DEBATE ON THE ADDRESS

HC Deb 12 November 1956 vol 560 cc570-695

[FIFTH DAY]

Order read for resuming adjourned debate on Question [6th November]: That an humble Address be presented to Her Majesty, as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament—[Mr. Vane.] Question again proposed.

3.38 p.m.

Mr. G. B. Drayson (Skipton)

When the debate was adjourned on Friday afternoon, Mr. Speaker, I was in the process of addressing some remarks to that part of the Gracious Speech which referred to the closing hours of shops, and I want to take this opportunity of making a special plea for the small shopkeeper.

The reference in the Gracious Speech to the closing hours of shops arises from the Gowers Report of 1947, which was issued during the administration of the party opposite. That Report said, in its conclusions, that, as far as could be seen, everything had been done for the benefit of shop assistants and that it was now the turn of the public to be considered. The consideration that the public deserves is that the closing hours of shops should be a time most convenient to the public and that certain restrictions concerning what can and cannot be sold at certain times of the day and on Sundays should be removed.

If a one-man shopkeeper is prepared to remain open at hours different from those followed by the general run of shops in a community, he should be entitled to do so. I do not subscribe to the view that if a man chooses to work harder than his fellows he is obtaining an unfair advantage over them, or that if a small shopkeeper is willing to stay open longer than the large chain stores that is unfair competition. I hope that those considerations will be covered by the legislation anticipated in the Gracious Speech.

One-man businesses and a number of small traders are having a very difficult time today keeping Wolfson from the door, or keeping out of the clutches of Clore—not that those two people do not confer a number of benefits on the shopping public.

The legislation will, I hope, deal with the regulations which put the small shops at a disadvantage compared with the barrow boys, because I understand that there are many items which can be sold from barrows on Sundays which cannot be sold on Sundays at an ordinary shop.

If we can reach general agreement in the country as to later closing hours so that workers can shop in the evenings rather than have to devote their free day, Saturday, to shopping, there will have to follow the staggering of pay days, so that shopping during the later hours can be done on any day in the week. I make no apology for making once more a plea for the small shopkeepers, and I hope that the Government's legislation will set them free from the many restrictions which now hamper their trade.

3.43 p.m.

Mr. Harold Wilson (Huyton)

I beg to move, at the end of the Question, to add: but humbly regret, in view of the serious economic problems facing the country, which have been aggravated by the effects of the Government's policy in the Middle East, that your Majesty's Gracious Speech gives no indication that your Ministers intend to pursue policies adequate to deal with the situation. For the past fortnight the House has debated the cost in political and moral terms of the Government's action in Suez. Today, we have to count the reckoning in economic terms as well. When I say "economic terms" I do not mean merely the cost in terms of Government expenditure. We are no longer in the days of the nineteenth century colonial wars, when the cost of these ventures could be reckoned in terms of another 2d. on the Income Tax or another 1d. on tea, and while I hope that the Chancellor will be frank in telling the House what the events of the past two weeks mean in terms of national expenditure, I think that the whole House will be much more concerned to assess their wider economic effects on the balance of payments, on the gold reserves, on the strength and position of sterling, on exports, on production, on employment, and on our ability to aid Commonwealth development—if hon. Members opposite can be persuaded any longer to take an interest in the Commonwealth.

I have just said that I hope that the Chancellor will tell us this, but I learned with some concern a few moments ago that the Chancellor does not intend to speak in this debate until he winds it up tonight. It is an extremely serious thing, when the whole country is waiting to know the economic effects of the Government's ventures, that the Chancellor should refuse to tell us before then; and, without any disrespect to the Minister of Supply, I think that a Cabinet Minister should tell the country at the earliest possible moment what the economic effects will be, instead of our having to wait, as, no doubt, we shall have to, for the usual knockabout turn by the Chancellor in which he always indulges at the end of a debate.

Before we come to the cost of Suez, what we all have to realise is that this is an additional economic burden, the strain of which the Chancellor himself has said, is: a strain which is more than we can bear. Those were his words a few days ago. This burden has to be borne by a country which was already, as a result of five years of Tory financial stewardship, facing a desperate economic crisis. I doubt whether there is an hon. Gentleman opposite even who, even before this latest action of the Government, in his private thoughts and private conversation, was not fearing a further economic crisis, not excluding the possibility of devaluation, in 1957.

Is there a single hon. Gentleman who could say he was not fearing such a crisis even before the Government's action in Suez? Certainly, international financial opinion had written sterling down as something which it was unsafe to hold before the Suez invasion. So I think that we can better appreciate the additional and crippling burdens which the country has to bear as a result of what history will no doubt call "Eden's war" if we spend a little time surveying the position we had already reached, say, in September or October, after five years of Conservative Government.

For four of those five years the Lord Privy Seal was responsible for the nation's economic affairs. We all know the economic consequences of the Lord Privy Seal. They have been set forth for all time in the imperishable words of the present Chancellor, who is always so refreshingly frank about his right hon. Friend. He summed up the main achievements of the Lord Privy Seal, in his statement of 17th February, as having … held back exports, swollen our imports, forced us into balance of payments deficit, helped to reduce our reserves by a quarter, and driven up our domestic price level."—[OFFICIAL REPORT, 17th February, 1956; Vol. 548, c. 2666–7.] If that did not convince you, Sir, the Chancellor in the following months issued the Economic Survey, 48 pages of frank assessment of the legacy that he had inherited from the Lord Privy Seal.

That was the record of the Lord Privy Seal. What about the present Chancellor? It is too early yet to get the results for a full year, and I have no hope that next year's Economic Survey, if by any mischance the Chancellor is still here at that time, will be as frank and objective as the last one was, but enough is already known to summarise, at any rate, the interim achievements of the right hon. Gentleman, and this I propose to do for a few moments under a number of heads.

First, the gold and dollar reserves. At 31st October they stood at 2,244 million dollars, an increase of 124 million since 1st January, and after netting 177 million from the Trinidad oil sell-out. Does the Chancellor still think that it was right to sell this year one of our principal Commonwealth oil assets? Is he as proud of that sell-out now as he was in June? But for Trinidad, we should have been 50 million dollars down on the year so far, and I emphasise the words "so far."

In June, the Chancellor told us that the Trinidad dollars would enable us to make new investments in Commonwealth development. In fact, they were poured out in less than six weeks' run on the gold and dollar reserves. That is where Trinidad went. In the three months, August to October, we lost 338 million dollars from our gold and dollar reserves against 247 million dollars in the same period last year. Over the last quarter we have been 90 million dollars worse off in our drain on the gold and dollar reserves.

The Chancellor has boasted in recent speeches in the country that the export trade has increased. So it has, but a great deal less than the export trade of our main rivals. Britain's export trade is not keeping pace with the growth of world trade, and our share in world trade is shrinking. Before the right hon. Gentleman gets too complacent about the export performance I should like to give three recent examples.

First, it was pointed out in the Economic Survey last year that 1955 was a bad year for Commonwealth trade. Our exports did not keep pace either with the expansion of total imports into the sterling area or with the rates of increase in sterling imports achieved by our main competitors. Therefore, it is not a good year to take as a standard of reference, but, taking it, we find that imports into the sterling area in the first half of this year increased by 7 per cent. over last year. They increased from Western Germany by 23 per cent.; from Japan by 23 per cent.; from Western Europe other than Western Germany by 11 per cent.; from the United States by 5 per cent., and from this country by 2 per cent. That is one export test.

The second example is contained in the figures recently published by the International Bank showing the amount of money spent on capital goods for world development. These show a reduction last year compared with the previous year of 50 per cent. in the amount spent in Great Britain. In 1954–55, 24 per cent. of the total loans were spent in this country. In the year just ended only 13 per cent. was spent in this country. Our proportion has fallen from 24 per cent. to 13 per cent. whilst that spent in Germany has risen from 6 per cent. to 14 per cent.

German exports of machine tools last year were £60 million in value whilst our exports were £20 million, although the total sizes of the two industries are not very different. The Germans are exporting 60 per cent. of their output and we are exporting 25 per cent. of ours. The ground which we are losing in motor car exports to other countries is another example, although that is only too well known to the House. What we are getting with all these examples in the export markets of the world this year is the pay-off for Tory freedom.

The Chancellor, no doubt, will tell us of the £144 million surplus in the balance of payments in the first half of this year, a figure with which he warmed the hearts of the bankers of the City of London at their annual dinner; but that figure was very largely contributed to by increased earnings from the sale of Middle Eastern oil. Therefore, if the right hon. Gentleman intends to quote that figure tonight I would ask whether he expects the total for the second half of this year to be anything like as good.

So much for exports. We come now to overseas investment. The Lord Privy Seal set a target of £300 million a year on overseas investment, which, at present prices, would take £400 million to £450 million to achieve. In the first half of this year, our overseas investment was £50 million, against £125 million last year and £175 million the year before. Therefore, we are going back, not forward. Our investment in the sterling area was £25 million in the first half of this year against £100 million for the whole of last year and £175 million for the previous year. Another thing which the Chancellor did in that half-year was to sell Trinidad. So much for overseas investment.

What about production? The Chancellor has halted the increase in production which had been going on almost continuously since the end of the war. We have now complete stagnation in production. This is where the right hon. Gentleman has reached his plateau. There has been no increase in the ten months since he became Chancellor, and all the signs now are pointing to a fall. Since this is what he set out to achieve, it cannot be marked down among his failures. It is one of his successes. If the Lord Privy Seal were here—and we can understand why he is not—I would say to him that we cannot double the standard of living in twenty-five years on falling production.

As to manpower, we were told that the idea of cutting back production was to get manpower where it was most needed. We on this side of the House warned the Government that merely to squeeze workers out of the wrong industries did not mean that they would get them into the right ones. Where have they gone? The January-June figures for those consumer industries, which the Government set out to contract, show that employment fell by 112,000, but employment figures in manufacturing industries as a whole fell by 116,000. Therefore, there was no increase in the rest of manufacturing industry.

In the engineering and electrical industries, mainly producing plant and equipment for exports and for priority capital investments in this country, the increase over this period was a miserable 8,000, but over the same period 40,000 went into professional, financial and miscellaneous occupations—presumably more miscellaneous than professional. I should think that many went into advertising and into some of those "spiv" trades which the Government have been encouraging over the last year or two.

The final test of the Chancellor's economic policy is investment. The right hon. Gentleman set out to cut investment. He has done so. New industrial building authorisations in the second quarter of this year fell by 52 per cent., compared with the second quarter of 1955. In Germany, they were up by 20 per cent. Therefore, while we are cutting our investments, Germany is increasing hers, and such expansion as there has been in our investment has been mainly in less essential industries.

There is the Government's record, the Chancellor's interim report in terms of gold reserves, exports, overseas investment, production, manpower and investment. Oh, yes! There is also the cost of living. With world prices stationary over the last year, the cost of living has risen by between 4½ per cent. and 5 per cent., and the Chancellor, obviously not satisfied with that increase, has made his attack on bread, on milk, on rents, and all the rest.

There we have the Chancellor's success story, covering the period before Suez. He will tell us, of course, that, because he has not done as badly as the Lord Privy Seal, Tory freedom is working, but that is not really fair to the Lord Privy Seal. In the crucial matter of gold reserves it would not have been possible for him to do as badly as the Lord Privy Seal—for a very serious reason. The run on sterling, because of the Lord Privy Seal's improvidence, was at a time when sterling holdings were relatively high and, therefore, the run on them was great. This year, we have been told by The Times and in the City columns of other newspapers of the establishment—though I do not know whether The Times still represents the establishment after this morning—that sterling was technically strong.

If you, Mr. Speaker, have the same difficulty in appreciating the meaning of this phrase as I had when I first saw it, perhaps I should explain that when sterling is technically strong apparently it means that the world opinion of sterling is so low that nobody who can avoid holding it will hold it. In fact, European traders and financiers have kept themselves so short of sterling that even in a crisis of confidence, such as we have had this autumn, there was less sterling to sell short, and, therefore, the Chancellor could not have expected to have done quite as badly as the Lord Privy Seal.

The right hon. Gentleman will tell us, of course, that at least his credit squeeze is working. "Hard pounding, gentlemen," he said at the bankers' dinner. But it is not the bankers who are getting the pounding. It is the old-age pensioners, it is those on small fixed incomes. I know that this always bores the noble Lord—

Viscount Hinchingbrooke (Dorset, South)

indicated dissent.

Mr. Wilson

It is the small business men. But at what price is the credit squeeze operating? Production—his credit squeeze has cost the nation £500 million of production. Investments—he has cut back investment in our industries regardless of whether they were essential or not. Indeed, the only ones subject to his direct control were the essential investment programmes of the nationalised industries and the local authorities.

We told him in July that the test as applied to investment should not be, is it public or is it private, but how essential is it? But, of course, this would mean controls, so the right hon. Gentleman has slashed wildly at investment, and the essential has gone down with the inessential, perhaps even more. We have advocated a policy of selective controls to hold back the inessential ruthlessly so that the essential can go on all the faster. That is the difference between us. But the right hon. Gentleman would rather see the nation go on floundering than swallow his pride and take our advice.

I have summarised some of the achievements, but what are all these achievements compared with the one that I have not mentioned so far? In his most recent speeches the Chancellor seems to be getting more and more remote from the economic situation of the country. He keeps on talking about appealing to history. History", he says, "will judge us". It will. He is quite right. I will tell him what the historians will say about his stewardship of the Treasury. They will say that in a few short months he wantonly threw away an asset valuable beyond money and beyond price that every Government in this country has had since 1939—the full co-operation of the trade union movement in wage restraint.

For seventeen years of a sellers' market in labour the trade union movement have shown great restraint in not using, as they could have used, their economic power. I ask the Chancellor: was this asset not worth preserving? Was it not worth even the right hon. Gentleman sacrificing his discredited economic philosophies in order to preserve it?

The Chancellor did not think so. For six months he had based his policies on the pretence that he was stabilising prices sufficiently to persuade the trade union movement to drop their wage claims. He has made speech after speech at them. [An HON. MEMBER: "When?"] But they could not hear what he was saying because of the noise of what he was doing. The right hon. Gentleman spoke of restraint and, at the same time, he was putting up the price of bread, putting up the price of milk, putting up council house rents, and it is now clear that he was planning a big increase in the rents of privately-owned, rented houses.

The Chancellor would say that he had an open mind on the introduction of the controls that were plainly necessary, but while he kept his open mind he steadfastly refused to introduce them. What we have to say to the Government this afternoon is that it was not Frank Cousins or any other trade union leader who ended wage restraint; it was the Chancellor of the Exchequer.

Traders and financiers all over the world had been listening to the Chancellor. For months he had said that if he could not stop the wage claims, the country was "facing disaster". Those were his own words.

Rightly or wrongly these people believed him. For them, 5th September—the day that the Trades Union Congress unanimously rejected the policy of wage restraint—marked the end of an era. And all these financiers, all the little gnomes in Zurich and the other financial centres about whom we keep on hearing, started to make their dispositions in regard to sterling.

That is why, even if there had been no aggression in Suez, in our view the right hon. Gentleman has proved his unfitness to be in charge of the nation's economic destinies. He does not carry the confidence of the producers of this country.

Hoping that we shall get some reply, I must ask the Chancellor what is his policy in relation to inflation? Having failed to persuade the unions, is it now his policy to force them? Has he accepted the arguments of those who have been demanding a show-down with the unions? Is the Cabinet swayed by an economic Suez group as well? Is it his policy to make money so tight that employers cannot afford to grant higher wages? The trade unions might well think that this is his policy. Within three days of the T.U.C. decision, the Government Deputy Chief Whip made a rare incursion into economic affairs.

Now I cannot believe that even in this schismatic and disintegrating Government the Deputy Chief Whip was speaking only for himself. I cannot believe that on a matter of such importance he had not previously cleared his speech with the Chancellor and, one would hope, with the Minister of Labour as well. Yet this is what he said, speaking at Attenborough, Nottinghamshire, in September: The trade unions are too late because the position of employers has changed, as a result of deliberate Government policies. The trade unions will find one thing—the atmosphere of negotiation when they come to employers will be very different from what it has been during the years since the war. This is not government by co-operation and consultation; this is government by ultimatum. Words such as these, taken with the Chancellor's policies, can be read in only one way by those to whom they are directed—as a direct provocation to industrial strife, as an appeal to force and to economic power as the arbiter in industrial relations. I hope that before this debate ends the Chancellor will say frankly whether he stands by his colleague in what he said—or does the right hon. Gentleman repudiate him?

It is clear to the House that, apart from the speech of the Government Deputy Chief Whip, the Chancellor had no sense of urgency in this situation. It is true that after the Trades Union Congress he decided to speak to the trade union movement through the medium of the Young Conservatives of Bromley. The Chancellor will no doubt remember that speech. It oozed complacency, and so did another speech he made at the Tory Conference at Llandudno, when even the Financial Times attacked him for his complacency. The right hon. Gentleman gave no sign that he realised, even before our aggression in Suez, that this country would be facing in 1957 a desperate struggle for economic survival. That was the position at the end of October.

Now on top of this, piling Pelion upon Ossa, came the Government's ultimatum and all that followed it. I hope that the Chancellor or the Minister of Supply will tell the House frankly today what, in the view of their advisers, will be the economic consequences of this military action. After all, it was long prepared. What estimates did the Government make of its cost and its economic consequences? What estimate do they make now? In his Budget speech the Chancellor of the Exchequer referred to Mr. Gladstone. I must remind him today of the words of Gladstone during the Crimean War. In his 1854 Budget speech, Mr. Gladstone had this to say: The expenses of a war are a moral check which it has pleased the Almighty to impose upon the ambition and lust of conquest that are inherent in so many nations … The necessity of meeting from year to year the expenditure which it entails is a salutary and wholesome check, making them measure the cost of the benefit upon which they may calculate. Whatever the benefit on which the Chancellor and his colleagues may have calculated in going in for this operation, the right hon. Gentleman certainly has a duty to the House to give us his estimates of the cost.

First, there is the cost of the Budget, which must be appreciable, big enough certainly to upset the whole basis of the Budget which he presented to us last April. Individual Ministers have given some figures of the cost of mobilisation before the Government's ultimatum. The Secretary of Slate for War told us that mobilisation for the War Office alone was costing about £1 million a week. The requisitioning of ships was costing the Government £400,000 a week. There is expenditure, on top of Cyprus, of £10 to £15 million before hostilities began. How much more now?

How does all this affect the general shape of the Budget estimates? In his Budget speech the Chancellor told us that he was aiming at an above-the-line Budget surplus of £460 million, plus £100 million to be achieved by a reduction in Government expenditure. The Exchequer returns to date show that the above-the-line deficit up to 5th November is £205 million more than in the same period last year. The ordinary revenue is £91 million up, and expenditure is £296 million up on last year in the period from the beginning of April to 5th November. Government expenditure is, therefore, so far running at a rate nearly £300 million above Government expenditure in the last financial year. Perhaps it is right to point out to the House that £53 million of the increase is increased interest on the National Debt.

I hope that the Chancellor will tell us whether he still expects a surplus of £460 million, plus the effect of the £100 million in Government economy. I hope that he will tell us how these cuts stand now. The country's impression is that, taking the increases in expenditure against any under-spending that has taken place, and against the cuts, the whole £100 million programme has turned out to be an entire illusion.

In July, we pointed out that the first £76 million which the right hon. Gentleman announced to the House resulted from either double counting of items for which the right hon. Gentleman had already taken credit in the Estimates or once-for-all disposals and running down of stocks, and that any genuine saving that there was was more than wiped out by the additional expenditure resulting from the Government's failure in the negotiations on the German occupation costs, which added a further £16 million to Government expenditure.

Five days before the Suez ultimatum, the Chancellor announced to the House another £17 million cut in Government expenditure. Some of this was just normal under-spending for which he was quite improperly taking credit as cuts in Government expenditure, but included in that figure was a mean and spiteful little economy, £5 million a year at the expense of the sick. That weekend—I am sure hon. Members in all parts of the House can confirm this—evidence piled up showing the unfair incidence of many of these proposals on many of the chronic sick in particular, including cancer sufferers and diabetics. Yet within five days of the Chancellor telling the House that the nation's economic security depended upon taking £5 million a year from the chronic sick, the £5 million had disappeared in the ashes and rubble of Port Said.

Will the Chancellor tell us how he is to balance his Budget now? Will he tell us how his estimates stand? He said in April that if he were not certain of the £100 million cuts, he would feel it his duty to propose additional taxation. Will he tell us now how he views the figures and the turn-out for the year? Will he tell us whether, in accordance with precedent, he proposes to introduce a supplementary Budget?

I turn now from the cost to the Exchequer to the much more serious economic damage inflicted on the nation. First, there is the increased cost of raw materials and foodstuffs. We are getting almost daily reports of increased prices in the markets of the world, and, particularly, daily reports of very big increases in freight rates. All these will be felt in this country. They will be felt in terms of our manufacturing costs and in terms of the cost of living. Will the right hon. Gentleman, therefore, tell us tonight what his hopes are of maintaining his plateau of prices now?

Secondly, what about the effect on exports? I have no doubt that the Chancellor or the Minister of Supply will be announcing the October trade figures, which have been very nicely timed for today. We may be told that imports have been reduced. That would hardly be surprising when ships have been diverted and when, as we have at present, there are thousands of unemployed in the docks. Clearly, some import arrivals will be postponed. They will still be to come.

What about exports? I have no doubt that the October export figures were good. October is usually the best month of the year. But how many shipments are being held up through lack of shipping? This was already becoming serious even before the ultimatum on 30th October. One industry after another was complaining that it could not get export tonnage. Imports may be merely postponed, but when exports are lost through shipping delays, it is not usually a matter of postponement. Too often they are lost for ever to those who can deliver the goods.

Again, we must ask how many markets are now boycotting British exports, including some Middle Eastern countries where the Board of Trade was encouraging British trade fairs, with our support, only a very few weeks ago.

I must also ask the Government about our essential raw materials. Can the Government guarantee that the emergency arrangements which are being made for the re-routing of shipments will ensure adequate supplies to maintain production? The Chancellor, again with his wonderful sense of timing, chose this year for running down Government strategic stocks and for forcing the liquidation of privately-owned stocks of raw materials at the same time. Are the Government to continue to run down stocks?

Finally, the question we are all asking: what about oil? I hope that one of the two Ministers who will speak today will give us a little more information than the Minister of Fuel and Power has so far given. There are a number of estimates in the Press. To take Western Europe, 75 million tons of oil a year went through the Suez Canal when it was open. Of this, 8 million tons was destined for the United States. About 25 million tons came from the Iraq Petroleum Company pipeline, and 15 million tons through the Tapline pipeline.

Now the Canal is closed. There are varying estimates as to how long it will take to reopen it. Some estimates state two to three months. An apparently authoritative statement over the weekend suggested that it might take six months. Meanwhile, ships will be diverted round the Cape, but it will be obvious to hon. Members in all parts of the House that we can expect far less oil brought round the Cape in the same number of tankers than if the tankers had come straight through the Canal, and, certainly, we can expect increased prices.

Then what about the I. P. C. pipeline? Three pumping stations, we are told, have been destroyed. That does not entirely stop the flow of oil. They are, in a sense, booster stations, and a restricted flow could still come through. Some people say that we can expect 40 per cent. of the normal supply. Tapline is intact, but we have been told that Saudi Arabia refuses to send any oil through Tapline if there is any question of any of it being loaded into British or French tankers.

It is very difficult to sort out all these figures. The Financial Times estimated last Friday that Western Europe would need oil at the rate of an additional 75 million tons from the Western Hemisphere. That is an annual rate of about 1,500 million dollars of expenditure for Western Europe, even if prices do not rise. But there is some doubt whether the supplies will be forthcoming from the United States and from Venezuela, because America has to replace her own lost Middle East supplies.

There are some who say that we can only expect about 20 million tons from the United States. There is talk this morning of pipeline bottlenecks in Texas. As soon as the oil is ordered, they find it difficult to supply it. There is the very big problem of whether we shall get the tankers for this trans-Atlantic importing of oil. There is, above all, the problem of whether we shall get the dollars. The best estimates seem to suggest that the Chancellor will be lucky to get away with an additional dollar expenditure of 200 million to 300 million.

Where will that come from? From our gold and dollar reserves, already so severely depleted? Are the Government hoping now to get a dollar loan for this purpose? There were plans at the time of the Canal Users' Association. The Middle East Emergency Committee was set up in Washington. There was a suggestion that the American Government might make loan capital available. Apparently the Emergency Committee is meeting, the consortium is meeting, but with no participation from the American Government. They are enacting Hamlet without the Prince.

As the Financial Times said this morning: The United Kingdom wants the United States to put its emergency oil supply programme in operation, but the Eisenhower Administration has shelved the plan for an indefinite time to come. The shunting aside of the plan is a high policy decision that reflects the unwillingness of the United States to be identified in the Arab countries as a supporter of the United Kingdom and France so long as their troops remain in Egypt. So there we are. So far as United States Government participation is concerned, and that is necessary to make this consortium of oil producers legal under United States law and it is certainly required so far as finance is concerned, the United States Government broke off all discussions on 1st November.

I hope that the Government will tell us how many dollars they have allocated for the purchase of oil, how many they expect to spend altogether. I do not need to remind the Chancellor that the additional cost of (importing dollar oil is nothing like the whole story. We have been earning considerable quantities of foreign exchange from sales by British companies of Middle East oil to Europe. Three-quarters of those sales to E. P. U. countries have, of course, in effect, been earning dollars for this country.

How much shall we lose? How many additional dollars will British companies have to spend in obtaining dollar oil in order to honour their contracts in Western Europe? What, in short, is the best estimate the Chancellor can make of the dollar cost of this operation which was undertaken to safeguard our oil supplies? And when he has spent the dollars, will he still have enough oil to avoid industrial paralysis in this country? I am not referring primarily to petrol for private motoring.

What about diesel oil, for buses and road transport? There has been a very big programme of conversion to oil-firing in British industry. In the first half of this year industry used 3⅓ million tons of fuel oil, an increase of over 20 per cent. compared with last year. Over one-third of the country's steel is produced in oil-fired furnaces, and an even higher proportion depends on oil at later stages in processing, such as rolling.

I need only to remind the House of the words used by the Prime Minister in his broadcast in August. He said: This is a matter of life and death to us all. Let me explain to you why. A great part of our industry and that in the Western lands is today run on oil, without which machinery and much of our transport would grind to a halt. We have come to rely more and more upon oil for power. Our industry and exports depend upon it. Here, therefore, is something which concerns every home in this land and not in this land alone. There have been estimates of 3 million unemployed. Do those warnings hold good today in the estimation of the Government?

I must say this to the Chancellor. It would be some consolation to the country, when it considers the Bill for the Government's actions, to feel that he, at any rate, was so conscious of his responsibilities to the nation that he urged restraint on the Prime Minister. It has been traditionally the rôle of the Chancellor to resist expenditure on military preparations. Gladstone restrained Palmerston in the 1860s and Lord Randolph Churchill resigned over the cost of a battleship.

If that is the Chancellor's duty on military preparations, how much more is it his duty to use all his powers to restrain military action? Will the Chancellor tell us that he tried but was overborne by his colleagues? I fear that the truth is otherwise. I fear the truth is what the country believes, that the Chancellor, so far from being a restraining influence, was in the van of those who since July have been calling for war. I say to the right hon. Gentleman in all sincerity that the Chancellor's first responsibility is not only to ensure the economic survival of this country, but to act in the Cabinet as trustee for the peoples of the entire sterling area. That should have been his mission in these critical months, not to act as the spokesman of the Suez group in the Cabinet.

We have complained, in our amendment, that the Government have offered no indication of any solution to these economic problems. We have Premium Savings Bonds, of course. We hear a lot about them from the Chancellor. What a wonderful sense of relevance and timing the right hon. Gentleman has. Go the day the bombs started dropping on Egypt there was the Chancellor, like a broken-down showman, peddling his, bonds in Trafalgar Square. Though he may feel that he sold quite a lot, all the evidence suggests that the greater sales have been made to Surtax payers because, if the law of averages continues to work under this Government, Surtax payers owning £500 of Premium Savings Bonds can expect to do far better with tax-free prizes than by investing that money in ordinary taxable investments. So that does not mean an increase in savings, but a diversion from other forms of savings. I hope that the right hon. Gentleman will tell us that he has some more positive proposals than Premium Savings Bonds and gimmicks of that kind. I hope he will tell us how he thinks he can deal with the problem of inflation, and on what basis he thinks he can appeal to the workers of the nation.

Let me tell the right hon. Gentleman how the Government's actions appear to the workers of the nation. I will quote two sentences from the speech of the elected leader of the Transport and General Workers' Union. Mr. Cousins said that his friend, Mr. Macmillan, had told the trade union movement that the wage claims put forward by the trade union movement on behalf of its members would bankrupt the economy. Now, he went on, Mr. Macmillan's Government had taken action which would have cost the country far more than all the wage claims would have done.

What authority does the Chancellor think he has now to speak to the industries of this country, on whom mainly rest our hope of avoiding economic catastrophe? I say that he has not that authority. The Government have not only lost the right to govern, but I believe that they have forfeited the power to govern. If the Chancellor and his colleagues have any longer that sense of responsibility to the national interest, and especially to our hopes of economic survival, that I believe they once had, there is only one patriotic and honourable course left to them—to get out and to make way for those who can deal with these problems.

4.31 p.m.

The Minister of Supply (Mr. Reginald Maudling)

When my right hon. Friend the Chancellor of the Exchequer winds up this debate he will be replying not only to the debate in general, but, no doubt, to many of the points made by the right hon. Member for Huyton (Mr. H. Wilson) including, no doubt, so many of the personal attacks on him as he thinks worth answering. In the meantime, I hope that the right hon. Gentleman will bear with me while I try to deal with some of the points which he has raised in the course of a speech which was certainly comprehensive, and touched on many points which, rightly, the House would wish to know about.

But may I just say, first, these things about the terms of the Amendment and what the right hon. Gentleman has said? The Amendment begins by referring to the … serious economic problems facing the country … No one denies that this country does face—and has faced for years—serious economic problems, but I do not know what at the present moment the right hon. Gentleman thinks that he is doing to help us in their solution. One of the remarks which he made early in his speech was that already, before the Middle East episode, we were facing a desperate economic crisis; and he referred to the possibility of devaluation in 1957 already being in people's minds. That is as unhelpful as it is untrue.

The Amendment then refers to the aggravation of these economic problems by … the Government's policy in the Middle East … Of course, no one denies for one moment that the intervention which we have made in the Middle East creates greater problems for our economy and for the Chancellor of the Exchequer. Of course it does. No one denies that, or would deny that.

In what I have to say I shall try to throw some more light on the extent and nature of these burdens, which should not be minimised, nor should they be exaggerated. But I think that there is one point—one very important point indeed—which the right hon. Gentleman omitted in his remarks. He talked about the cost of the action that we have taken, which, as I think he would agree, it was difficult if not impossible to estimate in exact detail beforehand. But he made no reference whatever to the cost which we might have had to meet by not taking action.

It is perfectly reasonable to refer to the cost of interference on our oil imports, the raising of freight rates, etc. It is perfectly reasonable to refer to that effect on our economy, if at the same time we calculate the effect on our economy if at the present moment there was a war raging throughout the Middle East, with the Israelis involved, and the Arab countries strongly backed by Russian arms.

Do right hon. and hon. Gentlemen opposite really think that if war were taking place at present between Israel and the Arab countries, the combatants would stop their fighting from time to time to allow our ships to pass through the Suez Canal? Of course not. [HON. MEMBERS: "Where are they now?"] A fair estimate of the cost of our intervention can be made only against the background of the cost of inaction which every day that passes shows would have been greater even than we thought.

Finally, this Amendment, strangely enough in the light of the right hon. Gentleman's speech, says that Her Majesty's Ministers do not intend to pursue policies adequate to deal with the situation. I think it was apparent to all of us that any suggestion as to what those policies might be was conspicuously absent from the right hon. Gentleman's speech. Not one single suggestion did he make. So far as I can gather from studying recent Labour Party publications on these matters, the sort of policy they would advocate would be to increase investment by imposing more controls and to increase output by increasing taxation. Those are the suggestions which they have been making in their recent policy documents, and nothing different from that or more useful than that appeared in the right hon. Gentleman's speech this afternoon.

I wish to deal with this Amendment by taking each part; by talking first about the economic problems facing the country and the effect upon them of the intervention in the Middle East; and secondly, by dealing with the question of policies to meet that situation. What are the serious economic problems which the country is facing, and to which the right hon. Gentleman referred at some length in the opening part of his speech? I think it most important to recognise that we have both short-term and long-term economic problems which are distinct but are interlinked. It is certain that sometimes action which has to be taken to deal with one makes the solution of the other more difficult—[HON. MEMBERS: "Hear, hear."] I am glad that hon. Gentlemen appreciate that.

Take, for example, the case of investment action. To restrict the credit base in order to put right the balance of payments problem of itself is inevitably liable to restrict investment. The reason, surely, is that this country has committed itself, by a decision of all political parties, to a policy of maintaining a very high level of activity and employment in a country where an excessive level of employment or activity leads inevitably to a balance of payments crisis.

Mr. Donald Chapman (Birmingham, Northfield)

What is an excessive level of employment?

Mr. Maudling

I think that it was the right hon. Member for Lewisham, South (Mr. H. Morrison) who first coined the phrase, "over-full employment". What mean, as I think the House is aware, is that in order to attain the objective which we set ourselves, we must ensure that industry and business is as active as possible without getting again into an inflationary position. So, in the years since 1951, we have constantly been trying to steer a course between an excess of inflation and an excess of deflation without arriving at a position where the reserves went out at a high rate. That problem was solved at the cost of a temporary check to the level of production.

Since 1952 my right hon. Friends have been pursuing a policy designed to increase output, to increase consumption and to increase investment—[HON. MEMBERS: "Of what?"]—all of which, of course, have been entirely successful, because all these things are running at record levels. But inevitably, if we have to steer this course between inflation and deflation, we must, from time to time, apply a check or counterbalance in one direction or the other. So it became apparent last year, or some time ago, that it was necessary to restrict the total activity of the economy in order to put right our balance of payments position. In fact that is what has happened, because the picture that the right hon. Gentleman gave of our balance of payments position is, I suggest, far too gloomy to be accurate.

In the first half of this year we had a surplus of £145 million on our balance of payments, an improvement of £125 million on the same period of last year. I can console the right hon. Member for Huyton, who was afraid that our export performance might not be continuing, because it certainly is continuing. Exports in the first nine months of this year were 9 per cent. up on last year, while imports were only 1 per cent. up.

In October we had the highest level of exports ever recorded in one month and, contrary to the right hon. Gentleman's expectation, imports for that month were also higher. This putting right of the balance of payments position has not been continued by putting a large check on the level of investment. Despite what the right hon. Gentleman said investment in manufacturing industry for the first part of the year was running at a level 25 per cent. above that of the corresponding period of last year.

Mr. Roy Jenkins (Birmingham, Stechford)

The right hon. Gentleman has made a very important statement about how our exports and imports are running. Do I understand that the Government's view is that we might expect an out-turn in the second half of the year roughly similar to that of the first half?

Mr. Maudling

The out-turn in terms of balance of payments depends upon a number of invisibles and the picture for the second half can be very different from that of the first half. To date, the figures of visible trade have continued the trend of the first half of the year, a very great improvement, and that trend is continuing. I can give the October trade figures. Exports for October were £295 million and imports £354 million. That is a gap roughly equivalent to the gap at which we have been running over recent months.

That was the position before the Middle East intervention. What is the effect of the intervention in the Middle East, and what is the current position of our reserves? I should like to deal with this matter as closely as I can. In the first half of 1956 our gold reserves showed a healthy increase of £95 million, and there was a simultaneous improvement in our capital position of a further £45 million by reason of the decrease in overseas sterling holdings, in other words, a decrease in overseas sterling indebtedness.

It is very important to realise that our capital position is represented not by our gold and dollar reserve alone, but by all our reserves and commitments. Since the middle of the year there have been declines in our gold reserves. The figures have been quoted by the right hon. Gentleman and were mitigated by the sale of the Trinidad Oil assets. Any decline in our gold reserves must be a cause of concern, because our reserves in relation to the total volume of trade are so very much smaller than before the war. It is because they are so very low that any small variation must give rise to more concern than before the war.

However, it is important to analyse with care the reasons for any particular movement of the reserves. Of course, there are seasonal reasons. In the second half of the year sterling always comes under pressure, and for fundamental trading reasons the reserves come under pressure. Apart from that, we have to analyse whether the movement of reserves is related to the current balance of trade or to capital movements, because the lessons which we will draw from either case will differ.

At present the current balance of the United Kingdom is very much improved over last year's, and is sound and healthy. The current balance of the sterling area, which is equally important to our gold and dollar reserves, is also encouraging. There are wide variations in the position of the rest of the countries of the sterling area. Some countries are doing better than others; some are more interested than others in the movements of commodity prices; but Australia in particular has shown a very considerable improvement, which I am sure we all welcome. So the current balances of both the United Kingdom and the rest of the sterling area are in a healthy position.

That leaves the impact of capital movements upon the state of our reserves.

Mr. Harold Davies (Leek)

Among the greatest leaks in the sterling area at which the Treasury has winked for a long time are the leaks at Kuwait, Bahrein and Qatar in exchange control. Now the leaks will be greater than ever. Will the Treasury take action to stop leaks in that area in future, or will it give up the task as impossible?

Mr. Maudling

Without accepting what the hon. Member says about leaks, I do not think that any recent upset should affect that.

In studying capital movements, it is important to look at our capital position as a whole. The Leader of the Opposition has more than once in the past pointed out, when we have referred to improving gold reserves, that improving gold reserves balanced by increasing liabilities are not a very great asset. In the same way, falls in gold reserves in order to replace debts are not losses to our total capital position. Some of the recent movements which have reflected themselves in lower levels of gold reserves have their counterpart in a lower level of total indebtedness. The increasingly short position of sterling begins at the same time to be rectified, so that when the difficulties are over and our position improves, it will improve all the faster.

The fact is that the use of reserves is essential to deal with temporary difficulties. Facing, as we are, temporary difficulties, it is not unreasonable to take a certain strain on our reserves, knowing that we shall afterwards be able to rebound, because fundamentally our trade and economic position is sound. One thing for which one should not employ reserves is to block a widening gap in the balance of payments position. That was what was happening in 1951, just before right hon. Gentlemen opposite left office.

What will be the effect of the Middle East situation upon our reserves position? Of course, there will be a strain on our dollar position in that we shall have to pay dollars for some oil and will also lose some oil revenues. That is perfectly true, but it is not possible at present to give an accurate assessment of what that strain will be, and I will explain why.

The damage to the oil fields, or rather the damage to the facilities for transporting oil—it is that which is important and not losing a quantity of oil—is the blocking of the Canal and damage to the Iraq pipeline. So far as I am aware, there is no other substantial damage to facilities. However, it is impossible to assess the full extent of the damage to either of those facilities until experts have examined them on the spot. It would be quite wrong for the Government to make any estimate or guess at the total difficulties involved until we have a close and accurate assessment of the amount involved in clearing the blockage to the Canal and repairing the damage to the pipeline.

Mr. Douglas Jay (Battersea, North)

Is there any truth in the report that a Shell oil refinery in Port Said has been partly destroyed by British bombardment?

Mr. Maudling

I was not aware of that. So far as I know, what I have said covers all the substantial damage to the oil flow to this country, which is the important matter.

In those circumstances, the Minister of Fuel and Power, as the House is aware, has taken a preliminary step aimed at reducing oil consumption by 10 per cent. and, at the same time, measures are being put in hand to prepare for further action, should that be necessary. No one can assess whether that further action will be necessary until we know the extent of the damage and the impediment to transport. At the same time, we are discussing this in the Oil Committee or O. E. E. C. The Committee had a meeting on Friday attended by the Americans and is to have another meeting shortly. It will be agreed that, in the nature of this problem, it is through that channel that the whole topic of further oil supplies in this temporary emergency can best be handled.

Mr. Hugh Gaitskell (Leeds, South)

Is the Committee working out a system of allocating the available oil supplies between the different European countries, including the United Kingdom?

Mr. Maudling

I cannot tell the right hon. Gentleman in detail how the discussions are proceeding, but all the European countries have voluntarily accepted the same 10 per cent. cut which we have had, which is a very good start to co-operation and indicates the way in which it should proceed. I have already said that this topic has been discussed in O. E. E. C. and while discussions are continuing it would not help to go into more detail.

I should like to turn to the longer term problems of our economy, which to some extent are affected by the intervention in the Middle East, and also to deal with our long-term problem itself. Our long-term problem, of fundamental concern, is that of earning enough surplus on our balance of payments to repay debts, increase our reserves and increase investment in the Commonwealth.

Mr. Arthur Lewis (West Ham, North)

On a point of order. I wish, Mr. Deputy-Speaker, to seek your advice and guidance. A number of my constituents had arranged to meet me, by appointment. On trying to see them, I and other hon. Members have had to go right out into the street because the police are stopping these women from coming in to see their Members. Quite a number of elderly women are standing in the cold in the street, although there is plenty of room for them in the Central Lobby. Their only purpose in coming here is to see Members on both sides of the House to protest against the Government's action in Suez. Are we to be prevented, because of some order which someone has given, from seeing our constituents in the Central Lobby after making an appointment to see them? I have missed five minutes of this debate by having to go into the street. Some of my hon. Friends are now on the pavement in the street discussing with them the suicidal policy of this Government. I would ask you, Mr. Deputy-Speaker, to make some inquiry concerning these law-abiding, respectable, constitutional women—[Laughter]—who are trying to use the Constitution which the Government have been breaking, so that I and other hon. Members can meet them in the Central Lobby in the normal way?

Mr. Deputy-Speaker (Sir Charles MacAndrew)

That is of course, not a point of order for me. I am responsible only for what happens in the Chamber. I have no doubt that the usual arrangements are being made. Further than (that. I cannot answer the question.

Mr. Lewis

Further to that point of order Mr. Deputy-Speaker. I think that you are entitled to see that hon. Members have an opportunity of listening to the debate and attending to their constitutional duties. Surely one of these constitutional duties is to meet constituents by appointment. If obstacles are being put in the way of hon. Members meeting their constituents, surely the Chair should protect hon. Members as well as their constituents. May I, therefore, again ask you, Sir, to make arrangements so that my constituents, who will be coming here for the next hour or so, will be in the Central Lobby, so that I do not have to spend ten minutes searching for them in the street?

Mr. Deputy-Speaker

As I have said, my responsibility is only for what happens in the Chamber and not for what happens outside. I am afraid that I can do nothing more than I have said. No doubt the usual plans are being carried out.

Mr. H. Wilson

I intervene, Mr. Deputy-Speaker, only because I am anxious to resume hearing the very important speech which the Minister is making. I recall, with respect, Mr. Deputy-Speaker, that exactly the same point was raised a year ago this very week. I think that it was on 16th November, and it was also raised by my hon. Friend the Member for West Ham, North (Mr. Lewis) on that occasion. The then occupant of the Chair was able to bring it to an end by saying that he would ask the Serjeant at Arms and others responsible to make inquiries so that this matter could be cleared up. On that, my hon. Friend did not press the matter further. If, in accordance with precedent, you could say that, I think that we could get on with the debate.

Mr. Lewis

Surely I can have some satisfaction, Mr. Deputy-Speaker. When there was some "phoney" organisation called the Housewives' League, coming here in their fur coats and Rolls-Royces they were all admitted into the Lobby in hundreds. [HON. MEMBERS: "Oh."] Surely the women outside, who represent the working-class women of this country—[Interruption.] Hon. Members opposite need not sneer and jibe. Some of their sons are in Suez as a result of this Government's action. I am asking you, Mr. Deputy-Speaker, to take some action.

Mr. Deputy-Speaker

As I said before, that is not a point of order. I have no doubt that the usual arrangements are being carried out. The Serjeant at Arms has heard what has been said and I have no doubt that those words will go to the proper quarter.

Mr. Maudling

I was about to deal with the longer-term problems of our economy and the effect on them of our intervention in the Middle East. The long-term problem is to earn adequate reserves, repay debts, increase our reserves and invest increasingly in the Commonwealth. That, as the House recognises, depends entirely on our international competitive position.

Not only have we to face competition from the United States, Germany and Japan, but there is undoubtedly an in-increasing threat of commercial and industrial competition from the Soviet Union, which, I think, it would be very unwise for us to underestimate. There are no longer any sheltered markets. Our ability to earn our living overseas depends entirely on the efficiency with which we meet the requirements of our customers. What are the policies which the Govern-have adopted to enable this country to maximise its overseas earnings?

Clearly, the first essential is the greatest possible investment in brain power and equipment for British industry. In the measures which the Minister of Education has taken, and to which reference was made in the Gracious Speech, we are embarking on what I think everyone agrees is an overdue programme of extending technical education in this country in face of the great competition from other countries who are extending their technological education with great speed. We are also doing a great deal to encourage improvement in machinery and equipment.

The right hon. Gentleman the Leader of the Opposition will know how sensitive is the leval of investment to changes in taxation policy, because by abolishing the initial allowance he brought about a very severe decline in the level of investment in this country. Similarly, by the initial allowance and investment allowance, my right hon. Friend stimulated a very high level of investment. That must be financed, and it can only be financed out of a high level of savings. The right hon. Gentleman was I think a little sneering in his reference to the new Savings Bonds. I do not know if he has bought any himself. Perhaps he is not a Surtax payer in adequate brackets to consider them. Certainly they have met with a substantial response among the public, not, I am sure, entirely undue to the admirable efforts of my right hon. Friend in launching them at such an appropriate opportunity.

There is no doubt from the figures available that there has been a very substantial increase in the level of personal savings. In fact, advances to professional and personal borrowers fell from August, 1955, to August this year by £69 million, and since the end of last year the hire-purchase debt outstanding has fallen by she same amount. If we compare the increase in production in the country with the increase in personal consumption and take the difference between the two, it is quite clear that for the first half of this year there has been a substantial increase in the level of personal savings. So savings have been encouraged, are rising and are quite essential to finance the increased and healthy investment programme that is now taking place in industry.

If we are to help and encourage industry further in overseas markets, it is quite clear that the share of the national product taken by Government expenditure and the share of personal incomes taken by taxation must be decreased and continue to be decreased. That is the object of the economies which my right hon. Friend has brought into effect, and is bringing into effect, and which, once again, I think the right hon. Gentleman rather underestimates.

The fact is that prices in this country have stabilised very much in recent months. Since the beginning of this year retail prices have risen by not more than 2 per cent., and in fact since April the level of retail prices has remained stable. Despite the somewhat contrary attitude adopted by hon. Members opposite when my right hon. Friend referred to this possibility, there has been in recent months a definite stabilisation in the level of prices. At the same time, there has been a remarkable change in the trend of profits. I think that everyone will have observed the very severe reduction in the profit margin which has been taking place as costs have been rising and prices have been held stable.

I am not one of those who believes that we can have a healthy industry without a healthy level of profits. It is only out of profits that expansion and re-equipment can, in the long run, be fully financed. Therefore, I do not think it is right to say that it is a good thing if profits fall steeply, but certainly a rapid rise in profits can be both evidence of inflation and a stimulus to inflation. In recent months, however, there has been a dramatic change in the movement of profits, and all concerned with the level of wages and other incomes should take very closely into account both the recent trend of retail prices and the recent trend of profits because in so far as they are relevant to wage or other claims and increased personal incomes there has been a very dramatic change in both recently.

I wish to say a word or two about the effect of the Middle East situation on our long-term position and, first, upon Government expenditure and the Budget, because on that the right hon. Member for Huyton asked a specific question to which I should like to reply. Expenditure in the course of the current financial year falling on the Exchequer as a result of the intervention in the Middle East, is not in the opinion of my right hon. Friend, likely to exceed something between £35 million and £45 million. That is the best figure we can give. It is a large figure, of course no one will deny that, but certainly it is a figure which is not large enough, particularly in the light of the present level of savings, to upset in any way the disinflationary balance of the Budget which my right hon. Friend introduced in April. That is the best answer I can give to what I recognise is a very important point.

In the long term, of course, our exports will be hampered in one or two ways by present circumstances. The shortage of shipping is bound to cause difficulties for exporters, but it is fair to point out that those difficulties will not be created solely for British exporters; our European competitors will certainly face similar difficulties. Also, our trade to the Middle East will be affected, but I wish to say a word or two about the future economic situation of the Middle East.

I think it most important not only to look at the effects of the action of the Government and what it is costing immediately, but at what would have happened if we had not taken action and what is likely to be the ultimate result. In economics, as in political matters, the ultimate result can be very considerably to the benefit of the people of the area. The Middle East is an underdeveloped area, to use the current phraseology, but it differs from many other underdeveloped areas in having natural resources out of which its development can be financed. Up to date these resources have not been anything like fully utilised for a number of reasons.

That has been partly because the area has been torn by political passions, partly because money has been spent on armaments rather than on development, and also partly because to a very large extent oil revenues spent by Iraq, for example, on development, have not been paralleled by other countries of the area. Therefore, although the Middle East has great prospects for development, they have not been fully realised and cannot be realised in the sort of political conditions which have existed in the last ten years.

It is our aim to get a really long-term Middle East political settlement, and on the basis of that it should be possible for the countries of that area, with help from outside, to develop a really sound economic programme. I think that the two outstanding examples of international organisation which have worked since the war have been O. E. E. C. and the Colombo Plan. Is there not a case for saying—I am merely making the suggestion—that in the Middle East voluntary cooperation between the countries of the area, in settled political conditions, could lay the first stages of a substantial and rapid advance in the standard of living of the people of the area? I am putting that forward as a suggestion on which we shall have to ponder. If we can get a lasting political settlement in the Middle East we can possibly help the people—as we were prepared to help the Egyptians with the Dam before they decided to buy arms instead—to build up a sound and progressive economy to the advantage, not only of themselves, but of the whole world.

I have tried as best I can to answer the Amendment and the questions which have been posed. On most of the questions relating to the effects of the Middle East situation on our economy I have done my best to give such facts as are available to the Government—the dollar cost, the flow of oil and the effect on the Budget. I have given the best estimate I can of the effect on these things of the Middle East intervention, as we can see it at the moment. I should like to sum up by returning to the Amendment, because it will be on the Amendment that we shall vote tonight.

The Amendment refers first to the serious economic problems facing the country … Of course there are economic problems which are serious and inevitable for a country like ours which, by nature, has quite inadequate raw materials and natural resources and which, by the fact of history, has great competitors and is a country which, by choice, has taken on itself the burden of defence, social services and full employment in a free society—the combination of which makes an economic burden which, so far as I know, no country has ever yet tackled or succeeded in handling. We are engaged on a great experiment to combine a high level of employment and social services in an island economy. While we are proving that that can be done, certainly for any Government for some years to come there will be serious economic problems facing the country.

It has been said that these problems have been aggravated by the policy of the Government in the Middle East. As I said, I do not think the right hon. Member and his friends have done much to help in recent weeks. I could go further and say that some of the remarks made this afternoon were calculated—that is not the right word—will have, or might have, the result of doing great damage to our economic prospects, if taken too seriously. [HON. MEMBERS: "Oh."] I deliberately said, "not calculated" but that they would have that effect. Some of the remarks of the right hon. Member about facing urgent and economic disaster might be taken seriously by some people overseas. He is singularly naive in these matters.

Mr. H. Wilson

My only reference to "facing serious economic disaster" was when I made a quotation from the famous "plateau" speech of the Chancellor last May, when he said that if there were not restraint there would be disaster. I was quoting that and saying that some people might take the Chancellor seriously, as I am afraid they do.

Mr. Maudling

It will be within the recollection of the House that the right hon. Gentleman said that before the Middle East crisis arose we were already facing a desperate economic crisis, referring to the £ being unsafe to hold and speaking of the possibility of devaluation in 1957. I think that speaks for itself. If we are calculating the cost of the policy of the Government in the Middle East—which, I admit, is a heavy cost and a burden we must and can carry, as we have carried more serious burdens in the past—it is quite unreal to calculate that without setting on the other side the very real and lasting damage which would have been inflicted on the economy of our country if we had not acted decisively and in time.

Finally, the Amendment refers to the need for an indication that the Government will pursue policies adequate to deal with the situation. The right hon. Member has made it quite plain that he himself has nothing to offer by way of a policy to deal with the situation, and there has been nothing that I could detect in recent Labour Party literature which leads one to suppose that hon. Members opposite have an idea on these matters. We intend to handle these economic problems as my right hon. Friend has been doing with effect and success in recent months. The policy of firmly restricting the supply of money and ensuring no return to inflation, the policy of restoring the balance of payments, the policy of encouraging investment within the limit allowed by our overseas payments problems—those are the policies which my right hon. Friend has been following and will continue to follow. I suggest to the House that we can well assume that they will continue to be effective in the future, as they have been in the past.

Mr. Deputy-Speaker

The question was raised some time ago about members of the public assembling outside. I have a report from the Serjeant at Arms, which states: Five hundred persons, mainly members of the Women's Co-operative Guild, have assembled outside St. Stephen's entrance to lobby Members of Parliament. They are being admitted to the Central Lobby as space there permits in accordance with usual practice. The behaviour inside and outside has been orderly.

5.10 p.m.

Mr. Norman Pentland (Chester-le-Street)

I crave the indulgence of the House on the occasion of my maiden speech. In the Gracious Speech reference is made to rising production, and I wish to refer to certain matters which, in my opinion, have a detrimental effect upon coal output.

I wish, first, to refer to the unwarranted criticism which has from time to time been levelled at our miners and at nationalisation itself. I want it to be understood that the miners will at all times welcome criticism which is objective in its character. However, in the coal fields, we have invariably found that the criticism which has been levelled at us in the first place has been from people who know little or nothing about the industry, and, second and most dangerous of all, from people who have never believed in nationalisation, whether it be of the coal mines or any other branch of industry. These people have tried to inculcate into the hearts and minds of the public and the miners the belief that nationalisation of the mining industry is bound to fail in the long run.

I want to tell the House where the miner stands in this respect. The miner realises that he has never had greater economic security and better conditions of employment than under nationalisation. Also, he knows that if through any fault of his, by any means whatever, nationalisation of the mines should fail or even falter in its path, he would be betraying everything which his forebears fought and sacrificed for in their bitter struggle against the coal owners in the past.

It is well known that miners and ex-miners may become very emotional when talking about their own people and their industry—goodness knows, the people in the industry often have every reason to be emotional—but I contend that everyone, particularly critics of the miners, should bear in mind the precise contribution that the miners have made to their industry.

Ever since 1941 the miner has heard the cry "Increase your production; intensify your efforts." He was asked to do it, first, to meet the demands of our war effort and, second, to meet the demands of our expanding economy, and he did that while adapting himself to new ideas and ever-changing methods of production. If the facts are examined, it will be found that the miners have increased their production even when the manpower in the industry has been gradually dwindling.

Last year, nearly 200,000 men worked Saturday shifts. This was done during the winter months as a result of the agreement which was reached. Even during the summer months, thousands of our men worked Saturday shifts. Working a Saturday shift does not mean that the pit closes down at 11 or 12 o'clock on the Saturday morning, and that all are free to go their own way. It means that thousands of miners go in during the Saturday afternoon, the Saturday night, the Sunday morning and the Sunday night, because the pit has to be prepared for the following week.

The country ought always to bear in mind the price the miners have to pay to win the coal which is so essential to meet the needs of our economy. Last year, 480 miners were killed in the pits and 1,850 were seriously injured. It should be remembered that many of the seriously injured will never do another day's work in their lives. Also, 214,000 were injured and were absent from work for three days or more.

There is now the ever-increasing scourge in our industry, pneumoconiosis. This terrible disease is spreading year by year and the number of men certified as suffering from it is increasing. In 1952, there were 3,143; in 1953, 4,003; in 1954, 4,449; and in 1955, 4,993.

Is it any wonder that men are leaving the industry? Since nationalisation nine years ago, 587,000 have left the mines. The moral is that the men working in the industry should be encouraged, and not discouraged, if we want the coal which is so vital to us. I am sure that the Minister of Fuel and Power will appreciate that point.

There is another aspect to which I wish to draw attention. We are all aware that Britain's first nuclear power electricity generating station at Calder Hall, Cumberland, is now feeding electricity into the national grid. There is no doubt that this is a startling development which definitely marks for Britain the crossing over the threshold into the atomic age. While, like everyone else, I am fully aware of the possibilities in this respect, I deprecate the announcements made by some people, supposed to be experts on the question, who seem to soar into the realms of science fiction fantasy and do not face up to present realities.

I am given to understand that it is expected that within the next ten years nuclear power stations will provide electricity equivalent to 6 million tons of coal a year, and by 1975 the equivalent of 40 million tons of coal a year. I appreciate that this will be a valuable and positive contribution to the nation's fuel and power needs, but it will still fall a long way short of what is required if our industrial production is to rise at the rate of the 2–3 per cent. a year needed to maintain and expand our economy.

The point that I want to make is that it must be realised by everyone that Britain's most important source of power, for this century at least, will still be coal, and all those who are looking at coal through spectacles covered with atomic energy dust should realise that they are doing a disservice to the nation by trying to suggest that the atomic energy age is just round the corner. It may be many years before that stage is reached.

These people are also doing a disservice to the country if, in their fantasy, they attempt to sow in the minds of the young men already in the industry the seeds of insecurity. If they do that, we shall never get the young men to remain in the industry, because they will not be sure about their career, and we shall not get the young men we so very badly need to enter the industry. It must be remembered, however, that if, tomorrow, we had as many as 25,000 men available, we could put them straight into our coal mines.

I am very much perturbed about one section of the community, the old-age pensioners, of whom there are thousands in my constituency who have spent a lifetime in the pits. Their position is not just a political matter. I believe that there are hon. Members in all parts of the House who realise that there are thousands of these old people who are today in dire need and extreme poverty. It is not my intention now to enlarge upon the needs of the old-age pensioners, but I hope that in the course of the discussion on our economic situation and the social conditions of our people, the needs of those old people will be brought very forcibly before this House.

5.20 p.m.

Mr. H. R. Spence (Aberdeenshire, West)

I am very glad to have caught your eye, Mr. Deputy-Speaker, because it allows me, on behalf of the House, to pay a tribute and offer our congratulations to the hon. Member for Chester-le-Street (Mr. Pentland), who has just delighted us with his maiden speech. His address was full of fact, and full of thought. It raised a number of most important issues, and I am sure that I speak for all hon. Members when I say that we shall look forward with interest to his future contributions to our debates.

The hon. Member called attention to the danger of people in the coal mining industry being made to feel that it was, in a sense, a dead-end industry, consequent upon the development of atomic power. He pointed out that by 1975 we hope to be producing atomic power equivalent to the consumption of 40 million tons of coal a year. I should like to add to that—for his comfort, I hope—that it is the declared intention of the National Coal Board to spend £1,000 million on coal mines in the next fifteen years or so.

Our annual consumption of coal for power is today 214 million tons; it is hoped to increase that to 240 million tons. Therefore, by 1975 atomic power will be producing only one-sixth of the total energy which we will require to sustain our industries and our standard of life. The hon. Member has done a useful service today by drawing public attention to the great, long-term future of the coal mining industry.

In speaking about our economic situation I want, in particular, to refer to that part of the Gracious Speech which says: It will be the aim of My Government to fortify the balance of payments and to extend oversea markets for our goods and services. My Ministers, while fostering the traditional and established Commonwealth preferential system, attach great importance to increasing and strengthening economic co-operation in Europe. To this end they are examining possible methods for creating in Europe an area within which restrictions on the free exchange of goods, other than foodstuffs, would be progressively removed. That we will all welcome anything that will strengthen Europe and the economic bonds that tie it together is, obviously, common ground, but this concept of a free trade area in Europe is one which we must approach with considerable reserve and with very great caution. It is clear that a number of tremendous difficulties will arise, and it was comforting to read in the Gracious Speech that the system of Empire preference will be retained.

Other problems, however, may arise. There is the problem of having a free interchange of goods between countries in which the social services and taxation burdens are unequal, giving obvious advantages to the countries with lower standards of living. Another problem which will have to be faced, if we are to have a free trade area in Europe, will be how to arrange rates of exchange. There will obviously be a flow of goods and payments in various directions. Under the old system of free trade, the correcting factor was a fluctuating rate of exchange, which automatically balanced different trading levels. If there is not such a fluctuating rate of exchange, it is difficult to see how free trade can operate without there being restrictions in the form either of tariffs or quotas. I hope that, before long, the Government will arrange a full-scale debate so that all views can be heard on this extremely complex problem.

I am sure that the fundamental principles of economic co-operation in Europe are correct, but I am not sure that limited free trade is the right method. From what was said at Strasbourg by the Joint Under-Secretary of State for Foreign Affairs, who quoted from the Chancellor's own speech made during the Recess, it seems that we have to discard any question of joining a European Customs Union, because by so doing we should have no self-determination about the level of tariffs which we should impose. I think that the Chancellor will be moving in the right direction if he can arrange for a debate on this issue.

I turn from the question of European free trade to the direct point of balance of payments. I have, on occasion, suggested that we should consider whether our present steps to increase our export trade are sufficient, and whether they are bringing about the results we desire. At the moment they consist mainly of what I call negative actions; applying Purchase Tax, and doing away with hire purchase, to reduce home consumption. There is also the action of the credit squeeze, which keeps down the spending of money.

There are all actions aimed at squeezing goods out of the home market and into overseas markets, and I suggest that the Chancellor should examine the possibility of applying some type of incentive to the exporter with a view to making him jump at the export market as one which will bring him some tangible result. As matters stand today, the exporter very often has to grant longer credits, and with a credit squeeze it is not always very easy to manage an increasing export trade.

A number of methods are used by our competitors abroad to give incentives to exports. One is to grant permisison to the exporters to retain a certain proportion of the foreign currency earned. It is only a small percentage, it is true, but something of that sort would not, I think, be any great strain on the Exchequer, and would be a great stimulus to the exporter to get the business. I suggest to the Chancellor that he should, by giving incentives to exports, reverse his rather negative policy of forcing goods overseas because there is no market for them at home.

I turn to one other matter which affects our economy. That is the part that agriculture can play. There is no better way of saving dollars and exchange than by producing our food at home. In a recent debate I asked the Government to consider the advisability of setting up a Select Committee of this House to examine the process and the means by which the products of agriculture, particularly meat, reach the consumer. Are these products being transferred in the most efficient way? Is the method that is being used correct in the light of the existing economic circumstances?

I feel that we are pursuing a method which was used and came into being forty or more years ago—a method which was all right when feeding stuffs were bought chiefly from abroad, when Britain was able to export 90 million tons of coal a year. But are they the right methods today? Today, in connection with meat, I think they are wrong because with the high cost of feeding stuffs we have to rely more and more upon grass for the main body-building materials and, therefore, meat tends increasingly to come on to the market in large quantities at certain times of the year and in small quantities at other times.

The fluctuations in price are tremendous. If one examines the records of the Fatstock Marketing Corporation for good quality breast carcass of lamb one finds a variation between 2s. 8d. and 4s. l½d. a lb. within six months. My suggestion is that a Select Committee of inquiry should look into all these matters. It should find out whether, by using modern means of refrigeration, we could spread our supplies of meat more easily through the year. This present method of booms and slumps invites the importation of meat at a time when prices are high, and that means again the use of foreign exchange. I ask the Government to consider whether it would not be a good plan to set up a Select Committee with powers to examine and report to the House, and to make recommendations.

I listened to the first two speeches today with great interest and it is not my intention to become embroiled in the rather party political atmosphere which was engendered. I would only say that, speaking for myself and for the part of Scotland from which I come, we have great confidence that the Government will be able to see us through the economic crisis that lies ahead, and we stand solidly behind the Prime Minister.

5.33 p.m.

Miss Margaret Herbison (Lanarkshire, North)

I wish that I were in a position to support the final statement made by the hon. Member for Aberdeenshire, West (Mr. Spence). The people whom I represent in Scotland take a view completely opposite to that which he expressed.

I am afraid that my speech will be partisan. The number of matters with which I intend to deal can be dealt with today in our present situation only in a partisan way. The Minister of Supply, concluding his speech, said that the Chancellor had pursued and was pursuing policies adequate to meet the needs of this nation. There is one policy which the Chancellor is pursuing furiously at present to which I take the gravest objection and I feel that many of the constituents of the hon. Member for Aberdeenshire, West will hold the same view as I and many of my constituents hold.

The policy to which I take the gravest objection is that of selling Premium Savings Bonds. It seemed to me, when this country was being faced with such serious problems, that the Chancellor of the Exchequer made a spectacle of himself when he stood in Trafalgar Square peddling what many of us call raffle tickets. He knows, as do the rest of the Government, that the Churches all over Britain, of almost every denomination, have taken grave objection to Premium Savings Bonds. Not only the Churches have taken grave objection to Premium Savings Bonds, but all those people who really care for the welfare of young people have objected. All who wish our young people to be trained on the soundest moral principles regard this policy of the Chancellor as one of the lowest projects that any Chancellor in Britain has ever introduced.

It seems to me that even the Chancellor had not found his policies so adequate when he came to the House a short time ago and told us of another mean action that he intended to perpetrate on the very worst-off in this country. I am certain that when the news went through Scotland about prescription charges and about one item only being allowed on a prescription, it caused great heartburning to many people.

My hon. Friend the Member for Chester-le-Street (Mr. Pentland), in his maiden speech, spoke about the mining industry. He told us the number of people who were killed in that industry last year and the number of people who were seriously injured. How right he was when he said that many of those men who were seriously injured in that industry would never be able to work again. Before we had any National Health Service those men were able to get all the medicine they needed without paying a single penny. Now, with a Tory Government, those men will have to pay not only 1s. for a prescription but 1s. for each item.

I come from a mining constituency, and I know some of the men to whom my hon. Friend referred. In my own village there are a number of paraplegics. I often meet them in their homes when they are too ill to go out, and sometimes I see them in their chairs in the village street. These men need many items prescribed for them by a doctor. In the past the doctor was often able to give them a number of items on one prescription. A paraplegic often suffers from many ailments and he needs continually to get medicine and salves with which to rub himself. Now, as a result of the Chancellor pursuing policies which he says are adequate to meet the needs of the nation, these men will have their very limited incomes made far less adequate to meet the needs of themselves and their families.

There are other people—the chronic sick, people who do not suffer from any industrial injury but who continually need prescriptions. They do not want them just for the sake of having them; they would far rather be healthy and able to do without them. I know a number of people who suffer from diabetis. The doctor sometimes has to prescribe cotton wool, insulin and methylated spirits. All these things, before the Chancellor's latest proposal, could be carried on one prescription. Now 1s. will have to be paid for each item. Many of these diabetics are old people. Many are people not in receipt of National Assistance.

Time and time again, since the announcement was made, questions have been asked on this side of the House about how people who are not in receipt of National Assistance can claim money from the National Assistance Board. The fact is that the National Assistance Board scales are applied, and if a person is not in receipt of National Assistance, then that person cannot have refunded to him the money paid for prescriptions. Many of those who have suffered industrial injuries are outside the scale for National Assistance. This seems a very strange and very heartless way for a Chancellor of the Exchequer to "adequately meet the needs of the nation".

The "plateau" speech of the Chancellor has been quoted many times. In considering the rise in the cost of living for a few moments, I shall quote some figures from the Monthly Digest of Statistics. A new index was introduced in February of this year, and since that was introduced there has been, according to the October Digest, a rise of 4 points over all items; and we are now only in November of the same year.

Taking the figures from the Digest, and taking the level at 15th January, 1952, as 100, we find that on 17th January, 1956, just before the new index was introduced, food had risen to 125.4, a rise of 25.4 points above the figure for January, 1952. This has happened under a Government which asked the people to return it to "mend the hole in the people's purse". If we look at the items individually, we find that some figures are much more serious for certain people. Butter, margarine and cooking fat have gone up from 100 to 143. That is a rise of 43 points on items which are essential for every household. The rise in tea and sugar is even greater, from 100 to 158 since January, 1952. Meat, bacon and fish are up to 130, 30 points above the 1952 figure.

The people who suffer most from these increases are our old people. The commodities I have mentioned, particularly butter, sugar and tea, are the things which the old people need and want. The chronic sick and people living on a small fixed income, from whatever source that income comes, are the people who have suffered greatly under the "adequate" policies of this Chancellor and the previous Tory Chancellor of the Exchequer.

The young people were told in 1951, in 1952, and in 1955, "Return the Tory Government if you want your cost of living to come down." Those young people now find that furniture for their new homes has gone up by 9 points under this Government. Hardware, pottery and glass—all things which young people need when starting a new home—have gone up 18 points over the level for 1952 to 118.

We remember the story told about a property-owning democracy. Young people who had no chance at all of getting a house from a county council or a town council, and who were willing to have a house built, are finding that the credit squeeze policy of this Government has made it impossible for them to get a house. Those who are living in houses are finding rents going up so steeply that they are not able to have many other things which they ought to have. I can remember reading the reports of the conference at Llandudno, reading of the many people who criticised the trade unions. The person who should have been criticised at that conference was the Chancellor of the Exchequer, for it is he, by his policies, who has made responsible trade union leaders in this country say that so long as these policies continue in Britain, it is quite impossible for them to ask their workers to exercise wage restraint.

Scottish members have put down an Amendment to add, at the end of the Address: But humbly regret that no indication is given in Your Majesty's Gracious Speech that Your Majesty's Government have any plans to secure the economic and social well being of Scotland; that no proposals are made for Government-financed factory building in advance of securing tenants as the only means of countering the attraction of labour from Scotland to the developing industrial enterprises in the south; and that no evidence is given that the location of industry is being planned in the interests of the country as a whole. I understand that that Amendment will not be called, but I wish to deal with one of the matters which caused us to put it down, namely, the situation as regards industrial building. The Labour Government, when they were in office, ensured that the greatest proportion of all new factory building built by the Government was put in areas where the need was greatest. Ever since this Government have come to power, there has been a reversal of that policy. I have raised this matter time and time again by speech in the House and by Questions to various Ministers, and always, in replies to speeches or in replies to Questions to the President of the Board of Trade, to the Secretary of State for Scotland, and to the Minister of Labour, I have been informed that the Government were doing everything possible to attract industry to Lanarkshire, the part of Scotland in which I am specially interested. They did everything except the one thing which would have ensured that new industry went into the area. My recent experience of a factory which became vacant in my constituency corroborates the case which I have continually made in this House.

The latest figures taken from the Monthly Digest of Statistics show that there are in Scotland 52,000 unemployed. These are all individuals, men and women who are unemployed and who desire to work; but there is no work for them. They are all men and women living in homes which are suffering because of low incomes. That figure of 52,000 represents 2–4 per cent. of our insured population. In the London and South-Eastern Area, the figure of unemployed is 38,000, or 07 per cent. of the insured population. Thus, we see that in Scotland we have almost four times the proportion of unemployed that there is in the London and South-Eastern Area.

Since Scotland suffers in this way, one would imagine that the present Government would be doing everything possible to attract new industry there. What do we find? According to the latest figures, there are in Scotland 177 new industrial premises being built, which will provide 6,789,000 square feet of factory space. In London, 405 new industrial premises are being built, covering 15,303,000 square feet. This gives a very strange picture to our people in Scotland. In an area where the proportion of unemployed is about a quarter that of Scotland, more than double the amount of new factory building is being provided.

Turning to another part of England, we find that in the North-Western Region the unemployed figure is 42,200, or 1.4 per cent. of the insured population. That number represents just about half the percentage of unemployed that we have in Scotland and yet that area is getting more than double our amount of new factory space. It is no wonder that I said to the hon. Member for Aberdeenshire, West that this speech of mine could be nothing but partisan.

The Chancellor of the Exchequer is responsible for the credit squeeze. He, I take it, is responsible for the announcement made some time ago by the President of the Board of Trade that even in Development Areas only the most essential buildings would be built by the Government. Are we to have any change in this policy?

Early this summer a factory which had been built in my constituency during the time of the Labour Government became vacant. It had been producing cotton. Because of the lack of a policy for the cotton industry by the Government, that factory, like many more in Lancashire, had to close. What did we find happening? It was not just one firm that was interested in getting that factory. There were important, reputable firms competing to get it.

Mr. Gerald Nabarro (Kidderminster)

A very good thing, too.

Miss Herbison

Yes, indeed. It backs up my policy completely and I am glad that for once the hon. Member for Kidderminster (Mr. Nabarro) agrees with me. My policy, and the policy I have long been asking the Government to pursue in the area, is the building of advance factories. That is why I said earlier in my speech that the one thing which would have brought new industry to the area was the one thing that the Government refused to do.

Mr. Nabarro

Will the hon. Lady give way?

Miss Herbison

I am sorry; other hon. Members are waiting to speak.

One firm only could get that factory. I am glad that it is a good firm, one which will provide work for many men and, I hope, for men who become redundant if more pits close in my constituency. But had the Government built an advance factory, we could have had one of the best firms in Britain occupying it and providing work for the women. The Government have refused to do that.

Again, I make this plea to the Government. If they are really concerned about that part of Scotland, and in the hope that the Secretary of State is doing his job in the Cabinet and urging the need of Scotland, which I doubt, I appeal to the Government to adopt a new policy for the Development Areas, especially those in Scotland. Not only do I ask them to build advance factories, but I ask the Chancellor of the Exchequer, with the President of the Board of Trade, to ensure that whatever factory accommodation is built, there will be a much more fair distribution of it than at present. That is the only way to make it possible for these parts of Scotland, which so desperately need work, to get it. I must say, however, from the policies which I have seen the present Government pursuing, that the only hope for my area and for other parts of the country is to have a return of the Labour Government who when in power produced policies that brought work to our people.

Mr. Nabarro

Will the hon. Lady tell us whether her policy, as distinct from that of the former Labour Government, is to direct firms requiring new factory space to go to her area or whether she is in favour of the present system of firms electing where it is most economic for them to manufacture without necessarily being compelled to go to some remote place in the north of Scotland?

Miss Herbison

The hon. Member has shown once again that he is so full of his own importance that he does not trouble to listen to a case when it is made. In the last part of my speech, I was showing clearly that we did not need to direct firms to come to my area, but that had the Government carried out the right policy, we could have had them. The firms were anxious to come to my area but because of the Government's policy there were no factories for them.

5.56 p.m.

Sir James Hutchison (Glasgow, Scotstoun)

It would be presumptuous of me to try to answer many of the questions and criticisms that have been hurled at my right hon. Friend the Chancellor of the Exchequer and his colleagues. There are, however, one or two points to which I should like to refer before I get on to the main burden of what I wanted to say.

The first is that I have made no secret of the fact that I think we want to look again at our Development Area policy in Scotland. Whether or not it should be advance factory building and whether that advance factory building should be all in the expanding areas, as some of the colleagues of the hon. Lady the Member for Lanarkshire, North (Miss Herbison) pressed upon the Government, or whether it should be in the old Development Areas, as the hon. Lady has been urging, is not clear to me. I am not sure that hon. Members opposite know which they really want so far as Scotland is concerned.

Mr. Woodburn

I take it that the hon. Member has seen that the Scottish Council (Development and Industry) has quite definitely made up its mind in support of the policy, put forward by my hon. Friend, that the real solution is to have advance factories. Perhaps the hon. Member has noticed that.

Sir J. Hutchison

Yes, I have noticed it.

The right hon. Gentleman, however, has not been following the point which I was trying to make, namely, whether the advance factory building is to be done in new areas not already scheduled as Development Areas or whether the hon. Lady wants it to be done in the Development Areas, leaving the outside area as it is now. That, however, is another question, on which I do not want to spend too long now.

In his speech, the right hon. Member for Huyton (Mr. H. Wilson) quoted figures for a reduction in overseas investment and then, in his satirical manner, he asked my right hon. Friend whether he still considers it wise to have sold the Trinidad Oil Company. What chance does the right hon. Gentleman think there would be of attracting investment abroad if, when a satisfactory—indeed, even generous—offer is made, we cut off the possibility of its acceptance? I can think of nothing which would dry up foreign investment more quickly than to deprive the investor of a chance of the kind which was offered when the Trinidad Oil Company was taken over.

The right hon. Gentleman went on to quote the increases in exports of Japan and Germany compared with our own increases in exports. Surely it is a quite different problem to size up the percentage increase in exports of a country whose exports have at one time been completely cut off and have for a long time been diminished by the action of war, as compared with the exports of a country like ours, which have gone on increasing over a long term of years already.

Now I turn to a quite different matter. It is not surprising that a number of hon. Members have been concerned with the acute question of oil. It is, of course, in the forefront of our minds. It is a subject which is linked with the remarks made, in his admirable maiden speech, by the hon. Member for Chester-le-Street (Mr. Pentland) about the need this country will have for coal for a very long time ahead.

I have recently returned from Strasbourg, where I listened to the many debates, all of them designed, in one form or another, to stress the need for Western European solidarity. If it was important then, a month or so ago, it is certainly not less important today. It was interesting and, indeed, encouraging to see the interest—almost enthusiasm—that was aroused among the European nations at the bare possibility of Britain's discussing a free trade area.

There are two proposals before us at present under which we can co-operate with Western Europe, in a closer or a looser form, in atomic energy production. I know that I am struggling with an extremely difficult subject here. Not only is the situation itself complicated, but the terminology of the scientific problems is such as to confuse even a scientific man but I must, nevertheless, try to struggle on to put to the House the differences between the proposal of O.E.E.C. and the proposal of what is known as Euratom, because I think that there is a big decision of very considerable importance to be made by this country.

Neither of these two projects, the O.E.E.C. project for co-operation in the production of atomic energy nor the Euratom project, has been finalised. They are still being examined, and a treaty has still to be drawn up by the nations who want to come into Euratom, and a form of agreement and a plan have still to be finalised for those who are to adhere to O.E.E.C.

O.E.E.C. provides—and this is the essential difference—for any number of European countries coming in to any extent they want; that is to say, one country may come in on one project, three on another; but there is nothing to bind a number of countries to come in for either all the projects or any particular project. Thus that is a loose conglomeration of nations coming in at any point at which they think it will be helpful to themselves.

Euratom tends to bind its adherents much more tightly. I have always wanted this country to go into Euratom in one form or another. We have not so agreed. Indeed, all the indications are that we are not going to. One of the reasons why I want our country to go in is that Euratom proposes the setting up of a large system of European research on atomic energy which, I think, we may well come to need very badly.

It is true that we are now a long way ahead of other European nations. In some senses we may even be ahead of the United States of America, but there are many possible roads for the scientists to choose in the further exploration of how atomic energy will be produced, whether it will continue to be through uranium 235 or uranium 238, on which Calder Hall is running just now, or plutonium.

There are many other alternatives, and the chances of our hitting the best research road are fairly remote. Research is costing a tremendous amount of money, and if we are determined to go ahead with research entirely on our own, and to hope to keep ourselves permanently ahead of other nations, we are setting up a programme of expenditure that we shall certainly not be able to face.

I should, therefore, like us to take part in the research reactor programme of Euratom, provided that that same research knowledge is not available to us from somewhere else already, either from our own reactor research or from the United States of America or elsewhere.

We are already in a number of organisations of this kind. We are in an organisation known as C.E.R.N., the European Nuclear Research Organisation, for which we provide quite a proportion of the finance; and we are in another organisation known as Société Etiropéen de l'energie atomique. So that we are in on the pure research side of atomic energy, but not, so to speak, the applied research, prototype reactor side.

What is the position at present? Of course, Britain is in a different position from those other nations. We are still ahead, as I have pointed out already, but there are other reasons why we cannot go into Euratom fully and completely. First, we have extensive and valuable supply contracts for the raw materials which are needed for the production of atomic energy. Euratom proposes to take control of all the raw materials which come into Europe for any of the countries which join this organisation. It really would be asking too much to expect us to give up our own supply contracts with countries like the Belgian Congo and Canada and to hand them over to other countries which have not such a supply system; but having retained that for ourselves, I myself would be prepared to make available to Euratom any surplus that arises from those supply contracts over and above our own private needs.

Then, Euratom wants an overall control system whereby the use of any of those nuclear ingredients is controlled from the beginning to the end in order that they cannot be diverted into the manufacture of arms. The Euratom countries know that we already manufacture arms and that we do not propose to give up that right, and so, in that sense, we cannot go into Euratom fully. The President of the Board of Trade has already told the Euratom countries we are prepared to make the "know-how"—if I may use that American jargon—the "know-how" which we have acquired available to other countries on reasonably favourable terms.

That, therefore, would be a way in which we should be able to go in. We are prepared, as I understand, to cooperate in a common market of nuclear ingredients; that is to say, we are prepared to apply no tariffs or import duties to any of the items which go to the making of nuclear energy. If an item, such as a boiler, can be used for two purposes, then it goes into a different category, but exclusively nuclear research material, we have agreed already, I understand, may go into the common market without our charging any tariffs and duties on it. We are making instruction available at Harwell for scientists from foreign countries. We are prepared to harmonise legislation required for such things as the disposal of irradiated material and for the protection of the health of the people who work in these establishments. In short, we are prepared to go a long way along the road which Euratom proposes.

What I should like to see the Government do is to offer to go into Euratom on the terms which I have indicated. In other words, let us contract out of the things to which we cannot adhere, such as the handing over of our supply system and sharing in the isotope separation plant and taking part in the heavy water production plant, neither of which we need, because we can buy heavy water elsewhere and because we already have our own means for isotope separation and the production of uranium 235. Let us make clear all the limitations that we think are desirable on our co-operation and say to the Euratom countries, "We are prepared to come in if you are prepared to accept us on these very limited terms."

It may be asked, what is the advantage of doing that? It is entirely a psychological advantage. We have indicated how far we are prepared to go in the O.E.E.C. plan. Let us go just as far as we have already said we are prepared to go, but let us do it with Euratom. It would mean that we should not be more deeply committed than we are committed now, but we should be giving a great fillip to the European idea and creating further hope of European solidarity.

At any rate, whether we go into Euratom or adhere to O.E.E.C., I beg the Government to realise the immense importance of the expansion of an atomic programme as quickly as possible. It is vital to the country. It is only when coal, plus atomic energy, many years ahead I fear, have been able to supplant oil that we shall be able to get out of the unhappy and dangerous position of being blackmailed by the oil-producing countries.

6.11 p.m.

Mr. David J. Pryde (Midlothian)

We deeply and humbly regret that there is no mention in the Gracious Speech of any practical plan to deal with Scotland's economic problems. This is not difficult to demonstrate, because in housing, for instance, we see a very dreary outlook for our young people and in the 48,852 unemployed in Scotland, the highest figure in the United Kingdom, we see something worse, something which tells us that Scotland is not getting her fair share of employment.

In my own constituency we have the proof that Governments at Westminster have not dealt fairly with Scotland. The Calders area was one of the first areas to be scheduled, yet not one factory has been erected there by direction or any other means. Over the years, because of the bad planning that has been applied to Scotland, only one factory has been built. That factory was built in Midlothian through the initiative of Wilson and Glennie, of Hawick, one of our most successful dollar earners. In the Tweed Valley our breathing space is very much restricted. If the planners had any idea at all of planning they would have put the overspill in the Midlothian in the Calders area. Instead of attracting industry, we have the curious spectacle of the Government closing down industry.

The unemployment figures are depressing, but what are the Government's plans for the old people? The only conclusion that our old people can come to from the Gracious Speech is that they are now set on despair's last journey. A great "do it yourself" campaign is running in the national newspapers. I wonder why the Government do not follow their own advice and do something for themselves.

Year by year I have drawn attention to the problem which is exercising all our minds in the House today—the problem of oil. The Government fiddle while Rome burns, shut down our oil-producing apparatus and sell our foreign investments in oil overseas, while, at the same time, an advance in the exploitation of our oil supplies is announced in the Press. Only the other week, in Forward, I saw a description of methods of boring for oil in the middle of the sea.

In war we should not get a barrel of oil across the sea, yet we have never made any serious effort to provide oil for ourselves. I have some data on the subject which will not take long to give to the House. Although the great octopus-like organisation, I.C.I., operates in southeast Scotland, and was operating in my constituency, no one has thought of employing it to provide oil from coal. I have in my hand a plan of the Midlothian coalfield. The coalfield is 9 miles long and 2½ miles broad. It is the most compact coalfield in Britain. It has more and thicker seams than any other coalfield, and rich Cannel coal at that, which is so necessary for distillation purposes.

Along the shores of the Firth of Forth, in the constituency of my hon. Friend tide Member for West Lothian (Mr. J. Taylor), there are rich, petroliferous materials which will prove a boon to anyone who has any idea of saving the country from its present-day perils. I have a list of the various seams, their thicknesses and their oil-bearing contents. In my own constituency there is a seam which the old coal owners never thought it worth while to work. They said that it contained pyrites and shale. There is a 3 ft. thick seam, the bottom 18 ins. being good domestic coal, the middle 6 ins. an oily mineral, and the top 18 ins. rich oil-bearing shale, which, when put into the retorts, produces 51 gallons of oil to the ton.

There is in the south-east Scotland coalfield an estimated content of 26 million tons of petroliferous material which can easily and most economically be worked, especially in the shallow pits which have been abandoned by the old coal owners. I have in mind one colliery of very shallow depth which could easily produce 1½ million tons of rich oil-bearing material. In the Midlothian coalfield itself the measures have never been exploited and they could produce a vast amount of oil to help our national economy.

We have a further grievance in Scotland about factory building. We do not require to utilise any of the ground in the compact coalfield for the building of factories, but we want assistance from Westminster in this matter of factory building. We should then advance factory building because our factories in south-east Scotland have proved conclusively that they can compete against anything produced in any other part of the world.

When the Chancellor replies to the debate I hope that he will remember that Britain does not terminate on the River Tyne. If anyone should know that it is the Chancellor of the Exchequer. I appeal to the right hon. Gentleman to endeavour to persuade the Minister of Fuel and Power to call in the National Coal Board and the National Union of Mineworkers and place the facts before them. In the Coal Board there are eager and skilled young mining engineers who would be glad to come to the nation's assistance, as the mining industry has often come to it before.

The time is now ripe for everyone to make a constructive effort. The penchant on the part of private enterprise for dealing with the Arabs, as I have pointed out many times before, has now presented the country with a menace which can only be countered if we set ourselves to the task. It is up to the Government of the day to tackle the problem.

6.22 p.m.

Mrs. Jean Mann (Coatbridge and Airdrie)

It would appear that Scotland is getting an undue share of the debate. I am glad, Sir, that you have called me, if only to show that we are not so insular as all that. Whilst the topic I am dealing with affects Scotland, it affects England much more; indeed, it affects the United Kingdom as a whole. It affects our entire national economy, and I think I can claim that it has never been alluded to in debate heretofore.

Many times I have asked at Question Time when the Hodgson Committee's recommendations were to be implemented. It may be asked: who is this Hodgson? The Hodgson Committee was appointed by the President of the Board of Trade in 1951, and it reported that year, just as the Labour Government were going to the country. Its Report is entitled "Report of the Committee on Weights and Measures Legislation," and shows the inaccuracy of the cost-of-living index figure. It shows that this figure can never be accurate until the recommendations of the Report are given effect.

Time and again the President of the Board of Trade and his Parliamentary Secretary have promised me that this legislation would be introduced next Session. They went further than that. They appeared before a conference of the National Council of Women, held in London, and promised the whole 900 who were there that legislation would be introduced in the coming Session. At the annual conference of the Inspectors of Weights and Measures, at Bournemouth, they were also confident that legislation would be introduced this coming Session. Therefore, Sir, I must express my disappointment that there is nothing in the Gracious Speech which indicates any intention to deal with this vital question.

What exactly am I getting at? The cost of living. I have here a document entitled "The Method of Construction and Calculation of the Index of Retail Prices." I find that most articles in daily use in the home are not accounted for at all. That may seem to be rather a strong statement to make, but if we look at Appendix A, what do we find? We find listed rolled oats, breakfast cereals, rice, custard powder and various kinds of biscuits, including crispbread. All the articles I have quoted are not sold by weight. The price can remain the same, but the weight can and does fluctuate. Therefore, not only is the Minister of Labour and also those responsible for compiling the survey baffled, but, in addition, the housewife is baffled.

I expect that hon. Members have heard the story of the housewife who was rebuked by her husband for always coming to him for more money. He asked, "What do you spend it all on?" She replied, "Well, you know that the cost of living has gone up so much. I just cannot tell where it all goes." "Oh," he said," You must be more accurate than that. Get a small account book and write down in it every item you purchase. Then we shall know where the money goes." So she kept a note of what she spent and at the end of the week she said to her husband, " I am still very short and I shall get into debt." He said, "Let me examine the book." He examined it and, every now and again, found these initials, "G.K.W." He asked, "What does 'G.K.W.' mean?" She replied, "It means 'Goodness Knows What'."

We are equally baffled, because while great attention has been paid in this House to the rise in the cost of living—and even my hon. Friend the Member for Lanarkshire, North (Miss Herbison) quoted the subsidies and the extra cost of milk, bread, and so on—we have never paid attention to the fluctuating weights of all the packet goods coming into the home.

I have quoted the list down to biscuits. To continue, it includes cakes, buns and pastries, and various kinds of cakes made by different firms. All these can alter in size, shape and weight from day to day. The list then includes sausages, pies, canned meat and other meat products, offal and poultry. Again, the contents can vary. I know that in many cases the weight does not vary, but, so far, there has not been a requisite standard of the contents.

The list contains tinned goods, packet goods, dried fish, canned fish and canned fruit. The tin may be all liquid with very little fruit at the bottom. Then there is packet cheese. We are even getting threatened with cheese which is cut off like a sausage, and with cheese that comes out of a tube. None of them is subject to weight. No tube of any kind from toothpaste to mustard is subject to weight. Then, again, we find in the list dried milk, canned milk, tinned coffee, tinned cocoa proprietary drinks—all can fluctuate in weight every day.

The Hodgson Committee's Report specifically applied not merely to soft drinks, but to hard drinks—to sauces, soft drinks and hard drinks, where the bottle is so made that the bottom is not flat but covers almost 30 per cent. of the entire contents. Some sauce bottles are indented at the sides and the bottom. Jam, marmalade and honey, which can be sold in cartons or in jars without specific weight, are also mentioned, as are sweets and chocolates.

Weights and measures men have directed attention to these. One has only to go to the cafeteria to see packets of sweets in cellophane wrappers. No weight is indicated on them. Next week there may be three fewer in every packet all over the country. The Weights and Measures Report asks that all sweets shall be sold by weight. Other foods include table jellies, sauces and pickles, table salt, canned soup, meat and vegetable extracts. On every item I have mentioned the housewife can be "gypped" from day to day.

Other foods mentioned include dog biscuits, cat food and tacko, etc., sold in boxes. Hon. Members know very well that often when they buy a box it is only partially filled. The Weights and Measures Report even refers to the amount of tobacco in a cigarette. One of the main items mentioned is household wool. In the Hodgson Report this is referred to as opening the door to abuse. I knit, when I have time to do so. Indeed, I am sorry that hon. Ladies are not allowed to knit in the House. I should enjoy the debates much better if I could pursue my hobby while listening to them.

After reading the Hodgson Report I went round some of the leading stores in Glasgow and London and I found that what the Committee had said was true; knitting wool said to be sold by the ounce sometimes bore the word, "approx." Sometimes the word was absent altogether, but very often it was present—" per approx. oz.". Let me say at once that when the reputable dealers say, "This is an ounce", it is an ounce and one can depend on it. Nevertheless, this abuse is going on.

I would draw attention to the circulars we get by which we are supposed to get cheap wool. I had one sent to me telling me the price per ounce. The circular enclosed a sample which I was to return, in the little envelope which I have here, when I had made by choice; but the little envelope bears the words "per approx. ounce". How far approximate to an ounce? Twelve drams, or 14 or 16? They are getting away with: it every day, and it is quite impossible; for the Minister of Labour to tell us that he knows the index figure of the cost of living when all the items which I have mentioned are subject to these fluctuations from day to day.

This point is not appreciated by those most concerned—the trade unions; they take into consideration such matters as subsidy removal and they go by the Ministry of Labour Gazette figure. But, as I have said, the Ministry cannot keep up with these fluctuations, even in such matters as household soap and household detergents. They advertise mammoth packs when there is not a teaspoonful more by weight in the bigger pack than in the smaller.

With the advent of the self-service stores this problem is growing in intensity. No longer does the woman buy a 1-lb. bag of rice across the counter at her grocer's after it has been weighed on the scales. The bags are all pre-packed, and the Hodgson Committee points out that there is a fluctuation of up to one-third of 1-lb., which goes under the name of evaporation. The Committee asks the Government to adopt the metric system of weights and measures in order to give the housewife a chance.

I am sorry that the Minister of Labour is not here, because I must again refer to his Report on the Method of Construction and Calculation of the Index of Retail Prices. I have searched through the method of construction to see how a calculation could be made for all those items which I have specified and which fluctuate in weight, size and quantity from day to day. I find that it is not contained in this Report. In paragraph 47, I find that information about the prices of books, newspapers and periodicals is obtained by postal inquiry. Changes in the price of representative proprietary medicines, toilet requisites and cosmetics —all subject to the fluctuation which I have mentioned— stationers goods, —which are mentioned specifically by the Weights and Measures Report— toys, camera films … are ascertained by correspondence with manufacturers or trade associations. The prices of household soap, soap powder, soapless detergents, soda, polishes, cleaning powders and matches are obtained by postal enquiry from a large and representative sample of retailers on lines similar to those used for clothing and footwear. But the words "similar to clothing and footwear "refer to quality, and who will say that methods similar to those used for clothing and footwear can possibly apply to sugar confectionery, flour confectionery, liquids in bottles, small items in household use in packages and boxes and all the other things which are taken into the homes in packets? It is impossible, and it is because it is impossible that the weights and measures inspectors are crying out for the Government to implement their promise and to introduce this legislation.

This would be comparatively easy to do. I know that the Government have a lot on their plate at present—perhaps rather too much on their plate. I know that even if they pull through the next few weeks or so they will run into economic difficulties. I think we all appreciate that war or threat of war brings in its train economic problems. Probably the cost of living will go up.

Here is one way in which the Government could help over a wide range of household commodities. They could give effect to the Hodgson Committee's recommendation. That would gladden the hearts of all the women's organisations in the country and it would help the trade unions to try to stabilise wage claims. It would be comparatively easy to introduce at least that section of the Report asking for stated weights for the whole of that range of goods. I ask the Government to keep their promise and to introduce such legislation.

6.40 p.m.

The Joint Under-Secretary of State for Scotland (Mr. Henderson Stewart)

I had not attempted or thought it necessary to intervene in this debate, but, as the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) said at the beginning of her speech, the Scots tonight have shown their usual ingenuity in introducing a little bit of Scottish and industrial politics into the debate. Perhaps the House will allow me briefly to deal with the main purely Scottish points which have been raised.

The matter to which the hon. Lady has been referring is not a purely Scottish one. It is a United Kingdom matter—an important one—and I would ask her to believe that her recommendations have been and will be carefully noted.

The hon. Lady the Member for Lanarkshire, North (Miss Herbison) and the hon. Member for Midlothian (Mr. Pryde) raised the general question of the industrial situation in Scotland. I should like to put the House right about this, because it would be a pity if we were to go away tonight with the impression that things were going backwards in Scotland. The reverse is true. Things are going forward. In recent years unemployment has gone steadily down.

In the year after we took over from the previous Administration there were 69,000 unemployed in Scotland. That is an average figure, and I am trying to compare the average figure for the first ten months of each year. That figure fell steadily until in the first ten months of this year it was down to 52,000. That is so in nearly every part of the country. Employment is better than it has ever been.

During the past five years the number of insured workers in Scotland has increased by over 50,000. It is clear that, with the lower figures of unemployment, the level of employment in Scotland in the last year or so has been higher than at any time since the war. That is very comforting because though one should not be complacent, it means that we are not going backwards, but forwards.

Mr. Pryde

Does that figure include the people who are working part-time in the paper-making industry?

Mr. Stewart

The figures I have given refer to people totally out of work for the time being.

The hon. Lady the Member for Lanarkshire, North made a considerable point, as she has done before, of the necessity and wisdom of reverting to the post-war system of building factories in advance of demand. Build the factory and then someone will come along and take it. Even the party opposite, when it was in power in 1951, abandoned that policy.

Mr. Thomas Fraser (Hamilton)

No.

Mr. Stewart

I will give the House the facts. Up to about 1948 or 1949, the programme introduced by the Labour Government was going along and was gradually tapering off. Between 1948 and 1950 the then Government proposed another advance. It was much more limited than their previous programme, but in 1951, on account of the then economic crisis the plan was temporarily stopped.

Mr. Fraser

Suspended.

Mr. Stewart

There is not very much difference between "suspended" and "stopped."

We have never changed our view about this. We think that the then Labour Government were right to stop this method of introducing new industries and we are now supported in that by the recent Report of the Select Committee on Estimates, which, as hon. Members know, looked into the whole question of these special areas. The Committee which was comprised of hon. Members representing both sides of the House, was perfectly plain on the point. It said; The Board of Trade should enforce more vigorously their policy of encouraging industrialists to build factories for themselves. That appears in page XXV of the Report. I agree with the Committee in that, and that, in fact, has proved to be very satisfactory and wise advice.

I will give the House the number of cases during the last year where industrialists have built or are building factories for themselves in Scotland. Caterpillar Tractor Co., 250,000 square feet; Jig Borers Ltd., 5,000 square feet; Dayton Rubber Co., 35,000 square feet; Burroughs Company, 600,000 square feet. Forth Chemicals Limited carried out a major extension at Grangemouth and British Hydro-Carbon Chemicals Ltd. also carried out a major extension at Grangemouth, which will enable that Company to double its output. The Union Carbide and Carbon Corporation Incorporated, a new plant at Grangemouth. The North British Rubber Company, extra factory space. Then there was Samuel Spencer and Company, and so one can go on.

The nine cases I have mentioned are all examples of the quite substantial, some of them very substantial, developments that have taken place or have been started during the past year by private companies without any Government help at all. How right the Select Committee was and how right was the right hon. Gentleman, in 1951, to say, "Let industry do that itself." But, of course, we have not thought that the Government should step aside and do nothing. On the contrary, the Government may still do, and, in my opinion, ought to do, whatever they can to encourage factories to come to these areas in Scotland where they are needed.

I have here a list, which I will not read to the House, of sixteen cases for which during the last year Treasury-financed factory accommodation has been approved or provided in Scotland. When completed, these projects will provide work for 3,500 people. We believe in that and shall go on doing it. I would, therefore, ask the hon. Lady—because I quite understand that she is anxious to get the best for her area, as I should be if I were in her place—to believe from the evidence of the last year or two that the action which we are taking is providing new factories in Scotland.

The factory mentioned by the hon. Lady the Member for Lanarkshire, North in the debate in July last, which, unfortunately, was temporarily lying idle, a fact which quite properly caused much anxiety, is, as she admitted tonight, now occupied. In Lanarkshire, the situation is much better than some would have us believe.

Miss Herbison

Is the hon. Gentleman going to give us any answer to show that either the Scottish Ministers or the Government have any policy at all for ensuring that Scotland gets its fair share of any new building? Does the hon. Gentleman intend to deal with the figures which I quoted, giving comparisons?

Mr. Stewart

I thought that the best answer I could give to the hon. Lady and to her hon. Friends was that very impressive list of new projects, started this year. Never, so far as I know, has there been such a list in any other year.

May I pick up the point made by the hon. Lady, which is a good one? Her argument, which we have heard before, and for which I always have sympathy, is how wrong it is that we should be piling up new industries in the South of England, particularly in London, rather than spreading them over Britain as a whole. We all agree that that is a wrong thing to do. But how difficult it is to carry out those ideas. May I give the House the "snags "? In the case of new industrial building any building exceeding 5,000 square feet in any part of Great Britain requires an industrial development certificate from the Board of Trade stating that the development is in accordance with the proper distribution of industry. Practically all the factory buildings in London and in the congested districts of the Midlands, where conditions are similar, have been for industries already established there and which could not economically develop elsewhere.

That means that firms have come to us from the Midlands and London and said," We want to develop." The Board of Trade has said, and I am well aware that this is true, "Would not you think of going elsewhere for your development?" The firms have made it abundantly plain that if they were obliged to go elsewhere, the extension and development would not take place. Surely it would be against the national interest if we stopped development merely for that limited location purpose. In discussions with manufacturers seeking new quarters the Board of Trade emphasise, of course, the easier labour supply and greater room to expand in other parts of the country, such as the Development Areas.

In the result—and this is the interesting point—congested areas have had a smaller share of post-war industrial building than their proportion of insured population in manufacturing industry. For example. Metropolitan London with about 20 per cent. of the insured population, has had only 10 per cent. of the new factory building approved since the war. I admit that I am going over these ten or eleven years—[HON. MEMBERS: "Hear, hear."] Certainly. I am doing that deliberately. I am not trying to hide anything. But I am saying that Metropolitan London, with about 20 per cent. of the insured population, has had only 10 per cent. of the new factory building approved since the war; while the development areas, with about 18 per cent. of the insured population, have had about 24 per cent. of the area of new building approved.

I can only suggest that that would appear to indicate—and although some of us may get vexed to see this constant building up of London and all the strategic dangers which some of us think associated with it—that the areas needing new factories are getting a fair share. It certainly is true of Scotland and of the constituency of the hon. Lady the Member for Lanarkshire, North.

Miss Herbison

Nonsense.

Mr. Stewart

We all know that Lanarkshire has peculiar problems and I do not under-rate them. I do not wish the hon. Lady to think that I am not conscious of the peculiarly difficult human problems of men who one day, sooner or later, will have to leave the mines, and so on. All that is of immense human importance.

However, I wish the House to realise that Lanarkshire has not been left unattended. On the contrary, extraordinary measures have been taken in Lanarkshire to improve the situation so far as we are able. Factories provided by the Government are already employing 21,000 workers, and are expected to employ over 1,000 more. In view of the inquiries made by the Board of Trade there would seem prospects that Lanarkshire will continue to secure a favourable share of the new industry into the Development Areas.

There is a major development scheme in the iron and steel industry which some of us—I do not know why—are inclined to forget. There is the development in Motherwell, in the iron and steel industry there, which is the biggest of any kind in our history. It represents a £20 million development. That is one scheme. It is a remarkable development.

Mr. George Lawson (Motherwell)

Is the hon. Member aware that when this development is completed and in operation, Scotland's share of the total steel production of Britain will be substantially below what it was in 1948? Then, it was 15 per cent. and it is now down to 11.4 per cent. Is he aware that Scotland's steel industry is lagging behind the steel industry in the rest of Britain to a substantial extent?

Mr. Stewart

We can all quote statistics to buttress our case. All I am asking hon. Members, particularly those outside Lanarkshire, to realise is that big things have been done and are being done in Lanarkshire. If the hon. Member for Lanarkshire, North wishes to take credit for having urged it on us, I give her that credit.

Miss Herbison

The hon. Gentleman talks about great things having been done in my constituency under his Government, but not one single industrial building has gone up in North Lanarkshire. It is evident that he does not know my constituency, just as he does not know the answer to the case which has been put up.

Mr. Stewart

The hon. Lady should be a little careful. New projects have been approved in Lanarkshire in the past year or so and have included a large new factory at Tannochside for Ranco Ltd.; extensions for Euclid Ltd. and Messrs. Honeywell and Brown, at Newhouse; factories at East Kilbride for the Sunbeam Corporation and Messrs. Waterlow and Sons Ltd. And, more recently, the large development of the Caterpillar Tractor Coy., at Tannochside. We also have the Government-financed factory to be provided at Airdrie for Pye, Ltd. I could go on, but I do not wish to give the impression that we are satisfied with what we have done. On the contrary, there is much to be done, particularly in Lanarkshire, where there are special and difficult problems.

Mr. John Taylor (West Lothian)rose—

Mr. Stewart

There are also problems in the hon. Member's constituency of Lothian.

Mr. Taylor

As a representative of an oil-producing constituency where, as he knows, we have oil production problems, may I ask the hon. Gentleman to say something about the economic need for Government encouragement for our oil production, which is a very hard-hit industry?

Mr. Stewart

The hon. Member is leading me into paths which it would be improper for me to tread. I am not skilled in that particular business. The hon. Member and his friends have come to see me and the Minister of Fuel and Power, and my right hon. Friend has met him in Scotland. We have gone into the shale oil business with great care. Here is an industry which appears to be dying. It is tragic to see it, but I do not think that the House would wish continually to support, on a subsidised basis, such an industry as that. I think that the right course—

Mr. T. Fraser

Is this industry subsidised? It is not.

Mr. Stewart

As the hon. Member knows, there are certain advantages which it gets at the moment.

The case I was putting to the House was that here is an industry which, in the world of the oil-well as we now know it, is declining. I do not think that it would be right to maintain that industry on an artificial basis. Surely a better plan would be to bring new industries into this area. That is the line we are trying to follow. At least one building at Broxburn, vacated by an oil company, has recently been occupied by another industry altogether. That is the right solution.

I have made this brief intervention to indicate that it would not be proper for the House or the country as a whole to be over-impressed by the doleful picture which the hon. Lady and her hon. Friends sometimes paint. I should like Scotland to feel that it is marching forward and that it has a Government determined to take it forward faster still.

Mr. Fraser

If the hon. Gentleman will not reply to the pleas of my hon. Friends in favour of advance factory building, will he say a word in reply to the Scottish Council (Development and Industry), which advocated the policy?

Mr. Stewart

Whether or not the Scottish Council advocated that, I am not sure. My recollection is that it had not exactly made up its mind on the matter of where and when. However, the Government's view—we feel that we are entitled to take this view and to stand by it, as did the Labour Party in 1951—is that the building of advance factories with Government money is not the proper way to introduce new industries into these areas.

7.2 p.m.

Mr. Arthur Holt (Bolton, West)

I am sure that our Scottish colleagues will not mind if I bring the debate back to the general subject.

The right hon. Member for Huyton (Mr. H. Wilson) referred to some remarks which he said that the Government Deputy Chief Whip had made indicating that the Government were now making it impossible for employers to grant wage increases. Whether that quotation is true or not does not concern me. What does concern me, however, is the implication in the right hon. Gentleman's comments. Does he think it a good thing to keep on paying increased wages out of inflation? He says that the Government are taking steps to stop that kind of thing happening and suggests that that is bad, but I should have thought it was good.

I am sure that trade unionists as a whole recognise that it is good. There is no benefit to anyone, trade unionists least of all—there is no benefit to any Government, no matter what its political colour is—from allowing the continuance of an inflationary situation which merely results in all trade union activities being devoted to maintaining the purchasing power of wages by continually submitting demands for increases.

Mr. Frederick Lee (Newton)

Is the hon. Member saying that the Government should inaugurate a policy which prevents the machinery of negotiation from functioning by allowing it to be known that it is no use demanding wage increases because they will not be granted anyway?

Mr. Holt

No, Sir. I am sure that the hon. Gentleman would not suggest that to any sane politician.

Mr. Lee

That is what the hon. Member said.

Mr. Holt

No; it is not. I must dwell on this point a little longer.

I take it that what the Government are trying to do, and what the Opposition would be trying to do if they were in power, is to remove inflation. If one removes inflation, no one, whether a trade unionist or someone not represented by a trade union organisation, can get a wage increase out of the inflation. To put it another way, if there is a 5 per cent. inflation one year, trade unionists are entitled, in my opinion, to try to get then-wages raised by 5 per cent. in order to maintain their value. I can see no disadvantage whatever in bringing that to a halt. I should have thought that of all people, trade unionists would have considered it a very great advantage.

I consider it an absolutely paramount part of Government policy that they should stop inflation. It is because we feel that the responsibility rests upon the Government and upon no one else that the Liberal Party has tabled its Amendment, which has not been selected. It reads: But humbly regret that Your Majesty's Gracious Speech gives no indication that Your Majesty's Government is firmly resolved to carry out those fiscal and economic measures which are essential if the collaboration of employers and workers is to be obtained and, in particular, measures to restrain inflation, to lower taxation on earnings, to encourage more widespread ownership in industry, and to facilitate the mobility of labour by the re-organisation of our social services. We have tabled our Amendment because of the following sentences in the Gracious Speech: My Ministers will continue to seek the collaboration of employers and workers in combining full employment, rising production and stable prices … It will be the aim of My Government to fortify the balance of payments and to extend oversea markets for our goods and services. Our Amendment points out that it is the job of the Government to take the lead. Unless the Government carry out the right policies, it will be useless and vain—I am glad to see the Minister of Labour and National Service in the Chamber; I am sure he will appreciate this—to appeal, in patriotic or any other terms, to trade unionists or employers to do things which it is not in their interests to do and which they will never do while the Government allow inflation to continue.

I had hoped that we might have got greater reassurance on this point from the Minister of Supply, but he seemed to produce another excuse which the Government will be throwing up in twelve months' time for not having succeeded in stopping inflation, keeping prices stable and, at the same time, maintaining a high level of employment. The right hon. Gentleman talked about the great experiment of running our island economy with few raw materials, maintaining full employment and the Welfare State, and providing for our own defence, something which he said had never been tried previously in a free society. He said it was a great experiment and we must just go on trying it.

If there is one thing in this free society which will guarantee to end what we are doing in relation to the Welfare State, our own defence and so on, it is a continuation of inflation. Therefore, above everything else, the Government must make it, as we imply in our Amendment, their firm resolve to stop inflation. Otherwise none of those things can come to fruition.

There is a great responsibility upon the Conservative Party, because it is the only party wedded to a free economy which at the moment has any chance of constituting the Government. If the Conservative Government do not succeed in doing this, people will be left with a feeling that perhaps it cannot be done. Judging from the policies which I have heard advocated from the Opposition Front Bench, I cannot believe that the Labour Party would be any more successful than the Conservative Party in solving some of our problems in their way. However, I believe that it can be done through a free economy, and it is my purpose this evening to urge the Government to do it.

I want to discuss what happens if there is any doubt in people's minds about whether or not the Government are firmly resolved. First, if there is any doubt, then there is a demand for goods which is artificially stimulated. If people feel that this Government do not intend to attack inflation they say "Perhaps we do not want that machine, or those goods, but we had better buy now, because we do not believe that this Government will deal with inflation, and it will cost us 5 per cent. more next year." In that way, an artificial demand is stimulated which defeats the whole object of the Government.

On the trade union side, it has a far worse effect. I do not believe all this nonsense to the effect that it is the wage demands of trade unionists which are causing inflation; they are merely the result of lack of action on the part of the Government. But what happens? When there is inflation, the trade unions have to devote all their attention—and a perfectly legitimate object I think it is—to retaining the purchasing power of the wages of their members. All their attention has to be devoted to that object. They realise that it is very embarrassing, and it appears to be a cycle which they would like to stop.

I am the first to pay tribute to the way in which they have exercised their restraint in recent years, but in my view it is not a job which they should ever be asked to do, and it is a job that they would not have to do if the Government pursued a proper policy. I will show later how, when the Government pursue proper policies, the attention of trade unions is entirely directed to those other matters which the Government want them to pursue.

Do this Government really believe that they can control the economy or do they not? That is a question which they must answer, and answer fairly soon, particularly in view of rather worsening circumstances recently. If one asked the Opposition Front Bench, they would say "No, we do not believe that it is possible to combine stable prices, rising production and full employment in a free economy. They are incompatible." That, I take it, is the view of the Socialist Party. Is it the view of the Tory Party? It must make up its mind about that. It is certainly not the view of the Liberal Party.

One suggestion which I should like to make relates to the way in which we think about full employment. We could do with rather more categories in describing those people who are actually unemployed at any one time, and should really consider for a moment what our object is. I should say that our object is that when a mentally normal and able-bodied person has to leave his job he should have no fear that, with a little searching, he will be unable to find another. That leaves out, of course, a whole category of people: those completely or partially disabled, those who can do only light work, and older people who cannot do a full day's work. Those people should be kept out of the ordinary unemployment figures and put in a separate category.

I should like the Minister of Labour to consider whether it will not be desirable in the coming years to expand the present arrangements for firms to take a percentage of disabled people. Why should not firms take a percentage, for instance, of people capable only of light work? Or why should they not take on a percentage of people over the retirement age? After all, we should like people of such an age to work, if they wish to. Some firms, however, if they took on a lot of them, would no doubt be at a disadvantage competitively with other firms which did not. If the Government's Restrictive Trade Practices Act is really to have effect, matters like that may be of some moment.

When one looks back at the efforts of the two Chancellors that the Tory party-has had in the last five or six years, one cannot help feeling that this resolve which I am urging on the Government has been sadly missing. I think that the present Lord Privy Seal has, in fact, felt that there is something incompatible, even in a free economy, between stable prices, full employment and an expanding production. To me, he has been somewhat like a surf rider. He has felt that one possible way in which he could get away with it was by going forward, on an expanding production, on a kind of crest of a wave of inflation. He tried it. Round about 1953 he appeared very nearly to have got away with it, but in the end he did not, and when he ceased to be Chancellor we were left with a flooded economy which had to be dealt with by the new Chancellor of the Exchequer.

The new Chancellor of the Exchequer, from all accounts, seems to be rather a tough guy. He does not like to get wet, and he appeared to jump for land at the first opportunity. He called it a plateau, but there seems to be some doubt about that now. I am not sure that it was not really a whale, and that he is now being taken for a rough ride round the Cape. But, whatever the merits of the two Chancellors, neither of them has really shown a firm resolve to stop inflation, and to stop it quickly. The present Chancellor has shown greater determination than did the previous one. There has been a considerable improvement in the last twelve months, but it is an improvement of a negative kind—stopping inflation, rather than both stopping it and bringing in those necessary measures which will also give expansion.

I do not wish to go into the details of the economic situation. They have been put from both Front Benches and I do not much quarrel with them. I would point out, however, that the floating debt is still very large. It is about £1,000 million more than it was four or five years ago, although it is a little less than it was a year ago. It is still over £5,000 million. Nor are the Exchequer returns at the moment really very encouraging. The deficit of expenditure over revenue so far received is £657 million. It is worse than it was this time last year, although, of course, the Chancellor is going for a much bigger surplus—bigger by £200 million. That is not very encouraging.

I know that the balance of payments was improving in the early part of the year, but I do not think that the figures for October given by the Minister of Supply this afternoon really encourage one to talk about the economy being essentially sound, which is what he said. He rather alarmed me by saying that in this situation it is quite all right to use reserves—even though, as he admitted, they are too small—because the economy is basically sound.

If a man has an income of even £1 million a year, which is a fair amount, but spends £1,100,000 a year and has reserves of only £50,000, I do not think it can be said that his economy is soundly based. I agree that with only a slight alteration of policy, a reduction in his expenditure or even an increase in his income, that man is obviously in a position which any of us would like to be in. That is the trouble with this country at the moment. In one sense the position is basically sound, but it is really only sound if the policies are either further tightened up or if there are some other changes.

For instance, the shipping situation has been considerably worsened in the recent Suez crisis. We understand that there is a shortage of shipping for exports in any case. There will be a shortage of shipping for bringing oil to this country. But there is also a bottleneck in the shipyards. Some very alarming figures were published recently showing a fall in the output of British shipyards, although the order book is bigger than it has ever been. But our output has fallen below that of Japan and Germany. It is just below Germany's and a great deal below Japan's production. When we consider that we still have an order book about twice as big as Japan's and yet she is turning out nearly twice as much as we are, it is rather alarming.

Mr. F. A. Burden (Gillingham)

Is it not a fact that one of the reasons for that state of affairs is that, unfortunately, German yards are working round the clock and there is very little overtime, if any, paid, whereas here the men do not like to do the three-shift work? Is that not one of the reasons why our output is so much lower than that of Germany or Japan?

Mr. Holt

It may be or it may not. I am unfortunately not in a position to say.

I would only point out that the figures published in September were 24 million tons for the quarter compared with -38 million tons in the same period last year. Our production is about 50 per cent. less. There is, no doubt, some reason for this, but it is a situation which ought to be dealt with, and we cannot possibly be complacent about the orders which have been turned down.

The right hon. Member for Huyton did not offer an alternative policy. I should like to say one or two things about what I think the Government must do. They must continue to pursue vigorously and firmly their monetary policy. They have to reduce considerably yet the floating debt. There are various ways of doing that, and no doubt the Chancellor has alternative schemes on his desk, but I hope that he is not going to run away from the present position because of further embarrassments caused by Suez. He has set himself the task rather more firmly than did his predecessor of dealing with inflation, and he must stick to it. The cost of Suez must be paid as we go along. There can be no passing of this buck to another year or to another country—least of all to America.

The next thing that must be done is to get an increase in coal production. That requirement has been mentioned on several occasions in this debate, and it is essential. I can see only one way in which that can be done, and that is by stopping inflation. The only time during the last five years when we were near to stopping inflation, we had the greatest rise in coal production.

This may sound blunt to some hon. Members, but the fact is that when inflation exists, people go to those jobs which are softest and pay highest. When inflation is removed a lot of those jobs do not exist any more. It is not a question of creating unemployment. It is merely a question of knocking out of the economy the kind of rather useless jobs which exist when inflation exists. When inflation does not exist, those jobs also cease to exist. Many of our employment problems are found in the mines, municipal transport, hospitals, etc. It is only a question of stopping inflation, and people will fill those jobs and get good wages in doing so.

Later—I appreciate that it cannot be done at the moment—having restricted the economy by his monetary policy, the Chancellor must in his next Budget give some incentives to encourage people to be enterprising and to go ahead. He must do that in the ways that we have indicated in our Amendment, both in easing taxation on earnings and in creating a greater interest in industry by encouraging the spread of ownership in industry.

Next—and I am glad to see that the Minister of Labour is still here—I hope that some serious thought is being given to the question of rearranging the system of our payments for unemployment. It has always seemed extraordinary to me that a man who, by all accounts, is the best of citizens, an honest and straightforward worker, has been at his work for twenty-five or thirty years, has been exemplary in every way, and who through no fault of his own is suddenly out of work and unable to get any work in the vicinity, can make no claim whatever on all the payments that he has made towards the Unemployment Fund for assistance of a special nature to help him to re-train or to assist him with the cost of moving into another job. I hope that serious consideration is being given to this problem.

Many different suggestions can be considered. If the Government are serious in their desire for greater mobility, but at the same time a mobility that can be carried out in a humane way, they must give urgent consideration to this problem.

Much as I dislike a lot of government, I feel that in certain respects the Government must govern, and where such a situation exists they must do it properly. Where they have a responsibility to govern, they must govern, and I think they have such a responsibility in respect of inflation. If only they will take their courage in their hands and pursue the right policies, a lot of other things will fall into their right places with far less trouble than the Government and many other people expect.

What collaboration is being asked in the Queen's Speech? What collaboration do the Government want from employers and employees? It is not collaboration to fight inflation. That is the Government's responsibility. The collaboration that they have a right to ask from employers is a realisation by employers that their existence is justified only by their existence and their ability to continue to exist in a competitive economy, unsupported by any of these objectionable agreements to fix prices or to fix markets. If they can exist in a competitive economy, that is in fact their reason for existing. They should realise that, get on with the job, and stop coming down to Whitehall in coach-loads in deputations about this bit of trouble and that. They should get on with the job of running their own businesses.

The second thing on which the Government should ask for collaboration from the employers is this. Employers must realise in this day and age that this civilised nation demands that its employers treat its employees in a proper and human way, just recognising the simple fact that they are men and women, not packages or parcels to be bandied about the market place.

If the Government do their job and the employers realise what their job is, as I have just indicated, nothing at all is required from the trade unions. The trade unions then will automatically carry out policies which will be in their interests and the interests of the country. It is not necessary—in fact, I find it thoroughly objectionable—for people to lecture trade unionists on what they should do. If the Government do their job properly and the employers do their job properly, the function of trade unions falls into place, carrying out their duties and looking after the interests of the workpeople.

The attitude of the trade unions would, in fact, be this. They would realise they could not get any money out of inflation, because that would have been stopped and prices would be stable. They would devote their attention to creating more wealth, so that wages would buy more, by helping, encouraging, and even jockeying employers into introducing new methods and increasing wealth; and they would see that their members had their share of the increased wealth. That kind of activity is entirely in the interests of trade unionism and entirely in the interests of the country.

I hope we shall in the months to come see that the Government intend to pursue those policies, which I believe to be in the interests of all concerned.

7.32 p.m.

Major H. Legge-Bourke (Isle of Ely)

The hon. Member for Bolton, West (Mr. Holt) has spent a good deal of time talking about inflation. I want to speak about something which is very closely allied to the problem of inflation and its solution.

In the Amendment moved by the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) this afternoon, reference is made to the need for a resolute policy to deal with the economic problems of today, particularly in the light of what has happened in the Middle East. I would agree to this extent, that it is absolutely vital to the well-being of our economy that we do solve the problems which now present themselves in the Middle East. I am very glad that my right Hon. Friend the Chancellor is in his place, because this is a matter on which, as he and other members of the Government know, I have been bombarding them for some months.

I believe that we shall never solve the problems which now confront us in the Middle East if we continue in the way we have been attempting, rather haphazardly, I think, to solve them up till the recent Suez crisis. What is the real stumbling block in this part of the world? I do not believe that there is a greater stumbling block than the existence of the State of Israel.

I realise, Mr. Speaker, that this is not a foreign affairs debate, and I do not intend to try to turn it into one, but I must emphasise my conviction that the existence of the State of Israel is the main bone of contention in the Arab world, and the problem must be solved. I do not believe it can be solved either solely or principally by political means. In my view, it can only be solved primarily by economic means. It is on that particular theme that I wish to offer a few remarks this evening.

The United Nations is not a trading organisation. The United Nations set up the State of Israel. We shall never win any confidence with the Arab States again—upon which we rely for our main oil supplies—unless we make quite clear to all those Arab States that, in regulating the trading relationship which they enjoy with this country, we are our own masters in deciding what we should do, and we are prepared to come to arrangements with them. I am particularly encouraged this afternoon by what the Minister of Supply said in his reply to the right hon. Gentleman the Member for Huyton, because he visualised new concepts in the Middle East of such organisations as O.E.E.C. in Europe. But I would say that there is a great danger in assuming that, because O.E.E.C. has worked in Europe, that organisation, or an organisation which is similar, will work in the Middle East.

The great problem we have to solve is that which concerns the one-quarter of our trade which is neither Commonwealth nor European. The Commonwealth is responsible for about half of our trade, and Europe is responsible for about a quarter. There is one vital quarter which is neither European nor Commonwealth and which includes the Middle East. In that particular section of our trade we have been "cabin'd, cribb'd, confin'd" to a great extent by the everlatsing pressure to which we have been subjected by the United States, particularly since the war though it dates back further than that, to drop the rule of discrimination in our trade and to pursue more nearly free trade policies.

I see the hon. Gentleman the Member for Bolton, West is smiling. He and I have often discussed this particular theory, and I do not want to deal with it too much in theory tonight. What I do emphasise is this: just so long as we are a debtor nation, and just so long as the United States remains the greatest creditor nation, so long will it be absolutely inevitable in the short or in the long run—and probably the short—that if we are denied the right to discriminate we shall be forced to do one of two things, either to become completely dependent upon the United States—or upon the greatest creditor, whoever that happens to be—or to adopt measures of internal State control.

I have been in communication with the Minister of Economic Affairs at the American Embassy on this, and I have even got his agreement to that theory. He admits that the Americans do not like tariff preferences; on the other hand, he says that they do not, in fact, insist upon free trade. The proof of the pudding is in the eating, and I should have said there is no doubt that what motivated United States trade policy, particularly over the years since the war, was an earnest desire to see free trade throughout the world.

If we are to solve our problems in the Middle East and have due regard to that one-quarter of our trade which is neither European nor Commonwealth, it is absolutely essential that we have the right to discriminate, unless we are prepared to restore internal State control. I hope that my right hon. Friend the Chancellor will acquit me of ever wishing to see an increase in internal State control, and I hope that he would not like to see it either. But we have to face the facts. Now that we shall have even greater strain put upon our economy as a result of what has happened in the Middle East, it will be all the more difficult for the Chancellor to resist having to employ the method of State control, unless he is prepared to take up far more firmly with the United States than has been done so far since the war the question whether or not we should have the right to discriminate in trade.

We had a statement at the end of Questions today from my right hon. Friend the President of the Board of Trade which shows that Australia finds it extremely difficult to operate the old Ottawa Agreements with this country which date back to 1932. I believe that other members of the Commonwealth also are finding that the Ottawa Agreements are somewhat outdated. I do not think any of us would dispute that conditions in the Commonwealth, with whom those Agreements were signed, have changed considerably over the years.

I do not believe that in our present position, even as it was before the latest Suez crisis, we would be wise to give way too far in amending those Ottawa Agreements unless, at the same time, we have restored to us the weapon by which we can make good in other sections of our trade what we have to concede in order to hold the Commonwealth together. I do not think that we can do that as long as we are deprived of the right to discriminate.

It seems to me essential, therefore, that if we are to hold the Commonwealth together and prevent it being attracted away through the A.N.Z.U.S. Pact and various other means into the American orbit, we must be prepared sooner or later to review the Ottawa Agreements. To do that, we must ensure that we have compensating factors elsewhere.

In the Gracious Speech there is mention of European free trade, and an hon. Friend of mine this afternoon referred to Euratom. All these international trade arrangements—Euratom, European free trade areas, customs union, and so on—are fundamentally based on the idea that free trade is the answer to all problems of the world commercially. We have got to be extremely wary of them just so long as we remain a debtor nation.

It may be that in the years to come, when one day, perhaps, we shall have restored ourselves to a position of supreme credit in the world, we shall be able to pursue a policy of free trade, as we were able to do in the last century, when we were the great creditor nation of the world and the workshop of the world. We are not the only workshop any longer and there are some countries whose workshops are far more modern than ours. There are some who work harder than ours and some who are able to compete on terms highly advantageous to themselves. The great problem seems to me to be not a question of discovering the will to co-operate, but a question of translating that will into a workable plan.

In approaching this problem, we should be wrong to confine our activities only to Europe. We must particularly pay attention to that one-quarter of our trade to which I have referred which is neither European nor Commonwealth. We may find that if we examine it, the best form of arrangement that we can make with some of these countries is not to set up international authorities or supra-national authorities, but rather to employ the method which has in the past proved so highly successful in our own Commonwealth—that is, a system of tariffs and preferences.

My plea tonight is that my right hon. Friend the Chancellor of the Exchequer should give an undertaking, before this debate closes, that he will re-examine the whole of this problem in the light of what has happened in the last two weeks in the Suez area to see whether we can overcome the enormous stumbling block which the existence of Israel represents and the association which that country automatically has with U.N.O., those two things from which flow the automatic resentment of the Arab countries to anything associated with U.N.O. or with Israel. I want my right hon. Friend to re-examine the whole of the problem to see whether we can find an alternative along the lines which I have been suggesting.

The United States is under a very great misconception in believing that what it has been doing since the war is not imperialist. I do not think that America intentionally means to be imperialist, but it is, in effect, nothing short of imperialism that is flowing from America's monopoly of credit in the world. I believe that the Americans have a great responsibility for the situation which now exists in the Middle East, as they had an enormous responsibility by dragging their feet in 1914, and again in 1939 and in 1956. They have dragged their feet in taking any forceful action since the war, perhaps with the best will in the world and perhaps simply in the belief in the old tradition that the United States is the result of a successful rebellion against the British Commonwealth. Wherever the Commonwealth re-emerges, America seems to think that we are trying to do the same thing as Lord North tried to do to America. I do not know what is in the minds of the United States, but the fact remains that it has, I believe, over the years, made it all the more difficult for successive British Governments, including the party opposite when in power, by insisting on the idea of non-discrimination by the debtor nations, ever again to become creditor Governments.

It is of vital importance that we should at least give a chance to the employment of that method, which we have shown over the years, has proved efficacious in our own Commonwealth. I believe that that system of tariffs and preferences is by far the best way of ironing out the differences in the costs and the standards of living of the world. It is all very well for the hon. Member for Bolton, West to suggest that British businessmen should do their job properly, and that if they cannot stand up to world competition they had better think of doing something else; that is all very fine provided, at the same time, one takes account of the fact that the costs of labour vary and that the standards of living vary considerably in the producing countries. We have to find some way of evening these things out and I do not believe that a better way has yet been found than tariffs and preferences.

If the Americans mean what they say and do not want to see the countries of the world adopting controlled economies, if they do not like the system of totalitarianism which is inherent in Communism and if they do not like Socialism and all the State control that goes with it, they must at least enable those countries whom they want to be free to be free. We can never be free unless we have some chance of again becoming creditor nations.

My plea to the Chancellor of the Exchequer would, therefore, be this. If we find that we the European countries are setting up a free trade area anyway, I would agree absolutely that we must be closely associated with it. I welcome the Government's statement that they will not adopt a tariff common to the rest of the area and against the outside world; but, whether or not we go into the European free trade area by association, we must do two other things simultaneously.

One is that we must start to work at once in building up a new layer of tariff and preference in the Middle East independently of the Americans and independently of the United Nations. At the same time, we must reassert our right to discriminate and tell the Americans that the time has come when we no longer find it possible to play with the policy which they have been pursuing and attempting to force others to pursue, too.

We are a debtor nation. America is a creditor nation. We have the right to earn our own living and to try to become a creditor nation again. America is stopping us from doing that and in stopping us from doing it is making us weaker; and, as we become weaker in the world, so does justice and law and respect for human bonds.

7.49 p.m.

Mr. Frederick Lee (Newton)

Both hon. Gentlemen who immediately preceded me, the hon. Member for Bolton, West (Mr. Holt) and the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke), in their different ways outlined—I will not say the insurmountable obstacles—the imponderables which are now massing against any Government who try to pursue a capitalist form of society. The hon. Member for Bolton. West, a Liberal, has shown that the Liberals still adhere to the old principles of free trade, while the hon. and gallant Member for the Isle of Ely has shown precisely how those principles react against debtor nations, and he himself is extremely worried because the great juggernaut of the American economy refuses to appreciate the difficulties of a far weaker economy, such as ours, which is striving to sustain 50 million people.

The economic structure in which the Government are now functioning is, from the point of view of my party, obsolete. It cannot achieve the things which I give the Tory Party credit for wanting to achieve. It cannot because of the innate discrepancies existing in the latter half of the twentieth century between open competition and the capitalist form of society, and when there are such discrepancies as there are in the strength of the great nations.

The hon. Member for Bolton, West, quite rightly, I thought, emphasised the difficulties which flow from inflation. I did not disagree with what he said about the need to curb inflation. Where he failed, I thought, was in not examining the nature of the inflation. It is not a lot of good to tell the agricultural worker on £7 a week that the economy of the country is suffering severe inflation because he is drawing £7 a week. If we were to tell the whole range of wage earners that their wage levels are causing inflation and that they are a primary cause of the inflation, which the hon. Gentleman, quite rightly, wants to eliminate, I do not think we should make much impression.

Mr. Holt

The hon. Gentleman is not suggesting that I was saying that the agricultural worker is the cause of inflation, is he? It was quite the opposite. That is the point of what I was saying.

Mr. Lee

I am not saying that the hon. Gentleman said that. I was suggesting to him that, in his examination of the causes of inflation, he was too general, and looked at the economy as a whole, and did not try to break it down to discover the components which are causing inflation.

I am very worried about the effects of the catastrophe in the Middle East on our oil supplies. I have a Question down to the Minister of Labour for tomorrow, because I want to know whether we have made any analysis of the effects of the blocking of the Canal upon employment in this country. I understand that about 75 per cent. of our oil supply is now affected by the blocking of the Suez Canal and the blowing up of the pipelines in Syria.

I also want to know whether it is the case, as has been reported—I think, in the Manchester Guardian—that because of the breaking off of diplomatic relations by Saudi Arabia a very considerable proportion of the crude oil flowing through Bahrein will now stop. If these are indeed the facts, the Minister of Labour and other Ministers will have a very serious time ahead in trying to plan the way in which that portion of our oil the supply of which is not yet stopped will be utilised to preserve some semblance of full employment in Britain.

However, I do not want to labour that matter any further, but to turn to another phase of our industrial position. I believe that we are now in considerable danger of misunderstandings and troubles in many of our most vital industries. I remember stating from our Front Bench last February that the action which had just then been taken by the British Employers' Confederation in attempting to interfere with the wage negotiations which were going on in the nationalised industries was a most dangerous thing. I shall not go into the details of that now. I think that hon. Members will remember as well as I do the instance to which I refer.

However, for outside bodies of employers to attempt to stop negotiations between employees and employers in other industries is a dangerous thing, and I suggested to the Government then that they should use their good offices in attempting to stop that sort of thing from happening. What happened? Instead of trying to stop it the Government actually embraced the policy. Shortly afterwards they announced that they were consulting the boards of the nationalised industries to get them not to increase the prices which they charged for their commodities. Like every other person, I do not want increased prices, but everybody with a knowledge of industry and business knows perfectly well that in certain conditions prices cannot be stabilised. If the costs of raw materials rise, for instance, other prices may have to be increased, and to seek a blanket demand from those industries that they would not increase their prices was a maladroit manner of ensuring that they would not have the wherewithal! to increase wages. That was the next stage in the determination by both the B.E.C. and the Government to stop any advances in wages by the nationalised industries.

The engineering employers took the same action. The National Committee of the A.E.U. decided it would recommend to the Confederation of Shipbuilding and Engineering Unions that it should go forward for an advance. Even before that recommendation had gone to the Confederation the engineering employers stepped in and said that under no circumstances would they consider giving any wage advance at all. They would not listen to the demand; they did not even want to hear the reasons why the advance should be asked for. I do not know, nobody knows as yet, what trouble there may be because of that.

We then saw the attitude of the British Employers' Confederation revealed in its statement a few weeks ago that it would not agree to any wage advances, in any of the industries under its control, if those advances meant an increase in costs.

The House can judge for itself the nature of such proclamations. Many trade unions have now submitted claims for wage advances. It does not need much imagination to perceive what will happen if the engineering employers are adamant in saying, irrespective of anything else, that if costs are involved no advance of any type will be given. I hope I am wrong, but I fear that the effect this winter may be disastrous to the nation's economy.

I should like to know what the attitude of the Government to all this is. I know they were instrumental in making it impossible for the nationalised boards to pay increases, but what is their attitude towards this blanket refusal of the employers to pay wage advances? If in those industries failure to agree ensues, and the cases go to arbitration, will the arbitrators in those cases be precluded from awarding advances, or biassed in their attitude to the cases by the knowledge of the Government's attitude towards wage advances at this time? What is the Government's attitude?

If that is indeed to be the attitude of the Government and of the large employers now, do hon. Gentlemen opposite see what will happen? Of what use is it for the trade unions, which have played their part in building up the complicated negotiating machinery in industry, to use that machine, if they know, before they start, that refusal of their claims is certain when they use it?

Mr. Raymond Gower (Barry)

I do not want to stress this too much, but with regard to the hon. Member's statement that employers and the Government have expressed a certain view, to be perfectly fair would he agree that the union which represents railway staff employees has said that an application for an increase is not opportune in the present conditions in the country?

Mr. Lee

I do not think that that is what it said. I was not present, neither was the hon. Member, but I think that it decided not to apply at this stage for an advance. However, I am not arguing that. I am arguing that once a Government, or indeed employers as a whole, say that in no conditions will they concede an advance, that they have no desire even to know the basis on which claims are founded, we shall reach a point where trade unionists might as well say that they need not bother to use negotiating machinery at all. That is a fantastically serious thing. I hope that the Minister of Labour will be able to say something about it today.

The machinery of collective bargaining has been built on the premise that each party has the power to respond to a convincing argument by the other party on existing wage agreements. Once we break that down, fifty years of hard work in many of these industries will have gone for nothing. At this time in particular when, goodness knows, our economic and industrial problems will be pretty intense, I hope that the Government will do what I asked them to do last February. I hope that they will inform the employers that this is a very dangerous game to play, and that they should use the negotiating machinery in the way in which it was intended to be used and not refuse applications before they have even heard them.

There is another phase of industrial development which requires a reinforcement of our belief in the machinery of negotiation. I do not want to speak of automation and the like tonight, but many of our great industries are undergoing changes in methods of production which will have far-reaching effects on employment. Inevitably, that must mean alterations in practice in relation to the whole of the existing machinery of agreement between employers and the trade unions.

I believe that for many years the negotiating machinery in engineering has been obsolete and ridiculous and has been a cause of a great deal of our troubles. I should like to see the trade unions and the employers able to meet and agree, not only on the present structure, but on methods of forestalling the problems involved by setting up new negotiating machinery which will be in line with mechanical changes in industry.

If we drive the trade unions on the defensive, the one thing that we cannot expect of them is that they will agree, at this stage, not only to scrap present negotiating machinery, but to arrive at a liberal interpretation of the new negotiating machinery which automation will make necessary. That is another reason why the Government should discourage employers from adopting their present attitude. I understand from pronouncements made by the Government that they are shouldering some of the responsibilities for what happens as a result of automation, but I have failed to find out from individual Ministers what those responsibilities will be.

I asked the Minister of Housing and Local Government whether he accepted the responsibility for housing those workers who will have to move to new areas. He did not want to accept that responsibility. He wanted to leave it to the local authorities to decide. We on this side of the House do not accept as a principle the need for men to move to the job, but rather should emphasise the need to have the jobs brought to the men.

Hon. Members representing Scottish constituencies have already been debating this point. The Government should consider the powers which they possess within the Distribution of Industry Act to deal with the Development Areas and to encourage certain types of employers whose industries would be appropriate to go into them. I take second place to none in my admiration of the massive work which it has been possible to achieve under this Act. It may well be that we have reached a phase in industrial development where the application of the Act will be necessary outside Development Areas, more particularly in areas where the industries are likely to be subject to automation and, therefore, to redundancy.

Our whole economy is in the gravest difficulty. Hon. Members have already stressed the importance of our oil supplies. We should look at other things which have been happening in many parts of the world and which will have a grave effect on our own standards. I have argued previously in the House that the manufacturing capacity in the world has been increasing at a far greater pace than the supply of raw materials to meet it. We are now entering a period in which in most industrialised countries an added fillip will be given to manufacturing industry by the coming of the new processes to which I have referred.

I know of no effort which the British Government or the Governments of the Commonwealth are making to ensure that when these countries from which we get our raw materials are no longer in a position to export them, we shall be able to find adequate supplies elsewhere. Nickel, for instance, is vital to our engineering industry and is now scarce all over the world. Our main source is Canada, a dollar country. Some nickel can be obtained from other parts of the American continent, but again it is a dollar import. The capacity of those countries to export will disappear if they themselves increase production and use more and more of their indigenous material. We are about to produce a great robot in Great Britain, but how are we to find something for it to eat when it has been produced?

It may well be that because of our lack of these raw materials, we shall be impeded in the development and modernisation of our industries. Once we have reached that point it will not be a question of raising our standards, but of receding into a third-rate position among the nations. What do the Government intend to do about the Colonies? There has been no geological survey of the Colonies. I do not want to go too far, but I do not think that there has even been a proper geological survey of this country as yet.

We know from findings in Rhodesia and elsewhere in the Empire that there are vast resources, but we know also that no real plan has been prepared by the home Government and Governments overseas for the survey and exploitation of these resources. Are we going to wait until it is too late and we have massive unemployment because we cannot obtain raw materials? Is it not now, when we are trying to evolve a new status for the Colonies, that we should be making some sacrifice, by the export of capital, to ensure our own position in the matter of raw materials and to give the colonial people the opportunity to enjoy a far higher standard of living than they have at present?

The Minister of Supply mentioned the developments in technical education undertaken by the Government. They do not go far enough but they represent a move in the right direction. Unless we continue on those lines, modernisation of industry might bring about fairly heavy unemployment of employees in industries to which automation is applied with, at the same time, a demand for large numbers of non-existent technicians, and that again would retard the development of our industries.

Therefore, I hope that the Government will not only continue with their present plans for technical education but will make it possible for our technical colleges and schools to develop at a far greater pace than is possible now. For instance, there is a grammar school in Newton-le-Willows which is trying hard to develop the technical side of its curriculum but has not a laboratory. So the sixth form is retarded for lack of equipment. And we are in the middle of a huge engineering area between Manchester and Liverpool, many of the firms in which will be competing for the services of those boys when they leave the school.

It is disgraceful that many British firms who are in a position to do so are doing very little to help our educational institutions in practical ways by providing them with the necessary instruments. Of course some firms do so, but many which could well help in this work are doing nothing. I ask, therefore, that industry generally, and the engineering industry especially, which will depend so largely upon the products of our technical schools and colleges, should do more to assist in the production of technologists, whose work will be of the greatest help to them in the future.

I have tried to show the Government that unless there can be a sane approach by industry to the legitimate demands of the trade unions for consideration of wage increases, this winter could be a difficult one. Because of the stupidity of the Government's Middle East policy we are in for trouble in any event. None of us wants to see a position in which the two sides of industry are driven to all kinds of action because of a policy which, if persisted in, will destroy the basis of collective bargaining.

For those reasons I hope, even now, that the Government will not only change their attitude of refusing to allow price increases in the nationalised industries to make sure that they cannot give wage increases, but will consult their friends of the Employers' Confederation, asking them to think again. I say that because the stability of this country, its fight for existence, our fight for something better than we now have, is of far greater importance than merely being stubborn and pigheaded towards future wage increases.

8.14 p.m.

Mr. F. A. Burden (Gillingham)

I apologise to hon. Members for not being here earlier in this debate. To some extent I shall follow the remarks of the hon. Gentleman the Member for Newton (Mr. Lee). I was interested in his comment to the effect that the economic structure of this country was now obsolete. I suggest to him that the party opposite has not so far indicated that it has found the answer to that so-called obsolescence. Certainly, it has given no indication of its ability to create the streamlined economy which will solve all the difficulties now facing us.

I was also interested in hearing the hon. Gentleman desert nationalisation. I appreciate that for some considerable time until it was put into operation nationalisation was for hon. Gentlemen opposite the beginning and the end of their policy and the cure for all our economic ills. Now, however, they are not quite so sure. Many other people in this country who previously might have supported nationalisation are now firmly convinced that further nationalisation is not the answer to our problems.

I was also rather surprised to hear the hon. Gentleman complaining that the Government had asked the nationalized industries to hold their prices stable. The only reason which the hon. Gentleman offered for disagreeing with that request was that the Government, by so doing, had denied to those industries the opportunity of putting more money into their coffers so that they could pay higher wages to their personnel.

Presumably, higher wages in the nationalized industries would show to all their employees that they were the best employers, because the workers had only to ask for a rise and, automatically, prices would be raised to the public and they would get their rise without question. The matter is not as simple as that. Many of the nationalized industries are dealing with power and other commodities essential not only to the consuming public but to our industry and thus to our exports.

I was also rather surprised at the line taken by the hon. Gentleman about trade union claims for increased wages, the implication being that these should merely be asked for and then should be granted straight away. [HON. MEMBERS: "No."] That was the implication—

Mr. Lee

May I disillusion the hon. Gentleman? I said that we had now got a blanket refusal by a large section of the employers even to consider wage applications and to examine the basis upon which they were put forward. I asked that negotiations should proceed, instead of the trade unions being told that there will be nothing doing even if they can prove their case.

Mr. Burden

I am sorry if I misunderstood the hon. Gentleman, but that has never been the suggestion of the Government. It has certainly not been the suggestion of the Chancellor of the Exchequer. What my right hon. Friend has said, and what every sensible person has said, is that increased wages and a higher standard of living in this country can come about only if there is increased output; in other words, if the increased wages do not put up the price of the article produced by an industry.

The hon. Gentleman was present during the speech of the hon. Member for Bolton, West (Mr. Holt), who spoke from the Liberal benches. He should have taken note when the hon. Gentleman pointed out the decline in output in British shipyards despite the fact that the order books were much fuller. I think the hon. Member for Newton would agree that in those circumstances, and in the face of increased output by the Japanese and German yards, it would be impossible for our shipbuilding industry to give increases in wages, unless there is an increase in output.

Mr. Lee

Could the hon. Gentleman tell me how is it that we are in such dire fear of the competition of the United States, when the levels of their wages are two or three times higher than ours?

Mr. Burden

Because the United States has an entirely different type of economy. There are 140 million people in that country who provide an enormous home market and enable long production runs, so keeping down the price of each article produced. By doing so, the output of each article is much greater than in this country and much higher wages can be paid.

The facts are very simple: whatever political theories and philosophies we may follow here, in the long run the future and the welfare of this country depend on one practical point—we must be able to produce goods in this country of a type and quality which the world will wish to buy and at a price which the world will pay. If we do not do this, then it does not matter what Government we have; whether it is Socialist, Conservative, Liberal or any other form of Government, there will be widespread unemployment, much suffering and a much lower standard of living.

When Governments go to the electorate and tell them, "We, as a Government, will do so and so; we will make it possible for you to draw much higher wages; we will give you full employment", they are misleading the public and in many cases are themselves suffering a delusion, because if the factories, the industries, the workshops, the employers and the employees, are not producing the right sort of merchandise at the right price nothing which a Government can do will maintain full employment or increase the standard of living in this country.

Many of us who are engaged in the export trades realise the difficulties. Many of us who have been to the Continent of Europe in recent years understand that some of the views held by our manufacturers are wrong. I was in Germany last year, having landed on an R.A.F. airfield. It was a very good airfield. Indeed, I have always found R.A.F. pilots very good. I was in the R.A.F. myself at one time, and probably they take better care of me than of some hon. Members opposite, especially these days, when hon. Members opposite are not very popular with the R.A.F.

When I landed in Germany the group captain pointed out that a new 2,000-yard metal runway had recently been laid and that this had taken about half the time which it would take to lay a comparable runway in this country. That is a point which should give us cause to pause and consider—and to ask why. Of course, the Germans were working longer hours, and I was informed that they appeared to be working harder. I was given the information by the R.A.F. officers concerned and the principal constructor of airfields from the Ministry, who was in Germany.

There was another feature of my visit to Germany which struck me forcibly. I noticed around the R.A.F. accommodation, both officers' and sergeants' accommodation, a number of high-quality German cars, and I wondered how it was possible for these men to purchase those cars. They told me. They said that in Germany comparatively few people can afford cars, and these people changed their cars every year or two years. Apart from them, there are very few people capable of buying or even running a second-hand car. In consequence, the cost of second-hand cars is extremely low and they can be purchased by these Service men.

I found, when I drove along the roads, that the density of traffic of private cars in Germany is extremely low. The position is that whereas, in this country, British motor car manufacturers say that they can export only if they have an enormous home market, with the result that for every three or four units of increased production probably one one-sixth goes for export, in Germany they have a very small home market, and to ensure that their motor car industry thrives and expands they have to go out, first of all, for the export market.

In their case, the home market and not the export market is the cream. Because they are going out for the export market, they have to produce cars of high quality and low cost, of extremely good performance and advanced design. I believe that this is another aspect of our export trade which we must take into account.

I believe that in this country a great many manufacturers must realise that we have nearly, if not completely, reached saturation point and that they must look upon the export markets as their first aim and the home market as the cream which can be skimmed off.

Mr. Chapman

I am very interested in what the hon. Gentleman has said and I agree with a great deal of it. I have recently been to the Volkswagen works and have looked at the same problem as that which he has been discussing. Would he not agree that one other factor which is an ingredient in Germany's success at present, compared with ours, is the very much higher degree of managerial efficiency and the building up of organisations with a scientific management setup the like of which we do not know in this country?

Mr. Burden

I am coming to that point.

I think that circumstances will drive a great many firms in this country to consider that aspect of their trading. Part of the difficulty in which we now find ourselves is due to the fact that a great many of our biggest industrial competitors were thrown out of competition because of their defeat in the war, with the result that this country had an enormous lush market which took no seeking and which only the Americans and ourselves were capable of filling. Many manufacturers in this country failed to realise that that holiday was over and that we should soon have to face competition from those countries which forced us so hard before the war.

A great deal too much emphasis can be placed on the way in which the Government can help industry, and I sometimes think that not enough emphasis is placed in the House on how much Government can hamper industry. We all know that whenever business is good, it is private industry's ingenuity, courage and foresight which are said to have created those circumstances, whereas whenever business is bad the Government, whatever shade of political opinion, are held responsible for industry's difficulties. I realise that in the future this country will probably have to recast its whole outlook regarding the type of goods it will export. Undoubtedly, it will have to realise that there will be an ever-increasing demand from many so-called backward countries for capital goods.

I wish tonight to deal for a while with the question of the export of consumer goods. I am quite sure that in many cases we can do far better than we are doing at the moment. I was extremely interested to hear references to European free trade. I am sure that is an aspect of our economy which must be given very serious consideration in the future for it may well assist us in having the type of long runs for a great many commodities, such as the Americans have, which was the subject of the intervention of the hon. Member for Newton.

I believe that there are still enormous opportunities in Canada and the United States. It is true that we are having difficulties at the moment because of the increase in competition from Germany in particular and from Japan. I am convinced that much of this competition can be overcome if British manufacturers will really face up to it and will go to the markets and find out what they are up against. I also believe that because of the Chancellor's policy we may well find that a more difficult home market will help us in competing in the export markets.

Buyers in this country are becoming much more selective now that the problem of trading is growing more difficult. But not only are the buyers becoming more selective. The restriction in purchasing power imposed by managements of stores and retail establishments upon their buyers is forcing them to look out for better value and better design, etc. Here, of course, the old question of the need for British manufacturers to go abroad to see what is required is illustrated very vividly. I do not see how it is possible for some of our manufacturers to export to certain of the markets available to them unless they really set out to design merchandise and to adapt that merchandise to the requirements of the countries to which they wish to sell it.

Too frequently one comes up against the absolute rigidity of manufacturers in this country who really think that what they can sell in this country they can sell equally well in South America, in Australia and in other countries where, because of temperature and geographical position, the requirements are quite different from what they are here. I feel sure that in the matter of design we can in many cases make enormous strides.

Then, of course, the question of quality also arises. Let us be perfectly honest about this. For too long, owing to the easy markets throughout the world, there was a tendency for many manufacturers in this country to export goods that were no credit to British workmanship and British manufacture. But from my experience I can now say that in many cases the old slogan of "British is best" is once again coming into its own. I am told by many overseas buyers that the quality of the merchandise which we are now producing is very much better than it has been for a long time.

Another necessity, if we are to export and increase our exports to our present markets, is price. I really would ask hon. Gentlemen opposite, employees and employers, to look very carefully at their costings in the export markets. We are running into trouble with Germany and Japan regarding a great many costings, not all; but, in any case, I suggest that they should carefully examine their costings.

Another aspect of our manufacturing and marketing of consumer goods which I think very important is that of presentation. Just over a year ago I had the good fortune to be in Switzerland. There, I saw the brilliant way in which the Swiss exploit this field of trading. The presentation of many of their goods is far superior to anything we may have. It may appear to be a narrow point, but I can assure hon. Members that it is not. Throughout the world, because of increased salaries, etc., the cost of store selling is going up and up. Because of that and the difficulty of getting good staff the self-service method of display is being adopted more and more.

Mr. Percy Dailies (East Ham, North)

Does the hon. Gentleman think that hon. Members of his own party are being fair to him, in view of the fact that there is not a single hon. Member of his party present in the Chamber to listen to his speech, other than the poor Ministers on the Front Bench?

Mr. Burden

I am sure that many of my hon. Friends will read it tomorrow, and I think that most of my hon. Friends know my views. But anyhow, I am grateful to the hon. Member for his solicitude.

I believe, therefore, that particularly in the North American markets, we must present our merchandise in such a way that it can stand alongside the products of any other country in self-service establishments. I believe presentation to be a matter of growing importance and I hope that more manufacturers in this country will realise it.

One of the greatest complaints about British industry is the question of delivery. It does not matter at what price or how good the design of our merchandise may be, unless it is delivered to its destination at the right time we shall not benefit; it will not sell and British manufacturers will be discredited. I therefore wish to draw the attention of my right hon. Friend to the growing importance of air freight. Because of the competition from Germany and Japan; because of the greater amount of merchandise on the markets, the opportunities for obtaining long-term delivery dates extending over many months are passing, and prompt delivery is more and more becoming the requirement of our overseas buyers.

If we are to buy time, as many of our manufacturers must do to fulfil the delivery dates required, it will be necessary to use air freight. I was extremely disappointed when I saw that Airwork, which had been doing a very good job in pioneering British air freight across the Atlantic, was forced out of business. I hope that every opportunity will be taken by the Government to ensure that the independent and the nationalised airways realise the tremendous importance of air freight in view of the growing competition and the narrowing of delivery dates.

Mr. Frank Allaun (Salford, East)

Is the hon. Gentleman aware that, far from helping over delivery dates, the action of the Government has just resulted in a new and very serious development? I have been informed this evening of something which will have a serious effect on our country. It is that British Road Services have, from Wednesday night, to take one in ten—

Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)

Order. This is not an appropriate intervention.

Mr. Allaun

I was referring to the hon. Gentleman's mention of delivery dates. I wanted to intervene on that point. I was trying to make the point that from Wednesday night, one in ten of all British Road Services lorries are to be taken off the road. This is bound to have a disastrous effect on delivery dates. In addition, it means—

Mr. Deputy-Speaker

Order. The hon. Member is developing his intervention into a speech. He should await the opportunity to make his own speech.

Mr. Burden

I should like to point out that, provided that export goods are always given priority, I am sure that the hon. Gentleman's fears will not be realised.

I come back to the point, which is that I hope that the Government will use every opportunity available to them to encourage the development of air freighting from this country to our overseas customers.

There is also the very important question of salesmanship. I am certain that we do not take sufficient advantage of the opportunities to send out to overseas markets people who have the "know-how" about the firms they represent. I should like to give one brief illustration of what can be done in this respect. The Scottish knitwear industry has an excellent record in exports, and I am sorry that some of those Scottish Members who were so fearful for the future of their country earlier in the debate are not present now.

One of the best examples of what can be achieved in the export trade, especially in the dollar markets, is shown by the little town of Hawick. Scottish knitwear in general is really playing its part in winning dollars for the country. I have in mind one firm which, in 1945, had an output worth £13,000, of which £4,000 worth went to the export market. Today, that firm is doing over £1 million worth of trade in the United States alone. That success has been accomplished by examining the market, by going into the question of designs suitable for America and also by the dynamic salesmanship of the managing director of the firm who makes three or four visits to America each year. If ever a problem of any importance crops up with any of his overseas customers, he immediately gets on an aircraft and goes off to settle the difficulty personally.

I am convinced that that sort of example can be copied and that trade with the United States, with Canada and many other countries can be considerably extended if management shows the ability, the courage and the flexibility which those in charge of that firm have shown. There are many small firms which are not able to do that sort of thing, but many of them could play a very big part in extending our export trade. The Government might well consider whether they can give any aid to those firms in the form of grouping. They should lose no opportunity to suggest to many small firms, which produce high-quality merchandise which is attractive to Americans; that they should group their enterprises in order to invade the American market.

They should go further. They should realise that in some overseas markets it will be necessary because of the need to carry stock owing to the intensified competition, for firms to spend a considerable amount of money, which they will have to find from their capital resources in the early stages, to take full advantage of the opportunities which exist.

I wonder whether the Government would consider favourably the suggestion that small firms which have shown a high export potential, but who, circumstances have shown, must carry stocks in, for instance, America and Canada, should have made available to them the dollars to enable them to put down the first stocks to set things rolling. Such firms would benefit very much from that course of action. The suggestion applies also to spares and replacements.

Mr. Martin Maddan (Hitchin)

Is my hon. Friend aware that the Export Credits Guarantee Department runs a scheme which helps exporters to move stocks abroad?

Mr. Deputy-Speaker

These are not matters for intervention. They are matters for debate.

Mr. Burden

The Department does not give credits for that sort of thing. It gives credits for specific orders, which is quite different.

I wish also to refer to the way in which the Customs and Excise can perhaps show a little more flexibility than it does at the moment. I have found quite extraordinary flexibility in Customs and Excise, far more than many people realise, and far more than the Department is given credit for.

In the changing circumstances of trade at the moment, it is frequently necessary for manufacturers to bring in a first delivery of raw materials to be manufactured here and then sent to, for instance, America. Many of these raw materials are normally subject to duty which cannot be refunded even when the primary product is imported for a manufacturing process and later exported in its entirety. However, it is possible under Section 12 of the Finance Act, 1951, for Customs and Excise to allow free entry in those circumstances. I hope that in such cases Customs and Excise will show the utmost flexibility and ensure that there is no hold-up in the case of goods imported for manufacture and subsequent export.

Another important point relates to travellers' samples. [Interruption.] There are many instances where—

Mr. Kenneth Thompson (Liverpool, Walton)

We cannot hear.

Mr. Burden

If my hon. Friend the Member for Walton (Mr. K. Thompson) will take his own advice, it will be much better.

A record is kept of all traveller samples that are sent abroad—they are plumbed. When those samples return to this country, the Customs and Excise can very readily see that they have gone from this country and were manufactured here. The Customs and Excise puts its own seal on them. In many cases, the salesmen returns here only for a very short stay before going to European markets, there again to try to sell merchandise. Nevertheless, there is frequently a considerable hold up in the Customs before the samples can be released, and I hope that my right hon. Friend will ensure that in such cases there is the least possible delay incurred.

I am sorry to have spoken at such length, but before I conclude I would like to refer to the Customs arrangements at London Airport. I know that there are sometimes considerable difficulties in clearing through Her Majesty's Customs because of the volume of goods that has to be dealt with, but I would impress upon my right hon. Friend the fact that if people are prepared to send goods to this country by air, despite the very high cost of transportation, there should be the least possible delay when the goods arrive at London Airport. It should be recognised that anything that is sent by air is a commodity for which the consignors and the consignees have probably paid very much in excess of the normal sea freight because the goods are urgently required, and quick delivery is essential. I hope that the delays that sometimes occur will be minimised in future.

Finally, I believe that our manufacturers are capable of doing very much more business throughout the world if they are not interfered with by Governments. The less they are interfered with in that way, the better for our trade.

8.53 p.m.

Mr. George Brown (Belper)

I think that it would be fair and proper to start with one comment about the Government side of the House. Right hon. and hon. Members opposite are, of course, responsible to their constituents and to their own consciences for the way in which they discharge their duties as a Government in this House, but this afternoon we have had long hours without a single Member on that side of the House being present, except the hon. Member who happened to be speaking.

We are debating the grave economic problems about which practically all commentators outside, whether they support the Government's political actions or not, are at the moment concerned. There is no journal published this weekend or today that does not express deep concern about the economic problems facing us. The Government benches, I suspect by arrangement, have deliberately boycotted this debate through most of the day. The hon. Member for Gillingham (Mr. Burden) has taken no less than forty-two minutes of the time of the House without ever once discussing a single subject that was the matter of debate or of the Amendment. At one stage he was heard to say to his hon. Friend the Member for Walton (Mr. K. Thompson)—who interrupted him without standing up—that if only he would stand up and speak he would help out the hon. Member for Gillingham.

Mr. Burden

No. I am quite sure that the right hon. Gentleman has no intention of doing me an injustice. I said nothing of the sort. What I said was that if my hon. Friend would keep quiet it would help.

Mr. Brown

I can only say that it sounded exactly the opposite to a number of us over here. But I will make no more comment on it. If those on the Government side of the House believe that this is how our constituents expect us to consider the problems that arise out of the Government's political action, I think that they are mistaken, and it remains for constituents to express themselves on the subject.

I believe that the recent political and military actions of this Government have been extremely irresponsible and extremely ill-advised, but I should never have thought that a Government party, at such a time of crisis in the world as this, could have been so irresponsible about the consequences of their action as not even to bother to come to the House, either to take part in the debate or even to listen to it.

Having made that comment, may I now make a more pleasant one and join my congratulations to those which have already been voiced to my hon. Friend the Member for Chester-le-Street (Mr. Pentland)? He addressed us this afternoon in a maiden speech which, if I may say so, remembering the difficulties of my own, seemed to me to be excellent not only in what it contained, which hon. Members opposite, had they been here, would have agreed was excellent, but in its form and in the confidence with which it was delivered. Chester-le-Street has had some distinguished Members in this House—none more, of course, than the present Lord Lawson—and I think the best tribute that I can pay to my hon. Friend is to say that quite clearly the constituency has lost nothing in its representation by having him here. We were delighted to hear him, and we shall be delighted to hear him again.

Having referred pleasantly to my hon. Friend, I now have the melancholy duty of referring to the Minister of Supply. Since I have known him, in this House and out of it, I have never seen a Minister more palpably uncomfortable than the right hon. Gentleman was today. Much of what he had to say, quite clearly he did not believe. As a matter of fact, when at one stage there was a little smile of incredulity on the faces of some of my right hon. and hon. Friends, I saw the reflection of it in the right hon. Gentleman's own face. I think that is the best comment upon what is happening. It was not in his spectacles. It was rather lower down his face, and revealed possibly rather more teeth than he normally shows.

The right hon. Gentleman obviously had a brief handed to him which he found it extremely difficult to deliver, and, having heard it, I am not at all surprised; but I am bound to say that I wonder why—no doubt, we shall be told in a moment—the Chancellor chose to take cover during this debate. The issues that we are discussing are matters of his responsibility. He may or may not have an answer. He may or may not think he has an answer. But to have deliberately run for cover at the beginning of the day, put his wretched and unfortunate colleague to cover up for him while he skulked in his burrow, in order to reappear at the very end of the day when there will be very little chance to press him if he takes refuge in not answering, which I suspect is what he is about to do, and very little chance to get back at him, seemed to me, like the whole tenor of the debate, to be a good deal less than the country deserves.

I am bound to invite the House to look back to the beginning of this debate and to examine again the issues with which we are faced. The hon. Member for Gillingham, who has just addressed us for forty-two minutes and then left us within two minutes of sitting down, spent a long time talking to us about the complications and problems of exporting. Of course, there are problems outside the realm of Government action, but the real problem is that none of us, either management or labour, can do our jobs unless the Government create the climate and provide the conditions within which we can operate. The great charge against this Government is that both over a long period and over the immediate past the Government have, in fact, provided a climate which defies the efforts of any section of industry to get on and provide this country with the well-being that it must have.

The Suez crisis and the action of the Government there has produced, in our view, an intensification of a problem that was there for a very long time. The economic cost of what has been done in the last fortnight is not a problem of itself. It is a problem to be seen as an aggravation of an economic situation that was already causing throughtful people a good deal of worry in this country.

Our first charge against the Chancellor is, as my right hon. Friend the Member for Huyton (Mr. H. Wilson) said, that it was his job, and is his job, to see that the costs of any adventure on which we are about to engage are measured, so far as they can be measured, and taken into consideration; and, if they have to be borne because of other over-riding considerations, he must see that steps are taken to enable them to be borne. The extraordinary thing which emerged from the speech of the Minister of Supply today was this. These matters never were considered. Nobody ever stopped to take them into account. Indeed, here we are well after the event now, and the Minister of Supply tells us that, in his view, it would be wrong—that was his word—to try to make an estimate of what those costs were.

Is it wrong to try to estimate after the event what it has cost us? I should have thought, on the contrary, that it was wrong in the first place not to have tried to make an estimate before the event, and very wrong to have got involved in something as to the costs of which we have not a clue. The Minister told us today that he would try to give us the best answers he could under three heads. The curious thing was that on the long term, indirect costs he had absolutely nothing to say. All he did give us was the figure on the Budget for the actual excess military expenditure, and that, with respect, is a figure which has been well canvassed; everybody knew it, and we scarcely required him to devote his speech this afternoon to giving us that information.

Everybody now is worried about the situation. Even The Times, which has given the Government a good deal of somewhat hesitant support during these events—though even that was a good deal more than they got from many other quarters—has this morning said that the operation in Suez has yielded no gains at all comparable with the cost of the operation.

This is the point from which the Chancellor has to start. He has to estimate the gains and give us the costs to set against them. The fact that the Government will not give the costs, and that such great efforts have been made today to avoid a debate upon them, is, in my view, the best evidence one could have of their culpability and, in particular, the culpability of the right hon. Gentleman. They do not seems to know whether or not to admit that the Suez crisis has caused costs to mount up.

The other day, the Chancellor seemed to be willing to use the costs of the Suez crisis as an excuse for his past failures. He said that the Suez crisis had made quite a serious impact upon Britain's economic situation, and that We have grave difficulties to come, physically and financially". He went on to say that, but for these, he had looked forward to the possibility next year, if prices and the wage structure could be kept reasonably stable, of moving into easier times. In other words, he could not move into the easier times that he had expected because of the grave physical and financial problems and difficulties caused by the Middle East crisis.

If he knows there are grave physical and financial problems to come, why are we deliberately kept in the dark about them? We must know what they are. He must have an idea of what is involved. He really must tell us tonight, and take all the time he wants. He knows that I will sit down when he is ready to get up. Let him take the time he wants to tell us about these grave physical and financial difficulties—I am quoting his words not somebody else's—which lie ahead.

The opening gambit of the Minister of Supply, that somehow it would be unpatriotic for the Opposition to deploy what we regard as the grave financial and economic problem of the country, really will not do. It is an easy opening gambit. In this case, his own Chancellor happens to have used exactly the same words. I remind the Minister of Supply that in our day, when the right hon. Member for Woodford (Sir W. Churchill) used to go around talking about the Weary Willies and the Tired Tims, there was a good deal more lack of patriotism in the speeches from this side of the House than there is today. Of course, it is our duty to draw the country's attention to the problem, and it becomes even more a duty when there is this conspiracy on the other side of the House to avoid doing it.

I do not believe that there is anything that justifies the Chancellor in using this alibi, because I do not believe that there was any chance of our moving into this fine "pie in the sky" land that he was talking about had it not been for the Suez situation. The real point of the matter is not that there has been this dramatic change from riding into Easy Street to a rather grave situation. The real point is that we have moved from a grave situation to one made very much graver. It is no use the Government trying to make an alibi out of the Suez situation. Surely we were getting into serious trouble before this happened.

Before I say a word about Suez, let me repeat for the benefit of the Chancellor, so that he knows, and is not troubled by lack of memory, what we want him to answer tonight, the main headings of the charge against him. In the first place, in our view the economic situation can be checked under a number of heads. First, there is the position of our gold and dollar reserves. When the Chancellor spoke in July, he talked of our regaining reserves every month so far this year. At the and of June, we had £94 million more than at the end of December. We would have liked more, but it is an achievement. As for the future. I can only say that … it is encouraging."—[OFFICIAL REPORT, 3rd July. 1956; Vol. 555, c. 1190.] What is the position so far as our reserves are concerned? In October, 1951, when right hon. Gentlemen opposite came to power, we had 2,953 million dollars as our reserves.

Captain Richard Pilkington (Poole)

They were rapidly running out.

Mr. Brown

In October, 1956, we had 2,244 million dollars. If, as the hon. and gallant Member so rashly says, our reserves were rapidly running out then, what are they doing now, when they are 700 million dollars less? That 700 million dollars represents a 25 per cent. drop in five years.

If hon. and right hon. Members opposite want to claim, as I guessed somebody would, that that was an unfair point to take because the reserves had not stopped running out at that point, I am all ready for that one. I thought I would then go to the point in time when the reserves had climbed right up again and take the position of June, 1954, when they reached their high-level peak of 3,017 million dollars. I thought I would see what had happened since then—there has been no Labour Government in the meantime, so we cannot be said to be responsible—and I find that as between June, 1954, and now, there has been a drop of, again, 773 million dollars, or 25 per cent. Wherever one looks therefore, there has been a 25 per cent. cut in the gold and dollar reserves for which the Government Front Bench is wholly responsible, whichever way one takes it.

The position is that the reserves today are less than they were five years ago, less than they were two years ago, less than they were one year ago and less than they were six months ago. Long before Suez became an actuality, when it was only a dream in the right hon. Gentleman's eye, whichever point in time one takes, the reserves are lower than they were at any of those periods before. That is the position.

The Minister of Supply today developed a remarkable and to me a new doctrine. I am not an economist, and I am always happy to be taught these things. However, this doctrine was new to me. It was that the reserves do not matter; that there are many other things one has to take into account. If one looks at enough things, I gather, one is bound to find something that looks better, and then one says, "The reserves do not matter. Look at this, which is better."

That may be a nice doctrine, but I cannot remember having heard the right hon. Gentleman develop it when the reserves have been discussed before, particularly when the reserves the Labour Government left behind were debated. I understood then that it was the level of reserves that counted. This is a new doctrine, that the size of the reserves does not matter. This novel doctrine was contradicted by the right hon. Gentleman himself, because he told us subsequently that if, in a situation of crisis, the reserves are too low to be dipped into, there is strain, and then it is a serious matter.

That is the case we want to develop. The gold and dollar reserves have been allowed to fall so consistently and so heavily under this Government that now, as defences not only of the United Kingdom but of the sterling area, they are much too low, too low for us to face the problems arising out of the Suez crisis with anything but grave trembling of our hearts.

What is true of the reserves is also true of production. The Minister of Supply talked of an increase in production. I did not know what he was talking about. He gave us no figures to support his remark. They take quite a lot of finding. The fact is that from an annual rate of increase of 4 per cent. or more, which we maintained for a very long time even when we were actively re-equipping and building up after the war, under this Government, and under the right hon. Gentleman in particular, we have fallen to the position where we are not only not increasing the rate of production but are actually reducing it month by month.

In every month this year there has been a fall in the rate of production in manufacturing industry—in every month this year. We just broke even with last year. We managed a magnificent stagnation. We achieved that simply by bringing into the calculation the increased production which there has been in the nationalised electricity industry and in the building industry. If we leave those two out, we have not even stagnated, but we have actually been going down.

I cannot understand how hon. and right hon. Gentlemen opposite can regard with any equanimity a situation in which we are failing to add to our production, to our total annual product, to our total ability to meet competition from overseas. In the four years from 1951 to 1955 the total increase of production before the rate fell off was only 17 per cent., a good deal less than half of what it was in the four or five years before then. I put it to the right hon. Gentleman, not to crow, but as a matter of concern, how can that be anything other than a grave situation, in which, when our competitors are building up, we are steadily falling away and losing our productive potential?

One of the excuses given for it is that it has had to be so to provide for the redeployment of labour which was required. I shall not repeat the figures which my right hon. Friend has given, but it really is not true to argue that there has been a redeployment of labour in any real sense. There has been a movement of labour out of the industries which were contracted, but not into the industries which we want to build up. There has been in the main an uninfluenced, uncontrolled movement of labour into miscellaneous trades and into distribution, and the only real gain which we have made has been in transport, where, admittedly, it was required. Otherwise, workers have gone into industries which are no more essential than those out of which we tried to move them.

The Minister of Labour is not present but his Parliamentary Secretary is here. The Minister promised last Session, in a debate on employment, what he called a social survey of the case histories of those who were moved out of the car factories, so that we could see how the redeployment had gone on. Is it significant, or am I unduly suspicious, that we have not had that survey? Although we are told that practically all these people are in other jobs, we still have not been told what has happened to them. I press the Minister to let us have that history, because I think it will show quite clearly that there has not been this redeployment of labour which is sometimes claimed as the excuse for the drop in our production.

The third monument to the Chancellor is the level of internal prices. As the House knows, I am a trade union official. It has often been said that the trade unions have a tremendous record since the war of responsibility in using the great power that came into their hands. Not only because we thought it a good thing to do, but because we had spent a lifetime, against bitter opposition, in reaching the situation where we were recognised as partners in industry and the State, we did not want to jeopardise that position but wanted to use our power for the good of the industry and ourselves.

What the Chancellor has done with internal prices—and Ministers still do not seem to understand this—has been to make it virtually impossible for an elected trade union leader to maintain the policies and attitudes which we have struggled so hard to build over the last ten years. We cannot be turned into stooges for a Government and a Chancellor who are determined to shift burdens from the well-to-do on to the backs of our members. We cannot do it even if we were tempted to do it—and there is no reason why we should do it.

Prices since 1951 have risen by over 25 per cent. and food prices by over 41 per cent. It is easy to say that they rose by a higher percentage when we on this side of the House were in office, but the real point of the comparison is that when we were in office internal prices rose by less than the rise in external prices at which we were buying from overseas. Under the present Government, internal prices have risen by more than the rise in external prices. The 25 per cent. increase in internal prices has to be set against a fall of 9 per cent. in our external prices.

The rise of 41 per cent. in our food prices has to be set against a rise of only 3 per cent. in the external prices of the food which we have to bring in. Therefore, there has been a deliberate internal inflation of the prices against the purchasing power of the people. The right hon. Gentleman claims that there has been a rise of only 2 per cent. this year, but that has to be measured against a fall of 2 per cent. in our external prices level. Therefore, there has been a rise of 4 per cent. internally—because the one rise has to be added to the other.

No Government can be attacked for not being able to keep prices down in an importing country like ours when external prices are rising against it, but to secure a rise in prices internally of that order when prices externally are falling is quite an achievement, and one which is bound to be resisted by the trade union movement.

It is no use the Chancellor trying to pull off a rather slick comparison about earnings. This must be gone into. For one thing, these figures of earnings are not universal. All the figures issued exclude large blocks of workers who happen to be those who in the main do not work overtime or on the piece-work system which the others follow. The higher earnings this year represent longer hours being worked. The hours now being worked are longer than they were when we on the side of the House were the Government. More overtime is being worked. A man does not expect to work more overtime in order to offset the milking operation which the right hon. Gentleman is conducting. If a man puts in longer hours at work he expects to get a real rise in his standard of living as a result.

I can assure the right hon. Gentleman that the figures are correct. I have checked them from every angle. The benefit of the extra 1.7 hour now being worked every week by men is being milked off them by the price rise which the right hon. Gentleman has worked. I repeat that if we included large blocks of workers who are excluded from the figures—transport workers and the like—and if we excluded bus men, whose general opportunity for piece work is much less than anyone else's, we should not even get the earnings figure which the right hon. Gentleman is using. I beg him to remember that only one worker in three in industry generally is able to be on piece work.

For example, on road haulage only one worker in twenty-five is on piece work, and therefore piece work earnings have no interest to these men, who still have to meet rising prices and can only do so with a rise in the basic rate. That is why it is so silly to lecture trade union officials who have to defend these men for claiming wage increases because the Chancellor has broken his own plateau with price rises that were quite unnecessary on the basis of our external—[An HON. MEMBER: "How does one break a plateau? "] Someone says he does not know how one breaks a plateau. Well one bursts through it. At any rate the Chancellor has ruined it.

There are many other ways of testing this position. I shall take one other. One of the actions of the Government which has largely produced this situation has been the use of unselective methods of control, particularly the credit squeeze and the dearer money policy. What have been the consequences? I ask the right hon. Gentleman to tell us something about this.

In 1950 to 1951 the cost of servicing the National Debt was £470 million. In 1955 to 1956 the cost was £638 million. At the beginning of this year the Chancellor estimated the cost at £670 million. In fact we have already exceeded that rate of increase, and it looks as though the turn-out at the end of the year is much more likely to be £730 million. This means that in five years the annual cost of servicing our National Debt, in the main our past borrowings, has increased by £260 million a year. Can anybody suggest, can the right hon. Gentleman tell us, what is the virtue in adding that amount of money per year to the cost of servicing the borrowings which we have made in the past? What gain is there from it? What value does the right hon. Gentleman see in it in helping to provide a plateau of stability?

The entire build-up has been one leading to crisis, one leading to grave economic problems, right from the time that the right hon. Gentleman's predecessor took over. All that the right hon. Gentleman has produced to meet it has been a series of miserable economies, some not right, some not economies at all, while those that are economies are secured at the expense of the people who are doing least damage to the national economy. They are not the people who are leading us to inflation. They are not the people who are making a demand on services in this country which we are unable to meet.

We now have the Suez situation imposed on top of these difficulties. If we are to believe what we read and are told, the Chancellor must bear a great deal of responsibility for this. Indeed, it rather looks to some of us as though he has much more influence on both foreign affairs and defence now that he is Chancellor of the Exchequer than he ever had when he adorned either or both of his previous offices; and that it is a baneful influence does not alter our recognition of the fact. I sometimes wonder whether he incites the Prime Minister for the sheer sadistic joy of seeing the miserable look on the face of the Lord Privy Seal. Whatever the reason, quite clearly he is doing it, and he therefore has a double responsibility for its consequences.

It is incredible that we had a speech from the Minister of Supply this afternoon in which he managed not to say a word about the economic consequences of this adventure. May I quickly repeat them to the Chancellor in the hope that he will comment on them. First, it appears clear that we have an inflation of our defence budget this year to the extent of 3 per cent. or 4 per cent.; we have about £45 million added to our direct defence budget. The argument that this is not so much will not be accepted, because if it is not so much when it is added, then it could not have been so much when the Government took it away, and imposed charges on prescriptions and milk and rent increases. If it was so important when they took it away, it is obviously equally important when it is added again.

There are much more worrying problems, and the outstanding problem is that of oil. The Chancellor ought to be able to take us into his confidence about this. It is all very well to say, "We are discussing it with the O.E.E.C.", but unless he knows himself what he thinks the situation is, how can he effectively discuss it with the O.E.E.C.? I want to ask the Chancellor what the effect will be, so far as he can estimate it at the moment, of the blocking of the Canal and the stopping of the pipelines. In his opinion, how long shall we be unable to use the Canal, when can we expect oil to be flowing again through the pipelines and to what extent?

Unless this is known, it is impossible to proceed to the next part of the exercise, which must be to try to estimate what the dollar costs will be, and what will be the effect on our reserves. Unless we estimate that, obviously we can take no action to put it right. Clearly no more tankers will come through the Suez for a time, and clearly no tankers will be arriving here round the Cape for two or three weeks. During that time we shall be using up what stocks we have. Somebody has estimated that in the next five weeks we shall be fortunate to have two normal weeks' supplies arriving in Western Europe.

There are other countries in Western Europe with an even greater claim than ours—for instance, the Scandinavian countries; and, of course, there is Germany, much more able to buy than we are. I think the Chancellor ought to tell us whether it is correct that after the beginning of December the most Western Europe can expect is 60 per cent. of her normal oil supplies. How do we expect to get that much, how much of that will cost dollars and shall we be able to find the dollars required for the extra 4 million tons, mainly from the United States and Venezuela? How much of this extra cost will be additional to the dollar element already in our oil costs, and where are we to find the dollars if this situation continues for a considerable time? How long will our present stocks last? When do we expect the so-called 10 per cent. cut to be replaced by a proper rationing system? Do we think that will be necessary? When do we think it will be necessary?

Many industries are far harder hit than others by the cut. Agriculture is clearly one, as are industries which have turned heavily over to oil. They will be hit much sooner than a general 10 per cent. cut, representing 1 per cent. cut in our total fuel supplies, would lead us to believe. It is not good enough to leave them in doubt if we expect the situation in which we are not getting our supplies to continue for a considerable time.

What effect does the Chancellor think that that will have on production? He must have some ideas about this, and I can assure him that our members in the trade unions, the workers of this country, are as worried as anybody else. Merely to say that one cannot estimate, that it is wrong to try to estimate, does not encourage them to feel that this is a time when they can go wholeheartedly about their jobs. The Government cannot preach higher productivity and leave men in doubt whether jobs will be there at one and the same time.

What about the shipping? Where are the extra tankers to come from to deal with this extra—[HON. MEMBERS: "Time."] Do not let hon. Gentlemen opposite worry. The right hon. Gentleman and I have a perfect understanding with each other, and it will be adhered to. The right hon. Gentleman is so worried about what he is going to say that he only wants twenty-five minutes. But I have things to say and questions to ask, even if he will not answer them.

What about the position of the shipping? Where are the extra tankers to come from to compensate for the added length of the journeys round the Cape? Are we going to get them from America? We have no more. At the moment, one-eighth of our tramp fleet is, in fact, requisitioned. We are net importers of tankers, which means dollar expenditure. How does the right hon. Gentleman see us dealing with that factor? When will our requisitioned tramp shipping be derequisitioned in order to release the pressure on those tramp ships and help to bring down the freight rates?

What does the right hon. Gentleman suspect that the effect of all this is going to be on his plateau of price and wage stability? Has he formed any view at all about the likely effect of this on internal prices, on our terms of trade and on our general levels of production? These are questions that I can only hurriedly re-ask at the end of the day, but which were asked at great length at the beginning of the day and not replied to. I emphasise to the Chancellor, party politics aside, that he owes it to the nation to do the best he can to answer these questions. The country is entitled to know and our members in the trade unions are entitled to know. We think that we are entitled to know. So far, we have had nothing in the way of an attempted answer at all.

I will now sit down to enable the Chancellor to reply. [HON. MEMBERS: "Hear hear."] That does not worry me one little bit. May I say, in conclusion, and I ask hon. Members to listen to this, that we have had a political and a diplomatic defeat of the first order. If we are going to back that up with a series of economic problems to which we have no answers, then the future for our country is really grave, and I warn the Chancellor that he and his colleagues will give such an impression of incompetence, added to their previous humiliation, that the future for them will be even graver.

9.34 p.m.

The Chancellor of the Exchequer (Mr. Harold Macmillan)rose—

Mr. William Ross (Kilmarnock)

Where are the Dagenham Girl Pipers?

Mr. Macmillan

The hon. Gentleman must come along next time.

This debate has fallen, quite naturally, into two parts. The right hon. Member for Huyton (Mr. H. Wilson), who opened it for the Opposition, and the right hon. Member for Belper (Mr. G. Brown), who closed it for them, dealt largely with the economic situation before Suez and also, quite rightly, with the effects of Suez upon the economy, the effects dating, first, from the seizure of the Canal at the end of July and, secondly, with recent events.

I think the House would wish me not to spend too much time on the first part of their attack. It was upon rather familiar grounds and we have debated it over and over again. I think I am entitled to say this. I do not think it will weaken the case they wish to deploy if they hear what I try to say in reply.

Up to the time of Suez, for the first seven months of this year, the inflation has been largely held, if not wholly controlled, by a variety of methods, monetary and fiscal. There has been a tight control upon Government expenditure, not always popular, but it has been done. There is the Budget surplus which I estimated would run to about £460 million; and apart from the direct expenditure, which I will come to in a moment, arising out of Colonel Nasser's seizure of the Canal and all the events since—this is the particular point the right hon. Gentleman put to me—I see no reason why that surplus should not be largely realised. There will be £35 million to £50 million additional expenditure upon military arrangements, but I see no reason why the rest of the surplus should not be realised.

There has been an employment situation which, while not so much "over-employment", if I may use that term, has been full employment with a certain degree of mobility. There has been an increase in the mining industry for the first time for a long time. I think that the hon. Member for Chester-le-Street (Mr. Pentland), who in a most admirable maiden speech dealt so much with the mining industry, would like to know that. There has been a general holding of the price level and, in this year, in the last few months, the actual level has fallen rather than risen.

There has been a great increase in savings. There has been a spectacular result, a really remarkable result, in the success of the new issue of the orthodox character; and I think there is good hope of the success of the less orthodox. The general position of the mass of our people—and they all know it—has been better almost than ever within living memory. [HON. MEMBERS: "Oh."] Well, hon. Members know it and the people know it. The balance of payments position has considerably improved. We had a profit on the six months of £125 million over a similar six months the year before, and £200 million over the last six months of the year before.

The sterling situation has also improved, and whatever may be said of the precise method adopted in this attempt to hold the inflationary position, I think that hon. Members on both sides have recognized that it should be done, and there has been a good deal of "shadow boxing" about the particular methods by which it ought to be done. The controls which we have exercised have been very severe—monetary controls, controls on lending, controls on hire purchase, and all the rest. There has been a general acceptance—I do not say this to try to weaken the case that right hon. and hon. Gentlemen have made; in a sense it strengthens it—that in this seven months we were making very real progress towards our purpose.

We are considering altogether new directions of trading policy. They have been mentioned in the debate and I will not now make reference to them, except to say that I hope that we may be able to have a day's debate upon the whole of this problem of the European market, which does not divide parties, but upon which there is very deep interest throughout the House.

After that seven months there came the Suez trouble—[HON. MEMBERS: "War."]—the threat which the right hon. Gentleman the Leader of the Opposition compared to the rising of a new Mussolini or a new Hitler. What happened immediately, of course, was, as one would expect, pressure upon sterling, a general sense of malaise and uncertainty throughout the world. The loss of sterling in August, September and October, amounting to 328 million dollars—nothing whatever to do with the events of the last fortnight—reflected that the world thought what the right hon. Gentleman thought, until his party made him retract it. The world thought that we were faced with a very serious new threat and that Colonel Nasser was a real danger

Now I come to the recent events. In the first three months this sense of uncertainty affected sterling and resulted in this loss. Now, what has happened? We are faced with very considerable problems, but I cannot give and I will not give a premature estimate upon uncertain premises. We have, first, the oil problem, and the first problem there is the physical difficulty of getting the oil we require. That depends upon two things, first, upon the opening of the Canal; and we cannot tell when it will be opened.

With the part under our control very substantial progress is being made already and I cannot believe that it will not be possible for the United Nations authorities to persuade the Egyptian authorities to allow the part of it not under our control to be opened with equal speed. All the resources are available. We will make them available to the United Nations authorities.

I was interested to see an estimate of an Egyptian authority, in Cairo, that it could be open within a period of six to eight weeks. That was reported in a newspaper tonight. All I can say is that we cannot be certain, but we are making great progress where we are able to operate, and I believe that great progress can be made if the will is there to do it.

On the question of the Syrian pipelines, as was rightly observed it is quite possible to get very substantial deliveries of oil even before the boosting pumping stations can be wholly restored. That will depend on whether—as I hope and believe—the Iraq Government and the Syrian Government can work together, as they say they are ready to do, to give every help to the restoration of the flow of oil, which is in the interests of both those countries.

The degree of difficulties we shall have and the degree of delay therefore depends upon those two things, still uncertain. Meanwhile, as my right hon. Friend the Minister of Supply said, the operations of O.E.E.C. are, together with the American observers at that body, working at the double problem—and the Leader of the Opposition mentioned this—of increasing to the maximum the imports for Western Europe and upon an agreed system of allocation. That is the actual physical problem of obtaining the oil that we require.

Then there is, of course, the serious problem of what will be the additional net cost to us in dollars. This also depends upon how rapidly the Canal can be reopened, and upon how rapidly the various arrangements which were under consideration, and are now under consideration, can be brought into play. But, whatever happens, it is quite clear that there must be—I do not wish either to minimise it or to exaggerate it—that there will be, a serious temporary effect upon our economy and upon our reserves.

These matters are, of course, questions partly as to what are the reasons for the falling away of our reserves. If they fall away because the fundamental trading position of a country is unsound, and if a country is not able to correct the unsoundness of its internal inflationary position, then the steady draining away of reserves is a very serious thing; but, as my right hon. Friend the Minister of Supply pointed out, if they fall away as a result of some temporary difficulties which occur, then that is what reserves are for, and that is what the reserves will be used for. Moreover, our reserves have behind them very substantial reinforcements available which can, I believe, be brought into play.

Mr. Desmond Donnelly (Pembroke)

There has been a statement in the Financial Times about the loss on the invisible trade account in view of the additional shipping costs—the tramp steamers, and so on. Will the right hon. Gentleman say something about that before he leaves the subject?

Mr. Macmillan

There would be a loss because of the requisitioned ships, but the more rapidly the United Nations takes over our responsibilities, the more rapidly our ships will be derequisitioned. It would be foolish for me to try to suggest, and I do not intend to do so, that we shall not suffer, on this material side, a setback. But I believe that we can overcome the difficulties which we confront. We have done so before.

The right hon. Gentleman the Member for Huyton who made, I thought, as always, a very able, well-constructed speech, ended it with a personal attack upon me to which I should like to make a reply. I do not mean "personal" in an offensive sense; I mean against the method, in a proper political sense, and I wish to answer it as sincerely as I am sure he made it. He asked why did not I, as Chancellor of the Exchequer, whose traditional duty it is to oppose expenditure—even sometimes good expenditure; especially defence expenditure, he said—strenuously oppose this? Why did not I set my face against any policy which might, and, indeed, must, lead to some economic troubles and difficulties?

Mr. G. Brown

He did not say that.

Mr. Macmillan

The right hon. Gentleman did say that. He said that I had betrayed the ordinary duties of a Chancellor.

I want to say quite frankly to the House that it was a very great temptation to me to take exactly that course. I believe, and I think the country believes, that in the short period during which I have had the honour to hold this office we have made very considerable progress. [Interruption.] I certainly—and this is my answer—believe it to be true. For that reason I could look forward—I say this frankly; perhaps I should say that I had looked forward towards the end of July—to moving into a rather easier period, perhaps to being able to lighten a little the tight control that we had upon our economy, and, in the next few months or the next year or two, to an increasingly, improving situation. To all that I could look forward.

I could also look forward, if I may introduce a purely personal note, if these unlucky events had not taken place and when I had reached what is the end of, normally, the last decade of one's life, political life at any rate, to retirement from many of these troubles.

Hon. Members

Cheer up.

Mr. Macmillan

Every interest of mine, every private, every personal interest that I had, would be in favour of leading me to oppose what we have done. Why, then, have I supported it? I will tell the House. All my interests would have been to follow what we used to call a policy of appeasement. Why have I not followed that? I will tell the House frankly and sincerely. It is because I have seen it all happen before. [Interruption.] That was what the Leader of the Opposition thought. That is what he meant when he spoke of standing up to Mussolini and Hitler.

Mr. Gaitskell

The right hon. Gentleman knows perfectly well—the Foreign Secretary himself pointed it out—that I made it very plain in the speech to which he is referring that in no circumstances must we do anything in conflict with the United Nations Charter.

Mr. Macmillan

That is just the point.

In 1914, when I was a very young man, I saw the drift into war. I had no responsibility for that, at any rate. I saw it again in the years 1936 to 1939. I then had the responsibilities of a backbencher, and I tried to act up to them. What were we asked to do then? We were asked to break all our literal, legal obligations. Had we gone to war with Hitler in 1936, 1937 or 1938 it would have been contrary to the Kellogg Act, contrary to the League of Nations, contrary to all our obligations. We did not do it, and we drifted, drifted and drifted.

I claim—[Interruption]—that this is why we have done three things. First, we have stopped the small war, which might have led to the big war. [Interruption]. We have, perhaps—although there are still great difficulties ahead—created for the first time a United Nations—[Interruption.] Thirdly, we have, perhaps, I believe—every indication which is coming in increases my belief—stopped a third world war. [Interruption.] I was asked why I supported these things, and I am saying why sincerely. They were contrary to the short-term interests of myself, of my Government and of my

party. I supported them because there are times in a man's life when he has to make great decisions.

History alone will prove whether what we did was right or wrong. Ministers, if they are fortunate, can go through a period of office with the ordinary debates and the ordinary discussions—and they are plentiful, and quite agreeable—and never be faced with decisions like these, but when we are faced with them there are only two courses: one is to run aw ay from them, and the other is to make the right decisions. I am sincerely convinced, having seen this happen twice in my lifetime, that the events of this period may prevent a third disaster coming to the world.

I think that we made the right decision. When these moments come, Then it is the brave man chooses, while the coward turns aside".

Whatever may be the economic disadvantages or troubles—and they will be substantial—I believe that history will show that we have chosen aright.

Mr. Allaun rose—

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 put accordingly, That those words be there added:—

The House divided: Ayes 259, Noes 321.

Division No. 2.]	AYES	[10.0 p.m.
Ainsley, J. W.	Brown, Thomas (Ince)	Davies, Harold (Leek)
Albu, A. H.	Burke, W. A.	Davies, Stephen (Merthyr)
Allaun, Frank (Salford, E.)	Butler, Herbert (Hackney, C.)	Deer, G.
Allen, Arthur (Bosworth)	Butler, Mrs. Joyce (Wood Green)	de Freitas, Geoffrey
Allen, Scholefield (Crewe)	Callaghan, L. J.	Delargy, H. J.
Anderson, Frank	Carmichael, J.	Dodds, N. N.
Awbery, S. S.	Castle, Mrs. B. A.	Donnelly, D. L.
Bacon, Miss Alice	Champion, A. J.	Dugdale, Rt. Hn. John (W. Brmwch)
Baird, J.	Chapman, W. D.	Dye, S.
Balfour, A.	Chetwynd, G. R.	Edelman, M.
Bellenger, Rt. Hon. F. J.	Clunie, J.	Edwards, Rt. Hon. John (Brighouse)
Bence, C. R. (Dunbartonshire, E.)	Coldrick, W.	Edwards, Rt. Hon. Ness (Caerphilly)
Benn, Hn. Wedgwood (Bristol, S. E.)	Collick, P. H. (Birkenhead)	Edwards, Robert (Bilston)
Benson, G.	Collins, V. J. (Shoreditch& Finsbury)	Edwards, W. J. (Stepney)
Beswick, F.	Corbet, Mrs. Freda	Evans, Albert (Islington, S. W.)
Bevan, Rt. Hon. A. (Ebbw Vale)	Cove, W. G.	Evans, Edward (Lowestoft)
Blackburn, F.	Craddock, George (Bradford, S.)	Evans, Stanley (Wednesbury)
Boardman, H.	Cronin, J. D.	Fernyhough, E.
Bottomley, Rt. Hon. A. G.	Crossman, R. H. S.	Fienburgh, W.
Bowles, F. G.	Cullen, Mrs. A.	Finch, H. J.
Boyd, T. C.	Daines, P.	Fletcher, Erie
Braddock, Mrs. Elizabeth	Dalton, Rt. Hon. H.	Forman, J. C.
Brockway, A. F.	Darling, George (Hillsborough)	Fraser, Thomas (Hamilton)
Broughton, Dr. A. D. D.	Davies, Rt. Hon. Clement (Montgomery)	Gaitskell, Rt. Hon. H. T. N.
Brown, Rt. Hon. George (Belper)	Davies, Ernest (Enfield, E.)	Gibson, C. W.
Gooch, E. G.	McInnes, J.	Shurmer, P. L. E.
Greenwood, Anthony	McKay, John (Wallsend)	Silverman, Julius (Aston)
Grenfell, Rt. Hon. D. R.	McLeavy, Frank	Silverman, Sydney (Nelson)
Grey, C. F.	MacMillan, M. K. (Western Isles)	Simmons, C. J. (Brierley Hill)
Griffiths, David (Rother valley)	MacPherson, Malcolm (Stirling)	Skeffington, A. M.
Griffiths, Rt. Hon. James (Llanelly)	Mahon, Simon	Slater, Mrs. H. (Stoke, N.)
Griffiths, William (Exchange)	Mainwaring, W. H.	Slater, J. (Sedgefield)
Grimond, J.	Mallalieu, J. P. W. (Huddersfd, E.)	Smith, Ellis (Stoke, S.)
Hale, Leslie	Mann, Mrs. Jean	Snow, J. W.
Hall, Rt. Hn. Glenvil (Colne Valley)	Mason, Roy	Sorensen, R. W.
Hamilton. W. W.	Mayhew, C. P.	Sparks, J. A.
Hannan, W.	Mellish, R. J.	Steele, T.
Harrison, J. (Nottingham, N.)	Messer, Sir F.	Stewart, Michael (Fulham)
Hastings, S.	Mikardo, Ian	Stokes, Rt. Hon. R. R. (Ipswich)
Hayman, F. H.	Mitchison, G. R.	Stones, W. (Consett)
Healey, Denis	Moody, A. S.	Strachey, Rt. Hon. J.
Henderson, Rt. Hn. A. (Rwly Regis)	Morris, Percy (Swansea, w.)	Strauss, Rt. Hon. George (Vauxhall)
Herbison, Miss M.	Mort, D. L.	Stross, Dr. Barnett (Stoke-on-Trent, C.)
Hewitson, Capt. M.	Moss, R.	Summerskill, Rt. Hon. E.
Hobson, C. R.	Moyle, A.	Swingler, S. T.
Holman, P.	Mulley, F. W.	Sylvester, G. O.
Holmes, Horace	Neal, Harold (Bolsover)	Taylor, Bernard (Mansfield)
Holt, A. F.	Noel-Baker, Francis (Swindon)	Taylor, John (West Lothian)
Houghton, Douglas	O' Brien, Sir Thomas	Thomas, Iorwerth (Rhondda, W.)
Howell, Charles (Perry Barr)	Oliver, G. H.	Thomson, George (Dundee, E.)
Howell, Denis (All Saints)	Oram, A. E.	Thornton, E.
Hubbard, T. F.	Orbach, M.	Timmons, J.
Hughes, Cledwyn (Anglesey)	Oswald, T.	Tomney, F.
Hughes, Emrys (S. Ayrshire)	Owen, W. J.	Turner-Samuels, M.
Hughes, Hector (Aberdeen, N.)	Padley, W. E.	Ungoed-Thomas, Sir Lynn
Hunter, A. E.	Paget, R. T.	Usborne, H. C.
Hynd, J. B. (Attercliffe)	Paling, Rt. Hon. W. (Dearne Valley)	Viant, S. P.
Irvine, A. J. (Edge Hill)	Paling, Will T. (Dewsbury)	Wade, D. W.
Irving, S. (Dartford)	Palmer, A. M. F.	Warbey, W. N.
Isaacs, Rt. Hon. G. A.	Pannell, Charles (Leeds, w.)	Watkins, T. E.
Janner, B.	Pargiter, G. A.	Weitzman, D.
Jay, Rt. Hon. D. P. T	Parker, J.	Wells, Percy (Faversham)
Jeger, Mrs. Lena (Holbn & St. Pncs, S.)	Parkin, B. T.	Wells, William (Walsall, N.)
Jenkins, Roy (Stechford)	Peart, T. F.	West, D. G.
Johnson, James (Rugby)	Pentland, N.	Wheeldon, W. E.
Johnston, Douglas (Paisley)	Plummer, Sir Leslie	White, Mrs. Eirene (E. Flint)
Jones, David (The Hartlepools)	Popplewell, E.	White, Henry (Derbyshire. N. E.)
Jones, Elwyn (W. Ham, S.)	Price, J. T. (Westhoughton)	Wigg, George
Jones, Jack (Rotherham)	Price, Philips (Gloucestershire, W.)	Wilcock, Group Captain C. A. B.
Jones, J. Idwal (Wrexham)	Probert, A. R.	Wilkins, W. A.
Jones, T. W, (Merioneth)	Proctor, W. T.	Willey, Frederick
Kenyon, C.	Pryde, D. J.	Williams, David (Neath)
Key, Rt. Hon. C. W.	Pursey, Cmdr. H.	Williams, Rev. Llywelyn (Ab'tillery)
King, Dr. H. M.	Randall, H. E.	Williams, Ronald (Wigan)
Lawson, G. M.	Rankin, John	Williams. Rt. Hon. T. (Don Valley)
Ledger, R. J.	Redhead, E. C.	Williams, W. R. (Openshaw)
Lee, Frederick (Newton)	Reeves, J.	Williams, W. T. (Barons Court)
Lee, Miss Jennie (Cannock)	Reid, William	Willis, Eustace (Edinburgh, E.)
Lever, Harold (Cheetham)	Rhodes, H.	Wilson, Rt. Hon. Harold (Huyton)
Lever, Leslie (Ardwick)	Robens, Rt. Hon. A.	Winterbottom, Richard
Lewis, Arthur	Roberts, Goronwy (Caernarvon)	Woodburn, Rt. Hon. A.
Lindgren, G. S.	Robinson, Kenneth (St. Pancras, N.	Woof, R. E.
Lipton, Lt.-Col. M.	Rogers, George (Kensington, N.)	Yates, V. (Ladywood)
Logan, D. G.	Ross, William	Younger, Rt. Hon. K.
Mabon, Dr. J. Dickson	Royle, C.	Zilliacus, K.
MacColl, J. E.	Shawcross, Rt. Hon. Sir Hartley
McGhee, H. G.	Short, E. W.	TELLERS FOR THE AYES:
		Mr. Bowden and Mr. Pearson.
NOES
Agnew, Cmdr. P. G.	Bell, Ronald (Bucks, S.)	Bryan, P.
Aitken, W. T.	Bennett, F. M. (Torquay)	Buchan-Hepburn, Rt. Hon. P. G. T.
Allan, R. A. (Paddington, S.)	Bennett, Dr. Reginald	Bullus, Wing Commander E. E.
Alport, C. J. M.	Bevins, J. R. (Toxteth)	Burden, F. F. A.
Amery, Julian (Preston, N.)	Bidgood, J. C.	Butcher, Sir Herbert
Amory, Rt. Hn. Heathcoat (Tiverton)	Biggs-Davison, J. A.	Butler, Rt. Hn. R. A. (Saffron Walden)
Anstruther-Gray, Major Sir William	Birch, Rt. Hon. Nigel	Campbell, Sir David
Arbuthnot, John	Bishop, F. P.	Carr, Robert
Armstrong, C. W.	Black, C. W.	Cary, Sir Robert
Ashton, H.	Body, R. F.	Channon, H.
Astor, Hon. J. J.	Boothby, Sir Robert	Chichester-Clark, R.
Atkins, H. E.	Bossom, Sir Alfred	Clarke, Brig. Terence (Portsmth, W.)
Baldock, Lt.-Cmdr. J. M.	Boyd-Carpenter, Rt. Hon. J. A.	Cole, Norman
Baldwin, A. E.	Boyle, Sir Edward	Conant, Maj. Sir Roger
Balniel, Lord	Braine, B. R.	Cooper, A. E.
Barber, Anthony	Braithwaite, Sir Albert (Harrow, W.)	Cooper-Key, E. M.
Barlow, Sir John	Bromley-Davenport, Lt.-Col. W. H.	Cordeaux, Lt.-Col. J. K.
Barter, John	Brooke, Rt. Hon. Henry	Corfield, Capt. F. V.
Baxter, Sir Beverley	Brooman-White, R. C.	Craddock, Beresford (Spelthorne)
Bell, Philip (Bolton, E.)	Browne, J. Nixon (Craigton)	Crosthwaite-Eyre, Col. O. E.

Crouch, R. F.	Hulbert, Sir Norman	Nugent, G. R. H.
Crowder, Sir John (Finchley)	Hurd, A. R.	Oakshott, H. D.
Crowder, Petre (Ruislip—Northwood)	Hutchison, Sir Ian Clark (E'b'gh, W.)	O'Neill, Hn. Phelim (Co. Antrim, N.)
Cunningham, Knox	Hutchison, Sir James (Scotstoun)	Ormsby-Gore, Hon. W. D.
Currie, G. B. H.	Hyde, Montgomery	Orr, Capt. L. P, S.
Dance, J. C. G.	Hylton-Foster, Sir H. S. H.	Orr-Ewing, Charles Ian (Hendon, N.)
Davidson, Viscountess	Iremonger, T. L.	Orr-Ewing, Sir Ian (Weston-S-Mare)
D'Avigdor-Goldsmid, Sir Henry	Irvine, Bryant Godman (Rye)	Osborne, C.
Deedes, W. F.	Jenkins, Robert (Dulwich)	Page, R. G.
Digby, Simon Wingfield	Jennings, J. C. (Burton)	Panned, N. A. (Kirkdale)
Dodds-Parker, A. D.	Jennings, Sir Roland (Hallam)	Partridge, E.
Donaldson, Cmdr. C. E. McA.	Johnson, Dr. Donald (Carlisle)	Paton, John
Doughty, C. J. A.	Johnson, Eric (Blaokley)	Pickthorn, K. W. M.
Drayson, G. B.	Johnson, Howard (Kemptown)	Pilkington, Capt. R. A.
Du Cann, E. D. L.	Jones, Rt. Hon. Aubrey (Hall Green)	Pitman, I. J.
Dugdale, Rt. Hn. Sir T. (Richmond)	Joseph, Sir Keith	Pitt, Miss E. M.
Duncan, Capt. J. A. L.	Joynson-Hicks, Hon. Sir Lancelot	Pott, H. P.
Duthie, W. S.	Kaberry, D.	Powell, J. Enoch
Eccles, Rt. Hon. Sir David	Keegan, D.	Price, David (Eastleigh)
Eden, Rt. Hn. SirA.(Warwick&L'm'tn)	Kerby, Capt. H. B.	Price, Henry (Lewisham, W.)
Eden, J. B. (Bournemouth, West)	Kershaw, J. A.	Prior-Palmer, Brig. O. L.
Elliot, Rt. Hon. W. E.	Kimball, M.	Profumo, J. D.
Emmet, Hon. Mrs. Evelyn	Kirk, P. M.	Raikes, Sir Victor
Errington, Sir Eric	Lagden, G. W.	Ramsden, J. E.
Erroll, F. J.	Lambert, Hon. G.	Rawlinson, Peter
Farey-Jones, F. W.	Lambton, Viscount	Redmayne, M.
Fell, A.	Lancaster, Col. C. G.	Rees-Davies, W. R.
Finlay, Graeme	Langford-Holt, J. A.	Remnant, Hon. P.
Fisher, Nigel	Leather, E. H. C.	Renton, D. L. M.
Fletcher-Cooke, C.	Leavey, J. A.	Ridsdale, J. E.
Fort, R.	Leburn, W. G.	Rippon, A. G. F.
Foster, John	Legge-Bourke, Maj. E. A. H.	Robertson, Sir David
Fraser, Hon. Hugh (Stone)	Legh, Hon. Peter (Petersfield)	Robinson, Sir Roland (Blackpool, S.)
Fraser, Sir Ian (M'cmbe & Lonsdale)	Lennox-Boyd, Rt. Hon. A. T.	Robson-Brown, W.
Freeth, D. K.	Lindsay, Hon. James (Devon, N.)	Rodgers, John (Sevenoaks)
Garner-Evans, E. H.	Lindsay, Martin (Solihull)	Roper, Sir Harold
George, J. C. (Pollok)	Linstead, Sir H. N.	Ropner, Col. Sir Leonard
Gibson-Watt, D.	Llewellyn, D. T.	Russell, R. S.
Glover, D.	Lloyd, Rt. Hon. G.(Sutton Coldfield)	Sandys, Rt. Hon. D.
Godber, J. B.	Lloyd, Maj, Sir Guy (Renfrew, E.)	Schofield, Lt.-Col. W.
Gomme-Duncan, Col. Sir Alan	Lloyd-George, Maj. Rt. Hon. G.	Scott-Miller, Cmdr. R.
Gough, C. F. H.	Longden, Gilbert	Sharples, R. C.
Gower, H. R.	Low, Rt. Hon. A. R. W.	Shepherd, William
Graham, Sir Fergus	Lucas, Sir Jocelyn (Portsmouth, S.)	Simon, J. E. S, (Middlesbrough, W.)
Grant, W. (Woodside)	Lucas, P. B. (Brentford & Chiswick)	Smithers, Peter (Winchester)
Grant-Ferris, Wg Cdr. R. (Nantwich)	Lucas-Tooth, Sir Hugh	Smyth, Brig. Sir John (Norwood)
Green, A.	McAdden, S. J.	Soames, Capt. C.
Gresham Cooke, R.	McCallum, Major Sir Duncan	Spearman, Sir Alexander
Grimston, Hon. John (St. Albans)	Macdonald, Sir Peter	Speir, R, M.
Grimston, Sir Robert (Westbury)	Mackeson, Brig. Sir Harry	Spence, H. R. (Aberdeen, W.)
Grosvenor, Lt.-Col. R. G.	McKibbin, A. J.	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Gurden, Harold	Mackie, J. H. (Galloway)	Stanley, Capt. Hon. Richard
Hall, John (Wycombe)	McLaughlin, Mrs. P.	Stevens, Geoffrey
Hare, Rt. Hon. J. H.	Maclay, Rt. Hon. John	Steward, Harold (Stockport, S.)
Harris, Frederic (Croydon, N. W.)	Maclean, Fitzroy (Lancaster)	Steward, Sir William (Woolwich, W.)
Harris, Reader (Heston)	McLean, Neil (Inverness)	Stewart, Henderson (Fife, E.)
Harrison, A. B. C. (Maldon)	Macleod, Rt. Hn. lain (Enfield, W.)	Stuart, Rt. Hon. James (Moray)
Harrison, Col. J. H. (Eye)	MacLeod, John (Ross & Cromarty)	Studholme, Sir Henry
Harvey, Air Cdre. A. V. (Macolesfd)	Macmillan, Rt. Hn. Harold (Bromley)	Sumner, W. D. M. (Orpington)
Harvey, Ian (Harrow, E.)	Macmillan, Maurice (Halifax)	Taylor, William (Bradford, N.)
Harvey, John (Walthamstow, E.)	Macpherson, Niall (Dumfries)	Teeling, W.
Harvie-Watt, Sir George	Maddan, Martin	Thomas, Leslie (Canterbury)
Hay, John	Maitland, Cdr. J. F. W.(Horncastle)	Thomas, P. J. M. (Conway)
Head, Rt. Hon. A. H.	Maitland, Hon. Patrick (Lanark)	Thompson, Kenneth (Walton)
Heald, Rt. Hon. Sir Lionel	Manningham-Buller, Rt. Hn. Sir R.	Thompson, Lt.-Cdr. R. (Croydon, S.)
Henderson, John (Cathcart)	Markham, Major Sir Frank	Thorneycroft, Rt. Hon. P.
Hesketh, R. F.	Marlowe, A. A. H.	Thornton-Kemsley, C. N.
Hicks-Beach, Maj. W. W.	Marples, A. E.	Tiley, A. (Bradford, W.)
Hill, Rt. Hon. Charles (Luton)	Marshall, Douglas	Tilney, John (Wavertree)
Hill, Mrs. E. (Wythenshawe)	Maude, Angus	Touche, Sir Gordon
Hill, John (S. Norfolk)	Maudling, Rt. Hon. R.	Turner, H. F. L.
Hinchingbrooke, Viscount	Medlicott, Sir Frank	Turton, Rt. Hon. R. H.
Hirst, Geoffrey	Milligan, Rt. Hon. W. R.	Vane, W. M. F.
Holland-Martin, C. J.	Molson, Rt. Hon. Hugh	Vaughan-Morgan, J. K.
Hope, Lord John	Monckton, Rt. Hon. Sir Walter	Vickers, Miss J. H.
Hornby, R. P.	Moore, Sir Thomas	Vosper, D. F.
Hornsby-Smith, Miss M. P.	Morrison, John (Salisbury)	Wakefield, Edward (Derbyshire, W.)
Horobin, Sir Ian	Mott-Radclyffe, C. E.	Wakefield, Sir Wavell (St. M'lebone)
Horsbrugh, Rt. Hon. Dame Florence	Nabarro, G. D. N.	Walker-Smith, D. C.
Howard, Gerald (Cambridgeshire)	Nairn, D. L. S.	Wall, Major Patrick
Howard, Hon. Greville (St. Ives)	Neave, Airey	Ward, Hon. George (Worcester)
Howard, John (Test)	Nicholls, Harmar	Waterhouse, Capt. Rt. Hon. C.
Hudson, W. R. A. (Hull, N.)	Nicholson, Godfrey (Farnham)	Watkinson, Rt. Hon. Harold
Hughes Hallett, Vice-Admiral J.	Nicolson, N. (B'n'm'th, E. & Chr'ch)	Webbe, Sir H.
Hughes-Young, M. H. C.	Noble, Comdr. A. H. P.	Whitelaw, W. S. I. (Penrith & Border)

Williams, Paul (Sunderland, S.)	Wilson, Geoffrey (Truro)	TELLERS FOR THE NOES:
Williams, R. Dudley (Exeter)	Wood, Hon. R.	Mr. Heath and
Wills, G. (Bridgwater)	Woollam, John Victor	Mr. T. G. D. Galbraith.

Main Question again proposed.

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

Debate to be resumed Tomorrow.