resources available to increase our exports.

We all know that it is possible to correct our balance of payments by reducing our imports without increasing our exports; that if we corrected our balance of payments in that way, there is no hope of an expansion in our standard of life, of our production and of employment. The hope of an expansion in production and in employment lies in the expansion of our exports. It is that aspect of Government and Opposition policy which I wish to tackle.

From time to time hon. Members opposite have been asked what is their policy to help exports. At the end of eight hours of debate the right hon. Member for Rochester and Chatham was challenged to say what was their policy to assist the export of motor cars and he replied that they would prod the motor car manufacturers.

Mr. Bottomley

rose—

Mr. Nabarro

The right hon. Gentleman only wishes to prod my right hon. Friend.

Mr. Low

In commenting about what the Government should do to help our exports the right hon. Gentleman blamed the Government for reducing the Purchase Tax on cashmere woollen articles, thus increasing the home demand for cashmire woollen articles and so affecting exports. It would seem that he would agree with us that the right way to help the exporter is to reduce home demand in all things, and that is what we have done.

In contrast, the Opposition challenge us and say, "You must plan. The right way to increase exports is by planning." I put it to the House: of all things exports are of the least plannable. How can we plan exports when our exports depend on what our overseas customers want to buy? Hon. Members opposite may say that we have to plan to make what they want, but how do we know, as a Government, what they want and what to make? How do we know what our customers are going to buy? Why not leave that to the experienced manufacturers and traders whose job it is to do exactly that?

Mr. Douglas Jay (Battersea, North)

How does the Minister explain the fact that the volume of exports did, in fact, increase by two-thirds over the last four years of the Labour Government, and that that rise has come to a stop since the Conservative Government have been in power?

Mr. Low

I am not complaining, but I do not think the right hon. Gentleman was here to hear the beginning of my speech. The explanation is simple, and it is that during the last four years of Labour Government there was a sellers' market in the world; and that makes all the difference.

Let us take the planners' arguments with reference to the motor car industry. The planners say that to increase the exports of motor cars we should use persuasive or allocating measures such as allocating steel. The result of that—in fact, the object of using those measures, presumably—would be to reduce the production of cars for the home market in order to encourage and stimulate greater production of cars for export.

Mr. Crossman

The object that we had was to keep the home market low so that we could increase our exports. What the hon. Gentleman has done is to boost the home market to a point where the export market has been killed. Would it not be wiser to keep the home market down, to regulate it by means of allocation, so that it would act as a kind of bumper, and a bit could be let off to the home market when exports fall? We regulated the home market in relation to exports. The right hon. Gentleman has unregulated the home market, and now he has got to make a chaotic cut. That, we think, is the result of not planning.

Mr. Low

Let me put it like this. [Laughter.] This is a serious argument. One can manage one's affairs by close regulation. That is not the way we are going to do it. We have had some experience of it. But whether or not that close regulation would lead to the sort of expansion of export sales that we want—

Mr. Crossman

Seventy-five per cent.

Mr. Low

—it led to devaluation when there was a sellers' market. How does one plan in a world where we have not only consumers' choice overseas in a competitive market but, also, competitors who enter the market afresh with a new car? How would the hon. Gentleman have planned for the Volkswagen?

Mr. Crossman

rose—

Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)

If the right hon. Gentleman does not give way, hon. Members must remain seated.

Several hon. Members

rose—

Mr. Deputy-Speaker

The right hon. Gentleman is in possession of the Floor and if he does not give way hon. Members must retain their seats.

Mr. Crossman

With great respect, Mr. Deputy-Speaker, the right hon. Gentleman asked me a question. He invited me to reply and, before I could reply, you sat me down.

Mr. Deputy-Speaker

All questions should be addressed to me and not across the Floor of the House.

Mr. G. Brown

Further to that point of order. Can we have an assurance that if the Minister addresses a question to you, Mr. Deputy-Speaker, he will allow you to answer?

Mr. Deputy-Speaker

That is not for me to answer, but if hon. Members addressed the Chair instead of one another it might be simpler.

Mr. Low

I am sorry to have caused that interruption. I was, in fact—[interruption.] It would be convenient if the hon. Member for Nelson and Colne would keep quiet for a few minutes. I was going to ask the hon. Member for Coventry, East two questions. I was in process of putting the second one, which was: would he have made his plans to allow for the success of the Volkswagen, or for its failure? That would make a great difference to the number of cars produced for export.

Mr. Crossman

I am grateful to the right hon. Gentleman, and will try to answer both questions as concisely as I can. I start with the Volkswagen and ask the right hon. Gentleman something. I would ask the Minister to consider how the Germans planned the success of the Volkswagen, for that is the car produced by a nationalised industry which has succeeded in knocking all British private enterprise into a cocked hat.

The right hon. Gentleman asked what we would have done about it, and I will tell him. We would have gone on with what we did before, to allocate steel by export achievement. We would not have taken that sanction off the employers. We would simply not have given them the steel if they did not succeed in exporting sufficiently. We would have saved at least £100 million of dollar steel exported last year to produce cars we could not sell abroad and we would have saved an ever crazily expanding industry which failed to compete with the Volkswagen.

Mr. Low

That is the answer I expected from the hon. Member. The motor car industry would not, on that assumption, be in as good a position as it is today to expand its exports all over the world.

Mr. Chapman

rose—

Mr. Low

I think we have had a good "do" about the motor industry.

The general arguments about planning were put again by the right hon. Member for Belper, and some of his hon. and right hon. Friends in favour of central planning. They are arguments we have had before and they amount to centralised planning of investment, of labour, of wages and of exports. The hon. Member for Newton (Mr. Lee), in a very interesting speech put forward arguments which can only be summed up by saying that he was advocating a national wages policy. That is where we get to when we take those arguments about planning to their logical conclusion. I do not believe we would get anything like as great an export achievement as we had from free enterprise—

Mr. Bottomley

But you have not.

Mr. Low

—in the last few year. It is quite wrong for the right hon. Gentleman to say that we have not, in general, had a great export achievement. We have had a steady increase of exports over the last two years. What is wrong is that we have not had a sufficient increase.

I will now come to our approach to the problem. I must say to the House that though our approach is different from that of the party opposite, it is just as positive. We are quite as clear as hon. Members opposite that we have a duty to perform and a part to play in making our economy the sort that will enable our exports to grow. In the short term, we can only do that—and I think the party opposite agree with this—by getting rid of inflation. But that is not the only thing we have been doing lately in an endeavour to assist in increasing our exports.

Our technical education plans, our arrangements for investment in research, in particular, and our whole commercial policy—which is very much an extension of the commercial policy of the party opposite—are all designed to help our exporters. It is a good thing that at the moment when we have to face an early increase in our exports more markets in Europe are freer than they have ever been before. It is a good thing that where quotas have recently had to be bargained for, we have been able to get increased quotas for, among other things, motor cars. It is a good thing that in the world generally there is increasing recognition of the value of fair and multilateral trading, though we have still some way to go.

I say to my hon. Friend the Member for Cheadle (Mr. W. Shepherd) that we ought to think very carefully indeed before we begin to undo some of this good work by encouraging export incentives of any kind. We can only achieve our purpose by trying to seek agreement among our trading partners. As has been said in this debate, there are important areas of rapidly expanding demand in the world which give us very good opportunities for increasing our exports. The Middle East oil countries, particularly Iran, are one example; Canada is another, and some of the Caribbean countries provide the third example.

Though in other parts of the world our trade may not expand as much as it did last year, or even not at all, we have a clear task in those markets too. We have to try to recapture some share of the world trade which we have lost. That may be difficult, but it highlights the importance of our manufacturers being competitive.

The question of East-West restrictions has been mentioned by several hon. Members on both sides of the House. With the exception of the contribution from the hon. Member for Northfield, the discussion has rather concentrated on the China list. The House knows what is happening about the China list, and I will not repeat it. [HON. MEMBERS: "We do not"] There was a Question on the Order Paper this afternoon and one yesterday on the subject, and I assumed that hon. Members had either heard the Answers or read them.

One new point today was about the tractor order. We are aware of that order and of its great importance, and we shall do everything we can with our partners in these matters to see whether the order can go through or not.

Mr. S. Silverman

What have our partners to do with it?

Mr. Low

The hon. Member for Nelson and Colne asks what our partners have to do with it. He seems to be overlooking the history of the last four or five years. The House well knows that there are agreements on this matter.

As to the trade with Eastern Europe, which the hon. Member for Northfield, mentioned, I would certainly like to see increased sales of cars. That would help us and those countries, but it is not our fault that cars, commercial vehicles and tractors are not bought in those markets. It is up to them, and I repeat that my right hon. Friend and I consider that it is up to them to buy. We place no obstacles in the way.

If I may return now to the steps that we are taking in reducing home demand to help our exports. Whether one studies the figures and reports about exports at home, or makes fairly extensive visits overseas—and I have done both—one finds that British industry has not been gathering all the orders that might have come to it for one or more of the following reasons: the price is just too high, the date given for delivery is too late, the design is not thought to be right, or there is some other sales promotion failure. The right hon. Gentleman mentioned those points, and much of what he said in criticism may well be right, but the cure of inflation is also the cure of every single one of those complaints. That is the way to help industry to sell more; that is the way to help industry to meet those complaints.

There is one other point I would put to the House arising out of my visits overseas, from observation on the spot—this is not criticism of what has been said today. We cannot expect to sell more goods overseas by crying stinking fish; and that is most relevant to a debate on employment. I am glad to see the hon. Member for Lichfield and Tamworth (Mr. Snow) nod. Constructive criticism of industry is helpful and necessary to avoid complacency. Mistakes there are, of course, but the wholesale running down of the workmanship and efficiency of whole industries is neither helpful nor justified. We have to face the fact that no other nation is as modest as we are, or as publicly introspective. Others will judge our goods by what we say about them.

Both right hon. Gentlemen have referred to our policy on fairs. It is one of the ways in which British goods are displayed to overseas customers. Do we do enough as a Government to encourage the display of our goods overseas? The House knows our approach to this problem. It is ultimately the job of industry to sell their goods and to advertise them, and industry does this business of fairs and exhibitions overseas extremely well.

The House will remember the Bagdad Fair, the Copenhagen Fair, and now the F.B.I. are running a pavilion for the British industry at Damascus this year. The Government have not altered their policy in this matter, but it is clear to us that there are certain areas of the world, particularly in Asia, where the grouping together of national exhibitions for prestige reasons may be particularly important, and we are considering, as I have told the House in answers to Questions, what steps should be taken, if any, in those areas.

Our support for exhibitions overseas is not just confined to what I have just said. We staff and pay for small displays in inquiry bureaux at a number of fairs, and. our expenditure for this purpose has increased five-fold in the last five years.

Mr. G. Brown

The right hon. Gentleman has said that there is no change in our policy on fairs. Does he deny the statement in the Observer of 18th March that the Government have decided experimentally to break with past policy by giving substantial financial aid to the British Pavilion at the International Trade Fair to be held at Damascus next September"? Does he also deny the statement that at this year's St. Erik's Fair, in Stockholm, the Government will support them by buying the space?

If the right hon. Gentleman does deny that either of those are true, he should say so, so that people may know that these are unfair statements. If that is so, will the right hon. Gentleman say why he is so sure that the Government are right in view of the great activity of other Governments in these matters?

Mr. Low

The right hon. Gentleman is not accurate in his last statement. What has happened overseas has been that British Overseas Fairs Ltd., a subsidiary of the F.B.I., is financing a British pavilion at Damascus. We in the Board of Trade are taking an official stand in the British pavilion. That stand will not occupy an abnormally large proportion of the fair space. We are contributing in that way, but not in as expensive a way as was indicated in that article. As to the point about St. Erik's Fair, I have not a copy of the article in question and I was not given notice of that point.

There is one further lesson that anybody who studies overseas trade must learn soon, whether he stays at home or goes abroad. This is that expanding 'exports mean now, as they always have meant, changing exports. They mean new products year by year. In 1929, engineering goods used to be 16 per cent. of our exports. They have become just under 40 per cent. of our exports today.

That change will go on all the time; and changing exports mean some workers changing their employment as well as some factories changing their products. We must not be frightened of change, for we depend upon it. Indeed, it is the positive duty of any Government to see that change can take place, and we are not the first Government by any means to stress the need for the mobility of labour, so that production and exports can change.

The Coalition Government did it in their White Paper on Full Employment. Sir Stafford Cripps did it on a number of occasions. I want to remind the House of what was written on the relation between unemployment and the balance of payments in Sir Stafford Cripps' Economic Survey of 1948, in which there was a forecast of an increase in total unemployment from 300,000 to 450,000. This is what we find, in paragraph 193: It will be seen that a figure for unemployment notably higher than the present level has been used. It is important to make clear what this implies. It does not imply any increase in long-term unemployment or the emergence of any new depressed areas … It allows for an increase in short-term unemployment … resulting from the changing pattern of industry; for an increase in transitional unemployment as a result of the internal changes in particular industries which are required to implement exports and essential re-equipment programmes. The Survey continued: If imports of raw materials had to be severely cut on balance of payments grounds, unemployment might rise to a much higher level. As my right hon. Friend showed, there are today vacant jobs open, and workers who leave the industries now affected are going into these vacant jobs. This movement of labour is not the only sign that the measures taken by the Government are beginning to work in the positive sense of leading to larger exports than there would otherwise have been. Board of Trade regional controllers keep us closely informed of all changes in thought and action in their areas. A short summary of the general reports we have been getting in the past week or two from the majority of our regions would be this: first, an increased interest in exports; secondly, one or two examples of firms affected by reduced demand getting increased orders for exports; thirdly, the firms with good export order books are still waiting for more labour and more materials.

I should like, briefly, to deal with the question which has been asked, and which will no doubt be asked again, namely, "How far will the Government go with their measures; how long will we go on?" That is a fair question for hon. Members to ask, but a question to which no one will expect a precise answer—[HON. MEMBERS: "Oh."] No, not at this moment, when the measures which the Government have taken are beginning to have effect. But I will give this answer. We intend to continue our policies until inflation is ended; to continue with the positive purpose of increasing our exports in what is today a highly competitive world.

The essential thing is that we end inflation, for that will be the greatest immediate contribution that can be made to full employment and to a surplus in our balance of payments. To talk of an impending slump should not, and will not, hide the fact that demand is still high—as is employment—and that many industries which want labour and materials for export orders are still short of both. Demand and supply are not in balance, and it would be the height of folly for the Government now to abandon their anti-inflationary measures, which are the essential safeguard against a slump.

The Government's intention was clearly stated four weeks ago; and that policy remains. It is to end inflation and thus safeguard both our balance of payments and the country's full employment.

Mr. Bottomley

Before the right hon. Gentleman sits down, may I remind him that I did put forward some constructive suggestions? He has some responsibility for the Export Credits Guarantee Department and the Commercial Relations and Export Department, and I suggested that there might be a fusion to form an export promotion corporation.

Mr. Low

We have noted that suggestion.

11.13 p.m.

Mr. Maurice Edelman (Coventry, North)

Whatever charges one may lay against Ministers who sit opposite and whose responsibilities are to industry, one certainly cannot accuse them of looks of self-satisfaction. As I watched the right hon. Gentleman the President of the Board of Trade the other day, and the Minister of Labour today, I could not but help recalling the vituperative heyday of the Minister of Transport, as the former then was, and of the Minister of Health, as the right hon. Member for Enfield, West (Mr. Iain Macleod) then was. I recall how at that time they were described by a Tory commentator as the Castor and Pollux of the Conservative Front Bench; and although I do not know which was supposed to be which at that time, I do know that nowadays they look a somewhat bedraggled pair. Their policies are discredited, and discredited by results particularly felt in the Midlands today.

Indeed, the origin of today's debate lies in that incipient, creeping infection which began in the Midlands in general, and in Coventry in particular, last summer. I and some of my hon. Friends from Coventry at that time saw the Minister of Supply on the specific subject of redundancy at Armstrong Whitworth's, pointing out that thousands of skilled men, because of lack of planning, were on the point of being thrown out of work.

The Minister of Supply, assessing the whole situation, suggested that those who might become redundant at Armstrong Whitworth's—men working in the aircraft industry—would easily find employment in the motor industry in Coventry because of the many vacancies then available. We warned the right hon. Gentleman that these many vacancies would not be realities when the time came for these men to be absorbed into the motor industry.

Our prophecy was, unhappily, correct. Those men who were discharged from Armstrong Whitworth's, had it not been for hon. Members on this side of the House who demanded that the Minister should find alternative employment within the industry, would not today be in the position of being able to find jobs inside the motor industry.

I want to emphasise that the problem in a city such as Coventry is particularly acute because Coventry is basically a single-industry city. Coventry, like Jarrow, is a city which depends mainly on one particular form of occupation; and although an attempt has been made to diversify the industry of Coventry, by means of the aircraft industry, we have a situation today in which men who are made redundant, thrown on short time, or forced out of their present employment, will have the most considerable difficulty in finding alternative employment.

When I consider the whole picture of the motor industry, I am inclined to think that the advice which has been offered year after year by motor manufacturers has been consistently unsound. Hon. Members who represent Midland constituencies have had close contact with the motor manufacturers—some of us for at least eleven years—and we recall vividly how, in 1946 and 1947, when the Labour Government were urging motor manufacturers to go out and capture export markets, those manufacturers consistently offered the argument that it would only be possible to develop the export industry provided there was a large basic home industry.

It is in the recollection of most hon. Members that when Sir Stafford Cripps, at the Society of Motor Manufacturers and Traders dinner, urged that the manufacturers should raise the percentage of their output for export from about 20 per cent., as it then was, to the modest 50 per cent. which he proposed, he was greeted with jeers, and derision.

My hon. Friend the Member for Coventry, South (Miss Burton) was not in Coventry at that time, but my hon. Friend the Member for Coventry, East (Mr. Crossman) and myself were badgered by the manufacturers, who urged us to bring before the Government of the day their objections to the suggestion that they should export so high a proportion of their output as 50 per cent.

To those who ask what is to be done to protect our motor output into the export market, I would say that to the extent that it is applicable to present-day needs we must revive some of the methods used by the Government between 1945 and 1950, which raised exports from 20 per cent. to 73 per cent. in 1950.

Mr. Osborne

Conditions today are very different. At that time we had a sellers' market.

Mr. Edelman

My point is that today There is in Europe, in our Colonies and in our Commonwealth, and beyond the Iron Curtain, a great demand for the potential output of the British motor industry. I am not suggesting that this demand is necessarily for 7 h.p. cars. On `the contrary, I think there should be a strategic plan by the industry to adapt itself to these markets, where we find competitors such as the Germans, French, Italians and Americans steadily increasing their proportion of the total exports being absorbed there.

To define the fundamental difference between ourselves and hon. Gentlemen opposite, I would say it is quite simply the fundamental separation of those who believe in laissez-faire and those who believe in a planned economy. I shall, briefly, try to show in detail how it is precisely the laissez-faire policy, which was defended so vigorously by the President of the Board of Trade the other day and by the Minister of Labour today and, in a rather half-hearted way, by the Minister of State, Board of Trade, just now, which has caused the present serious difficulties from which the motor industry is suffering.

When the first post-war Conservative Government came to power, with their policy of setting the people free, one of their first achievements was to set the motor industry free to expand and to develop on the home market. As the motor manufacturers are in business to make profits and to pay dividends to their shareholders one cannot blame them for turning, as, in the circumstances, it was natural for them to do, to the easiest market which was available to them; and the easiest market available to them was, clearly, the home market, where there was a great, pent-up demand, where people wanted new cars, and where, in conditions of full and buoyant employment, there was money available to buy those cars. The result was that output expanded and the percentage of cars which was exported fell from 73 per cent. in 1950 to the 38 per cent. that it is today.

I draw attention to the decline in exports because I offer this thought to those who are responsible for the policy of the motor industry, and because it has been suggested that the credit squeeze has been the main cause of the present slump—as it has been called—in the motor industry. I suggest it is not primarily the credit squeeze, important though it is for the motor industry, which is the cause of our present troubles. The real cause of our present troubles in the motor industry has been the dramatic decline in the percentage of our exports.

The result is that today we have this pincer movement, on the one hand, of the decline in exports, owing partly to sales resistance, partly to the inefficiency of those who are responsible for the promotion of sales, and, on the other, the credit squeeze on the home market, which is preventing the use of the home market today as a sort of expandable buffer to absorb the most serious effects of the decline in our trade overseas. Thus one can see why it is that the motor industry is running into serious trouble.

I would quote a very significant and serious figure which illustrates the decline of our competitive power in the European market. It is from an article written last year in the Coventry Evening Telegraph by a member of the staff of the Economist, who says: In the important European market our sales actually fell by some 15 per cent. last year, while every other important motor producing country reported a substantial increase. American sales rose by 15 per cent. France sold 30 per cent. more cars. Italy nearly doubled her sales, and Germany recorded a gain of 50 per cent. Everyone concerned with the future of the motor industry—and, after all, a good deal of the national prosperity depends on the prosperity of the industry—must recognise that those figures suggest that the situation in the industry will be an extremely grim one. Not only are we now seeing the result of a fall off in exports in the form of the substantial short time which is being worked. After all, I would emphasise that 30,000 men on short time in the relatively restricted area of Coventry and the area round about means that well over 10 per cent. of the working population are, in fact, working on short time. Perhaps I ought to add that, although the official figure given is about 30,000, I have it on the most reliable evidence of officials of the Confederation of Shipbuilding and Engineering Unions that the number of men engaged on short time is, in fact, substantially higher.

It has been suggested time after time in the debate today by hon. Members opposite that the object of the Government measures is to try, in some way or other, to redistribute the labour force in the country so that those skilled men available might be, somehow or other, directed by means of these financial pressures, into particular industries which are serving the export trade. Indeed, this morning that argument found substantial support from the leading article in The Times, which was quoted by my right hon. Friend but which I would venture to quote again because it is directly relevant to my argument. The Times leader says: There must be an appreciable movement of workers from production for the home market to production for export. Now, I would ask: what industries have the Government in mind as offering a better field for export than the motor industry itself, from which men are now being displaced, made redundant, or where they are working short time? Is there any industry at all which can be mentioned—I know the Minister of State did give a short list—in which the conversion factor of material is higher than that of the motor industry—

Mr. Nabarro

Oh, yes. Would the hon. Gentleman give way?

Mr. Edelman

—and which is, at the same time, capable of absorbing the many hundreds of thousands of men who may be displaced from the motor industry by the policy of the Government?

Mr. Nabarro

The hon. Gentleman has qualified it.

Mr. Edelman

Certainly I have qualified it. There are industries like the electronics industry which might take over highly skilled men, and where the conversion factor is, of course, very high. But if we are thinking in terms of an industry which is suitable for mass production, an industry in which we can get the volume and bulk of sales in the export market, which we have traditionally had from the motor industry as it was expanded by the Labour Government, then there is nothing which can equal the motor industry.

The fact is that the men in the motor industry today are actually on the site; they are on the job. Where are they going to be displaced to? The answer is that the Minister of Labour certainly does not know. He believes that he can shuffle men as no doubt he is wont to shuffle playing cards, but I assure him that he is dealing with a very different situation; men are not disposed to be moved about in that arbitrary way; they are not disposed just to be ejected from the job, then directed to the right hon. Gentleman's employment exchanges and there, under the soulless eye of the agents of his Ministry, directed into occupations where their skill cannot be used to its fullest advantage, either in the interests of the men themselves or in the interests of the country as a whole.

We come back to the central point, which is that these is a wide divergence between hon. Gentlemen on this side of the House and right hon. and hon. Gentlemen opposite, in that we believe that at this late stage, after the chaos which the laissez-faire attitude of the Government has introduced into the motor car industry, the only thing which can re-establish the situation is the reintroduction of central planning on the lines which were introduced by the Labour Government after 1945.

I want to offer a few practical suggestions about the ways in which such a policy can be carried out. In the first place, I do not believe that exhortation or, with great respect to my hon. Friend the Member for Northfield (Mr. Chapman) "even prodding," is enough to get the motor manufacturers to enter the export market with the energy and the practical physical organisation which is necessary in order to maintain large exports. It is clear that the only thing which will urge the motor manufacturers into the export market is a strong decision by the Government themselves.

I do not agree with one of my hon. Friends who said that the Government are afraid of the motor manufacturers. I can assure hon. Gentlemen opposite that the motor manufacturers—and we have had some experience of them—although they dislike Whitehall intensely, have a very strong respect for Whitehall's authority. I can also assure them that the only thing which will direct the motor manufacturers towards the export market today will be the imposition of sanctions if they do not achieve the targets which are set for them.

Today we see the steady withering away of those export markets built up so painfully under a Labour Government. Unless we now introduce some technique of direction—and the technique which I personally advocate is that of the reintroduction of the allocation of steel according to export performance—I can give the Government my prophetic assurance that they will continue to see a decline in exports. Although in the next few months there will be a seasonal improvement in sales on the home market, that will not last very long. It will soon disappear.

In Coventry, where the traditional prewar seasonal pattern is well known, it is equally well known that a seasonal pattern is naturally associated with an industry which depends almost entirely on the home market. If we have a home market which has as its complement and counterpart a thriving and vigorous export market, then, and then only, is it possible to get away from the seasonal pattern of trade. At home, the seasonal buyer naturally tends to buy for the summer. He tends not to buy when the Motor Show comes round, and, in fact, the seasonal habit on the home market is something peculiar to it.

The export market is wholly different. It is, in a way, an artificial contrivance. It is something which has to be planned. It needs a strategy to imagine it, a strategy which will adapt production lines to the markets overseas. At the same time, unless we persuade and convince the manufacturers that their long-term interest lies—like the interest of the Swiss in making watches for export —in the export industry, we shall continue to see this steady dwindling not only of the export market but of the home market as well.

I turn to the question of investment in the motor industry, which is in the mind of every motor worker. In the last two years we have seen two phenomena. On the one hand, we have seen certain rather arbitrary mergers which resulted in the British Motor Corporation and, on the other hand, we have seen the steady development of the companies which are controlled by American capital. Surely it is a lop-sided development of the industry when, on the one side, we have Vauxhall's and Ford's, with their enormous financial resources, which have absolutely no relation to the investment programme controlled, or at any rate directed to some extent, by our own Government; and, on the other, we have the wen-like proliferation of the productive capacity of the American controlled companies in a way which must ultimately be to the detriment of British industry.

It is clear that if the American companies develop in such a way as to dominate the whole British industry, and if, at any time, either for internal reasons or for reasons of external policy, they decided to contract their industry—I am stating the opposite of what is going on today—we might find that possibly hundreds of thousands of workers might be thrown out of work by a decision, not of our own Government, not even of our native domestic motor car manufacturers, but by a decision taken either in New York or in a boardroom in Detroit.

I suggest to the President of the Board of Trade and to the Minister of Labour that that is a serious consideration which must give rise to concern; particularly at a time when our own manufacturers, although they continue to pay fairly substantial dividends, are certainly short of working capital. Those are matters which concern us greatly. It would be a sorry day if, as a result of the credit squeeze, a decline in our export market and a lack of planning on the home market, our Coventry firms were gradually squeezed out and we were to find, on the other hand, either an uneconomic expansion of the American controlled industries, or, worse still, some arbitrary closing down of the American controlled sector, which would do the greatest harm to our national economy. Those are matters which concern us greatly and which I felt that I wanted to bring to the attention of the Government.

Although they may introduce palliatives, I do not think that Her Majesty's Government can arrest the desperate malady from which the motor industry is suffering today. It is a malady which arises from neglect, or, in other words, from economic laissez-faire—

Colonel O. E. Crosthwaite-Eyre (New Forest)

Nonsense.

Mr. Edelman

—in the motor industry today.

The hon. and gallant Member says "Nonsense." The motor industry today should be judged by results and those results, compared not only with its past history, but with the efforts made by comparable industries abroad, are certainly lamentable. We are importing from America—

Mr. Nabarro

Coal.

Mr. Edelman

We are importing from America—

Colonel Crosthwaite-Eyre

Coal.

Mr. Edelman

—steel, sheet steel, which is being used for the home market. We are paying for it in dollars and it is going into the dwindling home market.

Mr. Nabarro

Will the hon. Gentleman reply to two questions before he finishes his speech? He said a few moments ago that the British motor car industry is short of capital. He said that twice. In fact, there is no evidence at all of any of the major firms being short of capital. Secondly, he referred to the import of sheet steel. Will he also mention the fundamental factor affecting our whole economy today—the colossal expenditure on bringing in American coal?

Mr. Edelman

It is obvious that apart from Vauxhall and Ford, the British motor industry, particularly in Coventry, is short of investment capital.

Mr. Nabarro

Rubbish.

Mr. Edelman

As to coal, the issue with which we are dealing today is the Government's economic policy, and that policy, for which the Government have responsibility, which today consists in importing steel, paying for it in dollars and using it on the home market, is one which must inevitably lead to disaster.

In conclusion let me say this, and in doing so I speak not only for myself but I am advancing the view of the Confederation of Shipbuilding and Engineering Unions. We believe that though the Government, through their policy of incoherence, have encouraged the motor manufacturers, who have been having such a splendid spree on the home market, to produce the deplorable results which we see today, it may be possible to introduce measures of guidance which will be of benefit to the industry—matters of standardisation, rationalisation and design which I will not go into tonight.

It is the view of the Confederation that what is needed is a development council which will give to the industry guidance which the advisory committee on the motor industry, which serves the Ministry of Supply, has certainly failed to give, possibly because of the insufficient trade union representation on that committee. That committee has failed in its function, and, therefore, even today in the grim situation which confronts us, and which only a Labour Government can remedy, it may well be that the only solution which may be of some help will be the setting up of a development council which will save the Government and the motor industry from some of their grosser actions.

11.43 p.m.

Mrs. Patricia McLaughlin (Belfast, West)

I am grateful for what the Minister has said on the question of capital issues. I am aware that the Northern Ireland Government are responsible for their own loan raising in this matter, but they have to have Treasury support, and I hope that if the Northern Ireland advisory Development Council does succeed in bringing some large industries to where they are badly needed, and if there is a necessity for a large loan, Her Majesty's Government will see that every request is treated favourably.

There are one or two points which I wish to raise. We require a diversity of employment in a part of the United Kingdom where, as hon. Members know, we have suffered from considerable unemployment. At present, it is almost 8 per cent., and we are determined that as this diversity of employment has to be achieved in a time of extreme difficulty, when we have been asked to restrain ourselves in capital investment, we must be certain of getting industries which will be useful not only to Northern Ireland but to the entire United Kingdom.

Our export trade is of great importance to the United Kingdom as a whole, not only as a dollar earner but also through exports to the Commonwealth and, indeed, through agricultural exports to this country. Northern Ireland exports per head more agricultural products than any other part of the United Kingdom. We are proud of the work that we have done, and we are merely asking for opportunities to do more.

I have heard a great deal today about possible unemployment. I go home over the week-end to a part of the United Kingdom where one sees actual unemployment. It is with that in mind that I venture to take part in this debate tonight.

Mr. Snow

On a point of order. I apologise to the hon. Lady for interrupting her speech, but I noticed the Minister of State has just left the Chamber, Mr. Speaker, and he appeared to indicate as he left that he was going for good. So far as I am aware, the end of this debate has not yet been reached and many hon. Members wish to speak. We hope that we shall be left with a Minister of Standing on the Government Front Bench.

Mr. Speaker

That is not a point of order.

Mr. Wigg

Would my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow) be in order in moving the adjournment of the debate, Sir?

Mr. Speaker

The hon. Member would be in order in moving it, but I would not accept it.

Mrs. McLaughlin

If I may be allowed to continue. I was endeavouring to draw attention to the fact that Northern Ireland has a great need for diversity of employment because we suffer from a certain amount of seasonal unemployment as well as, unfortunately, from a definite amount of permanent unemploy ment as well as, unfortunately, from a definite amount of permanent unemployment.

There are one or two questions I should like to ask the Minister this evening. Last week the Irish Republican Government announced an increase in tariffs on a tremendously wide range of goods. I understand that the tariff has been put on because of balance of payments, but I wonder whether it is absolutely certain that balance of payments is the reason, or whether it is for the purpose of protecting their own interests. We in Northern Ireland have suffered considerably from the fact that the Irish Republican Government have put a tariff on a wide range of goods. A large number of our goods are unable to enter that country without a high tariff on them and we have been receiving a wide range of Eire goods without a tariff, or with a very low one on them. As we have a land border, it is easy for those goods to be sent to us.

This is a very important question for small traders and those employing perhaps one or two assistants. We are not a country of large employers and we have to look importantly at every single job. I should like the Minister to consider finding out and giving a categorical reply to the question whether the Irish Republic have put on the tariff on the question of balance of payments or to protect their own interests. In Northern Ireland we are not at all behind-hand in stating our case when we have to. We do not wish to be in the vanguard of complainants and are quite prepared to take our part in helping this country—which is our country—to get on to a stable basis.

Any industry coming to Northern Ireland can be assured of good workmen, men who wish to work and also of tremendous help by the Northern Ireland Government. The council under Lord Chandos has done much to help us and the Government have done much to help us, for which we must pay tribute and must be thankful, but tonight is an occasion for asking for a clarification about goods coming into our country at prices which are unfair to local traders and Ireland having to issue a large loan to cover a large industry which may come to us. We have to try to cover ourselves against possibilities which may not necessarily occur quickly, because it is not an easy thing to get a large industry to come across the water.

We have the men and the will to work and we hope that as a result of all the help we are getting the 7.8 per cent. of unemployment will not continue to be a blot on our country as it is at present.

11.55 p.m.

Mr. Julian Snow (Lichfield and Tamworth)

I knew that the Government were "rocky," but I did not really think that we should have two Front Bench speeches today which were remarkable for not taking into account the present situation and for not taking an intelligent view of the future. I am sorry that the Minister of Labour has gone, for no one doubts his ability. One can only presume that his performance was due to the fact that he was off form or off colour, or a combination of the two. He seemed oppressed by the past, depressed by the present and unconscious of the future.

Those who have anything to do with the export trade have received the impression from the speeches of Government spokesmen today that there is a feeling of remarkable complacency. Some of us who have been in the export trade for many years got the feeling, when listening to the speeches this afternoon, that this is where we came in. I had the doubtful pleasure, in the 'thirties, of trying to sell British goods in the East and of knowing the great difficulties then existing, with an army of unemployed at home and of having no job to go to if one could not stick working in India and similar places. The sort of conditions that existed then appear to me to be developing again.

I am not going to spend very much time on the motor car industry, because that has been the subject of long discussion this afternoon, and I assume that other hon. Members will mention it later in the debate. But, listening to the hon. Member for Twickenham (Mr. Gresham Cooke), who spoke with an allegedly intimate knowledge of the industry, it seemed to me that when he talked about the remarkably fine performance of the industry he was not taking into account the fact that if we do not increase our exports, then we are losing the battle. He talked about being able to hold our own this year in the export market.

I suggest that that was a thoroughly defeatist attitude. There is no reason at all why we should not increase our exports of motor vehicles if certain precautions are taken and certain policies are followed. I suppose that one factor more than any other which will control the level of sales in the export market is to find not only a willing importer, but an efficient importer.

When, in the course of his speech, the Minister of State said that this was a matter which we could not plan, I must say that I disagreed very strongly with him. After all, why have German exports of motor vehicles gone up so considerably? In my view, it is not because, by and large, their vehicles—I except the Volkswagen—are any better than our own. I do not think that they are. I believe that, generally, our vehicles are very good indeed. It is the after-sale service which is so remarkably deficient in our export trade.

In West Africa, where I was recently, and in many other markets we find that when our vehicles have been sold there are apparently unnecessary and frustrating delays in the provision of spares.

Mr. Low

I am grateful to the hon. Gentleman for allowing me to intervene. I want to make it quite clear to the hon. Gentleman that I am not against, and never spoke against, the planning by an exporter or manufacturer of his export market. He is the right man to plan that. I agree with what the hon. Gentleman said about the importance of planning the after-sale service, but it is not for the Government to do that. That is the point.

Mr. Snow

That is where we do not agree, because the German Government through their trade attaches and commissioners, have certainly seen to it that whatever else happens there is a service provided after sale. Our trade commissioners are slipping up on their job in not reporting to the Government that our after-sale service is not being properly attended to. If they are so reporting, then the Minister has not produced those reports to the House.

I am bound to say that in my experience the position ought to be watched most carefully by the Government, in view of their national responsibility. I do not agree that it can be left to the industry, because the industry is slipping up. I have it on very good authority that the motor-car industry of this country regards the export trade as a financial liability. I have heard it said that they lose £30 on the average vehicle exported. I do not believe that that is true, or, if it is, it can only be the result of mismanagement. There is no reason why one should not have a profitable export trade. I am a bit surprised, though after long experience perhaps I should not be, at the superficial and supercilious leading article in The Times today, and I quote: … the Government have got to stand firm against premature outcries from particular industries or localities and their representatives in Parliament. The political tendency of The Times in recent years in supporting the Government in their inefficiencies, is becoming more and more marked. I suggest that for people who represent localities which are running into industrial difficulties it is their duty to present those difficulties and the evidence to the House.

Mr. Nabarro

Surely the hon. Gentleman heard his right hon. Friend the Member for Belper (Mr. G. Brown) warmly support and endorse all that was written in The Times leader?

Mr. Snow

Unlike the party opposite, we are quite capable of having our own views on the matter.

Mr. Nabarro

The hon. Gentleman's party is split.

Mr. Snow

I hardly think that the party opposite should talk about splits in parties at the moment.

However, I want to refer to the question of the world potential of all these underdeveloped territories. Certainly, within the Commonwealth, and it goes with the French Union as a whole, there are vast road expansion programmes, and any idea that it is a static export market is, in my view, quite wrong. We should bear that in mind in judging the efficiency of the private sector of industry in this way.

I think all of us have to do a lot more serious thinking about the whole pattern of exports—and I am not referring particularly to the motor industry, because if one goes to these territories which are being developed and are getting autonomy one cannot but be impressed by the fact that they are demanding an increased rate of industrialisation. We should think more seriously in terms of making available light industrial plant, making facilities for providing designs applicable to local labour conditions.

In other words our traditional role of supplying end products and consumer goods is something that must change by the very economic development of these territories. The present restrictive attitude of manufacturers of machinery in this country is a thing which will militate against our exports in the long run.

I know of a company which was trying to promote a small industry in a West African territory. It advertised and wrote to manufacturers of the required machinery in this country for quotations to set up this small plant. What was the answer? It was that they wanted to know where the plant was being exported to, and it was obvious that they were under contractual agreements with manufacturers here not to export manufacturing plant.

That may be a sound or an unsound policy, but I suggest that the peoples of the underdeveloped territories who are obtaining autonomy now will not stand for ever being the receiving end of manufactured goods. They will demand plant and light industry to absorb their local products and to increase their technical skills. This is something we will all have to think about, namely, to encourage the export of light industrial plant and machinery for local manufacture and processing.

I would also like to refer to the position which manufacturers here are facing because of their price agreements as between members of the same industry. In one of tonight's newspapers I see that this country has lost a £600,000 job for hydro-electric machinery because all the tenders sent to Canberra quoted exactly the same price. The order has been lost to a Belgian company. This is by no means the first time that this sort of thing has happened. It seems to me that a new policy ought to be adopted on the question of capital investment for the underdeveloped territories.

Reverting for a moment to the motor car industry, and taking up the question of the supply of spares and servicing, it seems to me that in the case of a big corporation such as B.M.C., if there are no willing importers, or if it is so small that it cannot provide the right service, some capital investment by way of a supply store ought to be arranged. I can think of one West African territory where this is badly needed now. It is not really the fault of the exporter but because the local economy and local availability of skills and even capital is insufficient to meet the demand Therefore, we must re-think our ways of attracting the export trade.

There has been repeated reference during the debate to the vast order for tractors which, apparently, is offered by China. I was informed by a visitor to the Leipzig Fair that the official Chinese representative there had stated that the number of tractors which they required was the fantastic number of 1 million. There are, apparently, to be no export licences available.

I now ask the Minister whether he would bear with me in the matter of his own Departmental organisation, because I can assure him that many would-be exporters and shippers are fed up to the back teeth with the treatment they get from his Department in the matter of the embargo list. I shall give evidence and I shall refer substantially to a letter I have received. I shall also consider sending the right hon. Gentleman the document I have here, although it bears the names of certain of his officials which I would not wish to mention in the House.

If I may, I will refer for a moment to the question of tractors. As I understand the position, the Export of Goods Control Order, 1955, which gives the embargo list, specifies, in page 21, that wheel tractors of English manufacture developing over 100 brake horse power are on the embargo list. I understand that there are available English tractors which do not come within that category, but which would be acceptable to the Chinese. There is one make I know which is only 11 h.p. and which would not develop 100 b.h.p., yet the would-be exporters are told that no export licence is available. I am willing to concede that I have not got my technical facts right, but the Minister should get this matter clarified so that shippers and exporters can know where they are.

I will give another example of what happens to would-be shippers. There was an order from China for deep well turbo-pumps. There is an embargo against pumps of all sorts. This was referred to the Board of Trade to ascertain whether this order was or was not on the embargo list, and the inquirer was informed that the deep well turbo-pumps were on the list. His attention was then drawn to the Board of Trade Journal of 12th June, 1954, under the heading "Industrial Machinery Equipment," where certain pumps, including water pumps under 75 lbs. per square inch were permitted for export to China. So this was pointed out to the official, who then said that he had no knowledge of it, and would the inquirer please write in, which he did.

Now I quote from the letter to which I have referred: After a fortnight there was no reply. I then telephoned again, was told that the matter was under consideration by his senior. Again a long silence, after which I was informed by telephone that they had lost my letter. I then sent them a copy and we have now been told that export is prohibited due to the fact that these pumps are driven by a 30 h.p. steam turbine. But the Government's Control Order only bans turbines which develop 2,000 b.h.p.; the turbine pumps in question were only for 30 h.p., and it is now said that licences are not available.

I would also call the attention of the House to an inquiry for galvanised iron sheeting from China. It was said that the would-be shipper should state for what purpose this was going to be used because it could be argued that it could have been used for roofing barracks. This was a small order of only £40,000, but if we are to ask an importer in China for what purpose he is going to use galvanised iron I suggest that we are putting the shipper in an impossible position. He cannot possibly say what it will be used for. I can believe that this embargo list is difficult to administer, but the service which shippers are getting from the right hon. Gentleman's department is quite inadequate; worse than that, it is frustrating.

One other case which I think is worth mentioning is this: there was a substantial order for spare parts for American vehicles. Vast stores of these are held in this country, but when a businessman asked for an export licence—and here I quote—the reply was: This is a political matter and one must not annoy the Americans. If we are always looking over our shoulders at what the Americans are doing—and they are one of our major competitors—we shall find it very much to our disadvantage. Whatever embargo list we may or may not have, let us see, for heaven's sake, that exporters who are trying to do a good job for this country get a fair deal.

12.8 a.m.

Mr. Anthony Fell (Great Yarmouth)

I hope that my conceit is not so great that I believe it to be essential that the hon. Member for Great Yarmouth should contribute to this debate; and, indeed, I would not have risen had it not been for the fact that nobody has put a point which I have waited all day in the hope of putting.

I would like briefly to say one thing about mobility and adaptability of the British worker. A lot of nonsense has been talked about the mobility of workers, particularly when mobility is concerned, not so much with housing, but with the lack of ability on the part of the worker to adapt himself or herself from one job to another. The British worker—and I am not suggesting that this applies to a man who has been for, perhaps, fifty years or more in one job ever since he was a boy, and always in the one spot—has astonishing adaptability.

I will give just one example. Recently, a factory started in the neighbouring constituency of Lowestoft and "raw" labour was taken from the area. Most of it had never before been in this particular industry, but it was used and within six months it was successfully manufacturing, under a course of careful inspection and control, special, complicated electronic equipment for the Admiralty. This, surely, is proof of how adaptable the British worker can be and I mention this example to show that it would be a very bad thing if we tried to foster that illusion in the people's minds that our workers are not capable of learning and working at something else.

The reason for my boring hon. Members who want to go to bed is that I want to talk about wages and their relation to the present situation. It is said that there is a shortage of labour in the country. I do not believe that anything of the sort is true. There is adequate labour, but there is over-employment of labour on a very large scale indeed in the nationalised industries and in many private enterprise industries, particularly the bigger ones. I believe that we have done no re-thinking of the way in which wages are paid. I have been careful not to talk of a wages policy, because far too much nonsense is talked about an overall wages policy. I am referring to the way wages are paid. We started off many years ago, in times of laissez-faire and in the time of the Industrial Revolution—

Mr. Crossman

The hon. Member talks of times of laissez-faire: I thought it was clear that we were back in times when the Government left it to employers to fix these things.

Mr. Fell

I felt sure the hon. Gentleman would help my argument. Indeed, he has not done so very well.

To be less controversial I will speak of the time of the Industrial Revolution and onwards, when wages were paid rather arbitrarily, when there was not sufficient competition among labour, and when very bad wages were paid. Those conditions gave rise to the trade unions. The trade unions built up over many years a system of negotiating wage payments for large groups and masses of people. That system worked very well in conditions of uncertain employment and in conditions of great unemployment. I do not believe that it works at all in conditions of full employment.

This is one of our great difficulties. The difficulty is that whereas the sanction against the slacker, the bad worker and the worker who does not try was, in times of unemployment, the fear of being sacked, the sanction against these people in times of full employment is practically non-existent under present methods of paying wages.

As I see it, we have either to re-think our way of negotiating wages, or we have got to face the fact that we will inevitably land back in the position of having the sanction which is a concomitant of unemployment.

In order not just to state something and then leave the matter high and dry, I must say what I believe must be done.

Mr. Bence

This is rather important. The hon. Gentleman's analogy with the nineteenth century is inapplicable today. It may appear to him and to many people that wage negotiations are for blocks of people, but now, with the development of specialisation in industry, wage claims are not for blocks of people but for series of functions and skills.

Mr. Fell

The hon. Gentleman will no doubt agree with me when I put it this way. Although workers belong to different grades of skill it is, generally speaking, true to say that their wages are arranged in blocks. I cite one instance, the agricultural workers, perhaps the biggest group of all. When the agricultural workers receive an increase in their wages, that is a block rise in wages. The same practice applies throughout industry. Of course, there are exceptions, but they prove the rule, which is, for instance, that John Smith, who happens to be the worst worker in his grade, receives as much basic rise—I leave aside incentive payments and total income—when his grade receives it as does Jack Jones, who is the best worker in that grade.

Mr. Bence

The hon. Gentleman cannot get away with that. In every factory in Great Britain where there are skilled grades of workers who use initiative, there are merit payments. Their production speed and efforts are measured by production engineers who employ automatic machines in their measuring processes.

Mr. Fell

The hon. Gentleman seems to have an idea of British industry which is alien to mine. Some of the companies which are most maligned are leaders in introducing methods of merit payments and many encouragements to the individual, and I do not criticise the principle. What I complain of is that basic rises are negotiated for great blocks of people, perhaps of one or another grade, in an industry, and, in some cases, for all the grades, all the workers in the industry, as, for example, in the agricultural industry. It is so, too, in the nationalised industries.

What are we to do about this? Is there any way to overcome the difficulty? There is a great difference between organised labour in this country and in America. There is a fundamental psychological difference. I agree with many of the criticisms which have been made today about American trade, but I applaud something the American workers did immediately after the war. The C.I.O. and the A.F.L, at a joint conference, declared their support for the system of free enterprise. While reserving all their rights to negotiate better conditions, and so on, they swore to support the system of free enterprise.

Mr. Gibson

They will learn.

Mr. Fell

They may, but I wonder whether we have not something to learn from them.

Mr. Gibson

What?

Mr. Fell

It is extremely difficult to expect trade unionists to support free enterprise if they are forsworn by the rule books of their unions otherwise, and if they support a party sworn to get rid of free enterprise—not, indeed, now, but certainly in pre-war days. If that is the sort of leadership given to the rank and file trade unionist, how can he be expected to feel that he is a real partner in something that is a going concern, so that he will work himself to make that system work?

It is time that the Opposition made up their minds about it. It is time the Opposition decided whether they really do believe in free enterprise, or at least some free enterprise, or that they should nationalise everything, because it was very clearly said this afternoon by the hon. Member for Nelson and Colne (Mr. S. Silverman), who is an authority on at least some matters on the other side of the House, that the only possibility was a planned, directed and controlled economy.

The point I am trying to make is that, if we are to overcome the difficulties of labour, we must look again at the way in which wages are paid. Of course, it would be completely stupid for anybody to get up and say, "Let us have one grand wages policy," It would be completely stupid for me to get up and say, "Here is a panacea for all the ills of labour and all the difficulties that arise over wages."

But I believe that this is not stupid. It is time that both sides of industry—the trade unions and management and industrialists—gave a lead on this matter. I know that the history of management and industrialists has not always been very good. I know the reason far suspicion of piece rate payments. I have seen a piece rate set on a job, and because somebody among 30 or 40 people doing that job was brilliant at it, earning too much in one week, it has immediately been re-rated. I have seen that sort of thing.

Nevertheless, the trade unions are today very strong; they know what they are doing, and I should have thought that the time had now come when the trade unions themselves must co-operate with industry, and the industrialists themselves must also give very much more thought to this, to see in what ways the various systems of paying wages, not in the various industries but in every factory within every industry—because it must be brought down as fine as that—can be built or refashioned or added to, so that it really encourages merit and really discourages the person who is lazy, or the person who just will not try.

12.23 a.m.

Mr. Iorwerth Thomas (Rhondda, West)

I do not think that a debate of this character would be complete unless we had an expression of opinion on this problem of unemployment and underemployment from the Welsh Principality. I have sat here for quite a long time, and I have seen passing through this House during the speeches that have been delivered some of the ghosts of the 1930s. The basis of many of the speeches today has been fear. If fear is to be the stimulant to reason and argument, then the greatest fear of the consequences that may flow from this situation is the fear in the Development Areas. We are faced there with a peculiar situation.

In the Development Areas, sponsored by the Government of the day as a result of the Redistribution of Industry Act, we have the offshoots of the great empires of commerce and industry. We fear that, in a situation of this character, when boards meet to discuss what steps to take in the light of this slight recession, or this situation of inflation, they will come to the conclusion—some have already done so—that it is these orphans in the Development Areas, these people attached to the great commercial and industrial empires, who must be detached from the tail. The boards do everything to consolidate the position at the head.

The Minister of State indicated that the position in Wales was very satisfactory and that Wales is better off now than ever before. [HON. MEMBERS: "Hear, hear."] I am quite prepared to accept that as a fact and to accept the chorus of approval. What that chorus really indicates is that the Welsh prosperity is not due to an economy based upon laissez-faire, but is the direct result of Government and central planning.

In my constituency the people are already suffering from this effect of the action of the Government to deal with this inflationary situation. As an illustration, I would point out that in one village more than a hundred girls have already been dismissed from one factory. The rest of the female labour has been put on a four-day week. Assuming that the total number of persons who become redundant in a Development Area such as we have in South Wales is only 200, the problem is far more serious than that caused by the redundancy of 2,000 in an highly industrialised area in the south of London or in the Midlands.

There is a possibility, in view of the traditional make-up of those industrial communities, that the Ministry of Labour will be able to offer alternative forms of occupation, but, in view of the tradition of the Development Areas—I speak of South Wales in particular—when these girls are displaced, or even when male labour is displaced, the opportunity of alternative occupation is very limited. I hope that the Minister will not take consolation from the fact that now we speak merely of hundreds or think that the problem in our valleys is not serious.

Much discussion has taken place today about the car industry and the expansion in similar industries. The Minister of State, Board of Trade indicated that unless we had an expansion in the car industry and some of the other durable goods industries, the raw materials, either imported or home produced, would be allocated to other industries which now have potential markets in various parts of the world. The effectiveness of that point is reflected in the situation throughout Wales. We have had the expansion of consumer goods industries, and particularly the over-expansion of the car industry, which has brought about this distortion in our economy, and measures will have to be taken by authority to correct the present position.

The car industry is now facing fierce competition from abroad, and despite what has been said today, the most optimistic forecast about the future of the car industry does not impress me. In South Wales we have the greatest steel works in the country, and we produce over a quarter of the total steel production of the country. Yet in South Wales there are firms responsible for the production of capital goods which are compelled to refuse orders and create redundancies because of a shortage of the right kind of steel.

A long-established firm in Chepstow responsible for the production of rolling stock for British Railways has had to cancel work because it has not supplies of the proper type of steel. Four months ago the firm of T. C. Jones in my own constituency was compelled to put off 150 trained men, despite the fact that it could have had many new contracts; and in order to complete existing contracts it had to import steel from the Continent at an initial cost of over £30 a ton. These two examples of Fairfield and T. C. Jones indicate the extent of the distortion in our economy. Why is it that the motor car industry can have all these preferences which should be given to the other industries producing capital goods?

Some people are afraid that we are returning to the conditions that existed in the 1930s. Anybody who has that impression is making a great mistake. The cause of the depression in the 1930s was the collapse of the heavy basic industries, such as the coal, steel, shipping and engineering industries. The cause of the present inflationary situation is the overexpansion of the consumer goods industries and the high wages that have been paid in those industries. These factors have meant that those industries which are concerned with the production of capital goods for developing our in ternal investment programme and which are capable of exporting to potential overseas markets have been denied opportunities of doing so.

We are not merely concerned with the motor car and radio industries in this debate. The debate is the first indication that there is something basically wrong with the British economy. It may be that the closing of the trade gap, the lowering of Purchase Tax, the reduction of the Bank Rate and any other measures which the Government may take in the future will once more set free the British economy to go further on its economic spree. Therefore, the Government should take serious notice of what has been said on both sides of the House in the debate.

I come from a mining constituency. Suggestions have been made for rescuing the motor car industry from its present dilemma. I am convinced that the intention of that industry to increase production by 1960 to 1,500,000 vehicles is a target which the British economy cannot stand. It is wasteful that the resources of British labour and of the material resources that we have to import and produce at home should be directed—or, rather, dissipated—into the car industry in order to maintain that industry at the present standard.

What are we to do with people who are and are likely to be displaced as a result of the measures taken by the Government? [Interruption.] Put them in the salt mines? Did an hon. Member opposite say, "Put them in the salt mines?"

Mr. Nabarro

I should not like that to go on the record. I did not say, "Put them in the salt mines." I said, "What about the number of vacancies there are in the South Wales coal mines?"

Mr. Iowerth Thomas

The hon. Member has anticipated the next point in my argument. It is agreed in all parts of the House that we have a distortion by which the car industry has increased its personnel by 50 per cent. since 1939 and by more than 17 per cent. since 1953. What applies to that industry can also be applied to other industries concerned with the production of consumer goods for the home market. We have this flow of labour attracted by high wages and better conditions. We talk glibly in this House sometimes of the necessity of raising the economic standard of all Asian countries. The peasants of those countries want capital goods before they want cars.

Mr. Crossman

Commercial vehicles.

Mr. Thomas

Commercial vehicles as well. Therefore I say that the Government should accept the responsibility and not depend on the initiative or good will of car manufacturers. The Government must accept responsibility for cutting down and cutting back the total production of that industry. The question is asked, what are we to do about these pools of unemployment and these puddles of under-employment that now dot our economic landscape? I am not going to discuss the means tonight, but the general principle. Some means will have to be adopted by the present Government or the future alternative Government to see that those pools of unemployment are syphoned back to their original occupations.

The hon. Member for Kidderminster (Mr. Nabarro) referred to vacancies in the coal mines. That leads me to my conclusion. My main thesis is that our heavy industries coal, steel, shipping and even transport, are chasing after labour. The engineering industries have lost some of their best skilled craftsmen, who have been attracted to the car industry by its prosperity. We still have men from the engineering industries going into the car industry and just moving spanners about in the way that Charlie Chaplin did in "Modern Times." These skilled craftsmen should have been retained in the highly-developed engineering industries engaged in the manufacture of capital goods for which the world will be crying out for the next fifty years.

I am not prepared, as a miners' representative in this House, to ask the miners of this country to work harder, longer and more regularly. [An HON. MEMBER: "Why not?"] An hon. Member opposite asks "Why not?" May I point out to him that legally and by agreement—

Mr. Nabarro

Do not look at me like that I am not looking at the hon. Gentleman.

Mr. Thomas

May I remind the hon. Gentleman opposite who asked "Why not?" that if the miners of this country were not working on Saturdays it would mean an annual loss of 12 million tons of coal?

Mr. Nabarro

That is what I said last week.

Mr. Thomas

What, therefore, would be the shape of British economy if the miners refused to work on Saturdays? As I have said, I am not going to invite the miners to work harder, longer and more regularly in order to sustain an artificial economy in the Midlands. The miners and the workers in the other heavy industries should not be expected any longer to supply the raw materials in order to feed and sustain the motor car industry's projected target of 1,500,000 cars a year.

This pampered mistress of the British economy is beginning to believe that the British economy and British industry were made for her. The car industry must realise that it has to serve the interests of the British economy. I do not know whether hon. Members opposite are treating my arguments with a certain amount of hilarity and frivolity.

Mr. Crossman

They are enjoying them.

Mr. Thomas

If they are enjoying them, then I expect hon. Members on this side of the House to show an equal relish and enthusiasm, because if all the changes which I have outlined, and which are necessary, are to be made, there is only one party in the House which can bring about that change.

Mr. Crossman

Which one?

Mr. Thomas

The hon. Member for Coventry, East (Mr. Crossman) asks which one. I thought he had sufficient political sagacity to know which one—[An HON. MEMBER: "Poor old Dick."]—but because of an exposure of his profound ignorance on these matters, I will proceed to enlighten him. Recently the hon. Member has written a very interesting pamphlet, in which he endorses the opinions I am about to express.

I have said that it is only the party on this side of the House which can bring about the changes that are necessary to place the British economy on a more secure foundation, and it can only be done by a Government which is prepared to plan. Now the "Hear, hears" are becoming more subdued on the other side of the House.

Mr. Nabarro

Come back to this pamphlet.

Mr. Thomas

If I tell hon. Members about the hon. Member's pamphlet, the amount of royalties which he will receive will probably drop because they will not purchase it. The core of the argument advanced by my right hon. Friend the Member for Belper (Mr. G. Brown) today, and by other hon. Members on this side of the House, is that we must have central planning, and that Government action must regulate this country's economy. If we are to avoid a repetition of the present inflationary position that has given rise to all our fears, it can only be done by planning.

The greatest advocate of planning, though he is not in the House tonight, is, ironically, the person who has been responsible for the second turn of the screw. The present Chancellor of the Exchequer suggested twenty years ago what measures should be taken by the Government to avoid a situation of this character. He wrote a book in 1938, called "The Middle Way," and if he had applied in 1956 what he wrote then, a situation of this character would have been avoided. In his book, he stated that there should be in permanent session in this country an economic council representing the commercial, industrial and labour movements, and that all facets of our economy should be considered with a view to making certain recommendations. To whom? To the Treasury, to the Government.

Furthermore, the right hon. Gentleman advocated in 1938 the setting up of a national investment board which would be responsible for the examination of trends, and would make a continuous survey of the drifts of our economy, and so direct the financial resources of the country into those channels that would ensure stability. Right hon. and hon. Gentlemen opposite should read that book and apply it in 1956. Indeed, if they had applied it earlier we should not have been in the position we are in today.

The people in the Development Areas are in a state of fear because they have memories of the past. Their fears may be exaggerated and they may to some extent be drawing upon their imagination. However, I think that the Minister will agree that if the Development Areas are to be preserved at their present economic level, it can only be done to the extent that the Government are prepared to take the necessary steps to stabilise the industries there.

Unless that is done, the position there will be serious because there is no alternative occupation. I trust, therefore, that although we have had no assurance from any Minister tonight, the Government will exercise their political influence and direction to stabilise the economy, and not leave it to the conscience and good will and initiative of the industrialists alone.

12.58 a.m.

Mr. R. H. S. Crossman (Coventry, East)

It is not often that one waits so long and has such an interesting opportunity to join in the debate as I have, Mr. Deputy-Speaker, by catching your eye now. I should like to tell hon. Gentlemen opposite that in the pamphlet about which I spoke, and which I am glad to hear that my hon. Friend the Member for Rhondda, West (Mr. Iorwerth Thomas) has read, I described the notion of creative friction. I pointed out the Socialist dialectic in which the friction of Socialists creates a Socialist policy. I am glad that my hon. Friend, who represents the Welsh valleys, who is in friction with the motor car workers is in friction with me. I can assure hon. Gentlemen opposite that when our friction has created a common policy, we shall be able to tell them what to do, because what my hon. Friend has said represents not only the views of Welsh Members.

There are thousands of workers in Coventry who do not happen to work in motor car factories but who feel the same kind of jealousy and resentment of those people whom he called pampered mistresses in a distorted, artificial economy. This is not unique to Wales, therefore, but is much nearer home. We have people who ask why others should get high wages for short hours. I will give the answer. It is because we depend on productivity, and the essence of modern engineering is to try to achieve the highest possible output per man per unit. If we can get that down to a five-day week and make productivity sufficient within those five days, it is more efficient to do so.

After all, the Americans have a much shorter working week than have Coventry motor car engineers. They have much higher wages, and I suggest that, instead of being jealous of us, the hon. Member might ask the rest of British industry to take the advantages which it has and see if it cannot do it.

There is a special reason, however, for the British motor industry working in its own particular way. We know that we are not paragons of virtue, but at the same time it is fair to say, for example, to the miners, "This industry which you consider should be cut down has, since the war, been built up until about 10 per cent. of all our total exports come from it." Surely it would be defeatism to cut it back now in the hope of finding something else to take its place, because if we cannot compete by means of this particular industry, then in what can we compete? It is an industry ideally suited for a nation with a long record of engineering skill and knowledge. Of course, if we could sell millions of tons of coal, then our Coventry engineers would not be so necessary. But we have to sell our motor cars.

I would ask the Minister of Labour if he would give me his attention for a moment; I believe that he is working out a reply to my theory, but one thing which I want to do this morning is to go away feeling that I have understood him quite clearly. I do not ask him to do anything, because he has given up doing anything. It is no use giving him lectures, or asking him to set up councils, or having forms of control, because the right hon. Gentleman says it is not his job. He says that his job is to supply employment exchanges so that people who are out of a job will have nice places to go to; modern places, with flowers, and if the disaster comes, for which he has no responsibility, he will make a denial as quietly as possible.

So it is no use addressing any appeals to him. But what struck me while listening to him was the fact that, while the Liberals were not over here in a little patch, they were not absent. They were over there with the Minister. I have never heard such Liberal doctrine being talked. "No interference." "Let the economic system work its way out." But it is Sir Leonard Lord, or whatever his name is, who has to do it, and not the Government. "Let there be none of this Crippsian control," say the Government. "Let the banks do it." There must be no controls or planning. What the Government mean is that other people can do the dirty work for them. It is the local bank manager, and not the Chancellor, who carries out the policies.

Sir Leonard Lord sacks the men, and that is no responsibility of the Minister, although it is he who is creating the conditions under which these unfortunate agents will find themselves in a little slump. They were nice words which the Daily Express invented; "a little slump"; nothing much, but just sufficient to mop up purchasing power; conditions to be created by the denial of hire purchase to ordinary people, or by the credit squeeze to be operated by the banks.

All that is to be done by others and not by the Minister. But the policy is made by the Chancellor, and it is to him that we have to direct any appeal which we think worth directing. The Minister of Labour has told us that the Government have made up their mind. We are going to see the experiment in what is called "controlled deflation," creating sufficient unemployment to bring the surplus purchasing power out of the economy without getting us into a major slump, without physical controls, planning, or any of the things we believe in. I wish the Government good luck in the experiment—in the sense that I do not want the country to be in a major slump. But I do not think the experiment will succeed, because I do not think that the forces unleashed will be so easy to control.

There is an alternative way of handling the economy which I want to put to the Government. Let me take the question of Purchase Tax and hire-purchase terms: although I think it was blameworthy of the Government to permit such a reckless expansion of the industry that they were forced to have a ruthless contraction, by the sudden imposition of limitations on hire purchase, I am not pretending that by relaxing hire-purchase restrictions or by reducing Purchase Tax we can gain more than two or three months' work in the industry. It would be irresponsible for us to go to the workers and say we have only got to get a bit of the home market back.

The industry has developed to a size which cannot be supported by the home market, a size which means that the prime market has to be the export market. It would be wrong to tell the workers that this was not the fact, and it is fair to say that those of us who represent motor car cities have failed to say that that is the fact.

We do believe that it was a grave mistake to scrap the system of steel allocation. That system worked. Exhortations do not influence an employer at all. But the fact is that if an employer cannot get steel except by exporting, then he exports more. It is a fact of life that intensive sanctions have more effect on human beings, whatever their class, than exhortations from Governments of any kind.

I want to say candidly to the Minister that I do not imagine that we can stop short-time working now in this industry by suddenly reintroducing steel allocation. It would have to operate as part of a general policy. The Government do not believe in that policy. But as part of our policy we must start with the central issue. We should be prepared to reintroduce steel allocation, fully aware that it is more difficult to operate when steel is in full supply than when it is in short supply, and fully aware of the unpopularity of this step among the trade unions in the motor car industry, who do not like steel to be cut off. I still believe we must be prepared to be tough to an industry as extensive as this one, in which so many million pounds of capital have been invested.

Mr. Osborne

Does the bon. Gentleman think that by putting controls back he can reduce the price at which we can sell in foreign markets?

Mr. Crossman

Controls have little to do with price. They are a sanction which forces the industrialist to make exports his No. 1 consideration.

We have to face the problem of the size of this industry, which, the Minister says, has nothing to do with him. That is a very disingenuous statement for a spokesman of the Government to make, for it has a great deal to do with the Chancellor of the Exchequer. The policy of the Chancellor of the Exchequer will largely determine how much capital is available to the industry.

For two or three years the industry was encouraged to reckless expansion. The home market was opened to it. There was no incentive to it to sell abroad. Building limitations were removed. The firms were told, "Go in, each for yourself." Each of the big firms began to develop itself to supply the whole country, because volume is all-important in the motor car industry. Therefore, each company said, "We will have maximum possible production." So there was that frantic expenditure of capital on this production and this competition between the great concerns.

If it goes on only the very greatest combines can possibly survive the competition. I come from the newspaper world, where the same thing has happened. Competition of that sort liquidates the small unit. We have seen it happen in the newspaper world. Ford, Vauxhall, the Austin-Morris combine will survive, but unless those firms in Coventry form themselves into a combine they will have no chance, in such competition as this, of surviving the next five years.

Mr. Osborne

Jaguar will.

Mr. Crossman

There are exceptions, of course. The quality products, the proud parts of the industry, sports car models, will survive. They can manage it. Those small units of production can survive. They produce, as it were, hand-made models. I was talking of mass production on the production line as done by Vauxhall, Rootes, or Standard.

Because of the Government's policy of permitting this reckless expansion, our two small firms in Coventry will be broken in this grand competition of the mammoth concerns. I believe we shall see a time, when the Labour Party is again in power, when we shall have a cast-iron case for the first nationalisation in the motor industry. We shall have to pick up in a nationalised concern the pieces which are left—like the Volkswagen, one of our two most serious competitors in Europe, a nationalised concern. It is of value to us in competition because it is so big we can see where it is going.

This industry is of such size it cannot be left to grow like Topsy, left to the rationalisation of competition, creating unemployment in certain areas; to that old fashioned rationalisation by which the small are mopped up by the big. It is the essence of Government policy to let industry go to smithereens, letting a few victors come out on top. The Government just watch and say, "It has nothing to do with us." The country cannot afford such waste of resources, cannot afford to allow factories to go smash in that way because the Government refuse to have any planning for industry.

We on this side of the House believe it to be essential that the Government should control expansion by allocating resources for industry, damping down expansion in periods of inflation, slowing it down as the Labour Government did. That Government did not let the industry grow fast, but were concerned to let it grow steadily. Then, in time of depression, there should be expansion of industry. For the first time, I believe, two Ministers have said in this House, "The Government have no responsibility for industry, and are not going to take it." It vastly encourages me as a party man to hear that, because I know it means that they have doomed themselves. I only hope that they have not doomed this country as well as themselves to a catastrophe.

1.15 a.m.

Mr. C. W. Gibson (Clapham)

The debate today commenced as a discussion on unemployment, and was introduced by my right hon. Friend the Member for Belper (Mr. G. Brown) in a speech which covered the whole country. Unfortunately, or rather perhaps inevitably, it has tended to centre on the engineering and, in particular, the motor car industries. The fact is that there is incipient unemployment in many other parts of the country as well as Coventry and Birmingham. The Minister himself, through one of the figures which he gave, indicated that London was already one of the spots which was giving him some cause for thought.

I shall be as brief as I can, in view of the late hour and the fact that I am tired in any case, having waited for nearly eleven hours to say a word or two about the building industry, which is an industry as important to our economy as the motor car industry, and which employs over 1 million men all the year round, plus some hundreds of thousands of other workers who are engaged in producing the raw materials that go into the building of a house. It is an industry which, unfortunately, has on more than one occasion been the one which has started off a bad slump in this country, as I know from my own experience of two of them since 1914. The whole of the building industry is worried about the situation. The trade unions are worried, the employers are worried, and even the people who buy the houses they build are worried, as I hope to show in the course of the ten or fifteen minutes for which I wish to speak.

There is no serious unemployment in this industry yet, although there has been a little recently because of the bad weather. There is no serious unemployment at the moment, but everybody is expecting it—the contractors, the local authorities, the trade unions and all the journals which cater for the industry. The trade unions are so concerned about it that they have appointed in London a special committee to look into the matter and to make the necessary representations in the right quarter. In a document which they have produced they say: It is evident that the gravest consequential outcome of Government policy must be considerable unemployment for the building trades. When it is remembered that the beginnings of the hold-up in the building industry are due solely to the actions of the Government—the credit squeeze, the terrific raising of the rates of interest, the cutting of the subsidy almost to nil, and the promise that it will be nil in eighteen months or so—it can be seen that the unions are justified in feeling concerned. The President of the Building Contractors' Federation feels the same way about this, because in a speech which he made a few days ago, he said: The credit squeeze is already bringing about a slowing down in the building of houses for sale, and in building work of all kinds carried out on behalf of private clients. Now the new measures announced by the Chancellor of the Exchequer will additionally result in less building work for the Government and the nationalised industries, and little or no new work for local authorities beyond housing"— by which he meant slum clearance"— for at least six months. He makes the point which those of us connected with the industry have made so often: The temporary cuts in the building programme are almost bound to have considerable permanent effect. Contracting firms forced out of business—and some have already had to go into liquidation—are unlikely to restart when better times return, and operatives, particularly craftsmen, who transfer to other industries may never resume their original trade. That also is an experience which all of us in the industry have had over the years.

With both sides of the industry worried about the beginnings of an unemployment problem, it behoves the Government seriously to consider whether the policies—in this case the financial policies—which they pursue ought to be varied. The unions point out that one of the dangers of a slump is that the trade loses its apprentices. They say: The industry is only just recovering from the serious failure to train an adequate skilled labour force to replace the natural wastage of the years. If the skilled labour force goes, as unfortunately it did during the war, the difficulty of a restart if a slight recession begins will soon cause a good deal of trouble and will hold up progress.

The furniture industry has been mentioned. I emphasise that the Minister's figures were optimistic. The union concerned, in a special inquiry on 16th March, only a few days ago, and in a report in which are given figures for each branch from which replies were received, states that of over 45,000 of its members no fewer than 2,059 were actually out of work and 12,146 were on short-time.

Mr. Iain Macleod

Since the interruption about that point in my speech, I have looked at the figures from which the hon. Member is quoting. All I can say is that they are so widely at variance with the official figures that I have tried to collect that, without saying which is right and which is wrong, I will go into them. If the hon. Member wishes, I will let him know the result of my investigation.

Mr. Gibson

I am much obliged. I know how these figures are prepared inside the unions, and I am sure that the figures that I have given will not be far wrong. Every craftsman who is unemployed does not go to the unemployment exchange. These men often find jobs through the works officers of the branches, who tell them where there are vacancies.

There really is a serious problem for the construction industry with its million workers, for the industries which feed it and for the furniture trade which provides the equipment which goes into the buildings when they are erected. Therefore, we are entitled to expect that the Government should give more serious consideration to the matter than they appear to be giving, judging from the earlier part of the debate.

I confess that I am amazed at the unconcern which the Minister appeared to show. He appeared to think that it was a matter for the employers. If, in the building trade, the matter is left to the employers we shall have a terrific slump. Only Government action in the stimulation of new building can result in putting into the industry the enormous capital expenditure which must be undertaken every year if its million men are to be employed and if we are to get the houses which we are entitled to expect.

I know that the industry is concerned about its own productivity, although it has done well since the war. There is concern about the cost of building, and particularly about housing, but when we remember that during the last twelve months the Government, by their policy of raising the Bank Rate to 5½ per cent., have added 45 per cent. to the cost of a £2,000 house, we cannot blame the industry if there is a slowing down of the private buying of houses.

We are entitled to expect that the industry shall be encouraged and helped, and not be treated as the Minister is apparently content to treat the motor industry. Definite action should be taken over the control of materials and the licensing of building. Had I the time, I could quote from the House Builder, which is not a Labour publication, in which the view is expressed that the Government will be compelled, in view of the developments in the industry, to reintroduce physical controls. I hope that a little more sympathy will be expressed for that point of view, as the alternative is a steady worsening in the conditions in the industry.

On at least two occasions in this century we have seen a terrible slump which has meant misery for millions of families, and the slump has started with unemployment in the building industry. I warn the Government that if that happens again there will be an agitation which will do more than remove this Government from office.

I hope that this debate will result in a more definite effort on the part of the Government to use their powers to help to maintain full employment in this country, not only as a sort of ideal policy, but as a piece of practical politics in order to maintain a condition of life which millions of our people have earned and deserve.

The Parliamentary Secretary to the Treasury (Mr. Edward Heath)

rose in his place and claimed to move, That the Question be now put:—

Question, That the Question be now put, put and agreed to.

Question, That the Bill be now read a Second time, put accordingly and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

Committee this day.